Good morning. Good afternoon to all. My name is Marcelo Santos, and I am the LATAM TMT analyst for JPMorgan. I would like to welcome you all to our global TMT conference. Today, we have the pleasure of having Televisa here with us, represented by Mr. Alfonso de Angoitia, Co-CEO, Mr. Carlos Ferreiro, CFO, and Rodrigo Villanueva, Head of IR. Before we start this fireside chat, I would like to remind you to submit questions via the Ask a Question blue button on your screen. Please do send questions at any time. I will ask your questions to the company as soon as I get them. No need to wait until the end, and don't be shy. Now, Alfonso, Carlos, and Rodrigo, thank you very much for being here. I would like to start the discussion with the streaming market. You are aiming to become a very relevant player in the global arena. Could you please talk a bit about the size of the addressable market and the opportunity for Televisa? Yeah. Thank you, Marcelo. Thank you all of you for joining us today. We are very excited about the merger between Televisa and Univision, which we announced some weeks ago. One of the main reasons why we're doing the merger is because of the huge opportunity we see on the streaming side, basically on the digital transformation of both Televisa and Univision, and forming this company which will tap that huge opportunity. The addressable market for us is huge. We believe, that's why we have this huge opportunity. Basically, the streaming market in Spanish language has to do with an addressable market of 600 million people. 600 million people speak Spanish around the world. That is the second most spoken language after Mandarin. That represents a GDP of $7.3 trillion, out of which about half of that is basically the U.S. Hispanic market and Mexico. Which are the strengths of Televisa and Univision. One of the main things that we have looked at is that the OTT penetration or streaming penetration in Spanish in our markets is at 10% of the population, and that compares to about 70% in the U.S. As we all know, Televisa is the largest producer of content in Spanish in the world, and has the largest library in Spanish in the world, and has a huge amount of IP of rights. We believe that we have a great advantage, a great opportunity, to tap this market of $7.3 trillion. I would like to repeat that about half of those $7.3 trillion are just the U.S. Hispanic population and Mexico, which are the strengths of both companies. Great. I think a lot of interesting points we should touch. I think the first is, what's the best model to attack this market? Would it be more of a traditional subscription service like Netflix or more like a free streaming service as PrendeTV? How does monetization work in these free streaming services? Yeah, I guess for the merged company, we are going to have a hybrid model, which means that we will have a subscription-based service. In addition to that, we will have an AVOD product, which is basically based on advertising. Univision has launched Prende in the U.S., and it has gained a lot of traction. It has been very popular based on our library, our content, b ut we will evolve into a subscription service. Basically, we will optimize our windowing strategy. Nowadays, it is all about owning the IP, i t's all about owning the content and then being able to window that content on broadcast television, on pay television, on an AVOD service, and on streaming. We will have basically owning that content. As to your question, Marcelo, we will be able to monetize that content on all platforms. As far as streaming is concerned, we'll have this hybrid model where we're going to have both. Perfect. It will be a hybrid. One question on the content. Is the current content library of Televisa adequate for global streaming? Considering the typical free-to-air audience in Mexico tends to be more of lower income, doesn't it create a mismatch to use the same library to address the streaming public? How much would it cost to adapt? Any thoughts on this would be great. Yeah. Well, that's a very good question, Marcelo. Let me start by saying that we own the largest content library in Spanish in the world, 300,000 hours of content. Pretty much all that has been digitized, so w e'll take advantage of that. That provides the streaming service that we're going to launch with solid ground. The platform will start with a huge base of content. Of course, we have to complement that with new releases and with higher value content. We'll have different types of content and format. What I can tell you is that we will be evolving, w e will be producing more content, and we'll be producing differentiated content. Today, Televisa and Univision invest around $1.4 billion in content. We will have, as a result of the scale that this merged company will gain, we'll have much more money, and we'll have extra budget in order to produce content for streaming. Just as a summary, we'll have a huge base of content, 300,000 hours. From that, we'll produce new content specifically targeting the AVOD service and the subscription-based streaming platform. I don't know if you remember, when Amazon Prime launched in Mexico and in other countries in Latin America, they used two series that were produced by Televisa. They were higher value content series, shorter, more action-driven series that were very exciting and very popular, very attractive for that market. We know how to produce content for the streaming audiences. It will be a mix of course, the library. We own a tremendous amount of IP, which means that we can produce a lot of stuff. We'll have all types of content targeting all types of audiences through streaming. I'd like to tie my next question to this one. You start producing new content. The next question is on profitability, because I think it's related to the production of new content. You aim to have 40%-plus margin on your broadcasting and streaming business, on your content business. When you look at global peers such as Netflix, Viacom, they tend to have margins in their 20s, and they have scale. They have a lot of scale. Why is that mismatch between your goals and what they produce now, and how can this be sustainable, this gap? Yeah, I think you're right. Our pro forma for TelevisaUnivision, EBITDA the target for our margin is around 40%. On top of that, we'll have huge synergies. The run rate synergies that we're looking at is between $200 million-$300 million by 2023. We'll be able to capture a lot of those synergies and to execute on them pretty fast. That will take the margin even a little higher to the mid-40s. Why can we accomplish that? Basically, first because of the synergies by merging the two and in both companies, also because we have an advantage over our pure streaming competitors. Those companies, in most cases, don't have a library that we have, don't have already acquired the IP that we have. On top of that, they don't have the factory to produce content. Televisa, as I mentioned before, is the largest producer of content in Spanish in the world and has been the largest for many, many decades, and t herefore, we are very efficient in producing content. That's why we believe that we'll be able to produce even higher value content very efficiently. We know the producers of content in Spanish throughout the region. We have worked with most of them on top of our own productions. We believe that we're going to be very efficient in capturing value and producing our own content in Mexico and also through other companies in the region. That's why we're targeting a 40%-plus margin for the merged company. Perfect. I'm starting to get questions from investors here. I'll just remind the other investors who want to ask questions, please do send. I'll start reading some of those. The first question I get here reads like this: What are the prospects for Grupo Televisa to separate from Sky using a structure similar to that used by AT&T for relinquishing control in DIRECTV? Of course, the DTH platforms worldwide have had many challenges in the recent times. However, I would like to make a distinction between Sky México and how we operate that company and DIRECTV and other platforms around the world. If you compare Sky to DIRECTV and others, Sky has had a stable base of subscribers. We run that company with a 40%-plus EBITDA margin. I think it's the highest for a DTH company in the world. We are being very efficient in managing and operating that company. It's a cash cow, in essence. It generates a lot of cash and pays us and AT&T a dividend. We have been transforming Sky into a full telecom operator. Using the advantage that Sky has in terms of having a great brand, having a national presence, national sales force, national installation force throughout the territory of Mexico, we have leveraged on that to launch a broadband service, a broadband platform, which has been successful. We are now at around 700,000 broadband subscribers, so t hat is being successful. On top of that, we have a very sticky content proposition. If you look at VeTV, which is the prepaid service that we have, it's the lowest priced entertainment service that you can buy in Mexico for a home, for a family. What we're looking at with Sky is to continue to do the same thing. For us, it generates, as I mentioned, a huge amount of EBITDA, but most importantly, a huge amount of free cash. We will continue to consolidate the company because, of course, on a consolidated basis, it helps us a lot. Perfect. I have a follow-up of myself on this particular question, which is, I understand you're doing a very strong job in making it become more of a telecom company, but we see streaming growing and you want to be a leader of streaming, so video on demand is getting more important. Mobile download speeds are getting more important. Won't a company with linear programming see its value reduced over time? It's a follow-up on this previous one. Should we see this as a cash cow that keeps seeing a decline in cash flow generated, or do you think you can sustain that through the broadband services you're offering? Just trying to understand the long term how the linear programming matches with this growth that you're seeing on video on demand. Yeah, i t's a very good question. How we see it, we have been able to sustain the subscriber base, which has been a huge accomplishment. I think as I mentioned, it has to do with the strength of our brand, the service that we provide to the subscribers, the stickiness of the content, including the most important sports content that we offer. Of course, there's a natural evolution of a DTH company or of the DTH industry, where of course, because of competition, because of streaming and because of other platforms and services, the natural evolution of these companies is that they will lose subscribers in the years to come. We haven't seen that in Mexico, but it will remain a fact. We believe that will happen. Of course, we're trying to compensate, transforming the company into a telecom operator. We believe it will be very difficult to offset the losses of subscribers going forward with broadband subscribers. However, we believe that will happen in the following years. Since we have not seen that happening or to the extent and the speed that it has happened in other countries, we believe that there's an advantage to still consolidating this company. It doesn't mean that we will not look at different structures as the one that AT&T used or others, or an outright sale of the company, going forward. As far as today is concerned, we believe that the best course of action is to still consolidate. Perfect. I will jump to another investor question here. The investor asks, What's the return on investment on continued cable build-out and new adds versus share repurchases? Yeah. Well, what we're doing in the case of cable is that we saw an opportunity in terms of growing our homes passed. We went into a deep analysis as to our competitors and the regions where we operate. Basically, we saw that in several regions, we could take advantage of installing fiber. What has changed the paradigm of all this, it's the cost of installing fiber to the home. Five years ago, seven years ago, it would be impossible to do what we're doing now because of the cost of fiber to the home. Today, we can see great results and great advantages of tapping that open market. We decided basically to grow our homes passed, and we focused on Guadalajara, which is the third-largest city in Mexico, where we did not have a presence. However, we had the neighboring city, which is Zapopan. We had basically 100% of that market on the cable side. We won a contract where the state of Jalisco is paying or asked us to structure and to build a backbone. The state of Jalisco was already paying for the backbone, in essence, and therefore we decided to use that backbone and to take fiber to the home. It's the third largest city in Mexico, so that made a lot of sense. Now we said, okay, other competitors are basically growing in other regions, and w e focused on regions where there's only one competitor or where the existing competitors have under-invested. We decided to go in and with a disruptive fiber to the home offer, where we believe that this is going to be very successful, and that we'll be able to capture a lot of those subscribers early on. Basically, strategically we decided to do it and not wait, because in the long run, our aspiration is to become a national cable system, and therefore it's the right time to do it. Of course, we went into the analysis as to whether it made sense from the capital allocation point of view to invest in fiber to the home and to invest in these areas, especially in Guadalajara, rather than buying back our stock. We decided the returns were much better in investing in fiber to the home in those places. Perfect, v ery clear. From your comment about your aspirations to be a nationwide player, I wanted to ask a question about consolidation. Especially on the cable part. From an antitrust standpoint, is there any cable player in Mexico that Televisa would not be able to buy due to its size? Does the fact that Televisa has Sky, which has a nationwide presence in pay TV, reduce the prospects of a potential large acquisition of this kind? Yeah. Well, first we're not interested in buying Telmex. No, that's a joke. No. No. Going back to your question, from the regulatory perspective, we can buy any cable company in Mexico, provided that there is a preponderant operator on the telecommunication sector, which América Móvil is. We're not seeing that changing anytime soon because of the percentage that they have, of the market share that they have, especially on cellular, on mobile. Provided that there's a preponderant operator on the telecommunication sector, that means that we can consolidate companies in that same sector. We can do this without the prior approval and just notifying the IFT. After the fact, once you consolidate, IFT can start an analysis as to whether there's a significant market power in the regions being consolidated. We have done that basically with Cablecom and with Telecable in the state of Jalisco. We haven't seen any major issues with that as far as those acquisitions have been concerned. Perfect, v ery clear. I have a third question here from an investor regarding the content. They say, Can you discuss how you integrate local content news into your streaming platform? You're talking about the content that you produce at the station level, and for example, from your largest affiliate Intervisión, such that you don't marginalize these critical sources of free cash flow from both retransmission and advertising. Yeah. That's a very good question. It has to do with broadcasting, it has to do with the local stations, and it has to do with paid television, with the paid television broadcasting signals or networks. It has to do with the windowing of the content. Of course, with doing this as a process and swiftly. Today, of course in Mexico, broadcasted television is the main business of the content segment, as well as in the U.S., where you have a combination of the national broadcasted signals and the local stations. You have to do it as a process and as a windowing strategy. The most important thing is that we're owners of our IP and owners of our content. As I mentioned before, everything has to do today with the windowing of our content, and we'll be able to know the timing of that and to know and decide on which platforms we should put each content. We won't do anything harsh. However, we will be producing a lot of content, scripted and otherwise, for our streaming services. That will be a fact, but a s to the other content or the traditional content, we'll be able to decide which platform to put in. Okay, perfect. Right here. Going back a bit to the streaming part of the business. Just wanted to ask a question about the cultural advantage or advantage of producing Spanish. How important is this factor in global streaming? In other words, how relevant is to the Spanish-speaking population of the world to have content originally produced in Spanish? Do you have any data that could help us to understand this better? For example, I was looking in Brazil, Globoplay, which is a local player that produces original content in Portuguese. They have 8% share of the streaming market versus 32% for Netflix and 26% for Amazon, 10% for Disney. What could you tell us on this? It's tremendously important to produce in Spanish, and of course, the content originally produced in Spanish is extremely popular both in the U.S. and Mexico and in other parts of the Spanish-speaking world. It's vital to produce in Spanish. Where we want to tap on the Spanish-speaking streaming business and streaming platforms, that is going to be our focus, and that is going to be our opportunity. Basically, if you look at Univision in the U.S., the content that is produced in Spanish is extremely important. It's the most popular. Univision just last year, and of course during COVID and all that, but Univision grew its audiences by 8%. That you can compare with the English language networks where you saw even during COVID, decline of low to mid teens. In Mexico, the same thing happens. I mean, the content produced in Spanish, knowing our audiences, is the most successful content in terms of audiences, growing audiences. One of the main points that I would like to make is our flagship channel, Las Estrellas in Mexico, has 100% of content produced in Spanish by us, and that channel, that network, has an audience that is bigger than all the paid television platforms put together. That means that one channel, Las Estrellas, where you have all our productions in Spanish, has a bigger audience every night than all the paid television networks put together. This means Fox, Disney, Paramount, et cetera. All those together have a lower audience than one single channel. Why? Because we know our audiences and why? Because we're producing in Spanish. As to your question, it gives us a tremendous advantage, cultural advantage, to produce in Spanish, which we'll continue to do. Going back to what I have mentioned before, we're the largest producer of content in Spanish. We have a very efficient way of producing and a factory, the largest factory of Spanish language content in Mexico. We'll continue taking advantage of that. Perfect. I'd like to turn attention now to Blim. Mexico and the U.S. are half of the addressable market, and Mexico is a relevant part. You launched its local streaming service a few years ago. The results were, at least from what we know from the outside, limited. What are the lessons learned? Why should this new global streaming attempt do better than what was done at Blim? Yeah, definitely the results have been limited, to put it nicely. We have learned a lot of lessons. The first lesson, and the most important one, is that if you want to compete on the streaming business, with a streaming platform, it has to be global, and i t has to have the IP to compete, and it has to have the budgets to be able to produce and to compete. What happened to us that Televisa had the Mexican territory and other parts of Latin America. Univision had the U.S. territory, which is, in terms of GDP, the largest. We had a split in terms of the budget for production of content. Both companies were focusing basically on the broadcasting and not on the streaming side of the businesses. We had limited capacity, and we were unable to tap the global opportunity that Spanish language brings to us. In essence, putting the two companies together, we'll have global rights, w e will have a global budget for purposes of producing content because of synergies and because of the consolidation of both companies. Of course, the consolidated company will not have to pay for a program license agreement, and that's around $400 million every year. This company will have a ton of money to produce for the streaming services. Of course, another lesson that we learned is that to have a strategic partner in terms of technology makes a ton of sense. As a result of this, we went to Google, we went to SoftBank. Basically, them together with ForgeLight and Liberty are putting a billion into this. They believed the plan. They believed on the huge opportunity that the Spanish language streaming opportunity brings to the table and the strength of Univision and Televisa. Basically now we'll have a global company. We'll have this huge support in terms of technology, and we have the best content library IP. We have learned a lot of lessons from Blim and from the incipient streaming service that Univision launched some years ago that did not gain traction because nobody was paying attention to it, and w e believe that we have everything now to be able to compete and capture the growth of that market. Perfect. I think my next question on streaming is regarding the competition consolidation. The streaming market already is very competitive, and the consolidation trends appear to be on the move with the merger of WarnerMedia and Discovery, and some rumors regarding Amazon interested in acquiring MGM. How do you see competition in this segment going forward as these larger players are enhancing their portfolio and focus these efforts? Yeah. Amazon has bought MGM. Yeah. But so- Even when I wrote the question, it was. Well, it was just announced this morning, but I think consolidation will be good for the market. As I have been mentioning, we're going to target the Spanish language streaming opportunity, $7 trillion GDP opportunity. For others like Netflix, Amazon, Disney, Spanish language is not their core. It's not their focus. They're going to give global fights, but in all languages. Our focus, our core is going to be Spanish language content. As I have been mentioning, we're the largest and most efficient producer of that content, and we have been able to sustain that for decades. We believe that we have a competitive edge in that sense. In terms of media consolidation, we see it as an opportunity. We're going to be the strongest, I believe, niche player with very solid audiences and being able to capture a lot of streaming subscribers. I believe that considering the size of the addressable market and our strength in Spanish, then I believe that TelevisaUnivision will become a strategic asset for any large player. In this consolidation, who knows what will happen in the future? It's very clear. I'd like to go now for cable. Talk a bit about the competition in the cable, so shifting a bit the topic. How are the fiber players such as Totalplay behaving, and is the lack of last mile fiber in many cities of Televisa a competitive issue, or how are you dealing with that? It is a competitive issue because of what I have mentioned. I mean, the paradigm that has changed is the cost of installing fiber to the home, which would have been impossible several years ago to do. However, through Izzi, we have been investing money throughout all these years in our network. We have a very competitive network. We have 16 million homes passed, out of which 60% are fiber deep or fiber to the home. We operate in most of our networks on DOCSIS 3.0, which gives you the ability to have high speeds. We are ready to upgrade to DOCSIS 3.1, which is a tremendous advantage. As a result of what we're delivering to our subscribers, basically Netflix has an ISP speed index, and we have been number one in the last six months. That means that we have been very competitive. This is measured by Netflix, not by us. Totalplay has the advantage of having fiber to the home. It's an empty network, so it's very easy to give very good services, very good speeds when you're an empty network. It starts to get more complicated as you grow and have more subscribers. What I can tell you is that our market share has been growing every quarter. Basically, Telmex is the one that has been losing market share every quarter. We have been gaining even with the fiber disruptors or fiber competition. We believe that we have a competitive network, and we'll continue investing in the network. Great. Alfonso, thank you very much for the answer, and we are on time, so I'd like to thank Televisa very much for the participation in the conference and wish you a very good day. Thank you very much to all of you. If you have any additional questions, please give us a call.