Grupo Televisa, S.A.B. ADR (NYSE:TV) recently reported its second quarter earnings and discussed the following topics in its earnings conference call.
Michel Morin – Morgan Stanley: I thought I just wanted to see if you could clarify your comment about the guidance on content revenues, I think you said that it’s hard to anticipate or to give a much detail about the impact of the must offer rule but you also said something about the government entities and their ad spending, can you elaborate a little bit more on what you’ve seen in the second quarter and you’re seeing now? Thank you.
Alfonso de Angoitia Noriega – EVP: As I mentioned a few moments ago first we need to know to what extent the governmental entity will advertise with us and the impact that it will have on business and because basically they’re not advertising and also as to the free must offer we have to know first when that is going to become effective. And second, as you know we currently sell in a single package our referral with air channels together with our 10 pay TV channels. Only over the air channels will be free of charge and only in the specific market in which they are broadcasted. So, we will then need to renegotiate all the affiliation agreements with the paid television distributors to determine the price for the paid television channels. So, this will also depend on the negotiation of the prices for those channels. So, we have both the absence of political advertising or advertising by governmental entities and on top of that we don’t know when this free must offer is going to become effective, and what the new terms of the affiliation agreements for our 10 paid television channels will be. So, it’s very difficult then to know the exact impact on our numbers and that’s why we cannot – or we don’t feel it’s prudent to provide guidance at this point. But what I can say is that advertising sales have been – aside from the governmental entities have been extremely strong and that has covered some ground. However, we don’t feel comfortable until we have more clarity as to advertising by governmental entities.
Michel Morin – Morgan Stanley: And that’s across the board all areas of the federal government or also state governments?
Alfonso de Angoitia Noriega – EVP: Both.
Michel Morin – Morgan Stanley: So, I guess the implication will be, if given that you’ve seen strong trends elsewhere, the implication will be that if they do come back in the second half, it actually suggests that you would be on track to have a pretty good year?
Alfonso de Angoitia Noriega – EVP: Yes. However, I mean, they did not advertise in the first half, they will not advertise in the second, and that gap will not be filled…
Michel Morin – Morgan Stanley: So, it’s not a matter of them spending their entire budgets in the second half necessarily?
Alfonso de Angoitia Noriega – EVP: I don’t think so.
Michel Morin – Morgan Stanley: And if I can also just clarify separately on the Iusacell losses that you reported. The press release last night stated that the majority of the losses there were related to FX losses. Can you confirm that that’s accurate because if I read that correctly would imply that on an underlying basis, things improved, if you were to exclude FX losses, you would have had lower less losses this quarter than in the previous quarter?
Alfonso de Angoitia Noriega – EVP: That is the case, Michel. The Company is operating better. Iusacell is on track to meeting the target that we set for it. It’s growing at a good pace and making solid improvements in terms of expanding its market share. However, I mean you should not draw any conclusion from one quarter alone. We believe that Iusacell has several quarters to go before it reaches profitability and free cash flow breakeven, but as I mentioned it is operating much better. And I confirm that a substantial portion of the loss was attributed to the negative foreign exchange effect on Iusacell’s net dollar liability position.
Andre Baggio – JP Morgan: So, I have two questions. One is a follow-on to what Michel has asked with regards to the advertisements. We have seen over the last few quarters advertisements growing below GDP and even below inflation when we account for the fact that there was a positive seasonal effect of the Easter in this quarter, which was offsetting the negative impact last quarter. So, what’s needed for the advertisement to start growing in line at least with inflation and (indiscernible) in line with GDP in Mexico?
Alfonso de Angoitia Noriega – EVP: Well as we explained I think what you have seen is that absent of advertising by governmental entities, but as I turned out we had solid growth. So, that is basically the effect that you’re seeing the one that we have been explaining…
Andre Baggio – JP Morgan: Do you mind disclosing what’s the disclosed except of the government or could we imagine that next year that we don’t have this impact from the lower government because the government is not already there. We should see much better growth in advertisings?
Alfonso de Angoitia Noriega – EVP: Yeah, Andrea we do not disclose the percentages of gove3rnmental advertising versus regular clients. However what I can say again is that as to regular clients we had solid growth and what we have seen in terms of the pace has been the absence of advertising by governmental entities that has been the result but I mean once again as to regular clients we have seen solid growth and we are very excited about the prospect of that.
Andre Baggio – JP Morgan: And then my final question is with regard to CapEx. You always have been quoting CapEx in dollars, but the peso has depreciated. Do you think that we should see a lower CapEx budget or we should see relative to stable dollar CapEx budget despite the FX changes?
Alfonso de Angoitia Noriega – EVP: Andrea I mean most of the things that we buy for example equipment or set top boxes, etcetera are dollar-denominated. So, we continue to estimate that our CapEx this year will reach around $1 billion and of that amount about $135 million will be used for our content and other business segments around (565) will be used for Cable and Telcom and 300 million for Sky. But a lot of those things that we are buying in terms of equipment are dollar denominated.