TOGETHER WE ARE 2017 SUSTAINABILITY REPORT STRONG TV AZTECA AND STRONG WE ARE THE FUTURE 2017 SUSTAINABILITY REPORT TV AZTECA 2 - Throughout its 24-year history, TV Azteca has become an important social interlocutor. Today, it continues its steady and successful pace on the road to its Reinvention/Evolution inspiring the creation of: Economic value, through job creation and innovative contents. Economic value, through job creation and innovative contents. Social value, with initiatives such as the “Juguetón” –the world’s greatest toy drive– and “Vive Sin Drogas” (Live Without Drugs), the choice of a healthy and addiction-free lifestyle. Environmental value, with “Un Nuevo Bosque” –a permanent reforestation campaign–, and with other actions that mitigate the company’s impact on the environment. Thus begins a new era in which together we are strong and strong we are the future. 2017 SUSTAINABILITY REPORT TV AZTECA 3 - CONTENTS 2017 at a glance 4 TV Azteca: Evolution that inspires 5 Alliances 7 Subsidiaries 9 Message from the Chief Executive Officer 11 Creation of sustainable value 13 Making history 13 Value-creation model 15 Materiality 17 Industry participation 23 Economic value 24 Trust-inspiring soundness 25 Responsible leadership 27 Corporate culture 31 Joint work for value creation 43 Value offer 46 Social value 53 Talent 54 Strengthening society 68 Environmental Value 96 Commitment 97 About this report 102 Principles for the preparation of this report 103 GRI Content Index 105 2017 SUSTAINABILITY REPORT TV AZTECA 4 - 2017 AT A GLANCE 4 of the 6 national open television channels in Mexico More than 28% of the energy are owned by TV Azteca: Azteca 7, Azteca 13*, a+, and adn40 $63 million consumed by TV Azteca pesos raised for the 100th derives from renewable sources $13,829 16,751,423 toys –equal to edition of Movimiento Azteca. approximately The amount was assigned to million the reconstruction of homes pesos, TV Azteca $502 million affected by the September pesos– distributed to 6,095 net sales earthquakes TV Azteca children from low-income families on January 6, 2017 employees Over 39,000 hours of internally-produced content Close to TV Azteca reaches $90 million Over 1.2 million approximately pesos dedicated to trees planted in 1,147 hectares with supporting actions the participation of more than 28.8 million developed by 120,000 volunteers who contributed Mexican households Fundación Azteca to the national reforestation drive Un Nuevo Bosque * As of January 1, 2018, Azteca 13 becomes Azteca uno. 2017 SUSTAINABILITY REPORT TV AZTECA 5 - TV Azteca, S.A.B. de C.V. is one of the two main producers of content for TV AZTECA: Spanish language television worldwide. Operating in five countries –Mexico, Guatemala, Honduras, Peru and the United States–, it offers quality entertain- EVOLUTION ment in the categories of entertainment, news, sports, music and telenovelas. THAT INSPIRES In 2017 TV Azteca operated four television networks in Mexico: 102-1, 102-2, 102-4, 102-5, 102-6 • Azteca 7, focused on contemporary families www.azteca7.com • Azteca uno, a women-oriented channel www.aztecauno.com • adn40, first 24-hour information open television channel www.adn40.mx • a+, local station network www.amastv.com One of the main achievements of TV Azteca in 2017 was the launch of TV Azteca equipped and operated two new television channels channel a+ to start broadcasting in 2017 licensed for nation-wide coverage by the Federal Telecommunications Institute (IFT): adn40 and a+ 2017 SUSTAINABILITY REPORT TV AZTECA 6 - Azteca Digital is also part of its offer as operator of several of the most visited websites and social networks in Mexico. TV Azteca currently owns two first-division soccer teams of the Mexican Soc- cer Federation: • Monarcas Morelia www.fuerzamonarca.com • Atlas FC www.atlasfc.com.mx 102-7 41 conventional and 13 virtual forums 462 digital broadcasters and 874 signals TV Azteca strongly believes that its capacity to provide a diverse mix of quality content 2017 saw the integration of 4K-technology mobile aimed at all socio-economic levels in the units and studio equipment country has been, and will continue to be, one of its key strengths. 2017 SUSTAINABILITY REPORT TV AZTECA 7 - TV Azteca continued to strengthen Google/YouTube: At the ALLIANCES the network of alliances it has estab- end of 2017, TV Azteca established an lished since its beginnings, in order alliance with Google in order to wid- to add value to its unique and suc- en its digital platform offer and satis- cessful offer through a wide range of fy the needs and expectations of an innovative contents. Some of these ever more demanding public for in- alliances are: formation, sports and entertainment options. Buena Vista: In 1998, TV Azteca signed an exclusive licensing con- This agreement strengthens TV tracts with Buena Vista International, Azteca’s You Tube distribution offer- Inc., a subsidiary of The Walt Dis- ing its viewers the advantage of a wid- ney Company. Renewed in 2013, the er range of contents over its digital contract, which licenses TV Azteca platforms –azteca.com and apps– and to broadcast Buena Vista content in the possibility of on-demand viewing the channels it operates, remained in on any device. In addition, the You- force in 2017. Tube player enhances the experience and content consumption, providing FOX: In 2009, TV Azteca signed support for improved video and au- an exclusive licensing contract with dio quality. Twentieth Century Fox International Television, Inc. (Fox), which allows TV Azteca to broadcast a variety of Fox content including movies and TV se- ries in the channels it operates. The contract, renewed in 2015, continued in force in 2017. In 2017, TV Azteca and Sony: In addition, in 2009, TV Azteca Google established signed an exclusive licensing agree- an important synergy ment with CPT Holdings, Inc. (Sony). for broadcasting of TV This agreement makes it possible for the Company to broadcast a variety Azteca content over the of Sony content in the channels it op- YouTube erates. The contract, renewed in 2014, continued in force in 2017. 2017 SUSTAINABILITY REPORT TV AZTECA 8 - Other Alliances New commercial alliances were es- Isle) continued to be the reference tablished in 2017. One of them was for reality shows in Mexico. with AcunMedya (Turkey), the pro- ducer of Exatlón for Mexico, which In addition, Fremantle produced Co- has managed to garner the viewers’ cineros Mexicanos and Endemol Shine preference and has shown a positive Latine led the development of Master performance in all audience indica- Chef and Master Chef Jr. for Mexico. tors. On the other hand, La Isla (The 2017 SUSTAINABILITY REPORT TV AZTECA 9 - SUBSIDIARIES 102-2 Azteca tainment and news options to thou- States, estimated at more than 50 Comunicaciones Perú sands of Guatemalan households. million people. By the end of 2017, TV Azteca had In 2014, the Ministerio de Transportes broadcasters in 17 cities in Guatema- On November 29, 2017, AIC and y Comunicación of Peru assigned TV la and marketing over three channels. Northstar Media, LLC signed an Asset Azteca the project for the intercon- Purchase Agreement with HC2 Net- nection of 23 regions, 180 cities and www.azteca.com.gt work Inc. (“AA Sale Contract”). With 136 municipalities through the man- the AA Sale Contract between HC2 agement of 13,500 kilometers of a In 2013, TV Azteca obtained a license and AIC, all assets necessary to op- fiber optic network which was suc- to provide a 15-year nationwide digi- erate Azteca America and Northstar cessfully completed in 2016. In 2017, tal-channel broadcast service in Hon- Media LLC stations, were transferred the Management Board and the Ex- duras. At the end of 2017, TV Azteca to HC2. Said contract went into ef- ecutive Office began an assessment had broadcasters in four cities in fect on November 29, 2017. of the outlook of investments in the Honduras and awaited the authori- telecommunications business in Peru zation of the local regulator to start Through the AA Sale Contract be- in order to define the long-term stra- broadcasting in two more sites. tween Northstar Media LLC and tegic focus of TV Azteca. HC2, the licenses of the Northstar www.azteca.com.hn Media stations that were part of Az- www.aztecacomunicaciones.com teca America were transferred. On January 19, 2018, the FCC autho- TV Azteca Guatemala rized the AA Sale Contract between and TV Azteca Azteca America Northstar Media LLC and HC2, as well as the transfer of the licenses Honduras Azteca International Corporation to operate the Northstar Media LLC (AIC), namely, Azteca America, of- television stations in favor of HC2. In 2008, TV Azteca arrived in Guate- fers high-quality Spanish-language According to the AA Sale Contract, mala through an Alliance with Latitud contents for a significant part of the the sale was closed on February 7, TV and ever since has brought enter- Hispanic population in the United 2018 on payment of US$33 million. 2017 SUSTAINABILITY REPORT TV AZTECA 10 - 2017 SUSTAINABILITY REPORT TV AZTECA 11 - MESSAGE FROM THE CHIEF EXECUTIVE OFFICER 102-14, 102-15 In 2017, TV Azteca continued to Consequently, in 2017 income expe- reduce our foreign currency liability TV Azteca’s income advance its unwavering Evolution rienced a double-digit growth, which exposure. showed double-digit process through a clear strategy of combined with management efficien- topical and high-quality content pro- cy translated into a 5% increase in op- This was achieved through the issu- growth, which combined gramming to boost even more our erating profit. ance of debt in the national and in- with efficient management solid position in the Mexican market.