Operating Segment Income (OSI) Is Defined As Operating Income Before Corporate Expenses, Depreciation and Amortization

Today, Fundación Televisa (“Fundación”) reaches millions through Televisa’s media 2000 platforms and builds alliances with com- 2001 panies, non-governmental organizations, 2000 2002 and Mexico’s government and people. Al- 2002 liances play a key role in multiplying the social impact of Fundación’s work and telecommunications base funding. television contents innovation year innovation year 2005 2006 2004 2003 2005 2004 2003 In 2000, Televisa successfully refi- In 2007 Televisa celebrated 50 years of As of today, Televisa has nanced its debt, reducing borrow- producing its popular Telenovelas, capti- one of the largest telecom in- ing costs, extending maturities, vating audiences throughout the Spanish- frastructures in the country. and replacing a portion of its US- speaking world and beyond. Through its cable and telecom dollar-denominated indebtedness assets, it reaches several of the with inflation-adjusted indebted- Televisa launched Televisa most important cities in Mexi- ness. As a result of these steps, co with more than 6 million Televisa significantly improved

Deportes Network (TDN) GRUPO TELEVISA ANNUAL 2010 REPORT 2001 homes passed2001 and has close its capital structure and reduced a decade to 50 thousand miles of fiber its currency risk. That same year, and coaxial cable around the at the Moody’s gave Televisa’s debt an country. FOREFRONT GRUPO TELEVISA 2010 ANNUAL REPORT investment-grade rating. FOREFRONT • FOREFRONT 2008 2007 2008

www.televisa.com decade a decade at the Televisa forefront www.televisair.com 2007 2009 Televisa will build the largest media company in 2010 on these milestones 2009 the Spanish-speaking world ANNUAL growing annual report decade in the coming years” 2006 a great year In 2006 Cablevisión completed the conversion TELEVISA SIGNS LANDMARK of its network from analog to digital format. AGREEMENT WITH UNIVISION This milestone enabled the company to pro- 2005 vide a host of new services and pay-TV offer- 2005 INVESTOR INFORMATION

Common stock data Investor relations In the past decade, Televisa has achieved several CPOs (Certificados de Participación We ask that investors and Ordinarios) of Grupo Televisa, S.A.B., analysts direct all inquiries to: milestones that have enabled the Company comprise 117 shares each (25 Series to create value through the production and A Shares, 22 Series B Shares, 35 Series Grupo Televisa, S.A.B. Av. Vasco de Quiroga 2000 D Shares and 35 Series L Shares), and distribution of its content and to strengthen its C.P. 01210 México, D.F. are listed and admitted for trading on position as a leader in its industry. (5255) 5261-2445 the Mexican Stock Exchange (Bolsa [email protected] Mexicana de Valores, S.A.B. de C.V.), Today Televisa is well positioned to identify and under the ticker symbol TLEVISA CPO. www.televisa.com quickly respond to opportunities and events in the The GDRs (Global Depositary Receipts), www.televisair.com rapidly growing and ever-changing global media each representing five CPOs, are listed on the New York Stock Exchange and Corporate headquarters and telecommunications market. trade under the ticker symbol TV. Grupo Televisa, S.A.B. In the coming years, Televisa will build on these Dividend policy Av. Vasco de Quiroga 2000 milestones to continue benefiting its clients, C.P. 01210 México, D.F. Decisions regarding the payment (5255) 5261-2000 shareholders, employees, and the communities in and amount of dividends are subject to approval by a majority which it operates. Legal counsel of the Series A Shares and Series B Mijares, Angoitia, Cortés y Shares voting together, generally, Fuentes, S.C. by recommendation of the board of Montes Urales 505, 3er piso directors, as well as to the approval C.P. 11000 México, D.F. of a majority of the Series A Shares (5255) 5201-7400 voting separately. On March 25, 2004, the Company’s board of directors Fried, Frank, Harris, Shriver & approved a dividend payment policy Jacobson LLP pursuant to which the Company shall One New York Plaza pay an annual ordinary dividend of New York, New York 10004 COMPANY PROFILE Ps.0.35 per CPO. U.S.A. (212) 859-8000 Grupo Televisa, S.A.B., is the largest media company in the SEC filings Spanish-speaking world based on its market capitalization and Televisa files and submits annual reports Independent auditors a major participant in the international entertainment business. to the US Securities and Exchange PricewaterhouseCoopers, S.C. It has interests in television production and broadcasting, Commission. This annual report Mariano Escobedo 573 contains both historical information production of pay-television networks, international distribution C.P. 11580 México, D.F. and forward-looking statements. These of television programming, direct-to-home satellite services, (5255) 5263-6000 forward-looking statements, as well as cable television and telecommunication services, magazine other forward-looking statements made Depositary publishing and distribution, radio production and broadcasting, by the company, or its representatives professional sports and live entertainment, feature-film from time to time, whether orally or in The Bank of New York writing, involve risks and uncertainties BNY Mellon Shareowner production and distribution, the operation of a horizontal relating to the company’s businesses, Services internet portal, and gaming. operations, and financial condition. A PO Box 358516 summary of these risks is included in the Pittsburgh, PA 15252-8516 company’s filings with the US Securities (201) 680-6825 and Exchange Commission, and this summary as well as the other filings with and submissions to the US Securities and Exchange Commission, are and will be available through the office of CONTENTS investor relations upon written request.

TELEVISA AT A GLANCE 02 / LETTER TO SHAREHOLDERS 04 / FINANCIAL HIGHLIGHTS 06 A DECADE AT THE FOREFRONT 08 / MANAGEMENT´S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 30 / BOARD OF DIRECTORS 40 / This annual report is available in both English and Spanish. April 2011. FINANCIAL STATEMENTS 41 Este informe anual está disponible tanto en español como en inglés. Abril 2011. Design: signi.com.mx

II 1 TELEVISA AT A GLANCE

TELEVISION PAY-TELEVISION PROGRAMMING SKY BROADCASTING NETWORKS EXPORTS

The world’s leading Produces and Exports its programs Mexico’s leading producer of Spanish- distributes 18 pay-TV and formats to television direct-to-home satellite language television brands—15 owned networks around television system; also content, Televisa and 3 represented. the world. In the U.S., operates in Central operates four broadcast In the U.S., distributes distributes its content America and the channels—2, 4, 5, and its pay-TV channels through Univision Dominican Republic. 9—in Mexico through through Univision. under a recently 258 affiliated stations renewed and extended Contribution throughout the country. Contribution Programming License to Sales: 19% to Sales: 5% Agreement (PLA). Contribution Contribution Contribution Contribution to OSI:1 22% to OSI:1 7% to Sales: 5% to Sales: Demographic Produced Contribution expansion through % approximately 16 to OSI:1 7% new packages: 39 thousand hours of MiSky and VeTV. Contribution content in 2010 for The PLA, which was extended to at least More than one to OSI:1 46% pay-TV channels 2025, increases million subscribers Produced the royalties added in 2010. approximately 59 Televisa receives. Subscriber base: thousand hours of +26 In addition, the PLA now content in 2010 for million includes Televisa free-to-air television million pay-TV programming for 3 Average weekday all of Univision’s primetime subscribers audiovisual media audience platforms. share 70.5% 58 countries worldwide (approximate reach)

1Operating segment income (OSI) is defined as operating income before corporate expenses, depreciation and amortization. Fora reconciliation of operating segment income with operating income, see Note 22 to our year-end consolidated financial statements.

22 3 CABLE AND PUBLISHING OTHER BUSINESSES UNCONSOLIDATED TELECOM BUSINESSES

Cablevisión, Cablemás, The leading Spanish- TIM La Sexta (40.8%) and TVI offer pay-TV, language magazine Complete digital Free-to-air channel in Spain, voice, and data services publisher; produces 165 entertainment through which continues reporting in Mexico City, Monterrey, titles under 109 brands. several web portals. sustained audience and several cities in Mexico. share of 6.6% and strong Gaming Telecom company Bestel Contribution to operating performance. Bingo parlors and online provides data and long- Sales: 5% lottery business. distance services in Mexico Ocesa and the United States. Contribution Soccer teams Entretenimiento (40%) Live-entertainment to OSI:1 2% Three of Mexico’s Contribution to professional soccer teams. company in Mexico. Consolidated 2010 most popular event: Sales: 20% Azteca stadium restructuring process Paul McCartney concert. Mexico’s largest stadium. Contribution and returned to double- to OSI:1 17% digit Operating Segment Radio Income margin. Also, Network of 117 owned and Through its 20-year lease continued to expand affiliated radio stations. of dark fiber cable from the reach of its titles the Mexican Federal Elec- through digital platforms: Contribution tricity Commission (CFE), to Sales: 7% the consortium formed • caras.com.mx by Telefónica, Televisa, • vanidades.com and Megacable will offer alternative access to data • muyinteresante.com.mx transmission services. • tuenlinea.com.mx • esquirelat.com Cablevisión Video subscribers: 668,985 • Tvynovelas.com Broadband subscribers: 299,157 Voice subscribers: 190,441

Cablemás 20 Video subscribers: 997,239 Broadband subscribers: 360,049 countries Voice subscribers: 205,180 reached

TVI Video subscribers: 301,698 Broadband subscribers: 147,268 Voice subscribers: 106,129

2 33 TO OUR SHAREHOLDERS: When I became CEO of Televisa in 1997, I found an incredibly successful broadcasting operation with decades of experience producing highly rated content. But at that time, Televisa was facing a very challenging financial situation. The company was highly leveraged and held some non-strategic assets.

rom 1997 to 2000, we worked hard to strengthen the have diversified beyond advertising and positioned Televisa competitive position of Televisa and, importantly, its as a relevant and growing participant in telecommunica- F financial position. We shed non-strategic assets, im- tions, an industry that currently totals US$243 billion—five times proved our share of the television audience, made our op- the size of Mexico’s media industry. erations more efficient, and significantly reduced our debt. In the process of finding new and faster-growing sources of We continued along this path over the decade that followed. revenue, we have made many successful investments but We further strengthened our financial position, diversified our also a few challenging ones. One is our gaming business, business beyond broadcast television, and solidified our posi- which has been confronted by legislative changes that tion as the leading producer of Spanish-language content in have significantly increased taxes on gaming revenues. the world with a number of key strategic partnerships. Along Nonetheless, we see value in our license and will continue the way, we made successful inroads into the growing tele- to explore ways to profitably exploit it. And while La Sexta communications segment, in particular cable and satellite has succeeded operationally and delivers ratings above our television. Some of the results of the past decade were: initial expectations, it currently faces an economic crisis in Spain that has dampened its financial results. Strengthening our financial position There is no doubt, however, that—throughout the entire 1 • Revenue rose from Ps.19.7 billion in 2001 to Ps.57.9 bil- process—we have taken important steps that have ex- lion in 2010, reflecting a ten-year compounded annual panded the reach of our brand and our content, multiplying growth rate (CAGR) of 13 percent. the value of both. In the pages that follow we mention ten • Consolidated operating income grew at a CAGR of 16 key milestones, but these are only some of many milestones percent, from Ps.4.1 billion1 in 2001 to Ps.15.6 billion in that have positioned Televisa to continue succeeding in the 2010. coming years.

• Our balance sheet strengthened. At the end of 2010, our Building strong alliances net debt was only Ps.12.7 billion, and our net-debt-to-operating-income ratio was 0.8 times. In 2001, that number While diversifying our businesses we worked hard to improve was 1.8 times. our operations. Our strategic alliances—in particular our partnerships with two of the most important media companies in • Our market capitalization increased 2.3 times from US$5.5 the US Hispanic market—are a key component of our ability 2 2 billion in 2001 to US$14.4 billion in 2010 . Over that same to grow our audience with exciting and enduring program- period we returned to our shareholders nearly US$2.2 bil- ming, and to maximize the value that we derive from it. In lion in dividends. 2008, for example, we partnered with Telemundo for the exclusive rights to distribute its content in Mexico for ten years, Diversification beyond broadcast television and we have an option to extend this agreement for an ad- Over the past decade we have undertaken significant ef- ditional five years. forts to diversify the company beyond our legacy broadcast television business while building on and staying connected In 2010 we strengthened our relationship with Univision to the true cornerstone of our success: our content. through an agreement that brings significant upside potential for both companies. We extended our program license The results are already apparent. In 2001, advertising reve- agreement with Univision to at least 2025. The agreement nue was 71 percent of our total revenue, while in 2010 it was increases the royalties from Univision and includes the pur- 42 percent of revenue. Mexico’s advertising industry has yet chase of a five percent equity interest and the issuance of to expand as a result of an improving economy and of peo- debentures convertible into an additional 30 percent equity ple’s increasing purchasing power. But in the meantime, we stake of Univision in the future, subject to existing laws and

1 Mexican pesos in real terms as of December 31, 2001, as reported. 2 As of December 31. 3 Source: Pyramid Research 2010E.

44 5 regulations. We also have the option to acquire an additional five percent equity stake in Univision. This agreement positions Televisa to participate in the most underutilized and fastest-growing media market in the United States. We will work with Univision in order for them to optimize the exploita- tion of our content in the United States.

Cable and telecom: positioning for the long-term We continued to advance our cable and telecom strategy, which began in earnest with our acquisitions of Bestel and stakes in TVI and Cablemás over the past four years. In addition, as part of a consortium, in 2010 we won the auction to exploit dark fiber owned by the Mexican Federal Electricity Commission (CFE). This is a significant step in our effort to become a relevant participant in Mexico’s fast-growing telecom market. We are confident that our investments in these businesses are laying the groundwork for Televisa to benefit We further strengthened our financial position, from a rapidly changing and growing industry. diversified our business beyond broadcast Together, our activities have laid a solid foundation for years television, and solidified our position as the of operational and financial success. Today, our operations, leading producer of Spanish-language brands, and balance sheet are very strong. We are the pri- content in the world with a number of key mary producer of audiovisual content in the Spanish lan- strategic partnerships. guage and a very relevant producer of linear channels for pay-television platforms. Through our multiple investments, ample, since 2007, all of our content is produced with an eye Televisa is an important pay-television provider in Mexico toward the multiplatform opportunities for distribution. This, and has one of the largest telecom infrastructures in the together with the digitalization of a large portion of our library country. We are a company known for using our reach to of content, means that we now have more than 50 thousand contribute to the health, education, and cultural develop- hours of content available for digital audiovisual distribution. ment of the communities that we serve. And we consistently maintain relatively low levels of debt and long maturities on The media and telecom environment is rapidly changing. our indebtedness. We are confident that the steps we have taken during the last decade leave us well positioned to capitalize on the Even as we look back on a very successful decade, our eyes changes that are sure to come. We never tire of highlight- are fixed firmly on the future. Ever mindful of both challenges ing that our biggest competitive edge is the fact that we and opportunities, our vision is to: produce the majority of the content that we transmit, the • remain the world’s foremost producer of Spanish-lan- same content that has delivered close to 70 percent of the guage content; audience for many years now. We produce it and therefore have the ability to make it available in the platforms chosen • increase the reach of our linear pay-television channels by our audiences. around the world; • continue to play a role in the consolidation of Mexico’s I want to thank our dedicated employees, management cable industry; team, and board of directors for their hard work and our audiences and customers for their continuing loyalty. To our • participate in the opportunities presented by the growing shareholders I want to extend my appreciation for your con- wireless data industry; and tinued confidence in our vision and our long-term prospects. • continue to capitalize on the emergence of new platforms We look forward to rewarding you well into the future. that, through audience segmentation, present a highly frag- mented yet largely untapped advertising client base. We live in a multiplatform world, in which television content is viewed not only over televisions, but also on many other de- vices. Increasingly, people are viewing television content on the go. We are investing to ensure that our content reaches our audiences wherever they may be and on whatever de- Emilio Azcárraga Jean vice they prefer. We have made significant progress. For ex- Chairman of the Board and Chief Executive Officer

4 55 FINANCIAL HIGHLIGHTS

In millions of Mexican pesos, except per-CPO amounts and shares outstanding.

2009 2010 Var.%

Consolidated net sales Ps. 52,353 Ps. 57,857 10.5

Operating segment income 1 20,745 23,063 11.2

Segment margin 38.8% 39.0%

Operating income 15,157 15,583 2.8

Margin 29.0% 26.9%

Controlling interest net income 6,007 7,683 27.9

Earnings per CPO 2.14 2.75

Shares outstanding at year-end (in millions) 327,231 325,023

Cash and cash equivalents at year-end Ps. 29,942 Ps. 20,943 (30.1)

Temporary investments at year-end 8,902 10,447 17.4

Long-term investments at year-end 3,996 3,858 (3.5)

Total debt at year-end 43,416 47,965 10.5

Net debt position at year-end 576 12,717 2,107.8

1 Operating segment income (OSI) is defined as operating income before corporate expenses, depreciation and amortization. For a reconciliation of operating segment income with operating income, see Note 22 to our year-end consolidated financial statements.

6 Segment Net Sales Breakdown 57,857 52,353 TV Broadcasting 39%

Cable and Telecom 20%

Sky 19%

Other Businesses 7%

Publishing 5%

Programming Exports 5% 09 10 (millions of pesos) Pay-Television Networks 5%

Operating Segment Income 23,063 Breakdown 20,745

TV Broadcasting 46%

Sky 22%

Cable and Telecom 17%

Programming Exports 7%

Pay-Television Networks 7% 09 10 Publishing 2% (millions of pesos)

Other Businesses reported a negative contribution to OSI of Ps.184mm during the year 2010.

7 THE LAUNCH OF FUNDACIÓN TELEVISA

The first Televisa foundation was established in 1975 as Fundación Cultural Televisa and focused primarily on cultural initiatives. It closed in the late 1990s while Televisa underwent financial restructuring. To- ward the end of 2000, Emilio Azcarraga Jean, Televisa’s chairman and CEO, led an effort to reopen the foundation and to focus on social efforts, in particular education, nutrition, health, and housing, while continuing to promote Mexican culture.

Today, Fundación Televisa (“Fundación”) reaches millions through Televisa’s media platforms and builds alliances with companies, non- governmental organizations, and Mexico’s government and people. Alliances play a key role in multiplying the social impact of Fundación’s work and base funding. Through these alliances the effective dollar- for-dollar match for Fundación’s programs over the past ten years has been 8.39 to 1. In 2010 alone, the match was 17.7 to 1 —that’s US$17.70 for every dollar that the foundation contributes itself.

Over the years Fundación has worked hard to reach its goals and can now share with pride many of its success stories. For example, in 2006 Fundación launched Bécalos, a scholarship program, in partnership with the Mexican Bank Association. By leveraging these alliances and Fundación’s access to media, Bécalos has raised more than US$110 million and provided more than 113,000 scholarships since 2005. These include 65,813 awards for teachers and school prin- cipals; 26,808 for high school students; and 21,011 bachelor awards, primarily for studies in engineering, science, and technology.

Over the last decade, Fundación has improved the nutrition and health of more than 44,000 children in the poorest regions of Mexico.

Access to housing has also been at the top of Fundación’s agenda. As of year-end 2010, Fundación had built 22,000 homes through an alliance structure similar to that of Bécalos. If compared with commercial homebuilders, Fundación and its allies would be the fifth- largest housing developer in Mexico.

But its mission goes beyond education, health, and housing. Fun- dación’s relationship with Televisa enables it to raise awareness of social issues and expand the impact of its campaigns. Televisa contributes with advertising space for Fundación to promote and increase public action on health, such as breast cancer, and on environmen- tal issues, such as energy and water conservation.

8 Growing number of beneficiaries

The launch of Fundación in 2001 was only the beginning. The number of people directly benefiting from Fundación’s programs has risen each year, from 100,339 in 2001 to 633,403 in 2010. Fundación will continue to invest resources in education and health while maintaining its commitment to the promotion of Mexican culture at home and abroad.

9 Solid financial position

Even after our recent US$1.2 billion investment in Univision, our balance sheet remains strong. As of December 31, 2010, our consolidated net-debt position was approximately Ps.12.7 billion, and the average maturity of our debt was 14.3 years. In the years to come, we will continue to focus on maintaining the health of our balance sheet.

10 TELEVISA ISSUES US$300 MILLION, 30-YEAR, INVESTMENT-GRADE BOND

In the late 1990s Televisa initiated the arduous but necessary process of repairing its finances and strengthening its balance sheet. Later, in 2000, Televisa successfully refinanced its debt, reducing borrowing costs, extending maturities, and replacing a portion of its US-dollar- denominated indebtedness with inflation-adjusted indebtedness. As a result of these steps, Televisa significantly improved its capital structure and reduced its currency risk. That same year, Moody’s gave Televisa’s debt an investment-grade rating.

Because of the earlier work it had undertaken to refinance its debt and improve its financial structure, on March 11, 2002, Televisa was able to become the first Mexican company to issue a 30-year bond. The offering consisted of US$300 million in Senior Notes at a coupon of 8.50 percent. The proceeds were used to refinance a US$276 million bridge loan. Televisa was able to complete this transaction thanks to a strong credit profile and the market’s confidence in its long-term prospects.

The bond received three awards, including one from Latin Finance. Shortly after the bond was issued, Fitch and Standard & Poor’s gave Televisa’s debt an investment-grade rating. These ratings made Televisa one of the first Mexican companies to receive investment- grade ratings from all three agencies, even before Mexican sover- eign debt was given an investment-grade rating. The bond offering was also significant because, up to its issuance, Mexican companies had no access to financing with maturities of this length.

Since then, Televisa has continued to focus on improving the strength of its balance sheet. In November 2009, Televisa issued a US$600 million bond at a spread over U.S. Treasuries of only 245 basis points, the second-smallest spread of any Mexican issuer at the time. A year later, in October 2010, Televisa issued a Ps.10 billion bond with a coupon of 7.38 percent due in 2020 and a spread of only 135 basis points over Mexican Government Bonds. It was, at that time, the largest corporate fixed-rate debt issuance in the history of the Mexican market.

11 Solid and profitable growth

As of December 31, 2010, Televisa reached a market capitalization of US$14.4 billion. As it looks forward to the next decade, Televisa will continue to focus on delivering solid, profitable growth and on maintaining a consistent and open channel of communication with the market in order to remain a relevant holding for the investor community.

12 TELEVISA CELEBRATES 10 YEARS ON THE NYSE

Televisa was first traded on the Mexican stock exchange (BMV) in 1991. In June of 1993 the company’s GDS (Global Depositary Shares) began trading on the New York Stock Exchange (NYSE), and in 2003 the company celebrated the tenth anniversary of its listing.

During the fourth quarter of 2003, Televisa was the fifth-largest Latin American GDS holding for institutional investors and the third most liquid among Mexican companies. Televisa’s average daily volume on the NYSE was more than 450,000 shares, and the average daily value traded was more than US$18 million.

Since its listing, Televisa has focused on maintaining an ongoing dia- logue with the investor community—one that distinguishes itself for being an honest, open, and straightforward channel of communication. Televisa has always taken very seriously its fiduciary duty to all company shareholders and recognizes the importance of under- standing the expectations of the investor community.

In 2010, Televisa was the third most-liquid GDS holding among Mexi- can companies listed on the NYSE and the sixth most-liquid on the Mexican stock exchange. During 2010, the average daily volume on the NYSE was more than 2 million shares, or approximately US$50 million, representing more than 70 percent of the Company’s total trading volume.

Listing on the NYSE allowed Televisa to access capital in order to fuel growth while improving efficiency and management standards. Among other measures, Televisa took the necessary steps to strengthen corporate governance and meet the expectations of its shareholder base.

13 Quality and innovation

Sky will continue to seek profitable growth by maintaining superior service and innovative offerings. Low pay-TV penetration in Mexico and Sky’s scale and nationwide distribution will continue to contribute to solid profit margins. Along the way, Sky will remain focused on upgrading systems and facilities, increasing satellite capacity, and expanding its high-definition (HD) offerings to subscribers.

14 SKY CONSOLIDATES ITS POSITION AS THE LEADING DTH PROVIDER IN MEXICO

Sky began operations in 1997 and quickly became a very successful pay-TV provider in Mexico. From an early stage, it positioned itself as the pay-TV provider of choice for the same reasons that Sky is successful today: superior customer service, international sports content, and attractive pay-TV packages.

In 2004, Sky’s competitor decided to exit the Mexican market and reached an agreement with Televisa to migrate its subscribers to Sky. That same year, Televisa began the consolidation of Sky into its financial statements.

Since then, Sky’s subscriber base has grown at a compounded annual rate of 20 percent, from close to 600 thousand in 2000 to more than 3 million at year-end 2010. Much of the initial growth in Sky origi- nated from a strategy that targeted the high-end and middle-market segments. Sky continues to serve this customer base with attractive premium packages and value-added services.

Most recently, in the second quarter of 2010, Sky launched its successful HD package, further enhancing its premium pay-TV offerings. The profile of its customer base allows Sky to deliver one of the stron- gest ARPU, or average revenue per user, in Mexico.

In 2009 Sky entered the lower-income market segment with packages such as MiSky and VeTV. This strategic move allowed Sky to deliver growth of one million subscribers in 2010 alone. Furthermore, Sky was able to expand into this new segment of the market while maintaining strong margins. During 2010, at 45 percent, its Operating Segment Income margin was among the highest in the industry.

In addition to Sky’s recent successful inroads into other demographics in Mexico, Sky has developed a solid presence in other Latin Ameri- can markets. In the aggregate for the Dominican Republic and Cen- tral America, Sky closed 2010 with 145 thousand subscribers.

15 INTERNATIONAL SUCCESS OF TELEVISA’S CONTENT

In 2005 Rebelde (Rebel), a Telenovela that portrayed the life of teen- agers at a private boarding school in Mexico, became an international sensation. The success of Rebelde demonstrated Televisa’s ability to produce content that has universal appeal and can deliver value to all of Televisa’s business segments.

Televisa first aired Rebelde in October of 2004. The characters were also members of the band RBD, which, together with Rebelde, quickly captured the imagination of youth throughout Mexico, Latin America, the United States, and many other countries around the world.

Rebelde aired on Channel 2 in Mexico for three seasons through July 2006 for a total of 750 half-hour episodes. The Telenovela’s tremendous success spurred the production of additional content that crossed all of Televisa’s platforms. These other platforms included DVDs, pay-TV content, music production, nearly 240 live concerts, RBD magazine, SMS, ring tones, and licensing agreements for merchandising. Rebelde, the Mexican adaptation of Cris Morena’s original script, was not only a multiplatform success; it was also a global phenomena. Eventually, Rebelde was successfully transmitted in 65 countries.

The popularity of Rebelde has endured: the program was aired in 2009 and 2010 via pay-TV platforms and on Televisa’s all-Telenovela channel, TLnovela. Today, Rebelde continues to draw an important audience.

During 2005, Rebelde was just one success of many for Televisa’s Programming Exports business. That same year, other international hits included the reality series Bailando por un Sueño, of which we sold the format in Italy, France, and Peru, among others. Also, the Telenovela Rubí was televised in the United States, 16 countries in Latin America, the Philippines, Malaysia, Israel, and Eastern Europe, among other countries.

Beyond selling its content worldwide, in 2008 Televisa began export- ing some of its most successful program formats through collabora- tive arrangements with producers in China, Brazil, and afterwards with France. These arrangements enabled Televisa to participate in high-potential advertising markets around the world. Televisa is successfully adapting its content to the languages and nuances particular to each culture and in formats new to those markets.

16 Maximizing the value of our content

In the years to come, Televisa will continue to focus on finding creative ways to maximize the value of its content and expertise and will seek new markets, new formats, and new business models.

17 At the forefront of technology

Today Cablevisión is one of several cable assets that, together, have transformed Televisa into a relevant player in Mexico’s cable and telecom industry. In 2010, Cablevisión served a total of 1.2 million revenue-generating units (RGUs) in Mexico City. Of that number 669 thousand were video, 299 thousand broadband, and 190 thousand voice subscribers.

With this and other efforts Cablevisión is working to remain at the forefront of technology and to strengthen its competitive position in this fast-growing industry.

18 CABLEVISIÓN DIGITALIZES ITS NETWORK

In 2006 Cablevisión completed the conversion of its network from analog to digital format. This milestone enabled the company to provide a host of new services and pay-TV offerings, tapping its full potential in Mexico City and laying the groundwork to become one of the most technologically advanced players in Mexico’s cable and telecom market.

Two years earlier, Cablevisión had begun the process of convert- ing its analog-format cable infrastructure to a fully digitalized network. The conversion positioned Cablevisión to combat what was then an intractable problem in Mexico: piracy. The conversion brought an immediate jump in the number of video subscribers, which grew on average 10 percent annually during the three-year digitalization period.

More significant was the fact that the conversion, built with an investment of US$133 million, allowed the company to offer high-value- added services such as HD TV and video-on-demand.

During recent years, Cablevisión’s triple-play services have fueled the Company’s growth in Mexico’s cable and telecom market. In 2007, Cablevisión launched its first triple-play package, effectively transforming the company from a pay-TV provider into a telecommunications company.

In 2009 Cablevisión began a US$240-million project to deploy “fiber to the curb,” and in doing so to bring more and better services to the home. These include higher capacity and download speeds for high-speed internet, video-programming such as digital video re- cording, and HD TV.

19 TELEVISA CELEBRATES 50 YEARS OF THE TELENOVELA

In 2007 Televisa celebrated 50 years of producing its popular Tele- novelas, captivating audiences throughout the Spanish-speaking world and beyond.

The novela as a media format was first transmitted by radio in 1932. The first Telenovela produced in Mexico, Senda Prohibida, was broadcast in 1958. Since then, Televisa has produced more than 800 Telenovelas, and today the Telenovela remains one of our most successful formats.

Unlike soap operas, which can run for decades, Telenovelas begin with a defined story line, are broadcast on a daily basis, and have an average run of 120 episodes. Televisa is able to produce approximately ten to 15 Telenovelas every year, aided by an extensive library of scripts and a tremendous pool of talent, most of which is developed in-house.

The appeal of the Telenovela continues to grow in Mexico and abroad. As a matter of fact, three of the five most successful Tele- novelas ever were launched in the past five years. During 2007, for example, Destilando Amor achieved an average audience share of 46.8 percent and, during its final episode, garnered an impressive 61.1 percent audience share. Televisa repeatedly replicates successes such as these in the United States. That same year, Destilando Amor reached an audience of 12.7 million viewers and powered Univision to the nation’s number-one ranking among all adults in the coveted 18–34 and 18–49 demographics. Additionally, the final episode of Destilando Amor, transmitted by Univision, was the most-watched fi- nale of any Telenovela in Univision’s history1.

Key to the success of Televisa is the consistency in the quality and appeal of the content that it produces. In 2006, the final episode of La Fea Más Bella garnered 43 rating points and an audience share of more than 62 percent. And last year, the final episode of Soy tu Dueña was the highest-rated show in Mexico, with 30.4 rating points. In all, during 2010, Televisa produced and transmitted all of the top- ten Telenovelas in Mexico, including the final episode ofHasta que el Dinero nos Separe, which garnered 28.4 rating points.

The company’s skill in the production of Telenovelas has comple- mented Televisa’s success in the production of other popular formats, such as news and sports programs, reality shows, and series.

1 Among key demographics including all viewers 2 plus and adults 18 to 49. Source: Univision fourth-quarter 2007 earnings conference call transcript.

20 21 INVESTMENT IN CABLEMÁS ADVANCES TELEVISA’S CABLE AND TELECOM STRATEGY

In 2006, Televisa invested US$258 million in long-term notes convertible into a 49 percent interest in Cablemás, the second-largest cable company in Mexico.1 In 2008 Televisa made an additional investment in Cablemás, and COFECO, Mexico’s competition commission, approved the conversion of those notes into equity. Televisa’s resulting 58.3 percent investment in Cablemás was a key step forward in the company’s strategy to become a relevant participant in Mexico’s cable and telecommunications industry.

Televisa’s initial investment in Cablemás was one of the first in a series of steps to expand its presence in the rapidly growing cable and telecom industry. For example, in 2006, Televisa acquired a 50 percent interest in Televisión Internacional (TVI), which operates in Monterrey and other parts of northern Mexico. And in 2007 Televisa took a majority stake in Bestel, a fiber-optic network that provides voice, data, and managed services to domestic and international carriers both in Mexico and the United States. In 2009, Televisa’s cable assets Cablevisión, TVI, and Cablemás collabo- rated with Megacable to offer YOO, a nationally branded, low- cost triple-play offering. And in June 2010, the Mexican Commu- nications and Transportation Ministry awarded to the consortium formed by Televisa, Telefónica, and Megacable a 20-year contract for the lease of a pair of dark-fiber wires held by the Mexican Federal Electricity Commission.

As of today, Televisa has one of the largest telecom infrastructures in the country. Through its cable and telecom assets, it reaches several of the most important cities in Mexico with more than 6 million homes passed and has close to 50 thousand miles of fiber and coaxial cable around the country. In the aggregate, as of December 31, 2010, its three cable investments had more than 1.9 million video subscribers, 502 thousand voice subscribers, and 806 thousand data subscribers. Since the Cablemás investment in 2006, the total number of RGUs has been growing at an average rate of 22 percent per year. For the coming years, Televisa expects this business to remain an important source of growth.

1 Based on number of subscribers and homes passed.

22 Attractive growth potential

As Televisa continues to explore opportunities to expand its presence in cable and telecom, it will seek to play a role in the consolidation of cable in Mexico. The Company expects to benefit from economies of scale and the growth potential of this industry, and it will continue to work to improve its offerings, the quality of its service, and the profitability of its business.

23 Continuous growth

The ongoing growth in pay-TV penetration in Mexico and abroad, the appeal of Televisa’s pay-TV channels, and its extensive advertising inventory in this platform will continue to position Televisa Networks as one of the fastest-growing segments in Televisa.

24 TDN LAUNCH ENHANCES TELEVISA’S PAY-TV OFFERING

Televisa launched Televisa Deportes Network (TDN), its all-sports pay- TV channel, in 2009. The addition of TDN rounded out Televisa’s portfolio of pay-TV channels with one of the most important genres in terms of ratings and commercial opportunities.

Immediately upon its launch, TDN became one of the highest-rated sports channels in Mexico.1 TDN enabled Televisa to build an audience different from viewers of its general entertainment content, and one that is particularly attractive to advertising clients.

The dedication put into making TDN a success is evidence of the importance that Televisa gives to this media platform. Through Televisa Networks, we distribute a total of 18 pay-TV brands (15 owned and 3 represented) in more than 50 countries. Pay television provides Tele- visa with an opportunity to monetize much of the content that has already been produced and amortized while accessing a revenue stream different from advertising, namely subscription revenue. In addition, through this platform Televisa is able to monetize more effectively its content abroad. Of the more than 26 million subscribers around the world, two thirds of them are outside Mexico.

Today, Televisa’s pay-TV channels are top-ranked in many catego- ries. In 2010, the channels Televisa transmitted over pay-TV platforms in Mexico included five of the top-ten general entertainment channels; three of the top-five music/lifestyle channels; and three of the top-five movie channels.

Advertising in this platform is becoming an important source of revenue. Pay-TV channels attract demographics different from those of broadcast television. As such, Televisa is able to gain access to a special set of clients that otherwise would have not advertised in over-the-air television, such as those that seek certain demographics or that target specific geographies. In addition to benefiting from a recurring stream of affiliate revenue, the growth of this platform has effectively allowed Televisa to benefit from the fragmentation of adver- tisers, expanding its total client base. For Televisa Networks, advertising has grown at a CAGR of 43 percent2 since 2005. Today, it represents nearly 20 percent of the total revenues of this business segment.

1 As measured on platforms carrying both TDN and other sports channels.

2 Calculated with information as reported in each time period.

25 Increasing presence in the Hispanic market

In 2010, Univision royalties accounted for US$156 million and constituted the majority of Televisa’s Programming Exports segment revenue. Under the new agreement, Televisa now benefits from the creation of value in Univision. Televisa invested US$1.2 billion in Univision for a five percent equity stake and debentures convertible into a 30 percent equity stake of Univision, subject to existing laws and regulations. The agreement also gives Televisa an option to acquire an additional five percent equity stake in Univision. In addition, the two companies signed a program license agreement for Mexico, under which Televisa received the right to broadcast Univision’s content in the country.

The agreement expands and deepens the most important alliance in Spanish-language media today. It aligns the interests of both companies and empowers them to work together to enhance their presence and prospects in the growing U.S. Hispanic market.

26 TELEVISA SIGNS LANDMARK AGREEMENT WITH UNIVISION

In December 2010 Televisa made a substantial investment in Univision and expanded and extended its long-term Program License Agreement.

Since 1961, Televisa has successfully exported its content to the United States, initially through Spanish International Network, which in the 1980s changed its name to Univision. Televisa has also participated in the U.S. pay-TV market through TuTV, its joint venture with Univision, since 2002.

This new agreement increases the exposure of Televisa’s content to the U.S. Hispanic market, giving Univision the right to carry it across all of its audiovisual platforms.

The U.S. Hispanic market represents an important growth opportunity for Televisa, since a significant number of U.S. companies still do not advertise in this market—even though population is growing at four times the rate of the total U.S. population.

In addition, nearly two-thirds of the country’s 50 million Hispanics are of Mexican heritage, and household consumption is 27 percent higher than consumption in Mexico. As a cultural demographic, U.S. Hispanics tend to retain cultural traditions and value systems, which partly explains why Televisa’s content travels naturally and successfully to the United States.

This new agreement provides a mutually beneficial platform. For example, the agreement will enable them to capture the growth opportunity presented by offering new advertising alternatives to current and potential clients. The agreement will also extend the portfolio of pay-TV channels distributed in the United States and allow for the digital transmission of Televisa’s content.

The agreement expands the royalty base and immediately increases the royalty payment to Televisa from 9.36 percent of television-only revenues to 11.91 percent of all audiovisual revenue. The agreement provides for a further increase, to 16.22 percent, beginning in 2018.

27 a decade at the FOREFRONT

2005 • International success of Televisa’s content • The DirecTV subscriber 2001 migration process is completed, increasing Sky’s • The launch of base to more than 1.25 Fundación Televisa million. • Pricing of US$300 million 10-year Senior Notes offering 2003 • Cablevisión begins to offer with an 8% coupon. DVR and HD services. • Televisa celebrates 10 years on the NYSE • Salomé breaks rating • A US$600 million dollar records, delivering 25 rating • Niña Amada Mía breaks 20-year Senior Notes points. rating records, delivering 26 offering is priced.4 rating points.

2002 2004 2006 • Televisa issues US$300 • Sky consolidates its • Cablevisión digitalizes its million, 30-year, position as the leading DTH network investment-grade bond provider in Mexico • La Fea Más Bella breaks • Agreement to launch five • The corporate restructuring rating records, delivering 29 Pay-TV channels in the U.S.1 concludes, and a dividend rating points. policy3 is approved. • Cablevisión launches public • Pay-TV Network subscribers offering on the Mexican • Amor Real ranks as the most- reach more than 15 million. stock exchange2. watched Telenovela of all time among US Hispanics. • Televisa acquires a 50% • Pay-TV Networks subscribers equity stake in TVI. reach more than 10 million.

1 in partnership with Univision. 9 US$600 million aggregate principal amount due 2040. 2 49% of its capital. 10 together with Megacable. 3 Ps.0.35 per CPO annually. 11 at 7.38% and due 2020. 4 with a coupon rate of 6.625%. 12 formed by Telefónica, Televisa, and Megacable. 5 at 8.49% and due 2037. 13 among Total Viewers 2+. 6 which represented an approximate 11.3% equity stake. 7 US$500 million aggregate principal amount of Senior Notes due 2018. 8 in Mexico and Latin America.

2828 29 2007 2009 • Televisa celebrates 50 • TDN launch enhances • Television Broadcasting years of the Telenovela Televisa’s Pay-TV offering delivers revenue growth of 0.5%, while Mexican GDP • Pricing of Ps.4,500 million • Pricing of Senior Notes9 at decreases 6%. aggregate principal amount 6.625%, a 245 bp spread of Senior Notes,5 one of the over Mexican treasuries, the • Televisa expresses interest in few 30-year euro-peso deals. second smallest spread of participating in the mobile any Mexican issuer. telecommunications • Cablevisión launches market. telephony services and • Our three cable acquires Bestel. investments10 launch YOO, a successful triple-play • Sky reaches 1.5 million offering. subscribers and initiates operations in Central • Sky launches VeTV and pays America and the Dominican Ps.2.7 billion in dividends. Republic. • Cablevisión initiates “Grand • Televisa acquires Editorial Slam” project, taking fiber- Atlántida. to-the-curb and increasing homes passed, among other • Televisa sells its shares and objectives. warrants6 in Univision for US$1,094.37 million.

2008 2010 • Investment in Cablemás • Televisa signs landmark • The consortium12 receives a advances Televisa’s cable agreement with Univision contract for the lease of a and telecom strategy pair of dark-fiber wires held • Pricing of Ps.10,000 million by the Mexican Federal • Pricing of Senior Notes7 at aggregate principal Electricity Commission. 6%, the lowest coupon ever amount of notes,11 the paid for any bond issued by largest corporate issuance • Publishing concludes the Televisa. at a fixed rate in the local restructuring of the business market, at a historically low and extends the presence • Televisa becomes exclusive interest rate. of six brands to digital distributor of Telemundo platforms. content in all audiovisual • Sky reaches 3 mm platforms.8 subscribers, of which 1 mm • Televisa produces its 800th are added in 2010; launches Telenovela. • Pay-TV Networks subscribers IS-16 satellite; and starts to reach more than 20 million. offer HD services. • Soy tu Dueña becomes the most-watched Spanish- • Telehit beats MTV in Mexico • Televisa launches ForoTV, a language Telenovela in US national ratings and 24-hour news channel. television history13. maintains leadership in the years to follow. • Pay-TV Networks subscribers reach more than 25 million.

28 2929 MANAGEMENT´S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Set forth below are our consolidated results for the years ended December 31, 2009 and 2010. Results included have been prepared in accordance with Mexican Financial Reporting Standards (“Mexican FRS”), and are presented in Mexican Pesos. The financial information set forth below should be read in conjunction with our audited consolidated financial statements as of and for the years ended Decem- ber 31, 2009 and 2010 included in this Annual Report.

The images shown along the MD&A section of this report are extracts of a campaign named “Estrellas del Bicentenario” (Bicentennial Stars), which was produced and transmitted by Televisa to celebrate the Bicen- tennial of Mexico’s independence by highlighting some of the country’s most beautiful locations.

Year ended December 31,

(In millions of Mexican Pesos)(1) 2009 2010

Net sales Ps. 52,352.5 Ps. 57,856.8

Cost of sales(2) 23,768.4 26,294.8

Selling expenses(2) 4,672.1 4,797.7

Administrative expenses(2) 3,825.5 4,602.4

Depreciation and amortization 4,929.6 6,579.3

Operating income 15,156.9 15,582.6

Other expense, net 1,764.9 567.2

Integral cost of financing, net 2,973.3 3,028.6

Equity in losses of affiliates, net 715.3 211.9

Income taxes 3,120.7 3,259.0

Non-controlling interest net income 575.6 832.5

Controlling interest net income Ps. 6,007.1 Ps. 7,683.4

(1) Certain data set forth in the table above may differ from data set forth in the consolidated statements of income for the years ended December 31, 2009 and 2010 included in this Annual Report due to differences in rounding.

(2) Excluding depreciation and amortization.

30 Overview of Consolidated Results Selling Expenses

Net Sales Selling expenses increased by Ps.125.6 million, or 2.7%, to Ps.4,797.7 million for the year ended December 31, 2010 from Our net sales increased by Ps.5,504.3 million, or 10.5%, to Ps.4,672.1 million for the year ended December 31, 2009. This Ps.57,856.8 million for the year ended December 31, 2010 increase was attributable to higher selling expenses in our from Ps.52,352.5 million for the year ended December 31, Cable and Telecom, Pay Television Networks, Programming 2009. This increase was attributable to revenue growth across Exports and Television Broadcasting segments. These increas- all our business segments with the exception of Publishing es were partially offset by a decrease in selling expenses in which underwent a restructuring process. Growth was espe- our Publishing, Sky and Other Businesses segments. cially strong in our Cable and Telecom and Sky segments. Administrative Expenses Cost of Sales Administrative expenses increased by Ps.776.9 million, or Cost of sales increased by Ps.2,526.4 million, or 10.6%, to 20.3%, to Ps.4,602.4 million for the year ended December 31, Ps.26,294.8 million for the year ended December 31, 2010 2010 from Ps.3,825.5 million for the year ended December 31, from Ps.23,768.4 million for the year ended December 31, 2009. This increase reflects increased administrative expens- 2009. This increase was due to higher costs in our Cable and es in all our segments, especially in our Cable and Telecom Telecom, Television Broadcasting, Sky, Pay Television Net- and Sky segments, as well as an increase in corporate ex- works and Programming Exports segments. These increases penses due to higher share-based compensation expense, were partially offset by a decrease in the costs of our Publish- which amounted to approximately Ps.560.6 million in 2010, ing and Other Businesses segments. compared with Ps.375.7 million in 2009.

Palenque, Chiapas. Archaeological zone.

31 Overview of Operating Segment Results

The following tables set forth the net sales and operating segment income (loss), for each of the Company’s business segments for the years ended December 31, 2009 and 2010.

% Contribution to 2010 Year ended December 31, Total Segment (In millions of Mexican Pesos) 2009 2010 Net Sales

Net Sales

Television Broadcasting Ps. 21,561.6 Ps. 22,750.1 38.5 %

Pay Television Networks 2,736.6 3,146.2 5.3

Programming Exports 2,845.9 3,074.8 5.2

Publishing 3,356.1 3,229.6 5.5

Sky 10,005.2 11,248.2 19.0

Cable and Telecom 9,241.8 11,814.2 20.0

Other Businesses 3,771.4 3,812.3 6.5

Total Segment Net Sales 53,518.6 59,075.4 100.0

Intersegment Revenues (1) (1,166.1) (1,218.6) (2.1)

Consolidated Net Sales Ps. 52,352.5 Ps. 57,856.8 97.9 %

(1) For segment reporting purposes, intersegment revenues are included in each of the segment revenues.

Year ended December 31, (In millions of Mexican Pesos) 2009 2010

Operating Segment Income (Loss)(1)

Television Broadcasting Ps. 10,323.9 Ps. 10,714.3

Pay Television Networks 1,660.4 1,622.0

Programming Exports 1,437.2 1,503.6

Publishing 190.7 425.3

Sky 4,478.8 5,074.5

Cable and Telecom 2,971.9 3,907.2

Other Businesses (318.2) (184.0)

Total Operating Segment Income 20,744.7 23,062.9

Corporate Expenses (658.2) (901.0)

Depreciation and Amortization (4,929.6) (6,579.3)

Consolidated Operating Income Ps. 15,156.9 Ps. 15,582.6

(1) The operating segment income (loss) set forth in this Annual Report does not reflect corporate expenses or depreciation and amortization in any period presented and is presented herein to facilitate the discussion of segment results.

32 Television Broadcasting Pay-Television Networks

Television Broadcasting net sales, representing 40.3% and Pay Television Networks net sales, representing 5.1% and 5.3% 38.5% of our total segment net sales for the years ended of our total segment net sales for the years ended December December 31, 2009 and 2010, respectively, increased by 31, 2009 and 2010, respectively, increased by Ps.409.6 million, Ps.1,188.5 million, or 5.5%, to Ps.22,750.1 million for the year or 15.0%, to Ps.3,146.2 million for the year ended December ended December 31, 2010 from Ps.21,561.6 million for the 31, 2010 from Ps.2,736.6 million for the year ended December year ended December 31, 2009. Our content continued to 31, 2009. This increase was achieved in spite of a negative perform well. For example the final episode of the novela translation effect of foreign-currency-denominated sales, “Soy tu Dueña” was the highest rated program transmitted and was driven by higher revenues from channels sold in in Mexico through broadcast television during the year, and Mexico as well as higher advertising sales, which represent- nine of the top-ten rated shows on over-the-air television in ed 22.7% of segment revenue in 2010. Some of the most suc- Mexico were transmitted by us. The sales of the broadcast cessful channels during the year included “Clásico TV” and and transmission of the 2010 Soccer World Cup in South Af- the 2-hour delayed version of “Channel 2”. Additionally, dur- rica also contributed to the increase in net sales. ing the year, we successfully added to our portfolio of high- definition channels “Golden” and “American Network”, and Television Broadcasting operating segment income increased launched the “TL Novela” channel in Brazil. by Ps.390.4 million, or 3.8%, to Ps.10,714.3 million for the year ended December 31, 2010 from Ps.10,323.9 million for the Pay Television Networks operating segment income de- year ended December 31, 2009. This increase was due to the creased by Ps.38.4 million, or 2.3%, to Ps.1,622.0 million for the increase in net sales and was partially offset by an increase year ended December 31, 2010, from Ps.1,660.4 million for in cost of sales related to the transmission during the year the year ended December 31, 2009. This decrease reflects of programs produced in connection with the 2010 Soccer an increase in cost of sales and operating expenses, driven World Cup, including the soccer matches, and an increase in mainly by investments made in the production and launch operating expenses, primarily in personnel expenses. of two new channels. In August 2009 we launched our sports pay-TV channel, “Televisa Deportes Network (TDN)”, which carried on an exclusive basis ten of the 64 games of the 2010 Soccer World Cup. Additionally, in February 2010 we launched “Foro TV”, our 24-hour news pay-TV channel, which from September 2010 is broadcast on our free-to-air Channel 4.

Montebello lagoons, Chiapas. Pojoj lake.

33 Programming Exports inated sales; and from a restructuring of the business, which included taking some magazines off the market resulting in Programming Exports net sales, representing 5.3% and 5.2% a decrease in magazine circulation in Mexico and conse- of our total segment net sales for the years ended December quently a decrease in advertising revenue. This decrease was 31, 2009 and 2010, respectively, increased by Ps.228.9 million, partially offset by an increase in advertising sales abroad. or 8.0%, to Ps.3,074.8 million for the year ended December 31, 2010 from Ps.2,845.9 million for the year ended December 31, Publishing operating segment income increased by 2009. This increase was primarily due to an increase in royal- Ps.234.6 million, or 123.0%, to Ps.425.3 million for the year ties from Univision, from U.S.$143.0 million in 2009 to U.S.$156.1 ended December 31, 2010 from Ps.190.7 million for the year million in 2010, as well as higher programming sales mainly ended December 31, 2009. This increase reflects lower pa- in Europe and higher revenue from co-productions abroad. per and printing costs in connection with the restructuring This increase was partially offset by a negative translation ef- process and lower operating expenses due to non-recur- fect on foreign-currency-denominated sales. rent charges such as a decrease in allowances and the provision for doubtful trade accounts. This increase in the Programming Exports operating segment income increased operating segment income was partially offset by the de- by Ps.66.4 million, or 4.6%, to Ps.1,503.6 million for the year crease in net sales. ended December 31, 2010 from Ps.1,437.2 million for the year ended December 31, 2009. This increase was primarily due Sky to the increase in net sales, which was partially offset by an increase in cost of sales due to higher programming and co- Sky net sales, representing 18.7% and 19.0% of our total seg- production costs and operating expenses, primarily due to ment net sales for the years ended December 31, 2009 and an increase in personnel expenses and an increase in the 2010, respectively, increased by Ps.1,243.0 million, or 12.4%, provision for doubtful trade accounts. to Ps.11,248.2 million for the year ended December 31, 2010 from Ps.10,005.2 million for the year ended December 31, Publishing 2009. The annual increase was driven by solid growth in the subscriber base in Mexico, mainly attributable to the success Publishing net sales, representing 6.3% and 5.5% of our total of Sky’s new low-cost offerings. Additionally, Sky transmitted segment net sales for the years ended December 31, 2009 24 matches of the 2010 Soccer World Cup on an exclusive and 2010, respectively, decreased by Ps.126.5 million, or basis and in some packages sold it as a pay-per-view event. 3.8%, to Ps.3,229.6 million for the year ended December 31, The number of gross active subscribers increased to 3,044,000 2010 from Ps.3,356.1 million for the year ended December (including 149,900 commercial subscribers) as of December 31, 2009. The annual decrease was driven by the negative 31, 2010 from 1,959,700 (including 144,300 commercial sub- impact of the translation effect on foreign-currency-denom- scribers) as of December 31, 2009.

3434 35 Sky operating segment income increased by Ps.595.7 million The following table sets forth the breakdown of RGUs as of or 13.3% to Ps.5,074.5 million for the year ended December December 31, 2010:

31, 2010 from Ps.4,478.8 million for the year ended December CABLEVISIÓN CABLEMÁS TVI 31, 2009. This increase was due to the increase in net sales as Video 668,985 997,239 301,698 well as a reduction in the amount of costs amortized related to the exclusive transmission of certain 2010 Soccer World Cup Broadband 299,157 360,049 147,268 matches. This increase was partially offset by an increase in pro- Voice 190,441 205,180 106,129 gramming costs associated with the increase in our subscriber RGUs 1,158,583 1,562,468 555,095 base, and operating expenses due to commissions paid and increase in the provision for doubtful trade accounts.

Cable and Telecom Other Businesses

Cable and Telecom net sales, representing 17.3% and 20.0% Other Businesses net sales, representing 7.0% and 6.5% of our of our total segment net sales for the years ended December total segment net sales for the years ended December 31, 31, 2009 and 2010, respectively, increased by Ps.2,572.4 million, 2009 and 2010, respectively, increased by Ps.40.9 million, or or 27.8%, to Ps.11,814.2 million for the year ended December 1.1%, to Ps.3,812.3 million for the year ended December 31, 31, 2010 from Ps.9,241.8 million for the year ended Decem- 2010 from Ps.3,771.4 million for the year ended December 31, ber 31, 2009. This increase was primarily due to the consoli- 2009. This increase was primarily due to higher sales related to dation of Cablevisión Monterrey (“TVI”) effective October our gaming, sporting events production, radio and publishing 1, 2009, which represented incremental sales of Ps.1,463.5 distribution businesses. This increase was partially offset by low- million as well as the addition of more than 356,000 revenue er sales in our feature-film distribution and internet businesses. generating units (RGUs) in Cablevisión and Cablemás. Other Businesses operating segment loss decreased by Cable and Telecom operating segment income increased Ps.134.2 million, or 42.2%, to Ps.184.0 million for the year ended by Ps.935.3 million, or 31.5%, to Ps.3,907.2 million for the year December 31, 2010 from Ps.318.2 million for the year ended ended December 31, 2010 from Ps.2,971.9 million for the December 31, 2009. This decrease reflects a decrease in the year ended December 31, 2009. This increase was due to losses attributable to our sporting events production, gaming the continued growth in the cable platforms as well as a and publishing distribution businesses as well as an increase positive translation effect on foreign-currency-denominated in the operating segment income of our radio business. These costs, and was partially offset by the increase in costs result- favorable effects were partially offset by an increase in the ing from the growth in the subscriber base and higher costs losses attributable to our internet business and the losses at- and expenses resulting from the consolidation of TVI. tributable to our feature-film distribution business in 2010, as compared to 2009 when this business produced income.

Depreciation and Amortization

Depreciation and amortization expense increased by Ps.1,649.7 million, or 33.5%, to Ps.6,579.3 million for the year ended December 31, 2010 from Ps.4,929.6 million for the year ended December 31, 2009. This change primarily reflects an increase in such expense in our Cable and Telecom (due to the consolidation of TVI), Sky and Television Broadcasting segments. This increase was partially offset by a decrease in such expense in our Publishing segment.

Ría Lagartos, Yucatán. Biosphere reserve.

34 3535 Operating Income The net expense attributable to integral cost of financing increased by Ps.55.3 million, or 1.9%, to Operating income increased by Ps.425.7 million, or 2.8%, to Ps.3,028.6 million for the year ended December 31, 2010 from Ps.15,582.6 million for the year ended December 31, 2010 Ps.2,973.3 million for the year ended December 31, 2009. This from Ps.15,156.9 million for the year ended December 31, increase primarily reflected i) a Ps.478.9 million increase in 2009. This increase reflects the increase in our total net sales, interest expense, due mainly to a higher average principal partially offset by the increases in cost of sales, operating amount of long-term debt in 2010, and ii) a Ps.5.9 million de- expenses and depreciation and amortization expense. crease in interest income explained primarily by a reduction of interest rates applicable to cash equivalents and temporary investments in 2010. These unfavorable variances were Non-operating Results partially offset by a Ps.429.5 million decrease in foreign exchange loss resulting primarily from the favorable effect of a Other Expense, Net 5.5% appreciation of the Mexican peso against the U.S. dollar in 2010 our average net U.S. dollar liability position in 2010, Other expense, net, for the year ended December 31, 2010, which changed from a net U.S. dollar asset position in 2009. included expenses related to financial advisory and professional services mainly associated with our investment Equity in Losses of Affiliates, Net in Univision transaction, loss on disposition of property and equipment, non-recurring expenses in connection with the This line item reflects our equity participation in the operating refinancing of debt in our Cable and Telecom segment, and results and net assets of unconsolidated businesses in which an impairment adjustment to the carrying value of goodwill we maintain an interest, but over which we have no control. of a business within our Publishing segment. These expenses We recognized equity in losses of affiliates up to the amount were partially offset by a net gain on disposition of invest- of our initial investment and subsequent capital contribu- ments. tions, or beyond that amount when guaranteed commit- ments have been made by us in respect of obligations in- Other expense, net, decreased by Ps.1,197.7 million, or 67.9%, curred by affiliates. to Ps.567.2 million for the year ended December 31, 2010, compared with Ps.1,764.9 million for the year ended Decem- Equity in losses of affiliates, net, decreased by Ps.503.4 ber 31, 2009. This decrease reflected primarily i) a reduction million, or 70.4%, to Ps.211.9 million in 2010 compared with in non-cash impairment adjustments to the carrying value of Ps.715.3 million in 2009. This decrease mainly reflected a re- goodwill in our Cable and Telecom, Television Broadcasting duction in equity in loss of La Sexta, our 40.5% interest in and Publishing segments and ii) the gain on disposition of in- a free-to-air television channel in Spain. This decrease was vestments in shares. These favorable variances were partially offset by i) non-recurring expenses related to the refinancing of debt of Cablemás, and ii) increases in other expenses related to financial advisory and professional services and the disposition of equipment.

Integral Cost of Financing, Net

Integral cost of financing, net, significantly impacts ourfi- nancial statements in periods of high inflation or currency fluctuations. Under Mexican FRS, integral cost of financing reflects:

• interest expense, including gain or losses from derivative instruments; • interest income; and • foreign exchange gain or loss attributable to monetary assets and liabilities denominated in foreign currencies, including gains or losses from derivative instruments.

Our foreign exchange position is affected by our assets or liabilities denominated in foreign currencies, primarily U.S. dollars. We record a foreign exchange gain or loss if the exchange rate of the Peso to the other currencies in which our monetary assets or liabilities are denominated varies.

36 partially offset by the absence of equity in earnings of i) companies are subject to paying the greater of the flat tax Volaris, as we disposed of this investment in the third quar- or the income tax. The IETU is calculated by applying a tax ter of 2010, and ii) TVI, as we began consolidating its as- rate of 16.5% in 2008, 17% in 2009, and 17.5% in 2010 and the sets, liabilities and results of operations in our consolidated thereafter. Although the IETU is defined as a minimum tax it financial statements effective in the fourth quarter of 2009. has a wider taxable base as some of the tax deductions al- Equity in losses of affiliates, net, for the year ended Decem- lowed for income tax purposes are not allowed for the flat ber 31, 2010, mainly is comprised of the equity in loss of La tax. As of December 31, 2008, 2009 and 2010, this tax did not Sexta, which was partially offset by the equity in earnings have an effect on the Group´s deferred tax position, and of other associates. the Group does not expect to have to pay the IETU in the near future. Income Taxes In December 2009, the Mexican government enacted cer- Income taxes increased by Ps.138.3 million, or 4.4%, to tain amendments and changes to the Mexican Income Tax Ps.3,259.0 million in 2010 from Ps.3,120.7 million in 2009. This Law that became effective as of January 1, 2010. The main increase primarily reflected a higher income tax base, which provisions of these amendments and changes are as follows: was partially offset by a lower effective income tax rate. i) the corporate income tax rate is increased from 28% to 30% for the years 2010 through 2012, and will be reduced We are authorized by the Mexican tax authorities to com- to 29% and 28% in 2013 and 2014, respectively; ii) the de- pute our income tax on a consolidated basis. Mexican con- ferred income tax benefit derived from tax consolidation of trolling companies are allowed to consolidate, for income a parent company and its subsidiaries is limited to a period tax purposes, income or losses of their Mexican subsidiaries of five years; therefore, the resulting deferred income tax has up to 100% of their share ownership in such subsidiaries. to be paid starting in the sixth year following the fiscal year in which the deferred income tax benefit was received; iii) the The Mexican corporate income tax rate in 2008, 2009 and payment of this income tax has to be made in installments: 2010 was 28%, 28% and 30%, respectively. 25% in the first and second year, 20% in the third year, and 15% in the fourth and fifth year; and iv) this procedure ap- The Flat Rate Business Tax (“Impuesto Empresarial a Tasa Úni- plies for the deferred income tax resulting from the tax con- ca” or “IETU”) became effective in Mexico as of January 1, solidation regime prior to and from 2010, so taxpayers paid 2008. This flat tax replaced Mexico´s asset tax and is applied in 2010 the first installment of the cumulative amount of the along with Mexico´s regular income tax. In general, Mexican deferred tax benefits determined as of December 31, 2004.

Uxmal, Yucatán. Archaeological zone.

37 Non-controlling Interest Net Income These changes were partially offset by: • a Ps.55.3 million increase in integral cost of financing, net; Non-controlling interest net income reflects that portion of operating results attributable to the interests held by third • a Ps.138.3 million increase in income taxes; and parties in the businesses which are not wholly-owned by • a Ps.256.9 million increase in non-controlling interest us, including our Cable and Telecom and Sky segments, as net income. well as our Radio business. Capital Expenditures, Non-controlling interest net income increased by Ps.256.9 million, or 44.6%, to Ps.832.5 million in 2010, from Ps.575.6 mil- Acquisitions and Investments lion in 2009. This increase primarily reflected a higher portion During 2011, we expect to: of consolidated net income attributable to interests held by non-controlling stockholders in our Cable and Telecom and • make aggregate capital expenditures for property, Sky segments. plant and equipment totaling U.S.$850 million, of which U.S.$435 million and U.S.$270 million are for the expan- Controlling Interest Net Income sion and improvements of our Cable and Telecom and Sky segments, respectively, and the remaining U.S.$145 We generated controlling interest net income in the amount million are for our Television Broadcasting segment and of Ps.7,683.4 million in 2010, as compared to Ps.6,007.1 million other segments; in 2009. The net increase of Ps.1,676.3 million reflected: • make investments related to our 33.3% interest in GTAC for an aggregate amount of Ps.159 million. • a Ps.425.7 million increase in operating income; • a Ps.1,197.7 million decrease in other expense, net; and During 2010, we: • a Ps.503.4 million decrease in equity in losses of • made aggregate capital expenditures totaling U.S.$1,011 affiliates, net. million, of which U.S.$438.5 million, U.S.$436.6 million and U.S.$12.5 million correspond to our Cable and Telecom, Sky and Gaming businesses, respectively, and U.S.$123.4 million to our Television Broadcasting and other businesses;

Monte Albán, Oaxaca. Archaeological zone.

3838 39 • made loans related to our 40.5% interest in La Sexta for an Indebtedness aggregate amount of €21.5 million; • made investments of U.S.$1,255 million in cash in Broad- As of December 31, 2010, our consolidated long-term portion casting Media Partners, Inc. (“BMP”), the controlling of debt amounted to Ps.46,495.7 million, and our consolidat- company of Univision, in exchange for a 5% equity stake ed current portion of debt was Ps.1,469.1 million. As of De- of the outstanding common stock of BMP and U.S.$1,125 cember 31, 2010, our total consolidated debt was denomi- million principal amount debentures due 2025 bearing nated in U.S. dollars (59.18%) and Mexican pesos (40.82%). interest at an annual rate of 1.5%, that are initially con- Additionally, as of December 31, 2010, our consolidated vertible into a 30% equity stake in the common stock of long-term portion of capital lease obligations amounted BMP; and to Ps.280.1 million, and our consolidated current portion of capital lease obligations was Ps.349.7 million. • made investments and long-term loans related to our 33.3% interest in Grupo de Telecomunicaciones de Alta The major components of our total consolidated indebted- Capacidad, S.A.P.I. de C.V. (“GTAC”) for an aggregate ness as of December 31, 2010 were as follows: amount of Ps.426.7 million. • 8% Senior Notes due 2011 for an outstanding amount of During 2009, we: U.S.$72 million; • made aggregate capital expenditures totaling • 6% Senior Notes due 2018 for an amount of U.S.$500 U.S.$499.3 million, of which U.S.$239 million, U.S.$128.8 million; million and U.S.$17.5 million correspond to our Cable and Telecom, Sky and Gaming businesses, respectively, • 6.625% Senior Notes due 2025 for an amount of U.S.$600 and U.S.$114 million to our Television Broadcasting and million; other businesses; • 8.5% Senior Notes due 2032 for an amount of U.S.$300 • made investments related to our 40.5% interest in La Sex- million; ta for an aggregate amount of €35.7 million; and • 8.49% Senior Notes due 2037 for an amount of Ps.4,500 • made investments in Volaris, for U.S.$5 million, and in million ; other associates for approximately U.S.$5.5 million. • 6.625% Senior Notes due 2040 for an amount of U.S.$600 million; • Long-term loan facility due 2012 for an amount of U.S.$225 million with an average annual interest of LIBOR + 0.525% (Empresas Cablevisión); • Long-term loan facility due 2012 for an amount of Ps.1,000 million with an average annual interest rate of 10.35%; • Long-term loan facility due 2016 for an amount of Ps.1,400 million with an average annual interest of TIIE + 24 basis points (Sky); • Long-term loan facility due 2016 for an amount of Ps.2,100 million with an average annual interest rate of 8.74% (Sky); • 7.38% Notes due 2020 for an amount of Ps.10,000 million; • Short-term loan facilities for an aggregate amount of Ps.510 million with annual interest rates in the range of TIIE plus 1.50% and TIIE plus 3.50% (TVI); • Short-Term loan facilities for an aggregate amount of Ps.70 million with annual interest rates in the range of 7.10% and 7.84% (TVI); • Satellite transponder lease obligation for an amount equivalent to U.S.$33.6 million; and • Other capital lease obligations for an amount equivalent to U.S.$17.4 million.

For a further description of this indebtedness, see Note 8 to the Consolidated Financial Statements.

38 3939