TV Azteca Announces EBITDA of Ps 668 Millon (US$61 Million) With a 37% Margin

TV Azteca Announces EBITDA of Ps 668 Millon (US$61 Million) With a 37% Margin

-Net Sales Grow 4% to a Historical 1Q Level-

-Net Income Grows 42% to Ps.297 Million (US$27 Million)-

MEXICO CITY, April 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 4% growth in net sales to a historical first quarter record of Ps.1,801 million (US$164 million), and EBITDA of Ps.668 million (US$61 million), 2% higher than the same quarter on the previous year. The EBITDA margin was 37%.

"Revenue in Mexico and in the U.S. Hispanic market was remarkable, resulting in a record high sales level for a first quarter, continuing the growth trend that started in 2001," said Mario San Roman, Chief Executive Officer of TV Azteca. "Increased efforts were dedicated to Azteca America productions, affecting costs and EBITDA, but also strengthening our position in that market, and growth and profitability perspectives."

"From a strategic perspective, we made further progress with our plan for uses of cash, with shareholders' approval of cash distributions of US$88 million for 2006, as had been approved by our boar," added Mr. San Roman.

As previously announced, the company's cash usage plan entails distributions of over US$500 million and debt reductions of approximately US$250 million within a six-year period that began in 2003.

First Quarter Results

Net sales grew 4%, reaching a record high level of Ps.1,801 million (US$164 million), compared with Ps.1,725 million (US$158 million) for the first quarter of 2005. Total costs and expenses grew 6% to Ps.1,133 million (US$103 million), compared with Ps.1,073 million (US$98 million) for the same period of the previous year.

The company reported EBITDA of Ps.668 million (US$61 million), compared with Ps.652 million (US$60 million) from the first quarter of 2005. Net majority income was Ps.297 million (US$27 million), 42% higher than the net income of Ps.209 million (US$19 million) of the same period of 2005.

Net Sales

"Despite lower non-cash revenue this quarter -- especially from Grupo Todito -- our commercial audience share above 40% in Mexico translated into higher domestic sales," added Mr. San Roman. "Additionally, the popular content of Azteca America, which includes the successful reality show La Academia USA, generated considerably higher revenues from our U.S. operations."

Azteca America -- the company's wholly owned broadcasting network focused on the U.S. Hispanic market -- recorded revenue of Ps.130 million (US$12 million), a 60% increase compared with Ps.81 million (US$7 million) in the same period a year ago.

TV Azteca also reported programming sales to other countries of Ps.19 million (US$2 million), compared with Ps.34 million (US$3 million) for the first quarter of 2005. This quarter's programming exports were primarily driven by the company's novelas La Hija del Jardinero sold in Africa, as well as Lo que Callamos las Mujeres, sold mainly in European markets.

During this quarter, TV Azteca did not report material advertising sales from Azteca Web, a company through which TV Azteca controls 100% of the Grupo Todito site network. In the first quarter of 2005, non-cash content and advertising sales to Todito.com were Ps.30 million (US$3 million).

As previously announced, the first quarter of 2005 marked the end of a five-year service contract through which TV Azteca acquired 50% of Todito.com in exchange for content, advertising and sales support. During the second quarter, TV Azteca's board approved a new agreement that divided Grupo Todito into two independent companies, which resulted in TV Azteca controlling 100% of the Grupo Todito site network, named Azteca Web.

Barter sales were Ps.54 million (US$5 million), compared with Ps.67 million (US$6 million) in the same period last year. Inflation adjustment for advertising advanced payments was Ps.45 million (US$4 million), compared with Ps.55 million (US$5 million) for the first quarter of 2005.

Costs and Expenses

A 6% increase in cost and expenses resulted from the combination of a 12% rise in programming, production and transmission costs to Ps.885 million (US$81 million), from Ps.792 million (US$72 million) in the prior year period, as well as a 12% decrease in administrative and selling expenses to Ps.248 million (US$23 million), from Ps.281 million (US$26 million) in the same quarter of 2005.

"The production of La Academia USA, together with additional content production efforts in the U.S. and Mexico, boosted audience share to notable levels, but affected production costs," added Mr. San Roman. "On a proforma basis, excluding Ps.60 million of increased costs from Azteca America during this quarter, EBITDA grew by 12%. Nevertheless, we chose to allocate important resources to improve our market positioning in the U.S. Hispanic market, due to the enormous potential in demand for advertising and profitability for Azteca America."

Lower personnel, operating, services and travel expenses in the quarter have resulted in a 12% reduction in administrative and selling expenses. "This is the third consecutive quarter in which we achieve lower expenses, and now we have accomplished important reductions in all areas of cash outlays. Our solid strategy for expenditure control has made savings compatible with higher operations in Mexico and the U.S., while continuously searching for additional efficiency opportunities," said Carlos Hesles, Chief Financial Officer of TV Azteca.

EBITDA and Net Income

The 4% increase in net sales, combined with a 6% increase in costs and expenses, resulted in EBITDA of Ps.668 million (US$61 million), 2% above Ps.652 million (US$60 million) for the same quarter a year ago. The EBITDA margin was 37%, compared with 38% in the same period of 2005.

Below EBITDA, TV Azteca recorded depreciation and amortization of Ps.86 million (US$8 million) from Ps.101 million (US$9 million) a year ago, reflecting a Ps.16 million (US$1 million) decrease in the amortization account of the company, due to the adoption of accounting bulletin B-7. The bulletin allows making impairment tests in the company's goodwill, instead of periodic amortizations.

The company recorded other expenses of Ps.56 million (US$5 million), compared with Ps.108 million (US$10 million) a year ago. Other expenses this period included Ps.32 million (US$3 million) of legal fees; Ps.23 million (US$2 million) of charitable donations, and Ps.10 million (US$1 million) in pre-operative expenses from Azteca America. TV Azteca recorded other income of Ps.10 million (US$1 million) from the net effect of the recognition of participation, through the equity method, of the net income from Monarcas -- TV Azteca's soccer team -- net losses from Proyecto 40, the loss of Todito Card and other concepts.

Net comprehensive financing cost during the quarter was Ps.162 million (US$15 million), compared with Ps.187 million (US$17 million) a year ago. There was a Ps.10 million (US$1 million) reduction in paid interests due to a lower balance and lower interest rates in the company's debt with cost. Other financial costs increased Ps.11 million (US$1 million), due to the commissions for prepayment of the principal balance of the company's Structured Securities Certificates. Interest income rose Ps.9 million (US$1 million) as a result of an increase of the average cash balance of the company in the quarter, as well as higher interest rates. There was a Ps.21 million (US$2 million) growth in exchange gain due to a net asset monetary position in U.S. dollars, together with higher exchange rate depreciation this quarter. The loss in monetary position was Ps.3 million (US$0.3 million) compared with a zero balance a year ago, due to an asset monetary position in TV Azteca this quarter.

Income tax provision was Ps.45 million (US$4 million), compared with Ps.47 million (US$4 million) in the same period of the prior year, reflecting higher fiscal losses from subsidiaries during the quarter.

Net income was Ps.297 million (US$27 million), 42% higher than Ps.209 million (US$19 million) for the same period in 2005.

Proyecto 40

During the quarter, the company, together with Televisora del Valle de Mexico, began operations of Proyecto 40 -- an over-the-air UHF channel that covers the Mexico City metropolitan area -- with content that contributes to the consolidation of a more open and pluralistic society

Proyecto 40 presents a programming grid with news, opinion, research and debate, bringing together respected cultural, social, economic and political opinion leaders in Mexico.

TV Azteca has the right to program, operate, and sell advertising of Canal 40 in Mexico City based on the contracts signed with the television station in 1998, as previously detailed. The agreements were approved by the Communications and Transportation Ministry (SCT) and declared legally valid and obligatory without appeal by the courts.

Uses of Cash

As previously announced, the shareholders' meeting held on February 20, 2006, approved cash distributions of US$88 million to be paid during the year, in line with the company's plan for uses of cash. A first payment of US$66 million was scheduled to take place on May 23, followed by a second one of US$22 million on November 22.

Current disbursements under the cash plan represent an aggregate amount of US$405 million, equivalent to a 22% yield on the April 25, 2006 CPO closing price.

The distributions made to date consist of the following amounts: US$125 million paid on June 30, 2003; US$15 million on December 5, 2003; US$33 million on May 13, 2004; US$22 million on November 11, 2004; US$130 million on December 14, 2004; US$59 million on June 9, 2005; and US$21 million on December 1, 2005.

Advertising Advances

As of March 31, 2006, the balance of advertising advances -- excluding sales to Unefon -- reached a record high level of Ps.5,148 million (US$470 million), 6% higher than Ps.4,852 million (US$443 million) a year ago.

Outstanding Debt

As of March 31, 2005, the company's total outstanding debt was Ps.6,388 million (US$583 million). TV Azteca's cash balance was Ps.1,316 million (US$120 million), resulting in net debt of Ps.5,072 million (US$463 million). The total debt of the past twelve months (LTM) EBITDA ratio was 1.6 times, and net debt to EBITDA ratio was 1.3 times. LTM EBITDA to net interest expense ratio was 5.1 times.

Excluding -- for analytical purposes -- Ps.1,311 million (US$120 million) debt due 2069, total debt was Ps.5,077 million (US$463 million), and total debt to EBITDA ratio was 1.3 times.

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 Todito, an Internet portal for North American Spanish speakers.

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. Risks that may affect TV Azteca are identified in filings with securities authorities.

Investor Relations:
Bruno Rangel
+ 52 (55) 1720 9167
jrangelk@tvazteca.com.mx

Press Relations:
Tristan Canales
+ 52 (55) 1720 1441
tcanales@gruposalinas.com.mx

Daniel McCosh
+ 52 (55) 1720 0059
dmccosh@tvazteca.com.mx

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

CONTACT: Investors, Bruno Rangel, +011-52-55-1720-9167, or
jrangelk@tvazteca.com.mx, media, Tristan Canales, +011-52-55-1720-1441, or
tcanales@gruposalinas.com.mx, or Daniel McCosh, +011-52-55-1720-0059, or
dmccosh@tvazteca.com.mx, all of TV Azteca

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