Executive Summary / Key Takeaways

• Strategic Pivot to Profitability: Grupo Televisa is undergoing a significant transformation, shifting its focus from volume growth to profitability and efficiency across its core Cable and Sky segments, and its TelevisaUnivision investment. This is evidenced by robust cost-cutting initiatives and a disciplined capital allocation strategy.
• Digital Content Powerhouse: The company's stake in TelevisaUnivision, particularly the success of its streaming platform ViX, represents a powerful growth engine. ViX has achieved profitability and surpassed $10 million subscribers, leveraging Televisa's vast Spanish-language content library and efficient production capabilities.
• Financial Fortification: Grupo Televisa is actively deleveraging, having prepaid substantial debt in the first half of 2025 and significantly improving its leverage ratios. This commitment to financial discipline aims to maintain investment-grade ratings and enhance shareholder value.
• Cable Segment Resilience: Despite a competitive landscape, the Cable segment (Izzi) is demonstrating resilience through a "value customer" strategy, leading to stabilized internet subscriber growth and strong mobile net additions, supported by a relaunched MVNO service.
• DTH Challenges and Integration Benefits: While the Sky DTH segment faces secular decline, its integration with Izzi is unlocking material synergies, transforming it into a high-margin revenue stream with its cost structure largely absorbed by Izzi's infrastructure.

A Strategic Rebirth: Redefining Value in Mexican Telecommunications

Grupo Televisa, S.A.B., a long-standing telecommunications and media powerhouse founded in 1969 in Mexico City, is currently undergoing a profound strategic transformation. The company, which operates significant cable and direct-to-home (DTH) satellite pay television systems in Mexico and holds a substantial stake in TelevisaUnivision, is recalibrating its operations to prioritize profitability, efficiency, and disciplined capital allocation. This strategic pivot is critical in an industry experiencing an "existential transformation" driven by evolving consumer preferences and intense competition.

The Mexican telecommunications market is characterized by a "very rational" competitive environment, where major players maintain stable prices without significant discounting. This dynamic allows Grupo Televisa to focus on value creation rather than aggressive, costly subscriber acquisition. However, the industry is also highly competitive, with numerous providers of internet, fixed telephony, and pay-TV services, including Totalplay, Megacable (MEGACPO), and Dish Mexico. Indirect competition from global streaming platforms like Netflix , Disney+, and Amazon Prime Video is also intensifying, challenging traditional pay-TV models.

Grupo Televisa's competitive standing is anchored by its strong brand presence in Latin America, extensive proprietary content libraries, and valuable regulatory licenses for broadcasting. These advantages foster customer loyalty and provide a unique value proposition through culturally relevant content and regional market penetration. For instance, its regulatory licenses offer exclusive access to certain frequencies, enabling reliable satellite services. This contrasts with larger, more technologically advanced competitors like Comcast and AT&T , which often possess superior infrastructure and faster innovation cycles in broadband delivery. While these global players focus on broad connectivity and digital services, Grupo Televisa leverages its deep understanding of Hispanic cultures to offer tailored content and advertising, particularly through its TelevisaUnivision investment.

Technological Edge: Fueling Content and Connectivity

Grupo Televisa's technological differentiation is multifaceted, spanning its robust fiber network, innovative mobile virtual network operator (MVNO) service, and the advanced capabilities of its streaming platform, ViX. The company's cable segment, Izzi, boasts a network of almost 20 million homes passed, with approximately 18,000 new homes added in the second quarter of 2025 alone. This extensive fiber-to-the-home (FTTH) infrastructure is a critical asset, positioning Televisa as a leader in addressing Mexico's digital divide and a key player in the country's broadband evolution. The tangible benefit of this network is its ability to deliver high-speed data and integrated services, supporting the company's "value customer" strategy by offering reliable and competitive bundles.

A significant technological innovation is the relaunched MVNO service, developed by ZTE. This service has proven highly effective, driving mobile net additions of 83,000 subscribers in the second quarter of 2025, nearly double the first quarter and more than triple the full-year 2024 additions. This enhanced user experience makes Grupo Televisa's bundles more competitive and increases the share of wallet from existing customers.

At the heart of TelevisaUnivision's technological prowess is ViX, its direct-to-consumer streaming platform. ViX leverages Televisa's unparalleled content library, which is the world's largest repository of Spanish-speaking content, comprising over 300,000 hours of durable scripted entertainment. This vast library, combined with a highly efficient content production "factory" in Mexico, enables the company to produce approximately 100,000 hours of high-quality long-form video content annually across news, sports, and scripted entertainment at attractive costs. This vertical integration provides a material advantage in content cost production and allows for effective content windowing strategies.

The "so what" for investors is clear: these technological differentiators form a strong competitive moat. The extensive fiber network ensures a resilient and growing broadband business, while the MVNO enhances bundle attractiveness and customer stickiness. ViX, powered by proprietary content and efficient production, has rapidly become a profitable $1 billion revenue business, including subscriptions and advertising sales. This digital content advantage is further bolstered by the fact that digital content is not subject to U.S. tariffs, providing a stable environment for content produced in Mexico and streamed in the U.S.

Operational Excellence and Financial Rebalancing

Grupo Televisa's strategic pivot is yielding tangible operational and financial improvements. In the first half of 2025, the consolidated operating segment income margin expanded by approximately 80 basis points to 38.1%, driven by a year-on-year OpEx reduction of around 7%. This reflects a disciplined execution of cost-saving initiatives and the ongoing integration between Izzi and Sky.

The Cable segment (Izzi) is demonstrating resilience. Its strategy to focus on attracting and retaining "value customers" has stabilized the internet subscriber base in the first half of 2025, with broadband net additions turning positive at over 6,000 in the second quarter of 2025, a significant improvement from disconnections in the prior quarter and losses in late 2024. The monthly churn rate for Cable fell below its historical average of 2% in Q2 2025. While residential net revenue decreased by 3.1% year-on-year to MXN 10.5 billion in Q2 2025, it remained stable sequentially, potentially signaling a turning point. Enterprise net revenue, however, increased by 3% year-on-year to MXN 1.1 million in Q2 2025, driven by higher recurring revenue.

The Sky segment, a leading DTH satellite pay television system, is undergoing a significant transformation through its integration with Izzi. While the DTH industry faces a secular decline globally, leading to a loss of 347,000 revenue-generating units in Q2 2025 and a 16.3% year-on-year revenue decline to MXN 3.2 billion, the integration is designed to absorb Sky's cost structure into Izzi's infrastructure. This effectively transforms Sky into a high-margin revenue stream, with new subscribers charged an installation fee of MXN 1,250 to ensure payback. Management views the acquisition of AT&T's minority stake in Sky as a "great deal," with synergies already covering the purchase cost within the first 12 months.

TelevisaUnivision, in which Grupo Televisa is the largest shareholder, is a key driver of future value. Its streaming platform, ViX, has surpassed 10 million subscribers, demonstrating double-digit year-on-year growth. ViX has achieved profitability and become a $1 billion revenue business, including subscriptions and advertising sales. This success is underpinned by an aggressive efficiency plan at TelevisaUnivision, aiming to reduce operating expenses by over $400 million in 2025. In the first half of 2025, total operating expenses declined by approximately 13% year-on-year, resulting in savings of around $226 million. Despite a 4% year-on-year revenue decline to $1.2 billion in Q2 2025, TelevisaUnivision's adjusted EBITDA increased by 10%, or 14% excluding the impact of Mexican peso depreciation, reflecting margin expansion from a streamlined cost structure and continued direct-to-consumer (DTC) profitability.

Strengthening the Balance Sheet and Outlook

Grupo Televisa's commitment to financial discipline is evident in its robust free cash flow generation and deleveraging efforts. The company generated approximately MXN 3.6 billion in free cash flow in the first half of 2025. This strong cash flow enabled the prepayment of a MXN 2.65 billion bank loan due in 2026 and the payment of $219 million in senior notes on March 18, 2025. Consequently, Grupo Televisa's leverage ratio improved from 2.4x EBITDA at the end of Q1 2025 to 2.2x at the end of Q2 2025.

Similarly, TelevisaUnivision is prioritizing deleveraging, having refinanced $1.5 billion to eliminate the majority of its 2027 bond maturities. Its leverage ratio improved from 5.8x EBITDA in Q1 2025 to 5.5x at the end of Q2 2025. Grupo Televisa maintains a strong liquidity position with approximately $2.3 billion equivalent in cash, and its dollar-denominated debt maturities in 2025 and 2026 were strategically hedged into peso exposure at an average exchange rate of MXN 18.3 per dollar.

The company has also demonstrated disciplined capital expenditure (CapEx) management. The 2025 CapEx budget was revised downwards from $665 million to $600 million due to successful negotiations with suppliers. This follows a 2024 CapEx of $493 million, significantly below the initial guidance of $793 million, attributed to efficient deployment and inventory management. Management anticipates continued gradual margin expansion and sequential subscriber growth in Cable, with ViX expected to be even more profitable in 2025. The full impact of Izzi-Sky synergies is expected to materialize in 2025, contributing significantly to EBITDA and cash flow.

Risks and Competitive Dynamics

Despite the positive momentum, Grupo Televisa faces several risks. The secular decline of the DTH industry remains a challenge for Sky, though its integration with Izzi aims to mitigate financial burden. Macroeconomic conditions in Mexico could affect all businesses, requiring careful monitoring. While digital content is currently exempt from U.S. tariffs, any future changes in trade policy could introduce uncertainty. Moody's (MCO) downgraded Televisa's ratings to Ba1 in July 2025, citing concerns over persistent subscriber declines, weak cash flow generation, and rising debt levels, particularly for TelevisaUnivision. S&P Global (SPGI) Ratings also revised its outlook on Televisa to negative in June 2025, reflecting concerns that a declining subscriber base could weaken its market position and top line.

In the broader competitive landscape, while Grupo Televisa benefits from its localized content and strong brand in Latin America, it faces formidable rivals. Comcast (CMCSA) and Charter Communications (CHTR), with their extensive cable and broadband infrastructure in the U.S., often exhibit stronger growth rates and operational efficiencies in digital services. AT&T's (T) focus on 5G and fiber-optic networks presents a technologically advanced alternative. Indirect competitors like Netflix (NFLX) and other OTT providers continue to gain market share by offering on-demand content, accelerating cord-cutting trends. However, Grupo Televisa's vertically integrated content production and the success of ViX position it uniquely to compete in the Spanish-language streaming market.

Conclusion

Grupo Televisa is executing a strategic rebirth, transforming into a leaner, more efficient, and digitally-focused telecommunications and media entity. The company's unwavering commitment to operational efficiencies, disciplined capital allocation, and aggressive deleveraging is strengthening its financial foundation. The successful integration of Sky with Izzi and the remarkable growth and profitability of the ViX streaming platform underscore the efficacy of its strategic pivot. While challenges persist, particularly the secular decline of DTH and intense competition, Grupo Televisa's robust fiber infrastructure, innovative MVNO service, and unparalleled Spanish-language content library provide a formidable competitive advantage. For investors, the company's focus on value customers, expanding margins, and a fortified balance sheet, coupled with the significant growth potential of its digital content offerings, presents a compelling investment thesis as it continues to unlock value in a dynamic market.