annual report 2006 Televisa Grupo Televisa, S.A.B. annual report 2006 Av. Vasco de Quiroga 2000 C.P. 01210 México, D.F. (5255) 5261-2445 www.televisa.com www.televisair.com Grupo Televisa, S.A.B., is the largest media company in the Spanish-speaking world and a major participant Investor information in the international entertainment business. Corporate headquarters Common stock data It has interests in television production and broadcasting, Grupo Televisa, S.A.B. CPOs (Certificados de Participación Ordinarios) covering the Grupo Televisa, Av. Vasco de Quiroga 2000 S.A.B., comprise 117 shares (25 A Shares, 22 B Shares, 35 D Shares and 35 L production of pay television networks, international C.P. 01210 México, D.F. Shares), and are listed and admitted for trading on the Bolsa Mexicana de (5255) 5261 2000 Valores, S.A. de C.V. (the Mexican stock exchange), under the ticker symbol distribution of television programming, direct-to- TLEVISA CPO. The GDSs (Global Depositary Shares), each representing five Legal counsel CPOs, are listed on the New York Stock Exchange and trade under the ticker home satellite services, publishing and publishing Mijares, Angoitia, Cortés y Fuentes, S.C. symbol TV. On March 22, 2006, Televisa changed its GDS ratio from its previous Montes Urales 505, 3rd Fl. 1 GDS per 20 CPOs to 1 GDS per 5 CPOs, a 1:4 GDS split. distribution, cable television, radio production and C.P. 11000 México, D.F. (5255) 5201-7400 Dividend policy broadcasting, professional sports and live entertainment, Decisions regarding the payment and amount of dividends are subject to Fried, Frank, Harris, Shriver & Jacobson LLP approval by a majority of the A Shares and B Shares voting together gene- feature film production and distribution, gaming, and One New York Plaza rally, but not necessarily, on the recommendation of the board of directors, New York, New York 10004 U.S.A. as well as a majority of the A Shares voting separately. On March 25, 2004, the operation of a horizontal internet portal. Grupo (212) 859-8000 the company’s board of directors approved a dividend policy under which Televisa also owns an unconsolidated equity stake in Televisa intends to pay an annual regular dividend of Ps.0.35 per CPO. Independent auditors La Sexta, a free-to-air television venture in Spain. PricewaterhouseCoopers, S.C. SEC filings Mariano Escobedo 573 Televisa files and submits annual reports to the US Securities and Ex- C.P. 11580 México, D.F. change Commission. This annual report contains both historical information (5255) 5263-6000 and forward-looking statements. These forward-looking statements, as well as other forward-looking statements made by the company, or its repre- Depositary sentatives from time to time, whether orally or in writing, involve risks and JPMorgan Chase Bank uncertainties relating to the company’s businesses, operations, and financial One Chase Manhattan Plz., 40th Fl. condition. A summary of these risks is included in the company’s filings with New York, New York 10081 U.S.A. the US Securities and Exchange Commission, and this summary as well as (866) 576-2377 the other filings with and submissions to the US Securities and Exchange [email protected] Commission, are and will be available through the office of investor relations upon written request. Investor relations We ask that investors and analysts direct all inquiries to: Grupo Televisa, S.A.B. Av. Vasco de Quiroga 2000 C.P. 01210 México, D.F. (5255) 5261-2445 [email protected] www.televisa.com www.televisair.com This annual report is available in both English and Spanish. April 2007 Este informe anual está disponible tanto en español como en inglés. Abril 2007 Table of contents 2 10 31 Dear fellow Business Board of directors shareholders segments 4 18 32 Financial Fundación Financial highlights Televisa statements 6 19 Televisa at a MD&A glance Dear fellow shareholders Our 2006 results once again illustrate the strength of our In 2006, we exported our programs to more than 60 coun- business and extend our long track record of solid revenue tries throughout the world. In the United States, our content and margin growth. Our high-quality content consistently reaches viewers through Univision. Our programming repre- drives our performance, as does our ability to maximize sented approximately 42 percent of Univision’s non-repeat synergies among our business segments. broadcast hours, including most of its prime-time hours. We achieved strong sales growth in nearly all our operating We recently began exporting program formats to coun- segments during the year. Consolidated sales grew 12.2 percent, tries around the world, and we assist local production to reach Ps.37.9 billion. Our operating segment income in- companies in bringing them to life. Currently some of our creased 19.4 percent to Ps.16.4 billion, and we achieved a most popular shows, locally produced, are entertaining record-high operating segment income margin of 43.3 percent. audiences in countries such as Romania, Argentina, and the Czech Republic. Our Television Broadcasting segment is fundamental to our success. In 2006 we aired 24 of the top 25 programs in Sky Mexico is the national leader in direct-to-home satel- Mexico, and 83 of the top 100. Across our television broad- lite television service. We added 179,500 new subscribers in casting business, our average sign-on to sign-off audience 2006, bringing the total subscriber base to more than 1.4 share for the full year was 71 percent, driven primarily by million by year end. During the year we provided exclusive shareholders our programming on Channel 2, the country’s leading tele- access to a majority of the 2006 FIFA World Cup games and vision broadcast network. We produce nearly 100 percent all of the Spanish soccer league games. We also launched of the programming on Channel 2, including telenovelas, several new channels featuring movies, music, special events, newscasts, game shows, and variety shows. This popular sports, and children’s programs. We will continue to bring line-up captured an average sign-on to sign-off audience exciting new channels to our subscribers and see excellent share of 31.8 percent. growth potential for this platform. Dear fellow Dear fellow Cablevisión, our cable television business in Mexico City We achieved a record-high and the metropolitan area, increased its subscriber base by 17.6 percent, reaching more than 496 thousand subscribers operating segment at year end. All of those subscribers now enjoy our programs income margin of 43.3% in digital format, thanks to the completed conversion of our transmission from analog to digital format in December 2006. Cablevisión also enjoyed strong growth in its broad- Our Pay Television Networks segment delivered robust band business, adding 35 thousand broadband subscribers growth throughout the year. We produce 26 channels un- in 2006 and closing the year with 96 thousand in all. der 14 different brands for pay-television systems in more than 46 countries, reaching more than 16 million subscrib- We expect even greater growth in our subscriber base and ers throughout the world. In the United States we distribute our profits in the coming years. These will come not only five pay-television channels through TuTV, our joint venture from our ongoing efforts to improve our service but also with Univision. Given the quality of our networks, the strong from new regulations that will allow us to broaden our growth of the Hispanic population in the United States, offerings to include telephony services. We are very opti- and the increased pay-TV penetration in Mexico and Latin mistic about the future of this business segment. America, we continue to see excellent growth potential in this segment. We are using a broad array of digital platforms to grow and cross-promote our businesses. We distribute our programs, music, and other content through more than 120 vertical sites linked to Esmas, the leading digital entertainment web We entered the gaming business in 2006. We currently have portal in Latin America. Our new video-on-demand, live five bingo parlors in operation under the Play City brand, and television, and our online music store have made Televisa we expect to establish a total of 65 by 2013. In addition, we a leader in online entertainment. We see significant op- launched Multijuegos, our online lottery business, with portunities to distribute and promote our content over the access to a network of terminals located in stores through- Internet and are seeking new ways to broaden our reach in out the country. We are very excited about the opportunities the digital space. in this industry. Televisa is the world’s largest publisher and distributor of We have a strong balance sheet, and expect to continue re- Spanish-language magazines. In our publishing business warding our shareholders for their faith in Televisa long into we launched 16 new titles and grew total circulation to the future. 155 million, an increase of 6.9 percent over that of 2005. We currently distribute more than 130 magazine titles to more We appreciate the effort of our people and our board of than 105 thousand points of sale throughout the world. We directors. We also appreciate the support and loyalty of our will continue to take advantage of new opportunities to customers and the patronage of our audience. We look for- grow both of these businesses. ward to offering them even greater value and more choices in the future. shareholders Dear fellow Dear fellow Thank you for your trust and support. Emilio Azcárraga Jean Chairman of the Board and Chief Executive Officer April 2007 Financial highlights 2005 2006 % Net sales Ps.