TO THE ELECTRONIC FORM TITLED “PREPARATION, FILING, DELIVERY AND DISCLOSURE OF QUARTERLY ECONOMIC, ACCOUNTING AND ADMINISTRATIVE
INFORMATION BY ISSUERS”
III. QUALITATIVE AND QUANTITATIVE INFORMATION
Management’s discussion of the policies concerning the use of financial derivative instruments, and explanation
as to whether such policies permit the use of said instruments solely for hedging or also for trading or other purposes.
In accordance with the policies and procedures implemented by the Vice President of Finance and Risk and the Vice
President and Corporate Controller, along with the Vice President of Internal Audit, the Company has entered into certain financial derivative transactions for hedging purposes in both the Mexican and international markets so as to manage its exposure
to the market risks associated with the changes in interest and foreign exchange rates and inflation. In addition, the Company’s Investments Committee has established guidelines for the investment in structured notes or deposits associated with other
derivatives, which by their nature may be considered as derivative transactions for trading purposes. It should be noted that in the first quarter of 2020, no such financial derivatives were outstanding. Pursuant to the provisions of International
Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB), certain financial derivative transactions originally intended to serve as a hedge and in effect as of March 31, 2020, are not within the scope of hedge
accounting as specified in such Standards and, consequently, are recognized in the accounting based on the provisions included in the aforementioned Standards.
General description of the objectives sought in the execution of financial derivative transactions; the relevant
instruments; the hedging or trading strategies implemented in connection therewith; the relevant trading markets; the eligible counterparties; the policies for the appointment of calculation or valuation agents; the principal terms and conditions of
the relevant contracts; the policies as to margins, collateral and lines of credit; the authorization process and levels of authorization required by type of transaction (e.g., full hedging, partial hedging, speculation), stating whether the
transactions were previously approved by the committee(s) responsible for the development of corporate and auditing practices; the internal control procedures applicable to the management of the market and liquidity risks associated with the positions;
and the existence of an independent third party responsible for the review of such procedures and, as the case may be, the observations raised or deficiencies identified by such third party.
The Company’s principal objective when entering into financial derivative transactions is to mitigate the effects of
unforeseen changes in interest and foreign exchange rates and inflation, so as to reduce the volatility in its results and cash flows as a result of such changes.
The Company monitors its exposure to the interest rate risk by: (i) assessing the difference between the interest
rates applicable to its debt and temporary investments, and the prevailing market rates for similar instruments; (ii) reviewing its cash flow requirements and financial ratios (interest coverage); (iii) assessing the actual and budgeted-for trends in
the principal markets; and (iv) assessing the prevailing industry practices and other similar companies. This approach enables the Company to determine the optimum mix between fixed- and variable-rate interest for its debt.
Foreign exchange risk is monitored by assessing the Company’s monetary position in U.S. dollars and its budgeted cash flow
requirements for investments anticipated to be denominated in U.S. dollars and the service of its U.S. dollar-denominated debt.
Financial derivative transactions are reported from time to time to the Audit Committee.
The Company has entered into master derivatives agreements with both domestic and foreign financial institutions, that are
internationally recognized institutions with which the Company, from time to time, has entered into financial transactions involving corporate and investment banking, as well as treasury services. The form agreement used in connection with financial
derivatives transactions with foreign financial institutions is the Master Agreement published by the International Swaps and Derivatives Association, Inc. (“ISDA”) and with local institutions is the Master Agreement published by ISDA and in some
instances, using the form agreement ISDAmex. In both cases, the main terms and conditions are standard for these types of transactions and include mechanisms for the appointment of calculation or valuation
agents.
In addition, the Company enters into standard guaranty agreements that set forth the margins, collateral and lines of credit
applicable in each instance. These agreements establish the credit limits granted by the financial institutions with whom the Company enters into master financial derivative agreements, which specify the margin implications in the case of potential
negative changes in the market value of its open financial derivative positions. Pursuant to the agreements entered into by the Company, financial institutions are entitled to make margin calls if certain thresholds are exceeded. In the event of a
change in the credit rating issued to the Company by a recognized credit rating agency, the credit limit granted by each counterparty would be modified.
As of the date hereof, the Company has never experienced a margin call with respect to its financial derivative transactions.
In compliance with its risk management objectives and hedging strategies, the Company generally utilizes the following financial
derivative transactions:
The strategies for the acquisition of financial derivatives transactions are approved by the Risk Management Committee in accordance
with the Policies and Objectives for the Use of Financial Derivatives.
During the quarter from January to March 2020, there were no defaults or margin calls under the aforementioned financial derivative
transactions.
The Company monitors on a weekly basis the flows generated by the fair market value of and the potential for margin calls under its
open financial derivative transactions. The calculation or valuation agent designated in the relevant Master Agreement, which is always the counterparty, issues monthly reports as to the fair market value of the Company’s open positions.
The Risk Management area is responsible for measuring, at least once a month, the Company’s exposure to the financial market risks
associated with its financings and investments, and for submitting a report with respect to the Company’s risk position and the valuation of its financial derivatives to the Finance Committee on a monthly basis, and to the Risk Management Committee on
a quarterly basis. The Company monitors the credit rating assigned to its counterparties in its outstanding financial derivative transactions on a regular basis.
The office of the Comptroller is responsible for the validation of the Company’s accounting records as related to its financial
derivative transactions, based upon the confirmations received from the relevant financial intermediaries, and for obtaining from such intermediaries, on a monthly basis, confirmations or account statements supporting the market valuation of its open
financial derivative positions.
As a part of the yearly audit on the Company, the aforementioned procedures are reviewed by the Company’s external auditors. As of
the date hereof, the Company’s auditors have not raised any observation or identified any deficiency therein.
Information concerning the composition of the overall risk management committee, its operating rules, and the
existence of an overall risk management manual.
The Company has a Risk Management Committee, which is responsible for monitoring the Company’s risk management
activities and approving the hedging strategies used to mitigate the financial market risks to which the Company is exposed. The assessment and hedging of the financial market risks are subject to the policies and procedures applicable to the Company’s
Risk Management Committee, the Finance and Risk Management areas and the Comptroller that form the Risk Management Manual of the Company. In general terms, the Risk Management Committee is comprised of members of the Corporate Management, Corporate
Comptroller, Tax Control and Advice, Information to the Stock Exchange, Finance and Risk, Legal, Administration and Finance, Financial Planning and Corporate Finance areas.
The Company values its financial derivative instruments based upon the standard models and calculators provided by recognized market
makers. In addition, the Company uses the relevant market variables available from online sources. The financial derivative instruments are valued at a reasonable value pursuant to the applicable accounting provisions.
In the majority of cases, the valuation at a reasonable value is carried out on a monthly basis based on valuations of the
counterparties and the verification of such reasonable value with internal valuations prepared by the Risk Management area of the Company. Accounting wise, the valuation of the counterparty is registered.
The Company performs its valuations without the participation of any independent third party.
The method used by the Company to determine the effectiveness of an instrument depends on the hedging strategy and on whether the
relevant transaction is intended as a fair-value hedge or a cash-flow hedge. The Company’s methods take into consideration the prospective cash flows generated by or the changes in the fair value of the financial derivative, and the cash flows
generated by or the changes in the fair value of the underlying position that it seeks to hedge to determine, in each case, the hedging ratio.
As of the date hereof, the Company’s management has not discussed internal and external sources of liquidity so as to satisfy its
requirements in connection with its financial derivatives since, based upon the aggregate amount of the Company’s financial derivative transactions, management is of the opinion that the Company’s significant positions of cash, cash equivalents and
temporary investments, and the substantial cash flows generated by the Company, would enable the Company to respond adequately to any such requirements.
Since a significant portion of the Company’s debt and costs are denominated in U.S. dollars, while its revenues are primarily
denominated in Mexican pesos, depreciation in the value of the Mexican peso against the U.S. dollar and any future depreciation could have a negative effect on the Company’s results due to exchange rate losses. However, the significant amount of U.S.
dollars in the Company’s treasury, and the hedging strategies adopted by the Company in recent years, have enabled it to avoid significant foreign exchange losses.
Circumstances or events, such as changes in the value of the underlying assets or reference variables, resulting
in a financial derivative being used other than as originally intended, or substantially altering its structure, or resulting in the partial or total loss of the hedge, thereby forcing the Company to assume new obligations, commitments or changes in
its cash flows in a manner that affects its liquidity (e.g., margin calls). Description of the impact of such financial derivative transactions on the Company’s results or cash flows.
As of the date hereof, no circumstance or event of a financial derivative transaction, resulted in a partial or total loss of the
relevant hedge requiring that the Company assume new obligations, commitments or variations in its cash flow such that its liquidity is affected.
Description and number of financial derivatives maturing during the quarter, any closed positions and, if applicable, number and
amount of margin calls experienced during the quarter. Disclosure as to any default under the relevant contracts.
IV. SENSITIVITY ANALYSIS
Considering that the Company has entered into financial derivative transactions for hedging purposes, and given the low amount of the financial
derivative instruments that proved ineffective as a hedge, the Company has determined that such transactions are not material and, accordingly, the sensitivity analysis referred to in Section IV of the Official Communication is not applicable.
In those cases where the derivative instruments of the Company are for hedging purposes, for a material amount and where the effectiveness measures
were sufficient, the measures are justified when the standard deviation of the changes in cash flow as a result of changes in the variables of exchange rate and interest rates of the derivative instruments used jointly with the underlying position is
lower than the standard deviation of the changes in cash flow of the underlying position valued in pesos and the effective measures are defined by the correlation coefficient between both positions for the effective measures to be sufficient.
TABLE 1
GRUPO TELEVISA, S.A.B.
Summary of Financial Derivative Instruments as of
March 31, 2020
(In thousands of Mexican pesos and/or U.S. dollars, as indicated)
Type of Derivative, Securities or Contract
|
Purpose (e.g., hedging, trading or other)
|
Notional Amount/Face Value
|
Value of the Underlying Asset / Reference Variable
|
Fair Value
|
|
Collateral/
Lines of Credit/
Securities Pledged
|
Current Quarter (5)
|
Previous Quarter (6)
|
Current Quarter Dr (Cr) (5)
|
Previous Quarter Dr (Cr) (6)
|
Maturing per Year
|
Interest Rate Swap (1)
|
Hedging
|
Ps.2,000,000
|
TIIE 28 days / 7.3275%
|
TIIE 28 days / 7.3275%
|
(73,379)
|
(38,543)
|
Monthly interest
2020-2022
|
Does not exist (7)
|
Interest Rate Swap (1)
|
Hedging
|
Ps.1,500,000
|
TIIE 28 days / 7.3500%
|
TIIE 28 days / 7.3500%
|
(57,005)
|
(30,702)
|
Monthly interest
2020-2022
|
Does not exist (7)
|
Interest Rate Swap (1)
|
Hedging
|
Ps.2,500,000
|
TIIE 28 days / 7.7485%
|
TIIE 28 days / 7.7485%
|
(127,966)
|
(83,122)
|
Monthly interest
2020-2023
|
Does not exist (7)
|
Interest Rate Swap (1)
|
Hedging
|
Ps.6,000,000
|
TIIE 28 days / 7.3873%
|
TIIE 28 days / 7.3873%
|
(275,800)
|
(185,205)
|
Monthly interest
2020-2024
|
Does not exist (7)
|
Interest Rate Swap (1)
|
Hedging
|
Ps.14,770,694
|
TIIE 28 days / 6.0738%
|
-
|
(96,682)
|
-
|
Monthly interest
2020-2022
|
Does not exist (7)
|
Forward (1)
|
Hedging
|
U.S.$131,688 / Ps.2,608,568
|
U.S.$131,688 / Ps.2,608,568
|
U.S.$218,688 / Ps.4,357,473
|
534,424
|
(144,466)
|
Semi-annual interest
2020
|
Does not exist (7)
|
Forward (1)
|
Hedging
|
U.S.$242,650 / Ps.4,816,658
|
U.S.$242,650 / Ps.4,816,658
|
U.S.$361,550 / Ps.7,227,307
|
976,859
|
(242,777)
|
2020
|
Does not exist (7)
|
Interest Rate Swap (2)
|
Hedging
|
Ps.398,500
|
TIIE 28 days / 5.508%
|
TIIE 28 days / 5.508%
|
755
|
4,592
|
Monthly Interest
2020-2022
|
Does not exist (7)
|
Interest Rate Swap (2)
|
Hedging
|
Ps.886,260
|
TIIE 28 days / 7.2663%
|
TIIE 28 days / 7.2663%
|
(20,245)
|
(8,943)
|
Monthly Interest
2020-2022
|
Does not exist (7)
|
Forward (2)
|
Hedging
|
U.S.$43,500 / Ps.864,301
|
U.S.$43,500 / Ps.864,301
|
U.S.$66,000 / Ps.1,320,621
|
171,406
|
(45,968)
|
2020
|
Does not exist (7)
|
Forward (3)
|
Hedging
|
U.S.$48,000 / Ps.953,400
|
U.S.$48,000 / Ps.953,400
|
U.S.$73,000 / Ps.1,460,354
|
195,955
|
(48,474)
|
2020
|
Does not exist (7)
|
Forward (4)
|
Hedging
|
U.S.$94,850 / Ps.1,888,514
|
U.S.$94,850 / Ps.1,888,514
|
U.S.$127,850 / Ps.2,557,012
|
378,682
|
(87,090)
|
2020
|
Does not exist (7)
|
|
|
|
|
Total
|
1,607,004
|
(910,698)
|
|
|
(1)
|
Acquired by Grupo Televisa, S.A.B.
|
(2)
|
Acquired by Televisión Internacional, S.A. de C.V.
|
(3)
|
Acquired by Empresas Cablevisión, S.A.B. de C.V.
|
(4)
|
Acquired by Corporación Novavisión S. de R.L. de C.V.
|
(5)
|
The aggregate amount of the derivatives reflected in the consolidated statement of financial position of Grupo Televisa, S.A.B. as of March 31, 2020, is as follows:
|
|
|
|
Other financial assets
|
|
Ps.
|
2,257,642
|
|
|
Other non-current financial
assets
|
|
|
439
|
|
|
Other non-current financial
liabilities
|
|
|
(651,077)
|
|
|
|
|
Ps.
|
1,607,004
|
|
|
|
(6)
|
Information as of December 31, 2019.
|
(7)
|
Applies only to implicit financing in the ISDA ancillary agreements identified as “Credit Support Annex”.
|
[800100] Notes - Subclassifications of assets, liabilities and equities
Concept
|
Close Current Quarter
2020-03-31
|
Close Previous Exercise
2019-12-31
|
Subclassifications of assets, liabilities and equities
|
|
|
Cash and cash equivalents
|
|
|
Cash
|
|
|
Cash on hand
|
98,275,000
|
93,445,000
|
Balances with banks
|
2,038,363,000
|
1,664,816,000
|
Total cash
|
2,136,638,000
|
1,758,261,000
|
Cash equivalents
|
|
|
Short-term deposits, classified as cash equivalents
|
42,803,631,000
|
25,693,736,000
|
Short-term investments, classified as cash equivalents
|
0
|
0
|
Other banking arrangements, classified as cash equivalents
|
0
|
0
|
Total cash equivalents
|
42,803,631,000
|
25,693,736,000
|
Other cash and cash equivalents
|
0
|
0
|
Total cash and cash equivalents
|
44,940,269,000
|
27,451,997,000
|
Trade and other current receivables
|
|
|
Current trade receivables
|
20,749,132,000
|
14,486,184,000
|
Current receivables due from related parties
|
816,889,000
|
814,427,000
|
Current prepayments
|
|
|
Current advances to suppliers
|
0
|
0
|
Current prepaid expenses
|
3,297,614,000
|
2,130,521,000
|
Total current prepayments
|
3,297,614,000
|
2,130,521,000
|
Current receivables from taxes other than income tax
|
7,493,071,000
|
6,527,449,000
|
Current value added tax receivables
|
6,391,310,000
|
6,406,301,000
|
Current receivables from sale of properties
|
0
|
0
|
Current receivables from rental of properties
|
0
|
0
|
Other current receivables
|
2,044,000,000
|
1,532,579,000
|
Total trade and other current receivables
|
34,400,706,000
|
25,491,160,000
|
Classes of current inventories
|
|
|
Current raw materials and current production supplies
|
|
|
Current raw materials
|
0
|
0
|
Current production supplies
|
0
|
0
|
Total current raw materials and current production supplies
|
0
|
0
|
Current merchandise
|
0
|
0
|
Current work in progress
|
0
|
0
|
Current finished goods
|
0
|
0
|
Current spare parts
|
0
|
0
|
Property intended for sale in ordinary course of business
|
0
|
0
|
Other current inventories
|
1,115,667,000
|
1,151,421,000
|
Total current inventories
|
1,115,667,000
|
1,151,421,000
|
Non-current assets or disposal groups classified as held for sale or as held for distribution to owners
|
|
|
Non-current assets or disposal groups classified as held for sale
|
2,427,439,000
|
2,369,665,000
|
Non-current assets or disposal groups classified as held for distribution to owners
|
0
|
0
|
Total non-current assets or disposal groups classified as held for sale or as held for distribution to owners
|
2,427,439,000
|
2,369,665,000
|
Trade and other non-current receivables
|
|
|
Non-current trade receivables
|
0
|
0
|
Non-current receivables due from related parties
|
0
|
0
|
Non-current prepayments
|
0
|
0
|
Non-current lease prepayments
|
0
|
0
|
Non-current receivables from taxes other than income tax
|
0
|
0
|
Non-current value added tax receivables
|
0
|
0
|
Concept
|
Close Current Quarter
2020-03-31
|
Close Previous Exercise
2019-12-31
|
Non-current receivables from sale of properties
|
0
|
0
|
Non-current receivables from rental of properties
|
0
|
0
|
Revenue for billing
|
0
|
0
|
Other non-current receivables
|
0
|
0
|
Total trade and other non-current receivables
|
0
|
0
|
Investments in subsidiaries, joint ventures and associates
|
|
|
Investments in subsidiaries
|
0
|
0
|
Investments in joint ventures
|
758,245,000
|
763,639,000
|
Investments in associates
|
5,136,376,000
|
8,304,823,000
|
Total investments in subsidiaries, joint ventures and associates
|
5,894,621,000
|
9,068,462,000
|
Property, plant and equipment
|
|
|
Land and buildings
|
|
|
Land
|
4,895,572,000
|
4,891,094,000
|
Buildings
|
4,499,241,000
|
4,546,036,000
|
Total land and buildings
|
9,394,813,000
|
9,437,130,000
|
Machinery
|
53,970,547,000
|
54,987,042,000
|
Vehicles
|
|
|
Ships
|
0
|
0
|
Aircraft
|
518,930,000
|
521,241,000
|
Motor vehicles
|
685,101,000
|
674,077,000
|
Total vehicles
|
1,204,031,000
|
1,195,318,000
|
Fixtures and fittings
|
540,217,000
|
554,786,000
|
Office equipment
|
2,101,192,000
|
2,316,042,000
|
Tangible exploration and evaluation assets
|
0
|
0
|
Mining assets
|
0
|
0
|
Oil and gas assets
|
0
|
0
|
Construction in progress
|
15,034,035,000
|
13,714,368,000
|
Construction prepayments
|
0
|
0
|
Other property, plant and equipment
|
1,084,658,000
|
1,124,546,000
|
Total property, plant and equipment
|
83,329,493,000
|
83,329,232,000
|
Investment property
|
|
|
Investment property completed
|
0
|
0
|
Investment property under construction or development
|
0
|
0
|
Investment property prepayments
|
0
|
0
|
Total investment property
|
0
|
0
|
Intangible assets and goodwill
|
|
|
Intangible assets other than goodwill
|
|
|
Brand names
|
392,135,000
|
403,954,000
|
Intangible exploration and evaluation assets
|
0
|
0
|
Mastheads and publishing titles
|
0
|
0
|
Computer software
|
3,953,896,000
|
4,015,219,000
|
Licences and franchises
|
0
|
0
|
Copyrights, patents and other industrial property rights, service and operating rights
|
0
|
0
|
Recipes, formulae, models, designs and prototypes
|
0
|
0
|
Intangible assets under development
|
0
|
0
|
Other intangible assets
|
24,573,429,000
|
24,796,155,000
|
Total intangible assets other than goodwill
|
28,919,460,000
|
29,215,328,000
|
Goodwill
|
14,113,626,000
|
14,113,626,000
|
Total intangible assets and goodwill
|
43,033,086,000
|
43,328,954,000
|
Trade and other current payables
|
|
|
Current trade payables
|
24,341,895,000
|
20,909,655,000
|
Current payables to related parties
|
415,468,000
|
644,251,000
|
Concept
|
Close Current Quarter
2020-03-31
|
Close Previous Exercise
2019-12-31
|
Accruals and deferred income classified as current
|
|
|
Deferred income classified as current
|
12,299,319,000
|
5,779,758,000
|
Rent deferred income classified as current
|
0
|
0
|
Accruals classified as current
|
3,247,823,000
|
3,112,279,000
|
Short-term employee benefits accruals
|
873,564,000
|
911,935,000
|
Total accruals and deferred income classified as current
|
15,547,142,000
|
8,892,037,000
|
Current payables on social security and taxes other than income tax
|
3,840,826,000
|
3,074,732,000
|
Current value added tax payables
|
3,057,560,000
|
2,223,598,000
|
Current retention payables
|
589,987,000
|
373,273,000
|
Other current payables
|
0
|
0
|
Total trade and other current payables
|
44,735,318,000
|
33,893,948,000
|
Other current financial liabilities
|
|
|
Bank loans current
|
491,981,000
|
491,951,000
|
Stock market loans current
|
0
|
0
|
Other current liabilities at cost
|
0
|
1,324,063,000
|
Other current liabilities at no cost
|
0
|
568,775,000
|
Other current financial liabilities
|
2,206,937,000
|
1,943,863,000
|
Total Other current financial liabilities
|
2,698,918,000
|
4,328,652,000
|
Trade and other non-current payables
|
|
|
Non-current trade payables
|
2,609,322,000
|
2,459,157,000
|
Non-current payables to related parties
|
0
|
0
|
Accruals and deferred income classified as non-current
|
|
|
Deferred income classified as non-current
|
0
|
0
|
Rent deferred income classified as non-current
|
0
|
0
|
Accruals classified as non-current
|
0
|
0
|
Total accruals and deferred income classified as non-current
|
0
|
0
|
Non-current payables on social security and taxes other than income tax
|
0
|
0
|
Non-current value added tax payables
|
0
|
0
|
Non-current retention payables
|
0
|
0
|
Other non-current payables
|
0
|
0
|
Total trade and other non-current payables
|
2,609,322,000
|
2,459,157,000
|
Other non-current financial liabilities
|
|
|
Bank loans non-current
|
36,897,962,000
|
22,235,924,000
|
Stock market loans non-current
|
120,393,830,000
|
98,208,820,000
|
Other non-current liabilities at cost
|
0
|
0
|
Other non-current liabilities at no cost
|
651,077,000
|
346,515,000
|
Other non-current financial liabilities
|
0
|
0
|
Total Other non-current financial liabilities
|
157,942,869,000
|
120,791,259,000
|
Other provisions
|
|
|
Other non-current provisions
|
933,474,000
|
917,483,000
|
Other current provisions
|
2,732,000
|
2,423,000
|
Total other provisions
|
936,206,000
|
919,906,000
|
Other reserves
|
|
|
Revaluation surplus
|
0
|
0
|
Reserve of exchange differences on translation
|
2,811,042,000
|
1,280,541,000
|
Reserve of cash flow hedges
|
(122,408,000)
|
(381,753,000)
|
Reserve of gains and losses on hedging instruments that hedge investments in equity instruments
|
0
|
0
|
Reserve of change in value of time value of options
|
0
|
0
|
Reserve of change in value of forward elements of forward contracts
|
0
|
0
|
Reserve of change in value of foreign currency basis spreads
|
0
|
0
|
Reserve of gains and losses on financial assets measured at fair value through other comprehensive income
|
(15,403,312,000)
|
1,202,689,000
|
Reserve of gains and losses on remeasuring available-for-sale financial assets
|
0
|
0
|
Concept
|
Close Current Quarter
2020-03-31
|
Close Previous Exercise
2019-12-31
|
Reserve of share-based payments
|
0
|
0
|
Reserve of remeasurements of defined benefit plans
|
(705,611,000)
|
(705,611,000)
|
Amount recognised in other comprehensive income and accumulated in equity relating to non-current assets or disposal groups held for sale
|
0
|
0
|
Reserve of gains and losses from investments in equity instruments
|
0
|
0
|
Reserve of change in fair value of financial liability attributable to change in credit risk of liability
|
0
|
0
|
Reserve for catastrophe
|
0
|
0
|
Reserve for equalisation
|
0
|
0
|
Reserve of discretionary participation features
|
0
|
0
|
Reserve of equity component of convertible instruments
|
0
|
0
|
Capital redemption reserve
|
0
|
0
|
Merger reserve
|
0
|
0
|
Statutory reserve
|
0
|
0
|
Other comprehensive income
|
(86,864,000)
|
(75,415,000)
|
Total other reserves
|
(13,507,153,000)
|
1,320,451,000
|
Net assets (liabilities)
|
|
|
Assets
|
309,463,018,000
|
290,343,800,000
|
Liabilities
|
227,532,607,000
|
184,939,567,000
|
Net assets (liabilities)
|
81,930,411,000
|
105,404,233,000
|
Net current assets (liabilities)
|
|
|
Current assets
|
96,146,947,000
|
68,124,902,000
|
Current liabilities
|
51,256,806,000
|
42,385,850,000
|
Net current assets (liabilities)
|
44,890,141,000
|
25,739,052,000
|
[800200] Notes - Analysis of income and expense
Concept
|
Accumulated Current Year
2020-01-01 - 2020-03-31
|
Accumulated Previous Year
2019-01-01 - 2019-03-31
|
Analysis of income and expense
|
|
|
Revenue
|
|
|
Revenue from rendering of services
|
16,889,069,000
|
17,443,178,000
|
Revenue from sale of goods
|
218,011,000
|
230,969,000
|
Interest income
|
0
|
0
|
Royalty income
|
2,498,066,000
|
2,120,680,000
|
Dividend income
|
0
|
0
|
Rental income
|
3,623,642,000
|
3,600,418,000
|
Revenue from construction contracts
|
0
|
0
|
Other revenue
|
0
|
0
|
Total revenue
|
23,228,788,000
|
23,395,245,000
|
Finance income
|
|
|
Interest income
|
223,850,000
|
296,483,000
|
Net gain on foreign exchange
|
0
|
138,962,000
|
Gains on change in fair value of derivatives
|
2,198,144,000
|
0
|
Gain on change in fair value of financial instruments
|
0
|
0
|
Other finance income
|
0
|
0
|
Total finance income
|
2,421,994,000
|
435,445,000
|
Finance costs
|
|
|
Interest expense
|
2,528,229,000
|
2,406,726,000
|
Net loss on foreign exchange
|
8,601,364,000
|
0
|
Losses on change in fair value of derivatives
|
0
|
302,809,000
|
Loss on change in fair value of financial instruments
|
0
|
0
|
Other finance cost
|
0
|
0
|
Total finance costs
|
11,129,593,000
|
2,709,535,000
|
Tax income (expense)
|
|
|
Current tax
|
2,186,874,000
|
1,261,269,000
|
Deferred tax
|
(3,912,718,000)
|
(757,282,000)
|
Total tax income (expense)
|
(1,725,844,000)
|
503,987,000
|
[800500] Notes - List of notes
Disclosure of notes and other explanatory information
See Notes 1 y 2 of the Disclosure of interim financial reporting.
Disclosure of general information about financial statements
Corporate Information
Grupo Televisa, S.A.B. (the “Company”) is a limited liability public stock corporation (“Sociedad Anónima Bursátil” or “S.A.B.”),
incorporated under the laws of Mexico. Pursuant to the terms of the Company’s bylaws (“Estatutos Sociales”), its corporate existence continues through 2106. The shares of the Company are listed and traded in the form of “Certificados de Participación
Ordinarios” or “CPOs” on the Mexican Stock Exchange (“Bolsa Mexicana de Valores”) under the ticker symbol TLEVISA CPO, and in the form of Global Depositary Shares or GDSs, on the New York Stock Exchange, or NYSE, under the ticker symbol TV. The
Company’s principal executive offices are located at Avenida Vasco de Quiroga 2000, Colonia Santa Fe, 01210 Ciudad de México, México.
Basis of Preparation and Accounting Policies
The interim condensed consolidated financial statements of the Group, as of March
31, 2020 and December 31, 2019, and for the trhee months ended Marzo 31, 2020 and 2019, are unaudited, and have been prepared in accordance with the guidelines provided by the
International Accounting Standard 34, Interim Financial Reporting. In the opinion of management, all adjustments necessary for a fair presentation of the
condensed consolidated financial statements have been included herein.
The interim unaudited condensed consolidated financial statements should be read in conjunction with the Group’s audited
consolidated financial statements and notes thereto for the years ended December 31, 2019 and 2018, which have been prepared in accordance with International Financial Reporting Standards (“IFRSs”) as issued by the International Accounting Standards
Board, and include, among other disclosures, the Group’s most significant accounting policies, which were applied on a consistent basis as of March 31, 2020. The adoption of the improvements and amendments to
current IFRSs effective on January 1, 2020 did not have a significant impact in these interim un audited condensed consolidated financial statements.
Disclosure of significant accounting policies
The principal accounting policies followed by the Group and used in the preparation of its annual consolidated financial statements
as of December 31, 2019, and where applicable, of its interim condensed consolidated financial statements, are summarized below. These accounting policies should be read in conjunction with the audited consolidated financial statements of the Group
for the years ended December 31, 2019 and 2018, once they have been submitted to the Mexican Banking and Securities Commission (“Comisión Nacional Bancaria y de Valores” and the U.S. Securities and Exchange Commission, respectively
(a) Basis of Presentation
The consolidated financial statements of the Group as of December 31, 2019 and 2018, and for the years ended December 31, 2019, 2018
and 2017, are presented in accordance with International Financial Reporting Standards (“IFRS Standards”), as issued by the International Accounting Standards Board (“IASB”). IFRS Standards comprise: (i) IFRS Standards; (ii) International Accounting
Standards (“IAS Standards”); (iii) IFRS Interpretations Committee (“IFRIC”) Interpretations; and (iv) Standing Interpretations Committee (“SIC”) Interpretations.
The consolidated financial statements have been prepared on a historical cost basis, except for the measurement at fair value of
temporary investments, derivative financial instruments, financial assets, equity financial instruments, plan assets of post-employment benefits and share-based payments, as described below.
The preparation of consolidated financial statements in conformity with IFRS Standards, requires the use of certain critical
accounting estimates. It also requires management to exercise its judgment in the process of applying the Group’s accounting policies. Changes in assumptions may have a significant impact on the consolidated financial statements in the period the
assumptions changed. Management believes that the underlying assumptions are appropriate. The areas involving a higher degree of judgment or complexity, or areas where estimates and assumptions are significant to the Group’s financial statements are
disclosed in Note 5 to these consolidated financial statements.
These consolidated financial statements were authorized for issuance on April 13, 2020, by the Group’s Principal Financial Officer.
(b) Consolidation
The financial statements of the Group are prepared on a consolidated basis and include the assets, liabilities and results of
operations of all companies in which the Company has a controlling interest (subsidiaries). All intercompany balances and transactions have been eliminated from the consolidated financial statements.
Subsidiaries
Subsidiaries are all entities over which the Company has control. The Group controls an entity when it is exposed to, or has rights
to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The existence and effects of potential voting rights that are currently exercisable or convertible are considered
when assessing whether or not the Company controls another entity. The subsidiaries are consolidated from the date on which control is obtained by the Company and cease to consolidate from the date on which said control is lost.
The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a
subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability
resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The Group recognizes
any non-controlling interest in the acquiree on an acquisition-by-acquisition basis at the non-controlling interest’s proportionate share of the recognized amounts of acquiree’s identifiable net assets.
Acquisition-related costs are expensed as incurred.
Goodwill is initially measured as the excess of the aggregate of the consideration transferred and the fair value of non-controlling
interest over the net identifiable assets acquired and liabilities assumed. If this consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference is recognized in income or loss.
Changes in Ownership Interests in Subsidiaries without Change of Control
Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions that is,
as transactions with the owners in their capacity as owners. The difference between fair value of any consideration paid and the interest acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on
disposals of non-controlling interests are also recorded in equity.
Loss of Control of a Subsidiary
When the Company ceases to have control of a subsidiary, any retained interest in the entity is remeasured to its fair value at the
date when control is lost, with the change in carrying amount recognized in income or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or
financial asset. In addition, any amounts previously recognized in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This means that amounts previously
recognized in other comprehensive income are reclassified to income or loss except for certain equity financial instruments designated irrevocably with changes in other comprehensive income or loss.
At December 31, 2019 and 2018, the main direct and indirect subsidiaries of the Company were as follows:
Subsidiaries
|
Company’s
Ownership
Interest (1)
|
|
Business
Segment (2)
|
Empresas Cablevisión, S.A.B. de C.V. and subsidiaries (collectively, “Empresas Cablevisión”) (3)
|
51.2%
|
|
Cable
|
Subsidiaries engaged in the Cablemás business (collectively, “Cablemás”) (4)
|
100%
|
|
Cable
|
Televisión Internacional, S.A. de C.V. and subsidiaries (collectively, “TVI”) (5)
|
100%
|
|
Cable
|
Cablestar, S.A. de C.V. and subsidiaries (collectively, “Bestel”) (6)
|
66.2%
|
|
Cable
|
Arretis, S.A.P.I. de C.V. and subsidiaries (collectively, “Cablecom”) (7)
|
100%
|
|
Cable
|
Subsidiaries engaged in the Telecable business (collectively, “Telecable”) (8)
|
100%
|
|
Cable
|
FTTH de México, S.A. de C.V. (9)
|
100%
|
|
Cable
|
Corporativo Vasco de Quiroga, S.A. de C.V. (“CVQ”) and subsidiaries (10)
|
100%
|
|
Cable and Sky
|
Innova, S. de R.L. de C.V. (“Innova”) and subsidiaries (collectively, “Sky”) (11)
|
58.7%
|
|
Sky
|
Grupo Telesistema, S.A. de C.V. (“Grupo Telesistema”) and subsidiaries
|
100%
|
|
Content and Other Businesses
|
Televisa, S.A. de C.V. (“Televisa”) (12)
|
100%
|
|
Content
|
Televisión Independiente de México, S.A. de C.V. (“TIM”) (12)
|
100%
|
|
Content
|
G.Televisa-D, S.A. de C.V. (12)
|
100%
|
|
Content
|
Multimedia Telecom, S.A. de C.V. (“Multimedia Telecom”) and subsidiary (13)
|
100%
|
|
Content
|
Ulvik, S.A. de C.V. (14)
|
100%
|
|
Content and Other Businesses
|
Controladora de Juegos y Sorteos de México, S.A. de C.V. and subsidiaries
|
100%
|
|
Other Businesses
|
Editorial Televisa, S.A. de C.V. and subsidiaries
|
100%
|
|
Other Businesses
|
Grupo Distribuidoras Intermex, S.A. de C.V. and subsidiaries
|
100%
|
|
Other Businesses
|
Villacezán, S.A. de C.V. (“Villacezán”) and subsidiaries (15)
|
100%
|
|
Other Businesses
|
Sistema Radiópolis, S.A. de C.V. (“Radiópolis”) and subsidiaries (16)
|
50%
|
|
Held-for-sale operations
|
(1)
|
Percentage of equity interest directly or indirectly held by the Company.
|
|
|
(2)
|
See Note 26 for a description of each of the Group’s business segments.
|
|
|
(3)
|
Empresas Cablevisión, S.A.B. de C.V., is a direct majority-owned subsidiary of CVQ.
|
|
|
(4)
|
Some Cablemás subsidiaries are directly owned by CVQ and some other Cablemás subsidiaries are indirectly owned by CVQ.
|
|
|
(5)
|
Televisión Internacional, S.A. de C.V., is a direct subsidiary of CVQ.
|
|
|
(6)
|
Cablestar, S.A. de C.V., is an indirect majority-owned subsidiary of CVQ and Empresas Cablevisión, S.A.B. de C.V.
|
|
|
(7)
|
Arretis, S.A.P.I. de C.V.; is a direct subsidiary of CVQ.
|
|
|
(8)
|
The Telecable subsidiaries are directly owned by CVQ.
|
|
|
(9)
|
FTTH de México, S. A. de C.V., is an indirect subsidiary of CVQ.
|
|
|
(10)
|
CVQ is a direct subsidiary of the Company and the parent company of Empresas Cablevisión, Cablemás, TVI, Bestel, Cablecom, Telecable and Innova.
|
|
|
(11)
|
Innova is an indirect majority-owned subsidiary of the Company, CVQ and Sky DTH, S.A. de C.V. (“Sky DTH”), and a direct majority-owned subsidiary of Innova
Holdings, S. de R.L. de C.V. (“Innova Holdings”). Sky is a satellite television provider in Mexico, Central America and the Dominican Republic. Although the Company holds a majority of Innova’s equity and designates a majority of the
members of Innova’s Board of Directors, the non-controlling interest has certain governance and veto rights in Innova, including the right to block certain transactions between the companies in the Group and Sky. These veto rights are
protective in nature and do not affect decisions about relevant business activities of Innova.
|
|
|
(12)
|
Televisa, TIM and G.Televisa-D, S.A. de C.V., are direct subsidiaries of Grupo Telesistema.
|
|
|
(13)
|
Multimedia Telecom and its direct subsidiary, Comunicaciones Tieren, S.A. de C.V. (“Tieren”), are indirect wholly-owned subsidiaries of Grupo Telesistema,
through which the Company owns shares of the capital stock of UHI and maintains an investment in warrants that are exercisable for shares of common stock of UHI. As of December 31, 2019 and 2018, Multimedia Telecom and Tieren have
investments representing 95.3% and 4.7%, respectively, of the Group’s aggregate investment in shares of common stock and share warrants issued by UHI (see Notes 9, 10 and 20).
|
|
|
(14)
|
Direct subsidiary through which we conduct certain operations of our Content segment and certain operations of our Other Businesses segments.
|
|
|
(15)
|
Villacezán is an indirect subsidiary of Grupo Telesistema.
|
|
|
(16)
|
Radiópolis is a direct subsidiary of the Company through which the Group conducts the operations of its Radio business. The Company controls Radiópolis as
it has the right to appoint the majority of the members of the Board of Directors of Radiópolis. The Group has classified the assets and related liabilities of its Radio business as held-for-sale in its consolidated statement of financial
position as of December 31, 2019, and its Radio operations as held-for-sale operations in the Group’s segment information for the years ended December 31, 2019, 2018 and 2017. Through the third quarter of 2019, the Radio business was
included as part of the Group’s Other Businesses segment (see Notes 3 and 26).
|
The Group’s Cable, Sky and Content segments, as well as the Group’s Radio business, which is a held-for-sale operations (see Note 3
and 26), require governmental concessions and special authorizations for the provision of broadcasting and telecommunications services in Mexico. Such concessions are granted by the Mexican Institute of Telecommunications (“Instituto Federal de
Telecomunicaciones” or “IFT”) for a fixed term, subject to renewal in accordance with the Mexican Telecommunications and Broadcasting Law (“Ley Federal de Telecomunicaciones y Radiodifusión” or “LFTR”).
Renewal of concessions for the Content segment (Broadcasting) and the Radio business require, among others: (i) to request such
renewal to IFT prior to the last fifth period of the fixed term of the related concession; (ii) to be in compliance with the concession holder’s obligations under the LFTR, other applicable regulations, and the concession title; (iii) a declaration
by IFT that there is no public interest in recovering the spectrum granted under the related concession; and (iv) the acceptance by the concession holder of any new conditions for renewing the concession as set forth by IFT, including the payment of
a related fee. IFT shall resolve within the year following the presentation of the request, if there is public interest in recovering the spectrum granted under the related concession, in which case it will notify its determination and proceed with
the termination of the concession at the end of its fixed term. If IFT determines that there is no public interest in recovering the spectrum, it will grant the requested extension within 180 business days, provided that the concessionaire accepts,
in advance, the new conditions set by IFT, which will include the payment of the fee referred to above. Such fee will be determined by IFT for the relevant concessions, considering the following elements: (i) the frequency band; (ii) the amount of
spectrum; (iii) coverage of the frequency band; (iv) domestic and international benchmark regarding the market value of frequency bands; and (v) upon request of IFT, an opinion issued by the Ministry of Finance and Public Credit of IFT´s proposal for
calculation of the fee.
Renewal of concessions for the Sky and Cable segments require, among others: (i) to request its renewal to IFT prior to the last
fifth period of the fixed term of the related concession; (ii) to be in compliance with the concession holder’s obligations under the LFTR, other applicable regulations, and the concession title; and (iii) the acceptance by the concession holder of
any new conditions for renewing the concession as set forth by IFT. IFT shall resolve any request for renewal of the telecommunications concessions within 180 business days of its request. Failure to respond within such period of time shall be
interpreted as if the request for renewal has been granted.
The regulations of the broadcasting and the telecommunications concessions (including satellite pay TV) establish that at the end of
the concession, the frequency bands or spectrum attached to the services provided in the concessions shall return to the Mexican government. In addition, at the end of the concession, the Mexican government will have the preferential right to acquire
infrastructure, equipment and other goods directly used in the provision of the concession. If the Mexican government were to exercise its right to acquire infrastructure, equipment and other goods, it would be required to pay a price that is
equivalent to a formula that is similar to fair value. To the knowledge of the Company’s management, no spectrum granted for broadcasting services in Mexico has been recovered by the Mexican government in at least the past three decades for public
interest reasons. However, the Company’s management is unable to predict the outcome of any action by IFT in this regard. In addition, these assets, by themselves, would not be enough to immediately begin broadcasting or offering satellite pay TV
services or telecommunications services, as no content producing assets or other equipment necessary to operate the business would be included.
Also, the Group’s Gaming business, which is reported in the Other Businesses segment, requires a permit granted by the Mexican
Federal Government for a fixed term, subject to renewal in accordance with Mexican law. Additionally, the Group’s Sky businesses in Central America and the Dominican Republic require concessions or permits granted by local regulatory authorities for
a fixed term, subject to renewal in accordance with local laws.
The accounting guidelines provided by IFRIC 12 Service Concession Arrangements, are not
applicable to the Group due primarily to the following factors: (i) the Mexican government does not substantially control the Group’s infrastructure, what services are provided with the infrastructure and the price at which such services are offered;
(ii) the Group’s broadcasting service does not constitute a public service as per the definition in IFRIC 12; and (iii) the Group is unable to divide its infrastructure among the public (telephony and possibly Internet services) and non-public (pay
TV) service components.
At December 31, 2019, the expiration dates of the Group’s concessions and permits were as follows:
Segments
|
|
Expiration Dates
|
Cable
|
|
Various from 2022 to 2048
|
Sky
|
|
Various from 2020 to 2028
|
Content (broadcasting concessions) (1)
|
|
In 2021 and the relevant renewals start in 2022 ending in 2042
|
Other Businesses:
|
|
|
Gaming
|
|
In 2030
|
Held-for-sale operations:
|
|
|
Radio (2)
|
|
Various from 2020 to 2039
|
(1)
|
In November 2018, the IFT approved the renewal of the Group’s broadcasting concessions for all of its television stations in Mexico, for a term of 20 years after the existing
expiration date in 2021. In November 2018, the Group paid in cash for such renewal an aggregate amount of Ps.5,754,543, which includes a payment of Ps.1,194 for administrative expenses and recognized this payment as an intangible asset in
its consolidated statement of financial position. This amount will be amortized in a period of 20 years beginning on January 1, 2022, by using the straight-line method (see Note 13).
|
(2)
|
The amounts paid by the Group for renewal of certain Radio concessions in 2017 amounted to an aggregate of Ps.37,848. In addition, IFT granted in 2017 two new concessions to
the Group in Ensenada and Puerto Vallarta. The amount paid by the Group for obtaining these concessions amounted to an aggregate of Ps.85,486. The Group recognized the amounts for renewal and obtaining these concessions as intangible
assets in its consolidated statement of financial position, and are amortized in a period of 20 years by using the straight-line method (see Note 13).
|
The concessions or permits held by the Group are not subject to any significant pricing regulations in the ordinary course of
business.
(c) Investments in Associates and Joint Ventures
Associates are those entities over which the Group has significant influence but not control, generally those entities with a
shareholding of between 20% and 50% of the voting rights. Investments in joint arrangements are classified as either joint operations or joint ventures depending on the contractual rights and obligations of each investor. Joint ventures are those
joint arrangements where the Group exercises joint control with other stockholder or more stockholders without exercising control individually, and have rights to the net assets of the joint arrangements. Investments in associates and joint ventures
are accounted for using the equity method of accounting. Under the equity method, the investment is initially recognized at cost, and the carrying amount is increased or decreased to recognize the investor’s share of the net assets of the investee
after the date of acquisition.
The Group’s investments in associates include an equity interest in UHI represented by approximately 10% of the outstanding total
shares of UHI as of December 31, 2019 and 2018 (see Notes 9 and 10).
If the Group’s share of losses of an associate or a joint venture equals or exceeds its interest in the investee, the Group
discontinues recognizing its share of further losses. The interest in an associate or a joint venture is the carrying amount of the investment in the investee under the equity method together with any other long-term investment that, in substance,
form part of the Group’s net investment in the investee. After the Group’s interest is reduced to zero, additional losses are provided for, and a liability is recognized, only to the extent that the Group has incurred legal or constructive
obligations or made payments on behalf of the associate or joint venture.
(d) Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the Group’s chief executive officers
(“chief operating decision makers”) who are responsible for allocating resources and assessing performance for each of the Group’s operating segments.
(e) Foreign Currency Translation
Functional and Presentation Currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic
environment in which the entity operates (“functional currency”). The presentation and reporting currency of the Group’s consolidated financial statements is the Mexican peso, which is used for compliance with its legal and tax obligations.
Transactions and Balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the
transactions or measurement where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign
currencies are recognized in the statement of income as part of finance income or expense, except when deferred in other comprehensive income as qualifying cash flow hedges and qualifying net investment hedges.
Changes in the fair value of monetary securities denominated in foreign currency classified as investments in financial instruments
are analyzed between exchange differences resulting from changes in the amortized cost of the security and other changes in the carrying amount of the security. Translation differences related to changes in amortized cost are recognized in income or
loss, and other changes in carrying amount are recognized in other comprehensive income or loss.
Translation of Foreign Operations
The financial statements of the Group’s foreign entities that have a functional currency different from the presentation currency are
translated into the presentation currency as follows: (a) assets and liabilities are translated at the closing rate at the date of the statement of financial position; (b) income and expenses are translated at average exchange rates (unless this
average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and (c) all resulting translation
differences are recognized in other comprehensive income or loss.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the
foreign entity and translated at the closing rate. Translation differences arising are recognized in other comprehensive income or loss.
Assets and liabilities of non-Mexican subsidiaries that use the Mexican Peso as a functional currency are initially converted to
Mexican Pesos by utilizing the exchange rate of the statement of financial position date for monetary assets and liabilities, and historical exchange rates for non-monetary items, with the related adjustment included in the consolidated statement of
income as finance income or expense.
A portion of the Group’s outstanding principal amount of its U.S. dollar denominated long-term debt (hedging instrument, disclosed in
the line “Long-term debt, net of current portion” of the consolidated statement of financial position) has been designated as a hedge of a net investment in a foreign operation in connection with the Group’s investment in shares of common stock of
UHI (hedged item), which amounted to U.S.$433.7 million (Ps.8,189,662) and U.S.$421.2 million (Ps.8,285,286) as of December 31, 2019 and 2018, respectively. Consequently, any foreign exchange gain or loss attributable to this designated hedging
long-term debt is credited or charged directly to other comprehensive income or loss as a cumulative result from foreign currency translation (see Note 10).
A portion of the Group’s outstanding principal amount of its U.S. dollar denominated long-term debt (hedging instrument, disclosed in
the line “Long-term debt, net of current portion” of the consolidated statement of financial position) has been designated as a fair value hedge of foreign exchange exposure related to: (i) its investment in warrants exercisable for common stock of
UHI and (ii) its initial investment in Open Ended Fund until March 31, 2018, and its entire investment in Open Ended Fund beginning in the second quarter of 2018 (hedged items), which amounted to Ps.33,775,451 (U.S.$1,788.6 million) and Ps.4,688,202
(U.S.$248.3 million), respectively, as of December 31, 2019, and Ps.34,921,530 (U.S.$1,775.1 million) and Ps.7,662,726 (U.S.$389.5 million), respectively, as of December 31, 2018. Consequently, any foreign exchange gain or loss attributable to this
designated hedging long-term debt is credited or charged directly to other comprehensive income or loss, along with the recognition in the same line item of any foreign currency gain or loss of these investments in warrants and Open Ended Fund
designated as hedged items (see Notes 9, 14 and 18).
Beginning on January 1, 2018, the Group adopted the hedge accounting requirements of IFRS 9 Financial
Instruments, (“IFRS 9”) for all of its hedging relationships. This IFRS Standard became effective on that date.
(f) Cash and Cash Equivalents and Temporary Investments
Cash and cash equivalents consist of cash on hand and all highly liquid investments with an original maturity of three months or less
at the date of acquisition. Cash is stated at nominal value and cash equivalents are measured at fair value, and the changes in the fair value are recognized in the statement of income.
Temporary investments consist of short-term investments in securities, including without limitation debt with a maturity of over
three months and up to one year at the date of acquisition, stock and other financial instruments, or a combination thereof, as well as current maturities of non-current investments in financial instruments. Temporary investments are measured at fair
value with changes in fair value recognized in finance income in the consolidated statement of income, except securities which are measured at amortized cost.
As of December 31, 2019 and 2018, cash equivalents and temporary investments primarily consisted of fixed short-term deposits and
corporate fixed income securities denominated in U.S. dollars and Mexican pesos, with an average yield of approximately 2.20% for U.S. dollar deposits and 8.09% for Mexican peso deposits in 2019, and approximately 1.77% for U.S. dollar deposits and
7.69% for Mexican peso deposits in 2018.
(g) 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 and net realizable value. Programs and films are
valued at the lesser of production cost, which consists of direct production costs and production overhead, and net realizable value. Payments for production talent advances are initially capitalized and subsequently included as direct or indirect
costs of program production. Transmission rights are recognized from the point of which the legally enforceable license period begins. Until the license term commences and the programming rights are available, payments made are recognized as
prepayments.
The Group’s 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 Company’s historical revenue patterns and usage for similar productions.
Transmission rights, programs, literary works, production talent advances and films are recorded at acquisition or production cost.
Cost of sales is calculated and recorded for the month in which such transmission rights, programs, literary works, production talent advances and films are matched with related revenues.
Transmission rights are recognized in income 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 by past experience, but not exceeding 25 years.
(h) Inventories
Inventories of paper, magazines, materials and supplies for maintenance of technical equipment are recorded at the lower of cost or
its net realization value. The net realization value is the estimated selling price in the normal course of business, less estimated costs to conduct the sale. Cost is determined using the average cost method.
(i) Financial Assets
Through December 31, 2017, the Group classified its financial assets in the following categories: loans and receivables,
held-to-maturity investments, financial assets at fair value through income or loss (“FVIL”) and available-for-sale financial assets. The classification depended on the purpose for which the financial assets were acquired. Management determined the
classification of its financial assets at initial recognition.
Beginning on January 1, 2018, the Group classifies its financial assets in accordance with IFRS 9 which became effective on that
date. Under the guidelines of IFRS 9, the Group classifies financial assets as subsequently measured at amortized cost, fair value through other comprehensive income or loss (“FVOCIL”), or FVIL, based on the Company’s business model for managing the
financial assets and the contractual cash flows characteristics of the financial asset.
Financial Assets Measured at Amortized Cost
Financial assets are measured at amortized cost when the objective of holding such financial assets is to collect contractual cash
flows, and the contractual terms of the financial asset give rise on specified dates to cash flows that are only payments of principal and interest on the principal amount outstanding. These financial assets are initially recognized at fair value
plus transaction costs and subsequently carried at amortized cost using the effective interest rate method, with changes in carrying value recognized in the consolidated statement of income in the line which most appropriately reflects the nature of
the item or transaction. They are included in current assets, except for maturities greater than 12 months after the end of the reporting period that are included in non-current assets. The Group’s financial assets measured at amortized costs are
primarily presented as “trade notes and accounts receivable”, “other accounts and notes receivable”, and “due from related parties” in the consolidated statement of financial position (see Note 7).
Financial Assets Measured at FVOCIL
Financial assets are measured at FVOCIL when the objective of holding such financial assets is both collecting contractual cash flows
and selling financial assets, and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
The Group’s investments in certain equity instruments have been designated to be measured at FVOCIL, as permitted by IFRS 9 (see Note
28). In connection with this designation, any amounts presented in consolidated other comprehensive income are not subsequently transferred to consolidated income. Dividends from these equity instruments are recognized in consolidated income when the
right to receive payment of the dividend is established, and such dividend is probable to be paid to the Group.
Financial Assets at FVIL
Financial assets at FVIL are financial assets held for trading. A financial asset is classified in this category if acquired
principally for the purpose of selling in the short term. Derivatives are also categorized as held for trading unless they are designated as hedges. Assets in this category are classified as current assets if expected to be settled within 12 months,
otherwise they are classified as non-current.
Impairment of Financial Assets
From January 1, 2018, the Group assesses on a forward looking basis the expected credit losses associated with its financial assets
carried at fair value through other comprehensive income or loss. The impairment methodology applied depends on whether there has been a significant increase in credit risk.
For trade receivables, the Group applies the simplified approach permitted by IFRS 9, which requires expected lifetime losses to be
recognized from initial recognition of the receivables, see Note 7 for further details.
Offsetting of Financial Instruments
Financial assets are offset against financial liabilities and the net amount reported in the consolidated statement of financial
position if, and only when the Group: (i) currently has a legally enforceable right to set off the recognized amounts; and (ii) intends either to settle on a net basis, or to realize the assets and settle the liability simultaneously.
(j) Property, Plant and Equipment
Property, plant and equipment are recorded at acquisition cost.
Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized. All other repairs and maintenance are charged to
income or loss during the financial period in which they are incurred.
Land is not depreciated. Depreciation of property, plant and equipment is based upon the carrying value of the assets in use and is
computed using the straight-line method over the estimated useful lives of the asset, as follows:
|
|
Estimated
Useful Lives
|
Buildings
|
|
|
Buildings improvements
|
|
5-20 years
|
Technical equipment
|
|
3-30 years
|
Satellite transponders
|
|
15 years
|
Furniture and fixtures
|
|
3-10 years
|
Transportation equipment
|
|
4-8 years
|
Computer equipment
|
|
3-6 years
|
Leasehold improvements
|
|
5-30 years
|
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its
estimated recoverable amount.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognized within other
income or expense in the consolidated statement of income.
If significant parts of an item of property, plant and equipment have different useful lives, then they are accounted for as separate
items (major components) of property, plant and equipment.
(k) Right-of-use assets
Right-of-use assets are measured at cost comprising the following: the amount of the initial measurement of lease liability, any
lease payments made at or before the commencement date less any lease incentives received, any initial direct costs and restoration costs.
Right-of-use assets are generally depreciated over the shorter of the asset’s useful life and the lease term on a straight – line
basis. If the Group is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the underlying asset’s useful life.
Payments associated with short-term leases of equipment and vehicles and mostly leases of low-value assets are recognized on a
straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less.
(l) Intangible Assets and Goodwill
Intangible assets and goodwill are recognized at acquisition cost. Intangible assets and goodwill acquired through business
combinations are recorded at fair value at the date of acquisition. Intangible assets with indefinite useful lives, which include, trademarks, concessions, and goodwill, are not amortized, and subsequently recognized at cost less accumulated
impairment losses. Intangible assets with finite useful lives are amortized on a straight-line basis over their estimated useful lives, as follows:
|
|
Estimated
Useful Lives
|
Trademarks with finite useful lives
|
|
4 years
|
Licenses
|
|
3-14 years
|
Subscriber lists
|
|
4-10 years
|
Payments for renewal of concessions
|
|
20 years
|
Other intangible assets
|
|
3-20 years
|
Trademarks
The Group determines its trademarks to have an indefinite life when they are expected to generate net cash inflows for the Group
indefinitely. Additionally, the Group considers that there are no legal, regulatory or contractual provisions that limit the useful lives of trademarks. The Group has not capitalized any amounts associated with internally developed trademarks.
In 2015, the Company’s management evaluated trademarks in its Cable segment to determine whether events and circumstances continue to
support an indefinite useful life for these intangible assets. As a result of such evaluation, the Company identified certain businesses and locations that began migrating from an acquired trademark to an internally developed trademark between 2015
and 2016, in connection with enhanced service packages offered to current and new subscribers, and estimated that this migration process will take approximately four years. Accordingly, in 2015, the Group changed the useful life assessment from
indefinite to finite for acquired trademarks in certain businesses and locations in its Cable segment, and began to amortize on a straight line basis the related carrying value of these trademarks when the migration to the new trademark started using
an estimated useful life of four years.
Concessions
The Group defined concessions to have an indefinite life due to the fact that the Group has a history of renewing its concessions
upon expiration, has maintained the concessions granted by the Mexican government, and has no foreseeable limit to the period over which the assets are expected to generate net cash inflows. In addition, the Group is committed to continue to invest
for the long term to extend the period over which the broadcasting and telecommunications concessions are expected to continue to provide economic benefits.
Any fees paid by the Group to regulatory authorities for concessions renewed are determined to have finite useful lives and are
amortized on a straight-live basis over the fixed term of the related concession
Goodwill
Goodwill arises on the acquisition of a business and represents the excess of the consideration transferred over the Group’s interest
in net fair value of the identifiable assets, liabilities and contingent liabilities of the acquiree and the fair value of the non-controlling interest in the acquiree.
For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash generating units
(“CGUs”), or groups of CGUs, that are expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for
internal management purposes.
Goodwill impairment reviews are undertaken annually or more frequently if events or changes in circumstances indicate a potential
impairment. The carrying value of goodwill is compared to the recoverable amount, which is the higher between the value in use and the fair value less costs to sell. Any impairment of goodwill is recognized as an expense in the consolidated statement
of income and is not subject to be reversed in subsequent periods.
(m) 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
13), at least once a year, or whenever events or changes in business circumstances indicate that these carrying amounts may not be recoverable. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its
recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. To determine whether an impairment exists, the carrying value of the reporting unit is compared with its recoverable amount. 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. Any impairment of long-lived assets other than goodwill may be subsequently reversed under certain circumstances.
(n) Trade Accounts Payable and Accrued Expenses
Trade accounts payable and accrued expenses are obligations to pay for goods or services that have been acquired in the ordinary
course of business from suppliers. Trade accounts payable and accrued expenses are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as
non-current liabilities.
Trade accounts payable and accrued expenses are recognized initially at fair value and subsequently measured at amortized cost using
the effective interest method.
Trade accounts payable and accrued expenses are presented as a single item of consolidated current liabilities in the consolidated
statements of financial position as of December 31, 2019 and 2018.
(o) Debt
Debt is recognized initially at fair value, net of transaction costs incurred. Debt is subsequently carried at amortized cost; any
difference between the proceeds (net of transaction costs) and the redemption value is recognized in the consolidated statement of income over the period on which the debt is outstanding using the effective interest method.
Fees paid on the establishment of debt facilities are recognized as transaction costs of the loan to the extent that it is probable
that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalized as a
pre-payment for liquidity services and amortized over the period of the facility to which it relates.
Current portion of long-term debt and interest payable are presented as a single line item of consolidated current liabilities in the
consolidated statements of financial position as of December 31, 2019 and 2018.
Debt early redemption costs are recognized as finance expense in the consolidated statement of income.
(p) Customer Deposits and Advances
Customer deposits and advance agreements for advertising services provide that customers receive prices that are fixed for the
contract period for advertising time in the Group’s platforms based on rates established by the Group. Such rates vary depending on when the advertisement is made, including the season, hour, day and type of programming.
The Group recognizes customer deposits and advance agreements for advertising services in the consolidated statement of financial
position when these agreements are executed either with a consideration in cash paid by customers or with short-term non-interest bearing notes received from customers in connection with annual (“upfront basis”) and from time to time (“scatter
basis”) prepayments (see Note 7). In connection with the initial adoption of IFRS 15 Revenues from Contracts with Customers (“IFRS 15”) in the first quarter of 2018 (see Note 2 (s)), customer deposits and
advances agreements are presented by the Group as a contract liability in the consolidated statement of financial position when a customer pays consideration, or the Group has a right to an amount of consideration that is unconditional, before the
Group transfers services to the customer. Under the guidelines of this standard, a contract liability is a Group’s obligation to transfer services or goods to a customer for which the Group has received consideration, or an amount of consideration is
due, from the customer. In addition, the Group recognizes contract asset upon the approval of non-cancellable contracts that generate an unconditional right to receive cash consideration prior to services being rendered. The Company’s management has
consistently recognized that an amount of consideration is due, for legal, finance and accounting purposes, when a short-term non- interest bearing note is received from a customer in connection with a deposit or advance agreement entered into with
the customer for advertising services to be rendered by the Group in the short term.
(q) Provisions
Provisions are recognized when the Group has a present legal or constructive obligation as a result of past events, it is probable
that an outflow of resources will be required to settle the obligation, and the amount has been reliably estimated. Provisions are not recognized for future operating losses.
Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax
rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provisions due to passage of time is recognized as interest expense.
(r) Equity
The capital stock and other equity accounts include the effect of restatement through December 31, 1997, determined by applying the
change in the Mexican National Consumer Price Index between the dates capital was contributed or net results were generated and December 31, 1997, the date through which the Mexican economy was considered hyperinflationary under the guidelines of
IFRS Standards. The restatement represented the amount required to maintain the contributions and accumulated results in Mexican Pesos in purchasing power as of December 31, 1997.
Where any company in the Group purchases shares of the Company’s capital stock (shares repurchased), the consideration paid,
including any directly attributable incremental costs is deducted from equity attributable to stockholders of the Company until the shares are cancelled, reissued, or sold. Where such shares repurchased are subsequently reissued or sold, any
consideration received, net of any directly attributable incremental transaction costs, is included in equity attributable to stockholders of the Company.
(s) Revenue Recognition
In connection with the initial adoption of IFRS 15, in the first quarter of 2018, the Company’s management: (i) reviewed significant
revenue streams and identified certain effects on revenue recognition in the Group’s Cable and Sky segments, as discussed below; (ii) used the retrospective cumulative effect, which consists in recognizing any cumulative adjustment resulting from the
new standard at the date of initial adoption in consolidated equity; and (iii) did not restate the comparative information for the years ended December 31, 2017 and 2016, which was reported under the revenue recognition IFRS Standard in effect in
those periods (see Note 28).
Revenue is measured at the fair value of the consideration received or receivable, and represents amounts receivable for services
provided. The Group recognizes revenue when the amount of revenue can be reliably measured; when it is probable that future economic benefits will flow to the entity; and when specific criteria have been met for each of the Group’s activities, as
described below. The Group bases its estimate of return on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.
The Group derives the majority of its revenues from media and entertainment-related business activities both in Mexico 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:
•
|
Cable television, internet and telephone subscription, and pay-per-view and installation fees are recognized in the period in which the services are rendered. Through December 31,
2017, commissions for obtaining contracts with customers in the Group’s Cable segment were accounted for as they were incurred. Beginning on January 1, 2018, in accordance with IFRS 15, incremental costs for obtaining contracts with
customers, primarily commissions, are recognized as assets in the Group’s consolidated statement of financial position and amortized in the expected life of contracts with customers.
|
•
|
Revenues from other telecommunications and data services are recognized in the period in which these services are provided. Other telecommunications services include long distance
and local telephony, as well as leasing and maintenance of telecommunications facilities.
|
•
|
Sky program service revenues, including advances from customers for future direct-to-home (“DTH”) program services, are recognized at the time the service is provided. Through
December 31, 2017, commissions for obtaining contracts with customers in the Group’s Sky segment were accounted for as they were incurred. Beginning on January 1, 2018, in accordance with IFRS 15, certain incremental costs for obtaining
contracts with customers, primarily commissions, are recognized as assets in the Group’s consolidated statement of financial position and amortized in the expected life of contracts with customers.
|
•
|
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 network subscription and licensed and syndicated 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.
|
•
|
Revenues from publishing distribution are recognized upon distribution of the products.
|
•
|
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 and are recognized at the time
of such net win.
|
In respect to sales of multiple products or services, the Group evaluates whether it has fair value evidence for each deliverable in
the transaction. For example, the Group sells cable television, internet and telephone subscription to subscribers in a bundled package at a rate lower than if the subscriber purchases each product on an individual basis. Subscription revenues
received from such subscribers are allocated to each product in a pro-rata manner based on the fair value of each of the respective services.
(t) Interest Income
Interest income is recognized using the effective interest method. When a loan and receivable is impaired, the Group reduces the
carrying amount to its recoverable amount, being the estimated future cash flow discounted at the original effective interest rate of the instrument, and continues unwinding the discount as interest income. Interest income on impaired loan and
receivables is recognized using the original effective interest rate.
(u) Employee Benefits
Pension and Seniority Premium Obligations
Plans exist for pensions and seniority premiums (post-employment benefits), for most of the Group’s employees funded through
irrevocable trusts. Increases or decreases in the consolidated liability or asset for post-employment benefits are based upon actuarial calculations. Contributions to the trusts are determined in accordance with actuarial estimates of funding
requirements. Payments of post-employment benefits are made by the trust administrators. The defined benefit obligation is calculated annually using the projected unit credit method. The present value of the defined benefit obligation is determined
by discounting the estimated future cash outflows using interest rates of government bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension
obligation.
Remeasurement of post-employment benefit obligations related to experience adjustments and changes in actuarial assumptions of post-
employment benefits are recognized in the period in which they are incurred as part of other comprehensive income or loss in consolidated equity.
Profit Sharing
The employees’ profit sharing required to be paid under certain circumstances in Mexico, is recognized as a direct benefit to
employees in the consolidated statements of income in the period in which it is incurred.
Termination Benefits
Termination benefits, which mainly represent severance payments by law, are recorded in the consolidated statement of income. The
Group recognizes termination benefits at the earlier of the following dates: (a) when the Group can no longer withdraw the offer of those benefits; and (b) when the entity recognizes costs for a restructuring that involves the payment of termination
benefits.
(v) Income Taxes
The income tax expense for the period comprises current and deferred income tax. Income tax is recognized in the consolidated
statement of income, except to the extent that it relates to items recognized in other comprehensive income or directly in equity. In this case, the income tax is recognized in other comprehensive income.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the statement of
financial position date in the countries where the Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns and establishes provisions where appropriate on the basis of amounts
expected to be paid to the tax authorities.
Deferred income tax is recognized, using the balance sheet liability method, on temporary differences arising between the tax bases
of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred income tax liabilities are not recognized if they arise from the initial recognition of goodwill; deferred income tax is not accounted
for if it arises from initial recognition of an asset or liability in a transaction (other than in a business combination) that at the time of the transaction affects neither accounting nor taxable income or loss. Deferred income tax is determined
using tax rates (and laws) that have been enacted or substantively enacted by the statement of financial position date and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled.
Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against
which the temporary differences and tax loss carryforwards can be utilized. For this purpose, the Group takes into consideration all available positive and negative evidence, including factors such as market conditions, industry analysis, projected
taxable income, carryforward periods, current tax structure, potential changes or adjustments in tax structure, and future reversals of existing temporary differences.
Deferred income tax liabilities are provided on taxable temporary differences associated with investments in subsidiaries, joint
ventures and associates, except for deferred income tax liabilities where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred income tax assets are provided on deductible temporary differences associated with investments in subsidiaries, joint ventures and associates, to the extent that it is probable that there will be sufficient taxable income against which to
utilize the benefit of the temporary difference and it is expected to reverse in the foreseeable future.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against
current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the
balances on a net basis.
(w) Derivative Financial Instruments
The Group recognizes derivative financial instruments as either assets or liabilities in the consolidated statements of financial
position and measures such instruments at fair value. The accounting for changes in the fair value of a derivative financial instrument depends on the intended use of the derivative financial instrument and the resulting designation. For a derivative
financial instrument designated as a cash flow hedge, the effective portion of such derivative’s gain or loss is initially reported as a component of other comprehensive income or loss 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 financial 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. When a hedging instrument expires or is sold, terminated or exercised, the cumulative gain or loss on the hedging instrument that has been recognized in other
comprehensive income remains in equity until the forecast transaction occurs. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately reclassified to income or loss. For
derivative financial 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, 2019, 2018 and 2017, certain derivative financial instruments
qualified for hedge accounting (see Note 15).
(x) Comprehensive Income
Comprehensive income for the period includes the net income for the period presented in the consolidated statement of income plus
other comprehensive income for the period reflected in the consolidated statement of comprehensive income.
(y) Share-based Payment Agreements
Key officers and employees of certain subsidiaries of the Company have entered into agreements for the conditional sale of Company’s
shares under the Company’s Long-Term Retention Plan. The share-based compensation expense is measured at fair value at the date the equity benefits are conditionally sold to these officers and employees, and is recognized as a charge to consolidated
income (administrative expense) over the vesting period. The Group recognized a share-based compensation expense of Ps.1,129,644, Ps.1,327,549 and Ps.1,489,884 for the years ended December 31, 2019, 2018 and 2017, respectively, of which Ps.1,108,094,
Ps.1,305,999 and Ps.1,468,337 was credited in consolidated stockholders’ equity for those years, respectively (see Note 17).
(z) Leases
Through December 31, 2018:
•
|
The determination of whether an arrangement was, or contained, a lease was based on the substance of the arrangement and required an assessment of whether the fulfillment of the
arrangement was dependent on the use of a specific asset or assets and whether the arrangement conveyed the right to use the asset.
|
•
|
Leases of property, plant and equipment and other assets where the Group held substantially all the risks and rewards of ownership were classified as finance leases. Finance lease
assets were capitalized at the commencement of the lease term at the lower of the present value of the minimum lease payments or the fair value of the lease asset. The obligations relating to finance leases, net of finance charges in
respect of future periods, were recognized as liabilities. The interest element of the finance cost was charged to the consolidated statement of income over the lease period so as to produce a constant periodic rate of interest on the
remaining balance of the liability for each period. The property, plant and equipment acquired under finance leases was depreciated over the shorter of the useful life of the asset and the lease term.
|
•
|
Leases where a significant portion of the risks and rewards were held by the lessor were classified as operating leases. Rentals were charged to the consolidated statement of
income on a straight line basis over the period of the lease.
|
•
|
Leasehold improvements were depreciated at the lesser of its useful life or contract term.
|
In the first quarter of 2019, the Group adopted IFRS 16 Leases (“IFRS 16”), which became
effective for annual periods beginning on January 1, 2019 (see Note 28). The Group does not apply this new IFRS Standard to short-term leases and leases for which the underlying asset is of low value, as permitted by the guidelines of IFRS 16.
On adoption of IFRS 16, the Group recognized lease liabilities in relation to leases which had previously been classified as
operating leases under the principles of IAS 17 Leases (“IAS 17”). These liabilities were measured at the present value of the remaining lease payments, discounted
using the lessee´s incremental borrowing rate as of January 1, 2019. The average lessee’s incremental borrowing rate applied to the lease liabilities on January 1, 2019 was 4.7% and 10.6% for U.S. dollars leases and Mexican pesos leases,
respectively.
(aa) New and Amended IFRS Standards
The Group adopted IFRS 16 in 2019, which became effective on January 1, 2019 (see Notes 2 (k), 2 (z) and 28). The Group adopted IFRS
15 and IFRS 9 in 2018, which became effective on January 1, 2018 (see Notes 2 (i), 2 (t) and 28). Some other amendments and improvements to certain IFRS Standards became effective on January 1, 2019 and 2018, and they did not have any significant
impact on the Group’s consolidated financial statements.
Below is a list of the new and amended IFRS Standards that have been issued by the IASB and are effective for annual periods starting on or after January
1, 2020.
New or Amended IFRS Standard
|
|
Title of the IFRS Standard
|
|
Effective for Annual
Periods Beginning
On or After
|
Amendments to IFRS 10 and IAS 28 (1)
|
|
Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
|
|
Postponed
|
IFRS 17 (2)
|
|
Insurance Contracts
|
|
January 1, 2021
|
IFRS Conceptual Framework
|
|
Conceptual Framework for Financial Reporting
|
|
January 1, 2020
|
Amendments to IFRS 3 (1)
|
|
Definition of a Business
|
|
January 1, 2020
|
Amendments to IAS 1 and IAS 8 (1)
|
|
Definition of Material
|
|
January 1, 2020
|
Amendments to IFRS 9, IAS 39 and IFRS 7 (2)
|
|
Interest Rate Benchmark Reform
|
|
January 1, 2020
|
Amendments to IAS 1 (1)
|
|
Classification of Liabilities as Current or Non-current
|
|
January 1, 2022
|
(1) This new or amended IFRS Standard is not expected to have a significant impact on the
Group’s consolidated financial statements.
(2) This new or amended IFRS Standard is not expected to be applicable to the Group’s
consolidated financial statements.
Amendments to IFRS 10 and IAS 28 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture, were issued in September 2014 and address and acknowledge inconsistency between the requirements in IFRS 10 and those in IAS 28 (2011), in dealing with the sale or contribution
of assets between an investor and its associate or joint venture. The main consequence of the amendments is that a full gain or loss is recognized when a transaction involved a business (whether it is housed in a subsidiary or not). A partial gain or
loss is recognized when a transaction involved assets that do not constitute a business, even if these assets are housed in a subsidiary. In December 2015, the IASB postponed the effective date of these amendments indefinitely pending the outcome of
its research project on the equity method of accounting.
IFRS 17 Insurance Contracts (“IFRS 17”) was issued in May 2017 and supersedes IFRS 4 Insurance Contracts (“IFRS 4”), which has given companies dispensation to carry on accounting for insurance contracts using national accounting standards, resulting in a multitude of different approaches. IFRS 17
establishes principles for the recognition, measurement, presentation and disclosures of insurance contracts issued. It also requires similar principles to be applied to reinsurance contracts with discretionary participation features issued. IFRS 17
solves the comparison problems created by IFRS 4 by requiring all insurance contracts to be accounted for in a consistent manner. Under the provisions of IFRS 17, insurance obligations will be accounted for using current values instead of historical
cost. IFRS 17 is effective on January 1, 2021, and earlier application is permitted.
Conceptual Framework for Financial Reporting (“Conceptual Framework”) was issued in March
2018, replacing the previous version of the Conceptual Framework issued in 2010. The Conceptual Framework describes the objective of, and the concepts for, general purpose financial reporting. The purpose of the Conceptual Framework is to: (a) assist
the IASB to develop IFRS Standards that are based on consistent concepts; (b) assist preparers to develop consistent accounting policies when no Standard applies to a particular transaction or other event, or when a Standard allows a choice of
accounting policy; and (c) assist all parties to understand and interpret the IFRS Standards. The Conceptual Framework is not an IFRS Standard. Nothing in the Conceptual Framework overrides any IFRS Standard or any requirement in an IFRS Standard.
The revised Conceptual Framework is effective immediately for the IASB and the IFRIC, and has an effective date of January 1, 2020, with earlier application permitted, for companies that use the Conceptual Framework to develop accounting policies
when no IFRS Standard applies to a particular transaction.
Amendments to IFRS 3 Definition of a Business was issued in October 2018. The amended
definition emphasizes that the output of a business is to provide goods and services to customers, whereas the previous definition focused on returns in the form of dividends, lower costs or other economic benefits to investors and others.
Distinguishing between a business and a group of assets is important because an acquirer recognizes goodwill only when acquiring a business. Amendments to IFRS 3 is effective on January 1, 2020, and earlier application is permitted.
Amendments to IAS 1 and IAS 8 Definition of Material was issued in October 2018. The
definition of material helps a company determine whether information about an item, transaction or other event should be provided to users of financial statements. However, companies sometimes experienced difficulties using the previous definition of
material when making materiality judgements in the preparation of financial statements. Consequently, the IASB issued Definition of Material (Amendments to IAS 1 and IAS 8) in October 2018. Amendments to IAS
1 and IAS 8 is effective on January 1, 2020, and earlier application is permitted.
Amendments to IFRS 9, IAS 39 and IFRS 7 Interest Rate Benchmark Reform were issued in
September 2019. These amendments modify some specific hedge accounting requirements to provide relief from potential effects of the uncertainty caused by interest rate benchmarks such as interbank offered rates. In addition, the amendments require
companies to provide additional information to investors about their hedging relationships which are directly affected by these uncertainties. The amendments are effective for annual reporting periods beginning on or after January 1, 2020. Earlier
application is permitted.
Amendments to IAS 1 Classification of Liabilities as Current or Non-current was issued in
January 2020, the amendments clarify one of the criteria in IAS 1 for classifying a liability as non-current that is, the requirement for an entity to have the right to defer settlement of the liability for at least 12 months after the reporting
period. The amendments are effective for annual reporting periods beginning on or after January 1, 2022. Earlier application is permitted.
[800600] Notes - List of accounting policies
Disclosure of significant accounting policies
The principal accounting policies followed by the Group and used in the preparation of its annual consolidated financial statements as
of December 31, 2019, and where applicable, of its interim condensed consolidated financial statements, are summarized below. These accounting policies should be read in conjunction with the audited consolidated financial statements of the Group for
the years ended December 31, 2019 and 2018, once they have been submitted to the Mexican Banking and Securities Commission (“Comisión Nacional Bancaria y de Valores” and the U.S. Securities and Exchange Commission, respectively
(a) Basis of Presentation
The consolidated financial statements of the Group as of December 31, 2019 and 2018, and for the years ended December 31, 2019, 2018
and 2017, are presented in accordance with International Financial Reporting Standards (“IFRS Standards”), as issued by the International Accounting Standards Board (“IASB”). IFRS Standards comprise: (i) IFRS Standards; (ii) International Accounting
Standards (“IAS Standards”); (iii) IFRS Interpretations Committee (“IFRIC”) Interpretations; and (iv) Standing Interpretations Committee (“SIC”) Interpretations.
The consolidated financial statements have been prepared on a historical cost basis, except for the measurement at fair value of
temporary investments, derivative financial instruments, financial assets, equity financial instruments, plan assets of post-employment benefits and share-based payments, as described below.
The preparation of consolidated financial statements in conformity with IFRS Standards, requires the use of certain critical accounting
estimates. It also requires management to exercise its judgment in the process of applying the Group’s accounting policies. Changes in assumptions may have a significant impact on the consolidated financial statements in the period the assumptions
changed. Management believes that the underlying assumptions are appropriate. The areas involving a higher degree of judgment or complexity, or areas where estimates and assumptions are significant to the Group’s financial statements are disclosed in
Note 5 to these consolidated financial statements.
These consolidated financial statements were authorized for issuance on April 13, 2020, by the Group’s Principal Financial Officer.
(b) Consolidation
The financial statements of the Group are prepared on a consolidated basis and include the assets, liabilities and results of
operations of all companies in which the Company has a controlling interest (subsidiaries). All intercompany balances and transactions have been eliminated from the consolidated financial statements.
Subsidiaries
Subsidiaries are all entities over which the Company has control. The Group controls an entity when it is exposed to, or has rights to,
variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The existence and effects of potential voting rights that are currently exercisable or convertible are considered when
assessing whether or not the Company controls another entity. The subsidiaries are consolidated from the date on which control is obtained by the Company and cease to consolidate from the date on which said control is lost.
The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a
subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability
resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The Group recognizes
any non-controlling interest in the acquiree on an acquisition-by-acquisition basis at the non-controlling interest’s proportionate share of the recognized amounts of acquiree’s identifiable net assets.
Acquisition-related costs are expensed as incurred.
Goodwill is initially measured as the excess of the aggregate of the consideration transferred and the fair value of non-controlling
interest over the net identifiable assets acquired and liabilities assumed. If this consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference is recognized in income or loss.
Changes in Ownership Interests in Subsidiaries without Change of Control
Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions that is, as
transactions with the owners in their capacity as owners. The difference between fair value of any consideration paid and the interest acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals of
non-controlling interests are also recorded in equity.
Loss of Control of a Subsidiary
When the Company ceases to have control of a subsidiary, any retained interest in the entity is remeasured to its fair value at the
date when control is lost, with the change in carrying amount recognized in income or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial
asset. In addition, any amounts previously recognized in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This means that amounts previously recognized in
other comprehensive income are reclassified to income or loss except for certain equity financial instruments designated irrevocably with changes in other comprehensive income or loss.
At December 31, 2019 and 2018, the main direct and indirect subsidiaries of the Company were as follows:
Subsidiaries
|
Company’s
Ownership
Interest (1)
|
|
Business
Segment (2)
|
Empresas Cablevisión, S.A.B. de C.V. and subsidiaries (collectively, “Empresas Cablevisión”) (3)
|
51.2%
|
|
Cable
|
Subsidiaries engaged in the Cablemás business (collectively, “Cablemás”) (4)
|
100%
|
|
Cable
|
Televisión Internacional, S.A. de C.V. and subsidiaries (collectively, “TVI”) (5)
|
100%
|
|
Cable
|
Cablestar, S.A. de C.V. and subsidiaries (collectively, “Bestel”) (6)
|
66.2%
|
|
Cable
|
Arretis, S.A.P.I. de C.V. and subsidiaries (collectively, “Cablecom”) (7)
|
100%
|
|
Cable
|
Subsidiaries engaged in the Telecable business (collectively, “Telecable”) (8)
|
100%
|
|
Cable
|
FTTH de México, S.A. de C.V. (9)
|
100%
|
|
Cable
|
Corporativo Vasco de Quiroga, S.A. de C.V. (“CVQ”) and subsidiaries (10)
|
100%
|
|
Cable and Sky
|
Innova, S. de R.L. de C.V. (“Innova”) and subsidiaries (collectively, “Sky”) (11)
|
58.7%
|
|
Sky
|
Grupo Telesistema, S.A. de C.V. (“Grupo Telesistema”) and subsidiaries
|
100%
|
|
Content and Other Businesses
|
Televisa, S.A. de C.V. (“Televisa”) (12)
|
100%
|
|
Content
|
Televisión Independiente de México, S.A. de C.V. (“TIM”) (12)
|
100%
|
|
Content
|
G.Televisa-D, S.A. de C.V. (12)
|
100%
|
|
Content
|
Multimedia Telecom, S.A. de C.V. (“Multimedia Telecom”) and subsidiary (13)
|
100%
|
|
Content
|
Ulvik, S.A. de C.V. (14)
|
100%
|
|
Content and Other Businesses
|
Controladora de Juegos y Sorteos de México, S.A. de C.V. and subsidiaries
|
100%
|
|
Other Businesses
|
Editorial Televisa, S.A. de C.V. and subsidiaries
|
100%
|
|
Other Businesses
|
Grupo Distribuidoras Intermex, S.A. de C.V. and subsidiaries
|
100%
|
|
Other Businesses
|
Villacezán, S.A. de C.V. (“Villacezán”) and subsidiaries (15)
|
100%
|
|
Other Businesses
|
Sistema Radiópolis, S.A. de C.V. (“Radiópolis”) and subsidiaries (16)
|
50%
|
|
Held-for-sale operations
|
(1)
|
Percentage of equity interest directly or indirectly held by the Company.
|
|
|
(2)
|
See Note 26 for a description of each of the Group’s business segments.
|
|
|
(3)
|
Empresas Cablevisión, S.A.B. de C.V., is a direct majority-owned subsidiary of CVQ.
|
|
|
(4)
|
Some Cablemás subsidiaries are directly owned by CVQ and some other Cablemás subsidiaries are indirectly owned by CVQ.
|
|
|
(5)
|
Televisión Internacional, S.A. de C.V., is a direct subsidiary of CVQ.
|
|
|
(6)
|
Cablestar, S.A. de C.V., is an indirect majority-owned subsidiary of CVQ and Empresas Cablevisión, S.A.B. de C.V.
|
|
|
(7)
|
Arretis, S.A.P.I. de C.V.; is a direct subsidiary of CVQ.
|
|
|
(8)
|
The Telecable subsidiaries are directly owned by CVQ.
|
|
|
(9)
|
FTTH de México, S. A. de C.V., is an indirect subsidiary of CVQ.
|
|
|
(10)
|
CVQ is a direct subsidiary of the Company and the parent company of Empresas Cablevisión, Cablemás, TVI, Bestel, Cablecom, Telecable and Innova.
|
|
|
(11)
|
Innova is an indirect majority-owned subsidiary of the Company, CVQ and Sky DTH, S.A. de C.V. (“Sky DTH”), and a direct majority-owned subsidiary of Innova
Holdings, S. de R.L. de C.V. (“Innova Holdings”). Sky is a satellite television provider in Mexico, Central America and the Dominican Republic. Although the Company holds a majority of Innova’s equity and designates a majority of the members
of Innova’s Board of Directors, the non-controlling interest has certain governance and veto rights in Innova, including the right to block certain transactions between the companies in the Group and Sky. These veto rights are protective in
nature and do not affect decisions about relevant business activities of Innova.
|
|
|
(12)
|
Televisa, TIM and G.Televisa-D, S.A. de C.V., are direct subsidiaries of Grupo Telesistema.
|
|
|
(13)
|
Multimedia Telecom and its direct subsidiary, Comunicaciones Tieren, S.A. de C.V. (“Tieren”), are indirect wholly-owned subsidiaries of Grupo Telesistema,
through which the Company owns shares of the capital stock of UHI and maintains an investment in warrants that are exercisable for shares of common stock of UHI. As of December 31, 2019 and 2018, Multimedia Telecom and Tieren have investments
representing 95.3% and 4.7%, respectively, of the Group’s aggregate investment in shares of common stock and share warrants issued by UHI (see Notes 9, 10 and 20).
|
|
|
(14)
|
Direct subsidiary through which we conduct certain operations of our Content segment and certain operations of our Other Businesses segments.
|
|
|
(15)
|
Villacezán is an indirect subsidiary of Grupo Telesistema.
|
|
|
(16)
|
Radiópolis is a direct subsidiary of the Company through which the Group conducts the operations of its Radio business. The Company controls Radiópolis as it
has the right to appoint the majority of the members of the Board of Directors of Radiópolis. The Group has classified the assets and related liabilities of its Radio business as held-for-sale in its consolidated statement of financial
position as of December 31, 2019, and its Radio operations as held-for-sale operations in the Group’s segment information for the years ended December 31, 2019, 2018 and 2017. Through the third quarter of 2019, the Radio business was included
as part of the Group’s Other Businesses segment (see Notes 3 and 26).
|
The Group’s Cable, Sky and Content segments, as well as the Group’s Radio business, which is a held-for-sale operations (see Note 3 and
26), require governmental concessions and special authorizations for the provision of broadcasting and telecommunications services in Mexico. Such concessions are granted by the Mexican Institute of Telecommunications (“Instituto Federal de
Telecomunicaciones” or “IFT”) for a fixed term, subject to renewal in accordance with the Mexican Telecommunications and Broadcasting Law (“Ley Federal de Telecomunicaciones y Radiodifusión” or “LFTR”).
Renewal of concessions for the Content segment (Broadcasting) and the Radio business require, among others: (i) to request such renewal
to IFT prior to the last fifth period of the fixed term of the related concession; (ii) to be in compliance with the concession holder’s obligations under the LFTR, other applicable regulations, and the concession title; (iii) a declaration by IFT that
there is no public interest in recovering the spectrum granted under the related concession; and (iv) the acceptance by the concession holder of any new conditions for renewing the concession as set forth by IFT, including the payment of a related fee.
IFT shall resolve within the year following the presentation of the request, if there is public interest in recovering the spectrum granted under the related concession, in which case it will notify its determination and proceed with the termination of
the concession at the end of its fixed term. If IFT determines that there is no public interest in recovering the spectrum, it will grant the requested extension within 180 business days, provided that the concessionaire accepts, in advance, the new
conditions set by IFT, which will include the payment of the fee referred to above. Such fee will be determined by IFT for the relevant concessions, considering the following elements: (i) the frequency band; (ii) the amount of spectrum; (iii) coverage
of the frequency band; (iv) domestic and international benchmark regarding the market value of frequency bands; and (v) upon request of IFT, an opinion issued by the Ministry of Finance and Public Credit of IFT´s proposal for calculation of the fee.
Renewal of concessions for the Sky and Cable segments require, among others: (i) to request its renewal to IFT prior to the last fifth
period of the fixed term of the related concession; (ii) to be in compliance with the concession holder’s obligations under the LFTR, other applicable regulations, and the concession title; and (iii) the acceptance by the concession holder of any new
conditions for renewing the concession as set forth by IFT. IFT shall resolve any request for renewal of the telecommunications concessions within 180 business days of its request. Failure to respond within such period of time shall be interpreted as
if the request for renewal has been granted.
The regulations of the broadcasting and the telecommunications concessions (including satellite pay TV) establish that at the end of
the concession, the frequency bands or spectrum attached to the services provided in the concessions shall return to the Mexican government. In addition, at the end of the concession, the Mexican government will have the preferential right to acquire
infrastructure, equipment and other goods directly used in the provision of the concession. If the Mexican government were to exercise its right to acquire infrastructure, equipment and other goods, it would be required to pay a price that is
equivalent to a formula that is similar to fair value. To the knowledge of the Company’s management, no spectrum granted for broadcasting services in Mexico has been recovered by the Mexican government in at least the past three decades for public
interest reasons. However, the Company’s management is unable to predict the outcome of any action by IFT in this regard. In addition, these assets, by themselves, would not be enough to immediately begin broadcasting or offering satellite pay TV
services or telecommunications services, as no content producing assets or other equipment necessary to operate the business would be included.
Also, the Group’s Gaming business, which is reported in the Other Businesses segment, requires a permit granted by the Mexican Federal
Government for a fixed term, subject to renewal in accordance with Mexican law. Additionally, the Group’s Sky businesses in Central America and the Dominican Republic require concessions or permits granted by local regulatory authorities for a fixed
term, subject to renewal in accordance with local laws.
The accounting guidelines provided by IFRIC 12 Service Concession Arrangements, are not
applicable to the Group due primarily to the following factors: (i) the Mexican government does not substantially control the Group’s infrastructure, what services are provided with the infrastructure and the price at which such services are offered;
(ii) the Group’s broadcasting service does not constitute a public service as per the definition in IFRIC 12; and (iii) the Group is unable to divide its infrastructure among the public (telephony and possibly Internet services) and non-public (pay TV)
service components.
At December 31, 2019, the expiration dates of the Group’s concessions and permits were as follows:
Segments
|
|
Expiration Dates
|
Cable
|
|
Various from 2022 to 2048
|
Sky
|
|
Various from 2020 to 2028
|
Content (broadcasting concessions) (1)
|
|
In 2021 and the relevant renewals start in 2022 ending in 2042
|
Other Businesses:
|
|
|
Gaming
|
|
In 2030
|
Held-for-sale operations:
|
|
|
Radio (2)
|
|
Various from 2020 to 2039
|
(1)
|
In November 2018, the IFT approved the renewal of the Group’s broadcasting concessions for all of its television stations in Mexico, for a term of 20 years after the existing
expiration date in 2021. In November 2018, the Group paid in cash for such renewal an aggregate amount of Ps.5,754,543, which includes a payment of Ps.1,194 for administrative expenses and recognized this payment as an intangible asset in
its consolidated statement of financial position. This amount will be amortized in a period of 20 years beginning on January 1, 2022, by using the straight-line method (see Note 13).
|
(2)
|
The amounts paid by the Group for renewal of certain Radio concessions in 2017 amounted to an aggregate of Ps.37,848. In addition, IFT granted in 2017 two new concessions to the
Group in Ensenada and Puerto Vallarta. The amount paid by the Group for obtaining these concessions amounted to an aggregate of Ps.85,486. The Group recognized the amounts for renewal and obtaining these concessions as intangible assets in
its consolidated statement of financial position, and are amortized in a period of 20 years by using the straight-line method (see Note 13).
|
The concessions or permits held by the Group are not subject to any significant pricing regulations in the ordinary course of business.
(c) Investments in Associates and Joint Ventures
Associates are those entities over which the Group has significant influence but not control, generally those entities with a
shareholding of between 20% and 50% of the voting rights. Investments in joint arrangements are classified as either joint operations or joint ventures depending on the contractual rights and obligations of each investor. Joint ventures are those joint
arrangements where the Group exercises joint control with other stockholder or more stockholders without exercising control individually, and have rights to the net assets of the joint arrangements. Investments in associates and joint ventures are
accounted for using the equity method of accounting. Under the equity method, the investment is initially recognized at cost, and the carrying amount is increased or decreased to recognize the investor’s share of the net assets of the investee after
the date of acquisition.
The Group’s investments in associates include an equity interest in UHI represented by approximately 10% of the outstanding total
shares of UHI as of December 31, 2019 and 2018 (see Notes 9 and 10).
If the Group’s share of losses of an associate or a joint venture equals or exceeds its interest in the investee, the Group
discontinues recognizing its share of further losses. The interest in an associate or a joint venture is the carrying amount of the investment in the investee under the equity method together with any other long-term investment that, in substance, form
part of the Group’s net investment in the investee. After the Group’s interest is reduced to zero, additional losses are provided for, and a liability is recognized, only to the extent that the Group has incurred legal or constructive obligations or
made payments on behalf of the associate or joint venture.
(d) Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the Group’s chief executive officers
(“chief operating decision makers”) who are responsible for allocating resources and assessing performance for each of the Group’s operating segments.
(e) Foreign Currency Translation
Functional and Presentation Currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic
environment in which the entity operates (“functional currency”). The presentation and reporting currency of the Group’s consolidated financial statements is the Mexican peso, which is used for compliance with its legal and tax obligations.
Transactions and Balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the
transactions or measurement where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign
currencies are recognized in the statement of income as part of finance income or expense, except when deferred in other comprehensive income as qualifying cash flow hedges and qualifying net investment hedges.
Changes in the fair value of monetary securities denominated in foreign currency classified as investments in financial instruments are
analyzed between exchange differences resulting from changes in the amortized cost of the security and other changes in the carrying amount of the security. Translation differences related to changes in amortized cost are recognized in income or loss,
and other changes in carrying amount are recognized in other comprehensive income or loss.
Translation of Foreign Operations
The financial statements of the Group’s foreign entities that have a functional currency different from the presentation currency are
translated into the presentation currency as follows: (a) assets and liabilities are translated at the closing rate at the date of the statement of financial position; (b) income and expenses are translated at average exchange rates (unless this
average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and (c) all resulting translation
differences are recognized in other comprehensive income or loss.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign
entity and translated at the closing rate. Translation differences arising are recognized in other comprehensive income or loss.
Assets and liabilities of non-Mexican subsidiaries that use the Mexican Peso as a functional currency are initially converted to
Mexican Pesos by utilizing the exchange rate of the statement of financial position date for monetary assets and liabilities, and historical exchange rates for non-monetary items, with the related adjustment included in the consolidated statement of
income as finance income or expense.
A portion of the Group’s outstanding principal amount of its U.S. dollar denominated long-term debt (hedging instrument, disclosed in
the line “Long-term debt, net of current portion” of the consolidated statement of financial position) has been designated as a hedge of a net investment in a foreign operation in connection with the Group’s investment in shares of common stock of UHI
(hedged item), which amounted to U.S.$433.7 million (Ps.8,189,662) and U.S.$421.2 million (Ps.8,285,286) as of December 31, 2019 and 2018, respectively. Consequently, any foreign exchange gain or loss attributable to this designated hedging long-term
debt is credited or charged directly to other comprehensive income or loss as a cumulative result from foreign currency translation (see Note 10).
A portion of the Group’s outstanding principal amount of its U.S. dollar denominated long-term debt (hedging instrument, disclosed in
the line “Long-term debt, net of current portion” of the consolidated statement of financial position) has been designated as a fair value hedge of foreign exchange exposure related to: (i) its investment in warrants exercisable for common stock of UHI
and (ii) its initial investment in Open Ended Fund until March 31, 2018, and its entire investment in Open Ended Fund beginning in the second quarter of 2018 (hedged items), which amounted to Ps.33,775,451 (U.S.$1,788.6 million) and Ps.4,688,202
(U.S.$248.3 million), respectively, as of December 31, 2019, and Ps.34,921,530 (U.S.$1,775.1 million) and Ps.7,662,726 (U.S.$389.5 million), respectively, as of December 31, 2018. Consequently, any foreign exchange gain or loss attributable to this
designated hedging long-term debt is credited or charged directly to other comprehensive income or loss, along with the recognition in the same line item of any foreign currency gain or loss of these investments in warrants and Open Ended Fund
designated as hedged items (see Notes 9, 14 and 18).
Beginning on January 1, 2018, the Group adopted the hedge accounting requirements of IFRS 9 Financial
Instruments, (“IFRS 9”) for all of its hedging relationships. This IFRS Standard became effective on that date.
(f) Cash and Cash Equivalents and Temporary Investments
Cash and cash equivalents consist of cash on hand and all highly liquid investments with an original maturity of three months or less
at the date of acquisition. Cash is stated at nominal value and cash equivalents are measured at fair value, and the changes in the fair value are recognized in the statement of income.
Temporary investments consist of short-term investments in securities, including without limitation debt with a maturity of over three
months and up to one year at the date of acquisition, stock and other financial instruments, or a combination thereof, as well as current maturities of non-current investments in financial instruments. Temporary investments are measured at fair value
with changes in fair value recognized in finance income in the consolidated statement of income, except securities which are measured at amortized cost.
As of December 31, 2019 and 2018, cash equivalents and temporary investments primarily consisted of fixed short-term deposits and
corporate fixed income securities denominated in U.S. dollars and Mexican pesos, with an average yield of approximately 2.20% for U.S. dollar deposits and 8.09% for Mexican peso deposits in 2019, and approximately 1.77% for U.S. dollar deposits and
7.69% for Mexican peso deposits in 2018.
(g) 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 and net realizable value. Programs and films are
valued at the lesser of production cost, which consists of direct production costs and production overhead, and net realizable value. Payments for production talent advances are initially capitalized and subsequently included as direct or indirect
costs of program production. Transmission rights are recognized from the point of which the legally enforceable license period begins. Until the license term commences and the programming rights are available, payments made are recognized as
prepayments.
The Group’s 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 Company’s historical revenue patterns and usage for similar productions.
Transmission rights, programs, literary works, production talent advances and films are recorded at acquisition or production cost.
Cost of sales is calculated and recorded for the month in which such transmission rights, programs, literary works, production talent advances and films are matched with related revenues.
Transmission rights are recognized in income 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 by past experience, but not exceeding 25 years.
(h) Inventories
Inventories of paper, magazines, materials and supplies for maintenance of technical equipment are recorded at the lower of cost or its
net realization value. The net realization value is the estimated selling price in the normal course of business, less estimated costs to conduct the sale. Cost is determined using the average cost method.
(i) Financial Assets
Through December 31, 2017, the Group classified its financial assets in the following categories: loans and receivables,
held-to-maturity investments, financial assets at fair value through income or loss (“FVIL”) and available-for-sale financial assets. The classification depended on the purpose for which the financial assets were acquired. Management determined the
classification of its financial assets at initial recognition.
Beginning on January 1, 2018, the Group classifies its financial assets in accordance with IFRS 9 which became effective on that date.
Under the guidelines of IFRS 9, the Group classifies financial assets as subsequently measured at amortized cost, fair value through other comprehensive income or loss (“FVOCIL”), or FVIL, based on the Company’s business model for managing the
financial assets and the contractual cash flows characteristics of the financial asset.
Financial Assets Measured at Amortized Cost
Financial assets are measured at amortized cost when the objective of holding such financial assets is to collect contractual cash
flows, and the contractual terms of the financial asset give rise on specified dates to cash flows that are only payments of principal and interest on the principal amount outstanding. These financial assets are initially recognized at fair value plus
transaction costs and subsequently carried at amortized cost using the effective interest rate method, with changes in carrying value recognized in the consolidated statement of income in the line which most appropriately reflects the nature of the
item or transaction. They are included in current assets, except for maturities greater than 12 months after the end of the reporting period that are included in non-current assets. The Group’s financial assets measured at amortized costs are primarily
presented as “trade notes and accounts receivable”, “other accounts and notes receivable”, and “due from related parties” in the consolidated statement of financial position (see Note 7).
Financial Assets Measured at FVOCIL
Financial assets are measured at FVOCIL when the objective of holding such financial assets is both collecting contractual cash flows
and selling financial assets, and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
The Group’s investments in certain equity instruments have been designated to be measured at FVOCIL, as permitted by IFRS 9 (see Note
28). In connection with this designation, any amounts presented in consolidated other comprehensive income are not subsequently transferred to consolidated income. Dividends from these equity instruments are recognized in consolidated income when the
right to receive payment of the dividend is established, and such dividend is probable to be paid to the Group.
Financial Assets at FVIL
Financial assets at FVIL are financial assets held for trading. A financial asset is classified in this category if acquired
principally for the purpose of selling in the short term. Derivatives are also categorized as held for trading unless they are designated as hedges. Assets in this category are classified as current assets if expected to be settled within 12 months,
otherwise they are classified as non-current.
Impairment of Financial Assets
From January 1, 2018, the Group assesses on a forward looking basis the expected credit losses associated with its financial assets
carried at fair value through other comprehensive income or loss. The impairment methodology applied depends on whether there has been a significant increase in credit risk.
For trade receivables, the Group applies the simplified approach permitted by IFRS 9, which requires expected lifetime losses to be
recognized from initial recognition of the receivables, see Note 7 for further details.
Offsetting of Financial Instruments
Financial assets are offset against financial liabilities and the net amount reported in the consolidated statement of financial
position if, and only when the Group: (i) currently has a legally enforceable right to set off the recognized amounts; and (ii) intends either to settle on a net basis, or to realize the assets and settle the liability simultaneously.
(j) Property, Plant and Equipment
Property, plant and equipment are recorded at acquisition cost.
Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized. All other repairs and maintenance are charged to income
or loss during the financial period in which they are incurred.
Land is not depreciated. Depreciation of property, plant and equipment is based upon the carrying value of the assets in use and is
computed using the straight-line method over the estimated useful lives of the asset, as follows:
|
|
Estimated
Useful Lives
|
Buildings
|
|
|
Buildings improvements
|
|
5-20 years
|
Technical equipment
|
|
3-30 years
|
Satellite transponders
|
|
15 years
|
Furniture and fixtures
|
|
3-10 years
|
Transportation equipment
|
|
4-8 years
|
Computer equipment
|
|
3-6 years
|
Leasehold improvements
|
|
5-30 years
|
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its
estimated recoverable amount.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognized within other income
or expense in the consolidated statement of income.
If significant parts of an item of property, plant and equipment have different useful lives, then they are accounted for as separate
items (major components) of property, plant and equipment.
(k) Right-of-use assets
Right-of-use assets are measured at cost comprising the following: the amount of the initial measurement of lease liability, any lease
payments made at or before the commencement date less any lease incentives received, any initial direct costs and restoration costs.
Right-of-use assets are generally depreciated over the shorter of the asset’s useful life and the lease term on a straight – line
basis. If the Group is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the underlying asset’s useful life.
Payments associated with short-term leases of equipment and vehicles and mostly leases of low-value assets are recognized on a
straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less.
(l) Intangible Assets and Goodwill
Intangible assets and goodwill are recognized at acquisition cost. Intangible assets and goodwill acquired through business
combinations are recorded at fair value at the date of acquisition. Intangible assets with indefinite useful lives, which include, trademarks, concessions, and goodwill, are not amortized, and subsequently recognized at cost less accumulated impairment
losses. Intangible assets with finite useful lives are amortized on a straight-line basis over their estimated useful lives, as follows:
|
|
Estimated
Useful Lives
|
Trademarks with finite useful lives
|
|
4 years
|
Licenses
|
|
3-14 years
|
Subscriber lists
|
|
4-10 years
|
Payments for renewal of concessions
|
|
20 years
|
Other intangible assets
|
|
3-20 years
|
Trademarks
The Group determines its trademarks to have an indefinite life when they are expected to generate net cash inflows for the Group
indefinitely. Additionally, the Group considers that there are no legal, regulatory or contractual provisions that limit the useful lives of trademarks. The Group has not capitalized any amounts associated with internally developed trademarks.
In 2015, the Company’s management evaluated trademarks in its Cable segment to determine whether events and circumstances continue to
support an indefinite useful life for these intangible assets. As a result of such evaluation, the Company identified certain businesses and locations that began migrating from an acquired trademark to an internally developed trademark between 2015 and
2016, in connection with enhanced service packages offered to current and new subscribers, and estimated that this migration process will take approximately four years. Accordingly, in 2015, the Group changed the useful life assessment from indefinite
to finite for acquired trademarks in certain businesses and locations in its Cable segment, and began to amortize on a straight line basis the related carrying value of these trademarks when the migration to the new trademark started using an estimated
useful life of four years.
Concessions
The Group defined concessions to have an indefinite life due to the fact that the Group has a history of renewing its concessions upon
expiration, has maintained the concessions granted by the Mexican government, and has no foreseeable limit to the period over which the assets are expected to generate net cash inflows. In addition, the Group is committed to continue to invest for the
long term to extend the period over which the broadcasting and telecommunications concessions are expected to continue to provide economic benefits.
Any fees paid by the Group to regulatory authorities for concessions renewed are determined to have finite useful lives and are
amortized on a straight-live basis over the fixed term of the related concession
Goodwill
Goodwill arises on the acquisition of a business and represents the excess of the consideration transferred over the Group’s interest
in net fair value of the identifiable assets, liabilities and contingent liabilities of the acquiree and the fair value of the non-controlling interest in the acquiree.
For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash generating units
(“CGUs”), or groups of CGUs, that are expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for
internal management purposes.
Goodwill impairment reviews are undertaken annually or more frequently if events or changes in circumstances indicate a potential
impairment. The carrying value of goodwill is compared to the recoverable amount, which is the higher between the value in use and the fair value less costs to sell. Any impairment of goodwill is recognized as an expense in the consolidated statement
of income and is not subject to be reversed in subsequent periods.
(m) 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
13), at least once a year, or whenever events or changes in business circumstances indicate that these carrying amounts may not be recoverable. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable
amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. To determine whether an impairment exists, the carrying value of the reporting unit is compared with its recoverable amount. 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. Any impairment of long-lived assets other than goodwill may be subsequently reversed under certain circumstances.
(n) Trade Accounts Payable and Accrued Expenses
Trade accounts payable and accrued expenses are obligations to pay for goods or services that have been acquired in the ordinary course
of business from suppliers. Trade accounts payable and accrued expenses are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as
non-current liabilities.
Trade accounts payable and accrued expenses are recognized initially at fair value and subsequently measured at amortized cost using
the effective interest method.
Trade accounts payable and accrued expenses are presented as a single item of consolidated current liabilities in the consolidated
statements of financial position as of December 31, 2019 and 2018.
(o) Debt
Debt is recognized initially at fair value, net of transaction costs incurred. Debt is subsequently carried at amortized cost; any
difference between the proceeds (net of transaction costs) and the redemption value is recognized in the consolidated statement of income over the period on which the debt is outstanding using the effective interest method.
Fees paid on the establishment of debt facilities are recognized as transaction costs of the loan to the extent that it is probable
that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalized as a
pre-payment for liquidity services and amortized over the period of the facility to which it relates.
Current portion of long-term debt and interest payable are presented as a single line item of consolidated current liabilities in the
consolidated statements of financial position as of December 31, 2019 and 2018.
Debt early redemption costs are recognized as finance expense in the consolidated statement of income.
(p) Customer Deposits and Advances
Customer deposits and advance agreements for advertising services provide that customers receive prices that are fixed for the contract
period for advertising time in the Group’s platforms based on rates established by the Group. Such rates vary depending on when the advertisement is made, including the season, hour, day and type of programming.
The Group recognizes customer deposits and advance agreements for advertising services in the consolidated statement of financial
position when these agreements are executed either with a consideration in cash paid by customers or with short-term non-interest bearing notes received from customers in connection with annual (“upfront basis”) and from time to time (“scatter basis”)
prepayments (see Note 7). In connection with the initial adoption of IFRS 15 Revenues from Contracts with Customers (“IFRS 15”) in the first quarter of 2018 (see Note 2 (s)), customer deposits and advances
agreements are presented by the Group as a contract liability in the consolidated statement of financial position when a customer pays consideration, or the Group has a right to an amount of consideration that is unconditional, before the Group
transfers services to the customer. Under the guidelines of this standard, a contract liability is a Group’s obligation to transfer services or goods to a customer for which the Group has received consideration, or an amount of consideration is due,
from the customer. In addition, the Group recognizes contract asset upon the approval of non-cancellable contracts that generate an unconditional right to receive cash consideration prior to services being rendered. The Company’s management has
consistently recognized that an amount of consideration is due, for legal, finance and accounting purposes, when a short-term non- interest bearing note is received from a customer in connection with a deposit or advance agreement entered into with the
customer for advertising services to be rendered by the Group in the short term.
(q) Provisions
Provisions are recognized when the Group has a present legal or constructive obligation as a result of past events, it is probable that
an outflow of resources will be required to settle the obligation, and the amount has been reliably estimated. Provisions are not recognized for future operating losses.
Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate
that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provisions due to passage of time is recognized as interest expense.
(r) Equity
The capital stock and other equity accounts include the effect of restatement through December 31, 1997, determined by applying the
change in the Mexican National Consumer Price Index between the dates capital was contributed or net results were generated and December 31, 1997, the date through which the Mexican economy was considered hyperinflationary under the guidelines of IFRS
Standards. The restatement represented the amount required to maintain the contributions and accumulated results in Mexican Pesos in purchasing power as of December 31, 1997.
Where any company in the Group purchases shares of the Company’s capital stock (shares repurchased), the consideration paid, including
any directly attributable incremental costs is deducted from equity attributable to stockholders of the Company until the shares are cancelled, reissued, or sold. Where such shares repurchased are subsequently reissued or sold, any consideration
received, net of any directly attributable incremental transaction costs, is included in equity attributable to stockholders of the Company.
(s) Revenue Recognition
In connection with the initial adoption of IFRS 15, in the first quarter of 2018, the Company’s management: (i) reviewed significant
revenue streams and identified certain effects on revenue recognition in the Group’s Cable and Sky segments, as discussed below; (ii) used the retrospective cumulative effect, which consists in recognizing any cumulative adjustment resulting from the
new standard at the date of initial adoption in consolidated equity; and (iii) did not restate the comparative information for the years ended December 31, 2017 and 2016, which was reported under the revenue recognition IFRS Standard in effect in those
periods (see Note 28).
Revenue is measured at the fair value of the consideration received or receivable, and represents amounts receivable for services
provided. The Group recognizes revenue when the amount of revenue can be reliably measured; when it is probable that future economic benefits will flow to the entity; and when specific criteria have been met for each of the Group’s activities, as
described below. The Group bases its estimate of return on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.
The Group derives the majority of its revenues from media and entertainment-related business activities both in Mexico 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:
•
|
Cable television, internet and telephone subscription, and pay-per-view and installation fees are recognized in the period in which the services are rendered. Through December 31,
2017, commissions for obtaining contracts with customers in the Group’s Cable segment were accounted for as they were incurred. Beginning on January 1, 2018, in accordance with IFRS 15, incremental costs for obtaining contracts with
customers, primarily commissions, are recognized as assets in the Group’s consolidated statement of financial position and amortized in the expected life of contracts with customers.
|
•
|
Revenues from other telecommunications and data services are recognized in the period in which these services are provided. Other telecommunications services include long distance
and local telephony, as well as leasing and maintenance of telecommunications facilities.
|
•
|
Sky program service revenues, including advances from customers for future direct-to-home (“DTH”) program services, are recognized at the time the service is provided. Through
December 31, 2017, commissions for obtaining contracts with customers in the Group’s Sky segment were accounted for as they were incurred. Beginning on January 1, 2018, in accordance with IFRS 15, certain incremental costs for obtaining
contracts with customers, primarily commissions, are recognized as assets in the Group’s consolidated statement of financial position and amortized in the expected life of contracts with customers.
|
•
|
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 network subscription and licensed and syndicated 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.
|
•
|
Revenues from publishing distribution are recognized upon distribution of the products.
|
•
|
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 and are recognized at the time of
such net win.
|
In respect to sales of multiple products or services, the Group evaluates whether it has fair value evidence for each deliverable in
the transaction. For example, the Group sells cable television, internet and telephone subscription to subscribers in a bundled package at a rate lower than if the subscriber purchases each product on an individual basis. Subscription revenues received
from such subscribers are allocated to each product in a pro-rata manner based on the fair value of each of the respective services.
(t) Interest Income
Interest income is recognized using the effective interest method. When a loan and receivable is impaired, the Group reduces the
carrying amount to its recoverable amount, being the estimated future cash flow discounted at the original effective interest rate of the instrument, and continues unwinding the discount as interest income. Interest income on impaired loan and
receivables is recognized using the original effective interest rate.
(u) Employee Benefits
Pension and Seniority Premium Obligations
Plans exist for pensions and seniority premiums (post-employment benefits), for most of the Group’s employees funded through
irrevocable trusts. Increases or decreases in the consolidated liability or asset for post-employment benefits are based upon actuarial calculations. Contributions to the trusts are determined in accordance with actuarial estimates of funding
requirements. Payments of post-employment benefits are made by the trust administrators. The defined benefit obligation is calculated annually using the projected unit credit method. The present value of the defined benefit obligation is determined by
discounting the estimated future cash outflows using interest rates of government bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension
obligation.
Remeasurement of post-employment benefit obligations related to experience adjustments and changes in actuarial assumptions of post-
employment benefits are recognized in the period in which they are incurred as part of other comprehensive income or loss in consolidated equity.
Profit Sharing
The employees’ profit sharing required to be paid under certain circumstances in Mexico, is recognized as a direct benefit to employees
in the consolidated statements of income in the period in which it is incurred.
Termination Benefits
Termination benefits, which mainly represent severance payments by law, are recorded in the consolidated statement of income. The Group
recognizes termination benefits at the earlier of the following dates: (a) when the Group can no longer withdraw the offer of those benefits; and (b) when the entity recognizes costs for a restructuring that involves the payment of termination
benefits.
(v) Income Taxes
The income tax expense for the period comprises current and deferred income tax. Income tax is recognized in the consolidated statement
of income, except to the extent that it relates to items recognized in other comprehensive income or directly in equity. In this case, the income tax is recognized in other comprehensive income.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the statement of financial
position date in the countries where the Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns and establishes provisions where appropriate on the basis of amounts expected to
be paid to the tax authorities.
Deferred income tax is recognized, using the balance sheet liability method, on temporary differences arising between the tax bases of
assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred income tax liabilities are not recognized if they arise from the initial recognition of goodwill; deferred income tax is not accounted for if
it arises from initial recognition of an asset or liability in a transaction (other than in a business combination) that at the time of the transaction affects neither accounting nor taxable income or loss. Deferred income tax is determined using tax
rates (and laws) that have been enacted or substantively enacted by the statement of financial position date and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled.
Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against
which the temporary differences and tax loss carryforwards can be utilized. For this purpose, the Group takes into consideration all available positive and negative evidence, including factors such as market conditions, industry analysis, projected
taxable income, carryforward periods, current tax structure, potential changes or adjustments in tax structure, and future reversals of existing temporary differences.
Deferred income tax liabilities are provided on taxable temporary differences associated with investments in subsidiaries, joint
ventures and associates, except for deferred income tax liabilities where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred income tax assets are provided on deductible temporary differences associated with investments in subsidiaries, joint ventures and associates, to the extent that it is probable that there will be sufficient taxable income against which to
utilize the benefit of the temporary difference and it is expected to reverse in the foreseeable future.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against
current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the
balances on a net basis.
(w) Derivative Financial Instruments
The Group recognizes derivative financial instruments as either assets or liabilities in the consolidated statements of financial
position and measures such instruments at fair value. The accounting for changes in the fair value of a derivative financial instrument depends on the intended use of the derivative financial instrument and the resulting designation. For a derivative
financial instrument designated as a cash flow hedge, the effective portion of such derivative’s gain or loss is initially reported as a component of other comprehensive income or loss 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 financial 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. When a hedging instrument expires or is sold, terminated or exercised, the cumulative gain or loss on the hedging instrument that has been recognized in other comprehensive
income remains in equity until the forecast transaction occurs. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately reclassified to income or loss. For derivative financial
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, 2019, 2018 and 2017, certain derivative financial instruments qualified for hedge
accounting (see Note 15).
(x) Comprehensive Income
Comprehensive income for the period includes the net income for the period presented in the consolidated statement of income plus other
comprehensive income for the period reflected in the consolidated statement of comprehensive income.
(y) Share-based Payment Agreements
Key officers and employees of certain subsidiaries of the Company have entered into agreements for the conditional sale of Company’s
shares under the Company’s Long-Term Retention Plan. The share-based compensation expense is measured at fair value at the date the equity benefits are conditionally sold to these officers and employees, and is recognized as a charge to consolidated
income (administrative expense) over the vesting period. The Group recognized a share-based compensation expense of Ps.1,129,644, Ps.1,327,549 and Ps.1,489,884 for the years ended December 31, 2019, 2018 and 2017, respectively, of which Ps.1,108,094,
Ps.1,305,999 and Ps.1,468,337 was credited in consolidated stockholders’ equity for those years, respectively (see Note 17).
(z) Leases
Through December 31, 2018:
•
|
The determination of whether an arrangement was, or contained, a lease was based on the substance of the arrangement and required an assessment of whether the fulfillment of the
arrangement was dependent on the use of a specific asset or assets and whether the arrangement conveyed the right to use the asset.
|
•
|
Leases of property, plant and equipment and other assets where the Group held substantially all the risks and rewards of ownership were classified as finance leases. Finance lease
assets were capitalized at the commencement of the lease term at the lower of the present value of the minimum lease payments or the fair value of the lease asset. The obligations relating to finance leases, net of finance charges in
respect of future periods, were recognized as liabilities. The interest element of the finance cost was charged to the consolidated statement of income over the lease period so as to produce a constant periodic rate of interest on the
remaining balance of the liability for each period. The property, plant and equipment acquired under finance leases was depreciated over the shorter of the useful life of the asset and the lease term.
|
•
|
Leases where a significant portion of the risks and rewards were held by the lessor were classified as operating leases. Rentals were charged to the consolidated statement of income
on a straight line basis over the period of the lease.
|
•
|
Leasehold improvements were depreciated at the lesser of its useful life or contract term.
|
In the first quarter of 2019, the Group adopted IFRS 16 Leases (“IFRS 16”), which became
effective for annual periods beginning on January 1, 2019 (see Note 28). The Group does not apply this new IFRS Standard to short-term leases and leases for which the underlying asset is of low value, as permitted by the guidelines of IFRS 16.
On adoption of IFRS 16, the Group recognized lease liabilities in relation to leases which had previously been classified as operating
leases under the principles of IAS 17 Leases (“IAS 17”). These liabilities were measured at the present value of the remaining lease payments, discounted using the
lessee´s incremental borrowing rate as of January 1, 2019. The average lessee’s incremental borrowing rate applied to the lease liabilities on January 1, 2019 was 4.7% and 10.6% for U.S. dollars leases and Mexican pesos leases, respectively.
(aa) New and Amended IFRS Standards
The Group adopted IFRS 16 in 2019, which became effective on January 1, 2019 (see Notes 2 (k), 2 (z) and 28). The Group adopted IFRS 15
and IFRS 9 in 2018, which became effective on January 1, 2018 (see Notes 2 (i), 2 (t) and 28). Some other amendments and improvements to certain IFRS Standards became effective on January 1, 2019 and 2018, and they did not have any significant impact
on the Group’s consolidated financial statements.
Below is a list of the new and amended IFRS Standards that have been issued by the IASB and are effective for annual periods starting on or after January 1,
2020.
New or Amended IFRS Standard
|
|
Title of the IFRS Standard
|
|
Effective for Annual
Periods Beginning
On or After
|
Amendments to IFRS 10 and IAS 28 (1)
|
|
Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
|
|
Postponed
|
IFRS 17 (2)
|
|
Insurance Contracts
|
|
January 1, 2021
|
IFRS Conceptual Framework
|
|
Conceptual Framework for Financial Reporting
|
|
January 1, 2020
|
Amendments to IFRS 3 (1)
|
|
Definition of a Business
|
|
January 1, 2020
|
Amendments to IAS 1 and IAS 8 (1)
|
|
Definition of Material
|
|
January 1, 2020
|
Amendments to IFRS 9, IAS 39 and IFRS 7 (2)
|
|
Interest Rate Benchmark Reform
|
|
January 1, 2020
|
Amendments to IAS 1 (1)
|
|
Classification of Liabilities as Current or Non-current
|
|
January 1, 2022
|
(1) This new or amended IFRS Standard is not expected to have a
significant impact on the Group’s consolidated financial statements.
(2) This new or amended IFRS Standard is not expected to be applicable
to the Group’s consolidated financial statements.
Amendments to IFRS 10 and IAS 28 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture, were issued in September 2014 and address and acknowledge inconsistency between the requirements in IFRS 10 and those in IAS 28 (2011), in dealing with the sale or contribution
of assets between an investor and its associate or joint venture. The main consequence of the amendments is that a full gain or loss is recognized when a transaction involved a business (whether it is housed in a subsidiary or not). A partial gain or
loss is recognized when a transaction involved assets that do not constitute a business, even if these assets are housed in a subsidiary. In December 2015, the IASB postponed the effective date of these amendments indefinitely pending the outcome of
its research project on the equity method of accounting.
IFRS 17 Insurance Contracts (“IFRS 17”) was issued in May 2017 and supersedes IFRS 4 Insurance Contracts (“IFRS 4”), which has given companies dispensation to carry on accounting for insurance contracts using national accounting standards, resulting in a multitude of different approaches. IFRS 17
establishes principles for the recognition, measurement, presentation and disclosures of insurance contracts issued. It also requires similar principles to be applied to reinsurance contracts with discretionary participation features issued. IFRS 17
solves the comparison problems created by IFRS 4 by requiring all insurance contracts to be accounted for in a consistent manner. Under the provisions of IFRS 17, insurance obligations will be accounted for using current values instead of historical
cost. IFRS 17 is effective on January 1, 2021, and earlier application is permitted.
Conceptual Framework for Financial Reporting (“Conceptual Framework”) was issued in March
2018, replacing the previous version of the Conceptual Framework issued in 2010. The Conceptual Framework describes the objective of, and the concepts for, general purpose financial reporting. The purpose of the Conceptual Framework is to: (a) assist
the IASB to develop IFRS Standards that are based on consistent concepts; (b) assist preparers to develop consistent accounting policies when no Standard applies to a particular transaction or other event, or when a Standard allows a choice of
accounting policy; and (c) assist all parties to understand and interpret the IFRS Standards. The Conceptual Framework is not an IFRS Standard. Nothing in the Conceptual Framework overrides any IFRS Standard or any requirement in an IFRS Standard. The
revised Conceptual Framework is effective immediately for the IASB and the IFRIC, and has an effective date of January 1, 2020, with earlier application permitted, for companies that use the Conceptual Framework to develop accounting policies when no
IFRS Standard applies to a particular transaction.
Amendments to IFRS 3 Definition of a Business was issued in October 2018. The amended
definition emphasizes that the output of a business is to provide goods and services to customers, whereas the previous definition focused on returns in the form of dividends, lower costs or other economic benefits to investors and others.
Distinguishing between a business and a group of assets is important because an acquirer recognizes goodwill only when acquiring a business. Amendments to IFRS 3 is effective on January 1, 2020, and earlier application is permitted.
Amendments to IAS 1 and IAS 8 Definition of Material was issued in October 2018. The
definition of material helps a company determine whether information about an item, transaction or other event should be provided to users of financial statements. However, companies sometimes experienced difficulties using the previous definition of
material when making materiality judgements in the preparation of financial statements. Consequently, the IASB issued Definition of Material (Amendments to IAS 1 and IAS 8) in October 2018. Amendments to IAS 1
and IAS 8 is effective on January 1, 2020, and earlier application is permitted.
Amendments to IFRS 9, IAS 39 and IFRS 7 Interest Rate Benchmark Reform were issued in
September 2019. These amendments modify some specific hedge accounting requirements to provide relief from potential effects of the uncertainty caused by interest rate benchmarks such as interbank offered rates. In addition, the amendments require
companies to provide additional information to investors about their hedging relationships which are directly affected by these uncertainties. The amendments are effective for annual reporting periods beginning on or after January 1, 2020. Earlier
application is permitted.
Amendments to IAS 1 Classification of Liabilities as Current or Non-current was issued in
January 2020, the amendments clarify one of the criteria in IAS 1 for classifying a liability as non-current that is, the requirement for an entity to have the right to defer settlement of the liability for at least 12 months after the reporting
period. The amendments are effective for annual reporting periods beginning on or after January 1, 2022. Earlier application is permitted.
[813000] Notes - Interim financial reporting
Disclosure of interim financial reporting
GRUPO TELEVISA, S.A.B. AND SUBSIDIARIES
Notes to Interim Unaudited Condensed Consolidated Financial Statements
As of March 31, 2020 and December 31, 2019 and for three months ended March 31, 2020 and 2019
(In thousands of Mexican Pesos, except per CPO, per share and exchange rate amounts, unless otherwise indicated)
Grupo Televisa, S.A.B. (the “Company”) is a limited liability public stock corporation (“Sociedad Anónima Bursátil” or “S.A.B.”), incorporated under
the laws of Mexico. Pursuant to the terms of the Company’s bylaws (“Estatutos Sociales”) its corporate existence continues through 2106. The shares of the Company are listed and traded in the form of “Certificados de Participación Ordinarios” or “CPOs”
on the Mexican Stock Exchange (“Bolsa Mexicana de Valores” or “BMV”) under the ticker symbol TLEVISA CPO, and in the form of Global Depositary Shares or GDSs, on the New York Stock Exchange, or “NYSE”, under the ticker symbol TV. The Company’s
principal executive offices are located at Av. Vasco de Quiroga No. 2000, Colonia Santa Fe, 01210 Mexico City, Mexico.
Grupo Televisa, S.A.B. together with its subsidiaries (collectively, the “Group”) is a leading media company in the Spanish-speaking world, an
important cable operator in Mexico, and an operator of a leading direct-to-home satellite pay television system in Mexico. The Group distributes the content it produces through several broadcast channels in Mexico and in over 70 countries through 25
pay-tv brands, television networks, cable operators and over-the-top or “OTT” services. In the United States, the Group’s audiovisual content is distributed through Univision Communications Inc. (“Univision”), the leading media company serving the
Hispanic market. Univision broadcasts the Group’s audiovisual content through multiple platforms in exchange for a royalty payment. In addition, the Group has equity and warrants, which upon their exercise would represent approximately 36% on a
fully-diluted, as-converted basis of the equity capital in Univision Holdings, Inc. or “UHI”, the controlling company of Univision. The Group’s cable business offers integrated services, including video, high-speed data and voice services to
residential and commercial customers as well as managed services to domestic and international carriers. The Group owns a majority interest in Sky, a leading direct-to-home satellite pay television system and broadband provider in Mexico, operating
also in the Dominican Republic and Central America. The Group also has interests in magazine publishing and distribution, professional sports and live entertainment, feature-film production and distribution, and gaming.
|
2.
|
Basis of Preparation and Accounting Policies
|
These interim condensed consolidated financial statements of the Group, as of March 31, 2020 and December 31, 2019 and for three months ended March
31, 2020 and 2019, are unaudited, and have been prepared in accordance with the guidelines provided by the International Accounting Standard 34, Interim Financial Reporting. In the opinion of management, all
adjustments necessary for a fair presentation of the condensed consolidated financial statements have been included herein.
These interim unaudited condensed consolidated financial statements should be read in conjunction with the Group’s audited consolidated financial
statements and notes thereto for the years ended December 31, 2018 and 2017, which have been prepared in accordance with International Financial Reporting Standards (“IFRS Standards”) as issued by the International Accounting Standards Board (“IASB”),
and include, among other disclosures, the Group’s most significant accounting policies, which were applied on a consistent basis as of March 31, 2020.
These interim unaudited condensed consolidated financial statements do not include all financial risk management information and disclosures required
in the annual financial statements; they should be read in conjunction with the Group’s audited consolidated financial statements for the years ended December 31, 2018, 2017 and 2016. There have been no significant changes in the Corporate Finance
Department of the Company or in any risk management policies since the year end. The Group´s audited consolidated financial statements for the years ended December 31, 2019 and 2018, will be posted on the “Reports and Filings” section of the Group´s
investor relations website at Televisa www.televisair.com when filed with the Mexican Banking and Securities Commission (“Comisión Nacional Bancaria y de Valores” or “CNBV”) and the U.S. Securities and Exchange Commission (“SEC”), respectively.
These interim unaudited condensed consolidated financial statements were authorized for issuance on April 24, 2020, by the Group’s Principal Financial
Officer.
The preparation of interim unaudited condensed consolidated financial statements requires management to make judgments, estimates and assumptions that
affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.
In preparing these interim unaudited condensed consolidated financial statements, the significant judgments made by management in applying the Group’s
accounting policies and the key sources of estimation uncertainty were the same as those that applied to the audited consolidated financial statements for the year ended December 31, 2019.
IFRS Standard that became effective on January 1, 2019
IFRS 16
IFRS 16 Leases (“IFRS 16”) was issued in January 2016 replaced IAS 17 Leases
(“IAS 17”), and became effective on January 1, 2019. IFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases. IFRS 16 introduces a single, on-balance sheet lease accounting model for lessees. A lessee recognizes a right-of-use asset representing its right to use the underlying asset and a lease liability representing its obligation to make
lease payments. There are recognition exemptions for short-term leases and leases of low-value items. Lessor accounting remains similar to the former IFRS Standard: lessors continue to classify leases as finance or operating leases.
Beginning in the first quarter of 2019, the Group adopted the guidelines of IFRS 16 by using the retrospective cumulative effect, which consists of
recognizing any cumulative adjustment due to the new IFRS Standard at the date of initial adoption in consolidated assets and liabilities. Accordingly, as a lessee, the Group recognized lease liabilities as of January 1, 2019, for leases classified as
operating leases through December 31, 2018, and measured these lease liabilities at the present value of the remaining lease payments, discounted using the incremental borrowing rate as of January 1, 2019. The carrying amounts of leases classified as a
finance leases through December 31, 2018, became the initial carrying amounts of right-of-use assets and lease liabilities under the guidelines of IFRS 16 beginning on January 1, 2019.
The initial impact of recording lease liabilities, and the corresponding right-of-use assets in accordance with the guidelines of IFRS 16, increased
the Group’s consolidated total assets and liabilities as of January 1, 2019, as described below. Also, as a result of the adoption of IFRS 16, the Group recognizes a depreciation of rights-of-use assets for long-term lease agreements, and a finance
expense for interest from related lease liabilities, instead of affecting consolidated operating costs and expenses for lease payments made, as they were recognized through December 31, 2018, under the guidelines of the former IFRS Standard.
The Company’s management has concluded the analysis and assessment of any changes to be made in the Group’s accounting policies for long-term lease
agreements as a lessee, including the implementation ofcontrols over financial reporting in the different business segments of the Group, in connection with the measurement and disclosures required by IFRS 16.
As a result of the adoption of IFRS 16, the Group recognized as right-of-use assets and lease liabilities in its consolidated statements of financial
position as of March 31, 2020 and December 31, 2019, long-term lease agreements that were recognized as operating leases through December 31, 2018, as follows:
Long-term Lease Agreements
|
|
March 31, 2020
Assets (Liabilities)
|
|
|
December 31, 2019
Assets (Liabilities)
|
|
Right-of-use assets, net
|
|
Ps.
|
4,528,702
|
|
|
Ps.
|
4,502,590
|
|
Lease liabilities 1
|
|
|
(4,957,564
|
)
|
|
|
(4,641,705
|
)
|
Net effect
|
|
Ps.
|
(428,862
|
)
|
|
Ps.
|
(139,115
|
)
|
|
1
|
Current portion of lease liabilities as of March 31, 2020 and December 31, 2019, amounted to Ps.611,259 and Ps.533,260, respectively.
|
Depreciation of right-of-use assets referred to in the table above and charged to income for the three months ended March 31, 2020 and
2019, amounted to Ps.166,283 and Ps.151,215, respectively.
The Group has also classified as right-of-use assets and lease liabilities in its consolidated statements of financial position as of March 31, 2020
and December 31, 2019, property and equipment and obligations under long-term lease agreements that were recognized as finance leases through December 31, 2018, as follows:
Long-term Lease Agreements
|
|
March 31, 2020
Assets (Liabilities)
|
|
|
December 31, 2019
Assets (Liabilities)
|
|
Right-of-use assets, net
|
|
Ps.
|
2,949,019
|
|
|
Ps.
|
3,050,462
|
|
Lease liabilities 1
|
|
|
(5,669,949
|
)
|
|
|
(4,721,815
|
)
|
Net effect
|
|
Ps.
|
(2,720,930
|
)
|
|
Ps.
|
(1,671,353
|
)
|
|
1
|
Current portion of lease liabilities as of March 31, 2020 and December 31, 2019, amounted to Ps.860,433 and Ps.724,506, respectively.
|
Depreciation of right-of-use assets referred to in the table above and charged to income for the three months ended March 31, 2020 and 2019, amounted
to Ps.101,557 and Ps.110,697, respectively.
In applying IFRS 16 for the first time, the Group has used the following practical expedients permitted by the standard:
•
|
Applying a single discount rate to a portfolio of leases with reasonably similar characteristics
|
•
|
Relying on previous assessments on whether leases are onerous as an alternative to performing an impairment review – there were no onerous contracts as at January 1, 2019
|
•
|
Accounting for operating leases with a remaining lease term of less than 12 months as at January 1, 2019 as short-term leases
|
•
|
Excluding initial direct cost for the measurement of the right-of-use asset at the date of initial application, and
|
•
|
Using hindsight in determining the lease term where the contract contains options to extend or terminate the lease.
|
The Group has also elected not to reassess whether a contract is, or contains a lease at the date of initial application. Instead, for contracts
entered into before the transition date the Group relied on its assessment made applying IAS 17 and IFRIC 4 Determining whether an Arrangement contains a Lease.
In July 2019, the Company announced an agreement with Live Nation Entertainment, Inc. (“Live Nation”), to dispose of its 40%
equity interest in Ocesa Entretenimiento, S.A. de C.V. (“OCEN”), a live entertainment company with operations in Mexico, Central America and Colombia. OCEN is (i) a direct associate of OISE Entretenimiento, S.A. de C.V. (“OISE Entretenimiento”), a
wholly-owned subsidiary of the Company; and (ii) a subsidiary of Compañía Interamericana de Entretenimiento, S.A.B. de C.V.(“CIE”). The proposed disposal of OCEN is expected to be completed by the parties in the first half of 2020, through the sale of
all of the outstanding shares of OISE Entretenimiento, which net assets are comprised primarily of the 40% equity stake in OCEN. This transaction is subject to customary closing conditions, including regulatory approvals and certain notifications and
to the closing of the sale by CIE to Live Nation of a portion of its stake in OCEN. In consideration for the sale of the shares of OISE Entretenimiento, the Company expects to receive cash proceeds in the aggregate amount of Ps.5,206,000. Also, the
Group expects to receive a dividend from OCEN on or before the closing of this transaction, in the amount of approximately Ps.350,000, of which a significant part was paid in the second half of 2019. As a result of this proposed transaction, beginning
on July 31, 2019, the Group classifies the assets of OISE Entretenimiento, including the carrying value of its investment in OCEN as current assets held for sale in its consolidated statement of financial position. As of March 31, 2020, the carrying
value of current assets held for sale in connection with this proposed transaction amounted to Ps.696,178, of which Ps.693,970 are related to the carrying value of the investment in OCEN (see Note 14).
In July 2019, the Company announced a stock purchase agreement with Corporativo Coral, S.A. de C.V. (“Coral”) and Miguel Alemán
Magnani as Obligor to dispose of its 50% equity interest in Radiópolis, a direct subsidiary of the Company engaged in the Radio business, for an aggregate amount of Ps.1,248,000. While the sale of the Company’s equity interest in the Radio business has
been consummated for legal and tax purposes as of December 31, 2019, this transaction is considered as held for sale for financial reporting purposes, as the voting interest of the Company in Radiópolis continue to be in place until the full payment of
the purchase price is made by the acquirer. Accordingly, the Group has classified the assets (Ps.1,731,261) and related liabilities (Ps.414,964) of its Radio business as held for sale in its consolidated statement of financial position as of March 31,
2020, and its Radio operations as held for sale in the segment information of its consolidated statements of income for the years ended December 31, 2019, 2018 and 2017. The Group did not classify its Radio operations as discontinued operations in its
consolidated statements of income for the years ended December 31, 2019, 2018 and 2017, as these operations did not represent a separate major line of business for those years, based on a materiality assessment performed by management. In March 2020,
the Group entered into an agreement with Coral and its Obligor to complete this transaction by, among other things, the payment of an initial amount in cash of Ps.603,395 in March 2020, and the remaining amount of Ps.644,605 to be paid by June 2020, as
well as the payment of a dividend by Radiópolis to the Company by the closing date of this transaction in June 2020, in the amount of approximately Ps.300,000 (see Note 19).
|
4.
|
Investments in financial instruments
|
At March 31, 2020 and December 31, 2019, the Group had the following investments in financial instruments:
|
|
March 31, 2020
|
|
|
December 31, 2019
|
|
Equity instruments measured at fair value through other comprehensive income:
|
|
|
|
|
|
|
Warrants issued by UHI (1)
|
|
Ps.
|
20,746,213
|
|
|
Ps.
|
33,775,451
|
|
Open Ended Fund (2)
|
|
|
4,995,981
|
|
|
|
4,688,202
|
|
Other equity instruments (3)
|
|
|
4,818,245
|
|
|
|
5,751,001
|
|
|
|
|
30,560,439
|
|
|
|
44,214,654
|
|
Other
|
|
|
230,835
|
|
|
|
51,245
|
|
|
|
Ps.
|
30,791,274
|
|
|
Ps.
|
44,265,899
|
|
(1)
|
Investment in warrants issued by UHI that are exercisable for UHI’s common stock, in whole or in part, at an exercise price of U.S.$0.01 per warrant share. The warrants do not
entitle the holder to any voting rights or other rights as a stockholder of UHI. The warrants shall expire and no longer be exercisable after the tenth anniversary of the date of issuance (the “Expiration Date”); provided, however, the
Expiration Date shall automatically be extended for nine successive ten-year periods unless the Group provides written notice to UHI of its election not to so extend the Expiration Date. The warrants do not bear interest. As of March 31, 2020
and December 31, 2019, the number of warrants owned by the Group amounted to 4,590,953, which upon their exercise and together with the current investment in shares of UHI, would represent approximately 36% on a fully-diluted, as-converted
basis of the equity capital in UHI (see Notes 5 and 10). In conjunction with the acquisition of the majority stock of Univision Holdings, Inc. (“UHI”) by a group of investors, which was announced on February 25, 2020, the Company’s management
assessed and concluded that this information did not constitute evidence of a condition that existed as of December 31, 2019, and reviewed the assumptions and inputs related to its discounted cash flow model used to determine the fair value
of its investment in warrants and shares of UHI s of March 31, 2020. Based on this assessment and review, the Company’s management recognized (i) a decline in the fair value of the Group’s investment in warrants exercisable for shares of UHI
as of March 31, 2020, in the amount of Ps.21,937,142, which was accounted for in accumulated other comprehensive income or loss, net of income tax of Ps.6,581,146, in the Group’s consolidated statement of financial position as of March 31,
2020; and (ii) an impairment loss that decreased the carrying value of the Group’s investment in shares of UHI as of March 31, 2020, in the amount of Ps.5,455,356, which was accounted for in share of income or loss of associates and joint
ventures in the consolidated statement of income for the three months ended March 31, 2020 (see Note 5 and 10).
|
(2)
|
The Group has an investment in an Open Ended Fund that has as a primary objective to achieve capital appreciation by using a broad range of strategies through investments in
securities, including without limitation stock, debt and other financial instruments, a principal portion of which are considered as Level 1 financial instruments in telecom, media and other sectors across global markets, including Latin
America and other emerging markets. Shares may be redeemed on a quarterly basis at the Net Asset Value (“NAV”) per share as of such redemption date. The fair value of this fund is determined by using the NAV per share. The NAV per share is
calculated by determining the value of the fund assets, all of which are measured at fair value, and subtracting all of the fund liabilities and dividing the result by the total number of issued shares. In July and November 2019, the Company
redeemed a portion of its investment in Open Ended Fund at the aggregate fair value amount of U.S.$121.6 (Ps.2,301,682) and recognized cash proceeds from this redemption for such aggregate amount.
|
(3)
|
Other financial assets include equity instruments (publicly traded instruments) and the fair value is based on quoted market prices.
|
A roll-forward of financial assets at fair value through other comprehensive income for the three months ended March 31, 2020 and 2019, is presented
as follows:
|
|
Warrants Issued by UHI (1)
|
|
|
Open Ended
Fund (1)
|
|
|
Other Equity Instruments
|
|
|
Total
|
|
At January 1, 2020
|
|
Ps.
|
33,775,451
|
|
|
Ps.
|
4,688,202
|
|
|
Ps.
|
5,751,001
|
|
|
Ps.
|
44,214,654
|
|
Change in fair value in other comprehensive income
|
|
|
(13,029,238
|
)
|
|
|
307,779
|
|
|
|
(932,756
|
)
|
|
|
(13,654,215
|
)
|
At March 31, 2020
|
|
Ps.
|
20,746,213
|
|
|
Ps.
|
4,995,981
|
|
|
Ps.
|
4,818,245
|
|
|
Ps.
|
30,560,439
|
|
|
|
Warrants Issued by UHI (1)
|
|
|
Open Ended
Fund (1)
|
|
|
Other Equity Instruments
|
|
|
Other Financial Assets
|
|
|
Total
|
|
At January 1, 2019
|
|
Ps.
|
34,921,530
|
|
|
Ps.
|
7,662,726
|
|
|
Ps.
|
6,545,625
|
|
|
Ps.
|
72,612
|
|
|
Ps.
|
49,202,493
|
|
Change in fair value in other comprehensive income
|
|
|
(440,225
|
)
|
|
|
(96,597
|
)
|
|
|
143,329
|
|
|
|
(555
|
)
|
|
|
(394,048
|
)
|
At March 31, 2019
|
|
Ps.
|
34,481,305
|
|
|
Ps.
|
7,566,129
|
|
|
Ps.
|
6,688,954
|
|
|
Ps.
|
72,057
|
|
|
Ps.
|
48,808,445
|
|
(1)
|
The foreign exchange gain for the three months ended March 31, 2020, derived from the hedged warrants issued by UHI and the investment in Open Ended Fund, was hedged by foreign
exchange loss from the consolidated statement of income, in the amount of Ps.8,907,914 and Ps.1,160,731. The foreign exchange loss for the three months ended March 31, 2019, derived from the hedged warrants issued by UHI and the investment in
Open Ended Fund, was hedged by foreign exchange gain in the consolidated statement of income, in the amount of Ps.440,225 and Ps.96,597, respectively (see Notes 9 and 16).
|
|
5.
|
Investments in Associates and Joint Ventures
|
At March 31, 2020 and December 31, 2019, the Group had the following investments in associates and joint ventures accounted for by the equity method:
|
|
Ownership as of March 31, 2020
|
|
|
March 31, 2020
|
|
|
December 31, 2019
|
|
Associates:
|
|
|
|
|
|
|
|
|
|
UHI (1)
|
|
|
10.0%
|
|
|
Ps.
|
5,021,215
|
|
|
Ps.
|
8,189,662
|
|
Other
|
|
|
|
|
|
|
115,161
|
|
|
|
115,161
|
|
Joint ventures:
|
|
|
|
|
|
|
|
|
|
|
|
|
Grupo de Telecomunicaciones de Alta Capacidad, S.A.P.I. de C.V. and subsidiary (“GTAC”) (2)
|
|
|
33.3%
|
|
|
|
557,597
|
|
|
|
567,165
|
|
Periódico Digital Sendero, S.A.P.I. de C.V.(“PDS”) (3)
|
|
|
50.0%
|
|
|
|
200,648
|
|
|
|
196,474
|
|
|
|
|
|
|
|
Ps.
|
5,894,621
|
|
|
Ps.
|
9,068,462
|
|
(1)
|
The Group accounts for its investment in common stock of UHI, the parent company of Univision, under the equity method due to the Group’s ability to exercise significant
influence, as defined under IFRS Standards, over UHI’s operations. The Group has the ability to exercise significant influence over the operating and financial policies of UHI because the Group (i) as of March 31, 2020 and December 31, 2019,
owned 1,110,382 Class “C” shares of common stock of UHI, representing approximately 10% of the outstanding total shares of UHI and 4,590,953 warrants issued by UHI that upon their exercise would represent approximately 36% of the equity
capital of UHI on a fully-diluted, as-converted basis, subject to certain conditions, laws and regulations; (ii) as of March 31, 2020 and December 31, 2019, had three officers and one director of the Company designated as members of the Board
of Directors of UHI, which was composed of 19 directors, of 22 available board seats; and (iii) was party to a Program License Agreement (“PLA”), as amended, with Univision, an indirect wholly-owned subsidiary of UHI, pursuant to which
Univision has the right to broadcast certain Televisa content in the United States (“Program License Agreement”), and to another program license agreement pursuant to which the Group has the right to broadcast certain Univision’s content in
Mexico (“Mexican License Agreement”), in each case through 7.5 years after the Group has voluntarily sold two-thirds of its initial investment in UHI made in December 2010. On February 25, 2020, UHI, Searchlight Capital Partners, LP
(“Searchlight”), a global private investment firm, and ForgeLight LLC (“ForgeLight”), an operating and investment company focused on the media and consumer technology sectors, announced a definitive agreement in which Searchlight and
ForgeLight will acquire a majority ownership interest in UHI from all stockholders of UHI other than the Group. Terms of the transaction were not disclosed. The Group has elected to retain its approximately 36% stake in UHI’s equity capital
on a fully-diluted, as-converted basis. Under the terms of the acquisition, Searchlight and ForgeLight will purchase the remaining 64% ownership interest from the other stockholders of UHI. The transaction, which is subject to customary
closing conditions including receipt of regulatory approvals, is expected to close later in 2020. In conjunction with this transaction and a decline in the fair value of the Group’s investments in UHI as of March 31, 2020, the Company’s
management recognized an impairment loss in the amount of Ps.5,455,356 that decreased the carrying value of its investment in shares of UHI as of that date, which was accounted for in share of income or loss of associates and joint ventures
in the consolidated statement of income for the three months ended March 31, 2020 (see Notes 4, 9, 14 and 16).
|
(2)
|
GTAC was granted a 20-year contract for the lease of a pair of dark fiber wires held by the Mexican Federal Electricity Commission
and a concession to operate a public telecommunications network in Mexico with an expiration date in 2030. GTAC is a joint venture in which a subsidiary of the Company, a subsidiary of Grupo de Telecomunicaciones Mexicanas, S.A. de C.V.,
and a subsidiary of Megacable, S.A. de C.V., have an equal equity participation of 33.3%. In June 2010, a subsidiary of the Company entered into a long-term credit facility agreement to provide financing to GTAC for up to Ps.688,217, with
an annual interest rate of the Mexican Interbank Interest Rate (“Tasa de Interés Interbancaria de Equilibrio” or “TIIE”) plus 200 basis points. Under the terms of this agreement, principal and interest are payable at dates agreed by the
parties, between 2013 and 2021. As of March 31, 2020 and December 31, 2019, GTAC had used a principal amount of Ps.688,183 under this credit facility. During the three months ended March 31, 2020, GTAC did not paid any amount of principal
and interest to the Group in connection with this credit facility. During the year ended December 31, 2019, GTAC paid principal and interest to the Group in connection with this credit facility in the aggregate principal amount of
Ps.114,574. Also, a subsidiary of the Company entered into supplementary long-term loans to provide additional financing to GTAC for an aggregate principal amount of Ps.833,506, with an annual interest of TIIE plus 200 basis points computed
on a monthly basis and payable on an annual basis or at dates agreed by the parties. Under the terms of these supplementary loans, principal amounts can be prepaid at dates agreed by the parties before their maturities between 2023 and
2029. During the three months ended March 31, 2020, GTAC paid principal and interest to the Group in connection with this credit facility in the aggregate principal amount of Ps.40,220. During the year ended December 31, 2019, GTAC paid
principal and interest to the Group in connection with this credit facility in the aggregate principal amount of Ps.86,321. The net investment in GTAC as of March 31, 2020 and December 31, 2019, included amounts receivable in connection
with this long-term credit facility and supplementary loans to GTAC in the aggregate amount of Ps.871,374 and Ps.872,317, respectively. These amounts receivable are in substance a part of the Group’s net investment in this investee (see
Note 9).
|
(3)
|
The Group accounts for its investment in PDS under the equity method, due to its 50% interest in this joint venture.
As of March 31, 2020 and December 31, 2019, the Group’s investment in PDS included intangible assets and goodwill in the aggregate amount of Ps.113,837.
|
|
6.
|
Property, Plant and Equipment, Net
|
Property, plant and equipment as of March 31, 2020 and December 31, 2019, consisted of:
|
|
March 31, 2020
|
|
|
December 31, 2019
|
|
Buildings
|
|
Ps.
|
9,476,205
|
|
|
Ps.
|
9,435,452
|
|
Building improvements
|
|
|
185,966
|
|
|
|
182,660
|
|
Technical equipment
|
|
|
145,233,732
|
|
|
|
141,966,642
|
|
Satellite transponders
|
|
|
6,026,094
|
|
|
|
6,026,094
|
|
Furniture and fixtures
|
|
|
1,172,754
|
|
|
|
1,158,745
|
|
Transportation equipment
|
|
|
3,050,585
|
|
|
|
3,000,322
|
|
Computer equipment
|
|
|
8,590,531
|
|
|
|
8,548,265
|
|
Leasehold improvements
|
|
|
3,459,489
|
|
|
|
3,434,374
|
|
|
|
|
177,195,356
|
|
|
|
173,752,554
|
|
Accumulated depreciation
|
|
|
(113,795,470
|
)
|
|
|
(109,028,784
|
)
|
|
|
|
63,399,886
|
|
|
|
64,723,770
|
|
Land
|
|
|
4,895,572
|
|
|
|
4,891,094
|
|
Construction and projects in progress
|
|
|
15,034,035
|
|
|
|
13,714,368
|
|
|
|
Ps.
|
83,329,493
|
|
|
Ps.
|
83,329,232
|
|
As of March 31, 2020, technical equipment includes Ps.797,176 and related accumulated depreciation of Ps.39,637 in connection with costs of
dismantling certain equipment of the cable networks in the Group’s Cable segment.
Depreciation charged to income for the three months ended March 31, 2020 and 2019, was Ps.4,305,117 and Ps.4,279,383, respectively. As of January 1,
2019, in connection with the adoption of IFRS 16, the Group classified as right-of-use assets those obligations recognized as finance leases as of December 31, 2018 (see Note 2).
During the three months ended March 31, 2020, 2019, the Group invested Ps.4,552,915 and Ps. 4,279,828, respectively, in property, plant and equipment
as capital expenditures.
|
7.
|
Right-of-use assets, net
|
Right-of-use assets, net as of March 31, 2020 and December 31, 2019, consisted of:
|
|
March 31, 2020
|
|
|
December 31, 2019
|
|
Buildings
|
|
Ps.
|
5,275,931
|
|
|
Ps.
|
5,085,242
|
|
Satellite transponders
|
|
|
4,275,619
|
|
|
|
4,275,619
|
|
Technical Equipment
|
|
|
1,688,829
|
|
|
|
1,688,829
|
|
Others
|
|
|
61,794
|
|
|
|
58,021
|
|
|
|
|
11,302,173
|
|
|
|
11,107,711
|
|
Accumulated depreciation
|
|
|
(3,824,452
|
)
|
|
|
(3,554,659
|
)
|
|
|
Ps.
|
7,477,721
|
|
|
Ps.
|
7,553,052
|
|
|
8.
|
Intangible Assets and Goodwill, Net
|
The balances of intangible assets and goodwill, net as of March 31, 2020 and December 31, 2019, were as follows:
|
|
March 31, 2020
|
|
|
December 31, 2019
|
|
|
|
Cost
|
|
|
Accumulated Amortization
|
|
|
Carrying Value
|
|
|
Cost
|
|
|
Accumulated Amortization
|
|
|
Carrying Value
|
|
Intangible assets and goodwill with indefinite useful lives:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trademarks
|
|
Ps.
|
175,444
|
|
|
Ps.
|
—
|
|
|
Ps.
|
175,444
|
|
|
Ps.
|
175,444
|
|
|
Ps.
|
—
|
|
|
Ps.
|
175,444
|
|
Concessions
|
|
|
15,166,067
|
|
|
|
—
|
|
|
|
15,166,067
|
|
|
|
15,166,067
|
|
|
|
—
|
|
|
|
15,166,067
|
|
Goodwill
|
|
|
14,113,626
|
|
|
|
—
|
|
|
|
14,113,626
|
|
|
|
14,113,626
|
|
|
|
—
|
|
|
|
14,113,626
|
|
Intangible assets with finite useful lives:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trademarks
|
|
|
2,127,697
|
|
|
|
(1,911,006
|
)
|
|
|
216,691
|
|
|
|
2,127,697
|
|
|
|
(1,899,187
|
)
|
|
|
228,510
|
|
Concessions
|
|
|
553,505
|
|
|
|
(359,790
|
)
|
|
|
193,715
|
|
|
|
553,505
|
|
|
|
(332,103
|
)
|
|
|
221,402
|
|
Licenses
|
|
|
11,265,582
|
|
|
|
(7,311,686
|
)
|
|
|
3,953,896
|
|
|
|
10,858,388
|
|
|
|
(6,843,169
|
)
|
|
|
4,015,219
|
|
Subscriber lists
|
|
|
8,806,455
|
|
|
|
(6,787,600
|
)
|
|
|
2,018,855
|
|
|
|
8,782,852
|
|
|
|
(6,632,419
|
)
|
|
|
2,150,433
|
|
Payment for renewal of concessions
|
|
|
5,821,828
|
|
|
|
—
|
|
|
|
5,821,828
|
|
|
|
5,821,828
|
|
|
|
—
|
|
|
|
5,821,828
|
|
Other intangible assets
|
|
|
5,263,921
|
|
|
|
(3,890,957
|
)
|
|
|
1,372,964
|
|
|
|
5,198,960
|
|
|
|
(3,762,535
|
)
|
|
|
1,436,425
|
|
|
|
Ps.
|
63,294,125
|
|
|
Ps.
|
(20,261,039
|
)
|
|
Ps.
|
43,033,086
|
|
|
Ps.
|
67,798,367
|
|
|
Ps.
|
(19,469,413
|
)
|
|
Ps.
|
43,328,954
|
|
Amortization charged to income for the three months ended March 31, 2020 and 2019, was Ps.578,546 and Ps.674,665, respectively. Additional
amortization charged to income for the three months ended March 31, 2020 and 2019, was Ps.118,223 and Ps.151,206, respectively, primarily in connection with amortization of soccer player rights.
In November 2018, the Mexican Institute of Telecommunications (Instituto Federal de Telecomunicaciones or “IFT”) approved the renewal of the Group’s
broadcasting concessions for all of its television stations in Mexico, for a term of 20 years after the existing expiration date in 2021. In November 2018, the Group paid in cash for such renewal an aggregate amount of Ps.5,754,543, which includes a
payment of Ps.1,194 for administrative expenses and recognized this cost as an intangible asset in its consolidated statement of financial position. This amount will be amortized in a period of 20 years beginning on January 1, 2022, by using the
straight-line method.
In the fourth quarter of 2017, the Company’s management reviewed the useful life of certain Group’s television concessions accounted for as intangible
assets in conjunction with the payment made in 2018 for renewal of concessions expiring in 2021, which amount will be determined by the IFT before the renewal date. Based on such review, the Group classified these concessions as intangible assets with
a finite useful life and began to amortize the related net carrying amount of Ps.553,505 in a period ending in 2021.
During the second half of 2019, the Group monitored the market associated with its Publishing business, which is classified into the Other Businesses
segment, which has experienced a general slow-down in Latin America. Accordingly, the Group has reduced its cash flow expectations for some of its operations. As a result of such evaluation, the Group recognized an impairment loss for trademarks with
indefinite useful lives related to its Publishing business, for an aggregate amount of Ps.16,893 in other expense, net, in the consolidated statement of income for the three months ended March 31, 2019.
As of March 31, 2020 and December 31, 2019, there was no evidence of significant impairment indicators in connection with the Group’s intangible
assets in the Cable, Sky and Content segments.
|
9.
|
Debt, Lease Liabilities and Other Notes Payable
|
As of March 31, 2020 and December 31, 2019, debt, lease liabilities and other notes payable outstanding were as follows:
|
|
|
|
|
|
|
|
March 31, 2020
|
|
|
December 31, 2019
|
|
|
|
Principal
|
|
|
Finance Costs
|
|
|
Total
|
|
|
Total
|
|
U.S. dollar debt:
|
|
|
|
|
|
|
|
|
|
|
|
|
6.625% Senior Notes due 2025 (1)
|
|
Ps.
|
14,318,520
|
|
|
Ps.
|
(191,547
|
)
|
|
Ps.
|
14,126,973
|
|
|
Ps.
|
11,129,156
|
|
4.625% Senior Notes due 2026 (1)
|
|
|
7,159,260
|
|
|
|
(28,150
|
)
|
|
|
7,131,110
|
|
|
|
5,635,748
|
|
8.5% Senior Notes due 2032 (1)
|
|
|
7,159,260
|
|
|
|
(21,194
|
)
|
|
|
7,138,066
|
|
|
|
5,643,504
|
|
6.625% Senior Notes due 2040 (1)
|
|
|
14,318,520
|
|
|
|
(125,261
|
)
|
|
|
14,193,259
|
|
|
|
11,203,427
|
|
5% Senior Notes due 2045 (1)
|
|
|
23,864,200
|
|
|
|
(425,652
|
)
|
|
|
23,438,548
|
|
|
|
18,453,920
|
|
6.125% Senior Notes due 2046 (1)
|
|
|
21,477,780
|
|
|
|
(122,875
|
)
|
|
|
21,354,905
|
|
|
|
16,871,348
|
|
5.25% Senior Notes due 2049 (1)
|
|
|
17,898,150
|
|
|
|
(301,975
|
)
|
|
|
17,596,175
|
|
|
|
13,858,286
|
|
Total U.S. dollar debt
|
|
Ps.
|
106,195,690
|
|
|
Ps.
|
(1,216,654
|
)
|
|
Ps.
|
104,979,036
|
|
|
Ps.
|
82,795,389
|
|
Mexican peso debt:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8.79% Notes due 2027 (2)
|
|
|
4,500,000
|
|
|
|
(17,891
|
)
|
|
|
4,482,109
|
|
|
|
4,481,519
|
|
8.49% Senior Notes due 2037 (1)
|
|
|
4,500,000
|
|
|
|
(12,447
|
)
|
|
|
4,487,553
|
|
|
|
4,487,372
|
|
7.25% Senior Notes due 2043 (1)
|
|
|
6,500,000
|
|
|
|
(54,868
|
)
|
|
|
6,445,132
|
|
|
|
6,444,540
|
|
Bank loans (3)
|
|
|
30,770,694
|
|
|
|
(164,341
|
)
|
|
|
30,606,353
|
|
|
|
15,883,817
|
|
Bank loans (Sky) (4)
|
|
|
5,500,000
|
|
|
|
—
|
|
|
|
5,500,000
|
|
|
|
5,500,000
|
|
Bank loans (TVI) (5)
|
|
|
1,284,760
|
|
|
|
(1,170
|
)
|
|
|
1,283,590
|
|
|
|
1,344,058
|
|
Total Mexican peso debt
|
|
Ps.
|
53,055,454
|
|
|
Ps.
|
(250,717
|
)
|
|
Ps.
|
52,804,737
|
|
|
Ps.
|
38,141,306
|
|
Total debt (6)
|
|
|
159,251,144
|
|
|
|
(1,467,371
|
)
|
|
|
157,783,773
|
|
|
|
120,936,695
|
|
Less: Current portion of long-term debt
|
|
|
492,489
|
|
|
|
(508
|
)
|
|
|
491,981
|
|
|
|
491,951
|
|
Long-term debt, net of current portion
|
|
Ps.
|
158,758,655
|
|
|
Ps.
|
(1,466,863
|
)
|
|
Ps.
|
157,291,792
|
|
|
Ps.
|
120,444,744
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Satellite transponder lease obligation (7)
|
|
Ps.
|
4,950,433
|
|
|
Ps.
|
—
|
|
|
Ps.
|
4,950,433
|
|
|
Ps.
|
4,014,567
|
|
Leases (8)
|
|
|
5,677,080
|
|
|
|
—
|
|
|
|
5,677,080
|
|
|
|
5,348,953
|
|
Total lease liabilities
|
|
|
10,627,513
|
|
|
|
|
|
|
|
10,627,513
|
|
|
|
9,363,520
|
|
Less: Current portion
|
|
|
1,471,692
|
|
|
|
—
|
|
|
|
1,471,692
|
|
|
|
1,257,766
|
|
Lease liabilities, net of current portion
|
|
Ps.
|
9,155,821
|
|
|
Ps.
|
—
|
|
|
Ps.
|
9,155,821
|
|
|
Ps.
|
8,105,754
|
|
Other notes payable:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other notes payable (9)
|
|
Ps.
|
—
|
|
|
Ps.
|
—
|
|
|
Ps.
|
—
|
|
|
Ps.
|
1,324,063
|
|
Less: Current portion
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,324,063
|
|
Other notes payable, net of current portion
|
|
Ps.
|
—
|
|
|
Ps.
|
—
|
|
|
Ps.
|
—
|
|
|
Ps.
|
—
|
|
(1)
|
The Senior Notes due between 2025 and 2049, in the aggregate outstanding principal amount of U.S.$4,450 million and Ps.11,000,000, are unsecured obligations of the Company, rank
equally in right of payment with all existing and future unsecured and unsubordinated indebtedness of the Company, and are junior in right of payment to all of the existing and future liabilities of the Company’s subsidiaries. Interest rate
on the Senior Notes due 2025, 2026, 2032, 2037, 2040, 2043, 2045, 2046, and 2049 including additional amounts payable in respect of certain Mexican withholding taxes, is 6.97%, 4.86%, 8.94%, 8.93%, 6.97%, 7.62%, 5.26%, 6.44% and 5.52% per
annum, respectively, and is payable semi-annually. These Senior Notes may not be redeemed prior to maturity, except: (i) in the event of certain changes in law affecting the Mexican withholding tax treatment of certain payments on the
securities, in which case the securities will be redeemable, in whole or in part, at the option of the Company; and (ii) in the event of a change of control, in which case the Company may be required to redeem the securities at 101% of their
principal amount. Also, the Company may, at its own option, redeem the Senior Notes due 2025, 2026, 2037, 2040, 2043, 2046 and 2049, in whole or in part, at any time at a redemption price equal to the greater of the principal amount of these
Senior Notes or the present value of future cash flows, at the redemption date, of principal and interest amounts of the Senior Notes discounted at a fixed rate of comparable U.S. or Mexican sovereign bonds. The Senior Notes due 2026, 2032,
2040, 2043, 2045, 2046 and 2049 were priced at 99.385%, 99.431%, 98.319%, 99.733%, 96.534%, 99.677% and 98.588%, respectively, for a yield to maturity of 4.70%, 8.553%, 6.755%, 7.27%, 5.227%, 6.147% and 5.345%, respectively. The Senior Notes
due 2025 were issued in two aggregate principal amounts of U.S.$400 million and U.S.$200 million, and were priced at 98.081% and 98.632%, respectively, for a yield to maturity of 6.802% and 6.787%, respectively. The agreement of these Senior
Notes contains covenants that limit the ability of the Company and certain restricted subsidiaries engaged in the Group’s Content segment, to incur or assume liens, perform sale and leaseback transactions, and consummate certain mergers,
consolidations and similar transactions. The Senior Notes due 2025, 2026, 2032, 2037, 2040, 2045, 2046 y 2049 are registered with the U.S. Securities and Exchange Commission (“SEC”). The Senior Notes due 2043 are registered with both the SEC
and the Mexican Banking and Securities Commission (“Comisión Nacional Bancaria y de Valores” or “CNBV”).
|
(2)
|
In 2017, the Company issued Notes (“Certificados Bursátiles”) due 2027, respectively, through the BMV in the aggregate principal amount of Ps.4,500,000. In July 2019, the Company
prepaid all of the outstanding Notes due 2021 and 2022 in the aggregate principal amount of Ps.11,000,000. In October 2019, the Company prepaid all of the outstanding Notes due 2020 in the aggregate principal amount of Ps.10,000,000. Interest
rate on the Notes due 2027 is 8.79% per annum and is payable semi-annually. The Company may, at its own option, redeem the Notes due 2027, in whole or in part, at any semi-annual interest payment date at a redemption price equal to the
greater of the principal amount of the outstanding Notes and the present value of future cash flows, at the redemption date, of principal and interest amounts of the Notes discounted at a fixed rate of comparable Mexican sovereign bonds. The
agreement of the Notes due 2027 contains covenants that limit the ability of the Company and certain restricted subsidiaries appointed by the Company’s Board of Directors, and engaged in the Group’s Content segment, to incur or assume liens,
perform sale and leaseback transactions, and consummate certain mergers, consolidations and similar transactions.
|
(3)
|
In 2017, the Company entered into long-term credit agreements with three Mexican banks, in the aggregate principal amount of Ps.6,000,000, and an annual interest rate payable on a
monthly basis of 28-day TIIE plus a range between 125 and 130 basis points, and principal maturities between 2022 and 2023. The proceeds of these loans were used primarily for the prepayment in full of the Senior Notes due 2018. Under the
terms of these loan agreements, the Company is required to: (a) maintain certain financial coverage ratios related to indebtedness and interest expense; and (b) comply with the restrictive covenant on spin-offs, mergers and similar
transactions. The Company prepaid the remaining of certain credit agreement with Mexican Bank with original maturity in 2018 principal amount of this credit agreement in fourth quarter of 2017, in the aggregate amount of Ps.629,311, which
included accrued and unpaid interest. In July 2019, the Company entered into a credit agreement for a five-year term loan with a syndicate of banks in the aggregate principal amount of Ps.10,000,000. The funds from this loan were used for
general corporate purposes, including the refinancing of the Company’s indebtedness. This loan bears interest at a floating rate based on a spread of 105 or 130 basis points over the 28-day TIIE rate depending on the Group’s net leverage
ratio. The credit agreement of this loan requires the maintenance of financial ratios related to indebtedness and interest expense. During 2018, the Company executed a revolving credit facility with a syndicate of banks, for up to an amount
equivalent to U.S.$618 million payable in Mexican pesos, for a three-year term. The funds may be used for the repayment of existing indebtedness and such other general corporate purposes as may be authorized by the Board of Directors of the
Company. This revolving credit facility was available as of December 31, 2019. In March 2020, the Company drew down the Revolving Credit Facility as a prudent and precautionary measure in order to increase our cash position and preserve
financial flexibility in light of current uncertainty in the global and local markets resulting from the COVID-19 outbreak. The aggregate principal amount was Ps.14,770,694, with maturity in the first quarter of 2022. This facility bears
interest at a floating rate based on a spread of 87.5 or 112.5 basis points over the 28-day TIIE rate depending on our net leverage ratio. The Company may prepaid such amount on the last day of any interest period without penalty.
|
(4)
|
In March 2016, Sky entered into long-term credit agreements with two Mexican banks in the aggregate principal amount of Ps.5,500,000, with maturities between 2021 and 2023, and
interest payable on a monthly basis with an annual rate in the range of 7.0% and 7.13%. Under the terms of these credit agreements, the Company is required to: (a) maintain certain financial coverage ratios related to indebtedness and
interest expense; and (b) comply with the restrictive covenant on spin-offs, mergers and similar transactions.
|
(5)
|
As of March 31, 2020 and December 31, 2019, included outstanding balances in the aggregate principal amount of Ps.1,284,760 and Ps.1,345,382, respectively, in connection with
credit agreements entered into by TVI with Mexican banks, with maturities between 2019 and 2022, bearing interest at an annual rate of TIIE plus a range between 100 and 125 basis points, which is payable on a monthly basis. This TVI long-
term debt indebtedness is guaranteed by the Company. Under the terms of these credit agreements, TVI is required to comply with certain restrictive covenants and financial coverage ratios.
|
(6)
|
Total debt is presented net of unamortized finance costs as of March 31, 2020 and December 31, 2019, in the aggregate amount of Ps.1,467,371 and Ps.1,441,597, respectively, and
does not include related interest payable in the aggregate amount of Ps.2,206,937 and Ps.1,943,863, respectively.
|
(7)
|
Under a capital lease agreement entered into with Intelsat Global Sales & Marketing Ltd. (“Intelsat”) in March 2010, Sky is obligated to pay at an annual interest rate of
7.30% a monthly fee through 2027 of U.S.$3.0 million for satellite signal reception and retransmission service from 24 KU-band transponders on satellite IS-21, which became operational in October 2012. The service term for IS-21 will end at
the earlier of: (a) the end of 15 years or; (b) the date IS-21 is taken out of service (see Note 7).
|
(8)
|
In 2020, includes lease liabilities recognized beginning on January 1, 2019 under IFRS 16 for an aggregate amount of Ps.4,957,564. Also, includes minimum lease payments of
property and equipment under leases that qualify as lease liabilities. As of March 31, 2020 and December 31, 2019, includes Ps.711,948 and Ps.699,066, respectively, in connection with a lease agreement entered into by a subsidiary of the
Company and GTAC, for the right to use certain capacity of a telecommunications network through 2029. This lease agreement provides for annual payments through 2029. Other finance liabilities have terms, which expire at various dates between
2019 and 2020.
|
(9)
|
Notes payable issued by the Company in connection with the acquisition in 2016 of a non-controlling interest in TVI. As of December 31, 2019, cash payments to be made in 2020
related to these notes payable amounted to an aggregate of Ps.1,330,000, including implicit interest of Ps.142,500. Accumulated accrued interest for this transaction amounted to Ps.136,563 as of December 31, 2019. This was regarded as a Level
2 debt, which was fair valued using a discount cash flow approach, which discounts the contractual cash flows using discount rates derived from observable market price of other quotes debt instruments. In February 2020, the Group repaid all
of its outstanding other notes payable as of December 31, 2019.
|
As of March 31, 2020 and December 31, 2019, the outstanding principal amounts of Senior Notes of the Company that have been designated as hedging
instruments of the Group’s investments in UHI and the investment in Open Ended Fund (hedged items) were as follows:
|
|
March 31, 2020
|
|
|
December 31, 2019
|
|
Hedged items
|
|
Millions of U.S. dollars
|
|
|
Thousands of Mexican Pesos
|
|
|
Millions of U.S. dollars
|
|
|
Thousands of Mexican Pesos
|
|
Investment in shares of UHI (net investment hedge)
|
|
U.S.$
|
210.4
|
|
|
Ps.
|
5,021,215
|
|
|
U.S.$
|
433.7
|
|
|
Ps.
|
8,189,662
|
|
Warrants issued by UHI (foreign currency fair value hedge)
|
|
|
869.3
|
|
|
|
20,746,213
|
|
|
|
1,788.6
|
|
|
|
33,775,451
|
|
Open Ended Fund (foreign currency fair value hedge)
|
|
|
209.4
|
|
|
|
4,995,981
|
|
|
|
248.3
|
|
|
|
4,688,202
|
|
Total
|
|
U.S.$
|
1,289.1
|
|
|
Ps.
|
30,763,409
|
|
|
U.S.$
|
2,470.6
|
|
|
Ps.
|
46,653,315
|
|
The foreign exchange gain or loss derived from the Company’s U.S. dollar denominated long-term debt designated as a hedge, for the three months ended
March 31, 2020 and 2019, is analyzed as follows (see Notes 4 and 16):
Foreign Exchange Gain or Loss Derived from Senior Notes Designated as Hedging Instruments
|
|
March 31, 2020
|
|
|
March 31, 2019
|
|
Recognized in:
|
|
|
|
|
|
|
Comprehensive (loss) income
|
|
Ps.
|
(12,254,119
|
)
|
|
Ps.
|
641,782
|
|
Total foreign exchange (loss) gain derived from hedging Senior Notes
|
|
Ps.
|
(12,254,119
|
)
|
|
Ps.
|
641,782
|
|
Offset against by:
|
|
|
|
|
|
|
|
|
Foreign currency translation gain (loss) derived from the hedged net investment in shares of UHI
|
|
Ps.
|
2,185,474
|
|
|
Ps.
|
(104,960
|
)
|
Foreign exchange gain (loss) derived from hedged warrants issued by UHI
|
|
|
8,907,914
|
|
|
|
(440,225
|
)
|
Foreign exchange gain (loss) derived from the hedged Open Ended Fund
|
|
|
1,160,731
|
|
|
|
(96,597
|
)
|
Total foreign currency translation and foreign exchange gain (loss) derived from hedged assets
|
|
Ps.
|
12,254,119
|
|
|
Ps.
|
(641,782
|
)
|
The table below analyzes the Group’s debt, lease liabilities and other notes payable into relevant maturity groupings based on the remaining period at
the statement of financial position date to the contracted maturity date:
|
|
Less than 12 Months
April 1, 2020
to March 31, 2021
|
|
|
12-36 Months
April 1, 2021
to March 31, 2023
|
|
|
36-60 Months
April 1, 2024
to March 31, 2024
|
|
|
Maturities Subsequent to March 31, 2025
|
|
|
Total
|
|
Debt (1)
|
|
Ps.
|
492,489
|
|
|
Ps.
|
23,562,965
|
|
|
Ps.
|
13,500,000
|
|
|
Ps.
|
121,695,690
|
|
|
Ps.
|
159,251,144
|
|
Lease liabilities
|
|
|
1,471,692
|
|
|
|
2,316,802
|
|
|
|
2,412,021
|
|
|
|
4,426,998
|
|
|
|
10,627,513
|
|
Total debt, lease liabilities and other notes payable
|
|
Ps.
|
1,964,181
|
|
|
Ps.
|
25,879,767
|
|
|
Ps.
|
15,912,021
|
|
|
Ps.
|
126,122,688
|
|
|
Ps.
|
169,878,657
|
|
(1)
|
The amounts of debt are disclosed on a principal amount basis.
|
|
10.
|
Financial Instruments
|
The Group’s financial instruments presented in the consolidated statements of financial position included cash and cash equivalents, temporary
investments, accounts and notes receivable, a long-term loan receivable from GTAC, warrants that are exercisable for UHI’s common stock, non-current investments in debt and equity securities and in securities in the form of an open-ended fund, accounts
payable, outstanding debt, lease liabilities, other notes payable, and derivative financial instruments. For cash and cash equivalents, temporary investments, accounts receivable, accounts payable, and short-term notes payable due to banks and other
financial institutions, the carrying amounts approximate fair value due to the short maturity of these instruments. The fair value of the Group’s long-term debt securities is based on quoted market prices.
The fair value of long-term loans that the Group borrowed from leading Mexican banks (see Note 9) has been estimated using the borrowing rates
currently available to the Group for bank loans with similar terms and average maturities. The fair value of non-current investments in financial instruments, and currency option and interest rate swap agreements were determined by using valuation
techniques that maximize the use of observable market data.
The carrying and estimated fair values of the Group’s non-derivative financial instruments as of March 31, 2020 and December 31, 2019, were as
follows:
|
|
March 31, 2020
|
|
|
December 31, 2019
|
|
|
|
Carrying Value
|
|
|
Fair Value
|
|
|
Carrying Value
|
|
|
Fair Value
|
|
Assets:
Cash and cash equivalents
|
|
Ps.
|
44,940,269
|
|
|
Ps.
|
44,940,269
|
|
|
Ps.
|
27,451,997
|
|
|
Ps.
|
27,451,997
|
|
Trade notes and accounts receivable, net
|
|
|
20,749,132
|
|
|
|
20,749,132
|
|
|
|
14,486,184
|
|
|
|
14,486,184
|
|
Warrants issued by UHI (see Note 4)
|
|
|
20,746,213
|
|
|
|
20,746,213
|
|
|
|
33,775,451
|
|
|
|
33,775,451
|
|
Long-term loans and interest receivable from GTAC (see Note 5)
|
|
|
871,374
|
|
|
|
874,305
|
|
|
|
872,317
|
|
|
|
875,585
|
|
Open Ended Fund (see Note 4)
|
|
|
4,995,981
|
|
|
|
4,995,981
|
|
|
|
4,688,202
|
|
|
|
4,688,202
|
|
Other Equity Instruments (see Note 4)
|
|
|
4,818,245
|
|
|
|
4,818,245
|
|
|
|
5,751,001
|
|
|
|
5,751,001
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior Notes due 2025, 2032 and 2040
|
|
Ps.
|
35,796,300
|
|
|
Ps.
|
42,113,703
|
|
|
Ps.
|
28,325,700
|
|
|
Ps.
|
34,954,254
|
|
Senior Notes due 2045
|
|
|
23,864,200
|
|
|
|
23,967,293
|
|
|
|
18,883,800
|
|
|
|
19,739,047
|
|
Senior Notes due 2037 and 2043
|
|
|
11,000,000
|
|
|
|
8,328,595
|
|
|
|
11,000,000
|
|
|
|
8,986,870
|
|
Senior Notes due 2026 and 2046
|
|
|
28,637,040
|
|
|
|
31,857,776
|
|
|
|
22,660,560
|
|
|
|
26,645,193
|
|
Senior Notes due 2049
|
|
|
17,898,150
|
|
|
|
18,649,872
|
|
|
|
14,162,850
|
|
|
|
15,364,426
|
|
Notes due 2027
|
|
|
4,500,000
|
|
|
|
4,506,165
|
|
|
|
4,500,000
|
|
|
|
4,656,375
|
|
Short and long-term notes payable to Mexican banks
|
|
|
37,555,454
|
|
|
|
37,900,992
|
|
|
|
22,845,382
|
|
|
|
23,012,707
|
|
Lease liabilities (1)
|
|
|
10,627,513
|
|
|
|
10,476,236
|
|
|
|
9,363,520
|
|
|
|
9,120,903
|
|
Other notes payable
|
|
|
-
|
|
|
|
-
|
|
|
|
1,324,063
|
|
|
|
1,295,780
|
|
(1) In 2020, includes lease agreements recognized beginning on
January 1, 2019 under IFRS 16 for an aggregate amount of Ps.4,957,564.
The carrying values (based on estimated fair values), notional amounts, and maturity dates of the Group’s derivative financial instruments as of March
31, 2020 and December 31, 2019, were as follows:
March 31, 2020:
Derivative Financial Instruments
|
|
Carrying Value
|
|
|
Notional Amount (U.S. Dollars in Thousands)
|
|
Maturity Date
|
|
Assets:
|
|
|
|
|
|
|
|
|
Derivatives recorded as accounting hedges:
(cash flow hedges)
|
|
|
|
|
|
|
|
|
TVI’s interest rate swap
|
|
Ps.
|
755
|
|
|
Ps.
|
398,500
|
|
May 2020 through May 2022
|
|
Forward
|
|
|
534,424
|
|
|
U.S.$
|
131,688
|
|
May 2020 through September 2020
|
|
Derivatives not recorded as accounting hedges:
|
|
|
|
|
|
|
|
|
|
|
TVI’s forward
|
|
|
171,406
|
|
|
U.S.$
|
43,500
|
|
April 2020 through October 2020
|
|
Empresas Cablevisión´s forward
|
|
|
195,955
|
|
|
U.S.$
|
48,000
|
|
April 2020 through October 2020
|
|
Sky’s forward
|
|
|
378,682
|
|
|
U.S.$
|
94,850
|
|
April 2020 through September 2020
|
|
Forward
|
|
|
976,859
|
|
|
U.S.$
|
242,650
|
|
April 2020 through October 2020
|
|
Total assets
|
|
Ps.
|
2,258,081
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
Derivatives recorded as accounting hedges:
(cash flow hedges)
|
|
|
|
|
|
|
|
|
|
|
TVI’s interest rate swap
|
|
Ps.
|
20,245
|
|
|
Ps.
|
886,260
|
|
April 2022
|
|
Interest rate swap
|
|
|
73,379
|
|
|
Ps.
|
2,000,000
|
|
October 2022
|
|
Interest rate swap
|
|
|
57,005
|
|
|
Ps.
|
1,500,000
|
|
October 2022
|
|
Interest rate swap
|
|
|
127,966
|
|
|
Ps.
|
2,500,000
|
|
February 2023
|
|
Interest rate swap
|
|
|
275,800
|
|
|
Ps.
|
6,000,000
|
|
June 2024
|
|
Interest rate swap
|
|
|
96,682
|
|
|
Ps.
|
14,770,694
|
|
March 2022
|
|
Total liabilities
|
|
Ps.
|
651,077
|
|
|
|
|
|
|
|
December 31, 2019:
Derivative Financial Instruments
|
|
Carrying Value
|
|
|
Notional Amount (U.S. Dollars in Thousands)
|
|
Maturity Date
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
Derivatives recorded as accounting hedges:
(cash flow hedges)
|
|
|
|
|
|
|
|
|
|
|
TVI’s interest rate swap
|
|
Ps.
|
4,592
|
|
|
Ps.
|
407,200
|
|
May 2020 through May 2022
|
|
Total assets
|
|
Ps.
|
4,592
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
Derivatives recorded as accounting hedges:
(cash flow hedges)
|
|
|
|
|
|
|
|
|
|
|
TVI’s interest rate swap
|
|
Ps.
|
8,943
|
|
|
Ps.
|
938,182
|
|
April 2022
|
|
Interest rate swap
|
|
|
38,543
|
|
|
Ps.
|
2,000,000
|
|
October 2022
|
|
Interest rate swap
|
|
|
30,702
|
|
|
Ps.
|
1,500,000
|
|
October 2022
|
|
Interest rate swap
|
|
|
83,122
|
|
|
Ps.
|
2,500,000
|
|
February 2023
|
|
Interest rate swap
|
|
|
185,205
|
|
|
Ps.
|
6,000,000
|
|
June 2024
|
|
Forward
|
|
|
144,466
|
|
|
U.S.$
|
218,688
|
|
January 2020 through September 2020
|
|
Derivatives not recorded as accounting hedges:
|
|
|
|
|
|
|
|
|
|
|
TVI’s forward
|
|
|
45,968
|
|
|
U.S.$
|
66,000
|
|
January 2020 through October 2020
|
|
Empresas Cablevisión´s forward
|
|
|
48,474
|
|
|
U.S.$
|
73,000
|
|
January 2020 through October 2020
|
|
Sky’s forward
|
|
|
87,090
|
|
|
U.S.$
|
127,850
|
|
January 2020 through September 2020
|
|
Forward
|
|
|
242,777
|
|
|
U.S.$
|
361,550
|
|
January 2020 through October 2020
|
|
Total liabilities
|
|
Ps.
|
915,290
|
|
|
|
|
|
|
|
UHI Warrants
In July 2015, the Group exchanged its investment in U.S.$1,125 million principal amount of Convertible Debentures due 2025 issued by UHI for 4,858,485
warrants that are exercisable for UHI’s common stock, and exercised 267,532 of these warrants to increase its equity stake in UHI from 7.8% to 10% (see Notes 4 and 5).
The Group determined the fair value of its investment in warrants by using the income approach based on post-tax discounted cash flows. The income
approach requires management to make judgments and involves the use of significant estimates and assumptions. These estimates and assumptions include long-term growth rates and operating margins used to calculate projected future cash flows,
risk-adjusted discount rates based on weighted average cost of capital within a range of 8% to 9%, among others. The Group´s estimates for market growth were based on historical data, various internal estimates and observable external sources when
available, and are based on assumptions that are consistent with the strategic plans and estimates used to manage the underlying business. Since the described methodology is an internal model with significant unobservable inputs, the UHI warrants are
classified as Level 3. Additionally, the Group determined the fair value of its investment in warrants by using the Black-Scholes model (“BSPM”). The BSPM involves the use of significant estimates and assumptions. The assumptions used as of March 31,
2020 and December 31, 2019, included the UHI stock´s spot price of U.S.$189 and U.S.$390 per share on a fully-diluted, as–converted basis, respectively, and the UHI stock’s expected volatility of 70% and 40%, respectively.
The Company’s management applied significant judgment to determine the classification of the warrants issued by UHI. These warrants did not comply
with the definition of a derivative financial instrument because the initial investment that the Group paid to acquire the original instrument (Convertible Debentures) was significant and a derivative requires no initial investment or one that is
smaller than would be required for a contract with similar response to changes in market factors; therefore, the Group classified the warrants issued by UHI as equity instruments with changes in fair value recognized in other comprehensive income or
loss in consolidated equity. Significant judgment was applied by the Company’s management in assessing that the characteristics of the warrants issued by UHI are closer to an equity instrument in accordance with IAS 32 Financial Instruments: Presentation (see Note 4).
|
11.
|
Capital Stock and Long-term Retention Plan
|
At March 31, 2020, shares of capital stock and CPOs consisted of (in millions):
|
Authorized and Issued(1)
|
|
Repurchased by the Company (2)
|
|
Held by a Company´s Trust (3)
|
|
Outstanding
|
|
Series “A” Shares
|
122,179.4
|
|
(1,105.4
|
)
|
(6,909.5
|
)
|
114,164.5
|
|
Series “B” Shares
|
58,019.7
|
|
(972.8
|
)
|
(5,419.5
|
)
|
51,627.4
|
|
Series “D” Shares
|
88,554.1
|
|
(1,547.5
|
)
|
(4,872.2
|
)
|
82,134.4
|
|
Series “L” Shares
|
88,554.1
|
|
(1,547.5
|
)
|
(4,872.2
|
)
|
82,134.4
|
|
Total
|
357,307.3
|
|
(5,173.2
|
)
|
(22,073.4
|
)
|
330,060.7
|
|
Shares in the form of CPOs
|
296,023.0
|
|
(5,173.2
|
)
|
(16,287.0
|
)
|
274,562.8
|
|
Shares not in the form of CPOs
|
61,284.3
|
|
-
|
|
(5,786.4
|
)
|
55,497.9
|
|
Total
|
357,307.3
|
|
(5,173.2
|
)
|
(22,073.4
|
)
|
330,060.7
|
|
CPOs
|
2,530.1
|
|
(44.2
|
)
|
(139.2
|
)
|
2,346.7
|
|
(1)
|
As of March 31, 2020, the authorized and issued capital stock amounted to Ps.4,907,765 (nominal Ps.2,459,154).
|
(2)
|
During the three months ended March 31, 2020, the Company repurchased 616.0 million shares, in the form of 5.3 million CPOs, in the amount of Ps.195,597, in connection with a
share repurchase program that was approved by the Company’s stockholders.
|
(3)
|
In connection with the Company’s Long-Term Retention Plan.
|
A reconciliation of the number of shares and CPOs outstanding for the three months ended March 31, 2020 and 2019, is presented as follows (in
millions):
|
|
Series “A” Shares
|
|
|
Series “B” Shares
|
|
|
Series “D” Shares
|
|
|
Series “L” Shares
|
|
|
Shares Outstanding
|
|
|
CPOs Outstanding
|
|
As of January 1, 2020
|
|
116,223.9
|
|
|
52,852.8
|
|
|
84,083.8
|
|
|
84,083.8
|
|
|
337,244.3
|
|
|
2,402.4
|
|
Repurchased (1)
|
|
(131.7
|
)
|
|
(115.9
|
)
|
|
(184.2
|
)
|
|
(184.2
|
)
|
|
(616.0
|
)
|
|
(5.3
|
)
|
Acquired (2)
|
|
(1,927.7
|
)
|
|
(1,109.5
|
)
|
|
(1,765.2
|
)
|
|
(1,765.2
|
)
|
|
(6,567.6
|
)
|
|
(50.4
|
)
|
As of March 31, 2020
|
|
114,164.5
|
|
|
51,627.4
|
|
|
82,134.4
|
|
|
82,134.4
|
|
|
330,060.7
|
|
|
2,346.7
|
|
|
|
Series “A” Shares
|
|
|
Series “B” Shares
|
|
|
Series “D” Shares
|
|
|
Series “L” Shares
|
|
|
Shares Outstanding
|
|
|
CPOs Outstanding
|
|
As of January 1, 2019
|
|
116,207.2
|
|
|
53,116.1
|
|
|
84,502.9
|
|
|
84,502.9
|
|
|
338,329.1
|
|
|
2,414.4
|
|
Acquired (2)
|
|
(19.1
|
)
|
|
(16.8
|
)
|
|
(26.8
|
)
|
|
(26.8
|
)
|
|
(89.5
|
)
|
|
(0.8
|
)
|
As of March 31, 2019
|
|
116,188.1
|
|
|
53,099.3
|
|
|
84,476.1
|
|
|
84,476.1
|
|
|
338,239.6
|
|
|
2,413.6
|
|
(1)
|
Repurchased in connection with a share repurchase program.
|
(2)
|
Acquired by a Company’s trust in connection with the Company’s Long-Term Retention Plan.
|
Long-term Retention Plan
During the three months ended March 31, 2020, the trust for the Long-term Retention Plan increased the number of shares
and CPOs for the purposes of this Plan in the amount of: (i) 5,526.3 million shares of the Company in the form of 47.2 million CPOs, and 666.9 million Series “A” Shares, not in the form of CPO units, in connection with the cancellation of
these shares in the fourth quarter of 2019, which were conditionally sold to certain Company’s officers and employees in 2015 and 2016, as described in the paragraph below; and (ii) 374.4 million shares in the form of 3.2 million CPOs, in connection
with forfeited rights under this Plan.
In the fourth quarter of 2019, the Company agreed to (i) cancel 9,490.5 million shares that were conditionally sold to certain officers and employees
in 2015, 2016 and 2017, which conditions had not been complied with in full yet; and (ii) sell conditionally 4,745.3 million shares to the these officers and employees at a lower price and additional vesting periods of two and three years. In
connection with these events, the Company recognized an additional expense that was included as administrative expense for the year ended December 31, 2019.
The Group accrued in equity attributable to stockholders of the Company a share-based compensation expense of Ps.203,756 and Ps.311,860 for the three
months ended March 31, 2020 and 2019, respectively, which amount was reflected in consolidated operating income as administrative expense.
As of March 31, 2020 and December 31, 2019, the Company’s legal reserve amounted to Ps.2,139,007, and was classified into retained earnings in equity
attributable to stockholders of the Company.
In April 2019, the Company’s stockholders approved the payment of a dividend of Ps.0.35 per CPO and Ps.0.002991452991 per share of Series “A”, “B”,
“D” and “L” Shares, not in the form of a CPO unit, which was paid in cash in May 2019, in the aggregate amount of Ps.1,066,187.
|
13.
|
Non-controlling Interests
|
In 2019, the holding companies of the Sky segment paid a dividend to its equity owners in the aggregate amount of Ps.3,800,000, of which Ps.1,570,659
were paid to its non-controlling interests.
|
14.
|
Transactions with Related Parties
|
The balances of receivables and payables between the Group and related parties as of March 31, 2020 and December 31, 2019, were as follows:
|
|
March 31, 2020
|
|
|
December 31, 2019
|
|
Current receivables:
|
|
|
|
|
|
|
UHI, including Univision (1)
|
|
Ps.
|
715,473
|
|
|
Ps.
|
748,844
|
|
OCEN (see Note 3)
|
|
|
35,414
|
|
|
|
3,968
|
|
Editorial Clío, Libros y Videos, S.A. de C.V.
|
|
|
5,254
|
|
|
|
2,933
|
|
Other
|
|
|
60,748
|
|
|
|
58,682
|
|
|
|
Ps.
|
816,889
|
|
|
Ps.
|
814,427
|
|
|
|
|
|
|
|
|
|
|
Current payable:
|
|
|
|
|
|
|
|
|
UHI, including Univision (1)
|
|
Ps.
|
365,024
|
|
|
Ps.
|
594,254
|
|
AT&T/ DirecTV
|
|
|
21,265
|
|
|
|
25,447
|
|
Other
|
|
|
29,179
|
|
|
|
24,550
|
|
|
|
Ps.
|
415,468
|
|
|
Ps.
|
644,251
|
|
(1)
|
As of March 31, 2020 and December 31, 2019, the Group recognized a provision in the amount of Ps.365,024 and Ps.594,254, respectively, associated with a consulting arrangement entered into by the Group, UHI and
an entity controlled by the chairman of the Board of Directors of UHI, by which upon consummation of a qualified initial public offering of the shares of UHI or an alternative exit plan for the main current investors in UHI, the Group would
pay the entity a portion of a defined appreciation in excess of certain preferred returns and performance thresholds of UHI. In March 2018, UHI announced that it has determined not to utilize the registration statement initially filed on July
2, 2015 for an initial public offering in the United States. As of March 31, 2020, the Group decreased this provision in the amount of Ps.385,958, in connection with the acquisition of the majority stock of UHI by a group of investors
announced on February 25, 2020, and the decline in the fair value of the Group’s investments in UHI as of March 31, 2020 (see Notes 4 and 5), and accounted for this non-cash decrease in consolidated other income, net, for the three months
ended March 31, 2020 (see Note 15). Since the existing obligations contemplate other scenarios under which payment may be required, and such scenarios still remain, the Company has maintained this provision as of March 31, 2020. As of March
31, 2020 and December 31, 2019, receivables from UHI related primarily to the PLA amounted to Ps.715,473 and Ps.748,844, respectively.
|
In the three months ended March 31, 2020 and 2019, royalty revenue from Univision amounted to Ps.2,044,048 and Ps.1,699,227 respectively.
15. Other Income or Expense, Net
Other income (expense) for the three months ended March 31, 2020 and 2019 is analyzed as follows:
|
|
March 31, 2020
|
|
|
March 31, 2019
|
|
Net loss on disposition of investments
|
|
Ps.
|
–
|
|
|
Ps.
|
(84
|
)
|
Donations
|
|
|
(7,602
|
)
|
|
|
11,856
|
|
Legal and financial advisory professional services (1)
|
|
|
(83,762
|
)
|
|
|
(67,535
|
)
|
Gain (loss) on disposition of property and equipment
|
|
|
72,537
|
|
|
|
(34,191
|
)
|
Deferred compensation
|
|
|
(62,947
|
)
|
|
|
(62,947
|
)
|
Dismissal severance expense (2)
|
|
|
(46,161
|
)
|
|
|
(74,543
|
)
|
Impairment adjustments (3)
|
|
|
–
|
|
|
|
(16,893
|
)
|
Decrease in provision for UHI related party (see Note 14)
|
|
|
385,958
|
|
|
|
–
|
|
Other, net
|
|
|
26,905
|
|
|
|
55,427
|
|
|
|
Ps.
|
284,928
|
|
|
Ps.
|
(188,910
|
)
|
(1)
|
Includes primarily legal, financial advisory and professional services in connection with certain litigation and other matters.
|
(2)
|
Includes severance expense in connection with dismissals of personnel, as part of a cost reduction plan.
|
(3)
|
In 2019, includes impairment adjustments in connection with trademarks in the Publishing business.
|
Finance (expense) income for the three months ended March 31, 2020 and 2019, included:
|
|
March 31, 2020
|
|
|
March 31, 2019
|
|
Interest expense (1)
|
|
Ps.
|
(2,528,229
|
)
|
|
Ps.
|
(2,406,726
|
)
|
Other finance expense, net (2)
|
|
|
–
|
|
|
|
(302,809
|
)
|
Foreign Exchange loss, net (4)
|
|
|
(8,601,364
|
)
|
|
|
–
|
|
Finance expense, net
|
|
|
(11,129,593
|
)
|
|
|
(2,709,535
|
)
|
Interest income (3)
|
|
|
223,850
|
|
|
|
296,483
|
|
Other finance income, net (2)
|
|
|
2,198,144
|
|
|
|
–
|
|
Foreign Exchange gain, net (4)
|
|
|
–
|
|
|
|
138,962
|
|
Finance income, net
|
|
|
2,421,994
|
|
|
|
435,445
|
|
Finance expense, net
|
|
Ps.
|
(8,707,599
|
)
|
|
Ps.
|
(2,274,090
|
)
|
(1)
|
In 2020 and 2019, included interest expense related to lease liabilities that were recognized beginning on January 1, 2019, for first time in connection with initial adoption of
IFRS 16 in the aggregate amount of Ps.109,193 and Ps.102,073, respectively.
|
(2)
|
In 2020 and 2019, other finance income or expense, net, included gain or loss fair value from derivative financial instruments.
|
(3)
|
In 2020 and 2019, this line item included primarily gains from cash equivalents.
|
(4)
|
Foreign exchange gain or loss, net, included (i) foreign exchange gain or loss resulted primarily from the appreciation or depreciation of the Mexican peso against the U.S. dollar
on the Group’s U.S. dollar-denominated monetary liability position, excluding long-term debt designated as a hedging instrument of the Group’s investments in UHI and the Open Ended Fund, during the three months ended March 31, 2020 and 2019;
and (ii) foreign exchange gain or loss resulted primarily from the appreciation or depreciation of the Mexican peso against the U.S. dollar on the Group’s U.S. dollar-denominated monetary asset position during the three months ended March 31,
2020 and 2019 (see Note 9). The exchange rate of the Mexican peso against the U.S dollar was of Ps.23.8642, Ps.18.8838, Ps.19.4250 and Ps.19.6730 as of March 31, 2020, December 31, 2019, March 31,2019 and December 31, 2018, respectively.
|
Income taxes in the interim periods are accrued using the income tax rate that would be applicable to expected total annual earnings or losses. As of
March 31, 2020 and 2019, the estimated effective income tax rate for the years ended December 31, 2020 and 2019, was 16% and 37%, respectively.
|
18.
|
Earnings per CPO/Share
|
At March 31, 2020 and 2019 the weighted average of outstanding total shares, CPOs and Series “A”, Series “B”, Series “D” and Series “L” Shares (not in
the form of CPO units), was as follows (in thousands):
|
|
March 31, 2020
|
|
|
March 31, 2019
|
|
Total Shares
|
|
Ps.
|
333,096,649
|
|
|
Ps.
|
338,312,800
|
|
CPOs
|
|
|
2,370,259
|
|
|
|
2,414,221
|
|
Shares not in the form of CPO units:
|
|
|
|
|
|
|
|
|
Series “A” Shares
|
|
|
55,775,718
|
|
|
|
55,848,232
|
|
Series “B” Shares
|
|
|
187
|
|
|
|
187
|
|
Series “D” Shares
|
|
|
239
|
|
|
|
239
|
|
Series “L” Shares
|
|
|
239
|
|
|
|
239
|
|
Basic earnings per CPO and per each Series “A”, Series “B”, Series “D” and Series “L” Share (not in the form of a CPO unit) for the three months ended
March 31, 2020 and 2019, are presented as follows:
|
|
2020
|
|
|
2019
|
|
|
|
Per CPO
|
|
|
Per Share (*)
|
|
|
Per CPO
|
|
|
Per Share (*)
|
|
Net income attributable to stockholders of the Company
|
|
Ps.
|
(3.39
|
)
|
|
Ps.
|
(0.03
|
)
|
|
Ps.
|
0.19
|
|
|
Ps.
|
0.00
|
|
(*) Series “A”, “B”, “D” and “L” Shares not in the form of CPO units.
Diluted earnings per CPO and per Share attributable to stockholders of the Company:
|
|
March 31, 2020
|
|
|
March 31, 2019
|
|
Total Shares
|
|
Ps.
|
352,551,880
|
|
|
Ps.
|
357,307,272
|
|
CPOs
|
|
|
2,489,467
|
|
|
|
2,530,111
|
|
Shares not in the form of CPO units:
|
|
|
|
|
|
|
|
|
Series “A” Shares
|
|
|
58,926,613
|
|
|
|
58,926,613
|
|
Series “B” Shares
|
|
|
2,357,208
|
|
|
|
2,357,208
|
|
Series “D” Shares
|
|
|
239
|
|
|
|
239
|
|
Series “L” Shares
|
|
|
239
|
|
|
|
239
|
|
Diluted earnings per CPO and per each Series “A”, Series “B”, Series “D” and Series “L” Share (not in the form of a CPO unit) for the three months
ended March 31, 2020 and 2019, are presented as follows:
|
|
2020
|
|
|
2019
|
|
|
|
Per CPO
|
|
|
Per Share (*)
|
|
|
Per CPO
|
|
|
Per Share (*)
|
|
Net income attributable to stockholders of the Company
|
|
Ps.
|
(3.20
|
)
|
|
Ps.
|
(0.03
|
)
|
|
Ps.
|
0.18
|
|
|
Ps.
|
0.00
|
|
(*) Series “A”, “B”, “D” and “L” Shares not in the form of CPO units.
The table below presents information by segment and a reconciliation to consolidated total for the three months ended March 31, 2020 and 2019:
|
|
Total Revenues
|
|
|
Intersegment Revenues
|
|
|
Consolidated Revenues
|
|
|
Segment Income
|
|
|
2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cable
|
|
Ps.
|
10,824,667
|
|
|
Ps.
|
164,740
|
|
|
Ps.
|
10,659,927
|
|
|
Ps.
|
4,490,297
|
|
|
Sky
|
|
|
5,405,331
|
|
|
|
144,439
|
|
|
|
5,260,892
|
|
|
|
2,233,963
|
|
|
Content
|
|
|
6,727,612
|
|
|
|
905,540
|
|
|
|
5,822,072
|
|
|
|
1,613,891
|
|
|
Other Businesses
|
|
|
1,756,456
|
|
|
|
418,081
|
|
|
|
1,338,375
|
|
|
|
371,031
|
|
|
Segment total
|
|
|
24,714,066
|
|
|
|
1,632,800
|
|
|
|
23,081,266
|
|
|
|
8,709,182
|
|
|
Reconciliation to consolidated amounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Held-for-sale operations (Radio business)
|
|
|
147,522
|
|
|
|
–
|
|
|
|
147,522
|
|
|
|
25,669
|
|
|
Eliminations and corporate expenses
|
|
|
(1,632,800
|
)
|
|
|
(1,632,800
|
)
|
|
|
–
|
|
|
|
(441,620
|
)
|
|
Depreciation and amortization
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
(5,151,503
|
)
|
|
Consolidated total before other income
|
|
|
23,228,788
|
|
|
|
–
|
|
|
|
23,228,788
|
|
|
|
3,141,728
|
(1)
|
|
Other income, net
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
284,928
|
|
|
Consolidated total
|
|
Ps.
|
23,228,788
|
|
|
Ps.
|
–
|
|
|
Ps.
|
23,228,788
|
|
|
Ps.
|
3,426,656
|
(2)
|
|
|
|
Total Revenues
|
|
|
Intersegment Revenues
|
|
|
Consolidated Revenues
|
|
|
Segment Income
|
|
|
2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cable
|
|
Ps.
|
9,898,080
|
|
|
Ps.
|
131,997
|
|
|
Ps.
|
9,766,083
|
|
|
Ps.
|
4,297,145
|
|
|
Sky
|
|
|
5,281,597
|
|
|
|
89,202
|
|
|
|
5,192,395
|
|
|
|
2,306,851
|
|
|
Content
|
|
|
7,184,922
|
|
|
|
812,523
|
|
|
|
6,372,399
|
|
|
|
2,267,320
|
|
|
Other Businesses
|
|
|
2,104,381
|
|
|
|
195,837
|
|
|
|
1,908,544
|
|
|
|
503,070
|
|
|
Segment total
|
|
|
24,468,980
|
|
|
|
1,229,559
|
|
|
|
23,239,421
|
|
|
|
9,374,386
|
|
|
Reconciliation to consolidated amounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Held-for-sale operations (Radio business)
|
|
|
155,906
|
|
|
|
82
|
|
|
|
155,824
|
|
|
|
31,978
|
|
|
Eliminations and corporate expenses
|
|
|
(1,229,641
|
)
|
|
|
(1,229,641
|
)
|
|
|
–
|
|
|
|
(531,107
|
)
|
|
Depreciation and amortization
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
(5,215,951
|
)
|
|
Consolidated total before other expense
|
|
|
23,395,245
|
|
|
|
–
|
|
|
|
23,395,245
|
|
|
|
3,659,306
|
(1)
|
|
Other expense, net
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
(188,910
|
)
|
|
Consolidated total
|
|
Ps.
|
23,395,245
|
|
|
Ps.
|
–
|
|
|
Ps.
|
23,395,245
|
|
|
Ps.
|
3,470,396
|
(2)
|
|
(1)
|
This amount represents operating income before other income or expense, net.
|
(2)
|
This amount represents consolidated operating income.
|
Disaggregation of Total Revenues
The table below present total revenues for each reportable segment disaggregated by major service/product lines and primary geographical market for
the three months ended March 31, 2020 and 2019:
|
|
Domestic
|
|
|
Export
|
|
|
Abroad
|
|
|
Total
|
|
March 31, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cable:
|
|
|
|
|
|
|
|
|
|
|
|
|
Digital TV Service
|
|
Ps.
|
4,223,353
|
|
|
Ps.
|
–
|
|
|
Ps.
|
–
|
|
|
Ps.
|
4,223,353
|
|
Advertising
|
|
|
392,064
|
|
|
|
–
|
|
|
|
–
|
|
|
|
392,064
|
|
Broadband Services
|
|
|
3,787,610
|
|
|
|
–
|
|
|
|
–
|
|
|
|
3,787,610
|
|
Telephony
|
|
|
1,046,477
|
|
|
|
–
|
|
|
|
–
|
|
|
|
1,046,477
|
|
Other Services
|
|
|
181,028
|
|
|
|
–
|
|
|
|
–
|
|
|
|
181,028
|
|
Enterprise Operations
|
|
|
1,121,568
|
|
|
|
–
|
|
|
|
72,567
|
|
|
|
1,194,135
|
|
Sky:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DTH Broadcast Satellite TV
|
|
|
4,755,195
|
|
|
|
–
|
|
|
|
354,074
|
|
|
|
5,109,269
|
|
Advertising
|
|
|
275,667
|
|
|
|
–
|
|
|
|
–
|
|
|
|
275,667
|
|
Pay-Per-View
|
|
|
14,845
|
|
|
|
–
|
|
|
|
5,550
|
|
|
|
20,395
|
|
Content:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advertising
|
|
|
2,577,718
|
|
|
|
57,390
|
|
|
|
–
|
|
|
|
2,635,108
|
|
Network Subscription Revenue
|
|
|
1,031,673
|
|
|
|
300,444
|
|
|
|
–
|
|
|
|
1,332,117
|
|
Licensing and Syndication
|
|
|
439,476
|
|
|
|
2,320,911
|
|
|
|
–
|
|
|
|
2,760,387
|
|
Other Businesses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gaming
|
|
|
669,740
|
|
|
|
–
|
|
|
|
–
|
|
|
|
669,740
|
|
Soccer, Sports and Show Business Promotion
|
|
|
505,449
|
|
|
|
81,145
|
|
|
|
–
|
|
|
|
586,594
|
|
Publishing - Magazines
|
|
|
83,883
|
|
|
|
–
|
|
|
|
942
|
|
|
|
84,825
|
|
Publishing - Advertising
|
|
|
36,586
|
|
|
|
–
|
|
|
|
–
|
|
|
|
36,586
|
|
Publishing Distribution
|
|
|
76,484
|
|
|
|
–
|
|
|
|
–
|
|
|
|
76,484
|
|
Feature Film Production and Distribution
|
|
|
302,227
|
|
|
|
–
|
|
|
|
–
|
|
|
|
302,227
|
|
Segment total
|
|
|
21,521,043
|
|
|
|
2,759,890
|
|
|
|
433,133
|
|
|
|
24,714,066
|
|
Held-for-sale operations:
Radio – Advertising
|
|
|
147,522
|
|
|
|
–
|
|
|
|
–
|
|
|
|
147,522
|
|
Intersegment eliminations
|
|
|
(1,632,800
|
)
|
|
|
–
|
|
|
|
–
|
|
|
|
(1,632,800
|
)
|
Consolidated total revenues
|
|
Ps.
|
20,035,765
|
|
|
Ps.
|
2,759,890
|
|
|
Ps.
|
433,133
|
|
|
Ps.
|
23,228,788
|
|
|
|
Domestic
|
|
|
Export
|
|
|
Abroad
|
|
|
Total
|
|
March 31 2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cable:
|
|
|
|
|
|
|
|
|
|
|
|
|
Digital TV Service
|
|
Ps.
|
3,869,808
|
|
|
Ps.
|
–
|
|
|
Ps.
|
–
|
|
|
Ps.
|
3,869,808
|
|
Advertising
|
|
|
257,617
|
|
|
|
–
|
|
|
|
–
|
|
|
|
257,617
|
|
Broadband Services
|
|
|
3,540,593
|
|
|
|
–
|
|
|
|
–
|
|
|
|
3,540,593
|
|
Telephony
|
|
|
916,454
|
|
|
|
–
|
|
|
|
–
|
|
|
|
916,454
|
|
Other Services
|
|
|
135,358
|
|
|
|
–
|
|
|
|
–
|
|
|
|
135,358
|
|
Enterprise Operations
|
|
|
1,100,392
|
|
|
|
–
|
|
|
|
77,858
|
|
|
|
1,178,250
|
|
Sky:
|
|
|
|
|
|
|
|
|
|
|
–
|
|
|
|
|
|
DTH Broadcast Satellite TV
|
|
|
4,734,693
|
|
|
|
–
|
|
|
|
342,445
|
|
|
|
5,077,138
|
|
Advertising
|
|
|
194,860
|
|
|
|
–
|
|
|
|
–
|
|
|
|
194,860
|
|
Pay-Per-View
|
|
|
8,755
|
|
|
|
–
|
|
|
|
844
|
|
|
|
9,599
|
|
Content:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advertising
|
|
|
3,616,434
|
|
|
|
65,510
|
|
|
|
–
|
|
|
|
3,681,944
|
|
Network Subscription Revenue
|
|
|
910,650
|
|
|
|
307,658
|
|
|
|
–
|
|
|
|
1,218,308
|
|
Licensing and Syndication
|
|
|
292,523
|
|
|
|
1,992,147
|
|
|
|
–
|
|
|
|
2,284,670
|
|
Other Businesses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gaming
|
|
|
753,195
|
|
|
|
–
|
|
|
|
–
|
|
|
|
753,195
|
|
Soccer, Sports and Show Business Promotion
|
|
|
419,662
|
|
|
|
430,015
|
|
|
|
–
|
|
|
|
849,677
|
|
Publishing - Magazines
|
|
|
99,326
|
|
|
|
–
|
|
|
|
11,626
|
|
|
|
110,952
|
|
Publishing - Advertising
|
|
|
65,359
|
|
|
|
–
|
|
|
|
11,897
|
|
|
|
77,256
|
|
Publishing Distribution
|
|
|
76,441
|
|
|
|
–
|
|
|
|
–
|
|
|
|
76,441
|
|
Feature Film Production and Distribution
|
|
|
235,923
|
|
|
|
937
|
|
|
|
–
|
|
|
|
236,860
|
|
Segment total
|
|
|
21,228,043
|
|
|
|
2,796,267
|
|
|
|
444,670
|
|
|
|
24,468,980
|
|
Held-for-sale operations:
Radio – Advertising
|
|
|
155,906
|
|
|
|
–
|
|
|
|
–
|
|
|
|
155,906
|
|
Intersegment eliminations
|
|
|
(1,228,150
|
)
|
|
|
–
|
|
|
|
(1,491
|
)
|
|
|
(1,229,641
|
)
|
Consolidated total revenues
|
|
Ps.
|
20,155,799
|
|
|
Ps.
|
2,796,267
|
|
|
Ps.
|
443,179
|
|
|
Ps.
|
23,395,245
|
|
Seasonality of Operations
The Group’s results of operations are not highly seasonal. The Group typically recognizes a large percentage of its consolidated net sales
(principally advertising) in the fourth quarter in connection with the holiday shopping season. In 2019 and 2018, the Group recognized 27.8% and 26.4%, respectively, of its annual consolidated net sales in the fourth quarter of the year. The Group’s
costs, in contrast to its revenues, are more evenly incurred throughout the year and generally do not correlate to the amount of advertising sales.
On March 5, 2018, a purported stockholder class action lawsuit was filed in the United States District Court for the Southern
District of New York alleging securities law violations in connection with allegedly misleading statements and/or omissions in the Company’s public disclosures. The lawsuit alleges that the Company and two of its executives failed to disclose alleged
involvement in bribery activities relating to certain executives of Fédération Internationale de Football Association (“FIFA”), and wrongfully failed to disclose weaknesses in the Company’s internal control over its financial reporting as of December
31, 2016. On May 17, 2018, the Court appointed a lead plaintiff for the putative stockholder class. On August 6, 2018, the lead plaintiff filed an amended complaint. The Company thereupon filed a motion to dismiss the amended complaint. On March 25,
2019, the court issued a decision denying the Company’s motion to dismiss, holding that plaintiff’s allegations, if true, were sufficient to support a claim. The parties have begun to exchange discovery materials, and the discovery process will
continue throughout 2020. Separately, the parties are presently litigating class certification issues. The Company believes that the lawsuit, and the material allegations and claims therein, are without merit and intends to vigorously defend against
the lawsuit. With regard to plaintiff’s allegations regarding FIFA, outside counsel long previously investigated the circumstances surrounding the Company’s acquisition of the Latin American media rights for the Canada, Mexico and USA 2026 FIFA World
Cup and 2030 FIFA World Cup and uncovered no credible evidence that would form the basis for liability for the Company or for any executive, employee, agent or subsidiary thereof. In particular, the Company itself made no payment to any FIFA person and
in no way knew of, or condoned, any payment by any third party to any FIFA person. The Company also notes that no proceedings have been initiated against it by any governmental agency.
On April 27, 2017 the tax authorities, initiated a tax audit to the Company, with the purpose of verifying compliance with tax
provisions for the period from January 1st to December 31st, 2011 regarding federal taxes as direct subject of Income Tax (Impuesto Sobre la Renta or ISR), Flat Tax (Impuesto Empresarial a Tasa Única) and Value Added Tax (Impuesto al Valor Agregado).
On April 25, 2018 the authorities informed the observations determined as a result of such audit, that could entail a default on the payment of the abovementioned taxes. On May 25, 2018, by a document submitted before the authority, the Company
asserted arguments and offered evidence to undermine the authority’s observations. On June 27, 2019, the Company was notified of the outcome of the audit, in which a tax liability was determined for an amount of Ps.682 million Pesos for ISR, penalties,
surcharges and inflation adjustments. On August 22, 2019 the Company filed an administrative proceeding (recurso de revocación) against such tax liability, before the Legal area of the Tax Authorities, which is in the process of being resolved. As of
the date of this report, there are no elements to determine if the outcome would be adverse to the Company’s interests.
On June 1, 2016 the tax authority initiated a tax audit to a Company’s indirect subsidiary that carries out operations in the
Gaming business, which is presented in the Other Businesses segment, with the purpose of verifying compliance with tax provisions for the period from January 1, to December 31, 2014 regarding federal taxes as direct subject, as well as a withholder. On
April 24, 2017 the authorities informed the facts and omissions detected during the development of the verification process, that could entail a default on the payment of the abovementioned taxes. On May 30, 2017, by a document submitted before the
authorities, the Company’s subsidiary asserted arguments and offered evidence to undermine the facts and omissions included in the authority’s last partial record. On June 21, 2019 such entity was notified of the outcome of the audit, in which a tax
liability was determined for an amount of Ps.1,334 million Pesos, essentially related to IEPS (Impuesto Especial Sobre Producción y Servicios or Excise Tax); on August 16, 2019 an administrative proceeding (recurso de revocación) was filed before the
Legal area of the Tax Authorities, which is in the process of being resolved. As of the date of this report, there are no elements to determine if the outcome would be adverse to the Company’s interests.
The matters discussed in the three paragraphs referred to above did not require the recognition of a provision as of March 31,
2020.
There are several legal actions and claims pending against the Group, which are filed in the ordinary course of business. In the
opinion of the Company’s management, none of these actions and claims is now expected to have a material adverse effect on the Group’s financial statements as a whole; however, the Company’s management is unable to predict the outcome of any of these
legal actions and claims.
On March 11, 2020, the World Health Organization declared the outbreak of Coronavirus (“COVID19”) as pandemic.
Most governments in the world are implementing different restrictive measures to contain the spread of this pandemic. This situation is significantly affecting the global economy, including Mexico, due to the disruption or slowdown of supply chains and
the increase in economic uncertainty, as evidenced by the increase in volatility of asset prices, exchange rates and decreases in long-term interest rates. The consequences derived from COVID-19 in the second quarter of 2020, are events after the
reporting period not requiring an adjustment to the Group’s consolidated financial statements for the three months ended March 31, 2020, and these consequences will be recognized as required in the Group’s consolidated financial statements for periods
ending after that date in the year 2020. As of the authorization date of these consolidated financial statements, the Company’s management cannot predict the adverse impact of COVID-19 in the Group’s consolidated financial statements for any remaining
period for the year ending December 31, 2020.
- - - - - - - - -
Description of significant events and transactions
See Notes 1 y 2 of the Disclosure
of interim financial reporting.
Dividends paid, ordinary shares:
|
0
|
Dividends paid, other shares:
|
0
|
Dividends paid, ordinary shares per share:
|
0
|
Dividends paid, other shares per share:
|
0
|
Current assets – Other current non-financial assets: As of March 31, 2020 and December 31, 2019, includes transmission rights and programming for
Ps.5,327,850 thousands and Ps.6,479,258, thousands, respectively.
Non-current assets – Other non-current non-financial assets: As of March 31, 2020 and December 31, 2019, includes transmission rights and
programming for Ps.8,765,230 thousands and Ps.7,901,590 thousands, respectively.
Total basic earnings (loss) per share: This information is related to earnings per CPO. The CPO are the securities traded in the Mexican Stock
Exchange.
Total diluted earnings (loss) per share: This information is related to earnings per diluted CPO.
Breakdown of credits:
The Notes due 2020 and 2027 were contracted at a fixed rate.
The "Senior Notes" due in 2025, 2026, 2032, 2037, 2040, 2043, 2045, 2046 and 2049 were contracted at a fixed rate.
The exchange rates for the credits denominated in foreign currency were as follows:
Ps. 23.8642 pesos per US dollar
Bank loans and senior notes are presented net of unamortized finance costs in the aggregate amount of Ps.1,467,371.
For more information on debt; see Note 8 Notes to the Unaudited Condensed Consolidated Financial Statements.
Monetary foreign currency position:
The exchange rates used for translation were as follows :
Ps.
|
23.8642
|
|
pesos per US dollar
|
|
|
26.2673
|
|
pesos per euro
|
|
|
16.8460
|
|
pesos per canadian dollar
|
|
|
0.3705
|
|
pesos per argentinean peso
|
|
|
0.0285
|
|
pesos per chilean peso
|
|
|
0.0060
|
|
pesos per colombian peso
|
|
|
6.9840
|
|
pesos per peruvian nuevo sol
|
|
|
24.6914
|
|
pesos per swiss franc
|
|
|
4.5918
|
|
pesos per brazilian real
|
|
|
29.6302
|
|
pesos per pound sterling
|
|
|
2.3997
|
|
pesos per swedish krona
|
|
MEXICAN STOCK EXCHANGE
STOCK EXCHANGE CODE: TLEVISA
|
QUARTER: 01
|
YEAR: 2020
|
GRUPO TELEVISA, S.A.B.
|
|
|
DECLARATION OF THE REGISTRANT´S OFFICERS, RESPONSIBLE FOR THE INFORMATION.
WE HEREBY DECLARE THAT, TO THE EXTENT OF OUR FUNCTIONS, WE PREPARED THE INFORMATION RELATED TO THE REGISTRANT CONTAINED IN THIS
REPORT FOR THE FIRST QUARTER OF 2020, AND BASED ON OUR KNOWLEDGE, THIS INFORMATION FAIRLY PRESENTS THE REGISTRANT´S CONDITION. WE ALSO DECLARE THAT WE ARE NOT AWARE OF ANY RELEVANT INFORMATION THAT HAS BEEN OMITTED OR UNTRUE IN THIS QUARTERLY REPORT,
OR INFORMATION CONTAINED IN SUCH REPORT THAT MAY BE MISLEADING TO INVESTORS.
/s/ Alfonso De Angoitia Noriega
|
|
/s/ Bernardo Gómez Martínez
|
ALFONSO DE ANGOITIA NORIEGA
|
|
BERNARDO GÓMEZ MARTÍNEZ
|
CO-CHIEF EXECUTIVE OFFICER
|
|
CO-CHIEF EXECUTIVE OFFICER
|
|
|
|
|
|
|
/s/ Carlos Ferreiro Rivas
|
|
/s/ Luis Alejandro Bustos Olivares
|
CARLOS FERREIRO RIVAS
|
|
LUIS ALEJANDRO BUSTOS OLIVARES
|
VICE PRESIDENT OF FINANCE
|
|
LEGAL VICE PRESIDENT AND
|
|
|
GENERAL COUNSEL
|
MEXICO CITY, APRIL 27, 2020
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
|
GRUPO TELEVISA, S.A.B.
|
|
(Registrant)
|
|
|
|
|
|
|
Dated: May 4, 2020
|
By:
|
/s/ Luis Alejandro Bustos Olivares
|
|
Name:
|
Luis Alejandro Bustos Olivares
|
|
Title:
|
Legal Vice President and General Counsel
|
Grupo Televisa SA CV (PK) (USOTC:GRPFF)
Historical Stock Chart
From Jun 2024 to Jul 2024
Grupo Televisa SA CV (PK) (USOTC:GRPFF)
Historical Stock Chart
From Jul 2023 to Jul 2024