Trevali Mining Annual Report 2016

Plain-text annual report

On the move 2016 ANNUAL REPORT Contents 02 Televisa at a glance 04 Letter to Shareholders 08 Financial highlights 10 Content 14 Cable 16 Sky 18 Other Businesses 20 Univision 22 Fundación Televisa 24 Management’s discussion and analysis of ﬁnancial condition and results of operations 32 Board of Directors 34 Financial statements Company proﬁle Televisa is a leading media company in the Spanish-speaking world, an important cable operator in Mexico and an operator of a leading di- rect-to-home satellite pay television system in Mexico. Televisa distributes the content it produces through several broad- cast channels in Mexico and in over 50 countries through 26 pay-tv brands, and television networks, cable operators and over-the-top or “OTT” services. In the United States, Televisa’s audiovisual content is distributed through Univision Communications Inc. (“Univision”) the leading media company serving the Hispanic market. Univision broadcasts Televisa’s audiovisual content through multiple platforms in exchange for a roy- alty payment. In addition, Televisa has equity and warrants which upon their exercise would represent approximately 36% on a fully-diluted, as-converted basis of the equity capital in Univision Holdings, Inc., the controlling company of Univision. Televisa’s cable business offers integrated services, including video, high-speed data and voice services to residential and commercial cus- tomers as well as managed services to domestic and international car- riers through ﬁve cable Multiple System Operators in Mexico. Televisa owns a majority interest in Sky, a leading direct-to-home satellite pay television system in Mexico, operating also in the Dominican Republic and Central America. Televisa also has interests in magazine publishing and distribution, radio production and broadcasting, professional sports and live entertain- ment, feature-ﬁlm production and distribution, and gaming. Fully integrated media and content distribution platform Our world is changing rapidly and the industries where we operate are changing at an even faster pace. Media and tele- communications continue to converge, and viewing habits, content preferences, and the way people communicate are all evolving at a rapid pace. We have been a leading producer of Spanish-language content for many decades. Today, we are also a successful and growing participant in Mexico’s telecommunications industry. We embraced change many years ago and, as such, these changes keep presenting us with opportunity. 1 This is Televisa Our company at a glance Content In 2016, Televisa produced more than 90,000 hours of content for free-to-air and pay-TV. Advertising Televisa operates four broadcast channels—2, 4, 5, and 9— in Mexico City and complements its network geographic coverage through affiliat- ed stations throughout the country. Televisa also sells advertising on its pay-TV networks and online properties. Network Subscription Revenue Televisa produces and distributes 26 pay-TV brands and 52 feeds. In the United States, the Company distributes its pay-TV channels through Univision. In 2016, Televisa produced more than 27,000 hours of content for pay-TV networks. Licensing & Syndication Televisa exports its programs and formats to television networks around the world. In the United States, Tele- visa distributes its content through Univision under a Programming License Agreement (“PLA”). This year, the PLA resulted in royalties to Televisa of U.S.$324.6 million dollars. The royalty rate is set to increase from the current 11.84% on much of Univision’s audiovisual revenues to 16.45% in 2018. Sky Televisa owns a 58.7% interest in Sky, a leading direct-to-home satellite television system. Sky operates in Mexico, Central America, and the Do- minican Republic. In 2016, Sky added more than 23.4% contribution to segment net sales 742,000 subscribers. Subscriber base: 8 million Sky operates in: MEXICO CENTRAL AMERICA DOMINICAN REPUBLIC 4.4% contribution to segment net sales 44+ million pay-TV subscribers 9.1% contribution to segment net sales 80+ countries worldwide, approximately reach 36.9% contribution to segment net sales 37.9% contribution to OSI* 22.1% contribution to segment net sales 25.4% contribution to OSI* 2 Cable Unconsolidated Businesses Through seven operations in Mexico, Televisa is an Univision: Televisa holds a 10% direct economic important player in the country’s Cable industry. interest in Univision, the leading Spanish-language Televisa operates through two business divisions: media company in the United States and the number • The Multiple System Operators (“MSOs”) ﬁve network regardless of language. Upon the exer- division which offers video, high-speed data, cise of the warrants Televisa will hold approximately and voice services to residential and commercial 36% of the equity capital of Univision on a fully-di- customers, including small- and medium-sized luted, as-converted basis. 22 businesses and hotels. • The Enterprise division which provides tele- Ocesa Entretenimiento: Televisa holds 40% eq- communications services, including voice, data, uity interest in OCESA, a live-entertainment com- and managed services, to domestic and inter- pany in Mexico, Central America and Colombia. national carriers and to enterprise, corporate, The Company organized 2,969 events in Mexico and government customers in Mexico and the and Colombia in 2016. The most successful tour United States. in 2016 was The Rolling Stones. The MSOs footprint provides Televisa with the ability to leverage an extended network across Other Businesses Publishing: The leading Spanish-language magazine our coverage areas, including cities such as Mex- publisher; published 136 titles in 2016. ico City, Monterrey, Tijuana, Zapopan, Queréta- Gaming: Casino sites and online lottery business. ro, Cancún, Mérida, Mexicali, and San Luis Potosí, Soccer: A ﬁrst division soccer team of the Mexican among others. Televisa’s network consists of more league and owner of Mexico’s Azteca stadium. than 80,000 kilometers of coaxial cable and more Radio: Network of owned radio stations, comple- than 33,000 kilometers of ﬁber optic. mented by afﬁliated radio stations owned by third 34 RGUs (Includes Cablevisión, Cablemás, Cablecom, Telecable, and TVI) Video: 4,205,864 Broadband: 3,411,790 Voice: 2,113,282 Total RGUs: 9,730,936 parties. Feature-Film Distribution: Distributes movies in Mexico and Latin America. Publishing Distribution: Distributes publications in Mexico and Latin America. Segment net sales percentage 9 37 Advertising: 24 Network subscription: 4 Licensing and Syndication: 9 32 Operating segment income percentage 38 3 25 Content Cable Sky Other Businesses 32.1% contribution to segment net sales 34.0% contribution to OSI* 8.9% contribution to segment net sales 2.7% contribution to OSI* * Operating segment income (OSI) is deﬁned as operat- ing income before corporate expenses, depreciation, and amortization, and other expense, net. For a reconciliation of total operating segment income with consolidated op- erating income, see Note 25 to our year-end consolidated ﬁnancial statements. 3 9.4% increase in consolidated revenues and 9% in OSI, in 2016. US$325 million in royalties from Univision. Twice the amount received six years ago. Sky revenue and OSI have expanded over the last ten years at a compounded annual growth rate of 11% and 10%, respectively. 11.9% increase in Cable revenues and 150 basis points growth in OSI margin, in 2016. 4 Dear Shareholders: As I look back at 2016, I realize how much we achieved during the year. In our advertising sales business, in pay- TV, and in our growing presence in Mexico’s ﬁxed voice and data markets. Our new advertising sales strategy started to pay off The restructuring of our advertising sales strategy in mid-2015 was chal- lenging to our business, but also necessary. Among other measures, we re- organized the leadership of the team and restructured our rate card. We signiﬁcantly changed the way in which we had been running this business for more than 20 years. From the beginning, we implemented the restructuring of this business with conviction and discipline. We took the right step. Our 2016 results showed us that Televisa’s free-to-air channels continue to be the most efﬁcient way for our customers to run their advertising campaigns and reach their mar- keting goals. Univision posted strong ﬁnancial results and royalties reached U.S.$324.6 million dollars Univision continued to serve Hispanic audiences like no other company. In the most recent broadcast season, and for the 24th consecutive year, Uni- vision’s ﬂagship network ﬁnished as the number one network in the United States among Hispanics. Univision delivers the most ratings among Hispan- ics in many fronts; it is the number one newscast, the number one cable entertainment network, and the number one cable sports network. During 2016, Univision reported, for the ﬁrst time ever, revenues in excess of U.S.$3 billion dollars. As a result, royalties to Televisa reached U.S.$324.6 million dollars in the year. This is twice the amount of royalties received by Televisa just six years ago. Emilio Azcárraga Jean Chairman of the Board, President and Chief Executive Ofﬁcer of Grupo Televisa Sky reached 8 million pay-TV subscribers During the year, Sky added more than 742 thousand subscribers, reaching 8 million customers. Since 2010, when it launched its pre-paid VeTV package, Sky has added 5 million subscribers. The growth in revenue and proﬁtability has also been outstanding. Over the last ten years Sky revenue and operat- ing segment income have expanded at a compounded annual growth rate of 11% and 10%, respectively. Local loop unbundling has been mandated in Mexico for the preponderant economic agent in the telecommunications sector. Sky, having one of the most respected brands in Mexico and the operational scale necessary to launch new services, is very well positioned to beneﬁt from this. The recent changes to the Mexican regulation with regards to local loop unbundling have to be put to the test, but the chances that Sky launches triple-play services in an effective and proﬁtable manner increase every day. 5 For the second consecutive year, all our three core businesses posted operating segment income margins in excess of 40%. Proﬁtability in our cable assets continued to beneﬁt from integration In our cable division, 2016 was marked by relevant improvements in the ca- pacity of our network and by many integration initiatives to combine the op- erations of our ﬁve cable companies. During 2016, we invested close to U.S.$1 billion dollars in this segment, and a very relevant portion of it was directed at rebuilding the network in the ma- jority of the markets we serve. Today, close to 80% of our network has been updated to meet the standards of the cable industry, and we are now able to offer up to 100 megabits of speed in those markets. The integration of our various cable operations, a process which began in 2015, intensiﬁed in 2016. This process was not easy. The inevitable inter- ruptions in the delivery of our services contributed to the increase in churn of customers during the year, but the beneﬁt of integration was clearly shown in the increase in proﬁtability. During 2016, margins reached a record, expanding by 380 basis points from 2014. Our cable division continued to gain share in voice and data services During the year, our cable assets continued to gain share in ﬁxed voice and data by offering better services on attractive terms for the customer. Our share of ﬁxed voice services increased to approximately 10%, and our share of ﬁxed data services reached approximately 21%. The opportunity for us continues to be signiﬁcant. According to the OECD, Mexico is the country with the lowest penetration of data services among the 35 countries of the OECD, and according to the Mexico’s Federal Institute of Telecommunications (“IFT”), about half of those data service customers have a DSL connection. The opportunity for our cable segment rests not only in the growing adoption of these services, particularly data, but also as DSL data customers seek faster speeds and migrate to cable operators. We have made very important upgrades to the network, so we have plenty of room to grow. Today, we have approximately 2.1 million voice customers, 3.4 million data customers, and 4.2 million video customers. That is a fraction of the close to 13 million homes that we reach with our cable companies. 6 Enthusiastic about our future We are excited about the years to come with many opportunities ahead for us. Our cash ﬂow proﬁle is improving, our upfront advertising sales are a very good start for the year, and our relationship with Univision keeps evolving every day. Capital expenditures, for the ﬁrst time in many years, will come down in 2017. The reduction in capital expenditures is possible thanks to the conclusion of the main rebuilding phase in the majority of our cable systems. This will be followed in 2018 by the step-up in the royalties we get from Univision. Our current share of Univision’s audiovisual revenues will grow from 11.84% today to 16.45% in 2018. There is no incremental cost to us resulting from the increase in the royal- ties, so their contribution to free cash ﬂow is very relevant. Both of these events will positively change the trajectory of cash ﬂows for Televisa. In addition, last December we concluded the negotiation of the 2017 upfront advertising sales with a growth in customer deposits of 8.9%. The growth in full-year advertising revenues will continue to be closely linked to the growth in the economy, and our quarterly results are likely to be volatile. The result of the 2017 upfront sales, however, is a very good and encouraging start. Finally, during 2017 we plan to produce content in a more coordinated manner with Univision. In addition to producing content that will better capture the hearts and minds of audiences in both markets, we will look for synergies in the production of content by both companies. Mexico and the U.S. Hispanic market together represent a combined audience of over 175 million viewers and by far the most important region for Televisa’s content. While results will not be immediate, we believe that this initiative will allow both companies to compete more effectively in their respective markets. Thank you We have set for ourselves very aggressive goals for the coming year, from improving the ratings of our content and expanding its reach globally, to con- tinuing increasing the number of our video, voice and data customers. The opportunity for us is immense, and we look forward to sharing with you many more successes in the years to come. Over the last two years we have made some very important changes to our Board and senior management team. I am very lucky to count on their exper- tise, passion and support. I want to express my gratitude to them and to all the employees of Grupo Televisa for their continued dedication, and to our customers and audiences for their patronage. On behalf of all of us at Grupo Televisa, I thank you, our shareholders, for the trust that you place in us. Sincerely, Emilio Azcárragaaaaaaaaaaaaaa JJJJJJJJean Emilio Azcárraga Jean Chairman of the Board, President and Chief Executive Ofﬁcer of Grupo Televisa 7 2016 was also marked by increased competition and growing macroeco- nomic uncertainty During 2016, competition intensiﬁed across all our businesses. The new free- to-air network launched in the Fall of 2016 capturing a share of Mexico’s broad- cast audience, and is competing aggressively for a greater share of the market. Also, the IFT reported that the other direct-to-home operator in the country added close to 1.4 million pay TV customers during the year, a growth of 45%. In addition, the incumbent telephony company discounted the price of its ba- sic double play telecom offering by over 60%, from $999 at the time we launched our ﬂagship offer, to $389 pesos today. In addition to increased competition, the Mexican economy slowed down to- wards the end of the year. Expectations for GDP growth were close to 3% at the beginning of 2016, but actual growth was lower, at 2.3%. Higher eco- nomic uncertainty was clearly felt by Sky and Cable in the pace of net addi- tions during the fourth quarter. Also, the peso depreciated even further after an already steep decline in 2015. It has now come down from $14.76 pesos per U.S. dollar at year-end 2014, to $17.22 at year-end 2015, to $20.64 pesos per U.S. dollar at the end of 2016. In this environment, it has been very important and valuable for us to have close to U.S.$1 billion dollars in revenues that are either U.S. dollar-denominated or dollar-linked, and over U.S.$4 billion dollars in U.S. dollar-denominated assets. We continued to thrive in a challenging environment In spite of increased competition, a slower economy and a weaker peso, during 2016 we were able to post a growth in consolidated revenues and in operating segment income of 9.4% and 9.0%, respectively. Over the last ten years, Grupo Televisa has delivered solid growth every year, posting an average growth in consolidated revenue of 9.4%. During 2017, we expect consolidated revenue will approach the 100 billion pesos mark, three times as much as in 2005. During this period of time, the growth in revenues has been accompanied by growth in proﬁtability. For the second consecutive year, all our three core businesses, Content, Sky, and Cable, posted operating segment income mar- gins in excess of 40%. Consolidated net sales billions of pesos (as reported) 96.3 88.1 80.1 73.8 69.3 62.6 57.9 52.4 48.0 37.9 41.6 32.5 9.4% net sales increase in 2016 05 06 07 08 09 10 11 12 13 14 15 16 Operating segment income billions of pesos (as reported) 38.9 35.7 32.3 28.4 29.9 25.4 23.1 20.7 19.9 18.1 16.9 13.4 9.0% OSI increase mainly driven by Cable segment in 2016 05 06 07 08 09 10 11 12 13 14 15 16 8 Financial highlights 2016 2015 Var. % Consolidated net sales $ 96,287 $ 88,052 Operating segment income1 38,923 35,695 9.4 9.0 Segment margin Operating income Margin 39.2% 39.6% 16,598 18,745 -11.5 17.2% 21.3% Net income attributable to stockholders of the Company 3,721 10,899 -65.9 Earnings per CPO 1.28 3.77 Shares outstanding at year-end (in millions) Cash and cash equivalents at year-end 341,268 338,468 $ 47,546 $ 49,397 -3.7 Temporary investments at year-end 5,498 5,331 3.1 Long-term investments at year-end 6,792 6,007 13.1 Total debt at year-end 126,998 110,411 15.0 Net debt position at year-end 67,162 49,676 35.2 In millions of Mexican pesos, except per CPO amounts and shares outstanding. 1 Operating segment income (OSI) is deﬁned as operating income before corporate expenses, depreciation and amortization and other expense, net. For a reconciliation of operating segment income with operating income, see Note 25 to our year-end consolidated ﬁnancial statements. 9 +90 thousand hours of content produced in 2016 10 Content on the move Advertising During 2016, we remained disciplined and committed to our new adver- tising sales strategy and the results were encouraging. With four free-to-air channels in Mexico City —2, 4, 5, and 9— which Televisa operates with a combination of owned and afﬁliated network stations throughout Mexico, a strong portfolio of pay-TV networks, and new media platforms, Televisa is one of the largest providers of advertising alternatives in the Mexican market. Advertising revenues now represent 63.3% of our Content revenues and 23.4% of our segment net sales. We are constantly working to improve our content in order to better support our customers to achieve their advertising goals. During 2016, advertising sales posted a growth of 0.8%. Content revenues billions of pesos (as reported) 33.8 34.9 34.3 36.7 13 14 15 16 Advertising revenues billions of pesos (as reported) 25.5 24.9 23.0 23.2 13 14 15 16 11 Network Subscription Revenue Televisa Networks is one of the most successful producers and distributors of content for pay- TV platforms in Mexico. Licensing and Syndication(cid:1) Televisa(cid:1)keeps(cid:1)creating(cid:1)innovative content that travels far and reaches audiences around the world. We are one of the world’s leading producers of origi- nal Spanish-language content for pay-TV platforms. We commercialize 26 pay-TV brands through 52 domestic and international feeds, which reach over 44 million subscribers around the world. Over the years we’ve assembled a portfolio of channels for pay TV that improve every day, and that capture many of the viewers that migrate from free to air networks to pay-TV. Televisa’s pay-TV networks continue to be among the most watched networks on pay-TV platforms in Mexico. In 2016, Televisa produced over 27,000 hours of content for our pay-TV networks. Network Subscription Revenue expanded by 22.4% in 2016, partially helped by the deprecia- tion of the peso. In the United States, through our Programming License Agreement (“PLA”) with Univision, we reach a very important demographic in the Spanish speaking world: the Hispanic market. Our PLA grants Univision exclusive access to most of our audiovisual content in any format for dis- tribution in the United States. In exchange, we receive a royalty payment of 11.84% from Univi- sion on all its audiovisual revenues. This year, we received U.S.$324.6 million dollars in the form of royalties from Univision. The PLA also contemplates an increase in the royalty rate from the current 11.84% to 16.13% starting in January 2018. The royalty rate will again increase to 16.45% starting in June 1, 2018. Televisa’s content has been distributed globally for many decades and has an enduring base of follow- ers beyond Mexico and the United States. During 2016, we exported over 93,473 hours of our original programming to 80 countries. As of December 31, 2016, we had 264,671 half- hours of television programming in our library available for licensing. During 2016, Licensing and Syndication revenue grew 17.6%. Network Subscription Revenues billions of pesos (as reported) 4.4 3.6 3.3 2.9 13 14 15 16 12 Televisa’s content has been distributed globally for many decades and has an enduring base of followers beyond Mexico and the United States. With four free-to-air channels, Televisa is one of the largest providers of advertising alternatives in the Mexican market. 13 In 2016, revenues in our Cable segment grew 11.9% 14 Cable on the move During 2016 we kept on investing to create one of the most advanced networks in Mexico, with the capacity to deliver high-quality and af- fordable pay-TV, broadband and ﬁxed telephony services. Televisa’s Cable business includes ﬁve cable compa- nies: Cablevisión, Cablemás, Cablecom, Telecable, and TVI. Our Cable business offers cable and con- vergent services across 29 states in Mexico, cover- ing the main metropolitan areas of the country. During 2016 we continued upgrading our network, which now reaches close to 12.7 million homes in the country. Our network has been updated to the cable industry standard, combining traditional hy- brid ﬁber-coaxial, ﬁber deep, and deployments of Gigabit Passive Optical Networks, also called GPON. Additionally, our Enterprise division offers tele- communications services through a network of more than 30,000 kilometers of ﬁber to domes- tic and international carriers and to enterprise, corporate, and government customers in Mexico and the United States. Our network covers several important cities and economic regions in Mexico, and connects with the United States, enabling us to provide high capacity connectivity between the United States and Mexico. Internet Protocol Access and Large Scale Core net- works are in place and Voice over IP Cores were placed in several regions to support telephony trafﬁc for residential and enterprise customers. We are now able to deliver up to 100 megabits of speed per second. Our ﬂagship offer consists of a double-play pack- age that includes unlimited telephony to almost every corner of the globe and 10Mbps of internet speed. In addition, this double-play package can be upgraded to a triple-play package by adding pay- TV. At the end of 2016, this offer was available in the most important cities throughout Mexico. Supported by a state-of-the-art network and by the success of our offers, revenues for our Cable segment grew by 11.9% in 2016, adding over 700 hundred thousand revenue generating units. As of December 31, 2016, Televisa provided video services to 4.2 million subscribers, broadband ser- vices to 3.4 million subscribers, and voice services to 2.1 million subscribers throughout Mexico. 9.7 9.0 RGUs millions 6.9 5.1 13 14 15 16 15 Sky on the move Sky has added close to ﬁve million customers in the last six years closing 2016 with over 8 million cus- tomers. Sky is one of the most successful pay-TV operations in the region. Sky is our direct-to-home (DTH) satellite television operation. It reaches ev- ery corner in Mexico, plus the Dominican Republic and Central America. Sky offers pay-TV packages, including exclusive content that ranges from sports to concerts and special events. In February 2016, Sky launched VeTV Plus, a new product that targets low income households willing to spend more on TV services. During 2016, the success of VeTV Plus contributed to Sky’s revenue growth. We believe that, as the economy progresses, consumers will increasingly demand premium pay- TV offerings that Sky can deliver. 2016 was another year of strong growth for Sky, with over 742,000 new subscribers and a 14.0% increase in revenue, mainly explained by the success of its low-cost, prepaid package VeTV Plus and also driven by the transition from analog to digital television. By the end of 2016, Sky reached more than 8 million subscribers becoming one of the most competitive DTH pay-TV companies in the continent. Subscribers millions 8.0 7.3 6.6 6.0 13 14 15 16 16 742,000 new Sky subscribers in 2016 17 Other Businesses Televisa’s Other Businesses serve as important complements to our core businesses, while providing with further diversiﬁcation opportunities. Televisa’s Other Businesses segment includes pub- lishing, gaming, radio, soccer, feature-ﬁlm distribu- tion, and publishing distribution businesses. quality standards and a new product offering. The operating segment income grew double-digits for the seventh consecutive year. Multijuegos, Televisa’s lottery business, ended the year with positive results and has started all the preparations to implement a new platform which will include new retail and digital products. Radio As an important participant in Spanish-language radio in Mexico, Televisa broadcasts news, music, and talk show programming through a network of 99 radio stations. Of these stations, 17 are owned and 82 are afﬁliates owned by third parties. Our radio stations use various program formats that target speciﬁc audiences and advertisers, and cross-promote talent, content, and programming of our other businesses, including television, sports, and news. We produce some of Mexico’s top-rat- ed radio stations, W Radio (News-talk), Deportes (Sports), Ke Buena (Mexican music) and Los 40 (Pop music), and Ke Buena AM (Music in Spanish). Our exclusive broadcast of soccer matches and oth- er sporting events has placed Televisa’s radio sta- tions among the highest-rated sports-broadcasting radio stations in Mexico. Televisa’s entertainment and information radio programs are broadcast to more than 70% of Mexico’s population. Four of our most popular sta- tions— Los 40, Ke Buena, W Radio, and Ke Buena AM — are streamable over the Internet as well. Our Radio business is always innovating by ex- panding its programming and services offering for the beneﬁt of both our audiences and adver- tising customers. Publishing Televisa publishes 136 magazine titles in 15 coun- tries. These titles cover a wide variety of consum- er interests from health, beauty, fashion, and pop culture, to technology, travel, sports, and science. Some of our titles aim to capitalize on the success of Televisa’s audiovisual content and to engage with our audiences at a deeper level. As a result of structural challenges in the publishing industry, including shifts in reading habits, wider availability of online content, higher penetration of ﬁxed and broadband accesses, and growing com- petition from emerging platforms, we continued streamlining our operations, taking advantage of synergies that exist in the development of content and our back ofﬁce activities, including purchasing, printing, and distribution. In Mexico we embarked in restructuring our op- erations, moving from an organization based on titles and brands to creating teams dedicated to best serve our clients’ needs offering a wide range of segmented audiences through different media. Our premises now include facilities for the devel- opment of online video, which complements our contents and has opened a new way of offering advertising inventory to our clients. We have de- ployed aggressive marketing campaigns with the aim of increasing brand awareness of our titles, as well as expanding our subscription base. We have already started rolling out similar initiatives throughout the rest of our operations in Latin America. Gaming Play City, Televisa’s casino business, includes 17 sites across the country with close to 6,500 Elec- tronic Gaming Machines. In 2016, we set historical records in OSI margin and visitors both driven by a combination of more ﬂoor space, an increase in our 18 Televisa’s casino business, includes 17 sites across the country with close to 6,500 Electronic Gaming Machines. Televisa publishes 136 magazine titles in 15 countries. Revenues billions of pesos 13 14 15 16 19 The most-watched Spanish- language broadcast television network in United States. The United States market is an integral part of Televisa’s strategy to keep on expanding its global reach and the partnership and alignment with Univision is key for the success of this expansion. 20 Univision In the United States, Televisa has equity and warrants, which upon exercise, would represent, as of the date of this report, approximately 36% on a ful- ly diluted, as-converted basis of the equity capital in Univision Holdings Inc., the controlling company of Univision Communications Inc., the leading media company serving the Hispanic market in the United States. It includes: (cid:404) Univision Network, one of the leading networks in the United States re- gardless of language and the most-watched Spanish-language broadcast television network in that country available in approximately 92% of U.S. Hispanic television households. (cid:404) UniMás, a leading Spanish-language broadcast television network available in approximately 86% of U.S. Hispanic television households. (cid:404) Univision Cable Networks, including Galavisión, the most-watched U.S. Spanish-language entertainment cable network, as well as UDN (Univision Deportes Network), the most-watched U.S. Spanish-language sports cable network, Univision tlnovelas, a 24-hour Spanish-language cable network dedicated to telenovelas, Fusion, a 24-hour English-language news and lifestyle TV and digital network, ForoTV, a 24-hour Spanish-language cable network dedicated to international news, and an additional suite of cable offerings: De Película, De Película Clásico, Bandamax, Ritmoson and Telehit. (cid:404) Univision Television Group, which owns 59 television stations in major U.S. Hispanic markets and Puerto Rico. (cid:404) Various digital properties consisting of online and mobile websites and apps, including Univision.com, the most visited Spanish-language website among U.S. Hispanics, Univision Now, a direct to consumer video service, Uforia, a music application featuring multimedia music content, The Root, the leading online news, opinion, and culture destination for African- Americans, a stake in The Onion, the nation’s leading comedy and news satire brand, and Univision Radio, the leading Spanish-language radio group in the U.S. which owns and operates 67 radio stations including stations in 16 of the top 25 U.S. Hispanic markets and Puerto Rico. (cid:404) Univision’s assets also include a minority stake in El Rey Network, a 24- hour English-language general entertainment cable network. (cid:404) Headquartered in New York City, Univision has television network opera- tions in Miami and television and radio stations and sales ofﬁces in major cities throughout the United States. One of the leading networks in the United States regardless of language. 59 television stations in major U.S. (cid:72)ispanic markets and Puerto Rico 21 Fundación Televisa We are deeply committed to strengthening com- munities throughout Mexico and investing in their development. During the last 16 years, through Fundación Televisa, or Fundación, we have created and supported programs that provide educational opportunities, promote cultural identity and en- courage community engagement. Fundación offers a wide range of tools and opportunities that shape the lives of millions of Mexicans. We have taken advantage of the Company’s wide range of media platforms to promote social aware- ness campaigns, and digital platforms to foster civ- ic participation. Fundación has developed various digital educational platforms that, through innova- tion and creativity, allow users to substantially im- prove their abilities and capabilities. These no-cost, self-teaching tools are broadly available to many Mexicans that would otherwise lack basic tools and access to opportunities. Many of these efforts have improved the lives of thousands of people. Establishing strong, strategic partnerships is a prior- ity for Fundación. These partnerships have improved Fundación’s effectiveness and have broadened its reach. We continuously seek out and collaborate with experts in the academic, business, and ﬁnancial ﬁelds, as well as with other organizations to beneﬁt a greater number of people. During these 16 years, we have developed partnerships with more than 400 non-governmental organizations, public and private institutions. We believe that the best way to enhance quality of life, increase economic opportunities, and im- prove the well-being of families across Mexico is through education. Therefore, we offer a range of programs tailored for every development stage, in- cluding early stimulation programs for newborns to 3 year-olds, access to high-quality elementary and basic education for 4 to 15 year-olds, programs to increase middle and high school completion rates for 16 to 22 year-olds (including an educational pro- gram that teaches children computer coding, which, in 2016, reached approximately 150 public schools in six different states in Mexico and over 11,000 students and 350 trained teachers in the country), and programs that develop employability skills for adults above the age of 23. These programs, which focus on enhancing the quality of education in Mex- ico, include scholarships, school infrastructure, me- dia labs, reading workshops, knowledge competi- tions, infrastructure for schools, and the promotion of entrepreneurship and universal values. Our entrepreneurship program “Posible”, has be- come the major startup non-governmental program in Latin America, enrolling more than 83,000 indi- viduals in 2016, 40% of which are women. Fundación also focuses on expanding the reach of Mexican culture. We promote our cultural values inside and outside of Mexico, sponsoring and pro- moting various exhibitions, collaborations, and in- vestigative digital and editorial projects that bene- ﬁt from access to our photography and audiovisual collection, one of the most important visual arts collections in Latin America, which includes more than 70 exhibitions in different countries, approx- imately 30 published books and various format video content for 36 websites and 27 apps within social media networks. In 2016, Fundación Televisa participated in the implementation of several cultural and educa- tional projects that create virtual and augmented reality content by combining aerial, terrestrial and submarine 360-3D format footage. In particular, two noteworthy projects were accomplished: (i) the participation in the pioneering effort that pre- sented a virtual tour of the Anish Kapoor exhibition in the Museo Universitario Arte Contemporáneo (MUAC) of the Universidad Nacional Autónoma de México (UNAM) in Mexico City; and (ii) the imple- mentation of the nature conservational program known as “Entrelazando Vidas,” which among other activities, focused on the conservation efforts that both private and public sectors of society have developed and implemented in the Sea of Cortes natural environment. In the United States, through Televisa Foundation, we support the Hispanic community. Our efforts are particularly focused on improving the lives of His- panic children and young adults through programs focused on education and culture, including: (cid:404) A program to communicate the importance of early stimulation for healthy cognitive devel- opment to Hispanic families. To that end, we provide practical information and disseminate our message through Univision and various oth- er social media platforms, reaching millions of people through a network of several key part- nerships, including prestigious international or- ganizations such as UNICEF (who in particular adopted the concept as a global campaign). In 2016, the World Bank recognized this program as a high impact program. 22 (cid:404) State of the art learning materials and teacher training programs to strengthen bilingual educa- tion for young students. Our platform “Aprende con el Chavo” has reached over a million users in the United States, and our online courses have provided support to more than 1,500 teachers around the United States. (cid:404) A program directed to boost the development of scientiﬁc and technological abilities in Hispan- ic children, with an emphasis on young women. This program has gained recognition and sup- port through a national campaign in the United States, and the United Nations has recognized it as one of the top ﬁve global initiatives to close the gender gap in the tech sector. Televisa Foundation’s cultural program aims to strengthen the sense of identity among Hispanic families and promotes Mexican visual arts in the United States. Finally, in 2016 Televisa Foundation organized two exhibitions: (cid:404) La Calle de Alex Webb in collaboration with Ap- erture Foundation in (cid:79)(cid:102)(cid:120) York. (cid:404) Katharsis, images of ‘Lucha Libre’ (Mexican(cid:1) wrestling), in Centro Cultural La Plaza, in Los(cid:1) Angeles. Revenues billions of pesos 13 14 15 16 We have taken advantage of the Company’s wide range of media platforms to promote social awareness campaigns, and digital platforms to foster civic participation. 23

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