Grupo Televisa, S.A.B. (TV) Q2 2025 Earnings Call Transcript
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Overview
The earnings call reveals mixed signals: revenue declines in key areas offset by improved EBITDA and cost efficiencies. The Q&A highlights strategic focus on high-margin customers and digital expansion, but lacks strong catalysts. The market cap suggests moderate volatility. Overall, the sentiment is neutral, with no strong positive or negative factors to drive significant stock price movement in the short term.
Key Financial Performance
Consolidated Operating Segment Income Margin Expanded by around 80 basis points year-on-year to 38.1%, driven by a year-on-year OpEx reduction of around 7%.
CapEx Deployment Invested MXN 3.9 billion in CapEx, equivalent to 13% of sales. CapEx budget for 2025 reduced to $600 million from $665 million due to successful supplier negotiations.
Free Cash Flow Generated around MXN 3.6 billion in free cash flow in the first half of the year, enabling prepayment of a bank loan of MXN 2.65 billion and $219 million in senior notes.
Leverage Ratio Grupo Televisa's leverage ratio improved to 2.2x EBITDA from 2.4x in the previous quarter, driven by free cash flow generation.
TelevisaUnivision Subscribers Surpassed 10 million subscribers, showing double-digit year-on-year growth.
TelevisaUnivision Operating Expenses Declined by around 13% year-on-year, resulting in total savings of around $226 million due to cost-saving initiatives.
TelevisaUnivision Leverage Ratio Improved to 5.5x EBITDA from 5.8x in the prior quarter, driven by growth.
Cable Operations Revenue Net revenue from residential operations was MXN 10.5 billion, a decrease of 3.1% year-on-year due to a slightly lower subscriber base. Net revenue from enterprise operations was MXN 1.1 billion, an increase of 3% year-on-year due to higher recurring revenue.
Sky Revenue Second quarter revenue was MXN 3.2 billion, a decline of 16.3% year-on-year, mainly due to a lower subscriber base.
Segment Revenue and Operating Segment Income Segment revenue was MXN 14.8 billion, a decline of 5.9% year-on-year. Operating segment income was MXN 5.7 billion, a decline of 4.2%. Operating segment income margin expanded by 70 basis points year-on-year to 38.4% due to efficiency measures and synergies.
CapEx Deployment for Cable and Sky Total investment was MXN 2.1 billion, accounting for 14.3% of sales during the second quarter.
Operating Cash Flow for Cable and Sky Operating cash flow was MXN 3.6 billion in the second quarter, representing 24.1% of sales.
TelevisaUnivision Revenue Second quarter revenue was $1.2 billion, a decline of 4% year-on-year. Adjusted EBITDA was $398 million, an increase of 10%. Excluding the depreciation of the Mexican peso, revenue remained unchanged year-on-year, and adjusted EBITDA increased by 14%.
Consolidated Advertising Revenue Decreased by 5% year-on-year or 1% excluding FX impact. In the U.S., advertising revenue was 2% lower, while in Mexico, it declined by 13% year-on-year due to the depreciation of the Mexican peso.
Consolidated Subscription and Licensing Revenue Flat year-on-year but grew by 2% excluding FX impact. In the U.S., it increased by 9%, while in Mexico, it fell by 23%. Excluding FX and renewal cycle impacts, subscription and licensing revenue in Mexico grew by 13%.
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Operating Highlights
ViX engagement and growth: Subscribers surpassed 10 million, showing double-digit year-on-year growth. Strong momentum in both free and premium tiers.
New MVNO service: Relaunched an innovative MVNO service developed by ZTE, enhancing user experience and competitiveness of bundles.
Cable Internet subscriber base: Stabilized in the first half of the year with potential sequential growth in upcoming quarters.
Mobile net additions: Achieved 83,000 net adds in Q2, nearly double Q1 and triple the full year of 2024.
OpEx efficiencies: Reduced operating expenses by 7% year-on-year, expanding operating segment income margin by 80 basis points to 38.1%.
CapEx reduction: Reduced 2025 CapEx budget to $600 million from $665 million due to successful supplier negotiations.
TelevisaUnivision cost savings: Reduced operating expenses by $226 million in H1 2025, achieving 13% year-on-year decline.
Debt repayment: Prepaid MXN 2.65 billion bank loan due in 2026 and $219 million senior notes in March 2025.
Deleveraging at TelevisaUnivision: Improved leverage ratio to 5.5x EBITDA from 5.8x in Q1, refinanced $1.5 billion to address 2027 bond maturities.
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Risk or Challenges
Cable Operations Revenue Decline: Net revenue from residential operations decreased by 3.1% year-on-year due to a slightly lower subscriber base. This decline could impact overall financial performance.
Sky Subscriber Losses: Sky lost 347,000 revenue-generating units, mostly from prepaid subscribers, leading to a 16.3% year-on-year revenue decline. This could affect profitability and market share.
Advertising Revenue Decline: Consolidated advertising revenue decreased by 5% year-on-year, with a 13% decline in Mexico due to the depreciation of the Mexican peso. This could impact revenue stability.
Subscription and Licensing Revenue Challenges: Subscription and licensing revenue in Mexico fell by 23% year-on-year, primarily due to the renewal cycle with key distribution partners. This could hinder revenue growth.
Debt and Leverage Concerns: TelevisaUnivision's leverage ratio remains high at 5.5x EBITDA, despite improvements. High leverage could pose financial risks.
Sky Installation Fee Impact: The introduction of a new installation fee for satellite pay-TV subscribers slowed down video gross additions, potentially affecting customer acquisition.
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Guidance & Outlook
Internet subscriber base: The company expects to potentially grow its Internet subscriber base sequentially over the coming quarters.
CapEx budget: The company is cutting its CapEx budget for 2025 to $600 million from the previously disclosed $665 million due to successful supplier negotiations.
Free cash flow generation: The company plans to maintain a disciplined CapEx deployment approach to focus on free cash flow generation.
TelevisaUnivision operating expenses: The efficiency plan to reduce operating expenses at TelevisaUnivision by over $400 million in 2025 is on track, with total operating expenses already declining by 13% year-on-year in the first half of the year.
TelevisaUnivision leverage and debt profile: The company aims to further strengthen its capital structure during the second half of the year, with deleveraging remaining a core strategic priority.
ViX growth: Momentum for ViX is accelerating across both free and premium tiers, with subscribers surpassing 10 million, indicating double-digit year-on-year growth.
Sky's installation fee: Sky has introduced an installation fee of MXN 1,250 for all new satellite pay-TV subscribers to increase the return on investment for this service.
TelevisaUnivision adjusted EBITDA: Adjusted EBITDA increased by 10% year-on-year in Q2 2025, with expectations of continued margin expansion driven by a streamlined cost structure and DTC profitability.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:How does TelevisaUnivision view the ongoing separation between content streaming and Cable TV in the U.S.?
A:TelevisaUnivision sees value in keeping distribution and content bundles together for now, as the distribution business generates $1.1 billion in revenue. They have strong channel packages, especially in entertainment and sports, and have recently renewed deals with DIRECTV and Cox, and launched U.S. networks on Hulu. However, they are open to analyzing alternatives to generate value in the future.
Q:Will Sky's declining connections become a cost burden for Izzi?
A:No, Sky will not become a cost burden for Izzi. The integration is almost complete, and Sky's cost structure has been absorbed into Izzi's infrastructure. Sky is now a revenue stream with variable costs for programming and satellite. The company charges an installation fee of MXN 1,200 to ensure payback on new subscribers. While Sky's revenue is declining, it remains high-margin and contributes positively to the bottom line.
Q:What are the expectations for CapEx in 2025 and the target for homes passed?
A:CapEx guidance for 2025 has been updated from $665 million to $600 million due to more efficient supplier negotiations. The company is still targeting 1 million homes passed by 2025.
Q:What is the trend for broadband additions and the strategy for value clients?
A:Broadband additions are back in positive territory, and the company expects a positive trend in the second half of the year. The focus is on high-end, reliable, and stable customers rather than market share. Churn is at its lowest rate, and the strategy is to retain existing customers and grow revenues quarter-over-quarter in the cable business.
Q:What is the commercial strategy for high-end customers and the competitive landscape in Mexico?
A:The company continues to focus on high-end customers. The competition in Mexico is rational, with stable pricing and no significant discounting. This stable market environment supports the company's strategy.
Q:How is TelevisaUnivision addressing digital revenue opportunities, especially in sports and entertainment?
A:TelevisaUnivision is enhancing digital revenue opportunities by focusing on selling digital packages, particularly on ViX, which is now a $1 billion revenue business. They have hired a new head of sales from TikTok to improve digital product sales. The company is also improving content windowing and monetization through a unified Chief Content Officer.
Q:Are there concerns about U.S. tariff policy affecting programming produced in Mexico?
A:Currently, digital content is exempt from tariffs under the U.S.-Mexico-Canada Agreement (USMCA). Shows and films produced in Mexico and aired or streamed in the U.S. are not subject to tariffs. However, the company acknowledges the unpredictability of future tariff policies.
Q:Review of Unclear Management Responses
A:None of the questions were avoided or lacked clarity. Management provided detailed and direct answers to all questions.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Benchmark LLC
CEO Cable
CEO Director
Cable CFO
Cable Internet
Cable unit
Co CEO
DTC investment
Director Filho
Division Milenna
Division Olivia
ET Grupo
Emilio Fuentes
Filho CEO
Francisco CEO
Fuentes Unidentified
Group Inc
Harrigan Benchmark
Inc Research
Internet subscriber
Izzi synergy
Research Division
addition
amount
cable
disconnection
end
income segment
integration Izzi
leverage
maturity
milestone
profile
term
TV Transcript
Grupo Televisa, S.A.B. (TV) Q3 2025 Earnings Call Transcript
Positive10-24
Despite some challenges, such as declining revenues in Sky and TelevisaUnivision, the company has shown strong financial metrics, including a reduction in leverage ratio, increased adjusted EBITDA, and successful CapEx negotiation. Additionally, the positive momentum in ViX subscriber growth and strategic cost-cutting measures support a positive sentiment. The management's optimism in the U.S.-Mexico economic relationship and their strategic focus on high-end customers further reinforce a positive outlook. Given the market cap, the stock price is likely to react positively, with a predicted increase of 2% to 8%.
Grupo Televisa, S.A.B. (TV) Q2 2025 Earnings Call Transcript
Unknown7-23
The earnings call reveals mixed signals: revenue declines in key areas offset by improved EBITDA and cost efficiencies. The Q&A highlights strategic focus on high-margin customers and digital expansion, but lacks strong catalysts. The market cap suggests moderate volatility. Overall, the sentiment is neutral, with no strong positive or negative factors to drive significant stock price movement in the short term.
Grupo Televisa, S.A.B. (TV) Q1 2025 Earnings Call Transcript
Unknown4-30
The earnings call highlights significant challenges: declining revenues across segments, high leverage ratios, and a CapEx reduction. While there is some optimism in EBITDA growth and cash flow, these are overshadowed by concerns like currency depreciation, revenue declines, and Moody's downgrade. The Q&A reveals uncertainty in expansion plans and unclear responses from management. Given the company's small market cap, these negatives are likely to lead to a stock price decline in the coming weeks, placing the sentiment in the 'Negative' category.
Grupo Televisa, S.A.B. (NYSE:TV) Q4 2024 Earnings Call Transcript
Positive2-22
The earnings call summary shows strong financial performance, with significant cash flow generation and margin expansion. Despite a slight decline in TelevisaUnivision's EBITDA, the focus on deleveraging and efficient CapEx deployment is positive. The Q&A section reveals some concerns about competitive pressures and churn but highlights management's focus on improving operations and strategic investments. Given the company's market cap of $1.5 billion, these factors suggest a positive stock price reaction over the next two weeks, likely in the 2% to 8% range.
TV Report
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