Grupo Televisa, S.A.B. — FY2021 Form 20-F
Reporting period: Fiscal year ended December 31, 2021. This is an annual report, not a standalone fourth-quarter filing. Financial statements are audited and prepared under IFRS as issued by the IASB; amounts below are in Mexican pesos (Ps.) unless indicated otherwise.
Business context and reporting period
At year-end 2021, Televisa reported four segments: Cable, Sky, Content and Other Businesses. Cable and Sky provide Mexican telecommunications and pay-TV services; the company also had content, publishing, gaming, sports and entertainment activities. On January 31, 2022, after the reporting period, Televisa contributed most of its Content business to TelevisaUnivision. The transaction materially changes the continuing business mix and is not reflected in FY2021 historical results.
Key financial metrics
| Metric | FY2021 | FY2020 | Change / context |
|---|---|---|---|
| Net sales | Ps.103.5bn | Ps.97.4bn | Up 6.3% |
| Operating income | Ps.22.2bn | Ps.17.5bn | Up 26.5%; operating margin 21.4%, versus 18.0% |
| Net income (loss) attributable to Televisa stockholders | Ps.6.1bn | Ps.(1.3)bn | Basic EPS per CPO: Ps.2.17, versus Ps.(0.44) |
| Net finance expense | Ps.11.7bn | Ps.6.3bn | Higher mainly due to foreign exchange and derivative impacts |
| Cash from operating activities | Ps.29.3bn | Ps.33.2bn | Down 11.6% |
| Cash used in investing activities | Ps.18.8bn | Ps.15.9bn | Includes Ps.23.3bn of property and equipment investment |
| Cash used in financing activities | Ps.13.7bn | Ps.16.2bn | Cash and cash equivalents fell Ps.3.2bn during 2021 |
| Cash and cash equivalents | Ps.25.8bn | Ps.29.1bn | At December 31 |
| Total debt, net of unamortized finance costs | Ps.125.8bn | Ps.124.5bn | Excludes Ps.9.7bn of lease liabilities in 2021 |
| Total equity | Ps.96.5bn | Ps.87.9bn | Includes non-controlling interests |
Current assets were Ps.73.3bn and current liabilities Ps.56.7bn at year-end. Capital expenditures were Ps.23.3bn (reported as approximately US$1.15bn in the capital expenditure discussion). The ordinary dividend of Ps.0.35 per CPO was approved in April 2021; no dividend was proposed for 2020.
Material changes versus the prior comparable period
- Revenue growth reflected increases in Content, Cable and Other Businesses, partly offset by slightly lower Sky revenue. Cable sales rose 5.8%; Sky sales fell 0.5%; Content sales rose 10.2%; Other Businesses sales rose 17.6%.
- Operating income increased as segment revenue and operating performance improved. Cable segment operating income rose 7.3% to Ps.20.3bn; Sky fell 6.9% to Ps.8.5bn; Content rose 11.5% to Ps.13.8bn.
- Stockholder net income recovered from a 2020 loss. A Ps.9.4bn favorable swing in income from associates and joint ventures was a major factor, including reversal of a prior impairment related to the Univision investment. The 2021 result also included a Ps.4.5bn pretax gain on the sale of the OCEN stake.
- Finance expense increased Ps.5.5bn, largely reflecting an unfavorable foreign-exchange movement and changes in derivative fair values; lower interest expense partly offset the increase.
- Cash from operations declined while property and equipment investment increased. Cash declined overall by Ps.3.2bn, compared with a Ps.1.0bn increase in 2020.
- Sky video subscribers decreased by approximately 69,000, while broadband and mobile additions supported total Sky RGUs. Cable RGUs increased to 14.6m from 14.1m, with broadband and voice growth offsetting lower video RGUs.
Guidance, outlook, commentary and risks
- 2022 investment plan: Televisa expected approximately US$867m of property and equipment capital expenditures, including about US$620m for Cable and US$207m for Sky, plus US$8.9m of financing for GTAC. Funding may come from operating cash, cash on hand, equity securities or debt.
- TelevisaUnivision transaction: Televisa contributed most of its Content business for approximately US$4.5bn of consideration: US$3.0bn cash and US$1.5bn in common and preferred shares, excluding closing adjustments. It also expects commercial consideration valued at approximately US$300m. Televisa holds about 45% of TelevisaUnivision on an as-converted basis but does not control it. The former Content business’s results are to be presented as discontinued operations from 2022; Televisa will no longer receive royalties under the former Univision program license agreement.
- Economic and operating uncertainty: Management said COVID-19 continued to affect operations and demand, and its full future impact could not be estimated. Mexican GDP grew 4.8% in 2021; the filing cited an analyst forecast of 1.8% growth for 2022. Mexican inflation was 7.4% in 2021, with 5.8% projected for 2022 in the risk discussion.
- Financial and market risks: Revenue is primarily peso-denominated, while significant debt and costs are in U.S. dollars. Peso depreciation, inflation, higher interest rates, derivative movements and restricted capital-market access could harm results or liquidity.
- Regulatory and business risks: Risks include the broadcasting preponderance obligations, an IFT determination of substantial market power in 35 restricted-TV markets under challenge, concession renewal and compliance, intensifying competition (including streaming), satellite interruption, cyber incidents, and dependence on contractual content arrangements with TelevisaUnivision.
- Contingency: A U.S. securities class action alleges misleading disclosures concerning alleged FIFA-related bribery and internal controls. The company disputes the claims and says it will defend the case; discovery concluded in March 2022 with exceptions. The filing says other ordinary-course legal claims are not expected to have a material adverse effect, but outcomes are uncertain.
- Unusual items and subsequent financing actions: Other income included the OCEN disposal gain, partly offset by advisory costs, transaction-related accruals, prior-year tax surcharges, impairments and severance costs. After year-end, the company increased and extended its revolving credit facility to US$650m, prepaid Ps.6.0bn of bank loans, and redeemed US$200m of its 2025 notes.
Most important facts for investors to verify
- Review the audited IFRS statements and notes for the composition of debt, lease liabilities, maturities, covenants, interest payments and any post-year-end repayments or redemption.
- Reconcile the TelevisaUnivision transaction’s final cash proceeds, share valuation, closing adjustments and additional commercial consideration; assess the valuation and liquidity of its unlisted shares.
- Assess post-transaction continuing revenue, margins, cash flow and capital needs without the consolidated Content business or former Univision royalties.
- Check the drivers and sustainability of the Ps.29.3bn operating cash flow, Ps.23.3bn capital expenditure and Ps.3.2bn cash decrease, including working-capital movements.
- Monitor foreign-exchange exposure, derivative positions, refinancing capacity and the effect of peso movements on earnings and debt service.
- Track the securities class action, tax and regulatory proceedings, IFT market-power challenge, concession compliance, and any further COVID-related restrictions or operating effects.