Grupo Televisa, S.A.B. (TV) 23 Oct 202020 Q3 Earnings call transcript

Good morning, everyone, and welcome to the Grupo Televisa's Third Quarter 2020 Conference Call.

Before we begin, I would like to draw your attention to the press release which explains the use of forward-looking statements and applies to everything we discuss in today's call and in the earnings release. I will now turn the call over to Mr. Alfonso De Angoitia, Co-Chief Executive Officer of Grupo Televisa. Please go ahead, sir.

Victor. you, Thank and everyone, joining today. us Good thanks morning, for Folch, Cable; Wills, Alex With Carlos of me CEO of Salvi are Ferreiro. CFO, our Patricio today Penna, CEO of Studios; and Televisa Head Sky; consolidated our our in with start segment. will financial followed financial Content with results, results the I will I over Salvi, and to Then, Patricio, it Alex. turn

improvement. continues are but use and there challenging, throughout our the then answer we're will returning activities. be signs remaining to to we full year. your the Cable have still to uncertainty, At questions. way to We and time capacity The on operated seeing of macroeconomic Televisa, environment normal is at Sky

We rotating have offices. personnel either and center's in working from their call home or administrative

to our needs connectivity. we satisfy customers for personnel uninterrupted, division, newscasts of Content our non-news the content. nonstop field Our continued conditions to of In has production full production and work continued of the resumed our sanitary under strict

six in quarter. XXX,XXX in our RGUs In Sky the the and Mexico quarter RGUs, and with United quarter work million by record the the Cable, customers trends and our during of broadband. broadband organic through both our X.X difficult video and our year-over-year pace the under added three conditions. with Sky highest producing and full Most Univision. and of In capacity spite in second-highest the consecutive Content, Year-to-date, dramas, revenue strict added the the combined Content realities, With facilities record. net currently number the a XX,XXX to on of Cable Sky States total we generating continue has well Cable improving units been encouraged division audiences half are I very RGUs, of are in Bernardo of our a milestones at [indiscernible] the by of sixth customers. for production RGUs, X.X are million have a achieved XX In [indiscernible] growth We operating three XX.X%. At operations, circumstances, additions record. importantly, sanitary shows. productions daily our closed added or on growth

a Our XX% of flagship year-over-year weekday network ratings during growth in delivered primetime.

hand, the segment by continued affected lockup. the be Other to significantly other On Businesses our

sites, the of stadium, the impact the reverse movie sale our or the soon relates a and points closed gaming COVID, economy. were as closed. Our all of our This have opening and as magazines, of theaters partially full we to all should

We starting this seen have happen. is to that already

reaching operating third me our address segment X.X% XX.X billion, Revenues X.X%, MXN down reaching Let now income and consolidated was were MXN billion. down quarter results. XX.X

the results I of and operations, Content, the the COVID, segment the think up operating materially Excluding circumstances as We which very Cable, by this was mentioned, segment, our relatively great we Businesses result of experienced. our considering three impacted revenue was combined is by been Sky income combined X.X%. flat, core has and Other difficult a

by XX%. savings effort number we things X.X%, case set, are In margins. XXX program and were taskforce, massive deliver quarter, protect comprehensive deliver us mentioned by million. a operating to of income on third and X.X the Bernardo Cable so implemented Content our Along reductions. MXN it at MXN differently to renegotiating COVID, Sky cost our a costs made redundancies leaner which XXXX. segment we We full-year organization. in the expense meant allowed to our strong almost previous income compared measures of and of margin margin possible reduction to deliver the operating and growth more a expenses contracts, In Content the lowered track company, of could operations of This together to in restructuring in billion implemented Content, do operating we the these we many the of also we us income lines, to which our and for was everyone of during This for response impact cost approximately a segment become more the Cable, core areas, and to put that an consolidated segment and XXXX. a across I to These As and enforce call all when reaching XX%, highest learning a initiatives implement the of efficient. Sky, three since and and and businesses, a operation, eliminate than XX%

business by was Moving on down is Content Throughout XX% the compared to briefly with better the improvement quarter. XX%, impacted continued the an Content down our segment quarter, be second revenue results. which substantially when revenue of but quarter. to in drop let second COVID, than address our Advertising financial to the the me X.X%,

business While which or capacity, full government clients. sector are they said have at our private advertising operating a across X.X%. reduced subscription spend categories remained recovery for open Having not was clients substantially. means weak, revenue their not some we most our among are still saw up advertising that that, of Network

this a the driven of depreciation the XX.X% quarter, extent increase by peso and lesser dollar denominated. prior growth Revenues price was the portion by the mostly in that the a As and Other to

year. by with peso. of was exports mostly clients the of lower world effects but line to content down last quarter. their most $XX these The prior higher was XX% the than year, compared licensing of reached deal of depreciation or Finally, to own XX.X% when our and continue item lower royalties partially the than markets. X.X% as million Both last revenue Univision by slowdown X.X% balance quarter our in same syndication around to this the rest a the compensated the were

to Wills, Televisa Patricio Head of Studios. Let me it now turn over

Alfonso. you, Thank

television during of Televisa. this On XX than XX%. average XX the case were while news our was watched was ratings viewers nightly all primetime remained also very our During competitor. of the viewership this top free-to-air of more the flagship Also, with by growth XX%, of quarter, network the strong, our in shows quarter year-over-year of of combined closest submitted on program weekdays growth networks the free-to-air the twice

records Our comedies the during dramas and continued quarter. breaking

closed the Te drama, Univision soccer the XXXX. year-over-year for to declines. the growth during most - our La the [indiscernible] the and Univision see Univision network Also, Vida, with soccer improvement continued only season years continue reported In games network Doy strong MLB. of but delivering stability across of a last ratings. program returned the Univision finale third UniMás and the strong Soccer Telemundo growing of the be ratings program season broadcast during network was This success to place, distribution major growing this also networks the English League primetime growth and conclusion season to return the ratings the episode most and now X:XX taking NBA, key of primetime all XXXX-XXXX the like X% the audience of strong. advertising events has as was Champions primetime audience PM timeslot In the sports The and the fastest in Also, MX and Rubi, live season our driver, demographics. have shows TV in of audience was season the double example, Liga since the watched featured a five Mexican not a drama, provide for ratings quarter, For to benefit has in scheduled digit XXXX in [indiscernible]. in language the family network the our XXXX of watched with Univision programming new League in content fastest among revenue and of expanded July broadcast in NFL, the during with and [indiscernible], seen been post year-over-year revenues. the has very continues our all of growth Univision. quarter, key differentiator U.S., year-over-year tournaments the

you, Thank Patricio.

we extremely [indiscernible] over Before mention and the Salvi, group Searchlight investor next turning Wade leads have from the Capital, that Zinterhofer with the Univision are Davis, Univision we like from CEO current would developed who of it with progress. to Eric from the happy to relationship I

clear have vision We Univision, I share. a and very Bernard which for

of significant their many agreements top paid few They six on similar progress has expense They very the a undertook extend television affiliation many distributors. plan content to of and and ratings deliver have transactions fronts. and refinancing allowed a program the months, Over reduction They seven to ours. of entered to cost made massive changes them the renewed also growth maturity leadership. profile, that series regain last made make our and with Univision into better use

as closes. initiatives implement series We transformational and transaction the Wade are soon of ready with as to together Eric a

will very very You see a different Univision. soon

Salvi of me CEO it Folch, let Now, over turn to Cable.

Alfonso. you, Thank

to second fastest RGUs. time, our remained improvement Data results. were the our Net and and of over close able Total record. quarter, for deliver additions among growth to During we usage broadband this adding to million is investments RGUs third increasing With on operating This the XXX months. gigs XXX,XXX. customers quarter satisfy after strong at XXX,XXX had made we per financial has demand. use have strong reached the network XX.X a pace capacity were reliable solid

broadband in have opportunity uplink DSL uplink for larger represents gaining for to data us including especially broadband and continues technological distancing growing this significant us connected is via approximately valuable speed, measures with in share. continue market customers Social a in present for front, are news. increased services existing of market, of great still According requirements downlink our is disadvantage demand an quarter, base. and share a potential customer to the a telecom to continued In which customer. we gain the broadband regulator, pool XX% Mexico This in DSL. to this market

pace in quarter. services adding solid at We with also customers voice continued XXX,XXX a new the

continue with of doubt it has remained X.X share. number flat service that There market video videos the As is million. no more video, around is In at gain happens to faced that headwind. we our the broadband,

on we [indiscernible] and additional work during the offer content. OTT of front, strengthening Mexican League the this Football including NFL sports game channel. quarter our matches to to continue exclusive In weekly We relevant and our added

continues Additionally, Three we years ago, base great less about deploying to funding the the video our That set-top-box based third has of a XX% offering. deliver base of total was customer end are subscribed triple figure quarter. grown play Out of our technology. at strategy to our Android on TV customer to a third than results. new

launched our Finally, added service quarter. quarter, subscribers. last the XX,XXX reaching during new in We RGUs MVNO Móvil XX,XXX

quarter XX%. XX.X the that with closed homes passed, of our within approximately In low the close million. of services is penetration still means That our footprint which broadband terms to

and results operation in X.X% billion, reaching the up grew also was X.X MXN markets strong strong. cable billion. income our while was growth up MXN were in pressure. business our significant revenue at financial Our where our MSO XX.X is under business we was operating segment X.X%, Within income enterprise Household Revenue reaching XX.X%. X% operate

it's consolidate but that it's to watch enterprise collections, far, we acceleration the segment, customers, we contracts new with on something have seen growth So In not our the some line our plans is an to impact in with of very and business. turnaround this closely. continue to related in large

large both approximately of than year. Giving the new the enterprise will is growing number Our $XXX for RGUs the in growth capital division in in that being the our customers have expenditures RGUs we lower expenditures be our higher-than-expected we pace of in acceleration business. the $XXX on business, majority growth quarter CapEx are line MSO of and which capital last in and segment Capital million with expenditures number that for estimate of driven the reached million, our enterprise during year. the in the in XXXX by the last

Salvi, you, results. Thank great

CEO turn Sky. Now, over me Penna, to of Alex let it

you, Thank Alfonso.

video quarter, continued During customers. new needs the broadband resulted satisfying of and growth in and existing these remain in on we the very customers, and of number focused the our

strong in base healthy, our before. pace added subscriber their Sky the base It video prepaid are a than were consecutive quarters customer has been now customers. those XX,XXX Our video Collections recharging plans remained adding that services quarter. at video six faster during has slightly among and

and confirms the The continued brand, of growing of of Our quarter, X.X the efficacy XX,XXX adding our broadband our XXX,XXX. to loyalty close video customers. offer of our broadband success million around steadily, the strength reaching RGUs operations in the

quarter, combined the video with record is the closed RGUs, broadband for on we million third and Sky. which the of highest As X.X

MXN X.X MXN of In now to Operating billion income fastest the the reached quarters. growth X.X XX segment This XX.X%. in base was margin terms of and X.X% is revenue, it grew revenue billion.

million $XX reached the expenditures capital quarter. Our during

estimated pace for fast to the offer, our $XXX our broadband adoption CapEx million. are of now Given of XXXX reach

great you, Thank Alex, results as well.

report happy we're sheet on around to we quarter our liquid a billion. maintained that position a strong MXN and XX Moving balance post of with

reopening Even gradual of Sky, the of the and the X, of we credit content Given March facility, in we our Cable re-borrow improved which through and of XXXX. continue performance trends X.X can approximately maturities prepaid maintain segment our and times a economy, XXXX. we strong solid billion, the October MXN to on position revolving after operating the no of XX significant leverage we and prepaying have facility, ratio until net liquidity income

our but expenditures, of believe This we’ll slightly lower year. we the year terms capital last previous guidance our with approximately is than figure million. $XXX In close that higher than

very is day and third have the remain a entirely expenditures we metrics by through other businesses running focused remained of country, as being cost these our on year-over-year, and all operating to Alex now, the continued added of X.X strong for the day normal, at of but environment, we from the balance capital operating Both added growth We almost RGUs. morale a keep translating Sky saw an XXX,XXX reduction focused and the comprehensive and to In continue delivered generating mentioned one just non-stop to audience. capacity on exceeded The I In to crisis Salvi likely installing XX,XXX and our maintaining company high. the Cable year-over-year XX.X%. services equivalent all are in almost tough million As entertainment average our under and on full We the plan growth. the in Cable are over per In more to of year. delivering year-to-date, driven customers we newscasts, new RGUs. was uncertain new our execution we have absolutely quarter, This sure case opportunity. closing, This while have day and basically of promised. the expectations an results. making than aggressive Skype, we

the video In results. Sky, Salvi added our X.X RGUs to became programming content, mantra States. execution, customers close Our broadband consecutive Cable, mentioned, delivering as kind quarter. mentioned, of ratings both organic as we record reached and Alex we for the in growth growth in and with achieved of RGUs total, good In at of reached RGUs million execution, record. United space video Mexico sixth a new In second execution. In continued We XX the operating million. expanding solid on

Network Flagship year-over-year Our a primetime. weekday in ratings of XX% delivered growth during

years. is offering over strongest in it content Our the has been five

especially season. every Christmas reactivate day is their with our team working advertising sales Our partners the to investments during

X.X% a On margin the to financial businesses side, segment operating operator call like each operated combined with I'd Cable, over the to Sky, that, and and growth of those higher take the in Content of income turn to delivered your a than XX%. With questions.

Thank question of come BBA. from line from Itau Instructions] And our the Langa you. will [Operator first Arturo

You may begin.

its on is, for Mexico. first questions. and taking morning, hear Good you gentlemen. Disney Plus I my have love would Hi. Thank two, your thoughts I arrival to in

coming been at permanent a we in cable least XXXX? I and Content and division, these cost of the then cost billion around intend they MXN for how about savings Thank save the be, see that broad the negatively, business, think do new taking but savings, impact, about positively just year, my thinking it's into have how expected is I for expectations, competitor was Salvi, market or you the X.X can ahead you. you and think perspective, should how to to this, for from the second, this the into and wondering a the maybe come November, but market this

agreement signed on basically Arturo. we have you, about a Thank because talk Disney. Disney+, and cannot to will Salvi as Yes, it expand with confidentiality we that,

to that, izzi can please? Cable, to be for our for you for service products. a on going important Salvi, us, going it's expand be However, our it's and complimentary

is. you, and people way what provider watch but regardless thank that and, I it's changing we you to where that consuming who it, the positioned of place well say accelerated pandemic the Arturo. be the can would is is Yes, video, OTT only very Well, everywhere, the has are content

distribution of on now in example. pretty for are Mexico, We strong Netflix

rather For which the on TV on on it's than for used personal set watch many that Netflix is Netflix, can our their because TV they customer being their devices set. base people great

very Noggin, offered are Stars, additional will going the have we an Netflix, have Disney. to be we of the We experienced Blim, we with to we terms have the service that have we in have use have It's subscriber VOD, in growth happy of be base that customer we Mexico.

right, us, So can rather a have as because market, OTTs of from work in are the than ways just it well a their seeing Disney including entrants competitor, and we own there we benefit, can been as distributor all content. seeing that that new

as but aggregators So become we this expectation, see opportunity should I think great there's to content. an of that

to in reduction cost and we're happy to terms question, and expense of program. expectations second Yes, your your have Arturo, exceeded the

have billion side, MXN X.X focused will We been and really promised. what we committed to on We the delivering we Content on there. get

we're year, finalizing expenses permanently part as were There now. effort. of right eliminated are next to the As costs our reduction that budget and XXXX

areas We sports as used this However, cost primetime in entertainment. we didn’t as library we're were that on and there to on, have our focusing those even reruns sports on cancelled flagship. our year, and are related events

Games. basis, all on Next back sports will have hopefully year, the the a we regular including Olympic events

We Univision. be this especially and will our year, primetime producing more for also for than

this to look XXXX. two, our and as more like sports entertainment, costs those specifically XXXX So will than

However, I on eliminated that basis. are I mean permanent as there many a mentioned, have things we

very answers. I you you. Thank your thank appreciate Great, much,

line from of America. Rodrigo next our Bank Villanueva And come question will of from

begin. may You

are My morning. questions Cable. Good related to you. Thank

basically your that internet expecting have the future, considering market to experienced, you. related to you updated question the if respect the to near thoughts wondering consolidation the Thank Mexico. with of was I see the are in cable this further in First, and raise potential for demand to you solid is services second

question. will Salvi the first Rodrigo, answer Here,

prices. X did year, same the Rodrigo, increase last we year. that [technical increased Yes, prices We of difficulty] September this

especially cheaper not You're but has right, declined, going and were been the the ARPU with price to business to because the packages, able to increase. the of that's sure year the side. on on income if beginning be with has for broadband we looking were Customers pretty we at it's resilient, the right, have but been pandemic, household prices, increase their the important why compensate

I So, that think first we industry, to decided within were it. do one the the that

but about the different will our on on Now, what the package [indiscernible] -- a know many on you about yes, for it's for but so months, will have those about that don’t packages, we this increase I do buy we that fixed but be increase first when prices did the X%, customers, the of price your is -- they apply announced does prices. prices. average not did increase XX new doing, others to

I difficulty] through basically you accomplish or [Technical [overbuilding] think that [ph]. consolidation can

sense We have goal. going national those that's It from have to that's whole paths a brand, cetera. our single forward, so a perspective a makes of of operating nationally, our having presence lot the the synergies et aspiration, territory,

that in continue building consolidation via where via don’t path will areas or we we operate. So

thank clear. you much; Alfonso, Understood, very very

you. Thank

John come of question from the Evercore. will next from Belton Our line

You may begin. John, your line is open.

I his guess answered. might have been question

our and right, line the All of from JPMorgan. Marcelo from come question will next Santos

You may begin.

morning, two. good question, thanks for the taking there's morning. actually Hi, Good

changing way consume first discussing The is were the that video. you people

see, was there comments second room OTT. Do you that good, there make to expansion, further using could we helpful. the COVID Should it more would on think be what's there see on see last upfront the the for a first upfront? is with this any or so you. strategy comments also a some should going season, the the quarter. normalization would in video and the question was penetration is how are going forward you because be be delay, for more comment do also you the and upfront Thank coincided could Any so very since So year timeframe of we more the delayed year

video I'll go Thank video Marcelo. Salvi ahead. about Alex take your to and penetration. and both Please ask you, question

watch, with channels, the of program it that lot with you as Well, new home linear want programming strong, Marcelo. market it are people you, to it Televisa rights, that or especially transmitted, pause the of relevant the thank watching not Mexican and linear the pretty of but is video watching Well, I in over-the-air content channels they whenever out the it's or a -- watch of can only new aware, what want. as where has the is they think the is ways

I VOD The think be to at is for them to linear for a is video what relatively time. anywhere, Mexico other customers any device, any offer on cost that packages watch in is both able available and to compared see of channels low or compelling to OTT markets. strong

triple those with pretty So or offer see broadband remains demand, billing that customers. that's play we double why what compelling, of also connection, and they to becomes video consume need for want play on it's that that so video for Sky is many anyway very a attractive the the

of that that I but So, to think it's video, think I and yes, the other headwinds product. penetration appealing strong a anyway than broadband, especially very than have we services facing more continue

-- Okay

recharge This just what for for accounts And our prepaid On get about to easy XXX, base. or Also, a family. people little whole inexpensive skip we offer the cannot It's explains Sky, their better, it prepaid month. XX with in the payment a entertainment very compliment for case rich for the service the the said, why $XX this in our very average, time. pay Salvi compelling, to package roughly is of and less made per our channels offer TV a XX% just MXN majority afford if customer customers particular than only can they bit of of customers month. very a

which comparing range per you cost most OTT package $X solid a broadband month, So offer video from need also connection. Mexico, and the our $X of to the popular with in

over continue there pay have price material our still why I TV OTT That's So, believe for potential alternatives offer. a do advantage base. our subscriber is growing not video

Thank you, Alex.

a that with We year, competitive I COVID all [Technical of the -- of in difficulty] because well, things question, second say in we indeed a for very that Marcelo, your on been lot negotiations those be very not which were model, negotiations surprised but prices. to took some many, ones, basis, and all we CPM was by, we We including accomplished I large got buying largest was a also accomplished but and in you reduced distorted targets. on delayed targets, clients has mean clients. to -- upfront. had buying -- going a We what CPM complicated this XXXX, which and many increasing As client the have and might clients, it unmanageable. general, the

also So tough a that was negotiation.

still because upfront we're of week. that So, leaving and the the living uncertain guess we environment in I launched last we're

a So simpler upfront. see for this more also it taking proposal and a will a you customers, upfront be XXXX, normalized to our place will year, simpler

Perfect. Thanks the lot for all answers. a

Thank you.

Our will line come from next from Legarreta Carlos question GBM. the of

begin. may You

Thank taking Hi, for you questions. There actually thank two. the you. are

fiber. Cable; so focusing on pass fiber half will with their your of one homes on footprint, main first Salvi, having basically The be competitor on its focusing increasing

with Thank izzi so the of how that all XX fiber? are pass homes rich or many So, you. those has, of

thank Thank with Rich you. are passed. XX% your overall questions. Yes, fiber homes except you, Carlos, for

is way node, a we we deep. go or that network good most ready competitive. However, what technology being to X.X use footprint at what fiber, with be about deep, The that looking with have, network of to very fiber then allows we're to of because the X.XX, our have for us at DOCSIS the fiber XX% DOCSIS don't think it I treats it if we fiber looking at of with the then, right it's just

ARPUs One main to of are on is the other challenges market low markets. that compared our

order to need additional a return investment, higher charge to on we in So, for have good speeds.

and So, we sensitive. articles price is customers demand the even very in fibers, have where areas of the the

among the So, the is offers. most sold usually product cheapest

changes to that and technology. have to the the made what that good we we well-prepared knew we are we be coming compete and the to prepared was make fibers, compete problems of reconstructions that we of Well, that's of have over coming, deploying this deployments doing are, There's but network. with places from where from fiber going and have investments, to to we need any and both players in other and we’re Content the investments, think So, been we additional frontally. compete the time overtime

Okay, thanks.

So capital, basically, with the comfortable? you current levels feel of

equipment, DOCSIS the we equipment higher Yes, no of the we have, want XXX we able an speeds I I give mean simply pay DOCSIS for to more that costs move very with is us that, to If additional say feel but of to the tactics help to requires, equipment than XX% would will us X.X it terminal change we continue will and terminal then to Megs there allows with but have we about that terminal installation DOCSIS tactics costs, X.X decide that if problems. the be would to than we X.X, being competitive. speeds

about re-launch for the or read something on and very press could Patricio, of on clear. of That's if Alfonso content strategy online talk about that if Thank a you, if I follow-up the distribution, maybe. Blim, bit maybe content, you I the know don't little I

a case In thank your for hybrid the have Carlos Yes, you, of question. you. Thank Blim, direct-to-consumer we platform.

allowed to and television assets. and offering Televisa by in apps. say XX,XXX of Sports library would kids VOD direct largest their and and both programming, we consumers Sky an us and XXX,XXX programming the live everywhere the carried and that assets to channels Network, I a It in the has entire of Spanish, has also more have world in content has than also XX our including offer have appeal family customers We izzi both television

added to continue content this So to time. over much will platform our of be

one all content that So, been the that a Televisa advantages have windows. of fully access has integrated to media we company is

that Mexico, are those requires. positioned where well the be future moment prioritize particularly capture to monetize will our this as but the of viewer we base. to adoption effectively. mean in we as a viewers is our develops television, At windows very free-to-air market digital near among we trends, the So, to Blim and migrating in -- seeing TV platform more I would the continues mass be content critical the I say we OTT

and to that can we’ll quarter and traction, migrate grew had users as viewed key exciting when content we good Blim I is keep viewers the the sense. trial XXX%, number very are XX%. our We will this making up last demands The saying Blim the adjustments it year-over-year as getting for signing makes I results. registered to platform us. during and up follow content free TV market say users our was on over of strategy who

So, overall impact corresponding on our we numbers. year-over-year, the saw subscriber

are the will over to we accelerate working we pace a we on continue AVOD which users, and million of hope have So, today growth. our offer

will AVOD XXXX. offer of in announcing TV part be through our early We Blim the

We on demand strong media content social seen have platform. of our very

example, the of in X our single number and of content exceeds Facebook billion in For a views. YouTube month views

only we have our a great we indicator effectively us why is key for So, this we this to enable for more believe and products. and this can that appetite that content, shows monetize content

for the comments. Thanks

Thank I I any turn not remarks. to back time, would you closing like for the further Alfonso and this any questions over at am showing to call

Thank call us. Yes, concludes well, you joining for our today. this

day and safe. you contact Have any If again. you thank Investor team and please stay questions, our follow-up have Relations a nice

you Thank participating. and Ladies conference for call. concludes this gentlemen, today’s

You may now disconnect.