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Grupo Televisa : 1Q 2017 earnings release

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04/29/2017 | 03:44am CEST
4/26/2017 6:01 PM

INVESTOR RELATIONS

FIRST-QUARTER 2017 RESULTS FOR IMMEDIATE RELEASE

Highlights
  • Growth in Consolidated Net Sales and Operating Segment Income of 2.0% and 2.4%, respectively
  • Revenue and operating segment income growth in our Cable segment of 6.2% and of 7.8%, respectively
  • Continued discipline in cost and expenses across all our business segments
  • Operating segment income margin in line with last year in spite of peso depreciation
  • Univision royalties reached US$72.6 million during the first-quarter
  • Capital expenditures came down by 34% to US$217.9 million
Consolidated Results

Mexico City, April 26, 2017 - Grupo Televisa, S.A.B. (NYSE:TV; BMV: TLEVISA CPO; "Televisa" or "the Company"), today announced results for first-quarter 2017. The results have been prepared in accordance with International Financial Reporting Standards ("IFRS").

The following table sets forth condensed consolidated statements of income for the quarters ended March 31, 2017 and 2016, in millions of Mexican pesos:

1Q'17

Margin

%

1Q'16

Margin

%

Change

%

Net sales

22,177.1

100.0

21,741.0

100.0

2.0

Net income

1,868.6

8.4

981.3

4.5

90.4

Net income attributable to stockholders of the Company

1,350.4

6.1

600.4

2.8

124.9

Segment net sales

22,909.0

100.0

22,272.2

100.0

2.9

Operating segment income (1)

8,559.1

37.4

8,358.3

37.5

2.4

(1) The operating segment income margin is calculated as a percentage of segment net sales.

Net sales increased by 2.0% to Ps.22,177.1 million in first-quarter 2017 compared with Ps.21,741.0 million in first-quarter 2016. This increase was mainly attributable to revenue growth in Cable and Sky segments. Operating segment income increased by 2.4%, reaching Ps.8,559.1 million with a margin of 37.4%.

Net income attributable to stockholders of the Company increased to Ps.1,350.4 million in first-quarter 2017 compared to Ps.600.4 million in first-quarter 2016. The net increase of Ps.750.0 million reflected primarily (i) a Ps.1,475.2 favorable change in foreign exchange gain or loss, net, as a result of the Mexican peso appreciation; and (ii) a Ps.101.5 million decrease in other expense, net. These favorable variances were partially offset by (i) a Ps.544.7 million increase in depreciation and amortization; (ii) a Ps.358.7 million increase in income taxes; and (iii) a Ps.279.6 million increase in interest expense.

First-quarter Results by Business Segment

The following table presents first-quarter consolidated results ended March 31, 2017 and 2016, for each of our business segments. Consolidated results for first-quarter 2017 and 2016 are presented in millions of Mexican pesos.

Net Sales

1Q'17

%

1Q'16

%

Change

%

Content

7,290.7

31.8

7,526.4

33.8

(3.1)

Sky

5,540.6

24.2

5,349.6

24.0

3.6

Cable

8,096.3

35.3

7,621.1

34.2

6.2

Other Businesses

1,981.4

8.7

1,775.1

8.0

11.6

Segment Net Sales

22,909.0

100.0

22,272.2

100.0

2.9

Intersegment Operations1

(731.9)

(531.2)

(37.8)

Net Sales

22,177.1

21,741.0

2.0

Operating Segment Income2

1Q'17

Margin

%

1Q'16

Margin

%

Change

%

Content

2,618.6

35.9

2,655.0

35.3

(1.4)

Sky

2,466.3

44.5

2,409.4

45.0

2.4

Cable

3,397.3

42.0

3,152.4

41.4

7.8

Other Businesses

76.9

3.9

141.5

8.0

(45.7)

Operating Segment Income

8,559.1

37.4

8,358.3

37.5

2.4

Corporate Expenses

(580.7)

(2.5)

(544.2)

(2.4)

(6.7)

Depreciation and Amortization

(4,554.5)

(20.5)

(4,009.8)

(18.4)

(13.6)

Other Expense, net

(393.7)

(1.8)

(495.2)

(2.3)

20.5

Operating Income

3,030.2

13.7

3,309.1

15.2

(8.4)

1 For segment reporting purposes, intersegment operations are included in each of the segment operations.

2 Operating segment income is defined as operating income before depreciation and amortization, corporate expenses, and other expense, net.

Content First-quarter sales decreased by 3.1% to Ps.7,290.7 million compared with Ps.7,526.4 million in first-quarter 2016.

Millions of Mexican pesos

1Q'17

%

1Q'16

%

Change

%

Advertising

4,128.2

56.6

4,478.7

59.5

(7.8)

Network Subscription Revenue

1,042.3

14.3

1,077.9

14.3

(3.3)

Licensing and Syndication

2,120.2

29.1

1,969.8

26.2

7.6

Net Sales

7,290.7

100.0

7,526.4

100.0

(3.1)

Advertising

First-quarter Advertising revenue decreased by 7.8% to Ps.4,128.2 million compared with Ps.4,478.7 million in first-quarter 2016. The drop in revenues is mainly explained by the reduction in advertising expenditures by certain clients in the banking, telecommunications, and high-caloric products industries.

The drop in revenues is also explained by our pricing discipline as part of the restructuring of our advertising sales business. As a result, we believe that certain clients that depend heavily on high-frequency and low-cost advertising migrated a portion of their budgets to broadcast competitors who offered discounts and promotions.

Network Subscription Revenue

First-quarter Network Subscription Revenue decreased by 3.3% to Ps.1,042.3 million compared with Ps.1,077.9 million in first-quarter 2016. The decrease is explained by the loss of Megacable revenues starting September 2016. Excluding this event, Network Subscription Revenue would have expanded by 17.2%.

During this quarter, Televisa's pay-TV networks continued to be among the most watched networks on pay-TV platforms in Mexico, producing and transmitting some of the leading pay-TV channels in key categories, including general entertainment, sports, music and lifestyle, and movies.

Licensing and Syndication

First-quarter Licensing and Syndication revenue increased by 7.6% to Ps.2,120.2 million compared with Ps.1,969.8 million in first-quarter 2016. The increase is explained mainly by a positive translation effect on foreign-currency-denominated revenues and by higher royalties from Univision, which increased by 2.6% to US$72.6 million in first- quarter 2017 from US$70.7 million in first-quarter 2016. These effects were partially compensated by the loss of Netflix revenues starting July 2016

First-quarter operating segment income slightly decreased by 1.4% to Ps.2,618.6 million compared with Ps.2,655.0 million in first-quarter 2016. The margin increased 60 basis points to 35.9%. The slight increase in margins reflects our commitment to control costs and expenses, seek operating efficiencies, and reach a full-year operating segment income margin similar to that of 2016.

Sky First-quarter sales increased by 3.6% to Ps.5,540.6 million compared with Ps.5,349.6 million in first-quarter 2016. The number of net active subscribers increased by 4.2% to 8,008,148 as of March 31, 2017, compared with 7,682,379 as of March 31, 2016. This is equivalent to a growth of 325,769 subscribers compared to March 31, 2016 and a drop of 18,371 compared to December 31, 2016. Sky ended the quarter with 207,827 subscribers in Central America and the Dominican Republic.

The marginal drop in subscribers during the first quarter is mainly explained by the above-average growth experienced in the first half of 2016 as a result of the transition from analog to digital transmission of broadcast signals that concluded in December 2015. To a lesser extent, it is also explained by lower disposable income in our target markets and a weak macroeconomic environment.

In addition, the transition to digital broadcasting temporarily increased the recharge rate in our pre-paid packages during the first and second quarters last year and such rate is back to historical levels. The normalization of the recharge rate makes the comparison to first quarter 2016 more challenging.

First-quarter operating segment income increased by 2.4% to Ps.2,466.3 million compared with Ps.2,409.4 million in first-quarter 2016. The margin was 44.5%, comparable to the 45.0% margin achieved in first-quarter 2016.

Cable First-quarter sales increased by 6.2% to Ps.8,096.3 million compared with Ps.7,621.1 million in first-quarter 2016 driven primarily by broadband additions.

During the quarter, we adjusted downward our RGU count by 206,700. As part of the integration of all our cable assets under the same systems we standardized the methodology for accounting for RGUs across all companies. Prior to standardization of policies, TVI had a different accounting methodology. The strictest criteria to determine active RGUs has now been adopted by all five cable operations. The adjustment to the RGU count does not have an impact on financial results.

During the quarter, voice and data revenue generating units, or RGUs, grew organically 0.1% and 1.4%, respectively. Video RGUs decreased organically by 1.6%. RGU growth was heavily influenced this quarter by our new credit filters meant to increase customer creditworthiness and reduce churn, and by lower disposable income across our target markets.

The following table sets forth the organic change in RGUs during the quarter, as well the adjustment in the RGU count per service type.

RGUs

1Q'17 Change

(Organic)

1Q'17 Adjustment to RGU Count

Video

-67,624

-71,341

Broadband

45,057

-80,288

Voice

2,848

-55,071

Total RGUs

-19,719

-206,700

The following table sets forth the breakdown of RGUs per service type for our Cable segment as of March 31, 2017 and 2016.

RGUs

1Q'17

1Q'16

Video

4,066,899

4,153,300

Broadband

3,376,559

3,147,286

Voice

2,061,059

1,968,590

Total RGUs

9,504,517

9,269,176

First-quarter operating segment income increased by 7.8% to Ps.3,397.3 million compared with Ps.3,152.4 million in first-quarter 2016. Margin increased 60 basis points to 42.0%, the highest on record for a first quarter.

The following tables set forth the breakdown of revenues and operating segment income, excluding consolidation adjustments, for our cable and network operations for first-quarter 2017 and 2016.

Grupo Televisa SA published this content on 26 April 2017 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 29 April 2017 01:44:14 UTC.

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