AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 22, 2005.
REGISTRATION NO.: 333-125779
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM F-4/A
(AMENDMENT NO. 1)
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
GRUPO TELEVISA, S.A.
(Exact name of Registrant as specified in its charter)
N/A
(Translation of Registrant's name into English)
UNITED MEXICAN STATES 4833 NONE
(State or other jurisdiction of (Primary Standard Industrial (IRS Employer
incorporation or organization) Classification Code Number) Identification No.)
---------------------
AV. VASCO DE QUIROGA NO. 2000
COLONIA SANTA FE
01210 MEXICO, D.F. MEXICO
(52) (55) 5261-2000
(Address and telephone number of registrant's principal executive offices)
---------------------
DONALD J. PUGLISI
PUGLISI AND ASSOCIATES
850 LIBRARY AVENUE, SUITE 804
NEWARK, DELAWARE 19711
(302) 738-6680
(Name, address and telephone number of agent for service)
---------------------
COPIES TO:
KENNETH ROSH, ESQ. JUAN SEBASTIAN MIJARES ORTEGA
FRIED, FRANK, HARRIS, SHRIVER & JACOBSON LLP GRUPO TELEVISA, S.A.
ONE NEW YORK PLAZA AV. VASCO QUIROGA NO. 2000
NEW YORK, NEW YORK 10004-1980 COLONIA SANTA FE
(212) 859-8000 01210 MEXICO, D.F. MEXICO
(52) (55) 5261-2000
---------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED EXCHANGE OFFER: As soon as
practicable after this Registration Statement becomes effective.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
CALCULATION OF REGISTRATION FEE
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT OFFERING AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED TO BE REGISTERED PRICE PER UNIT(1) OFFERING PRICE(1) FEE(1)
-----------------------------------------------------------------------------------------------------------------------------
6.625% Senior Exchange Notes due 2025 $600,000,000 100% $600,000,000 $70,620.00
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
(1) The notes being registered are being offered (i) in exchange for 6.625%
Senior Notes due 2025 previously sold in transactions exempt from
registration under the Securities Act of 1933 and (ii) upon certain resales
of the notes by broker-dealers. The registration fee, which was previously
wired to the Securities and Exchange Commission, was computed based on the
face value of the 6.625% Senior Notes due 2025 solely for the purpose of
calculating the registration fee pursuant to Rule 457 under the Securities
Act of 1933.
---------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY THE EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
The information in this prospectus is not complete and may be changed. We may
not sell these securities or consummate the exchange offer until the
registration statement filed with the Securities and Exchange Commission is
effective. This prospectus is not an offer to sell or exchange these securities
and it is not soliciting an offer to acquire or exchange these securities in any
jurisdiction where the offer, sale or exchange is not permitted.
SUBJECT TO COMPLETION, DATED JULY 22, 2005
PROSPECTUS
(GRUPO TELEVISA LOGO)
GRUPO TELEVISA, S.A.
OFFER TO EXCHANGE ALL OF OUR OUTSTANDING UNREGISTERED
U.S.$600,000,000 6.625% NOTES DUE 2025
FOR
U.S.$600,000,000 6.625% NOTES DUE 2025
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
MATERIAL TERMS OF THE EXCHANGE OFFER
- We are offering to exchange the notes that we sold previously in a
private offering for new registered notes.
- The terms of the new notes are identical to the terms of the old notes,
except for the transfer restrictions and registration rights relating to
the outstanding old notes.
- The exchange offer will expire at 5:00 p.m., New York City time, on
-- , 2005, unless we extend it.
- We will exchange all old notes that are validly tendered and not validly
withdrawn.
- You may withdraw tenders of old notes at any time before 5:00 p.m., New
York City time, on the date of the expiration of the exchange offer.
- Application has been made to list the new notes on the Luxembourg Stock
Exchange.
- We will not receive any proceeds from the exchange offer.
- We will pay the expenses of the exchange offer.
- No dealer-manager is being used in connection with the exchange offer.
- The exchange of old notes for new notes will not be a taxable exchange
for U.S. federal income tax purposes.
YOU SHOULD CAREFULLY REVIEW "RISK FACTORS" BEGINNING ON PAGE 17 OF THIS
PROSPECTUS.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is -- , 2005.
TABLE OF CONTENTS
Incorporation by Reference.................................. ii
Limitation of Liability..................................... iii
Prospectus Summary.......................................... 1
Recent Developments......................................... 6
Summary Financial Data...................................... 16
Risk Factors................................................ 20
The Exchange Offer.......................................... 32
Use of Proceeds............................................. 41
Capitalization.............................................. 42
Description of the New Notes................................ 48
Taxation.................................................... 65
Plan of Distribution........................................ 72
General Information......................................... 73
Cautionary Statement Regarding Forward-Looking Statements... 74
Available Information....................................... 74
Legal Matters............................................... 75
Experts..................................................... 75
We have applied to list the new notes on the Luxembourg Stock Exchange.
The new notes have been registered in the Seccion Especial, or the Special
Section, of the Registro Nacional de Valores e Intermediarios, or the National
Registry for Securities and Intermediaries, or the Registry, maintained by the
Comision Nacional Bancaria y de Valores, or the National Banking and Securities
Commission, or the CNBV. Registration of the new notes in the Special Section of
the Registry does not imply any certification as to the investment quality of
the new notes, our solvency or the accuracy or completeness of the information
contained or incorporated by reference in this prospectus. THE NEW NOTES MAY NOT
BE PUBLICLY OFFERED OR SOLD IN MEXICO AND THIS PROSPECTUS MAY NOT BE PUBLICLY
DISTRIBUTED IN MEXICO.
WE ARE NOT MAKING AN OFFER TO EXCHANGE NOTES IN ANY JURISDICTION WHERE THE
OFFER IS NOT PERMITTED, AND WILL NOT ACCEPT SURRENDERS FOR EXCHANGE FROM HOLDERS
IN ANY SUCH JURISDICTION.
INCORPORATION BY REFERENCE
The Securities and Exchange Commission, or the SEC, allows us to
"incorporate by reference" information contained in documents we file with them,
which means that we can disclose important information to you by referring you
to those documents. The information incorporated by reference is considered to
be part of this prospectus, and later information that we file with the SEC, to
the extent that we identify such information as being incorporated by reference
into this prospectus, will automatically update and supersede this information.
Information set forth in this prospectus supersedes any previously filed
information that is incorporated by reference into this prospectus. We
incorporate by reference into this prospectus the following information and
documents:
- our annual report on Form 20-F for the fiscal year ended December 31,
2004, dated June 13, 2005, as amended by our report on Form 20-F/A dated
July 7, 2005 (SEC File No. 001-12610) and as it may be further amended
from time to time, which we refer to in this prospectus as the "2004 Form
20-F";
- information set forth under the captions "Consolidated Results,"
"Pro-Forma Results by Business Segment," "Non-operating Results," "Grupo
Televisa, S.A. Condensed Consolidated Balance Sheets as of June 30, 2005
and December 31, 2004" and "Grupo Televisa, S.A. Condensed Consolidated
Statements of Income for the Three and Six Months ended June 30, 2005 and
2004" in our Form 6-K, which we submitted to the SEC on July 21, 2005 and
which discusses our results for the quarter ended June 30, 2005;
- all future filings on Form 20-F we make under the Securities Exchange Act
of 1934, as amended, after the date of this prospectus and prior to the
effectiveness of this prospectus and any future submissions on Form 6-K
during this period that are identified as being incorporated into this
prospectus; and
- any future filings on Form 20-F we make under the Securities Exchange Act
of 1934, as amended, after the effectiveness of this prospectus and prior
to the termination of the exchange offer, and any future submissions on
Form 6-K during this period that are identified as being incorporated
into this prospectus.
YOU MAY REQUEST A COPY OF THESE FILINGS, AT NO COST, AT THE OFFICE OF OUR
LUXEMBOURG PAYING AGENT AND TRANSFER AGENT AT THE ADDRESS LISTED ON THE BACK
COVER OF THIS PROSPECTUS OR BY WRITING OR CALLING US AT THE FOLLOWING ADDRESS
AND PHONE NUMBER:
Investor Relations
Grupo Televisa, S.A.
Avenida Vasco de Quiroga, No. 2000
Colonia Santa Fe, 01210
Mexico, D.F., Mexico
(52) (55) 5261-2000
You should rely only on the information contained in this prospectus or to
which we have referred you. We have not authorized any person to provide you
with different information. We are offering to exchange the old notes for new
notes only in jurisdictions where offers and sales are permitted. The
information in this document may only be accurate on the date of this document.
ii
LIMITATION OF LIABILITY
Substantially all of our directors, executive officers and controlling
persons reside outside of the United States, all or a significant portion of the
assets of our directors, executive officers and controlling persons, and
substantially all of our assets, are located outside of the United States and
some of the experts named in this prospectus also reside outside of the United
States. As a result, it may not be possible for you to effect service of process
within the United States upon these persons or to enforce against them or us in
U.S. courts judgments predicated upon the civil liability provisions of the
federal securities laws of the United States. We have been advised by our
Mexican counsel, Mijares, Angoitia, Cortes y Fuentes, S.C., that there is doubt
as to the enforceability, in original actions in Mexican courts, of liabilities
predicated solely on U.S. federal securities laws and as to the enforceability
in Mexican courts of judgments of U.S. courts obtained in actions predicated
upon the civil liability provisions of U.S. federal securities laws. See "Risk
Factors -- Risk Factors Related to the Notes and the Exchange Offer -- It May Be
Difficult to Enforce Civil Liabilities Against Us or Our Directors, Executive
Officers and Controlling Persons."
iii
PROSPECTUS SUMMARY
You should read the following summary together with the information set
forth under the heading "Risk Factors" and in our audited year-end financial
statements and the accompanying notes, which are included in the 2004 Form 20-F
and which are incorporated herein by reference. All references to "Televisa,"
"we," "us" and words of similar effect refer to Grupo Televisa, S.A., and,
unless the context requires otherwise, its restricted and unrestricted
consolidated subsidiaries. Unless otherwise indicated, all Mexican Peso, or
Peso, information is stated in Pesos in purchasing power as of December 31,
2004.
OUR COMPANY
We are the largest media company in the Spanish-speaking world and a major
participant in the international entertainment industry. We produce the most
Spanish-language television programs, and we believe we own the largest library
of Spanish-language television programming, in the world. We broadcast those
programs, as well as programs produced by others, through our own networks,
through our cable system and through our direct-to-home, or DTH, satellite
services in which we own interests in Mexico and Latin America. We also license
our programming to other television broadcasters and pay-television systems
throughout the world. We believe we are also the leading publisher in the world,
in terms of circulation, of Spanish-language magazines. We are a major
international distributor of Spanish-language magazines. We engage in other
businesses, including radio production and broadcasting, professional sports and
show business promotions, feature film production and distribution, and an
Internet portal. We also own an unconsolidated 10.7% equity interest in
Univision Communications, Inc., or Univision, on a fully diluted basis, the
leading Spanish-language television broadcaster in the U.S.
The programs shown on our networks are among the most watched in Mexico. In
2003 and 2004, approximately 70% and 69%, respectively, of all Mexicans watching
television during prime time hours, 72% and 70%, respectively, of all Mexicans
watching television during weekday prime time hours and 72% and 71%,
respectively, watching from sign-on to sign-off watched our networks or
stations. Our television operations represent our primary source of revenues,
and generated approximately 64.4% and 56.9% of our total revenues in 2003 and
2004, respectively. On April 1, 2004, we began consolidating our DTH joint
venture in Mexico, Innova, referred to herein by its legal name, Innova, S. de
R.L. de C.V., and, for segment reporting purposes, alternatively as Sky Mexico.
OUR STRATEGY
We intend to leverage our position as the largest media company in the
Spanish-speaking world to continue expanding our business while maintaining
profitability and financial discipline. We intend to do so by maintaining our
leading position in the Mexican television market, by continuing to produce high
quality programming and by improving our sales and marketing efforts while
improving our operating margins. We also intend to continue building our
pay-television platforms, expanding our publishing business, increasing our
international programming sales and strengthening our position in the growing
U.S. Hispanic market. We will also continue to analyze expansion through
acquisitions.
MAINTAINING OUR LEADING POSITION IN THE MEXICAN TELEVISION MARKET
Continuing to produce high quality programming. We aim to continue
producing the type of high quality television programming that has propelled
many of our programs to the top of the national ratings and audience share in
Mexico. In each of 2003 and 2004, our networks aired 88% of the 200 most watched
television programs in Mexico, according to the Mexican subsidiary of the
Brazilian Institute of Statistics and Public Opinion, or Instituto Brasileno de
Opinion Publica y Estadistica, or IBOPE, the largest research company in Brazil.
We have launched a number of initiatives in creative development, program
scheduling and on-air promotion. These initiatives include improved production
of our highly rated telenovelas, the overhaul of our news division, new comedy
and game show formats and the development of reality shows. We have improved our
scheduling to be better attuned to viewer habits by demographic segment while
improving
1
viewer retention through more dynamic on-air graphics and pacing. We have
enhanced tune-in promotion both in terms of creative content and strategic
placement. In addition, we plan to continue expanding and leveraging our
exclusive Spanish-language video and international film library, exclusive
rights to soccer games and other events, as well as cultural, musical and show
business productions.
Improving our sales and marketing efforts. The rate of growth in
advertising expenditures and rates for the Mexican television market have
decelerated since 2000 due to the slowdown of the Mexican economy. However, in
2003 and 2004, we outperformed Mexican economic growth by increasing our
television broadcasting revenues in real terms by 5.4% and 5.7%, respectively,
as compared to an increase of only 1.4%, and 4.4%, respectively, in gross
domestic product, or GDP, in Mexico during the same periods. See "Risk Factors
-- Risk Factors Related to Mexico -- Mexico Has Experienced Adverse Economic
Conditions." The increase in our television broadcasting revenues was primarily
due to the marketing and advertising strategies we have implemented over the
course of the last several years.
Over the past few years we have improved our television broadcasting
advertising sales strategy by: (i) introducing a rate structure for television
advertising that more closely ties individual program pricing to audience
ratings, group demographics and advertiser demand; (ii) implementing
differentiated pricing by quarter; (iii) reorganizing our sales force into teams
focusing on each of our divisions; and (iv) emphasizing a compensation policy
for salespeople that is performance-based, with variable commissions tied to
year-end results for a larger portion of total compensation. Our new rate
structure for television advertising, implemented in January 2005, is conducted
on a cost per thousand basis, or CPM, which is a structure that adjusts
advertising pricing per thousand viewers of the specific program during which
the advertisement appears. We believe that, by giving our customers a choice
between this new rate structure and our traditional rate structure of
differentiated pricing by quarter, we have gained the flexibility to target
underserved industries and increase our focus on local sales causing an increase
in our advertising revenue. Advertising revenues from local sales as a
percentage of our television broadcasting revenues have increased steadily for
the past four years. During 2004, local sales accounted for 13.7% of our
television broadcasting revenues compared to 12.5% and 13.2% in 2002 and 2003,
respectively.
We plan to continue expanding our advertising customer base by targeting
medium-sized and local companies who were previously underserved. For example,
as part of our plan to attract medium-sized and local advertisers in Mexico
City, we reduced the number of households reached by the Channel 4 Network
throughout Mexico and revised its format to create 4TV, which targets viewers in
the Mexico City metropolitan area. See "Item 4 -- Information on the
Company -- Business Overview -- Television -- Television Broadcasting -- Channel
4 Network" included in the 2004 Form 20-F. We currently sell local advertising
time on 4TV to medium-sized and local advertisers at rates comparable to those
charged for advertising time on local, non-television media, such as radio,
newspapers and billboards. However, by purchasing local advertising time on 4TV,
medium-sized and local advertisers are able to reach a wider audience than they
would reach through local, non-television media. We are also developing new
advertising plans in the Mexican market, such as product tie-ins on our shows,
and encouraging customers to advertise their products jointly through
co-marketing and co-branding arrangements.
Improving our operating margins. Our operating margin (operating income
before depreciation of tangible assets and amortization of intangible assets
over net sales) increased in 2004, ending the year at 36.3% compared to 32.1%
for 2003. We intend to continue improving our margins by increasing revenues and
controlling costs.
In response to the slowdown in Mexican GDP growth in 2001, we introduced a
number of cost-cutting initiatives. These initiatives included the creation of
independent business units, the introduction of stricter cost controls, the
continued elimination of under-performing assets, the introduction of a
performance-based compensation policy for executives and further reductions in
our number of employees. On a historical basis, at December 31, 2004, our total
employee headcount (excluding Innova) was approximately 12,300 compared to
approximately 12,300 at December 31, 2003 and approximately 12,600 at December
31, 2002. On a pro forma basis, giving effect to the consolidation of Innova,
our total employee headcount would have been
2
approximately 14,100 at December 31, 2004, approximately 14,200 at December 31,
2003 and approximately 14,400 at December 31, 2002. We intend to continue
pursuing cost-cutting initiatives throughout 2005.
CONTINUE BUILDING OUR PAY-TELEVISION PLATFORMS
DTH. We believe that Ku-band DTH satellite services offer the greatest
opportunity for rapid expansion of pay-television services into cable households
seeking to upgrade and in areas not currently serviced by operators of cable or
multi-channel, multi-point distribution services. Innova is the dominant
participant in the Mexican DTH market with approximately 1,002,500 subscribers,
of which 60,700 were commercial subscribers, as of December 31, 2004.
The key components of our DTH strategy include:
- offering high quality and exclusive programming, including rights in
Mexico to our four over-the-air broadcast channels and other channels
produced by our partners, as well as special events, such as reality
shows, and games or sports programming we produce or with respect to
which we have exclusive rights;
- capitalizing on our relationship with The News Corporation Limited, or
News Corp., and Liberty Media International Holdings, LLC, or Liberty
Media, and local operators in terms of technology, distribution networks,
infrastructure and cross-promotional opportunities;
- capitalizing on the low penetration of pay-television services in Mexico
and elsewhere; and
- providing superior digital Ku-band DTH satellite services and emphasizing
customer service quality.
Cable. With over 364,000 and 355,000 basic subscribers as of December 31,
2003 and 2004, respectively, Cablevision, the Mexico City cable system in which
we own a 51% interest, is one of the largest cable television operators in
Mexico in terms of number of subscribers and homes passed. Over 60,300 and
123,000 of Cablevision's basic subscribers as of December 31, 2003 and 2004,
respectively, also subscribed to one of Cablevision's digital service packages.
Cablevision's strategy aims to increase its subscriber base, average monthly
revenues per subscriber and penetration rate by:
- continuing to offer high quality programming;
- upgrading its existing cable network into a broadband bidirectional
network;
- switching its current analog subscribers to digital service in order to
stimulate new subscriptions and substantially reduce piracy;
- increasing the penetration of its high-speed and bidirectional Internet
access and other multimedia services as well as providing a platform to
offer Internet protocol, or IP, telephony services; and
- continuing the roll-out of digital set-top boxes and beginning the
roll-out of advanced digital set-top boxes subject to their availability
and their ability to provide advanced interactive features.
Cablevision has introduced a variety of new multimedia communications
services over the past few years, such as interactive television and other
enhanced program services, including high-speed Internet access through cable
modem. As of December 31, 2004, Cablevision had more than 26,500 cable modem
customers compared to 5,800 and 8,600 at December 31, 2002 and 2003,
respectively. Cablevision is continuing with its plan to substantially reduce
subscriber piracy by switching its current analog subscriber base to digital
service. In addition, Cablevision intends to introduce video on demand, or VOD,
services and, subject to the receipt of the requisite governmental approvals and
the availability of certain technology, IP telephony services.
EXPANDING OUR PUBLISHING BUSINESS
With a total annual circulation of approximately 127 million magazines
during 2004, we believe our subsidiary, Editorial Televisa S.A. de C.V., or
Editorial Televisa, produces and distributes the most magazines in the
Spanish-speaking world. Among the 60 titles published, 26 are fully owned and
produced in-house and the remaining 34 titles are licensed from world-renowned
publishing houses, including the Spanish-language
3
editions of some of the most prestigious brands in the world. Editorial Televisa
distributes its titles to more than 20 countries, including Mexico, the U.S. and
countries throughout Latin America. During 2003 and 2004, Editorial Televisa
implemented an aggressive commercial strategy in order to increase its market
share and advertising revenues market share. As a result of this strategy,
according to IBOPE, our market share grew from 35% in 2003 to 45% in 2004.
Additionally, a solid circulation strategy in the U.S. generated beneficial
results. According to the Audit Bureau of Circulation, three of the top ten
fastest growing magazines (in terms of circulation) in the U.S. are published
and distributed by Editorial Televisa.
Editorial Televisa's strategy regarding the U.S.-Hispanic market is to
strengthen its portfolio and increase its market share. In November 2004,
Editorial Televisa formed a strategic alliance with Hispanic Publishing Group,
or HPG, under which Televisa acquired 51% of HPG, while HPG retained a 49%
equity stake. Through this strategic alliance, Editorial Televisa added its
first two English-language magazines for Hispanics in the U.S. to its
publications: Hispanic Magazine, which has a monthly circulation of
approximately 280,000 copies, and Hispanic Trends, which has a circulation per
edition of approximately 75,000 copies. Hispanic Trends published six editions
in 2004 and will publish seven editions in 2005. Hispanic Trends and Hispanic
Magazine complement Televisa's U.S. strategy by permitting access to new general
market advertisers interested in the U.S. Hispanic market. See "Item
4 -- Information on the Company -- Business Overview -- Publishing" included in
the 2004 Form 20-F.
Also, during 2004, Editorial Televisa continued with the initiative it
launched in 2002 aimed at increasing its circulation and advertising revenues of
our publishing business including: (i) improving magazine portfolio mix, (ii)
enhancing marketing efforts and reorganizing our sales force, and (iii)
implementing new sales strategies. As a result of successfully implementing
these strategies, revenues and operating margins increased in 2004 as compared
to 2003.
INCREASING OUR INTERNATIONAL PROGRAMMING SALES AND STRENGTHENING OUR POSITION IN
THE GROWING U.S. HISPANIC MARKET
We license our programs to television broadcasters and pay-television
providers in the U.S., Latin America, Asia, Europe and Africa. Excluding the
U.S., in 2004, we licensed approximately 54,500 hours of programming in over 100
countries throughout the world. We intend to continue exploring ways of
expanding our international programming sales.
The U.S. Hispanic population, estimated to be 35.3 million, or
approximately 12.5% of the U.S. population according to the 2000 U.S. Census, is
currently one of the fastest growing segments in the U.S. population, growing at
approximately seven times the rate of the non-Hispanic population. The U.S.
Census Bureau projects that the Hispanic population will double to approximately
25% of the U.S. population by the middle of this century. The Hispanic
population accounted for estimated total consumer expenditures of U.S.$622
billion in 2003, or 8.3% of the total U.S. consumer expenditures, an increase of
190% since 1990. Hispanics are expected to account for U.S.$1 trillion of U.S.
consumer spending, or 9.7% of the U.S. total consumer expenditures, by 2010,
outpacing the expected growth in total U.S. consumer expenditures.
We intend to leverage our unique and exclusive content, media assets and
long-term associations with other media conglomerates to benefit from the
growing demand for entertainment among the U.S. Hispanic population.
We supply television programming for the U.S. Hispanic market through
Univision. During 2002, 2003 and 2004, most of the 7:00 p.m. to 10:00 p.m.
weekday prime time programming broadcast by Univision and substantially all of
the programming broadcast by Galavision, Inc., or Galavision (a wholly-owned
subsidiary of Univision), was produced by Televisa. In exchange for this
programming, during 2002, 2003 and 2004, Univision paid Televisa U.S.$77.7
million, U.S.$96.1 million and U.S.$105.0 million, respectively, in royalties.
In 2003, Univision became obligated to remit to us an additional 12% in
royalties from the net time sales of the TeleFutura Network, subject to certain
adjustments, including minimum annual royalties of U.S.$5.0 million in respect
of Telefutura for 2003, increasing by U.S.$2.5 million for each year to
U.S.$12.5 million. For a description of agreements we entered into with
Univision in December 2001,
4
including amendments to our program license agreement which increased our
percentage royalties, see "Item 4 -- Information on the Company -- Business
Overview -- Univision" included in the 2004 Form 20-F.
In April 2003, we entered into a joint venture with Univision to operate
and distribute a suite of Spanish-language television channels for digital cable
and satellite delivery in the U.S. The joint venture, called "TuTV," and
operated through TuTV LLC, began operations in the second quarter of 2003 and
currently distributes five cable channels, including two movie channels and
three channels featuring music videos, celebrity lifestyle and interviews and
entertainment news programming.
We own additional media and entertainment businesses in the U.S. that
complement our television programming exports businesses. We also publish and
sell magazines that target Spanish-speaking readers in the U.S. We believe we
can increase our marketing, sales and distribution efforts in this region
directly and through partnerships.
In live entertainment, we have a joint venture with Clear Channel
Entertainment, called "Vivelo," which produces and promotes tours of
Spanish-speaking artists as well as other live entertainment events targeting
Spanish-speaking audiences in the U.S. In 2004, Vivelo promoted more than 70
concerts and events in the U.S. Vivelo intends to produce and promote a growing
number of entertainment and sporting events in response to the increasing demand
for live entertainment among the U.S. Hispanic population.
EXPANDING THROUGH ACQUISITIONS
In October 2002, we acquired a 40% stake in OCESA Entretenimiento, or OCEN,
our live entertainment venture in Mexico, a subsidiary of Corporacion
Interamericana de Entretenimiento, S.A. de C.V., or CIE, which owns all the
assets related to CIE's live entertainment business unit in Mexico. Through this
acquisition, we became a shareholder of the leading live entertainment business
in Mexico with several valuable assets including: 11 venues with a total seating
capacity of more than 230,000; TicketMaster, the leading ticket company in
Mexico; several promotional ventures headed by OCEN; food, beverage and
merchandising units; and Audiencias Cautivas, the largest producer in Mexico of
corporate events. We will continue to analyze expanding our business through
acquisitions or investments that add strategic and economic value to the
Company.
HOW TO REACH US
Grupo Televisa, S.A. is a sociedad anonima, a limited liability stock
corporation organized under the laws of the United Mexican States. Our principal
executive offices are located at Avenida Vasco de Quiroga, No. 2000, Colonia
Santa Fe, 01210 Mexico, D.F., Mexico. Our telephone number at that address is
(52-55) 5261 2000.
5
RECENT DEVELOPMENTS
The following are significant developments since December 31, 2004:
REFINANCING
On March 23, 2005, we consummated an offer to purchase, for cash, any and
all of our outstanding 8.00% Senior Notes due 2011 and any and all of our
Ps.3,850 million (equivalent to approximately U.S.$342.7 million) aggregate
principal amount 8.15% Unidades de Inversion, or UDI, denominated Notes due
2007. At the expiration of the tender offer periods, we had received tenders
from the holders of approximately U.S.$222.0 million in aggregate principal
amount of the outstanding 8.00% Senior Notes due 2011, representing
approximately 74% of the outstanding principal amount of the Senior Notes, and
approximately Ps.2,935 million (equivalent to approximately U.S.$262.0 million)
in aggregate principal amount of the outstanding 8.15% UDI-denominated Notes due
2007, representing approximately 76% of the outstanding principal amount of the
UDI-denominated Notes. We used the net proceeds from our offering of U.S.$400
million aggregate principal amount of 6.625% Senior Notes due 2025 in March
2005, together with cash on hand, to fund the purchase of outstanding debt
securities tendered pursuant to these tender offers. As a result of these tender
offers and the consummation of our offering of U.S.$400 million aggregate
principal amount of 6.625% Senior Notes due 2025 in March 2005, we expect to
reduce nominal interest expense by approximately U.S.$8.0 million and U.S.$12.0
million per year in 2005 and 2006, respectively. Additionally, with these
transactions, we extended the average term of maturity of our debt from 8.2 to
11.9 years.
DIVIDEND
On April 29, 2005, at a General Shareholders' Meeting, our shareholders
approved the payment of an extraordinary dividend of Ps.1.00 per CPO, which was
in addition to our ordinary dividend of Ps.0.35 per CPO for a total dividend of
Ps.1.35 per CPO. This extraordinary dividend was paid on May 31, 2005. See
"Dividends."
NOTE OFFERING
On May 26, 2005, we consummated our offering of U.S.$200 million aggregate
principal amount of 6.625% Senior Notes due 2025. The notes issued in March 2005
and May 2005 are a single series of notes. We are offering to exchange these
notes for new registered notes on the terms described in this prospectus.
FIRST QUARTER RESULTS
On April 26, 2005, we announced our results of operations for the three
months ended March 31, 2005. For a description of these results, see Exhibit I.
Since the financial information in Exhibit I is presented in constant Mexican
Pesos in purchasing power as of March 31, 2005, the financial information in
Exhibit I is not directly comparable to the financial information included
elsewhere in this prospectus, which, unless otherwise indicated, is presented in
constant Mexican Pesos in purchasing power as of December 31, 2004. The change
in the Mexican National Consumer Price Index, or the NCPI, for the three-month
period ended March 31, 2005 was 0.8%.
SECOND QUARTER RESULTS
On July 14, 2005, we announced our results of operations for the three
months ended June 30, 2005. For additional details on our results of operations
for this period, see the portions of our Form 6-K, which we submitted to the SEC
on July 21, 2005, which are identified in "Incorporation by Reference." Since
the financial information in this section is presented in constant Mexican Pesos
in purchasing power as of June 30, 2005, the financial information in this
section is not directly comparable to the financial information included
elsewhere in this prospectus, which, unless otherwise indicated, is presented in
constant Mexican Pesos in purchasing power as of December 31, 2004. The NCPI for
the three- and six-month periods ended June 30, 2005 was 0.0% and 0.8%,
respectively.
6
The following table presents our unaudited selected consolidated financial
information under Mexican GAAP for the three- and six-month periods ended June
30, 2005 and 2004:
THREE MONTHS ENDED JUNE
30, SIX MONTHS ENDED JUNE 30,
------------------------- -------------------------
2005 2004 2005 2004
----------- ----------- ----------- -----------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
(MILLIONS OF MEXICAN PESOS)
INCOME STATEMENT DATA:
Net sales.................................... Ps.7,856.4 Ps.7,779.6 Ps.14,226.5 Ps.13,240.2
Operating income before depreciation and
amortization............................... 3,247.2 2,877.9 5,434.1 4,444.7
Depreciation and amortization................ 548.5 560.4 1,090.6 915.9
Operating income............................. 2,698.7 2,317.5 4,343.5 3,528.8
Net income................................... 1,277.1 481.6 1,871.2 974.3
Net sales increased 1.0% to Ps.7,856.4 million for the three months ended
June 30, 2005 compared with Ps.7,779.6 million for the three months ended June
30, 2004. This increase was attributable to revenue growth in our Television
Broadcasting, Sky Mexico, Publishing, Pay Television Networks, Cable Television
and Radio segments. These increases were partially offset by lower sales in our
Publishing Distribution, Other Businesses and Programming Exports segments. The
following chart sets forth the net sales of each of our segments for the three
months ended June 30, 2005 and 2004:
THREE THREE
MONTHS MONTHS
ENDED ENDED INCREASE/
NET SALES JUNE 30, 2005 JUNE 30, 2004 (DECREASE)%
--------- ------------- ------------- -----------
(UNAUDITED) (UNAUDITED)
Television Broadcasting................................. 4,475.7 4,163.4 7.5
Pay Television Networks................................. 252.7 202.0 25.1
Programming Exports..................................... 492.9 545.8 (9.7)
Publishing.............................................. 633.7 553.7 14.4
Publishing Distribution(1).............................. 98.8 493.0 (80.0)
Sky Mexico.............................................. 1,442.5 1,225.1 17.7
Cable Television........................................ 330.7 286.4 15.5
Radio................................................... 86.9 70.7 22.9
Other Businesses........................................ 296.2 366.3 (19.1)
SEGMENT NET SALES....................................... 8,110.1 906.4 2.6
Intersegment Operations(2).............................. (253.7) (198.8) (27.6)
Disposed Operations(3).................................. -- 72.0 --
CONSOLIDATED NET SALES.................................. 7,856.4 7,779.6 1.0
---------------
(1) In October 2004, we changed the accounting treatment of our Publishing
Distribution segment's sales and cost of goods sold. As a result of this
change, we currently recognize the difference between sales and cost of
sales in the Publishing Distribution segment as net sales. This accounting
change did not have any impact on operating result.
(2) For segment reporting purposes, intersegment operations are included in each
of the segment operations.
(3) Reflects the results of operations of our nationwide paging and sports
businesses.
Operating income before depreciation and amortization ("OIBDA") increased
12.8% to Ps.3,247.2 million for the three months ended June 30, 2005 compared
with Ps.2,877.9 million for the three months ended June 30, 2004. This increase
reflects higher sales, which were partially offset by an increase in cost of
7
sales and operating expenses. The following chart sets forth the operating
income of each of our segments for the three months ended June 30, 2005 and
2004:
THREE THREE
MONTHS MONTHS
OPERATING INCOME (LOSS) BEFORE ENDED ENDED INCREASE/
DEPRECIATION AND AMORTIZATION JUNE 30, 2005 JUNE 30, 2004 (DECREASE)%
------------------------------ ------------- ------------- -----------
(UNAUDITED) (UNAUDITED)
(MILLIONS OF MEXICAN PESOS)
Television Broadcasting................................. 2,208.5 1,933.0 14.3
Pay Television Networks................................. 102.1 79.4 28.6
Programming Exports..................................... 194.6 250.3 (22.3)
Publishing.............................................. 136.0 133.9 1.6
Publishing Distribution................................. 3.6 (2.0) 280.0
Sky Mexico.............................................. 587.3 443.5 32.4
Cable Television........................................ 104.2 109.3 (4.7)
Radio................................................... 14.9 9.1 63.7
Other Businesses........................................ (56.0) (27.5) (103.6)
Corporate Expenses...................................... (48.0) (46.3) (3.7)
SEGMENT OPERATING INCOME BEFORE DEPRECIATION AND
AMORTIZATION.......................................... 3,247.2 2,882.7 12.6
Disposed Operations(1).................................. -- (4.8) --
CONSOLIDATED OPERATING INCOME BEFORE DEPRECIATION AND
AMORTIZATION.......................................... 3,247.2 2,877.9 12.8
---------------
(1) Reflects the results of operations of our nationwide paging and sports
businesses.
Depreciation and amortization for the three months ended June 30, 2005 was
Ps.548.5 million compared with Ps.560.4 million for the three months ended June
30, 2004.
Operating income increased 16.4% to Ps.2,698.7 million for the three months
ended June 30, 2005 compared with Ps.2,317.5 million for the three months ended
June 30, 2004. The following chart sets forth the operating income of each of
our segments for the three months ended June 30, 2005 and 2004:
THREE THREE
MONTHS MONTHS
ENDED ENDED INCREASE/
OPERATING INCOME (LOSS) JUNE 30, 2005 JUNE 30, 2004 (DECREASE)%
----------------------- ------------- ------------- -----------
(UNAUDITED) (UNAUDITED)
(MILLIONS OF MEXICAN PESOS)
Television Broadcasting................................. 1,961.9 1,667.4 17.7
Pay Television Networks................................. 96.0 74.7 28.5
Programming Exports..................................... 193.5 248.5 (22.1)
Publishing.............................................. 131.7 128.3 2.7
Publishing Distribution................................. (1.3) (7.8) 83.3
Sky Mexico.............................................. 385.0 247.0 55.9
Cable Television........................................ 33.0 56.4 (41.5)
Radio................................................... 10.2 4.4 131.8
Other Businesses........................................ (63.3) (38.8) (63.1)
Corporate Expenses...................................... (48.0) (46.3) (3.7)
SEGMENT OPERATING INCOME................................ 2,698.7 2,333.8 15.6
Disposed Operations(1).................................. -- (16.3) --
CONSOLIDATED OPERATING INCOME........................... 2,698.7 2,317.5 16.4
8
---------------
(1) Reflects the results of operations of our nationwide paging and sports
businesses.
Net income increased Ps.795.5 million, or 165.2% to Ps.1,277.1 million for
the three months ended June 30, 2005 compared with Ps.481.6 million for the
three months ended June 30, 2004. This increase was attributable to a Ps.369.3
million increase in OIBDA, a Ps.11.9 million decrease in depreciation and
amortization, a Ps.11.4 million decrease in other expense, a Ps.32.4 million
decrease in income taxes, a Ps.29.0 million increase in equity income of
affiliates and a Ps.1,034.9 million decrease in loss effect of accounting
change. These increases were partially offset by a Ps.517.8 million increase in
integral cost of financing, a Ps.1.5 million increase in restructuring and
non-recurring charges and a Ps.174.1 million increase in minority interest.
According to IBOPE, during the three month period ended June 30, 2005, our
weekday prime time audience share was 70.1%, our prime time audience share was
67.3% and our sign-on to sign-off audience share was 69.3%.
During 2005, Televisa prepaid indebtedness outstanding under various debt
instruments using the net proceeds from the issuance in March 2005 of U.S.$400.0
million of Senior Notes due 2025. Under Mexican GAAP, in a debt restructuring,
the premium paid to holders of existing indebtedness may be capitalized and
amortized over the term of the newly-issued debt securities. Under U.S. GAAP, if
the premium paid in a debt restructuring is not paid to the holders of the new
indebtedness, such premium should be expensed when paid. We capitalized, in
accordance with Mexican GAAP, premiums paid in the amount of Ps.570.9 million to
the holders of the indebtedness repaid using the net proceeds from the note
issuance described above; this amount would have been expensed under U.S. GAAP.
MUSIC JOINT VENTURE
On July 19, 2005, Televisa and EMI Music, a division of EMI Group plc,
announced that they plan to form a new 50/50 joint venture record company in
Mexico and that Televisa would participate in EMI Music's US Latin operations,
subject to regulatory approvals. These arrangements will be subject to buy-sell
arrangements pursuant to which, in certain circumstances, (i) in the case of the
joint venture record company, either party will have the right to acquire the
other party's interest in the Mexican joint venture record company in accordance
with a specified formula and (ii) in the case of Televisa's investment in EMI
Music's US Latin operations, Televisa may require EMI Music to purchase, or EMI
Music may require Televisa to sell, Televisa's interests in EMI Music's US Latin
operations. No assurances can be given that this venture will ultimately be
formed or, if formed, whether it will be successful.
PROPOSED REFINANCING OF INNOVA'S HSBC LOAN
We recently entered into a loan agreement with Innova pursuant to which we
intend to lend Ps.1,012.0 million to Innova, the proceeds of which will be used
to repay all of the principal and other amounts outstanding under Innova's
credit agreement with HSBC Mexico, S.A. The loan agreement includes terms and
conditions substantially similar to Innova's current credit agreement with HSBC
Mexico, S.A. and will not be guaranteed by Innova's other shareholders. Interest
on the loan from Televisa will be at a fixed rate of 10.55% per annum, and will
be payable on a monthly basis. The outstanding principal is to be repaid in
eight equal quarterly installments during 2010 and 2011.
UNIVISION LITIGATION
On June 16, 2005, we amended our complaint against Univision to include
allegations to the effect that Univision has altered Televisa programs in ways
not permitted by the soccer agreement and the program license agreement, and has
failed, in breach of the program license agreement, to make certain unused
advertising time available to us. For further information about this matter, see
"Item 4 -- Information on the Company -- Business Overview -- Legal Proceedings"
included in the 2004 Form 20-F.
9
SUMMARY OF TERMS OF THE EXCHANGE OFFER
Set forth below is a summary description of the terms of the exchange
offer. We refer you to "The Exchange Offer" for a more complete description of
the terms of the exchange offer.
New Notes..................... Up to U.S.$600,000,000 aggregate principal
amount of 6.625% Senior Notes due 2025. The
terms of the new notes and the old notes are
identical in all respects, except that, because
the offer of the new notes will have been
registered under the Securities Act of 1933, or
the Securities Act, the new notes will not be
subject to transfer restrictions, registration
rights or the related provisions for increased
interest if we default under the related
registration rights agreement.
The Exchange Offer............ We are offering to exchange up to
U.S.$600,000,000 aggregate principal amount of
new notes for a like aggregate principal amount
of old notes. Old notes may be tendered in
minimum principal amounts of $100,000 and in
integral multiples of U.S.$1,000 in excess
thereof.
In connection with the private placement of the
old notes on March 18, 2005 and May 26, 2005,
we entered into two registration rights
agreements, which grant holders of the old
notes certain exchange and registration rights.
This exchange offer is intended to satisfy our
obligations under these registration rights
agreements.
If the exchange offer is not completed within
the time period specified in either of the
registration rights agreements, we will be
required to pay additional interest on the old
notes covered by the registration rights
agreements for which the specified time period
was exceeded.
Resale of New Notes........... Based on existing interpretations by the staff
of the SEC set forth in interpretive letters
issued to parties unrelated to us, we believe
that the new notes may be offered for resale,
resold or otherwise transferred by you without
compliance with the registration and prospectus
delivery requirements of the Securities Act,
provided that:
- you are acquiring the new notes in the
exchange offer in the ordinary course of your
business;
- you are not participating, do not intend to
participate, and have no arrangements or
understandings with any person to participate
in the exchange offer for the purpose of
distributing the new notes; and
- you are not our "affiliate," within the
meaning of Rule 405 under the Securities Act.
If any of the statements above are not true and
you transfer any new notes without delivering a
prospectus that meets the requirements of the
Securities Act or without an exemption from
registration of your new notes from those
requirements, you may incur liability under the
Securities Act. We will not assume or indemnify
you against that liability.
Each broker-dealer that receives new notes for
its own account in exchange for old notes that
were acquired by such broker-dealer as a result
of market-making or other trading activities
may be a
10
statutory underwriter and must acknowledge that
it will comply with the prospectus delivery
requirements of the Securities Act in
connection with any resale or transfer of the
new notes. A broker-dealer may use this
prospectus, as amended or supplemented, for a
period of 90 days following the consummation of
the exchange offer for an offer to resell,
resale or other transfer of the new notes. See
"Plan of Distribution."
The exchange offer is not being made to, nor
will we accept surrenders of old notes for
exchange from, holders of old notes in any
jurisdiction in which the exchange offer or the
acceptance thereof would not be in compliance
with the securities or blue sky laws of the
jurisdiction.
Consequences of Failure to
Exchange Old Notes for New
Notes......................... If you do not exchange your old notes for new
notes, you will not be able to offer, sell or
otherwise transfer your old notes except:
- in compliance with the registration
requirements of the Securities Act and any
other applicable securities laws;
- pursuant to an exemption from the securities
laws; or
- in a transaction not subject to the
securities laws.
Old notes that remain outstanding after
completion of the exchange offer will continue
to bear a legend reflecting these restrictions
on transfer. In addition, upon completion of
the exchange offer, you will not be entitled to
any rights to have the resale of old notes
registered under the Securities Act, and we
currently do not intend to register under the
Securities Act the resale of any old notes that
remain outstanding after the completion of the
exchange offer.
Expiration Date............... The exchange offer will expire at 5:00 p.m.,
New York City time, on -- , 2005, unless
we extend it. We do not currently intend to
extend the exchange offer.
Interest on the New Notes..... Interest on the new notes will accrue at the
rate of 6.625% from the date of the last
periodic payment of interest on the old notes
or, if no interest has been paid, from March
18, 2005. No additional interest will be paid
on old notes tendered and accepted for
exchange.
Conditions to the Exchange
Offer......................... The exchange offer is subject to customary
conditions, including that:
- the exchange offer does not violate
applicable law or any applicable
interpretation of the SEC staff;
- the old notes are validly tendered in
accordance with the exchange offer;
- no action or proceeding would impair our
ability to proceed with the exchange offer;
and
- any governmental approval that we believe, in
our sole discretion, is necessary for the
consummation of the exchange offer, as
outlined in this prospectus, has been
obtained.
11
The exchange offer is not conditioned upon any
minimum principal amount of old notes being
tendered for exchange. See "The Exchange
Offer -- Conditions."
Procedures for Tendering Old
Notes......................... If you wish to accept the exchange offer, you
must follow the procedures for book-entry
transfer described in this prospectus, whereby
you will agree to be bound by the letter of
transmittal and we may enforce the letter of
transmittal against you. Questions regarding
the tender of old notes or the exchange offer
generally should be directed to the exchange
agent at one of its addresses specified in "The
Exchange Offer -- Exchange Agent." See "The
Exchange Offer -- Procedures for Tendering" and
"The Exchange Offer -- Guaranteed Delivery
Procedures."
Guaranteed Delivery
Procedures.................... If you wish to tender your old notes and the
procedure for book entry transfer cannot be
completed on a timely basis, you may tender
your old notes according to the guaranteed
delivery procedures described under the heading
"The Exchange Offer -- Guaranteed Delivery
Procedures."
Acceptance of Old Notes and
Delivery of New Notes......... We will accept for exchange any and all old
notes that are properly tendered in the
exchange offer before 5:00 p.m., New York City
time, on the expiration date, as long as all of
the terms and conditions of the exchange offer
are met. We will deliver the new notes promptly
following the expiration date.
Withdrawal Rights............. You may withdraw the tender of your old notes
at any time before 5:00 p.m., New York City
time, on the expiration date of the exchange
offer. To withdraw, you must send a written
notice of withdrawal to the exchange agent at
one of its addresses specified in "The Exchange
Offer -- Exchange Agent" before 5:00 p.m., New
York City time, on the expiration date. See
"The Exchange Offer -- Withdrawal of Tenders."
Taxation...................... We believe that the exchange of old notes for
new notes should not be a taxable transaction
for U.S. federal income tax purposes. For a
discussion of certain other U.S. and Mexican
federal tax considerations relating to the
exchange of the old notes for the new notes and
the purchase, ownership and disposition of new
notes, see "Taxation."
Exchange Agent................ The Bank of New York is the exchange agent. The
address, telephone number and facsimile number
of the exchange agent are set forth in "The
Exchange Offer -- Exchange Agent" and in the
back cover of this prospectus.
Use of Proceeds............... We will not receive any proceeds from the
issuance of the new notes. We are making the
exchange offer solely to satisfy our
obligations under the registration rights
agreements. See "Use of Proceeds" for a
description of our use of the net proceeds
received in connection with the issuances of
the old notes.
12
SUMMARY OF TERMS OF THE NEW NOTES
The terms of the new notes and the old notes are identical in all respects,
except that, because the offer of the new notes will have been registered under
the Securities Act, the new notes will not be subject to transfer restrictions,
registration rights or the related provisions for increased interest if we
default under either of the registration rights agreements. Unless otherwise
specified, references in this section to the "notes" mean the U.S.$600,000,000
aggregate principal amount of old notes issued on March 18, 2005 and May 26,
2005 and up to an equal principal amount of new notes we are offering hereby.
The new notes will be issued under the same indenture under which the old notes
were issued and, as a holder of new notes, you will be entitled to the same
rights under the indenture that you had as a holder of old notes. The old notes
and the new notes will be treated as a single series of debt securities under
the indenture.
Issuer........................ Grupo Televisa, S.A.
Notes Offered................. Up to U.S.$600 million aggregate principal
amount of 6.625% Senior Notes due 2025 which
have been registered under the Securities Act
Maturity...................... March 18, 2025
Interest Payment Dates........ Interest on the notes is payable semi-annually
on March 18 and September 18 of each year,
beginning September 18, 2005
Ranking....................... The notes are our unsecured general obligations
and rank equally with all of our existing and
future unsecured and unsubordinated
indebtedness. The notes effectively rank junior
to all of our secured indebtedness with respect
to the value of our assets securing that
indebtedness and to all of the existing and
future liabilities, including trade payables,
of our subsidiaries.
As of March 31, 2005:
(i) Televisa had approximately Ps.19,672.3
million (equivalent to approximately
U.S.$1,762.9 million using the interbank
free market exchange rate, or the Interbank
Rate, as reported by Banco Nacional de
Mexico, S.A., or Banamex, as of March 31,
2005, which was Ps.11.1590 per U.S. Dollar)
of aggregate liabilities (not including the
old notes and excluding liabilities to
subsidiaries), U.S.$1,004.5 million of
which was Dollar-denominated. These
liabilities include approximately
Ps.15,875.1 million (equivalent to
approximately U.S.$1,422.6 million) of
indebtedness, U.S.$985.1 million of which
was Dollar-denominated, all of which would
have effectively ranked equal to the old
notes; and
(ii) Televisa's subsidiaries had approximately
Ps.22,070.1 million (equivalent to
approximately U.S.$1,977.8 million at the
Interbank Rate reported by Banamex as of
March 31, 2005) of liabilities (excluding
liabilities to us and excluding guarantees
by subsidiaries of indebtedness of
Televisa), U.S.$570.9 million of which was
Dollar-denominated. These liabilities
include approximately Ps.4,411.2 million
(equivalent to approximately U.S.$395.3
million at the Interbank Rate reported by
Banamex as of March 31, 2005) of
indebtedness, U.S.$304.5 million of which
was dollar-denominated, all of which
(equivalent to approximately
13
Ps.3,347.7 million) would have effectively
ranked senior to the notes.
Peso-denominated information in this paragraph
is stated in constant Mexican Pesos in
purchasing power as of March 31, 2005. The
change in the Mexican National Consumer Price
Index, or the NCPI, for the three month period
ended March 31, 2005 was 0.8%.
Certain Covenants............. The indenture governing the notes contains
certain covenants relating to Televisa and its
restricted subsidiaries, including covenants
with respect to:
- limitations on liens;
- limitations on sales and leasebacks; and
- limitations on certain mergers,
consolidations and similar transactions.
These covenants are subject to a number of
important qualifications and exceptions. See
"Description of the New Notes -- Certain
Covenants."
Change of Control Offer....... If we experience specific changes of control,
we must offer to repurchase the notes at 101%
of their principal amount, plus accrued and
unpaid interest. See "Description of the New
Notes -- Certain Covenants -- Repurchase of
Notes upon a Change of Control."
Additional Amounts............ All payments by us in respect of the notes,
whether of principal or interest, will be made
without withholding or deduction for certain
Mexican taxes, unless required by law, in which
case, subject to specified exceptions and
limitations, we will pay such additional
amounts so that the net amount received by the
holders of the notes after such withholding or
deduction will not be less than the amount that
would have been received in the absence of that
withholding or deduction. See "Description of
the New Notes -- Certain Covenants --
Additional Amounts."
Redemption for Changes in
Mexican Withholding Taxes..... In the event that, as a result of certain
changes in law affecting Mexican withholding
taxes, we become obligated to pay additional
amounts in excess of those attributable to a
Mexican withholding tax rate of 10%, the notes
will be redeemable, as a whole but not in part,
at our option at any time at 100% of their
principal amount plus accrued and unpaid
interest, if any. See "Description of the New
Notes -- Certain Covenants -- Additional
Amounts."
Optional Redemption........... We may redeem any of the notes at any time in
whole or in part by paying the greater of the
principal amount of the notes and a "make-
whole" amount, plus in each case accrued
interest, as described under "Description of
the New Notes -- Optional Redemption."
Form and Denomination......... The new notes will be issued in fully
registered book-entry form, with a minimum
denomination of U.S.$100,000 and integral
multiples of U.S.$1,000 in excess thereof.
Trustee and Principal Paying
Agent......................... The Bank of New York
14
Governing Law................. The notes and the indenture are, and following
the completion of the exchange offer will
continue to be, governed by New York law.
Risk Factors.................. See "Risk Factors" and the other information in
this prospectus for a discussion of factors you
should carefully consider before deciding to
participate in the exchange offer.
Luxembourg Listing............ We have applied to list the new notes on the
Luxembourg Stock Exchange.
For more complete information regarding the new notes, see "Description of
the New Notes."
15
SUMMARY FINANCIAL DATA
The following tables present our selected consolidated financial information
as of and for each of the periods indicated. This data is qualified in its
entirety by reference to, and should be read together with, our audited year-
end financial statements. The following data for each of the years ended
December 31, 2000, 2001, 2002, 2003 and 2004 has been derived from our audited
year-end financial statements, including the consolidated balance sheets as of
December 31, 2003 and 2004, and the related consolidated statements of income
and changes in financial position for the years ended December 31, 2002, 2003
and 2004 and the accompanying notes appearing elsewhere in this prospectus. The
data should also be read together with "Item 5 -- Operating and Financial Review
and Prospects -- Results of Operations" in the 2004 Form 20-F.
The exchange rate used in translating Pesos into U.S. Dollars in calculating
the convenience translations included in the following tables is determined by
reference to the Interbank Rate, as reported by Banamex, as of December 31,
2004, which was Ps.11.1490 per U.S. Dollar. The exchange rate translations
contained in this prospectus should not be construed as representations that the
Peso amounts actually represent the U.S. Dollar amounts presented or that they
could be converted into U.S. Dollars at the rate indicated.
Our year-end financial statements have been prepared in accordance with
Mexican generally accepted accounting principles, or Mexican GAAP, which differ
in some significant respects from U.S. GAAP. Note 26 to our year-end financial
statements appearing in the 2004 Form 20-F provides a description of the
relevant differences between Mexican GAAP and U.S. GAAP as they relate to us,
and a reconciliation to U.S. GAAP of net income and other items for the years
ended December 31, 2002, 2003 and 2004 and stockholders' equity at December 31,
2003 and 2004. Any reconciliation to U.S. GAAP may reveal significant
differences between our stockholders' equity, net income and other items as
reported under Mexican GAAP and U.S. GAAP. See "Risk Factors -- Risk Factors
Related to Mexico -- Differences Between Mexican GAAP and U.S. GAAP May Have an
Impact on the Presentation of Our Financial Information."
For unaudited selected consolidated financial information as of March 31,
2005 and for the three month periods ended March 31, 2004 and 2005 and a
discussion of our financial results for the three month periods ended March 31,
2004 and 2005, which are presented in constant Pesos in purchasing power as of
March 31, 2005, see Exhibit I to this prospectus. Since the financial
information in Exhibit I and the information under "Capitalization" are
presented in constant Pesos in purchasing power as of March 31, 2005, the
financial information in Exhibit I and the information under "Capitalization"
are not directly comparable to the financial information included elsewhere in
this prospectus, in the table below and in the 2004 Form 20-F, which, unless
otherwise indicated, is presented in constant Pesos in purchasing power as of
December 31, 2004. The change in the Mexican National Consumer Price Index, or
the NCPI, for the three-month period ended March 31, 2005 was 0.8%.
For a description of our indebtedness as of December 31, 2004, see
"Capitalization" and "Item 5 -- Operating and Financial Review and
Prospects -- Results of Operations -- Liquidity, Foreign Exchange and Capital
Resources -- Indebtedness" included in the 2004 Form 20-F, and as of March 31,
2005, see the financial information in Exhibit I -- Indebtedness and
"Capitalization."
In December 2001, we entered into an agreement to sell our music recording
operations to Univision, and we consummated this sale in April 2002. We no
longer engage in the music recording business, and under Mexican GAAP, the
results of our music recording segment have been classified as discontinued
operations. See "Item 5 -- Operating and Financial Review and
Prospects -- Results of Operations -- Discontinued Operations" and Note 22 to
our year-end financial statements included in the 2004 Form 20-F.
Effective April 1, 2004, we began consolidating Sky Mexico, in accordance
with the Financial Accounting Standards Board Interpretation No. 46,
"Consolidation of Variable Interest Entities" (FIN 46), which is applicable
under Mexican GAAP Bulletin A-8, "Supplementary Application of International
Accounting Standards."
At a general extraordinary meeting and at special meetings of the
shareholders of Televisa, held on April 16, 2004, our shareholders approved the
creation of a new class of capital stock, the B Shares, and the distribution of
new shares to our shareholders as part of the recapitalization of our capital
stock or the Recapitalization, as described in the Information Statement dated
March 25, 2004, which was submitted to the U.S. Securities and Exchange
Commission, or the SEC, on Form 6-K on March 25, 2004. Except where otherwise
indicated, all information in the prospectus reflects our capital structure as
of December 31, 2004, and gives effect to the Recapitalization.
16
SELECTED CONSOLIDATED FINANCIAL INFORMATION
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------------
2000 2001 2002 2003 2004 2004
---------- ---------- ---------- ---------- ---------- ----------
(MILLIONS OF PESOS IN PURCHASING POWER AS OF DECEMBER 31, 2004 OR
MILLIONS OF U.S. DOLLARS)(1)
(MEXICAN GAAP)
INCOME STATEMENT DATA:
Net sales........................................... Ps. 23,605 Ps. 22,734 Ps. 23,580 Ps. 24,786 Ps. 29,314 U.S.$2,629
Operating income.................................... 5,700 4,746 5,086 6,360 8,558 768
Integral cost of financing-net(2)................... 1,154 477 670 646 1,516 136
Restructuring and non-recurring charges(3).......... 2,217 628 921 691 395 35
(Loss) income from continuing operations............ (771) 1,652 (431) 3,723 5,570 500
Income (loss) from discontinued operations(4)....... 27 16 1,162 (67) -- --
Cumulative effect of accounting change-net.......... -- (80) -- -- (1,022) (92)
Net income (loss)................................... (955) 1,556 807 3,783 4,317 387
(Loss) income from continuing operations per
CPO(5)............................................ (0.33) 0.57 (0.12) 1.34 1.83 --
Net income (loss) per CPO(5)........................ (0.33) 0.54 0.28 1.32 1.48 --
Weighted-average number of shares outstanding (in
millions)(5)...................................... 353,185 354,485 353,906 352,421 345,206 --
Shares outstanding (in millions, at year end)(6).... 222,475 221,400 221,210 218,840 341,638 --
(U.S. GAAP)(7)
INCOME STATEMENT DATA:
Net sales........................................... Ps. 25,105 Ps. 23,876 Ps. 23,807 Ps. 24,786 Ps. 29,314 U.S.$2,629
Operating income.................................... 5,048 2,682 3,294 6,153 7,045 632
Income from continuing operations................... 1,318 2,413 110 2,950 3,473 312
Cumulative effect of accounting change-net.......... -- (909) (1,348) -- -- --
Net (loss) income................................... 219 1,504 (1,239) 2,950 3,473 312
Income from continuing operations per CPO(5)........ 0.44 1.01 0.04 1.01 1.19 --
Net (loss) income per CPO(5)........................ 0.06 0.51 (0.42) 1.01 1.19 --
Weighted-average number of Shares outstanding (in
millions)(6)...................................... 353,185 354,485 353,906 352,421 345,206 --
Shares outstanding (in millions, at year end)(6).... 222,475 221,400 221,210 218,840 341,638 --
(MEXICAN GAAP)
BALANCE SHEET DATA (END OF YEAR):
Cash and temporary investments...................... Ps. 9,109 Ps. 6,503 Ps. 9,610 Ps. 12,900 Ps. 16,641 U.S.$1,493
Total assets........................................ 56,352 56,879 61,703 68,121 73,884 6,627
Current notes payable to banks and other notes
payable(8)........................................ 417 387 1,355 300 3,297 296
Long-term debt(9)................................... 13,123 14,822 14,597 15,467 18,944 1,699
Customer deposits and advances...................... 11,966 12,487 12,854 14,731 15,303 1,373
Capital stock issued................................ 8,328 8,328 8,328 8,633 9,571 858
Total stockholders' equity (including minority
interest)......................................... 21,227 21,652 23,323 28,955 27,604 2,476
(U.S. GAAP)(7)
BALANCE SHEET DATA (END OF YEAR):
Property, plant and equipment, net.................. Ps. 16,240 Ps. 16,465 Ps. 16,626 Ps. 16,025 Ps. 18,826 U.S.$1,689
Total assets........................................ 53,238 59,187 61,649 71,177 77,182 6,923
Current notes payable to banks and other notes
payable(8)........................................ 417 387 1,355 300 3,297 296
Long-term debt(9)................................... 13,123 14,822 14,597 15,467 18,944 1,699
Total stockholders' equity (excluding minority
interest)......................................... 19,027 20,693 19,312 25,438 24,491 2,197
(MEXICAN GAAP)
OTHER FINANCIAL INFORMATION:
Capital expenditures................................ Ps.1,810 Ps.1,538 Ps.1,548 Ps.1,120 Ps.1,947 U.S.$175
Ratio of earnings to fixed charges.................. 1.8 2.6 1.7 3.4 3.4 --
(U.S. GAAP)(7)
OTHER FINANCIAL INFORMATION:
Cash provided by operating activities............... 1,396 1,688 6,131 5,202 7,971 715
Cash provided by (used for) financing activities.... 443 2,351 408 (1,388) (1,543) (138)
Cash used for investing activities.................. (532) (6,348) (3,273) (2,272) (813) (73)
Ratio of earnings to fixed charges.................. 2.3 2.9 -- 4.3 2.7 --
OTHER DATA (UNAUDITED):
Average prime time audience share (TV
broadcasting)(10)................................. 73.7% 70.5% 72.4% 70.1% 68.9% --
Average prime time rating (TV broadcasting)(10)..... 41.0 39.1 39.6 38.1 36.7 --
Magazine circulation (millions of copies)(11)....... 140 132 137 128 127 --
Number of employees (at year end)................... 14,600 13,700 12,600 12,300 14,100 --
Number of Innova subscribers (in thousands at year
end)(12).......................................... 590 716 738 857 1,003 --
Number of Cablevision subscribers (in thousands at
year end)(13)..................................... 403 452 412 364 355 --
Number of EsMas.com registered users (in thousands
at year end)(14).................................. 375 866 2,514 3,085 3,665 --
17
NOTES TO SELECTED CONSOLIDATED FINANCIAL INFORMATION:
---------------
(1) Except per CPO, ratio, average audience share, average rating, magazine
circulation, employee, subscriber and registered user data. Information in
these footnotes is in thousands of Pesos in purchasing power as of December
31, 2004, unless otherwise indicated.
(2) Includes interest expense, interest income, foreign exchange gain or
loss -- net, gain or loss from monetary position and monetary results
classified as provisions for deferred income taxes. See Note 18 to our
year-end financial statements.
(3) See Note 19 to our year-end financial statements.
(4) See Note 22 to our year-end financial statements.
(5) For further analysis of income (loss) from continuing operations per CPO
and net income (loss) per CPO (as well as corresponding amounts per A Share
not traded as CPOs), see Note 23 (for the calculation under Mexican GAAP)
and Note 26 (for the calculation under U.S. GAAP) to our year-end financial
statements.
(6) As of December 31, 2004, after giving effect to the Recapitalization we had
four classes of common stock: A shares, B shares, L shares and D shares.
For purposes of this table, the weighted-average number of shares for all
periods reflects the 25-for-one stock split and the 14-for-one stock
dividend from the Recapitalization, and the number of shares outstanding
for all periods reflects the 25-for-one stock split from the
Recapitalization. As of December 31, 2004, for legal purposes, there were
approximately 2,617 million CPOs issued and outstanding, each of which was
represented by 25 A shares, 22 B shares, 35 L shares and 35 D shares and an
additional number of approximately 58,927 million A shares and 2,357
million B shares (not in the form of CPO units). See Note 13 to our
year-end financial statements.
As of December 31, 2003, we had three classes of common stock: A Shares,
L Shares and D Shares. As of December 31, 2003, some of our A Shares, and
all of our L Shares and D Shares, were publicly traded in Mexico in the
form of CPOs, each of which represented one A Share, one L Share and one
D Share, and were publicly traded in the United States in the form of
GDSs, each of which represents 20 CPOs. See Note 13 to our year-end
financial statements.
The number of CPOs and shares authorized, issued and outstanding for
financial reporting purposes under Mexican and U.S. GAAP is different
than the number of CPOs issued and outstanding for legal purposes,
because under Mexican and U.S. GAAP shares owned by subsidiaries and/or
the trusts created to implement our stock purchase plan and our long-term
retention plan are not considered issued and outstanding for financial
reporting purposes.
(7) See Note 26 to our year-end financial statements. In contrast to Mexican
GAAP, the results of our music recording segment are not reflected as
discontinued operations under U.S. GAAP, since we continue to have
significant influence over Univision.
(8) Current notes payable to banks and other notes payable include Ps.68.7
million, Ps.14.8 million and Ps.7.7 million of other notes payable as of
December 31, 2000, 2001 and 2002, respectively. As of December 31, 2003 and
2004, there are no other notes payable outstanding. See Note 8 to our
year-end financial statements.
(9) Long-term debt includes the Ps.86.5 million and Ps.7.1 million of other
notes payable as of December 31, 2000 and 2001, respectively. As of
December 31, 2002, 2003 and 2004, there are no other long-term notes
payable. See "Item 5 -- Operating and Financial Review and
Prospects -- Results of Operations -- Liquidity, Foreign Exchange and
Capital Resources -- Indebtedness" included in the 2004 Form 20-F and Note
8 to our year-end financial statements.
(10) "Average prime time audience share" for a period refers to the average
daily prime time audience share for all of our networks and stations during
that period, and "average rating" for a period refers to the average daily
rating for all of our networks and stations during that period, each rating
point representing one percent of all television households. As used in
this prospectus, "prime time" in Mexico is 4:00 p.m. to 11:00 p.m., seven
days a week, and "weekday prime time" is 7:00 p.m. to 11:00 p.m., Monday
through
18
Friday. Data for all periods reflects the average prime time audience share
and ratings nationwide as published by IBOPE Mexico. For further
information regarding audience share and ratings information and IBOPE
Mexico, see "Item 4 -- Information on the Company -- Business
Overview -- Television -- Television Broadcasting" included in the 2004
Form 20-F.
(11) The figures set forth in this line item represent total circulation of
magazines that we publish independently and through joint ventures and
other arrangements and do not represent magazines distributed on behalf of
third parties.
(12) Innova, S. de R.L. de C.V., or Innova, our direct-to-home, or DTH,
satellite service in Mexico, commenced operations on December 15, 1996. The
figures set forth in this line item represent the total number of gross
active residential and commercial subscribers for Innova at the end of each
year presented. Our share in the results of operations of Innova through
December 31, 2000 was included in our income statement under the line item
"Equity in losses of affiliates." For a description of Innova's business
and results of operations and financial condition, see "Item
4 -- Information on the Company -- Business Overview -- DTH Joint
Ventures -- Mexico" and Innova's year-end financial statements for the
years ended December 31, 2002 and 2003 included in the 2004 Form 20-F.
Under Mexican GAAP, effective January 1, 2001 and through March 31, 2004,
we did not recognize equity in losses in respect of our investment in
Innova in our income statement. See "Item 5 -- Operating and Financial
Review and Prospects -- Results of Operations -- Equity in Losses of
Affiliates" included in the 2004 Form 20-F. Beginning April 1, 2004, Innova
was consolidated in our financial results.
(13) The figures set forth in this line item represent the total number of
subscribers for Cablevision's basic service package at the end of each year
presented. For a description of Cablevision's business and results of
operations and financial condition, see "Item 5 -- Operating and Financial
Review and Prospects -- Results of Operations -- Cable Television" and
"Item 4 -- Information on the Company -- Business Overview -- Cable
Television" included in the 2004 Form 20-F.
(14) We launched EsMas.com in May 2000. Since May 2000, the results of
operations of EsMas.com have been included in the results of operations of
our Other Businesses segment. See "Item 5 -- Operating and Financial Review
and Prospects -- Results of Operations -- Other Businesses" included in the
2004 Form 20-F. For a description of EsMas.com, see "Item 4 -- Information
on the Company -- Business Overview -- Other Businesses -- EsMas.com"
included in the 2004 Form 20-F. The figures set forth in this line item
represent the number of registered users in each year presented. The term
"registered user" means a visitor that has completed a profile
questionnaire that enables the visitor to use the e-mail service provided
by EsMas.com."
19
RISK FACTORS
An investment in the new notes involves risk. You should consider carefully
the following factors, as well as all other information in this prospectus,
before deciding to participate in the exchange offer.
RISK FACTORS RELATED TO MEXICO
ECONOMIC AND POLITICAL DEVELOPMENTS IN MEXICO MAY ADVERSELY AFFECT OUR BUSINESS
Most of our operations and assets are located in Mexico. As a result, our
financial condition, results of operations and business may be affected by the
general condition of the Mexican economy, the devaluation of the Peso as
compared to the U.S. Dollar, Mexican inflation, interest rates, regulation,
taxation, social instability and political, social and economic developments in
Mexico.
MEXICO HAS EXPERIENCED ADVERSE ECONOMIC CONDITIONS
Mexico has historically experienced uneven periods of economic growth. In
2001, Mexico's GDP decreased 0.2% primarily as a result of the downturn in the
U.S. economy. Mexican GDP increased 0.8%, 1.4%, 4.4% and 0.4% in 2002, 2003,
2004 and the three month period ended March 31, 2005, respectively. Inflation in
2002, 2003, 2004 and the three month period ended March 31, 2005 was 5.7%, 4.0%,
5.2% and 0.8%, respectively. Although these inflation rates tend to be lower
than Mexico's historical inflation rates, Mexico's current level of inflation
remains higher than the annual inflation rates of its main trading partners,
including the U.S. GDP growth fell short of Mexican government estimates in
2004; however, according to Mexican government estimates, GDP in Mexico is
expected to grow by approximately 3.5% to 4.0%, while inflation is expected to
be less than 4.0%, in 2005. We cannot assure you that these estimates will prove
to be accurate.
If the Mexican economy should fall into a recession or if inflation and
interest rates increase significantly, our business, financial condition and
results of operations may be adversely affected for the following reasons:
- demand for advertising may decrease both because consumers may reduce
expenditures for our advertisers' products and because advertisers may
reduce advertising expenditures; and
- demand for publications, cable television, DTH satellite services,
pay-per-view programming and other services and products may decrease
because consumers may find it difficult to pay for these services and
products.
DEVELOPMENTS IN OTHER EMERGING MARKET COUNTRIES OR IN THE U.S. MAY AFFECT US AND
THE PRICES FOR OUR DEBT SECURITIES
The market value of securities of Mexican companies, the economic and
political situation in Mexico and our financial condition and results of
operations are, to varying degrees, affected by economic and market conditions
in other emerging market countries and in the U.S. Although economic conditions
in other emerging market countries and in the U.S. may differ significantly from
economic conditions in Mexico, investors' reactions to developments in any of
these other countries may have an adverse effect on the market value or trading
price of securities of Mexican issuers, including our debt securities, or on our
business.
In particular, Argentina's continued insolvency and default on its public
debt, could adversely affect Mexico, the market value of our debt securities or
our business. Although a majority of the foreign holders of Argentina's
indebtedness have agreed to exchange their securities in connection with
Argentina's restructuring, holders of a substantial amount of the country's
indebtedness have refused such exchange. To the extent that the Argentine
government is unsuccessful in preventing further economic decline, the crisis
may also adversely affect Mexico, the price of our securities or our business.
In addition, the political and economic future of Venezuela remains
uncertain. A nationwide general strike that occurred between December 2002 and
January 2003 caused a significant reduction in oil production in Venezuela, and
has had a material adverse effect on Venezuela's oil-dependent economy. In
February 2003, Venezuelan authorities imposed foreign exchange and price
controls on specified products. Inflation continues
20
to grow despite price controls and the political and economic environment has
continued to deteriorate. Venezuela has experienced increasing social
instability and massive public demonstrations against President Chavez. We
cannot predict what effect, if any, the decisions of the Venezuelan government
will have on the economies of other emerging market countries, including Mexico,
the price of our debt securities or our business.
Our operations, including demand for our products or services, and the
price of our debt securities, have also historically been adversely affected by
increases in interest rates in the U.S. and elsewhere. The Federal Reserve Bank
of the U.S. has signaled that it will continue implementing "measured" increases
in interest rates in 2005. As interest rates rise, the prices of our debt
securities may fall.
MILITARY OPERATIONS IN IRAQ AND ELSEWHERE HAVE NEGATIVELY AFFECTED INDUSTRY AND
ECONOMIC CONDITIONS GLOBALLY, AND THESE CONDITIONS HAVE HAD, AND MAY CONTINUE TO
HAVE, A NEGATIVE EFFECT ON OUR BUSINESS
Our profitability is affected by numerous factors, including changes in
viewing preferences, priorities of advertisers and reductions in advertisers'
budgets. Historically, advertising in most forms of media has correlated
positively with the general condition of the economy and thus, is subject to the
risks that arise from adverse changes in domestic and global economic
conditions, consumer confidence and spending, which may decline as a result of
numerous factors outside of our control, such as terrorist attacks and acts of
war. Military operations in Iraq have depressed economic activity in the U.S.
and globally, including the Mexican economy. Since the invasion, there have been
terrorist attacks abroad, such as the terrorist attacks in Madrid on March 11,
2004, as well as ongoing threats of future terrorist attacks in the U.S. and
abroad. Although it is not possible at this time to determine the long-term
effect of these terrorist threats and attacks and the consequent response by the
U.S., there can be no assurance that there will not be other attacks or threats
in the U.S. or abroad that will lead to a further economic contraction in the
U.S. or any other major markets. In the short term, however, terrorist activity
against the U.S. and the U.S. military operations in Iraq have contributed to
the uncertainty of the stability of the U.S. economy as well as global capital
markets. It is not certain how long these economic conditions will continue. If
terrorist attacks continue or become more prevalent or serious, if the economic
conditions in the U.S. decline or if a global recession materializes, our
business, financial condition and results of operations may be materially and
adversely affected.
CURRENCY FLUCTUATIONS OR THE DEVALUATION AND DEPRECIATION OF THE PESO COULD
LIMIT THE ABILITY OF OUR COMPANY AND OTHERS TO CONVERT PESOS INTO U.S. DOLLARS
OR OTHER CURRENCIES WHICH COULD ADVERSELY AFFECT OUR BUSINESS, FINANCIAL
CONDITION OR RESULTS OF OPERATIONS
A portion of our indebtedness and a significant amount of our costs are
U.S. Dollar-denominated, while our revenues are primarily Peso-denominated. As a
result, decreases in the value of the Peso against the U.S. Dollar could cause
us to incur foreign exchange losses, which would reduce our net income.
Severe devaluation or depreciation of the Peso may also result in
governmental intervention, as has resulted in Argentina, or disruption of
international foreign exchange markets. This may limit our ability to transfer
or convert Pesos into U.S. Dollars and other currencies for the purpose of
making timely payments of interest and principal on our indebtedness and
adversely affect our ability to obtain foreign programming and other imported
goods. The Mexican economy has suffered current account balance payment of
deficits and shortages in foreign exchange reserves in the past. While the
Mexican government does not currently restrict, and for more than ten years has
not restricted, the right or ability of Mexican or foreign persons or entities
to convert Pesos into U.S. Dollars or to transfer other currencies outside of
Mexico, the Mexican government could institute restrictive exchange control
policies in the future. To the extent that the Mexican government institutes
restrictive exchange control policies in the future, our ability to transfer or
convert pesos into U.S. Dollars for the purpose of making timely payments of
interest and principal on indebtedness, including the notes, would be adversely
affected. Devaluation or depreciation of the Peso against the U.S. Dollar may
also adversely affect U.S. Dollar prices for our debt securities.
21
HIGH INFLATION RATES IN MEXICO MAY DECREASE DEMAND FOR OUR SERVICES WHILE
INCREASING OUR COSTS
Mexico historically has experienced high levels of inflation, although the
rates have been lower in recent years. The annual rate of inflation, as measured
by changes in the NCPI was 5.7% for 2002, 4.0% for 2003, 5.2% for 2004 and 0.8%
for the three-month period ended March 31, 2005. Nonetheless, at approximately
4.4% per annum (as measured from March 2004 to March 2005), Mexico's current
level of inflation remains higher than the annual inflation rates of its main
trading partners. High inflation rates can adversely affect our business and
results of operations in the following ways:
- inflation can adversely affect consumer purchasing power, thereby
adversely affecting consumer and advertiser demand for our services and
products;
- to the extent inflation exceeds our price increases, our prices and
revenues will be adversely affected in "real" terms; and
- if the rate of Mexican inflation exceeds the rate of devaluation of the
Peso against the U.S. Dollar, our U.S. Dollar-denominated sales will
decrease in relative terms when stated in constant Mexican Pesos.
HIGH INTEREST RATES IN MEXICO COULD INCREASE OUR FINANCING COSTS
Mexico historically has had, and may continue to have, high real and
nominal interest rates. The interest rates on 28-day Mexican government treasury
securities averaged 6.2%, 6.8% and 9.1% for 2003, 2004 and for the three month
period ended March 31, 2005, respectively. Accordingly, if we have to incur
Peso-denominated debt in the future, it will likely be at higher interest rates.
POLITICAL EVENTS IN MEXICO COULD AFFECT MEXICAN ECONOMIC POLICY AND OUR
BUSINESS, FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Mexico's President Vicente Fox has encountered strong opposition to a
number of his proposed reforms in both the Chamber of Deputies and the Senate,
where opposition forces have frequently joined to block his initiatives.
Although the Mexican economy has exhibited signs of improvement, general
economic sluggishness continues. This continuing weakness in the Mexican
economy, combined with recent political events, has slowed economic reform and
progress. In the 2003 and 2004 elections, the political party of President Fox,
the Partido Accion Nacional, or the National Action Party, lost additional seats
in the Mexican congress, as well as state governorships. The increased party
opposition and legislative gridlock arising out of the elections could further
hinder President Fox's ability to implement his economic reforms. Presidential
and federal congressional elections in Mexico are scheduled to be held in July
2006. Under Mexican law, President Fox cannot run for re-election. The electoral
process could lead to further friction among political parties and the executive
branch officers, which could potentially cause additional political and economic
instability. Additionally, once the President and representatives are elected,
there could be significant changes in laws, public policies and government
programs, which could have a material adverse effect on the Mexican economic and
political situation which, in turn may adversely affect our business, financial
condition and results of operations.
National politicians are currently focused on the 2006 elections and
crucial reforms regarding fiscal and labor policies, gas, electricity, social
security and oil have not been and may not be approved. In addition, recent
impeachment proceedings of Andres Manuel Lopez Obrador, the mayor of Mexico
City, have increased political uncertainty. The effects on the social and
political situation in Mexico, including the 2006 presidential elections and
presidential succession, could adversely affect the Mexican economy, including
the stability of its currency, which in turn could have a material adverse
effect on our business, financial condition and results of operations, as well
as market conditions and prices for our securities.
MEXICAN ANTITRUST LAWS MAY LIMIT OUR ABILITY TO EXPAND THROUGH ACQUISITIONS OR
JOINT VENTURES
Mexico's federal antitrust laws and regulations may affect some of our
activities, including our ability to introduce new products and services, enter
into new or complementary businesses or joint ventures and complete
acquisitions. In addition, the federal antitrust laws and regulations may
adversely affect our ability to
22
determine the rates we charge for our services and products. Approval of the
Comision Federal de Competencia, or Mexican Antitrust Commission, is required
for us to acquire and sell significant businesses or enter into significant
joint ventures. In 2002, the Mexican Antitrust Commission did not approve the
proposed merger of our radio subsidiary Sistema Radiopolis, S.A. de C.V., or
Sistema Radiopolis, with Grupo Acir Comunicaciones, S.A. de C.V., or Grupo Acir,
and it may not approve possible future acquisitions or joint ventures that we
may pursue.
DIFFERENCES BETWEEN MEXICAN GAAP AND U.S. GAAP MAY HAVE AN IMPACT ON THE
PRESENTATION OF OUR FINANCIAL INFORMATION
Our annual audited consolidated financial statements are prepared in
accordance with Mexican GAAP, which differ in some significant respects from
U.S. GAAP. We are required, however, to file an annual report on Form 20-F
containing financial statements reconciled to U.S. GAAP, although this filing
only contains year-end financial statements reconciled to U.S. GAAP for the
three most recent fiscal years since its filing. See Note 26 to our year-end
financial statements included in the 2004 Form 20-F for a description of the
principal differences between Mexican GAAP and U.S. GAAP applicable to us. In
addition, we do not publish U.S. GAAP information on an interim basis.
RISK FACTORS RELATED TO OUR MAJOR SHAREHOLDERS
EMILIO AZCARRAGA JEAN HAS SUBSTANTIAL INFLUENCE OVER OUR MANAGEMENT AND THE
INTERESTS OF MR. AZCARRAGA JEAN MAY DIFFER FROM THOSE OF OTHER SHAREHOLDERS
We have four classes of common stock: A Shares, B Shares, D Shares, and L
Shares. As of March 31, 2005, approximately 49.87% of the outstanding A Shares,
13.35% of the outstanding B Shares, 13.90% of the outstanding D Shares and
13.90% of the outstanding L Shares of our Company are held through a trust,
including shares in the form of CPOs, or the Shareholder Trust. The largest
beneficiary of the Shareholder Trust is a trust for the benefit of Emilio
Azcarraga Jean. As a result, Emilio Azcarraga Jean controls the voting of the
Shares held through the Shareholder Trust. The A Shares held through the
Shareholder Trust constitute a majority of the A Shares whose holders are
entitled to vote, because non-Mexican holders of Certificados de Participacion
Ordinarios, or CPOs, and Global Depositary Shares, or GDSs, are not permitted by
law to vote the underlying A Shares. Accordingly, and so long as non-Mexicans
own more than a minimal number of A Shares, Emilio Azcarraga Jean will have the
ability to direct the election of 11 out of 20 members of our Board as well as,
prevent certain actions by the shareholders, including the timing and payment of
dividends, if he so chooses. See "Item 7 -- Major Shareholders and Related Party
Transactions -- The Major Shareholders" included in the 2004 Form 20-F.
AS CONTROLLING SHAREHOLDER, EMILIO AZCARRAGA JEAN WILL HAVE THE ABILITY TO LIMIT
OUR ABILITY TO RAISE CAPITAL, WHICH WOULD REQUIRE US TO SEEK OTHER FINANCING
ARRANGEMENTS
Emilio Azcarraga Jean has the voting power to prevent us from raising money
through equity offerings. Mr. Azcarraga Jean has informed us that if we conduct
a primary sale of our equity, he would consider exercising his pre-emptive
rights to purchase a sufficient number of additional A shares in order to
maintain such power. In the event that Mr. Azcarraga Jean is unwilling to
subscribe for additional Shares and/or prevents us from raising money through
equity offerings, we would need to raise money through a combination of debt or
other form of financing, which we may not obtain, or if so, possibly not on
favorable terms.
RISK FACTORS RELATED TO OUR BUSINESS
THE OPERATION OF OUR BUSINESS MAY BE TERMINATED OR INTERRUPTED IF THE MEXICAN
GOVERNMENT DOES NOT RENEW OR REVOKES OUR BROADCAST OR OTHER CONCESSIONS;
PROPOSED REVISIONS TO THE LEY FEDERAL DE RADIO Y TELEVISION, OR RADIO AND
TELEVISION LAW, IF ADOPTED, COULD ADVERSELY IMPACT OUR RESULTS OF OPERATIONS
Under Mexican law, we need concessions from the Secretaria de
Comunicaciones y Transportes, or SCT, to broadcast our programming over our
television and radio stations and our cable and DTH satellite systems.
23
In July 2004, in connection with the adoption of a release issued by the SCT for
the transition to digital television, all of our television concessions were
renewed until 2021. The expiration dates for the concessions for our radio
stations range from 2008 to 2016. Our cable telecommunications concessions
expire in 2029. In the past, the SCT has typically renewed the concessions of
those concessionaires that comply with the requisite procedures set forth for
renewal under Mexican law. The SCT can revoke our concessions and the Mexican
government can require us to forfeit our broadcast assets under the
circumstances described under "Item 4 -- Information on the Company -- Business
Overview -- Regulation" included in the 2004 Form 20-F. This may not happen in
the future and the current law may change or be superseded by new laws. In this
regard, there is currently a proposal to enact a new Ley Federal de Radio y
Television which is being discussed by a sub-commission of the Mexican Congress,
that may be introduced to the Mexican Congress for discussion and, if it is so
introduced, for approval. We cannot assure you that any proposal to enact a new
Ley Federal de Radio y Television will be introduced to or adopted by the
Mexican Congress, and, if it is, the terms of any such proposal and the impact
it would have on our results of operations.
WE FACE COMPETITION IN EACH OF OUR MARKETS THAT WE EXPECT WILL INTENSIFY
We face competition in all of our businesses, including television
advertising and other media businesses, as well as our strategic investments and
joint ventures. In particular, we face substantial competition from TV Azteca,
S.A. de C.V., or TV Azteca. See "Item 4 -- Information on the
Company -- Business Overview -- Television -- Television Industry in Mexico" and
"-- Television Broadcasting" included in the 2004 Form 20-F. In addition, the
entertainment and communications industries in which we operate are changing
rapidly because of evolving distribution technologies. Our future success will
be affected by these changes, which we cannot predict. Consolidation in the
entertainment and broadcast industries could further intensify competitive
pressures. As the pay-television market in Mexico matures, we expect to face
competition from an increasing number of sources, including emerging
technologies that provide new services to pay-television customers and require
us to make significant capital expenditures in new technologies. Developments
may limit our access to new distribution channels, may require us to make
significant capital expenditures in order to have access to new digital and
other distribution channels or may create additional competitive pressures on
some or all of our businesses.
THE SEASONAL NATURE OF OUR BUSINESS AFFECTS OUR REVENUE AND A SIGNIFICANT
REDUCTION IN FOURTH QUARTER NET SALES COULD IMPACT OUR RESULTS OF OPERATIONS
Our business reflects seasonal patterns of advertising expenditures, which
is common in the television broadcast industry. We typically recognize a
disproportionately large percentage of our overall advertising net sales in the
fourth quarter in connection with the holiday shopping season. For example, in
2003 and 2004 we recognized 29.8% and 28.7%, respectively, of our net sales in
the fourth quarter of the year. Accordingly, a significant reduction in fourth
quarter advertising revenue could adversely affect our business, financial
condition and results of operations.
FUTURE ACTIVITIES WHICH WE MAY WISH TO UNDERTAKE IN THE U.S. MAY BE AFFECTED BY
OUR ARRANGEMENTS WITH UNIVISION. THESE ACTIVITIES, AS WELL AS A CURRENT DISPUTE
WE ARE HAVING WITH UNIVISION, MAY AFFECT OUR RELATIONSHIP WITH, AND OUR EQUITY
INTEREST IN, UNIVISION.
We have a program license agreement with Univision whereby we have granted
Univision an exclusive right to broadcast our television programming in the
U.S., with some exceptions, as described in "Item 4 -- Information on the
Company -- Business Overview -- Univision" included in the 2004 Form 20-F.
We are required to offer Univision the opportunity to acquire a 50%
economic interest in our interest in certain Spanish-language television
broadcasting ventures to the extent they relate to U.S. Spanish-language
television broadcasting. Should Univision exercise these rights, Univision would
reduce our share of potentially lucrative corporate opportunities involving
these ventures. In April 2003, we entered into a joint venture with Univision to
introduce our satellite and cable pay-TV programming into the U.S., including
two of our existing movie channels and three channels featuring music videos,
celebrity lifestyle, interviews and entertainment news programming, and to
create future channels available in the U.S. that feature our
24
programming. See "Item 4 -- Information on the Company -- Business
Overview -- Univision" included in the 2004 Form 20-F. The current joint venture
with Univision and any future venture we might pursue involving U.S.
Spanish-language television broadcasting, with or without Univision as a
partner, may compete directly with Univision to the extent such ventures seek
viewership among Hispanic households in the U.S. Direct competition between
Univision and these ventures could have a material adverse effect on the
financial condition and results of operations of our joint ventures and the
value of our investment in Univision.
We are currently involved in a dispute with Univision related to the
program license agreement and other issues. In that regard, on May 9, 2005, we
filed a complaint in the United States District Court Central District of
California alleging, among other things, that Univision breached the program
license agreement by failing to pay certain royalties and by making certain
unauthorized edits of our programs. In connection with these claims, we are
seeking monetary relief in an amount not less than U.S.$1.5 million, declaratory
relief against Univision's ability to recover approximately U.S.$5 million of
royalties previously paid to us, and an injunction against the alteration of our
programs without our consent. We cannot assure you that we will prevail in the
case we filed against Univision or any litigation Univision may initiate. In
addition, effective as of May 9, 2005, Emilio Azcarraga Jean resigned as a
director, and Alfonso de Angoitia Noriega resigned as an alternate director, of
Univision. While we have the right to elect one director and one alternate
director to the Univision board, we have not determined whether we will seek to
elect replacements for Mr. Azcarraga Jean and Mr. de Angoitia Noriega. We cannot
predict how our overall business relationship with Univision will be affected by
this dispute.
In addition, in the past, we had disagreements with Univision over our
ability to broadcast over the Internet programs to which Univision had rights in
the U.S. As part of the amendments in December 2001 to our arrangements with
Univision, we agreed that for a five-year period, ending December 2006, we and
Univision each would have limited rights to transmit via the Internet certain
limited programming. At the end of this period, the terms of our agreement with
Univision in respect of these rights will revert to the provisions of our prior
agreement. We continue to believe that these terms allow us to distribute
internationally, including in the U.S., on our Internet service originating from
Mexico, programs to which Univision believes it has exclusive rights in the U.S.
If Univision disagrees with our position, we cannot assure you as to whether,
after December 2006, we will provide our television programming over the
Internet for U.S. distribution. However, if we do provide our programming for
U.S. distribution via the Internet, Univision may commence legal proceedings and
we may not prevail in litigation.
In addition, by operation of the ownership rules and policies of the U.S.
Federal Communications Commission, or the FCC, our interest in Univision may
limit our ability to invest in other U.S. media entities. See "Item
4 -- Information on the Company -- Business Overview -- Regulation --
Television -- U.S. Regulation of Broadcast Stations" included in the 2004 Form
20-F.
WE HAVE EXPERIENCED SUBSTANTIAL LOSSES, PRIMARILY IN RESPECT OF OUR INVESTMENTS
IN INNOVA AND SKY MULTI-COUNTRY PARTNERS, AND EXPECT TO CONTINUE TO EXPERIENCE
SUBSTANTIAL LOSSES AS A RESULT OF OUR PARTICIPATION IN DTH JOINT VENTURES, WHICH
WOULD ADVERSELY AFFECT OUR NET INCOME
We have invested a significant amount to develop DTH satellite services
primarily in Mexico and other countries throughout Latin America. Although
Innova achieved net income for the first time in 2004 and generated positive
cash flow in 2003 and 2004, we have, in the past, experienced substantial losses
and substantial negative cash flow, and we may experience substantial losses
over the next several years, as a result of our participation in the DTH joint
ventures, which would adversely affect our net income. We cannot assure you that
Innova will continue to generate net income in the upcoming years, principally
due to the substantial capital expenditures and investments required to expand
and improve its DTH service, the impact of any potential devaluation of the Peso
versus the U.S. Dollar on Innova's financial structure, as well as the strong
competition that exists in the pay-television industry in Mexico. See Notes 10
and 12 to our year-end financial statements. See "Item 5 -- Operating and
Financial Review and Prospects -- Results of Operations -- Equity in Losses of
Affiliates" included in the 2004 Form 20-F.
25
We own a 60% interest in Innova, our DTH joint venture in Mexico. The
balance of Innova's equity is owned by News Corp. and Liberty Media. Although we
hold a majority of Innova's equity, News Corp. has significant governance
rights, including the right to block any transaction between us and Innova.
Accordingly, we do not have complete control over the operations of Innova. The
indenture that governs the terms of the notes issued by Innova in September 2003
and the credit agreement entered into in December 2004 both contain covenants
that restrict the ability of Innova to pay dividends and make investments and
other restricted payments.
We own minority interests in DTH joint ventures in Colombia and Chile
through Sky Multi-Country Partners, or MCOP, a U.S. partnership in which we,
News Corp., and Globo Comunicacoes e Participacoes S.A., or Globopar, a
Brazilian multimedia company, supply programming and other services, to the Sky
DTH platforms in Latin America outside Mexico and Brazil. See "Item
4 -- Information on the Company -- Business Overview -- DTH Joint Ventures"
included in the 2004 Form 20-F. Although we have some governance rights, we do
not control these joint ventures.
In October 2004, we, Innova, News Corp., Liberty Media and Globopar entered
into a series of transactions with each other and with The DIRECTV Group, Inc.,
or DIRECTV, relating to our DTH joint ventures, which, if consummated, would
result in (i) Innova being owned 57% by us and 43% by DIRECTV and DIRECTV Latin
America, or DTVLA, and (ii) MCOP being wholly owned by DIRECTV. See "Item
4 -- Information on the Company -- Business Overview -- DTH Joint Ventures"
included in the 2004 Form 20-F.
MCOP'S INABILITY TO PROVIDE FINANCIAL SUPPORT TO TECHCO COULD COMPROMISE
INNOVA'S ABILITY TO PROVIDE SERVICES TO ITS CUSTOMERS
DTH TechCo Partners, or TechCo, is a U.S. partnership formed to provide
certain technical services from two uplink facilities located in Florida. TechCo
provides these services primarily to MCOP, Innova and Sky Brasil Servicos Ltda.,
or Sky Brasil (a DTH service owned indirectly by Globopar, News Corp. and
Liberty Media). TechCo depends on payments from MCOP, Innova and Sky Brasil to
fund its operations. Since September 2002, Globopar has ceased providing
financial support to TechCo and MCOP, and MCOP, in turn, has ceased making
payments to TechCo, which payments we believe previously accounted for over 50%
of TechCo's revenue. TechCo is obligated to make payments under its capital
leases with various maturities through 2007 for an aggregate amount of U.S.$27.4
million. We indirectly hold a 30% interest in TechCo, and have guaranteed 36% of
certain of TechCo's obligations. As of December 31, 2004, we had guaranteed
payments by TechCo in the aggregate amount of U.S.$9.9 million. We, News Corp.,
Liberty Media and, since October 2004, DIRECTV have been funding TechCo's
operating cash shortfall through loans, and we currently intend to continue to
fund TechCo's shortfall in the form of loans. In addition, we are in discussions
regarding how TechCo will be fully funded, although no assurances can be given
that we will reach a satisfactory resolution as to how to provide continued
funding for TechCo. If MCOP and Sky Brasil continue to fail to make their
required payments and we and DIRECTV decide not to make up the shortfall, then
TechCo's ability to provide services to its customers, including Innova, and
Innova's ability to provide services to its customers, could be compromised. In
that case, if Innova is unable to obtain replacement services at comparable
prices, it would be unable to provide a substantial portion of its programming
services to its customers which would, in turn, have a material adverse effect
on its business.
WE HAVE RECOGNIZED AN INCREASED INDEBTEDNESS, A CUMULATIVE LOSS EFFECT AND OTHER
ADVERSE ACCOUNTING IMPACTS AS A RESULT OF THE CONSOLIDATION OF INNOVA SINCE
APRIL 1, 2004 IN OUR CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDING
DECEMBER 31, 2004, AND THESE IMPACTS MAY CONTINUE IN FUTURE YEARS
As a result of the consolidation of Innova beginning April 1, 2004, our
financial statements have been updated as follows:
Our consolidated total assets increased by approximately Ps.3,080.1 million
beginning April 1, 2004. Our consolidated total liabilities increased by
approximately Ps.5,508.9 million beginning April 1, 2004, including an
approximately Ps.6,082.2 million increase in our aggregate consolidated debt.
Our consolidated
26
shareholders' equity decreased by approximately Ps.2,428.9 million beginning
April 1, 2004, as a result of the outstanding shareholders' deficit reflected in
Innova's financial statements. Our consolidated net sales, costs and operating
expenses, and operating income before depreciation and amortization increased in
the second, third and fourth quarters of 2004. The adverse impacts on our
financial statements, including the substantial increase in our consolidated
debt, the decrease in our shareholder's equity, and the increase in our
consolidated costs and expenses, may have an adverse impact on the price of our
securities.
RISK FACTORS RELATED TO THE NOTES AND THE EXCHANGE OFFER
WE HAVE AND WILL CONTINUE TO HAVE SUBSTANTIAL INDEBTEDNESS AND MAY INCUR
ADDITIONAL INDEBTEDNESS; A SUBSTANTIAL PORTION OF OUR OTHER EXISTING
INDEBTEDNESS MATURES PRIOR TO THE MATURITY OF THE NOTES
We now have a substantial amount of indebtedness outstanding. Any Unidades
de Inversion, or UDI-denominated indebtedness we may issue in the future will
increase as the NCPI increases. In addition, the indenture governing the notes
does not limit our ability, or the ability of our subsidiaries, to incur
additional indebtedness, and we may incur indebtedness in connection with our
business, including borrowings to fund investments and acquisitions. Such
additional borrowings could adversely affect our financial position and results
of operations. To the extent our restricted or unrestricted subsidiaries borrow
money, whether on a secured or an unsecured basis, that indebtedness will
effectively rank senior to the notes. The degree to which we are leveraged may
impair our ability to internally fund or obtain financing in the future for
working capital, capital expenditures, acquisitions or other general corporate
purposes and may limit our flexibility in planning for or reacting to changes in
market conditions and industry trends. As a result, we may be more vulnerable in
the event of a further substantial downturn in general economic conditions in
Mexico.
The indenture does not restrict our ability or the ability of our
unrestricted subsidiaries to pledge shares of capital stock or assets of our
unrestricted subsidiaries, and our ability and our restricted subsidiaries'
ability to pledge assets is subject only to the limited restrictions contained
in the indenture. To the extent we pledge shares of capital stock or other
assets to secure indebtedness, the indebtedness so secured will effectively rank
senior to the notes to the extent of the value of the shares or other assets
pledged. The indenture also does not restrict the ability of our unrestricted
subsidiaries to pledge shares of capital stock or other assets that they own to
secure indebtedness. See "Description of the New Notes."
The indenture does not restrict the ability of Televisa to lend its funds
to, or otherwise invest in, its subsidiaries, including its unrestricted
subsidiaries. If Televisa were to lend funds to, or otherwise invest in, its
subsidiaries, creditors of such subsidiaries could have a claim on their assets
that would be senior to the claims of Televisa. See "-- We Are a Holding Company
With Our Assets Held Primarily by Our Subsidiaries; Creditors of Those Companies
Have a Claim on Their Assets That Is Effectively Senior to That of Holders of
the Notes."
27
The following table sets forth a description of our outstanding
indebtedness as of December 31, 2004 (i) on a historical, actual basis, and (ii)
as adjusted to give pro forma effect to (a) the early redemption in January 2005
by Innova of U.S.$88 million of 12.875% Senior Notes due 2007 using a portion of
the net proceeds from a bank loan from HSBC, which was incurred in December
2004, (b) the issuance of U.S.$400 million in aggregate principal amount of
6 5/8% Senior Notes due 2025 in March 2005 and the application of the net
proceeds from that issuance, together with cash on hand, to fund our tender
offers for any or all of our U.S.$300.0 million aggregate principal amount
outstanding of our 8.00% Senior Notes due 2011 and our Ps.3,839 million
(equivalent to approximately U.S.$336.9 million) aggregate principal amount of
8.15% UDI-denominated Notes due 2007, (c) the prepayment of the Serfin loan in
the aggregate principal amount of Ps.80 million in May 2005 and (d) the issuance
of the U.S.$200 million aggregate principal amount of 6 5/8% Senior Notes due
2025 in May 2005, as if such transactions occurred on December 31, 2004. In
addition, the terms of our bank loans require us to maintain compliance with
certain financial covenants. See "Item 5 -- Operating and Financial Review and
Prospects -- Results of Operations -- Liquidity, Foreign Exchange and Capital
Resources -- Indebtedness" included in the 2004 Form 20-F. If we cannot maintain
such compliance, this indebtedness could be accelerated. Information in the
following table is presented in millions of constant Pesos in purchasing power
as of December 31, 2004:
DECEMBER 31, 2004(1)
-----------------------
DESCRIPTION OF DEBT ACTUAL AS ADJUSTED
------------------- --------- -----------
(IN MILLIONS)
Senior unsecured and other indebtedness of Televisa (other
than the notes)........................................... Ps.16,754 Ps.11,348
Innova 12.875% Senior Notes due 2007........................ 981 --
6.625% Senior Notes due 2025 issued in March 2005........... -- 4,460
Serfin loan................................................. 96 --
6.625% Senior Notes due 2025 issued in May 2005............. -- 2,230
Indebtedness of consolidated subsidiaries................... 4,410 4,410
--------- ---------
Total..................................................... Ps.22,241 Ps.22,448
========= =========
---------------
(1) UDI-denominated indebtedness has been converted into Pesos by applying the
UDI-Peso exchange rate at the date of issuance, as adjusted for the increase
in the UDI-Peso exchange rate through December 31, 2004, and this debt,
together with other Peso-denominated indebtedness, has been converted into
Dollars solely for the convenience of the reader at an exchange rate of
Ps.11.1490 per U.S. Dollar, the Interbank Rate reported by Banamex as of
December 31, 2004.
A substantial portion of our currently outstanding indebtedness will mature
prior to the maturity date of the notes. If we cannot generate sufficient cash
flow from operations to meet our obligations (including payments on the notes at
their maturity), then our indebtedness (including the notes) may have to be
refinanced. Any such refinancing may not be effected successfully or on terms
that are acceptable to us. In the absence of such refinancings, we could be
forced to dispose of assets in order to make up for any shortfall in the
payments due on our indebtedness, including interest and principal payments due
on the notes, under circumstances that might not be favorable to realizing the
best price for such assets. Further, any assets may not be sold quickly enough,
or for amounts sufficient, to enable us to make any such payments. If we are
unable to sell sufficient assets to repay this debt we could be forced to issue
equity securities to make up any shortfall. Any such equity issuance would be
subject to the approval of Emilio Azcarraga Jean who has the voting power to
prevent us from raising money in equity offerings. In addition, the terms of our
bank loans require us to maintain compliance with certain financial covenants.
See "Item 5 -- Operating and Financial Review and Prospects -- Results of
Operations -- Liquidity, Foreign Exchange and Capital Resources -- Indebtedness"
included in the 2004 Form 20-F. If we cannot maintain such compliance, this
indebtedness could be accelerated.
28
WE ARE A HOLDING COMPANY WITH OUR ASSETS HELD PRIMARILY BY OUR SUBSIDIARIES;
CREDITORS OF THOSE COMPANIES HAVE A CLAIM ON THEIR ASSETS THAT IS EFFECTIVELY
SENIOR TO THAT OF HOLDERS OF THE NOTES
We are a holding company with no significant operating assets other than
through our ownership of shares of our subsidiaries. We receive substantially
all of our operating income from our subsidiaries. Televisa is the only company
obligated to make payments under the notes. Our subsidiaries are separate and
distinct legal entities and they will have no obligation, contingent or
otherwise, to pay any amounts due under the notes or to make any funds available
for any of those payments. The notes will be senior unsecured obligations of
Televisa ranking pari passu with other unsubordinated and unsecured obligations.
Claims of creditors of our subsidiaries, including trade creditors and banks and
other lenders, will effectively have priority over the holders of the notes with
respect to the assets of our subsidiaries. In addition, our ability to meet our
financial obligations, including obligations under the notes, will depend in
significant part on our receipt of cash dividends, advances and other payments
from our subsidiaries. In general, Mexican corporations may pay dividends only
out of net income, which is approved by shareholders. The shareholders must then
also approve the actual dividend payment after we establish mandatory legal
reserves (5% of net income annually up to at least an amount equal to 20% of the
paid-in capital) and satisfy losses for prior fiscal years. The ability of our
subsidiaries to pay such dividends or make such distributions will be subject
to, among other things, applicable laws and, under certain circumstances,
restrictions contained in agreements or debt instruments to which we, or any of
our subsidiaries, are parties. In addition, third parties own substantial
interests in certain of our other businesses such as Cablevision. Accordingly,
we must share with minority shareholders any dividends paid by these businesses.
Claims of creditors of our subsidiaries, including trade creditors, will
generally have priority as to the assets and cash flows of those subsidiaries
over any claims we and the holders of the notes may have. For a description of
our outstanding debt, see "Item 5 -- Operating and Financial Review and
Prospects -- Results of Operations -- Liquidity, Foreign Exchange and Capital
Resources -- Indebtedness" included in the 2004 Form 20-F.
In addition, creditors of Televisa, including holders of the notes, will be
limited in their ability to participate in distributions of assets of our
subsidiaries to the extent that the outstanding shares of any of our
subsidiaries are either pledged as collateral to our other creditors or are not
owned by us. As of the date of this prospectus, only a small portion of the
shares of our subsidiaries are pledged as collateral, although minority
interests in several subsidiaries, as described above, are held by third
parties. See "Item 5 -- Operating and Financial Review and Prospects -- Results
of Operations -- Liquidity, Foreign Exchange and Capital
Resources -- Indebtedness" and "-- Minority Interest" included in the 2004 Form
20-F. At December 31, 2004, our subsidiaries had approximately Ps.24,008.0
million (equivalent to approximately U.S.$2,153.4 million) of liabilities
(excluding liabilities to us and excluding guarantees by subsidiaries of
indebtedness of Televisa), U.S.$673.4 million of which was Dollar-denominated.
These liabilities include approximately U.S.$483.6 million of indebtedness
(equivalent to approximately Ps.5,391.1 million), U.S.$392.6 million of which
was Dollar-denominated indebtedness (equivalent to approximately Ps.4,325.8
million). All of these liabilities would effectively have ranked senior to the
notes. The indenture does not limit the amount of indebtedness which can be
incurred by us or by our restricted or unrestricted subsidiaries.
JUDGMENTS OF MEXICAN COURTS ENFORCING OUR OBLIGATIONS IN RESPECT OF THE NOTES
WOULD BE PAID ONLY IN PESOS
Under the Ley Monetaria, or the Mexican Monetary Law, in the event that any
proceedings are brought in Mexico seeking performance of our obligations under
the notes, pursuant to a judgment or on the basis of an original action, we may
discharge our obligations denominated in any currency other than Mexican Pesos
by paying Mexican Pesos converted at the rate of exchange prevailing on the date
payment is made. This rate is currently determined by Banco de Mexico, or the
Mexican Central Bank, every business day in Mexico and published the next
business day in the Diario Oficial de la Federacion, or the Official Gazette of
the Federation of Mexico, for application the following business day. As a
result, if the notes are paid by us in Pesos to holders of the debt securities,
the amount received may not be sufficient to cover the amount of
29
U.S. Dollars that we are obligated to pay under the indenture. In addition, our
obligation to indemnify against exchange losses may be unenforceable in Mexico.
In addition, in the case of our bankruptcy or concurso mercantil, or
judicial reorganization, our foreign currency-denominated liabilities, including
our liabilities under the notes, will be converted into Mexican Pesos at the
rate of exchange applicable on the date on which the declaration of bankruptcy
or judicial reorganization is effective, and the resulting amount, in turn, will
be converted to UDIs, or inflation-indexed units. Our foreign
currency-denominated liabilities, including our liabilities under the notes,
will not be adjusted to take into account any depreciation of the Peso as
compared to the U.S. Dollar occurring after the declaration of bankruptcy or
judicial reorganization. Also, all obligations under the notes will cease to
accrue interest from the date of the bankruptcy or judicial reorganization
declaration, will be satisfied only at the time those of our other creditors are
satisfied and will be subject to the outcome of, and amounts recognized as due
in respect of, the relevant bankruptcy or judicial reorganization proceeding.
WE MAY NOT HAVE SUFFICIENT FUNDS TO MEET OUR OBLIGATION UNDER THE INDENTURE TO
REPURCHASE THE NOTES UPON A CHANGE OF CONTROL
Upon the occurrence of a change of control, we will be required to offer to
repurchase each holder's notes at a price of 101% of the principal amount plus
accrued and unpaid interest, if any, to the date of purchase. We may not have
the financial resources necessary to meet our obligations in respect of our
indebtedness, including the required repurchase of notes, following a change of
control. If an offer to repurchase the notes is required to be made and we do
not have available sufficient funds to repurchase the notes, an event of default
would occur under the indenture. The occurrence of an event of default will
result in acceleration of the maturity of the notes and other indebtedness. See
"Description of the New Notes."
IT MAY BE DIFFICULT TO ENFORCE CIVIL LIABILITIES AGAINST US OR OUR DIRECTORS,
EXECUTIVE OFFICERS AND CONTROLLING PERSONS
We are organized under the laws of Mexico. Substantially all of our
directors, executive officers and controlling persons reside outside the U.S.,
all or a significant portion of the assets of our directors, executive officers
and controlling persons, and substantially all of our assets, are located
outside the U.S., and some of the experts named in this prospectus also reside
outside the U.S. As a result, it may be difficult for you to effect service of
process within the United States upon these persons or to enforce against them
or us in U.S. courts judgments predicated upon the civil liability provisions of
the federal securities laws of the U.S. We have been advised by our Mexican
counsel, Mijares, Angoitia, Cortes y Fuentes, S.C., that there is doubt as to
the enforceability, in original actions in Mexican courts, of liabilities
predicated solely on U.S. federal securities laws and as to the enforceability
in Mexican courts of judgments of U.S. courts obtained in actions predicated
upon the civil liability provisions of U.S. federal securities laws. See
"Limitation of Liability."
THERE MAY NOT BE A LIQUID TRADING MARKET FOR THE NEW NOTES, WHICH COULD LIMIT
YOUR ABILITY TO SELL YOUR NEW NOTES IN THE FUTURE
The new notes are being offered to the holders of the old notes. The new
notes will constitute a new issue of securities for which, prior to the exchange
offer, there has been no public market, and the new notes may not be widely
distributed. Accordingly, an active trading market for the new notes may not
develop. If a market for any of the new notes does develop, the price of such
new notes may fluctuate and liquidity may be limited. If a market for any of the
new notes does not develop, purchasers may be unable to resell such new notes
for an extended period of time, if at all.
YOUR FAILURE TO TENDER OLD NOTES IN THE EXCHANGE OFFER MAY AFFECT THEIR
MARKETABILITY
If old notes are tendered for exchange and accepted in the exchange offer,
the trading market, if any, for the untendered and tendered but unaccepted old
notes will be adversely affected. Your failure to participate in the exchange
offer will substantially limit, and may effectively eliminate, opportunities to
sell your old notes in
30
the future. We issued the old notes in a private placement exempt from the
registration requirements of the Securities Act.
Accordingly, you may not offer, sell or otherwise transfer your old notes
except in compliance with the registration requirements of the Securities Act
and any other applicable securities laws, or pursuant to an exemption from the
securities laws, or in a transaction not subject to the securities laws. If you
do not exchange your old notes for new notes in the exchange offer, or if you do
not properly tender your old notes in the exchange offer, your old notes will
continue to be subject to these transfer restrictions after the completion of
the exchange offer. In addition, after the completion of the exchange offer, you
will no longer be able to obligate us to register the old notes under the
Securities Act.
31
THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
We issued and sold the old notes in private placements on March 18, 2005
and on May 26, 2005. In connection with each issuance and sale, we entered into
a registration rights agreement with the initial purchasers of the old notes. In
both registration rights agreements we agreed to, among other things
- use our best efforts to file with the SEC a registration statement within
90 days following the original issue date of the applicable old notes,
relating to an offer to exchange the old notes for the new notes;
- use our reasonable best efforts to cause the registration statement to be
declared effective under the Securities Act within 150 days of the
original issue date of the applicable old notes; and
- use our best efforts to cause the exchange offer, or a "shelf"
registration with respect to the notes, to be consummated not later than
180 days following the original issue date of the applicable old notes.
These requirements under the registration rights agreements will be
satisfied when we complete the exchange offer. However, if we fail to meet any
of these requirements under either of the registration rights agreements and
under some other circumstances, then the interest rate borne by the old notes
that are affected by the registration default under the applicable registration
rights agreement with respect to the first 90-day period, or portion thereof,
will be increased by an additional interest of 0.25% per annum upon the
occurrence of such registration default. The amount of additional interest will
increase by an additional 0.25% per annum each 90-day period, or portion
thereof, while a registration default under the applicable registration rights
agreement is continuing until all registration defaults under such registration
rights agreement have been cured, provided that the maximum aggregate increase
in the interest rate will in no event exceed one percent (1%) per annum. Upon
- the filing of the exchange offer registration statement after the 90th
calendar day following the original issue date of the applicable old
notes;
- the effectiveness of the exchange offer registration statement after the
150th calendar day following the original issue date of the applicable
old notes;
- the consummation of the exchange offer;
- the effectiveness of the shelf registration statement after the 180th
calendar day following the original issue date of the applicable old
notes; or
- the date on which all new notes are saleable pursuant to Rule 144(k)
under the Securities Act or any successor provision,
the interest rate on the old notes will be reduced to the original interest rate
set forth on the cover page of this prospectus if Televisa is otherwise in
compliance with this paragraph. If after any such reduction in interest rate, a
different event specified above occurs, the interest rate will again be
increased pursuant to the foregoing provisions.
Application has been made to list the new notes on the Luxembourg Stock
Exchange. The Luxembourg Stock Exchange will be informed and notice will be
published in a daily newspaper of general circulation in Luxembourg prior to
commencing the exchange offer. You may obtain documents relating to the exchange
offer and complete the exchange of your old notes for new notes at the office of
Dexia Banque Internationale a Luxembourg S.A., our paying and transfer agent in
Luxembourg, at 69 route d'Esch, L-2953, Luxembourg. The results of the exchange
offer, including any increase in the rate, will be provided to the Luxembourg
Stock Exchange and published in a daily newspaper of general circulation in
Luxembourg.
We have also agreed to keep the registration statement for the exchange
offer effective for not less than 20 business days after the notice of the
exchange offer is mailed to holders (or longer, if required by applicable law).
32
Under each of the registration rights agreement, our obligations to
register the new notes will terminate upon the completion of the exchange offer.
However, pursuant to each registration rights agreement, we will be required to
file a "shelf" registration statement for a continuous offering by the holders
of the outstanding notes if:
- we are not permitted to file the exchange offer registration statement or
to consummate the exchange offer because the exchange offer is not
permitted by applicable law or SEC policy;
- for any reason, the exchange offer registration statement is not declared
effective within 150 days following the original issue date of the
applicable old notes or the exchange offer is not consummated within 180
days following the original issue date of the applicable old notes;
- upon the request of the initial purchasers in certain circumstances; or
- a holder is not permitted to participate in the exchange offer or does
not receive fully tradable new notes pursuant to the exchange offer.
During any 365-day period, we will have the ability to suspend the
availability of such shelf registration statement for up to two periods of up to
45 consecutive days (except for the consecutive 45-day period immediately prior
to the maturity of the notes), but no more than an aggregate of 60 days during
any 365-day period, if our Board of Directors determines in good faith that
there is a valid purpose for the suspension.
We will, in the event of the filing of a shelf registration statement,
provide to each holder of notes that are covered by the shelf registration
statement copies of the prospectus which is a part of the shelf registration
statement and notify each such holder when the shelf registration statement has
become effective. A holder of notes that sells the notes pursuant to the shelf
registration statement generally will be required to be named as a selling
security holder in the related prospectus and to deliver a prospectus to
purchasers, will be subject to certain of the civil liability provisions under
the Securities Act in connection with the sales and will be bound by the
provisions of the registration rights agreement which are applicable to the
holder (including certain indemnification obligations).
Once the exchange offer is complete, we will have no further obligation to
register any of the old notes not tendered to us in the exchange offer. See
"Risk Factors -- Risk Factors Related to the Notes and the Exchange
Offer -- Your Failure to Tender Old Notes in the Exchange Offer May Affect Their
Marketability."
EFFECT OF THE EXCHANGE OFFER
Based on interpretations by the SEC staff set forth in Exxon Capital
Holdings Corporation (available May 13, 1988), Morgan Stanley & Co. Incorporated
(available June 5, 1991), Shearman & Sterling (available July 2, 1993) and other
no-action letters issued to third parties, we believe that you may offer for
resale, resell and otherwise transfer the new notes issued to you in the
exchange offer without compliance with the registration and prospectus delivery
requirements of the Securities Act, provided:
- you are acquiring the new notes in the ordinary course of your business;
- you are not engaging in and do not intend to engage in a distribution of
the new notes;
- you have no arrangements or understandings with any person to participate
in the exchange offer for the purpose of distributing the new notes; and
- you are not our "affiliate," within the meaning of Rule 405 under the
Securities Act.
If you are not able to make these representations, you are a "restricted
holder." As a restricted holder, you will not be able to participate in the
exchange offer, you may not rely on the interpretations of the SEC staff set
forth in the no-action letters referred to above and you may only sell your old
notes in compliance with the registration and prospectus delivery requirements
of the Securities Act or under an exemption from the registration requirements
of the Securities Act or in a transaction not subject to the Securities Act.
33
In addition, each broker-dealer that is not a restricted holder that
receives new notes for its own account in exchange for old notes that it
acquired as a result of market-making activities or other trading activities may
be a statutory underwriter and must acknowledge in the letter of transmittal
that it will deliver a prospectus meeting the requirements of the Securities Act
upon any resale of such new notes. This prospectus may be used by those
broker-dealers to resell new notes they receive pursuant to the exchange offer.
We have agreed that, for a period of 90 days after the completion of the
exchange offer, we will make this prospectus available to any broker-dealer for
use by the broker-dealer in any resale. By acceptance of this exchange offer,
each broker-dealer that receives new notes under the exchange offer agrees to
notify us prior to using this prospectus in a sale or transfer of new notes. See
"Plan of Distribution."
Except as described above, this prospectus may not be used for an offer to
resell, resale or other transfer of new notes.
To the extent old notes are tendered and accepted in the exchange offer,
the principal amount of old notes that will be outstanding will decrease with a
resulting decrease in the liquidity in the market for the old notes. Old notes
that are still outstanding following the completion of the exchange offer will
continue to be subject to transfer restrictions.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions of the exchange offer
described in this prospectus and in the accompanying letter of transmittal, we
will accept for exchange all old notes validly tendered and not withdrawn before
5:00 p.m., New York City time, on the expiration date. We will issue U.S.$1,000
principal amount of new notes in exchange for each U.S.$1,000 principal amount
of old notes accepted in the exchange offer. You may tender some or all of your
old notes pursuant to the exchange offer. However, old notes may be tendered
only in a minimum principal amount of U.S.$100,000 and in integral multiples of
U.S.$1,000 in excess thereof.
The new notes will be substantially identical to the old notes, except
that:
- the offering of the new notes has been registered under the Securities
Act;
- the new notes will not be subject to transfer restrictions; and
- the new notes will be issued free of any covenants regarding registration
rights and free of any provision for additional interest.
The new notes will evidence the same debt as the old notes and will be
issued under and be entitled to the benefits of the same indenture under which
the old notes were issued. The old notes and the new notes will be treated as a
single series of debt securities under the indenture. For a description of the
terms of the indenture and the new notes, see "Description of the New Notes."
The exchange offer is not conditioned upon any minimum aggregate principal
amount of old notes being tendered for exchange. As of the date of this
prospectus, an aggregate of U.S.$600,000,000 principal amount of old notes is
outstanding. This prospectus is being sent to all registered holders of old
notes. There will be no fixed record date for determining registered holders of
old notes entitled to participate in the exchange offer.
We intend to conduct the exchange offer in accordance with the applicable
requirements of the Securities Act and the Securities Exchange Act and the rules
and regulations of the SEC. Holders of old notes do not have any appraisal or
dissenters' rights under law or under the indenture in connection with the
exchange offer. Old notes that are not tendered for exchange in the exchange
offer will remain outstanding and continue to accrue interest and will be
entitled to the rights and benefits their holders have under the indenture
relating to the old notes.
We will be deemed to have accepted for exchange validly tendered old notes
when we have given oral or written notice of the acceptance to the exchange
agent. The exchange agent will act as agent for the tendering holders of old
notes for the purposes of receiving the new notes from us and delivering the new
notes to the tendering holders. Subject to the terms of the registration rights
agreements, we expressly reserve the right to
34
amend or terminate the exchange offer, and not to accept for exchange any old
notes not previously accepted for exchange, upon the occurrence of any of the
conditions specified below under "-- Conditions." All old notes accepted for
exchange will be exchanged for new notes promptly following the expiration date.
If we decide for any reason to delay for any period our acceptance of any old
notes for exchange, we will extend the expiration date for the same period.
If we do not accept for exchange any tendered old notes because of an
invalid tender, the occurrence of certain other events described in this
prospectus or otherwise, such unaccepted old notes will be returned, without
expense, to the holder tendering them or the appropriate book-entry will be
made, in each case, as promptly as practicable after the expiration date.
We are not making, nor is our Board of Directors making, any recommendation
to you as to whether to tender or refrain from tendering all or any portion of
your old notes in the exchange offer. No one has been authorized to make any
such recommendation. You must make your own decision whether to tender in the
exchange offer and, if you decide to do so, you must also make your own decision
as to the aggregate amount of old notes to tender after reading this prospectus
and the letter of transmittal and consulting with your advisers, if any, based
on your own financial position and requirements.
EXPIRATION DATE; EXTENSIONS; AMENDEMENTS
The term "expiration date" means 5:00 p.m., New York City time, on
-- , 2005, unless we, in our sole discretion, extend the exchange offer, in
which case the term "expiration date" shall mean the latest date and time to
which the exchange offer is extended.
If we determine to extend the exchange offer, we will notify the exchange
agent of any extension by oral or written notice. We will notify the registered
holders of old notes of the extension no later than 9:00 a.m., New York City
time, on the business day immediately following the previously scheduled
expiration date.
We reserve the right, in our sole discretion:
- to delay accepting for exchange any old notes;
- to extend the exchange offer or to terminate the exchange offer and to
refuse to accept old notes not previously accepted if any of the
conditions set forth below under "-- Conditions" have not been satisfied
by the expiration date; or
- subject to the terms of the registration rights agreement, to amend the
terms of the exchange offer in any manner.
Any such delay in acceptance, extension, termination or amendment will be
followed as promptly as practicable by oral or written notice to the registered
holders of old notes. If we amend the exchange offer in a manner that we
determine to constitute a material change, we will promptly disclose the
amendment in a manner reasonably calculated to inform the holders of the old
notes of the amendment.
Without limiting the manner in which we may choose to make public
announcements of any delay in acceptance, extension, termination or amendment of
the exchange offer, we will have no obligation to publish, advertise or
otherwise communicate any public announcement, other than by making a timely
release to a financial news service.
During any extension of the exchange offer, all old notes previously
tendered will remain subject to the exchange offer, and we may accept them for
exchange. We will return any old notes that we do not accept for exchange for
any reason without expense to the tendering holder as promptly as practicable
after the expiration or earlier termination of the exchange offer.
INTEREST ON THE NEW NOTES AND THE OLD NOTES
Any old notes not tendered or accepted for exchange will continue to accrue
interest at the rate of 6.625% per annum in accordance with their terms. The new
notes will accrue interest at the rate of 6.625% per annum from the date of the
last periodic payment of interest on the old notes or, if no interest has been
paid,
35
from the original issue date of old notes. Interest on the new notes and any old
notes not tendered or accepted for exchange will be payable semi-annually in
arrears on March 18 and September 18 of each year, commencing on September 18,
2005.
PROCEDURES FOR TENDERING
Only a registered holder of old notes may tender those notes in the
exchange offer. To tender in the exchange offer, a holder must properly
complete, sign and date the letter of transmittal, have the signatures thereon
guaranteed if required by the letter of transmittal, and mail or otherwise
deliver such letter of transmittal, together with all other documents required
by the letter of transmittal, to the exchange agent at one of the addresses set
forth below under "-- Exchange Agent," before 5:00 p.m., New York City time, on
the expiration date. In addition, either:
- the exchange agent must receive, before the expiration date, a timely
confirmation of a book-entry transfer of the tendered old notes into the
exchange agent's account at The Depository Trust Company, or DTC, or the
depositary, according to the procedure for book-entry transfer described
below; or
- the holder must comply with the guaranteed delivery procedures described
below.
A tender of old notes by a holder that is not withdrawn prior to the
expiration date will constitute an agreement between that holder and us in
accordance with the terms and subject to the conditions set forth in this
prospectus and in the letter of transmittal.
The method of delivery of letters of transmittal and all other required
documents to the exchange agent, including delivery through DTC, is at the
holder's election and risk. Instead of delivery by mail, we recommend that
holders use an overnight or hand delivery service. If delivery is by mail, we
recommend that holders use certified or registered mail, properly insured, with
return receipt requested. In all cases, holders should allow sufficient time to
assure delivery to the exchange agent before the expiration date. Holders should
not send letters of transmittal or other required documents to us. Holders may
request their respective brokers, dealers, commercial banks, trust companies or
other nominees to effect the above transactions for them.
Any beneficial owner whose old notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender those notes should contact the registered holder promptly and instruct
it to tender on the beneficial owner's behalf.
We will determine, in our sole discretion, all questions as to the
validity, form, eligibility (including time of receipt), acceptance of tendered
old notes and withdrawal of tendered old notes, and our determination will be
final and binding. We reserve the absolute right to reject any and all old notes
not properly tendered or any old notes the acceptance of which would, in the
opinion of us or our counsel, be unlawful. We also reserve the absolute right to
waive any defects or irregularities or conditions of the exchange offer as to
any particular old notes either before or after the expiration date. Our
interpretation of the terms and conditions of the exchange offer as to any
particular old notes either before or after the expiration date, including the
instructions in the letter of transmittal, will be final and binding on all
parties. Unless waived, any defects or irregularities in connection with tenders
of old notes for exchange must be cured within such time as we shall determine.
Although we intend to notify holders of any defects or irregularities with
respect to tenders of old notes for exchange, neither we nor the exchange agent
nor any other person shall be under any duty to give such notification, nor
shall any of them incur any liability for failure to give such notification.
Tenders of old notes will not be deemed to have been made until all defects or
irregularities have been cured or waived. Any old notes delivered by book-entry
transfer within DTC, will be credited to the account maintained within DTC by
the participant in DTC which delivered such old notes, unless otherwise provided
in the letter of transmittal, as soon as practicable following the expiration
date.
In addition, we reserve the right in our sole discretion (a) to purchase or
make offers for any old notes that remain outstanding after the expiration date,
(b) as set forth below under "-- Conditions," to terminate the exchange offer
and (c) to the extent permitted by applicable law, purchase old notes in the
open market, in privately negotiated transactions or otherwise. The terms of any
such purchases or offers could differ from the terms of the exchange offer.
36
By signing, or otherwise becoming bound by, the letter of transmittal, each
tendering holder of old notes (other than certain specified holders) will
represent to us that:
- it is acquiring the new notes in the exchange offer in the ordinary
course of its business;
- it is not engaging in and does not intend to engage in a distribution of
the new notes;
- it is not participating, does not intend to participate, and has no
arrangements or understandings with any person to participate in the
exchange offer for the purpose of distributing the new notes; and
- it is not our "affiliate," within the meaning of Rule 405 under the
Securities Act, or, if it is our affiliate, it will comply with the
registration and prospectus delivery requirements of the Securities Act
to the extent applicable.
If the tendering holder is a broker-dealer that will receive new notes for
its own account in exchange for old notes that were acquired as a result of
market-making activities or other trading activities, it may be deemed to be an
"underwriter" within the meaning of the Securities Act. Any such holder will be
required to acknowledge in the letter of transmittal that it will deliver a
prospectus in connection with any resale or transfer of these new notes.
However, by so acknowledging and by delivering a prospectus, the holder will not
be deemed to admit that it is an "underwriter" within the meaning of the
Securities Act.
BOOK-ENTRY TRANSFER
The exchange agent will establish a new account or utilize an existing
account with respect to the old notes at DTC promptly after the date of this
prospectus, and any financial institution that is a participant in DTC's systems
may make book-entry delivery of old notes by causing DTC to transfer these old
notes into the exchange agent's account in accordance with DTC's procedures for
transfer. However, the exchange for the old notes so tendered will only be made
after timely confirmation of this book-entry transfer of old notes into the
exchange agent's account, and timely receipt by the exchange agent of an agent's
message and any other documents required by the letter of transmittal. The term
"agent's message" means a message transmitted by DTC to, and received by, the
exchange agent and forming a part of a book-entry confirmation, that states that
DTC has received an express acknowledgment from a participant in DTC tendering
old notes that are the subject of the book-entry confirmation stating (1) the
aggregate principal amount of old notes that have been tendered by such
participant, (2) that such participant has received and agrees to be bound by
the terms of the letter of transmittal and (3) that we may enforce such
agreement against the participant.
Although delivery of old notes must be effected through book-entry transfer
into the exchange agent's account at DTC, the letter of transmittal, properly
completely and validly executed, with any required signature guarantees, or an
agent's message in lieu of the letter of transmittal, and any other required
documents, must be delivered to and received by the exchange agent at one of its
addresses listed below under "-- Exchange Agent," before 5:00 p.m., New York
City time, on the expiration date, or the guaranteed delivery procedure
described below must be complied with.
Delivery of documents to DTC in accordance with its procedures does not
constitute delivery to the exchange agent.
All references in this prospectus to deposit or delivery of old notes shall
be deemed to also refer to DTC's book-entry delivery method.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their old notes and (1) who cannot deliver a
confirmation of book-entry transfer of old notes into the exchange agent's
account at DTC, the letter of transmittal or any other required
37
documents to the exchange agent prior to the expiration date or (2) who cannot
complete the procedure for book-entry transfer on a timely basis, may effect a
tender if:
- the tender is made through an eligible institution;
- before the expiration date, the exchange agent receives from the eligible
institution a properly completed and duly executed notice of guaranteed
delivery, by facsimile transmission, mail or hand delivery, listing the
principal amount of old notes tendered, stating that the tender is being
made thereby and guaranteeing that, within three New York Stock Exchange,
Inc. trading days after the expiration date, a duly executed letter of
transmittal together with a confirmation of book-entry transfer of such
old notes into the exchange agent's account at DTC, and any other
documents required by the letter of transmittal and the instructions
thereto, will be deposited by such eligible institution with the exchange
agent; and
- the properly completed and executed letter of transmittal and a
confirmation of book-entry transfer of all tendered old notes into the
exchange agent's account at DTC and all other documents required by the
letter of transmittal are received by the exchange agent within three New
York Stock Exchange, Inc. trading days after the expiration date.
Upon request to the exchange agent, a notice of guaranteed delivery will be
sent to holders who wish to tender their old notes according to the guaranteed
delivery procedures described above.
WITHDRAWAL OF TENDERS
Except as otherwise provided in this prospectus, tenders of old notes may
be withdrawn at any time prior to 5:00 p.m., New York City time, on the
expiration date.
For a withdrawal to be effective, the exchange agent must receive a written
or facsimile transmission notice of withdrawal at one of its addresses set forth
below under "-- Exchange Agent." Any notice of withdrawal must:
- specify the name of the person who tendered the old notes to be
withdrawn;
- identify the old notes to be withdrawn, including the principal amount of
such old notes;
- be signed by the holder in the same manner as the original signature on
the letter of transmittal by which the old notes were tendered and
include any required signature guarantees; and
- specify the name and number of the account at DTC to be credited with the
withdrawn old notes and otherwise comply with the procedures of DTC.
We will determine, in our sole discretion, all questions as to the
validity, form and eligibility (including time of receipt) of any notice of
withdrawal, and our determination shall be final and binding on all parties. Any
old notes so withdrawn will be deemed not to have been validly tendered for
exchange for purposes of the exchange offer and no new notes will be issued with
respect thereto unless the old notes so withdrawn are validly retendered.
Properly withdrawn old notes may be retendered by following one of the
procedures described above under "-- Procedures for Tendering" at any time prior
to the expiration date.
Any old notes that are tendered for exchange through the facilities of DTC
but that are not exchanged for any reason will be credited to an account
maintained with DTC for the old notes as soon as practicable after withdrawal,
rejection of tender or termination of the exchange offer.
CONDITIONS
Despite any other term of the exchange offer, we will not be required to
accept for exchange, or to issue new notes in exchange for, any old notes, and
we may terminate the exchange offer as provided in this prospectus prior to the
expiration date, if:
- the exchange offer, or the making of any exchange by a holder of old
notes, would violate applicable law or any applicable interpretation of
the SEC staff; or
38
- the old notes are not tendered in accordance with the exchange offer;
- you do not represent that you are acquiring the new notes in the ordinary
course, that you are not engaging in and do not intend to engage in a
distribution of the new notes, of your business and that you have no
arrangement or understanding with any person to participate in a
distribution of the new notes and you do not make any other
representations as may be reasonably necessary under applicable SEC
rules, regulations or interpretations to render available the use of an
appropriate form for registration of the new notes under the Securities
Act;
- any action or proceeding is instituted or threatened in any court or by
or before any governmental agency with respect to the exchange offer
which, in our judgment, would reasonably be expected to impair our
ability to proceed with the exchange offer; or
- any governmental approval has not been obtained, which we believe, in our
sole discretion, is necessary for the consummation of the exchange offer
as outlined in this prospectus.
These conditions are for our sole benefit and may be asserted by us
regardless of the circumstances giving rise to any of these conditions or may be
waived by us, in whole or in part, at any time and from time to time in our
reasonable discretion. Our failure at any time to exercise any of the foregoing
rights shall not be deemed a waiver of the right and each right shall be deemed
an ongoing right which may be asserted at any time and from time to time.
If we determine in our reasonable judgment that any of the conditions are
not satisfied, we may:
- refuse to accept and return to the tendering holder any old notes or
credit any tendered old notes to the account maintained within DTC by the
participant in DTC which delivered the old notes; or
- extend the exchange offer and retain all old notes tendered before the
expiration date, subject to the rights of holders to withdraw the tenders
of old notes (see "-- Withdrawal of Tenders" above); or
- waive the unsatisfied conditions with respect to the exchange offer prior
to the expiration date and accept all properly tendered old notes that
have not been withdrawn or otherwise amend the terms of the exchange
offer in any respect as provided under "-- Expiration Date; Extensions;
Amendments." If a waiver constitutes a material change to the exchange
offer, we will promptly disclose the waiver by means of a prospectus
supplement that will be distributed to the registered holders, and we
will extend the exchange offer for a period of five to ten business days,
depending upon the significance of the waiver and the manner of
disclosure to the registered holders, if the exchange offer would
otherwise expire during such five to ten business day period.
In addition, we will not accept for exchange any old notes tendered, and we
will not issue new notes in exchange for any of the old notes, if at that time
any stop order is threatened or in effect with respect to the registration
statement of which this prospectus constitutes a part or the qualification of
the indenture under the Trust Indenture Act of 1939.
EXCHANGE AGENT
The Bank of New York has been appointed as the exchange agent for the
exchange offer. All signed letters of transmittal and other documents required
for a valid tender of your old notes should be directed to the exchange agent at
one of the addresses set forth below. Questions and requests for assistance,
requests for additional copies of this prospectus or of the letter of
transmittal and requests for notices of guaranteed delivery should be directed
to the exchange agent addressed as follows:
BY HAND DELIVERY: BY REGISTERED MAIL OR OVERNIGHT CARRIER:
The Bank of New York The Bank of New York
Corporate Trust Operations Corporate Trust Operations
Reorganization Section Reorganization Section
101 Barclay Street, 7 East 101 Barclay Street, 7 East
New York, New York 10286 New York, New York 10286
Attention: Kin Lau Attention: Kin Lau
39
FACSIMILE TRANSMISSION:
(212) 298-1915
Confirm by Telephone:
(212) 815-3750
FOR INFORMATION WITH RESPECT TO THE EXCHANGE OFFER, CALL:
Kin Lau of the Exchange Agent
at (212) 815-3750
Delivery to other than the above addresses or facsimile number will not
constitute a valid delivery.
FEES AND EXPENSES
We will bear the expenses of soliciting tenders. We have not retained any
dealer-manager in connection with the exchange offer and will not make any
payments to brokers, dealers or others soliciting acceptance of the exchange
offer. The principal solicitation is being made by mail; however, additional
solicitation may be made by facsimile, telephone or in person by our officers
and employees.
We will pay the expenses to be incurred in connection with the exchange
offer. These expenses include fees and expenses of the exchange agent and the
trustee, accounting and legal fees, printing costs, and related fees and
expenses.
TRANSFER TAXES
Holders who tender their old notes for exchange will not be obligated to
pay any transfer taxes in connection with the exchange offer. If, however, new
notes issued in the exchange offer are to be delivered to, or are to be issued
in the name of, any person other than the holder of the outstanding old notes
tendered, or if a transfer tax is imposed for any reason other than the exchange
of outstanding old notes for new notes in connection with the exchange offer,
then the holder must pay any applicable transfer taxes, whether imposed on the
registered holder or on any other person. If satisfactory evidence of payment
of, or exemption from, transfer taxes is not submitted with the letter of
transmittal, the amount of the transfer taxes will be billed directly to the
tendering holder.
ACCOUNTING TREATMENT
We will record the new notes in our accounting records at the same carrying
values as the old notes on the date of the exchange. Accordingly, we will
recognize no gain or loss, for accounting purposes, as a result of the exchange
offer. Under Mexican GAAP, the expenses of the exchange offer and the
unamortized expenses relating to the issuance of the old notes will be amortized
over the term of the new notes.
CONSEQUENCES OF FAILURE TO EXCHANGE
Holders of old notes who do not exchange their old notes for new notes
pursuant to the exchange offer will continue to be subject to the restrictions
on transfer of the old notes as set forth in the legend printed thereon as a
consequence of the issuance of the old notes pursuant to an exemption from the
Securities Act and applicable state securities laws. Old notes not exchanged
pursuant to the exchange offer will continue to accrue interest at 6.625% per
annum, and the old notes will otherwise remain outstanding in accordance with
their terms. Holders of old notes do not have any appraisal or dissenters'
rights under Mexican law in connection with the exchange offer.
In general, the old notes may not be offered or sold unless registered
under the Securities Act, except pursuant to an exemption from, or in a
transaction not subject to, the Securities Act and applicable state securities
laws. Upon completion of the exchange offer, holders of old notes will not be
entitled to any rights to have the resale of old notes registered under the
Securities Act, and we currently do not intend to register under the Securities
Act the resale of any old notes that remain outstanding after completion of the
exchange offer.
40
USE OF PROCEEDS
We will not receive any cash proceeds from the exchange offer. We are
making this exchange offer solely to satisfy our obligations under the
registration rights agreement entered into in connection with each issuance of
the old notes. In consideration for issuing the new notes, we will receive old
notes in an aggregate principal amount equal to the value of the new notes. The
old notes surrendered in exchange for the new notes will be retired and
canceled. Accordingly, the issuance of the new notes will not result in any
change in our indebtedness.
We received approximately U.S.$390.0 million in net proceeds from the sale
of $400 million in aggregate principal amount of the old notes on March 18,
2005. We used those net proceeds, together with cash on hand, to fund our tender
offers in March 2005 for any or all of our U.S.$300 million aggregate principal
amount outstanding of our 8.00% Senior Notes due 2011 and our Ps.3,839 million
(equivalent to approximately U.S.$336.9 million) aggregate principal amount of
8.15% UDI-denominated Notes due 2007.
We received approximately U.S.$196.0 million in net proceeds from the sale
of $200 million in aggregate principal amount of old notes on May 26, 2005. We
may use the net proceeds from this offering for general corporate purposes and
may also apply it, subject to market conditions and other factors, to the
repayment of some of our and/or our subsidiaries' outstanding indebtedness. For
a description of our outstanding indebtedness as of March 31, 2005, see
"Capitalization" and "Exhibit I -- Indebtedness." For a description of our
outstanding indebtedness as of December 31, 2004, see "Item 5 -- Operating and
Financial Review and Prospects -- Results of Operations -- Liquidity, Foreign
Exchange and Capital Resources -- Indebtedness" included in the 2004 Form 20-F.
41
CAPITALIZATION
The following table sets forth our consolidated capitalization as of March
31, 2005, (i) on a historical, actual basis and (ii) as adjusted to reflect (a)
the issuance of notes in the aggregate principal amount of U.S.$200 million and
(b) the prepayment of the Serfin loan in the aggregate principal amount of
approximately Ps.80 million in May 2005, in each case, as if such transactions
occurred on March 31, 2005. This table should be read together with our year-end
financial statements, which are incorporated herein by reference in our 2004
20-F, and our unaudited selected consolidated financial information included
elsewhere in this prospectus. Information in the following table presented in
U.S. Dollar amounts are translated from the Peso amounts, solely for the
convenience of the reader, at an exchange rate of Ps.11.1590 to U.S.$1.00, the
Interbank Rate on March 31, 2005. Since the financial information in the
following table is presented in constant Mexican Pesos in purchasing power as of
March 31, 2005, it is not directly comparable to the financial information
included elsewhere in this prospectus, which, unless otherwise indicated, is
presented in constant Mexican Pesos in purchasing power as of March 31, 2005.
The change in the NCPI for the three month period ended March 31, 2005 was 0.8%.
AS OF MARCH 31, 2005(1)(2)
----------------------------------------------------
ACTUAL AS ADJUSTED ACTUAL AS ADJUSTED
--------- ----------- ----------- ------------
(MILLIONS OF PESOS) (MILLIONS OF U.S. DOLLARS)
CURRENT DEBT:
Notes payable....................... Ps. 27 Ps. 27 U.S.$ 2 U.S.$ 2
8 5/8% Senior Notes due 2005........ 2,232 2,232 200 200
Serfin loan......................... 64 -- 6 --
--------- --------- ---------- ----------
Total current debt............... 2,323 2,259 208 202
--------- --------- ---------- ----------
LONG-TERM DEBT:
Series B Senior Notes............... 60 60 5 5
UDI-denominated notes............... 920 920 83 83
Notes payable....................... 48 48 4 4
8% Senior Notes due 2011............ 865 865 78 78
8.5% Senior Notes due 2032.......... 3,348 3,348 300 300
6.625% Senior Notes due 2025 issued
in March 2005.................... 4,464 4,464 400 400
6.625% Senior Notes due 2025 issued
in May 2005...................... -- 2,232 -- 200
Innova's 9.375% Senior Notes due
2013............................. 3,348 3,348 300 300
Banamex loan due 2009............... 1,162 1,162 104 104
Banamex loan due 2008............... 720 720 65 65
Banamex loan due 2010 and 2012...... 2,000 2,000 179 179
Serfin loan......................... 16 -- 1 --
Innova's HSBC loan.................. 1,012 1,012 91 91
--------- --------- ---------- ----------
Total long-term debt................ 17,963 20,179 1,610 1,809
--------- --------- ---------- ----------
Total stockholders' equity(3)....... 28,437 28,437 2,548 2,548
--------- --------- ---------- ----------
Total capitalization................ Ps.48,723 Ps.50,875 U.S.$4,366 U.S.$4,559
========= ========= ========== ==========
---------------
(1) Columns may not add due to rounding. See "Recent Developments -- Second
Quarter Results" for more recent financial information about us.
(2) Solely for purposes of preparing calculations for this table, our U.S.
Dollar-denominated indebtedness has been translated into Pesos at an
exchange rate of Ps.11.590 to U.S.$1.00, the Interbank Rate, as reported by
Banamex, as of March 31, 2005.
(3) On April 29, 2005, our shareholders approved the payment of an extraordinary
dividend of Ps.1.00 per CPO, in addition to our ordinary dividend of Ps.0.35
per CPO, for a total of Ps.1.35 per CPO. The total amount of the dividend is
approximately Ps.4,250 million. The dividend was paid on May 31, 2005 to
shareholders of record as of May 30, 2005.
42
DESCRIPTION OF THE NEW NOTES
We issued the old notes and will issue the new notes under an indenture,
dated August 8, 2000, as amended or supplemented through the expiration date,
which we collectively call the indenture, between Televisa, as issuer, The Bank
of New York, as trustee, registrar, paying agent and transfer agent, Dexia
Banque Internationale a Luxembourg, as Luxembourg paying agent and transfer
agent and the holders and beneficial owners of the notes. The following summary
of certain provisions of the indenture and the notes does not purport to be
complete and is subject to, and qualified in its entirety by, reference to the
provisions of the indenture, including the definitions of certain terms
contained in the indenture. Capitalized terms not defined in this section of the
prospectus have meanings as set forth in the indenture.
GENERAL
The indenture does not limit the aggregate principal amount of senior debt
securities which may be issued under the indenture and provides that Televisa
may issue senior debt securities from time to time in one or more series. The
senior debt securities which Televisa may issue under the indenture, including
the notes, are collectively referred to in this prospectus as the "senior
notes."
The old notes issued in March 2005 and May 2005 are a single series of
notes under the indenture. The old notes and the new notes, which together are
referred to in this prospectus as the "notes," will constitute a single series
of senior notes under the indenture. If the exchange offer described under "The
Exchange Offer" is consummated, holders of old notes who do not exchange their
old notes for new notes will vote together as a single series of notes with
holders of the new notes of the series for all relevant purposes under the
indenture. In that regard, the indenture requires that certain actions by the
holders under the notes (including acceleration following an event of default)
must be taken, and certain rights must be exercised, by specified minimum
percentages of the aggregate principal amount of the outstanding notes. In
determining whether holders of the requisite percentage in principal amount have
given any notice, consent or waiver or taken any other action permitted under
the indenture, any old notes which remain outstanding after the exchange offer
will be aggregated with the new notes of the relevant series and the holders of
the old notes and new notes will vote together as a single series for all
purposes. Accordingly, all references in this prospectus to specified
percentages in aggregate principal amount of the outstanding notes will be
deemed to mean, at any time after the exchange offer is consummated, the
percentages in aggregate principal amount of the old notes and the new notes
then outstanding.
The notes are unsecured senior obligations of Televisa and are initially
limited to an aggregate principal amount of U.S.$600 million, consisting of U.S.
$400 million principal amount of senior notes issued on March 18, 2005 and U.S.
$200 million principal amount of senior notes of the same series issued on May
26, 2005. Televisa may "reopen" the note series and issue additional notes of
the same series. The notes bear interest at the rate per annum shown above from
the date of original issuance or from the most recent date to which interest has
been paid or duly provided for, payable semi-annually on March 18 and September
18 of each year, each of which is referred to in this prospectus as an "interest
payment date," commencing September 18, 2005, to the persons in whose names the
notes are registered at the close of business on the fifteenth calendar day
preceding the interest payment date. Interest payable at maturity will be
payable to the person to whom principal will be payable on that date. Interest
on the notes will be calculated on the basis of a 360-day year of twelve 30-day
months. The maturity date for the notes is March 18, 2025. If any interest
payment date or maturity date would otherwise be a day that is not a business
day, the related payment of principal and interest will be made on the next
succeeding business day as if it were made on the date the payment was due, and
no interest will accrue on the amounts so payable for the period from and after
the interest payment date or the maturity date, as the case may be, to the next
succeeding business day. A business day means a day other than a Saturday,
Sunday or other day on which banking institutions in New York, New York or
Luxembourg are authorized or obligated by law, regulation or executive order to
close. The notes will not be subject to any sinking fund. For a discussion of
the circumstances in which the interest rate on the notes may be adjusted, see
"The Exchange Offer."
43
The indenture does not contain any provision that would limit the ability
of Televisa to incur indebtedness or to substantially reduce or eliminate
Televisa's assets or that would afford the holders of the notes protection in
the event of a decline in Televisa's credit quality or a takeover,
recapitalization or highly leveraged or similar transaction involving Televisa.
In addition, subject to the limitations set forth under "-- Merger and
Consolidation," Televisa may, in the future, enter into certain transactions,
including the sale of all or substantially all of its assets or the merger or
consolidation of Televisa, that would increase the amount of Televisa's
indebtedness or substantially reduce or eliminate Televisa's assets, which may
have an adverse effect on Televisa's ability to service its indebtedness,
including the notes.
Each book-entry note will be represented by one or more global notes in
fully registered form, registered in the name of The Depository Trust Company,
which is referred to in this prospectus as "DTC" or the "depositary," or its
nominee. Beneficial interests in the global notes will be shown on, and
transfers thereof will be effected only through, records maintained by DTC and
its participants. See "-- Form, Denomination and Registration." Except in the
limited circumstances described in this prospectus, book-entry notes will not be
exchangeable for notes issued in fully registered form ("certificated notes").
In the event that, as a result of certain changes in law affecting Mexican
withholding taxes, Televisa becomes obliged to pay additional amounts in excess
of those attributable to a Mexican withholding tax rate of 10%, the notes will
be redeemable, as a whole but not in part, at Televisa's option at any time at
100% of their principal amount plus accrued and unpaid interest, if any. See
"-- Withholding Tax Redemption." In addition, we will have the right at our
option to redeem any of the Notes in whole or in part at a redemption price
equal to the Make-Whole Amount (as defined below).
Book-entry notes may be transferred or exchanged only through the
depositary. See "-- Form, Denomination and Registration." Registration of
transfer or exchange of certificated notes will be made at the office or agency
maintained by Televisa for this purpose in the Borough of Manhattan, The City of
New York, currently the office of the trustee at 101 Barclay Street, New York,
New York 10286 or at the office of Dexia Banque Internationale a Luxembourg, our
paying and transfer agent in Luxembourg, at 69 route d'Esch, L-2953, Luxembourg.
Neither Televisa nor the trustee will charge a service charge for any
registration of transfer or exchange of notes, but Televisa may require payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with the transfer or exchange (other than exchanges
pursuant to the indenture not involving any transfer). Televisa will maintain a
paying and transfer agent in Luxembourg for so long as any notes or any new
notes are listed on the Luxembourg Stock Exchange.
Televisa will make payments of principal, and premium, if any, and interest
on book-entry notes through the trustee to the depositary. See "-- Form,
Denomination and Registration." In the case of certificated notes, Televisa will
pay the principal and premium, if any, due on the maturity date in immediately
available funds upon presentation and surrender by the holder of the notes at
the office or agency maintained by Televisa for this purpose in the Borough of
Manhattan, The City of New York, currently the office of the trustee at 101
Barclay Street, New York, New York 10286 or at the office of Dexia Banque
Internationale a Luxembourg, our paying and transfer agent in Luxembourg. In the
case of a transfer of only part of a certificated note, the new certificated
note in respect of the balance of the principal amount of the certificated note
not transferred will be delivered at the office of the Trustee or relevant
transfer agent, as the case may be, or sent by mail to the transferor at the
transferor's risk and expense. Televisa will pay interest due on the maturity
date of a certificated note to the person to whom payment of the principal and
premium, if any, will be made. Televisa will pay interest due on a certificated
note on any interest payment date other than the maturity date by check mailed
to the address of the holder entitled to the payment as the address shall appear
in the note register of Televisa. Notwithstanding the foregoing, a holder of
U.S.$10.0 million or more in aggregate principal amount of certificated notes
will be entitled to receive interest payments, if any, on any interest payment
date other than the maturity date by wire transfer of immediately available
funds if appropriate wire transfer instructions have been received in writing by
the trustee not less than 15 calendar days prior to the interest payment date.
Any wire transfer instructions received by the trustee will remain in effect
until revoked by the holder. Any interest not punctually paid or duly provided
for on a certificated note on any interest payment date other than the maturity
date will cease to be payable to the holder of the note as of the close of
business on the related record date and may either be paid (1) to the person in
whose name the
44
certificated note is registered at the close of business on a special record
date for the payment of the defaulted interest that is fixed by Televisa,
written notice of which will be given to the holders of the notes not less than
30 calendar days prior to the special record date, or (2) at any time in any
other lawful manner.
All monies paid by Televisa to the trustee or any paying agent for the
payment of principal of, and premium and interest on, any note which remains
unclaimed for two years after the principal, premium or interest is due and
payable may be repaid to Televisa and, after that payment, the holder of the
note will look only to Televisa for payment.
RANKING AND HOLDING COMPANY STRUCTURE
We are a holding company with no significant operating assets other than
through our ownership of shares of our subsidiaries and cash and cash
equivalents. We receive substantially all of our operating income from our
subsidiaries. The notes are solely our unsecured senior obligations ranking pari
passu among themselves and with other unsecured senior obligations, including
the 8 5/8% Notes due 2005, 8% Notes due 2011 and the 8.50% Notes due 2032.
Claims of creditors of our subsidiaries, including trade creditors and banks and
other lenders, will have priority over the claims of holders of the notes with
respect to the assets of our subsidiaries. At March 31, 2005, our subsidiaries
had approximately Ps.22,070.1 million (equivalent to approximately U.S.$1,977.8
million) of liabilities, (excluding liabilities to us and excluding guarantees
by subsidiaries of indebtedness of Televisa), U.S.$570.9 million of which was
Dollar-denominated including approximately Ps.4,411.2 million (equivalent to
approximately U.S.$395.3 million), U.S.$304.5 million of which was Dollar-
denominated of indebtedness. All of these liabilities will effectively rank
senior to the notes. See "Risk Factors -- Risk Factors Related to the Notes and
the Exchange Offer -- We Are a Holding Company with Our Assets Held Primarily by
Our Subsidiaries; Creditors of Those Companies Have a Claim on Their Assets That
Is Effectively Senior to That of Holders of the Notes."
FORM, DENOMINATION AND REGISTRATION
The new notes will be issued in book-entry form in minimum denominations of
U.S.$100,000 and integral multiples of U.S.$1,000 in excess thereof. The notes
will initially be issued in the form of one or more global notes in definitive,
full registered book entry form, without interest coupons that will be deposited
with, or on behalf of, the depositary or its nominee.
So long as the depositary, which initially will be DTC, or its nominee is
the registered owner of a global note, the depositary or its nominee, as the
case may be, will be the sole holder of the notes represented by the global note
for all purposes under the indenture. Except as otherwise provided in this
section, the beneficial owners of the global notes representing the notes will
not be entitled to receive physical delivery of certificated notes and will not
be considered the holders of the notes for any purpose under the indenture, and
no global note representing the book-entry notes will be exchangeable or
transferable. Accordingly, each beneficial owner must rely on the procedures of
the depositary and, if the beneficial owner is not a participant of the
depositary, then the beneficial owner must rely on the procedures of the
participant through which the beneficial owner owns its interest in order to
exercise any rights of a holder under the global notes or the indenture. The
laws of some jurisdictions may require that certain purchasers of notes take
physical delivery of the notes in certificated form. Such limits and laws may
impair the ability to transfer beneficial interests in a global note
representing the notes.
The global notes representing the notes will be exchangeable for
certificated notes of like tenor and terms and of differing authorized
denominations aggregating a like principal amount, only if the depositary
notifies us that it is unwilling or unable to continue as depositary for the
global notes, the depositary ceases to be a clearing agency registered under the
Exchange Act, we in our sole discretion determine that the global notes shall be
exchangeable for certificated notes, or there shall have occurred and be
continuing an event of default under the indenture with respect to the notes.
Upon any exchange, the certificated notes shall be registered in the names
of the beneficial owners of the global notes representing the notes, which names
shall be provided by the depositary's relevant participants (as identified by
the depositary) to the trustee.
45
Cross-Market Transfers. Subject to compliance with the transfer
restrictions applicable to any new notes and the certification and other
requirements set forth in the indenture, any cross-market transfer between
participants of the depository, on the one hand, and Euroclear or Clearstream
banking, on the other hand, will be effected in the depositary's book-entry
system on behalf of Euroclear or Clearstream Banking, as the case may be in
accordance with the rules of the depositary. However, these cross-market
transfers may require delivery of instructions to Euroclear or Clearstream
Banking, as the case may be, by the counterparty in such system in accordance
with its rules and procedures and within its established deadlines. Euroclear or
Clearstream Banking, as the case may be, will, if the transfer meets its
settlement requirements, deliver instructions to its respective depositary to
take action to effect final settlement on its behalf by delivering or receiving
the beneficial interests in the applicable global note in the depositary, and
making or receiving payment in accordance with normal procedures for same-day
funds settlement applicable to the depositary. Participants in Euroclear or
Clearstream Banking may not deliver instructions directly to the depositaries
for Euroclear or Clearstream Banking, as the case may be.
Because of time zone differences, the securities account of a Euroclear or
Clearstream Banking participant purchasing a beneficial interest in a global
note from a depositary participant will be credited during the securities
settlement processing day, which must be a business day for Euroclear or
Clearstream Banking, as applicable, immediately following the depositary's
settlement date. Credit of a transfer of a beneficial interest in a global note
settled during that processing day will be reported to the applicable Euroclear
or Clearstream Banking participant on that day. Cash received in Euroclear or
Clearstream Banking as a result of a transfer of a beneficial interest in a
global note by or through a Euroclear or Clearstream Banking participant to a
depositary participant will be received with value on the depositary's
settlement date but will be available in the applicable Euroclear or Clearstream
Banking cash account only as of the business day following settlement in the
depositary.
Any beneficial interest in a global note that is transferred for a
beneficial interest in another global note will, upon transfer, cease to be an
interest in the original global note and will become an interest in the other
global note and, accordingly, will be subject to all transfer restrictions and
other procedures applicable to beneficial interests in the other global note for
as long as it remains a beneficial interest in that global note.
In order to insure the availability of Rule 144(k) under the Securities
Act, the indenture provides that all notes, other than the new notes, which are
redeemed, purchased or otherwise acquired by Televisa or any of its subsidiaries
or "affiliates," as defined in Rule 144 under the Securities Act, may not be
resold or otherwise transferred and will be delivered to the trustee for
cancellation.
Information Relating to the Depositary. The following is based on
information furnished by the depositary:
The depositary will act as the depositary for the notes. The notes
will be issued as fully registered senior notes registered in the name of
Cede & Co., which is the depositary's partnership nominee. Fully registered
global notes will be issued for the notes, in the aggregate principal
amount of the issue, and will be deposited with the depositary.
The depositary is a limited-purpose trust company organized under the
New York Banking Law, a "banking organization" within the meaning of the
New York Banking Law, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code,
and a "clearing agency" registered pursuant to the provisions of Section
17A of the Exchange Act. The depositary holds securities that its
participants deposit with the depositary. The depositary also facilitates
the settlement among participants of securities transactions, including
transfers and pledges, in deposited securities through electronic
computerized book-entry changes to participants' accounts, thereby
eliminating the need for physical movement of senior notes certificates.
Direct participants of the depositary include securities brokers and
dealers, including the initial purchasers of the notes, banks, trust
companies, clearing corporations and certain other organizations. The
depositary is owned by a number of its direct participants, including the
initial purchasers of the notes and by the New York Stock Exchange, Inc.,
the American Stock Exchange, Inc., and the National Association of
Securities Dealers, Inc. Access to the depositary's system is also
available to indirect participants, which includes securities
46
brokers and dealers, banks and trust companies that clear through or
maintain a custodial relationship with a direct participant, either
directly or indirectly. The rules applicable to the depositary and its
participants are on file with the SEC.
Purchases of notes under the depositary's system must be made by or
through direct participants, which will receive a credit for the notes on
the depositary's record. The ownership interest of each beneficial owner,
which is the actual purchaser of each note, represented by global notes, is
in turn to be recorded on the direct and indirect participants' records.
Beneficial owners will not receive written confirmation from the depositary
of their purchase, but beneficial owners are expected to receive written
confirmations providing details of the transaction, as well as periodic
statements of their holdings, from the direct or indirect participants
through which the beneficial owner entered into the transaction. Transfers
of ownership interests in the global notes representing the notes are to be
accomplished by entries made on the books of participants acting on behalf
of beneficial owners. Beneficial owners of the global notes representing
the notes will not receive certificated notes representing their ownership
interests therein, except in the limited circumstances described above.
To facilitate subsequent transfers, all global notes representing the
notes which are deposited with, or on behalf of, the depositary are
registered in the name of the depositary's nominee, Cede & Co. The deposit
of global notes with, or on behalf of, the depositary and their
registration in the name of Cede & Co. effect no change in beneficial
ownership. The depositary has no knowledge of the actual beneficial owners
of the global notes representing the notes; the depositary's records
reflect only the identity of the direct participants to whose accounts the
notes are credited, which may or may not be the beneficial owners. The
participants will remain responsible for keeping account of their holdings
on behalf of their customers.
Conveyance of notices and other communications by the depositary to
direct participants, by direct participants to indirect participants, and
by direct and indirect participants to beneficial owners will be governed
by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Neither the depositary nor Cede & Co. will consent or vote with
respect to the global notes representing the notes. Under its usual
procedure, the depositary mails an omnibus proxy to Televisa as soon as
possible after the applicable record date. The omnibus proxy assigns Cede &
Co.'s consenting or voting rights to those direct participants to whose
accounts the notes are credited on the applicable record date (identified
in a listing attached to the omnibus proxy).
Principal, premium, if any, and/or interest payments on the global
notes representing the notes will be made to the depositary. The
depositary's practice is to credit direct participants' accounts on the
applicable payment date in accordance with their respective holdings shown
on the depositary's records unless the depositary has reason to believe
that it will not receive payment on the date. Payments by participants to
beneficial owners will be governed by standing instructions and customary
practices, as is the case with securities held for the accounts of
customers in bearer form or registered in "street name," and will be the
responsibility of the participant and not of the depositary, the trustee or
Televisa, subject to any statutory or regulatory requirements as may be in
effect from time to time. Payment of principal, premium, if any, and/or
interest to the depositary is the responsibility of Televisa or the
trustee, disbursement of the payments to direct participants will be the
responsibility of the depositary, and disbursement of the payments to the
beneficial owners will be the responsibility of direct and indirect
participants.
The depositary may discontinue providing its services as securities
depositary with respect to the notes at any time by giving reasonable
notice to Televisa or the trustee. Under such circumstances, in the event
that a successor securities depositary is not obtained, certificated notes
are required to be printed and delivered.
Televisa may decide to discontinue use of the system of book-entry
transfers through the depositary or a successor securities depositary. In that
event, certificated notes will be printed and delivered.
47
Although the depositary, Euroclear and Clearstream Banking have agreed to
the procedures described above in order to facilitate transfers of interests in
the global notes among participants of the depositary, Euroclear and Clearstream
Banking, they are under no obligation to perform or continue to perform these
procedures, and these procedures may be discontinued at any time. Neither the
trustee nor Televisa will have any responsibility for the performance by the
depositary, Euroclear or Clearstream Banking or their respective participants or
indirect participants of their respective obligations under the rules and
procedures governing their operations.
Trading. Transfers between participants in the depositary will be effected
in the ordinary way in accordance with the depositary's rules and operating
procedures, while transfers between participants in Euroclear and Clearstream
Banking will be effected in the ordinary way in accordance with their respective
rules and operating procedures.
The information in this subsection "-- Form, Denomination and Registration"
concerning the depositary, Euroclear and Clearstream Banking and their
respective book-entry systems has been obtained from the depository, Euroclear
and Clearstream Banking but Televisa takes responsibility solely for the
accuracy of its extraction of this information.
CERTAIN COVENANTS
The indenture provides that the covenants set forth below are applicable to
Televisa and its Restricted Subsidiaries.
Limitation on Liens. Televisa will not, and will not permit any Restricted
Subsidiary to, directly or indirectly, create, incur or assume any Lien, except
for Permitted Liens, on any Principal Property to secure the payment of Funded
Indebtedness of Televisa or any Restricted Subsidiary if, immediately after the
creation, incurrence or assumption of such Lien the sum of (without duplication)
(A) the aggregate outstanding principal amount of all Funded Indebtedness of
Televisa and the Restricted Subsidiaries that is secured by Liens (other than
Permitted Liens) on any Principal Property and (B) the Attributable Debt
relating to any Sale and Leaseback Transaction which would otherwise be subject
to the provisions of clause 2(A)(i) of the "Limitation on Sale and Leaseback"
covenant would exceed the greater of (x) U.S.$300 million and (y) 15% of
Adjusted Consolidated Net Tangible Assets, unless effective provision is made
whereby the notes (together with, if Televisa shall so determine, any other
Funded Indebtedness ranking equally with the notes, whether then existing or
thereafter created) are secured equally and ratably with (or prior to) such
Funded Indebtedness (but only for so long as such Funded Indebtedness is so
secured). For purposes of this covenant, the value of any Lien on any Principal
Property securing Funded Indebtedness will be computed on the basis of the
lesser of (i) the outstanding principal amount of such secured Funded
Indebtedness and (ii) the higher of (x) the book value or (y) the Fair Market
Value of the Principal Property securing such Funded Indebtedness.
The foregoing limitation on Liens shall not apply to the creation,
incurrence or assumption of the following Liens ("Permitted Liens"):
(1) Any Lien which arises out of a judgment or award against Televisa
or any Restricted Subsidiary with respect to which Televisa or such
Restricted Subsidiary at the time shall be prosecuting an appeal or
proceeding for review (or with respect to which the period within which
such appeal or proceeding for review may be initiated shall not have
expired) and with respect to which it shall have secured a stay of
execution pending such appeal or proceedings for review or with respect to
which Televisa or such Restricted Subsidiary shall have posted a bond and
established adequate reserves (in accordance with Mexican GAAP) for the
payment of such judgment or award;
(2) Liens arising from the rendering of a final judgment or order
against Televisa or any Restricted Subsidiary of Televisa that would not,
with notice, passage of time or both, give rise to an Event of Default;
(3) Liens incurred or deposits made to secure indemnity obligations in
respect of the disposition of any business or assets of Televisa or any
Restricted Subsidiary; provided that the property subject to such
48
Lien does not have a Fair Market Value in excess of the cash or cash
equivalent proceeds received by Televisa and its Restricted Subsidiaries in
connection with such disposition;
(4) Liens resulting from the deposit of funds or evidences of
Indebtedness in trust for the purpose of discharging or defeasing
Indebtedness of Televisa or any Restricted Subsidiary;
(5) Liens on assets or property of a Person existing at the time such
Person is merged into, consolidated with or acquired by Televisa or any
Restricted Subsidiary or becomes a Restricted Subsidiary; provided that:
(i) any such Lien is not incurred in contemplation of such merger,
consolidation or acquisition and does not secure any property of Televisa
or any Restricted Subsidiary other than the property and assets subject to
such Lien prior to such merger, consolidation or acquisition or (ii) if
such Lien is incurred in contemplation of such merger, consolidation or
acquisition it would be, if created or incurred on or after the
consummation of such merger, consolidation or acquisition, a Permitted Lien
under clause 7 below;
(6) Liens existing on the date of original issuance of the notes;
(7) Liens securing Funded Indebtedness (including in the form of
Capitalized Lease Obligations and purchase money Indebtedness) incurred for
the purpose of financing the cost (including without limitation the cost of
design, development, site acquisition, construction, integration,
manufacture or acquisition) of real or personal property (tangible or
intangible) which is incurred contemporaneously therewith or within 180
days thereafter; provided (i) such Liens secure Funded Indebtedness in an
amount not in excess of the cost of such property (plus an amount equal to
the reasonable fees and expenses incurred in connection with the incurrence
of such Funded Indebtedness) and (ii) such Liens do not extend to any
property of Televisa or any Restricted Subsidiary other than the property
for which such Funded Indebtedness was incurred;
(8) Liens to secure the performance of statutory and common law
obligations, surety or appeal bonds, performance bonds or other obligations
of a like nature incurred in the ordinary course of business;
(9) Liens to secure the notes;
(10) Liens granted in favor of Televisa and/or any Wholly Owned
Restricted Subsidiary to secure indebtedness owing to Televisa or such
Wholly Owned Restricted Subsidiary;
(11) Legal or equitable encumbrances deemed to exist by reason of the
inclusion of customary negative pledge provisions in any financing document
of Televisa or any Restricted Subsidiary;
(12) Liens on the rights of Televisa or any Restricted Subsidiary to
licensing, royalty and other similar payments in respect of programming or
films and all proceeds therefrom; and
(13) Any Lien in respect of Funded Indebtedness representing the
extension, refinancing, renewal or replacement (or successive extensions,
refinancings, renewals or replacements) of Funded Indebtedness secured by
Liens referred to in clauses (3), (4), (5), (6), (7), (8), (9), (10), (11)
and (12) above; provided that the principal of the Funded Indebtedness
secured thereby does not exceed the principal of the Funded Indebtedness
secured thereby immediately prior to such extension, renewal or
replacement, plus any accrued and unpaid interest or capitalized interest
payable thereon, reasonable fees and expenses incurred in connection
therewith, and the amount of any prepayment premium necessary to accomplish
any refinancing; and provided, further, that such extension, renewal or
replacement shall be limited to all or a part of the property (or interest
therein) subject to the Lien so extended, renewed or replaced (plus
improvements and construction on such property); and provided, further,
that in the case of Liens referred to in clauses (3), (4), (8), (9), (10),
(11) and (12), the secured party with respect to the Lien so extended,
renewed, refinanced or replaced is the party (or any successor or assignee
thereof) that was secured prior to such extension, renewal, refinancing or
replacement.
49
Limitation on Sale and Leaseback. Televisa will not, and will not permit
any Restricted Subsidiary to, enter into any Sale and Leaseback Transaction;
provided that Televisa or any Restricted Subsidiary may enter into a Sale and
Leaseback Transaction if:
(1) the gross cash proceeds of the Sale and Leaseback Transaction are
at least equal to the Fair Market Value, as determined in good faith by the
Board of Directors and set forth in a resolution delivered to the Trustee,
of the Principal Property that is the subject of the Sale and Leaseback
Transaction; and
(2) either
(A) Televisa or the Restricted Subsidiary, as applicable, either
(i) could have incurred a Lien to secure Funded Indebtedness in an
amount equal to the Attributable Debt relating to such Sale and
Leaseback Transaction pursuant to the "Limitation on Liens" covenant, or
(ii) makes effective provision whereby the notes (together with, if
Televisa shall so determine, any other Funded Indebtedness ranking
equally with the notes, whether then existing or thereafter created) are
secured equally and ratably with (or prior to) the obligations of
Televisa or the Restricted Subsidiary under the lease of such Principal
Property, or
(B) within 360 days, Televisa or the Restricted Subsidiary either
(i) applies an amount equal to the Attributable Debt in respect of such
Sale and Leaseback Transaction to purchase the notes or to retire,
defease or prepay (in whole or in part) other Funded Indebtedness, or
(ii) enters into a bona fide commitment to expend for the acquisition or
improvement of a Principal Property an amount at least equal to the
Attributable Debt in respect of such Sale and Leaseback Transaction.
Designation of Restricted Subsidiaries. The Board of Directors of Televisa
may designate an Unrestricted Subsidiary as a Restricted Subsidiary or designate
a Restricted Subsidiary as an Unrestricted Subsidiary at any time; provided that
(1) immediately after giving effect to such designation, Televisa and its
Restricted Subsidiaries would have been permitted to incur at least $1.00 of
additional Funded Indebtedness secured by a Lien pursuant to the "Limitation on
Liens" covenant (other than Funded Indebtedness permitted to be secured by a
Lien pursuant to the provisions of the definition of "Permitted Liens"), (2) no
default or event of default shall have occurred and be continuing, and (3) an
Officer's Certificate with respect to such designation is delivered to the
Trustee within 75 days after the end of the fiscal quarter of Televisa in which
such designation is made (or, in the case of a designation made during the last
fiscal quarter of Televisa's fiscal year, within 120 days after the end of such
fiscal year), which Officers' Certificate shall state the effective date of such
designation. Televisa has initially designated as Unrestricted Subsidiaries all
of its Subsidiaries other than those subsidiaries engaged in television
broadcasting, pay television networks and programming exports (other than the
subsidiaries which operate Bay City Television) and will deliver the required
Officers' Certificate with respect thereto to the Trustee, on or prior to the
date of initial issuance of the notes.
Repurchase of Notes upon a Change of Control. Televisa must commence,
within 30 days of the occurrence of a Change of Control, and consummate an Offer
to Purchase for all notes then outstanding, at a purchase price equal to 101% of
the principal amount of the notes on the date of repurchase, plus accrued
interest (if any) to the date of purchase. Televisa is not required to make an
Offer to Purchase following a Change of Control if a third party makes an Offer
to Purchase that would be in compliance with the provisions described in this
covenant if it were made by Televisa and such third party purchases (for the
consideration referred to in the immediately preceding sentence) the notes
validly tendered and not withdrawn. Prior to the mailing of the notice to
holders and publishing such notice to holders in a daily newspaper of general
circulation in Luxembourg commencing such Offer to Purchase, but in any event
within 30 days following any Change of Control, Televisa covenants to (i) repay
in full all indebtedness of Televisa that would prohibit the repurchase of the
notes pursuant to such Offer to Purchase or (ii) obtain any requisite consents
under instruments governing any such indebtedness of Televisa to permit the
repurchase of the notes. Televisa shall first comply with the covenant in the
preceding sentence before it repurchases notes upon a Change of Control pursuant
to this covenant.
50
The covenant requiring Televisa to repurchase the notes will, unless
consents are obtained, require Televisa to repay all indebtedness then
outstanding, which by its terms would prohibit such note repurchase, either
prior to or concurrently with such note repurchase. There can be no assurance
that Televisa will have sufficient funds available at the time of any Change of
Control to make any debt payment (including repurchases of notes) required by
the foregoing covenant (as well as by any covenant contained in other securities
of Televisa which might be outstanding at the time).
Additional Amounts. All payments of amounts due in respect of the notes by
Televisa will be made without withholding or deduction for or on account of any
present or future taxes or duties of whatever nature imposed or levied by or on
behalf of Mexico, any political subdivision thereof or any agency or authority
of or in Mexico ("Taxes") unless the withholding or deduction of such Taxes is
required by law or by the interpretation or administration thereof. In that
event, Televisa will pay such additional amounts ("Additional Amounts") as may
be necessary in order that the net amounts receivable by the holders after such
withholding or deduction shall equal the respective amounts which would have
been receivable in respect of the notes, in the absence of such withholding or
deduction, which Additional Amounts shall be due and payable when the amounts to
which such Additional Amounts relate are due and payable; except that no such
Additional Amounts shall be payable with respect to:
(i) any Taxes which are imposed on, or deducted or withheld from,
payments made to the holder or beneficial owner of a note by reason of the
existence of any present or former connection between the holder or
beneficial owner of the note (or between a fiduciary, settlor, beneficiary,
member or shareholder of, or possessor of a power over, such holder or
beneficial owner, if such holder or beneficial owner is an estate, trust,
corporation or partnership) and Mexico (or any political subdivision or
territory or possession thereof or area subject to its jurisdiction)
(including, without limitation, such holder or beneficial owner (or such
fiduciary, settlor, beneficiary, member, shareholder or possessor) (x)
being or having been a citizen or resident thereof, (y) maintaining or
having maintained an office, permanent establishment, fixed base or branch
therein, or (z) being or having been present or engaged in a trade or
business therein) other than the mere holding of such note or the receipt
of amounts due in respect thereof;
(ii) any estate, inheritance, gift, sales, stamp, transfer or personal
property Tax;
(iii) any Taxes that are imposed on, or withheld or deducted from,
payments made to the holder or beneficial owner of a note to the extent
such Taxes would not have been so imposed, deducted or withheld but for the
failure by such holder or beneficial owner of such note to comply with any
certification, identification, information, documentation or other
reporting requirement concerning the nationality, residence, identity or
connection with Mexico (or any political subdivision or territory or
possession thereof or area subject to its jurisdiction) of the holder or
beneficial owner of such note if (x) such compliance is required or imposed
by a statute, treaty, regulation, rule, ruling or administrative practice
in order to make any claim for exemption from, or reduction in the rate of,
the imposition, withholding or deduction of any Taxes, and (y) at least 60
days prior to the first payment date with respect to which Televisa shall
apply this clause (iii), Televisa shall have notified all the holders of
notes, in writing, that such holders or beneficial owners of the notes will
be required to provide such information or documentation;
(iv) any Taxes imposed on, or withheld or deducted from, payments made
to a holder or beneficial owner of a note at a rate in excess of the 4.9%
rate of Tax in effect on the date hereof and uniformly applicable in
respect of payments made by Televisa to all holders or beneficial owners
eligible for the benefits of a treaty for the avoidance of double taxation
to which Mexico is a party without regard to the particular circumstances
of such holders or beneficial owners (provided that, upon any subsequent
increase in the rate of Tax that would be applicable to payments to all
such holders or beneficial owners without regard to their particular
circumstances, such increased rate shall be substituted for the 4.9% rate
for purposes of this clause (iv)), but only to the extent that (x) such
holder or beneficial owner has failed to provide on a timely basis, at the
reasonable request of Televisa (subject to the conditions set forth below),
information, documentation or other evidence concerning whether such holder
or beneficial
51
owner is eligible for benefits under a treaty for the avoidance of double
taxation to which Mexico is a party if necessary to determine the
appropriate rate of deduction or withholding of Taxes under such treaty or
under any statute, regulation, rule, ruling or administrative practice, and
(y) at least 60 days prior to the first payment date with respect to which
Televisa shall make such reasonable request, Televisa shall have notified
the holders of the notes, in writing, that such holders or beneficial
owners of the notes will be required to provide such information,
documentation or other evidence;
(v) to or on behalf of a holder of a note in respect of Taxes that
would not have been imposed but for the presentation by such holder for
payment on a date more than 15 days after the date on which such payment
became due and payable or the date on which payment thereof is duly
provided for and notice thereof given to holders, whichever occurs later,
except to the extent that the holder of such note would have been entitled
to Additional Amounts in respect of such Taxes on presenting such note for
payment on any date during such 15-day period; or
(vi) any combination of (i), (ii), (iii), (iv) or (v) above (the Taxes
described in clauses (i) through (vi), for which no Additional Amounts are
payable, are hereinafter referred to as "Excluded Taxes").
Notwithstanding the foregoing, the limitations on Televisa's obligation to
pay Additional Amounts set forth in clauses (iii) and (iv) above shall not apply
if (a) the provision of information, documentation or other evidence described
in such clauses (iii) and (iv) would be materially more onerous, in form, in
procedure or in the substance of information disclosed, to a holder or
beneficial owner of a note (taking into account any relevant differences between
U.S. and Mexican law, rules, regulations or administrative practice) than
comparable information or other reporting requirements imposed under U.S. tax
law, regulations and administrative practice (such as IRS Forms W-8BEN and W-9)
or (b) Rule 3.23.8 issued by the Secretaria de Hacienda y Credito Publico
(Ministry of Finance and Public Credit) or a substantially similar successor of
such rule is in effect, unless the provision of the information, documentation
or other evidence described in clauses (iii) and (iv) is expressly required by
statute, regulation, rule, ruling or administrative practice in order to apply
Rule 3.23.8 (or a substantially similar successor of such rule), Televisa cannot
obtain such information, documentation or other evidence on its own through
reasonable diligence and Televisa otherwise would meet the requirements for
application of Rule 3.23.8 (or such successor of such rule). In addition, such
clauses (iii) and (iv) shall not be construed to require that a non-Mexican
pension or retirement fund or a non-Mexican financial institution or any other
holder register with the Ministry of Finance and Public Credit for the purpose
of establishing eligibility for an exemption from or reduction of Mexican
withholding tax or to require that a holder or beneficial owner certify or
provide information concerning whether it is or is not a tax-exempt pension or
retirement fund.
At least 30 days prior to each date on which any payment under or with
respect to the notes is due and payable, if Televisa will be obligated to pay
Additional Amounts with respect to such payment (other than Additional Amounts
payable on the date of the indenture), Televisa will deliver to the Trustee an
Officer's Certificate stating the fact that such Additional Amounts will be
payable and the amounts so payable, and will set forth such other information
necessary to enable the Trustee to pay such Additional Amounts to holders on the
payment date. Whenever either in the indenture or in this prospectus there is
mentioned, in any context, the payment of principal (and premium, if any),
redemption price, interest or any other amount payable under or with respect to
any note, such mention shall be deemed to include mention of the payment of
Additional Amounts to the extent that, in such context, Additional Amounts are,
were or would be payable in respect thereof.
In the event that Televisa has become or would become required to pay any
Additional Amounts in excess of those attributable to Taxes that are imposed,
deducted or withheld at a rate of 10% as a result of certain changes affecting
Mexican tax laws, Televisa may redeem all, but not less than all, of the notes,
at any time at 100% of the principal amount, together with accrued and unpaid
interest thereon, if any, to the redemption date. See "-- Withholding Tax
Redemption."
52
Televisa will provide the Trustee with documentation evidencing the payment
of Mexican taxes in respect of which Televisa has paid any Additional Amounts.
Copies of such documentation will be made available to the holders or the paying
agent, as applicable, upon request therefor.
In addition, Televisa will pay any stamp, issue, registration, documentary
or other similar taxes and other duties (including interest and penalties) (a)
payable in Mexico or the United States (or any political subdivision of either
jurisdiction) in respect of the creation, issue and offering of the notes, and
(b) payable in Mexico (or any political subdivision thereof) in respect of the
subsequent redemption or retirement of the notes (other than, in the case of any
subsequent redemption or retirement, Excluded Taxes; except for this purpose,
the definition of Excluded Taxes will not include those defined in clause (ii)
thereof).
OPTIONAL REDEMPTION
We will not be permitted to redeem the notes before their stated maturity,
except as set forth below. The notes will not be entitled to the benefit of any
sinking fund -- meaning that we will not deposit money on a regular basis into
any separate account to repay your notes. In addition, you will not be entitled
to require us to repurchase your notes from you before the stated maturity.
OPTIONAL REDEMPTION WITH "MAKE-WHOLE" AMOUNT
We will have the right at our option to redeem any of the notes in whole or
in part, at any time or from time to time prior to their maturity, on at least
30 days' but not more than 60 days' notice, at a redemption price equal to the
greater of (1) 100% of the principal amount of such notes and (2) the sum of the
present values of each remaining scheduled payment of principal and interest
thereon (exclusive of interest accrued to the date of redemption) discounted to
the redemption date on a semiannual basis (assuming a 360-day year consisting of
twelve 30-day months) at the Treasury Rate plus 40 basis points (the "Make-Whole
Amount"), plus in each case accrued interest on the principal amount of the
notes to the date of redemption.
"Treasury Rate" means, with respect to any redemption date, the rate per
annum equal to the semiannual equivalent yield to maturity or interpolated
maturity (on a day count basis) of the Comparable Treasury Issue, assuming a
price for the Comparable Treasury Issue (expressed as a percentage of its
principal amount) equal to the Comparable Treasury Price for such redemption
date.
"Comparable Treasury Issue" means the United States Treasury security or
securities selected by an Independent Investment Banker as having an actual or
interpolated maturity comparable to the remaining term of the notes to be
redeemed that would be utilized, at the time of selection and in accordance with
customary financial practice, in pricing new issues of corporate debt securities
of a comparable maturity to the remaining term of such notes.
"Independent Investment Banker" means one of the Reference Treasury Dealers
appointed by us.
"Comparable Treasury Price" means, with respect to any redemption date (1)
the average of the Reference Treasury Dealer Quotations for such redemption
date, after excluding the highest and lowest such Reference Treasury Dealer
Quotation or (2) if the trustee obtains fewer than four such Reference Treasury
Dealer Quotations, the average of all such quotations.
"Reference Treasury Dealer" means Credit Suisse First Boston LLC or its
affiliates which are primary United States government securities dealers and two
other leading primary United States government securities dealers in New York
City reasonably designated by us; provided, however, that if any of the
foregoing shall cease to be a primary United States government securities dealer
in New York City (a "Primary Treasury Dealer"), we will substitute therefor
another Primary Treasury Dealer.
"Reference Treasury Dealer Quotation" means, with respect to each Reference
Treasury Dealer and any redemption date, the average, as determined by the
trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the trustee by such Reference Treasury Dealer at 3:30 pm New York
time on the third business day preceding such redemption date.
53
On and after the redemption date, interest will cease to accrue on the
notes or any portion of the notes called for redemption (unless we default in
the payment of the redemption price and accrued interest). On or before the
redemption date, we will deposit with the trustee money sufficient to pay the
redemption price of and (unless the redemption date shall be an interest payment
date) accrued interest to the redemption date on the notes to be redeemed on
such date. If less than all of the notes are to be redeemed, the notes to be
redeemed shall be selected by the trustee by such method as the trustee shall
deem fair and appropriate.
WITHHOLDING TAX REDEMPTION
The notes are subject to redemption ("Withholding Tax Redemption") at any
time (a "Withholding Tax Redemption Date"), as a whole but not in part, at the
election of Televisa, at a redemption price equal to 100% of the unpaid
principal amount thereof plus accrued and unpaid interest, if any, to and
including the Withholding Tax Redemption Date (the "Withholding Tax Redemption
Price") if, as a result of (i) any change in or amendment to the laws, rules or
regulations of Mexico, or any political subdivision or taxing authority or other
instrumentality thereof or therein, or (ii) any amendment to or change in the
rulings or interpretations relating to such laws, rules or regulations made by
any legislative body, court or governmental or regulatory agency or authority
(including the enactment of any legislation and the publication of any judicial
decision or regulatory determination) of Mexico, or any political subdivision or
taxing authority or other instrumentality thereof or therein, or (iii) any
official interpretation, application or pronouncement by any legislative body,
court or governmental or regulatory agency or authority that provides for a
position with respect to such laws, rules or regulations that differs from the
theretofore generally accepted position, which amendment or change is enacted,
promulgated, issued or announced or which interpretation, application or
pronouncement is issued or announced, in each case, after the Closing Date,
Televisa has become or would become required to pay any Additional Amounts (as
defined above) in excess of those attributable to Taxes (as defined above) that
are imposed, deducted or withheld at a rate of 10% on or from any payments under
the notes. See "-- Additional Amounts" and "Taxation -- Mexican Taxation."
The election of Televisa to redeem the notes shall be evidenced by a
certificate (a "Withholding Tax Redemption Certificate") of a financial officer
of Televisa, which certificate shall be delivered to the Trustee. Televisa
shall, not less than 30 days nor more than 45 days prior to the Withholding Tax
Redemption Date, notify the Trustee in writing of such Withholding Tax
Redemption Date and of all other information necessary to the giving by the
Trustee of notices of such Withholding Tax Redemption. The Trustee shall be
entitled to rely conclusively upon the information so furnished by Televisa in
the Withholding Tax Redemption Certificate and shall be under no duty to check
the accuracy or completeness thereof. Such notice shall be irrevocable and upon
its delivery Televisa shall be obligated to make the payment or payments to the
Trustee referred to therein at least two Business Days prior to such Withholding
Tax Redemption Date.
Notice of Withholding Tax Redemption shall be given by the Trustee to the
holders, in accordance with the provisions under "Notices," upon the mailing by
first-class postage prepaid to each holder at the address of such holder as it
appears in the Register not less than 15 days nor more than 30 days prior to the
Withholding Tax Redemption Date.
The notice of Withholding Tax Redemption shall state:
(i) the Withholding Tax Redemption Date;
(ii) the Withholding Tax Redemption Price;
(iii) the sum of all other amounts due to the holders under the notes
and the indenture;
(iv) that on the Withholding Tax Redemption Date the Withholding Tax
Redemption Price will become due and payable upon each such note so to be
redeemed; and
(v) the place or places, including the offices of our paying agent in
Luxembourg, where such notes so to be redeemed are to be surrendered for
payment of the Withholding Tax Redemption Price.
Notice of Withholding Tax Redemption having been given as aforesaid, the
notes so to be redeemed shall, on the Withholding Tax Redemption Date, become
due and payable at the Withholding Tax
54
Redemption Price therein specified. Upon surrender of any such notes for
redemption in accordance with such notice, such notes shall be paid by the
paying agent on behalf of Televisa on the Withholding Tax Redemption Date;
provided that moneys sufficient therefor have been deposited with the Trustee
for the holders.
Notwithstanding anything to the contrary herein or in the indenture or in
the notes, if a Withholding Tax Redemption Certificate has been delivered to the
Trustee and Televisa shall have paid to the Trustee for the benefit of the
holders (i) the Withholding Tax Redemption Price and (ii) all other amounts due
to the holders and the Trustee under the notes and the indenture, then neither
the holders nor the Trustee on their behalf shall any longer be entitled to
exercise any of the rights of the holders under the notes other than the rights
of the holders to receive payment of such amounts from the paying agent and the
occurrence of an Event of Default whether before or after such payment by
Televisa to the Trustee for the benefit of the holders shall not entitle either
the holders or the Trustee on their behalf after such payment to declare the
principal of any notes then outstanding to be due and payable on any date prior
to the Withholding Tax Redemption Date. The funds paid to the Trustee shall be
used to redeem the notes on the Withholding Tax Redemption Date.
MERGER AND CONSOLIDATION
Televisa may not consolidate with or merge into, or sell, assign, transfer,
lease, convey or otherwise dispose of all or substantially all of its assets and
the properties and assets of its Subsidiaries (taken as a whole) as an entirety
to, any entity or entities (including limited liability companies) unless (1)
the successor entity or entities, each of which shall be organized under the
laws of Mexico or of the United States or a State thereof, shall assume by
supplemental indenture all the obligations of Televisa under the notes, the
indenture and the registration rights agreements, (2) immediately after giving
effect to the transaction or series of transactions, no default or event of
default shall have occurred and be continuing, and (3) if, as a result of such
transaction, properties or assets of Televisa would become subject to an
encumbrance which would not be permitted by the terms of the notes, Televisa or
the successor entity or entities shall take such steps as are necessary to
secure such notes equally and ratably with all indebtedness secured thereunder;
provided, that notwithstanding the foregoing, nothing herein shall prohibit
Televisa or a Restricted Subsidiary from selling, assigning, transferring,
leasing, conveying or otherwise disposing of any of Televisa's Subsidiaries that
are Unrestricted Subsidiaries at the date of the indenture or any interest
therein or any assets thereof. Thereafter, all such obligations of Televisa
shall terminate.
EVENTS OF DEFAULT
The term "event of default" means any one of the following events with
respect to any series of senior debt securities, including the notes:
(1) default in the payment of any interest on any senior debt security
of the series, or any Additional Amounts payable with respect thereto, when
the interest becomes or the Additional Amounts become due and payable, and
continuance of the default for a period of 30 days;
(2) default in the payment of the principal of or any premium on any
senior debt security of the series, or any Additional Amounts payable with
respect thereto, when the principal or premium becomes or the Additional
Amounts become due and payable at their maturity;
(3) failure of Televisa to comply with any of its obligations
described above under "-- Merger and Consolidation";
(4) default in the deposit of any sinking fund payment when and as due
by the terms of a senior debt security of the series;
(5) default in the performance, or breach, of any covenant or warranty
of Televisa in the indenture or the senior debt securities (other than a
covenant or warranty a default in the performance or the breach of which is
elsewhere in the indenture specifically dealt with or which has been
expressly included in the indenture solely for the benefit of a series of
senior debt securities other than the relevant series), and continuance of
the default or breach for a period of 60 days after there has been given,
by registered
55
or certified mail, to Televisa by the trustee or to Televisa and the
trustee by the holders of at least 25% in principal amount of the
outstanding senior debt securities of the series, a written notice
specifying the default or breach and requiring it to be remedied and
stating that the notice is a "Notice of Default" under the indenture;
(6) if any event of default as defined in any mortgage, indenture or
instrument under which there may be issued, or by which there may be
secured or evidenced, any Indebtedness of Televisa or any Material
Subsidiary of Televisa, whether the Indebtedness now exists or shall
hereafter be created, shall happen and shall result in Indebtedness in
aggregate principal amount (or, if applicable, with an issue price and
accreted original issue discount) in excess of U.S.$100 million becoming or
being declared due and payable prior to the date on which it would
otherwise become due and payable, and (i) the acceleration shall not be
rescinded or annulled, (ii) such Indebtedness shall not have been paid or
(iii) Televisa or such Material Subsidiary shall not have contested such
acceleration in good faith by appropriate proceedings and have obtained and
thereafter maintained a stay of all consequences that would have a material
adverse effect on Televisa, in each case within a period of 30 days after
there shall have been given, by registered or certified mail, to Televisa
by the trustee or to Televisa and the trustee by the holders of at least
25% in principal amount of the outstanding senior debt securities of the
series then outstanding, a written notice specifying the default or
breaches and requiring it to be remedied and stating that the notice is a
"Notice of Default" or other notice as prescribed in the indenture;
provided, however, that if after the expiration of such period, such event
of default shall be remedied or cured by Televisa or be waived by the
holders of such Indebtedness in any manner authorized by such mortgage,
indenture or instrument, then the event of default with respect to such
series of senior debt securities or by reason thereof shall, without
further action by Televisa, the trustee or any holder of senior debt
securities of such series, be deemed cured and not continuing;
(7) the entry by a court having competent jurisdiction of:
(a) a decree or order for relief in respect of Televisa or any
Material Subsidiary in an involuntary proceeding under any applicable
bankruptcy, insolvency, reorganization or other similar law, which
decree or order shall remain unstayed and in effect for a period of 60
consecutive days;
(b) a decree or order adjudging Televisa or any Material Subsidiary
to be insolvent, or approving a petition seeking reorganization,
arrangement, adjustment or composition of Televisa or any Material
Subsidiary, which decree or order shall remain unstayed and in effect
for a period of 60 consecutive days; or
(c) a final and non-appealable order appointing a custodian,
receiver, liquidator, assignee, trustee or other similar official of
Televisa or any Material Subsidiary or of any substantial part of the
property of Televisa or any Material Subsidiary or ordering the winding
up or liquidation of the affairs of Televisa;
(8) the commencement by Televisa or any Material Subsidiary of a
voluntary proceeding under any applicable bankruptcy, insolvency,
reorganization or other similar law or of a voluntary proceeding seeking to
be adjudicated insolvent or the consent by Televisa or any Material
Subsidiary to the entry of a decree or order for relief in an involuntary
proceeding under any applicable bankruptcy, insolvency, reorganization or
other similar law or to the commencement of any insolvency proceedings
against it, or the filing by Televisa or any Material Subsidiary of a
petition or answer or consent seeking reorganization or relief under any
applicable law, or the consent by Televisa or any Material Subsidiary to
the filing of the petition or to the appointment of or taking possession by
a custodian, receiver, liquidator, assignee, trustee or similar official of
Televisa or any Material Subsidiary or any substantial part of the property
of Televisa or any Material Subsidiary or the making by Televisa or any
Material Subsidiary of an assignment for the benefit of creditors, or the
taking of corporate action by Televisa or any Material Subsidiary in
furtherance of any such action; or
(9) any other event of default provided in or pursuant to the
indenture with respect to senior debt securities of the series.
56
If an event of default with respect to senior debt securities of any series
at the time outstanding (other than an event of default specified in clause (7)
or (8) above) occurs and is continuing, then the trustee or the holders of not
less than 25% in principal amount of the outstanding senior debt securities of
the series may declare the principal of all the senior debt securities of the
series, or such lesser amount as may be provided for in the senior debt
securities of the series, to be due and payable immediately, by a notice in
writing to Televisa (and to the trustee if given by the holders), and upon any
declaration the principal or such lesser amount shall become immediately due and
payable. If an event of default specified in clause (7) or (8) above occurs, all
unpaid principal of and accrued interest on the outstanding senior debt
securities of that series (or such lesser amount as may be provided for in the
senior debt securities of the series) shall become and be immediately due and
payable without any declaration or other act on the part of the trustee or any
holder of any senior debt security of that series.
At any time after a declaration of acceleration or automatic acceleration
with respect to the senior debt securities of any series has been made and
before a judgment or decree for payment of the money due has been obtained by
the trustee, the holders of not less than a majority in principal amount of the
outstanding senior debt securities of the series, by written notice to Televisa
and the trustee, may rescind and annul the declaration and its consequences if:
(1) Televisa has paid or deposited with the trustee a sum of money
sufficient to pay all overdue installments of any interest on and
additional amounts with respect to all senior debt securities of the series
and the principal of and any premium on any senior debt securities of the
series which have become due otherwise than by the declaration of
acceleration and interest on the senior debt securities; and
(2) all events of default with respect to senior debt securities of
the series, other than the non-payment of the principal of, any premium and
interest on, and any additional amounts with respect to senior debt
securities of the series which shall have become due solely by the
acceleration, shall have been cured or waived.
No rescission shall affect any subsequent default or impair any right
consequent thereon.
MEETINGS OF NOTEHOLDERS
A meeting of noteholders may be called by the trustee, Televisa or the
holders of at least 10% in aggregate principal amount of the outstanding notes
at any time and from time to time, to make, give or take any request, demand,
authorization, direction, notice, consent, waiver or other actions provided by
the indenture to be made, given or taken by holders of notes. The meeting shall
be held at such time and at such place in the Borough of Manhattan, The City of
New York or in such other place as the trustee shall determine. Notice of every
meeting of noteholders, setting forth the time and the place of such meeting and
in general terms the action proposed to be taken at such meeting, shall be given
not less than 21 nor more than 180 days prior to the date fixed for the meeting.
The persons entitled to vote a majority in principal amount of the
outstanding notes shall constitute a quorum for a meeting; except that if any
action requires holders of at least 66 2/3% in principal amount of the
outstanding notes to consent or waiver the Persons entitled to vote 66 2/3% in
principal amount of the outstanding notes shall constitute a quorum. Any
resolution presented to a meeting at which a quorum is present may be adopted
only by the affirmative vote of the holders of a majority in principal amount of
the outstanding notes; except that any resolution requiring consent of the
holders of at least 66 2/3% in principal amount of the outstanding notes may be
adopted at a meeting by the affirmative vote of the holders of at least 66 2/3%
in principal amount of the outstanding notes. Any resolution passed or decision
taken at any meeting of holders of notes duly held in accordance with the
indenture shall be binding on all the holders of notes, whether or not such
holders were present or represented at the meeting.
MODIFICATION AND WAIVER
Modification and amendments of the indenture may be made by Televisa and
the trustee with the consent of the holders of not less than a majority in
aggregate principal amount of the outstanding senior debt
57
securities of each series affected thereby; provided, however, that no
modification or amendment may, without the consent of the holder of each
outstanding senior debt security affected thereby:
(1) change the stated maturity of the principal of, or any premium or
installment of interest on, or any Additional Amounts with respect to, any
senior debt security;
(2) reduce the principal amount of, or the rate (or modify the
calculation of the rate) of interest on, or any Additional Amounts with
respect to, or any premium payable upon the redemption of, any senior debt
security;
(3) change the redemption provisions of any senior debt security or
adversely affect the right of repayment at the option of any holder of any
senior debt security;
(4) change the place of payment or the coin or currency in which the
principal of, any premium or interest on or any Additional Amounts with
respect to any senior debt security is payable;
(5) impair the right to institute suit for the enforcement of any
payment on or after the stated maturity of any senior debt security (or, in
the case of redemption, on or after the redemption date or, in the case of
repayment at the option of any holder, on or after the date for repayment);
(6) reduce the percentage in principal amount of the outstanding
senior debt securities, the consent of whose holders is required in order
to take certain actions;
(7) reduce the requirements for quorum or voting by holders of senior
debt securities as provided in the indenture;
(8) modify any of the provisions in the indenture regarding the waiver
of past defaults and the waiver of certain covenants by the holders of
senior debt securities except to increase any percentage vote required or
to provide that certain other provisions of the indenture cannot be
modified or waived without the consent of the holder of each senior debt
security affected thereby; or
(9) modify any of the above provisions.
The holders of not less than a majority in aggregate principal amount of
the senior debt securities of any series may, on behalf of the holders of all
senior debt securities of the series, waive compliance by Televisa with certain
restrictive provisions of the indenture. The holders of not less than a majority
in aggregate principal amount of the outstanding senior debt securities of any
series may, on behalf of the holders of all senior debt securities of the
series, waive any past default and its consequences under the indenture with
respect to the senior debt securities of the series, except a default:
- in the payment of principal (or premium, if any), or any interest on or
any Additional Amounts with respect to senior debt securities of the
series; or
- in respect of a covenant or provision of the indenture that cannot be
modified or amended without the consent of the holder of each senior debt
security of any series.
Under the indenture, Televisa is required to furnish the trustee annually a
statement as to performance by Televisa of certain of its obligations under the
indenture and as to any default in the performance. Televisa is also required to
deliver to the trustee, within five days after becoming aware thereof, written
notice of any event of default or any event which after notice or lapse of time
or both would constitute an event of default.
The indenture contains provisions permitting Televisa and the trustee,
without the consent of any holders of notes, to enter into a supplemental
indenture, among other things, for purposes of curing any ambiguity or
correcting or supplementing any provisions contained in the indenture or in any
supplemental indenture or making other provisions in regard to the matters or
questions arising under the indenture or any supplemental indenture as the Board
of Directors of Televisa deems necessary or desirable and which does not
adversely affect the interests of the holders of notes in any material respect.
Televisa and the trustee, without the consent of any holders of notes, may also
enter into a supplemental indenture to establish the forms or terms of any
series of senior debt securities as are not otherwise inconsistent with any of
the provisions of the indenture.
58
NOTICES
All notices regarding the notes shall be valid if that notice is given to
holders of notes in writing and mailed to each holder of notes, and, for so long
as the notes are listed on the Luxembourg Stock Exchange, if published in a
leading daily newspaper of general circulation in Luxembourg.
UNCLAIMED AMOUNTS
Any money deposited with the trustee or paying agent or held by Televisa,
in trust, for the payment of principal, premium, interest or any Additional
Amounts, that remains unclaimed for two years after such amount becomes due and
payable shall be paid to Televisa on its request or, if held by Televisa, shall
be discharged from such trust. The holder of the notes will look only to
Televisa for payment thereof, and all liability of the trustee, paying agent or
of Televisa, as trustee, shall thereupon cease. However, the trustee or paying
agent may at the expense of Televisa cause to be published once in a newspaper
in each place of payment, or to be mailed to holders of notes, or both, notice
that that money remains unclaimed and any unclaimed balance of such money
remaining, after a specified date, will be repaid to Televisa.
CERTAIN DEFINITIONS
The following are certain of the terms defined in the indenture:
For purposes of the following definitions, the covenants described
under "Certain Covenants" and the indenture generally, all calculations and
determinations shall be made in accordance with Mexican GAAP as in effect
on the closing date and shall be based upon the consolidated financial
statements of Televisa and its restricted subsidiaries prepared in
accordance with Mexican GAAP and Televisa's accounting policies as in
effect on the closing date. Where calculations or amounts are determined
with reference to reports filed with the Commission or the Trustee, the
information contained in such reports shall (solely for purposes of the
indenture) be adjusted to the extent necessary to conform to Mexican GAAP
as in effect on the closing date.
"Adjusted Consolidated Net Tangible Assets" means the total amount of
assets of Televisa and its Restricted Subsidiaries (less applicable
depreciation, amortization and other valuation reserves), including any
write-ups or restatements required under Mexican GAAP (other than with
respect to items referred to in clause (ii) below), after deducting
therefrom (i) all current liabilities of Televisa and its Restricted
Subsidiaries (excluding deposits and customer advances) and (ii) all
goodwill, trade names, trademarks, licenses, concessions, patents,
unamortized debt discount and expense and other intangibles, all as
determined in accordance with Mexican GAAP; provided that "Adjusted
Consolidated Net Tangible Assets" shall be deemed to include transmission
rights, programs and films, as determined in accordance with Mexican GAAP.
"Affiliate" means, as applied to any Person, any other Person directly
or indirectly controlling, controlled by, or under direct or indirect
common control with, such Person. For purposes of this definition,
"control" (including, with correlative meanings, the terms "controlling,"
"controlled by" and "under common control with"), as applied to any Person,
means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such Person, whether
through the ownership of voting securities, by contract or otherwise.
"Attributable Debt" in respect of a Sale and Leaseback transaction
means, at the time of determination, the present value of the obligation of
the lessee for net rental payments during the remaining term of the lease
included in such Sale and Leaseback transaction including any period for
which such lease has been extended or may, at the option of the lessor, be
extended. Such present value shall be calculated using a discount rate
equal to the rate of interest implicit in such transaction, determined in
accordance with Mexican GAAP.
"Board of Directors" means the Board of Directors of Televisa or the
Executive Committee thereof, if duly authorized by the Board of Directors
and under Mexican Law to act with respect to the indenture;
59
provided, that for purposes of clause (ii) of the definition of Change of
Control, the Board of Directors shall mean the entire Board of Directors
then in office.
"Capitalized Lease Obligation" of any Person means any obligation of
such Person to pay rent or other amounts under a lease with respect to any
property (whether real, personal or mixed) acquired or leased (other than
leases for transponders) by such Person and used in its business that is
required to be accounted for as a liability on the balance sheet of such
Person in accordance with Mexican GAAP and the amount of such Capitalized
Lease Obligation shall be the amount so required to be accounted for as a
liability.
"Change of Control" means such time as (i) a "person" or "group"
(within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act)
becomes the ultimate "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act) of shares of Voting Stock of Televisa representing more than
35% of the total voting power of the total Voting Stock of Televisa on a
fully diluted basis and (A) such ownership is greater than the amount of
voting power of the total Voting Stock, on a fully diluted basis,
"beneficially owned" by the Existing Stockholders and their Affiliates on
such date, (B) such beneficial owner has the right under applicable law to
exercise the voting power of such shares and (C) such beneficial owner has
the right to elect more directors than the Existing Stockholders and their
Affiliates on such date; or (ii) individuals who on the Closing Date
constitute the Board of Directors of Televisa (together with any new
directors whose election by the Board of Directors or whose nomination for
election by Televisa's stockholders was approved by a vote of at least
two-thirds of the members of the Board of Directors then in office who
either were members of the Board of Directors on the Closing Date or whose
election or nomination for election was previously so approved) cease for
any reason to constitute a majority of the members of the Board of
Directors then in office.
"Existing Stockholders" means (i) Emilio Azcarraga Jean, (ii) a
parent, brother or sister of the individual named in clause (i), (iii) the
spouse or a former spouse of any individual named in clause (i) or (ii),
(iv) the lineal descendants of any person named in clauses (i) through
(iii) and the spouse or a former spouse of any such lineal descendant, (v)
the estate or any guardian, custodian or other legal representative of any
individual named in clauses (i) through (iv), (vi) any trust established
solely for the benefit of any one or more of the individuals named in
clauses (i) through (v) and (vii) any Person in which all of the equity
interests are owned, directly or indirectly, by any one or more of the
Persons named in clauses (i) through (vi).
"Fair Market Value" means, with respect to any asset or property, the
price which could be negotiated in an arm's-length transaction, for cash,
between an informed and willing seller under no compulsion to sell and an
informed and willing buyer under no compulsion to buy. Fair Market Value
shall be determined by the Board of Directors of Televisa, acting in good
faith and evidenced by a resolution delivered to the Trustee.
"Funded Indebtedness" of any Person means, as of the date as of which
the amount thereof is to be determined, without duplication, all
Indebtedness of such Person for borrowed money or for the deferred purchase
price of property or assets in respect of which such Person is liable and
all guarantees by such Person of any Indebtedness of others for borrowed
money, and all Capitalized Lease Obligations of such Person, which by the
terms thereof have a final maturity, duration or payment date more than one
year from the date of determination thereof (including, without limitation,
any balance of such Indebtedness or obligation which was Funded
Indebtedness at the time of its creation maturing within one year from such
date of determination) or which has a final maturity, duration or payment
date within one year from such date of determination but which by its terms
may be renewed or extended at the option of such Person for more than one
year from such date of determination, whether or not theretofore renewed or
extended; provided, however, "Funded Indebtedness" shall not include (1)
any Indebtedness of Televisa or any Subsidiary to Televisa or another
Subsidiary, (2) any guarantee by Televisa or any Subsidiary of Indebtedness
of Televisa or another Subsidiary; provided that such guarantee is not
secured by a Lien on any Principal Property, (3) any guarantee by Televisa
or any Subsidiary of the Indebtedness of any person (including, without
limitation, a business trust), if the obligation of Televisa or such
Subsidiary
60
under such guaranty is limited in amount to the amount of funds held by or
on behalf of such person that are available for the payment of such
Indebtedness, (4) liabilities under interest rate swap, exchange, collar or
cap agreements and all other agreements or arrangements designed to protect
against fluctuations in interest rates or currency exchange rates, and (5)
liabilities under commodity hedge, commodity swap, exchange, collar or cap
agreements, fixed price agreements and all other agreements or arrangements
designed to protect against fluctuations in prices. For purposes of
determining the outstanding principal amount of Funded Indebtedness at any
date, the amount of Indebtedness issued at a price less than the principal
amount thereof shall be equal to the amount of the liability in respect
thereof at such date determined in accordance with Mexican GAAP.
"Indebtedness" of any Person means:
(1) any indebtedness of such Person (i) for borrowed money or (ii)
evidenced by a note, debenture or similar instrument (including a
purchase money obligation) given in connection with the acquisition of
any property or assets, including securities;
(2) any guarantee by such Person of any indebtedness of others
described in the preceding clause (1); and
(3) any amendment, renewal, extension or refunding of any such
indebtedness or guarantee.
"Lien" means any mortgage, pledge, lien, security interest, or other
similar encumbrance.
"Marketable Securities" means any securities listed on a U.S. national
securities exchange or reported by the Nasdaq Stock Market or listed on a
recognized international securities exchange or traded in the
over-the-counter market and quoted by at least two broker-dealers as
reported by the National Quotation Bureau or similar organization,
including as Marketable Securities options, warrants and other rights to
purchase, and securities exchangeable for or convertible into, Marketable
Securities.
"Material Subsidiary" means, at any relevant time, any Subsidiary that
meets any of the following conditions:
(1) Televisa's and its other Subsidiaries' investments in and
advances to the Subsidiary exceed 10% of the total consolidated assets
of Televisa and its Subsidiaries;
(2) Televisa's and its other Subsidiaries' proportionate share of
the total assets (after intercompany eliminations) of the Subsidiary
exceeds 10% of the total consolidated assets of Televisa and its
Subsidiaries;
(3) Televisa's and its other Subsidiaries' proportionate share of
the total revenues (after intercompany eliminations) of the Subsidiary
exceeds 10% of the total consolidated revenue of Televisa and its
Subsidiaries; or
(4) Televisa's and its other Subsidiaries' equity in the income
from continuing operations before income taxes, extraordinary items and
cumulative effect of a change in accounting principle of the Subsidiary
exceeds 10% of such income of Televisa and its Subsidiaries;
all as calculated by reference to the then latest fiscal year-end accounts
(or consolidated fiscal year-end accounts, as the case may be) of such
Subsidiary and the then latest audited consolidated fiscal year-end
accounts of Televisa and its Subsidiaries.
"Mexican GAAP" means generally accepted accounting principles in
Mexico and the accounting principles and policies of Televisa and its
Restricted Subsidiaries, in each case as in effect as of the date of the
indenture. All ratios and computations shall be computed in conformity with
Mexican GAAP applied on a consistent basis and using constant Mexican Peso
calculations.
"Nasdaq Stock Market" means The Nasdaq Stock Market, a subsidiary of
the National Association of Securities Dealers, Inc.
61
"Person" means an individual, a corporation, a partnership, a limited
liability company, an association, a trust or any other entity or
organization, including a government or political subdivision or an agency
or instrumentality thereof.
"Principal Property" means, as of any date of determination, (a) any
television production and/or network facility, television programming
library, and, if applicable, any cable system and satellite television
services facility, including land and buildings and other improvements
thereon and equipment located therein, owned by Televisa or any Restricted
Subsidiary and used in the ordinary course of its business and (b) any
executive offices, administrative buildings, and research and development
facilities, including land and buildings and other improvements thereon and
equipment located therein, of Televisa or any Restricted Subsidiary, other
than any such property which, in the good faith opinion of the Board of
Directors, is not of material importance to the business conducted by
Televisa and its Restricted Subsidiaries taken as a whole.
"Rating Agencies" means (i) Standard & Poor's, or S&P, a division of
The McGraw-Hill Companies, Inc. and (ii) Moody's Investors Service, Inc.
and (iii) if S&P or Moody's or both shall not make a rating of the notes
publicly available, a nationally recognized United States securities rating
agency or agencies, as the case may be, selected by Televisa, which shall
be substituted for S&P or Moody's or both, as the case may be.
"Restricted Subsidiary" means, as of any date of determination, a
subsidiary which has been, or is then being, designated a Restricted
Subsidiary in accordance with the "Designation of Restricted Subsidiaries"
covenant, unless and until designated an Unrestricted Subsidiary in
accordance with such covenant.
"Sale and Leaseback Transactions" means any arrangement providing for
the leasing to Televisa or a Subsidiary of any Principal Property (except
for temporary leases for a term, including renewals, of not more than three
years) which has been or is to be sold by Televisa or such Subsidiary to
the lessor.
"Subsidiary" means any corporation, association, limited liability
company, partnership or other business entity of which a majority of the
total voting power of the capital stock or other interests (including
partnership interests) entitled (without regard to the incurrence of a
contingency) to vote in the election of directors, managers, or trustees
thereof is at the time owned or controlled, directly or indirectly, by (i)
Televisa, (ii) Televisa and one or more of its Subsidiaries or (iii) one or
more Subsidiaries of Televisa.
"Televisa" means Grupo Televisa, S.A., a limited liability stock
corporation (sociedad anonima) organized under the laws of the United
Mexican States, until a successor replaces it pursuant to the applicable
provisions of the indenture and thereafter means the successor.
"Unrestricted Subsidiary" means, as of any date of determination, any
Subsidiary of Televisa that is not a Restricted Subsidiary.
"Voting Stock" means, with respect to any Person, capital stock of any
class or kind ordinarily having the power to vote for the election of
directors, managers or other voting members of the governing body of such
Person.
"Wholly Owned" means, with respect to any Restricted Subsidiary of any
Person, such Restricted Subsidiary if all of the outstanding Capital Stock
in such Restricted Subsidiary (other than any director's qualifying shares
or investments by foreign nationals mandated by applicable law and shares
of Common Stock that, in the aggregate, do not exceed 1% of the economic
value or voting power of the Capital Stock of such Restricted Subsidiary)
is owned by such Person or one or more Wholly Owned Restricted Subsidiaries
of such Person.
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
Televisa may discharge certain obligations to holders of any series of
senior debt securities that have not already been delivered to the trustee for
cancellation and that either have become due and payable or will
62
become due and payable within one year (or scheduled for redemption within one
year) by depositing with the trustee, in trust, funds in U.S. Dollars or
Government Obligations in an amount sufficient to pay the entire indebtedness on
the senior debt securities with respect to principal (and premium, if any) and
interest to the date of the deposit (if the senior debt securities have become
due and payable) or to the maturity thereof, as the case may be.
The indenture provides that, unless the provisions of the "Defeasance and
Covenant Defeasance" section thereof are made inapplicable in respect of any
series of senior debt securities of or within any series pursuant to the "Amount
Unlimited; Issuable in Series" section thereof, Televisa may elect, at any time,
either:
- to defease and be discharged from any and all obligations with respect to
the senior debt securities (except for, among other things, the
obligation to pay additional amounts, if any, upon the occurrence of
certain events of taxation, assessment or governmental charge with
respect to payments on the senior debt securities and other obligations
to register the transfer or exchange of the senior debt securities, to
replace temporary or mutilated, destroyed, lost or stolen senior debt
securities, to maintain an office or agency with respect to the senior
debt securities and to hold moneys for payment in trust) ("defeasance");
or
- to be released from its obligations with respect to the senior debt
securities under the covenants described under "-- Certain Covenants" and
"-- Merger and Consolidation" above or, if provided pursuant to the
"Amount Unlimited; Issuable in Series" section of the indenture, its
obligations with respect to any other covenant, and any omission to
comply with the obligations shall not constitute a default or an event of
default with respect to the senior debt securities ("covenant
defeasance").
Defeasance or covenant defeasance, as the case may be, shall be conditioned
upon the irrevocable deposit by Televisa with the trustee, in trust, of an
amount in U.S. Dollars at stated maturity, or Government Obligations, which is
defined below, or both, applicable to the senior debt securities which through
the scheduled payment of principal and interest in accordance with their terms
will provide money in an amount sufficient to pay the principal of (and premium,
if any) and interest on the senior debt securities on the scheduled due dates
therefor.
Such a trust may only be established if, among other things,
- the applicable defeasance or covenant defeasance does not result in a
breach or violation of, or constitute a default under, the indenture or
any other material agreement or instrument to which Televisa is a party
or by which it is bound, and
- Televisa has delivered to the trustee an opinion of counsel (as specified
in the indenture) to the effect that the holders of the senior debt
securities will not recognize income, gain or loss for U.S. federal
income tax purposes as a result of the defeasance or covenant defeasance
and will be subject to U.S. federal income tax on the same amounts, in
the same manner and at the same times as would have been the case if the
defeasance or covenant defeasance had not occurred, and the opinion of
counsel, in the case of defeasance, must refer to and be based upon a
letter ruling of the Internal Revenue Service received by Televisa, a
revenue ruling published by the Internal Revenue Service or a change in
applicable U.S. federal income tax law occurring after the date of the
indenture.
"Government Obligations" means senior debt securities which are:
- direct obligations of the United States of America or the government or
the governments in the confederation which issued the Foreign Currency in
which the senior debt securities of a particular series are payable, for
the payment of which its full faith and credit is pledged; or
- obligations of a Person controlled or supervised by and acting as an
agency or instrumentality of the United States of America, the timely
payment of which is unconditionally guaranteed as a full faith and credit
obligation by the United States of America;
and which are not callable or redeemable at the option of the issuer or issuers
thereof, and shall also include a depositary receipt issued by a bank or trust
company as custodian with respect to any Government Obligation
63
or a specific payment of interest on or principal of or any other amount with
respect to any Government Obligation held by the custodian for the account of
the holder of the depositary receipt; provided that (except as required by law)
the custodian is not authorized to make any deduction from the amount payable to
the holder of the depositary receipt from any amount received by the custodian
with respect to the Government Obligation or the specific payment of interest on
or principal of or any other amount with respect to the Government Obligation
evidenced by the depositary receipt.
In the event Televisa effects covenant defeasance with respect to any
senior debt securities and the senior debt securities are declared due and
payable because of the occurrence of any event of default other than an event of
default with respect to the "Limitations on Liens" and "Limitation on Sale and
Leaseback" covenants contained in the indenture (which sections would no longer
be applicable to the senior debt securities after the covenant defeasance) or
with respect to any other covenant as to which there has been covenant
defeasance, the amount in the Foreign Currency in which the senior debt
securities are payable, and Government Obligations on deposit with the trustee,
will be sufficient to pay amounts due on the senior debt securities at the time
of the stated maturity but may not be sufficient to pay amounts due on the
senior debt securities at the time of the acceleration resulting from the event
of default. However, Televisa would remain liable to make payment of the amounts
due at the time of acceleration.
GOVERNING LAW
The indenture and the notes will be governed by, and construed in
accordance with, the laws of the State of New York, without giving effect to any
provisions relating to conflicts of laws other than Section 5-1401 of the New
York General Obligations Law.
SUBMISSION TO JURISDICTION; AGENT FOR SERVICE OF PROCESS
We will submit to the jurisdiction of any federal or state court in the
City of New York, Borough of Manhattan for purposes of all legal actions and
proceedings instituted in connection with the notes, the indenture or the
registration rights agreements. We expect to appoint CT Corporation System Inc.,
111 Eighth Avenue, New York, New York 10011 as our authorized agent upon which
service of process may be served in any such action.
REGARDING THE TRUSTEE
The trustee is permitted to engage in other transactions with Televisa and
its subsidiaries from time to time; provided that if the trustee acquires any
conflicting interest it must eliminate the conflict upon the occurrence of an
event of default, or else resign.
Televisa may at any time remove the trustee at its office or agency in the
City of New York designated for the foregoing purposes and may from time to time
rescind such designations.
NO PERSONAL LIABILITY OF SHAREHOLDERS, OFFICERS, DIRECTORS, OR EMPLOYEES
The indenture provides that no recourse for the payment of the principal
of, premium, if any, or interest on any of the notes or for any claim based
thereon or otherwise in respect thereof, and no recourse under or upon any
obligation, covenant or agreement of Televisa in such indenture, or in any of
the notes or because of the creation of any indebtedness represented thereby,
shall be had against any shareholder, officer, director, employee or controlling
person of Televisa or of any successor thereof.
64
TAXATION
The following is a general summary of the principal U.S. federal income and
Mexican federal tax consequences of the purchase, ownership and disposition of
the new notes and the exchange of old notes for new notes, but it does not
purport to be a comprehensive description of all the tax considerations that may
be relevant to a decision to purchase, own and dispose of the new notes or
exchange old notes for new notes. This summary does not describe any tax
consequences arising under the laws of any state, locality or taxing
jurisdiction other than the United States and Mexico.
This summary is for general information only and is based on the tax laws
of the United States and Mexico as in effect on the date of this prospectus, as
well as regulations, rulings and decisions of the United States and rules and
regulations of Mexico available on or before that date and now in effect. All of
the foregoing are subject to change, possibly with retroactive effect, which
could affect the continued validity of this summary.
PROSPECTIVE PURCHASERS OF THE NEW NOTES AND BENEFICIAL OWNERS OF OLD NOTES
CONSIDERING AN EXCHANGE OF OLD NOTES FOR NEW NOTES SHOULD CONSULT THEIR OWN TAX
ADVISORS AS TO THE MEXICAN, U.S. OR OTHER TAX CONSEQUENCES OF THE PURCHASE,
OWNERSHIP AND DISPOSITION OF THE NEW NOTES AND THE EXCHANGE OF THE OLD NOTES FOR
NEW NOTES, INCLUDING THE PARTICULAR TAX CONSEQUENCES TO THEM IN LIGHT OF THEIR
PARTICULAR INVESTMENT CIRCUMSTANCES.
UNITED STATES/MEXICO TAX TREATY
A convention for the Avoidance of Double Taxation and protocols to that
convention (collectively referred to herein as the "U.S.-Mexico treaty") are in
effect. However, as discussed below under "-- Mexican Taxation," as of the date
of this prospectus, the U.S.-Mexico treaty is not generally expected to have any
material effect on the Mexican income tax consequences described in this
prospectus. The United States and Mexico have also entered into an agreement
that covers the exchange of information with respect to tax matters.
Mexico has also entered into, and is negotiating several other, tax
treaties with various countries that also, as of the date of this prospectus,
are not generally expected to have any material effect on the Mexican income tax
consequences described in this prospectus.
UNITED STATES FEDERAL INCOME TAXATION
This summary of the principal U.S. federal income tax consequences of the
purchase, ownership and disposition of the new notes and the exchange of old
notes for new notes is limited to beneficial owners of the new notes and old
notes that:
- are U.S. holders (as defined below); and
- hold the old notes and will hold the new notes as capital assets.
As used in this prospectus, a "U.S. holder" means a beneficial owner of the
old notes or new notes who or that is, for U.S. federal income tax purposes:
- a citizen or individual resident of the United States;
- a corporation (or entity treated as a corporation for such purposes)
created or organized in or under the laws of the United States, or any
State thereof or the District of Columbia;
- an estate the income of which is includible in its gross income for U.S.
federal income tax purposes without regard to its source; or
- a trust, if either (x) it is subject to the primary supervision of a
court within the United States and one or more "United States persons"
has the authority to control all substantial decisions of the trust or
(y) it has a valid election in effect under applicable treasury
regulations to be treated as a "United States person."
65
This summary does not discuss considerations on consequences relevant to
persons subject to special provisions of U.S. federal income tax law, such as:
- entities that are tax-exempt for U.S. federal income tax purposes and
retirement plans, individual retirement accounts and tax-deferred
accounts;
- pass-through entities (including partnerships and entities and
arrangements classified as partnerships for U.S. federal income tax
purposes) and beneficial owners of pass-through entities;
- certain U.S. expatriates;
- persons that are subject to the alternative minimum tax;
- financial institutions, insurance companies, and dealers or traders in
securities or currencies;
- persons having a "functional currency" other than the U.S. Dollar; and
- persons that hold the old notes or will hold the new notes as part of a
constructive sale, wash sale, conversion transaction or other integrated
transaction or a straddle, hedge or synthetic security.
If a partnership (or an entity or arrangement classified as a partnership
for U.S. federal income tax purposes) holds the old notes or the new notes, the
U.S. federal income tax treatment of a partner in the partnership generally will
depend on the status of the partner and the activities of the partnership, and
partnerships holding the old notes or the new notes should consult their own tax
advisors regarding the U.S. federal income tax consequences of purchasing,
owning and disposing of the new notes and exchanging the old notes for the new
notes. Further the discussion below does not address the effect of any U.S.
state or local tax law on a beneficial owner of the old notes or new notes. This
discussion assumes that each beneficial owner of the notes will comply with the
certification procedures described in "Description of the New Notes -- Certain
Covenants -- Additional Amounts" as may be necessary to obtain a reduced rate of
withholding tax under Mexican law. Each beneficial owner of an old note
considering an exchange of the old note for a new note should consult a tax
advisor as to the particular tax consequences to it of the exchange and the
ownership and disposition of the new note, including the applicability and
effect of any state, local or foreign tax laws.
Exchange of Notes. The exchange of the old notes for the new notes in the
exchange offer will not be a taxable exchange for U.S. federal income tax
purposes and, accordingly, for such purposes a U.S. holder will not recognize
any taxable gain or loss as a result of such exchange and will have the same tax
basis and holding period in the new notes as it had in the old notes immediately
before the exchange.
Interest and Additional Amounts. Interest on the new notes and Additional
Amounts paid in respect of Mexican withholding taxes imposed on interest
payments on the new notes (as described in "Description of the New
Notes -- Certain Covenants -- Additional Amounts") will be taxable to a U.S.
holder as ordinary interest income at the time they are paid or accrued in
accordance with the U.S. holder's usual method of accounting for U.S. federal
income tax purposes. The amount of income taxable to a U.S. holder will include
the amount of all Mexican taxes that we withhold (as described below under
"-- Mexican Taxation") from these payments made on the new notes. Thus, a U.S.
holder will have to report income in an amount that is greater than the amount
of cash it receives from these payments on its new note.
However, a U.S. holder may, subject to certain limitations, be eligible to
claim the Mexican taxes withheld as a credit or deduction for purposes of
computing its U.S. federal income tax liability, even though the payment of
these taxes will be remitted by us. Interest and Additional Amounts paid on the
new notes will constitute income from sources without the United States for
foreign tax credit purposes. For taxable years beginning on or before December
31, 2006, such income generally will constitute "high withholding tax interest"
for foreign tax credit purposes, unless the Mexican withholding tax rate
applicable to the U.S. holder is less than 5% (such as during any period in
which the 4.9% Mexican withholding tax rate, as discussed in "-- Mexican
Taxation," applies), in which case such income generally will constitute
"passive income" or, in the case of certain U.S. holders, "financial services
income." For taxable years beginning after December 31, 2006, such income
generally will constitute "passive category income" or, in the case of certain
U.S. holders,
66
"general category income," for foreign tax credit purposes. The rules relating
to the calculation and timing of foreign tax credits and, in the case of a U.S.
holder that elects to deduct foreign taxes, the availability of deductions,
involves the application of complex rules that depend upon a U.S. holder's
particular circumstances. In addition, foreign tax credits generally will not be
allowed for Mexican taxes withheld from interest on certain short-term or hedged
positions in the notes. U.S. holders should consult with their own tax advisors
with regard to the availability of a credit or deduction in respect of foreign
taxes and, in particular, the application of the foreign tax credit rules to
their particular situations.
Pre-Issuance Accrued Interest. A portion of the initial purchase price of
the old notes issued in May 2005 was attributable to the amount of unpaid
interest on those old notes that had accrued prior the issue date of those old
notes (the "pre-issuance accrued interest"). Pursuant to the applicable Treasury
regulations, we intend to compute the issue price of the old notes issued in May
2005 by subtracting the pre-issuance accrued interest from the first price at
which a substantial amount of those old notes were sold in the offering of those
old notes (other than to bond houses, brokers or similar persons or
organizations acting in the capacity of underwriters, placement agents or
wholesalers) and therefore to treat a portion of the first interest payment on
those old notes (or the new notes exchanged for those old notes in the exchange
offer) as a return of the pre-issuance accrued interest, rather than an amount
payable on those old notes (or the new notes exchanged for those old notes in
the exchange offer). A U.S. holder that purchased the old notes issued in May
2005 in the offering of those old notes for a price equal to the issue price of
those old notes should be able treat a portion of the first interest payment on
the new notes exchanged for those old notes in the exchange offer as a non-
taxable return of the pre-issuance accrued interest paid by such U.S. holder,
rather than as taxable interest, as if the U.S. holder purchased a debt
instrument on the secondary market in between interest payment dates. U.S.
holders should consult their own tax advisors concerning the tax treatment of
the pre-issuance accrued interest on the old notes issued in May 2005 and the
new notes exchanged for those old notes in the exchange offer.
Market Discount and Bond Premium. If a U.S. holder purchases a new note
(or purchased the old note for which the new note was exchanged, as the case may
be) at a price that is less than its principal amount, the excess of the
principal amount over the U.S. holder's purchase price will be treated as
"market discount." However, the market discount will be considered to be zero if
it is less than 1/4 of 1% of the principal amount multiplied by the number of
complete years to maturity from the date the U.S. holder purchased the new note
or old note, as the case may be.
Under the market discount rules of the U.S. Internal Revenue Code, a U.S.
holder generally will be required to treat any principal payment on, or any gain
realized on the sale, exchange, retirement or other disposition of, a new note
as ordinary income (generally treated as interest income) to the extent of the
market discount which accrued but was not previously included in income by the
U.S. holder during the period the U.S. holder held the new note (and the old
note for which the new note was exchanged, as the case may be). In addition, the
U.S. holder may be required to defer, until the maturity of the new note or its
earlier disposition in a taxable transaction, the deduction of all or a portion
of the interest expense on any indebtedness incurred or continued to purchase or
carry the new note (or the old note for which the new note was exchanged, as the
case may be). In general, market discount will be considered to accrue ratably
during the period from the date of the purchase of the new note (or old note for
which the new note was exchanged, as the case may be) to the maturity date of
the new note, unless the U.S. holder makes an irrevocable election (on an
instrument-by-instrument basis) to accrue market discount under a constant yield
method. A U.S. holder of a new note may elect to include market discount in
income currently as it accrues (under either a ratable or constant yield
method), in which case the rules described above regarding the treatment as
ordinary income of gain upon the disposition of the new note and upon the
receipt of certain payments and the deferral of interest deductions will not
apply. The election to include market discount in income currently, once made,
applies to all market discount obligations acquired on or after the first day of
the first taxable year to which the election applies, and may not be revoked
without the consent of the Internal Revenue Service.
If a U.S. holder purchases a new note (or purchased the old note for which
the new note was exchanged, as the case may be) for an amount in excess of the
amount payable at maturity of the new note, the U.S. holder will be considered
to have purchased the new note (or old note) with "bond premium" equal to
67
the excess of the U.S. holder's purchase price over the amount payable at
maturity (or on an earlier call date if it results in a smaller amortizable bond
premium). It may be possible for a U.S. holder of a new note to elect to
amortize the premium using a constant yield method over the remaining term of
the new note (or until an earlier call date, as applicable). The amortized
amount of the premium for a taxable year generally will be treated first as a
reduction of interest on the new note included in such taxable year to the
extent thereof, then as a deduction allowed in that taxable year to the extent
of the U.S. holder's prior interest inclusions on the new note, and finally as a
carryforward allowable against the U.S. holder's future interest inclusions on
the new note. The election, once made, is irrevocable without the consent of the
Internal Revenue Service and applies to all taxable bonds held during the
taxable year for which the election is made or subsequently acquired. A U.S.
holder that does not make this election will be required to include in gross
income the full amount of interest on the new note in accordance with its
regular method of tax accounting, and will include the premium in its tax basis
for the new note for purposes of computing the amount of its gain or loss
recognized on the taxable disposition of the new note. U.S. holders should
consult their own tax advisors concerning the computation and amortization of
any bond premium on the new notes.
A U.S. holder may elect to include in gross income under a constant yield
method all amounts that accrue on a new note that are treated as interest for
tax purposes (i.e., stated interest, market discount and de minimis market
discount, as adjusted by any amortizable bond premium). U.S. holders should
consult their tax advisors as to the desirability, mechanics and collateral
consequences of making this election.
Dispositions. Except as discussed above, under "-- Exchange of Notes" and
unless a non-recognition provision of the U.S. Internal Revenue Code applies,
upon the sale, exchange, redemption, retirement or other taxable disposition of
a new note, a U.S. holder will recognize taxable gain or loss in an amount equal
to the difference, if any, between the amount realized on the sale, exchange,
redemption, retirement or other taxable disposition (other than amounts
attributable to accrued interest, which will be treated as described above) and
the U.S. holder's adjusted tax basis in the new note. A U.S. holder's adjusted
tax basis in a new note will generally be its cost for the new note (or, in the
case of a new note exchanged for an old note in the exchange offer, the tax
basis of the old note, as discussed above under "-- Exchange of Notes," which in
the case of a U.S. holder that purchased an old note issued in May 2005 in the
offering of the old notes issued in May 2005 for a price equal to the issue
price of those old notes, should exclude the amount of pre-issuance accrued
interest paid by the U.S. holder upon acquisition of that old note), increased
by the amount of any market discount previously included in the U.S. holder's
gross income, and reduced by the amount of any amortizable bond premium applied
to reduce, or allowed as a deduction against, interest on the new note. Gain or
loss recognized by a U.S. holder on the sale, exchange, redemption, retirement
or other taxable disposition of a new note will generally be capital gain or
loss, except with respect to accrued market discount not previously included in
income, which will be taxable as ordinary income.
The gain or loss recognized by a U.S. holder will be long-term capital gain
or loss if the new note has been held for more than one year at the time of the
disposition (taking into account, for this purpose, in the case of a new note
received in exchange for an old note in the exchange offer, the period of time
that the old note was held). Long-term capital gains recognized by individual
and certain other non-corporate U.S. holders generally are eligible for reduced
rates of taxation. The deductibility of capital losses is subject to
limitations. Capital gain or loss recognized by a U.S. holder generally will be
U.S. source gain or loss. Therefore, if any such gain is subject to Mexican
income tax, a U.S. holder may not be able to credit the Mexican income tax
against its U.S. federal income tax liability. U.S. holders should consult their
own tax advisors as to the foreign tax credit implications of a disposition of
the new notes.
Backup Withholding. In general, "backup withholding" may apply to payments
of principal and interest made on a new note, and to the proceeds of a
disposition of a new note before maturity within the United States, that are
made to a non-corporate beneficial owner of new notes if that beneficial owner
fails to provide an accurate taxpayer identification number or otherwise comply
with applicable requirements of the backup withholding rules. Backup withholding
is not an additional tax and may be credited against a beneficial owner's U.S.
federal income tax liability, provided that the required information is
furnished to the U.S. Internal Revenue Service.
68
Non-U.S. Holders. For purposes of the following discussion a "non-U.S.
holder" means a beneficial owner of the new notes that is not, for U.S. federal
income tax purposes, a U.S. holder or a partnership (or entity or arrangement
classified as a partnership for such purposes). A non-U.S. holder generally will
not be subject to U.S. federal income or withholding tax on:
- interest and Additional Amounts received in respect of the new notes,
unless those payments are effectively connected with the conduct by the
non-U.S. holder of a trade or business in the United States; or
- gain realized on the sale, exchange, redemption or retirement of the new
notes, unless that gain is effectively connected with the conduct by the
non-U.S. holder of a trade or business in the United States or, in the
case of gain realized by an individual non-U.S. holder, the non-U.S.
holder is present in the United States for 183 days or more in the
taxable year of the disposition and certain other conditions are met.
MEXICAN TAXATION
The discussion below does not address all Mexican tax considerations that
may be relevant to particular investors, nor does it address the special tax
rules applicable to certain categories of investors or any tax consequences
under the tax laws of any state or municipality of Mexico.
The following is a general summary of the principal consequences, under
Mexico's income tax law and rules as currently in effect, and under the
U.S.-Mexico treaty, of the purchase, ownership and disposition of the new notes
and exchange of old notes for new notes by a foreign holder. As used in this
prospectus, a "foreign holder" means a beneficial owner of the old notes or new
notes that:
- is not a resident of Mexico for tax purposes;
- does not hold the old notes or new notes or a beneficial interest in the
old notes or new notes in connection with the conduct of a trade or
business through a permanent establishment in Mexico; and
- is not (a) a holder of more than 10% of our voting stock, directly or
indirectly, jointly with persons related to us or individually, or (b) a
corporation or other entity, more than 20% of whose stock is owned,
directly or indirectly, jointly by persons related to us or individually,
that in the case of either (a) or (b), is the effective beneficiary,
directly or indirectly, jointly with persons related to us or
individually, of more than 5% of the aggregate amount of any interest
payment on the old notes or new notes. For these purposes, persons will
be related if:
- one person holds an interest in the business of the other person;
- both persons have common interests; or
- a third party has an interest in the business or assets of both
persons.
For purposes of Mexican taxation:
- an individual is treated as a resident of Mexico if the individual has
established his home in Mexico. When an individual, in addition to his
home in Mexico, has a home in another country, the individual will be a
resident of Mexico if his center of vital interests is located in Mexico.
This will be deemed to occur if, among others, either (i) more than 50%
of the total income obtained by the individual in the calendar year is
Mexican source or (ii) when the individual's center of professional
activities is located in Mexico. Unless otherwise proven, a Mexican
national is considered a Mexican resident;
- a legal entity is considered a resident of Mexico if it is incorporated
under Mexican law or if it maintains the main administration of its head
office or the effective location of its management in Mexico; and
- a permanent establishment of a foreign person will be treated as a
resident of Mexico, and that permanent establishment will be required to
pay taxes in Mexico in accordance with applicable law for income
attributable to such permanent establishment.
69
Each foreign holder should consult a tax advisor as to the particular
Mexican or other tax consequences to that foreign holder of purchasing, owning
and disposing of the new notes and exchanging the old notes for new notes,
including the applicability and effect of any state, local or foreign tax laws.
Exchange of Notes. There will be no tax consequences under the Mexican
income tax law to a foreign holder exchanging an old note for a new note. Each
new note will be treated as having been issued at the time the old note
exchanged therefor was originally issued.
Interest and Principal. Payments of interest on the new notes (including
payments of principal in excess of the issue price of the old notes, which under
the Mexican tax law are deemed to be interest) made by us to a foreign holder
will be subject to a Mexican withholding tax assessed at a rate of 4.9% if all
of the following requirements are met:
- the new notes, as expected, are placed outside of Mexico through banks or
brokerage houses, in a country with which Mexico has entered into a
treaty for the avoidance of double taxation and such treaty is in effect;
- the new notes, as expected, are registered in the Special Section of the
Mexican National Registry of Securities, and copies of the approval of
that registration are provided to the Mexican Ministry of Finance and
Public Credit;
- we timely file with the Mexican Ministry of Finance and Public Credit,
after completion of the transaction described in this prospectus, certain
information relating to the issuance of the new notes and this
prospectus; and
- we timely file with the Mexican Ministry of Finance and Public Credit, on
a quarterly basis, information representing that no party related to us
jointly or individually, directly or indirectly, is the effective
beneficiary of more than 5% of the aggregate amount of each interest
payment, and we maintain records that evidence compliance with this
requirement.
We expect that all of the foregoing requirements will be met and,
accordingly, we expect to withhold Mexican tax from interest payments on the new
notes made to foreign holders at the 4.9% rate in accordance with the Mexican
income tax law. In the event that any of the foregoing requirements are not met,
under the Mexican income tax law, payments of interest on the new notes made by
us to a foreign holder will be subject to Mexican withholding tax assessed at a
rate of 10%.
As of the date of this prospectus, neither the U.S.-Mexico treaty nor any
other tax treaty entered into by Mexico is expected generally to have any
material effect on the Mexican income tax consequences described in this
prospectus, because, as discussed above, it is expected that the 4.9% rate will
apply in the future and, therefore, that we will be entitled to withhold taxes
in connection with interest payments under the new notes at the 4.9% rate.
Foreign holders residing in the United States should nonetheless be aware
that Mexico presently has a treaty for the avoidance of double taxation with the
United States. Under the U.S.-Mexico treaty, the Mexican withholding tax rate
applicable to interest payments made to U.S. holders which are eligible for
benefits under the U.S.-Mexico treaty will be limited to either:
- 15% generally; or
- 4.9% in the event that the new notes are considered to be "regularly and
substantially traded on a recognized securities market."
Other foreign holders should consult their tax advisors regarding whether
they reside in a country that has entered into a treaty for avoidance of double
taxation with Mexico and, if so, the conditions and requirements for obtaining
benefits under that treaty. The Mexican income tax law provides that in order
for a foreign holder to be entitled to the benefits under a treaty entered into
by Mexico, it is necessary for the foreign holder to meet the procedural
requirements established in the law.
70
Holders or beneficial owners of the new notes may be requested, subject to
specified exceptions and limitations, to provide certain information or
documentation necessary to enable us to apply the appropriate Mexican
withholding tax rate applicable to such holders or beneficial owners. In the
event that the specified information or documentation concerning the holder or
beneficial owner, if requested, is not provided prior to the payment of any
interest to that holder or beneficial owner, we may withhold Mexican tax from
that interest payment to that holder or beneficial owner at the maximum
applicable rate, but our obligation to pay Additional Amounts relating to those
withholding taxes will be limited as described under "Description of the New
Notes -- Certain Covenants -- Additional Amounts."
Under the Mexican income tax law, payments of interest made by us with
respect to the new notes to non-Mexican pension or retirement funds will be
exempt from Mexican withholding taxes, provided that the fund:
- is the effective beneficiary of each interest payment;
- is duly organized under the laws of its country of origin;
- is exempt from income tax in that country on such interest payment; and
- is registered with the Mexican Ministry of Finance and Public Credit for
that purpose.
We have agreed, subject to specified exceptions and limitations, to pay
Additional Amounts relating to the above-mentioned Mexican withholding taxes to
foreign holders of the new notes. See "Description of the New Notes -- Certain
Covenants -- Additional Amounts."
Under the Mexican income tax law and applicable rules, a foreign holder
will not be subject to any Mexican withholding or similar taxes on payments of
principal on the new notes made by us (except for payments of principal in
excess of the issue price of the old notes, which under the Mexican tax law are
deemed to be interest subject to the Mexican withholding taxes described above).
Dispositions. As of January 1, 2005, gains resulting from the sale of the
new notes by a foreign holder to a Mexican resident will be treated as interest
and therefore will be subject to the Mexican withholding tax rules described
above.
Other Taxes. A foreign holder will not be liable for Mexican estate, gift,
inheritance or similar taxes with respect to its holding of the new notes, nor
will it be liable for Mexican stamp, registration or similar taxes.
71
PLAN OF DISTRIBUTION
The new notes will constitute a new issue of securities with no established
trading market. We do not intend to list the new notes on any national
securities exchange or to seek approval for quotation through any automated
quotation system, except that application has been made to list the new notes on
the Luxembourg Stock Exchange. We have been advised by the placement agents of
the old notes that following completion of this exchange offer, these placement
agents intend to make a market in the new notes. However, they are not obligated
to do so and any market-making activities with respect to the new notes may be
discontinued at any time without notice. Accordingly, no assurance can be given
that an active public or other market will develop for the new notes or as to
the liquidity of or the trading market for the new notes. If a trading market
does not develop or is not maintained, holders of the new notes may experience
difficulty in reselling the new notes or may be unable to sell them at all. If a
market for the new notes develops, any such market may cease to continue at any
time. In addition, if a market for the new notes develops, the market prices of
the new notes may be volatile. Factors such as fluctuations in our earnings and
cash flow, the difference between our actual results and results expected by
investors and analysts and Mexican and U.S. currency and economic developments
could cause the market prices of the new notes to fluctuate substantially.
For a period of 90 days after the expiration date, we will promptly send
additional copies of this prospectus and any amendment or supplement to this
prospectus to any broker-dealer that requests these documents in the letter of
transmittal. We have agreed to pay all expenses incident to the exchange offer,
including the reasonable expenses of one counsel for the holders of the old
notes, other than commissions or concessions of any brokers or dealers. In
addition, we will indemnify the holders of the old notes (including any
broker-dealers) against certain liabilities, including liabilities under the
Securities Act.
The following requirements apply only to broker-dealers. If you are not a
broker-dealer as defined in Section 3(a)(4) and Section 3(a)(5) of the Exchange
Act, these requirements do not affect you.
Each broker-dealer that receives new notes for its own account under the
exchange offer must acknowledge that it will deliver a prospectus in connection
with any resale of the new notes. This prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of new notes received in exchange for old notes where the old notes
were acquired as a result of market-making activities or other trading
activities. We have agreed that, for a period of 90 days after the expiration
date, we will make this prospectus, as amended or supplemented, available to any
broker-dealer for use in connection with any such resale.
We will not receive any proceeds from any sale of new notes by
broker-dealers or any other holder of new notes. New notes received by
broker-dealers for their own account under the exchange offer may be sold from
time to time in one or more transactions in the over-the-counter market, in
negotiated transactions, through the writing of options on the new notes or a
combination of these methods of resale, at market prices prevailing at the time
of resale, at prices related to the prevailing market prices or at negotiated
prices. The resale may be made directly to purchasers or to or through brokers
or dealers who may receive compensation in the form of commissions or
concessions from any of these broker-dealers and/or the purchasers of any such
new notes. Any broker-dealer that resells new notes that were received by it for
its own account in the exchange offer or participates in a distribution of the
new notes may be deemed to be an "underwriter" within the meaning of the
Securities Act and any profit on their resale of new notes and any commissions
or concessions received by them may be deemed to be underwriting compensation
under the Securities Act. The letter of transmittal states that by acknowledging
that it will deliver a prospectus and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
72
GENERAL INFORMATION
CLEARING SYSTEMS
The new notes have been accepted for clearance through Euroclear and
Clearstream Banking. In addition, the new notes have been accepted for trading
in book-entry form by DTC. The ISIN number for the new notes is US40049JAV98 and
the CUSIP number is 40049JAV9.
LISTING
Application has been made to list the new notes on the Luxembourg Stock
Exchange. In connection with the application to list notes on the Luxembourg
Stock Exchange, a legal notice relating to the issuance of the notes and a copy
of the bylaws (estatutos sociales) of Televisa will be available at the
Registrar of the District Court in Luxembourg (Greffier en Chef du Tribunal
d'Arrondissement de et a Luxembourg) where such documents may be examined or
copies obtained. Copies of the estatutos sociales of Televisa in English, the
indenture, as may be amended or supplemented from time to time, any published
annual audited consolidated financial statements and quarterly unaudited
consolidated financial statements of Televisa will be available at the principal
office of Televisa, at the offices of the trustee, the offices of the Luxembourg
listing agent, at no cost, and at the addresses of the paying agents set forth
on the back cover of this prospectus. Televisa does not make publicly available
annual or quarterly non-consolidated financial statements. Televisa will
maintain a paying and transfer agent in Luxembourg for so long as any old notes
or new notes are listed on the Luxembourg Stock Exchange.
AUTHORIZATION
We have obtained all necessary consents, approvals and authorizations in
connection with the issuance and performance of the new notes. The issuance of
the new notes was authorized by resolutions of the Board of Directors of
Televisa passed on February 22, 2005 and April 26, 2005.
NO MATERIAL ADVERSE CHANGE
Except as disclosed in this prospectus (or in the documents incorporated
herein by reference), there has been no material adverse change in the financial
position or prospects of Televisa and its subsidiaries taken as a whole since
December 31, 2004.
LITIGATION
Except as disclosed in "Item 4 -- Information on the Company -- Business
Overview -- Legal Proceedings" included in the 2004 Form 20-F and under "Recent
Developments -- Univision Litigation," Televisa is not involved in any legal or
arbitration proceedings (including any such proceedings which are pending or
threatened) relating to claims or amounts which may have or have had during the
12 months prior to the date of this prospectus a material adverse effect on the
financial position of Televisa and its subsidiaries taken as a whole.
73
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated by reference into this
prospectus contain forward-looking statements. We may from time to time make
forward-looking statements in our periodic reports to the SEC on Form 6-K, in
our annual report to shareholders, in prospectuses, press releases and other
written materials and in oral statements made by our officers, directors or
employees to analysts, institutional investors, representatives of the media and
others. Examples of these forward-looking statements include:
- projections of operating revenues, net income (loss), net income (loss)
per share, capital expenditures, dividends, capital structure or other
financial items or ratios;
- statements of our plans, objectives or goals, including those relating to
anticipated trends, competition, regulation and rates;
- our current and future plans regarding our Spanish-language horizontal
Internet portal, EsMas.com;
- statements concerning our transactions with Univision;
- statements concerning our recent series of transactions with DIRECTV and
News Corp.;
- statements about our future economic performance or that of Mexico or
other countries in which we operate or have investments; and
- statements of assumptions underlying these statements.
Words such as "believe," "anticipate," "plan," "expect," "intend,"
"target," "estimate," "project," "predict," "forecast," "guideline," "should"
and similar expressions are intended to identify forward-looking statements, but
are not the exclusive means of identifying these statements.
Forward-looking statements involve inherent risks and uncertainties. We
caution you that a number of important factors could cause actual results to
differ materially from the plans, objectives, expectations, estimates and
intentions expressed in these forward-looking statements. These factors, some of
which are discussed under "Risk Factors," include economic and political
conditions and government policies in Mexico or elsewhere, inflation rates,
exchange rates, regulatory developments, customer demand and competition. We
caution you that the foregoing list of factors is not exclusive and that other
risks and uncertainties may cause actual results to differ materially from those
in forward-looking statements.
Forward-looking statements speak only as of the date they are made, and we
do not undertake any obligation to update them in light of new information or
future developments.
You should evaluate any statements made by us in light of these important
factors.
AVAILABLE INFORMATION
We have filed with the SEC a registration statement on Form F-4 under the
Securities Act with respect to the securities offered by this prospectus. The
prospectus, which forms a part of the registration statement, including
amendments, does not contain all the information included in the registration
statement. This prospectus is based on information provided by us and other
sources that we believe to be reliable. This prospectus summarizes certain
documents and other information and we refer you to them for a more complete
understanding of what we discuss in this prospectus. This prospectus
incorporates important business and financial information about us which is not
included in or delivered with this prospectus. You can obtain documents
containing this information through us. If you would like to request these
documents from us, please do so by -- , 2005, to receive them before the
expiration date.
Televisa is subject to the informational requirements of the Exchange Act
and in accordance therewith files reports and other information with the SEC.
Reports and other information filed by Televisa with the SEC can be inspected
and copied at the public reference facilities maintained by the SEC at its
Public Reference Room at 100 F Street, NE, Room 1580, Washington, D.C. 20549 and
at the SEC's regional offices located at the Woolworth Building, 233 Broadway,
13th Floor, New York, New York 10007 and Citicorp
74
Center, Suite 1400, 500 West Madison Street, Chicago, Illinois 60661-2511. You
may obtain information on the operation of the Public Reference Room by calling
the SEC at 1-800-SEC-0330. Such materials can also be inspected at the offices
of the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005.
Such information is also available in Luxembourg upon request, without charge,
from the Luxembourg Listing Agent, Dexia Banque Internationale a Luxembourg. Any
filings we make electronically will be available to the public over the Internet
at the SEC's website at www.sec.gov.
We will make available to the holders of the notes, at the corporate trust
office of The Bank of New York, the trustee under the indenture and supplemental
indenture governing the notes, at no cost, copies of the indenture and the
supplemental indenture as well as our annual report on Form 20-F in English,
including a review of our operations, and annual audited consolidated financial
statements prepared in conformity with Mexican GAAP, together with a
reconciliation of operating income, net income and total shareholders' equity to
U.S. GAAP. We will also make available at the office of the trustee our
unaudited quarterly consolidated financial statements in English prepared in
accordance with Mexican GAAP.
LEGAL MATTERS
Some legal matters relating to the validity of the new notes will be passed
upon by Mijares, Angoitia, Cortes y Fuentes, S.C., Mexico City, Mexico and
Fried, Frank, Harris, Shriver & Jacobson LLP, New York, New York, Televisa's
Mexican and U.S. counsel, respectively. With respect to matters of Mexican law,
Fried, Frank, Harris, Shriver & Jacobson LLP may rely upon the opinion of
Mijares, Angoitia, Cortes y Fuentes, S.C.
Alfonso de Angoitia Noriega, one of our directors, Executive Vice President
and Member of the Executive Office of the Chairman and Member of the Executive
Committee of Televisa, and Juan Sebastian Mijares Ortega, our Vice
President -- Legal and Corporate General Counsel of Grupo Televisa, are both
partners on leave of absence from Mijares, Angoitia, Cortes y Fuentes, S.C.
EXPERTS
The audited financial statements of Televisa, except as they relate to
Univision Communications Inc., an equity method investee, as of December 31,
2003 and 2004, and for the three years ended December 31, 2002, 2003 and 2004,
and the financial statements of Innova, S. de R.L. de C.V. as of December 31,
2002 and 2003, and for the two years ended December 31, 2002 and 2003, which are
included in the 2004 Form 20-F, have been incorporated herein by reference in
reliance on the reports of PricewaterhouseCoopers, S.C., independent registered
public accounting firm, given the authority of such firm as experts in auditing
and accounting.
The audited financial statements of Univision Communications Inc., as of
December 31, 2004 and 2003 and for each of the three years in the period ended
December 31, 2004, which are not separately included in the 2004 Form 20-F, have
been audited by Ernst & Young LLP, an independent registered public accounting
firm, whose report thereon appears in the 2004 Form 20-F. Such financial
statements, to the extent they have been included in the financial statements of
Televisa, have been so included in reliance on the reports of such independent
registered public accounting firm given on the authority of said firm as experts
in auditing and accounting.
75
EXHIBIT
I
UNAUDITED RESULTS FOR THE THREE MONTH PERIODS
ENDED MARCH 31, 2004 AND 2005
Set forth below are our unaudited consolidated results for the three months
ended March 31, 2004 and 2005. Results included in this Exhibit I have been
prepared in accordance with Mexican GAAP and are presented in Mexican Pesos in
purchasing power as of March 31, 2005. In the opinion of management, the
unaudited financial information set forth in this Exhibit I includes all
adjustments, consisting of only normally recurring adjustments, necessary for a
fair presentation of this financial information. The unaudited financial
information set forth in this Exhibit I should be read in connection with our
audited consolidated financial statements for the years ended December 31, 2002,
2003 and 2004, which are included elsewhere in this prospectus. Financial
information set forth in this Exhibit I is presented in Mexican Pesos in
purchasing power as of March 31, 2005 and is therefore not directly comparable
to the financial information presented elsewhere in this prospectus, which,
unless otherwise stated, is presented in Mexican Pesos in purchasing power as of
December 31, 2004.
The information contained in this Exhibit I does not contain all of the
information and disclosures normally included in interim financial statements
prepared in accordance with Mexican GAAP. Results for the three months ended
March 31, 2005 set forth in this Exhibit I are not directly comparable to
results for the three months ended March 31, 2004 or the years ended December
31, 2002, 2003 and 2004 included elsewhere in this prospectus, which do not
reflect, in the case of results for the three months ended March 31, 2004 and
the years ended December 31, 2002 and 2003, the effects related to the
consolidation of Innova's financial statements into our financial statements
beginning April 1, 2004. We have not undertaken a U.S. GAAP reconciliation for
any period or date in 2005. The change in the NCPI for the three-month period
ended March 31, 2005 was 0.8%. Financial highlights follow:
THREE MONTHS ENDED
MARCH 31,
-------------------------
2004 2005
----------- -----------
(UNAUDITED) (UNAUDITED)
(IN MILLIONS OF MEXICAN
PESOS IN PURCHASING POWER
AS OF MARCH 31, 2005)*
Net sales................................................... Ps.5,460.2 Ps.6,369.6
Cost of sales............................................... 3,113.9 3,186.1
Gross profit................................................ 2,346.3 3,183.5
Selling expenses............................................ 407.2 574.4
Administrative expenses..................................... 372.4 422.3
Depreciation and amortization............................... 355.5 542.1
Operating income............................................ 1,211.2 1,644.7
Integral cost of financing -- net........................... 385.5 302.8
Restructuring and non-recurring charges..................... 105.4 168.4
Other expense -- net........................................ 127.3 31.4
Income tax, assets tax and employees' profit sharing........ 166.8 311.1
Equity in earnings of affiliates............................ 46.4 18.4
Cumulative loss effect of accounting change................. -- 177.9
Minority interest (gain) loss............................... (20.1) 77.4
Net income.................................................. 492.7 594.1
---------------
* Certain data set forth in the table above could differ from data set forth in
the unaudited condensed consolidated statements of income for the three months
ended March 31, 2004 and 2005 included in this Exhibit I due to differences in
rounding.
I-1
OVERVIEW OF CONSOLIDATED RESULTS
Net sales. Our net sales increased by Ps.909.4 million, or 16.7%, to
Ps.6,369.6 million for the three months ended March 31, 2005 from Ps.5,460.2
million for the three months ended March 31, 2004. This increase reflects the
consolidation of Sky Mexico into our financial statements beginning in April
2004 as well as higher revenues in our Television Broadcasting, Pay Television
Networks, Publishing, Cable Television and Radio segments, partially offset by a
decrease in the Publishing Distribution segment due to a change in an accounting
treatment, as described herein and lower revenues in our Programming Exports and
Other Businesses segments.
Cost of sales. Cost of sales increased by Ps.72.2 million, or 2.3%, to
Ps.3,186.1 million for the three months ended March 31, 2005 from Ps.3,113.9
million for the three months ended March 31, 2004. This increase principally
reflects the consolidation of Sky Mexico beginning in April 2004, as well as
increases in costs of sales in our Publishing, Cable Television, Radio and Pay
Television Networks segments. These increases were partially offset by lower
costs in the Publishing Distribution segment as a result of the change in the
accounting treatment and decreases in cost of sales in Television Broadcasting,
Programming Exports and Other Businesses segments.
Selling expenses. Selling expenses increased by Ps.167.2 million, or
41.1%, to Ps.574.4 million for the three months ended March 31, 2005 from
Ps.407.2 million for the three months ended March 31, 2004. This increase
principally was due to the consolidation of Sky Mexico, as well as higher
selling expenses in our Publishing, Television Broadcasting and Radio segments,
as a result of increases in promotional and advertising expenses and personnel
costs due to the restructuring of our sales force. These increases were
partially offset by lower selling expenses in our Pay Television Networks,
Programming Exports, Publishing Distribution, Cable Television and Other
Businesses segments.
Administrative expenses. Administrative expenses increased by Ps.49.9
million, or 13.4%, to Ps.422.3 million for the three months ended March 31, 2005
from Ps.372.4 million for the three months ended March 31, 2004. This increase
reflects the consolidation of Sky Mexico as well as increases in administrative
expenses in our Pay Television Networks, Publishing and Cable Television
segments and was partially offset by a decrease in the administrative expenses
in our Television Broadcasting, Programming Exports, Publishing Distribution,
Radio and Other Businesses segments.
Operating Income before Depreciation and Amortization. Operating income
before depreciation and amortization increased by Ps.620.1 million, or 39.6%, to
Ps.2,186.8 million for the three months ended March 31, 2005 from Ps.1,566.7
million for the three months ended March 31, 2004. This increase reflects the
increase in our total net sales, partially offset by the increases in cost of
sales and operating expenses.
Including the effect of the consolidation of Sky Mexico and the change in
accounting treatment of the Publishing Distribution segment on our operating
results for the three months ended March 31, 2004, our net sales would have
increased by approximately 4.6% and our operating income before depreciation and
amortization would have increased by approximately 11.0%.
I-2
OVERVIEW OF SEGMENT RESULTS
THREE MONTHS ENDED MARCH 31,
---------------------------------------------
% CONTRIBUTION TO
2005 SEGMENT
2004 2005 REVENUES
----------- ----------- -----------------
(UNAUDITED) (UNAUDITED)
(IN MILLIONS OF MEXICAN PESOS IN PURCHASING
POWER AS OF MARCH 31, 2005)
TOTAL NET SALES
Television Broadcasting....................... Ps.3,334.1 Ps.3,390.1 51.4%
Pay Television Networks....................... 175.7 235.3 3.6
Programming Exports........................... 432.6 396.2 6.0
Publishing.................................... 387.2 458.8 7.0
Publishing Distribution....................... 464.6 85.7 1.3
Sky Mexico(1)................................. -- 1,303.5 19.8
Cable Television.............................. 281.4 304.1 4.6
Radio......................................... 55.1 62.1 0.9
Other Businesses.............................. 415.2 355.1 5.4
---------- ---------- -----
Segment Revenues.............................. 5,545.9 6,590.9 100.0
Intersegment Revenues(2)...................... (85.7) (221.3) (3.4)
---------- ---------- -----
Consolidated Net Sales........................ Ps.5,460.2 Ps.6,369.6 96.6%
========== ========== =====
THREE MONTHS ENDED
MARCH 31,
-------------------------
2004 2005
----------- -----------
(UNAUDITED) (UNAUDITED)
(IN MILLIONS OF MEXICAN
PESOS IN PURCHASING POWER
AS OF MARCH 31, 2005)
OPERATING INCOME (LOSS) BEFORE DEPRECIATION AND AMORTIZATION
Television Broadcasting..................................... Ps.1,324.3 Ps.1,384.7
Pay Television Networks..................................... 46.4 94.5
Programming Exports......................................... 129.4 106.4
Publishing.................................................. 31.7 34.7
Publishing Distribution..................................... (3.5) (5.6)
Sky Mexico(1)............................................... -- 509.8
Cable Television............................................ 88.6 82.6
Radio....................................................... (2.8) 0.3
Other Businesses............................................ (13.8) 13.2
---------- ----------
Segment Operating Income before Depreciation and
Amortization.............................................. 1,600.3 2,220.6
Corporate Expenses.......................................... (33.6) (33.8)
---------- ----------
Consolidated Operating Income before Depreciation and
Amortization.............................................. Ps.1,566.7 Ps.2,186.8
========== ==========
---------------
(1) Effective April 1, 2004 we began consolidating Sky Mexico, according with
the Financial Accounting Standard Board Interpretation No. 46 "Consolidation
of Variable Interest Entities" (FIN 46), which is applicable under Mexican
GAAP Bulletin A-8 "Supplementary Application of International Accounting
Standards."
(2) For segment reporting purposes, intersegment revenues are included in each
of the segment revenues.
I-3
TELEVISION BROADCASTING
Net Sales
Television Broadcasting net sales increased by Ps.56.0 million, or 1.7%, to
Ps.3,390.1 million for the three months ended March 31, 2005 from Ps.3,334.1
million for the three months ended March 31, 2004. This increase is mainly
attributable to an increase in advertising revenues, driven mainly by our
telenovelas and reality shows, as well as by higher local sales.
Operating Income before Depreciation and Amortization
Television Broadcasting operating income before depreciation and
amortization increased by Ps.60.4 million, or 4.6%, to Ps.1,384.7 million for
the three months ended March 31, 2005 from Ps.1,324.3 million for the three
months ended March 31, 2004. This increase was primarily due to the increase in
net sales, a marginal decrease in cost of sales and stable operating expenses.
PAY TELEVISION NETWORKS
Net Sales
Pay Television Networks net sales increased by Ps.59.6 million, or 33.9%,
to Ps.235.3 million for the three months ended March 31, 2005 from Ps.175.7
million for the three months ended March 31, 2004. This increase was primarily
due to the inclusion of TuTV's results of operations in our consolidated
financial statements as of January 1, 2005, higher advertising revenues and
signals sold in Mexico as well as higher revenues from signals sold in Latin
America, partially offset by lower revenues from signals sold to pay television
systems in Spain.
Operating Income before Depreciation and Amortization
Pay Television Networks operating income before depreciation and
amortization increased by Ps.48.1 million, or 103.7%, to Ps.94.5 million for the
three months ended March 31, 2005, from Ps.46.4 million for the three months
ended March 31, 2004, primarily due to higher sales, partially offset by a
marginal increase in the cost of sales combined with an increase in operating
expenses resulting from the consolidation of TuTV and higher advertising and
promotion expenses.
PROGRAMMING EXPORTS
Net Sales
Programming Exports net sales decreased by Ps.36.4 million, or 8.4%, to
Ps.396.2 million for the three months ended March 31, 2005 from Ps.432.6 million
for the three months ended March 31, 2004. This decrease was primarily due to
lower export sales to Latin America, Europe, Asia and Africa and a negative
translation effect of foreign-currency denominated sales. The decrease explained
above was partially offset by an increase in royalties paid to us under our
program license agreement with Univision in the amount of U.S.$741 thousand for
the three months ended March 31, 2005 as compared to the three months ended
March 31, 2004.
Operating Income before Depreciation and Amortization
Programming Exports operating income before depreciation and amortization
decreased by Ps.23.0 million, or 17.8%, to Ps.106.4 million for the three months
ended March 31, 2005 from Ps.129.4 million for the three months ended March 31,
2004. This decrease was primarily due to lower sales, partially offset by lower
cost of sales and operating expenses, due to a decrease in advertising and
promotional expenses and a lower provision for doubtful trade accounts.
I-4
PUBLISHING
Net Sales
Publishing net sales increased by Ps.71.6 million, or 18.5%, to Ps.458.8
million for the three months ended March 31, 2005 from Ps.387.2 million for the
three months ended March 31, 2004. This increase was primarily due to an
increase in advertising pages sold and an increase in magazines sold in Mexico
and abroad, partially offset by a negative translation effect on
foreign-currency denominated sales.
Operating Income before Depreciation and Amortization
Publishing operating income before depreciation and amortization increased
by Ps.3.0 million, or 9.5%, to Ps.34.7 million for the three months ended March
31, 2005 from Ps.31.7 million for the three months ended March 31, 2004. This
increase primarily reflects the increase in net sales and was partially offset
by increases in cost of sales due to the increase in paper and printing costs
and higher operating expenses due to higher personnel and promotional expenses.
PUBLISHING DISTRIBUTION
Beginning in October 2004, we changed the accounting treatment of sales and
cost of goods sold in our Publishing Distribution segment due to certain
amendments to the terms and conditions of the agreements with our publishers. As
a result of this change, we now recognize, as sales, the marginal contribution
of the products we distribute. This change does not affect operating result
before depreciation and amortization.
Net Sales
Publishing Distribution net sales decreased by Ps.378.9 million, or 81.6%,
to Ps.85.7 million for the three months ended March 31, 2005 from Ps.464.6
million for the three months ended March 31, 2004. This decrease was primarily
attributable to the accounting change described above and the negative
translation effect on foreign-currency denominated sales, partially offset by
higher distribution of magazines published by the Company and sold in Mexico and
abroad.
Giving effect to the accounting change in both periods, Publishing
Distribution net sales increased by Ps.2.5 million, or 3.0%, to Ps.85.7 million
for the three months ended March 31, 2005 from Ps.83.2 million for the three
months ended March 31, 2004. This increase was primarily attributable to higher
distribution sales of magazines published by the Company and sold in Mexico and
abroad. This increase was partially offset by a negative translation effect on
foreign-currency denominated sales.
Operating Loss before Depreciation and Amortization
Publishing Distribution operating loss before depreciation and amortization
increased by Ps.2.1 million, or 60.0%, to Ps.5.6 million for the three months
ended March 31, 2005 from Ps.3.5 million for the three months ended March 31,
2004. This increase primarily reflects the decrease in net sales, partially
offset by lower cost of sales and operating expenses.
SKY MEXICO
Effective April 1, 2004, we began consolidating Sky Mexico into our
financial statements in order to comply with the Financial Accounting Standard
Board Interpretation No. 46, "Consolidation of Variable Interest Entities" (FIN
46) and in accordance with Mexican GAAP Bulletin A-8, "Supplementary Application
of International Accounting Standards."
Net Sales
On a pro forma basis, giving effect to the consolidation of Sky Mexico as
if it occurred on January 1, 2004, Sky Mexico net sales increased by Ps.162.5
million or 14.2% to Ps.1,303.5 million for the three months ended March 31, 2005
from Ps.1,141.0 million for the three months ended March 31, 2004. This increase
was
I-5
primarily due to a 25.0% increase in its subscriber base, which as of March 31,
2005 reached 1,107,500 gross active subscribers (including 63,400 commercial
subscribers) compared to 886,100 gross active subscribers as of March 31, 2004,
of which 50,200 were commercial subscribers.
Operating Income before Depreciation and Amortization
Sky Mexico operating income before depreciation and amortization increased
by Ps.105.8 million or 26.2% to Ps.509.8 million for the three months ended
March 31, 2005 from Ps.404.0 million for the three months ended March 31, 2004.
This increase was due to the increase in net sales, partially offset by higher
programming and activations costs and increase in operating expenses due to more
free special events offered to the subscribers and higher promotion expenses.
CABLE TELEVISION
Net Sales
Cable Television net sales increased by Ps.22.7 million, or 8.1%, to
Ps.304.1 million for the three months ended March 31, 2005 from Ps.281.4 million
for the three months ended March 31, 2004. This increase is attributable to an
increase in the subscriber base as well as both higher advertising revenues and
broadband subscription fees. This subscriber base increased 1.3% as of March 31,
2005, to over 370,800, of which over 147,000 were digital subscribers, from a
subscriber base of over 365,900, of which over 69,800 were digital subscribers,
at the same date of 2004. Broadband subscribers increased to over 36,500 in the
first quarter of 2005 compared with over 11,200 in the first quarter of 2004.
Operating Income before Depreciation and Amortization
Cable Television operating income before depreciation and amortization
decreased by Ps.6.0 million, or 6.8%, to Ps.82.6 million for the three months
ended March 31, 2005 from Ps.88.6 million for the three months ended March 31,
2004. This decrease primarily reflects higher programming costs and operating
expenses, partially offset by higher sales.
RADIO
Net Sales
Radio net sales increased by Ps.7.0 million, or 12.7%, to Ps.62.1 million
for the three months ended March 31, 2005 from Ps.55.1 million for the three
months ended March 31, 2004. This increase primarily reflects an increase in
advertising time sold particularly in newscasts and sporting events programs.
Operating Result before Depreciation and Amortization
Radio operating result before depreciation and amortization increased by
Ps.3.1 million to an income of Ps.0.3 million for the three months ended March
31, 2005 from a loss of Ps.2.8 million for the three months ended March 31,
2004. This increase was primarily due to the increase in net sales, partially
offset by an increase in cost of sales and operating expenses due to an increase
in programming costs and commission expenses.
OTHER BUSINESSES
Net Sales
Other Businesses net sales decreased by Ps.60.1 million, or 14.5%, to
Ps.355.1 million for the three months ended March 31, 2005 from Ps.415.2 million
for the three months ended March 31, 2004. This decrease was primarily due to
lower revenues in our feature film distribution business, sports promotion
business and by the sale in the fourth quarter of 2004 of our interest in our
nationwide paging business. This decrease was partially offset by higher sales
in our EsMas.com Internet portal business, which include sales related to our
SMS messaging service.
I-6
Operating Result before Depreciation and Amortization
Other Businesses operating result before depreciation and amortization
increased by Ps.27.0 million, to an income of Ps.13.2 million for the three
months ended March 31, 2005 from a loss of Ps.13.8 million for the three months
ended March 31, 2004. This increase reflects lower cost of sales and operating
expenses, partially offset by a decrease in net sales.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization expense increased by Ps.186.6 million, or
52.5%, to Ps.542.1 million for the three months ended March 31, 2005 from
Ps.355.5 million for the three months ended March 31, 2004. This increase
primarily reflects the depreciation expense of Sky Mexico and increases in the
depreciation and amortization expenses related to our Cable Television segment,
partially offset by a decrease in amortization of deferred costs of EsMas.com
and lower depreciation expense in Television Broadcasting.
INTEGRAL COST OF FINANCING
The expense attributable to integral cost of financing decreased by Ps.82.7
million, or 21.5%, to Ps.302.8 million in the three months ended March 31, 2005,
from Ps.385.5 million in the three months ended March 31, 2004. This decrease
reflects:
- a Ps.134.1 million increase in interest income in connection with a
higher average amount of temporary investments during the first quarter
of 2005 and higher interest rates in the same period; and
- a Ps.147.7 million decrease in loss from monetary position, primarily as
a result of a lower net asset monetary position and a lower inflation in
the three months ended March 31, 2005 (0.8%) compared to the three months
ended March 31, 2004 (1.6%).
These favorable variances were offset by:
- a Ps.177.0 million increase in interest expense, primarily as a result of
an increase in the average amount of our debt, resulting from the
consolidation of Sky Mexico's debt beginning the second quarter of 2004;
and
- a Ps.22.1 million increase in net foreign exchange loss, primarily in
connection with a 0.09% depreciation of the Mexican peso against the U.S.
dollar during the first quarter 2005 compared with a 0.45% appreciation
of the Mexican peso against the U.S. dollar in last year's first quarter.
RESTRUCTURING AND NON-RECURRING CHARGES
Restructuring and non-recurring charges increased by Ps.63.0 million, or
59.8%, to Ps.168.4 million in the first quarter of 2005 compared to Ps.105.4
million in the first quarter of 2004. This increase primarily reflects the
recognition of financing expenses in connection with the prepayment of certain
of our outstanding long-term debt in March 2005, which was partially offset by a
reduction in restructuring charges in connection with work force reductions.
OTHER EXPENSE, NET
Other expense decreased by Ps.95.9 million, or 75.3%, to Ps.31.4 million in
the first quarter of 2005, as compared with Ps.127.3 million in the first
quarter of 2004. This decrease primarily reflects a reduction in donations, a
decrease in loss on disposition of fixed assets, and a reduction in advisory and
professional services.
INCOME TAXES, ASSETS TAX AND EMPLOYEES' PROFIT SHARING
Income taxes increased by Ps.144.3 million, or 86.5%, to Ps.311.1 million
in the three months ended March 31, 2005 from Ps.166.8 million in the three
months ended March 31, 2004. This increase primarily
I-7
reflects a higher income tax base in the first quarter of 2005. Our effective
income tax rate was 27.2% for the three months ended March 31, 2005 as compared
to 28.0% for the three months ended March 31, 2004.
We are authorized by the Mexican tax authorities to compute our income tax
and assets tax on a consolidated basis. Prior to January 1, 2005, Mexican
controlling companies were allowed to consolidate, for income tax purposes,
income or losses of their Mexican subsidiaries up to 60% of their share
ownership in such subsidiaries. Effective January 1, 2005, such percentage
increased to 100%.
EQUITY IN RESULTS OF AFFILIATES
Equity in income of affiliates decreased by Ps.28.0 million to Ps.18.4
million in the first quarter of 2005 compared to Ps.46.4 million in the first
quarter of 2004. This decrease primarily reflects the absence of equity income
of Sky Mexico in the first quarter of 2005, as well as a reduction in our equity
income of OCEN.
MINORITY INTEREST
Minority interest increased by Ps.97.5 million to a charge of Ps.77.4
million in the first quarter of 2005 from a benefit of Ps.20.1 million in the
first quarter of 2004. This increase primarily reflects the portion of net
income attributable to the interest held by third parties in the Sky Mexico
business beginning the second quarter of 2004.
NET INCOME
We generated net income in the amount of Ps.594.1 million in the first
quarter of 2005, as compared to net income of Ps.492.7 million in the first
quarter of 2004. The net increase of Ps.101.4 million reflected:
- a Ps.433.5 million increase in operating income;
- a Ps.82.7 million decrease in integral cost of financing; and
- a Ps.95.9 million decrease in other expense-net.
This change was partially offset by a Ps.63.0 million increase in
restructuring and non-recurring charges, a Ps.144.3 million increase in income
taxes, a Ps.28.0 million decrease in equity in income of affiliates, a Ps.177.9
million increase in cumulative loss effect of accounting change, and an increase
of Ps.97.5 million in minority interest.
CAPITAL EXPENDITURES, ACQUISITIONS AND INVESTMENTS
During the first quarter of 2005, we:
- made aggregate capital expenditures for property, plant and equipment of
approximately U.S.$38.4 million, which amount includes capital
expenditures in the amount of U.S.$3.4 million for the expansion and
improvement of our cable business and U.S.$28.7 million related to
equipment in connection with new subscribers in our Sky Mexico business.
During the first quarter of 2004, we:
- made aggregate capital expenditures for property, plant and equipment of
approximately U.S.$12.4 million, which amount includes capital
expenditures in the amount of U.S.$4.7 million for the expansion and
improvement of our cable business;
- invested an aggregate of U.S.$1.0 million in "TuTV" a 50/50 joint venture
with Univision for distribution of our Spanish-speaking programming
packages in the United States; and
- invested an aggregate of U.S.$6.3 million in our Latin America DTH joint
ventures in the form of long-terms loans.
I-8
INDEBTEDNESS
As of March 31, 2005, our consolidated long-term portion of debt amounted
to Ps.17,963.6 million, including Ps.4,359.7 million from Sky Mexico of which
Ps.3,843.6 million is not guaranteed by Televisa, and our consolidated current
portion of debt was Ps.2,322.7 million. Additionally, as of March 31, 2005, Sky
Mexico had long-term and current portions of a capital lease obligation in an
aggregate amount of Ps.1,306.8 million and Ps.72.9 million, respectively. As of
March 31, 2004, our consolidated long-term portion of debt amounted to
Ps.15,349.9 million, and our consolidated current portion of debt was Ps.259.4
million. Excluding Sky Mexico, as of March 31, 2005, our consolidated net debt
amounted to Ps.120.5 million which compares to a consolidated net debt of
Ps.62.3 million as of March 31, 2004.
In March 2005, we issued U.S.$400 million aggregate principal amount of
6.625% Senior Notes due 2025. The net proceeds were used to pay the tender offer
of 74% of the aggregate principal amount of the 8.00% Senior Notes due 2011 and
76% of the 8.15% UDI-denominated Notes due 2007. As a result of these tender
offers and the consummation in the first quarter of the offering of U.S.$400
million aggregate principal amount of 6.625% Senior Notes due 2025, we expect to
reduce nominal interest expense by approximately U.S.$8.0 million in 2005 and
U.S.$12.0 million in 2006. Through these transactions, we extended our average
debt maturity from 8.2 to 11.9 years.
Effective March 18, 2005, we designated our net investment in Univision as
a hedge of the foreign exchange differences arising from the U.S.$400 million
Senior Notes due 2025 issued in connection with the prepayment of approximately
U.S.$485.4 million of principal amount of our outstanding long-term debt as of
that date. As of March 31, 2005, the total principal amount of our long-term
debt being hedged by Univision was of approximately U.S.$777.5 million.
I-9
GRUPO TELEVISA, S.A. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2004 (UNAUDITED) AND MARCH 31, 2005 (UNAUDITED)
DECEMBER 31, 2004 MARCH 31, 2005
-------------------- -----------------
(UNAUDITED)(1) (UNAUDITED)
(IN THOUSANDS OF MEXICAN PESOS IN
PURCHASING POWER AS OF MARCH 31,
2005)
ASSETS
Current:
Available:
Cash................................................... Ps. 393,606 Ps. 260,975
Temporary investments.................................. 16,379,019 16,563,121
------------- -------------
16,772,625 16,824,096
Trade notes and accounts receivable -- net.................. 11,318,572 7,104,155
Other accounts and notes receivable -- net.................. 1,143,069 1,021,044
Due from affiliated companies -- net........................ 77,017 23,623
Transmission rights and programming......................... 3,622,262 3,596,503
Inventories................................................. 667,988 708,823
Other current assets........................................ 716,565 735,290
------------- -------------
Total current assets................................... 34,318,098 30,013,534
Transmission rights and programming......................... 4,527,143 4,334,542
Investments................................................. 6,811,034 6,785,874
Property, plant and equipment -- net........................ 19,310,717 19,185,056
Goodwill and other intangible assets -- net................. 9,228,832 9,810,588
Other assets................................................ 270,700 50,089
------------- -------------
Total assets........................................... Ps.74,466,524 Ps.70,179,683
============= =============
---------------
(1) The December 31, 2004 amounts included throughout these condensed
consolidated financial statements were taken from our audited consolidated
financial statements as of and for the year ended December 31, 2004, but
restated to March 31, 2005 constant Mexican pesos. See "Item 3 -- Key
Information -- Selected Financial Data" included in the 2004 Form 20-F.
I-10
GRUPO TELEVISA, S.A. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2004 (UNAUDITED) AND MARCH 31, 2005 (UNAUDITED)
DECEMBER 31, 2004 MARCH 31, 2005
-------------------- -----------------
(UNAUDITED)(1) (UNAUDITED)
(IN THOUSANDS OF MEXICAN PESOS IN
PURCHASING POWER AS OF MARCH 31,
2005)
LIABILITIES
Current:
Current portion of long-term debt......................... Ps. 3,323,102 Ps. 2,322,701
Current portion of satellite transponder lease
obligation............................................. 71,301 72,862
Trade accounts payable.................................... 2,152,095 2,339,717
Customer deposits and advances............................ 15,048,108 13,322,472
Taxes payable............................................. 1,571,059 557,134
Accrued interest.......................................... 452,921 125,820
Other accrued liabilities................................. 1,280,780 1,383,292
------------- -------------
Total current liabilities.............................. 23,899,366 20,123,998
Long-term debt.............................................. 19,093,247 17,963,646
Satellite transponder lease obligation...................... 1,335,065 1,306,799
Customer deposits and advances.............................. 375,830 345,826
Other long-term liabilities................................. 596,674 534,247
Deferred taxes.............................................. 1,344,546 1,327,633
Labor obligations........................................... -- 140,213
------------- -------------
Total liabilities...................................... 46,644,728 41,742,362
------------- -------------
STOCKHOLDERS' EQUITY
Majority interest:
Capital stock issued, no par value........................ 9,646,008 9,646,008
Additional paid-in capital................................ 4,108,742 4,108,742
------------- -------------
13,754,750 13,754,750
------------- -------------
Retained earnings:
Legal reserve.......................................... 1,536,575 1,536,575
Reserve for repurchase of shares....................... 5,603,165 5,603,165
Unappropriated earnings................................ 11,624,604 15,732,172
Net income for the period.............................. 4,350,798 594,052
------------- -------------
23,115,142 23,465,964
Accumulated other comprehensive loss...................... (2,582,250) (2,581,752)
Shares repurchased........................................ (6,344,350) (6,081,461)
------------- -------------
14,188,542 14,802,751
------------- -------------
Total majority interest................................ 27,943,292 28,557,501
Minority interest........................................... (121,496) (120,180)
------------- -------------
Total stockholders' equity............................. 27,821,796 28,437,321
------------- -------------
Total liabilities and stockholders' equity............. Ps.74,466,524 Ps.70,179,683
============= =============
---------------
(1) The December 31, 2004 amounts included throughout these condensed
consolidated financial statements were taken from our audited consolidated
financial statements as of and for the year ended December 31, 2004, but
restated to March 31, 2005 constant Mexican pesos. See "Item 3 -- Key
Information -- Selected Financial Data" included in the 2004 Form 20-F.
I-11
GRUPO TELEVISA, S.A. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2004 AND 2005
THREE MONTHS ENDED MARCH 31,
---------------------------------
2004 2005
--------------- ---------------
(UNAUDITED) (UNAUDITED)
(IN THOUSANDS OF MEXICAN PESOS IN
PURCHASING POWER AS OF MARCH 31,
2005)
Net sales................................................... Ps.5,460,186 Ps.6,369,590
Cost of sales............................................... 3,113,972 3,186,157
------------ ------------
Gross profit.............................................. 2,346,214 3,183,433
------------ ------------
Operating expenses:
Selling................................................... 407,161 574,380
Administrative............................................ 372,387 422,289
------------ ------------
779,548 996,669
------------ ------------
Depreciation and amortization............................... 355,469 542,074
------------ ------------
Operating income.......................................... 1,211,197 1,644,690
Integral cost of financing -- net........................... 385,488 302,766
Restructuring and non-recurring charges..................... 105,445 168,459
Other expense -- net........................................ 127,278 31,386
------------ ------------
Income before taxes....................................... 592,986 1,142,079
------------ ------------
Income tax and assets tax................................... 166,036 310,234
Employees' profit sharing................................... 731 853
------------ ------------
166,767 311,087
------------ ------------
Income before equity in earnings of affiliates, cumulative
loss effect of accounting change and minority interest.... 426,219 830,992
Equity in earnings of affiliates -- net..................... 46,432 18,375
Cumulative loss effect of accounting change -- net.......... -- (177,893)
Minority interest........................................... 20,092 (77,422)
------------ ------------
Net income................................................ Ps. 492,743 Ps. 594,052
============ ============
Net income per CPO........................................ Ps. 0.17 Ps. 0.21
============ ============
I-12
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
GRUPO TELEVISA, S.A.
AVENIDA VASCO DE QUIROGA, NO. 2000
COLONIA SANTA FE,
01210 MEXICO, D.F., MEXICO
EXCHANGE AGENT, TRUSTEE, REGISTRAR,
PAYING AGENT
AND TRANSFER AGENT
THE BANK OF NEW YORK
CORPORATE TRUST OPERATION
REORGANIZATION SECTION
101 BARCLAY STREET, 7 EAST
NEW YORK, NEW YORK 10286
ATTN: KIN LAU
U.S.A.
LUXEMBOURG PAYING AGENT LUXEMBOURG LISTING
AND TRANSFER AGENT AGENT
DEXIA BANQUE INTERNATIONALE A LUXEMBOURG DEXIA BANQUE INTERNATIONALE A LUXEMBOURG
69 ROUTE D'ESCH 69 ROUTE D'ESCH
L-2953 LUXEMBOURG L-2953 LUXEMBOURG
LEGAL ADVISERS TO GRUPO TELEVISA, S.A.
AS TO UNITED STATES LAW: AS TO MEXICAN LAW:
FRIED, FRANK, HARRIS, SHRIVER & JACOBSON LLP MIJARES, ANGOITIA, CORTES Y FUENTES, S.C.
ONE NEW YORK PLAZA MONTES URALES 505, PISO 3
NEW YORK, NEW YORK 10004 COLONIA LOMAS DE CHAPULTEPEC
U.S.A. 11000 MEXICO, D.F., MEXICO
AUDITORS OF GRUPO TELEVISA, S.A.
PRICEWATERHOUSECOOPERS, S.C.
MARIANO ESCOBEDO 573
COLONIA RINCON DEL BOSQUE
11580 MEXICO, D.F., MEXICO
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(GRUPO TELEVISA LOGO)
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under Mexican law, when an officer or director of a corporation acts within
the scope of his authority, the corporation will answer for any resulting
liabilities or expenses. In addition, the Board of Directors of the Registrant
has expressly resolved that the Registrant will indemnify and hold harmless each
director or officer of the Registrant against liabilities incurred in connection
with the distribution of the securities registered under this Registration
Statement on Form F-4, as amended. The Registrant has also entered into
indemnification agreements with certain of its officers and directors. Such
indemnification agreements provide for the Registrant to indemnify and advance
expenses to any officer and/or director a party thereto to the fullest extent
permitted by applicable law.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION PAGE
------- ----------- ----
3.1 -- English translation of Amended and Restated Bylaws
(Estatutos Sociales) of the Registrant, dated as of April
16, 2004 (previously filed with the Securities Exchange
Commission as Exhibit 1.1 to the Registrant's Annual Report
on Form 20-F for the year ended December 31, 2003 and
incorporated herein by reference).
4.1 -- Indenture relating to Senior Debt Securities, dated as of
August 8, 2000, between the Registrant, as Issuer, and The
Bank of New York, as Trustee, as amended or supplemented
from time to time (previously filed with the Securities and
Exchange Commission as Exhibit 4.1 to the Registrant's
Registration Statement on Form F-4 (File number 333-12738),
as amended (the "2000 Form F-4"), and incorporated herein by
reference).
4.2 -- First Supplemental Indenture relating to the 8 5/8% Senior
Notes due 2005, dated as of August 8, 2000, between the
Registrant, as Issuer, and The Bank of New York and Banque
Internationale a Luxembourg, S.A. (previously filed with the
Securities and Exchange Commission as Exhibit 4.2 to the
2000 Form F-4 and incorporated herein by reference).
4.3 -- Second Supplemental Indenture relating to the 8 5/8% Senior
Exchange Notes due 2005, dated as of January 19, 2001,
between the Registrant, as Issuer, and The Bank of New York
and Banque Internationale a Luxembourg, S.A. (previously
filed with the Securities and Exchange Commission as Exhibit
4.3 to the 2000 Form F-4 and incorporated herein by
reference).
4.4 -- Third Supplemental Indenture relating to the 8% Senior Notes
due 2011, dated as of September 13, 2001, between the
Registrant, as Issuer, and The Bank of New York and Banque
Internationale a Luxembourg, S.A. (previously filed with the
Securities and Exchange Commission as Exhibit 4.4 to the
Registrant's Registration Statement on Form F-4 (File number
333-14200) (the "2001 Form F-4") and incorporated herein by
reference).
4.5 -- Fourth Supplemental Indenture relating to the 8.5% Senior
Notes due 2032 between the Registrant, as Issuer, and The
Bank of New York and Dexia Banque Internationale a
Luxembourg (previously filed with the Securities and
Exchange Commission as Exhibit 4.5 to the Registrant's
Registration Statement on Form F-4 (File number 333-90342)
(the "2002 Form F-4") and incorporated herein by reference).
4.6 -- Fifth Supplemental Indenture relating to the 8% Senior
Exchange Notes due 2011 between the Registrant, as Issuer,
and The Bank of New York and Dexia Banque Internationale a
Luxembourg, S.A (previously filed with the Securities and
Exchange Commission as Exhibit 4.6 to the 2002 Form F-4 and
incorporated herein by reference).
II-1
EXHIBIT
NUMBER DESCRIPTION PAGE
------- ----------- ----
4.7 -- Sixth Supplemental Indenture relating to the 8.5% Senior
Exchange Notes due 2032 between the Registrant, as Issuer,
and The Bank of New York and Dexia Banque Internationale a
Luxembourg (previously filed with the Securities and
Exchange Commission as Exhibit 4.7 to the 2002 Form F-4 and
incorporated herein by reference).
4.8 -- Seventh Supplemental Indenture relating to the 6 5/8% Senior
Notes due 2025 between Registrant, as Issuer, and The Bank
of New York and Dexia Banque Internationale a Luxembourg,
dated March 18, 2005 (previously filed with the Securities
and Exchange Commission as Exhibit 2.8 to the Registrant's
Annual Report on Form 20-F for the year ended December 31,
2004 as it may be amended from time to time (the "2004 Form
20-F") and incorporated herein by reference).
4.9 -- Eighth Supplemental Indenture relating to the 6 5/8% Senior
Notes due 2025 between Registrant, as Issuer, and The Bank
of New York and Dexia Banque Internationale a Luxembourg,
dated May 26, 2005 (previously filed with the Securities and
Exchange Commission as Exhibit 2.9 to the 2004 Form 20-F and
incorporated herein by reference).
4.10 -- Form of Ninth Supplemental Indenture relating to the 6 5/8%
Senior Notes due 2025 between Registrant, as Issuer, and The
Bank of New York and Dexia Banque Internationale a
Luxembourg, dated May 26, 2005 (previously filed with the
Securities and Exchange Commission as Exhibit 4.10 to the
Registrant's Statement on Form F-4 (File number 333-
125779)(the "2005 Form F-4") and incorporated herein by
reference).
4.11 -- Form of 6 5/8% Senior Exchange Note (included in Exhibit
4.10).
4.12 -- Form of Deposit Agreement between the Registrant, JPMorgan
Chase Bank, as depositary and all holders and beneficial
owners of the Global Depositary Shares, evidenced by Global
Depositary Receipts, (previously filed with the Securities
and Exchange Commission as an Exhibit to the Registrant's
Registration Statement on Form F-6 (File number 333-99195)
(the "Form F-6") and incorporated herein by reference).
4.13 -- Registration Rights Agreement, dated as of March 18, 2005,
among the Registrant and Credit Suisse First Boston LLC and
Citigroup Global Markets Inc. (previously filed with the
Securities and Exchange Commission as Exhibit 4.13 to the
2005 Form F-4 and incorporated herein by reference).
4.14 -- Registration Rights Agreement, dated as of May 26, 2005,
among the Registrant and Credit Suisse First Boston LLC and
Citigroup Global Markets Inc. (previously filed with the
Securities and Exchange Commission as Exhibit 4.14 to the
2005 Form F-4 and incorporated herein by reference).
5.1 -- Opinion of Fried, Frank, Harris, Shriver & Jacobson LLP
(previously filed with the Securities and Exchange
Commission as Exhibit 5.1 to the 2005 Form F-4 and
incorporated herein by reference).
5.2 -- Opinion of Mijares, Angoitia, Cortes y Fuentes, S.C.
(previously filed with the Securities and Exchange
Commission as Exhibit 5.2 to the 2005 Form F-4 and
incorporated herein by reference).
10.1 -- Form of Indemnity Agreement between the Registrant and its
directors and executive officers (previously filed with the
Securities and Exchange Commission as Exhibit 10.1 to the
Registrant's Registration Statement on Form F-4 (File number
33-69636), as amended, (the "1993 Form F-4") and
incorporated herein by reference).
10.2 -- Agreement of General Partnership of Sky Multi-Country
Partners, dated as of October 24, 1997, among DTH USA, Inc.,
SESLA, Inc., Televisa MCOP Holdings, Inc. and TCI
Multicountry DTH, Inc (previously filed with the Securities
and Exchange Commission as Exhibit 10.3 to the Form F-3 and
incorporated herein by reference).
II-2
EXHIBIT
NUMBER DESCRIPTION PAGE
------- ----------- ----
10.3 -- Amended and Restated Collateral Trust Agreement, dated as of
June 13, 1997, as amended, among PanAmSat Corporation,
Hughes Communications, Inc., Satellite Company, LLC, the
Registrant and IBJ Schroder Bank and Trust Company
(previously filed with the Securities and Exchange
Commission as an Exhibit to the Registrant's Annual Report
on Form 20-F for the year ended December 31, 2001 (the "2001
Form 20-F") and incorporated herein by reference).
10.4 -- Amended and Restated Program License Agreement, dated as of
December 19, 2001, by and between Productora de
Teleprogramas, S.A. de C.V. and Univision Communications
Inc. ("Univision") (previously filed with the Securities and
Exchange Commission as Exhibit 10.7 to the 2001 Form F-4 and
incorporated herein by reference).
10.5 -- Participation Agreement, dated as of October 2, 1996, by and
among Univision, Perenchio, the Registrant, Venevision and
certain of their respective affiliates (previously filed
with the Securities and Exchange Commission as Exhibit 10.8
to Univision's Registration Statement on Form S-1 (File
number 333-6309) (the "Univision Form S-1") and incorporated
herein by reference).
10.6 -- Amended and Restated International Program Rights Agreement,
dated as of December 19, 2001, by and among Univision,
Venevision and the Registrant (previously filed with the
Securities and Exchange Commission as Exhibit 10.9 to the
2001 Form F-4 and incorporated herein by reference).
10.7 -- Co-Production Agreement, dated as of March 27, 1998, between
the Registrant and Univision Network Limited Partnership
(previously filed with the Securities and Exchange
Commission as an Exhibit to Univision's Annual Report on
Form 10-K for the year ended December 31, 1997 and
incorporated herein by reference).
10.8 -- Amended and Restated Bylaws (Estatutos Sociales) of Innova,
S. de R.L. de C.V. dated as of December 22, 1998 (previously
filed with the Securities and Exchange Commission as an
Exhibit to the 1998 Form 20-F and incorporated herein by
reference).
10.9 -- English summary of Ps.1,162.5 million credit agreement,
dated as of May 17, 2004, between the registrant and Banamex
(the "May 2004 Credit Agreement") and the May 2004 Credit
Agreement (in Spanish)(previously filed with the Securities
and Exchange Commission as Exhibit 4.9 to the 2004 Form 20-F
and incorporated herein by reference).
10.10 -- English summary of amendment to the May 2004 Credit
Agreement and the amendment to the May 2004 Credit Agreement
(in Spanish)(previously filed with the Securities and
Exchange Commission as Exhibit 4.10 to the 2004 Form 20-F
and incorporated herein by reference).
10.11 -- English summary of Ps.2,000.0 million credit agreement,
dated as of October 22, 2004, between the registrant and
Banamex (the "October 2004 Credit Agreement") and the
October 2004 Credit Agreement (in Spanish)(previously filed
with the Securities and Exchange Commission as Exhibit 4.11
to the 2004 Form 20-F and incorporated herein by reference).
10.12 -- Administration Trust Agreement relating to Trust No. 80375,
dated as of March 23, 2004, by and among Nacional
Financiera, S.N.C., as trustee of Trust No. 80370, Banco
Inbursa, S.A., as trustee of Trust No. F/0553, Banco
Nacional de Mexico, S.A., as trustee of Trust No. 14520-1,
Nacional Financiera, S.N.C., as trustee of Trust No. 80375,
Emilio Azcarraga Jean, Promotora Inbursa, S.A. de C.V.,
Maria Asuncion Aramburuzabala Larregui, Lucrecia
Aramburuzabala Larregui de Fernandez, Maria de las Nieves
Fernandez Gonzalez, Antonino Fernandez Rodriguez, Carlos
Fernandez Gonzalez, Grupo Televisa, S.A. and Grupo
Televicentro, S.A. de C.V. (as previously filed with the
Securities and Exchange Commission as an Exhibit to
Schedules 13D or 13D/A in respect of various parties' to the
Trust Agreement (File number 005-60431) and incorporated
herein by reference).
12.1 -- Computation of Ratio of Earnings to Fixed Charges
(previously filed with the Securities and Exchange
Commission as Exhibit 12.1 to the 2005 Form F-4 and
incorporated herein by reference).
II-3
EXHIBIT
NUMBER DESCRIPTION PAGE
------- ----------- ----
13.1 -- Press Release reporting the Registrant's first quarter
financial results (previously submitted to the Securities
and Exchange Commission on Form 6-K on April 27, 2005 and
incorporated herein by reference).
21.1 -- List of Subsidiaries of Registrant (previously filed with
the Securities and Exchange Commission as Exhibit 21.1 to
the 2005 Form F-4 and incorporated herein by reference).
23.1 -- Consent of Fried, Frank, Harris, Shriver & Jacobson LLP
(included as part of its opinion filed as Exhibit 5.1).
23.2 -- Consent of Mijares, Angoitia, Cortes y Fuentes, S.C.
(included as part of its opinion filed as Exhibit 5.2).
23.3 -- Consents of PricewaterhouseCoopers, S.C., independent public
accountants.
23.4 -- Consent of Ernst & Young LLP, independent public
accountants.
25.1 -- Statement of Eligibility of Trustee on Form T-1 (previously
filed with the Securities and Exchange Commission as Exhibit
25.1 to the 2005 Form F-4 and incorporated herein by
reference).
99.1 -- Form of Letter of Transmittal for 6.625% Senior Exchange
Notes due 2025 (previously filed with the Securities and
Exchange Commission as Exhibit 99.1 to the 2005 Form F-4 and
incorporated herein by reference).
99.2 -- Form of Notice of Guaranteed Delivery for 6.625% Senior
Notes due 2025 (previously filed with the Securities and
Exchange Commission as Exhibit 99.2 to the 2005 Form F-4 and
incorporated herein by reference).
99.3 -- Form of Letter to Registered Holders and/or Participants of
the Book-Entry Transfer Facility (previously filed with the
Securities and Exchange Commission as Exhibit 99.3 to the
2005 Form F-4 and incorporated herein by reference).
99.4 -- Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees (previously filed with the
Securities and Exchange Commission as Exhibit 99.4 to the
2005 Form F-4 and incorporated herein by reference).
99.5 -- Form of Letter to Clients (previously filed with the
Securities and Exchange Commission as Exhibit 99.5 to the
2005 Form F-4 and incorporated herein by reference).
99.6 -- Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9 (included in Exhibit 99.1).
All financial statement schedules relating to the Registrant are omitted
because they are not required or because the required information, if material,
is contained in the audited year-end financial statements or notes thereto.
ITEM 22. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) that, insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions,
or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in
the successful defense of an action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such
issue.
II-4
(2) that, for purposes of determining any liability under the
Securities Act of 1933, each filing of the Registrant's annual report
pursuant to section 13(a) or 15(d) of the Securities Exchange Act of 1934
(and, where applicable, each filing of an employee benefit plan's annual
report pursuant to section 15(d) of the Securities Exchange Act of 1934)
that is incorporated by reference in the Registration Statement shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) (i) to respond to requests for information that is incorporated by
reference into the prospectus pursuant to Items 4, 10(b), 11, or 13 of this
form, within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt means,
and (ii) to arrange or provide for a facility in the United States for the
purpose of responding to such requests. The undertaking in subparagraph (i)
above includes information contained in documents filed subsequent to the
effective date of the Registration Statement through the date of responding
to the request.
(4) to supply by means of a post-effective amendment all information
concerning a transaction and the company being acquired involved therein,
that was not the subject of and included in the registration statement when
it became effective.
(5) to file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act 1933;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20 percent change
in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
(iii) to include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;
(6) that, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(7) to remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(8) to file a post-effective amendment to the registration statement
to include any financial statements required by Item 8.A. of Form 20-F at
the start of any delayed offering or throughout a continuous offering.
Financial statements and information otherwise required by Section 10(a)(3)
of the Act need not be furnished, provided, that the registrant includes in
the prospectus, by means of a post-effective amendment, financial
statements required pursuant to this paragraph (8) and other information
necessary to ensure that all other information in the prospectus is at
least as current as the date of those financial statements.
II-5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to the Registration Statement on Form F-4
to be signed on its behalf by the undersigned, thereunto duly authorized, in
Mexico City, Mexico on July 22, 2005.
GRUPO TELEVISA, S.A.
By: /s/ Salvi Folch Viadero
------------------------------------
Name: Salvi Folch Viadero
Title: Chief Financial Officer
By: /s/ Jorge Lutteroth Echegoyen
------------------------------------
Name: Jorge Lutteroth Echegoyen
Title: Vice President and
Controller
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement on Form F-4 has been signed by the following
persons in the capacities and on the date first above indicated:
SIGNATURE TITLE
--------- -----
* Director, Chairman of the Board, President
------------------------------------------------------- and
Emilio Azcarraga Jean Chief Executive Officer
* Director and Vice-Chairwoman of the Board
-------------------------------------------------------
Maria Asuncion Aramburuzabala Larregui
* Director
-------------------------------------------------------
Alfonso de Angoitia Noriega
* Director
-------------------------------------------------------
Pedro Aspe Armella
* Director
-------------------------------------------------------
Julio Barba Hurtado
* Director
-------------------------------------------------------
Jose Antonio Baston Patino
* Director
-------------------------------------------------------
Alberto Bailleres Gonzalez
* Director
-------------------------------------------------------
Manuel Jorge Cutillas Covani
* Director
-------------------------------------------------------
Carlos Fernandez Gonzalez
* Chief Financial Officer
-------------------------------------------------------
Salvi Folch Viadero
II-6
SIGNATURE TITLE
--------- -----
* Director
-------------------------------------------------------
Bernardo Gomez Martinez
* Director
-------------------------------------------------------
Claudio X. Gonzalez Laporte
Director
-------------------------------------------------------
Roberto Hernandez Ramirez
* Director
-------------------------------------------------------
Enrique Krauze Kleinbort
Director
-------------------------------------------------------
German Larrea Mota Velasco
* Controller
-------------------------------------------------------
Jorge Lutteroth Echegoyen
* Director
-------------------------------------------------------
Gilberto Perezalonso Cifuentes
* Director
-------------------------------------------------------
Carlos Slim Domit
* Director
-------------------------------------------------------
Alejandro Quintero Iniguez
* Director
-------------------------------------------------------
Fernando Senderos Mestre
* Director
-------------------------------------------------------
Enrique F. Senior Hernandez
* Director
-------------------------------------------------------
Lorenzo H. Zambrano Trevino
By: /s/ Joaquin Balcarcel Santa Cruz
---------------------------------------------------
Name: Joaquin Balcarcel Santa Cruz
Title: Attorney-in-Fact
II-7
SIGNATURE OF AUTHORIZED REPRESENTATIVE
Pursuant to the requirements of the Securities Act of 1933, the
undersigned, the duly authorized representative in the United States of Grupo
Televisa, S.A., has signed this Amendment No. 1 to the Registration Statement on
Form F-4 in the City of Newark, State of Delaware on July 22, 2005.
SIGNATURE TITLE
--------- -----
/s/ Donald J. Puglisi Authorized Representative in the United States
------------------------------------------------
Donald J. Puglisi
II-8