Investor Presentation First Quarter 2017
Forward looking statements This presentation contains statements that constitute forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements regarding the current intent, belief or expectations of our officers or management with respect to future developments, including such important matters as (1) our asset growth and financing plans, (2) trends affecting our financial condition or results of operations, (3) the impact of competition and regulations, (4) projected capital expenditures and (5) liquidity. Forwardlooking statements are not guarantees of future performance and involve risks and uncertainties, and actual results may differ materially from those described in forward-looking statements included in this presentation as a result of various factors. These factors, many of which are beyond our control, include the actions of competitors, future global economic conditions, market conditions, changes in interest rates and foreign exchange rates, changes in legislation or regulations applicable to our business, operating and financial risks, the outcome of legal proceedings and the factors discussed under Risk Factors in our annual report on Form 20-F for the year ended December 31, 2016. The results in this presentation appear as they were originally reported in our financial statements. 2
Overview 1Q 17 Results Underlying Drivers 3
Overview 4
Our Core Businesses Fully Integrated Media and Distribution Content Cable Sky** Advertising Four broadcast channels in Mexico City and affiliated stations Network Subscription 26 pay-tv networks and 52 feeds in Mexico and globally Licensing & Syndication Univision royalties, other licensing fees, and exports to +/- 80 countries Video: 4.1 million RGUs * Data: 3.4 million RGUs Voice: 2.1 million RGUs A leading cable operator in Mexico Video: 8 million subs A leading DTH system in Mexico, operating also in Central America and the Dominican Republic * Revenue generating units ** In partnership with AT&T which owns 41.3% of Sky. Univision*** *** Televisa has equity and warrants which upon their exercise, would represent approximately 36% on a fully diluted, as-converted basis of the equity capital in Univision Holdings Inc. Ownership of approximately 36% of the equity and warrants on a fully diluted, as-converted basis 5
Revenue breakdown Consolidated net revenue US$5.03b (1) LTM 1Q 17 US$mm (2) 1Q 17 YoY growth (3) LTM YoY growth (3) 9% 37% Content 1,895-3.1% 4.6% 22% 37% 23% Advertising 1,189-7.8% -0.1% 5% Network Subsc. 227-3.3% 13.3% 9% Licensing and Synd. 479 7.6% 13.7% 32% Cable 1,683 6.2% 10.1% 32% 22% Sky 1,151 3.6% 10.8% 9% Other 470 11.6% 13.2% (1) As of LTM 1Q 17. Consolidated net sales include elimination of intersegment operations amounting to US$170 million. (2) Equivalent in US$ at the FX rate of 19.2325 Ps/US$. The average of rates published by Mexico s Central Bank for LTM ending March 31, 2017. (3) ) 1Q 17 year over year and LTM growth in peso terms. 6 6
Operating segment income (1) Net OSI (2) of US$2.03b Share of OSI LTM 1Q 17 US$mm (3) LTM YoY growth (4) Margin LTM 1Q 17 3% 38% Content 765 0.7% 40.4% 25% Sky 518 7.8% 45.0% 34% 38% 34% Cable 701 13.3% 41.7% 3% Other 51 45.0% 10.8% 25% (1) Operating Segment Income OSI is defined as operating income before depreciation and amortization, corporate expenses, and other expense net. (2) ) Net OSI is after corporate expenses. As of LTM ending March 31, 2017 Net OSI includes Corporate Expenses of US$117.0 million. (3) Equivalent in US$ at the FX rate of 19.2325 Ps/US$. The average of rates published by Mexico s Central Bank for LTM ending March 31, 2017. (4) 1Q 17 year over year and LTM growth in peso terms. 7 7
Conservative balance sheet Capacity to continue supporting strategic initiatives Net Debt / EBITDA Ratio Debt composition 2.4 2.1 2.0 1.9 Ps$, 35% 1.6 1.2 1.3 1.1 1.4 1.5 1.6 US$, 65% Financial Assets 0.8 0.4 0.0-0.4-0.2-0.1 0.1 0.6 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 LTM 1Q17 Ps$, 28% US$, 71% Total debt* (1Q'17): Ps$128.4 billion Financial Assets**: Ps$55.78 billion Net debt: Ps$72.62 billion Average maturity: 15.68 years Moody s Baa1 S&P BBB+ Fitch BBB+ *Includes capital lease obligations and other notes payable. ** Financial Assets: Cash, temporary investments and other long-term available for sale and held-to-maturity investments. Source: Grupo Televisa's public filings. 8
1Q 17 Results 9
1Q'17 Results: Highlights Discipline in costs and expenses lead to solid margins 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 in the first quarter of 2017 came down by 34% when compared to first quarter 2016 We continue to improve our competitive position as one of the few truly integrated media and telecommunications companies 10
1Q 17 Results: Content Financial Results Billions of Ps. Revenues OSI OSI margin $7.53 $7.29 Content revenues decreased 3.1% during 1Q 17 Operating segment income margin reached 35.9%, in line with 1Q 16 (35.3%) 35.3% 35.9% Decline in revenues is explained mainly by lower advertising sales $2.66 $2.62 1Q16 1Q17 Content Revenue Mix Advertising performance driven by weak economic environment and pricing discipline Licensing and Syndication 29% Advertising Network subscription revenue decrease driven by loss of Megacable revenues (Sep-16) Network Subscription Revenues 14% 57% Licensing and syndication revenues grew 7.6% driven by higher Univision royalty payments and Mexican peso depreciation. 11
1Q'17 Results: Content Financial Results Advertising Billions of Ps. $4.48 $4.13 Advertising revenues decreased by 7.8% in 1Q`17 1Q16 1Q17 The drop in revenues is mainly explained by a. the reduction in advertising expenditures by certain clients in the banking, telecommunications, and high-caloric products industries. b. our pricing discipline as part of the long term restructuring of this business. Financial Results Network Subscription Revenues Billions of Ps. $1.08 $1.04 Revenues decreased 3.3% year-over-year in 1Q 17, mainly explained by the carriage dispute with Megacable. Excluding the loss of Megacable, Network Subscription Revenue would have expanded by 17.2%. 1Q16 1Q17 12
1Q'17 Results: Content Financial Results Licensing and Syndication Billions of Ps. $2.12 $1.97 Licensing and Syndication revenues increased 7.6% in 1Q'17 Growth is explained by higher royalty payments from Univision and also by the Mexican peso depreciation 1Q16 1Q17 These effects were partially compensated by the loss of Netflix revenues starting July 2016 Univision Royalties US$ millions $70.7 $72.6 Univision royalties reached US$72.6 million dollars during 1Q 17 from US$70.7 million in the first-quarter 2016 1Q16 1Q17 13
1Q'17 Results: Cable Financial Results Billions of Ps. Revenues OSI OSI margin During 1Q 17, sales increased by 6.2%. OSI increased by 7.8% and the margin reached 42.0% $7.62 $8.10 Revenue and OSI growth driven by RGU net additions in data (7.3%) and voice (4.7%). 41.4% 42.0% 2.1% video RGUs decreased explained by macroeconomic environment and new credit filters Cable RGUs (millions) $3.15 $3.40 1Q16 1Q17 Video RGUs Data RGUs Voice RGUs 9.3 9.5 2.0 2.1 3.1 3.4 4.2 4.1 Adjustment to RGUs counting methodology (-206,700 RGUs*). The margin reached 42.0% in 1Q 17, equivalent to an increase of 60 basis points when compared to 1Q 16. Year-over-year variation in all services: Video down 2.1% Data up 7.3% Voice up 4.7% 1Q16 1Q17 *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 14
1Q'17 Results: Sky Financial Results Billions of Ps. Revenues OSI OSI margin $5.3 $5.5 45.0% 44.5% Revenue and OSI growth of 3.6% and 2.4%, respectively Subscribers base increased by 4.2% year-over-year (+325,769 additional subscribers) Recharge rate at low-end of historical range $2.4 $2.5 OSI margin was 44.5% during the first quarter, in line with 45.0% achieved in 1Q 16 and 50 bps higher than 4Q 16 1Q16 1Q17 Sky Subscribers (millions) 7.7 7.8 Subscribers 7.9 8.0 8.0 1Q16 2Q16 3Q16 4Q16 1Q17 Net drop in subscribers of 18,000 mainly explained by: Above-average growth experienced in the first half of 2016 due to digital TV transition Lower disposable income in our target markets Recent price increases Sky ended the quarter with 207,827 subscribers in Central America and the Dominican Republic 15
Underlying Drivers 16
Underlying Drivers Drivers that are shaping our business, long term I. Advertising Revenue II. III. IV. Network Subscription Revenue Licensing and Syndication Revenue Sky Pay TV Revenue V. Cable Video RGUs VI. VII. VIII. IX. Cable Voice RGUs Cable Data RGUs Position as a Leading Cable Operator Diversification 17
MX$ billions I Advertising Revenue Restructuring ad business to drive long-term growth 30.0 Advertising Revenues Regulatory and competitive challenges have overshadowed underlying growth 25.0 20.6 20.5 21.1 21.5 22.7 23.2 23.9 24.9 25.5 23.0 23.2 22.9 06 Electoral reform and resulting loss of political ad revenue 20.0 15.0 09 Mexico s GDP drops by 5%; Televisa s broadcast revenues grow 0.5% 10.0 5.0 11 Loss of AMX/Carso as customer; represented 4% of broadcast revenues in 2010 0.0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 LTM 1Q17 Repricing of ad inventory starting in 2015 reduced flexibility for discounts and promotions while maintaining pricing discipline. 14 Ban on TV advertising of food/beverage with high caloric content during certain times of day (starting Q3 14) Ban on most government advertising during election time (Q2 09, Q2 12, Q2 15, Q2 16 ) Source: Grupo Televisa's public filings 18
I Advertising Revenue (Cont d) The restructuring is a multi-year process 3Q 14 Ban on advertising of food and beverage with high caloric content during certain times of day YoY % change in Advertising Revenues Dec 14 Closing of 2015 upfront negotiations resulting in 11.2% drop 1Q 15 Replacement of leadership and mandate in ad sales organization 2Q 15 Introduction of new rate card; customers minimize scatter market buys 2H 15 Customers stay away from scatter market for the balance of 2015 Dec 15 Closing of 2016 upfront negotiations under new pricing structure Dec 16 Customer deposits grow 8.9% in 2017 upfront 8.2% 6.0% -6.4% 3.8% 1.6% -16.4% -8.9% -11.0% -3.1% 2.1% -1.5% 4.0% -7.8% 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 Reversal of trend is under way, but growth will continue to be irregular for the time being Source: Grupo Televisa's public filings 19
I Advertising Revenue (Cont d) Even under new pricing, broadcast is the most effective platform The relevance of online advertising continues to grow, but free-to-air advertising remains the largest and most effective platform Broadcast and Online Advertising $29.4 $29.2 $30.3 $30.6 $33.0 $33.6 $35.4 $35.9 $37.0 $33.7 $34.3 12.0% 1.0% 2.0% 3.5% 4.8% 5.9% 7.5% 9.6% 13.4% 14.5% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Broadcast Advertising Online as % of Total Advert. Ps. billions The majority of our customers are nondurable CPG companies, retailers, and service providers in need for scale and efficiency * Broadcast advertising is the sum of Televisa s and Azteca s reported Mexico advertising revenues. 2015 drop reflects reaction to repricing of inventory. Source: Grupo Televisa's and Azteca s public filings and Mexican Association of Media Agencies 20
II I Network Subscription Revenue Still among the most watched networks in Mexico Network Subscription Revenues 4.0 3.0 2.0 1.0 1.5 1.8 2.1 2.4 2.6 3.2 3.3 2.9 3.6 4.4 4.4 CAGR of 11.3% in Network Subscription Revenues 2017 LTM 1Q 17 1Q 17 results affected by the loss of Megacable revenues starting September 2016 (17.2% growth if this event was excluded) One of the most important providers of content for pay TV platforms in Mexico 0.0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 LTM 1Q17 Series2 Already recuperated from loss, starting Q3 13, of substantially all its retransmission revenue in Mexico (1) Networks are distributed internationally (1) Starting on September 10, 2013 we had to forego retransmission revenues as a result of the implementation of the must-offer rules that came into effect with the telecommunications reform. Prior to 2011, network subscription revenues were classified under Pay Television Networks and included as additional revenues. 21
III Licensing and Syndication Revenue Approaching 2018 s step-up by 39% in royalty rate 350 300 250 Univision Royalties 273 248 225 (1) 314 311 325 327 Univision royalties make up most of Licensing and Syndication revenue Step-up in the royalty rate by 39% starting in 2018 200 150 100 138 (2) 147 143 156 Univision royalties reached US$72.6 million in the first quarter, a year-overyear growth of 2.6% 50 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 LTM 1Q17 Royalties (US$mm) The Royalty agreement does not expire unless Televisa voluntarily sells two thirds of its investment, but in no event earlier than 2025 Growth was partially compensated by the loss of Netflix revenues starting July 2016 (1) In 2014, Univision transmitted the World Cup which contributed with US$174.2 million of incremental net advertising revenue. (2) Prior to 2011, Licensing and Syndication revenues were classified under Programming Exports and are not directly comparable Source: Grupo Televisa's and Univision s public filings 22
IV Sky Pay TV Revenue Continued growth in revenues and great opportunities ahead 600 Sky ARPU and Revenues 21.9 22.1 25 Sky revenues have doubled in size in just seven years 500 400 300 200 100 481 7.7 464 457 448 375 11.2 9.2 10.0 8.4 12.5 295 14.5 263 16.1 240 19.3 17.5 230 230 239 230 20 15 10 5 Subscribers have expanded at a CAGR of 19.2% since the launch of VeTV in 2009, its low-cost pre-paid offer Subscriber growth accelerated temporarily (3Q 15-1Q 16) due to conversion of analog to digital transmission of broadcast signals 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 LTM 1Q17 Revenues (Ps. billions) ARPU (Ps.) * 0 2017 subscriber growth will be impacted by above-average growth in 2016 ARPU opportunity: Majority of Sky customers subscribe to its lowestcost pay TV offering Source: Grupo Televisa public filings. 23
millions V Cable Video RGUs 62% penetration still provides with growth opportunities 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 0.5 0.5 1.4 1.8 Video RGUs 2.0 2.2 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 1Q17 CAGR in video RGUs of 21.3% since 2006, including acquisitions 2.3 2.5 3.4 4.1 4.2 4.1 Overtime growth has been complemented by the acquisition of four cable operators starting in 2011 As of 1Q 17, a total of 4.1 million video RGUs, on more than 13 million homes passed Mexico s penetration of pay TV remains relatively low at 62% when compared with other Latin-American countries (e.g. 77% Argentina)* Net adds affected more recently by macro softness, competition, and integration initiatives Source: Grupo Televisa's public filings * Tercer Informe Trimestral Estadístico 2016 --2016 - Instituto Federal de Telecomunicaciones 24
millions VI Cable Voice RGUs Gaining market share against main competitor Voice RGUs 2.5 2.0 1.9 2.1 2.1 Overall number of fixed lines is expanding slightly as a result of attractive offers 1.5 1.0 0.5 0.4 0.5 0.6 0.8 0.9 1.2 Televisa Cable has become the second largest provider of voice services in terms of number of customers Televisa s unlimited calling plan is still unmatched by the incumbent 0.0 0.0 0.0 0.1 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 1Q17 With a share of fixed-line voice customers in Mexico of 11%*, the opportunity is still significant * As of 4Q 16. Source: Grupo Televisa's public filings 25
millions VII Cable Data RGUs Data services are the main driver of growth 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 0.1 0.1 0.4 0.7 Data RGUs 0.8 1.1 1.3 Televisa Cable captures 21.4%* of data customers in Mexico, compared to 16% at the end of 2014 1.7 2.3 3.1 3.4 3.4 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 1Q17 Mexico s penetration of data services is 13/100 inhabitants vs an average of 32/100 among the OECD (35 countries) Most customers subscribe to Televisa Cable s least expensive data plan Current Televisa Cable offer includes multiple high-speed data plans: Residential: 5, 10, 20, 50 & 100 mbps Business: 25, 50, & 100 mbps As adoption of computers and tablets increases, so will the subscription of high speed data services * As of FY 16. Source: Grupo Televisa's public filings 26
VIII Position as a Leading Cable Operator Multiple strategic and operational milestones 12.0 10.0 RGUs Televisa Cable (million) 9.0 9.7 9.5 06 Cablevision completes digitalization of its network 06 Acquisition of 50% of TVI 8.0 6.9 07 Cablevision launches voice services 6.0 4.0 2.8 3.3 3.9 4.4 5.1 09 Televisa Cable launches YOO 09 Cablevision begins conversion to fiberto-the-curve 2.0 11 Acquisition of 100% of Cablemás 0.0 2009 2010 2011 2012 2013 2014 2015 2016 1Q17 Video RGUs Data RGUs Voice RGUs Televisa Cable RGUs have grown at a CAGR of 18.3% since 2006 Source: Grupo Televisa's public filings 14 Acquisition of 100% of Cablecom 14 Televisa Cable launches IZZI 15 Acquisition of 100% of Telecable 16 Acquisition of the remaining 50% of TVI 16 Conclusion of the rebuilding phase of main cable systems 27
VIII Position as a Leading Cable Operator (Cont d) Resulting in Mexico s 2nd largest telecom network 28
VIII Position as a Leading Cable Operator (Cont d) Overcoming the side effects of rapid growth Pre-Integration Multiple brands and value propositions 2017 Single Brand & Positioning Diverse and complex product set Unified and simplified offer Multiple companies and work cultures Heterogeneous, fragmented and scattered IT Platforms Networks with different technologies & capabilities Single company & work culture Single IT Platform & architecture Aligned Technologies and Network capabilities 29
US$ millions VIII Position as a Leading Cable Operator (Cont d) Most of the heavy capital expenditures are behind us Capex Cable segment Investments in our cable assets have been put to good work: 1,200 1,000 800 600 400 200 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017* With cable capex coming down by 28% in 2017 (compared with 1Q 16), the trajectory of free cash flow is very favorable Over 112 thousand km (MSOs); 31 thousand km are fiber Additional 30 thousand km in Bestel, Metrored and GTAC backbone More than 96% has bidirectional capabilities More than 68% operates with 1 GHz; approximately 22% with 870 MHz Cablevisión, Cablemás, and TVI operate using DOCSIS 3.0; it has been implemented in the entire network and the national backbone is currently carrying up to 100 G More than 13 million homes passed Source: Grupo Televisa's public filings *Estimated 30
Ps. Billion Ps. Billion IX Ongoing diversification of top line and OSI* Revenue by Business Segment OSI by Business Segment 120 40.0 100 30.0 80 60 20.0 40 10.0 20 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 LTM 1Q17 0.0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 LTM 1Q17 Content Sky Cable Other Businesses Content Sky Cable Other Businesses Sky and Cable revenues have expanded at a CAGR of 10.2% and 28.6%, respectively, since 2007 Content revenues expanded at a CARG of 3.6%, since 2007 Source: Grupo Televisa's public filings *OSI: Operating Segment Income Rapid OSI expansion driven by Sky and Cable, CARG of 9.4% and 30.4%, respectively, since 2007 Potential for OSI to continue expanding as businesses grow and margins expand Diversified portfolio of assets provide additional sources of growth 31
Investor Relations Website: www.televisair.com Carlos Madrazo Investor Relations Officer cmadrazov@televisa.com.mx Santiago Casado Investor Relations Director scasado@televisa.com.mx Paola Talancón Investor Relations ptalancon@televisa.com.mx + (52) 55 5261 2445 Av. Vasco de Quiroga 2000, A4. Col. Santa Fe CP. 01210 32