Grupo Televisa SAB (TV) 2007 Q4 法說會逐字稿

Good morning, everyone, and welcome to Grupo Televisa's fourth quarter and full year 2007 conference call.

Before we will begin, I would like to draw your attention to page nine of the Press Release, which explains the use of forward-looking statements and applies to everything we discuss in today's call and in the earnings release.

I will now turn the call over to Mr. Alfonso De Angoitia, Executive Vice President of Grupo Televisa. Please go ahead, sir.

Thank you. Good morning. We are pleased that you have joined us for this discussion of Grupo Televisa's fourth quarter and full year 2007 results. With me today are Jose Baston, Corporate Vice President of Television and Salvi Foch, our Chief Financial Officer.

First, I will take you through the highlights of our financial results for the fourth quarter and full year and we will review the outlook for 2008. After that Pepe will discuss the operating results of our Television segment. Then we will be happy to take your questions.

Televisa delivered solid results during the fourth quarter. Consolidated sales increased 11.3% to MXN12.4b. Operating income increased 10.6% to MXN4.6b, and our margin was 37.1%. This growth was driven by the strong performance in our Television Broadcasting, Pay Television, Publishing, Sky and Cable businesses.

For the full year, consolidated sales increased 5.6% to MXN41.5b, operating income increased 1.5% to MXN14.4b, and we achieved a 34.8% margin. Net income decreased 9.3% to MXN8b in 2007 compared with MXN8.9b in 2006 due to an increase of MXN1.2b in income taxes.

In 2007 our Television Broadcasting business faced a very difficult comparison because of the large amount of political and World Cup advertising generated in 2006. In addition, we experienced an unexpected slowdown in consumer spending throughout the year. As a result, sales decreased 2.5% to MXN21.2b. Operating segment income decreased 4.3% to MXN10.5b, and we achieved a 49.6% margin.

In our Pay Television Networks business, sales rose 34% to MXN1.8b. Operating segment income increased 62% to MXN1.1b, and we achieved a record margin of 62%. This growth was driven by an increase in sales to Pay Television platforms in Mexico, to TuTV in the United States and to DirecTV in Latin America, as well as by an increase in advertising sales.

Sales in our Programming Exports business increased 3% to MXN2.2b. Operating segment income increased 14% to MXN1b. And we achieved a record margin of 45.6%. This growth resulted from an 8.7% increase in royalties from Univision, which amounted to $138m, and from an increase in exports to Europe, Asia and Africa. This was partially offset by a negative translation effect of MXN74.7m, and an increase in exports to Latin America.

Moving on to our Publishing business, sales increased 10% to MXN3.3b. Operating segment income increased 8% to MXN624m and we achieved an 18.9% margin. This growth resulted from an increase in revenues from magazines, advertising and circulation in Mexico and abroad, and from the consolidation of Editorial Atlantida, the leading magazine publishing company in Argentina, in our results during the third quarter.

Shifting to our Pay Television and Telecom platforms. Sky had another outstanding year. In 2007, Sky added 155,000 subscribers, bringing its total subscriber base to 1,585,000. This growth was driven by Sky's unique content offering and high-quality service.

In addition, Sky began operations in Central America, specifically in Costa Rica and The Dominican Republic in the third quarter, and closed the year with 33,000 subscribers in the region.

As a result, Sky sales increase 8.7% to MXN8.4b. Operating segment income grew 9.5% to MXN4b. And we achieved a record margin for the year of 48.1%.

Sky continues to expand its operations in Central America. In addition to Costa Rica and The Dominican Republic, Sky began operations in Nicaragua in January, and expects to launch operations in Panama and Guatemala in the first half of 2008.

In addition, Sky reached an agreement with Intelsat Corporation to launch a satellite that will provide backup and will double Sky's current capacity. Sky will use this extra capacity to broadcast high definition channels and to provide other value-added services.

Cablevision also delivered strong results. In 2007, Cablevision RGUs increased 19% reaching 694,000 at the end of the year. This includes 539,000 television subscribers, 145,000 broadband customers and 9,000 telephony customers. Sales increased 26% to MXN2.6b and operating segment income grew 12% to MXN947m.

This growth was driven by four factors; the increasing RGUs that I just mentioned, a 3% price increase that became effective in March, also an increase in advertising sales and, finally, the consolidation of Bestel starting December.

Moving to our Gaming business, we closed the year with 13 bingo parlors with approximately 3,900 electronic bingo machines in operation. In our Lottery business we have begun working together with Scientific Games to improve our distribution network, and sales are gradually increasing. We currently have more than 5,500 lottery terminals installed in convenience stores throughout Mexico.

Moving to the outlook for the year. Until 2007 our reported results included certain inflationary adjustments. The most important effect was related to the impact of inflation on our Television Broadcasting sales. In this case sales got effectively grossed up by inflation from the time we booked the deposits to the end of the year. Since our upfront represents about 80% of our sales, the effect of inflation is very significant.

Beginning in 2008, as required by Mexican financial reporting standards, we will report our financial results in nominal peso terms. Therefore, the results for 2008 and 2007 will not be directly comparable.

For 2008, we estimate that both Television Broadcasting sales and operating segment income will grow by approximately 4.5% in nominal terms. This is equivalent to an increase of approximately 1% in sales, and a decline of 1% in operating segment income, when comparing our results as reported.

In addition, we expect the first quarter of '08 to compare unfavorably with the first quarter of '07, because the Easter holiday this year falls in March. We expect the first quarter 2008 Television Broadcasting sales to be approximately 5% lower in nominal terms, and expect operating segment income margin to be at 35%. This unfavorable comparison will be compensated in the second quarter.

Finally, I want to mention that during 2007 we repurchased 67.2m CPOs in the aggregate nominal amount of MXN3.9b. In addition, we paid a cash dividend of MXN1.45 per CPO, equivalent to MXN4.4b.

Thanks for your attention. I will now turn the call over to Pepe.

Thank you, Alfonso, and good morning to everyone, and thank you for joining us. We are very pleased with the results for 2007. During the year we aired 78% of the top 100 programs, and 45 of the top 50.

Our average sign-on to sign-off audience share on the Television Broadcasting business for the whole year was 70.9%, and was driven primarily by the well based programming of our channels, in particular Channel 2, which focuses on families and women, and Channel 5, which is targeted to mainly children and young adults.

I'd like to share with you some of the highlights of the year. In 2007 we celebrated with [huge hits] the fiftieth anniversary of the Telenovelas format that was invented 100% in Televisa, and a format that has enjoyed tremendous success over the past 50 years, and it has -- and we always continue to reinforce it and innovate it.

For example, our 9.30 pm Novela Destilando Amor achieved an average audience share of 46.6%, and during its final episode got an incredible 61.1% audience share. In fact, Destilando Amor captured the highest rating of any Novela since the year 2000, and it also created an excellent advertising opportunities, such as integration -- [intuition] of a well-known tequila brand.

In addition, our popular Novela, La Fea Mas Bella, which aired at 8.30 pm was the highest rated program in the first quarter of 2007, and it captured a 50.4% audience share on an average basis. And the finale, which was in February, captured a 52.7% audience share.

For 2008, we are developing new concepts for our Telenovelas. For example, Las Tontas No Van Al Cielo, or Fools don't go to Heaven, is a concept that was 100% conceived by Televisa, and has 100% multi-platform potential. This Novela has already been on -- began broadcasting in Mexico and it started with an average audience share of 46%.

During 2007 we shifted the focus our Channel 5 to the highly desirable 1945 -- 1944 demographic, and we saw programming from the U.S., like Law and Order, Malcolm in the Middle, House and Prison Break. These programs together with the production of our series, SOS and El Pantera, please audience and advertisers alike. As a result, we have significantly improved both audience quality and quantity in this channel.

This transition continues to bring positive results. In 2008, we will be producing four new series completely developed internally in Televisa, and we will be broadcasting the second season of SOS and El Pantera.

We continue to successfully export our programs to foreign markets. In addition to our Novelas, during 2007 we will enforce our co-production strategy in other countries. We have co-production programs using our formats, including of course the Telenovelas formats and local [candidates], which make these shows relevant and attractive to the local audience. We co-produced our first Novela for France, and we are about to being shooting our first co-production in China with the script of La Fea Mas Bella.

In fact, also with our formats, we are growing a lot. We have shown our formats for 15 different countries, and this is the format of dancing. And, in fact, we are the new country to this format, which is 420, and in the first show it began with a 35.9% audience share.

We are also, in 2008, continuing to seek alliances with high potential countries such as India, Russia, Indonesia and Korea. And the way that we are going to start these strategies is with different kinds of strategies and planning, not also to sell the actual program, but also to begin co-production strategies as well as to work -- as to play in the advertising [side] of each of the countries.

Now, I would like to discuss some activities in the U.S. Hispanic market. Our Telenovelas continue to serve as Univision's main prime time offering, and we are responsible for some of the networks most outstanding ratings during 2007.

For example, the finale of our Novela Destilando Amor reached an audience of 12.7m people and powered the network to the nation's number one ranking among all adults, not just Hispanic, aged 18 to 34 and 18 to 49.

In addition, the two-hour finale of our popular Novela, La Fea Mas Bella, reached an estimated Jewish audience of more than 9m people, and enabled Univision to capture the nation's number one ranking, again, among all those aged 18 to 34 and 18 to 49.

Our Pay Television networks -- Network business continues to grow. We reached more than 18m subscribers throughout The Americas, Europe and Asia Pacific including 1.8m in the U.S. -- in the United States to our company TuTV.

Over the past four years, sales in our Pay Television Network business has grown on a compounded annual rate of 22%. And operating income has increased by more than 58%. Because TV penetration is still low in many of the markets we serve, we see continued strong growth in this segment.

We remain committed to integrating our cross promoting and all of our -- in all of our business segments. We will be producing for each platform in order to extract maximum value for our high-quality content by expanding and adapting and to satisfy the diverse needs of our audiences. We will continue to connect with the demographics that our advertisers want to reach, and to deliver exciting and engaging programs, products and services to audiences all around the world.

Thank you for your attention, and we will be ready to take your questions.

Thank you. (OPERATOR INSTRUCTIONS). Your first question is coming from Miguel Garcia of Deutsche Bank.

Hello, thanks for taking my question. My first question is regarding the Gaming business. I wanted to know what you guys have been working on in order to improve the lottery business. And what would be the impact this year in terms of the guidance on revenues and margin?

And second, if you think that you will get the license for scratch off games during 2008, or is more uncertain than that?

And lastly, we have heard from [Teliastaka] that they have increased the ratings in the high income segment. I wanted to know if you agree with that view, and what the impact would be in market share going forward. Thank you.

Hello, Miguel. As to your first question that had to do with the lottery business and with gaming in general, we are improving that business. We had, during 2007, a lot of problems in the implementation of the lottery, especially in what had to do with the sales chain. We are changing that. We started that process in the last quarter of '07 and we will continue to do that in this quarter and the next one.

We are -- we had several problems in respect of, as I was mentioning, in what had to do with the sales chain. We still believe that this is going to be a great business, a great cash flow generator for Grupo Televisa and the investment that Televisa is making is virtually nothing. So, in terms of return and in terms of cash generation, it's going to be a fantastic business once we solve the sales chain issues.

To scratch lotteries, we believe that we will get the permit, and we will start offering those in the second semester of this year.

As to the ratings, I totally do not agree. Actually, we are leaving, as we speak, one of the best beginnings of the year that we've had since probably the last 10 years. Our audience share has grown significantly. And actually the demographic that you were talking about that [Azteca] was referring is a demographic that has grown the most in this beginning of the year. So our ratings have been growing in all the different targets.

And, of course, the beginning of the year with the market share that we have really tells you what kind of year we can have, because those shows are just starting. So we see in the ratings side a great year.

Thank you. Going back to the Gaming business, could you give guidance in terms of revenues and also when you expect to break even in terms of the EBITDA?

Yes, we are not giving guidance in respect to Gaming.

Not even the breakeven point?

Not even.

Thanks a lot.

Okay.

Thank you. Your next question is coming from Vera Rossi of Morgan Stanley.

Thank you. Can you talk about the difference in prices for this year on the upfront season versus the spot market? And also give us an idea of what do you think about the broadcasting business in terms of the revenue growth, or decline in '08 versus '07? And also where do you think EBITDA margins could be? Thank you.

The growth that we had in the rates on the upfront was an 8% growth on nominal terms. And we are going to keep up with our guidance of the year based on the Broadcasting results that we had for 2007. So we will keep with our guidance of the growth in the Broadcasting.

Can you -- what is the guidance that you have for -- that you are keeping? It's a negative growth? Can you just remind us about that, what is the number?

The number is an equivalent increase of approximately 1% in sales and a decline of 1% in operating segment income, when comparing our results as we reported. So it will be, for 2008, for both Television Broadcasting sales and operating segment it would -- a growth of approximately 4.5% in nominal terms.

Okay. So --

Vera, you have to keep in mind there that if you -- when we compare '08 with '07 it's going to be -- it's not going to be comparable because of what I mentioned before in terms of changes to the Mexican financial standards.

Especially in the case of Television Broadcasting in '07, we had a two-fold effect that had to do with an inflation adjustment. In that business, on one side, we grossed up by inflation our upfront deposits from the date on which we received them. And on the other side, sales were grossed up by inflation from the date we actually placed the spots.

So you have that two-fold effect which will make the numbers of '08 not comparable precisely with the numbers of '07. So, in general, Television Broadcasting will, as a result of these changes, will have a 1 point effect on margin -- lower -- I mean lower than '07.

Okay. So just for me to see if I understood correctly, in terms of revenues, so if I compare '08 with '07 that we won't have inflationary accounting any more, revenues are going to be -- of the Television Broadcasting business are going to be up. That's the expectation now? Around 1% in '08 versus '07.

That is correct.

And in terms of EBITDA margins, what is the expectation?

We expect an EBITDA margin of 48.6%; 1% less than '07.

Okay. And in terms of just the first point that was made about 8% growth in nominal terms, what is that? Is it a price readjustment or --?

No, it's a price increase.

A price increase. But there was a big decline in volume in your upfront season?

Well, not a big decline, but there was a decline in volume, yes.

And do you expect during the year the advertisers to come back and we may get a better than 1% in revenue growth?

Well, we -- like I said, we are going to keep in our guidance. But we believe that our customers decided to be very conservative because of the uncertain economic environment. We really expect that our customers will increase their advertisement investments as the year goes by. And we are developing content that has different kinds of advertising opportunities to make that happen, and to give you the guidance that we are expecting.

That's -- Vera, just to clarify, it's very important to say that for 2008 we expect both Television Broadcasting sales and operating segment income to grow 4.5% in nominal terms. So if you compare apples to apples, it would be 4.5% increase in sales and EBITDA.

In EBITDA.

Of course, as I mentioned before, this change to the Mexican financial reporting standards in what has to do with inflation affects our results because of what I mentioned. We were having this inflation adjustment, both in the deposits that we received upfront and also in the sales of Television Broadcasting. So that's why -- if you compare apples to apples, a growth of sales and EBITDA would be 4.5% in nominal terms.

In nominal terms. Okay. Thank you.

Thank you, Vera.

Thank you. Your next question is coming from Jessica Reif Cohen of Merrill Lynch.

This is related to Univision. The trial date has been pushed back to April 29. I was wondering if you could say what the chances -- what you think the chances are of further delays? If you could describe what a best case outcome would be for you from either litigation or current negotiations?

And if Univision loses, will they have to -- do you think they will have to buy it from you at market rates, or is there enough third party programming for them to buy elsewhere?

Hello, Jessica.

Hello.

As always, you have easy questions. The lawsuit is proceeding, as you mentioned, in the Federal Court in Los Angeles. The trial is now set to start on April 29. What I can say is that we are prosecuting our claims and we are confident in our legal position.

What I can say is that, of course, what we are claiming is that, as a result of material breaches by Univision, this agreement as a program license agreement should be terminated immediately. And if we were to win the lawsuit, we would be free to do with our content in the U.S. territory whatever we wanted.

So if we win that lawsuit because of the material breaches, the agreement, the program license agreement, would be terminated and we would -- could start a new relationship with Univision or with other companies in respect to our content.

And market rates, clearly, would be much higher than they're paying now, right?

I don't know. Yes, I don't know what market rates will be because, of course, we have this agreement, long-term agreement, with them, so I don't think that there's something comparable. So it's very difficult to say what market rates would be.

And can I just have one follow-up on Univision? So, given the weakness in the U.S. market and the increasing outlook for consumer spending and eventually advertising, does the short-term outlook have any impact on your long-term goals in regard to Univision?

Yes, well what I can say is that because of the situation that you are describing we're not providing guidance for '08 because of the economic environment. As to '07, we received the royalty in the amount of $138m, which was pretty disappointing for us, especially considering that in '06 Univision transmitted the World Cup and they don't pay us a royalty based on the World Cup.

So if you consider the deductions that were made in respect to the World Cup in '06, and you see what they paid us in terms of royalty in '07, the $138m was pretty disappointing. In essence, we saw no growth.

Right. But has your long-term outlook regarding Univision changed [because of it]?

No, I think Univision is a great company. I think Univision is greatly positioned. They have a great brand. They have, of course, our content, which is great and it's the most popular in the United States. So with that combination, a great brand, a great distribution system and our content, I think it's a company that will be successful.

Okay. Thank you.

Thank you.

Thank you. Your next question is coming from Andrew Campbell of Credit Suisse.

Yes. Hello. Good morning. My question is on the Cable strategy. And I think there were some developments in terms of getting your [mas] offer, getting your content out there with the price grid. And so do you have any update on when you'd be able to close on the -- or convert anyway the Cablemas loans?

Yes, hello, Andy. We'll be able to convert that instrument, the convertible debenture that Cablemas issued, in April.

Okay. And are you continuing to look at new alternatives within the Cable sector? New opportunities?

Yes, we're great believers in the consolidation of the Cable industry in Mexico. We have, as you know, bought 50% of a cable company in Monterrey and we have a great partner there, [Francisco Gonzales].

We bought 49% through this convertible debenture of Cablemas with the Alvarez Guerrero family, also great partners, and we're working towards consolidating those companies and also of course if any opportunity comes up, we'll take advantage of it.

Okay. Great. And my last question is just do you have CapEx guidance for 2008?

Yes. Hold on a second.

Yes. The budget for '08 is $360m, where $120m will go to Sky, $85m for Cable and Telecom, $50m to Gaming and $105m to Television Broadcasting and Other business.

Perfect. Great. Thank you very much.

Thank you, Andy.

Thank you. Your next question is coming from Gordon Lee of UBS.

Hello. Good morning. Just a couple of questions. The first on the Cable unit, if you look at your subscriber growth, for several quarters you've been seeing very significant q-on-q growth. And that seems to have paused in the fourth quarter. And I was wondering whether there was anything specific that might have led to that pause in the sequential growth rate.

And another question just on the comments on the co-production and international markets, will that have any impact on broadcasting margins or CapEx that we should be aware of over a longer timeframe? Thank you.

Hello, Gordon. Yes, as to Cable, I think we created some confusion as to the results of the fourth quarter. The number of subscribers we reported in the third quarter was 538,073 subscribers. And those were unique subscribers of Cablevision.

However, in the fourth quarter, we decided to start reporting RGUs, or revenue generating units, so that is by service. So in the fourth quarter, we reported 539,662 video subscribers. So the amount of video subscribers in the third quarter was 526,446 and, therefore, during the fourth quarter we added about 13,000 video subscribers.

So I think this is -- you saw that number and it appeared to be an addition of about 1,500 subscribers, but now we're comparing unique subscribers to RGUs, to revenue generating units, so if you compare apples to apples, this is video subscribers to video subscribers, we added a little bit more than 13,000.

As the co-productions in the international countries, the way that we're starting our approach is based on doing like a co-production, putting Televisa, the know-how and the formats that we have and, of course, all the support in the production process with our local partners. So we are not expecting to invest something -- CapEx that can hurt our numbers in our Broadcasting business.

Perfect. Thank you. That's very clear.

Thank you.

Thank you. Your next question is coming from Michelle Copeland of Merrill Lynch.

Hello. Good morning, everyone. Mike Kopelman here. I have a couple of questions on Television. Alfonso, it would be helpful maybe if you could tell us how much Television Broadcasting got grossed up, both at the revenue and EBITDA line in 2007? I think that would maybe allow us to get a cleaner growth rate as we do our estimates in 2008. One.

And two, I was wondering, you talked about the first quarter, obviously, it's a difficult comp because of the Easter shift. What are you seeing in January and February? What are the trends there? If you exclude March and just looked at those two, are you seeing something that's a little bit more in line with your full year broad -- full-year guidance?

And finally, I'm just wondering if you could talk a little bit about Columbia. I know you guys have applied to be part of the auction there. And I'm wondering what you think about the opportunity there, who you might partner with and what the investment and timing might be? Thank you.

Hello, Mike. As to your first question, we -- I don't have the gross up amounts with me. But we'll share them with you and the rest of the investors shortly, so you can look at the -- at exactly the numbers --

Okay.

-- and it becomes clearer what we're talking about.

Then as to your third question that had to do with Columbia we're -- as you know, we're always analyzing investment opportunities in our core business. In the case of Columbia, the government is planning to auction a concession to operate a national network and this is an interesting opportunity for us, basically, for two reasons.

First, our content is already very popular in Columbia. And second, Columbia's advertising market is the third largest in the region and is growing quickly.

So, as I mentioned, we always analyze these type of opportunities and this one is interesting, so we'll continue to analyze it and see whether we want to participate in the auction or not.

Okay. And just on the -- on what you're seeing so far in the first quarter, I'm just trying to get a sense of, you take out the Easter shift, exactly what kind of environment you're seeing. And I don't know if the --January, February, or if it's easier to talk about and what you saw in December. I don't -- but I'm just trying to get a sense of what's happening currently in the ad market there.

Yes. Well first, as I mentioned before, in the first quarter, we'll have an unfavorable comparison with the first quarter of '07 because the Easter holiday this year falls in March. And as a result of that and the market in general, we expect first quarter sales of the Television Broadcasting segment to be approximately 5% lower in nominal terms and the operating segment income margin, we believe, will be 35%.

This unfavorable comparison, of course as I mentioned also before, will be compensated in the second quarter. But as of this date, I don't think we're seeing a lot of softness in the market. January was a pretty good month.

January was a pretty good month. All right. So January was up, then?

Yes.

Okay. Thank you very much.

Thank you. Your next question is coming from Anthony DiClemente of Lehman Brothers.

Thank you. Two general questions. One is just when you talked about January being a good month, how does pricing versus units look in terms of the scatter market? How does the scatter pricing look?

Another question on the weakness or softness that you've seen, is there any kind of differentiation in your months between national and local broadcast or ad buyers in that market? Any other texture on softness that you can provide us in terms of the types of advertisers that are pulling back?

And then my second question is just on your balance sheet, which continues to be very strong. I'm just wondering if you have any thoughts, or any comments you can share with us on your strategy of returning capital to shareholders in terms of the dividend and the buybacks? And I know you've done both and have both but, incrementally, is there anything that you can do, or is there a reason that you continue to maintain such a low leverage ratio? Thank you.

Well, for your first question, we -- like Alfonso said, we don't see any softness. And the beginning of the year has a lot to do also with the great results of our audience. We have the audience that the clients are looking for and we don't see any changes in the consumption of advertising local and international. So we see a very stable market in comparison with any other year and we see very, very positive the year based on the audience that the clients are looking for and the audience that we are delivering to them. So we feel very comfortable.

Hello, Anthony. As you know, in '07, we paid a cash dividend of MXN1.45 per CPO, which was around MXN4.4b. In addition, we repurchased CPOs, we repurchased 67.2m CPOs, in the amount of almost MXN4b. So going forward, as to use of cash policy, our priority, as we have always mentioned, is to grow the business organically and through acquisitions.

If opportunities come up, we would like to be in a position to take advantage of them and that's why we believe, especially in this environment, that it is a very good idea to maintain a very strong cash balance. But if opportunities don't materialize, and as we have done it in this previous year, we will propose to the Board the return of additional capital to our shareholders. Also as we have done it in -- throughout this year, via the repurchase of shares and/or the payment of dividends.

Thank you for that. Just going back to the first question, I can't help but follow-up and say that I just feel like we're getting mixed signals on -- I know that in terms of the market share that Televisa's very well positioned, but would you say that in Mexico that the ad environment is in a recession?

And would you say -- because I do think that some of the guidance that you've provided is below Street models and what we were expecting in terms of TV Broadcast revenue growth on a nominal basis in '08. So does it feel like a deep soft bump that we're hitting here? Or is it something that is temporary, a little mild? Or are you just not even admitting that there is any recessionary weakness in terms of the macro environment? Thanks.

All right. Yes. Well, I don't know about the macro environment. I can't -- I'm not qualified to make a comment as to that. But we haven't felt -- haven't, have not, felt a softness in January. As Pepe mentioned, we started the year with very strong ratings. The Novelas that were launched by Pepe have been extremely successful, so that helps us.

So we -- in the month of January, we did not feel softness. Now, basically comparing apples to apples and, as I mentioned before, we're saying that Television Broadcasting sales will grow 4.5% in nominal terms.

However, considering the changes in the Mexican financial standards, of course, we will have this inflation adjustment effect and that's why we're forecasting -- we're guiding what we mentioned before. So -- but if you compare apples to apples there will be 4.5% growth, or that's what we expect.

Okay. Thank you so much for taking the question.

Thank you.

Thank you. Your next question is coming from Richard Jenkins of Trimark.

Hello? Okay.

Hello, Richard.

Okay. So the question -- two questions, just quickly. I didn't notice what your end of period share count was.

And then the more important question, on Bestel, my understanding is you just consolidated it for the month of December. Is that correct?

As to your second question, yes, that is correct. We consolidated Bestel on the Cable segment. But those were just the results of December.

Okay. Can you somehow give us a context of -- for '07 what the annualized number would have been, or something to give us a base effect going into '08?

Yes. Hold on. As to your first question, we closed the year with -- I'll give you the number of outstanding shares.

Yes.

They were -- this is shares, okay?

Yes.

329m, 960, 194, 941.

Okay.

And then outstanding CPOs, if you convert CPOs, it's 2, 820, 172, 606.

Thank you.

Okay.

And then -- just on Bestel, I'm trying to get a sense of either '08, some guidance, or '07, what the base effect would have been.

Yes. Hold on a second, please.

Yes. This -- the Bestel, sold in '07, about MXN1.9b.

Okay. Have you given any form of guidance or thought on the combined business etcetera going forward? Whether it would just be an in line growth, or there's some step-change function going on with positioning it now inside of Televisa?

Yes. No, I think we will -- there will be a lot of synergies and what has to do with Televisa and also with the three cable companies that participated in the purchase of that company. So I think that you will see better results.

We haven't provided the guidance but, of course, we think that there will be an increase in sales and EBITDA in -- for '08.

Okay. Okay. Thank you.

Thank you.

Thank you. Your next question is coming from Fernando Ramos of GBM.

Good morning. Thanks for taking my questions. My first question is if the lower upfront sales were a result of a slowdown in advertising from a particular sector of the economy, or if it was more of a general slowdown?

And my second question is how many of your quarterly net ads in Sky came from Central American operations? Thank you.

The upfront -- the reason of the upfront being lower than last year is because that we always try to grow our rates and, as you see, we grew 8% the rates of the upfront and that's -- that doesn't have to do with any industry or any kind of market, it's just a matter of negotiation and we look forward to keep trying to grow our rates on a yearly basis.

Fernando, as to your second question, in the fourth quarter Sky added 43,000 subscribers, out of which about half came from Central America, this is Costa Rica and also from the Dominican Republic, and the other half came from Mexico.

Great. Thank you very much.

Thank you. Your next question is coming from Rodrigo Ortega of BBVA.

Hello?

Rodrigo, your line is live.

We'll move on. Your next question is from Christopher [Buke] of Barclays Capital.

Yes, good morning. I just wanted to follow-up on the situation with the Cablemas. It was my understanding that that was still awaiting regulatory approval. From your comment earlier, it sounds like that may have been given approval.

That transaction was approved. By that transaction, I mean the conversion of the instruments -- of the debt instruments convertible into equity securities of Cablemas.

So that transaction, the conversion of those securities into stock of Cablemas, was approved subject to certain conditions imposed by the anti-trust commission. We're complying with all of those conditions, which means that in the month of April, we'll be able to convert bad debt into equity of Cablemas, into 49% of Cablemas.

Okay. Great. So you're no longer waiting for any last approval? I understand that you have certain requirements and you've been given a go ahead. I noticed you've gone ahead with those so, in other words, there's no last judgment from [Cofeco]?

Yes, well of course it was subject to conditions; we have to comply with those conditions and then convert. We are complying, so -- and we don't foresee any problems in continuing the compliance of those conditions and being able to convert in the month of April.

Okay. Great. And just continuing on the Cablemas, is there any news in terms of the funding of Cablemas and Bestel? There were some rumors that Cablevision -- I'm sorry, Televisa may supply some of that funding and help them with a small portion that they have, their 15%. Is there any news on that?

Well, no. The acquisition of Bestel was fully funded by the three parties that were involved; this is Cablevision, Cablemas and TVI in Monterrey. It was funded partially by financing. So that was closed in the month of December, both the funding and the acquisition of Bestel.

Okay. Thanks for your help.

Thank you. At this time, I would like to turn the floor back to Mr. de Angoitia for any closing comments.

Well, thank you very much, and call us with any questions that you may have. Thank you.

Thank you. This does conclude today's Televisa conference call. Please disconnect your lines at this time and have a wonderful day.