TV Azteca Announces Net Sales of Ps.2,909 Million and EBITDA of Ps.1,401 Million In 4Q08

TV Azteca Announces Net Sales of Ps.2,909 Million and EBITDA of Ps.1,401 Million In 4Q08

-Quarterly Net Income Quadruples to Ps.863 Million-

MEXICO CITY, Feb. 26 /PRNewswire-FirstCall/ -- TV Azteca, S.A. de C.V. (BMV: TVAZTCA; Latibex: XTZA), one of the two largest producers of Spanish- language television programming in the world, announced today net sales of Ps.2,909 million, EBITDA of Ps.1,401 million and EBITDA margin of 48% for the fourth quarter of 2008.

"We were able to preserve the solid top line level reported in the prior year and multiply net profit by four in the quarter, despite the difficult economic environment," said Mario San Roman, Chief Executive Officer of TV Azteca. "On the operating front, we further strengthened our successful programming grid, particularly in prime time, positively influencing sales in the period, and setting the basis for a firm market positioning in 2009."

Fourth Quarter Results

Net sales were Ps.2,909 million, practically unchanged compared to Ps.2,898 million in the same quarter of 2007. Total costs and expenses were Ps.1,508 million, from Ps.1,381 million in the same period of the previous year. As a result, TV Azteca reported EBITDA of Ps.1,401 million, compared to Ps.1,517 million in the fourth quarter of 2007. The company registered net majority income of Ps.863 million, more than four times above the Ps.186 million in the same period of 2007.

Net Sales

"The growing popularity of our content -- especially novelas and La Academia: Ultima Generacion -- translated into a 41% commercial audience share in prime time in the quarter. Successful programming was key to build effective advertising campaigns for recognized brands in Mexico, and enhanced demand for multiple ad spaces in the period," added Mr. San Roman.

Fourth quarter revenue includes sales of Ps.62 million from Proyecto 40, which have been consolidated in TV Azteca results beginning this year.

TV Azteca also reported net sales from Azteca America -- the company's wholly owned broadcast television network focused on the U.S. Hispanic market -- of Ps.194 million, compared to Ps.132 million a year ago.

Programming sales to other countries were Ps.15 million in the period, compared to Ps.26 million the prior year. Revenue this quarter resulted from the sale of the shows Lo que Callamos las Mujeres and Montecristo in Latin America, and Bellezas Indomables in Europe.

Revenue from barter sales was Ps.112 million, practically unchanged from Ps.113 million from the previous year.

Costs and Expenses

Total costs and expenses grew 9% in the quarter, as a result of a 13% increase in programming, production and transmission costs -- to Ps.1,219 million, from Ps.1,079 million in the same period a year ago -- and a 4% reduction in selling and administrative expenses -- to Ps.288 million, compared to Ps.302 million in the same quarter of 2007.

The increase in costs reflects the consolidation of Proyecto 40 in TV Azteca results, and the effect of the exchange rate depreciation on peso disbursements of the acquired programming that was transmitted during the quarter.

Decrease in selling and administrative expenses resulted from reductions in operating and travel expenses, and advisory fees, as a result of initiatives that punctually control the company's outlays.

TV Azteca continues to seek additional actions to reduce expenses, as a response to the deceleration of the economic activity in Mexico.

EBITDA and Net Income

EBITDA was Ps.1,401 million, compared with Ps.1,517 million in the same period of the prior year; EBITDA margin was 48%.

Below EBITDA the main changes were: i) reduction of Ps.798 million in provision for taxes, due primarily to an extraordinary charge in the deferred income tax a year ago, ii) decrease of Ps.80 million in other financial expense, and iii) a Ps.60 million increase in interest paid, due to changes in the debt balance.

Net majority income for the period was Ps.863 million, more than four times higher than Ps.186 million a year ago.

Advertising Advances

The balance of advertising advances as of December 31, 2008 was Ps.3,971 million, 8% above Ps.3,693 million in the prior year.

The company considers that growth in advertising advances represents a vote of confidence of clients regarding the effectiveness of TV Azteca content to reach target markets.

Debt

As of December 31, 2008, TV Azteca's outstanding debt -- excluding Ps.1,621 million debt due 2069 -- was Ps.8,043 million.

Such debt is peso denominated, and of it, Ps.6,000 million are long term Securities Certificates. The interest rate is fixed at 9.29% annually, thanks to interest coverage for the next three years.

The cash balance was Ps.3,250 million, which resulted in net debt of Ps.4,793 million. Debt to last twelve months (LTM) EBITDA ratio was 2.1 times, and net debt to LTM EBITDA was 1.2 times.

Twelve Months Results

Net sales in 2008 were Ps.9,815 million, 3% above the Ps.9,505 million reported a year ago. Total costs and expenses were Ps.5,923 million, from Ps.5,482 million in the same period in the prior year, primarily due to the consolidation of Proyecto 40 in TV Azteca results and the production and transmission of the Summer Olympic Games in Beijing. As a result, TV Azteca reported EBITDA of Ps.3,893 million in the year, compared to Ps.4,022 million in 2007. The company reported majority net income of Ps.1,054 million, from net income of Ps.1,041 million in the prior year.

Company Profile

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

TV Azteca is a Grupo Salinas company (www.gruposalinas.com), a group of dynamic, fast growing, and technologically advanced companies focused on creating shareholder value, and improving society through excellence. Created by Mexican entrepreneur Ricardo B. Salinas, Grupo Salinas operates as a management development and decision forum for the top leaders of member companies.

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

                            Investor Relations:   Bruno Rangel                                      Dinorah Macias   + 52 (55) 1720 9167                              + 52 (55) 1720 0041   jrangelk@tvazteca.com.mx                         dmacias@tvazteca.com.mx                               Press Relations:   Tristan Canales                                    Daniel McCosh   + 52 (55) 1720 1441                              + 52 (55) 1720 0059   tcanales@gruposalinas.com.mx                   dmccosh@tvazteca.com.mx   

(Financial tables follow)

                   TV AZTECA, S.A. DE C.V. AND SUBSIDIARIES                       CONSOLIDATED RESULTS OF OPERATIONS          (Millions of Mexican pesos of December 31, 2007 and 2008 )                                     Fourth Quarter of:                               2007            2008                                                                  Change    Net revenue             Ps 2,898  100% Ps  2,909   100%    Ps    11    0%    Programming, production    and transmission costs    1,079   37%     1,219    42%         140   13%   Selling and    administrative expenses     302   10%       288    10%         (13)  -4%    Total costs and expenses   1,381   48%     1,508    52%         127    9%    EBITDA                     1,517   52%     1,401    48%        (115)  -8%    Depreciation and    amortization                126             129                  4    Operating profit           1,391   48%     1,272    44%        (119)  -9%    Other expense -Net          (301)           (308)                (6)    Comprehensive financing    result:   Interest expense            (200)           (261)               (60)   Other financing expense      (97)            (17)                80   Interest income               31              23                 (8)   Exchange gain  -Net            3              39                 36   Gain on monetary    position                     44              -                 (44)                               (220)           (216)                 4    Income before the    following provision         870   30%       749    26%        (121) -14%    Provision for income tax    (684)            114                798    Net income              Ps   187         Ps  863            Ps  676    Net income    of minority    stockholders           Ps     1         Ps    -            Ps   (1)    Net income    of majority    stockholders           Ps   186    6%   Ps  863    30%     Ps  677  365%                     TV AZTECA, S.A. DE C.V. AND SUBSIDIARIES                       CONSOLIDATED RESULTS OF OPERATIONS          (Millions of Mexican pesos of December 31, 2007, and 2008)                                      Year ended December 31,                                      2007           2008            Change   Net revenue                   Ps 9,505  100% Ps 9,815  100%  Ps  311    3%    Programming, production    and transmission costs          4,323   45%    4,767   49%      444   10%   Selling and administrative    expenses                        1,159   12%    1,156   12%       (3)   0%    Total costs and expenses         5,482   58%    5,923   60%      440    8%    EBITDA                           4,022   42%    3,893   40%     (130)  -3%    Depreciation and amortization      434            479             45    Operating profit                 3,588   38%    3,414   35%     (175)  -5%    Other expense -Net                (744)          (867)          (122)    Comprehensive financing result:   Interest expense                  (799)          (868)           (70)   Other financing expense           (162)          (119)            42   Interest income                    110             93            (17)   Exchange (loss) gain -Net          (10)            79             89   Gain on monetary position           70              -            (70)                                     (790)          (816)           (26)    Income before the following    provision                       2,053   22%    1,731   18%     (323) -16%    Provision for income tax        (1,013)          (676)           336    Net income                    Ps 1,041        Ps1,055          Ps 14    Net income of minority    stockholders                 Ps    (1)       Ps    1              1        Net income of majority        stockholders             Ps 1,041   11%  Ps1,054   11%    Ps 13    1%                      TV AZTECA, S.A.  DE C.V. AND SUBSIDIARIES                          CONSOLIDATED BALANCE SHEETS          (Millions of Mexican pesos of December 31, 2007 and 2008 )                                              At December 31,                                           2007        2008                                                                Change   Current assets:   Cash and cash equivalents          Ps   1,678  Ps   3,250 Ps  1,572   Accounts receivable                     4,210       4,547       337   Other current assets                    1,337       1,642       305    Total current assets                    7,225       9,439     2,214   31%    Long-term accounts receivable from    Pappas                                 1,672       2,039       367   Exhibition rights                         476         524        48   Property, plant and equipment-Net       2,985       3,242       257   Television concessions-Net              4,636       4,650        14   Other assets                            1,611       1,539       (72)   Goodwill - Net                            154         159         5   Deferred income tax asset                 469         259      (210)   Total long term assets                 12,003      12,412       409    3%    Total assets                       Ps  19,228  Ps  21,851 Ps  2,623   14%     Current liabilities:   Short-term debt                    Ps     -    Ps   1,984 Ps  1,984   Other current liabilities               3,760       3,225      (535)    Total current liabilities               3,760       5,209     1,449   39%    Long-term debt:   Structured Securities Certificates      6,000       6,000       -   Long-term debt                            -            60        60   Total long-term debt                    6,000       6,060        60   Other long term liabilities:   Advertising advances                    3,693       3,971       278   Exhibition rights payable                  36         -         (36)   American Tower Corporation (due 2069)   1,301       1,621       320    Total other long-term liabilities       5,030       5,592       562   11%    Total liabilities                      14,790      16,861     2,071   14%    Total stockholders' equity              4,438       4,990       552   12%    Total liabilities and equity       Ps  19,228  Ps  21,851 Ps  2,623   14%  

First Call Analyst:
FCMN Contact:

Source: TV Azteca, S.A. de C.V.

CONTACT: Investors, Bruno Rangel, +011-5255-1720-9167,
jrangelk@tvazteca.com.mx, or Dinorah Macias, +011-5255-1720-0041,
dmacias@tvazteca.com.mx, or media, Tristan Canales, +011-5255-1720-1441,
tcanales@gruposalinas.com.mx, or Daniel McCosh, +011-5255-1720-0059,
dmccosh@tvazteca.com.mx, all of TV Azteca

Web site: http://www.tvazteca.com.mx/

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Profile: International Entertainment