Trevali Mining
Annual Report 2013

Plain-text annual report

2013 Annual Report GRUPO TELEVISA TRANSFORMATIONALContents 02 Televisa at a Glance 04 Letter to Shareholders 08 Financial Highlights 10 Our Content Businesses 12 Advertising 14 Network Subscription Revenue 16 Licencing and Syndication Revenue 18 Cable and Telecom 20 Sky 22 Publishing 24 Other Businesses 26 Univision 28 Iusacell 30 Fundación Televisa 32 Management’s discussion and analysis of financial condition and results of operations 40 Board of Directors 42 Financial Statements Company Profile Televisa is the largest media company in the Spanish-speaking world based on its market capitalization and a major participant in the international entertainment business. It operates four broad- cast channels in Mexico City, produces and distributes 24 pay-TV brands for distribution in Mexico and the rest of the world, and exports its programs and formats to the U.S. through Univision Communications Inc. (“Univision”) and to other television networks in over 50 countries. Televisa also has interests in magazine publishing and distribution, radio production and broadcasting, professional sports and live entertainment, feature-film production and distribution, the operation of a horizontal In- ternet portal, and gaming. In addition, Televisa has a 50% equity stake in GSF Telecom Holdings, S.A.P.I. de C.V. (“GSF”), the controlling company of Grupo Iusacell, S.A. de C.V. (“Iusa- cell”), Mexico’s third largest mobile telecom provider in terms of subscribers. Televisa is also an active participant in Mexico’s telecommunications industry. It has a majority interest in Sky, a leading direct-to-home sat- ellite television system operating in Mexico, the Dominican Republic and Central America and in four cable and telecommunications busi- nesses: Cablevisión, Cablemás, TVI, and Bestel. Through its cable com- panies, Televisa offers video, voice, and broadband services. In the United States, Televisa has equity and debentures that, upon conver- sion and subject to any necessary approval from the Federal Communications Commission (“FCC”) in the United States, would represent approximately 38% on a fully diluted, as-converted basis of the equity capital in Broadcasting Media Partners, Inc. (“BMP”), the controlling company of Univision, the lead- ing media company serving the United States Hispanic market. II trans·for·ma·tion (tran(t)s-fər-ˈmā-shən) An act, process, or instance of transforming a traditional media company into a diversified and fully integrated media and telecommunications operator. Televisa at a Glance Content: In 2013, Televisa produced more than 93,000 hours of content for free-to- air and pay-TV Revenue Breakdown by Segment Contribution to Sales: 45.0% Contribution to OSI*: 52.1% Advertising Televisa operates four broadcast channels—2, 4, 5, and 9— in Mexico City and complements its network coverage through affiliated stations, throughout the country, in which it provides advertising services. Televisa also sells advertising on its pay-TV networks and Internet assets. Contribution to Sales: 33.1% Network Subscription Produces and distributes 24 pay-TV brands and close to 50 feeds. In the United States Televisa distributes its pay-TV channels through Univi- sion. Produced more than 23,000 hours of content in 2013 for pay-TV networks. Operating Segment Income +35.7 million pay-TV subscribers Contribution to Sales: 4.3% Licensing and Syndication Exports its programs and formats to television networks around the world. In the United States, distributes its content through Univision under a Programming License Agreement (PLA). The PLA, which was extended in 2010 to at least 2025, resulted in royalties to Televisa of U.S.$273.2 million in 2013. The royalty rate is set to increase from the cur- rent 11.91 percent on much of Univision’s audiovisual revenues to 16.22 percent starting in December 2017. Over 70 countries worldwide (approximate reach) Contribution to Sales: 7.6% 45% Content 33% Advertising Network 8% Licencing and Syndication 4% Network Subscription 23% Cable and Telecom 21% Sky 7% 4% Other Businesses Publishing 52% Content 25% Sky 20% Cable and Telecom 2% Other Businesses 1% Publishing 2 Sky Other Businesses A leading direct-to-home satellite television system. Sky also oper- ates in Central America and the Dominican Republic. Demograph- ic expansion through new packages: MiSky and VeTV. More than 860,000 subscribers added in 2013. Subscriber base: 6.0 million Contribution to Sales: 21.4% Contribution to OSI*: 24.6% Cable and Telecom Cablevisión, Cablemás, and TVI offer video, voice, and broadband services in Mexico City, Monterrey, and other cities in Mexico. Bestel provides broadband and long-distance services in Mexico and the United States. Video Broadband Voice Total RGUs Cablevisión 867,525 666,464 415,023 1,949,012 Cablemás 1,185,090 705,202 347,609 2,237,901 TVI 442,697 295,122 153,295 891,114 Total 2,495,312 1,666,788 915,927 5,078,027 Contribution to Sales: 22.8% Contribution to OSI*: 20.5% Publishing The leading Spanish-language magazine publisher; in 2013 pro- duced 201 titles with a circulation of approximately 126 million magazines. Continued to expand the reach of its titles through dig- ital platforms: Cosmopolitan, Men’s Health, National Geographic, and Seventeen. 21 countries reached Contribution to Sales: 4.3% Contribution to OSI*: 1.1% Gaming Casino sites and online lottery business. Soccer teams Two of Mexico’s professional soccer teams and Mexico’s largest stadium. Radio Network of owned radio stations, complemented by affiliated radio sta- tions owned by third parties. Feature-Film Distribution Distributes movies in Mexico and Latin America. Publishing Distribution Distributes publications in Latin America. Contribution to Sales: 6.5% Contribution to OSI*: 1.7% Unconsolidated Businesses Univision 8% direct economic interest in BMP, the controlling company of Univision, the leading Spanish-language media company in the United States and the number five network regardless of language. In case of conversion of the debentures held by Televisa and any necessary approval of the FCC, Televisa would hold close to 38% of the equity capital of BMP on a fully diluted, as converted basis. Iusacell 50% equity interest in Mexico’s third-largest mobile telecom provider. Expanded its number of users by 8 percent during 2013. Ocesa Entretenimiento 40% equity interest in a live-entertainment company in Mexico. Orga- nized nearly 5,400 events in Mexico in 2013. Most successful shows: Fes- tival Vive Latino and Festival Corona Capital. Imagina 14.5% equity interest in a Spanish media group whose main activities in- clude the commercialization of sports rights including the Spanish Soc- cer League La Liga, production of television content and movies, digital production and post-production services, transmission of content via satellite, and technical and advisory services. * Operating segment income (OSI) is defined as operating income before corporate expenses, depreciation and amortization, and other expense, net. For a reconciliation of total operating segment income with consolidated operating income, see Note 25 to our year-end consolidated financial statements. 3 Dear fellow Shareholders: Last October, we proudly rang the opening bell of the NYSE in celebration of 20 years of being listed. Televisa has changed a lot over these years. The last ten years have been particularly transformational. We went from being highly dependent on the advertising market in Mexico, to the leading Spanish-language media corporation in the world and an active participant in Mexico’s growing telecommunica- tions industry. In the process, we have significantly enhanced our po- tential as a diversified media and telecommunications corporation. This transformation has been dramatic in terms of operations, market scope, and financial strength. We built a very strong balance sheet, broadened our presence in key geographies, reached new markets with our content and our production expertise, significantly expand- ed our telecom infrastructure, grew our pay-TV offerings, and became a provider of voice and data services in the markets that we serve. The economic potential of both of our key markets, Mexico and the Hispanic in the United States is rapidly growing and the outlook is very favorable. Within this context, the key to achieving our success has been the continued production of high quality content and the expansion and improvement of our telecom services at a lower cost for customers. From 2003 to 2013, consolidated revenue expanded at CAGR of 12.1 percent and Operating Segment Income grew at a CAGR of 14.5 percent. 4 In our Content business, we expanded our licensing agreement with Univision, increasing our share of their audiovisual revenues from 9.36 percent to 11.91 percent starting in 2010, and to 16.22 percent starting in December 2017. In addition, we extended the length of our agree- ment to the latest of 2025 or seven and a half years after we have sold two-thirds of our initial investment in its holding company. Over this period of time, we also expanded our portfolio of pay-TV channels to a total of 24 brands and close to 50 feeds, some of which now reach 37 million households on three different continents. Domestically, we were able to achieve advertising revenue growth on free-to-air television in nine of the last ten years. This is a nota- ble achievement given that pay-TV penetration grew from less than 20 percent in 2003 to 48 percent as of year-end 2013 and, therefore, competition for viewers increased substantially every year. Going forward, competition will continue to intensify for advertis- ing sales on our free to air networks. This will result from the launch of two new national commercial free-to-air networks, a new State- owned network, further growth in pay-TV penetration, and the growing availability of other forms of audiovisual entertainment. We will continue to work hard to produce the best possible content, and make it available on as many platforms and in as many markets as we can. In Sky, the DTH operation we own in partnership with DirecTV, we expanded our content offering from 142 pay-TV networks in 2004 to over 200 as of year-end 2013, including 49 high-definition channels. Most importantly, we transformed our business from one with a fo- cus on targeting the high-end segment of the market, exclusively offering premium pay-TV offerings, to an operation reaching every single segment of the population with attractive pre-paid and post- paid television packages. This alone allowed Sky to triple its custom- er base in the last four years. Today, Sky has an established base of 6 million pay-TV subscribers. Over half of them subscribe to Sky’s most basic pay-TV service and spend close to U.S.$10 per month. We see this as a terrific opportuni- ty because as disposable income grows in Mexico, so will the interest in premium pay-TV offerings which Sky is able to offer. 5 In addition to our investment in Cablevisión, in 2006, we saw an oppor- tunity to further expand our participation in the telecommunications in- dustry and presented this initiative to our Board. As part of this strategy, we acquired Bestel, a national provider of telecommunications services, followed by two cable operations that at the time offered mainly pay- TV services, Cablemás and TVI. Over the years, Televisa has invested significant capital to upgrade the infrastructure in these telecommunications companies. Today we have a national telecom network of over 57,000 miles, serving a total of 2.5 million video customers, 1.7 million data customers, and 916,000 voice customers. We are an active but small participant in the telecommuni- cations market; therefore the potential for further growth is very large and attractive. We have an exciting opportunity ahead of us. At 48 percent, pay-TV pen- etration remains low and computer penetration even lower. Only around 30 percent of households have computers1, and the adoption of Inter- 1 Source: OECD http://www.oecd-ilibrary.org/sites/factbook-2013-en/08/02/04/index.html;jsessionid=4vfhclqamdanr.x- oecd-live-01?contentType=/ns/StatisticalPublication,/ns/Chapter&itemId=/content/chapter/factbook-2013- 67-en&containerItemId=/content/serial/18147364&accessItemIds&mimeType=text/html 6 In 2013, the Mexican government implemented reforms to the broadcasting and telecommunications industries. The reforms on the broadcasting industry, Televisa’s core business, will have an important impact in our business. For example, we will face in- creased competition from the new broadcast channels and will be subject to restrictive measures with respect to the acquisi- tion of content from third parties. But the reform is also opening great opportunities in the telecommunications sector, an industry where we have invested over U.S.$5 billion over the last six years2. We are confident that we have a great opportunity ahead of us especially since the telecommunications market in Mexico is not quite developed and therefore presents important growth op- portunities for participants interested in investing on it. I am pleased to inform you that in 2013 we launched Televisa Foundation in the United States. The foundation will initially fo- cus on improving early childhood development, supporting En- glish language learners and bilingual education, and promoting Latino-related cultural events in the United States. These efforts, in addition to Fundación Televisa’s meaningful contributions in the areas of health, education, and culture in Mexico, demon- strate our commitment to the communities in which we operate. I would like to thank our Board of Directors, management, and employees for their continued dedication; our customers and au- diences for their patronage; and our shareholders for their valu- able feedback and the trust they continue to place in Grupo Tele- visa. Our priority and commitment to you is to build the long term value of Televisa. Emilio Azcárraga Jean Chairman of the Board, President and CEO of Grupo Televisa net-connected devices will grow fast. This trend should give us the opportunity to sell more advanced, high-speed data services and much of the investment required for our telecommunications oper- ations to satisfy this demand is already on the ground. In addition to strengthening our core operations, we have continued to operate our other businesses —including publishing, gaming, ra- dio, and sports— with focus and discipline. In the aggregate, reve- nue and profitability for these businesses have grown every year at a gradual but steady pace. In addition to our core operations, Televisa’s equity investments in Iusacell and Univision position Televisa well to create further value for our shareholders in two transformational operations. The 2011 in- vestment in the Mexican mobile operator, Iusacell, will allow us to benefit from a largely under-penetrated mobile data market and a changing regulatory environment meant to level the playing field. Further, the 2010 investment in Univision provides us with very at- tractive exposure to an operation that benefits from the increasing relevance of the Hispanic market in the United States and the grow- ing success of our content among those viewers. Over the years, we have built a strong balance sheet. As of year-end 2013, our net debt to EBITDA ratio was less than 1.3 and the average maturity of our debt was 13 years. This has been one of the pillars of our business philosophy. Even though the Mexican economy grew at a very modest pace in 2013, the resilience of our advertising customer base, the success of our content in Mexico and beyond, and the healthy consumer appe- tite for our video, voice, and data services allowed us to deliver solid growth in Consolidated Revenues and Operating Segment Income of 6.5 percent and 5.1 percent, respectively. Looking forward, we are enthusiastic about our businesses and Tele- visa’s strategic long term positioning. Mexico has undergone signifi- cant structural reforms, many of which were long overdue. Their ef- fect will not be immediate, but these reforms will have a dramatic impact on the economy, on consumer demand, and on the house- holds that we serve. 2 Includes our Investments in Cable and Telecom, Sky and Iusacell from 2008 to 2013. 7 Financial Highlights In millions of Mexican pesos, except per CPO amounts and shares outstanding. 2013 2012 Var.% Consolidated net sales Ps. 73,791 Ps. 69,290 Operating segment income* Segment margin Operating income Margin Net income atributtable to stockholders of the Company Earnings per CPO 29,860 39.7% 18,738 25.4% 7,748 2.71 28,414 40.3% 18,140 26.2% 8,761 3.08 Shares outstanding at year-end (in millions) 335,501 333,898 Cash and cash equivalents at year-end Ps. 16,692 Ps. 19,064 Temporary investments at year-end Long-term investments at year-end Total debt at year-end Net debt position at year-end 3,723 4,647 60,056 34,994 5,317 3,375 52,991 25,235 6.5 5.1 3.3 -11.6 -12.4 -30.0 37.7 13.3 38.7 * Operating segment income (OSI) is defined as operating income before corporate expenses, depreciation and amortization, and other expense, net. For a reconciliation of total operating segment income with consolidated operating income, see Note 25 to our year-end consolidated financial statements. 8 73.8 69.3 Segment net sales billions of pesos (as reported) 62.6 57.9 52.4 48.0 41.6 37.9 32.5 29.1 04 05 06 07 08 09 10 11 12 13 29.9 28.4 Operating Segment Income billions of pesos (as reported) 25.4 23.1 19.9 20.7 18.1 16.9 13.4 11.2 04 05 06 07 08 09 10 11 12 13 9 Our content business Over the past ten years the television and entertainment landscape has dramatically transformed: pay-TV penetration in Mexico has expanded from 17.4 percent in 2003 to around 48 percent in 2013. Changes in tech- nology have allowed for more viewing choices and delivery platforms; audiences have become more sophisticated, diversified, segmented and demanding; and distribution of content has become more democratic. Today, anyone can distribute content through the Internet at very little expense. Nevertheless, Televisa has been able to expand its content rev- enues year after year, while maintaining strong profitability. Since its foundation, Televisa has been producing the best Spanish-lan- guage content, with top talent and the most compelling stories. We are committed to creating the most innovative programming in the industry, and the performance of our three sources of content revenue – advertising, network subscription, and licensing and syndication – has demonstrated our ability to meet that goal. In 2013 alone, we pro- duced more than 93,000 hours of content. 10 72,890 71,326 68,818 25.5 26.3 27.4 64,743 25.5 79,152 30.7 74,929 29.2 57,548 23.4 54,791 22.3 93,323 Produced Hours 33.8 Revenues billions of pesos 90,492 32.9 04 05 06 07 08 09 10 11 12 13 The numbers from 2004 to 2007 are expressed in pesos of 2007. 11 CONTENT: Advertising In 2013, advertising represented 73.5 percent of Televisa’s content revenues, and 33.1 percent of consolidated revenue. Our main sources of advertising revenue are our four channels in Mexico City—2, 4, 5, and 9— which Televisa operates through a combina- tion of owned and affiliated network stations throughout Mexico. We also generate advertising revenue through our range of pay-TV networks, which contributed 5.1 percent of advertising revenue in 2013, growing by 14.6 percent. Thanks to the combination of free- to-air channels and pay-TV networks, Televisa will continue to fo- cus on expanding its advertising revenue base in both platforms. The 10-year transformation → Continued developing its key talent in-house. Over 59,000 applicants to Televisa’s talent school since 2003, 8,800 of whom applied in 2013. → Expanded its expertise to the production of new formats, including reality TV and television series. → Increased the number of hours of content produced from 53,000 in 2003 to more than 93,000 in 2013, reducing dependence on third party content. → Produced close to 800,000 hours of content over this ten year period, assembling one of the largest content libraries in the world. 12 19.3 19.0 20.6 20.5 21.1 21.5 22.7 23.2 23.9 24.9 Revenues billions of pesos 04 05 06 07 08 09 10 11 12 13 The numbers from 2004 to 2007 are expressed in pesos of 2007. 13 3.2 3.3 Revenues billions of pesos 2.6 2.4 2.1 1.8 1.5 0.7 04 0.9 05 1.1 06 07 08 09 10 11 12 13 The numbers from 2004 to 2007 are expressed in pesos of 2007. 14 CONTENT: Network subscription revenue With 24 pay-TV brands and close to 50 national and international feeds reaching 35.7 million subscribers, Televisa is one of the world’s leading producers of original Spanish-language content for pay- TV platforms. During 2013, Televisa produced over 23,000 hours of content for its pay-TV networks, adding close to 2.5 million new subscribers with an average of 6.2 networks per subscriber. This year, Televisa Networks extended its entertainment offerings with the launch of Golden Premier, a channel showcasing top-tier, exclusive movies and TV series. In spite of strong competition, in 2013, Televisa’s pay-TV networks remained among the most watched networks on pay-TV plat- forms in Mexico. We finished the year with five of the top seven general entertainment networks, three of the top five movie net- works (including the number one network in the segment), and the top three music and lifestyle networks. During 2013, Televisa Networks reached a new record for audience viewership during prime time from Monday to Friday*. The 10-year transformation → Expanded the portfolio of networks three-fold, reaching a total of 24 brands and 46 feeds in 2013, many of which are top-rated within their categories. → Increased production of content from 4,000 hours in 2003 to over 23,000 hours in 2013. → In spite of strong competition from key international networks, doubled the average rating per network over this period. → Reached 35.7 million households in 2013, 3.8 times more than in 2003, with the average number of channels sold per subscriber expanding from 3.7 to 6.2. * Source: Nielsen IBOPE México. Ratings for 15 Televisa networks measured by IBOPE. Among people 4+ years. Primetime, Monday through Friday. 15 CONTENT: Licensing and syndication Our content reaches millions of people around the world. In 2013, we exported close to 80,000 hours of our original programming to over 70 countries. Growth in our licensing business continues to be driven by our Program License Agreement (PLA) with Univision. In 2013, Televi- sa’s content represented a significant portion of Univision Net- work’s programming, and we received U.S.$273.2 million from this agreement, a 10.3 percent increase from the previous year. Under the current license agreement with Univision, Televisa receives a royalty base of approximately 12 percent of all audiovisual reve- nue generated by Univision. The agreement includes an increase in the royalty rate in December 2017 to more than 16 percent of all audiovisual revenue generated by Univision. The 10-year transformation → Extended and expanded licensing agreement with Univision. In 2013, royalties were 2.8 times larger than those in 2003. → Signed a non-exclusive content licensing agreement with Netflix for Latin America and the Caribbean. → Expanded production expertise into new markets including China, Brazil, the United States, Colombia, Argentina, and France. In 2013 Televisa produced content in 3 languages. → Exported over 700,000 hours of content to North America, Latin America, Asia, Europe, and Africa over this period of time. 16 273 Univision Royalties US$ millions 248 225 138 127 105 110 147 143 156 04 05 06 07 08 09 10 11 12 13 17 17.1 5.1 Revenues billions of pesos (as reported) 15.6 4.4 RGUs millions 13.6 3.9 11.8 3.3 9.2 2.8 6.6 2.4 0.9 1.1 04 1.1 1.4 05 1.5 2.1 06 2.0 2.6 07 08 09 10 11 12 13 18 Cable and Telecom Our telecom assets, which include our cable business, reach many important cities in Mexico with a network of over 57,000 miles of fiber and coaxial cable. Through this network, Televisa’s Telecom business provides video, broadband, and voice services to millions of people throughout the country. Operating three cable companies in Mexico —Cablevisión, Ca- blemás, and TVI — by year-end 2013, and in spite of aggressive competition, we reached an aggregate of close to 2.5 million video subscribers, 1.7 million broadband subscribers, and 916,000 voice subscribers. During 2013, we continued to deploy investments that will allow us to continue to grow and maintain the momentum of this busi- ness and, more importantly, enable us to provide better and faster services to an increasingly demanding customer base. The 10-year transformation → Led the consolidation of the cable industry; made important investments in cable operations. → Bought Bestel and participated in a consortium to form GTAC, a structural backbone with over 17,000 miles of optical fiber that provides wholesale telecommunication services. → Invested over U.S.$2.5 billion in capital expenditures over the past decade to support growth and upgrade infrastructure. → Reached a total of 5.1 million Revenue Generating Units (RGUs), equivalent to 4.7 million more RGUs than in 2003. 19 Sky Sky is an important part of our telecommunications business. In 2013, Sky, our direct-to-home (DTH) satellite television business, in spite of aggressive competition, added subscribers at a very fast pace for the fourth year in a row. Sky owes its success to its attractive pay- TV packages, sports content, superior customer service, nationwide coverage, and its use of advanced digital and satellite technologies. Although originally aimed at high-end and middle-market seg- ments, Sky began adding value-added services and lower-priced packages, including VeTV, to attract new market segments in 2009. The success of these packages has allowed Sky to reach more than 6 million subscribers and maintain strong profitability. Sky subscribers can watch soccer matches held in Mexico and around the world, and a wide range of U.S. sports programming. In 2014, Sky will be the only platform in Mexico that will provide access to all 64 matches of the 2014 World Cup in Brazil. The 10-year transformation → Expanded channel offering from 116 video pay-TV networks in 2004 to 171 as of year-end 2013, including 49 high-definition networks. → Introduced a highly successful pre-paid pay-TV package, reinvigorating the company for continued growth. → Launched two new satellites, significantly increasing the capacity for further expansion in content offerings. → Despite strong competition from cable and Dish, expanded subscriber base from 857,000 in 2003 to over 6 million in 2013. 20 16.1 6.0 Revenues billions of pesos (as reported) 14.5 5.2 12.5 4.0 11.2 3.0 Subs millions 10.0 2.0 9.2 1.8 7.7 1.4 8.4 1.6 06 07 08 09 10 11 12 13 4.8 1.0 04 6.0 1.3 05 21 22 Publishing The 10-year transformation → Number of titles published expanded from 60 in 2004, including owned and licensed titles, to 201 in 2013. → Became a global player, reaching 21 countries. Revenues from abroad were close to 60 percent of publishing revenues. → Consolidated its presence as the leading magazine publisher among female readers and expanded its appeal in the male segment. → Expanded its key brands onto digital platforms. Televisa publishes 201 magazine titles in 21 countries around the world. From health, beauty, fashion, and pop culture, to technology, travel, sports, and science, our magazines cover a wide array of pop- ular topics and address a variety of consumer interests. As a result of structural challenges in the publishing industry, we have continued to streamline our operations and seek new ways to extract maximum value from our brands. We are expanding the reach of our titles through our digital platforms to raise brand awareness, create new business opportunities, and ex- pand content options. In addition, Televisa Publishing capitalizes on the success of Televisa’s made-for-TV content, launching publications that complement this content and engage the audience at a deeper level. In 2013, Televisa’s publishing segment consolidated its presence as the leading publisher and distributor of comics in the region. This year also witnessed the initial results of Televisa’s Digital Archive Me- dia (DAM), which allows us to share content and stories among all of our publications, creating efficiencies and reducing costs. 23 Other Businesses Our Other Businesses segment includes our gaming, radio, soccer, feature-film distribution, and publishing distribution businesses. Some of these operations serve as an important complement to our core businesses, while others present Televisa with opportuni- ties for further diversification of its revenue base. Gaming Despite a challenging environment, our gaming operation continued to grow at a moderate, but steady pace. Televisa’s casino business includes 18 sites across the country with a total of 5,300 Electronic Gaming Machines (EGMs) and 4 million vis- itors per year. In 2013, casino revenues continued to grow as a result of better product mix that included new game libraries, better floor distributions and the remodeling of some of our sites, which add- ed a real casino atmosphere. In addition, we placed strong empha- sis on improving customer service. Thanks to these actions, players now spend more time in our sites and enjoy a better overall casino experience. Our lottery business relies on approximately 5,200 lottery terminals located across the country. In March 2013, we signed an agreement with Oxxo – the leading chain of convenience stores in Mexico with 24 over 11,000 locations across the country – to implement on-line sales in its stores. This agreement will allow us to offer our lottery games to more players, and continue growing in a profitable manner. Radio An important participant in Spanish-language radio, Televisa broad- casts news, music, and talk programming through a network of 89 ra- dio stations. Of these stations, 17 are owned and 72 are affiliates owned by third parties. Our radio stations use various program formats which target specific audiences and advertisers and cross-promote the talent, content, and programming of many of our other businesses, including television, sports, and news. We produce some of Mexico’s top-rated radio for- mats, including W Radio (News-talk), TDW (Sports), Ke Buena (Mexican music), 40 Principales (Pop music), and Bésame Radio (Spanish ballads). Our exclusive broadcast of soccer matches and sporting events has placed Televisa’s radio stations among the highest-rated sports-broad- casting radio stations in Mexico. Televisa’s entertainment and information radio programs are broadcast to more than 70 percent of Mexico’s population. Four of our most pop- ular stations – 40 Principales, Ke Buena, W Radio, and Bésame Radio — can be streamed over the Internet as well. 25 Univision On December 20, 2010, Univision (UCI); Televisa; BMP, the parent com- pany of UCI; and other parties affiliated with the investor groups that own UCI’s parent company, entered into various agreements and completed certain transactions announced in October 2010. As a result, in December 2010, we: i) made a cash investment of U.S.$1,255 million in BMP in exchange for an initial 5 percent equity stake in BMP, and U.S.$1,125 million aggregate principal amount of 1.5 percent Convertible Debentures of BMP due in 2025 which are convertible at our option into additional shares currently equiva- lent to a 30 percent equity stake of BMP, subject to existing laws and regulations in the United States and other conditions, ii) ac- quired an option to purchase at fair value an additional 5 percent equity stake in BMP, subject to existing laws and regulations in the United States, and other terms and conditions, and iii) sold to UCI our 50 percent equity interest in TuTv, previously our joint venture with Univision, engaged in satellite and cable pay-TV pro- gramming distribution in the United States. In December 2012, we made an additional investment of U.S.$49.1 million in cash in com- mon stock of BMP, by which we increased our interest in BMP from 5 percent to 7.1 percent. In August 2013, we made an addi- tional investment of U.S.$22.5 million in cash in common stock of BMP, by which we increased our interest in BMP from 7.1 percent to 8.0 percent. As of year-end 2013, Televisa’s direct equity stake of BMP reached 8 percent and, as a result of a recent investment in BMP by a third party, it is now closer to 7.8 percent. As part of the 2010 investment agreement, the Programming Li- cense Agreement (PLA) between Televisa and Univision was amend- ed, expanding Univision’s exclusive rights to Televisa programming in the U.S., and extending the PLA to the latest of 2025 or seven and one-half years after we have sold two-thirds of our initial invest- ment in its holding company. In exchange, royalties to Televisa in- creased from 9.36 percent of television revenue to 11.91 percent of substantially all of Univision’s audiovisual and interactive revenues through December 2017, at which time royalty payments to Televisa are set to increase further to 16.22 percent. Univision Communications Inc. (UCI) is the leading media company serving Hispanic America. Its assets include: 26  → Univision Network, one of the top five networks in the U.S. re- gardless of language and the most-watched Spanish-language broadcast television network in the country reaching 97 percent of U.S. Hispanic households; → UniMás Network, a general-interest Spanish-language broadcast television network reaching 88 percent of U.S. Hispanic households; → Univision Cable Networks, including Galavisión, the country’s leading Spanish-language cable network, and a suite of six cable offerings – De Película, De Película Clásico, Bandamax, Ritmoson, Telehit and Clásico TV; → Univision Studios, which produces and co-produces reality shows, dramatic series and other programming formats for the Compa- ny’s platforms; → Univision Local Media, which owns and/or operates 62 television stations and 70 radio stations in major U.S. Hispanic markets and Puerto Rico; → Univision Interactive Media, a network of national and local on- line and mobile sites including Univision.com, which continues to be the #1 most-visited Spanish-language website among U.S. on- line Hispanics; → Univision Móvil, a longstanding industry-leader with unique, relevant mobile products and services; → Univision Partner Group, a specialized advertising and publish- er network. In 2013, UCI continued its strategy of successfully growing revenues and maximizing profitability while increasing the long term value of the company. During the year revenues increased by 7.6 percent to U.S.$2.6 billion dollars, and UCI continued with its multiplatform expansion with the official launches of Fusion and El Rey, the social media launch of Flama and the impressive performance of Univision Deportes, which finished as the fastest-growing cable network in any language in both total day and primetime. The U.S. marketplace is of paramount importance to Televisa’s strat- egy to expand our reach beyond Mexico and maintain our status as the leading media company in the Spanish-speaking world based on our market capitalization. We will continue to work closely with Univision to make our content even more appealing to Hispanic au- diences in the United States, and to Univision’s advertising clients. 27 Iusacell In April 2011, we made a substantial investment for the acquisition of equity and convertible debentures issued by GSF, which indirect- ly owns 100 percent of the outstanding shares of Iusacell. We sub- sequently converted the convertible debentures into equity inter- ests and, as a result, we now hold a 50 percent equity stake in GSF. According to Pyramid Research, total revenues in Mexico’s telecommu- nications market are estimated to reach U.S.$31 billion by 2015, 60 per- cent of which are expected to result from mobile services. The partici- pation of Televisa in mobile voice and broadband is critical to its efforts to expand its presence in the telecommunications industry. Iusacell is a well-positioned mobile operator with an extensive na- tional network. It was the first provider of third-generation wire- less cellular services in Mexico, and its spectrum capacity is suffi- cient to deploy next-generation services to support current and future growth. Televisa’s investment has allowed Iusacell to resume growth by strengthening its capital structure, finance capital expenditures and launch new and better services, expanding its market share. Since Televisa’s investment in 2011, Iusacell’s customer base has increased from approximately 4 million wireless customers to 8 million at year- end 2013. In that year, Iusacell’s customer base increased around 8 percent and its market share was close to 8 percent. 28 29 Fundación Televisa Fundación Televisa (Fundación) aims to act as a positive catalyst for the growth and development of Mexico by providing a broad range of opportunities to its people. Through Fundación Televisa, Grupo Televisa consolidates its efforts as a socially responsible company working for the benefit of Mexico. We want Mexicans to have access to better education and a high- er quality of life. Fundación Televisa makes social investments that have maximum impact by reaching the largest possible num- ber of people, using our media assets to help us achieve this goal. Grupo Televisa’s various media platforms multiply the impact of Fundación by broadcasting its messages to millions of viewers throughout the country. One of Fundación’s most successful initiatives has been Bécalos. This program, first launched in 2006, is a prime example of Fun- dación’s collaborative model. The program is co-sponsored by the Association of Banks of Mexico and is funded in part through dona- tions made via automated teller machines (ATMs) and grants from dozens of enterprises across the country. Bécalos awards fellow- ships and scholarships to students, teachers, and professionals that help to advance knowledge and skills through additional education and training. In 2013, Bécalos grew 17 percent, naming 27,000 new fellows, bringing the total number of Bécalos fellows to 191,279. This unique program is made possible through the collaboration of 218 organizations, firms, and academic institutions. Another notable example is Fundación’s nationwide campaign to promote the understanding and practice of universal values. Launched in 2002, we have distributed materials to every elemen- tary classroom in the country. In 2013, we distributed for the first time materials to all public middle schools in the country. Today, the Program reaches 780,000 classrooms and more than 20 million students. In addition, we publish a book series called “Vivir los Va- lores”, which, now in its ninth edition, has distributed more than 2.4 million copies to educational institutions in Mexico. Our values pro- 30 gram has become an important benchmark among Mexican and Lat- in American companies. Demonstrating the organization’s evolution and thought leadership, Fundación launched POSIBLE, a new program to inspire, identify, and support entrepreneurs with the potential for driving significant so- cial and environmental impact. In its first year, POSIBLE became the largest privately-funded program of its kind in Latin America, regis- tering over 15,000 entrepreneurs. This is a promising, innovative ap- proach to generating positive social impact. In 2013, Televisa launched Televisa Foundation in the United States. Through Televisa Foundation, we are committed to the millions of Latino families that live in the United States in pursuit of the Amer- ican Dream. The intention of those families is to thrive, prosper, and give back to the communities which they are part of. Ours is to con- tinue to support those communities by affording Latino children a better future through educational and cultural programs. In education, we promote parents’ involvement in children’s early development through awareness and cause marketing campaigns. We support the academic advancement of English language learn- ers (ELLs) through digital platforms. We strengthen Latinos’ personal identity and cultural pride through high-quality exhibitions. In 2013 Fundación produced the exhibit “Under the Mexican Sky, Ga- briel Figueroa, Art and Film”, at the Los Angeles County Museum of Art (LACMA). This exhibit paid homage to Gabriel Figueroa, the iconic cinematographer who was involved in the production of several of Mexico’s most important films. Fundación will continue to create and promote initiatives that impact as many people, in as many ways as possible. We believe that working with the communities, companies, NGOs, and the government allows Fundación to combine resources and multi- ply their effect for economic, social, and cultural development in Mexico. 31 

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