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May 2015

GRUPO TELEVISA:
VALUE WITH A PATH TO OUTPERFORMANCE
Grupo Televisa (NYSE:TV)
Current Price: $36.50
Market Cap: $21 billion
1-Year Target Price: $45 - 57 (24% - 55% upside)

Sean P. Murphy
(617) 849-6587
sean@gamecreekcapital.com

Game Creek Capital

Disclaimer
The analyses and conclusions of Game Creek Capital, L.P., a Delaware limited partnership (Game Creek),
contained in this presentation are based on publicly available information. Game Creek recognizes that there
may be confidential information in the possession of Grupo Televisa (the Company) discussed in the
presentation that could lead the Company to disagree with Game Creeks conclusions. This presentation and
the information contained herein is not a recommendation or solicitation to buy or sell any securities. As of the
date of this presentation, Game Creeks client, Game Creek Fund, L.P., a Delaware limited partnership,
currently beneficially owns equity securities in the Company. The Company does not represent all of the
securities purchased, sold or recommended for the Companys clients, including the Fund. The reader should
not assume that the Funds investment in the Company was or will be profitable.
The analyses provided may include certain statements, estimates and projections prepared with respect to,
among other things, the historical and anticipated operating performance of the Company, access to capital
markets and the values of assets and liabilities. Such statements, estimates, and projections reflect various
assumptions by Game Creek concerning anticipated results that are inherently subject to significant
economic, competitive, and other uncertainties and contingencies and have been included solely for
illustrative purposes. No representations, express or implied, are made as to the accuracy or completeness of
such statements, estimates or projections or with respect to any other materials herein. Actual results may
vary materially from the estimates and projected results contained herein. Accordingly, no party should
purchase or sell securities on the basis of the information contained in this presentation. Game Creek
expressly disclaims liability on account of any partys reliance on the information contained herein with respect
to any such purchases or sales.
Game Creek manages clients that are in the business of trading buying and selling securities and financial
instruments. It is possible that there will be developments in the future that cause Game Creek to change its
position regarding the Company. Game Creek may buy, sell, cover or otherwise change the form of its
investment regarding the Company for any reason. Game Creek hereby disclaims any duty to provide any
updates or changes to the analyses contained herein, including, without limitation, the manner or type of any
Game Creek investment.

Game Creek Capital

Investment Thesis
Leading vertically integrated media company best-in-class management team
US cable and content companies have been trying to achieve this for decades
Univision IPO is near-term catalyst to valuation realization
TV has 38% ownership stake and gets paid 12% royalty stream
Recent changes to foreign ownership rules in US allowing for greater ownership
Opportunities for substantial value creation across all Mexican segments
Cable

#1 Market Share (11% of Mexican HHs)


Satellite #1 Market Share (22% of Mexican HHs)
Content #1 Market Share (Highest Ratings, Most Viewed)
Holding company structure makes SOTP best valuation methodology
We view SOTP valuation of $45-57/share of 24-55% upside

Game Creek Capital

TV is a Highly Diversified Media / Telco Platform


Business Segment

Content

Univision
Licensing

Univision
Ownership
Content
(excl.
Univision)

Description

% of '14 EBITDA

Business Model Similar To:

- Royalty stream of 12%+ of Univision's TV revenue


- Royalty rate increases to 16%+ in 2018
- 38% economic ownership of Univision
- IPO expected 2H 2015

14%

Not
Consolidated

- 4 broadcast channels & 24 Pay TV networks


37%
- Produces 90,000 hours of content annually

Distribution

- Majority ownership in 6 cable operators


Telecom

26%
- ~3.4 mm TV subs (~11% of Mexican HHs)

14.5mm US subs 5.8mm US subs


12% of US HHs 5% of US HHs

- 58.7% ownership of Sky Mexico (DTV is partner)


Satellite (Sky)

27%
14.0mm US subs
12% of US HHs

- 6.6mm total subs (~22% of Mexican HHs)

Other (1)

1. Includes publishing, other, intersegment operations, and corporate expenses.

(3%)

20.4mm US subs
17% of US HHs

Game Creek Capital

TV is Undervalued Today

Distribution

Content

Business Segment

Current Valuation
$ Per Share

Univision
Licensing

15.68

Univision
Ownership

7.16

TV has 24% upside in our Base Case


SOTP valuation
Given the highly predictable nature of

Content
(excl.
Univision)

13.95

Telecom

9.88

Satellite (Sky)

5.13

Other (1)

(1.56)

Net Debt
Total
Current
% vs. Current

(5.13)
45.11
36.50
23.6%

1. Includes publishing, other, intersegment operations, and corporate expenses.

the cash flows, GCC is confident in


its $16 / share valuation of Univisions
licensing business
This implies that the rest of the

business trades at 6.0x 2014


EBITDA (assuming Univision
equity value of $7 per share)

Game Creek Capital

TV has Underperformed its Peers


Content
110.0%
Satellite
97.3%
Cable
90.5%

S&P 500
54.9%
TV
53.9%
Mexico IPC
24.4%

Note:
Content peers include CBS, TWX, VIAB, FOXA, DIS, DISCA, SNI.
Cable peers include CMCS, CVC, TWC, LBTYA, RCI.
Satellite peers include DTV, DISH.

Game Creek Capital

New Board Members Implications?


Televisa has nominated three interesting Board members in the past month
Mike Fries CEO of Liberty Global

We expect Mike Fries will help think about appropriate capital structures to

drive levered equity returns and minimize taxes


David Zaslav - CEO of Discovery
We expect David Zaslav will help TV explore content value maximization on

a global scale
Jon Feltheimer - CEO of Lionsgate

Game Creek Capital

Early Innings of Cable Roll-Up in Mexico


Cable in Mexico looks like the United States in the late 1980s
- Televisa has grown its cable RGUs 60% over the last 2 years today reaching 11% of Mexican HHs
- Last quarter, TV rolled out its first competitive triple-play offering in Mexico City
- More than 70% of the population can afford double / triple play services (yet penetration is at ~50%)
- Comcasts stock is up 24x since 1988
US
1988
Pay TV Penetration

Mexico
2014

54%

US
2014

52%

84%

Avg. Monthly Cable Bill

14.52

14.87

64.41

Avg. Income Per Capita

1,790

859

4,420

US
2001
% of Population Using Internet

49%

Mexico
2014
49%

US
2014
87%

Game Creek Capital

Univision Monetization
Univision represents ~50% of GCCs Base Case Valuation

IPO or monetization event within 12 months


Book value is $1.9 billion versus our base case of $4.0 billion
2016 Incentive (Broadcast Spectrum) Auction could be worth $2bn+
Univision is the largest holder of 600 MHz Broadcast Spectrum in the US
13 duopolies (9 in top 20 markets) & channel-sharing opportunities in 6 other

markets (5 in top 20 markets)


Televisa has a path to control Univision with expected changes to FCC foreign

ownership regulations

Game Creek Capital

10

GCC has Identified Multiple Ways to Win

Distribution

Content

Business Segment

Upside Opportunity
$ Per Share

Univision
Licensing

17.96
14.6% Upside

Univision
Ownership

10.14
41.5% Upside

Near-term catalysts include (i) an expected

Content
(excl.
Univision)

18.01
29.1% Upside

Telecom

11.36
15.0% Upside

Satellite (Sky)

Other (1)

There is additional 31%+ upside, for


total upside of 55%+, associated with
identifiable, near-term catalysts

5.73
11.6% Upside

2015 Univision IPO and (ii) increased revenue


growth and margin expansion in the Telecom
business
Medium-term catalysts include (i) continued

consolidation to create a national cable


operator and eventual spin of the business
and (ii) investor-like allocation of capital by
management

(1.56)

Long-term catalysts of monetizing spectrum at


Net Debt
Total
Current
% vs. Current

(5.13)
56.51
36.50
54.8%

1. Includes publishing, other, intersegment operations, and corporate expenses.

Univision and potentially gaining control

Game Creek Capital

FULL PRESENTATION

11

Game Creek Capital

Table of Contents
A. Summary
B. Unmatched Set of Assets
1. Univision
2. Telecom
3. Sky
4. Content
C. Management & Capital Structure
D. Valuation & Risks
E. Appendix

12

Game Creek Capital

SUMMARY

13

Game Creek Capital

14

Investment Overview
We believe Televisa offers investors an opportunity to own world class assets run by smart
managers at a discounted valuation. Televisas unique set of media & telecom assets are in
the early innings of benefitting from long term secular tailwinds. We see a 1-year price target
of $45.11 (24% upside) and believe Televisa has a multi-year runway in your portfolio

Bull Case
+55% ($56.51)

Current Price
$36.50

Base Case
+24% ($45.11)

Bear Case
-17% ($30.13)

Game Creek Capital

15

Investment Thesis
Televisa (TV) is the most vertically integrated media company in the world and is currently being underappreciated by
the market. As a market leader in both content and distribution, Televisa has already accomplished what large US media
peers (Comcast, AT&T, etc.) are trying to do today, without the same regulatory restrictions

Strong Competitive Positioning:


Unmatched Set of Media / Telco Assets. Unique set of assets has resulted in a media / telco platform with revenue diversification and
market leading positions in industries with high barriers to entry.
Content Value is Increasing. The premium placed on content will persist. Content has high barriers to entry, promotes customer
loyalty, is difficult to regulate, and is becoming a brand differentiator for large media / telco / tech companies given the proliferation of
distribution channels. TV is the largest producer of content in Mexico and in the US for Hispanics. (TV produces 90,000 hours of
content per year versus only 75,000 hours in the Warner Brothers library)
Shareholder-Friendly Management Team. Management is incentivized alongside shareholders and has shown a focus on creating
shareholder value, capital allocation and prudent balance sheet management.

Medium-Term Macro Tailwinds:


Increase in US Hispanic Consumer Spend. Exposure to rapidly growing Hispanic community in the US (18% of US population).
Univision is currently ranked as the No. 3 Broadcast Network in the US regardless of language.
TV owns 38% of Univision and collects a sizable royalty stream from Univision
Regulatory Reform Provides Opportunity in Mexico and US. Regulatory reform in Mexico has minimal negative impact on TVs Pay-TV
business and provides upside opportunity for TVs telecom companies. Regulatory reform in the US has given TV a path to own more
Univision equity.
Cable Roll-Up Strategy in Mexico. Televisa is in the same position the US cable companies were in 1988 as Pay-TV and broadband
penetration increases in Mexico, Televisa will stand to be the clear beneficiary.

Current valuation provides compelling risk / reward proposition. We view TV as being a long-term compounder fueled by strong
secular tailwinds, a superior set of assets, and identifiable catalysts.
TV trades with a 24% upside to fair value today with multiple ways to unlock value.
Bull case valuation with 55%+ upside can be achieved through identifiable catalysts including (i) Univision IPO, (ii) continued roll-up of
the Mexican cable industry, and (iii) Univision spectrum sale.
TV has traded at a discount to US peers largely due to regulatory concerns and complexity which will disappear in time.

Game Creek Capital

16

TV is Undervalued Today GCC Base Case

Content

Business Segment

Current Valuation
$ Per Share
Total ($mm)

Univision
Licensing

15.68

9,013.7

Univision
Ownership

7.16

4,117.2

Content
(excl. Univision)

13.95

8,022.6

TV trades with 24% upside in


our Base Case sum of the
parts valuation
This SOTP is intended to be a

status quo analysis of what the


business is worth today and does
not include any of GCCs
anticipated catalysts
Given the highly predictable nature

9.88

5,682.4

Satellite (Sky)

5.13

2,952.4

(1)

(1.56)

(899.3)

Net Debt

(5.13)

(2,949.7)

Total

45.11

25,939.2

Current
% Difference vs. Current

36.50
23.6%

20,987.5
23.6%

Distribution

Telecom

Other

1. Includes publishing, other, intersegment operations, and corporate expenses.

of the cash flows, GCC is confident


in its $16 / share valuation of UVNs
licensing business.
This implies that the rest of the
business trades at 6.0x 2014
EBITDA (assuming Univision
equity value of $7 per share).

Game Creek Capital

17

What Wall Street has been Missing


1. TV is no longer just a Mexican advertising or content company
We believe that there are still investors and sell-side analysts that focus too much on quarterly advertising

despite (i) TVs diversification away from being a content only company and (ii) TVs unique ability to manage
content margins overnight if need be

We continue to view Televisa primarily as a content company Sell Side Analyst 4/27/15

As recently as 2005, the Mexican content business was almost 75% of revenues today it is only 38% excluding

Univision (and only 32% advertising)


We value the Mexican advertising business as only 26% of our Base Case Value versus 51% for Univision and
33% for Telecom & Sky (1)
2. TVs broadcast networks in Mexico and Univisions networks in the US are not susceptible to the shift of

advertising dollars from television to digital that US language networks have been experiencing
91% of Univisions audience views content live every night (by far the highest of any network in the US)
~70% of Univisions audience is unduplicated
Only 49% of the Mexican population is using the internet
TV has 70% market share in broadcast TV in Mexico making it difficult to displace them or stop advertising with
them. It would also be difficult for anyone to offer an OTT solution that does not include TVs content.

Carlos Slims companies stopped advertising with TV years ago due to the competitive nature of the two companies. However,
with the increased competition in telecom, Grupo Carco is now advertising again with TV in order to go head-to-head with AT&T

3. Telecom capex levels are inline with US cable capex levels during historical investment phases.

Management is correctly planning ahead to take advantage of a long term secular tailwind
4. Sell-side analyst projections (i) underestimate Univisions value, (ii) dont contemplate the future earnings potentials

of Telecom or Sky (medium-term projected margins are too low in Telecom and ARPUs too low in Sky), and (iii)
dont contemplate the future value of TVs content library
1. Adds up to more than 100% because it excludes Other, Corporate Expenses, and Net Debt.

Game Creek Capital

18

Company Snapshot
Company Overview

Financial Highlights

Headquartered in Mexico City, Televisa (TV) is the

largest media company in the Spanish-speaking world


TV is a vertically-integrated media / telco company with

significant content and distribution businesses:


Content (44% of Revenue):

4 Broadcast Networks

24 Pay-TV Brands

Royalties & 38% Ownership of Univision

Distribution & Other (56% of Revenue):

Sky (satellite TV)

6 cable companies

27-Apr-15
36.50
575.0
20,988

Net Debt (MXN in mm)


MXN:USD
Net Debt (USD in mm)

39,261
15.40
2,549

Enterprise Value (USD in mm)

23,537

Short Interest (mm)

(1)

Income Statement
Revenue
% growth

2.9

2010

2011

2012

2013

2014

57,857
10.5%

62,582
8.2%

69,291
10.7%

73,791
6.5%

80,118
8.6%

COGS
Gross Profit
% of Revenue

(26,295) (28,133) (29,826) (29,756) (31,346)


31,562 34,449 39,465 44,035 48,773
54.6%
55.0%
57.0%
59.7%
60.9%

Opex
EBITDA
% of Revenue

(9,400) (10,220) (12,201) (15,367) (17,971)


22,162 24,229 27,264 28,668 30,802
38.3%
38.7%
39.3%
38.9%
38.4%

D&A
Other Expense
EBIT
% of Revenue

(6,579)
0
15,583
26.9%

Net Income
% growth

Market Data
Stock Price (USD)
Shares Outstanding (mm)
Market Cap (USD in mm)

(MXN in millions)

(7,362)
(593)
16,274
26.0%

7,683
6,666
27.9% (13.2%)

(8,474)
(650)
18,140
26.2%

(9,846) (11,563)
(83) (5,282)
18,738 13,957
25.4%
17.4%

8,761
7,748
5,387
31.4% (11.6%) (30.5%)

Cash Flow
EBITDA
Capex
EBITDA - Capex
% of Revenue

22,162
(11,306)
10,856
18.8%

Leverage
Debt
Cash
Net Debt
Net Debt / EBITDA

47,049 55,965 52,991 60,056 80,998


(31,389) (21,699) (24,381) (20,415) (34,518)
15,659 34,266 28,611 39,641 46,480
0.7x
1.4x
1.0x
1.4x
1.5x

1. Currently 1 USD = 15.4 MXN.

24,229 27,264 28,668 30,802


(9,669) (11,428) (14,871) (17,004)
14,560 15,836 13,797 13,798
23.3%
22.9%
18.7%
17.2%

Game Creek Capital

UNMATCHED SET OF ASSETS

19

Game Creek Capital

20

TV is a Highly Diversified Media / Telco Platform


TV is the most vertically integrated media company in the world with leading content and distribution businesses. No other media
company has a comparable breadth of businesses and diversification of revenue streams.

Business Segment

Distribution

Content

Univision
Licensing

Description

% of 2014 Revenue

% of 2014 EBITDA

- Licensing royalty stream of 12%+ of UVN's audiovisual revenue


- Leading Spanish-language media company in the US
- #4 network in the US regardless of language
- Retrans revenue expected to 2x in 4 years, reducing reliance on ad revenue

5%

14%

Not Consolidated

Not Consolidated

Univision
Ownership

- 38% economic ownership of UVN (8% direct, 30% through converts)


- Leading Spanish-language media company in the US
- #4 network in the US regardless of language

Content
(excl. Univision)

- Operates 4 broadcast channels in Mexico


- Produces and distributes 24 Pay-TV networks in Mexico and globally
- Produced more than 93,000 hours of content in 2013

38%

37%

- Majority ownership in 6 cable operators


- 6.9mm Total RGUs (including 3.4mm Video RGUs or 11% of Mexican HHs)
- Offers television programming, high speed internet, and IP telephony

26%

26%

22%

27%

Telecom

Satellite (Sky)

Other

(1)

- 58.7% ownership of Sky Mexico (partner is Direct TV)


- 6.6mm subs (21.6% of Mexican HHs)
- Mexico's leading direct-to-home satellite television system
- Also operates in Central America and the Dominican Republic
- Publishing is the largest piece of Other Revenue
- Also includes gaming, soccer teams, Azteca stadium and radio businesses

1. Includes publishing, other, intersegment operations, and corporate expenses.

Business Model Similar To:

14.5mm US subs 5.8mm US subs


12% of US HHs 5% of US HHs

14.0mm US subs
12% of US HHs

9%

(3%)

20.4mm US subs
17% of US HHs

Game Creek Capital

1. UNIVISION

21

Game Creek Capital

22

1. Univision
Univision represents ~50% of GCCs Base Case Valuation

We expect Univisions valuation to become clear upon its imminent IPO / sale
There are additional sources of hidden value as we believe no one has been focused on Univisions spectrum value or 2016 political proceeds

Univision Overview & Valuation Catalysts

Univision is the leading media company serving the 54mm Hispanic

Royalty Stream

population (17% of US population) in America with #1 market share in each


of its businesses

Univision Network: one of the top five broadcast networks in the US


regardless of language; reaches 94% of US Hispanic TV households

whereby TV gets paid ~12%+ of Univisions revenue

The royalty rate is set to increase to ~16%+ in 2018

Licensing revenue to Televisa is nearly 100% margin as there are


no incremental costs to Televisa

Other assets include: (i) Unimas (broadcast network reaching 88% of


US Hispanic TV HHs), (ii) Univision Cable Networks, (iii) 61 Owned

advertising assets
Univision is 62% owned by a private equity consortium of Haim Saban,
Madison Dearborn, Providence, TPG, and Thomas H. Lee

Ownership Stake

The PE owners acquired Univision in March 2007. Today, the


investment is approaching the end of its investment horizon and we

believe an exit (IPO or M&A) is imminent:

We forecast a 6-year revenue CAGR of 7% (almost 2x its US peers)

Univisions Royalty Stream


is valued at $15-16 per share

and/or Operated TV stations and 67 radio stations, and (iv) digital and

Televisa has a perpetual licensing agreement with Univision

Televisa effectively owns 38% of Univision through an equity stake


and convertible debt making Televisa the entity with the largest

Univision has publicly stated that an IPO is likely within 12-18

economic interest in Univision

months

In time, it would make sense for TV and Univision to consolidate but

Refinanced its two nearest term maturities in early 2015

Ended its management agreements with the PE owners and

its unlikely until (i) Univisions net debt is lower and (ii) the US

technical assistance agreement with TV

foreign ownership rules for media companies are more clear

David Zaslov left the Board of Univision and has been


nominated to join the Board of Televisa

Univision Ownership Stake


is valued at $7-8 per share

Game Creek Capital

23

Valuation of Royalty Stream from Univision


Univisions Royalty Stream is worth $15-16 or 35% of GCCs Base Case Valuation
(Numbers in millions, unless otherwise stated)
2014A
2,454.6
10.6%
77.8
154.8
99.0%
2,297.7
2,609.4
11.91% 11.91%
273.7
310.8

2015E
2,577.3
5.0%
178.0
15.0%
2,755.4
11.91%
328.2

2016E
2,783.5
8.0%
204.7
15.0%
2,988.2
11.91%
355.9

2017E
3,061.9
10.0%
225.2
10.0%
3,287.1
11.91%
391.5

2018E
3,306.8
8.0%
247.7
10.0%
3,554.5
16.22%
576.5

2019E
3,472.2
5.0%
272.5
10.0%
3,744.6
16.22%
607.4

2020E
3,645.8
5.0%
292.9
7.5%
3,938.7
16.22%
638.9

Total TV & Interactive Revenue (USD)


Amount Greater Than 2010 Revenues ($1.65bn) (USD)
Incremental Royalty Rate
Incremental Royalties (USD)

2,297.7
647.7
2.00%
13.0

2,609.4
959.4
2.00%
19.2

2,755.4
1,105.4
2.00%
22.1

2,988.2
1,338.2
2.00%
26.8

3,287.1
1,637.1
2.00%
32.7

3,554.5
1,904.5
2.00%
38.1

3,744.6
2,094.6
2.00%
41.9

3,938.7
2,288.7
2.00%
45.8

Formula Calculation
Forecasting Error
% of Formula Calculation
Total Royalties (USD)
% growth

286.6
(13.4)
(4.7%)
273.2

330.0
(16.0)
(4.8%)
314.0
14.9%

350.3
(16.9)
(4.8%)
333.3
6.2%

382.7
(18.5)
(4.8%)
364.1
9.2%

424.2
(20.5)
(4.8%)
403.7
10.9%

614.6
(29.7)
(4.8%)
584.9
44.9%

649.3
(31.4)
(4.8%)
617.9
5.6%

684.6
(33.1)
(4.8%)
651.5
5.4%

Tax Rate

26.7%

28.6%

30.0%

30.0%

30.0%

30.0%

30.0%

30.0%

Licensing Cash Flow to TV (USD)

200.2

224.2

233.3

254.9

282.6

409.4

432.5

456.0

Univision TV Revenue (USD)


% growth
Univision Interactive Revenue (USD)
% growth
Total TV & Interactive Revenue (USD)
Royalty Rate
Base Royalties (USD)

2013A
2,219.9

Base Case
8.00%
4.00%
11,857.3

Discount Rate
Long Term Growth Rate
Terminal Value (USD)
Cash Flows for DCF (USD)
Present Value of Cash Flows (USD) - Base Case
Per Share (USD) - Base Case
Bear Case / Upside Case

233.3
9,013.7
15.68
12.35 / 17.96

254.9

282.6

409.4

432.5

12,313.3

CAGR
'13-'18
8%
26%
9%

16%

15%

Game Creek Capital

24

Valuation of Univision Ownership Stake


Televisas Ownership Stake of Univision is worth $7-8 or 16% of GCCs Base Case Valuation

Our base case is conservative and implies a 6.6% IRR and 1.7x MoM for the PE investors

(Numbers in millions, unless otherwise stated)


Total Univision Revenue (USD)
% growth
Univision EBITDA (USD)
EBITDA Margin

2016 EBITDA
Forward EV / EBITDA Multiple
EV (USD)
Less: Net Debt (USD)
Equity Value (USD)
TV Ownership
Equity Value to TV (USD) - Base Case
Per Share (USD) - Base Case
Bear Case / Upside Case

2013A
2,627.4
1,120.4
42.6%
Base Case
1,487.8
13.5x
20,085.8
(9,251.0)
10,834.8
38%
4,117.2
7.16
5.69 / 8.64

2014A
2,911.4
10.8%
1,253.8
43.1%

2015E
3,057.0
5.0%
1,347.1
44.1%

2016E
3,301.5
8.0%
1,487.8
45.1%

Game Creek Capital

25

Addl Upside Catalyst #1: Spectrum Auction


We value Univisions excess spectrum at $2bn-$2.5bn or an additional $1.50 per share for Televisa
-

Univision is the largest holder of broadcast spectrum in the 600 MHz band and has duopolies and channel sharing opportunities in 14 of the Top
20 US Markets
- Duopolies and channel sharing opportunities enable Univision to stay in business with no downside to current operations or financial outlook
while being able to monetize its valuable excess spectrum assets

The FCCs Incentive Auction is set for 2016 and, following the recent record-breaking AWS-3 Auction, the demand and valuation potential for
spectrum-constrained major US cities is high (potentially higher than the FCC released Greenhill valuations below)

Market

DMA Rank

TV HHs

# of Stations By Power Level


Class A
Full Power
Total

# of Stations To Be Sold
Class A
Full Power
Total

Max

Class A
Median

Full Power
Max
Median

Multiple Station Univision / Unimas Markets


New York
1
7,384,340
Los Angeles
2
5,613,460
Chicago
3
3,484,800
Dallas
5
2,588,020
San Francisco
6
2,502,030
Houston
10
2,215,650
Phoenix
12
1,812,040
Miami
16
1,621,130
Sacramento
20
1,387,710
San Antonio
36
881,050
Fresno
55
576,820
Tucson
71
438,440
Bakersfield
127
221,740
Total
37,904,010

1
1

3
2
2
2
2
2
1
2
2
2
2
2
1

3
2
2
2
2
2
2
2
2
2
2
2
2

1
1

2
1
1
1
1
1
1
1
1
1
1
-

2
1
1
1
1
1
1
1
1
1
1
1
1

360
370
120
58
92
38
22
76
55
22
17
15
28

280
310
100
50
70
36
10
70
43
20
16
11
15

490
570
130
67
140
52
36
80
130
35
30
38
80

Channel Sharing Opportunities with Entravision


Boston
7
2,433,040
Washington DC
8
2,412,250
Tampa
14
1,827,510
Denver
17
1,574,610
Orlando
18
1,490,380
Albuquerque
47
690,740
Total
10,428,530

2
2
2
2
2
2

2
2
2
2
2
2

1
1
1
1
1
1

1
1
1
1
1
1

77
98
43
22
67
6

77
67
39
10
44
5

140
140
71
33
85
9

410
340
120
53
110
45
223
78
94
29
26
20
31
UVN Value

93
130
60
28
68
5

UVN Value Assuming 50%


Total Spectrum Value to UVN

Greenhill Valuation
Max
Median

980
570
130
67
140
52
22
80
130
35
30
38
28
2,302

820
340
120
53
110
45
10
78
94
29
26
20
15
1,760

140
140
71
33
85
9
478
239
2,541

93
130
60
28
68
5
384
192
1,952

Game Creek Capital

26

Addl Upside Catalyst #2: 2016 Political


Hispanics are the fastest growing population in the US

The Hispanic population is expected to almost double over the next

2012 Presidential Race

blacks and whites) making Hispanics 10% of the US electorate

35 years while the Non-Hispanic population grows at a 0.3% CAGR


Hispanics
Non-Hispanics
Total

2015E
56,755
264,615
321,370

2050E
105,551
292,778
398,329

% of Total:
Hispanics
Non-Hispanics
Total

18%
82%
100%

26%
74%
100%

Growth
86%
11%
24%

48% of Hispanic eligible voters turned out in 2012 (versus 65% for

Hispanics tend to vote 63% Democrat and 27% Republican

Obamas campaign aimed ~10% of its money towards attracting


Hispanic voters in key states while Romney spent just ~4%

After six months of mulling over Novembers election results, many


Republicans remain convinced that the partys only path to future
victory is to improve the GOPs appeal to Hispanic voters.
- Byron York, Washington Examiner May 2, 2013

Source: US Census Bureau

Increasingly Important Hispanic Vote & Univision Implications

The Hispanic vote in the US is becoming increasingly important to win elections as proven by the outcome of the 2012 Presidential Race. We
expect campaign spending on the Hispanic population to meaningfully increase in 2016

From the beginning it was clear Hispanic voters would play a pivotal role this election (2012) Yet neither party seems to have fully gotten
the message. Investment in Spanish-language advertising is a mere fraction of what it should beOne cannot help but feel that both
parties have a good deal of work to do if they hope to keep up with Americas fastest-growing population. Javier Palomarez, CEO of
USHCC

Come 2016, Latino voters may hold enough political clout to make or break any presidential hopeful. Maria Santana, CNN

In 2012, Univision made $37.2mm of political revenue despite being the #1 way to reach Hispanic voters by TV or radio in the US.

We expect 2016 political revenue to be magnitudes higher than 2012 given (i) the importance of the Hispanic voter in the US and (ii) a widely
expected record-setting presidential campaign with no incumbent

Univision is well positioned with owned and operated stations in Florida, Washington DC, North Carolina, etc.

Game Creek Capital

2. TELECOM

27

Game Creek Capital

28

Telecom
TVs Telecom business is worth $9-10 or 22% of GCCs Base Case Valuation
Cable in Mexico looks like it did in the US in 1988 and provides a long runway of growth
- Management has structured the cable business as one separate entity. We believe this provides optionality for a spin in the future
-

Telecom Overview

Televisa is a leader in the Mexican cable industry with 6.9mm RGUs


(including 3.4mm Video RGUs or 11% of Mexican HHs) across its six cable
companies

Majority owner of Cablevision (51% ownership), Cablemas (100%),

Telecom Valuation
(Numbers in millions, unless otherwise stated)
2012A
2013A
2014A
Telecom Revenue (MXN) 15,570.4 17,138.8 20,937.3
% growth
10.1%
22.2%

2015E
24,706.0
18.0%

2016E
28,411.9
15.0%

9,635.3
39.0%

11,364.8
40.0%

TVI (50%), Cablecom (100%), Tele-cable (100%), and Bestel (85%)

TV is consolidating the cable industry in Mexico

The Company is expected to continue consolidating while being

Telecom EBITDA (MXN)


EBITDA Margin

5,812.8
37.3%

disciplined on valuation (e.g. Megacable is an asset of interest but not


at current trading levels)

Significant margin expansion opportunity

Post-acquisition, TV has shown its ability to achieve significant

2016 EBITDA (MXN)


EV / EBITDA Multiple
EV (MXN)

6,131.8
35.8%
BASE
11,364.8
10.0x
113,647.7

operating synergies through SG&A and procurement savings

TV is able to control programming expense more than cable


companies in the US as TVs content division provides the largest
amount of programming to the cable companies

New low cost triple play offering, Izzi, is gaining market share

In Q4 2014, TV rolled out a low cost triple play option for consumers
in Mexico City that has been very successful is gaining market share
from incumbent Telmex

Izzi will be rolled out to the rest of TVs cable footprint and will be
accretive to margins by adding additional products (voice / data) to
existing subscribers plans

TV Ownership

77.0%

EV to TV (MXN)
2015 FX Conversion (MXN:USD)

87,508.7
0.065

Value to TV (USD) - Base Case


Per Share (USD) - Base Case
Bear Case / Upside Case

5,682.4
9.88
5.86 / 11.36

7,882.9
37.7%

Game Creek Capital

29

Cable Opportunity Mexico vs. US


Pay TV Industry in Mexico looks like the United States in the late 1980s
Since 1988, penetration in the US increased from 54% to 84% and the average monthly cable bill increased at a 6% CAGR which
was double the rate of GDP growth over the same period
- More than 70% of the population can afford double / triple play services (yet penetration is at ~50%)
-

US
1988
Pay TV Penetration

Mexico
2014

54%

US
2014

52%

84%

30% Add'l Penetration

Avg. Monthly Cable Bill

14.52

14.87

64.41

6% CAGR

Avg. Income Per Capita

1,790

859

4,420

3% CAGR

Cable (% of Monthly Income)

0.8%

1.7%

1.5%

Population (mm)
HHs (mm)
People / HH

244
92
2.7

122
31
4.0

304
118
2.6

US
2001
% of Population Using Internet

49%

Mexico
2014
49%

US
2014
87%

38% Add'l Penetration

Sources: TV Company materials, Leichtman Research Group, California Cable & Telecommunications Association, New York Times, FCC Media Bureaus Annual Survey of Cable Rates,
Sentier Research, World Bank, Broadband Commission.

Game Creek Capital

30

Cable Capex Is Not a Bad Thing

Spending capex equal to 35-45% of revenue is not unheard of:

It seems high compared to levels in the US today (14%) but in the early 2000s, the US cable sector spent at levels similar to Televisas
current spending levels in order to upgrade their infrastructure for high speed broadband

From 1996-2002, the US cable industry spent $65bn to build higher capacity hybrid networks of fiber optic and coaxial cable for broadband
networks

Similarly, from 1984-1992, the US cable industry spent more than $15bn on wiring the US

Televisa is in a position to deploy capital more efficiently than US peers in the early 2000s as TV benefits from learning from its US peers
mistakes and utilizing best practices

Televisas management team is investing wisely in the cable business they are ROI-driven and are positioning themselves to be the biggest
beneficiary of a very strong secular tailwind as cable / broadband becomes as important as electricity

We expect capex within Televisas telecom business to show signs of normalizing in 2017

2000

US Cable Industry ($ in mm)


2001
2002

2014

Televisa ($ in mm)
2014
2015E

Revenue (FX adjusted)

42,116

45,477

47,898

130,424

1,574

1,858

Capex

14,600

16,100

14,500

17,805

700

824

35%

35%

30%

14%

44%

44%

Capex (% of Revenue)

Sources: Televisa company materials, UBS, and Statista.

Game Creek Capital

31

CMCSA Case Study


Cable & Broadband Penetration Drives Value Creation
While there is no perfect case study given limited trading histories and different business mixes, we believe CMCSA is worth studying in
the context of long term value creation at Televisa
- Televisa already has a similar strategy to CMCSA today having both distribution and content under one roof
- We view Televisa as being a long-term compounder fueled by strong secular tailwinds that will have a place in a portfolio
for years

Share Price

1988
2mm video subs

2002
22mm video subs; 3.3mm data subs
AT&T deal closed

2009
Began roll-out of high speed wireless
NBCU deal is announced

Game Creek Capital

32

Potential Long Term Value of TVs Telecom


Under an Illustrative Long Term Scenario, TVs Telecom business could be worth more than 3x todays valuation (not including
acquisitions) by further penetrating the nascent PayTV and broadband markets in Mexico. We believe this is a realistic scenario as
the Mexican economy continues to mature and become more reliant on broadband and PayTV products. Our ARPU assumption is
extremely conservative at ~$36 / month for Triple Play versus ~$150+ / month in the US.
Long Term

Subs

Value

Total Subscribers (mm)


% growth

6.9

9.0
30%

ARPU

Current

(1)

ARPU (MXN)
% growth

240

550
129%

19,872

59,400
199%

7,949
40%

26,730
45%

EBITDA Multiple
EV (MXN in mm)
TV Ownership
EV to TV (MXN in mm)
FX Conversion (MXN:USD)

9.5x
75,514
77.0%
58,145
0.07

9.5x
253,935
77.0%
195,530
0.07

Value to TV (USD in mm)


Per Share (USD)

3,876
6.76

13,035
22.72

Revenue (MXN in mm)


% growth

Valuation

EBITDA (MXN in mm)


% margin

Assumptions
- Assumes industry Pay TV penetration
increases below that of the US and TV
maintains its market shares.
- Does not include any acquisitions.
- Assumes ARPU increases to
lowest tier Triple Play pricing currently
available at Izzi - ~$36 / month

- Assumes 500bps of margin


expansion as the new cable companies
are integrated and synergies realized.

1. Current valuation is meant to be illustrative and does not tie to 2014 actuals or base case projections as we are using
2014 ending subscribers as the base (versus average 2014 subscribers or our view of 2015/2016 subscribers).

Game Creek Capital

3. SKY

33

Game Creek Capital

34

Sky
TVs stake in Sky is worth $5-6 or 11% of GCCs Base Case Valuation
Sky has experienced tremendous subscriber growth (28% CAGR since 2009) as a result of its low-priced offering while maintaining industryleading high 40%s EBITDA margins
- As the macro-economic conditions improve in Mexico, there will be an opportunity to reduce churn and upsell to the premium offering
-

Sky Overview

Mexicos leading satellite television company with 6.6mm


subscribers (21.6% of Mexican HHs); also operates in Central
America and the Dominican Republic

TV owns Sky in partnership with DirecTV (AT&T). TV is the majority


owner with 58.7% ownership

Sky Valuation
(Numbers in millions, unless otherwise stated)
2012A
2013A
2014A
Sky Revenue (MXN)
14,465.4 16,098.3 17,498.6
% growth
11.3%
8.7%
Sky EBITDA (MXN)
EBITDA Margin

6,558.0
45.3%

7,340.5
45.6%

Our diligence has shown that TV has a strong relationship with


both DirecTV and AT&T. We believe that AT&T could be
interested in owning TVs stake in Sky. Given quality and

2016 EBITDA (MXN)


Forward EV / EBITDA Multiple

BASE
9,681.9
8.0x

EV (MXN)
TV Ownership
EV to TV (MXN)
2015 FX Conversion (MXN:USD)

77,455.2
58.7%
45,466.2
0.065

future trajectory of the asset, our understanding is that TV is


not a seller at this time.

Outlook: Mid-single digit revenue growth & expanding EBITDA /


FCF margins over near-to-medium term. Opportunity for ARPU
growth over medium-to-long term.

6.6mm subscribers; 28% CAGR for subscribers since 2009


projecting mid-to-high single digit growth

ARPU growth dependent on macro-economic improvement in


Mexico and higher per capita disposable income

Lower capex as replacement satellite will be finished soon

Value to TV (USD) - Base Case


2,952.4
Per Share (USD) - Base Case
5.13
Bear Case / Upside Case
3.84 / 5.73

8,211.3
46.9%

2015E
18,986.0
8.5%

2016E
20,599.8
8.5%

8,923.4
47.0%

9,681.9
47.0%

Game Creek Capital

35

Potential Long Term Value of Sky


Under an Illustrative Long Term Scenario, Sky could be worth 80% more than todays valuation by converting its subscriber base to
postpaid plans. We believe this is a realistic scenario as the Sky product is very cheap today (~$15/month), TV has never raised prices
and instead has acquired millions of entry-level subscribers that will look to upgrade as their HH income increases.
Long Term

ARPU

Subscribers

(1)

Current
4.4
67%

Value
2.6
35%

Postpaid Subscribers (mm)


% of Total Subs

2.2
33%

4.9
65%

Total Subscribers (mm)


% growth

6.6

7.5
14%

Prepaid ARPU (MXN)


% growth

123

150
22%

- Assumes no growth in current


postpaid plan pricing.

Postpaid ARPU (MXN)


% growth

450

450
0%

- Assumes reduced churn in prepaid


subscribers (as reflected through increased
price)

230

345
50%

18,216

31,050
70%

8,562
47%

15,525
50%

EBITDA Multiple
EV (MXN in mm)
TV Ownership
EV to TV (MXN in mm)
FX Conversion (MXN:USD)

7.5x
64,211
58.7%
37,692
0.07

7.5x
116,438
58.7%
68,349
0.07

Value to TV (USD in mm)


Per Share (USD)

2,513
4.38

Prepaid Subscribers (mm)


% of Total Subs

ARPU (MXN)
% growth
Revenue (MXN in mm)
% growth

Valuation

EBITDA (MXN in mm)


% margin

Assumptions
- Assumes moderate 14% total
subscriber growth.
- Assumes a portion of prepaid subscribers
convert to higher end postpaid plans
as Mexican HH income grows

- Improved margins as price increases


will drop to the bottom line

4,557
7.94

1. Current valuation is meant to be illustrative and does not tie to 2014 actuals or base case projections as we are using
2014 ending subscribers as the base (versus average 2014 subscribers or our view of 2015/2016 subscribers).

Game Creek Capital

4. CONTENT

36

Game Creek Capital

37

Content
Content is worth $13-14 or 31% of GCCs Base Case Valuation

Televisas content business should be viewed as a stable revenue business with highly manageable costs
Any macroeconomic benefit would be an upside to our valuation and should be viewed as a free call option on the Mexican economy
There is also upside associated with TVs extensive library of content (produces 90,000 hours annually)

Content Overview

TV has three streams of content revenue: advertising, licensing and


syndication, and network subscription

Operates four broadcast networks (Channels 2, 4, 5, and 9) in Mexico


and through 258 affiliated stations

Sells additional advertising on its Pay-TV and Internet assets

Syndicates programs to networks in 50 countries

Produces and distributes 24 Pay-TV brands

Televisa was built on its content business but has diversified itself so that it
is not as dependent on macroeconomic factors. As recently as 2005, the
content business was almost 75% of revenues today it is only 38%
excluding Univision.

Despite challenging macro-economic and regulatory factors in the


past, management has consistently shown its ability to grow
advertising revenue and cut costs quickly enough to maintain
mid-to-high 40% EBITDA margins

Outlook: Low-single digit revenue growth & flat EBITDA margins in near-tomedium term. Opportunity for mid-single digit revenue growth and
expanding EBITDA margins as macroeconomic factors improve,
competition within Mexico intensifies under new regulations intended to
promote competition, and advertising as a percentage of GDP improves
from 0.48% to global average of 1.0%.

Content Valuation
(Numbers in millions, unless otherwise stated)
2012A
190.1
13.156
2,501.6

2013A
172.4
12.767
2,201.1
-12.0%

2014A
178.0
13.310
2,368.7
7.6%

2015E
161.5
15.400
2,487.1
5.0%

2016E
169.6
15.400
2,611.4
5.0%

23,935.9

24,864.5
3.9%
3,263.6
2.3%
30,329.2
2.4%

25,465.7
2.4%
2,854.4
-12.5%
30,688.8
1.2%

25,975.0
2.0%
2,997.1
5.0%
31,459.2
2.5%

26,754.3
3.0%
3,147.0
5.0%
32,512.7
3.3%

247.6
13.156
3,257.4

273.2
12.767
3,487.9
7.1%

314.0
13.310
4,179.3
19.8%

333.3
15.400
5,133.1
22.8%

364.1
15.400
5,607.9
9.2%

Total Content Revenue (Incl. Univision) (MXN)


% growth

32,884.1

33,817.1
2.8%

34,868.1
3.1%

36,592.3
4.9%

38,120.5
4.2%

Total Content EBITDA (Incl. Univision) (MXN)


EBITDA Margin

15,411.2
46.9%

15,566.0
46.0%

15,534.3
44.6%

16,930.3
46.3%

17,962.7
47.1%

Total Content EBITDA (Excl. Univision) (MXN)


EBITDA Margin

12,153.8
41.0%

12,078.1
39.8%

11,355.0
37.0%

11,797.2
37.5%

12,354.8
38.0%

Licensing Revenue (Excl. Univision) (USD)


FX Conversion (USD:MXN)
Licensing Revenue (Excl. Univision) (MXN)
% growth
Advertising Revenue (MXN)
% growth
Network Subscription Revenue (MXN)
% growth
Total Content Revenue (Excl. Univision) (MXN)
% growth
Univision Licensing Revenue (USD)
FX Conversion (USD:MXN)
Univision Licensing Revenue (MXN)
% growth

2016 EBITDA
Forward EV / EBITDA Multiple
EV (MXN)
2015 FX Conversion (MXN:USD)
Value to TV (USD)
Per Share (USD)
Bear Case / Upside Case

3,189.2
29,626.7

Base Case
12,354.8
10.0x
123,548.2
0.065
8,022.6
13.95
9.23 / 18.16

Game Creek Capital

MANAGEMENT & CAPITAL STRUCTURE

38

Game Creek Capital

39

Strong Management

Disciplined Capital Allocation. We are confident that management puts valuation first and foremost when making
acquisition / divestiture decisions
While rolling up the cable industry is a focus for TV, we are confident that management will not overpay for acquisitions. It
is obvious that Megacable is a likely target for TV but at these valuations, we expect TV to wait
Given the opportunity to buy the remaining 50% or sell its 50% of Iusacell, management relied solely on valuation they
were a buyer below a certain level (and already had a partnership agreement in place with Telefonica) but walked away
when they deemed the valuation to be too high

Recent Board of Directors Nominations. TV recently nominated Mike Fries (CEO of Liberty Global), David Zaslav (CEO of
Discovery), and Jon Feltheimer (CEO of Lionsgate) to its BoD
We are excited by these new additions to the Board and think they highlight (i) the quality of TVs business and team, (ii)
managements openness to study other models, capital allocation policies, and partnership opportunities, and (iii) bring TV
slightly under the ever-growing John Malone media umbrella
We expect Mike Fries will help think about appropriate capital structures to drive levered equity returns and minimize taxes
We expect David Zaslav will help TV explore content value maximization on a global scale

Good Operators. We appreciate managements ability to manage costs while also investing for the future
When the macroeconomic indicators are weak in Mexico, management has shown the flexibility and foresight to
immediately cut costs within the content division. They are able to do this effectively as a result of producing content in
house (i.e. they are able to push a show that was originally slated for 2015 into 2016 or cancel it altogether)
Despite criticism of high capex in the cable business, management has not lost sight of the future potential of that business
and the need to build now in order to be the winner over the next few decades. TV wins customers today because of its
low cost offerings while investing in infrastructure in order to upgrade its customers to higher price point products in the
future

Focused on Maximizing Shareholder Value. Management has shown they are students of the industry and study all global
media business models including John Malone, BSkyB, US Telcos, etc.
We believe management is currently open to exploring shareholder return opportunities. While we do not believe theyre
likely to be aggressive, we highlight their 38bn MXN cash balance and under-levered balance sheet (~1x Net Debt /
EBITDA). If they were to use their cash balance for a share repurchase, they could buyback 12% of shares
outstanding

Game Creek Capital

40

Holding Company Structure Offers Advantages


TVs corporate structure reminds us of many of John Malones investment holdings (e.g. Liberty

entities) structured in a holding company format


Multiple ways to win across media: broadcast, content, telecom, satellite, mobile
Investments often made through convertible debt investments opportunely timed during business, capital market or
regulatory stress; emphasis on protecting downside and preserving upside
Opportunity to maximize leverage levels at subsidiaries and create greater tax shields / more efficient tax structure
Ability to upstream cash to parent for shareholder distributions and buybacks

Televisa

Content

Cable &
Telecom

Sky

Other

Publishing

100% Ownership

77% WA Ownership

58.7% Ownership

100% Ownership

100% Ownership

Advertising

Consolidated
Unconsolidated

Network
Subscription

Licensing &
Syndication

Univision

Imagina

Ocesa

38% Ownership

14.5% Ownership

40% Ownership

Game Creek Capital

41

Ownership & Capital Structure


Capital Structure

Ownership

TV has a very conservative capital structure with leverage of only

1.2x and investment grade ratings

TV is under-owned by US media & cable investors despite 50%+ of


its value being in US-based Univision

Management acknowledges their capital structure is inefficient


they prioritize optionality but seem to be more open to exploring

shareholder return options

consumer goods company

(MXN in millions)
Short Term Debt
Long Term Debt
Total Debt
Cash
Net Debt
EBITDA
Net Debt / EBITDA
Ratings
Interest Expense
Cost of Debt

Most TV holders are Latin American generalists and treat it as a

3/31/2015
1,065
82,325
83,390
(44,129)
39,261
32,256
1.2x
Baa1 and BBB+
5,790
6.9%

The founders family trust is the single-largest shareholder with over


15% ownership

Other notable holders include First Eagle (5%), Gates


Foundation (3%), GAMCO, Highfields, Oaktree, Citadel, Amici

Game Creek Capital

VALUATION

42

Game Creek Capital

43

TV is Undervalued Today

Content

Business Segment

Current Valuation
$ Per Share
Total ($mm)

Univision
Licensing

15.68

9,013.7

Univision
Ownership

7.16

4,117.2

Content
(excl. Univision)

13.95

8,022.6

TV trades with 24% upside in


our Base Case sum of the
parts valuation
This SOTP is intended to be a

status quo analysis of what the


business is worth today and does
not include any of GCCs
anticipated catalysts
Given the highly predictable nature

9.88

5,682.4

Satellite (Sky)

5.13

2,952.4

(1)

(1.56)

(899.3)

Net Debt

(5.13)

(2,949.7)

Total

45.11

25,939.2

Current
% Difference vs. Current

36.50
23.6%

20,987.5
23.6%

Distribution

Telecom

Other

1. Includes publishing, other, intersegment operations, and corporate expenses.

of the cash flows, GCC is confident


in its $15.68 / share valuation of
UVNs licensing business.
This implies that the rest of the
business trades at 6.0x 2014
EBITDA (assuming Univision
equity value of $7.16 per
share).

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44

TV has Traded at a Discount to Peers


Over the past 4 years, TV has underperformed its US media and telco peers due to regulatory reform in Mexico and
complexity of the business. GCC believes the regulatory reform in Mexico is an opportunity and has gotten
comfortable with TVs consolidated and unconsolidated interests.

Content
110.0%
Satellite
97.3%
Cable
90.5%

S&P 500
54.9%
TV
53.9%
Mexico IPC
24.4%

Note:
Content peers include CBS, TWX, VIAB, FOXA, DIS, DISCA, SNI.
Cable peers include CMCS, CVC, TWC, LBTYA, RCI.
Satellite peers include DTV, DISH.

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45

GCC has Identified Multiple Ways to Win

Content

Business Segment

Current Valuation
$ Per Share

Upside Opportunity
$ Per Share

Univision
Licensing

15.68

17.96
14.6% Upside

Univision
Ownership

7.16

10.14
41.5% Upside

Upside Catalysts

Univision IPO in 2014 / 2015 will provide transparency into the


value of TV's 38% economic ownership. Includes additional
$1.50 per share in spectrum assets.

There is additional 31%+


upside, for total upside of
55%+, associated with
identifiable, near-term
catalysts
Near term catalysts include (i)

Distribution

Content
(excl. Univision)

Telecom

13.95

18.01
29.1% Upside

9.88

11.36
15.0% Upside

TV has been consolidating the Mexican cable sector since 2006.


GCC believes the company will continue to be a consolidator
going forward and will eventually look to spin off their cable
assets.

an expected 2015 Univision IPO


and (ii) increased revenue
growth and margin expansion in
the Telecom business
Medium term catalysts include

Satellite (Sky)

5.13

5.73
11.6% Upside

(1)

(1.56)

Net Debt

(5.13)

Total

45.11

56.51

Current
% Difference vs. Current

36.50
23.6%

36.50
54.8%

Other

1. Includes publishing, other, intersegment operations, and corporate expenses.

(i) continued consolidation to


create a national cable operator
and eventual spin of the
business and (ii) investor-like
allocation of capital by
management
Long-term catalysts of

monetizing spectrum at
Univision and potentially gaining
control

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46

Risks to Our Thesis / Bear Case


Business Segment

Distribution

Content

Univision
Licensing

Current Valuation
$ Per Share

Bear Case
$ Per Share

15.68

12.35
-21.2% Downside

Univision
Ownership

7.16

5.69
-20.6% Downside

Content
(excl. Univision)

13.95

9.08
-34.9% Downside

Telecom

9.88

5.86
-40.7% Downside

Satellite (Sky)

5.13

3.84
-25.1% Downside

(1)

(1.56)

Net Debt

(5.13)

Total

45.11

30.13

Current
% Difference vs. Current

36.50
23.6%

36.50
-17.5%

Other

1. Includes publishing, other, intersegment operations, and corporate expenses.

We have gotten comfortable with the risks and believe


there is significantly greater upside than downside
providing a comfortable margin of safety

Mexican Regulatory Changes


We feel we understand the current regulatory environment and are
comfortable with TV being allowed to operate status quo. That said, we
recognize that in a developing economy starved for competition, there
could always be additional regulatory action taken against Televisa
We view TVs dominant positions as:
Broadcast its very difficult to regulate market share within
advertising (e.g. Google has ~80%+ of US desktop advertising but no
actions have been taken against them)
Cable / Satellite under current regulations, the Mexican government
would need to prove that TV was anticompetitve and prove harm to
consumers. Its very difficult to prove harm when prices arent raised
and TV is investing in infrastructure to connect the Mexican economy

Mexican Macroeconomy
Our thesis in no way hinges on a thriving Mexican economy (in fact we
assume a status quo, slow growing economy in our base case) however, if
Mexico were to go into a recession it would impact our growth projections
as the population may no longer be able to afford basic connectivity given
low GDP
(Note: any improvement in the Mexican economy would provide
substantial upside to our model)

On a consolidated basis, TV is very expensive relative to Latin American peers.

(Note: we dont believe Latin American peers are the right comp set.)

Game Creek Capital

APPENDIX

47

Game Creek Capital

Comparable Companies

Source: Morgan Stanley as of 4/28/15.

48

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49

Disclaimer
The analyses and conclusions of Game Creek Capital, L.P., a Delaware limited partnership (Game Creek),
contained in this presentation are based on publicly available information. Game Creek recognizes that there
may be confidential information in the possession of Grupo Televisa (the Company) discussed in the
presentation that could lead the Company to disagree with Game Creeks conclusions. This presentation and
the information contained herein is not a recommendation or solicitation to buy or sell any securities. As of the
date of this presentation, Game Creeks client, Game Creek Fund, L.P., a Delaware limited partnership,
currently beneficially owns equity securities in the Company. The Company does not represent all of the
securities purchased, sold or recommended for the Companys clients, including the Fund. The reader should
not assume that the Funds investment in the Company was or will be profitable.
The analyses provided may include certain statements, estimates and projections prepared with respect to,
among other things, the historical and anticipated operating performance of the Company, access to capital
markets and the values of assets and liabilities. Such statements, estimates, and projections reflect various
assumptions by Game Creek concerning anticipated results that are inherently subject to significant
economic, competitive, and other uncertainties and contingencies and have been included solely for
illustrative purposes. No representations, express or implied, are made as to the accuracy or completeness of
such statements, estimates or projections or with respect to any other materials herein. Actual results may
vary materially from the estimates and projected results contained herein. Accordingly, no party should
purchase or sell securities on the basis of the information contained in this presentation. Game Creek
expressly disclaims liability on account of any partys reliance on the information contained herein with respect
to any such purchases or sales.
Game Creek manages clients that are in the business of trading buying and selling securities and financial
instruments. It is possible that there will be developments in the future that cause Game Creek to change its
position regarding the Company. Game Creek may buy, sell, cover or otherwise change the form of its
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updates or changes to the analyses contained herein, including, without limitation, the manner or type of any
Game Creek investment.