TV Azteca Announces 11% EBITDA Growth to Ps.1,045 Million in 2Q10

MEXICO CITY, July 27 /PRNewswire-FirstCall/ -- TV Azteca, S.A. de C.V. (BMV: TVAZTCA; Latibex: XTZA), one of the two largest producers of Spanish-language television programming in the world, announced today financial results for the second quarter of 2010.

"Our attractive programming grids generated once again a solid expansion of advertising demand, which was complemented this quarter by campaigns for our World Cup Soccer coverage," said Mario San Roman, Chief Executive Officer of TV Azteca. "Client preferences translated into strong increases in revenue, the highest level in history for a second quarter, as well as double digit EBITDA and net income increases for the period."

Second quarter results

Net sales were Ps.2,859 million, 16% above the 2,475 million of the same quarter of 2009.  Total costs and expenses were Ps.1,814 million, compared to Ps.1,532 million in the same period of the previous year.  

As a result, TV Azteca reported EBITDA of Ps.1,045 million, 11% above the Ps.944 million in the second quarter of 2009.  The EBITDA margin was 37%. The company registered net income of Ps.380 million, 24% higher than the Ps.307 million from the previous year.

Net sales

"Our content's popularity translated in a commercial audience share of 41% in the full day this quarter, and generated unparalleled options for high-impact campaigns for advertisers in Mexico," added Mr. San Roman.  "Our World Cup coverage, with attractive sports analysis, was an additional stimulus to the dynamic demand for spaces in our programming."

Second quarter revenue includes sales at Azteca America - the company's wholly-owned broadcast television network focused on the U.S. Hispanic market - of Ps.205 million, 5% higher than the Ps.195 million a year ago.

Revenue from barter sales was Ps.108 million in the period, from Ps.92 million in the previous year.

Costs and expenses

The 18% growth in costs and expenses resulted from a 20% increase in production, programming and transmission costs - to Ps.1,519 million, from Ps.1,263 million in the same period a year ago - and from a 10% increase in selling and administrative expenses —to Ps.296 million, from Ps.268 million in the same quarter of 2009.

The growth in costs mainly derives from the World Cup exhibition rights, as well as associated costs of the event's production and broadcast, and analysis segments related to the Cup at various times.

The selling and administrative expenses results are due to higher operating expenses and fee payments.

EBITDA and net income

EBITDA was Ps.1,045 million, 11% above the Ps.944 million in the same period of the prior year.

The main changes below EBITDA were a Ps.48 million increase in other expenses, as well as a Ps.23 million reduction in integrated financing cost, mainly derived from an improved exchange result and higher interest earnings in the period.

Net income for the period was Ps.380 million, 24% higher than the Ps.307 million from a year ago.

Debt

As of June 30, 2010, TV Azteca's outstanding debt - excluding Ps.1,516 million debt due in 2069 - was Ps.7,622 million, compared to Ps.7,144 million a year ago.  

The debt is peso denominated - congruent with most of the company income - and Ps.6,000 million is comprised of long-term Securities Certificates with a fixed annual interest rate of 9.29%, with interest coverage for the next three years.

The cash balance of the company was Ps.3,733 million, 36% higher than Ps.2,748 million a year ago.

Net debt was Ps.3,889 million, 12% below the Ps.4,396 million from the previous year.  Debt to last twelve months (LTM) EBITDA ratio was 1.7 times, and net debt to LTM EBITDA was 0.9 times.

Six months results

Net sales in the first six months of the year were Ps.5,081 million, 14% superior from the Ps.4,470 million of the same period of 2009. Total costs and expenses were Ps.3,274 million, from Ps.2,921 million in the same period a year ago, mainly derived from costs related to the World Cup transmission this year. As a result, TV Azteca recorded EBITDA of Ps.1,806 million, 17% higher than the Ps.1,550 million in the first half of the prior year.  The EBITDA margin for the six month period was 36%, one percentage point higher than last year. The company recorded net income of Ps.513 million, compared to Ps.94 million in the same period of 2009.

Company Profile

TV Azteca is one of the two largest producers of Spanish-language television programming in the world, operating two national television networks in Mexico, Azteca 13 and Azteca 7, through more than 300 owned and operated stations across the country.  TV Azteca affiliates include Azteca America Network, a new broadcast television network focused on the rapidly growing U.S. Hispanic market, and Azteca Web, an Internet company for North American Spanish speakers.

TV Azteca is a Grupo Salinas company (www.gruposalinas.com), a group of dynamic, fast-growing, and technologically advanced companies focused on creating shareholder value, contributing to build the middle class of the countries in which they operate, and improving society through excellence.  Created by Mexican entrepreneur Ricardo B. Salinas (www.ricardosalinas.com), Grupo Salinas operates as a management development and decision forum for the top leaders of member companies. The companies include: TV Azteca (www.irtvazteca.com), Azteca America (www.aztecaamerica.com), Grupo Elektra (www.grupoelektra.com.mx), Banco Azteca (www.bancoazteca.com.mx), Afore Azteca (www.aforeazteca.com.mx), Seguros Azteca (www.segurosazteca.com.mx) and Grupo Iusacell (www.iusacell.com).  Each of the Grupo Salinas companies operates independently, with its own management, board of directors and shareholders.  Grupo Salinas has no equity holdings.  However, member companies share a common vision, values and strategies for achieving rapid growth, superior results and world-class performance.

Except for historical information, the matters discussed in this press release are forward-looking statements and are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected.  Other risks that may affect TV Azteca and its subsidiaries are identified in documents sent to securities authorities.

SOURCE TV Azteca, S.A. de C.V.

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