e424b3
Filed Pursuant to Rule 424(b)(3)
File No. 333-164595
PROSPECTUS
Grupo Televisa,
S.A.B.
Offer to exchange all of our
outstanding unregistered
U.S.$600,000,000
6.625% Senior Notes due 2040
for
U.S.$600,000,000
6.625% Senior Exchange Notes due 2040
which have been registered
under the Securities Act of 1933
Material Terms of the Exchange Offer
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We are offering to exchange the notes that we
sold previously in a private offering for new registered
notes.
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You may withdraw tenders of old notes at any
time before 5:00 p.m., New York City time, on the date of
the expiration of the exchange offer.
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The terms of the new notes are identical to
the terms of the old notes, except for the transfer restrictions
and registration rights relating to the outstanding old notes.
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Application has been made to list the new
notes on the Luxembourg Stock Exchange, for trading on the Euro
MTF market.
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The exchange offer will expire at
5:00 p.m., New York City time,
on March 16, 2010, unless we extend it.
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We will not receive any proceeds from the
exchange offer.
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We will exchange all old notes that are
validly tendered
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We will pay the expenses of the exchange offer.
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and not validly withdrawn.
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No dealer-manager is being used in connection
with the exchange offer.
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The exchange of old notes for new notes will
not be a taxable exchange for U.S. federal income tax purposes.
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You should carefully review Risk Factors
beginning on page 20 of this prospectus.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or passed upon the adequacy or accuracy of this
prospectus. Any representation to the contrary is a criminal
offense.
The date of this prospectus
is February 16, 2010.
TABLE
OF CONTENTS
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F-1
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i
We have applied to list the new notes on the Luxembourg Stock
Exchange and to be admitted to trading on the Euro MTF market.
THE NOTES HAVE NOT BEEN AND WILL NOT BE REGISTERED WITH THE
NATIONAL SECURITIES REGISTRY (REGISTRO NACIONAL DE VALORES)
MAINTAINED BY THE NATIONAL BANKING AND SECURITIES COMMISSION
(THE COMISION NACIONAL BANCARIA Y DE VALORES, OR CNBV), AND MAY
NOT BE OFFERED OR SOLD PUBLICLY, OR OTHERWISE BE THE SUBJECT OF
BROKERAGE ACTIVITIES, IN MEXICO, EXCEPT PURSUANT TO A PRIVATE
PLACEMENT EXEMPTION SET FORTH UNDER ARTICLE 8 OF THE
LEY DEL MERCADO DE VALORES (THE MEXICAN SECURITIES MARKET
LAW). AS REQUIRED UNDER THE MEXICAN SECURITIES MARKET LAW,
WE WILL NOTIFY THE CNBV OF THE OFFERING OF THE
NOTES OUTSIDE OF MEXICO. SUCH NOTICE WILL BE TIMELY
DELIVERED TO THE CNBV TO COMPLY WITH A LEGAL REQUIREMENT AND FOR
INFORMATION PURPOSES ONLY, AND THE DELIVERY TO AND THE RECEIPT
BY THE CNBV OF SUCH NOTICE DOES NOT IMPLY ANY CERTIFICATION AS
TO THE INVESTMENT QUALITY OF THE NOTES OR OUR SOLVENCY,
LIQUIDITY OR CREDIT QUALITY. THE INFORMATION CONTAINED IN THIS
PROSPECTUS OF THE NOTES IS EXCLUSIVELY THE RESPONSIBILITY
OF THE COMPANY AND HAS NOT BEEN REVIEWED OR AUTHORIZED BY THE
CNBV. IN MAKING AN INVESTMENT DECISION, ALL INVESTORS, INCLUDING
ANY MEXICAN INVESTORS WHO MAY ACQUIRE NOTES FROM TIME TO
TIME, MUST RELY ON THEIR OWN REVIEW AND EXAMINATION OF THE
COMPANY.
We are not making an offer to exchange notes in any
jurisdiction where the offer is not permitted, and will not
accept surrenders for exchange from holders in any such
jurisdiction.
INCORPORATION
BY REFERENCE
The Securities and Exchange Commission, or the SEC, allows us to
incorporate by reference information contained in
documents we file with them, which means that we can disclose
important information to you by referring you to those
documents. The information incorporated by reference is
considered to be part of this prospectus, and later information
that we file with the SEC, to the extent that we identify such
information as being incorporated by reference into this
prospectus, will automatically update and, where applicable,
supersede this information. Information set forth in this
prospectus supersedes any previously filed information that is
incorporated by reference into this prospectus. We incorporate
by reference into this prospectus the following information and
documents:
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our annual report on
Form 20-F
for the fiscal year ended December 31, 2008, dated
June 30, 2009 (SEC File
No. 001-12610),
which we refer to in this prospectus as the 2008 Form
20-F, except for our consolidated financial statements as
of December 31, 2007 and 2008, and for the years ended
December 31, 2006, 2007 and 2008, which were superseded by the
revised consolidated financial statements included in this prospectus
(refer to Summary Financial Data); and
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any future filings on
Form 20-F
we make under the Securities Exchange Act of 1934, as amended,
or the Exchange Act, after the date of this prospectus and prior
to the termination of the exchange offer, and any future
submissions on
Form 6-K
during this period that are identified as being incorporated
into this prospectus.
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You may request a copy of these filings, at no cost, at the
office of our Luxembourg paying agent and transfer agent at the
address listed on the back cover of this prospectus or by
writing or calling us at the following address and phone
number:
Investor Relations
Grupo Televisa, S.A.B.
Avenida Vasco de Quiroga, No. 2000
Colonia Santa Fe, 01210
México, D.F., México
(52)
(55) 5261-2000
ii
You should rely only on the information contained in this
prospectus or to which we have referred you. We have not
authorized any person to provide you with different information.
We are offering to exchange the old notes for new notes only in
jurisdictions where offers and sales are permitted. The
information in this document may only be accurate on the date of
this document.
LIMITATION
OF LIABILITY
Substantially all of our directors, executive officers and
controlling persons reside outside of the United States, all or
a significant portion of the assets of our directors, executive
officers and controlling persons, and substantially all of our
assets, are located outside of the United States and some of the
experts named in this prospectus also reside outside of the
United States. As a result, it may not be possible for you to
effect service of process within the United States upon
these persons or to enforce against them or us in
U.S. courts judgments predicated upon the civil liability
provisions of the federal securities laws of the United States.
We have been advised by our Mexican counsel, Mijares, Angoitia,
Cortés y Fuentes, S.C., that there is doubt as to the
enforceability, in original actions in Mexican courts, of
liabilities predicated solely on U.S. federal securities
laws and as to the enforceability in Mexican courts of judgments
of U.S. courts obtained in actions predicated upon the
civil liability provisions of U.S. federal securities laws.
See Risk Factors Risk Factors Related to the
New Notes and Exchange Offer It May Be Difficult to
Enforce Civil Liabilities Against Us or Our Directors, Executive
Officers and Controlling Persons.
CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated by reference into
this prospectus contain forward-looking statements. We may from
time to time make forward-looking statements in periodic reports
to the SEC on
Form 6-K,
in annual report to stockholders, in prospectuses, press
releases and other written materials and in oral statements made
by our officers, directors or employees to analysts,
institutional investors, representatives of the media and
others. Examples of these forward-looking statements include,
but are not limited to:
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projections of operating revenues, net income (loss), net income
(loss) per Certificado de Participación Ordinario, or CPO,
net income (loss) per share, capital expenditures, dividends,
capital structure or other financial items or ratios;
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statements of our plans, objectives or goals, including those
relating to anticipated trends, competition, regulation and
rates;
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our current and future plans regarding our online and wireless
content division, Televisa Interactive Media, or TIM;
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statements concerning our current and future plans regarding our
investment in the Spanish television channel Gestora de
Inversiones Audiovisuales La Sexta, S.A., or La Sexta;
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statements concerning our current and future plans regarding our
gaming business;
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statements concerning our current and future plans regarding the
fixed telephony service provided by Empresas Cablevisión,
S.A.B. de C.V., or Cablevisión;
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statements concerning our transactions with
and/or
litigation involving Univision;
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statements concerning our series of transactions with DIRECTV,
and News Corporation, or News Corp.;
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statements concerning our transactions with NBC Universals
Telemundo Communications Group, or Telemundo;
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statements concerning our plans to build and launch a new
transponder satellite;
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statements about our future economic performance or statements
concerning general economic, political or social conditions in
the United Mexican States, or Mexico, or other countries in
which we operate or have investments; and
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statements or assumptions underlying these statements.
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iii
Words such as believe, anticipate,
plan, expect, intend,
target, estimate, project,
predict, forecast,
guideline, may, should and
similar words and expressions are intended to identify
forward-looking statements, but are not the exclusive means of
identifying these statements.
Forward-looking statements involve inherent risks and
uncertainties. We caution you that a number of important factors
could cause actual results to differ materially from the plans,
objectives, expectations, estimates and intentions expressed in
these forward-looking statements. These factors, some of which
are discussed under Item 3 Key
Information Risk Factors, in our 2008
Form 20-F,
herein incorporated by reference, include economic and political
conditions and government policies in Mexico or elsewhere,
inflation rates, exchange rates, regulatory developments,
customer demand and competition. We caution you that the
foregoing list of factors is not exclusive and that other risks
and uncertainties may cause actual results to differ materially
from those in forward-looking statements. You should evaluate
any statements made by us in light of these important factors.
Forward-looking statements speak only as of the date they are
made, and we do not undertake any obligation to update them in
light of new information, future developments or other factors.
iv
PROSPECTUS
SUMMARY
You should read the following summary together with the
information set forth under the heading Risk
Factors, in the 2008 Form 20-F which is incorporated herein
by reference, in our audited year-end financial statements and
the accompanying notes, which are included in this prospectus and
in our unaudited condensed consolidated financial statements and the accompanying notes for the nine
months ended September 30, 2009 included in this
prospectus. All references to Televisa,
we, us and words of similar effect refer
to Grupo Televisa, S.A.B., and, unless the context requires
otherwise, its restricted and unrestricted consolidated
subsidiaries. References to Innova or, for segment
reporting purposes, Sky refer to Innova, S. de R.L.
de C.V. Unless otherwise indicated, all Peso information is
stated in Pesos in purchasing power as of September 30,
2009.
Our
Company
Grupo Televisa, S.A.B., is the largest media company in the
Spanish-speaking world based on its market capitalization and a
major participant in the international entertainment business.
We operate broadcast channels in Mexico and complement our
network coverage through affiliated stations throughout the
country. As of September 30, 2009, our broadcast television
channels had an average sign-on to sign-off audience share of
70.9%. We produce pay television channels with national and
international feeds, which reach subscribers throughout Latin
America, the United States, Canada, Europe and Asia Pacific. We
export our programs and formats to television networks around
the world. As of September 30, 2009, we had exported
50,197 hours of programming to approximately 53 countries.
We believe we are the most important
Spanish-language
magazine publisher in the world, as measured by circulation,
which was approximately 114 million magazines during the
first nine months of 2009, publishing 178 titles in
approximately 20 countries.
We own 58.7% of Sky, a DTH satellite television provider in
Mexico, Central America and the Dominican Republic. We are also
a shareholder in three Mexican cable companies,
Cablevisión, Cablemás and TVI. We own 58.3% of
Cablemás through our 100% participation in the capital
stock of Alvafig, which holds an equity interest in
Cablemás.
We also own Esmas.com, one of the leading digital entertainment
web portals in Latin America, a gaming business which includes
bingo parlors, a 50% stake in a radio company that as of
September 30, 2009 reached 75% of the Mexican population, a
feature film production and distribution company, soccer teams
and a stadium in Mexico.
We also own an unconsolidated equity stake in La Sexta, a
free-to-air
television channel in Spain, and in OCESA, one of the leading
live entertainment companies in Mexico.
Our
Strategy
We intend to leverage our position as the largest media company
in the Spanish-speaking world to continue expanding our business
while maintaining profitability and financial discipline. We
intend to do so by maintaining our leading position in the
Mexican television market, by continuing to produce high quality
programming and by improving our sales and marketing efforts
while maintaining high operating margins. We have been able to
withstand the economic downturn as well as the depreciation of
the Peso as a result, in part, of our cost cutting plan, which
we put into effect in the last quarter of 2008.
By leveraging all our business segments and capitalizing on
their synergies to extract maximum value from our content, we
also intend to continue expanding our
pay-TV
networks business, increasing our international programming
sales worldwide and strengthening our position in the growing
U.S.-Hispanic
market. We also intend to continue developing and expanding Sky,
our DTH platform, strengthen our position in the cable and
telecommunications industry, continue developing our publishing
business and become an important player in the gaming industry.
We intend to continue to expand our business by developing new
business initiatives
and/or
through business acquisitions and investments in Mexico, the
United States and elsewhere.
1
Maintaining
Our Leading Position in the Mexican Television
Market
Continuing to Produce High Quality
Programming. We aim to continue producing the
type of high quality television programming that has propelled
many of our programs to the top of the national ratings and
audience share in Mexico. In 2007, 2008 and as of
September 30, 2009, our networks aired 73%, 69% and 66%
respectively, of the 200 most-watched television programs in
Mexico, according to IBOPE Mexico. We have launched a number of
initiatives in creative development, program scheduling and
on-air promotion. These initiatives include improved production
of our highly rated telenovelas, new comedy and game show
formats and the development of reality shows and new series. We
have improved our scheduling to be better aligned with viewer
habits by demographic segment while improving viewer retention
through more dynamic on-air graphics and pacing. We have
enhanced tune-in promotion both in terms of creative content and
strategic placement. In addition, we plan to continue expanding
and leveraging our exclusive
Spanish-language
video library, exclusive rights to soccer games and other
events, as well as cultural, musical and show business
productions.
In April 2008, we began broadcasting more than 1,000 hours
per year of Telemundos original programming on Channel 9.
We currently and through December 2011, pay Telemundo a fixed
license fee for the broadcast of Telemundos programming on
our Channel 9 Network. Beginning January 2012, we will pay
Telemundo a license fee based on a percentage of all revenues
generated from sales related to Telemundo programming. We
currently distribute, via Sky and Cablevisión, a new pay
television channel in Mexico, among other countries, produced by
Telemundo principally featuring Telemundo branded content. As a
result of the strategic alliance agreement entered into with NBC
Universals Telemundo, we distribute Telemundo content in
Mexico on an exclusive basis across multiple platforms including
broadcast television, pay television and our emerging digital
platforms. In October 2008, we entered into license agreements
to distribute Telemundos original content through digital
and wireless platforms in Mexico. As part of the agreements,
Telemundo provides us with Telemundos original content,
including its highly popular telenovelas currently broadcast on
Televisas Channel 9, on all of Televisas digital
platforms including: esmas.com, the leading entertainment portal
in Mexico; Tvolucion.com, our online video on demand streaming
service; and EsmasTv.com, our as aired online television
service. Moreover, Televisa also offers mobile wall papers, ring
tones and text messaging services based on Telemundo branded
content to mobile phone subscribers in Mexico through
Televisas mobile business unit Esmas Movil, the leading
mobile premium content provider in Mexico. The agreements
complement and are part of the strategic alliance to distribute
Telemundos original content in Mexico across multiple
platforms, including, broadcast TV, Pay TV and emerging digital
platforms.
Improving Our Sales and Marketing
Efforts. Over the past few years we have improved
our television broadcasting advertising sales strategy by:
(i) introducing a cost per rating point basis pricing
system; (ii) implementing differentiated pricing by
quarter, by channel and by time of day; (iii) reorganizing
our sales force into teams focusing on each of our divisions;
(iv) emphasizing a compensation policy for salespeople that
is performance-based, with variable commissions tied to year-end
results for a larger portion of total compensation; and
(v) continuing to provide our customers with increased
opportunities for product integration.
Maintaining High Operating Segment Income
Margins. Our television broadcasting operating
segment income margin for 2008 and the first nine months of 2009
was 48.9% and 47.1%, respectively. We intend to continue
maintaining high television broadcasting operating segment
income margins by increasing revenues and controlling costs and
expenses.
Advertising Sales Plan. Our sales force is
organized into separate teams, each of which focuses on a
particular segment of our business. We sell commercial time in
two ways: upfront and scatter basis. Advertisers that elect the
upfront option lock in prices for the upcoming year, regardless
of future price changes. Advertisers that choose the upfront
option make annual prepayments, with cash or short-term notes,
and are charged the lowest rates for their commercial time,
given the highest priority in schedule placement, and given a
first option in advertising during special programs. Scatter
advertisers, or advertisers who choose not to make upfront
payments but rather advertise from time to time, risk both
higher prices and lack of access to choice commercial time
slots. We sell advertising to our customers on a cost per rating
point basis, whereby our television advertisers are billed for
actual minutes used, and the amount billed per minute is based
on the price per rating point and actual ratings delivered. This
pricing alternative allows an advertiser to purchase advertising
time based on the actual ratings of the television
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programs during which its advertisements are aired. We do not
have commitments with advertisers to achieve a certain rating
upon broadcast and therefore do not provide any future price
adjustments if a certain rating is not met.
We currently sell only a portion of our available television
advertising time. We use a portion of our television advertising
time to satisfy our legal obligation to the Mexican government
to provide up to 18 minutes per day of our broadcast time
between 6:00 a.m. and midnight for public service
announcements and 30 minutes per day for public programming
(referred to in this prospectus as Official Television Broadcast
Time), and our remaining available television advertising time
to promote, among other things, our television products. We sold
approximately 59%, 62% and 55% of total available national
advertising time on our networks during prime time broadcasts in
2007, 2008 and the first nine months of 2009, respectively, and
approximately 50%, 49% and 44% of total available national
advertising time during all time periods in 2007, 2008 and the
first nine months of 2009, respectively.
Continue
Building Our Pay Television Platforms
DTH. We believe that Ku-band DTH satellite
services offer an enhanced opportunity for expansion of pay
television services into cable households seeking to upgrade
reception of our broadcasting and in areas not currently
serviced by operators of cable or multi-channel, multi-point
distribution services. We own a 58.7% interest in Innova, or
Sky, our joint venture with DIRECTV. Innova is a DTH company
with services in Mexico, Central America and the Dominican
Republic with approximately 1.82 million subscribers, of
which 139,800 were commercial subscribers as of
September 30, 2009.
Following the merger with PanAmSat, Intelsat, our primary
satellite service provider, renamed the satellites PAS-9 and
PAS-3R as IS-9 and IS-3R, respectively. Intelsat recently
reported that IS-9 is estimated to have its end of life reduced
to October, 2012, and that it anticipates delivery of a
replacement satellite, IS-21, by April 2012 but has not yet
determined the launch vehicle or launch schedule for IS-21.
In December 2007, Innova and Sky Brasil Servicos Ltda., or Sky
Brasil, reached an agreement with Intelsat Corporation and
Intelsat LLC to build and launch a new 24- transponder
satellite, IS-16, for which its estimated
15-year
service life will be dedicated as
back-up
capacity to Sky and Sky Brasil. The satellite will be
manufactured by Orbital Sciences Corporation and is expected to
launch during the first half of 2010.
The key components of our DTH strategy include:
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offering high quality programming, including rights to our four
over-the-air
broadcast channels, exclusive broadcasts of sporting events,
such as selected matches of the Mexican Soccer League and the
Spanish Soccer League, including La Liga and La Copa
del Rey, the NFL Sunday Ticket, NBA Pass, MLB Extra Innings, the
NHL and the Golf Channel;
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capitalizing on our relationship with DIRECTV and local
operators in terms of technology, distribution networks,
infrastructure and cross-promotional opportunities;
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capitalizing on the low penetration of
pay-TV
services in Mexico;
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expanding our DTH services in Central America and the Caribbean;
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providing superior digital Ku-band DTH satellite services and
emphasizing customer service quality; and
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continuing to leverage our strengths and capabilities to develop
new business opportunities and expand through acquisitions.
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Pay Television Networks. Through our 14
pay-TV
brands and 31 national and international feeds, we reached more
than 21 million subscribers throughout Latin America, the
United States, Canada, Europe and Asia Pacific in 2009. Our
pay-TV
channels include three music, four movie, seven variety and
entertainment channels and one recently launched sports channel,
Televisa Deportes Network, or TDN. Through TuTV, our joint
venture with Univision, we distribute five
pay-TV
channels within the United States. These channels, whose content
includes film, music and lifestyle programming, reached more
than 1.9 million households in 2009.
Cable. We are a shareholder in three Mexican
cable companies, Cablevisión, Cablemás and TVI. With a
subscriber base of over 616,806 cable television subscribers
(all of which were digital subscribers), as of
3
September 30, 2009 and over 1.8 million homes passed
as of September 30, 2009, Cablevisión, the Mexico City
cable system in which we own a 51% interest, is one of the most
important cable television operators in Mexico.
Cablevisións strategy aims to increase its subscriber
base, average monthly revenues per subscriber and penetration
rate by:
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continuing to offer high quality programming;
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continuing to upgrade its existing cable network into a
broadband bidirectional network;
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maintaining its 100% digital service in order to stimulate new
subscriptions, substantially reduce piracy and offer new
value-added services;
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increasing the penetration of its high-speed and bidirectional
internet access and other multimedia services as well as
providing a platform to offer internet protocol, or IP, and
telephony services;
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continuing the roll out of digital set-top boxes and the roll
out, which began in the third quarter of 2005, of advanced
digital set-top boxes which allow the transmission of high
definition programming and recording capability; and
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continuing to leverage our strengths and capabilities to develop
new business opportunities and expand through acquisitions.
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Cablevisión has introduced a variety of new multimedia
communications services over the past few years, such as
interactive television and other enhanced program services,
including high-speed internet access through cable modem as well
as IP telephony. As of September 30, 2009, Cablevisión
had 234,138 Internet customers compared to 199,731 at
December 31, 2008. The growth we have experienced in
Cablevisión has been driven primarily by the conversion of
our system from analog to digital format. Accordingly,
Cablevisión has concluded its plan to switch its analog
subscriber base to the digital service. In addition,
Cablevisión introduced video on demand, or VOD and High
Definition services and, in May 2007 received governmental
approval to introduce telephony services. On July 2, 2007,
Cablevisión began to offer IP telephony services in certain
areas of Mexico City and as of September 30, 2009, it had
111,709 IP telephone lines in service. As of September 30,
2009, Cablevisión has offered the service in every area in
which its network is bidirectional.
As of September 30, 2009, we owned 58.3% of the capital
stock and 49% of the voting stock of Cablemás.
Cablemás operates in 49 cities. As of
September 30, 2009, the Cablemás cable network served
more than 890,270 cable television subscribers, 266,824
high-speed internet subscribers and 119,144
IP-telephony
lines, with approximately 2,696,640 homes passed. On
August 8, 2007, the Mexican Antitrust Commission
authorized, subject to compliance with certain conditions, the
conversion of our long-term notes into 99.99% of the equity of
Alvafig, and on December 11, 2007, after we appealed the
first decision of the Mexican Antitrust Commission, the
conversion of our long-term convertible notes into 99.99% of the
equity of Alvafig was authorized subject to compliance with
certain new conditions. The initial two conditions that have
already been met, and that going forward must be complied with
on a continuous basis, are: (1) to make available, subject
to certain conditions, our over the air channels to
pay-TV
operators on non-discriminatory terms (must offer)
and (2) that our
pay-TV
platforms carry, upon request and subject to certain conditions,
over the air channels operating in the same geographic zones
where such
pay-TV
platforms provide their services (must carry). There
are other conditions that have been met and that have to be met,
which we are complying with on a timely basis, including the
termination of the Stockholder Trust which took place on
June 17, 2009.
In March 2006, our subsidiary, Corporativo Vasco de Quiroga,
S.A. de C.V. or CVQ, acquired a 50% interest in TVI. TVI is a
telecommunications company offering pay television, data and
voice services in the metropolitan area of Monterrey and other
areas in northern Mexico. As of September 30, 2009, TVI has
served more than 230,857 cable television subscribers, 101,883
high-speed internet subscribers and 62,981 telephone lines.
CVQ notified the Mexican Antitrust Commission of its intent to
acquire a 50% interest in TVI, and after appealing the decision
of such authority at the first stage of the process on
February 23, 2007, the Mexican Antitrust Commission
authorized the intended acquisition, subject to compliance with
certain conditions. We believe that as of the date of this
prospectus, CVQ has complied on a regular basis with all of such
conditions.
4
Expanding
Our Publishing Business
With a total approximate circulation of 152 million
magazines from January through December 2009, we believe our
subsidiary, Editorial Televisa, S.A. de C.V., or Editorial
Televisa, is the most important
Spanish-speaking
publishing company in the world in number of magazines
distributed. Editorial Televisa publishes 178 titles; 113 are
wholly-owned and produced in-house and the 65 remaining titles
are licensed from world renowned publishing houses, including
Spanish language editions of some of the most prestigious brands
in the world. Editorial Televisa distributes its titles to
approximately 20 countries, including Mexico, the United States
and countries throughout Latin America.
We believe that Editorial Televisa leads at least 18 of the 20
markets in which we compete in terms of readership. During 2009,
we launched the following new titles, Atrévete a
Soñar, a telenovela-themed licensed magazine, Poder
y Negocios Venezuela and Poder y Negocios Perú,
which are wholly-owned business titles.
Increasing
Our International Programming Sales Worldwide and Strengthening
Our Position in the Growing
U.S.-Hispanic
Market
We license our programs to television broadcasters and
pay-TV
providers in the United States, Latin America, Asia, Europe and
Africa. Excluding the United States, during the first nine
months of 2009, we licensed 50,197 hours of programming in
approximately 53 countries throughout the world. We intend to
continue exploring ways of expanding our international
programming sales.
In November 2005, the government of Spain granted a concession
for a nationwide
free-to-air
analog television channel and two nationwide
free-to-air
digital television channels to La Sexta, a consortium that
includes Televisa, which holds a 40.517% equity interest
therein; Grupo Globomedia and the Mediapro Group, which control
a 51.658% equity interest, indirectly, through their interest in
GAMP Audiovisual, S.A., or GAMP; and as of November 2006, Gala
Desarrollos Comerciales, S.L. or Gala, which holds a 7.825%
equity interest which it acquired from GAMP. La Sexta began
broadcasting on March 27, 2006. Through our investment in
La Sexta, we believe we are able to capitalize on the size
of Spains advertising market, as well as the potential
synergies between the countrys entertainment market and
our current markets.
The
U.S.-Hispanic
population, estimated to be 46.9 million, or approximately
15.1% of the U.S. population according to U.S. Census
estimates published May 14, 2009, is currently one of the
fastest growing segments in the U.S. population, with the
growth among Hispanics responsible for half of the
U.S. population gains between 2000 and 2008. The
U.S. Census Bureau projects that the Hispanic population
will be approximately 21% of the U.S. population by the
year 2025. Hispanics are expected to account for U.S.$1.0
trillion of U.S. consumer spending, or 9.7% of the
U.S. total disposable income, by 2010, outpacing the
expected growth in total U.S. consumer expenditures.
We intend to leverage our unique and exclusive content, media
assets and long-term associations with others to benefit from
the growing demand for entertainment among the
U.S.-Hispanic
population.
We supply television programming for the
U.S.-Hispanic
market through Univision, the leading
Spanish-language
media company in the United States. During 2008, we provided
39.3% of Univision Networks non-repeat broadcast hours and
19.5% of TeleFutura Networks non-repeat broadcast hours.
In exchange for this programming, during 2006, 2007, 2008 and
until September 30, 2009, Univision paid us
U.S.$126.9 million, U.S.$138.0 million,
U.S.$146.5 million and U.S.$104.0 million,
respectively, in royalties.
In March 2007, at the closing of the acquisition of Univision,
all of our shares and warrants in Univision were cancelled and
converted into cash in an aggregate amount of
U.S.$1,094.4 million. As a result of such conversion, we no
longer hold an equity interest in Univision. We are also no
longer bound by the provisions of the certain participation
agreement by and among Televisa, Univision, certain principals
of Univision, and Venevision, or the Participation Agreement,
except in the case that we enter into certain transactions
involving direct broadcast satellite or DTH satellite to the
U.S. market. The Participation Agreement had formerly
restricted our ability to enter into certain transactions
involving
Spanish-language
television broadcasting and a
Spanish-language
television network in the U.S. without first offering
Univision the opportunity to acquire a 50% economic interest.
Subject to certain restrictions which may continue to bind us by
reason of the 2001 Program License Agreement, or PLA, between
Televisa Internacional, S.A. de C.V. and Univision, and other
limited exceptions, we can now engage in
5
certain business opportunities in the growing U.S. Hispanic
marketplace relating to programming or otherwise without
offering Univision participation in such opportunities.
We maintain a joint venture, TuTv, with Univision through which
we operate and distribute a suite of
Spanish-language
television channels for digital cable and satellite delivery in
the United States. In May 2003, TuTv entered into a five-year
distribution agreement with DISH Network Corporation, formerly
EchoStar Communications Corporation, the third largest provider
of Latino
pay-TV
programming in the U.S., for three of the five existing
channels. In October 2008, TuTv extended this agreement through
December 2012, and in relation to the extension launched the
Mexican regional music network Bandamax as well as one more
channel for a total of four. TuTv currently distributes five
cable channels, including two movie channels and three channels
featuring music videos, celebrity lifestyle and interviews and
entertainment news programming. In 2008, channels distributed by
TuTv reached approximately 1.9 million subscribers through
EchoStar Communications Corporation, DIRECTV Puerto Rico, Cox,
Time Warner and other smaller systems.
Developing
New Businesses and Expanding through Acquisitions
We plan to continue leveraging our strengths and capabilities to
develop new business opportunities and expand through
acquisitions and investments in Mexico, the United States and
elsewhere. Any such acquisition or investment, which could be
funded using cash on hand, our equity securities
and/or the
issuance of debt securities, could be substantial in size.
In 2006, we launched our gaming business which consists of bingo
and sports books halls, and a national lottery. As of
September 30, 2009, we had 25 bingo and sports books halls
in operation, under the brand name Play City. We
plan to continue opening bingo and sports books halls over the
course of the next four years, to result in a total of 65. In
addition, during 2007 we launched Multijuegos, an online lottery
with access to a nationwide network of approximately 5,000
electronic terminals. The bingo and sports books halls and
Multijuegos are operated under the Gaming Permit obtained from
the Mexican Ministry of the Interior, to establish, among other
things, up to 65 bingo and sports books halls and number
draws throughout Mexico. In the first quarter of 2009, we
negotiated an orderly termination of the existing contract with
Scientific Games, our technology partner for the operations of
our online lottery business, and on June 30, 2009 entered
into new agreements by which Multijuegos obtained from
Scientific Games a license for the lottery software and all the
electronic terminals, communications equipment and hardware of
the lottery system to operate directly the same.
In November 2006, we invested U.S.$258.0 million in
long-term notes, convertible, at our option and subject to
regulatory approval, into 99.99% of the equity of Alvafig, the
holding company of a 49% interest in the voting stock of
Cablemás. In February 2008, we invested
U.S.$100.0 million in an additional issuance of long-term
notes convertible into 99.99% of the equity of Alvafig, which
proceeds were used by Alvafig to increase its interest in
Cablemás. On May 16, 2008, we converted all of the
convertible long-term notes into 99.99% of the capital stock of
Alvafig. On February 20, 2009, Alvafig subscribed and paid
28,052,881 limited voting shares of Cablemás, for a
consideration of Ps.557,200,000. With this capital increase,
Alvafig reached its current ownership stock in Cablemás of
58.3%.
In December 2007, our indirect majority-owned subsidiary,
Cablestar, S.A. de C.V., or Cablestar, completed the acquisition
of shares of companies owning the majority of the assets of
Bestel, a privately held, facilities-based telecommunications
company in Mexico, for U.S.$256.0 million in cash plus an
additional capital contribution of U.S.$69.0 million. In
connection with the financing of the acquisition of the majority
of the assets of Bestel, Cablevisión, Cablemás and
TVI, which as of December 2007 held 69.2%, 15.4% and 15.4% of
the equity stock of Cablestar, respectively, each entered into
five year term loan facilities for U.S.$225.0 million,
U.S.$50.0 million and U.S.$50.0 million, respectively.
In June 2009, the Company acquired TVIs indebtedness under
the abovementioned credit facility. In July 2009 the Company
exchanged its account receivable in connection with such credit
facility for the 15.4% interest TVI held in Cablestar. Bestel
focuses on providing nationwide voice and data services
solutions to private and public companies and to international
and domestic telecommunications service providers in both Mexico
and the United States. Bestel owns a fiber-optic network of
approximately 8,000 kilometers that covers several important
cities and economic regions in Mexico and has direct crossing of
its network into Laredo, McAllen and El Paso, Texas as well as
San Diego, California and Nogales, Arizona in the United
States. This enables the company to provide connectivity between
the United States and Mexico.
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We expect that in the future we may identify and evaluate
opportunities for strategic acquisitions of complementary
businesses, technologies or companies. We may also consider
joint ventures and other collaborative projects and investments.
How to
Reach Us
Grupo Televisa, S.A.B. is a sociedad anónima
bursátil, a limited liability public stock corporation
organized under the laws of the United Mexican States. Our
principal executive offices are located at Avenida Vasco de
Quiroga, No. 2000, Colonia Santa Fe, 01210
México, D.F., México. Our telephone number at that
address is (52)(55) 5261 2000.
7
RECENT
DEVELOPMENTS
Dividends
On December 10, 2009, at a general stockholders
meeting, our stockholders approved a cash distribution to
stockholders for up to Ps.4.0 billion, which includes the
payment of an extraordinary dividend of Ps.1.0 per CPO, which is
in addition to our ordinary dividend of Ps.0.35 per CPO, for a
total dividend of Ps.1.35 per CPO and Ps.0.011538461538 per
share of series A, B, D and
L, not in the form of a CPO. The dividend was paid
starting on December 22, 2009. See
Item 3 Key Information
Dividends included in the 2008
Form 20-F.
Note
Offering
On November 30, 2009, we consummated our offering of
U.S.$600.0 million aggregate principal amount of
6.625% Senior Notes due 2040. The notes issued in November
2009 are part of a single series of notes. We are offering to
exchange these notes for new registered notes on the terms
described in this prospectus.
Mexican
Antitrust Commission Ruling
On November 20, 2009, the Mexican antitrust authority
(Comisión Federal de Competencia) imposed a fine of
approximately U.S.$3.5 million alleging that a subsidiary of
Televisa abused its dominant position in the wholesale free
television signals market for cable broadcasting. The company is
accused of having refused to allow its competitor Telecable
Centro de Occidente, S.A. de C.V. to broadcast a number of free
television signals owned by Televisa in some regions of the
state of Michoacán. Televisa does not agree with the
resolution and will vigorously oppose it.
Ernesto
Alonso Litigation
The executor of the estate of Mr. Ernesto Alonso
(Executor) filed a lawsuit in Mexico seeking to
invalidate an agreement pursuant to which Mr. Alonso
assigned to us all the rights to more than 170 scripts written
by him. The Executor alleges, among other things, that the term
of such agreement exceeds the term permitted under the Mexican
Federal Copyright Law. We believe the Executors claims are
without merit and will defend our position vigorously.
Changes
to Mexican Tax Law
In October 2009, the Mexican Congress approved a tax bill that
became effective as of January 1, 2010. The approved tax
bill amends and provides for additional changes to several
provisions contained within the Mexican tax laws related to
income tax, value added tax, excise tax, and tax on cash
deposits. The main provisions of the approved tax bill are as
follows:
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The corporate income tax rate is increased from 28% to 30% for
the years 2010 through 2012 and reduced to 29% and 28% in 2013
and 2014, respectively;
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New rules for the tax consolidation regime were approved. The
deferred income tax benefit derived from tax consolidation of a
parent company and its subsidiaries is limited to a period of
five years; therefore, the resulting deferred income tax has to
be paid starting in the sixth year following the fiscal year in
which the deferred income tax benefit was received. The payment
of this tax has to be made in installments: 25% in the first and
second year, 20% in the third year, and 15% in the fourth and
fifth year. This procedure applies for the deferred income tax
resulting from the tax consolidation regime prior to and from
2010, so taxpayers have to pay in 2010 the first installment of
the cumulative amount of the deferred tax benefits determined as
of December 31, 2004. We are calculating the deferred tax
that we will have to pay as of 2010 pursuant to the new rules
for the tax consolidation regime, as well as the effect that we
may have to recognize in our financial statements for 2009. We
expect that the Mexican tax authorities will issue certain rules
to complement and clarify what has been published thus far.
These rules will enable us to better determine such effect.
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These changes in the tax consolidation regime could have a
significant negative impact on our financial results. We believe
that the new provisions for the tax consolidation regime have a
retroactive application and, thus, we are evaluating whether to
challenge the constitutionality of these new provisions;
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Effective January 1, 2010, revenues from telecommunications
and pay television services (except access to Internet services,
interconnection services between public networks of
telecommunications and public telephone services) are subject to
a 3% excise tax; and
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Effective January 1, 2010, the excise tax rate on gaming
(including bets and drawings) is increased from 20% to 30%.
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These changes and additional changes to the Mexican tax laws
directly affect our Pay Television Networks, Sky and Cable and
Telecom segments, and the gaming business within our Other
Businesses segment;
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The general value added tax rate is increased from 15% to 16%,
and the rate on the border region is increased from 10% to 11%.
Therefore, beginning on January 1, 2010, our Company and
its subsidiaries transfer to their clients such tax at a 16%
rate for activities such as sale of goods or assets, rendered
services and lease of assets; and
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The tax on cash deposits is increased from 2% to 3%, and the
monthly exemption threshold is reduced so that corporations are
not bound to pay the tax on cash deposits for a cumulative
amount of fifteen thousand Mexican Pesos per month.
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Consolidation
of TVI
Beginning in the fourth quarter of 2009, we began to include in
our consolidated financial statements the assets, liabilities
and results of operations of Televisión Internacional, S.A.
de C.V. and subsidiaries, collectively TVI, a telecommunications
company with operations in Monterrey and nearby cities, as we
have a majority in the TVI board of directors. Through
September 30, 2009, our 50% interest in TVI was accounted
for by applying the equity method.
Our consolidated total assets, liabilities and
stockholders equity at October 1, 2009 increased by
approximately 1.0%, 1.1% and 0.8%, respectively, as a result of
including the assets and liabilities of TVI in our consolidated
balance sheet beginning in the fourth quarter 2009. Also, we
expect an immaterial increase in our consolidated net sales and
operating income in the fourth quarter of 2009, as a result of
including the results of operations of TVI in our consolidated
statement of income beginning in the fourth quarter of 2009.
La Lupa
Litigation
In October 2001, a claim for damages was filed in connection
with an alleged copyright infringement on a technical written
work titled La Lupa, or Catch the Clue. In
November 2002, a final judgment was entered against us whereby
we were declared liable for an amount equal to 40% of the income
generated from such work. In January 2005, a motion to enforce
the final judgment, or the Final Motion, was filed. The Final
Motion was resolved and the amount of liability set by the Court
was Ps.138,097,002.99. An appeal filed by the Company overturned
the lower Courts ruling, and the Court of Appeal ordered
the original judge to issue a new resolution. The judge issued a
new
9
resolution dismissing the Final Motion on September 29,
2009. The plaintiff has appealed the new resolution. We expect a
ruling from the Court of Appeal in the near term. Although we
currently believe that the final amount of damages will not be
material, no assurances can be given in this regard.
Strategic
Alliance with Genomma Lab Internacional, S.A.B.
On August 30, 2009, we announced that we entered into a
strategic alliance agreement with Genomma Lab Internacional,
S.A.B. de C.V., or Genomma Lab, to sell and distribute personal
care and over the counter pharmaceuticals in the United States
and Puerto Rico. The strategic alliance will operate through
Televisa Consumer Products USA, or TCP, a company owned 51% by
Televisa and 49% by Genomma Lab. The sale and distribution of
Genomma Labs products will be an integral part of the
activities of TCP. As part of this alliance, on October 8,
2009, TCP entered into, among others, a commercial supply
agreement with Genomma Lab. We will make available our different
media platforms in the United States and Puerto Rico to TCP,
which will provide Genomma Labs brands with significant
advertising in the targeted markets corresponding to Genomma
Labs business model. This will enable Genomma Lab to
expand the extensive success of its brands beyond Mexico and
Latin America by accessing a Hispanic market of approximately
50 million consumers with an estimated purchasing power of
over $870 billion annually while leveraging our reach and
name recognition in the Hispanic market. The transaction was
closed on October 8, 2009 and we contemplate launching
operations by March 2010.
Services
Agreement with Allen & Company
In August 2009, we entered into an agreement with
Allen & Company to provide the Company with advisory
services related to investment opportunities outside of Mexico.
Two of our directors are directors of Allen & Company
as well. This agreement was entered into on an arms length
basis. We believe that the amounts paid and to be paid under
this agreement to Allen & Company are comparable to
those paid to third parties for these types of services.
Univision
Litigation
In May 2005, Televisa, S.A. de C.V. filed a complaint
(subsequently amended) in the U.S. District Court for the
Central District of California (the Court). Among
other claims, Televisa, S.A. de C.V. alleged that Univision had
materially breached the PLA, as between Televisa Internacional,
S.A. de C.V. and Univision (the District Court
Action).
On January 22, 2009, Televisa, S.A. de C.V. and Univision
agreed to dismiss all claims in the District Court Action with
the exception of the Univision Internet Counterclaim (as defined
below).
In October 2006, Univision filed a counterclaim in the District
Court Action for a judicial declaration that on or after
December 19, 2006, pursuant to the 2001 PLA between
Televisa Internacional, S.A. de C.V. and Univision, Televisa,
S.A. de C.V. may not transmit or permit others to transmit any
television programming into the United States by means of
the Internet (the Univision Internet Counterclaim).
The Univision Internet Counterclaim was tried in a non-jury
trial before the Hon. Philip S. Gutierrez (the
Judge) commencing on June 9, 2009. A hearing
for closing arguments before the Court occurred on July 8,
2009. On July 17, 2009, the Judge issued a written decision
following trial in favor of Univision. By judgment entered on
August 3, 2009, the Judge held: Under the 2001
Program License Agreement (PLA) between Univision
and Televisa, Televisa is prohibited from making Programs, as
that term is defined in the PLA, available to viewers in the
United States via the Internet. Televisa, S.A. de C.V.
filed a notice of appeal of the judgment on August 17,
2009. Briefing on the appeal is expected to be completed in
March 2010, with oral argument to be scheduled at some point
thereafter. The Judges ruling does not grant Univision the
right to distribute Televisa, S.A. de C.V.s content over
the Internet, and this decision has no effect on our current
business as we do not derive any revenues from the transmission
of video content over the Internet in the United States. For a
description of risks associated with this litigation, please see
Risk Factors Risk Factors Related to Our
Business Current Litigation We Are Engaged In With
Univision May Affect Our Exploitation of Certain Internet Rights
in the United States in our 2008
Form 20-F.
We cannot predict how the outcome of this litigation will affect
our business relationship with Univision with respect to
Internet distribution rights in the United States.
10
SUMMARY
OF TERMS OF THE EXCHANGE OFFER
Set forth below is a summary description of the terms of the
exchange offer. We refer you to The Exchange Offer
for a more complete description of the terms of the exchange
offer.
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New Notes |
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Up to U.S.$600,000,000 aggregate principal amount of
6.625% Senior Exchange Notes due 2040, or Exchange Notes,
or new notes. The terms of the new notes and the old notes are
identical in all respects, except that, because the offer of the
new notes will have been registered under the Securities Act of
1933, or the Securities Act, the new notes will not be subject
to transfer restrictions, registration rights or the related
provisions for increased interest if we default under the
related registration rights agreement. |
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The Exchange Offer |
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We are offering to exchange up to U.S.$600,000,000 aggregate
principal amount of new notes for a like aggregate principal
amount of old notes. Old notes may be tendered only in a minimum
principal amount of U.S.$2,000 and in integral multiples of
U.S.$1,000. |
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In connection with the private placement of the old notes on
November 30, 2009, we entered into a registration rights
agreement, which grants holders of the old notes certain
exchange and registration rights. This exchange offer is
intended to satisfy our obligations under this registration
rights agreement. |
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If the exchange offer is not completed within the time period
specified in the registration rights agreement, we will be
required to pay additional interest on the old notes covered by
the registration rights agreement for which the specified time
period was exceeded. |
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Resale of New Notes |
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Based on existing interpretations by the staff of the SEC set
forth in interpretive letters issued to parties unrelated to us,
we believe that the new notes may be offered for resale, resold
or otherwise transferred by you without compliance with the
registration and prospectus delivery requirements of the
Securities Act, provided that: |
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you are acquiring the new notes in the
exchange offer in the ordinary course of your business;
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you are not participating, do not intend to
participate, and have no arrangements or understandings with any
person to participate in the exchange offer for the purpose of
distributing the new notes; and
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you are not our affiliate, within
the meaning of Rule 405 under the Securities Act.
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If any of the statements above are not true and you transfer any
new notes without delivering a prospectus that meets the
requirements of the Securities Act or without an exemption from
registration of your new notes from those requirements, you may
incur liability under the Securities Act. We will not assume or
indemnify you against that liability. |
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Each broker-dealer that receives new notes for its own account
in exchange for old notes that were acquired by such
broker-dealer as a result of market-making or other trading
activities may be a statutory underwriter and must acknowledge
that it will comply with the prospectus delivery requirements of
the Securities Act in connection |
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with any resale or transfer of the new notes. A broker-dealer
may use this prospectus for an offer to resell, resale or other
transfer of the new notes. See Plan of Distribution. |
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The exchange offer is not being made to, nor will we accept
surrenders of old notes for exchange from, holders of old notes
in any jurisdiction in which the exchange offer or the
acceptance thereof would not be in compliance with the
securities or blue sky laws of the jurisdiction. |
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Consequences of Failure to Exchange Old Notes for New Notes |
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If you do not exchange your old notes for new notes, you will
not be able to offer, sell or otherwise transfer your old notes
except: |
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in compliance with the registration
requirements of the Securities Act and any other applicable
securities laws;
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pursuant to an exemption from the securities
laws; or
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in a transaction not subject to the
securities laws.
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Old notes that remain outstanding after completion of the
exchange offer will continue to bear a legend reflecting these
restrictions on transfer. In addition, upon completion of the
exchange offer, you will not be entitled to any rights to have
the resale of old notes registered under the Securities Act, and
we currently do not intend to register under the Securities Act
the resale of any old notes that remain outstanding after the
completion of the exchange offer. |
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Expiration Date |
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The exchange offer will expire at 5:00 p.m., New York City
time,
on March 16, 2010, unless we extend it. We do not currently intend to extend
the exchange offer. |
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Interest on the New Notes |
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Interest on the new notes will accrue at the rate of 6.625% from
the date of the last periodic payment of interest on the old
notes or, if no interest has been paid, from November 30,
2009. No additional interest will be paid on old notes tendered
and accepted for exchange. |
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Conditions to the Exchange Offer |
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The exchange offer is subject to customary conditions, including
that: |
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the exchange offer does not violate
applicable law or any applicable interpretation of the
Securities and Exchange Commission staff;
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the old notes are validly tendered in
accordance with the exchange offer;
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no action or proceeding would impair our
ability to proceed with the exchange offer; and
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any governmental approval that we believe, in
our sole discretion, is necessary for the consummation of the
exchange offer, as outlined in this prospectus, has been
obtained.
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The exchange offer is not conditioned upon any minimum principal
amount of old notes being tendered for exchange. See The
Exchange Offer Conditions. |
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Procedures for Tendering Old Notes |
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If you wish to accept the exchange offer, you must follow the
procedures for book-entry transfer described in this prospectus,
whereby you will agree to be bound by the letter of transmittal
and we may enforce the letter of transmittal against you.
Questions regarding the tender of old notes or the exchange
offer generally should be directed |
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to the exchange agent at one of its addresses specified in
The Exchange Offer Exchange Agent. See
The Exchange Offer Procedures for
Tendering and The Exchange Offer
Guaranteed Delivery Procedures. |
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Guaranteed Delivery Procedures |
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If you wish to tender your old notes and the procedure for book
entry transfer cannot be completed on a timely basis, you may
tender your old notes according to the guaranteed delivery
procedures described under the heading The Exchange
Offer Guaranteed Delivery Procedures. |
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Acceptance of Old Notes and Delivery of New Notes |
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We will accept for exchange any and all old notes that are
properly tendered in the exchange offer before 5:00 p.m.,
New York City time, on the expiration date, as long as all of
the terms and conditions of the exchange offer are met. We will
deliver the new notes promptly following the expiration date. |
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Withdrawal Rights |
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You may withdraw the tender of your old notes at any time before
5:00 p.m., New York City time, on the expiration date of
the exchange offer. To withdraw, you must send a written notice
of withdrawal to the exchange agent at one of its addresses
specified in The Exchange Offer Exchange
Agent before 5:00 p.m., New York City time, on the
expiration date. See The Exchange Offer
Withdrawal of Tenders. |
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Taxation |
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The exchange of old notes for new notes will not be a taxable
transaction for U.S. federal income tax purposes. For a
discussion of certain other U.S. and Mexican federal tax
considerations relating to the exchange of the old notes for the
new notes and the purchase, ownership and disposition of new
notes, see Taxation. |
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Exchange Agent |
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The Bank of New York Mellon is the exchange agent. The address,
telephone number and facsimile number of the exchange agent are
set forth in The Exchange Offer Exchange
Agent and in the back cover of this prospectus. |
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Use of Proceeds |
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We will not receive any proceeds from the issuance of the new
notes. We are making the exchange offer solely to satisfy our
obligations under the registration rights agreement. See
Use of Proceeds for a description of our use of the
net proceeds received in connection with the issuance of the old
notes. |
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SUMMARY
OF TERMS OF THE EXCHANGE NOTES
Unless otherwise specified, references in this section to the
notes mean the U.S.$600,000,000 aggregate principal
amount of old notes issued on November 30, 2009 and up to
an equal principal amount of new notes we are offering hereby.
The new notes will be issued under the same indenture under
which the old notes were issued and, as a holder of new notes,
you will be entitled to the same rights under the indenture that
you had as a holder of old notes. The old notes and the new
notes will be treated as a single series of debt securities
under the indenture.
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Issuer |
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Grupo Televisa, S.A.B. |
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Notes Offered |
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Up to U.S.$600.0 million aggregate principal amount of
6.625% Senior Exchange Notes due 2040 which have been
registered under the Securities Act. |
|
Maturity |
|
January 15, 2040. |
|
Interest Payment Dates |
|
Interest on the Exchange Notes will be payable semi-annually on
January 15 and July 15 of each year, beginning on July 15,
2010. |
|
Ranking |
|
The Exchange Notes are our unsecured general obligations and
rank equally with all of our existing and future unsecured and
unsubordinated indebtedness. The Exchange Notes effectively rank
junior to all of our secured indebtedness with respect to the
value of our assets securing that indebtedness and to all of the
existing and future liabilities, including trade payables, of
our subsidiaries. |
|
|
|
As of September 30, 2009: |
|
|
|
(i) Televisa had Ps.26,864.1 million (equivalent to
U.S.$1,989.8 million) of aggregate liabilities (not
including the notes and excluding liabilities to subsidiaries),
U.S.$1,488.6 million of which was Dollar-denominated. These
liabilities include Ps.26,372.8 million (equivalent to
U.S.$1,953.4 million) of indebtedness,
U.S.$1,472.0 million of which was Dollar-denominated, all
of which would have effectively ranked equal to the notes; and
|
|
|
|
(ii) Televisas subsidiaries had
Ps.34,837.4 million (equivalent to
U.S.$2,580.4 million) of liabilities (excluding liabilities
to us and excluding guarantees by subsidiaries of indebtedness
of Televisa), U.S.$958.5 million of which was
Dollar-denominated. These liabilities include
Ps.9,655.7 million (equivalent to U.S.$715.2 million)
of indebtedeness, U.S.$452.6 million of which was
Dollar-denominated, all of which (equivalent to
Ps.6,111.0 million) would have effectively ranked senior to
the notes.
|
|
Certain Covenants |
|
The indenture governing the Exchange Notes contains certain
covenants relating to Televisa and its restricted subsidiaries,
including covenants with respect to: |
|
|
|
limitations on liens;
|
|
|
|
limitations on sales and leasebacks; and
|
|
|
|
limitations on certain mergers, consolidations and
similar transactions.
|
|
|
|
These covenants are subject to a number of important
qualifications and exceptions. See Description of the New
Notes Certain Covenants. |
14
|
|
|
Change of Control Offer |
|
If we experience specific changes of control, we must offer to
repurchase the Exchange Notes at 101% of their principal amount,
plus accrued and unpaid interest. See Description of the
New Notes Certain Covenants Repurchase
of Notes upon a Change of Control. |
|
Additional Amounts |
|
All payments by us in respect of the Exchange Notes, whether of
principal or interest, will be made without withholding or
deduction for Mexican taxes, unless any withholding or deduction
is required by law. If you are not a resident of Mexico for tax
purposes, payment of interest on the Exchange Notes to you will
generally be subject to Mexican withholding tax at a rate which
is currently 4.9% (subject to certain exceptions). See
Taxation Federal Mexican Taxation in
this prospectus. In the event any withholding or deduction for
Mexican taxes is required by law, subject to specified
exceptions and limitations, we will pay the additional amounts
required so that the net amount received by the holders of the
Exchange Notes after the withholding or deduction will not be
less than the amount that would have been received by the
holders in the absence of such withholding or deduction. See
Description of the New Notes Certain
Covenants Additional Amounts. |
|
Redemption for Changes in Mexican Withholding Taxes |
|
In the event that, as a result of certain changes in law
affecting Mexican withholding taxes, we become obligated to pay
additional amounts in respect of the Exchange Notes in excess of
those attributable to a Mexican withholding tax rate of 10%, the
Exchange Notes will be redeemable, as a whole but not in part,
at our option at any time at 100% of their principal amount plus
accrued and unpaid interest, if any. See Description of
the New Notes Certain Covenants
Additional Amounts and Description of the New
Notes Withholding
Tax Redemption. |
|
Optional Redemption |
|
We may redeem any of the Exchange Notes at any time in whole or
in part by paying the greater of the principal amount of the
Exchange Notes or a make-whole amount, plus in each
case accrued interest, as described under Description of
the New Notes Optional Redemption
Optional Redemption with Make-Whole Amount. |
|
Form and Denomination |
|
The Exchange Notes will be issued in fully registered book-entry
form, with a minimum denomination of U.S.$2,000 and integral
multiples of U.S.$1,000 in excess thereof. |
|
Trustee and Principal Paying Agent |
|
The Bank of New York Mellon |
|
Governing Law |
|
The Exchange Notes and the indenture are, and following the
completion of the exchange offer will continue to be, governed
by New York law. |
|
Risk Factors |
|
See Risk Factors and the other information in this
prospectus for a discussion of factors you should carefully
consider before deciding to participate in the exchange offer. |
|
Luxembourg Listing |
|
We have applied to list the Exchange Notes on the Luxembourg
Stock Exchange, for trading on the Euro MTF market. |
For more complete information regarding the Exchange Notes, see
Description of the New Notes.
15
SUMMARY
FINANCIAL DATA
The following tables present our selected consolidated financial
information as of and for each of the periods indicated. This
data is qualified in its entirety by reference to, and should be
read together with, our audited year-end consolidated financial statements
and our unaudited condensed consolidated financial statements. The following data for
each of the years ended December 31, 2004, 2005, 2006, 2007
and 2008 has been derived from our audited year-end consolidated financial
statements, including the consolidated balance sheets as of
December 31, 2007 and 2008, the related consolidated
statements of income and of changes in stockholders equity
for the years ended December 31, 2006, 2007 and 2008, the
related consolidated statements of changes in financial position
for the years ended December 31, 2006 and 2007, and of cash
flows for the year ended December 31, 2008, and the
accompanying notes appearing in our 2008
Form 20-F.
Beginning on January 1, 2008, we were no longer required by
Mexican FRS to recognize the effects of inflation in our
financial statements. Accordingly, our financial information
through December 31, 2007 is stated in Pesos in purchasing
power as of December 31, 2007. The financial information as
of and for the year ended December 31, 2008 is not directly
comparable to prior periods due to the recognition of inflation
effects in financial information in prior periods. Our financial
information for the year ended December 31, 2008 maintained
the inflation adjustments recognized in prior years in our
consolidated stockholders equity, and the
inflation-adjusted amounts for nonmonetary assets and
liabilities at December 31, 2007 became the accounting
basis for those assets and liabilities beginning on
January 1, 2008 and for subsequent periods.
These tables contain revised selected consolidated financial
information as of December 31, 2004, 2005, 2006, 2007 and
2008 and for the years ended December 31, 2004, 2005, 2006, 2007 and 2008. The information in this table and the
revised consolidated financial statements and the accompanying notes in this prospectus supersede the audited
consolidated financial statements in our 2008 Form 20-F.
The revised year-end financial statements and notes thereto included in this prospectus reflect the
retrospective application of SFAS No. 160, Noncontrolling
Interests in Consolidated Financial Statements, an amendment of ARB
No. 51, or SFAS 160 in the U.S. GAAP reconciliation. The revisions to the
financial statements presented in our 2008 Form 20-F consist of changing the presentation of noncontrolling
interests in our U.S. GAAP reconciliation which appear in Note 23 to the audited consolidated financial statements.
The adoption of SFAS 160 had no effect on our U.S. GAAP net income attributable to controlling interests,
earnings per share, cash flow or any asset or liability account, nor did it affect any amounts reported in our
2008 Form 20-F in conformity with accounting practices adopted in Mexico.
The financial statements in this prospectus should be read in conjunction with our 2008 Form 20-F.
The summary financial data as of September 30, 2009 and for
the nine months ended September 30, 2008 and 2009 has been
derived from our unaudited condensed consolidated financial
statements, including the consolidated balance sheet as of
September 30, 2009 and the related consolidated statements
of income and of cash flows for the nine months ended
September 30, 2008 and 2009 contained in this prospectus.
These results are not necessarily indicative of results of a
full year.
The exchange rate used in translating Pesos into
U.S. Dollars in calculating the convenience translations
included in the following tables is determined by reference to
the Interbank Rate as of September 30, 2009, which was
13.5010. This prospectus contains translations of certain Peso
amounts into U.S. Dollars at specified rates solely for the
convenience of the reader. The exchange rate translations
contained in this prospectus should not be construed as
representations that the Peso amounts actually represent the
U.S. Dollar amounts presented or that they could be
converted into U.S. Dollars at the rate indicated.
Our consolidated financial statements have been prepared in accordance with
Mexican FRS, which became effective on January 1, 2006, and
differ in some significant respects from U.S. GAAP. Prior
to 2006, Mexican generally accepted accounting principles, or
Mexican GAAP, were followed. The adoption of Mexican FRS did not
have a significant effect on our consolidated financial
statements. Note 23 to our year-end consolidated financial statements in
our 2008
Form 20-F
and Note 12 to our unaudited condensed consolidated financial statements for the
period ended September 30, 2009 contained in this
prospectus provide a description of the relevant differences
between Mexican FRS, the accounting and reporting standards used
in Mexico as of December 31, 2008 and September 30,
2009 respectively, and U.S. GAAP as they relate to us.
Note 23 to our year-end consolidated financial statements in our 2008
Form 20-F
and Note 12 to our unaudited condensed consolidated financial statements for the
period ended September 30, 2009 provide a reconciliation to
U.S. GAAP of net income and other items for the years ended
December 31, 2006, 2007 and 2008 and for the periods ended
September 30, 2008 and 2009, and stockholders equity at
December 31, 2007 and 2008 and at September 30, 2009.
Any reconciliation to U.S. GAAP may reveal certain
differences between our stockholders equity, net income
and other items as reported under Mexican FRS and U.S. GAAP.
16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
Nine Months Ended September 30,
(Unaudited)
|
|
|
|
2004
|
|
|
2005
|
|
|
2006
|
|
|
2007
|
|
|
2008
|
|
|
2008
|
|
|
2008
|
|
|
2009
|
|
|
2009
|
|
|
|
(Millions of pesos or millions of U.S. dollars)(1)
|
|
|
(Mexican GAAP/FRS)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Statement Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
Ps.
|
32,704
|
|
|
Ps.
|
35,068
|
|
|
Ps.
|
39,358
|
|
|
Ps.
|
41,562
|
|
|
Ps.
|
47,972
|
|
|
U.S.$
|
3,553
|
|
|
Ps.
|
33,501
|
|
|
Ps.
|
37,189
|
|
|
U.S. $
|
2,755
|
|
Operating income
|
|
|
9,547
|
|
|
|
11,663
|
|
|
|
14,266
|
|
|
|
14,481
|
|
|
|
15,128
|
|
|
|
1,120
|
|
|
|
10,369
|
|
|
|
10,862
|
|
|
|
805
|
|
Integral cost of financing, net(2)
|
|
|
1,691
|
|
|
|
1,924
|
|
|
|
1,141
|
|
|
|
410
|
|
|
|
831
|
|
|
|
62
|
|
|
|
1,330
|
|
|
|
2,056
|
|
|
|
152
|
|
Income from continuing operations
|
|
|
6,214
|
|
|
|
8,330
|
|
|
|
9,519
|
|
|
|
9,018
|
|
|
|
8,731
|
|
|
|
647
|
|
|
|
5,770
|
|
|
|
5,618
|
|
|
|
416
|
|
Cumulative effect of accounting change, net
|
|
|
(1,139
|
)
|
|
|
(546
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Majority interest net income
|
|
|
4,815
|
|
|
|
6,613
|
|
|
|
8,909
|
|
|
|
8,082
|
|
|
|
7,804
|
|
|
|
578
|
|
|
|
4,961
|
|
|
|
4,819
|
|
|
|
357
|
|
Income from continuing operations per CPO(3)
|
|
|
2.04
|
|
|
|
2.46
|
|
|
|
3.07
|
|
|
|
2.84
|
|
|
|
2.77
|
|
|
|
|
|
|
|
1.76
|
|
|
|
1.71
|
|
|
|
|
|
Net income per CPO(3)
|
|
|
1.66
|
|
|
|
2.27
|
|
|
|
3.07
|
|
|
|
2.84
|
|
|
|
2.77
|
|
|
|
|
|
|
|
1.76
|
|
|
|
1.71
|
|
|
|
|
|
Weighted-average number of shares outstanding (in millions)(3)(4)
|
|
|
345,206
|
|
|
|
341,158
|
|
|
|
339,776
|
|
|
|
333,653
|
|
|
|
329,580
|
|
|
|
|
|
|
|
329,964
|
|
|
|
329,642
|
|
|
|
|
|
Cash dividend per CPO(3)
|
|
|
1.41
|
|
|
|
1.49
|
|
|
|
0.37
|
|
|
|
1.50
|
|
|
|
0.75
|
|
|
|
|
|
|
|
0.75
|
|
|
|
1.75
|
|
|
|
|
|
Shares outstanding (in millions, at period end)(4)
|
|
|
341,638
|
|
|
|
339,941
|
|
|
|
337,782
|
|
|
|
329,960
|
|
|
|
328,393
|
|
|
|
|
|
|
|
328,537
|
|
|
|
329,189
|
|
|
|
|
|
(U.S. GAAP)(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Statement Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
Ps.
|
32,704
|
|
|
Ps.
|
35,068
|
|
|
Ps.
|
39,358
|
|
|
Ps.
|
41,562
|
|
|
Ps.
|
47,972
|
|
|
U.S.$
|
3,553
|
|
|
Ps.
|
33,501
|
|
|
Ps.
|
37,189
|
|
|
U.S.$
|
2,755
|
|
Operating income
|
|
|
8,746
|
|
|
|
10,806
|
|
|
|
14,068
|
|
|
|
14,322
|
|
|
|
14,673
|
|
|
|
1,087
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
|
4,983
|
|
|
|
8,550
|
|
|
|
8,917
|
|
|
|
9,167
|
|
|
|
9,049
|
|
|
|
670
|
|
|
|
6,183
|
|
|
|
5,566
|
|
|
|
412
|
|
Net income
|
|
|
4,983
|
|
|
|
8,550
|
|
|
|
8,917
|
|
|
|
9,167
|
|
|
|
9,049
|
|
|
|
670
|
|
|
|
6,183
|
|
|
|
5,566
|
|
|
|
412
|
|
Net income attributable to the noncontrolling interest
|
|
|
287
|
|
|
|
1,182
|
|
|
|
609
|
|
|
|
934
|
|
|
|
919
|
|
|
|
68
|
|
|
|
802 |
|
|
|
799 |
|
|
|
59
|
|
Net income attributable to the controlling interest
|
|
|
4,696
|
|
|
|
7,368
|
|
|
|
8,308
|
|
|
|
8,233
|
|
|
|
8,130
|
|
|
|
602
|
|
|
|
5,381 |
|
|
|
4,767
|
|
|
|
353
|
|
Income from continuing operations per CPO(3)
|
|
|
1.61
|
|
|
|
2.44
|
|
|
|
2.76
|
|
|
|
2.86
|
|
|
|
2.82
|
|
|
|
|
|
|
|
1.91
|
|
|
|
1.69
|
|
|
|
|
|
Net income per CPO(3)
|
|
|
1.61
|
|
|
|
2.44
|
|
|
|
2.76
|
|
|
|
2.86
|
|
|
|
2.82
|
|
|
|
|
|
|
|
1.91
|
|
|
|
1.69
|
|
|
|
|
|
Weighted-average number of shares outstanding (in millions)(3)(4)
|
|
|
345,206
|
|
|
|
341,158
|
|
|
|
339,776
|
|
|
|
333,653
|
|
|
|
329,580
|
|
|
|
|
|
|
|
329,964
|
|
|
|
329,642
|
|
|
|
|
|
Shares outstanding (in millions, at period end)(4)
|
|
|
341,638
|
|
|
|
339,941
|
|
|
|
337,782
|
|
|
|
329,960
|
|
|
|
328,393
|
|
|
|
|
|
|
|
328,537
|
|
|
|
329,189
|
|
|
|
|
|
(Mexican GAAP/FRS)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet Data (end of period):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and temporary investments
|
|
Ps.
|
18,566
|
|
|
Ps.
|
15,955
|
|
|
Ps.
|
16,405
|
|
|
Ps.
|
|
|
|
Ps.
|
|
|
|
U.S.$
|
|
|
|
Ps.
|
|
|
|
Ps.
|
|
|
|
U.S.$
|
|
|
Cash and cash equivalents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,480
|
|
|
|
35,106
|
|
|
|
2,600
|
|
|
|
|
|
|
|
28,734
|
|
|
|
2,128
|
|
Temporary investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,825
|
|
|
|
6,798
|
|
|
|
504
|
|
|
|
|
|
|
|
4,477
|
|
|
|
332
|
|
Total assets
|
|
|
82,469
|
|
|
|
81,162
|
|
|
|
86,186
|
|
|
|
98,703
|
|
|
|
122,852
|
|
|
|
9,099
|
|
|
|
|
|
|
|
110,054
|
|
|
|
8,152
|
|
Current portion of long-term debt and other notes payable(6)
|
|
|
3,678
|
|
|
|
367
|
|
|
|
1,023
|
|
|
|
489
|
|
|
|
2,283
|
|
|
|
169
|
|
|
|
|
|
|
|
541
|
|
|
|
40
|
|
Long-term debt, net of current portion(7)
|
|
|
21,134
|
|
|
|
19,581
|
|
|
|
18,464
|
|
|
|
25,307
|
|
|
|
36,680
|
|
|
|
2,717
|
|
|
|
|
|
|
|
35,487
|
|
|
|
2,628
|
|
Customer deposits and advances
|
|
|
17,073
|
|
|
|
19,484
|
|
|
|
17,807
|
|
|
|
19,810
|
|
|
|
18,688
|
|
|
|
1,384
|
|
|
|
|
|
|
|
8,822
|
|
|
|
653
|
|
Capital stock issued
|
|
|
10,677
|
|
|
|
10,677
|
|
|
|
10,507
|
|
|
|
10,268
|
|
|
|
10,061
|
|
|
|
745
|
|
|
|
|
|
|
|
10,020
|
|
|
|
742
|
|
Total stockholders equity (including minority interest)
|
|
|
30,796
|
|
|
|
32,242
|
|
|
|
38,015
|
|
|
|
40,650
|
|
|
|
47,252
|
|
|
|
3,500
|
|
|
|
|
|
|
|
48,352
|
|
|
|
3,581
|
|
(U.S. GAAP)(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet Data (end of period):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
Ps.
|
17,746
|
|
|
Ps.
|
15,833
|
|
|
Ps.
|
15,461
|
|
|
Ps.
|
25,480
|
|
|
Ps.
|
33,583
|
|
|
U.S.$
|
2,487
|
|
|
Ps.
|
|
|
|
Ps.
|
|
|
|
U.S.$
|
|
|
Total assets
|
|
|
91,877
|
|
|
|
88,724
|
|
|
|
91,806
|
|
|
|
103,728
|
|
|
|
127,966
|
|
|
|
9,478
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current portion of long-term debt and other notes payable(6)
|
|
|
3,678
|
|
|
|
367
|
|
|
|
1,023
|
|
|
|
489
|
|
|
|
2,283
|
|
|
|
169
|
|
|
|
|
|
|
|
541
|
|
|
|
40
|
|
Long-term debt, net of current portion(7)
|
|
|
21,134
|
|
|
|
19,582
|
|
|
|
18,464
|
|
|
|
25,307
|
|
|
|
36,680
|
|
|
|
2,717
|
|
|
|
|
|
|
|
35,487
|
|
|
|
2,628
|
|
Controlling interest stockholders equity
|
|
|
29,170
|
|
|
|
30,589
|
|
|
|
35,799
|
|
|
|
36,580
|
|
|
|
41,539
|
|
|
|
3,077
|
|
|
|
|
|
|
|
41,358
|
|
|
|
3,063
|
|
Noncontrolling interest stockholders equity
|
|
|
99
|
|
|
|
965
|
|
|
|
1,688
|
|
|
|
3,655
|
|
|
|
5,269
|
|
|
|
390
|
|
|
|
|
|
|
|
6,489
|
|
|
|
481
|
|
Total stockholders equity
|
|
|
29,269
|
|
|
|
31,554
|
|
|
|
37,487
|
|
|
|
40,235
|
|
|
|
46,808
|
|
|
|
3,467
|
|
|
|
|
|
|
|
47,847
|
|
|
|
3,544
|
|
(Mexican FRS)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flow Data(14):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
Ps.
|
|
|
|
Ps.
|
|
|
|
Ps.
|
|
|
|
Ps.
|
|
|
|
Ps.
|
22,258
|
|
|
U.S.$
|
1,649
|
|
|
Ps.
|
10,403
|
|
|
Ps.
|
8,276
|
|
|
U.S. $
|
613
|
|
Net cash used for investing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(11,361
|
)
|
|
|
(841
|
)
|
|
|
(2,964
|
)
|
|
|
(4,982
|
)
|
|
|
(369
|
)
|
Net cash used for financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,886
|
)
|
|
|
(140
|
)
|
|
|
(1,274
|
)
|
|
|
(9,575
|
)
|
|
|
(709
|
)
|
Increase (decrease) in cash and cash equivalents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,143
|
|
|
|
677
|
|
|
|
6,161
|
|
|
|
(6,372
|
)
|
|
|
(472
|
)
|
17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
Nine Months Ended September 30,
(Unaudited)
|
|
|
|
2004
|
|
|
2005
|
|
|
2006
|
|
|
2007
|
|
|
2008
|
|
|
2008
|
|
|
2008
|
|
|
2009
|
|
|
2009
|
|
|
|
(Millions of pesos or millions of U.S. dollars)(1)
|
|
|
(U.S. GAAP)(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flow Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash provided by operating activities
|
|
|
7,641
|
|
|
|
10,478
|
|
|
|
11,542
|
|
|
|
12,107
|
|
|
|
19,851
|
|
|
|
1,470
|
|
|
|
8,531 |
|
|
|
6,132 |
|
|
|
454 |
|
Cash (used for) provided by financing activities
|
|
|
(703
|
)
|
|
|
(9,412
|
)
|
|
|
(3,088
|
)
|
|
|
(1,395
|
)
|
|
|
522
|
|
|
|
39
|
|
|
|
598 |
|
|
|
(7,431 |
) |
|
|
(550 |
) |
Cash used for investing activities
|
|
|
(673
|
)
|
|
|
(2,392
|
)
|
|
|
(8,216
|
)
|
|
|
(294
|
)
|
|
|
(12,884
|
)
|
|
|
(954
|
)
|
|
|
(2,964 |
) |
|
|
(7,137 |
) |
|
|
(529 |
) |
(Mexican GAAP/FRS)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Financial Information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures(8)
|
|
Ps.
|
2,173
|
|
|
Ps.
|
2,849
|
|
|
Ps.
|
3,346
|
|
|
Ps.
|
3,878
|
|
|
Ps.
|
6,627
|
|
|
U.S.$
|
491
|
|
|
Ps.
|
3,392
|
|
|
Ps.
|
3,745
|
|
|
U.S. $
|
277
|
|
Ratio of earnings to fixed charges
|
|
|
3.5
|
|
|
|
3.6
|
|
|
|
5.9
|
|
|
|
5.7
|
|
|
|
4.6
|
|
|
|
|
|
|
|
4.3
|
|
|
|
3.7
|
|
|
|
|
|
(U.S. GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Financial Information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratio of earnings to fixed charges
|
|
|
3.3
|
|
|
|
3.7
|
|
|
|
5.6
|
|
|
|
5.7
|
|
|
|
4.7
|
|
|
|
|
|
|
|
4.4
|
|
|
|
3.7
|
|
|
|
|
|
Other Data (unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average prime time audience share (TV broadcasting)(9)
|
|
|
68.9
|
%
|
|
|
68.5
|
%
|
|
|
69.5
|
%
|
|
|
69.0
|
%
|
|
|
71.2
|
%
|
|
|
|
|
|
|
71.9
|
%
|
|
|
69.8
|
%
|
|
|
|
|
Average prime time rating (TV broadcasting)(9)
|
|
|
36.7
|
|
|
|
36.5
|
|
|
|
35.5
|
|
|
|
33.4
|
|
|
|
35.2
|
|
|
|
|
|
|
|
35.1
|
|
|
|
34.7
|
|
|
|
|
|
Magazine circulation (millions of copies)(10)
|
|
|
127
|
|
|
|
145
|
|
|
|
155
|
|
|
|
165
|
|
|
|
174
|
|
|
|
|
|
|
|
133
|
|
|
|
114
|
|
|
|
|
|
Number of employees (at period end)
|
|
|
14,100
|
|
|
|
15,100
|
|
|
|
16,200
|
|
|
|
17,800
|
|
|
|
22,500
|
|
|
|
|
|
|
|
22,000
|
|
|
|
22,400
|
|
|
|
|
|
Number of Innova subscribers (in thousands at period
end)(11)
|
|
|
1,003
|
|
|
|
1,251
|
|
|
|
1,430
|
|
|
|
1,585
|
|
|
|
1,760
|
|
|
|
|
|
|
|
1,728
|
|
|
|
1,816
|
|
|
|
|
|
Number of Cablevisión RGUs (in thousands at period
end)(12)
|
|
|
381
|
|
|
|
475
|
|
|
|
583
|
|
|
|
695
|
|
|
|
844
|
|
|
|
|
|
|
|
808
|
|
|
|
963
|
|
|
|
|
|
Number of Cablemás RGUs (in thousands at period
end)(12)(13)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,170
|
|
|
|
|
|
|
|
1,130
|
|
|
|
1,276
|
|
|
|
|
|
Notes to Summary Financial Data:
|
|
|
(1) |
|
Except per CPO, average audience share, average rating, magazine
circulation, employee, subscriber, and Revenue Generating Units,
or RGUs. Amounts in Pesos for the years ended December 31,
2004, 2005, 2006 and 2007 are stated in Pesos in purchasing
power as of December 31, 2007, in accordance with Mexican
FRS. Beginning on January 1, 2008, we discontinued
recognizing the effects of inflation in our financial
information in accordance with Mexican FRS. Accordingly, amounts
in Pesos for the year ended December 31, 2008 and for the
nine months ended September 30, 2008 and 2009 do not
recognize the effects of inflation beginning on January 1,
2008, and are not directly comparable to periods prior to 2008. |
|
(2) |
|
Includes interest expense, interest income, foreign exchange
gain or loss, net, and through December 31, 2007, gain or
loss from monetary position. See Note 18 to our year-end
consolidated financial statements in our 2008
Form 20-F and Note 9 to our unaudited condensed consolidated financial statements. |
|
(3) |
|
For further analysis of income (loss) from continuing operations
per CPO and net income per CPO (as well as corresponding amounts
per A Share not traded as CPOs), see Note 20 (for the
calculation under Mexican FRS) and Note 23 (for the
calculation under U.S. GAAP) to our year-end consolidated financial
statements in our 2008
Form 20-F and Note 12 to our unaudited condensed consolidated financial statements. |
|
(4) |
|
As of December 31, 2004, 2005, 2006, 2007 and 2008, and as
of September 30, 2009, we had four classes of common stock:
A Shares, B Shares, D Shares and L Shares. Our shares are
publicly traded in Mexico, primarily in the form of CPOs, each
CPO representing 117 shares comprised of 25 A Shares, 22 B
Shares, 35 D Shares and 35 L Shares; and in the United
States in the form of Global Depositary Shares, or GDSs, each
GDS representing 5 CPOs. Before March 22, 2006, each GDS
represented 20 CPOs. |
|
|
|
The number of CPOs and shares issued and outstanding for
financial reporting purposes under Mexican GAAP/FRS and U.S.
GAAP is different than the number of CPOs issued and outstanding
for legal purposes, because under Mexican GAAP/FRS and U.S. GAAP
shares owned by subsidiaries and/or the trusts created to
implement our Stock Purchase Plan and our Long-Term Retention
Plan are not considered outstanding for financial reporting
purposes. |
|
|
|
As of December 31, 2008, for legal purposes, there were
approximately 2,438.1 million CPOs issued and outstanding,
each of which was represented by 25 A Shares, 22 B Shares, 35 D
Shares and 35 L Shares, and an additional number of
approximately 58,926.6 million A Shares and
2,357.2 million B Shares (not in the form of CPO units).
See Note 12 to our year-end consolidated financial statements in our
2008
Form 20-F. |
18
|
|
|
|
|
As of September 30, 2009, for legal purposes, there were
approximately 2,436.5 million CPOs issued and outstanding,
each of which was represented by 25 A Shares, 22 B Shares, 35 D
Shares and 35 L Shares, and an additional number of
approximately 58,926.6 million A Shares and
2,357.2 million B Shares (not in the form of CPO units). See Note 8 to our unaudited condensed consolidated financial statements. |
|
(5) |
|
See Note 23 to our year-end consolidated financial statements in our
2008
Form 20-F and Note 12 to our unaudited condensed consolidated financial statements.
|
|
(6) |
|
See Note 8 to our year-end consolidated financial statements in our 2008
Form 20-F and Note 3 to our unaudited condensed consolidated financial statements. |
|
(7) |
|
See Note 8 to our year-end consolidated financial statements in our 2008
Form 20-F and Note 3 to our unaudited condensed consolidated financial statements. |
|
(8) |
|
Capital expenditures are those investments made by us in
property, plant and equipment, which amounts are first
translated from Pesos into U.S. Dollars, and the resulting
aggregate U.S. Dollar amount is then translated to Pesos at
year-end exchange rate for convenience purposes only; the
aggregate amount of capital expenditures in Pesos does not
indicate the actual amounts accounted for in our consolidated
financial statements. |
|
(9) |
|
Average prime time audience share for a period
refers to the average daily prime time audience share for all of
our networks and stations during that period, and average
prime time rating for a period refers to the average daily
rating for all of our networks and stations during that period,
each rating point representing one percent of all television
households. As used in this prospectus, prime time
in Mexico is 4:00 p.m. to 11:00 p.m., seven days a
week, and weekday prime time is 7:00 p.m. to
11:00 p.m., Monday through Friday. Data for all periods
reflects the average prime time audience share and ratings
nationwide as published by the Mexican subsidiary of the
Brazilian Institute of Statistics and Public Opinion, or
Instituto Brasileño de Opinión Pública y
Estadística, or IBOPE. The Mexican subsidiary of IBOPE
is referred to as IBOPE Mexico in this prospectus. |
|
(10) |
|
The figures set forth in this line item represent total
circulation of magazines that we publish independently and
through joint ventures and other arrangements and do not
represent magazines distributed on behalf of third parties. |
|
(11) |
|
Sky commenced operations in Mexico in 1996, and in Central
America in 2007. The figures set forth in this line item
represent the total number of gross active residential and
commercial subscribers for Innova at the end of each year
presented. Under Mexican GAAP, effective January 1, 2001
and through March 31, 2004, we did not recognize equity in
results in respect of our investment in Innova in our
consolidated income statement, as we recognized equity in losses
of Innova up to the amount of our initial investment and
subsequent capital contributions in Innova. Since April 1,
2004, Innova has been consolidated in our financial results. |
|
(12) |
|
An RGU is defined as an individual service subscriber who
generates recurring revenue under each service provided by
Empresas Cablevisión, S.A.B. de C.V., or Cablevisión
and Cablemás
(pay-TV,
broadband internet and digital telephony). For example, a single
subscriber paying for cable television, broadband internet and
digital telephony services represents three RGUs. We believe it
is appropriate to use the number of RGUs as a performance
measure for Cablevisión and Cablemás given that these
businesses provide other services in addition to
pay-TV. |
|
(13) |
|
Beginning June 2008, we started to consolidate Cablemás, a
significant cable operator in Mexico, operating in
49 cities. |
|
(14) |
|
Through December 31, 2007, under Mexican FRS, the changes
in financial position for operating, financing and investing
activities, were presented through the statements of changes in
financial position. On January 1, 2008, Mexican FRS NIF
B-2, Statement of Cash Flows became effective on a
prospective basis. Therefore, we have included the new statement
of cash flows for the year ended December 31, 2008. See
Note 1 to our year-end consolidated financial statements in our 2008
Form 20-F for further detail regarding this change. Due to the
adoption of Mexican FRS NIF B-2, Statement of Cash
Flows, 2008 information is not directly comparable to 2007
and prior years. The criteria for determining net cash provided
by, or used for, operating, investing and financing activities
under the new Mexican FRS NIF B-2, Statement of Cash
Flows is different from that used in prior years. |
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RISK
FACTORS
An investment in the new notes involves risk. You should
consider carefully the following factors, as well as all other
information in, or incorporated by reference into, this
prospectus, including Item 3 Key
Information Risk Factors in the 2008
Form 20-F,
before deciding to participate in the exchange offer.
Risk
Factors Related to the New Notes and Exchange Offer
We
Have Substantial Indebtedness and May Incur Additional
Indebtedness; Most of Our Other Existing Indebtedness Matures
Prior to the Maturity of the Exchange Notes
We now have and will continue to have after the issuance of
these notes a substantial amount of indebtedness outstanding.
Any Mexican UDI-denominated indebtedness we may issue in the
future, will increase as the Mexican National Consumer Price
Index, or the NCPI, increases. The Unidad de
Inversión, or UDI, is an inflation-indexed, Mexican
Peso-denominated monetary unit that is linked to, and adjusted
daily to reflect changes in, the NCPI. In addition, the
indenture governing the Exchange Notes does not limit our
ability, or the ability of our subsidiaries, to incur additional
indebtedness, and we may incur indebtedness in connection with
our business, including borrowings to fund investments and
acquisitions. Such additional borrowings could adversely affect
our financial position and results of operations. To the extent
our restricted or unrestricted subsidiaries borrow money,
whether on a secured or an unsecured basis, that indebtedness
will effectively rank senior to the Exchange Notes. The degree
to which we are leveraged may impair our ability to internally
fund or obtain financing in the future for working capital,
capital expenditures, acquisitions or other general corporate
purposes and may limit our flexibility in planning for or
reacting to changes in market conditions and industry trends. As
a result, we may be more vulnerable in the event of a further
substantial downturn in general economic conditions in Mexico.
The indenture does not restrict our ability or the ability of
our unrestricted subsidiaries to pledge shares of capital stock
or assets of our unrestricted subsidiaries, and our ability and
our restricted subsidiaries ability to pledge assets is
subject only to the limited restrictions contained in the
indenture. To the extent we pledge shares of capital stock or
other assets to secure indebtedness, the indebtedness so secured
will effectively rank senior to the Exchange Notes to the extent
of the value of the shares or other assets pledged. The
indenture also does not restrict the ability of our unrestricted
subsidiaries to pledge shares of capital stock or other assets
that they own to secure indebtedness. See Description of
the New Notes.
The indenture does not restrict the ability of Televisa to lend
its funds to, or otherwise invest in, its subsidiaries,
including its unrestricted subsidiaries. If Televisa were to
lend funds to, or otherwise invest in, its subsidiaries,
creditors of such subsidiaries could have a claim on their
assets that would be senior to the claims of Televisa. See
We Are a Holding Company With Our Assets Held
Primarily by Our Subsidiaries; Creditors of Those Companies Have
a Claim on Their Assets That Is Effectively Senior to That of
Holders of the Exchange Notes.
Most of our outstanding indebtedness will mature prior to the
maturity date of the Exchange Notes. If we cannot generate
sufficient cash flow from operations to meet our obligations
(including payments on the Exchange Notes at their maturity),
then our indebtedness (including the Exchange Notes) may have to
be refinanced. Any such refinancing may not be effected
successfully or on terms that are acceptable to us. In the
absence of such refinancings, we could be forced to dispose of
assets in order to make up for any shortfall in the payments due
on our indebtedness, including interest and principal payments
due on the Exchange Notes, under circumstances that might not be
favorable to realizing the best price for such assets. Further,
any assets may not be sold quickly enough, or for amounts
sufficient, to enable us to make any such payments. If we are
unable to sell sufficient assets to repay this debt we could be
forced to issue equity securities to make up any shortfall. Any
such equity issuance would be subject to the approval of Emilio
Azcárraga Jean who has the voting power to prevent us from
raising money in equity offerings. In addition, the terms of our
bank loans require us to maintain compliance with certain
financial covenants. See Operating and Financial Review
and Prospects Results of Operations
Liquidity in this prospectus and
Item 5 Operating and Financial Review and
Prospects Results of Operations
Liquidity, Foreign Exchange and Capital Resources
Indebtedness included in the 2008
Form 20-F.
If we cannot maintain such compliance, this indebtedness could
be accelerated.
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We Are
a Holding Company With Our Assets Held Primarily by Our
Subsidiaries; Creditors of Those Companies Have a Claim on Their
Assets That Is Effectively Senior to That of Holders of the
Exchange Notes
We are a holding company with no significant operating assets
other than through our ownership of shares of our subsidiaries.
We receive substantially all of our operating income from our
subsidiaries. Televisa is the only company obligated to make
payments under the Exchange Notes. Our subsidiaries are separate
and distinct legal entities and they will have no obligation,
contingent or otherwise, to pay any amounts due under the
Exchange Notes or to make any funds available for any of those
payments. The Exchange Notes will be senior unsecured
obligations of Televisa ranking pari passu with other
unsubordinated and unsecured obligations. Claims of creditors of
our subsidiaries, including trade creditors and banks and other
lenders, will effectively have priority over the holders of the
Exchange Notes with respect to the assets of our subsidiaries.
In addition, our ability to meet our financial obligations,
including obligations under the Exchange Notes, will depend in
significant part on our receipt of cash dividends, advances and
other payments from our subsidiaries. In general, Mexican
corporations may pay dividends only out of net income, which is
approved by stockholders. The stockholders must then also
approve the actual dividend payment after we establish mandatory
legal reserves (5% of net income annually up to at least an
amount equal to 20% of the paid-in capital) and satisfy losses
for prior fiscal years. The ability of our subsidiaries to pay
such dividends or make such distributions will be subject to,
among other things, applicable laws and, under certain
circumstances, restrictions contained in agreements or debt
instruments to which we, or any of our subsidiaries, are
parties. In addition, third parties own substantial interests in
certain of our other businesses such as Cablevisión and
Innova. Accordingly, we must share with minority stockholders
any dividends paid by these businesses.
Claims of creditors of our subsidiaries, including trade
creditors, will generally have priority as to the assets and
cash flows of those subsidiaries over any claims we and the
holders of the Exchange Notes may have. For a description of our
outstanding debt, see Operating and Financial Review and
Prospects Results of Operations
Liquidity in this prospectus and
Item 5 Operating and Financial Review and
Prospects Results of Operations
Liquidity, Foreign Exchange and Capital Resources
Indebtedness included in the 2008
Form 20-F.
In addition, creditors of Televisa, including holders of the
Exchange Notes, will be limited in their ability to participate
in distributions of assets of our subsidiaries to the extent
that the outstanding shares of any of our subsidiaries are
either pledged as collateral to our other creditors or are not
owned by us. As of the date of this prospectus, only a small
portion of the shares of our subsidiaries are pledged as
collateral, although minority interests in several subsidiaries,
as described above, are held by third parties. See
Operating and Financial Review and Prospects
Results of Operations Liquidity in this
prospectus and Item 5 Operating and
Financial Review and Prospects Results of
Operations Liquidity, Foreign Exchange and Capital
Resources Indebtedness and
Minority Interest Net Income included in
the 2008
Form 20-F.
At September 30, 2009, our subsidiaries had
Ps.34,837.4 million (equivalent to
U.S.$2,580.4 million) of liabilities (excluding liabilities
to us and excluding guarantees by subsidiaries of our
indebtedness), U.S.$958.5 million of which was
U.S. Dollar-denominated. These liabilities include
Ps.9,655.7 million (equivalent to U.S.$715.2 million)
of indebtedness, U.S.$452.6 million of which was
U.S. Dollar-denominated indebtedness (equivalent to
Ps.6,111.0 million). All of these liabilities would
effectively have ranked senior to the Exchange Notes. The
indenture does not limit the amount of indebtedness which can be
incurred by us or by our restricted or unrestricted subsidiaries.
Judgments
of Mexican Courts Enforcing Our Obligations in Respect of the
Exchange Notes Would Be Paid Only in Pesos
Under the Ley Monetaria, or the Mexican Monetary Law, in
the event that any proceedings are brought in Mexico seeking
performance of our obligations under the Exchange Notes,
pursuant to a judgment or on the basis of an original action, we
may discharge our obligations denominated in any currency other
than Mexican Pesos by paying Pesos converted at the rate of
exchange prevailing on the date payment is made. This rate is
currently determined by the Mexican Central Bank every business
day in Mexico and published the next business day in the
Diario Oficial de la Federación, or the Official
Gazette of the Federation, for application the following
business day. As a result, if the Exchange Notes are paid by us
in Pesos to holders of the debt securities, the amount received
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may not be sufficient to cover the amount of Dollars that the
holder of the note would have received under the terms of the
Exchange Notes. In addition, our obligation to indemnify against
exchange losses may be unenforceable in Mexico.
In addition, in the case of our bankruptcy or concurso
mercantil, or judicial reorganization, our foreign
currency-denominated liabilities, including our liabilities
under the Exchange Notes, will be converted into Pesos at the
rate of exchange applicable on the date on which the declaration
of bankruptcy or judicial reorganization is effective, and the
resulting amount, in turn, will be converted to UDIs, or
inflation-indexed units. Our foreign currency-denominated
liabilities, including our liabilities under the Exchange Notes,
will not be adjusted to take into account any depreciation of
the Peso as compared to the U.S. Dollar occurring after the
declaration of bankruptcy or judicial reorganization. Also, all
obligations under the Exchange Notes will cease to accrue
interest from the date of the bankruptcy or judicial
reorganization declaration, will be satisfied only at the time
those of our other creditors are satisfied and will be subject
to the outcome of, and amounts recognized as due in respect of,
the relevant bankruptcy or judicial reorganization proceeding.
We May
Not Have Sufficient Funds to Meet Our Obligation Under the
Indenture to Repurchase the Exchange Notes Upon a Change of
Control
Upon the occurrence of a change of control, we will be required
to offer to repurchase each holders Exchange Notes at a
price of 101% of the principal amount plus accrued and unpaid
interest, if any, to the date of purchase. We may not have the
financial resources necessary to meet our obligations in respect
of our indebtedness, including the required repurchase of
Exchange Notes, following a change of control. If an offer to
repurchase the Exchange Notes is required to be made and we do
not have available sufficient funds to repurchase the Exchange
Notes, an event of default would occur under the indenture. The
occurrence of an event of default will result in acceleration of
the maturity of the Exchange Notes and other indebtedness. See
Description of the New Notes.
It May
Be Difficult to Enforce Civil Liabilities Against Us or Our
Directors, Executive Officers and Controlling
Persons
We are organized under the laws of Mexico. Substantially all of
our directors, executive officers and controlling persons reside
outside the U.S., all or a significant portion of the assets of
our directors, executive officers and controlling persons, and
substantially all of our assets, are located outside of the
U.S., and some of the parties named in this prospectus also
reside outside of the U.S. As a result, it may be difficult
for you to effect service of process within the United States
upon these persons or to enforce against them or us in
U.S. courts judgments predicated upon the civil liability
provisions of the federal securities laws of the U.S. We
have been advised by our Mexican counsel, Mijares, Angoitia,
Cortés y Fuentes, S.C., that there is doubt as to the
enforceability, in original actions in Mexican courts, of
liabilities predicated solely on U.S. federal securities
laws and as to the enforceability in Mexican courts of judgments
of U.S. courts obtained in actions predicated upon the
civil liability provisions of U.S. federal securities laws.
See Limitation of Liability.
There
May Not Be a Liquid Trading Market for the New Notes, Which
Could Limit Your Ability to Sell Your New Notes in the
Future
The new notes are being offered to the holders of the old notes.
The new notes will constitute a new issue of securities for
which, prior to the exchange offer, there has been no public
market, and the new notes may not be widely distributed.
Accordingly, an active trading market for the new notes may not
develop. If a market for any of the new notes does develop, the
price of such new notes may fluctuate and liquidity may be
limited. If a market for any of the new notes does not develop,
purchasers may be unable to resell such new notes for an
extended period of time, if at all.
Your
Failure to Tender Old Notes in the Exchange Offer May Affect
Their Marketability
If old notes are tendered for exchange and accepted in the
exchange offer, the trading market, if any, for the untendered
and tendered but unaccepted old notes will be adversely
affected. Your failure to participate in the exchange offer will
substantially limit, and may effectively eliminate,
opportunities to sell your old notes in the
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future. We issued the old notes in a private placement exempt
from the registration requirements of the Securities Act.
Accordingly, you may not offer, sell or otherwise transfer your
old notes except in compliance with the registration
requirements of the Securities Act and any other applicable
securities laws, or pursuant to an exemption from the securities
laws, or in a transaction not subject to the securities laws. If
you do not exchange your old notes for new notes in the exchange
offer, or if you do not properly tender your old notes in the
exchange offer, your old notes will continue to be subject to
these transfer restrictions after the completion of the exchange
offer. In addition, after the completion of the exchange offer,
you will no longer be able to obligate us to register the old
notes under the Securities Act.
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THE
EXCHANGE OFFER
Purpose
of the Exchange Offer
We issued and sold the old notes in a private placement on
November 30, 2009. In connection with the issuance and
sale, we entered into a registration rights agreement with the
initial purchasers of the old notes. In the registration rights
agreement we agreed, for the benefit of the holders of the
notes, at our cost, to, among other things:
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use our best efforts to prepare and, as soon as practicable
within 120 days following the original issue date of the
old notes, file with the SEC an exchange offer registration
statement with respect to a proposed exchange offer and the
issuance and delivery to the holders, in exchange for the old
notes, of the new notes, which will have terms identical in all
material respects to the old notes, except that the new notes
will not contain terms with respect to transfer restrictions and
will not provide for any increase in the interest rate under the
circumstances described below;
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use our reasonable best efforts to cause the exchange offer
registration statement to be declared effective under the
Securities Act within 180 days of the most recent issue
date;
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use our best efforts to keep the exchange offer registration
statement effective until the closing of the exchange
offer; and
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use our best efforts to cause the exchange offer to be
consummated not later than 210 days following the most
recent issue date.
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These requirements under the registration rights agreement will
be satisfied when we complete the exchange offer. However, if we
fail to meet any of these requirements under the registration
rights agreement and under some other circumstances, then the
interest rate borne by the notes that are affected by the
registration default with respect to the first
90-day
period, or portion thereof, will be increased by an additional
interest of 0.25% per annum upon the occurrence of each
registration default. The amount of additional interest will
increase by an additional 0.25% each
90-day
period, or portion thereof, while a registration default is
continuing until all registration defaults have been cured;
provided that the maximum aggregate increase in the
interest rate will in no event exceed one percent (1%) per
annum. Upon:
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the filing of the exchange offer registration statement after
the 120th calendar day following the most recent issue date;
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the effectiveness of the exchange offer registration statement
after the 180th calendar day following the most recent
issue date;
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the consummation of the exchange offer;
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the effectiveness of the shelf registration statement after the
210th calendar day following the most recent issue
date; or
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the date of the first anniversary of the last date of original
issue of the notes,
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the interest rate on the notes will be reduced to the original
interest rate set forth on the cover page of this prospectus if
Televisa is otherwise in compliance with this paragraph. If
after any such reduction in interest rate, a different event
specified above occurs, the interest rate will again be
increased pursuant to the foregoing provisions.
Application has been made to list the new notes on the
Luxembourg Stock Exchange for trading on the Euro MTF, the
alternative market of the Luxembourg Stock Exchange. Notice will
be made prior to commencing the exchange offer. You may obtain
documents relating to the exchange offer and consummate the
exchange at the office of The Bank of New York (Luxembourg)
S.A., our paying and transfer agent in Luxembourg, at Aerogulf
Center, 1A Hoehenhof, L-1736 Senningerberg, Luxembourg. The
results of the exchange offer, including any increase in the
rate, will be provided to the Luxembourg Stock Exchange and
published in a daily newspaper of general circulation in
Luxembourg (which is expected to be dWort).
We have also agreed to keep the exchange offer open for not less
than 20 business days after the notice thereof is mailed to
holders (or longer, if required by applicable law).
Under the registration rights agreement, our obligations to
register the new notes will terminate upon the completion of the
exchange offer. However, pursuant to the registration rights
agreement, we will be required to file a shelf registration
statement for a continuous offering by the holders of the
outstanding notes if:
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we are not permitted to file the exchange offer registration
statement or to consummate the exchange offer because the
exchange offer is not permitted by applicable law or SEC policy;
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for any reason, the exchange offer registration statement is not
declared effective within 180 days following the date of
most recent issuance of these notes or the exchange offer is not
consummated within 210 days following the most recent issue
date;
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upon the request of the initial purchasers in certain
circumstances; or
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a holder is not permitted to participate in the exchange offer
or does not receive freely tradable new notes pursuant to the
exchange offer.
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During any
365-day
period, we will have the ability to suspend the availability of
such shelf registration statement for up to two periods of up to
45 consecutive days (except for the consecutive
45-day
period immediately prior to the maturity of the notes), but no
more than an aggregate of 60 days during any
365-day
period, if our Board of Directors determines in good faith that
there is a valid purpose for the suspension.
We will, in the event of the filing of a shelf registration
statement, provide to each holder of notes that are covered by
the shelf registration statement copies of the prospectus which
is a part of the shelf registration statement and notify each
such holder when the shelf registration statement has become
effective. A holder of notes that sells the notes pursuant to
the shelf registration statement generally will be required to
be named as a selling securityholder in the related prospectus
and to deliver a prospectus to purchasers, will be subject to
certain of the civil liability provisions under the Securities
Act in connection with the sales and will be bound by the
provisions of the registration rights agreement which are
applicable to the holder (including certain indemnification
obligations).
Once the exchange offer is complete, we will have no further
obligation to register any of the old notes not tendered to us
in the exchange offer. See Risk Factors Risk
Factors Related to the New Notes and Exchange Offer
Your Failure to Tender Old Notes in the Exchange Offer May
Affect Their Marketability.
Effect of
the Exchange Offer
Based on existing interpretations of the Securities Act by the
staff of the SEC in several no-action letters to third parties,
and subject to the immediately following sentence, we believe
that the exchange notes issued pursuant to the exchange offer
may be offered for resale, resold or otherwise transferred by
the holders (other than holders who are broker-dealers) without
further compliance with the registration and prospectus delivery
provisions of the Securities Act. However, any purchaser of
notes who is an affiliate of Televisa or who intends to
participate in the exchange offer for the purpose of
distributing the exchange notes, or any participating
broker-dealer who purchased
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the notes for its own account, other than as a result of
market-making activities or other trading activities, to resell
pursuant to Rule 144A or any other available exemption
under the Securities Act:
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will not be able to rely on the interpretations by the staff of
the SEC;
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will not be able to tender its notes in the exchange
offer; and
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must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any sale
or transfer of the exchange notes, unless such sale or transfer
is made pursuant to an exemption from such requirements.
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We do not intend to seek our own interpretation regarding the
exchange offer and there can be no assurance that the staff of
the SEC would make a similar determination with respect to the
exchange notes as it has in other interpretations to third
parties.
Each holder of notes, other than certain specified holders, who
wishes to exchange the old notes for the new notes in the
exchange offer will be required to make representations that:
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it is not an affiliate of Televisa;
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it is not a broker-dealer tendering notes acquired directly from
Televisa for its own account;
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any exchange notes to be received by it will be acquired in the
ordinary course of its business; and
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it has no arrangement with any person to participate in the
distribution, within the meaning of the Securities Act, of the
exchange notes.
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In addition, in connection with resales of new notes, any
participating broker-dealer must acknowledge in that it will
deliver a prospectus meeting the requirements of the Securities
Act. The letter of transmittal states that by so acknowledging
and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an underwriter within the
meaning of the Securities Act. The staff of the SEC has taken
the position that participating broker-dealers may fulfill their
prospectus delivery requirements with respect to the exchange
notes, other than a resale of an unsold allotment from the
original sale of the notes, with this prospectus. Under the
registration rights agreement, we have agreed, for a period of
90 days following the consummation of the exchange offer,
to make available a prospectus meeting the requirements of the
Securities Act to any such participating broker-dealer for use
in connection with any resale of any exchange notes acquired in
the exchange offer. By acceptance of this exchange offer, each
broker-dealer that receives new notes under the exchange offer
agrees to notify us prior to using this prospectus in a sale or
transfer of new notes. See Plan of Distribution.
Except as described above, this prospectus may not be used for
an offer to resell, resale or other transfer of new notes.
To the extent old notes are tendered and accepted in the
exchange offer, the principal amount of old notes that will be
outstanding will decrease with a resulting decrease in the
liquidity in the market for the old notes. Old notes that are
still outstanding following the completion of the exchange offer
will continue to be subject to transfer restrictions.
Terms of
the Exchange Offer
This prospectus and the accompanying letter of transmittal
together constitute the exchange offer. Upon the terms and
subject to the conditions of the exchange offer described in
this prospectus and in the accompanying letter of transmittal,
we will accept for exchange all old notes validly tendered and
not withdrawn before 5:00 p.m., New York City time, on
the expiration date. We will issue U.S.$1,000 principal amount
of new notes in exchange for each U.S.$1,000 principal amount of
old notes accepted in the exchange offer. You may tender some or
all of your old notes pursuant to the exchange offer. However,
old notes may be tendered only in a minimum principal amount of
U.S.$2,000 and in integral multiples of U.S.$1,000 in excess
thereof.
The new notes will be substantially identical to the old notes,
except that:
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the new notes will have been registered under the Securities Act;
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the new notes will not be subject to transfer
restrictions; and
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the new notes will be issued free of any covenants regarding
registration rights and free of any provision for additional
interest.
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The new notes will evidence the same debt as the old notes and
will be issued under and be entitled to the benefits of the same
indenture under which the old notes were issued. The old notes
and the new notes will be treated as a single series of debt
securities under the indenture. For a description of the terms
of the indenture and the new notes, see Description of the
New Notes.
The exchange offer is not conditioned upon any minimum aggregate
principal amount of old notes being tendered for exchange. As of
the date of this prospectus, an aggregate of U.S.$600,000,000
principal amount of old notes is outstanding. This prospectus is
being sent to all registered holders of old notes. There will be
no fixed record date for determining registered holders of old
notes entitled to participate in the exchange offer.
We intend to conduct the exchange offer in accordance with the
applicable requirements of the Securities Act and the Securities
Exchange Act and the rules and regulations of the SEC. Holders
of old notes do not have any appraisal or dissenters
rights under law or under the indenture in connection with the
exchange offer. Old notes that are not tendered for exchange in
the exchange offer will remain outstanding and continue to
accrue interest and will be entitled to the rights and benefits
their holders have under the indenture relating to the old notes.
We will be deemed to have accepted for exchange validly tendered
old notes when we have given oral or written notice of the
acceptance to the exchange agent. The exchange agent will act as
agent for the tendering holders of old notes for the purposes of
receiving the new notes from us and delivering the new notes to
the tendering holders. Subject to the terms of the registration
rights agreement, we expressly reserve the right to amend or
terminate the exchange offer, and not to accept for exchange any
old notes not previously accepted for exchange, upon the
occurrence of any of the conditions specified below under
Conditions. All old notes accepted for
exchange will be exchanged for new notes promptly following the
expiration date. If we decide for any reason to delay for any
period our acceptance of any old notes for exchange, we will
extend the expiration date for the same period.
If we do not accept for exchange any tendered old notes because
of an invalid tender, the occurrence of certain other events
described in this prospectus or otherwise, such unaccepted old
notes will be returned, without expense, to the holder tendering
them or the appropriate book-entry will be made, in each case,
as promptly as practicable after the expiration date.
We are not making, nor is our Board of Directors making, any
recommendation to you as to whether to tender or refrain from
tendering all or any portion of your old notes in the exchange
offer. No one has been authorized to make any such
recommendation. You must make your own decision whether to
tender in the exchange offer and, if you decide to do so, you
must also make your own decision as to the aggregate amount of
old notes to tender after reading this prospectus and the letter
of transmittal and consulting with your advisers, if any, based
on your own financial position and requirements.
Expiration
Date; Extensions; Amendments
The term expiration date means 5:00 p.m., New
York City
time, March 16, 2010, unless we, in our sole discretion, extend the exchange
offer, in which case the term expiration date shall
mean the latest date and time to which the exchange offer is
extended.
If we determine to extend the exchange offer, we will notify the
exchange agent of any extension by oral or written notice. We
will notify the registered holders of old notes of the extension
no later than 9:00 a.m., New York City time, on the
business day immediately following the previously scheduled
expiration date.
We reserve the right, in our sole discretion:
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to delay accepting for exchange any old notes;
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to extend the exchange offer or to terminate the exchange offer
and to refuse to accept old notes not previously accepted if any
of the conditions set forth below under
Conditions have not been satisfied by
the expiration date; or
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subject to the terms of the registration rights agreement, to
amend the terms of the exchange offer in any manner.
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Any such delay in acceptance, extension, termination or
amendment will be followed as promptly as practicable by oral or
written notice to the registered holders of old notes. If we
amend the exchange offer in a manner that we determine to
constitute a material change, we will promptly disclose the
amendment in a manner reasonably calculated to inform the
holders of the old notes of the amendment.
Without limiting the manner in which we may choose to make
public announcements of any delay in acceptance, extension,
termination or amendment of the exchange offer, we will have no
obligation to publish, advertise or otherwise communicate any
public announcement, other than by making a timely release to a
financial news service.
During any extension of the exchange offer, all old notes
previously tendered will remain subject to the exchange offer,
and we may accept them for exchange. We will return any old
notes that we do not accept for exchange for any reason without
expense to the tendering holder as promptly as practicable after
the expiration or earlier termination of the exchange offer.
Interest
on the New Notes and the Old Notes
Any old notes not tendered or accepted for exchange will
continue to accrue interest at the rate of 6.625% per annum in
accordance with their terms. The new notes will accrue interest
at the rate of 6.625% per annum from the date of the last
periodic payment of interest on the old notes or, if no interest
has been paid, from the original issue date of old notes.
Interest on the new notes and any old notes not tendered or
accepted for exchange will be payable semi-annually in arrears
on January 15 and July 15 of each year, commencing on
July 15, 2010.
Procedures
for Tendering
Only a registered holder of old notes may tender those notes in
the exchange offer. When the holder of outstanding notes
tenders, and we accept such notes for exchange pursuant to that
tender, a binding agreement between us and the tendering holder
is created, subject to the terms and conditions set forth in
this prospectus and the accompanying letter of transmittal. To
tender in the exchange offer, a holder must transmit a properly
completed and duly executed letter of transmittal, including any
required signature guarantees, together with all other documents
required by such letter of transmittal, to the exchange agent at
one of the addresses set forth below under
Exchange Agent, before 5:00 p.m.,
New York City time, on the expiration date. In addition, either:
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the exchange agent must receive, before the expiration date, a
timely confirmation of a book-entry transfer of the tendered old
notes into the exchange agents account at The Depository
Trust Company, or DTC, or the depositary, along with the
letter of transmittal or an agents message, according to
the procedure for book-entry transfer described below; or
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the holder must comply with the guaranteed delivery procedures
described below.
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The term agents message means a message
transmitted by DTC to, and received by, the exchange agent and
forming a part of a book-entry confirmation, that states that
DTC has received an express acknowledgment from a participant in
DTC tendering old notes that are the subject of the book-entry
confirmation stating (1) the aggregate principal amount of
old notes that have been tendered by such participant,
(2) that such participant has received and agrees to be
bound by the terms of the letter of transmittal and
(3) that we may enforce such agreement against the
participant.
A tender of old notes by a holder that is not withdrawn prior to
the expiration date will constitute an agreement between that
holder and us in accordance with the terms and subject to the
conditions set forth in this prospectus and in the accompanying
letter of transmittal.
28
The method of delivery of letters of transmittal and all other
required documents to the exchange agent is at the holders
election and risk. Instead of delivery by mail, we recommend
that holders use an overnight or hand delivery service. If
delivery is by mail, we recommend that holders use certified or
registered mail, properly insured, with return receipt
requested. In all cases, holders should allow sufficient time to
assure delivery to the exchange agent before the expiration
date. Holders should not send letters of transmittal or other
required documents to us. Holders may request their respective
brokers, dealers, commercial banks, trust companies or other
nominees to effect the above transactions for them.
Signatures on a letter of transmittal or a notice of withdrawal
must be guaranteed by an eligible institution unless the
outstanding notes surrendered for exchange are tendered:
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by a registered holder of the outstanding notes; or
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for the account of an eligible institution.
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An eligible institution is a firm which is a member
of a registered national securities exchange or a member of the
the Financial Industry Regulatory Authority, Inc., or a
commercial bank or trust company having an office or
correspondent in the United States.
Any beneficial owner whose old notes are registered in the name
of a broker, dealer, commercial bank, trust company or other
nominee and who wishes to tender those notes should contact the
registered holder promptly and instruct it to tender on the
beneficial owners behalf.
If outstanding notes are registered in the name of a person
other than the signer of the letter of transmittal, the
outstanding notes surrendered for exchange must be endorsed by,
or accompanied by a written instrument or instruments of
transfer or exchange, in satisfactory form as determined by us
in our sole discretion, duly executed by the registered holder
with the holders signature guaranteed by an eligible
institution.
We will determine, in our sole discretion, all questions as to
the validity, form, eligibility (including time of receipt),
acceptance of tendered old notes and withdrawal of tendered old
notes, and our determination will be final and binding. We
reserve the absolute right to reject any and all old notes not
properly tendered or any old notes the acceptance of which
would, in the opinion of us or our counsel, be unlawful. We also
reserve the absolute right to waive any defects or
irregularities or conditions of the exchange offer as to any
particular old notes either before or after the expiration date.
Our interpretation of the terms and conditions of the exchange
offer as to any particular old notes either before or after the
expiration date, including the instructions in the letter of
transmittal, will be final and binding on all parties. Unless
waived, any defects or irregularities in connection with tenders
of old notes for exchange must be cured within such time as we
shall determine. Although we intend to notify holders of any
defects or irregularities with respect to tenders of old notes
for exchange, neither we nor the exchange agent nor any other
person shall be under any duty to give such notification, nor
shall any of them incur any liability for failure to give such
notification. Tenders of old notes will not be deemed to have
been made until all defects or irregularities have been cured or
waived. Any old notes delivered by book-entry transfer to DTC
will be credited to the account maintained with DTC by the
participant in DTC which delivered such old notes, unless
otherwise provided in the letter of transmittal, as soon as
practicable following the expiration date.
In addition, we reserve the right in our sole discretion
(a) to purchase or make offers for any old notes that
remain outstanding after the expiration date, (b) as set
forth below under Conditions, to
terminate the exchange offer and (c) to the extent
permitted by applicable law, purchase old notes in the open
market, in privately negotiated transactions or otherwise. The
terms of any such purchases or offers could differ from the
terms of the exchange offer.
By signing, or otherwise becoming bound by, the letter of
transmittal, each tendering holder of old notes (other than
certain specified holders) will represent to us that:
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it is acquiring the new notes in the exchange offer in the
ordinary course of its business;
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it is not engaging in and does not intend to engage in a
distribution of the new notes;
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it is not participating, does not intend to participate, and has
no arrangements or understandings with any person to participate
in the exchange offer for the purpose of distributing the new
notes; and
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29
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it is not our affiliate, within the meaning of
Rule 405 under the Securities Act, or, if it is our
affiliate, it will comply with the registration and prospectus
delivery requirements of the Securities Act to the extent
applicable.
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If the tendering holder is a broker-dealer that will receive new
notes for its own account in exchange for old notes that were
acquired as a result of market-making activities or other
trading activities, it may be deemed to be an
underwriter within the meaning of the Securities
Act. Any such holder will be required to acknowledge in the
letter of transmittal that it will deliver a prospectus in
connection with any resale or transfer of these new notes.
However, by so acknowledging and by delivering a prospectus, the
holder will not be deemed to admit that it is an
underwriter within the meaning of the Securities Act.
Book-Entry
Transfer
The exchange agent will establish a new account or utilize an
existing account with respect to the old notes at DTC promptly
after the date of this prospectus, and any financial institution
that is a participant in DTCs systems may make book-entry
delivery of old notes by causing DTC to transfer these old notes
into the exchange agents account in accordance with
DTCs procedures for transfer. However, the exchange for
the old notes so tendered will only be made after timely
confirmation of this book-entry transfer of old notes into the
exchange agents account, and timely receipt by the
exchange agent of an agents message and any other
documents required by the letter of transmittal.
Although delivery of old notes must be effected through
book-entry transfer into the exchange agents account at
DTC, the letter of transmittal, properly completely and validly
executed, with any required signature guarantees, or an
agents message in lieu of the letter of transmittal, and
any other required documents, must be delivered to and received
by the exchange agent at one of its addresses listed below under
Exchange Agent, before 5:00 p.m.,
New York City time, on the expiration date, or the guaranteed
delivery procedure described below must be complied with.
Delivery of documents to DTC in accordance with its procedures
does not constitute delivery to the exchange agent.
All references in this prospectus to deposit or delivery of old
notes shall be deemed to also refer to DTCs book-entry
delivery method.
Guaranteed
Delivery Procedures
Holders who wish to tender their old notes and (1) who
cannot deliver a confirmation of book-entry transfer of old
notes into the exchange agents account at DTC, the letter
of transmittal or any other required documents to the exchange
agent prior to the expiration date or (2) who cannot
complete the procedure for book-entry transfer on a timely
basis, may effect a tender if:
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the tender is made through an eligible institution;
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before the expiration date, the exchange agent receives from the
eligible institution a properly completed and duly executed
notice of guaranteed delivery, by facsimile transmission, mail
or hand delivery, listing the principal amount of old notes
tendered, stating that the tender is being made thereby and
guaranteeing that, within three New York Stock Exchange trading
days after the expiration date, a book-entry confirmation,
together with a properly completed and duly executed letter of
transmittal or agents message with any required signature
guarantees and together with a confirmation of book-entry, and
any other documents required by the letter of transmittal and
the instructions thereto, will be deposited by such eligible
institution with the exchange agent; and
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the properly completed and executed letter of transmittal and a
confirmation of book-entry transfer of all tendered old notes
into the exchange agents account at DTC and all other
documents required by the letter of transmittal are received by
the exchange agent within three New York Stock Exchange, Inc.
trading days after the expiration date.
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30
Upon request to the exchange agent, a notice of guaranteed
delivery will be sent to holders who wish to tender their old
notes according to the guaranteed delivery procedures described
above.
Withdrawal
of Tenders
Except as otherwise provided in this prospectus, tenders of old
notes may be withdrawn at any time prior to 5:00 p.m., New
York City time, on the expiration date.
For a withdrawal to be effective, the exchange agent must
receive a written or facsimile transmission notice of withdrawal
at one of its addresses set forth below under
Exchange Agent. Any notice of withdrawal
must:
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specify the name of the person who tendered the old notes to be
withdrawn;
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identify the old notes to be withdrawn, including the principal
amount of such old notes;
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be signed by the holder in the same manner as the original
signature on the letter of transmittal by which the old notes
were tendered and include any required signature
guarantees; and
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specify the name and number of the account at DTC to be credited
with the withdrawn old notes and otherwise comply with the
procedures of DTC.
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We will determine, in our sole discretion, all questions as to
the validity, form and eligibility (including time of receipt)
of any notice of withdrawal, and our determination shall be
final and binding on all parties. Any old notes so withdrawn
will be deemed not to have been validly tendered for exchange
for purposes of the exchange offer and no new notes will be
issued with respect thereto unless the old notes so withdrawn
are validly retendered. Properly withdrawn old notes may be
retendered by following one of the procedures described above
under Procedures for Tendering at any
time prior to the expiration date.
Any old notes that are tendered for exchange through the
facilities of DTC but that are not exchanged for any reason will
be credited to an account maintained with DTC for the old notes
as soon as practicable after withdrawal, rejection of tender or
termination of the exchange offer.
Conditions
Despite any other term of the exchange offer, we will not be
required to accept for exchange, or to issue new notes in
exchange for, any old notes, and we may terminate the exchange
offer as provided in this prospectus prior to the expiration
date, if:
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the exchange offer, or the making of any exchange by a holder of
old notes, would violate applicable law or any applicable
interpretation of the SEC staff; or
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the old notes are not tendered in accordance with the exchange
offer;
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you do not represent that you are acquiring the new notes in the
ordinary course, that you are not engaging in and do not intend
to engage in a distribution of the new notes, of your business
and that you have no arrangement or understanding with any
person to participate in a distribution of the new notes and you
do not make any other representations as may be reasonably
necessary under applicable SEC rules, regulations or
interpretations to render available the use of an appropriate
form for registration of the new notes under the Securities Act;
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any action or proceeding is instituted or threatened in any
court or by or before any governmental agency with respect to
the exchange offer which, in our judgment, would reasonably be
expected to impair our ability to proceed with the exchange
offer; or
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any governmental approval has not been obtained, which we
believe, in our sole discretion, is necessary for the
consummation of the exchange offer as outlined in this
prospectus.
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These conditions are for our sole benefit and may be asserted by
us regardless of the circumstances giving rise to any of these
conditions or may be waived by us, in whole or in part, at any
time and from time to time in our
31
reasonable discretion. Our failure at any time to exercise any
of the foregoing rights shall not be deemed a waiver of the
right and each right shall be deemed an ongoing right which may
be asserted at any time and from time to time.
If we determine in our reasonable judgment that any of the
conditions are not satisfied, we may:
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refuse to accept and return to the tendering holder any old
notes or credit any tendered old notes to the account maintained
with DTC by the participant in DTC which delivered the old
notes; or
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extend the exchange offer and retain all old notes tendered
before the expiration date, subject to the rights of holders to
withdraw the tenders of old notes (see
Withdrawal of Tenders above); or
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waive the unsatisfied conditions with respect to the exchange
offer prior to the expiration date and accept all properly
tendered old notes that have not been withdrawn or otherwise
amend the terms of the exchange offer in any respect as provided
under Expiration Date; Extensions;
Amendments. If a waiver constitutes a material change to
the exchange offer, we will promptly disclose the waiver by
means of a prospectus supplement that will be distributed to the
registered holders, and we will extend the exchange offer for a
period of five to ten business days, depending upon the
significance of the waiver and the manner of disclosure to the
registered holders, if the exchange offer would otherwise expire
during such five to ten business day period.
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In addition, we will not accept for exchange any old notes
tendered, and we will not issue new notes in exchange for any of
the old notes, if at that time any stop order is threatened or
in effect with respect to the registration statement of which
this prospectus constitutes a part or the qualification of the
indenture under the Trust Indenture Act of 1939.
Exchange
Agent
The Bank of New York Mellon has been appointed as the exchange
agent for the exchange offer. All signed letters of transmittal
and other documents required for a valid tender of your old
notes should be directed to the exchange agent at one of the
addresses set forth below. Questions and requests for
assistance, requests for additional copies of this prospectus or
of the letter of transmittal and requests for notices of
guaranteed delivery should be directed to the exchange agent
addressed as follows:
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By Hand Delivery:
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By Registered Mail or Overnight Carrier:
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The Bank of New York Mellon
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The Bank of New York Mellon
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Corporate Trust Operations
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Corporate Trust Operations
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Reorganization Unit
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Reorganization Unit
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101 Barclay Street, 7 East
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101 Barclay Street, 7 East
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New York, New York 10286
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New York, New York 10286
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Facsimile
Transmission:
(212) 298-1915
Confirm by Telephone:
(212) 815-3687
For information with respect to the exchange offer,
call:
Corporate Trust Operations
Reorganization Unit
at
(212) 815-3687
Delivery to other than the above addresses or facsimile number
will not constitute a valid delivery.
Fees and
Expenses
We will bear the expenses of soliciting tenders. We have not
retained any dealer-manager in connection with the exchange
offer and will not make any payments to brokers, dealers or
others soliciting acceptance of the exchange offer. The
principal solicitation is being made by mail; however,
additional solicitation may be made by facsimile, telephone or
in person by our officers and employees.
32
We will pay the expenses to be incurred in connection with the
exchange offer. These expenses include fees and expenses of the
exchange agent and the trustee, accounting and legal fees,
printing costs, and related fees and expenses.
Transfer
Taxes
Holders who tender their old notes for exchange will not be
obligated to pay any transfer taxes in connection with the
exchange offer.
Accounting
Treatment
We will record the new notes in our accounting records at the
same carrying values as the old notes on the date of the
exchange. Accordingly, we will recognize no gain or loss, for
accounting purposes, as a result of the exchange offer. Under
Mexican FRS, the expenses of the exchange offer and the
unamortized expenses relating to the issuance of the old notes
will be amortized over the term of the new notes.
Consequences
of Failure to Exchange
Holders of old notes who do not exchange their old notes for new
notes pursuant to the exchange offer will continue to be subject
to the restrictions on transfer of the old notes as set forth in
the legend printed thereon as a consequence of the issuance of
the old notes pursuant to an exemption from the Securities Act
and applicable state securities laws. Old notes not exchanged
pursuant to the exchange offer will continue to accrue interest
at 6.625% per annum, and the old notes will otherwise remain
outstanding in accordance with their terms. Holders of old notes
do not have any appraisal or dissenters rights under
Mexican law in connection with the exchange offer.
In general, the old notes may not be offered or sold unless
registered under the Securities Act, except pursuant to an
exemption from, or in a transaction not subject to, the
Securities Act and applicable state securities laws. Upon
completion of the exchange offer, holders of old notes will not
be entitled to any rights to have the resale of old notes
registered under the Securities Act, and we currently do not
intend to register under the Securities Act the resale of any
old notes that remain outstanding after completion of the
exchange offer.
33
USE OF
PROCEEDS
We will not receive any cash proceeds from the exchange offer.
We are making this exchange offer solely to satisfy our
obligations under the registration rights agreement entered into
in connection with each issuance of the old notes. In
consideration for issuing the new notes, we will receive old
notes in an aggregate principal amount equal to the value of the
new notes. The old notes surrendered in exchange for the new
notes will be retired and canceled. Accordingly, the issuance of
the new notes will not result in any change in our indebtedness.
34
CAPITALIZATION
The following table sets forth our consolidated capitalization
as of September 30, 2009, (i) on a historical, actual
basis and (ii) as adjusted to reflect the issuance of notes
in the aggregate principal amount of U.S.$600.0 million, as
if such transaction occurred on September 30, 2009. This table should be read together with
Operating and Financial Review and Prospects
included in this prospectus and in our 2008
Form 20-F,
our year-end consolidated financial statements in this prospectus,
and our unaudited condensed consolidated financial statements
included in this prospectus. Information in the following table
presented in U.S. Dollar amounts are translated from the
Peso amounts, solely for the convenience of the reader, at an
exchange rate of Ps.13.5010 to U.S.$1.00, the Interbank Rate on
September 30, 2009. The financial information as of
September 30, 2009 is presented in Pesos and does not
recognize the effects of inflation beginning on January 1,
2008, in accordance with Mexican FRS. Accordingly, this
financial information is not directly comparable to our audited
year-end consolidated financial statements prior to 2008.
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|
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|
|
|
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As of September 30, 2009(1)(2)
|
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Actual
|
|
|
As Adjusted
|
|
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Actual
|
|
|
As Adjusted
|
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
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(Unaudited)
|
|
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(Millions of pesos)
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(Millions of U.S. dollars)
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|
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Current debt and satellite transponder lease obligation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes payable(3)
|
|
Ps.
|
41
|
|
|
Ps.
|
41
|
|
|
U.S. $
|
3
|
|
|
U.S. $
|
3
|
|
Inbursa loan due 2010 and 2012
|
|
|
500
|
|
|
|
500
|
|
|
|
37
|
|
|
|
37
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current debt
|
|
|
541
|
|
|
|
541
|
|
|
|
40
|
|
|
|
40
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current portion of satellite transponder lease obligation
|
|
|
148
|
|
|
|
148
|
|
|
|
11
|
|
|
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt and satellite transponder lease obligation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes payable(3)
|
|
|
43
|
|
|
|
43
|
|
|
|
3
|
|
|
|
3
|
|
8.0% Senior Notes due 2011
|
|
|
971
|
|
|
|
971
|
|
|
|
72
|
|
|
|
72
|
|
8.5% Senior Notes due 2032
|
|
|
4,050
|
|
|
|
4,050
|
|
|
|
300
|
|
|
|
300
|
|
6.625% Senior Notes due 2025
|
|
|
8,101
|
|
|
|
8,101
|
|
|
|
600
|
|
|
|
600
|
|
8.49% Senior Notes due 2037
|
|
|
4,500
|
|
|
|
4,500
|
|
|
|
333
|
|
|
|
333
|
|
6.0% Senior Notes due 2018
|
|
|
6,750
|
|
|
|
6,750
|
|
|
|
500
|
|
|
|
500
|
|
6.625% Senior Exchange Notes due 2040 offered hereby
|
|
|
|
|
|
|
8,101
|
|
|
|
|
|
|
|
600
|
|
Cablemáss 9.375% Senior Notes due 2015
|
|
|
2,359
|
|
|
|
2,359
|
|
|
|
175
|
|
|
|
175
|
|
Inbursa loan due 2010 and 2012
|
|
|
1,500
|
|
|
|
1,500
|
|
|
|
111
|
|
|
|
111
|
|
Empresas Cablevisións JPMorgan Chase Bank, N.A. loan
due 2012
|
|
|
3,038
|
|
|
|
3,038
|
|
|
|
225
|
|
|
|
225
|
|
Santander Serfin loan due 2016(4)
|
|
|
1,400
|
|
|
|
1,400
|
|
|
|
104
|
|
|
|
104
|
|
Banamex loan due 2016(4)
|
|
|
2,100
|
|
|
|
2,100
|
|
|
|
156
|
|
|
|
156
|
|
Cablemáss JPMorgan Chase Bank, N.A. loan due 2012
|
|
|
675
|
|
|
|
675
|
|
|
|
50
|
|
|
|
50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total long-term debt
|
|
|
35,487
|
|
|
|
43,588
|
|
|
|
2,629
|
|
|
|
3,229
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Satellite transponder lease obligation, net of current portion
|
|
|
1,032
|
|
|
|
1,032
|
|
|
|
76
|
|
|
|
76
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Stockholders Equity
|
|
|
48,352
|
|
|
|
48,352
|
|
|
|
3,581
|
|
|
|
3,581
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total capitalization
|
|
Ps.
|
85,560
|
|
|
Ps.
|
93,661
|
|
|
U.S.$
|
6,337
|
|
|
U.S.$
|
6,937
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Columns may not add up due to rounding. |
|
(2) |
|
Solely for purposes of preparing calculations for this table,
our U.S. Dollar-denominated indebtedness has been translated
into Pesos at an exchange rate of Ps.13.5010 to U.S.$1.00, the
Interbank Rate, as reported by Banamex, as of September 30,
2009. |
|
(3) |
|
Represents secured debt. |
|
(4) |
|
Represents debt incurred by Sky and guaranteed by us. |
35
OPERATING
AND FINANCIAL REVIEW AND PROSPECTS
Overview
Our unaudited condensed consolidated financial statements for
the nine months ended September 30, 2008 and 2009 have been
prepared in accordance with Mexican FRS, which differ in some
signficant respects from U.S. GAAP and are stated in
millions of Pesos without recognizing the effects of inflation
for such nine-month periods. Note 12 to these unaudited
condensed consolidated financial statements describes the
principal quantititative and disclosure differences between
Mexican FRS and U.S. GAAP. In the opinion of management,
the unaudited condensed consolidated financial statements for
the nine months ended September 30, 2008 and 2009 includes
all adjustments, consisting of only normally recurring
adjustments, necessary for a fair presentation of these
financial statements. The unaudited condensed consolidated
financial statements for the nine months ended
September 30, 2008 and 2009 as set forth in this prospectus
should be read in connection with our audited consolidated
financial statements for the years ended December 31, 2006,
2007 and 2008 and as of December 31, 2007 and 2008
included in this prospectus and our 2008 Form 20-F incorporated by reference herein.
The financial information for the nine months ended
September 30, 2009 is not necessarily indicative of future
results.
Results
of Operations
The following tables set forth our unaudited condensed consolidated
results for the nine month periods ended September 30, 2008
and 2009:
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
|
|
|
|
September 30,(1)
|
|
|
|
2008
|
|
|
2009
|
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
|
(Millions of pesos)
|
|
|
Net Sales
|
|
Ps.
|
33,500.7
|
|
|
Ps.
|
37,189.1
|
|
Cost of Sales(2)
|
|
|
15,211.7
|
|
|
|
16,926.3
|
|
Selling Expenses(2)
|
|
|
2,648.9
|
|
|
|
3,123.8
|
|
Administrative Expenses(2)
|
|
|
2,165.4
|
|
|
|
2,720.0
|
|
Depreciation and Amortization
|
|
|
3,105.8
|
|
|
|
3,557.3
|
|
Consolidated Operating Income
|
|
|
10,368.9
|
|
|
|
10,861.7
|
|
Other expense, net
|
|
|
614.1
|
|
|
|
356.4
|
|
Integral cost of financing
|
|
|
1,330.4
|
|
|
|
2,056.4
|
|
Equity in losses of affiliates, net
|
|
|
436.8
|
|
|
|
590.7
|
|
Income taxes
|
|
|
2,217.1
|
|
|
|
2,240.0
|
|
Consolidated net income
|
|
|
5,770.5
|
|
|
|
5,618.2
|
|
Noncontrolling interest net income
|
|
|
809.2
|
|
|
|
799.2
|
|
Controlling interest net income
|
|
|
4,961.3
|
|
|
|
4,819.0
|
|
|
|
|
(1) |
|
Certain segment data set forth in these tables may vary from
certain data set forth in the unaudited condensed consolidated
statements of income for the interim periods ended
September 30, 2008 and 2009 due to differences in rounding.
The segment net sales and total segment net sales data set forth
in this prospectus reflect sales from intersegment operations in
all periods presented. |
|
(2) |
|
Excluding depreciation and amortization. |
Summary
of Business Segment Results
The following table sets forth the net sales and operating
segment income (loss) of each of our business segments and
intersegment sales, corporate expenses and depreciation and
amortization for the nine months ended September 30, 2008
and 2009. We currently classify our operations into seven
business segments: Television Broadcasting, Pay Television
Networks, Programming Exports, Publishing, Sky, Cable and
Telecom, and Other Businesses. Our results for 2008, include
Cablemás, a significant cable operator in Mexico which has
been
36
consolidated into the Cable and Telecom segment.
Effective June 1, 2008, we began consolidating the assets,
liabilities and results of operations of Cablemás in our
consolidated financial statements. See Note 2 to our year
end financial statements included in our 2008
Form 20-F,
herein incorporated by reference.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,(1)
|
|
|
|
|
|
|
% Contribution
|
|
|
|
|
|
% Contribution
|
|
|
|
|
|
|
to 2008 Segment
|
|
|
|
|
|
to 2009 Segment
|
|
|
|
2008
|
|
|
Revenues
|
|
|
2009
|
|
|
Revenues
|
|
|
|
|
|
|
(Millions of pesos)
|
|
|
|
|
|
Segment Net Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Television Broadcasting
|
|
Ps.
|
14,750.3
|
|
|
|
42.9
|
|
|
Ps.
|
14,815.1
|
|
|
|
38.9
|
|
Pay Television Networks
|
|
|
1,513.2
|
|
|
|
4.4
|
|
|
|
1,994.8
|
|
|
|
5.2
|
|
Programming Exports
|
|
|
1,701.5
|
|
|
|
5.0
|
|
|
|
2,080.6
|
|
|
|
5.5
|
|
Publishing
|
|
|
2,556.2
|
|
|
|
7.4
|
|
|
|
2,410.7
|
|
|
|
6.3
|
|
Sky
|
|
|
6,749.7
|
|
|
|
19.7
|
|
|
|
7,367.8
|
|
|
|
19.4
|
|
Cable and Telecom
|
|
|
4,441.8
|
|
|
|
12.9
|
|
|
|
6,586.8
|
|
|
|
17.3
|
|
Other Businesses
|
|
|
2,640.9
|
|
|
|
7.7
|
|
|
|
2,811.9
|
|
|
|
7.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Segment Net Sales
|
|
|
34,353.6
|
|
|
|
100.0
|
|
|
|
38,067.7
|
|
|
|
100.0
|
|
Intersegment Operations
|
|
|
(852.9
|
)
|
|
|
|
|
|
|
(878.6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Consolidated Net Sales
|
|
Ps.
|
33,500.7
|
|
|
|
|
|
|
Ps.
|
37,189.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,(1)
|
|
|
|
2008
|
|
|
Margin %
|
|
|
2009
|
|
|
Margin %
|
|
|
Operating Segment Income (Loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Television Broadcasting
|
|
Ps.
|
7,025.2
|
|
|
|
47.6
|
|
|
Ps.
|
6,978.9
|
|
|
|
47.1
|
|
Pay Television Networks
|
|
|
948.4
|
|
|
|
62.7
|
|
|
|
1,257.4
|
|
|
|
63.0
|
|
Programming Exports
|
|
|
748.6
|
|
|
|
44.0
|
|
|
|
1,058.2
|
|
|
|
50.9
|
|
Publishing
|
|
|
382.8
|
|
|
|
15.0
|
|
|
|
189.6
|
|
|
|
7.9
|
|
Sky
|
|
|
3,331.1
|
|
|
|
49.4
|
|
|
|
3,334.5
|
|
|
|
45.3
|
|
Cable and Telecom
|
|
|
1,452.4
|
|
|
|
32.7
|
|
|
|
2,184.8
|
|
|
|
33.2
|
|
Other Businesses
|
|
|
(79.7
|
)
|
|
|
(3.0
|
)
|
|
|
(99.9
|
)
|
|
|
(3.6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Operating Segment Income(2)
|
|
|
13,808.8
|
|
|
|
40.2
|
|
|
|
14,903.5
|
|
|
|
39.1
|
|
Corporate Expenses(2)
|
|
|
(334.1
|
)
|
|
|
(1.0
|
)
|
|
|
(484.5
|
)
|
|
|
(1.3
|
)
|
Depreciation and Amortization
|
|
|
(3,105.8
|
)
|
|
|
(9.3
|
)
|
|
|
(3,557.3
|
)
|
|
|
(9.6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Consolidated Operating Income(3)
|
|
Ps.
|
10,368.9
|
|
|
|
31.0
|
|
|
Ps.
|
10,861.7
|
|
|
|
29.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Certain segment data set forth in these tables may vary from
certain data set forth in the unaudited condensed consolidated
statements of income for the interim periods ended
September 30, 2008 and 2009 due to differences in rounding.
The segment net sales and total segment net sales data set forth
in this prospectus reflect sales from intersegment operations in
all periods presented. |
|
(2) |
|
The operating segment income (loss), and total operating segment
income data set forth in prospectus report do not reflect
corporate expenses and depreciation and amortization in any
period presented, but are presented herein to facilitate the
discussion of segment results. |
|
(3) |
|
Total consolidated operating income reflects corporate expenses
and depreciation and amortization in all periods presented. |
37
Results
of Operations for the Nine Months Ended September 30,
2009
Compared to the Nine Months Ended September 30,
2008
Total
Segment Results
Net
Sales
Our net sales increased by Ps.3,688.4 million, or 11.0%, to
Ps.37,189.1 million for the nine months ended
September 30, 2009 from Ps.33,500.7 million for the
nine months ended September 30, 2008. This increase
reflects a revenue growth in our Cable and Telecom, Sky, Pay
Television Networks, Other Businesses, Television Broadcasting
and Programming Exports segments. These increases were partially
offset by a decrease in net sales in our Publishing segment.
Cost
of Sales
Cost of sales increased by Ps.1,714.6 million, or 11.3%, to
Ps.16,926.3 million for the nine months ended
September 30, 2009 from Ps.15,211.7 million for the
nine months ended September 30, 2008. This increase was due
to higher costs in our Cable and Telecom, Sky, Pay Television
Networks, Other Businesses, Television Broadcasting, Programming
Exports and Publishing segments.
Selling
Expenses
Selling expenses increased by Ps.474.9 million, or 17.9%,
to Ps.3,123.8 million for the nine months ended
September 30, 2009 from Ps.2,648.9 million for the
nine months ended September 30, 2008. This increase was
attributable to higher selling expenses in our Sky, Cable and
Telecom, Other Businesses, Pay Television Networks, Programming
Exports, Television Broadcasting and Publishing segments.
Administrative
Expenses
Administrative expenses increased by Ps.554.6 million, or
25.6%, to Ps.2.720.0 million for the nine months ended
September 30, 2009 from Ps.2,165.4 million for the
nine months ended September 30, 2008. This increase
reflects the administrative expense growth in our Cable and
Telecom, Television Broadcasting, Other Businesses, Publishing,
Pay Television Networks and Sky segments, as well as an increase
in corporate expenses due to higher share-based compensation
expense, which amounted to Ps.269.2 million as of
September 30, 2009, compared with Ps.148.0 million as
of September 30, 2008.
Television
Broadcasting
Television Broadcasting net sales, representing 42.9% and 38.9%
of our total segment net sales for the nine months ended
September 30, 2008 and 2009, respectively, increased by
Ps.64.8 million, or 0.4%, to Ps.14,815.1 million for
the nine months ended September 30, 2009 from
Ps.14,750.3 million for the nine months ended
September 30, 2008. This marginal increase was attributable
to the transmission of television series produced and aired in
Mexico and special events like Expedición Bicentenario
and Mexicanas, Mujeres con Valor as well as the
positive translation effect from foreign-currency-denominated
sales. This increase was offset by the absence of the 2008
Olympic Games revenues and lower sales in our local station in
San Diego.
Television Broadcasting operating segment income had a marginal
decrease by Ps.46.3 million, or 0.7%, to
Ps.6,978.9 million for the nine months ended
September 30, 2009 from Ps.7,025.2 million for the
nine months ended September 30, 2008. This decrease was due
to higher foreign-currency denominated costs and expenses as
well as the increase in costs of sales due to the broadcast of
sporting events and an increase in operating expenses driven by
higher personnel costs and promotional expenses, which were
partially offset by an increase in net sales and the absence of
the 2008 Olympic Games production costs.
We believe that results in the Television Broadcasting segment
for the remainder of fiscal year 2009 will continue to remain
flat because of the H1N1 epidemic and further deterioration in
the Mexican economy, which has negatively impacted advertising
sales in the spot market. In order to maintain this outlook for
the Television Broadcasting segment, we have implemented strict
controls over costs and expenses in order to protect our margins
while continuing to deliver solid ratings.
38
Pay
Television Networks
Pay Television Networks net sales, representing 4.4% and 5.2% of
our total segment net sales for the nine months ended
September 30, 2008 and 2009 respectively, increased by
Ps.481.6 million, or 31.8%, to Ps.1,994.8 million for
the nine months ended September 30, 2009 from
Ps.1,513.2 million for the nine months ended
September 30, 2008. This increase reflects higher revenues
from signals sold in Mexico and Latin America, due to an
increase of the subscriber base and rates, and an increase in
advertising sales.
Pay Television Networks operating segment income increased by
Ps.309.0 million, or 32.6%, to Ps.1,257.4 million for
the nine months ended September 30, 2009 from
Ps.948.4 million for the nine months ended
September 30, 2008, primarily due to higher sales that were
partially offset by an increase in cost of sales mainly by costs
of programs produced by the Company related mainly to the launch
of our new sports channel, TDN as well as cost of programs
produced by third parties and an increase in operating expenses
due to higher promotional and advertising expenses and personnel
expenses.
Programming
Exports
Programming Exports net sales, representing 5.0% and 5.5% of our
total segment net sales for the nine months ended
September 30, 2008 and 2009, respectively, increased by
Ps.379.1 million, or 22.3%, to Ps.2,080.6 million for
the nine months ended September 30, 2009 from
Ps.1,701.5 million for the nine months ended
September 30, 2008. This increase was primarily due to a
positive translation effect from foreign-currency denominated
sales, an increase in programming exports to Europe, Asia and
Africa, as well as co-production and format-programming
revenues. These increases were partially offset by lower
royalties paid to us under the Program License Agreement entered
into with Univision in the amount of U.S.$104.0 million,
for the nine months ended September 30, 2009 as compared to
U.S.$113.6 million, for the nine months ended
September 30, 2008 and a decrease in programming exports to
Latin America.
Programming Exports operating segment income increased by
Ps.309.6 million, or 41.4%, to Ps.1,058.2 million for
the nine months ended September 30, 2009 from
Ps.748.6 million for the nine months ended
September 30, 2008. This increase was primarily due to the
increase in net sales, and was partially offset by an increase
in cost of sales due to higher programming costs and operating
expenses, mainly due to an increase in personnel and advertising
expenses.
Publishing
Publishing net sales, representing 7.4% and 6.3% of our total
segment net sales for the nine months ended September 30,
2008 and 2009, respectively, decreased by Ps.145.5 million,
or 5.7%, to Ps.2,410.7 million for the nine months ended
September 30, 2009 from Ps.2,556.2 million for the
nine months ended September 30, 2008. The decrease was
driven by lower revenues from magazine circulation and
advertising pages sold in Mexico as well as abroad. This was
partially offset by a positive translation effect from
foreign-currency denominated sales.
Publishing operating segment income decreased by
Ps.193.2 million, or 50.5%, to Ps.189.6 million for
the nine months ended September 30, 2009 from
Ps.382.8 million for the nine months ended
September 30, 2008. This decrease reflects lower sales,
higher cost of sales and operating expenses due to the negative
impact of certain non-recurring costs and expenses, and a
negative translation effect from foreign-currency-denominated
costs.
Our Publishing business continues to struggle, along with the
rest of the industry. However, we have taken steps to remain
profitable while at the same time protecting the value of our
brands.
Sky
Sky net sales, representing 19.7% and 19.4% of our total
segments net sales for the nine months ended September 30,
2008 and 2009 respectively, increased by Ps.618.1 million
or 9.2% to Ps.7,367.8 million for the nine months ended
September 30, 2009 from Ps.6,749.7 million for the
nine months ended September 30, 2008. This increase was
primarily due to an increase in its subscriber base in Mexico,
Central America and the Dominican Republic. As of
September 30, 2009 the number of gross active subscribers
increased to 1,816,400 (including 139,800 commercial
subscribers) compared with 1,728,200 (including 124,400
commercial subscribers) as of September 30, 2008.
39
Sky operating segment income increased by
Ps.3.4 million or 0.1% to Ps.3,334.5 million for the
nine months ended September 30, 2009 from
Ps.3,331.1 million for the nine months ended
September 30, 2008. This increase was due to the increase
in net sales, which was offset by: (i) higher cost of sales
and operating expenses explained primarily by higher programming
costs associated with the increase of our subscriber base,
(ii) by the amortization of costs related to the exclusive
transmission of certain matches of the 2010 Soccer World Cup and
(iii) to a lesser extent, a negative translation effect on
foreign-currency-denominated costs. We continue to believe that
there will be growth in Sky revenues due to Skys expanded
product offering, including Mi Sky, a lower priced pay
television offering, and its exclusive content, which has
enabled us to withstand a difficult economic environment.
Cable
and Telecom
Cable and Telecom net sales, representing 12.9% and 17.3% of our
total segment net sales for the nine months ended
September 30, 2008 and 2009, respectively, increased by
Ps.2,145.0 million, or 48.3%, to Ps.6,586.8 million
for the nine months ended September 30, 2009 from
Ps.4,441.8 million for the nine months ended
September 30, 2008. This increase was primarily due to
(i) a 17.8% increase in sales of Cablevision, driven mainly
by a 19.1% increase in RGUs due to the success of the triple
play bundles; and (ii) the consolidation of Cablemás
starting June 2008, which represented an increase in revenue of
Ps.1,649.4 million;
Cable and Telecom operating segment income increased by
Ps.732.4 million, or 50.4%, to Ps.2,184.8 million for
the nine months ended September 30, 2009 from
Ps. 1,452.4 million for the nine months the year ended
September 30, 2008. These results reflect higher sales and
an increase in operating segment income of Ps.598.3 million
due to the consolidation of Cablemás. These increases were
partially offset by an increase in cost of sales due primarily
to higher signal and personnel costs as well as promotional and
advertising expenses.
The following table sets forth the breakdown of subscribers as
of September 30, 2009:
|
|
|
|
|
|
|
|
|
|
|
Cablevisión
|
|
|
Cablemás
|
|
|
Video
|
|
|
616,806
|
|
|
|
890,270
|
|
Broadband
|
|
|
234,138
|
|
|
|
266,824
|
|
Telephony
|
|
|
111,709
|
|
|
|
119,144
|
|
RGUs
|
|
|
962,653
|
|
|
|
1,276,238
|
|
Other
Businesses
Other Businesses net sales, representing 7.7% and 7.4% of our
total segments net sales for the nine months ended
September 30, 2008 and 2009 respectively, increased by
Ps.171.0 million, or 6.5%, to Ps.2,811.9 million for
the nine months ended September 30, 2009 from
Ps.2,640.9 million for the nine months ended
September 30, 2008. This increase was primarily due to
higher sales related to our gaming, sport events production and
internet businesses. This increase was partially offset by lower
sales in our feature-film distribution, publishing distribution
and radio businesses.
Other Businesses operating segment loss increased by
Ps.20.2 million, or 25.3%, to Ps.99.9 million for the
nine months ended September 30, 2009 from
Ps.79.7 million for the nine months ended
September 30, 2008. This increase reflects higher cost of
sales and operating expenses related to our sport events, gaming
and internet businesses and lower sales in our
feature film distribution and publishing
distribution businesses. These increases were partially offset
by higher total segment sales and a decrease in the cost of
sales of our feature-film distribution business and lower
operating expenses in our radio businesses.
Depreciation
and Amortization
Depreciation and amortization expense increased by
Ps.451.5 million, or 14.5%, to Ps.3,557.3 million for
the nine months ended September 30, 2009 from
Ps.3,105.8 million for the nine months ended
September 30, 2008. This change primarily reflects an
increase in our Cable and Telecom segment due to the
consolidation of Cablemás and Other Businesses segments.
40
Other
Expense, Net
Other expense, net, in the nine months ended September 30,
2009, included primarily professional services in connection
with certain litigation and donations. Other expense, net,
decreased by Ps.257.7 million, or 42.0%, to
Ps.356.4 million for the nine months ended
September 30, 2009, compared with Ps.614.1 million for
the nine months ended September 30, 2008. This decrease
reflected an impairment adjustment of Ps.427.1 million
recorded in 2008 where no adjustment was taken in 2009. This
decrease was partially offset by a loss on disposition of fixed
assets.
Integral
Cost of Financing
The net expense attributable to integral cost of financing
increased by Ps.726.0 million, or 54.6%, to
Ps.2,056.4 million for the nine months ended
September 30, 2009 from Ps.1,330.4 million for the
nine months ended September 30, 2008. This increase
reflected primarily (i) a Ps.367.0 million increase in
interest expense, due primarily to a higher average of principal
amount of long-term debt in 2009; (ii) a
Ps.304.9 million decrease in interest income explained
mainly by a reduction of interest rates applicable to foreign
currency cash equivalents and temporary investments in 2009; and
(iii) a Ps.54.1 million increase in foreign exchange
loss resulting from a higher average amount of our net liability
foreign currency position combined with the 2.4% appreciation of
the Peso and from derivative contracts to cover interest and
foreign exchange risks
Equity in
Losses of Affiliates, Net
Equity in losses of affiliates, net, for the nine months ended
September 30, 2008 and 2009, is comprised mainly of the
equity in losses of La Sexta, our 40.5% interest in a
free-to-air
television channel in Spain. Equity in losses of affiliates,
net, increased by Ps.153.9 million, or 35.2%, to
Ps.590.7 million in the nine months ended
September 30, 2009, compared with Ps.436.8 million in
the nine months ended September 30, 2008. This increase
reflected primarily an increase in equity in loss of
La Sexta. This variance was partially offset by an increase
in equity in income of Volaris, our 25% interest in a low cost
carrier airline with a concession to operate in Mexico.
Income
Taxes
Income taxes increased by Ps.22.9 million, or 1.0%, to
Ps.2,240.0 million in the nine months ended
September 30, 2009 from Ps.2,217.1 million in the nine
months ended September 30, 2008. This increase reflected a
higher effective income tax rate. Our tax rate in the future
will be affected by recent tax changes. See Recent
Developments Changes to Mexican Tax Law in
this prospectus for a discussion on recent tax changes in Mexico.
Noncontrolling
Interest Net Income
Noncontrolling interest net income is comprised mainly of that
portion of operating results attributable to the interests held
by third parties in the businesses which are not wholly-owned by
us, primarily in our Sky and Cable and Telecom segments.
Noncontrolling interest net income decreased by
Ps.10 million, or 1.2%, to Ps.799.2 million in the
nine months ended September 30, 2009, from
Ps.809.2 million in the nine months ended
September 30, 2008. This decrease primarily reflected a
lower portion of consolidated net income attributable to
interests held by minority equity owners in our Sky segment.
Controlling
Interest Net Income
We generated controlling interest net income in the amount of
Ps.4,819.0 million in the nine months ended
September 30, 2009, a decrease of 2.9% as compared to net
income of Ps.4,961.3 million for the nine months ended
September 30, 2008. The net decrease of
Ps.142.3 million reflected:
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a Ps.726.0 million increase in integral cost financing, net;
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|
a Ps.153.9 million increase in equity in losses of
affiliates, net; and
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|
a Ps.22.9 million increase in income taxes.
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41
These changes were partially offset by:
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a Ps.492.8 million increase in operating income;
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a Ps.257.7 million decrease in other expenses, net; and
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a Ps.10.0 million decrease in noncontrolling interest net
income.
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Effects
of Depreciation/Appreciation of the Mexican Peso and
Inflation
The following table sets forth, for the periods indicated:
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the percentage that the Peso depreciated or appreciated against
the U.S. Dollar;
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the Mexican inflation rate; and
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the U.S. inflation rate.
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Nine Months Ended
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|
Nine Months Ended
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September 30,
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September 30,
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2008
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2009
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|
Depreciation (appreciation) of the Peso as compared to the U.S.
Dollar(1)
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0.15
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%
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|
(2.40
|
)%
|
Mexican inflation rate(2)
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3.90
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%
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2.30
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%
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U.S. inflation rate
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4.16
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%
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2.73
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%
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|
(1) |
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Based on changes in the Interbank Rates, as reported by Banamex,
at the end of each period, which were as follows: Ps.10.9222 per
U.S. Dollar as of December 31, 2007; Ps.10.9385 per U.S.
Dollar as of September 30, 2008; Ps.13.8400 per U.S. Dollar
as of December 31, 2008; and Ps.13.5010 per U.S. Dollar as
of September 30, 2009. |
|
(2) |
|
Based on the NCPI reported by the Mexican Central Bank, which
was as follows. 125.6 as of December 31, 2007; 130.5 as of
September 30, 2008; 133.8 as of December 31, 2008; and
136.8 as of September 30, 2009. |
Liquidity
We generally rely on a combination of operating revenues,
borrowings and net proceeds from dispositions to fund our
working capital needs, capital expenditures, acquisitions and
investments. Historically, we have received, and continue to
receive, most of our advertising revenues in the form of upfront advertising
deposits in the fourth quarter of a given year, which in turn are
used, and continue to be used, to fund our cash requirements
during the rest of the quarter in which the deposits were received
and for the first nine months of the following year.
We expect to fund most of our operating cash needs during 2010
other than cash needs in connection with any potential
investments and acquisitions, through a combination of
financing, cash from operations and cash on hand. We intend to
finance our potential investments or acquisitions in 2010
through available cash from operations, cash on hand
and/or
borrowings. The amount of borrowings required to fund these cash
needs in 2010 will depend upon the timing of cash payments from
advertisers under our advertising sales plan.
Refinancings
In November 2009, we issued U.S.$600 million Senior Notes
due 2040. We intend to use the net proceeds from the issuance
for general corporate purposes, including to repay outstanding
indebtedness and repurchase our shares, among other uses, in
each case, subject to market conditions and other factors.
Derivatives
During the first quarter of 2009, the following financial
derivatives matured and were settled:
Coupon Swaps. We entered into
cross-currency rate swaps whereby the U.S. Dollar
denominated coupon on a notional amount of
U.S.$689.7 million (representing the par value of a portion
of our 2011, 2025 and 2032 Senior Notes) was swapped for a
Mexican Peso denominated coupon on an equivalent Mexican Peso
42
denominated notional amount (the Swap Transactions).
The Swap Transactions were entered into in 2004 and 2005 and
matured in 2009.
Coupon Swaption. We granted the
counterparty to the Swap Transactions the option of extending
the maturity date for one additional year, exercisable on
March 13, 2009. The counterparty declined to exercise the
option and the Swap Transactions expired on the exercise date.
During the second quarter of 2009, the following financial
derivatives matured and were settled:
Credit Default Swap. We entered
into a Credit Default Swap in a notional amount of
U.S.$20 million to hedge our credit risk related to our
ownership of notes which were due in April 2009. As a result of
the maturity of the notes, we decided the Credit Default Swap
was no longer needed so we terminated the Credit Default Swap
ahead of its scheduled maturity.
Credit Default Swap. We entered
into a Credit Default Swap in a notional amount of
U.S.$4.5 million to hedge our credit risk related to our
ownership of notes we currently hold. On June 30, 2009 we
decided to terminate such Credit Default Swap.
In August 2009, we entered into cross-currency rate swaps whereby
the U.S. dollar denominated coupon on a notional amount of
U.S.$1,200 million (representing the par value of our 2018,
2025 and 2032 Senior Notes) was swapped for a Mexican Peso
denominated coupon on an equivalent Mexican Peso denominated
notional amount. These swap transactions will mature in 2011.
In December 2009, we entered into cross-currency swaps whereby
the U.S. dollar denominated coupon on a notional amount of
U.S.$450 million (representing the par value of a portion
of our U.S.$600 million Senior Notes due in 2040) was
swapped for a Mexican Peso denominated coupon on an equivalent
Mexican Peso denominated notional amount (the Swap
Transactions). The Swap Transactions will mature in 2011.
Capital
Expenditures and Investments
In the nine months ended September 30, 2009, we invested
U.S.$277.4 million in property, plant and equipment as
capital expenditures, including U.S.$123.4 million for our
Cable and Telecom segment, U.S.$67.1 million for our Sky
segment, U.S.$13.1 million for our Gaming business, and
U.S.$73.8 million for our Television Broadcasting segment
and other businesses. In addition, we made a capital
contribution in connection with our 40.5% interest in
La Sexta in the amount of 35.7 million.
Debt and
Satellite Transponder Lease Obligation
As of September 30, 2009, our total consolidated debt
amounted to Ps.36,028.5 million, and our consolidated
current portions of long-term debt was Ps.541.4 million.
These amounts do not include our offering of U.S.$600 million
aggregate principal amount of 6.625% Senior Notes due 2040 consummated on November 30, 2009.
Additionally, as of September 30, 2009, Sky had long-term
and current portions of a capital lease obligation in an
aggregate amount of Ps.1,031.9 million and
Ps.147.5 million, respectively.
In May 2009, we repaid a bank loan at its maturity in the
principal amount of Ps.1,162.5 million.
As of September 30, 2009 and 2008, our consolidated net
cash position (cash and cash equivalents, temporary investments,
held-to-maturity
investments and
available-for-sale
investments less total debt) was Ps.492 million and
Ps.1,049.4 million, respectively.
Held-to-maturity
and
available-for-sale
investments as of September 30, 2009 and 2008, amounted to
Ps.3,310.1 million and Ps.880 million, respectively.
Share
Buyback Program
During the nine months ended September 30, 2009, we
repurchased approximately 1.6 million CPOs for
Ps.75.6 million. At our stockholders meeting held on
April 30, 2009, the stockholders approved cancelling
approximately 12.1 million CPOs repurchased in 2008.
43
Dividends
On April 30, 2009, our stockholders approved the payment of
a dividend of Ps.1.75 per CPO, which was paid in cash in May
2009 in the amount of Ps.5,183 million.
In April 2009, the holding companies of our Sky segment paid a
dividend in cash to its equity owners of Ps.2,000 million,
of which Ps.826.7 million was paid to minority equity
owners.
On December 10, 2009, our stockholders approved the payment
of a dividend in the aggregate amount of Ps.3,980.8 million, which
consisted of Ps.1.35 per CPO and Ps.0.011538461538 per share
of series A, B, D and
L not in the form of a CPO, which started to be paid
in cash on December 22, 2009.
Capital
Contribution in Cablevisión
In June 2009, the stockholders of our consolidated subsidiary
Empresas Cablevisión, S.A.B. de C.V. made a capital
contribution in cash to increase the capital stock in the
aggregate amount of Ps.3,699.7 million, of which
Ps.1,812.7 million was contributed by the noncontrolling
interest.
44
DESCRIPTION
OF THE NEW NOTES
We issued the old notes and will issue the new notes under an
indenture, dated as of August 8, 2000, as amended or
supplemented, which we collectively call the indenture, between
Televisa, as issuer, The Bank of New York Mellon, as
trustee, registrar, paying agent and transfer agent and The Bank
of New York Mellon (Luxembourg) S.A., as Luxembourg paying agent
and transfer agent. The following summary of certain provisions
of the indenture and the notes does not purport to be complete
and is subject to, and qualified in its entirety by, reference
to the provisions of the indenture, including the definitions of
certain terms contained in the indenture. Capitalized terms not
defined in this section of the prospectus have meanings as set
forth in the indenture.
General
The indenture does not limit the aggregate principal amount of
senior debt securities which may be issued under the indenture
and provides that Televisa may issue senior debt securities from
time to time in one or more series. The senior debt securities
which Televisa may issue under the indenture, including the
notes, are collectively referred to in this prospectus as the
senior notes.
The old notes and the new notes, which together are referred to
in this prospectus as the notes, will constitute a
single series of senior notes under the indenture. The notes
will be unsecured senior obligations of Televisa. Televisa may
reopen the note series and issue additional notes of
the same series. If the exchange offer described under The
Exchange Offer is consummated, holders of old notes who do
not exchange their old notes for new notes will vote together as
a single series of senior notes with holders of the new notes of
the series for all relevant purposes under the indenture. In
that regard, the indenture requires that certain actions by the
holders under the notes (including acceleration following an
event of default) must be taken, and certain rights must be
exercised, by specified minimum percentages of the aggregate
principal amount of the outstanding notes. In determining
whether holders of the requisite percentage in principal amount
have given any notice, consent or waiver or taken any other
action permitted under the indenture, any old notes which remain
outstanding after the exchange offer will be aggregated with the
new notes of the relevant series and the holders of the old
notes and new notes will vote together as a single series for
all purposes. Accordingly, all references in this prospectus to
specified percentages in aggregate principal amount of the
outstanding notes will be deemed to mean, at any time after the
exchange offer is consummated, the percentages in aggregate
principal amount of the old notes and the new notes then
outstanding.
The notes bear interest at the rate per annum shown above from
November 30, 2009, or from the most recent date to
which interest has been paid or duly provided for, payable
semi-annually on January 15 and July 15 of each year, each of
which is referred to in this prospectus as an interest
payment date, commencing July 15, 2010, to the
persons in whose names the notes are registered at the close of
business on the fifteenth calendar day preceding the interest
payment date. Interest payable at maturity will be payable to
the person to whom principal will be payable on that date.
Interest on the notes will be calculated on the basis of a
360-day year
of twelve
30-day
45
months. The maturity date for the notes is January 15,
2040. If any interest payment date or maturity date would be
otherwise a day that is not a business day, the related payment
of principal and interest will be made on the next succeeding
business day as if it were made on the date the payment was due,
and no interest will accrue on the amounts so payable for the
period from and after the interest payment date or the maturity
date, as the case may be, to the next succeeding business day. A
business day means a day other than a Saturday, Sunday or other
day on which banking institutions in New York, New York or
Luxembourg are authorized or obligated by law, regulation or
executive order to close. The notes will not be subject to any
sinking fund. For a discussion of the circumstances in which the
interest rate on the notes may be adjusted, see The
Exchange Offer.
The indenture does not contain any provision that would limit
the ability of Televisa to incur indebtedness or to
substantially reduce or eliminate Televisas assets or that
would afford the holders of the notes protection in the event of
a decline in Televisas credit quality or a takeover,
recapitalization or highly leveraged or similar transaction
involving Televisa. In addition, subject to the limitations set
forth below under Merger and
Consolidation, Televisa may, in the future, enter into
certain transactions, including the sale of all or substantially
all of its assets or the merger or consolidation of Televisa,
that would increase the amount of Televisas indebtedness
or substantially reduce or eliminate Televisas assets,
which may have an adverse effect on Televisas ability to
service its indebtedness, including the notes.
Each book-entry note will be represented by one or more global
notes in fully registered form, registered in the name of DTC.
Beneficial interests in the global notes will be shown on, and
transfers thereof will be effected only through, records
maintained by DTC and its participants. See
Form, Denomination and Registration
below. Except in the limited circumstances described in this
prospectus, book-entry notes will not be exchangeable for notes
issued in fully registered form (certificated notes).
Notes sold to qualified institutional buyers, or QIBs, and
subsequent transferees, directly or indirectly, of those notes
and notes sold initially to
non-U.S. persons
in reliance on Regulation S under the Securities Act will
be issued as book-entry notes and will be represented as global
notes, which will be deposited with the custodian for DTC and
registered in the name of DTCs nominee. See
Form, Denomination and Registration
below.
In the event that, as a result of certain changes in law
affecting Mexican withholding taxes, Televisa becomes obliged to
pay additional amounts in excess of those attributable to a
Mexican withholding tax rate of 10%, the notes will be
redeemable, as a whole but not in part, at Televisas
option at any time at 100% of their principal amount plus
accrued and unpaid interest, if any. See
Withholding Tax Redemption. In addition,
we will have the right at our option to redeem any of the notes
in whole or in part at a redemption price equal to the
Make-Whole Amount (as defined below).
Book-entry notes may be transferred or exchanged only through
the depositary. See Form, Denomination and
Registration below. Registration of transfer or exchange
of certificated notes will be made at the office or agency
maintained by Televisa for this purpose in the Borough of
Manhattan, The City of New York, currently the office of the
trustee at 101 Barclay Street, 4 East, New York, New York 10286
or at the office of The Bank of New York (Luxembourg) S.A.,
our paying and transfer agent in Luxembourg, at Aerogulf Center,
1A Hoehenhof,
L-1736
Senningerberg, Luxembourg. Neither Televisa nor the trustee will
charge a service charge for any registration of transfer or
exchange of notes, but Televisa may require payment of a sum
sufficient to cover any tax or other governmental charge that
may be imposed in connection with the transfer or exchange
(other than exchanges pursuant to the indenture not involving
any transfer). Televisa will maintain a paying and transfer
agent in Luxembourg for so long as any notes or any new notes
are listed on the Luxembourg Stock Exchange for trading on the
Euro MTF.
Payments
Televisa will make payments of principal, and premium, if any,
and interest on book-entry notes through the trustee to the
depositary. See Form, Denomination and
Registration below. In the case of certificated notes,
Televisa will pay the principal and premium, if any, due on the
maturity date in immediately available funds upon presentation
and surrender by the holder of the notes at the office or agency
maintained by Televisa for this purpose in the Borough of
Manhattan, The City of New York, currently the office of the
trustee at 101 Barclay Street, 4 East, New York, New York 10286.
Televisa will pay interest due on the maturity date of a
certificated note to the person to whom payment of the principal and premium, if any, will be made.
Televisa will pay interest due on a certificated note on any
interest payment date other than the maturity date by check
mailed to the address of the holder entitled to the payment as
the address shall appear in the note register of Televisa.
46
Notwithstanding the foregoing, a holder of
U.S.$10.0 million or more in aggregate principal amount of
certificated notes will be entitled to receive interest
payments, if any, on any interest payment date other than the
maturity date by wire transfer of immediately available funds if
appropriate wire transfer instructions have been received in
writing by the trustee not less than 15 calendar days prior to
the interest payment date. Any wire transfer instructions
received by the trustee will remain in effect until revoked by
the holder. Any interest not punctually paid or duly provided
for on a certificated note on any interest payment date other
than the maturity date will cease to be payable to the holder of
the note as of the close of business on the related record date
and may either be paid (1) to the person in whose name the
certificated note is registered at the close of business on a
special record date for the payment of the defaulted interest
that is fixed by Televisa, written notice of which will be given
to the holders of the notes not less than 30 calendar days prior
to the special record date, or (2) at any time in any other
lawful manner.
All monies paid by Televisa to the trustee or any paying agent
for the payment of principal of, and premium and interest on,
any note which remains unclaimed for two years after the
principal, premium or interest is due and payable may be repaid
to Televisa and, after that payment, the holder of the note will
look only to Televisa for payment.
Ranking
and Holding Company Structure
We are a holding company with no significant operating assets
other than through our ownership of shares of our subsidiaries
and cash and cash equivalents. We receive substantially all of
our operating income from our subsidiaries. The notes will be
solely our unsecured senior obligations ranking pari passu among
themselves and with other unsecured senior obligations,
including the 8% Senior Notes due 2011, the
8.50% Senior Notes due 2032, the 6.625% Senior Notes
due 2025, the 8.49% Senior Notes due 2037 and the
6% Senior Notes due 2018. Claims of creditors of our
subsidiaries, including trade creditors and banks and other
lenders, will have priority over the claims of holders of the
notes with respect to the assets of our subsidiaries. At
September 30, 2009, our subsidiaries had
Ps.34,837.4 million (equivalent to
U.S.$2,580.4 million) of liabilities (excluding liabilities
to us and excluding guarantees by subsidiaries of our
indebtedness), U.S.$958.5 million of which was
Dollar-denominated including Ps.9,655.7 million (equivalent
to U.S.$715.2 million) of indebtedness,
U.S.$452.6 million of which was Dollar-denominated
indebtedness (equivalent to Ps.6.111.0 million), that will
effectively rank senior to the notes. See Risk
Factors Risk Factors Related to the New Notes and
Exchange Offer We Are a Holding Company with Our
Assets Held Primarily by Our Subsidiaries; Creditors of Those
Companies Have a Claim on Their Assets That Is Effectively
Senior to That of Holders of the Exchange Notes.
Form,
Denomination and Registration
The new notes will be issued in book-entry form in minimum
denominations of U.S.$2,000 and integral multiples of U.S.$1,000
in excess thereof.
The notes will initially be issued in the form of one or more
U.S. global notes in definitive, full registered book entry
form, without interest coupons that will be deposited with, or
on behalf of, the depositary, which initially will be DTC, and
registered in the name of the depositary or its nominee.
So long as the depositary, which initially will be DTC, or its
nominee is the registered owner of a global note, the depositary
or its nominee, as the case may be, will be the sole holder of
the notes represented by the global note for all purposes under
the indenture. Except as otherwise provided in this section, the
beneficial owners of the global notes representing the notes
will not be entitled to receive physical delivery of
certificated notes and will not be considered the holders of the
notes for any purpose under the indenture, and no global note
representing the book-entry notes will be exchangeable or
transferable. Accordingly, each beneficial owner must rely on
the procedures of the depositary and, if the beneficial owner is
not a participant of the depositary, then the beneficial owner
must rely on the procedures of the participant through which the
beneficial owner owns its interest in order to exercise any
rights of a holder under the global notes or the indenture. The
laws of some jurisdictions may require that certain
47
purchasers of notes take physical delivery of the notes in
certificated form. Such limits and laws may impair the ability
to transfer beneficial interests in a global note representing
the notes.
The global notes representing the notes will be exchangeable for
certificated notes of like tenor and terms and of differing
authorized denominations aggregating a like principal amount,
only if the depositary notifies us that it is unwilling or
unable to continue as depositary for the global notes, the
depositary ceases to be a clearing agency registered under the
Exchange Act, we in our sole discretion determine that the
global notes shall be exchangeable for certificated notes, or
there shall have occurred and be continuing an event of default
under the indenture with respect to the notes.
Upon any exchange, the certificated notes shall be registered in
the names of the beneficial owners of the global notes
representing the notes, which names shall be provided by the
depositarys relevant participants (as identified by the
depositary) to the trustee.
Cross-Market Transfers. Subject to compliance
with the transfer restrictions applicable to any new notes, and
the certification and other requirements set forth in the
indenture, any cross-market transfer between participants of the
depositary, on the one hand, and Euroclear or Clearstream
Banking, on the other hand, will be effected in the
depositarys book-entry system on behalf of Euroclear or
Clearstream Banking, as the case may be, in accordance with the
rules of the depositary. However, these cross-market transfers
may require delivery of instructions to Euroclear or Clearstream
Banking, as the case may be, by the counterparty in such system
in accordance with its rules and procedures and within its
established deadlines. Euroclear or Clearstream Banking, as the
case may be, will, if the transfer meets its settlement
requirements, deliver instructions to its respective depositary
to take action to effect final settlement on its behalf by
delivering or receiving the beneficial interests in the
applicable global note in the depositary, and making or
receiving payment in accordance with normal procedures for
same-day
funds settlement applicable to the depositary. Participants in
Euroclear or Clearstream Banking may not deliver instructions
directly to the depositaries for Euroclear or Clearstream
Banking, as the case may be.
Because of time zone differences, the securities account of a
Euroclear or Clearstream Banking participant purchasing a
beneficial interest in a global note from a depositary
participant will be credited during the securities settlement
processing day, which must be a business day for Euroclear or
Clearstream Banking, as applicable, immediately following the
depositarys settlement date. Credit of a transfer of a
beneficial interest in a global note settled during that
processing day will be reported to the applicable Euroclear or
Clearstream Banking participant on that day. Cash received in
Euroclear or Clearstream Banking as a result of a transfer of a
beneficial interest in a global note by or through a Euroclear
or Clearstream Banking participant to a depositary participant
will be received with value on the depositarys settlement
date but will be available in the applicable Euroclear or
Clearstream Banking cash account only as of the business day
following settlement in the depositary.
Any beneficial interest in a global note that is transferred for
a beneficial interest in another global note will, upon
transfer, cease to be an interest in the original global note
and will become an interest in the other global note and,
accordingly, will be subject to all transfer restrictions and
other procedures applicable to beneficial interests in the other
global note for as long as it remains a beneficial interest in
that global note.
In order to insure the availability of Rule 144 under the
Securities Act for non-affiliates, the indenture provides that
all notes, other than the notes referred to herein, which are
redeemed, purchased or otherwise acquired by Televisa or any of
its subsidiaries or affiliates, as defined in
Rule 144 under the Securities Act, may not be resold or
otherwise transferred and will be delivered to the trustee for
cancellation.
Information Relating to the Depositary. The
following is based on information furnished by the depositary:
The depositary will act as the depositary for the notes. The
notes will be issued as fully registered senior notes registered
in the name of Cede & Co., which is the
depositarys partnership nominee. Fully registered global
notes will be issued for the notes, in the aggregate principal
amount of the issue, and will be deposited with the depositary.
The depositary is a limited-purpose trust company organized
under the New York Banking Law, a banking
organization within the meaning of the New York Banking
Law, a member of the Federal Reserve
48
System, a clearing corporation within the meaning of
the New York Uniform Commercial Code, and a clearing
agency registered pursuant to the provisions of
Section 17A of the Exchange Act. The depositary holds
securities that its participants deposit with the depositary.
The depositary also facilitates the settlement among
participants of securities transactions, including transfers and
pledges, in deposited securities through electronic computerized
book-entry changes to participants accounts, thereby
eliminating the need for physical movement of senior notes
certificates. Direct participants of the depositary include
securities brokers and dealers, including the initial purchaser
of the notes, banks, trust companies, clearing corporations and
certain other organizations. The depositary is owned by a number
of its direct participants, including the initial purchasers of
the notes and by the New York Stock Exchange, Inc., the American
Stock Exchange, Inc., and the the Financial Industry Regulatory
Authority, Inc. Access to the depositarys system is also
available to indirect participants, which includes securities
brokers and dealers, banks and trust companies that clear
through or maintain a custodial relationship with a direct
participant, either directly or indirectly. The rules applicable
to the depositary and its participants are on file with the SEC.
Purchases of notes under the depositarys system must be
made by or through direct participants, which will receive a
credit for the notes on the depositarys record. The
ownership interest of each beneficial owner, which is the actual
purchaser of each note, represented by global notes, is in turn
to be recorded on the direct and indirect participants
records. Beneficial owners will not receive written confirmation
from the depositary of their purchase, but beneficial owners are
expected to receive written confirmations providing details of
the transaction, as well as periodic statements of their
holdings, from the direct or indirect participants through which
the beneficial owner entered into the transaction. Transfers of
ownership interests in the global notes representing the notes
are to be accomplished by entries made on the books of
participants acting on behalf of beneficial owners. Beneficial
owners of the global notes representing the notes will not
receive certificated notes representing their ownership
interests therein, except in the limited circumstances described
above.
To facilitate subsequent transfers, all global notes
representing the notes which are deposited with, or on behalf
of, the depositary are registered in the name of the
depositarys nominee, Cede & Co. The deposit of
global notes with, or on behalf of, the depositary and their
registration in the name of Cede & Co. effect no
change in beneficial ownership. The depositary has no knowledge
of the actual beneficial owners of the global notes representing
the notes; the depositarys records reflect only the
identity of the direct participants to whose accounts the notes
are credited, which may or may not be the beneficial owners. The
participants will remain responsible for keeping account of
their holdings on behalf of their customers.
Conveyance of notices and other communications by the depositary
to direct participants, by direct participants to indirect
participants, and by direct and indirect participants to
beneficial owners will be governed by arrangements among them,
subject to any statutory or regulatory requirements as may be in
effect from time to time.
Neither the depositary nor Cede & Co. will consent or
vote with respect to the global notes representing the notes.
Under its usual procedure, the depositary mails an omnibus proxy
to Televisa as soon as possible after the applicable record
date. The omnibus proxy assigns Cede & Co.s
consenting or voting rights to those direct participants to
whose accounts the notes are credited on the applicable record
date (identified in a listing attached to the omnibus proxy).
Principal, premium, if any,
and/or
interest payments on the global notes representing the notes
will be made to the depositary. The depositarys practice
is to credit direct participants accounts on the
applicable payment date in accordance with their respective
holdings shown on the depositarys records unless the
depositary has reason to believe that it will not receive
payment on the date. Payments by participants to beneficial
owners will be governed by standing instructions and customary
practices, as is the case with securities held for the accounts
of customers in bearer form or registered in street
name, and will be the responsibility of the participant
and not of the depositary, the trustee or Televisa, subject to
any statutory or regulatory requirements as may be in effect
from time to time. Payment of principal, premium, if any,
and/or
interest to the depositary is the responsibility of Televisa or
the trustee, disbursement of the payments to direct participants
will be the responsibility of the depositary, and disbursement
of the payments to the beneficial owners will be the
responsibility of direct and indirect participants.
49
The depositary may discontinue providing its services as
securities depositary with respect to the notes at any time by
giving reasonable notice to Televisa or the trustee. Under such
circumstances, in the event that a successor securities
depositary is not obtained, certificated notes are required to
be printed and delivered.
Televisa may decide to discontinue use of the system of
book-entry transfers through the depositary or a successor
securities depositary. In that event, certificated notes will be
printed and delivered.
Although the depositary, Euroclear and Clearstream Banking have
agreed to the procedures described above in order to facilitate
transfers of interests in the global notes among participants of
the depositary, Euroclear and Clearstream Banking, they are
under no obligation to perform or continue to perform these
procedures, and these procedures may be discontinued at any
time. Neither the trustee nor Televisa will have any
responsibility for the performance by the depositary, Euroclear
or Clearstream Banking or their respective participants or
indirect participants of their respective obligations under the
rules and procedures governing their operations.
Trading. Transfers between participants in the
depositary will be effected in the ordinary way in accordance
with the depositarys rules and operating procedures, while
transfers between participants in Euroclear and Clearstream
Banking will be effected in the ordinary way in accordance with
their respective rules and operating procedures.
The information in this subsection Form,
Denomination and Registration concerning the depositary,
Euroclear and Clearstream Banking and their respective
book-entry systems has been obtained from the depository,
Euroclear and Clearstream Banking but Televisa takes
responsibility solely for the accuracy of its extraction of this
information.
Certain
Covenants
The indenture provides that the covenants set forth below are
applicable to Televisa and its Restricted Subsidiaries.
Limitation on Liens. Televisa will not, and
will not permit any Restricted Subsidiary to, directly or
indirectly, create, incur or assume any Lien, except for
Permitted Liens, on any Principal Property to secure the payment
of Funded Indebtedness of Televisa or any Restricted Subsidiary
if, immediately after the creation, incurrence or assumption of
such Lien the sum of (without duplication) (A) the
aggregate outstanding principal amount of all Funded
Indebtedness of Televisa and the Restricted Subsidiaries that is
secured by Liens (other than Permitted Liens) on any Principal
Property and (B) the Attributable Debt relating to any Sale
and Leaseback Transaction which would otherwise be subject to
the provisions of clause 2(A)(i) of the Limitation on
Sale and Leaseback covenant would exceed the greater of
(x) U.S.$300.0 million and (y) 15% of Adjusted
Consolidated Net Tangible Assets, unless effective provision is
made whereby the notes (together with, if Televisa shall so
determine, any other Funded Indebtedness ranking equally with
the notes, whether then existing or thereafter created) are
secured equally and ratably with (or prior to) such Funded
Indebtedness (but only for so long as such Funded Indebtedness
is so secured). For purposes of this covenant, the value of any
Lien on any Principal Property securing Funded Indebtedness will
be computed on the basis of the lesser of (i) the
outstanding principal amount of such secured Funded Indebtedness
and (ii) the higher of (x) the book value or
(y) the Fair Market Value of the Principal Property
securing such Funded Indebtedness.
The foregoing limitation on Liens shall not apply to the
creation, incurrence or assumption of the following Liens
(Permitted Liens):
(1) Any Lien which arises out of a judgment or award
against Televisa or any Restricted Subsidiary with respect to
which Televisa or such Restricted Subsidiary at the time shall
be prosecuting an appeal or proceeding for review (or with
respect to which the period within which such appeal or
proceeding for review may be initiated shall not have expired)
and with respect to which it shall have secured a stay of
execution pending such appeal or proceedings for review or with
respect to which Televisa or such Restricted Subsidiary shall
have posted a bond and established adequate reserves (in
accordance with Mexican GAAP) for the payment of such judgment
or award;
50
(2) Liens arising from the rendering of a final judgment or
order against Televisa or any Restricted Subsidiary of Televisa
that would not, with notice, passage of time or both, give rise
to an Event of Default;
(3) Liens incurred or deposits made to secure indemnity
obligations in respect of the disposition of any business or
assets of Televisa or any Restricted Subsidiary; provided that
the property subject to such Lien does not have a Fair Market
Value in excess of the cash or cash equivalent proceeds received
by Televisa and its Restricted Subsidiaries in connection with
such disposition;
(4) Liens resulting from the deposit of funds or evidences
of Indebtedness in trust for the purpose of discharging or
defeasing Indebtedness of Televisa or any Restricted Subsidiary;
(5) Liens on assets or property of a Person existing at the
time such Person is merged into, consolidated with or acquired
by Televisa or any Restricted Subsidiary or becomes a Restricted
Subsidiary; provided that: (i) any such Lien is not
incurred in contemplation of such merger, consolidation or
acquisition and does not secure any property of Televisa or any
Restricted Subsidiary other than the property and assets subject
to such Lien prior to such merger, consolidation or acquisition
or (ii) if such Lien is incurred in contemplation of such
merger, consolidation or acquisition it would be, if created or
incurred on or after the consummation of such merger,
consolidation or acquisition, a Permitted Lien under
clause 7 below;
(6) Liens existing on the date of original issuance of the
first series of notes pursuant to the indenture;
(7) Liens securing Funded Indebtedness (including in the
form of Capitalized Lease Obligations and purchase money
Indebtedness) incurred for the purpose of financing the cost
(including without limitation the cost of design, development,
site acquisition, construction, integration, manufacture or
acquisition) of real or personal property (tangible or
intangible) which is incurred contemporaneously therewith or
within 180 days thereafter; provided (i) such Liens
secure Funded Indebtedness in an amount not in excess of the
cost of such property (plus an amount equal to the reasonable
fees and expenses incurred in connection with the incurrence of
such Funded Indebtedness) and (ii) such Liens do not extend
to any property of Televisa or any Restricted Subsidiary other
than the property for which such Funded Indebtedness was
incurred;
(8) Liens to secure the performance of statutory and common
law obligations, surety or appeal bonds, performance bonds or
other obligations of a like nature incurred in the ordinary
course of business;
(9) Liens to secure the notes;
(10) Liens granted in favor of Televisa
and/or any
Wholly Owned Restricted Subsidiary to secure indebtedness owing
to Televisa or such Wholly Owned Restricted Subsidiary;
(11) Legal or equitable encumbrances deemed to exist by
reason of the inclusion of customary negative pledge provisions
in any financing document of Televisa or any Restricted
Subsidiary;
(12) Liens on the rights of Televisa or any Restricted
Subsidiary to licensing, royalty and other similar payments in
respect of programming or films and all proceeds
therefrom; and
(13) Any Lien in respect of Funded Indebtedness
representing the extension, refinancing, renewal or replacement
(or successive extensions, refinancings, renewals or
replacements) of Funded Indebtedness secured by Liens referred
to in clauses (3), (4), (5), (6), (7), (8), (9), (10),
(11) and (12) above; provided that the principal of
the Funded Indebtedness secured thereby does not exceed the
principal of the Funded Indebtedness secured thereby immediately
prior to such extension, renewal or replacement, plus any
accrued and unpaid interest or capitalized interest payable
thereon, reasonable fees and expenses incurred in connection
therewith, and the amount of any prepayment premium necessary to
accomplish any refinancing; and provided, further, that such
extension, renewal or replacement shall be limited to all or a
part of the property (or interest therein) subject to the Lien
so extended, renewed or replaced (plus improvements and
construction on such property); and provided, further, that in
the case of Liens referred to in clauses (3), (4), (8), (9),
(10), (11) and (12), the secured party with respect to the
Lien so extended, renewed, refinanced or replaced is the party
(or any successor or assignee thereof) that was secured prior to
such extension, renewal, refinancing or replacement.
51
Limitation on Sale and Leaseback. Televisa
will not, and will not permit any Restricted Subsidiary to,
enter into any Sale and Leaseback Transaction; provided that
Televisa or any Restricted Subsidiary may enter into a Sale and
Leaseback Transaction if:
(1) the gross cash proceeds of the Sale and Leaseback
Transaction are at least equal to the Fair Market Value, as
determined in good faith by the Board of Directors and set forth
in a resolution delivered to the trustee, of the Principal
Property that is the subject of the Sale and Leaseback
Transaction; and
(2) either
(A) Televisa or the Restricted Subsidiary, as applicable,
either (i) could have incurred a Lien to secure Funded
Indebtedness in an amount equal to the Attributable Debt
relating to such Sale and Leaseback Transaction pursuant to the
Limitation on Liens covenant, or (ii) makes
effective provision whereby the notes (together with, if
Televisa shall so determine, any other Funded Indebtedness
ranking equally with the notes, whether then existing or
thereafter created) are secured equally and ratably with (or
prior to) the obligations of Televisa or the Restricted
Subsidiary under the lease of such Principal Property, or
(B) within 360 days, Televisa or the Restricted
Subsidiary either (i) applies an amount equal to the
Attributable Debt in respect of such Sale and Leaseback
Transaction to purchase the notes or to retire, defease or
prepay (in whole or in part) other Funded Indebtedness, or
(ii) enters into a bona fide commitment to expend for the
acquisition or improvement of a Principal Property an amount at
least equal to the Attributable Debt in respect of such Sale and
Leaseback Transaction.
Designation of Restricted Subsidiaries. The
Board of Directors of Televisa may designate an Unrestricted
Subsidiary as a Restricted Subsidiary or designate a Restricted
Subsidiary as an Unrestricted Subsidiary at any time; provided
that (1) immediately after giving effect to such
designation, Televisa and its Restricted Subsidiaries would have
been permitted to incur at least U.S.$1.00 of additional Funded
Indebtedness secured by a Lien pursuant to the Limitation
on Liens covenant (other than Funded Indebtedness
permitted to be secured by a Lien pursuant to the provisions of
the definition of Permitted Liens), (2) no
default or event of default shall have occurred and be
continuing, and (3) an Officers Certificate with
respect to such designation is delivered to the trustee within
75 days after the end of the fiscal quarter of Televisa in
which such designation is made (or, in the case of a designation
made during the last fiscal quarter of Televisas fiscal
year, within 120 days after the end of such fiscal year),
which Officers Certificate shall state the effective date
of such designation. Televisa has initially designated as
Unrestricted Subsidiaries all of its Subsidiaries other than
those subsidiaries engaged in television broadcasting, pay
television networks and programming exports (other than the
subsidiaries which operate Bay City Television) and will deliver
the required Officers Certificate with respect thereto to
the trustee, on or prior to the date of initial issuance of the
first series of notes pursuant to the indenture.
Repurchase of Notes upon a Change of
Control. Televisa must commence, within
30 days of the occurrence of a Change of Control, and
consummate an Offer to Purchase for all notes then outstanding,
at a purchase price equal to 101% of the principal amount of the
notes on the date of repurchase, plus accrued interest (if any)
to the date of purchase. Televisa is not required to make an
Offer to Purchase following a Change of Control if a third party
makes an Offer to Purchase that would be in compliance with the
provisions described in this covenant if it were made by
Televisa and such third party purchases (for the consideration
referred to in the immediately preceding sentence) the notes
validly tendered and not withdrawn. Prior to the mailing of the
notice to holders and publishing such notice to holders in a
daily newspaper of general circulation in Luxembourg commencing
such Offer to Purchase, but in any event within 30 days
following any Change of Control, Televisa covenants to
(i) repay in full all indebtedness of Televisa that would
prohibit the repurchase of the notes pursuant to such Offer to
Purchase or (ii) obtain any requisite consents under
instruments governing any such indebtedness of Televisa to
permit the repurchase of the notes. Televisa shall first comply
with the covenant in the preceding sentence before it
repurchases notes upon a Change of Control pursuant to this
covenant.
The covenant requiring Televisa to repurchase the notes will,
unless consents are obtained, require Televisa to repay all
indebtedness then outstanding, which by its terms would prohibit
such note repurchase, either prior to or concurrently with such
note repurchase. There can be no assurance that Televisa will
have sufficient funds available at the time of any Change of
Control to make any debt payment (including repurchases of
notes) required by the
52
foregoing covenant (as well as by any covenant contained in
other securities of Televisa which might be outstanding at the
time).
Additional Amounts. All payments of amounts
due in respect of the notes by Televisa will be made without
withholding or deduction for or on account of any present or
future taxes or duties of whatever nature imposed or levied by
or on behalf of Mexico, any political subdivision thereof or any
agency or authority of or in Mexico (Taxes) unless
the withholding or deduction of such Taxes is required by law or
by the interpretation or administration thereof. In that event,
Televisa will pay such additional amounts (Additional
Amounts) as may be necessary in order that the net amounts
receivable by the holders after such withholding or deduction
shall equal the respective amounts which would have been
receivable in respect of the notes, in the absence of such
withholding or deduction, which Additional Amounts shall be due
and payable when the amounts to which such Additional Amounts
relate are due and payable; except that no such Additional
Amounts shall be payable with respect to:
(i) any Taxes which are imposed on, or deducted or withheld
from, payments made to the holder or beneficial owner of a note
by reason of the existence of any present or former connection
between the holder or beneficial owner of the note (or between a
fiduciary, settlor, beneficiary, member or shareholder of, or
possessor of a power over, such holder or beneficial owner, if
such holder or beneficial owner is an estate, trust, corporation
or partnership) and Mexico (or any political subdivision or
territory or possession thereof or area subject to its
jurisdiction) (including, without limitation, such holder or
beneficial owner (or such fiduciary, settlor, beneficiary,
member, shareholder or possessor) (x) being or having been
a citizen or resident thereof, (y) maintaining or having
maintained an office, permanent establishment, fixed base or
branch therein, or (z) being or having been present or
engaged in a trade or business therein) other than the mere
holding of such note or the receipt of amounts due in respect
thereof;
(ii) any estate, inheritance, gift, sales, stamp, transfer
or personal property Tax;
(iii) any Taxes that are imposed on, or withheld or
deducted from, payments made to the holder or beneficial owner
of a note to the extent such Taxes would not have been so
imposed, deducted or withheld but for the failure by such holder
or beneficial owner of such note to comply with any
certification, identification, information, documentation or
other reporting requirement concerning the nationality,
residence, identity or connection with Mexico (or any political
subdivision or territory or possession thereof or area subject
to its jurisdiction) of the holder or beneficial owner of such
note if (x) such compliance is required or imposed by a
statute, treaty, regulation, rule, ruling or administrative
practice in order to make any claim for exemption from, or
reduction in the rate of, the imposition, withholding or
deduction of any Taxes, and (y) at least 60 days prior
to the first payment date with respect to which Televisa shall
apply this clause (iii), Televisa shall have notified all the
holders of notes, in writing, that such holders or beneficial
owners of the notes will be required to provide such information
or documentation;
(iv) any Taxes imposed on, or withheld or deducted from,
payments made to a holder or beneficial owner of a note at a
rate in excess of the 4.9% rate of Tax in effect on the date
hereof and uniformly applicable in respect of payments made by
Televisa to all holders or beneficial owners eligible for the
benefits of a treaty for the avoidance of double taxation to
which Mexico is a party without regard to the particular
circumstances of such holders or beneficial owners (provided
that, upon any subsequent increase in the rate of Tax that would
be applicable to payments to all such holders or beneficial
owners without regard to their particular circumstances, such
increased rate shall be substituted for the 4.9% rate for
purposes of this clause (iv)), but only to the extent that
(x) such holder or beneficial owner has failed to provide
on a timely basis, at the reasonable request of Televisa
(subject to the conditions set forth below), information,
documentation or other evidence concerning whether such holder
or beneficial owner is eligible for benefits under a treaty for
the avoidance of double taxation to which Mexico is a party if
necessary to determine the appropriate rate of deduction or
withholding of Taxes under such treaty or under any statute,
regulation, rule, ruling or administrative practice, and
(y) at least 60 days prior to the first payment date
with respect to which Televisa shall make such reasonable
request, Televisa shall have notified the holders of the notes,
in writing, that such holders or beneficial owners of the notes
will be required to provide such information, documentation or
other evidence;
(v) to or on behalf of a holder of a note in respect of
Taxes that would not have been imposed but for the presentation
by such holder for payment on a date more than 15 days
after the date on which such payment
53
became due and payable or the date on which payment thereof is
duly provided for and notice thereof given to holders, whichever
occurs later, except to the extent that the holder of such note
would have been entitled to Additional Amounts in respect of
such Taxes on presenting such note for payment on any date
during such
15-day
period;
(vi) any withholding or deductions imposed on a payment to
an individual required to be made pursuant to the European
Council Directive 2003/48/EC (the Directive) or any
law implementing or introduced in order to conform to, such
Directive; or
(vii) any combination of (i), (ii), (iii), (iv),
(v) or (vi) above (the Taxes described in
clauses (i) through (vii), for which no Additional Amounts
are payable, are hereinafter referred to as Excluded
Taxes).
Notwithstanding the foregoing, the limitations on
Televisas obligation to pay Additional Amounts set forth
in clauses (iii) and (iv) above shall not apply if
(a) the provision of information, documentation or other
evidence described in such clauses (iii) and
(iv) would be materially more onerous, in form, in
procedure or in the substance of information disclosed, to a
holder or beneficial owner of a note (taking into account any
relevant differences between U.S. and Mexican law, rules,
regulations or administrative practice) than comparable
information or other reporting requirements imposed under
U.S. tax law, regulations and administrative practice (such
as IRS
Forms W-8BEN
and W-9) or
(b) Rule I.3.22.8 issued by the Secretaría de
Hacienda y Crédito Público (Ministry of Finance and
Public Credit) or a substantially similar successor of such rule
is in effect, unless the provision of the information,
documentation or other evidence described in clauses (iii)
and (iv) is expressly required by statute, regulation,
rule, ruling or administrative practice in order to apply
Rule I.3.22.8 (or a substantially similar successor of such
rule), Televisa cannot obtain such information, documentation or
other evidence on its own through reasonable diligence and
Televisa otherwise would meet the requirements for application
of Rule I.3.22.8 (or such successor of such rule). In
addition, such clauses (iii) and (iv) shall not be
construed to require that a non-Mexican pension or retirement
fund or a non-Mexican financial institution or any other holder
register with the Ministry of Finance and Public Credit for the
purpose of establishing eligibility for an exemption from or
reduction of Mexican withholding tax or to require that a holder
or beneficial owner certify or provide information concerning
whether it is or is not a tax-exempt pension or retirement fund.
At least 30 days prior to each date on which any payment
under or with respect to the notes is due and payable, if
Televisa will be obligated to pay Additional Amounts with
respect to such payment (other than Additional Amounts payable
on the date of the indenture), Televisa will deliver to the
trustee an Officers Certificate stating the fact that such
Additional Amounts will be payable and the amounts so payable,
and will set forth such other information necessary to enable
the trustee to pay such Additional Amounts to holders on the
payment date. Whenever either in the indenture or in this
prospectus there is mentioned, in any context, the payment of
principal (and premium, if any), redemption price, interest or
any other amount payable under or with respect to any note, such
mention shall be deemed to include mention of the payment of
Additional Amounts to the extent that, in such context,
Additional Amounts are, were or would be payable in respect
thereof.
In the event that Televisa has become or would become required
to pay any Additional Amounts in excess of those attributable to
Taxes that are imposed, deducted or withheld at a rate of 10% as
a result of certain changes affecting Mexican tax laws, Televisa
may redeem all, but not less than all, of the notes, at any time
at 100% of the principal amount, together with accrued and
unpaid interest thereon, if any, to the redemption date. See
Withholding
Tax Redemption.
Televisa will provide the trustee with documentation evidencing
the payment of Mexican taxes in respect of which Televisa has
paid any Additional Amounts. Copies of such documentation will
be made available to the holders or the paying agent, as
applicable, upon request therefor.
In addition, Televisa will pay any stamp, issue, registration,
documentary or other similar taxes and other duties (including
interest and penalties) (a) payable in Mexico or the United
States (or any political subdivision of either jurisdiction) in
respect of the creation, issue and offering of the notes, and
(b) payable in Mexico (or any political subdivision
thereof) in respect of the subsequent redemption or retirement
of the notes (other than, in the case of any subsequent
redemption or retirement, Excluded Taxes; except for this
purpose, the definition of Excluded Taxes will not include those
defined in clause (ii) thereof).
54
Optional
Redemption
We will not be permitted to redeem the notes before their stated
maturity, except as set forth below. The notes will not be
entitled to the benefit of any sinking fund meaning
that we will not deposit money on a regular basis into any
separate account to repay your notes. In addition, you will not
be entitled to require us to repurchase your notes from you
before the stated maturity.
Optional
Redemption With Make-Whole Amount
We will have the right at our option to redeem any of the notes
in whole or in part, at any time or from time to time prior to
their maturity, on at least 30 days but not more than
60 days notice, at a redemption price equal to the
greater of (1) 100% of the principal amount of such notes
and (2) the sum of the present values of each remaining
scheduled payment of principal and interest thereon (exclusive
of interest accrued to the date of redemption) discounted to the
redemption date on a semiannual basis (assuming a
360-day year
consisting of twelve
30-day
months) at the Treasury Rate plus 45 basis points (the
Make-Whole Amount), plus in each case accrued
interest on the principal amount of the notes to the date of
redemption.
Treasury Rate means, with respect to any
redemption date, the rate per annum equal to the semiannual
equivalent yield to maturity or interpolated maturity (on a day
count basis) of the Comparable Treasury Issue, assuming a price
for the Comparable Treasury Issue (expressed as a percentage of
its principal amount) equal to the Comparable Treasury Price for
such redemption date.
Comparable Treasury Issue means the United
States Treasury security or securities selected by an
Independent Investment Banker as having an actual or
interpolated maturity comparable to the remaining term of the
notes to be redeemed that would be utilized, at the time of
selection and in accordance with customary financial practice,
in pricing new issues of corporate debt securities of a
comparable maturity to the remaining term of such notes.
Independent Investment Banker means one of
the Reference Treasury Dealers appointed by us.
Comparable Treasury Price means, with respect
to any redemption date (1) the average of the Reference
Treasury Dealer Quotations for such redemption date, after
excluding the highest and lowest such Reference Treasury Dealer
Quotation or (2) if we obtain fewer than four such
Reference Treasury Dealer Quotations, the average of all such
quotations.
Reference Treasury Dealer means Credit Suisse
Securities (USA) LLC or its affiliates which are primary United
States government securities dealers and two other leading
primary United States government securities dealers in New York
City reasonably designated by us; provided, however, that if any
of the foregoing shall cease to be a primary United States
government securities dealer in New York City (a Primary
Treasury Dealer), we will substitute therefore another
Primary Treasury Dealer.
Reference Treasury Dealer Quotation means,
with respect to each Reference Treasury Dealer and any
redemption date, the average, as determined by us, of the bid
and asked prices for the Comparable Treasury Issue (expressed in
each case as a percentage of its principal amount) quoted in
writing to us by such Reference Treasury Dealer at 3:30 pm New
York time on the third business day preceding such redemption
date.
On and after the redemption date, interest will cease to accrue
on the notes or any portion of the notes called for redemption
(unless we default in the payment of the redemption price and
accrued interest). On or before the redemption date, we will
deposit with the trustee money sufficient to pay the redemption
price of and (unless the redemption date shall be an interest
payment date) accrued interest to the redemption date on the
notes to be redeemed on such date. If less than all of the notes
are to be redeemed, the notes to be redeemed shall be selected
by the trustee by such method as the trustee shall deem fair and
appropriate.
Withholding
Tax Redemption
The notes are subject to redemption (Withholding Tax
Redemption) at any time (a Withholding Tax
Redemption Date), as a whole but not in part, at the
election of Televisa, at a redemption price equal to 100% of the
unpaid principal amount thereof plus accrued and unpaid
interest, if any, to and including the Withholding Tax
55
Redemption Date (the Withholding Tax
Redemption Price) if, as a result of (i) any
change in or amendment to the laws, rules or regulations of
Mexico, or any political subdivision or taxing authority or
other instrumentality thereof or therein, or (ii) any
amendment to or change in the rulings or interpretations
relating to such laws, rules or regulations made by any
legislative body, court or governmental or regulatory agency or
authority (including the enactment of any legislation and the
publication of any judicial decision or regulatory
determination) of Mexico, or any political subdivision or taxing
authority or other instrumentality thereof or therein, or
(iii) any official interpretation, application or
pronouncement by any legislative body, court or governmental or
regulatory agency or authority that provides for a position with
respect to such laws, rules or regulations that differs from the
theretofore generally accepted position, which amendment or
change is enacted, promulgated, issued or announced or which
interpretation, application or pronouncement is issued or
announced, in each case, after the Closing Date, Televisa has
become or would become required to pay any Additional Amounts
(as defined above) in excess of those attributable to Taxes (as
defined above) that are imposed, deducted or withheld at a rate
of 10% on or from any payments under the notes. See
Certain Covenants Additional
Amounts and Taxation Federal Mexican
Taxation.
The election of Televisa to redeem the notes shall be evidenced
by a certificate (a Withholding Tax
Redemption Certificate) of a financial officer of
Televisa, which certificate shall be delivered to the trustee.
Televisa shall, not less than 35 days nor more than
45 days prior to the Withholding Tax Redemption Date,
notify the trustee in writing of such Withholding Tax
Redemption Date and of all other information necessary to
the giving by the trustee of notices of such Withholding Tax
Redemption. The trustee shall be entitled to rely conclusively
upon the information so furnished by Televisa in the Withholding
Tax Redemption Certificate and shall be under no duty to
check the accuracy or completeness thereof. Such notice shall be
irrevocable and upon its delivery Televisa shall be obligated to
make the payment or payments to the trustee referred to therein
at least two Business Days prior to such Withholding Tax
Redemption Date.
Notice of Withholding Tax Redemption shall be given by the
trustee to the holders, in accordance with the provisions under
Notices, upon the mailing by first-class postage
prepaid to each holder at the address of such holder as it
appears in the Register not less than 30 days nor more than
60 days prior to the Withholding Tax Redemption Date.
The notice of Withholding Tax Redemption shall state:
(i) the Withholding Tax Redemption Date;
(ii) the Withholding Tax Redemption Price;
(iii) the sum of all other amounts due to the holders under
the notes and the indenture;
(iv) that on the Withholding Tax Redemption Date the
Withholding Tax Redemption Price will become due and
payable upon each such note so to be redeemed;
(v) the place or places, including the offices of our
paying agent in Luxembourg, where such notes so to be redeemed
are to be surrendered for payment of the Withholding Tax
Redemption Price; and
(vi) the ISIN number of the notes.
Notice of Withholding Tax Redemption having been given as
aforesaid, the notes so to be redeemed shall, on the Withholding
Tax Redemption Date, become due and payable at the
Withholding Tax Redemption Price therein specified. Upon
surrender of any such notes for redemption in accordance with
such notice, such notes shall be paid by the paying agent on
behalf of Televisa on the Withholding Tax Redemption Date;
provided that moneys sufficient therefor have been deposited
with the trustee for the holders.
Notwithstanding anything to the contrary herein or in the
indenture or in the notes, if a Withholding Tax
Redemption Certificate has been delivered to the trustee
and Televisa shall have paid to the trustee for the benefit of
the holders (i) the Withholding Tax Redemption Price
and (ii) all other amounts due to the holders and the
trustee under the notes and the indenture, then neither the
holders nor the trustee on their behalf shall any longer be
entitled to exercise any of the rights of the holders under the
notes other than the rights of the holders to receive payment of
such amounts from the paying agent and the occurrence of an
Event of Default whether before or after such payment
56
by Televisa to the trustee for the benefit of the holders shall
not entitle either the holders or the trustee on their behalf
after such payment to declare the principal of any notes then
outstanding to be due and payable on any date prior to the
Withholding Tax Redemption Date. The funds paid to the
trustee shall be used to redeem the notes on the Withholding Tax
Redemption Date.
Merger
and Consolidation
Televisa may not consolidate with or merge into, or sell,
assign, transfer, lease, convey or otherwise dispose of all or
substantially all of its assets and the properties and assets of
its Subsidiaries (taken as a whole) as an entirety to, any
entity or entities (including limited liability companies)
unless (1) the successor entity or entities, each of which
shall be organized under the laws of Mexico or of the United
States or a State thereof, shall assume by supplemental
indenture all the obligations of Televisa under the notes, the
indenture and the registration rights agreement,
(2) immediately after giving effect to the transaction or
series of transactions, no default or event of default shall
have occurred and be continuing, and (3) if, as a result of
such transaction, properties or assets of Televisa would become
subject to an encumbrance which would not be permitted by the
terms of the notes, Televisa or the successor entity or entities
shall take such steps as are necessary to secure such notes
equally and ratably with all indebtedness secured thereunder;
provided, that notwithstanding the foregoing, nothing herein
shall prohibit Televisa or a Restricted Subsidiary from selling,
assigning, transferring, leasing, conveying or otherwise
disposing of any of Televisas Subsidiaries that are
Unrestricted Subsidiaries at the date of the indenture or any
interest therein or any assets thereof. Thereafter, all such
obligations of Televisa shall terminate.
Events of
Default
The term event of default means any one of the
following events with respect to any series of senior debt
securities, including the notes:
(1) default in the payment of any interest on any senior
debt security of the series, or any Additional Amounts payable
with respect thereto, when the interest becomes or the
Additional Amounts become due and payable, and continuance of
the default for a period of 30 days;
(2) default in the payment of the principal of or any
premium on any senior debt security of the series, or any
Additional Amounts payable with respect thereto, when the
principal or premium becomes or the Additional Amounts become
due and payable at their maturity;
(3) failure of Televisa to comply with any of its
obligations described above under Merger and
Consolidation;
(4) default in the deposit of any sinking fund payment when
and as due by the terms of a senior debt security of the series;
(5) default in the performance, or breach, of any covenant
or warranty of Televisa in the indenture or the senior debt
securities (other than a covenant or warranty a default in the
performance or the breach of which is elsewhere in the indenture
specifically dealt with or which has been expressly included in
the indenture solely for the benefit of a series of senior debt
securities other than the relevant series), and continuance of
the default or breach for a period of 60 days after there
has been given, by registered or certified mail, to Televisa by
the trustee or to Televisa and the trustee by the holders of at
least 25% in principal amount of the outstanding senior debt
securities of the series, a written notice specifying the
default or breach and requiring it to be remedied and stating
that the notice is a Notice of Default under the
indenture;
(6) if any event of default as defined in any mortgage,
indenture or instrument under which there may be issued, or by
which there may be secured or evidenced, any Indebtedness of
Televisa or any Material Subsidiary of Televisa, whether the
Indebtedness now exists or shall hereafter be created, shall
happen and shall result in Indebtedness in aggregate principal
amount (or, if applicable, with an issue price and accreted
original issue discount) in excess of U.S.$100.0 million
becoming or being declared due and payable prior to the date on
which it would otherwise become due and payable, and
(i) the acceleration shall not be rescinded or annulled,
(ii) such Indebtedness shall not have been paid or
(iii) Televisa or such Material Subsidiary shall not have
contested such acceleration in good faith by appropriate
proceedings and have obtained and thereafter
57
maintained a stay of all consequences that would have a material
adverse effect on Televisa, in each case within a period of
30 days after there shall have been given, by registered or
certified mail, to Televisa by the trustee or to Televisa and
the trustee by the holders of at least 25% in principal amount
of the outstanding senior debt securities of the series then
outstanding, a written notice specifying the default or breaches
and requiring it to be remedied and stating that the notice is a
Notice of Default or other notice as prescribed in
the indenture; provided, however, that if after the expiration
of such period, such event of default shall be remedied or cured
by Televisa or be waived by the holders of such Indebtedness in
any manner authorized by such mortgage, indenture or instrument,
then the event of default with respect to such series of senior
debt securities or by reason thereof shall, without further
action by Televisa, the trustee or any holder of senior debt
securities of such series, be deemed cured and not continuing;
(7) the entry by a court having competent jurisdiction of:
(a) a decree or order for relief in respect of Televisa or
any Material Subsidiary in an involuntary proceeding under any
applicable bankruptcy, insolvency, reorganization or other
similar law, which decree or order shall remain unstayed and in
effect for a period of 60 consecutive days;
(b) a decree or order adjudging Televisa or any Material
Subsidiary to be insolvent, or approving a petition seeking
reorganization, arrangement, adjustment or composition of
Televisa or any Material Subsidiary, which decree or order shall
remain unstayed and in effect for a period of 60 consecutive
days; or
(c) a final and non-appealable order appointing a
custodian, receiver, liquidator, assignee, trustee or other
similar official of Televisa or any Material Subsidiary or of
any substantial part of the property of Televisa or any Material
Subsidiary or ordering the winding up or liquidation of the
affairs of Televisa;
(8) the commencement by Televisa or any Material Subsidiary
of a voluntary proceeding under any applicable bankruptcy.
insolvency, reorganization or other similar law or of a
voluntary proceeding seeking to be adjudicated insolvent or the
consent by Televisa or any Material Subsidiary to the entry of a
decree or order for relief in an involuntary proceeding under
any applicable bankruptcy, insolvency, reorganization or other
similar law or to the commencement of any insolvency proceedings
against it, or the filing by Televisa or any Material Subsidiary
of a petition or answer or consent seeking reorganization or
relief under any applicable law, or the consent by Televisa or
any Material Subsidiary to the filing of the petition or to the
appointment of or taking possession by a custodian, receiver,
liquidator, assignee, trustee or similar official of Televisa or
any Material Subsidiary or any substantial part of the property
of Televisa or any Material Subsidiary or the making by Televisa
or any Material Subsidiary of an assignment for the benefit of
creditors, or the taking of corporate action by Televisa or any
Material Subsidiary in furtherance of any such action; or
(9) any other event of default provided in or pursuant to
the indenture with respect to senior debt securities of the
series.
If an event of default with respect to senior debt securities of
any series at the time outstanding (other than an event of
default specified in clause (7) or (8) above) occurs
and is continuing, then the trustee or the holders of not less
than 25% in principal amount of the outstanding senior debt
securities of the series may declare the principal of all the
senior debt securities of the series, or such lesser amount as
may be provided for in the senior debt securities of the series,
to be due and payable immediately, by a notice in writing to
Televisa (and to the trustee if given by the holders), and upon
any declaration the principal or such lesser amount shall become
immediately due and payable. If an event of default specified in
clause (7) or (8) above occurs, all unpaid principal
of and accrued interest on the outstanding senior debt
securities of that series (or such lesser amount as may be
provided for in the senior debt securities of the series) shall
become and be immediately due and payable without any
declaration or other act on the part of the trustee or any
holder of any senior debt security of that series.
At any time after a declaration of acceleration or automatic
acceleration with respect to the senior debt securities of any
series has been made and before a judgment or decree for payment
of the money due has been obtained by the trustee, the holders
of not less than a majority in principal amount of the
outstanding senior debt securities of the series, by written notice to Televisa and the
trustee, may rescind and annul the declaration and its
consequences if:
58
(1) Televisa has paid or deposited with the trustee a sum
of money sufficient to pay all overdue installments of any
interest on and additional amounts with respect to all senior
debt securities of the series and the principal of and any
premium on any senior debt securities of the series which have
become due otherwise than by the declaration of acceleration and
interest on the senior debt securities; and
(2) all events of default with respect to senior debt
securities of the series, other than the non-payment of the
principal of, any premium and interest on, and any additional
amounts with respect to senior debt securities of the series
which shall have become due solely by the acceleration, shall
have been cured or waived.
No rescission shall affect any subsequent default or impair any
right consequent thereon.
Meetings
of Noteholders
A meeting of noteholders may be called by the trustee, Televisa
or the holders of at least 10% in aggregate principal amount of
the outstanding notes at any time and from time to time, to
make, give or take any request, demand, authorization,
direction, notice, consent, waiver or other actions provided by
the indenture to be made, given or taken by holders of notes.
The meeting shall be held at such time and at such place in the
Borough of Manhattan, The City of New York or in such other
place as the trustee shall determine. Notice of every meeting of
noteholders, setting forth the time and the place of such
meeting and in general terms the action proposed to be taken at
such meeting, shall be given not less than 21 nor more than
180 days prior to the date fixed for the meeting.
The persons entitled to vote a majority in principal amount of
the outstanding notes shall constitute a quorum for a meeting;
except that if any action requires holders of at least
662/3%
in principal amount of the outstanding notes to consent or
waiver the Persons entitled to vote
662/3%
in principal amount of the outstanding notes shall constitute a
quorum. Any resolution presented to a meeting at which a quorum
is present may be adopted only by the affirmative vote of the
holders of a majority in principal amount of the outstanding
notes; except that any resolution requiring consent of the
holders of at least
662/3%
in principal amount of the outstanding notes may be adopted at a
meeting by the affirmative vote of the holders of at least
662/3%
in principal amount of the outstanding notes, Any resolution
passed or decision taken at any meeting of holders of notes duly
held in accordance with the indenture shall be binding on all
the holders of notes, whether or not such holders were present
or represented at the meeting.
Modification
and Waiver
Modification and amendments of the indenture may be made by
Televisa and the trustee with the consent of the holders of not
less than a majority in aggregate principal amount of the
outstanding senior debt securities of each series affected
thereby; provided, however, that no modification or amendment
may, without the consent of the holder of each outstanding
senior debt security affected thereby:
(1) change the stated maturity of the principal of, or any
premium or installment of interest on, or any Additional Amounts
with respect to, any senior debt security;
(2) reduce the principal amount of, or the rate (or modify
the calculation of the rate) of interest on, or any Additional
Amounts with respect to, or any premium payable upon the
redemption of, any senior debt security;
(3) change the redemption provisions of any senior debt
security or adversely affect the right of repayment at the
option of any holder of any senior debt security;
(4) change the place of payment or the coin or currency in
which the principal of, any premium or interest on or any
Additional Amounts with respect to any senior debt security is
payable;
(5) impair the right to institute suit for the enforcement
of any payment on or after the stated maturity of any senior
debt security (or, in the case of redemption, on or after the
redemption date or, in the case of repayment at the option of
any holder, on or after the date for repayment);
(6) reduce the percentage in principal amount of the
outstanding senior debt securities, the consent of whose holders
is required in order to take certain actions;
59
(7) reduce the requirements for quorum or voting by holders
of senior debt securities as provided in the indenture;
(8) modify any of the provisions in the indenture regarding
the waiver of past defaults and the waiver of certain covenants
by the holders of senior debt securities except to increase any
percentage vote required or to provide that certain other
provisions of the indenture cannot be modified or waived without
the consent of the holder of each senior debt security affected
thereby; or
(9) modify any of the above provisions.
The holders of not less than a majority in aggregate principal
amount of the senior debt securities of any series may, on
behalf of the holders of all senior debt securities of the
series, waive compliance by Televisa with certain restrictive
provisions of the indenture.
The holders of not less than a majority in aggregate principal
amount of the outstanding senior debt securities of any series
may, on behalf of the holders of all senior debt securities of
the series, waive any past default and its consequences under
the indenture with respect to the senior debt securities of the
series, except a default:
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in the payment of principal (or premium, if any), or any
interest on or any Additional Amounts with respect to senior
debt securities of the series; or
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in respect of a covenant or provision of the indenture that
cannot be modified or amended without the consent of the holder
of each senior debt security of any series.
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Under the indenture, Televisa is required to furnish the trustee
annually a statement as to performance by Televisa of certain of
its obligations under the indenture and as to any default in the
performance. Televisa is also required to deliver to the
trustee, within five days after becoming aware thereof, written
notice of any event of default or any event which after notice
or lapse of time or both would constitute an event of default.
The indenture contains provisions permitting Televisa and the
trustee, without the consent of any holders of notes, to enter
into a supplemental indenture, among other things, for purposes
of curing any ambiguity or correcting or supplementing any
provisions contained in the indenture or in any supplemental
indenture or making other provisions in regard to the matters or
questions arising under the indenture or any supplemental
indenture as the Board of Directors of Televisa deems necessary
or desirable and which does not adversely affect the interests
of the holders of notes in any material respect. Televisa and
the trustee, without the consent of any holders of notes, may
also enter into a supplemental indenture to establish the forms
or terms of any series of senior debt securities as are not
otherwise inconsistent with any of the provisions of the
indenture.
Notices
All notices regarding the notes shall be valid if that notice is
given to holders of notes in writing and mailed to each holder
of notes, and, for so long as the notes are listed on the
Luxembourg Stock Exchange, if published in a leading daily
newspaper of general circulation in Luxembourg.
While the notes are represented by the global note deposited
with the common depositary, notices to holders may be given by
delivery to the depositary, and such notices will be deemed to
be given on the date of delivery to the depositary. The trustee
will also mail notices by first class mail, postage prepaid, to
each registered holders last known address as it appears
in the security register that the trustee maintains. The trustee
will only mail these notices to the registered holder of the
notes. You will not receive notices regarding the notes directly
from us unless we reissue the notes to you in fully certificated
form.
In addition, so long as the notes are admitted to listing on the
Official List of the Luxembourg Stock Exchange and for trading
on the Euro MTF, in accordance with the rules and regulations of
the Luxembourg Stock Exchange, all notices regarding the notes
shall be valid if published in a leading daily newspaper of
general circulation in Luxembourg, which is expected to be
dWort or on the website of the Luxembourg Stock
Exchange (www.bourse.lu). If such publication is not
practicable, notice will be considered to be validly given if
otherwise made in accordance with the rules of the Luxembourg
Stock Exchange.
60
Notices will be deemed to have been given on the date of mailing
or of publication as aforesaid or, if published on different
dates, on the date of the first such publication.
Neither the failure to give any notice to a particular holder,
nor any defect in a notice will be considered to be validly
given if otherwise made in accordance with the rules of the
Luxembourg Stock Exchange.
Unclaimed
Amounts
Any money deposited with the trustee or paying agent or held by
Televisa, in trust, for the payment of principal, premium,
interest or any Additional Amounts, that remains unclaimed for
two years after such amount becomes due and payable shall be
paid to Televisa on its request or, if held by Televisa, shall
be discharged from such trust. The holder of the notes will look
only to Televisa for payment thereof, and all liability of the
trustee, paying agent or of Televisa, as trustee, shall
thereupon cease. However, the trustee or paying agent may at the
expense of Televisa cause to be published once in a newspaper in
each place of payment, or to be mailed to holders of notes, or
both, notice that that money remains unclaimed and any unclaimed
balance of such money remaining, after a specified date, will be
repaid to Televisa.
Certain
Definitions
The following are certain of the terms defined in the indenture:
For purposes of the following definitions, the covenants
described above under Certain Covenants
and the indenture generally, all calculations and determinations
shall be made in accordance with Mexican GAAP as in effect on
the closing date and shall be based upon the consolidated
financial statements of Televisa and its restricted subsidiaries
prepared in accordance with Mexican GAAP and Televisas
accounting policies as in effect on the closing date. Where
calculations or amounts are determined with reference to reports
filed with the Commission or the trustee, the information
contained in such reports shall (solely for purposes of the
indenture) be adjusted to the extent necessary to conform to
Mexican GAAP as in effect on the closing date.
Adjusted Consolidated Net Tangible Assets
means the total amount of assets of Televisa and its
Restricted Subsidiaries (less applicable depreciation,
amortization and other valuation reserves), including any
write-ups or
restatements required under Mexican GAAP (other than with
respect to items referred to in clause (ii) below), after
deducting therefrom (i) all current liabilities of Televisa
and its Restricted Subsidiaries (excluding deposits and customer
advances) and (ii) all goodwill, trade names, trademarks,
licenses, concessions, patents, unamortized debt discount and
expense and other intangibles, all as determined in accordance
with Mexican GAAP; provided that Adjusted Consolidated Net
Tangible Assets shall be deemed to include transmission
rights, programs and films, as determined in accordance with
Mexican GAAP.
Affiliate means, as applied to any Person,
any other Person directly or indirectly controlling, controlled
by, or under direct or indirect common control with, such
Person. For purposes of this definition, control
(including, with correlative meanings, the terms
controlling, controlled by and
under common control with), as applied to any
Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting
securities, by contract or otherwise.
Attributable Debt in respect of a Sale and
Leaseback transaction means, at the time of determination, the
present value of the obligation of the lessee for net rental
payments during the remaining term of the lease included in such
Sale and Leaseback transaction including any period for which
such lease has been extended or may, at the option of the
lessor, be extended, Such present value shall be calculated
using a discount rate equal to the rate of interest implicit in
such transaction, determined in accordance with Mexican GAAP.
Board of Directors means the Board of
Directors of Televisa or the Executive Committee thereof, if
duly authorized by the Board of Directors and under Mexican Law
to act with respect to the indenture; provided, that for
purposes of clause (ii) of the definition of Change of
Control, the Board of Directors shall mean the entire Board of
Directors then in office.
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Capitalized Lease Obligation of any Person
means any obligation of such Person to pay rent or other amounts
under a lease with respect to any property (whether real,
personal or mixed) acquired or leased (other than leases for
transponders) by such Person and used in its business that is
required to be accounted for as a liability on the balance sheet
of such Person in accordance with Mexican GAAP and the amount of
such Capitalized Lease Obligation shall be the amount so
required to be accounted for as a liability.
Change of Control means such time as
(i) a person or group (within the
meaning of Sections 13(d) and 14(d)(2) of the Exchange Act)
becomes the ultimate beneficial owner (as defined in
Rule 13d-3
under the Exchange Act) of shares of Voting Stock of Televisa
representing more than 35% of the total voting power of the
total Voting Stock of Televisa on a fully diluted basis and
(A) such ownership is greater than the amount of voting
power of the total Voting Stock, on a fully diluted basis,
beneficially owned by the Existing Stockholders and
their Affiliates on such date, (B) such beneficial owner
has the right under applicable law to exercise the voting power
of such shares and (C) such beneficial owner has the right
to elect more directors than the Existing Stockholders and their
Affiliates on such date; or (ii) individuals who on the
closing date constitute the Board of Directors of Televisa
(together with any new directors whose election by the Board of
Directors or whose nomination for election by Televisas
stockholders was approved by a vote of at least two-thirds of
the members of the Board of Directors then in office who either
were members of the Board of Directors on the closing date or
whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the
members of the Board of Directors then in office.
Existing Stockholders means (i) Emilio
Azcárraga Jean, (ii) a parent, brother or sister of
the individual named in clause (i), (iii) the spouse or a
former spouse of any individual named in clause (i) or
(ii), (iv) the lineal descendants of any person named in
clauses (i) through (iii) and the spouse or a former
spouse of any such lineal descendant, (v) the estate or any
guardian, custodian or other legal representative of any
individual named in clauses (i) through (iv), (vi) any
trust established solely for the benefit of any one or more of
the individuals named in clauses (i) through (v) and
(vii) any Person in which all of the equity interests are
owned, directly or indirectly, by any one or more of the Persons
named in clauses (i) through (vi).
Fair Market Value means, with respect to any
asset or property, the price which could be negotiated in an
arms-length transaction, for cash, between an informed and
willing seller under no compulsion to sell and an informed and
willing buyer under no compulsion to buy. Fair Market Value
shall be determined by the Board of Directors of Televisa,
acting in good faith and evidenced by a resolution delivered to
the trustee.
Funded Indebtedness of any Person means, as
of the date as of which the amount thereof is to be determined,
without duplication, all Indebtedness of such Person for
borrowed money or for the deferred purchase price of property or
assets in respect of which such Person is liable and all
guarantees by such Person of any Indebtedness of others for
borrowed money, and all Capitalized Lease Obligations of such
Person, which by the terms thereof have a final maturity,
duration or payment date more than one year from the date of
determination thereof (including, without limitation, any
balance of such Indebtedness or obligation which was Funded
Indebtedness at the time of its creation maturing within one
year from such date of determination) or which has a final
maturity, duration or payment date within one year from such
date of determination but which by its terms may be renewed or
extended at the option of such Person for more than one year
from such date of determination, whether or not theretofore
renewed or extended; provided, however, Funded
Indebtedness shall not include (1) any Indebtedness
of Televisa or any Subsidiary to Televisa or another Subsidiary,
(2) any guarantee by Televisa or any Subsidiary of
Indebtedness of Televisa or another Subsidiary; provided that
such guarantee is not secured by a Lien on any Principal
Property, (3) any guarantee by Televisa or any Subsidiary
of the Indebtedness of any person (including, without
limitation, a business trust), if the obligation of Televisa or
such Subsidiary under such guaranty is limited in amount to the
amount of funds held by or on behalf of such person that are
available for the payment of such Indebtedness,
(4) liabilities under interest rate swap, exchange, collar
or cap agreements and all other agreements or arrangements
designed to protect against fluctuations in interest rates or
currency exchange rates, and (5) liabilities under
commodity hedge, commodity swap, exchange, collar or cap
agreements, fixed price agreements and all other agreements or
arrangements designed to protect against fluctuations in prices.
For purposes of determining the outstanding principal amount of
Funded Indebtedness at any date, the amount of Indebtedness
issued at a price less than the principal amount thereof shall be equal to the amount of the liability in
respect thereof at such date determined in accordance with
Mexican GAAP.
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Indebtedness of any Person means:
(1) any indebtedness of such Person (i) for borrowed
money or (ii) evidenced by a note, debenture or similar
instrument (including a purchase money obligation) given in
connection with the acquisition of any property or assets,
including securities;
(2) any guarantee by such Person of any indebtedness of
others described in the preceding clause (1); and
(3) any amendment, renewal, extension or refunding of any
such indebtedness or guarantee.
Lien means any mortgage, pledge, lien,
security interest, or other similar encumbrance.
Material Subsidiary means, at any relevant
time, any Subsidiary that meets any of the following conditions:
(1) Televisas and its other Subsidiaries
investments in and advances to the Subsidiary exceed 10% of the
total consolidated assets of Televisa and its Subsidiaries;
(2) Televisas and its other Subsidiaries
proportionate share of the total assets (after intercompany
eliminations) of the Subsidiary exceeds 10% of the total
consolidated assets of Televisa and its Subsidiaries;
(3) Televisas and its other Subsidiaries
proportionate share of the total revenues (after intercompany
eliminations) of the Subsidiary exceeds 10% of the total
consolidated revenue of Televisa and its Subsidiaries; or
(4) Televisas and its other Subsidiaries equity
in the income from continuing operations before income taxes,
extraordinary items and cumulative effect of a change in
accounting principle of the Subsidiary exceeds 10% of such
income of Televisa and its Subsidiaries;
all as calculated by reference to the then latest fiscal
year-end accounts (or consolidated fiscal year-end accounts, as
the case may be) of such Subsidiary and the then latest audited
consolidated fiscal year-end accounts of Televisa and its
Subsidiaries.
Mexican GAAP means Financial Reporting
Standards (Normas de Información Financiera) in
Mexico and the accounting principles and policies of Televisa
and its Restricted Subsidiaries, in each case as in effect on
the date the notes under the indenture supplement are first
issued. All ratios and computations shall be computed in
conformity with Mexican GAAP.
Person means an individual, a corporation, a
partnership, a limited liability company, an association, a
trust or any other entity or organization, including a
government or political subdivision or an agency or
instrumentality thereof.
Principal Property means, as of any date of
determination, (a) any television production
and/or
network facility, television programming library, and, if
applicable, any cable system and satellite television services
facility, including land and buildings and other improvements
thereon and equipment located therein, owned by Televisa or any
Restricted Subsidiary and used in the ordinary course of its
business and (b) any executive offices, administrative
buildings, and research and development facilities, including
land and buildings and other improvements thereon and equipment
located therein, of Televisa or any Restricted Subsidiary, other
than any such property which, in the good faith opinion of the
Board of Directors, is not of material importance to the
business conducted by Televisa and its Restricted Subsidiaries
taken as a whole.
Restricted Subsidiary means, as of any date
of determination, a subsidiary which has been, or is then being,
designated a Restricted Subsidiary in accordance with the
Designation of Restricted Subsidiaries covenant,
unless and until designated an Unrestricted Subsidiary in
accordance with such covenant.
63
Sale and Leaseback Transactions means any
arrangement providing for the leasing to Televisa or a
Subsidiary of any Principal Property (except for temporary
leases for a term, including renewals, of not more than three
years) which has been or is to be sold by Televisa or such
Subsidiary to the lessor.
Subsidiary means any corporation,
association, limited liability company, partnership or other
business entity of which a majority of the total voting power of
the capital stock or other interests (including partnership
interests) entitled (without regard to the incurrence of a
contingency) to vote in the election of directors, managers, or
trustees thereof is at the time owned or controlled, directly or
indirectly, by (i) Televisa, (ii) Televisa and one or
more of its Subsidiaries or (iii) one or more Subsidiaries
of Televisa.
Televisa means Grupo Televisa, S.A.B., a
limited liability public stock corporation (sociedad
anónima bursátil) organized under the laws of the
United Mexican States, until a successor replaces it pursuant to
the applicable provisions of the indenture and thereafter means
the successor.
Unrestricted Subsidiary means, as of any date
of determination, any Subsidiary of Televisa that is not a
Restricted Subsidiary.
Voting Stock means, with respect to any
Person, capital stock of any class or kind ordinarily having the
power to vote for the election of directors, managers or other
voting members of the governing body of such Person.
Wholly Owned means, with respect to any
Restricted Subsidiary of any Person, such Restricted Subsidiary
if all of the outstanding Capital Stock in such Restricted
Subsidiary (other than any directors qualifying shares or
investments by foreign nationals mandated by applicable law and
shares of Common Stock that, in the aggregate, do not exceed 1%
of the economic value or voting power of the Capital Stock of
such Restricted Subsidiary) is owned by such Person or one or
more Wholly Owned Restricted Subsidiaries of such Person.
Discharge,
Defeasance and Covenant Defeasance
Televisa may discharge certain obligations to holders of any
series of senior debt securities that have not already been
delivered to the trustee for cancellation and that either have
become due and payable or will become due and payable within one
year (or scheduled for redemption within one year) by
irrevocably depositing or causing to be deposited with the
trustee, in trust, funds specifically pledged as security for,
and dedicated solely to, the benefit of the holders in
U.S. Dollars or Government Obligations, which is defined
below, in an amount sufficient, in the opinion of a nationally
recognized firm of independent public accountants expressed in a
written certification thereof delivered to the trustee, to pay
and discharge the entire indebtedness on the senior debt
securities with respect to principal (and premium, if any) and
interest to the date of the deposit (if the senior debt
securities have become due and payable) or to the maturity
thereof, as the case may be.
The indenture provides that, unless the provisions of the
Defeasance and Covenant Defeasance section thereof
are made inapplicable in respect of any series of senior debt
securities of or within any series pursuant to the Amount
Unlimited; Issuable in Series section thereof, Televisa
may elect, at any time, either:
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to defease and be discharged from any and all obligations with
respect to the senior debt securities (except for, among other
things, the obligation to pay additional amounts, if any, upon
the occurrence of certain events of taxation, assessment or
governmental charge with respect to payments on the senior debt
securities and other obligations to register the transfer or
exchange of the senior debt securities, to replace temporary or
mutilated, destroyed, lost or stolen senior debt securities, to
maintain an office or agency with respect to the senior debt
securities and to hold moneys for payment in trust)
(defeasance); or
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to be released from its obligations with respect to the senior
debt securities under the covenants described under
Certain Covenants and
Merger and Consolidation above or, if
provided pursuant to the Amount Unlimited; Issuable in
Series section of the indenture, its obligations with
respect to any other covenant, and any omission to comply with
the obligations shall not constitute a default or an event of
default with respect to the senior debt securities
(covenant defeasance).
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Defeasance or covenant defeasance, as the case may be, shall be
conditioned upon the irrevocable deposit by Televisa with the
trustee, as trust funds in trust for the purpose of making the
following payments, specifically pledged as security for, and
dedicated solely to, the benefit of the holders of the notes, of
(i) an amount in Dollars, in which such senior debt
securities, together with all interest appertaining thereto, are
then specified as payable at their stated maturity, or
(ii) an amount of Government Obligations, which is defined
below, applicable to such senior debt securities and the
interest appertaining thereto, which through the scheduled
payment of principal and interest in accordance with their terms
will provide money, or a combination thereof in an amount, in
any case, sufficient, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written
certification thereof delivered to the trustee, to pay and
discharge the entire indebtedness on the senior debt securities
with respect to principal (and premium, if any) and interest to
the date of the deposit (if the senior debt securities have
become due and payable) or to the maturity thereof, as the case
may be.
Such a trust may only be established if, among other things,
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the applicable defeasance or covenant defeasance does not result
in a breach or violation of, or constitute a default under, the
indenture or any other material agreement or instrument to which
Televisa is a party or by which it is bound, and
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Televisa has delivered to the trustee an opinion of counsel (as
specified in the indenture) to the effect that the holders of
the senior debt securities will not recognize income, gain or
loss for U.S. federal income tax purposes as a result of
the defeasance or covenant defeasance and will be subject to
U.S. federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if the
defeasance or covenant defeasance had not occurred, and the
opinion of counsel, in the case of defeasance, must refer to and
be based upon a letter ruling of the Internal Revenue Service
received by Televisa, a revenue ruling published by the Internal
Revenue Service or a change in applicable U.S. federal
income tax law occurring after the date of the indenture.
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Government Obligations means securities which
are:
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direct obligations of the United States of America or the
government or the governments in the confederation which issued
the Foreign Currency in which the senior debt securities of a
particular series are payable, for the payment of which the full
faith and credit of the United States or such other government
or governments is pledged; or
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obligations of a Person controlled or supervised by and acting
as an agency or instrumentality of the United States of America
or such other government or governments, the timely payment of
which is unconditionally guaranteed as a full faith and credit
obligation by the United States of America or such other
government or governments;
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and which are not callable or redeemable at the option of the
issuer or issuers thereof, and shall also include a depositary
receipt issued by a bank or trust company as custodian with
respect to any Government Obligation or a specific payment of
interest on or principal of or any other amount with respect to
any Government Obligation held by the custodian for the account
of the holder of the depositary receipt; provided that (except
as required by law) the custodian is not authorized to make any
deduction from the amount payable to the holder of the
depositary receipt from any amount received by the custodian
with respect to the Government Obligation or the specific
payment of interest on or principal of or any other amount with
respect to the Government Obligation evidenced by the depositary
receipt.
In the event Televisa effects covenant defeasance with respect
to any senior debt securities and the senior debt securities are
declared due and payable because of the occurrence of any event
of default other than an event of default with respect to the
Limitations on Liens and Limitation on Sale
and Leaseback covenants contained in the indenture (which
sections would no longer be applicable to the senior debt
securities after the covenant defeasance) or with respect to any
other covenant as to which there has been covenant defeasance,
the amount in the Foreign Currency in which the senior debt
securities are payable, and Government Obligations on deposit
with the trustee, will be sufficient to pay amounts due on the
senior debt securities at the time of the stated maturity but
may not be sufficient to pay amounts due on the senior debt
securities at the time of the acceleration resulting from the
65
event of default. However, Televisa would remain liable to make
payment of the amounts due at the time of acceleration.
Governing
Law
The indenture and the notes will be governed by, and construed
in accordance with, the laws of the State of New York, without
giving effect to any provisions relating to conflicts of laws
other than
Section 5-1401
of the New York General Obligations Law.
Submission
to Jurisdiction; Agent for Service of Process
We will submit to the jurisdiction of any federal or state court
in the City of New York, Borough of Manhattan for purposes of
all legal actions and proceedings instituted in connection with
the notes, the indenture or the registration rights agreement.
We expect to appoint CT Corporation System Inc., 111 Eighth
Avenue, New York, New York 10011 as our authorized agent upon
which service of process may be served in any such action.
Regarding
the Trustee
The trustee is permitted to engage in other transactions with
Televisa and its subsidiaries from time to time; provided that
if the trustee acquires any conflicting interest it must
eliminate the conflict upon the occurrence of an event of
default, or else resign.
Televisa may at any time remove the trustee at its office or
agency in the City of New York designated for the foregoing
purposes and may from time to time rescind such designations.
No
Personal Liability of Shareholders, Officers, Directors, or
Employees
The indenture provides that no recourse for the payment of the
principal of, premium, if any, or interest on any of the notes
or for any claim based thereon or otherwise in respect thereof,
and no recourse under or upon any obligation, covenant or
agreement of Televisa in such indenture, or in any of the notes
or because of the creation of any indebtedness represented
thereby, shall be had against any shareholder, officer,
director, employee or controlling person of Televisa or of any
successor thereof.
66
TAXATION
The following is a general summary of the principal
U.S. federal income and Mexican federal tax consequences of
the purchase, ownership and disposition of the new notes and the
exchange of the old notes for the new notes, but it does not
purport to be a comprehensive description of all the tax
considerations that may be relevant to a decision to purchase,
own and dispose of the new notes or exchange the old notes for
the new notes. This summary does not describe any tax
consequences arising under the laws of any state, locality or
taxing jurisdiction other than the United States and Mexico.
This summary is for general information only and is based on the
tax laws of the United States and Mexico as in effect on the
date of this prospectus, as well as regulations, rulings and
decisions of the United States and rules and regulations of
Mexico available on or before that date and now in effect. All
of the foregoing are subject to change, possibly with
retroactive effect, which could affect the continued validity of
this summary.
Prospective purchasers of the new notes and beneficial owners
of the old notes considering an exchange of the old notes for
the new notes should consult their own tax advisors as to the
Mexican, U.S. or other tax consequences of the purchase,
ownership and disposition of the new notes and the exchange of
the old notes for the new notes, including the particular tax
consequences to them in light of their particular investment
circumstances.
United
States/Mexico Tax Treaty
A convention for the Avoidance of Double Taxation and protocols
to that convention (collectively referred to herein as the
U.S.-Mexico
treaty) are in effect. However, as discussed below under
Federal Mexican Taxation, as of the date
of this prospectus, the
U.S.-Mexico
treaty is not generally expected to have any material effect on
the Mexican income tax consequences described in this
prospectus. The United States and Mexico have also entered into
an agreement that covers the exchange of information with
respect to tax matters.
Mexico has also entered into, and is negotiating, several other
tax treaties with various countries that also, as of the date of
this prospectus, are not generally expected to have any material
effect on the Mexican income tax consequences described in this
prospectus.
United
States Federal Income Taxation
This summary of the principal U.S. federal income tax
consequences of the purchase, ownership and disposition of the
new notes and the exchange of the old notes for the new notes is
limited to beneficial owners of the new notes and the old notes
that:
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are U.S. holders (as defined below); and
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hold the old notes
and/or will
hold the new notes as capital assets.
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As used in this prospectus, a U.S. holder means
a beneficial owner of the old notes or the new notes that is,
for U.S. federal income tax purposes:
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a citizen or individual resident of the United States;
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a corporation (or entity treated as a corporation for such
purposes) created or organized in or under the laws of the
United States, or any State thereof or the District of Columbia;
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an estate the income of which is includible in its gross income
for U.S. federal income tax purposes without regard to its
source; or
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a trust, if either (x) it is subject to the primary
supervision of a court within the United States and one or more
United States persons has the authority to control
all substantial decisions of the trust or (y) it has a
valid election in effect under applicable U.S. Treasury
regulations to be treated as a United States person.
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This summary does not discuss considerations or consequences
relevant to persons subject to special provisions of
U.S. federal income tax law, such as:
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entities that are tax-exempt for U.S. federal income tax
purposes and retirement plans, individual retirement accounts
and tax-deferred accounts;
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pass-through entities (including partnerships and entities and
arrangements classified as partnerships for U.S. federal
income tax purposes) and beneficial owners of pass-through
entities;
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certain U.S. expatriates;
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persons that are subject to the alternative minimum tax;
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financial institutions, insurance companies, and dealers or
traders in securities or currencies;
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persons having a functional currency other than the
U.S. Dollar; and
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persons that hold the old notes or will hold the new notes as
part of a constructive sale, wash sale, conversion transaction
or other integrated transaction or a straddle, hedge or
synthetic security.
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If a partnership (or an entity or arrangement classified as a
partnership for U.S. federal income tax purposes) holds the
old notes or the new notes, the U.S. federal income tax
treatment of a partner in the partnership generally will depend
on the status of the partner and the activities of the
partnership, and partnerships holding the old notes or the new
notes should consult their own tax advisors regarding the
U.S. federal income tax consequences of purchasing, owning
and disposing of the new notes and exchanging the old notes for
the new notes. Further, the discussion below does not address
the effect of any U.S. federal tax laws other than the
U.S. federal income tax laws (e.g., U.S. federal
estate or gift tax laws) or any U.S. state or local tax
laws on a beneficial owner of the old notes or the new notes.
This discussion assumes that each beneficial owner of the new
notes will comply with the certification procedures described in
Description of the New Notes Certain
Covenants Additional Amounts as may be
necessary to obtain a reduced rate of withholding tax under
Mexican law. Each beneficial owner of an old note considering an
exchange of the old note for the new note should consult a tax
advisor as to the particular tax consequences to it of the
exchange and the ownership and disposition of the new note,
including the applicability and effect of any U.S. federal
tax laws other than the U.S. federal income tax laws,
U.S. state, local and foreign tax laws.
Exchange of Notes. The exchange of the old
notes for the new notes in the exchange offer will not be a
taxable exchange for U.S. federal income tax purposes and,
accordingly, for such purposes a U.S. holder will not
recognize any taxable gain or loss as a result of such exchange
and will have the same tax basis and holding period in the new
notes as it had in the old notes immediately before the exchange.
Interest and Additional Amounts. Interest on
the new notes and Additional Amounts paid in respect of Mexican
withholding taxes imposed on interest payments on the new notes
(as described in Description of the New Notes
Certain Covenants Additional Amounts) will be
taxable to a U.S. holder as ordinary interest income at the
time they are paid or accrued in accordance with the
U.S. holders usual method of accounting for
U.S. federal income tax purposes. The amount of income
taxable to a U.S. holder will include the amount of all
Mexican taxes that we withhold (as described below under
Federal Mexican Taxation) from these
payments made on the new notes. Thus, a U.S. holder will
have to report income in an amount that is greater than the
amount of cash it receives from these payments on its new note.
For purposes of the following discussion, references to interest
include Additional Amounts.
A U.S. holder may, subject to certain limitations, be
eligible to claim any Mexican income taxes withheld from
interest payments as a credit for purposes of computing its
U.S. federal income tax liability, even though we will
remit these Mexican withholding tax payments. Interest and
Additional Amounts paid on the new notes will constitute income
from sources without the United States for foreign tax credit
purposes. Such income generally will constitute passive
category income or, in the case of certain
U.S. holders, general category income, for
foreign tax credit purposes. The rules relating to the
calculation and timing of foreign tax credits are complex and
their application depends upon a U.S. holders
particular circumstances. In addition, foreign tax credits
generally will not be allowed for Mexican taxes withheld from
interest on certain short-term or hedged positions in the new
68
notes. U.S. holders should consult with their own tax
advisors with regard to the availability of a credit in respect
of foreign taxes and, in particular, the application of the
foreign tax credit rules to their particular situations. As an
alternative to claiming the foreign tax credit, a
U.S. holder may elect to deduct foreign taxes. If a
U.S. holder so elects, the election will apply to all of
that U.S. holders foreign taxes for that tax year.
U.S. holders should consult their own tax advisors with
regard to the election to deduct foreign taxes.
Market Discount and Bond Premium. If a
U.S. holder purchases a new note (or purchased the old note
for which the new note was exchanged, as the case may be) at a
price that is less than its principal amount, the excess of the
principal amount over the U.S. holders purchase price
will be treated as market discount. However, the
market discount will be considered to be zero if it is less than
1/4 of 1% of the principal amount multiplied by the number of
complete years to maturity from the date the U.S. holder
purchased the new note or old note, as the case may be.
Under the market discount rules of the U.S. Internal
Revenue Code, a U.S. holder generally will be required to
treat any principal payment on, or any gain realized on the
sale, exchange, retirement or other disposition of, a new note
as ordinary income (generally treated as interest income) to the
extent of the market discount which accrued but was not
previously included in income by the U.S. holder during the
period the U.S. holder held the new note (and the old note
for which the new note was exchanged, as the case may be). In
addition, the U.S. holder may be required to defer, until
the maturity of the new note or its earlier disposition in a
taxable transaction, the deduction of all or a portion of the
interest expense on any indebtedness incurred or continued to
purchase or carry the new note (or the old note for which the
new note was exchanged, as the case may be). In general, market
discount will be considered to accrue ratably during the period
from the date of the purchase of the new note (or old note for
which the new note was exchanged, as the case may be) to the
maturity date of the new note, unless the U.S. holder makes
an irrevocable election (on an
instrument-by-instrument
basis) to accrue market discount under a constant yield method.
A U.S. holder of a new note may elect to include market
discount in income currently as it accrues (under either a
ratable or constant yield method), in which case the rules
described above regarding the treatment as ordinary income of
gain upon the disposition of the new note and upon the receipt
of certain payments and the deferral of interest deductions will
not apply. The election to include market discount in income
currently, once made, applies to all market discount obligations
acquired on or after the first day of the first taxable year to
which the election applies, and may not be revoked without the
consent of the Internal Revenue Service.
If a U.S. holder purchases a new note (or purchased the old
note for which the new note was exchanged, as the case may be)
for an amount in excess of the amount payable at maturity of the
new note, the U.S. holder will be considered to have
purchased the new note (or old note) with bond
premium equal to the excess of the U.S. holders
purchase price over the amount payable at maturity (or on an
earlier call date if it results in a smaller amortizable bond
premium). It may be possible for a U.S. holder of a new
note to elect to amortize the premium using a constant yield
method over the remaining term of the new note (or until an
earlier call date, as applicable). The amortized amount of the
premium for a taxable year generally will be treated first as a
reduction of interest on the new note included in such taxable
year to the extent thereof, then as a deduction allowed in that
taxable year to the extent of the U.S. holders prior
interest inclusions on the new note, and finally as a
carryforward allowable against the U.S. holders
future interest inclusions on the new note. The election, once
made, is irrevocable without the consent of the Internal Revenue
Service and applies to all taxable bonds held during the taxable
year for which the election is made or subsequently acquired. A
U.S. holder that does not make this election will be
required to include in gross income the full amount of interest
on the new note in accordance with its regular method of tax
accounting, and will include the premium in its tax basis for
the new note for purposes of computing the amount of its gain or
loss recognized on the taxable disposition of the new note.
U.S. holders should consult their own tax advisors
concerning the computation and amortization of any bond premium
on the new notes.
A U.S. holder may elect to include in gross income under a
constant yield method all amounts that accrue on a new note that
are treated as interest for tax purposes (i.e., stated interest,
market discount and de minimis market discount, as adjusted by
any amortizable bond premium). U.S. holders should consult
their tax advisors as to the desirability, mechanics and
collateral consequences of making this election.
Dispositions of the Notes. Except as discussed
above, under Exchange of Notes and
unless a nonrecognition provision of the U.S. federal
income tax laws applies, upon the sale, exchange, redemption,
retirement or other taxable disposition of a new note, a U.S. holder will
recognize taxable gain or loss in an amount equal to the difference,if any, between the amount realized on the sale,
exchange, redemption, retirement or other
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taxable disposition (other than amounts attributable to accrued interest, which will
be treated as described above) and the U.S. holders
adjusted tax basis in the new note. A U.S. holders
adjusted tax basis in a new note generally will be its cost for
the new note (or, in the case of a new note exchanged for an old
note in the exchange offer, the tax basis of the old note, as
discussed above under Exchange of
Notes), increased by the amount of any market discount
previously included in the U.S. holders gross income,
and reduced by the amount of any amortizable bond premium
applied to reduce, or allowed as a deduction against, interest
on the new note.
Gain or loss recognized by a U.S. holder on the sale,
exchange, redemption, retirement or other taxable disposition of
a new note generally will be capital gain or loss, except with
respect to accrued market discount not previously included in
income, which will be taxable as ordinary income. The gain or
loss recognized by a U.S. holder will be long-term capital
gain or loss if the new note has been held for more than one
year at the time of the disposition (taking into account, for
this purpose, in the case of a new note received in exchange for
an old note in the exchange offer, the period of time that the
old note was held). Long-term capital gains recognized by
individual and certain other non-corporate U.S. holders
generally are eligible for reduced rates of taxation. The
deductibility of capital losses is subject to limitations.
Capital gain or loss recognized by a U.S. holder generally
will be U.S. source gain or loss for foreign tax credit
purposes. Therefore, if any such gain is subject to Mexican
income tax, a U.S. holder may not be able to credit the
Mexican income tax against its U.S. federal income tax
liability. U.S. holders should consult their own tax
advisors as to the foreign tax credit implications of a
disposition of the new notes.
Backup Withholding and Certain Reporting
Requirements. In general, backup
withholding may apply to payments of principal and
interest made on a new note, and to the proceeds of a
disposition of a new note before maturity within the United
States, that are made to a non-corporate beneficial owner of the
new notes if that beneficial owner fails to provide an accurate
taxpayer identification number or otherwise comply with
applicable requirements of the backup withholding rules. Backup
withholding is not an additional tax and may be credited against
a beneficial owners U.S. federal income tax
liability, provided that the required information is furnished
to the U.S. Internal Revenue Service.
Non-U.S. Holders. For
purposes of the following discussion a
non-U.S. holder
means a beneficial owner of the new notes that is not, for
U.S. federal income tax purposes, a U.S. holder or a
partnership (or entity or arrangement classified as a
partnership for such purposes). A
non-U.S. holder
generally will not be subject to U.S. federal income or
withholding tax on:
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interest and Additional Amounts received in respect of the new
notes, unless those payments are effectively connected with the
conduct by the
non-U.S. holder
of a trade or business in the United States; or
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gain realized on the sale, exchange, redemption or retirement of
the new notes, unless that gain is effectively connected with
the conduct by the
non-U.S. holder
of a trade or business in the United States or, in the case of
gain realized by an individual
non-U.S. holder,
the
non-U.S. holder
is present in the United States for 183 days or more in the
taxable year of the disposition and certain other conditions are
met.
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Federal
Mexican Taxation
The below discussion does not address all Mexican tax
considerations that may be relevant to particular investors, nor
does it address the special tax rules applicable to certain
categories of investors or any tax consequences under the tax
laws of any state or municipality of Mexico.
The following is a general summary of the principal
consequences, under the Mexican Income Tax Law, Federal Tax Code
and rules as currently in effect (collectively, the
Mexican Income Tax Laws), all of which are subject
to change or interpretation, and under the
U.S.-Mexico
treaty, of the purchase, ownership and disposition of the notes
by a foreign holder that acquires the notes in this offering at
the price at which the notes are sold in this offering. As used
in this prospectus, a foreign holder means a
beneficial owner of the notes that:
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is not a resident of Mexico for tax purposes;
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70
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does not hold the notes or a beneficial interest in the notes in
connection with the conduct of a trade or business through a
permanent establishment in Mexico; and
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is not (a) a holder of more than 10% of our voting stock,
directly or indirectly, jointly with persons related to us or
individually, or (b) a corporation or other entity, more
than 20% of whose stock is owned, directly or indirectly,
jointly by persons related to us or individually (each a
Related Party), that in the case of either
(a) or (b), is the effective beneficiary, directly or
indirectly, jointly with persons related to us or individually,
of more than 5% of the aggregate amount of any interest payment
on the notes.
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For these purposes, persons will be related if:
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one person holds an interest in the business of the other person;
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both persons have common interests; or
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a third party has an interest in the business or assets of both
persons.
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According to the Mexican Income Tax Laws:
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an individual is a Mexican tax resident if the individual has
established his permanent home in Mexico. When an individual, in
addition to his permanent home in Mexico, has a permanent home
in another country, the individual will be a Mexican tax
resident if his center of vital interests is located in Mexico.
This will be deemed to occur if, among other circumstances,
either (i) more than 50% of the total income obtained by
the individual in the calendar year is Mexican source or
(ii) when the individuals center of professional
activities is located in Mexico, and (iii) Mexican
nationals who are state officials or state workers, even if
their center of vital interest is located abroad. Mexican
nationals who filed a change of tax residence to a country or
jurisdiction that does not have a comprehensive exchange of
information agreement with Mexico in which her/his income is
subject to a preferred tax regime pursuant to the provisions of
the Mexican Income Tax Law, will be considered Mexican residents
for tax purposes during the year of filing of the notice of such
residence change and during the following three years. Unless
otherwise proven, a Mexican national is considered a Mexican tax
resident;
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a legal entity is considered a Mexican tax resident if it
maintains the main administration of its head office, business
or the effective location of its management in Mexico;
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a foreign person with a permanent establishment in Mexico will
be required to pay taxes in Mexico in accordance with the
Mexican Income Tax Law for all income attributable to such
permanent establishment; and
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a foreign person without a permanent establishment in Mexico
will be required to pay taxes in Mexico in respect of revenues
proceeding from sources of wealth located in national territory.
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Each foreign holder should consult a tax advisor as to the
particular Mexican or other tax consequences to that foreign
holder of purchasing, owning and disposing of the notes,
including the applicability and effect of any state, local or
foreign tax laws.
Interest and Principal. Payments of interest
on the notes (including payments of principal in excess of the
issue price of the notes, which under the Mexican Income Tax Law
are deemed to be interest) made by us to a foreign holder will
be subject to a Mexican withholding tax assessed at a rate of
4.9% if all of the following requirements are met:
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the notes, as expected, are placed outside of Mexico through
banks or brokerage houses, in a country with which Mexico has
entered into a treaty for the avoidance of double taxation and
such treaty is in effect;
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regarding the notes, as expected, the notice referred to in the
second paragraph of Article 7 of the Securities Market Law
is filed with the National Banking and Securities Commission,
and a copy of that notice is provided to the Mexican Ministry of
Finance and Public Credit;
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we timely file with the Mexican Ministry of Finance and Public
Credit 15 days after placement of the notes according to
this prospectus, certain information relating to the issuance of
the notes and this prospectus; and
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71
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we timely file with the Mexican Ministry of Finance and Public
Credit, on a quarterly basis, information representing
(a) the amount and the payment date of interest, and
(b) that no Related Party jointly or individually, directly
or indirectly, is the effective beneficiary of more than 5% of
the aggregate amount of each interest payment, and we maintain
records that evidence compliance with this requirement.
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We expect that all of the foregoing requirements will be met
and, accordingly, we expect to withhold Mexican income tax from
interest payments on the notes made to foreign holders at the
4.9% rate in accordance with the Mexican Income Tax Law. In the
event that any of the foregoing requirements are not met, under
the Mexican Income Tax Law, payments of interest on the notes
made by us to a foreign holder will be subject to Mexican
withholding tax assessed at a rate of 10% or higher, if certain
other requirements are not complied with.
As of the date of this prospectus, neither the
U.S.-Mexico
treaty nor any other tax treaty entered into by Mexico is
expected generally to have any material effect on the Mexican
income tax consequences described in this prospectus, because,
as discussed above, it is expected that the 4.9% rate will apply
in the future and, therefore, that we will be entitled to
withhold taxes in connection with interest payments under the
notes at the 4.9% rate.
Other foreign holders should consult their tax advisors
regarding whether they reside in a country that has entered into
a treaty for the avoidance of double taxation with Mexico and,
if so, the conditions and requirements for obtaining benefits
under that treaty. The Mexican Income Tax Law provides that in
order for a foreign holder to be entitled to the benefits under
a treaty entered into by Mexico, it is necessary for the foreign
holder to meet the procedural requirements established in the
Mexican Income Tax Law.
Holders or beneficial owners of the notes may be requested,
subject to specified exceptions and limitations, to provide
certain information or documentation necessary to enable us to
apply the appropriate Mexican withholding tax rate applicable to
such holders or beneficial owners. In the event that the
specified information or documentation concerning the holder or
beneficial owner, if requested, is not provided prior to the
payment of any interest to that holder or beneficial owner, we
may withhold Mexican tax from that interest payment to that
holder or beneficial owner at the maximum applicable rate, but
our obligation to pay Additional Amounts relating to those
withholding taxes will be limited as described under
Description of the New Notes Certain
Covenants Additional Amounts.
Under the Mexican Income Tax Law, payments of interest made by
us with respect to the notes to non-Mexican pension or
retirement funds will be exempt from Mexican withholding taxes,
provided that the fund:
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is the effective beneficiary of each interest payment;
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is duly organized under the laws of its country of origin;
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is exempt from income tax in that country in respect of such
interest payment; and
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is registered with the Mexican Ministry of Finance and Public
Credit for that purpose.
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We have agreed, subject to specified exceptions and limitations,
to pay Additional Amounts relating to the above-mentioned
Mexican withholding taxes to foreign holders of the notes. See
Description of the New Notes Certain
Covenants Additional Amounts.
Under the Mexican Income Tax Law, a foreign holder will not be
subject to any Mexican withholding or similar taxes on payments
of principal on the notes made by us (except for payments of
principal in excess of the issue price of the notes, which under
the Mexican Income Tax Law are deemed to be interest subject to
the Mexican withholding taxes described above).
Dispositions. Under the Mexican Income Tax
Law, gains resulting from the sale of the notes by a foreign
holder to a Mexican resident or permanent establishment of a
foreign holder, or by the sale of a permanent establishment of a
foreign holder, will be treated as interest and therefore will
be subject to the Mexican withholding tax rules described above.
Other Taxes. A foreign holder will not be
liable for Mexican estate, gift, inheritance or similar taxes
with respect to its holding of the notes, nor will it be liable
for Mexican stamp, registration or similar taxes.
72
European
Union Directive on the Taxation of Savings Income
The European Union Council Directive 2003/48/EC regarding the
taxation of savings income payments (the Directive)
obliges each Member State of the European Union (Member
State), to provide to the tax authorities of each other
Member State details of payments of interest and other similar
income payments made by a person within the jurisdiction of the
first Member State to an individual or to certain other persons
in that other Member State (or of certain payments secured for
their benefit). However, Austria and Luxembourg have, and
remain, opted out of these reporting requirements and are
instead applying a special withholding tax for a transitional
period in relation to such payments of interest, deducting tax
at rates rising over time to 35 percent. This transitional
period will terminate at the end of the first fiscal year
following agreements by certain non European Union countries to
the exchange of information in relation to such payments.
Also, a number of non European Union countries and certain
dependent or associated territories of Member States have
adopted similar measures (either provision of information or
transitional withholding) in relation to payments of interest or
other similar income payments made by a person in that
jurisdiction to an individual or certain other persons in any
Member State. The Member States have entered into reciprocal
provision of information or transitional special withholding tax
arrangements with certain of those dependent or associated
territories. These apply in the same way to payments by persons
in any Member State to individuals or certain other persons in
those territories.
If a payment were to be made or collected through a Member State
(or such a non-European Union country or territory) which has
opted for a withholding system and an amount of, or in respect
of, tax were to be withheld from that payment, neither the
issuer nor any paying agent nor any other person would be
obliged to pay additional amounts to the holders of the new
notes or to otherwise compensate the holders of the new notes
for the reduction in the amounts that they will receive as a
result of the imposition of such withholding tax.
It should be noted that the European Commission has announced
proposals to amend the Directive. If implemented, the proposed
amendments would, among other things, extend the scope of the
Directive to (i) payments made through certain intermediate
structures (whether or not established in a Member State) for
the ultimate benefit of an individual resident in the European
Union, and (ii) a wider range of income similar to interest.
73
PLAN OF
DISTRIBUTION
The following requirements apply only to broker-dealers. If you
are not a broker-dealer as defined in Section 3(a)(4) and
Section 3(a)(5) of the Exchange Act, these requirements do
not affect you.
Each broker-dealer that receives new notes for its own account
under the exchange offer must acknowledge that it will deliver a
prospectus in connection with any resale of the new notes. This
prospectus, as it may be amended or supplemented from time to
time, may be used by a broker-dealer in connection with resales
of new notes received in exchange for old notes where the old
notes were acquired as a result of market-making activities or
other trading activities. We have agreed that, for a period of
90 days after the expiration date, we will make this
prospectus, as amended or supplemented, available to any
broker-dealer for use in connection with any such resale.
We will not receive any proceeds from any sale of new notes by
broker-dealers or any other holder of new notes. New notes
received by broker-dealers for their own account under the
exchange offer may be sold from time to time in one or more
transactions in the
over-the-counter
market, in negotiated transactions, through the writing of
options on the new notes or a combination of these methods of
resale, at market prices prevailing at the time of resale, at
prices related to the prevailing market prices or at negotiated
prices. The resale may be made directly to purchasers or to or
through brokers or dealers who may receive compensation in the
form of commissions or concessions from any of these
broker-dealers
and/or the
purchasers of any such new notes. Any broker-dealer that resells
new notes that were received by it for its own account in the
exchange offer or participates in a distribution of the new
notes may be deemed to be an underwriter within the
meaning of the Securities Act and any profit on their resale of
new notes and any commissions or concessions received by them
may be deemed to be underwriting compensation under the
Securities Act. The letter of transmittal states that by
acknowledging that it will deliver a prospectus and by
delivering a prospectus, a broker-dealer will not be deemed to
admit that it is an underwriter within the meaning
of the Securities Act.
The new notes will constitute a new issue of securities with no
established trading market. We do not intend to list the new
notes on any national securities exchange or to seek approval
for quotation through any automated quotation system, except
that application has been made to list the new notes on the
Luxembourg Stock Exchange. We have been advised by the placement
agents of the old notes that following completion of this
exchange offer, these placement agents intend to make a market
in the new notes. However, they are not obligated to do so and
any market-making activities with respect to the new notes may
be discontinued at any time without notice. Accordingly, no
assurance can be given that an active public or other market
will develop for the new notes or as to the liquidity of or the
trading market for the new notes. If a trading market does not
develop or is not maintained, holders of the new notes may
experience difficulty in reselling the new notes or may be
unable to sell them at all. If a market for the new notes
develops, any such market may cease to continue at any time. In
addition, if a market for the new notes develops, the market
prices of the new notes may be volatile. Factors such as
fluctuations in our earnings and cash flow, the difference
between our actual results and results expected by investors and
analysts and Mexican and U.S. currency and economic
developments could cause the market prices of the new notes to
fluctuate substantially.
For a period of 90 days after the expiration date, we will
promptly send additional copies of this prospectus and any
amendment or supplement to this prospectus to any broker-dealer
that requests these documents in the letter of transmittal. We
have agreed to pay all expenses incident to the exchange offer,
including the reasonable expenses of one counsel for the holders
of the old notes, other than commissions or concessions of any
brokers or dealers. In addition, we will indemnify the holders
of the old notes (including any broker-dealers) against certain
liabilities, including liabilities under the Securities Act.
74
GENERAL
INFORMATION
Clearing
Systems
The new notes have been accepted for clearance through Euroclear
and Clearstream Banking. In addition, the new notes have been
accepted for trading in book entry form by DTC. The ISIN number
for the new notes is US40049JAZ03 and the CUSIP number is
40049JAZ0.
Listing
Application has been made to list the new notes on the
Luxembourg Stock Exchange. In connection with the application to
list notes on the Luxembourg Stock Exchange, a legal notice
relating to the issuance of the notes and a copy of the bylaws
(estatutos sociales) of Televisa will be available at the
Registrar of the District Court in Luxembourg (Greffier en
Chef du Tribunal dArrondissement de et à Luxembourg)
where such documents may be examined or copies obtained.
Copies of the estatutos sociales of Televisa in English,
the indenture, as may be amended or supplemented from time to
time, any published annual audited consolidated financial
statements and quarterly unaudited consolidated financial
statements of Televisa will be available at the principal office
of Televisa, at the offices of the trustee, the offices of the
Luxembourg listing agent, at no cost, and at the addresses of
the paying agents set forth on the back cover of this
prospectus. Televisa does not make publicly available annual or
quarterly non-consolidated financial statements. Televisa will
maintain a paying and transfer agent in Luxembourg for so long
as any old notes or new notes are listed on the Luxembourg Stock
Exchange.
Authorization
We have obtained all necessary consents, approvals and
authorizations in connection with the issuance and performance
of the notes. The issuance of the notes was authorized by
resolutions of the Board of Directors of Televisa passed on
April 30, 2009.
No
Material Adverse Change
Except as disclosed in this prospectus, there has been no
material adverse change in the financial position or prospects
of Televisa and its subsidiaries taken as a whole since
September 30, 2009.
Litigation
Except as disclosed in Item 10 Additional
Information Legal Proceedings included in the
2008
Form 20-F
and Recent Developments herein, Televisa is not involved in any
legal or arbitration proceedings (including any such proceedings
which are pending or threatened) relating to claims or amounts
which may have or have had during the 12 months prior to
the date of this prospectus a material adverse effect on the
financial position of Televisa and its subsidiaries taken as a
whole.
75
AVAILABLE
INFORMATION
We have filed with the SEC a registration statement on
Form F-4
under the Securities Act with respect to the securities offered
by this prospectus. The prospectus, which forms a part of the
registration statement, including amendments, does not contain
all the information included in the registration statement. This
prospectus is based on information provided by us and other
sources that we believe to be reliable. This prospectus
summarizes certain documents and other information and we refer
you to them for a more complete understanding of what we discuss
in this prospectus. This prospectus incorporates important
business and financial information about us which is not
included in or delivered with this prospectus. You can obtain
documents containing this information through us. If you would
like to request these documents from us, please do so
by March 5, 2010,
to receive them before the expiration date.
Televisa is subject to the informational requirements of the
Exchange Act and in accordance therewith files reports and other
information with the SEC. Reports and other information filed by
Televisa with the SEC can be inspected and copied at the public
reference facilities maintained by the SEC at its Public
Reference Room at 100 F Street, N.E.,
Washington, D.C. 20549. You may obtain information on the
operation of the Public Reference Room by calling the SEC at
1-800-SEC-0330.
Such materials can also be inspected at the offices of the New
York Stock Exchange, Inc., 20 Broad Street, New York, New
York 10005. Any filings we make electronically will be available
to the public over the Internet at the SECs website at
www.sec.gov.
We will make available to the holders of the notes, at the
corporate trust office of The Bank of New York Mellon, the
trustee under the indenture and supplemental indenture governing
the notes, at no cost, copies, in physical form, of the
indenture and the supplemental indenture as well as our annual
report on
Form 20-F
in English, including a review of our operations, and annual
audited consolidated financial statements prepared in conformity
with Mexican FRS, together with a reconciliation of operating
income, net income and total stockholders equity to
U.S. GAAP as well as a copy of this prospectus and our
articles of association (estatutos sociales). We will
also make available at the office of the trustee our unaudited
quarterly consolidated financial statements in English prepared
in accordance with Mexican FRS.
LEGAL
MATTERS
Some legal matters relating to the validity of the notes will be
passed upon by Mijares, Angoitia, Cortés y Fuentes, S.C.,
Mexico City, Mexico and Fried, Frank, Harris,
Shriver & Jacobson LLP, New York, New York,
Televisas Mexican and U.S. counsel, respectively.
With respect to matters of Mexican law, Fried, Frank, Harris,
Shriver & Jacobson LLP may rely upon the opinion of
Mijares, Angoitia, Cortés y Fuentes, S.C.
Alfonso de Angoitia Noriega, one of our directors, Executive
Vice President and Member of the Executive Office of the
Chairman and Member of the Executive Committee of Televisa, is a
partner on leave of absence from Mijares, Angoitia, Cortés
y Fuentes, S.C. and Ricardo Maldonado Yáñez, Secretary
of the Board and Secretary of the Executive Committee of Grupo
Televisa, is an active partner of Mijares, Angoitia, Cortés
y Fuentes, S.C.
EXPERTS
The financial statements as of December 31, 2007 and 2008,
and for each of the three years ended December 31, 2008 included
in this registration statement and managements assessment of the
effectiveness of internal control over financial reporting
(which is included in Managements Report on Internal
Control over Financial Reporting) incorporated in this
registration statement by reference to the Annual Report on
Form 20-F
for the year ended December 31, 2008, have been so included and incorporated in reliance of the report of
PricewaterhouseCoopers, S.C., an independent registered public
accounting firm, given on the authority of such firm as an
expert in auditing and accounting.
76
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of Grupo Televisa, S.A.B.:
In our opinion, the accompanying consolidated balance sheets and the related consolidated
statements of income, of changes in stockholders equity, of changes in financial position and
of cash flows, present fairly, in all material respects, the financial position of Grupo
Televisa, S.A.B. (the Company) and its subsidiaries at December 31, 2007 and 2008, and the
results of their operations and changes in their stockholders equity for each of the three
years in the period ended December 31, 2008, as well as the changes in their financial position
for each of the two years ended in the period ended December 31, 2007, and their cash flows for
the year ended December 31, 2008, in conformity with Mexican Financial Reporting Standards.
Also in our opinion, the Company maintained, in all material respects, effective internal
control over financial reporting as of December 31, 2008, based on the criteria established in
Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of
the Treadway Commission (COSO). The Companys management is responsible for these financial
statements, for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting, included in
Managements Report on Internal Control Over Financial Reporting appearing on Item 15. Our
responsibility is to express opinions on these financial statements and on the Companys
internal control over financial reporting based on our integrated audits. We conducted our
audits in accordance with the standards of the Public Company Accounting Oversight Board
(United States) and with generally accepted auditing standards in Mexico. Those standards
require that we plan and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement and whether effective internal control
over financial reporting was maintained in all material respects. Our audits of the financial
statements included examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation. Our audit of
internal control over financial reporting included obtaining an understanding of internal
control over financial reporting, assessing the risk that a material weakness exists, and
testing and evaluating the design and operating effectiveness of internal control based on the
assessed risk. Our audits also included performing such other procedures as we consider
necessary in the circumstances. We believe that our audits provide a reasonable basis for our
opinions.
As discussed in Note 1(a) to the consolidated financial statements, effective January 1, 2008,
the Company discontinued the recognition of the effects of inflation in its financial
information, in accordance with Mexican Financial Reporting Standards. As a retroactive
application to the prior years financials is not permitted by such standards, the accompanying
consolidated financial statements as of December 31, 2007 and for the years ended December 31,
2006 and 2007 are restated in Mexican Pesos in purchasing power as of December 31, 2007.
As discussed in Note 1(a) to the consolidated financial statements, effective January 1, 2008,
the Company is required by Mexican Financial Reporting Standards to present a statement of cash
flows in place of a statement of changes in financial position. As a restatement of prior
years financials is not permitted by such standards, the Company presents consolidated
statements of changes in financial position for the years ended December 31, 2006 and 2007, and
a consolidated statement of cash flows for the year ended December 31, 2008.
Mexican Financial Reporting Standards vary in certain significant respects from accounting
principles generally accepted in the United States of America. Information relating to the
nature and effect of such differences is presented in Note 23 to the consolidated financial
statements.
A companys internal control over financial reporting is a process designed to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting
principles. A companys internal control over financial reporting includes those policies and
procedures that (i) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company;
(ii) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company are being made only in accordance
with authorization of management and directors of the company; and (iii) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the companys assets that could have a material effect on the financial
statements.
Because of its inherent limitations, internal control over financial reporting may not prevent
or detect misstatements. Also, projections of any evaluation of effectiveness to future periods
are subject to the risk that controls may become inadequate because of changes in conditions,
or that the degree of compliance with the policies or procedures may deteriorate.
PricewaterhouseCoopers, S.C.
C.
P. C. José A. Salazar Tapia
Audit Partner
México, D. F.,
June 30, 2009 (except with respect to the retrospective application of SFAS No. 160 as described in Note 23, as
to which the date is January 28, 2010).
F-2
Grupo Televisa, S.A.B.
Consolidated Balance Sheets
As of December 31, 2007 and 2008
(In thousands of Mexican Pesos)
(Notes 1 and 2)
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|
|
|
|
|
|
|
|
|
|
Notes |
|
|
2007 |
|
|
2008 |
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
Current: |
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
|
|
|
Ps. |
25,479,541 |
|
|
Ps. |
35,106,060 |
|
Temporary investments |
|
|
|
|
|
|
1,825,355 |
|
|
|
6,798,271 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,304,896 |
|
|
|
41,904,331 |
|
Trade notes and accounts receivable, net |
|
|
3 |
|
|
|
17,294,674 |
|
|
|
18,199,880 |
|
Other accounts and notes receivable, net |
|
|
|
|
|
|
2,536,803 |
|
|
|
2,231,562 |
|
Due from affiliated companies |
|
|
16 |
|
|
|
195,023 |
|
|
|
161,821 |
|
Transmission rights and programming |
|
|
4 |
|
|
|
3,154,681 |
|
|
|
3,343,448 |
|
Inventories |
|
|
|
|
|
|
833,996 |
|
|
|
1,612,024 |
|
Other current assets |
|
|
|
|
|
|
653,260 |
|
|
|
1,105,871 |
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets |
|
|
|
|
|
|
51,973,333 |
|
|
|
68,558,937 |
|
Derivative financial instruments |
|
|
9 |
|
|
|
53,527 |
|
|
|
2,316,560 |
|
Transmission rights and programming |
|
|
4 |
|
|
|
5,252,748 |
|
|
|
6,324,761 |
|
Investments |
|
|
5 |
|
|
|
8,115,584 |
|
|
|
3,348,610 |
|
Property, plant and equipment, net |
|
|
6 |
|
|
|
25,853,925 |
|
|
|
30,798,398 |
|
Intangible assets and deferred charges, net |
|
|
7 |
|
|
|
7,416,073 |
|
|
|
11,433,783 |
|
Other assets |
|
|
|
|
|
|
38,286 |
|
|
|
70,756 |
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
|
|
|
|
Ps. |
98,703,476 |
|
|
Ps. |
122,851,805 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
|
|
|
|
|
|
Current: |
|
|
|
|
|
|
|
|
|
|
|
|
Current portion of long-term debt |
|
|
8 |
|
|
Ps. |
488,650 |
|
|
Ps. |
2,283,175 |
|
Current portion of satellite transponder lease obligation |
|
|
8 |
|
|
|
97,696 |
|
|
|
138,806 |
|
Trade accounts payable |
|
|
|
|
|
|
4,457,519 |
|
|
|
6,337,436 |
|
Customer deposits and advances |
|
|
|
|
|
|
17,145,053 |
|
|
|
18,098,643 |
|
Taxes payable |
|
|
|
|
|
|
684,497 |
|
|
|
830,073 |
|
Accrued interest |
|
|
|
|
|
|
307,814 |
|
|
|
439,777 |
|
Employee benefits |
|
|
|
|
|
|
255,574 |
|
|
|
199,993 |
|
Due to affiliated companies |
|
|
16 |
|
|
|
127,191 |
|
|
|
88,622 |
|
Other accrued liabilities |
|
|
|
|
|
|
1,833,939 |
|
|
|
2,293,806 |
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
|
|
|
|
25,397,933 |
|
|
|
30,710,331 |
|
Long-term debt, net of current portion |
|
|
8 |
|
|
|
25,307,163 |
|
|
|
36,679,889 |
|
Derivative financial instruments |
|
|
9 |
|
|
|
84,413 |
|
|
|
604,650 |
|
Satellite transponder lease obligation, net of current portion |
|
|
8 |
|
|
|
1,035,134 |
|
|
|
1,172,857 |
|
Customer deposits and advances |
|
|
|
|
|
|
2,665,185 |
|
|
|
589,369 |
|
Other long-term liabilities |
|
|
|
|
|
|
1,975,593 |
|
|
|
3,225,482 |
|
Deferred income taxes |
|
|
19 |
|
|
|
1,272,834 |
|
|
|
2,265,161 |
|
Retirement and termination benefits |
|
|
10 |
|
|
|
314,921 |
|
|
|
352,390 |
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
|
|
|
|
58,053,176 |
|
|
|
75,600,129 |
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies |
|
|
11 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
Capital stock issued, no par value |
|
|
12 |
|
|
|
10,267,570 |
|
|
|
10,060,950 |
|
Additional paid-in capital |
|
|
|
|
|
|
4,547,944 |
|
|
|
4,547,944 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,815,514 |
|
|
|
14,608,894 |
|
|
|
|
|
|
|
|
|
|
|
|
Retained earnings: |
|
|
13 |
|
|
|
|
|
|
|
|
|
Legal reserve |
|
|
|
|
|
|
2,135,423 |
|
|
|
2,135,423 |
|
Reserve for repurchase of shares |
|
|
|
|
|
|
1,240,869 |
|
|
|
|
|
Unappropriated earnings |
|
|
|
|
|
|
21,713,378 |
|
|
|
19,595,259 |
|
Net income for the year |
|
|
|
|
|
|
8,082,463 |
|
|
|
7,803,652 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33,172,133 |
|
|
|
29,534,334 |
|
Accumulated other comprehensive (loss) income, net |
|
|
14 |
|
|
|
(3,009,468 |
) |
|
|
3,184,043 |
|
Shares repurchased |
|
|
12 |
|
|
|
(7,939,066 |
) |
|
|
(5,308,429 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,223,599 |
|
|
|
27,409,948 |
|
|
|
|
|
|
|
|
|
|
|
|
Total majority interest |
|
|
|
|
|
|
37,039,113 |
|
|
|
42,018,842 |
|
Minority interest |
|
|
15 |
|
|
|
3,611,187 |
|
|
|
5,232,834 |
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders equity |
|
|
|
|
|
|
40,650,300 |
|
|
|
47,251,676 |
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders equity |
|
|
|
|
|
Ps. |
98,703,476 |
|
|
Ps. |
122,851,805 |
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these consolidated financial statements.
F-3
Grupo Televisa, S.A.B.
Consolidated Statements of Income
For the Years Ended December 31, 2006, 2007 and 2008
(In thousands of Mexican Pesos, except per CPO amounts)
(Notes 1 and 2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes |
|
|
2006 |
|
|
2007 |
|
|
2008 |
|
Net sales |
|
|
22 |
|
|
Ps. |
39,357,699 |
|
|
Ps. |
41,561,526 |
|
|
Ps. |
47,972,278 |
|
Cost of sales (excluding depreciation and
amortization) |
|
|
|
|
|
|
16,791,197 |
|
|
|
18,128,007 |
|
|
|
21,556,025 |
|
Selling expenses (excluding depreciation and
amortization) |
|
|
|
|
|
|
3,130,230 |
|
|
|
3,277,526 |
|
|
|
3,919,163 |
|
Administrative expenses (excluding
depreciation and amortization) |
|
|
|
|
|
|
2,390,785 |
|
|
|
2,452,027 |
|
|
|
3,058,168 |
|
Depreciation and amortization |
|
6 and 7 |
|
|
|
2,779,772 |
|
|
|
3,223,070 |
|
|
|
4,311,115 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income |
|
|
22 |
|
|
|
14,265,715 |
|
|
|
14,480,896 |
|
|
|
15,127,807 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other expense, net |
|
|
17 |
|
|
|
888,070 |
|
|
|
953,352 |
|
|
|
952,139 |
|
Integral cost of financing, net |
|
|
18 |
|
|
|
1,141,028 |
|
|
|
410,214 |
|
|
|
830,882 |
|
Equity in losses of affiliates, net |
|
|
5 |
|
|
|
624,843 |
|
|
|
749,299 |
|
|
|
1,049,934 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes |
|
|
|
|
|
|
11,611,774 |
|
|
|
12,368,031 |
|
|
|
12,294,852 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income taxes |
|
|
19 |
|
|
|
2,092,478 |
|
|
|
3,349,641 |
|
|
|
3,564,195 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated net income |
|
|
|
|
|
|
9,519,296 |
|
|
|
9,018,390 |
|
|
|
8,730,657 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minority interest net income |
|
|
15 |
|
|
|
610,353 |
|
|
|
935,927 |
|
|
|
927,005 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Majority interest net income |
|
|
13 |
|
|
Ps. |
8,908,943 |
|
|
Ps. |
8,082,463 |
|
|
Ps. |
7,803,652 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Majority interest net income per CPO |
|
|
20 |
|
|
Ps. |
3.07 |
|
|
Ps. |
2.84 |
|
|
Ps. |
2.77 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these consolidated financial statements.
F-4
Grupo Televisa, S.A.B.
Consolidated Statements of Changes in Stockholders Equity
For the Years Ended December 31, 2006, 2007 and 2008
(In thousands of Mexican Pesos)
(Notes 1 and 2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital |
|
|
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock |
|
|
Additional |
|
|
Retained |
|
|
Comprehensive |
|
|
Shares |
|
|
Total |
|
|
Minority |
|
|
Total |
|
|
|
Issued |
|
|
Paid-In |
|
|
Earnings |
|
|
(Loss) Income |
|
|
Repurchased |
|
|
Majority |
|
|
Interest |
|
|
Stockholders |
|
|
|
(Note 12) |
|
|
Capital |
|
|
(Note 13) |
|
|
(Note 14) |
|
|
(Note 12) |
|
|
Interest |
|
|
(Note 15) |
|
|
Equity |
|
Balance at
January 1, 2006 |
|
Ps. |
10,677,114 |
|
|
Ps. |
4,547,944 |
|
|
Ps. |
27,533,836 |
|
|
Ps. |
(3,828,825 |
) |
|
Ps. |
(7,606,260 |
) |
|
Ps. |
31,323,809 |
|
|
Ps. |
918,641 |
|
|
Ps. |
32,242,450 |
|
Dividends |
|
|
|
|
|
|
|
|
|
|
(1,161,839 |
) |
|
|
|
|
|
|
|
|
|
|
(1,161,839 |
) |
|
|
|
|
|
|
(1,161,839 |
) |
Share cancellation |
|
|
(170,258 |
) |
|
|
|
|
|
|
(1,575,231 |
) |
|
|
|
|
|
|
1,745,489 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Repurchase of
capital stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,224,515 |
) |
|
|
(3,224,515 |
) |
|
|
|
|
|
|
(3,224,515 |
) |
Sale of repurchase
shares |
|
|
|
|
|
|
|
|
|
|
(609,049 |
) |
|
|
|
|
|
|
1,196,312 |
|
|
|
587,263 |
|
|
|
|
|
|
|
587,263 |
|
|
Increase in
minority interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
723,960 |
|
|
|
723,960 |
|
|
Benefit from
capital
contribution of
minority interest
in Sky |
|
|
|
|
|
|
|
|
|
|
385,596 |
|
|
|
|
|
|
|
|
|
|
|
385,596 |
|
|
|
|
|
|
|
385,596 |
|
Loss on minority
interest
acquisition of Sky |
|
|
|
|
|
|
|
|
|
|
(711,311 |
) |
|
|
|
|
|
|
|
|
|
|
(711,311 |
) |
|
|
|
|
|
|
(711,311 |
) |
Stock-based
compensation |
|
|
|
|
|
|
|
|
|
|
243,882 |
|
|
|
|
|
|
|
|
|
|
|
243,882 |
|
|
|
|
|
|
|
243,882 |
|
Comprehensive income |
|
|
|
|
|
|
|
|
|
|
8,908,943 |
|
|
|
20,448 |
|
|
|
|
|
|
|
8,929,391 |
|
|
|
|
|
|
|
8,929,391 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at
December 31, 2006 |
|
|
10,506,856 |
|
|
|
4,547,944 |
|
|
|
33,014,827 |
|
|
|
(3,808,377 |
) |
|
|
(7,888,974 |
) |
|
|
36,372,276 |
|
|
|
1,642,601 |
|
|
|
38,014,877 |
|
Dividends |
|
|
|
|
|
|
|
|
|
|
(4,506,492 |
) |
|
|
|
|
|
|
|
|
|
|
(4,506,492 |
) |
|
|
|
|
|
|
(4,506,492 |
) |
Share cancellation |
|
|
(239,286 |
) |
|
|
|
|
|
|
(3,386,013 |
) |
|
|
|
|
|
|
3,625,299 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Repurchase of
capital stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,948,331 |
) |
|
|
(3,948,331 |
) |
|
|
|
|
|
|
(3,948,331 |
) |
Sale of repurchase
shares |
|
|
|
|
|
|
|
|
|
|
(173,169 |
) |
|
|
|
|
|
|
272,940 |
|
|
|
99,771 |
|
|
|
|
|
|
|
99,771 |
|
|
Increase in
minority interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,968,586 |
|
|
|
1,968,586 |
|
Stock-based
compensation |
|
|
|
|
|
|
|
|
|
|
140,517 |
|
|
|
|
|
|
|
|
|
|
|
140,517 |
|
|
|
|
|
|
|
140,517 |
|
Comprehensive income |
|
|
|
|
|
|
|
|
|
|
8,082,463 |
|
|
|
798,909 |
|
|
|
|
|
|
|
8,881,372 |
|
|
|
|
|
|
|
8,881,372 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at
December 31, 2007 |
|
|
10,267,570 |
|
|
|
4,547,944 |
|
|
|
33,172,133 |
|
|
|
(3,009,468 |
) |
|
|
(7,939,066 |
) |
|
|
37,039,113 |
|
|
|
3,611,187 |
|
|
|
40,650,300 |
|
Reclassification of
cumulative balances
to retained
earnings (see Note
14) |
|
|
|
|
|
|
|
|
|
|
(5,896,939 |
) |
|
|
5,896,939 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends |
|
|
|
|
|
|
|
|
|
|
(2,229,973 |
) |
|
|
|
|
|
|
|
|
|
|
(2,229,973 |
) |
|
|
|
|
|
|
(2,229,973 |
) |
Share cancellation |
|
|
(206,620 |
) |
|
|
|
|
|
|
(3,275,032 |
) |
|
|
|
|
|
|
3,481,652 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Repurchase of
capital stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,251,148 |
) |
|
|
(1,251,148 |
) |
|
|
|
|
|
|
(1,251,148 |
) |
Sale of repurchase
shares |
|
|
|
|
|
|
|
|
|
|
(261,553 |
) |
|
|
|
|
|
|
400,133 |
|
|
|
138,580 |
|
|
|
|
|
|
|
138,580 |
|
|
Increase in
minority interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,621,647 |
|
|
|
1,621,647 |
|
Stock-based
compensation |
|
|
|
|
|
|
|
|
|
|
222,046 |
|
|
|
|
|
|
|
|
|
|
|
222,046 |
|
|
|
|
|
|
|
222,046 |
|
Comprehensive income |
|
|
|
|
|
|
|
|
|
|
7,803,652 |
|
|
|
296,572 |
|
|
|
|
|
|
|
8,100,224 |
|
|
|
|
|
|
|
8,100,224 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at
December 31, 2008 |
|
Ps. |
10,060,950 |
|
|
Ps. |
4,547,944 |
|
|
Ps. |
29,534,334 |
|
|
Ps. |
3,184,043 |
|
|
Ps. |
(5,308,429 |
) |
|
Ps. |
42,018,842 |
|
|
Ps. |
5,232,834 |
|
|
Ps. |
47,251,676 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these consolidated financial statements.
F-5
Grupo Televisa, S.A.B.
Consolidated Statements of Changes in Financial Position
For the Years Ended December 31, 2006 and 2007
(In thousands of Mexican Pesos)
(Notes 1 and 2)
|
|
|
|
|
|
|
|
|
|
|
2006 |
|
|
2007 |
|
Operating activities: |
|
|
|
|
|
|
|
|
Consolidated net income |
|
Ps. |
9,519,296 |
|
|
Ps. |
9,018,390 |
|
|
|
|
|
|
|
|
|
|
Adjustments to reconcile net income to resources provided by operating
activities: |
|
|
|
|
|
|
|
|
Equity in losses of affiliates |
|
|
624,843 |
|
|
|
749,299 |
|
Depreciation and amortization |
|
|
2,779,772 |
|
|
|
3,223,070 |
|
Impairment of long-lived assets and other amortization |
|
|
176,884 |
|
|
|
541,996 |
|
Deferred income taxes |
|
|
1,292,645 |
|
|
|
(358,122 |
) |
Loss on disposition of available-for sale investment in Univision |
|
|
|
|
|
|
565,862 |
|
Gain on disposition of affiliates |
|
|
(19,556 |
) |
|
|
(41,527 |
) |
Stock-based compensation |
|
|
243,882 |
|
|
|
140,517 |
|
|
|
|
|
|
|
|
|
|
|
14,617,766 |
|
|
|
13,839,485 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Decrease (increase) in: |
|
|
|
|
|
|
|
|
Trade notes and accounts receivable, net |
|
|
894,378 |
|
|
|
(3,090,936 |
) |
Transmission rights and programming |
|
|
778,059 |
|
|
|
(1,878,256 |
) |
Inventories |
|
|
(112,827 |
) |
|
|
(32,053 |
) |
Other accounts and notes receivable and other current assets |
|
|
(1,104,190 |
) |
|
|
(443,962 |
) |
(Decrease) increase in: |
|
|
|
|
|
|
|
|
Customer deposits and advances |
|
|
(1,676,832 |
) |
|
|
1,840,116 |
|
Trade accounts payable |
|
|
390,413 |
|
|
|
840,911 |
|
Other liabilities, taxes payable and deferred taxes |
|
|
560,690 |
|
|
|
519,488 |
|
Retirement and termination benefits |
|
|
90,360 |
|
|
|
17,097 |
|
|
|
|
|
|
|
|
|
|
|
(179,949 |
) |
|
|
(2,227,595 |
) |
|
|
|
|
|
|
|
Resources provided by operating activities |
|
|
14,437,817 |
|
|
|
11,611,890 |
|
|
|
|
|
|
|
|
Financing activities: |
|
|
|
|
|
|
|
|
Issuance of Senior Notes due 2037 |
|
|
|
|
|
|
4,500,000 |
|
Empresas Cablevisións long-term loan due 2012 |
|
|
|
|
|
|
2,457,495 |
|
Prepayments of Senior Notes and UDIs denominated Notes |
|
|
|
|
|
|
(1,017,093 |
) |
Prepayments of Senior Notes due 2013 |
|
|
(3,315,749 |
) |
|
|
|
|
Other increase in debt |
|
|
3,631,565 |
|
|
|
50,051 |
|
Other decrease in debt |
|
|
(888,623 |
) |
|
|
(675,234 |
) |
Repurchase and sale of capital stock |
|
|
(2,637,252 |
) |
|
|
(3,848,560 |
) |
Dividends paid |
|
|
(1,161,839 |
) |
|
|
(4,506,492 |
) |
Gain on valuation of available-for-sale investments |
|
|
(565,862 |
) |
|
|
|
|
Loss on minority interest acquisition of Sky |
|
|
(711,311 |
) |
|
|
|
|
Benefit from capital contribution of minority interest in Sky |
|
|
385,596 |
|
|
|
|
|
Minority interest |
|
|
113,607 |
|
|
|
1,032,659 |
|
Translation effect |
|
|
17,202 |
|
|
|
32,877 |
|
|
|
|
|
|
|
|
Resources used in financing activities |
|
|
(5,132,666 |
) |
|
|
(1,974,297 |
) |
|
|
|
|
|
|
|
Investing activities: |
|
|
|
|
|
|
|
|
Due from affiliated companies, net |
|
|
(644,409 |
) |
|
|
32,636 |
|
Investments |
|
|
(4,938,453 |
) |
|
|
(3,385,342 |
) |
Disposition of investments |
|
|
7,194,364 |
|
|
|
700,689 |
|
Investments in property, plant and equipment |
|
|
(3,428,532 |
) |
|
|
(3,915,439 |
) |
Disposition of property, plant and equipment |
|
|
532,676 |
|
|
|
704,310 |
|
Investments in goodwill and other intangible assets |
|
|
(1,224,707 |
) |
|
|
(3,310,968 |
) |
Disposition of goodwill and other intangible assets |
|
|
5,924,375 |
|
|
|
|
|
Available-for-sale investment in shares of Univision |
|
|
(12,266,318 |
) |
|
|
12,266,318 |
|
Acquisition of Telecom net assets |
|
|
|
|
|
|
(1,975,666 |
) |
Other assets |
|
|
(4,026 |
) |
|
|
7,430 |
|
|
|
|
|
|
|
|
Resources (used in) provided by investing activities |
|
|
(8,855,030 |
) |
|
|
1,123,968 |
|
|
|
|
|
|
|
|
Net increase in cash, cash equivalents and temporary investments |
|
|
450,121 |
|
|
|
10,761,561 |
|
Net increase in cash, cash equivalents and temporary investments upon Telecom
acquisition |
|
|
|
|
|
|
138,261 |
|
Cash, cash equivalents and temporary investments at beginning of year |
|
|
15,954,953 |
|
|
|
16,405,074 |
|
|
|
|
|
|
|
|
Cash, cash equivalents and temporary investments at end of year |
|
Ps. |
16,405,074 |
|
|
Ps. |
27,304,896 |
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these consolidated financial statements.
F-6
Grupo Televisa, S.A.B.
Consolidated Statement of Cash Flows
For the Year Ended December 31, 2008
(In thousands of Mexican Pesos)
(Notes 1 and 2)
|
|
|
|
|
|
|
2008 |
|
Operating activities: |
|
|
|
|
Income before income taxes |
|
Ps. |
12,294,852 |
|
|
|
|
|
|
Adjustments to reconcile income before income taxes to net cash
provided by operating activities: |
|
|
|
|
Equity in losses of affiliates |
|
|
1,049,934 |
|
Depreciation and amortization |
|
|
4,311,115 |
|
Impairment of long-lived assets and other amortization |
|
|
669,222 |
|
Provision for doubtful accounts and write-off of receivables |
|
|
337,478 |
|
Retirement and termination benefits |
|
|
5,467 |
|
Write-down of held-to-maturity debt security |
|
|
405,111 |
|
Stock-based compensation |
|
|
222,046 |
|
Derivative financial instruments |
|
|
(895,734 |
) |
Interest expense |
|
|
2,529,221 |
|
Unrealized foreign exchange loss, net |
|
|
4,981,960 |
|
|
|
|
|
|
|
|
25,910,672 |
|
|
|
|
|
Increase in trade notes and accounts receivable, net |
|
|
(1,094,389 |
) |
Increase in transmission rights and programming |
|
|
(1,186,991 |
) |
Increase in inventories |
|
|
(375,153 |
) |
Increase in other accounts and notes receivable and other current assets |
|
|
(391,399 |
) |
Increase in trade accounts payable |
|
|
1,577,231 |
|
Decrease in customer deposits and advances |
|
|
(1,187,734 |
) |
Increase in other liabilities, taxes payable and deferred taxes |
|
|
1,744,395 |
|
Decrease in retirement and termination benefits |
|
|
(81,314 |
) |
Income taxes paid |
|
|
(2,657,525 |
) |
|
|
|
|
|
|
|
(3,652,879 |
) |
|
|
|
|
Net cash provided by operating activities |
|
|
22,257,793 |
|
|
|
|
|
Investing activities: |
|
|
|
|
Temporary investments |
|
|
(3,685,272 |
) |
Due from affiliated companies, net |
|
|
(89,826 |
) |
Investments |
|
|
(1,982,100 |
) |
Disposition of investments |
|
|
109,529 |
|
Disposition of held-to-maturity investments |
|
|
874,999 |
|
Investments in property, plant and equipment |
|
|
(5,191,446 |
) |
Disposition of property, plant and equipment |
|
|
91,815 |
|
Investments in goodwill and other intangible assets |
|
|
(1,489,174 |
) |
|
|
|
|
Net cash used for investing activities |
|
|
(11,361,475 |
) |
|
|
|
|
Financing activities: |
|
|
|
|
Issuance of Senior Notes due 2018 |
|
|
5,241,650 |
|
Prepayment of Senior Notes due 2013 (Sky) |
|
|
(122,886 |
) |
Repayment of Mexican Peso debt |
|
|
(480,000 |
) |
Satellite transponder lease payments |
|
|
(97,696 |
) |
Other increase in debt |
|
|
1,231 |
|
Interest paid |
|
|
(2,407,185 |
) |
Repurchase and sale of capital stock |
|
|
(1,112,568 |
) |
Dividends paid |
|
|
(2,229,973 |
) |
Minority interest |
|
|
(332,029 |
) |
Derivative financial instruments |
|
|
(346,065 |
) |
|
|
|
|
Net cash used for financing activities |
|
|
(1,885,521 |
) |
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents |
|
|
131,854 |
|
|
|
|
|
Net increase in cash and cash equivalents |
|
|
9,142,651 |
|
Cash and cash equivalents of Cablemás upon consolidation |
|
|
483,868 |
|
Cash and cash equivalents at beginning of year |
|
|
25,479,541 |
|
|
|
|
|
Cash and cash equivalents at end of year |
|
Ps. |
35,106,060 |
|
|
|
|
|
The accompanying notes are an integral part of these consolidated financial statements.
F-7
Grupo Televisa, S.A.B.
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2006, 2007 and 2008
(In thousands of Mexican Pesos, except per CPO, per share and exchange rate amounts)
1. Accounting Policies
The principal accounting policies followed by Grupo Televisa, S.A.B. (the Company) and
its consolidated entities (collectively, the Group) and observed in the preparation of these
consolidated financial statements are summarized below.
(a) Basis of Presentation
The financial statements of the Group are presented on a consolidated basis in accordance
with Mexican Financial Reporting Standards (Mexican FRS) issued by the Mexican Financial
Reporting Standards Board (Consejo Mexicano para la Investigación y Desarrollo de Normas de
Información Financiera or CINIF).
Effective January 1, 2008, the Group discontinued recognizing the effects of inflation in
its financial statements in accordance with Mexican FRS. Mexican FRS requires that a company
discontinue, or start, recognizing the effects of inflation in financial statements when
general inflation applicable to a specific entity is up to, or above 26%, in a cumulative
three-year period. The cumulative inflation in Mexico measured by the National Price Consumer
Index (NCPI) for the three-year period ended December 31, 2007 and 2008 was 11.6% and 15%,
respectively. Accordingly, the consolidated financial statements of the Group as of
December 31, 2007, and for the years ended December 31, 2006 and 2007, include the effects of
inflation through December 31, 2007, and are stated in thousands of Mexican Pesos in purchasing
power as of that date.
The consolidated financial statements include the assets, liabilities and results of
operations of all companies in which the Company has a controlling interest (subsidiaries). The
consolidated financial statements also include the accounts of variable interest entities, in
which the Group is deemed the primary beneficiary. The primary beneficiary of a variable
interest entity is the party that absorbs a majority of the entitys expected losses, receives
a majority of the entitys expected residual returns, or both, as a result of ownership,
contractual or other financial interest in the entity. See Note 1(b) for further discussion of
all variable interest entities. All significant intercompany balances and transactions have
been eliminated from the financial statements.
The preparation of financial statements in conformity with Mexican FRS requires management
to make estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the dates of the financial statements
and the reported amounts of revenues and expenses during the reporting periods. Actual results
could differ from those estimates.
Effective January 1, 2008, Mexican FRS requires a statement of cash flows as part of a
full set of financial statements in place of a statement of changes in financial position. The
statement of cash flows classifies cash receipts and payments according to whether they stem
from operating, investing, or financing activities. Restatement of financial statements for
years provided before 2008 is not permitted by Mexican FRS; therefore, the Group presents
consolidated statements of changes in financial position for the two years ended December 31,
2006 and 2007.
These consolidated financial statements were authorized for issuance on June 22, 2009, by
the Groups Chief Financial Officer.
F-8
(b) Members of the Group
At December 31, 2008, the Group consisted of the Company and various consolidated
entities, including the following:
|
|
|
|
|
|
|
|
|
Companys |
|
|
Consolidated Entities |
|
Ownership(1) |
|
Business Segments(2) |
Telesistema Mexicano, S.A. de C.V. and subsidiaries, including Televisa, S.A. de C.V. |
|
|
100 |
% |
|
Television Broadcasting Pay Television Networks Programming Exports |
Televisión Independiente de México, S.A. de C.V. and
subsidiaries |
|
|
100 |
% |
|
Television Broadcasting |
TuTv, LLC (TuTv)(3) |
|
|
50 |
% |
|
Pay Television Networks |
Editorial Televisa, S.A. de C.V. and subsidiaries |
|
|
100 |
% |
|
Publishing |
Innova, S. de R. L. de C.V. and subsidiaries (Sky)(3) |
|
|
58.7 |
% |
|
Sky |
|
Empresas Cablevisión, S.A.B. de C.V. and subsidiaries
(Empresas Cablevisión) |
|
|
51 |
% |
|
Cable and Telecom |
|
Cablemás, S.A. de C.V. and subsidiaries (Cablemás) |
|
|
54.5 |
% |
|
Cable and Telecom |
Corporativo Vasco de Quiroga, S.A. de C.V. and
subsidiaries |
|
|
100 |
% |
|
Other Businesses |
CVQ Espectáculos, S.A. de C.V. and subsidiaries |
|
|
100 |
% |
|
Other Businesses |
Grupo Distribuidoras Intermex, S.A. de C.V. and
subsidiaries |
|
|
100 |
% |
|
Other Businesses |
Sistema Radiópolis, S.A. de C.V. and subsidiaries |
|
|
50 |
% |
|
Other Businesses |
Televisa Juegos, S.A. de C.V. and subsidiaries |
|
|
100 |
% |
|
Other Businesses |
|
|
|
(1) |
|
Percentage of equity interest directly or indirectly held by the Company in the holding entity. |
|
(2) |
|
See Note 22 for a description of each of the Groups business segments. |
|
(3) |
|
At December 31, 2008, the Group had identified Sky and TuTv as variable interest entities and
the Group as the primary beneficiary of the investment in each of these entities. The Group
has a 58.7% interest in Sky, a satellite television provider. TuTv is a 50% joint venture with
Univision Communications Inc. (Univision), engaged in the distribution of the Groups
Spanish-speaking programming packages in the United States. |
The Groups Television Broadcasting, Sky, Cable and Telecom, and Radio businesses require
concessions (licenses) granted by the Mexican Federal Government for a fixed term, subject to
renewal in accordance with Mexican law. Also, the Groups Gaming business, which is reported in
the Other Businesses segment, requires a permit granted by the Mexican Federal Government for a
fixed term. Additionally, the Groups Sky business in certain Central American and Caribbean
countries requires concessions granted by local regulatory authorities for a fixed term and
subject to renewal. At December 31, 2008, the expiration dates of the Groups concessions and
permit were as follows:
|
|
|
Businesses |
|
Expiration Dates |
Television Broadcasting
|
|
In 2021 |
Sky
|
|
Various from 2016 to 2033 |
Cable and Telecom
|
|
Various from 2013 to 2038 |
Radio(1)
|
|
Various from 2008 to 2016 |
Gaming
|
|
In 2030 |
|
|
|
(1) |
|
Concessions for three of the Groups Radio stations in
Guadalajara and Mexicali expired in 2008 and 2009, and renewal is
still pending before the Mexican regulatory authorities as
certain related regulations of the applicable law are being
reviewed by the Mexican Federal Government. The Groups
management expects that concessions for these three stations will
be renewed or granted by the Mexican Federal Government. The
concessions for the Groups remaining Radio stations will expire
between 2015 and 2016. |
F-9
(c) Foreign Currency Translation
Monetary assets and liabilities of Mexican companies denominated in foreign currencies are
translated at the prevailing exchange rate at the balance sheet date. Resulting exchange rate
differences are recognized in income for the year, within integral cost of financing.
Through December 31, 2007, assets, liabilities and results of operations of non-Mexican
subsidiaries and affiliates were first converted to Mexican FRS, including restating to
recognize the effects of inflation based on the inflation of each foreign country, and then
translated to Mexican Pesos utilizing the exchange rate as of the balance sheet date at
year-end. Resulting translation differences were recognized in consolidated stockholders
equity as part of the accumulated other comprehensive income or loss. Assets and liabilities of
non-Mexican operations that were integral to Mexican operations were converted to Mexican FRS
and translated to Mexican Pesos by utilizing the exchange rate of the balance sheet date at
year-end for monetary assets and liabilities, with the related adjustment included in net
income, and historical exchange rates for non-monetary items.
Beginning on January 1, 2008, for non-Mexican subsidiaries and affiliates operating in a
local currency environment, assets and liabilities are translated into Mexican Pesos at
year-end exchange rates, and results of operations and cash flows are translated at average
exchange rates prevailing during the year. Resulting translation adjustments are accumulated as
a separate component of accumulated other comprehensive income or loss in consolidated
stockholders equity. Assets and liabilities of non-Mexican subsidiaries that use the Mexican
Peso as a functional currency are translated into Mexican Pesos by utilizing the exchange rate
of the balance sheet date for monetary assets and liabilities, and historical exchange rates
for nonmonetary items, with the related adjustment included in the consolidated statement of
income as integral result of financing.
In connection with its former investment in shares of Univision, the Group designated as
an effective hedge of foreign exchange exposure a portion of the outstanding principal amount
of its U.S.-dollar-denominated Senior Notes due 2011, 2025 and 2032, which amounted to
U.S.$971.9 million as of December 31, 2006. The investment in shares of Univision was disposed
of by the Group in March 2007, and through that date any foreign exchange gain or loss
attributable to this long-term debt was credited or charged directly to equity (other
comprehensive income or loss) (see Notes 2 and 9).
(d) Cash, Cash Equivalents and Temporary Investments
Cash and cash equivalents consist of cash on hand and all highly liquid investments with a
maturity of three months or less at the balance sheet date.
Temporary investments consist of highly liquid securities, including without limitation
debt with a maturity of three months, or over, and up to one year at the balance sheet date,
stock and/or other financial instruments. Temporary investments are valued at fair value.
As of December 31, 2007 and 2008, highly liquid and temporary investments primarily
consisted of fixed short-term deposits, structured notes and corporate fixed income securities
denominated in U.S. dollars and Mexican Pesos, with an average yield of approximately 5.34% for
U.S. dollar deposits and 7.18% for Mexican Peso deposits in 2007, and approximately 2.45% for
U.S. dollar deposits and 7.40% for Mexican Peso deposits in 2008.
(e) Transmission Rights and Programming
Programming is comprised of programs, literary works, production talent advances and
films.
Transmission rights and literary works are valued at the lesser of acquisition cost or net
realizable value. Programs and films are valued at the lesser of production cost, which
consists of direct production costs and production overhead, or net realizable value. Payments
for production talent advances are initially capitalized and subsequently included as direct or
indirect costs of program production.
The Groups policy is to capitalize the production costs of programs which benefit more
than one annual period and amortize them over the expected period of future program revenues
based on the Companys historical revenue patterns for similar productions.
Transmission rights, programs, literary works, production talent advances and films are
recorded at acquisition or production cost, and through December 31, 2007, were restated by
using the NCPI factors, and specific costs for some of these assets, which were determined by
the Group on the basis of the last purchase price or production cost, or replacement cost
whichever was more representative. Cost of sales is calculated for the month in which such
transmission rights, programs, literary works, production talent advances and films are matched
with related revenues, and through December 31, 2007, was determined based on restated costs.
Transmission rights and literary works are amortized over the lives of the contracts.
Transmission rights in perpetuity, are amortized on a straight-line basis over the period of
the expected benefit as determined based upon past experience, but not exceeding 25 years.
F-10
(f) Inventories
Inventories of paper, magazines, materials and supplies are valued at the lesser of
acquisition cost or net realizable value. Inventories were restated through December 31, 2007
by using the NCPI factors and specific costs for some of these assets, which were determined by
the Group on the basis of the last purchase price.
(g) Investments
Investments in companies in which the Group exercises significant influence or joint
control are accounted for by the equity method. The Group recognizes equity in losses of
affiliated companies up to the amount of its initial investment and subsequent capital
contributions, or beyond that when guaranteed commitments have been made by the Group in
respect of obligations incurred by investees, but not in excess of such guarantees. If an
affiliated company for which the Group had recognized equity losses up to the amount of its
guarantees generates net income in the future, the Group would not recognize its proportionate
share of this net income until the Group first recognizes its proportionate share of previously
unrecognized losses.
Investments in debt securities that the Group has the ability and intent to hold to
maturity are classified as investments held-to-maturity, and reported at amortized cost.
Investments in debt securities not classified as held-to-maturity are classified as
available-for-sale, and are recorded at fair value with unrealized gains and losses included
in consolidated stockholders equity as accumulated other comprehensive result (see Notes 5 and
14).
The Group assesses at each balance sheet date whether there is objective evidence that a
financial asset or group of financial assets is impaired. A financial asset or a group of
financial assets is impaired and impairment losses are incurred only if there is objective and
other-than-temporary evidence of impairment as a result of one or more events that occurred
after the initial recognition of the asset.
For financial assets classified as held-to-maturity, the amount of the loss is measured as
the difference between the assets carrying amount and the present value of estimated future
cash flows (excluding future credit losses that have not been incurred) discounted at the
financial assets original effective interest rate.
Other investments are accounted for at cost.
(h) Property, Plant and Equipment
Property, plant and equipment are recorded at acquisition cost and were restated through
December 31, 2007 to constant Mexican Pesos using the NCPI, except for equipment of non-Mexican
origin, which was restated through that date by using an index which reflected the inflation in
the respective country of origin and the exchange rate of the Mexican Peso against the currency
of such country at the balance sheet date (Specific Index).
Depreciation of property, plant and equipment is based upon the restated carrying value of
the assets in use and is computed using the straight-line method over the estimated useful
lives of the assets ranging principally from 20 to 65 years for buildings, from 5 to 20 years
for building improvements, from 3 to 20 years for technical equipment and from 3 to 10 years
for other property and equipment.
(i) Intangible Assets and Deferred Financing Costs
Intangible assets and deferred financing costs are recognized at cost and were restated
through December 31, 2007 by using the NCPI.
Intangible assets are composed of goodwill, publishing trademarks, television network
concessions, licenses and software, subscriber lists and other items. Goodwill, publishing
trademarks and television network concessions are intangible assets with indefinite lives and
are not amortized. Indefinite-lived intangibles are assessed annually for impairment or more
frequently, if circumstances indicate a possible impairment exists. Licenses and software,
subscriber lists and other items are intangible assets with finite lives and are amortized, on
a straight-line basis, over their estimated useful lives, which range principally from 3 to
20 years.
Deferred financing costs consist of fees and expenses incurred in connection with the
issuance of long-term debt. These financing costs are amortized over the period of the related
debt (see Note 7).
(j) Impairment of Long-lived Assets
The Group reviews for impairment the carrying amounts of its long-lived assets, tangible
and intangible, including goodwill (see Note 7), at least once a year, or whenever events or
changes in business circumstances indicate that these carrying amounts may not be recoverable.
To determine whether an impairment exists, the carrying value of the reporting unit is compared
with its fair value. Fair value estimates are based on quoted market values in active markets,
if available. If quoted market prices are not available, the estimate of fair value is based on
various valuation techniques, including discounted value of estimated future cash flows, market
multiples or third-party appraisal valuations.
F-11
(k) Customer Deposits and Advances
Customer deposit and advance agreements for television advertising services provide that
customers receive preferential prices that are fixed for the contract period, for television
broadcast advertising time based on rates established by the Group. Such rates vary depending
on when the advertisement is aired, including the season, hour, day, rating and type of
programming.
Customer deposits and advances for television advertising services are considered
non-monetary items since they are non-refundable and are applied at rates in effect when they
were received. Accordingly, these deposits and advances were restated to recognize the effects
of inflation through December 31, 2007 by using the NCPI.
(l) Stockholders Equity
The capital stock and other stockholders equity accounts (other than the result from
holding non-monetary assets account and the foreign currency translation adjustments account)
include the effect of restatement through December 31, 2007, determined by applying the change
in the NCPI between the dates capital was contributed or net results were generated. The
restatement represented the amount required to maintain the contributions, share repurchases
and accumulated results in Mexican Pesos in purchasing power as of December 31, 2007.
(m) Revenue Recognition
The Group derives the majority of its revenues from media and entertainment-related
business activities both domestically and internationally. Revenues are recognized when the
service is provided and collection is probable. A summary of revenue recognition policies by
significant activity is as follows:
|
|
Advertising revenues, including deposits and advances from customers
for future advertising, are recognized at the time the advertising
services are rendered. |
|
|
Revenues from program services for pay television and licensed
television programs are recognized when the programs are sold and
become available for broadcast. |
|
|
|
Revenues from magazine subscriptions are initially deferred and recognized
proportionately as products are delivered to subscribers. Revenues from the sales of
magazines are recognized on the date of circulation of delivered merchandise, net of a
provision for estimated returns. |
|
|
|
The revenue from publishing distribution is recognized upon distribution of the products. |
|
|
|
Sky program service revenues, including advances from customers for
future direct-to-home (DTH) program services and installation fees,
are recognized at the time the DTH service is provided. |
|
|
|
Cable television, internet and telephone subscription, and
pay-per-view and installation fees are recognized in the period in
which the services are rendered. |
|
|
|
Revenues from telecommunications and data services are recognized in
the period in which these services are provided. |
|
|
|
Revenues from attendance to soccer games, including revenues from
advance ticket sales for soccer games and other promotional events,
are recognized on the date of the relevant event. |
|
|
|
Motion picture production and distribution revenues are recognized as the films are exhibited. |
|
|
|
Gaming revenues consist of the net win from gaming activities, which
is the difference between amounts wagered and amounts paid to winning
patrons. |
(n) Retirement and Termination Benefits
Plans exist for pension and other retirement payments for substantially all of the Groups
employees (retirement benefits), funded through irrevocable trusts. Payments to the trusts are
determined in accordance with actuarial computations of funding requirements. Pension and other
retirement payments are made by the trust administrators. Increases or decreases in the
liability for retirement benefits are based upon actuarial calculations.
Seniority premiums and severance indemnities to dismissed personnel (termination
benefits), other than those arising from restructurings, are recognized based upon actuarial
calculations.
F-12
Beginning January 1, 2008, Mexican FRS requires (i) the recognition of any termination
benefit costs directly in income as a provision, with no deferral of any unrecognized prior
service cost or related actuarial gain or loss; (ii) shorter amortization
periods for items to be amortized; and (iii) the recognition of any employees profit
sharing required to be paid under certain circumstances in Mexico, as a direct benefit to
employees. Also, effective January 1, 2008, Mexican FRS no longer requires the recognition of
(i) a transition asset or liability other than benefits granted in a plan amendment (prior
service cost or benefit); (ii) an additional liability determined on the actuarial computation
of benefits without consideration of salary increases; and (iii) a related intangible asset
derived from the recognition of such additional liability.
(o) Income Taxes
The income taxes and the asset tax are recognized in income as they are incurred.
The recognition of deferred income taxes is made by using the comprehensive asset and
liability method. Under this method, deferred income taxes are calculated by applying the
respective income tax rate to the temporary differences between the accounting and tax values
of assets and liabilities at the date of the financial statements.
A valuation allowance is provided for those deferred income tax assets for which it is
more likely than not that the related benefits will not be realized.
Effective January 1, 2008, the Group classified in retained earnings the outstanding
balance of cumulative loss effect of deferred income taxes in the amount of Ps.3,224,437, as
required by Mexican FRS (see Note 14).
(p) Derivative Financial Instruments
The Group recognizes derivative financial instruments as either assets or liabilities in
the consolidated balance sheet and measures those instruments at fair value. The accounting for
changes in the fair value of a derivative depends on the intended use of the derivative and the
resulting designation. For a derivative financial instrument designated as a cash flow hedge,
the effective portion of the derivatives gain or loss is initially reported as a component of
accumulated other comprehensive income and subsequently reclassified into income when the
hedged exposure affects income. The ineffective portion of the gain or loss is reported in
income immediately. For a derivative instrument designated as a fair value hedge, the gain or
loss is recognized in income in the period of change together with the offsetting loss or gain
on the hedged item attributed to the risk being hedged. For derivative instruments that are not
designated as accounting hedges, changes in fair value are recognized in income in the period
of change. During the years ended December 31, 2006 and 2007, none of the Groups derivatives
qualified for hedge accounting. During the year ended December 31, 2008, certain derivatives
qualified for hedge accounting (see Note 9).
(q) Comprehensive Income
Comprehensive income includes the net income for the period presented in the income
statement plus other results for the period reflected in the stockholders equity which are
from non-owner sources (see Note 14).
(r) Stock-based Compensation
In accordance with Mexican FRS, the Group has adopted and follows the guidelines of the
IFRS 2, Share-based payment, issued by the International Accounting Standards Board. IFRS 2
requires accruing in stockholders equity for share-based compensation expense as measured at
fair value at the date of grant, and applies to those equity benefits granted to officers and
employees (see Note 12). The Group recognized a stock-based compensation expense of Ps.243,882,
Ps.140,517 and Ps.222,046 for the years ended December 31, 2006, 2007 and 2008, respectively,
which was accounted for in consolidated income as administrative expense.
(s) Prior Years Financial Statements
The Groups financial statements for 2006 have been restated to Mexican Pesos in
purchasing power as of December 31, 2007, by using a restatement factor derived from the change
in the NCPI, which was 1.0375. Had the alternative weighted average factor allowed under
Mexican FRS been applied to restate the Groups financial statements for 2006, which included
the results of Mexican and non-Mexican subsidiaries, the restatement factor would have been
1.0400.
|
|
|
|
|
The NCPI at December 31 was: |
|
|
|
|
2005 |
|
|
116.301 |
|
2006 |
|
|
121.015 |
|
2007 |
|
|
125.564 |
|
Certain reclassifications have been made to prior years financial information to conform
to the December 31, 2008 presentation.
F-13
(t) Recently Issued Mexican FRS
In December 2008, the CINIF issued five new standards (NIF) that became effective as of
January 1, 2009, as follows:
NIF B-7, Business Acquisitions, replaces the previous Mexican FRS Bulletin B-7, Business
Acquisitions, and confirms the use of the purchase method for recognition of business
acquisitions. The purchase method, under the provisions of NIF B-7, is based on (i) identifying
that a business is being acquired; (ii) identifying the acquiring entity; (iii) determining the
acquisition date; (iv) recognizing identifiable assets, assumed liabilities and non-controlling
interests in the acquired business; (v) a valuation at fair value of the consideration paid for
the acquired business; and (vi) recognizing a related goodwill or, in certain instances, an
excess of acquired net assets over purchase price. The provisions of NIF B-7 are not expected
to have a significant effect on the Groups consolidated financial statements.
NIF B-8, Consolidated or Combined Financial Statements, replaces the previous Mexican FRS
Bulletin B-8, Consolidated and Combined Financial Statements and Valuation of Permanent
Investments in Shares. NIF B-8 defines a special purpose entity (SPE) and establishes that an
SPE should be considered a subsidiary of an entity if such entity exercises control over the
SPE. NIF B-8 requires that existing voting rights, which can be exercised or converted by an
entity, be considered when analyzing if control is exercised by such entity. NIF B-8 introduces
new terminology for majority and minority interests: controlling and noncontrolling interests,
respectively. NIF B-8 also requires that a valuation of a noncontrolling interest in financial
statements be determined based on the fair value of net assets of the subsidiary and related
goodwill at the time of acquisition. The provisions of NIF B-8 are not expected to have a
significant effect on the Groups consolidated financial statements.
NIF C-7, Investments in Associates and Other Permanent Investments, replaces the
applicable provisions in previous Mexican FRS Bulletin B-8, Consolidated and Combined Financial
Statements and Valuation of Permanent Investments in Shares. NIF C-7 establishes that an
associate is an entity or SPE, on which other entity exercises a significant influence, as
defined, and is accounted for by applying the equity method. NIF C-7 requires that existing
voting rights, which can be exercised or converted by an entity, be considered when analyzing
if significant influence is exercised by such entity. NIF C-7 also establishes a specific
procedure and a limit for recognizing losses incurred by an associate. The provisions of NIF
C-7 are not expected to have a significant effect on the Groups consolidated financial
statements.
NIF C-8, Intangible Assets, replaces the previous Mexican FRS Bulletin C-8, Intangible
Assets, and includes certain new provisions, including principally: (i) intangible assets are
defined as those identifiable non-monetary assets, without physical substance, which are able
to generate future economic benefits controlled by an entity; (ii) intangible assets are to be
first measured at acquisition cost, as they may be individually acquired, acquired as a part of
a business acquisition or internally generated; (iii) subsequent payments in connection with
in-progress research and development projects are to be expensed if they are related to the
research phase or capitalized if certain criteria is met: (iv) guidance on the accounting
treatment for exchange of intangible assets; (v) a consideration that intangible assets may
have a useful life over 20 years; and (vi) a new concept of preoperating costs is introduced.
The provisions of NIF C-8 are not expected to have a significant effect on the Groups
consolidated financial statements.
NIF D-8, Share-based Payments, requires the recognition of an incurred cost or expense,
either in income or as a capitalized item, and its related effect in liabilities or
stockholders equity, for share-based payments, including those share options granted to
employees. NIF D-8 substitutes the guidelines provided by IFRS 2, Share-based payment, which
were applied by the Group on a supplementary basis through December 31, 2008, as required by
Mexican FRS. The provisions of NIF D-8 are not expected to have a significant effect on the
Groups consolidated financial statements.
2. Acquisitions, Investments and Dispositions
In February 2006, affiliates of The DIRECTV Group, Inc. (DIRECTV) completed the
acquisition of equity interests in Sky, which were formerly held by News Corporation (News
Corp.) and Liberty Media Corp. (Liberty Media). This acquisition included the capitalization
of the purchase price of the list of subscribers sold by DIRECTV Mexico to Sky in the aggregate
amount of Ps.665,653. As a result of these transactions, the Groups equity stake in Sky was
reduced from 60% to 52.7%, and DIRECTV became the owner of the remaining 47.3% stake. In
April 2006, the Group exercised its right to acquire two-thirds of the equity interest in Sky
that DIRECTV acquired from Liberty Media. This minority interest acquisition amounted to
approximately U.S.$58.7 million (Ps.699,891), and was financed with cash on hand. After this
transaction, the Group (i) increased its equity stake in Sky from 52.7% to 58.7%, and DIRECTV
became the owner of the remaining 41.3%; and (ii) recognized the excess of the purchase price
over the carrying value of this minority interest as a capital distribution made to DIRECTV in
the amount of Ps.711,311.
In March 2006, the Group acquired a 50% interest in Televisión Internacional, S.A. de C.V.
(TVI), a cable television company with a license to operate in the city of Monterrey and
other areas in northern Mexico, which expires in 2026, in the amount of Ps.798,304, which was
substantially paid in cash. In conjunction with this transaction, the Group (i) provided TVI
with a short-term financing at the acquisition date in the principal nominal amount of
Ps.240,589, with an annual interest rate equal to the Mexican inter-bank rate plus 150 basis
points, and maturity in March 2007; and (ii) paid a first purchase price adjustment in the
second quarter of 2006, in the amount of Ps.19,287. Also, during the first half of 2007, the
Group (i) paid a second purchase price adjustment in the amount of Ps.19,155; (ii) recognized a
final third purchase price adjustment paid in 2008, subject to certain conditions, in the
amount of Ps.19,447; and (iii) capitalized all of the amounts receivable from TVI in the
aggregate amount of Ps.269,028, in connection with the short-term financing provided at the
acquisition date. In the third quarter of 2007, the Group completed a final valuation of this
acquisition and recognized related goodwill in the amount of Ps.405,264. This transaction was
approved by the Mexican regulatory authorities in 2007 (see Notes 5 and 7).
F-14
Beginning in the third quarter of 2006, the Group announced its intention to have its
investment in shares and warrants of Univision common stock cashed out in connection with the
merger contemplated by a related agreement entered into by Univision and an acquiring investor
group. Accordingly, the Group (i) classified its investment in shares of Univision common stock
as a current available-for-sale financial asset; (ii) discontinued the recognition of any
equity method result related to this investment; (iii) recorded this financial asset at fair
value, with unrealized gains and losses included in the Groups consolidated stockholders
equity as accumulated other comprehensive income or loss; and (iv) this financial asset was
hedged by the Groups outstanding Senior Notes due 2011, 2025 and 2032, in the aggregate amount
of approximately U.S.$971.9 million. As of December 31, 2006, the Group owned 16,594,500 shares
Class A and 13,593,034 shares Class T of common stock of Univision, as well as warrants to
acquire 6,374,864 shares Class A and 2,727,136 shares Class T of common stock of Univision,
most of which had an exercise price of U.S.$38.261 per share and expired in December 2017. Most
of the warrants to acquire shares of Univision common stock did not have a carrying value at
December 31, 2006, since the exercise price was greater than the tender offer price. The
proposed merger was concluded by Univision on March 29, 2007, and the 30,187,534 shares of
Univision common stock owned by the Group were converted, like all shares of Univision common
stock, into cash at U.S.$36.25 per share. Also, under the terms of the merger agreement, all of
the Groups warrants to acquire shares of Univision common stock were cancelled. The aggregate
cash amount received by the Group in connection with the closing of this merger was of
approximately U.S.$1,094.4 million (Ps.12,385,515). As a result of this disposition, the Group
recognized in consolidated income for the year ended December 31, 2007, a non-cash loss of
Ps.669,473 (see Notes 1 (c), 11, 16 and 17).
In November 2006, the Group invested U.S.$258 million (Ps.2,943,986) in convertible
debentures of Alvafig, S.A. de C.V. (Alvafig), which holds a 49% interest in the voting
equity of Cablemás, a significant cable operator in Mexico operating in 49 cities. These
debentures matured in 2011, and were secured by substantially all of the outstanding shares of
common stock of Alvafig. Annual interest on these debentures was 8% in the first year and 10%
in the remaining four years, and was payable on an annual basis. The conversion of these
debentures into equity of Alvafig was subject to approval by the Mexican regulatory authorities
and the compliance with certain regulatory requirements. In February 2008, the Group made an
additional investment of U.S.$100 million (Ps.1,082,560) in convertible debentures of Alvafig,
which proceeds were used by this entity to increase its interest in the outstanding equity of
Cablemás to approximately 54.6%, and retained a 49% of the voting equity of Cablemás. In
May 2008, the Mexican regulatory authorities announced that the Group complied with all of the
required regulatory conditions and authorized the conversion of debentures into 99.99% of the
capital stock of Alvafig. Following this conversion, Alvafig ceased to be a variable interest
entity where the Group was the primary beneficiary of the investment in this entity, and became
an indirect subsidiary of the Company. Beginning in June 2008, Alvafig has a controlling
interest in Cablemás and the Group began consolidating the assets, liabilities and results of
operations of Cablemás in its consolidated financial statements. Through May 31, 2008, the
Groups investment in Cablemás was accounted for by using the equity method. In February 2009,
the Group made an additional capital contribution in Cablemás for an amount of Ps.557,200, and
increased its interest in this subsidiary from 54.5% to 58.3% (see Notes 1(b) and 5).
In August 2007, the Group acquired substantially all of the outstanding shares of capital
stock of Editorial Atlántida, S.A. (Atlántida), a leading magazine publishing company in
Argentina, in the aggregate amount of approximately U.S.$78.8 million (Ps.885,377), which was
paid in cash. The Group completed a purchase price allocation of this transaction and
recognized a related goodwill in the amount of Ps.665,960 (see Note 7).
In August 2007, the Group announced an agreement signed by Cablestar, S.A. de C.V.
(Cablestar), an indirect subsidiary of the Company and Empresas Cablevisión, to acquire the
majority of the assets of Bestel, S.A. de C.V. (Bestel), a Mexican facilities-based
telecommunications company engaged in providing data and long-distance services solutions to
carriers and other telecommunications service providers through a fiber-optic network of
approximately 8,000 kilometers that covers the most important cities and economic regions of
Mexico and crosses directly into the United States in the cities of San Antonio, Texas and San
Diego, California. In December 2007, after obtaining the approval from the Mexican regulatory
authorities, Cablestar completed this transaction by acquiring, at an aggregate purchase price
of U.S.$256 million (Ps.2,772,352), all of the outstanding equity of Letseb, S.A. de C.V.
(Letseb) and Bestel USA, Inc. (Bestel USA), the companies that owned the majority of assets
of Bestel. In connection with this acquisition: (i) Cablestar made an additional capital
contribution to Letseb in the amount of U.S.$69 million (Ps.747,236), which was used by Letseb
to pay certain pre-acquisition liabilities; (ii) the Company granted a guarantee to a
third-party creditor for any amounts payable in connection with Letsebs long-term liability in
the amount of U.S.$80 million; (iii) Empresas Cablevisión issued long-term debt to finance this
acquisition in the amount of U.S.$225 million (Ps.2,457,495); (iv) Cablemás and TVI made
capital contributions for an aggregate amount of U.S.$100 million related to their aggregate
30.8% minority interest in Cablestar; and (v) Cablestar recognized an excess purchase price
that was preliminary allocated to goodwill in the amount of Ps.1,552,054 as of December 31,
2007. In April 2008, the parties agreed a purchase price adjustment in accordance with the
terms of the related acquisition agreement, and accordingly, the Group made an additional
payment in the aggregate amount of U.S$18.7 million (Ps.199,216). In December 2008, the Group
completed a final valuation and purchase price allocation of these transactions and recognized
Ps.728,884 of concessions, Ps.11,199 of trademarks, Ps.281,000 of a subscriber list, a
write-down of Ps.221,999 relating to technical equipment, and a related goodwill in the amount
of Ps.818,317, net of an impairment adjustment of Ps.132,500 as of December 31, 2008 (see Notes
7, 8 and 17).
F-15
3. Trade Notes and Accounts Receivable, Net
Trade notes and accounts receivable as of December 31, consisted of:
|
|
|
|
|
|
|
|
|
|
|
2007 |
|
|
2008 |
|
Non-interest bearing notes received from customers as deposits and advances |
|
Ps. |
14,753,180 |
|
|
Ps. |
14,383,384 |
|
Accounts receivable, including value-added tax receivables related to
advertising services |
|
|
3,507,639 |
|
|
|
4,838,999 |
|
Allowance for doubtful accounts |
|
|
(966,145 |
) |
|
|
(1,022,503 |
) |
|
|
|
|
|
|
|
|
|
Ps. |
17,294,674 |
|
|
Ps. |
18,199,880 |
|
|
|
|
|
|
|
|
4. Transmission Rights and Programming
At December 31, transmission rights and programming consisted of:
|
|
|
|
|
|
|
|
|
|
|
2007 |
|
|
2008 |
|
Transmission rights |
|
Ps. |
5,439,918 |
|
|
Ps. |
5,764,887 |
|
Programming |
|
|
2,967,511 |
|
|
|
3,903,322 |
|
|
|
|
|
|
|
|
|
|
|
8,407,429 |
|
|
|
9,668,209 |
|
|
|
|
|
|
|
|
Non-current portion of: |
|
|
|
|
|
|
|
|
Transmission rights |
|
|
3,626,320 |
|
|
|
4,069,777 |
|
Programming |
|
|
1,626,428 |
|
|
|
2,254,984 |
|
|
|
|
|
|
|
|
|
|
|
5,252,748 |
|
|
|
6,324,761 |
|
|
|
|
|
|
|
|
Current portion of transmission rights and programming |
|
Ps. |
3,154,681 |
|
|
Ps. |
3,343,448 |
|
|
|
|
|
|
|
|
5. Investments
At December 31, the Group had the following investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ownership% |
|
|
|
|
|
|
|
|
|
|
|
as of December 31, |
|
|
|
2007 |
|
|
2008 |
|
|
2008 |
|
Accounted for by the equity method: |
|
|
|
|
|
|
|
|
|
|
|
|
Cablemás, including goodwill of Ps.1,870,393 (see Note 2) |
|
Ps. |
3,208,265 |
|
|
Ps. |
|
|
|
|
|
|
Gestora de Inversiones Audiovisuales La Sexta, S.A. (La
Sexta) (a) |
|
|
1,238,576 |
|
|
|
1,296,950 |
|
|
|
40 |
% |
Ocesa Entretenimiento, S.A. de C.V. (OCEN)(b) |
|
|
448,158 |
|
|
|
457,598 |
|
|
|
40 |
% |
Concesionaria Vuela Compañía de Aviación, S.A. de C.V.
(Volaris) (c) |
|
|
202,949 |
|
|
|
80,381 |
|
|
|
25 |
% |
TVI (see Note 2) |
|
|
324,508 |
|
|
|
367,856 |
|
|
|
50 |
% |
Other |
|
|
132,758 |
|
|
|
96,192 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,555,214 |
|
|
|
2,298,977 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other investments: |
|
|
|
|
|
|
|
|
|
|
|
|
Held-to-maturity debt securities (see Note 1(g))(d) |
|
|
2,525,204 |
|
|
|
809,115 |
|
|
|
|
|
Other |
|
|
35,166 |
|
|
|
240,518 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,560,370 |
|
|
|
1,049,633 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ps. |
8,115,584 |
|
|
Ps. |
3,348,610 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
La Sexta is a free-to-air television channel in Spain,
which started operations in March 2006. During 2006,
2007 and 2008, the Group made additional capital
contributions related to its 40% interest in La Sexta
in the amount of approximately 104.6 million euros
(Ps.1,535,176), 65.9 million euros (Ps.1,004,697) and
44.4 million euros (Ps.740,495), respectively. During
2007, a third party acquired a 20% stake in Imagina
Media Audiovisual, S.A. (Imagina), the parent
company of the companies that hold a majority equity
interest in La Sexta. As a result of this acquisition,
Imagina paid the Company 29 million euros
(Ps.462,083) as a termination fee for the cancellation
of a call option to subscribe at a price of
80 million euros, a certain percentage of the capital
stock of Imagina (see Notes 11 and 17). |
|
(b) |
|
OCEN is a majority-owned subsidiary of Corporación
Interamericana de Entretenimiento, S.A. de C.V.
(CIE), and is engaged in the live entertainment
business in Mexico. In 2006, 2007 and in the third
quarter of 2008, OCEN paid dividends to the Group in
the aggregate amount of Ps.106,429, Ps.94,382 and
Ps.56,000, respectively (see Note 16). |
F-16
|
|
|
(c) |
|
Volaris is a low-cost carrier airline with a
concession to operate in Mexico. In 2006, 2008 and
January 2009, the Group made additional capital
contributions related to its 25% interest in Volaris
in the amount of U.S.$7.5 million (Ps.87,408),
U.S.$12 million (Ps.125,856), and U.S.$5 million
(Ps.69,000), respectively. |
|
(d) |
|
Held-to-maturity securities represent structured notes
and corporate fixed income securities with long-term
maturities. These investments are stated at amortized
cost. During the year ended December 31, 2008, the
Group recognized a write-down of Ps.405,111 on a
held-to-maturity debt security reducing the carrying
amount of this security to zero. As of December 31,
2008, the aggregate carrying value of held-to-maturity
securities, exceeded the fair value of such securities
by Ps.53,118. This variance was due to overall
increases in market interest rates subsequent to
purchase; therefore, the Group has not recognized any
impairment losses for these securities (see Note 9). |
The Group recognized equity in comprehensive income (loss) of affiliates for the years
ended December 31, 2006, 2007 and 2008, as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006 |
|
|
2007 |
|
|
2008 |
|
Equity in losses of affiliates, net |
|
Ps. |
(624,843 |
) |
|
Ps. |
(749,299 |
) |
|
Ps. |
(1,049,934 |
) |
Equity in other comprehensive income (loss) of affiliates: |
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments, net |
|
|
578,481 |
|
|
|
171,297 |
|
|
|
244,122 |
|
Result from holding non-monetary assets, net |
|
|
(7,161 |
) |
|
|
2,151 |
|
|
|
|
|
|