Business Context and Reporting Period
Company: GRUPO TELEVISA, S.A.B.
Filing Type: Form 6-K (Report of Foreign Issuer)
Reporting Period: Second Quarter ended June 30, 2024 (Results announced July 23, 2024)
Business Overview: Televisa is a major Mexican telecommunications corporation operating cable, broadband, and direct-to-home satellite pay television (Sky). The financial statements reflect the spin-off of Ollamani S.A.B. (completed January 31, 2024), with results from spun-off assets presented as discontinued operations.
Key Financial Metrics
| Metric | 2Q 2024 (MXN Millions) | 2Q 2023 (MXN Millions) | Change % |
|---|---|---|---|
| Revenues | 15,720.3 | 16,693.7 | (5.8)% |
| Operating Segment Income (OSI) | 5,950.1 | 6,445.9 | (7.7)% |
| OSI Margin | 37.7% | 38.5% | (80 bps) |
| Operating Income | 89.5 | 793.0 | (88.7)% |
| Net (Loss) Income | (78.0) | 172.5 | n/a |
| Net Loss Attributable to Stockholders | (25.6) | 133.5 | n/a |
| Operating Cash Flow (OCF) | Increased 37.8% YoY | — | — |
| Capital Expenditures | 1,761.5 (MXN) / $102.1 (USD) | 3,406.3 (MXN) / $192.9 (USD) | (48.3)% |
| Total Debt & Lease Liabilities | 99,420.9 | — | — |
| Net Debt Position | 59,276.4 | — | — |
Note: OCF is defined by the company as total OSI minus capital expenditures in property, plant, and equipment.
Material Changes vs. Prior Period
- Revenue Decline: Consolidated revenue fell 5.8% year-over-year. The decline was driven primarily by the Sky segment, which saw a 13.3% revenue drop due to a 13.9% decrease in Revenue Generating Units (RGUs). The Cable segment revenue declined 3.1% following a deliberate RGU base clean-up in Q3 2023.
- Profitability Shift: Operating Segment Income (OSI) margin decreased 80 basis points to 37.7% due to inflationary pressures on labor and content costs. However, profitability improved 90 basis points on a quarter-over-quarter basis due to efficiency measures.
- Net Loss: The company reported a net loss of Ps.25.6 million attributable to stockholders, compared to a net income of Ps.133.5 million in 2Q 2023. This swing was caused by a Ps.368.7 million decrease in operating income, a Ps.334.8 million increase in other expenses (severance and asset disposal), and a Ps.235.8 million decrease in income from discontinued operations.
- Segment Performance:
- Cable: Broadband subscribers grew by 10.7 thousand to 5.7 million. Video RGUs declined by 65.6 thousand due to the cancellation of the "Afizzionados" package. Mobile subscribers increased by 9.5 thousand.
- Sky: Total RGUs declined by 262 thousand, primarily driven by a loss of 210.1 thousand video RGUs.
- Debt Management: Finance expense, net, decreased 28.9% to Ps.590.0 million, driven by lower interest expense from debt prepayments and favorable changes in derivative fair values, partially offset by foreign exchange losses due to peso depreciation.
Guidance, Outlook, and Material Events
- Acquisition of Sky: On June 7, 2024, Televisa completed the acquisition of AT&T's 41.3% non-controlling interest in Sky, achieving 100% ownership. The transaction price is scheduled to be paid in 2027 and 2028.
- Capital Structure: In April 2024, the company executed a new credit agreement for a Ps.10,000 million term loan and a $500 million revolving facility. Proceeds were used to prepay a Ps.10,000 million debt maturing in June 2024.
- Dividend: A dividend of Ps.0.35 per CPO was approved in April 2024 and paid in cash in May 2024, totaling Ps.1,019.0 million.
- Outlook: Management highlighted a focus on value customers and churn reduction. The company noted ongoing efficiency measures that improved quarter-over-quarter profitability despite inflationary headwinds.
- Risks: The filing includes standard forward-looking statement disclaimers. Specific risks mentioned include foreign exchange volatility (10.9% peso depreciation impact) and inflationary pressures on labor and content costs.
Investor Verification Checklist
- Sky Acquisition Terms: Verify the specific payment schedule and total consideration for the AT&T stake acquisition to be paid in 2027 and 2028.
- Discontinued Operations: Confirm the impact of the Ollamani spin-off on comparative financials, noting that 2Q 2023 included Ps.235.8 million in income from discontinued operations which is absent in 2Q 2024.
- FX Exposure: Assess the sensitivity of future earnings to Mexican peso depreciation, given the Ps.527.1 million unfavorable foreign exchange change in 2Q 2024.
- RGU Trends: Monitor the sustainability of broadband growth in the Cable segment against the significant video RGU losses in both Cable and Sky segments.
- Capital Expenditure Reduction: Verify if the 48% year-over-year drop in CapEx is a temporary measure or a strategic shift in investment policy.