Grupo Televisa(TV)2024-04-26 16:18Financial Data and Key Metrics - Consolidated revenue for Grupo Televisa reached MXN 16 billion, a decline of 4.8% year-on-year, while operating segment income decreased by 12.5% to MXN 5.9 billion, driven by lower revenue and inflationary pressures [23] - Cable segment revenue fell by 1.8% year-on-year to MXN 11.9 billion, with operating segment income declining by 8.7% to MXN 4.7 billion. The segment margin contracted by 300 basis points to 39.2% [19] - Sky's revenue declined by 12.3% year-on-year to MXN 4.1 billion, with operating segment income decreasing by 24.4% to MXN 1.2 billion. The margin contracted by 370 basis points to 29.8% [21] - Operating cash flow for the Cable segment increased by 52.1% year-on-year to MXN 3 billion, representing 25.5% of sales, while Sky's operating cash flow was flat at MXN 0.8 billion, accounting for 19.8% of sales [20][22] Business Line Data and Key Metrics - Cable segment net adds accelerated to 10,700 in broadband and 2,800 in video, compared to 600 and 100 net adds, respectively, in Q4 2023. Churn decreased by 5% sequentially [18] - Sky lost 251,000 revenue-generating units, primarily from prepaid subscribers not recharging their service. Integration with the Cable segment is expected to reduce churn through better customer management and cross-selling opportunities [100] - TelevisaUnivision's revenue grew by 7.3% year-on-year to 329 million due to streaming investments [46] Market Data and Key Metrics - In Mexico, advertising revenue grew by 19% year-on-year, driven by the appreciation of the Mexican peso and the acquisition of third-party ad inventory, which contributed 500 basis points of growth [47] - FX-neutral advertising revenue in Mexico increased by 9% year-on-year, while subscription and licensing revenue grew by 24% [101] - In the US, advertising revenue was flat, with growth in direct-to-consumer offset by softness in linear networks [24] Company Strategy and Industry Competition - The company is focused on integrating Sky with its Cable operations to strengthen its competitive position, extract OpEx and CapEx synergies, and enhance free cash flow generation. Synergies are expected to reach MXN 400 million by the end of the year [38][58] - The integration will standardize regions, sales channels, and commission schemes, improve customer base management, and leverage Sky's exclusive sporting content to differentiate video packages [92] - The company aims to achieve profitability in its streaming business by the second half of 2024 and reduce leverage organically [94] Management Commentary on Operating Environment and Future Outlook - Management expects EBITDA growth to return in the second half of 2024, driven by a record political year for ad sales and a profitable streaming business [26] - The company is confident in its ability to achieve profitability in its streaming service, VIX, by the second half of 2024, with narrowing direct-to-consumer losses and improved engagement metrics [83][84] - Inflationary pressures and the impact of Hurricane Otis in Acapulco have affected revenue and profitability, but price increases and efficiency measures are expected to stabilize margins [70] Other Important Information - The company completed the spin-off of Ollamani and its listing on the Mexican Stock Exchange, unlocking significant shareholder value [14] - The 2024 CapEx budget for the Cable segment remains at 30 million for network reconstruction in Acapulco, which is expected to be reimbursed by insurance [20] - Sky's CapEx budget for 2024 is 630 million, including $30 million for Acapulco reconstruction. Sky's CapEx is expected to be below 14% of sales [77][45] Question: Commercial dynamics in Cable and streaming profitability [80] - The market remains active, with improved ARPU and client retention. The company is confident in achieving streaming profitability by the second half of 2024 [82][83]