Grupo Televisa SAB Q3 FY2024 earnings call

• Corporate Restructuring: Cable segment profitability improved by ~400 basis points, CapEx optimized, operating cash flow up. Sky integration led to OpEx cut and CapEx reduction.
• DTC Business: VIX became profitable in Q3, growing with positive metrics like user growth and reduced churn.
• TelevisaUnivision Strategy: Focus on further integration, operational optimization, moving to a content-first, platform-agnostic company, and becoming more data-driven.
• Efficiencies: Consolidated operating cash flow up 27% year-on-year, free cash flow over MXN6.3 billion in nine months, driven by operational efficiencies and CapEx optimization.

Cable Segment

• Year-to-date cable investments declined by 38% to ~$290 million, with CapEx to sales ratio at 14.4% (800 basis points lower than Q3 2023). Operating cash flow from cable was over MXN8.8 billion in the first nine months, up 40% year-on-year and accounting for ~25% of sales. Third quarter: residential net revenue down 1.6% year-on-year, enterprise net revenue down 22.6% year-on-year.

Sky Segment

• OpEx cut by ~8.5% year-on-year in the first nine months, CapEx at $62 million (down 45% year-on-year). Third quarter revenue fell 13.2% year-on-year to MXN3.7 billion, segment revenue MXN15.4 billion (down 6.3% year-on-year), operating segment income MXN5.7 billion (down 4.7% year-on-year), operating cash flow MXN3.3 billion (up 7.2% year-on-year, 21.4% of sales).

TelevisaUnivision

• Third quarter revenue ~$1.3 billion, up 2% year-on-year; EBITDA $427 million, up 4%. DTC business VIX became profitable in Q3, with user growth, reduced churn, and marketing savings.

• Cable segment expects to end 2024 below revised CapEx budget of $590 million.
• TelevisaUnivision focused on further integration, operational optimization, efficiency, content-first approach, and data-driven strategy.
• Expect continued free cash flow generation, with focus on reducing leverage and strengthening balance sheet.

• Sky facing technology-related subscriber decline and enterprise segment loss of a major government contract.
• Currency fluctuations impacting revenue in Mexico.
• Structural changes in the media industry affecting linear platform subscribers.

Q: On TelevisaUnivision efficiency and deleveraging implementation, and broadband competitive environment/churn A: Focus on cost-cutting initiatives to improve free cash flow and reduce leverage; rational market in broadband with prices stable, churn spiked due to price increase but returning to historical levels Q: Operating segment margin vs Q2, Sky restructuring impact, bad debt provisions A: Operating segment income margin expanded 60 basis points year-on-year due to efficiency measures; OpEx cut ~7% year-on-year since Q2 2024; bad debt not material to margin performance Q: Free cash flow generation despite EBITDA decline, price increases A: Operational efficiencies, CapEx efficiency, and tax streamlining contributed to strong free cash flow; price increases via new products to boost ARPU rather than pass-through inflation Q: Sky stabilization, cable enterprise trends A: Sky facing technology-related subscriber decline, with focus on reducing decline via new products; enterprise segment loss of major government contract, with strategies to regain market share Q: Competition on DTC, venture portfolio A: ViX's strengths in AVOD and sports position it well against competition; continued media for equity venture investments in technology and financial sectors Q: Capital allocation, debt reduction A: Focus on reducing net debt to strengthen balance sheet, aiming for net debt leverage ratio around 2.5 times or lower, consistent with investment grade ratings