GRUPO TELEVISA - ValueWalk · 2015. 5. 8. · Televisa (“TV”) is the most vertically integrated...

GRUPO TELEVISA: VALUE WITH A PATH TO OUTPERFORMANCE Grupo Televisa (NYSE:TV)

May 2015

Current Price: $36.50 Market Cap: $21 billion 1-Year Target Price: $45 - 57 (24% - 55% upside)

Sean P. Murphy (617) 849-6587

[email protected]

Disclaimer 2 Game Creek Capital

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 Creek’s 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 Creek’s 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 Company’s clients, including the Fund. The reader should not assume that the Fund’s 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 party’s reliance on the information contained herein with respect to any such purchases or sales.

Game Creek manages clients that are in the business of trading – buying and selling – securities and financial instruments. It is possible that there will be developments in the future that cause Game Creek to change its position regarding the Company. Game Creek may buy, sell, cover or otherwise change the form of its investment regarding the Company for any reason. Game Creek hereby disclaims any duty to provide any updates or changes to the analyses contained herein, including, without limitation, the manner or type of any Game Creek investment.

Investment Thesis •  Leading vertically integrated media company – best-in-class management team

•  US cable and content companies have been trying to achieve this for decades

•  Univision IPO is near-term catalyst to valuation realization •  TV has 38% ownership stake and gets paid 12% royalty stream •  Recent changes to foreign ownership rules in US allowing for greater ownership

•  Opportunities for substantial value creation across all Mexican segments •  Cable #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

3 Game Creek Capital

TV is a Highly Diversified Media / Telco Platform 4 Game Creek Capital

14.0mm US subs 12% of US HHs




Business Segment Description % of '14 EBITDA Business Model Similar To:

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

- Produces 90,000 hours of content annually

- Majority ownership in 6 cable operators

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

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

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

- 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

- 4 broadcast channels & 24 Pay TV networks

(3%)Other (1)

Dis

trib

utio

n 26%

27%

Telecom

Satellite (Sky)

37%

14%

Not Consolidated

Con

tent Univision

Ownership

Content (excl.

Univision)

Univision Licensing

TV is Undervalued Today 5 Game Creek Capital

TV has 24% upside in our Base Case

SOTP valuation

•  Given the highly predictable nature of the cash flows, GCC is confident in its $16 / share valuation of Univision’s licensing business

•  This implies that the rest of the business trades at 6.0x 2014 EBITDA (assuming Univision equity value of $7 per share)

Business Segment Current Valuation$ Per Share

(5.13)

36.5023.6%


% vs. Current

Total 45.11Current

(1.56)

Net Debt

Other (1)

Dis

trib

utio

n 9.88

5.13

Telecom

Satellite (Sky)

Con

tent

13.95

15.68

Univision Ownership 7.16

Content (excl.

Univision)

Univision Licensing

TV has Underperformed its Peers


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

Cable 90.5%

Content 110.0%

Satellite 97.3%

TV 53.9%

S&P 500 54.9%

Mexico IPC 24.4%

New Board Members – Implications? 7 Game Creek Capital

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

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%)

-  Comcast’s stock is up 24x since 1988

Early Innings of Cable Roll-Up in Mexico 8 Game Creek Capital

US Mexico1988 2014

Pay TV Penetration 54% 52% 84%

Avg. Monthly Cable Bill 14.52$ 14.87$ 64.41$

Avg. Income Per Capita 1,790$ 859$ 4,420$

US Mexico2001 2014

% of Population Using Internet 49% 49% 87%

US2014

US2014

Univision Monetization 9 Game Creek Capital

Univision represents ~50% of GCC’s 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

GCC has Identified Multiple Ways to Win 10 Game Creek Capital

There is additional 31%+ upside, for total upside of 55%+, associated with

identifiable, near-term catalysts

•  Near-term catalysts include (i) an expected 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

•  Long-term catalysts of monetizing spectrum at Univision and potentially gaining control

Business Segment Upside Opportunity$ Per Share

17.9614.6% Upside

10.1441.5% Upside

18.0129.1% Upside

11.3615.0% Upside

5.7311.6% Upside

(1.56)

(5.13)

36.5054.8%


% vs. Current

TotalCurrent

56.51Net Debt

Other (1)

Dis

trib

utio

n Telecom

Satellite (Sky)

Con

tent Univision

Ownership

Content (excl.

Univision)

Univision Licensing

FULL PRESENTATION


Table of Contents 12 Game Creek Capital

A.  Summary B.  Unmatched Set of Assets

1.  Univision 2.  Telecom 3.  Sky 4.  Content

C.  Management & Capital Structure D.  Valuation & Risks E.  Appendix

SUMMARY


Investment Overview

We believe Televisa offers investors an opportunity to own world class assets run by smart

managers at a discounted valuation. Televisa’s 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)

Base Case +24% ($45.11)

Bear Case -17% ($30.13)

Current Price $36.50

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 TV’s Pay-TV business and provides upside opportunity for TV’s 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.


TV is Undervalued Today – GCC Base Case 16 Game Creek Capital

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 GCC’s anticipated catalysts

•  Given the highly predictable nature of the cash flows, GCC is confident in its $16 / share valuation of UVN’s licensing business.

•  This implies that the rest of the business trades at 6.0x 2014 EBITDA (assuming Univision equity value of $7 per share).

Business Segment Current Valuation$ Per Share Total ($mm)

(5.13) (2,949.7)

36.50 20,987.523.6% 23.6%


% Difference vs. Current

Total 45.11 25,939.2

(1.56) (899.3)

Net Debt

Other (1)

Current

5,682.4

2,952.4

Dis

trib

utio

n 9.88

5.13

Telecom

Satellite (Sky)


Content (excl. Univision)

Univision Licensing

13.95 8,022.6

15.68 9,013.7

Con

tent

4,117.2

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) TV’s diversification away from being a “content only” company and (ii) TV’s 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.  TV’s broadcast networks in Mexico and Univision’s 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 Univision’s audience views content live every night (by far the highest of any network in the US) •  ~70% of Univision’s 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 TV’s content. •  Carlos Slim’s 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 Univision’s value, (ii) don’t 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) don’t contemplate the future value of TV’s content library


1. Adds up to more than 100% because it excludes Other, Corporate Expenses, and Net Debt.

Company Snapshot

18

•  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

Company Overview Financial Highlights

Game Creek Capital

Market Data 27-Apr-15

Stock Price (USD) 36.50Shares Outstanding (mm) 575.0

Market Cap (USD in mm) 20,988

Net Debt (MXN in mm) 39,261MXN:USD 15.40Net Debt (USD in mm) 2,549

Enterprise Value (USD in mm) 23,537

Short Interest (mm) 2.9

(MXN in millions) (1) 2010 2011 2012 2013 2014

Income StatementRevenue 57,857 62,582 69,291 73,791 80,118% growth 10.5% 8.2% 10.7% 6.5% 8.6%

COGS (26,295) (28,133) (29,826) (29,756) (31,346)Gross Profit 31,562 34,449 39,465 44,035 48,773% of Revenue 54.6% 55.0% 57.0% 59.7% 60.9%

Opex (9,400) (10,220) (12,201) (15,367) (17,971)EBITDA 22,162 24,229 27,264 28,668 30,802% of Revenue 38.3% 38.7% 39.3% 38.9% 38.4%

D&A (6,579) (7,362) (8,474) (9,846) (11,563)Other Expense 0 (593) (650) (83) (5,282)

EBIT 15,583 16,274 18,140 18,738 13,957% of Revenue 26.9% 26.0% 26.2% 25.4% 17.4%

Net Income 7,683 6,666 8,761 7,748 5,387% growth 27.9% (13.2%) 31.4% (11.6%) (30.5%)

Cash FlowEBITDA 22,162 24,229 27,264 28,668 30,802Capex (11,306) (9,669) (11,428) (14,871) (17,004)

EBITDA - Capex 10,856 14,560 15,836 13,797 13,798% of Revenue 18.8% 23.3% 22.9% 18.7% 17.2%

LeverageDebt 47,049 55,965 52,991 60,056 80,998Cash (31,389) (21,699) (24,381) (20,415) (34,518)

Net Debt 15,659 34,266 28,611 39,641 46,480Net Debt / EBITDA 0.7x 1.4x 1.0x 1.4x 1.5x

1. Currently 1 USD = 15.4 MXN.

UNMATCHED SET OF ASSETS


Business Segment Description % of 2014 Revenue % of 2014 EBITDA Business Model Similar To:

- 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

- 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

- 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

- 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

- 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


Con

tent Univision

Ownership


Univision Licensing

37%

14%

Not ConsolidatedNot Consolidated

38%

5%

Dis

trib

utio

n 26%

27%

Telecom

Satellite (Sky)

26%

22%

(3%)Other (1) 9%

TV is a Highly Diversified Media / Telco Platform 20 Game Creek Capital

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.





1. UNIVISION


1. Univision 22 Game Creek Capital

Univision represents ~50% of GCC’s Base Case Valuation •  We expect Univision’s 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 Univision’s spectrum value or 2016 political proceeds

Royalty Stream

Ownership Stake

Univision Overview & Valuation Catalysts

•  Univision is the leading media company serving the 54mm Hispanic

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

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

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

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

advertising assets

•  Univision is 62% owned by a private equity consortium of Haim Saban,

Madison Dearborn, Providence, TPG, and Thomas H. Lee

•  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:

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

months

•  Refinanced its two nearest term maturities in early 2015

•  Ended its management agreements with the PE owners and

technical assistance agreement with TV

•  David Zaslov left the Board of Univision and has been

nominated to join the Board of Televisa

•  Televisa has a perpetual licensing agreement with Univision

whereby TV gets paid ~12%+ of Univision’s 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

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

Univision’s Royalty Stream is valued at $15-16 per share

•  Televisa effectively owns 38% of Univision through an equity stake

and convertible debt making Televisa the entity with the largest

economic interest in Univision

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

it’s unlikely until (i) Univision’s net debt is lower and (ii) the US

foreign ownership rules for media companies are more clear

Univision Ownership Stake is valued at $7-8 per share

Valuation of Royalty Stream from Univision 23 Game Creek Capital

Univision’s Royalty Stream is worth $15-16 or 35% of GCC’s Base Case Valuation

(Numbers in millions, unless otherwise stated) CAGR2013A 2014A 2015E 2016E 2017E 2018E 2019E 2020E '13-'18

Univision TV Revenue (USD) 2,219.9 2,454.6 2,577.3 2,783.5 3,061.9 3,306.8 3,472.2 3,645.8 8%% growth 10.6% 5.0% 8.0% 10.0% 8.0% 5.0% 5.0%Univision Interactive Revenue (USD) 77.8 154.8 178.0 204.7 225.2 247.7 272.5 292.9 26%% growth 99.0% 15.0% 15.0% 10.0% 10.0% 10.0% 7.5%Total TV & Interactive Revenue (USD) 2,297.7 2,609.4 2,755.4 2,988.2 3,287.1 3,554.5 3,744.6 3,938.7 9%Royalty Rate 11.91% 11.91% 11.91% 11.91% 11.91% 16.22% 16.22% 16.22%Base Royalties (USD) 273.7 310.8 328.2 355.9 391.5 576.5 607.4 638.9

Total TV & Interactive Revenue (USD) 2,297.7 2,609.4 2,755.4 2,988.2 3,287.1 3,554.5 3,744.6 3,938.7Amount Greater Than 2010 Revenues ($1.65bn) (USD) 647.7 959.4 1,105.4 1,338.2 1,637.1 1,904.5 2,094.6 2,288.7Incremental Royalty Rate 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00%Incremental Royalties (USD) 13.0 19.2 22.1 26.8 32.7 38.1 41.9 45.8

Formula Calculation 286.6 330.0 350.3 382.7 424.2 614.6 649.3 684.6Forecasting Error (13.4) (16.0) (16.9) (18.5) (20.5) (29.7) (31.4) (33.1)% of Formula Calculation (4.7%) (4.8%) (4.8%) (4.8%) (4.8%) (4.8%) (4.8%) (4.8%)Total Royalties (USD) 273.2 314.0 333.3 364.1 403.7 584.9 617.9 651.5 16%% growth 14.9% 6.2% 9.2% 10.9% 44.9% 5.6% 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 15%

Base CaseDiscount Rate 8.00%Long Term Growth Rate 4.00%Terminal Value (USD) 11,857.3

Cash Flows for DCF (USD) 233.3 254.9 282.6 409.4 432.5 12,313.3

Present Value of Cash Flows (USD) - Base Case 9,013.7Per Share (USD) - Base Case 15.68Bear Case / Upside Case 12.35 / 17.96

Valuation of Univision Ownership Stake 24 Game Creek Capital

Televisa’s Ownership Stake of Univision is worth $7-8 or 16% of GCC’s 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)2013A 2014A 2015E 2016E

Total Univision Revenue (USD) 2,627.4 2,911.4 3,057.0 3,301.5% growth 10.8% 5.0% 8.0%Univision EBITDA (USD) 1,120.4 1,253.8 1,347.1 1,487.8EBITDA Margin 42.6% 43.1% 44.1% 45.1%

Base Case2016 EBITDA 1,487.8Forward EV / EBITDA Multiple 13.5x

EV (USD) 20,085.8Less: Net Debt (USD) (9,251.0)Equity Value (USD) 10,834.8TV Ownership 38%

Equity Value to TV (USD) - Base Case 4,117.2Per Share (USD) - Base Case 7.16Bear Case / Upside Case 5.69 / 8.64

Add’l Upside Catalyst #1: Spectrum Auction 25 Game Creek Capital

We value Univision’s 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 FCC’s 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)

# of Stations By Power Level # of Stations To Be Sold Class A Full Power Greenhill Valuation MHz-POP ValuationMarket DMA Rank TV HHs Class A Full Power Total Class A Full Power Total Max Median Max Median Max Median

Multiple Station Univision / Unimas MarketsNew York 1 7,384,340 - 3 3 - 2 2 360 280 490 410 980 820Los Angeles 2 5,613,460 - 2 2 - 1 1 370 310 570 340 570 340Chicago 3 3,484,800 - 2 2 - 1 1 120 100 130 120 130 120Dallas 5 2,588,020 - 2 2 - 1 1 58 50 67 53 67 53San Francisco 6 2,502,030 - 2 2 - 1 1 92 70 140 110 140 110Houston 10 2,215,650 - 2 2 - 1 1 38 36 52 45 52 45Phoenix 12 1,812,040 1 1 2 1 - 1 22 10 36 223 22 10Miami 16 1,621,130 - 2 2 - 1 1 76 70 80 78 80 78Sacramento 20 1,387,710 - 2 2 - 1 1 55 43 130 94 130 94San Antonio 36 881,050 - 2 2 - 1 1 22 20 35 29 35 29Fresno 55 576,820 - 2 2 - 1 1 17 16 30 26 30 26Tucson 71 438,440 - 2 2 - 1 1 15 11 38 20 38 20Bakersfield 127 221,740 1 1 2 1 - 1 28 15 80 31 28 15

Total 37,904,010 UVN Value 2,302 1,760

Channel Sharing Opportunities with EntravisionBoston 7 2,433,040 - 2 2 - 1 1 77 77 140 93 140 93Washington DC 8 2,412,250 - 2 2 - 1 1 98 67 140 130 140 130Tampa 14 1,827,510 - 2 2 - 1 1 43 39 71 60 71 60Denver 17 1,574,610 - 2 2 - 1 1 22 10 33 28 33 28Orlando 18 1,490,380 - 2 2 - 1 1 67 44 85 68 85 68Albuquerque 47 690,740 - 2 2 - 1 1 6 5 9 5 9 5

Total 10,428,530 478 384UVN Value Assuming 50% 239 192

Total Spectrum Value to UVN 2,541 1,952

Add’l Upside Catalyst #2: 2016 Political 26 Game Creek Capital

Hispanics are the fastest growing population in the US

•  The Hispanic population is expected to almost double over the next

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

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 be…One cannot help but feel that both

parties have a good deal of work to do if they hope to keep up with America’s 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.

2012 Presidential Race

•  48% of Hispanic eligible voters turned out in 2012 (versus 65% for blacks and whites) making Hispanics 10% of the US electorate

•  Hispanics tend to vote 63% Democrat and 27% Republican

•  Obama’s campaign aimed ~10% of its money towards attracting

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

•  “After six months of mulling over November’s election results, many Republicans remain convinced that the party’s only path to future

victory is to improve the GOP’s appeal to Hispanic voters.”

- Byron York, Washington Examiner May 2, 2013

2015E 2050E GrowthHispanics 56,755 105,551 86%Non-Hispanics 264,615 292,778 11%

Total 321,370 398,329 24%

% of Total:Hispanics 18% 26%Non-Hispanics 82% 74%

Total 100% 100%

Source: US Census Bureau

2. TELECOM


Telecom 28 Game Creek Capital

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%),

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

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 it’s ability to achieve significant

operating synergies through SG&A and procurement savings

•  TV is able to control programming expense more than cable

companies in the US as TV’s 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 TV’s cable footprint and will be

accretive to margins by adding additional products (voice / data) to

existing subscribers’ plans

Telecom Valuation

TV’s Telecom business is worth $9-10 or 22% of GCC’s 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

(Numbers in millions, unless otherwise stated)2012A 2013A 2014A 2015E 2016E

Telecom Revenue (MXN) 15,570.4 17,138.8 20,937.3 24,706.0 28,411.9% growth 10.1% 22.2% 18.0% 15.0%

Telecom EBITDA (MXN) 5,812.8 6,131.8 7,882.9 9,635.3 11,364.8EBITDA Margin 37.3% 35.8% 37.7% 39.0% 40.0%

BASE2016 EBITDA (MXN) 11,364.8EV / EBITDA Multiple 10.0x

EV (MXN) 113,647.7

TV Ownership 77.0%

EV to TV (MXN) 87,508.72015 FX Conversion (MXN:USD) 0.065

Value to TV (USD) - Base Case 5,682.4Per Share (USD) - Base Case 9.88Bear Case / Upside Case 5.86 / 11.36

Cable Opportunity – Mexico vs. US 29 Game Creek Capital

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%)

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

US Mexico1988 2014

Pay TV Penetration 54% 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) 244 122 304HHs (mm) 92 31 118People / HH 2.7 4.0 2.6

US Mexico2001 2014

% of Population Using Internet 49% 49% 87% 38% Add'l Penetration

US2014

US2014

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 Televisa’s

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

•  Televisa’s 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 Televisa’s telecom business to show signs of normalizing in 2017

US Cable Industry ($ in mm) Televisa ($ in mm)2000 2001 2002 2014 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

Capex (% of Revenue) 35% 35% 30% 14% 44% 44%

Sources: Televisa company materials, UBS, and Statista.

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

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

Sha

re P

rice

Potential Long Term Value of TV’s Telecom 32 Game Creek Capital

Under an Illustrative Long Term Scenario, TV’s Telecom business could be worth more than 3x today’s 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 TermCurrent (1) Value Assumptions

- Assumes industry Pay TV penetrationTotal Subscribers (mm) 6.9 9.0 increases below that of the US and TV% growth 30% maintains its market shares.

- Does not include any acquisitions.

- Assumes ARPU increases toARPU (MXN) 240 550 lowest tier Triple Play pricing currently% growth 129% available at Izzi - ~$36 / month

Revenue (MXN in mm) 19,872 59,400% growth 199%

EBITDA (MXN in mm) 7,949 26,730 - Assumes 500bps of margin % margin 40% 45% expansion as the new cable companies

are integrated and synergies realized.EBITDA Multiple 9.5x 9.5x

EV (MXN in mm) 75,514 253,935TV Ownership 77.0% 77.0%

EV to TV (MXN in mm) 58,145 195,530FX Conversion (MXN:USD) 0.07 0.07

Value to TV (USD in mm) 3,876 13,035Per Share (USD) 6.76 22.72

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).

Valu

atio

nSu

bsA

RPU

3. SKY


Sky 34 Game Creek Capital

Sky Overview

•  Mexico’s 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 •  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 TV’s stake in Sky. Given quality and

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

Sky Valuation

TV’s stake in Sky is worth $5-6 or 11% of GCC’s Base Case Valuation -  Sky has experienced tremendous subscriber growth (28% CAGR since 2009) as a result of its low-priced offering while maintaining industry-

leading 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 Revenue (MXN) 14,465.4 16,098.3 17,498.6 18,986.0 20,599.8% growth 11.3% 8.7% 8.5% 8.5%

Sky EBITDA (MXN) 6,558.0 7,340.5 8,211.3 8,923.4 9,681.9EBITDA Margin 45.3% 45.6% 46.9% 47.0% 47.0%

BASE2016 EBITDA (MXN) 9,681.9Forward EV / EBITDA Multiple 8.0x

EV (MXN) 77,455.2TV Ownership 58.7%EV to TV (MXN) 45,466.22015 FX Conversion (MXN:USD) 0.065

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

Potential Long Term Value of Sky 35 Game Creek Capital

Under an Illustrative Long Term Scenario, Sky could be worth 80% more than today’s 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

Current (1) Value AssumptionsPrepaid Subscribers (mm) 4.4 2.6 - Assumes moderate 14% total% of Total Subs 67% 35% subscriber growth.

Postpaid Subscribers (mm) 2.2 4.9 - Assumes a portion of prepaid subscribers% of Total Subs 33% 65% convert to higher end postpaid plans

as Mexican HH income growsTotal Subscribers (mm) 6.6 7.5% growth 14%

Prepaid ARPU (MXN) 123 150 - Assumes no growth in current % growth 22% postpaid plan pricing.

Postpaid ARPU (MXN) 450 450 - Assumes reduced churn in prepaid % growth 0% subscribers (as reflected through increased

price)ARPU (MXN) 230 345% growth 50%

Revenue (MXN in mm) 18,216 31,050% growth 70%

EBITDA (MXN in mm) 8,562 15,525 - Improved margins as price increases% margin 47% 50% will drop to the bottom line

EBITDA Multiple 7.5x 7.5xEV (MXN in mm) 64,211 116,438

TV Ownership 58.7% 58.7%EV to TV (MXN in mm) 37,692 68,349

FX Conversion (MXN:USD) 0.07 0.07

Value to TV (USD in mm) 2,513 4,557Per Share (USD) 4.38 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).

Subs

crib

ers

AR

PUVa

luat

ion

4. CONTENT


Content 37 Game Creek Capital

Content is worth $13-14 or 31% of GCC’s Base Case Valuation •  Televisa’s 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 TV’s extensive library of content (produces 90,000 hours annually)

Content Valuation 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-to-

medium 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%.


Licensing Revenue (Excl. Univision) (USD) 190.1 172.4 178.0 161.5 169.6FX Conversion (USD:MXN) 13.156 12.767 13.310 15.400 15.400Licensing Revenue (Excl. Univision) (MXN) 2,501.6 2,201.1 2,368.7 2,487.1 2,611.4% growth -12.0% 7.6% 5.0% 5.0%

Advertising Revenue (MXN) 23,935.9 24,864.5 25,465.7 25,975.0 26,754.3% growth 3.9% 2.4% 2.0% 3.0%Network Subscription Revenue (MXN) 3,189.2 3,263.6 2,854.4 2,997.1 3,147.0% growth 2.3% -12.5% 5.0% 5.0%Total Content Revenue (Excl. Univision) (MXN) 29,626.7 30,329.2 30,688.8 31,459.2 32,512.7% growth 2.4% 1.2% 2.5% 3.3%

Univision Licensing Revenue (USD) 247.6 273.2 314.0 333.3 364.1FX Conversion (USD:MXN) 13.156 12.767 13.310 15.400 15.400Univision Licensing Revenue (MXN) 3,257.4 3,487.9 4,179.3 5,133.1 5,607.9% growth 7.1% 19.8% 22.8% 9.2%

Total Content Revenue (Incl. Univision) (MXN) 32,884.1 33,817.1 34,868.1 36,592.3 38,120.5% growth 2.8% 3.1% 4.9% 4.2%

Total Content EBITDA (Incl. Univision) (MXN) 15,411.2 15,566.0 15,534.3 16,930.3 17,962.7EBITDA Margin 46.9% 46.0% 44.6% 46.3% 47.1%

Total Content EBITDA (Excl. Univision) (MXN) 12,153.8 12,078.1 11,355.0 11,797.2 12,354.8EBITDA Margin 41.0% 39.8% 37.0% 37.5% 38.0%

Base Case2016 EBITDA 12,354.8Forward EV / EBITDA Multiple 10.0x

EV (MXN) 123,548.22015 FX Conversion (MXN:USD) 0.065

Value to TV (USD) 8,022.6Per Share (USD) 13.95Bear Case / Upside Case 9.23 / 18.16

MANAGEMENT & CAPITAL STRUCTURE


Strong Management 39 Game Creek Capital

•  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 TV’s business and team, (ii) management’s 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 management’s 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 they’re 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

Holding Company Structure Offers Advantages •  TV’s corporate structure reminds us of many of John Malone’s 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

Consolidated

Unconsolidated

Content Cable & Telecom Sky Other Publishing

77% WA Ownership 100% Ownership 58.7% Ownership 100% Ownership 100% Ownership

Advertising Network Subscription

Licensing & Syndication Univision Imagina

38% Ownership 14.5% Ownership

Ocesa

40% Ownership

Ownership & Capital Structure 41 Game Creek Capital

Ownership Capital Structure

•  TV has a very conservative capital structure with leverage of only

1.2x and investment grade ratings

•  Management acknowledges their capital structure is inefficient –

they prioritize optionality but seem to be more open to exploring

shareholder return options

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

its value being in US-based Univision

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

consumer goods company

•  The founder’s 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

(MXN in millions)3/31/2015

Short Term Debt 1,065Long Term Debt 82,325

Total Debt 83,390Cash (44,129)

Net Debt 39,261

EBITDA 32,256Net Debt / EBITDA 1.2x

Ratings Baa1 and BBB+

Interest Expense 5,790Cost of Debt 6.9%

VALUATION


TV is Undervalued Today 43 Game Creek Capital

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 GCC’s anticipated catalysts

•  Given the highly predictable nature of the cash flows, GCC is confident in its $15.68 / share valuation of UVN’s 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).

Business Segment Current Valuation$ Per Share Total ($mm)

(5.13) (2,949.7)

36.50 20,987.523.6% 23.6%



Total 45.11 25,939.2

(1.56) (899.3)

Net Debt

Other (1)

Current

5,682.4

2,952.4

Dis

trib

utio

n 9.88

5.13

Telecom

Satellite (Sky)



Univision Licensing

13.95 8,022.6

15.68 9,013.7

Con

tent

4,117.2

TV has Traded at a Discount to Peers


Cable 90.5%

Content 110.0%

Satellite 97.3%

TV 53.9%

S&P 500 54.9%

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

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 TV’s consolidated and unconsolidated interests.

Mexico IPC 24.4%

GCC has Identified Multiple Ways to Win 45 Game Creek Capital

There is additional 31%+ upside, for total upside of

55%+, associated with identifiable, near-term

catalysts

•  Near term catalysts include (i) an expected 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

•  Long-term catalysts of monetizing spectrum at Univision and potentially gaining control

Business Segment Current Valuation Upside Opportunity Upside Catalysts$ Per Share $ Per Share

17.9614.6% Upside

10.1441.5% Upside

18.0129.1% Upside

11.3615.0% Upside

5.7311.6% Upside

(5.13)

36.50 36.5023.6% 54.8%



Total 45.11

(1.56)

Net Debt

Other (1)

Current

Dis

trib

utio

n 9.88

5.13

Telecom

Satellite (Sky)



Univision Licensing

13.95

15.68

56.51

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.

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.

Con

tent

Risks to Our Thesis / Bear Case 46 Game Creek Capital

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 TV’s “dominant” positions as: •  Broadcast – it’s 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. It’s very difficult to prove harm when prices aren’t 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 don’t believe Latin American peers are the right comp set.)

Business Segment Current Valuation Bear Case$ Per Share $ Per Share

12.35-21.2% Downside

5.69-20.6% Downside

9.08-34.9% Downside

5.86-40.7% Downside

3.84-25.1% Downside

(5.13)

36.50 36.5023.6% -17.5%


30.13


Total 45.11

(1.56)

Net Debt

Other (1)

Current

Dis

trib

utio

n 9.88

5.13

Telecom

Satellite (Sky)



Univision Licensing

13.95

15.68

Con

tent

APPENDIX


Comparable Companies 48 Game Creek Capital

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

Disclaimer 49 Game Creek Capital

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 Creek’s 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 Creek’s 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 Company’s clients, including the Fund. The reader should not assume that the Fund’s 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 party’s 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.

GRUPO TELEVISA - ValueWalk · 2015. 5. 8. · Televisa (“TV”) is the most vertically integrated...

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