Mexico City, October 22, 2013—TV Azteca, S.A.B. de C.V. (BMV: AZTECA; Latibex: XTZA), one of the two largest producers of Spanish-language television programming in the world, announced today financial results for the third quarter and for the first nine months of 2013.
Third quarter results
The results for this period are hardly comparable to those of the same period of last year because of the transmission and commercialization of the London Olympic Games during the third quarter of 2012.
Net sales for the quarter were Ps.3,016 million, from Ps.3,198 million for the same quarter of 2012. Total costs and expenses were Ps.2,044 million, 4% below the Ps.2,138 million for the same period of the previous year.
As a result, Azteca reported EBITDA of Ps.971 million, compared to Ps.1,060 million from last year; EBITDA margin for the quarter was 32%. The company registered net income of Ps.330 million, compared to net income of Ps.718 million for the same quarter of 2012.
Domestic ad sales were Ps.2,750 million in the period, compared to Ps.2,923 million for the same period of the previous year. Additionally, the company registered sales from Azteca America —the company’s wholly-owned broadcast television network focused on the U.S. Hispanic market— of Ps.223 million, compared to Ps.229 million a year ago.
Content sales to other countries were Ps.43 million in the period, from Ps.46 million in the previous year; revenue for the quarter resulted from the exports of programs such as La Mujer de Judas in Latin America and Asia, as well as Destino in South America and Europe.
Costs and expenses
Costs and expenses decreased 4% during the period, as a result of a 6% reduction in production, programming and transmission costs —to Ps.1,659 million from Ps.1,761 million in the same period a year ago— and a 2% increase in selling and administrative expenses —to Ps.385 million, compared to Ps.377 million in the same quarter of 2012.
The reduction in costs results from growing efficiency in the production of successful content, derived from solid strategies that control disbursements effectively; as well as the absence of the exhibition rights and production costs related to the Olympic Games from a year ago.
The performance of sales and administrative expenses during the period is mainly related to fees and personnel expenses.
EBITDA and net result
EBITDA was Ps.971 million, compared to Ps.1,060 million in the same period of last year; the most significant change below EBITDA was a Ps.201 million deterioration in the comprehensive financing result, derived from an exchange rate loss during the period, compared to income during last year. Net income for the quarter was Ps.330 million, from Ps.718 million last year.
As of September 30, 2013, Azteca’s outstanding debt —on a pro forma basis, excluding Ps.5,142 million that will be prepaid during the fourth quarter— was Ps.11,353 million.
The cash balance of the company at the end of the period —excluding the Ps.5,142 million that will be applied to the previously mentioned prepayment of debt— was Ps.5,716 million. As a result, net debt was Ps.5,637 million at the end of the third quarter.
During the period Azteca successfully placed notes for US$500 million, with a maturity of seven years, and a 7.63% coupon. With this debt placement, the company will pay, during the fourth quarter, Structured Securities Certificates for Ps.4,778 million, that have gradual amortizations; as well as US$28 million —equivalent to Ps.364 million— from outstanding American Tower Corporation debt.
The new issuance will improve the maturity profile of the debt and increase available cash flow generation after financial obligations for the coming years. This will result in higher resources for investments that will generate greater dynamism in future company operations.
Fiber optic network
During the quarter Azteca made solid progress in the construction of the fiber optic network that will cover close to 80% of the territory of Colombia. At the end of September, the network already covered 500 of a total of 753 municipalities to be covered at the end of the project, which represents a 66% advancement in the deployment of 19,000 kilometers of fiber optics.
As previously announced, Azteca is building in Colombia the largest fiber optic network in Latin America, and will sell telecommunications services in the country. The commercialization of telecommunications services will diversify and strengthen Azteca revenue sources, adding to existing solid results in the media business.
Nine month results
Net sales in the first nine months of 2013 were Ps.8,252 million, compared to the Ps.8,943 million for the previous year. The decrease was mainly caused by the changes in the Mexican federal government, which is redefining communication projects, as well as the commercialization of the Olympic Games during last year.
Total costs and expenses were Ps.5,821 million, 4% below the Ps.6,068 million for the same period of 2012, derived mainly from strict budgeting and effective control of disbursements for content production.
Azteca reported EBITDA of Ps.2,432 million, compared to Ps.2,875 million for the prior year; EBITDA margin was 29% for the period. The company generated net income of Ps.397 million, compared to Ps.1,196 million for the same period of 2012, in the context of a Ps.213 million exchange rate deterioration during the period.