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GRUPO TELEVISA:
VALUE WITH A PATH TO OUTPERFORMANCE
Grupo Televisa (NYSE:TV)
Current Price: $36.50
Market Cap: $21 billion
1-Year Target Price: $45 - 57 (24% - 55% upside)
Sean P. Murphy
(617) 849-6587
sean@gamecreekcapital.com
Disclaimer
The analyses and conclusions of Game Creek Capital, L.P., a Delaware limited partnership (Game Creek),
contained in this presentation are based on publicly available information. Game Creek recognizes that there
may be confidential information in the possession of Grupo Televisa (the Company) discussed in the
presentation that could lead the Company to disagree with Game Creeks conclusions. This presentation and
the information contained herein is not a recommendation or solicitation to buy or sell any securities. As of the
date of this presentation, Game Creeks client, Game Creek Fund, L.P., a Delaware limited partnership,
currently beneficially owns equity securities in the Company. The Company does not represent all of the
securities purchased, sold or recommended for the Companys clients, including the Fund. The reader should
not assume that the Funds investment in the Company was or will be profitable.
The analyses provided may include certain statements, estimates and projections prepared with respect to,
among other things, the historical and anticipated operating performance of the Company, access to capital
markets and the values of assets and liabilities. Such statements, estimates, and projections reflect various
assumptions by Game Creek concerning anticipated results that are inherently subject to significant
economic, competitive, and other uncertainties and contingencies and have been included solely for
illustrative purposes. No representations, express or implied, are made as to the accuracy or completeness of
such statements, estimates or projections or with respect to any other materials herein. Actual results may
vary materially from the estimates and projected results contained herein. Accordingly, no party should
purchase or sell securities on the basis of the information contained in this presentation. Game Creek
expressly disclaims liability on account of any partys reliance on the information contained herein with respect
to any such purchases or sales.
Game Creek manages clients that are in the business of trading buying and selling securities and financial
instruments. It is possible that there will be developments in the future that cause Game Creek to change its
position regarding the Company. Game Creek may buy, sell, cover or otherwise change the form of its
investment regarding the Company for any reason. Game Creek hereby disclaims any duty to provide any
updates or changes to the analyses contained herein, including, without limitation, the manner or type of any
Game Creek investment.
Investment Thesis
Leading vertically integrated media company best-in-class management team
US cable and content companies have been trying to achieve this for decades
Univision IPO is near-term catalyst to valuation realization
TV has 38% ownership stake and gets paid 12% royalty stream
Recent changes to foreign ownership rules in US allowing for greater ownership
Opportunities for substantial value creation across all Mexican segments
Cable
Content
Univision
Licensing
Univision
Ownership
Content
(excl.
Univision)
Description
% of '14 EBITDA
14%
Not
Consolidated
Distribution
26%
- ~3.4 mm TV subs (~11% of Mexican HHs)
27%
14.0mm US subs
12% of US HHs
Other (1)
(3%)
20.4mm US subs
17% of US HHs
TV is Undervalued Today
Distribution
Content
Business Segment
Current Valuation
$ Per Share
Univision
Licensing
15.68
Univision
Ownership
7.16
Content
(excl.
Univision)
13.95
Telecom
9.88
Satellite (Sky)
5.13
Other (1)
(1.56)
Net Debt
Total
Current
% vs. Current
(5.13)
45.11
36.50
23.6%
S&P 500
54.9%
TV
53.9%
Mexico IPC
24.4%
Note:
Content peers include CBS, TWX, VIAB, FOXA, DIS, DISCA, SNI.
Cable peers include CMCS, CVC, TWC, LBTYA, RCI.
Satellite peers include DTV, DISH.
We expect Mike Fries will help think about appropriate capital structures to
a global scale
Jon Feltheimer - CEO of Lionsgate
Mexico
2014
54%
US
2014
52%
84%
14.52
14.87
64.41
1,790
859
4,420
US
2001
% of Population Using Internet
49%
Mexico
2014
49%
US
2014
87%
Univision Monetization
Univision represents ~50% of GCCs Base Case Valuation
ownership regulations
10
Distribution
Content
Business Segment
Upside Opportunity
$ Per Share
Univision
Licensing
17.96
14.6% Upside
Univision
Ownership
10.14
41.5% Upside
Content
(excl.
Univision)
18.01
29.1% Upside
Telecom
11.36
15.0% Upside
Satellite (Sky)
Other (1)
5.73
11.6% Upside
(1.56)
(5.13)
56.51
36.50
54.8%
FULL PRESENTATION
11
Table of Contents
A. Summary
B. Unmatched Set of Assets
1. Univision
2. Telecom
3. Sky
4. Content
C. Management & Capital Structure
D. Valuation & Risks
E. Appendix
12
SUMMARY
13
14
Investment Overview
We believe Televisa offers investors an opportunity to own world class assets run by smart
managers at a discounted valuation. Televisas unique set of media & telecom assets are in
the early innings of benefitting from long term secular tailwinds. We see a 1-year price target
of $45.11 (24% upside) and believe Televisa has a multi-year runway in your portfolio
Bull Case
+55% ($56.51)
Current Price
$36.50
Base Case
+24% ($45.11)
Bear Case
-17% ($30.13)
15
Investment Thesis
Televisa (TV) is the most vertically integrated media company in the world and is currently being underappreciated by
the market. As a market leader in both content and distribution, Televisa has already accomplished what large US media
peers (Comcast, AT&T, etc.) are trying to do today, without the same regulatory restrictions
Current valuation provides compelling risk / reward proposition. We view TV as being a long-term compounder fueled by strong
secular tailwinds, a superior set of assets, and identifiable catalysts.
TV trades with a 24% upside to fair value today with multiple ways to unlock value.
Bull case valuation with 55%+ upside can be achieved through identifiable catalysts including (i) Univision IPO, (ii) continued roll-up of
the Mexican cable industry, and (iii) Univision spectrum sale.
TV has traded at a discount to US peers largely due to regulatory concerns and complexity which will disappear in time.
16
Content
Business Segment
Current Valuation
$ Per Share
Total ($mm)
Univision
Licensing
15.68
9,013.7
Univision
Ownership
7.16
4,117.2
Content
(excl. Univision)
13.95
8,022.6
9.88
5,682.4
Satellite (Sky)
5.13
2,952.4
(1)
(1.56)
(899.3)
Net Debt
(5.13)
(2,949.7)
Total
45.11
25,939.2
Current
% Difference vs. Current
36.50
23.6%
20,987.5
23.6%
Distribution
Telecom
Other
17
despite (i) TVs diversification away from being a content only company and (ii) TVs unique ability to manage
content margins overnight if need be
We continue to view Televisa primarily as a content company Sell Side Analyst 4/27/15
As recently as 2005, the Mexican content business was almost 75% of revenues today it is only 38% excluding
advertising dollars from television to digital that US language networks have been experiencing
91% of Univisions audience views content live every night (by far the highest of any network in the US)
~70% of Univisions audience is unduplicated
Only 49% of the Mexican population is using the internet
TV has 70% market share in broadcast TV in Mexico making it difficult to displace them or stop advertising with
them. It would also be difficult for anyone to offer an OTT solution that does not include TVs content.
Carlos Slims companies stopped advertising with TV years ago due to the competitive nature of the two companies. However,
with the increased competition in telecom, Grupo Carco is now advertising again with TV in order to go head-to-head with AT&T
3. Telecom capex levels are inline with US cable capex levels during historical investment phases.
Management is correctly planning ahead to take advantage of a long term secular tailwind
4. Sell-side analyst projections (i) underestimate Univisions value, (ii) dont contemplate the future earnings potentials
of Telecom or Sky (medium-term projected margins are too low in Telecom and ARPUs too low in Sky), and (iii)
dont contemplate the future value of TVs content library
1. Adds up to more than 100% because it excludes Other, Corporate Expenses, and Net Debt.
18
Company Snapshot
Company Overview
Financial Highlights
4 Broadcast Networks
24 Pay-TV Brands
6 cable companies
27-Apr-15
36.50
575.0
20,988
39,261
15.40
2,549
23,537
(1)
Income Statement
Revenue
% growth
2.9
2010
2011
2012
2013
2014
57,857
10.5%
62,582
8.2%
69,291
10.7%
73,791
6.5%
80,118
8.6%
COGS
Gross Profit
% of Revenue
Opex
EBITDA
% of Revenue
D&A
Other Expense
EBIT
% of Revenue
(6,579)
0
15,583
26.9%
Net Income
% growth
Market Data
Stock Price (USD)
Shares Outstanding (mm)
Market Cap (USD in mm)
(MXN in millions)
(7,362)
(593)
16,274
26.0%
7,683
6,666
27.9% (13.2%)
(8,474)
(650)
18,140
26.2%
(9,846) (11,563)
(83) (5,282)
18,738 13,957
25.4%
17.4%
8,761
7,748
5,387
31.4% (11.6%) (30.5%)
Cash Flow
EBITDA
Capex
EBITDA - Capex
% of Revenue
22,162
(11,306)
10,856
18.8%
Leverage
Debt
Cash
Net Debt
Net Debt / EBITDA
19
20
Business Segment
Distribution
Content
Univision
Licensing
Description
% of 2014 Revenue
% of 2014 EBITDA
5%
14%
Not Consolidated
Not Consolidated
Univision
Ownership
Content
(excl. Univision)
38%
37%
26%
26%
22%
27%
Telecom
Satellite (Sky)
Other
(1)
14.0mm US subs
12% of US HHs
9%
(3%)
20.4mm US subs
17% of US HHs
1. UNIVISION
21
22
1. Univision
Univision represents ~50% of GCCs Base Case Valuation
We expect Univisions valuation to become clear upon its imminent IPO / sale
There are additional sources of hidden value as we believe no one has been focused on Univisions spectrum value or 2016 political proceeds
Royalty Stream
advertising assets
Univision is 62% owned by a private equity consortium of Haim Saban,
Madison Dearborn, Providence, TPG, and Thomas H. Lee
Ownership Stake
and/or Operated TV stations and 67 radio stations, and (iv) digital and
months
its unlikely until (i) Univisions net debt is lower and (ii) the US
23
2015E
2,577.3
5.0%
178.0
15.0%
2,755.4
11.91%
328.2
2016E
2,783.5
8.0%
204.7
15.0%
2,988.2
11.91%
355.9
2017E
3,061.9
10.0%
225.2
10.0%
3,287.1
11.91%
391.5
2018E
3,306.8
8.0%
247.7
10.0%
3,554.5
16.22%
576.5
2019E
3,472.2
5.0%
272.5
10.0%
3,744.6
16.22%
607.4
2020E
3,645.8
5.0%
292.9
7.5%
3,938.7
16.22%
638.9
2,297.7
647.7
2.00%
13.0
2,609.4
959.4
2.00%
19.2
2,755.4
1,105.4
2.00%
22.1
2,988.2
1,338.2
2.00%
26.8
3,287.1
1,637.1
2.00%
32.7
3,554.5
1,904.5
2.00%
38.1
3,744.6
2,094.6
2.00%
41.9
3,938.7
2,288.7
2.00%
45.8
Formula Calculation
Forecasting Error
% of Formula Calculation
Total Royalties (USD)
% growth
286.6
(13.4)
(4.7%)
273.2
330.0
(16.0)
(4.8%)
314.0
14.9%
350.3
(16.9)
(4.8%)
333.3
6.2%
382.7
(18.5)
(4.8%)
364.1
9.2%
424.2
(20.5)
(4.8%)
403.7
10.9%
614.6
(29.7)
(4.8%)
584.9
44.9%
649.3
(31.4)
(4.8%)
617.9
5.6%
684.6
(33.1)
(4.8%)
651.5
5.4%
Tax Rate
26.7%
28.6%
30.0%
30.0%
30.0%
30.0%
30.0%
30.0%
200.2
224.2
233.3
254.9
282.6
409.4
432.5
456.0
2013A
2,219.9
Base Case
8.00%
4.00%
11,857.3
Discount Rate
Long Term Growth Rate
Terminal Value (USD)
Cash Flows for DCF (USD)
Present Value of Cash Flows (USD) - Base Case
Per Share (USD) - Base Case
Bear Case / Upside Case
233.3
9,013.7
15.68
12.35 / 17.96
254.9
282.6
409.4
432.5
12,313.3
CAGR
'13-'18
8%
26%
9%
16%
15%
24
Our base case is conservative and implies a 6.6% IRR and 1.7x MoM for the PE investors
2016 EBITDA
Forward EV / EBITDA Multiple
EV (USD)
Less: Net Debt (USD)
Equity Value (USD)
TV Ownership
Equity Value to TV (USD) - Base Case
Per Share (USD) - Base Case
Bear Case / Upside Case
2013A
2,627.4
1,120.4
42.6%
Base Case
1,487.8
13.5x
20,085.8
(9,251.0)
10,834.8
38%
4,117.2
7.16
5.69 / 8.64
2014A
2,911.4
10.8%
1,253.8
43.1%
2015E
3,057.0
5.0%
1,347.1
44.1%
2016E
3,301.5
8.0%
1,487.8
45.1%
25
Univision is the largest holder of broadcast spectrum in the 600 MHz band and has duopolies and channel sharing opportunities in 14 of the Top
20 US Markets
- Duopolies and channel sharing opportunities enable Univision to stay in business with no downside to current operations or financial outlook
while being able to monetize its valuable excess spectrum assets
The FCCs Incentive Auction is set for 2016 and, following the recent record-breaking AWS-3 Auction, the demand and valuation potential for
spectrum-constrained major US cities is high (potentially higher than the FCC released Greenhill valuations below)
Market
DMA Rank
TV HHs
# of Stations To Be Sold
Class A
Full Power
Total
Max
Class A
Median
Full Power
Max
Median
1
1
3
2
2
2
2
2
1
2
2
2
2
2
1
3
2
2
2
2
2
2
2
2
2
2
2
2
1
1
2
1
1
1
1
1
1
1
1
1
1
-
2
1
1
1
1
1
1
1
1
1
1
1
1
360
370
120
58
92
38
22
76
55
22
17
15
28
280
310
100
50
70
36
10
70
43
20
16
11
15
490
570
130
67
140
52
36
80
130
35
30
38
80
2
2
2
2
2
2
2
2
2
2
2
2
1
1
1
1
1
1
1
1
1
1
1
1
77
98
43
22
67
6
77
67
39
10
44
5
140
140
71
33
85
9
410
340
120
53
110
45
223
78
94
29
26
20
31
UVN Value
93
130
60
28
68
5
Greenhill Valuation
Max
Median
980
570
130
67
140
52
22
80
130
35
30
38
28
2,302
820
340
120
53
110
45
10
78
94
29
26
20
15
1,760
140
140
71
33
85
9
478
239
2,541
93
130
60
28
68
5
384
192
1,952
26
2015E
56,755
264,615
321,370
2050E
105,551
292,778
398,329
% of Total:
Hispanics
Non-Hispanics
Total
18%
82%
100%
26%
74%
100%
Growth
86%
11%
24%
48% of Hispanic eligible voters turned out in 2012 (versus 65% for
The Hispanic vote in the US is becoming increasingly important to win elections as proven by the outcome of the 2012 Presidential Race. We
expect campaign spending on the Hispanic population to meaningfully increase in 2016
From the beginning it was clear Hispanic voters would play a pivotal role this election (2012) Yet neither party seems to have fully gotten
the message. Investment in Spanish-language advertising is a mere fraction of what it should beOne cannot help but feel that both
parties have a good deal of work to do if they hope to keep up with Americas fastest-growing population. Javier Palomarez, CEO of
USHCC
Come 2016, Latino voters may hold enough political clout to make or break any presidential hopeful. Maria Santana, CNN
In 2012, Univision made $37.2mm of political revenue despite being the #1 way to reach Hispanic voters by TV or radio in the US.
We expect 2016 political revenue to be magnitudes higher than 2012 given (i) the importance of the Hispanic voter in the US and (ii) a widely
expected record-setting presidential campaign with no incumbent
Univision is well positioned with owned and operated stations in Florida, Washington DC, North Carolina, etc.
2. TELECOM
27
28
Telecom
TVs Telecom business is worth $9-10 or 22% of GCCs Base Case Valuation
Cable in Mexico looks like it did in the US in 1988 and provides a long runway of growth
- Management has structured the cable business as one separate entity. We believe this provides optionality for a spin in the future
-
Telecom Overview
Telecom Valuation
(Numbers in millions, unless otherwise stated)
2012A
2013A
2014A
Telecom Revenue (MXN) 15,570.4 17,138.8 20,937.3
% growth
10.1%
22.2%
2015E
24,706.0
18.0%
2016E
28,411.9
15.0%
9,635.3
39.0%
11,364.8
40.0%
5,812.8
37.3%
6,131.8
35.8%
BASE
11,364.8
10.0x
113,647.7
New low cost triple play offering, Izzi, is gaining market share
In Q4 2014, TV rolled out a low cost triple play option for consumers
in Mexico City that has been very successful is gaining market share
from incumbent Telmex
Izzi will be rolled out to the rest of TVs cable footprint and will be
accretive to margins by adding additional products (voice / data) to
existing subscribers plans
TV Ownership
77.0%
EV to TV (MXN)
2015 FX Conversion (MXN:USD)
87,508.7
0.065
5,682.4
9.88
5.86 / 11.36
7,882.9
37.7%
29
US
1988
Pay TV Penetration
Mexico
2014
54%
US
2014
52%
84%
14.52
14.87
64.41
6% CAGR
1,790
859
4,420
3% CAGR
0.8%
1.7%
1.5%
Population (mm)
HHs (mm)
People / HH
244
92
2.7
122
31
4.0
304
118
2.6
US
2001
% of Population Using Internet
49%
Mexico
2014
49%
US
2014
87%
Sources: TV Company materials, Leichtman Research Group, California Cable & Telecommunications Association, New York Times, FCC Media Bureaus Annual Survey of Cable Rates,
Sentier Research, World Bank, Broadband Commission.
30
It seems high compared to levels in the US today (14%) but in the early 2000s, the US cable sector spent at levels similar to Televisas
current spending levels in order to upgrade their infrastructure for high speed broadband
From 1996-2002, the US cable industry spent $65bn to build higher capacity hybrid networks of fiber optic and coaxial cable for broadband
networks
Similarly, from 1984-1992, the US cable industry spent more than $15bn on wiring the US
Televisa is in a position to deploy capital more efficiently than US peers in the early 2000s as TV benefits from learning from its US peers
mistakes and utilizing best practices
Televisas management team is investing wisely in the cable business they are ROI-driven and are positioning themselves to be the biggest
beneficiary of a very strong secular tailwind as cable / broadband becomes as important as electricity
We expect capex within Televisas telecom business to show signs of normalizing in 2017
2000
2014
Televisa ($ in mm)
2014
2015E
42,116
45,477
47,898
130,424
1,574
1,858
Capex
14,600
16,100
14,500
17,805
700
824
35%
35%
30%
14%
44%
44%
Capex (% of Revenue)
31
Share Price
1988
2mm video subs
2002
22mm video subs; 3.3mm data subs
AT&T deal closed
2009
Began roll-out of high speed wireless
NBCU deal is announced
32
Subs
Value
6.9
9.0
30%
ARPU
Current
(1)
ARPU (MXN)
% growth
240
550
129%
19,872
59,400
199%
7,949
40%
26,730
45%
EBITDA Multiple
EV (MXN in mm)
TV Ownership
EV to TV (MXN in mm)
FX Conversion (MXN:USD)
9.5x
75,514
77.0%
58,145
0.07
9.5x
253,935
77.0%
195,530
0.07
3,876
6.76
13,035
22.72
Valuation
Assumptions
- Assumes industry Pay TV penetration
increases below that of the US and TV
maintains its market shares.
- Does not include any acquisitions.
- Assumes ARPU increases to
lowest tier Triple Play pricing currently
available at Izzi - ~$36 / month
1. Current valuation is meant to be illustrative and does not tie to 2014 actuals or base case projections as we are using
2014 ending subscribers as the base (versus average 2014 subscribers or our view of 2015/2016 subscribers).
3. SKY
33
34
Sky
TVs stake in Sky is worth $5-6 or 11% of GCCs Base Case Valuation
Sky has experienced tremendous subscriber growth (28% CAGR since 2009) as a result of its low-priced offering while maintaining industryleading high 40%s EBITDA margins
- As the macro-economic conditions improve in Mexico, there will be an opportunity to reduce churn and upsell to the premium offering
-
Sky Overview
Sky Valuation
(Numbers in millions, unless otherwise stated)
2012A
2013A
2014A
Sky Revenue (MXN)
14,465.4 16,098.3 17,498.6
% growth
11.3%
8.7%
Sky EBITDA (MXN)
EBITDA Margin
6,558.0
45.3%
7,340.5
45.6%
BASE
9,681.9
8.0x
EV (MXN)
TV Ownership
EV to TV (MXN)
2015 FX Conversion (MXN:USD)
77,455.2
58.7%
45,466.2
0.065
8,211.3
46.9%
2015E
18,986.0
8.5%
2016E
20,599.8
8.5%
8,923.4
47.0%
9,681.9
47.0%
35
ARPU
Subscribers
(1)
Current
4.4
67%
Value
2.6
35%
2.2
33%
4.9
65%
6.6
7.5
14%
123
150
22%
450
450
0%
230
345
50%
18,216
31,050
70%
8,562
47%
15,525
50%
EBITDA Multiple
EV (MXN in mm)
TV Ownership
EV to TV (MXN in mm)
FX Conversion (MXN:USD)
7.5x
64,211
58.7%
37,692
0.07
7.5x
116,438
58.7%
68,349
0.07
2,513
4.38
ARPU (MXN)
% growth
Revenue (MXN in mm)
% growth
Valuation
Assumptions
- Assumes moderate 14% total
subscriber growth.
- Assumes a portion of prepaid subscribers
convert to higher end postpaid plans
as Mexican HH income grows
4,557
7.94
1. Current valuation is meant to be illustrative and does not tie to 2014 actuals or base case projections as we are using
2014 ending subscribers as the base (versus average 2014 subscribers or our view of 2015/2016 subscribers).
4. CONTENT
36
37
Content
Content is worth $13-14 or 31% of GCCs Base Case Valuation
Televisas content business should be viewed as a stable revenue business with highly manageable costs
Any macroeconomic benefit would be an upside to our valuation and should be viewed as a free call option on the Mexican economy
There is also upside associated with TVs extensive library of content (produces 90,000 hours annually)
Content Overview
Televisa was built on its content business but has diversified itself so that it
is not as dependent on macroeconomic factors. As recently as 2005, the
content business was almost 75% of revenues today it is only 38%
excluding Univision.
Outlook: Low-single digit revenue growth & flat EBITDA margins in near-tomedium term. Opportunity for mid-single digit revenue growth and
expanding EBITDA margins as macroeconomic factors improve,
competition within Mexico intensifies under new regulations intended to
promote competition, and advertising as a percentage of GDP improves
from 0.48% to global average of 1.0%.
Content Valuation
(Numbers in millions, unless otherwise stated)
2012A
190.1
13.156
2,501.6
2013A
172.4
12.767
2,201.1
-12.0%
2014A
178.0
13.310
2,368.7
7.6%
2015E
161.5
15.400
2,487.1
5.0%
2016E
169.6
15.400
2,611.4
5.0%
23,935.9
24,864.5
3.9%
3,263.6
2.3%
30,329.2
2.4%
25,465.7
2.4%
2,854.4
-12.5%
30,688.8
1.2%
25,975.0
2.0%
2,997.1
5.0%
31,459.2
2.5%
26,754.3
3.0%
3,147.0
5.0%
32,512.7
3.3%
247.6
13.156
3,257.4
273.2
12.767
3,487.9
7.1%
314.0
13.310
4,179.3
19.8%
333.3
15.400
5,133.1
22.8%
364.1
15.400
5,607.9
9.2%
32,884.1
33,817.1
2.8%
34,868.1
3.1%
36,592.3
4.9%
38,120.5
4.2%
15,411.2
46.9%
15,566.0
46.0%
15,534.3
44.6%
16,930.3
46.3%
17,962.7
47.1%
12,153.8
41.0%
12,078.1
39.8%
11,355.0
37.0%
11,797.2
37.5%
12,354.8
38.0%
2016 EBITDA
Forward EV / EBITDA Multiple
EV (MXN)
2015 FX Conversion (MXN:USD)
Value to TV (USD)
Per Share (USD)
Bear Case / Upside Case
3,189.2
29,626.7
Base Case
12,354.8
10.0x
123,548.2
0.065
8,022.6
13.95
9.23 / 18.16
38
39
Strong Management
Disciplined Capital Allocation. We are confident that management puts valuation first and foremost when making
acquisition / divestiture decisions
While rolling up the cable industry is a focus for TV, we are confident that management will not overpay for acquisitions. It
is obvious that Megacable is a likely target for TV but at these valuations, we expect TV to wait
Given the opportunity to buy the remaining 50% or sell its 50% of Iusacell, management relied solely on valuation they
were a buyer below a certain level (and already had a partnership agreement in place with Telefonica) but walked away
when they deemed the valuation to be too high
Recent Board of Directors Nominations. TV recently nominated Mike Fries (CEO of Liberty Global), David Zaslav (CEO of
Discovery), and Jon Feltheimer (CEO of Lionsgate) to its BoD
We are excited by these new additions to the Board and think they highlight (i) the quality of TVs business and team, (ii)
managements openness to study other models, capital allocation policies, and partnership opportunities, and (iii) bring TV
slightly under the ever-growing John Malone media umbrella
We expect Mike Fries will help think about appropriate capital structures to drive levered equity returns and minimize taxes
We expect David Zaslav will help TV explore content value maximization on a global scale
Good Operators. We appreciate managements ability to manage costs while also investing for the future
When the macroeconomic indicators are weak in Mexico, management has shown the flexibility and foresight to
immediately cut costs within the content division. They are able to do this effectively as a result of producing content in
house (i.e. they are able to push a show that was originally slated for 2015 into 2016 or cancel it altogether)
Despite criticism of high capex in the cable business, management has not lost sight of the future potential of that business
and the need to build now in order to be the winner over the next few decades. TV wins customers today because of its
low cost offerings while investing in infrastructure in order to upgrade its customers to higher price point products in the
future
Focused on Maximizing Shareholder Value. Management has shown they are students of the industry and study all global
media business models including John Malone, BSkyB, US Telcos, etc.
We believe management is currently open to exploring shareholder return opportunities. While we do not believe theyre
likely to be aggressive, we highlight their 38bn MXN cash balance and under-levered balance sheet (~1x Net Debt /
EBITDA). If they were to use their cash balance for a share repurchase, they could buyback 12% of shares
outstanding
40
Televisa
Content
Cable &
Telecom
Sky
Other
Publishing
100% Ownership
77% WA Ownership
58.7% Ownership
100% Ownership
100% Ownership
Advertising
Consolidated
Unconsolidated
Network
Subscription
Licensing &
Syndication
Univision
Imagina
Ocesa
38% Ownership
14.5% Ownership
40% Ownership
41
Ownership
(MXN in millions)
Short Term Debt
Long Term Debt
Total Debt
Cash
Net Debt
EBITDA
Net Debt / EBITDA
Ratings
Interest Expense
Cost of Debt
3/31/2015
1,065
82,325
83,390
(44,129)
39,261
32,256
1.2x
Baa1 and BBB+
5,790
6.9%
VALUATION
42
43
TV is Undervalued Today
Content
Business Segment
Current Valuation
$ Per Share
Total ($mm)
Univision
Licensing
15.68
9,013.7
Univision
Ownership
7.16
4,117.2
Content
(excl. Univision)
13.95
8,022.6
9.88
5,682.4
Satellite (Sky)
5.13
2,952.4
(1)
(1.56)
(899.3)
Net Debt
(5.13)
(2,949.7)
Total
45.11
25,939.2
Current
% Difference vs. Current
36.50
23.6%
20,987.5
23.6%
Distribution
Telecom
Other
44
Content
110.0%
Satellite
97.3%
Cable
90.5%
S&P 500
54.9%
TV
53.9%
Mexico IPC
24.4%
Note:
Content peers include CBS, TWX, VIAB, FOXA, DIS, DISCA, SNI.
Cable peers include CMCS, CVC, TWC, LBTYA, RCI.
Satellite peers include DTV, DISH.
45
Content
Business Segment
Current Valuation
$ Per Share
Upside Opportunity
$ Per Share
Univision
Licensing
15.68
17.96
14.6% Upside
Univision
Ownership
7.16
10.14
41.5% Upside
Upside Catalysts
Distribution
Content
(excl. Univision)
Telecom
13.95
18.01
29.1% Upside
9.88
11.36
15.0% Upside
Satellite (Sky)
5.13
5.73
11.6% Upside
(1)
(1.56)
Net Debt
(5.13)
Total
45.11
56.51
Current
% Difference vs. Current
36.50
23.6%
36.50
54.8%
Other
monetizing spectrum at
Univision and potentially gaining
control
46
Distribution
Content
Univision
Licensing
Current Valuation
$ Per Share
Bear Case
$ Per Share
15.68
12.35
-21.2% Downside
Univision
Ownership
7.16
5.69
-20.6% Downside
Content
(excl. Univision)
13.95
9.08
-34.9% Downside
Telecom
9.88
5.86
-40.7% Downside
Satellite (Sky)
5.13
3.84
-25.1% Downside
(1)
(1.56)
Net Debt
(5.13)
Total
45.11
30.13
Current
% Difference vs. Current
36.50
23.6%
36.50
-17.5%
Other
Mexican Macroeconomy
Our thesis in no way hinges on a thriving Mexican economy (in fact we
assume a status quo, slow growing economy in our base case) however, if
Mexico were to go into a recession it would impact our growth projections
as the population may no longer be able to afford basic connectivity given
low GDP
(Note: any improvement in the Mexican economy would provide
substantial upside to our model)
(Note: we dont believe Latin American peers are the right comp set.)
APPENDIX
47
Comparable Companies
48
49
Disclaimer
The analyses and conclusions of Game Creek Capital, L.P., a Delaware limited partnership (Game Creek),
contained in this presentation are based on publicly available information. Game Creek recognizes that there
may be confidential information in the possession of Grupo Televisa (the Company) discussed in the
presentation that could lead the Company to disagree with Game Creeks conclusions. This presentation and
the information contained herein is not a recommendation or solicitation to buy or sell any securities. As of the
date of this presentation, Game Creeks client, Game Creek Fund, L.P., a Delaware limited partnership,
currently beneficially owns equity securities in the Company. The Company does not represent all of the
securities purchased, sold or recommended for the Companys clients, including the Fund. The reader should
not assume that the Funds investment in the Company was or will be profitable.
The analyses provided may include certain statements, estimates and projections prepared with respect to,
among other things, the historical and anticipated operating performance of the Company, access to capital
markets and the values of assets and liabilities. Such statements, estimates, and projections reflect various
assumptions by Game Creek concerning anticipated results that are inherently subject to significant
economic, competitive, and other uncertainties and contingencies and have been included solely for
illustrative purposes. No representations, express or implied, are made as to the accuracy or completeness of
such statements, estimates or projections or with respect to any other materials herein. Actual results may
vary materially from the estimates and projected results contained herein. Accordingly, no party should
purchase or sell securities on the basis of the information contained in this presentation. Game Creek
expressly disclaims liability on account of any partys reliance on the information contained herein with respect
to any such purchases or sales.
Game Creek manages clients that are in the business of trading buying and selling securities and financial
instruments. It is possible that there will be developments in the future that cause Game Creek to change its
position regarding the Company. Game Creek may buy, sell, cover or otherwise change the form of its
investment regarding the Company for any reason. Game Creek hereby disclaims any duty to provide any
updates or changes to the analyses contained herein, including, without limitation, the manner or type of any
Game Creek investment.