Q3 2024 Grupo Televisa SAB Earnings Call
Pardon me, ladies and gentlemen, this is the operator just wanted to let everybody know that speakers will join in and approximately five minutes that is all thank you for your patience and understanding.
[music].
Speaker Change: Good morning, everyone and welcome to Grupo Televisa's third quarter 'twenty 'twenty four conference call.
Before we begin I would like to draw your attention to the press release, which explains the use of forward looking statements and applies to everything we discuss on today's call and in the earnings release.
Speaker Change: I'll now turn the call over to Mr. Alfonzo, Durango, which are co chief Executive Officer of Grupo Televisa. Please go ahead Sir.
Speaker Change: Thank you Elsa good morning, everyone and thank you for joining US with me today are Francisco believe CEO of cable and Sky and Carlos Phillips CFO of Grupo Televisa.
Before discussing our third quarter operating and financial performance, Let me share with you. What we believe are the key milestones achieved so far this year, both at Grupo Televisa and Televisa and Univision.
Speaker Change: First the corporate restructuring process at our cable segment intended to improve profitability optimized capex increased free cash flow generation and position us well to achieve sustainable revenue growth over the coming years is already delivering results now.
Speaker Change: Sure. It's implemented so far have allowed us to improve profitability by almost 400 basis points to 39.4% relative to the third quarter of 2023.
Speaker Change: As we are confident that our cable EBITDA margin will continue to expand gradually over the coming years due to ongoing efficiencies.
Speaker Change: Regarding capex optimization, our year to date cable investments are almost $290 million have declined by around 38% year on year, while our cable capex to sales ratio of 14, 4% use over 800 basis points lower than that of the.
Speaker Change: Same period of 2023.
Speaker Change: This streamlining cable investments has been driven by a more disciplined subscriber acquisition approach focused on value customers and a more efficient and rational expansion of our fiber network.
Speaker Change: During the first nine months of the year operating cash flow from our cable segment, which is equivalent to EBITDA minus Capex was over 8.8 billion pesos growing by almost 40% year on year and accounting for around 25% of sales.
Speaker Change: This implies that the operating cash flow margin for our cable segment has increased by 750 basis points. So far this year.
Speaker Change: The fourth quarter of the year is expected to be heavier in terms of capex deployment, but we expect to end the year below our revised 'twenty 'twenty four capex budget for our cable segment of $590 million, including $30 million for the reconstruction of our network in Acapulco, which we expect to.
Speaker Change: Be reimbursed by the insurance company.
Speaker Change: Second the integration of Sky with our cable segment to strengthen our competitive and financial position on this front, we have already reorganized the structure of the combined company, allowing us to retain top talent and optimize duplicated roles. We have also started to implement synergies and efficiencies across.
Speaker Change: Several areas, including commercial sales commissions programming I T technology finance and marketing among others.
Speaker Change: This integration will also allow us to standardize regions sales channels and commissions have a better customer base management increased productivity achieved cross selling and upselling improved penetration of triple play services and gradually reduce churn.
Speaker Change: The sky restructuring and integration process has allowed us to cut opex by around data and the 5% year on year. During the first nine months of the year, while our capex deployment of $62 million has declined by 45%, therefore skies operating cash flow of one.
For two and a half billion pesos was basically flat year on year, but accounted for 22% of sales.
This means that the operating cash flow margin for Sky has expanded by 240 basis points year to date.
Speaker Change: All in all Grupo Televisa's consolidated operating cash flow was around $11 3 billion pesos growing by about 27% year on year and accounting for around 24% of sales. This implies that our consolidated operating cash flow margin has increased by 620 <unk>.
Speaker Change: Basis points during the first nine months of the year.
Speaker Change: So far this year, the Opex and Capex efficiencies obtained in our two consolidated businesses and a leaner corporate structure have allowed Grupo Televisa to generate over $6 3 billion peso seen free cash flow. We view this as a great achievement as it represents our nine months free.
<unk> cash flow yield of around 25% for our consolidated operations.
Speaker Change: And our third major milestone has been to turn our direct to consumer business VIX profitable during the third quarter of this year, our DTC business is growing and scaling with our most important metrics trending in the right direction with most of them ahead of plan, we added users and subscribers.
Speaker Change: <unk> grew engagement reduced churn and generated significant marketing savings driven by our efficient customer acquisition funnel through our free tier therefore during the third quarter, we already delivered the major milestone of a profitable DTC business only two years after launching the surge.
Speaker Change: This compared to four to five years for our peers.
Speaker Change: Achieving this milestone was an essential step in our transformation phase for Televisa and Univision now the next big opportunity for value creation is to build on this foundation through further integration and operational optimization of the business.
Speaker Change: There is significant value to be unlocked in this new phase, but the opportunity comes with unique challenges with this in mind, we initiated the Televisa and Univision succession planning process earlier this year looking for a leader with a unique combination of skills and expertise that is not easy to <unk>.
Speaker Change: Finding and executors someone who speak Spanish has vast business experience across the U S. Latin America and Mexico. In particular has track record managing large scale global enterprises and has deep knowledge of the media and technology sectors.
Speaker Change: We are thrilled that Daniela legwork has joined us as Televisa and Univision <unk> new CEO.
Speaker Change: Having said that let me turn the call over to Aleem ask you will discuss the operating and financial performance of our consolidated assets think Alfonso good morning, everyone.
First let me walk you through the operating performance of cable operations. We ended September with a network of $19 9 million homes after passing around 86000, new homes during the quarter.
Speaker Change: In the third quarter, we continued to execute our strategy to focus on value customers rather than volume, while working on customer retention and satisfaction are third quarter broadband net adds remained relatively stable on a sequential basis at 11000 on the other hand, we lost 55000 data subscribers during the quarter net.
Speaker Change: Revenue from the reservation operations, which accounts for around 89% of cable revenue decreased by one 6% year on year as we lost some revenue given the cancellation of a fix tornadoes video package during the second quarter and due to the ongoing negative impact from hurricane artisan Acapulco as some customers are not paying their bills yet.
Speaker Change: Net revenue from our enterprise operations, which account for around 11% of total cable revenue declined by 22, 6% year on year as we didn't renew an important government contract during the quarter.
Speaker Change: However, on a sequential basis net revenue from the enterprise operations remain relatively stable for a third consecutive quarter now let me walk you through Sky's operating performance during the third quarter Sky's product portfolio continued to be under review from a content and pricing standpoint, it sounds later into a.
Speaker Change: Softer commercial activities. Therefore, we lost 270000 revenue generating units, mostly coming from prepaid subscribers that have not been recharging. Their services is still what we're looking to reactivate our commercial staff. Because you asked are integrating our product portfolio commercial regions on sales channels with our cable.
Speaker Change: <unk>.
Speaker Change: This should contribute to gradually reduce churn by having a better customer base management, and allowing us to take advantage of cross selling and up selling opportunities.
Speaker Change: Sky's third quarter revenue was $3 7 billion pesos fell by 13, 2% year on year, mainly driven by a soft commercial activity to sum up segment revenue of $15 4 billion peso fell by six 3% year on year why operating segment income was $5 7 billion peso declined by four 7%.
Speaker Change: Our operating segment income margin of 37, 1% expanded by 60 basis points year on year, mainly driven by the efficiency measures that we have been implementing since third quarter of 2023 regarding capex deployment, our tortillas vast amount of $2 4 billion pesos during the third quarter fell by 17.
Speaker Change: Percent year on year.
Speaker Change: So our capex to sales ratio of 15, 8% was over 200 basis points lower than that of the third quarter of 2023.
Speaker Change: Finally, operating cash flow for cable and Sky, which is equivalent to EBITDA minus Capex was $3 3 billion pesos in the third quarter, increasing by seven 2% year on year and accounted for 21, 4% of sales there.
Speaker Change: This basically means that our operating cash flow margin increased by 270 basis points year on year. Thank you well now let me walk you through Televisa and Univision third quarter results released on Tuesday morning.
Speaker Change: The company delivered another quarter of top line growth with revenue of around $1.3 billion, increasing by 2% year on year and EBITDA of $427 million growing by 4%. This shows a solid improvement over the first half of the year as we have moved to.
Consolidated EBITDA growth, mainly driven by achieving profitability in our direct to consumer business during the third quarter.
Speaker Change: FX neutral Televisa and Univision revenue and EBIT increased by 6% and 7% respectively.
Speaker Change: Moving onto the details of our revenue performance during the quarter consolidated advertising revenue increased by 3% year on year.
Speaker Change: In the U S advertising revenue was 5% higher driven by growth in DTC and record setting third quarter political AD dollars, which added 300 basis points to our top line growth.
Speaker Change: We then VIX a strong soccer lineup helped drive a 30% increase in our book, even as we continued to expand our user base.
Speaker Change: Sellouts on VIX remained at around 90% and we effectively leveraged cross selling opportunities achieving an 80% attach rate with linear advertisers during the quarter in Mexico advertising revenue declined by 1% year on year, driven by the depreciation of the Mexican peso.
Speaker Change: FX neutral advertising revenue in Mexico increased by 10%, reflecting the third party AD inventory, we acquired at the start of the year, which contributed with approximately half of this growth during the quarter. We took advantage of top performing content across sports and entertainment.
Speaker Change: In sports, we got strong demand for Copa America, while revenue from the Olympics, almost doubled compared to the last cycle.
In entertainment season, two of our gasoline was phimosis, Mexico broke viewership and engagement records with over 50 million viewers tuning in throughout the season during the quarter consolidated subscription and licensing revenue grew by 1% year on year in the U S.
Speaker Change: Subscription and licensing revenue grew by 6% driven by VIX, where we posted strong subscriber growth.
This more than offset a low single digit decline in linear subscription revenue.
Speaker Change: In Mexico subscription and licensing revenue fell by 12%, mainly due to the depreciation of the Mexican peso ethics.
Speaker Change: FX neutral subscription and licensing revenue in Mexico declined by 4%, primarily driven by global content licensing all of which runs through Mexico. This decline reflects some strategic decisions, we made not to sublicense certain sports content to other platforms. We also experienced weakness in linear.
Speaker Change: Platform subscribers, partially offset by subscriber growth in the big Sis premium tier.
Speaker Change: Looking ahead, Televisa and Univision next phase will be focused on further integration and operational optimization.
Speaker Change: And we already have a clear path to achieve this.
Speaker Change: First.
Speaker Change: We need to drive further efficiency and integration across products and geographies.
Speaker Change: Second we have to evolve to a content first company that is platform agnostic, we need to be prepared to connect with our audiences wherever they choose to engage particularly as cord cutting structurally changes the value proposition of linear.
Speaker Change: This means more efficient content windowing strategies and evolving our sales and marketing organizations to be more solutions than platform oriented.
Speaker Change: Third we need to evolve into a more data driven company that monetize this on our differentiated audiences and on the rich data and insights on these consumers.
Speaker Change: All of this will require hard work, but it will bring substantial opportunities for growth and improved efficiencies, having said that we're conducting a detailed review of our investments and operations identifying areas, where we can streamline and optimize resources.
Speaker Change: As a more integrated multi platform company. We believe there are considerable efficiencies to be unlocked, allowing us to enhance profitability, while maintaining our competitive edge. These.
Speaker Change: This focused approach will position us to invest in key growth areas further innovate and achieve better results to sum up we have a clear mandate from the Televisa and Univision board to increase efficiencies generate cash flow and reduce leverage.
Danielle when Paul and I are focused.
Speaker Change: On all of those efforts and I'm getting them executed.
To wrap up mathematical and I are confident that this year's focus on free cash flow generation of Grupo Televisa and the implementation and execution of our next phase focused on further integration and operational optimization that Televisa and Univision will allow us to create greater value for our stakeholders.
Speaker Change: At Grupo Televisa will continue to be laser focused on integrating sky with our cable segment streamlining our combined operations strengthening our competitive position and enhancing free cash flow generation.
Speaker Change: More efficient capex deployment focused on higher investment returns lead us to feel confident that free cash flow generation for the full year will remain strong and that Televisa and Univision now that our DTC business has achieved profitability. We are confident that additional value can be unlocked.
Speaker Change: Through further integration and unification of both our content business and our geographies.
Speaker Change: Now we're ready to take your questions Elisa could you. Please provide instructions for the Q&A.
Speaker Change: We will now begin the question and answer session.
Elisa: Ask a question you May press Star then one on your telephone keypad.
Elisa: Using a speakerphone please pick up your handset before pressing the keys.
Elisa: But I think time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.
Elisa: At this time, we will pause momentarily to assemble our roster.
Speaker Change: And our first question comes from Marcelo Santos with Jpmorgan. Please go ahead.
Marcelo Santos: Hi, good morning, Thanks for the opportunity to make questions I have two the first is on Televisa unit vision I think commission right now that our efficiency with the leveraging Arctic objectives, you expect to achieve could you. Please just give us a bit more color on how to implement this so that's the first question. The second question is about the competitive environment in broadband.
Marcelo Santos: And maybe to Valeant. So how is this unfolding could you please discuss a bit deeper to trends in churn if how they evolved from a second quarter. When you saw an uptick thank you.
Speaker Change: Thank you Marcelo.
Speaker Change: Well to answer the second question. After your first question that has to do with Televisa and Univision.
Speaker Change: What are you guys said is correct efficiency and the deleveraging will become our top priorities are this is an important turning point I would say and the beginning of a new face we.
Speaker Change: We have to reinvent and rethink the way we run the company.
Speaker Change: This means.
Speaker Change: We no longer are going to grow at any cost we should have.
Speaker Change: Abandon that sometime ago, but we didn't.
Speaker Change: This requires a refocusing and repurposing of our business.
Speaker Change: We need to implement broad cost cutting initiatives across <unk>.
Speaker Change: The board to material I mean, basically to materially improve free cash flow generation to be able to reduce leverage over the coming quarters. So this is going to be done in a negative top priority and I'm going to be focused oh sure on that.
Speaker Change: So your second question. Please from his coke on the answer.
Oh.
Speaker Change: Marcelo.
The competitive environment, what do you see a very rational.
Speaker Change: Yeah.
Mexico prices are stable some comparisons are even crazy prices.
Speaker Change: Yes, Stephen speaks so we see a rational market very competitive.
There were all players are playing in a way that they can try to maximize our revenue growth.
Speaker Change: Sure.
Speaker Change: We had the literally spiking sure give them to a price increase which is typical whenever you have a price increase you have those reactions, but theyre already gone back to historical levels.
Perfect. Thank you very much.
Speaker Change: And our next question comes from Vitor Tomita with Goldman Sachs. Please go ahead.
Vitor Tomita: Hello, Good morning, and thank you for taking our question. So we have two questions from our side. The first one is on operating segment margin for the quarter. If you could give us some more color relative to the marching for pharmacy desk and this quarter relative to the second quarter and in particular.
Vitor Tomita: In particular regarding the progress of our efficiency initiatives concerning sky and how much the restructuring at Sky already benefited this quarter and how much you believe it's called the Florida Aw or starts to benefit results in the next quarter or at the margin level and also could you could you give us a sense.
Vitor Tomita: How in cable bad debt provisions are behaving for cable and Sky a gas and on the ladder bad debt has been a relevant factor for margin performance. This quarter. Thank you very much.
Speaker Change: Thank you Victor.
Speaker Change: And now he's co can expand on this but I would say that bad debt has not been.
An issue and has not affected our margin our margin some.
Speaker Change: <unk>.
Speaker Change: I could tell you for the margins our operating segment income margin has expanded by 60 basis points year on year due to the ongoing efficiency measures that we have been implementing since the third quarter of 2023 are in our cable segment. When <unk> took over in addition.
Speaker Change: I'm the head count reduction implemented in the second quarter of this year following our acquisition of At&t's, a minority stake in Sky and are there synergies and efficiency measures that we implemented have allowed us to basically cut our opex.
Speaker Change: Structure by over 7% a year.
Speaker Change: Year on year during the third quarter. This is a huge number if you consider the the opex structure of the companies going forward, we're likely to experience gradual margin expansion and this is the most important point as we keep improving our sales channel it's a mix.
Speaker Change: Two digital from physical in cable.
Speaker Change: And also as we continue integrating sky with our cable segment and as.
Speaker Change: As we renegotiate contracts with content providers.
Speaker Change: Ah I can also say that on our side.
Speaker Change: Commercial basis, our operating segment income margin contracted by 60 basis points as the pace of sequential revenue decline at Sky and that was faster.
Speaker Change: Then the reallocation of synergy.
Speaker Change: However into Joanne My comment I would say that we would expect that to change over the coming quarters.
Speaker Change: Further synergies should be obtained I don't know if he's great do you want to add something.
Speaker Change: Well I think that's exactly that's perfect answer.
Speaker Change: Thank you very much just a follow up if I may do you have a sense of how much of the the efficiencies was already realized in this quarter from the Sky integration now and how much is still left to be realizing further quarters.
Speaker Change: We should have a by the end of the year.
Speaker Change: We should have all of our platform integrated.
Speaker Change: So when we see the full we're up 20 to 25, that's when you'll see the full benefit of the synergies between <unk> and Sky. All you think right now we are incurring additional expenses.
Speaker Change: Why are we integrate the two companies.
Very clear thank you very much.
Speaker Change: Our next question comes from Fannie can you marry with HSBC. Please go ahead.
Speaker Change: Okay.
Speaker Change: Thanks for taking my question for the first one is regarding Oh free.
Speaker Change: Free cash flow generation in terms of free cash flow from operations and the cash flow. It seems that you had an already strong.
Speaker Change: Nine and 24 of US are strategically with that all 22 billion of free cash flow from operations for can you Guide me how are you able to get such a strong free cash flow from operations. Despite epic.
Yeah.
Speaker Change: That's the first question I mean, you're studying for and often there's a free cash flow generation. The second one is on price increases and how do you see any scope for price increases this year.
Speaker Change: Oh, Thank you finally, yeah.
Speaker Change: I'll ask Carlos Felix to answer your first question as you have seen in our numbers our top priority as we discussed throughout the year was in respect of our free cash flow generation I think we have obtained a amazing result, and you can see that in the numbers and you see that in the fourth.
For us well.
Speaker Change: But I'm just kind of expand on that and and then up to the second question that has to do with prices I'll ask Marlin to answer.
Well. Thank you for the question as you pointed out our cash flow our free cash flow has strengthened significantly in the past couple of quarters, especially when you compare it versus last year if.
Speaker Change: If you go from the top to the bottom I think the most important aspect has been and as I'm confident I've also.
Speaker Change: <unk> mentioned many of the operational efficiencies we've been working on in terms of the execution and an operation in our cable and sky in the corporate and easy so that that has led to an increase in the operating cash flow is that that's meant a leaner operation better inventory management.
More efficient working capital management as well and then there's also two very important factors in terms of the cash flow to get to a free cash flow, which would be the capex efficiency.
Speaker Change: We've discussed it in many of the previous calls, but theres been a laser focus on being very efficient in terms of the capex deployment of a company that cash capex deployment. So that's also boosted our free cash flow significantly and then in addition, we've also done a lot of streamlining and turn to the corporate organization and in terms of the a R. R.
Speaker Change: <unk> expenses in terms of cash. So that's also been a significant improvement versus last year. So when you combine all of those are all factors that that's how you see the significant improvement in free cash flow that we've had so far this year compared to a year to date last year.
Speaker Change: And put on his call.
The price increases.
Speaker Change: Well, we haven't seen the price increases here and there.
Speaker Change: We haven't seen we have had a price increase in March of this year.
Speaker Change: Well, we anticipate having moving forward is by adding new products, which we are already bringing to market now in October and November just like a revamp mobile having a more oh.
Speaker Change: Thank you Sally Sky miles, so those things will add to it.
Speaker Change: Our revenue pool in terms of increasing our pool more salt an increasing as a pass through inflation, but that's the plan at this point.
Speaker Change: Okay I guess.
Speaker Change: Couple of follow up so in this quarter. We are I think you seem to have no cash tax timing okay.
Speaker Change: So there's been a tax credit in terms of cashes to.
Speaker Change: This quarter and in terms of Capex, you know and you said that you were expecting it below your budget do you know what do you think that is kind of sustainable going forward.
Speaker Change: Yeah.
Speaker Change: I'll answer your second question and and then Gatos will last.
Speaker Change: Answer the one that has to do with our cash tax.
Speaker Change: As to Capex.
Speaker Change: A more efficient capex deployment focused on higher investment returns.
It has led us to feel confident that our capex requirements for the full year will be $650 million and that as we have mentioned includes a $550 million in cable $90 million in sky and about $10 million for corporate purposes.
Speaker Change: So this year most of our Capex has been sales related.
Therefore, we maintain subscriber gross adds at a reasonable level and further reduce churn we should be able to have low single digit subscriber base growth in the medium term with a rational capex intensity.
Speaker Change: Now, having said that we believe capex to sales this year should be close to around 20% in.
Speaker Change: In 2023 Capex to sales.
Speaker Change: Already had declined to 23% from almost 27% in 2022, so our belief has done an amazing job at rationalizing our Capex and this has been the result, so as to the tax question, Alaska catalysts to answer yeah.
Speaker Change: As you can see from our third quarter press release, there was a decline in our income tax rate in this quarter, but the decline has to do a little bit from the following factor, which is in the third quarter of last year, we recognized an.
Speaker Change: Income tax expense they have to do it with a noncash expenses they have to do with our.
Actress from previous years, and we have to discount but that was a noncash charge that was in the previous year, but and that's in terms of the accounting and reduction in income taxes. This quarter, but if we mentioned in our previous call in the previous answer in terms of cash flow. We are seeing a decline in the cash tax payment quarter by quarter as well compared to last year.
Yeah. Thanks.
Speaker Change: Yeah.
Speaker Change: Our next question comes from Carlos <unk> with a Chow. Please go ahead.
Speaker Change: Hi, Thank you and good morning, I have two of my end. Please the first one and within Sky.
Speaker Change: I was wondering if so far is doing up silver.
Have you seen any signs of stabilization at a top line level.
Speaker Change: And secondly, and within cable can you give us some color on what has driven the sop friends within the enterprise segment.
Speaker Change: And I was wondering if you can detail what strategies are you undertaking to regain market share. Thank you.
Speaker Change: Yeah Belem.
Speaker Change: Sure so well.
Speaker Change: Okay.
Hi.
Speaker Change: Beyond that there is an issue with the technology.
Speaker Change: That we have to deal with meaning with expansion of the math works here in Mexico, you have more people you can offer different services. So that this has happened worldwide.
Speaker Change: He has a rate of decline, but so I don't think the word stabilization would be the one bucket.
Speaker Change: The reduction of the decline is what we're focusing on.
Speaker Change: On the speed of decline, although technologies that will eventually the next I don't find 10 years, however, less subscribers.
Speaker Change: Right.
Speaker Change: Well in terms of.
Speaker Change: Enterprise the reason why the growth is not as significant as one would expect it just because you lost a bidding process for a major Godfrey.
Speaker Change: Here in Mexico.
Speaker Change: The biggest feedback that we have had.
Speaker Change: Oh no surprise so those are the two factors more than the other.
Speaker Change: The rate of reduction of the subscribers a try.
Speaker Change: New products and more services more content.
Speaker Change: So a really good.
Speaker Change: Laughter compensating some of those losses.
Michael.
Speaker Change: [laughter].
Speaker Change: Thank you Francisco.
Michael: Let me follow through on Sky I mean, I think we're all very well aware of the secular trend that's going on with M. D ph.
My question was specifically during the month of October have you seen any signs of stabilization in subscribers. This connection while youre seeing similar trends to what we have seen so far year to date. Thank you.
Michael: Yeah.
Michael: We like I mentioned, we have a.
Speaker Change: We are launching some of those sky mass products now November so that you think will help us compensate for some of the losses that we have had on the subscriber well, mostly modest subscriber base, but the revenue base generated by mostly be paid subscribers that Scott.
Speaker Change: I appreciate the color. Thank you.
Speaker Change: Yeah.
Our next question comes from Matthew Harrigan with benchmark. Please go ahead.
Matthew Harrigan: Oh, Thank you I'm sure you're well aware on that's why I said, a mild Scarborough law lab I know some of that was attributable to the price increase I know that you are much more a bought center already and you've got.
Speaker Change: Just on sports.
Speaker Change: Paul well news, but.
Speaker Change: Can you comment on competition on including in the U S with the.
Speaker Change: The entity, making Apple Telemundo side, and then lastly, I know this was prudent.
Speaker Change: Couldnt political right now was there anything of interest going on with your bachelors portfolio I know you're much more focused on <unk>.
Improving the core business.
Speaker Change: It might have been going on there.
Speaker Change: Thank you.
Speaker Change: Yes Matthew.
Direct to consumer side I E.
Speaker Change: We have done great.
Speaker Change: With that with VIX and with our digital offerings.
Matthew Harrigan: You're right in the sense that.
This has become a very powerful offering in terms of a lot.
Matthew Harrigan: But the subscription side of the business has also proven to be.
Matthew Harrigan: Very successful and there is more competition and both in terms of the offering of streaming services in Spanish and also in the production of content in Spanish.
But I think that the two of the greatest things that we have or the Televisa library, which is the world's largest library in Spanish content in the world and that has proven to be extremely efficient extremely powerful in terms of our audiences Oh.
Matthew Harrigan: Avon N S. One.
And also I mean of course, the factory that we have in Mexico, which again is the largest and most prolific factory of content in Spanish in the world.
Matthew Harrigan: We produce large quantities of content at a very attractive.
Matthew Harrigan: Production costs. So I believe that are considering those two assets, even with more intense competition on the direct to consumer front, we're going to be a successful now VIX has become the largest streaming.
Matthew Harrigan: The streaming platform in Spanish in the World.
In just two years and we feel very proud of our accomplishments in the case of pigs, because for the second quarter in a row this platform.
Matthew Harrigan: That has been going on for just two years has been a profitable. So I think with those assets that we have including as I mentioned, the IP and the soccer rights that we have put together, we're going to continue to be very successful with a DTC offering.
And can you repeat the second question, Matthew because I did not get it.
Matthew Harrigan: Sure.
Matthew Harrigan: Yeah.
Matthew Harrigan: Oh no.
Matthew Harrigan: The portfolio was somewhat.
Matthew Harrigan: Focus when it was the only neglected by the Street I know you're much more focused on your core business right now.
Matthew Harrigan: You don't think you can no longer term alright.
Alright.
Matthew Harrigan: Hi, I'm, sorry, Matthew Yeah, I guess youre talking about the deals we have done and we continue to do in respect to media for equity and creating this venture portfolio. So what I can say is that we have expanded them what do we have done in the past.
Matthew Harrigan: And we have a very attractive portfolios.
Matthew Harrigan: Assets, specifically of Hum of stock of companies, especially technology companies, especially on on the financial sector and in Mexico.
Matthew Harrigan: Of new banks. So are we have we will continue to to expand that we have been very actively doing those type of venture investments.
Matthew Harrigan: And are most of those are our media for equity deals.
Oh, great. Thank you apologies for the bad connection.
Thank you.
Matthew Harrigan: Yeah.
Speaker Change: Our next question comes from Eduardo <unk> with J P. Morgan. Please go ahead.
Hi, Good morning, Thanks for taking my question I actually wanted to discuss capital allocation because I see how you see your cash flows are stronger now you do have a sizable cash position, but your cross studies also high I was wondering if you guys are considering reducing the gross amount of debt or how you're thinking about keeping such a large cash cause.
Speaker Change: Thank you.
Speaker Change: Yes.
Speaker Change: A lot of those thank you for your question I'll ask Alex to answer it Yeah, Hey.
Speaker Change: This would be consistent with what we said in the past couple of quarters.
Speaker Change: We most of the cash flow generation of the cash balance that we have is gonna be directed on strengthening our balance sheet and reducing debt ever since we did the transaction with Univision when we receive the proceeds we've been.
Speaker Change: Deploying that cash to reduce our net leverage and the idea is to continue in that direction. We have a strong liquidity position as you pointed out and we have a large cash balance which is mostly denominated in dollars.
Speaker Change: But we have a net debt level.
Speaker Change: Leverage ratio of around two five times that we want to make sure that we keep there are below as we've mentioned in the past or our investment grade ratings are very important to us and as you as you've seen from from rating agency actions recently and they also.
Speaker Change: Have a keen focus on deleveraging, which is which are which is gonna be a key objective for for the cash generation going forward.
Speaker Change: Got it and then just a follow up I guess, you're comfortable with that level, but on the gross level, you're comfortable where you are right now.
Speaker Change: Yeah, I mean, as we start to deploy cash to reduce debt that has obviously moved down but the idea is to focus on the net debt level.
Speaker Change: Printer primarily.
Speaker Change: Got it thank you very much.
Speaker Change: Okay.
Speaker Change: Concludes our question and answer session I would like to turn the conference back over to Mr. Alfonso didn't go at Shaw for any closing remarks.
Thank you very much for participating in our call and let us know and call us if you have any additional questions.
Great weekend.
Speaker Change: Yeah.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Hum.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Yeah.
Speaker Change: [music].