TV Azteca Announces Revenue Of Ps.2,238 Million and EBITDA Of Ps.849 Million In 2Q07

TV Azteca Announces Revenue Of Ps.2,238 Million and EBITDA Of Ps.849 Million In 2Q07

- Growing Strength in Azteca America, Sales Increase 22% -

- TV Azteca Shareholders Receive US$46 Million in the Quarter, and Obtain a 17% Yield in Grupo Iusacell Shares in July -

MEXICO CITY, July 23 /PRNewswire/ -- 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.2,238 million in the second quarter, compared with Ps.2,757 million in the same period of 2006. EBITDA this quarter was Ps.849 million, from PS.1,192 million registered a year ago. EBITDA margin was 38%.

"Comparables are particularly difficult this period because the second quarter a year ago, registered the peak of the advertising revenue cycle related to the extraordinary events of 2006," said Mario San Roman, Chief Executive Officer of TV Azteca. "The expectations for the second half of the year are more favorable, and we have a solid position to capture higher advertising investment, through programming grids that generate superior audience levels, and allow for the development of wide range commercial plans."

On the strategic front, during the quarter the company distributed US$46 million in cash to its shareholders, as part of its six year plan for uses of cash; this distribution, together with cash disbursements since the beginning of the plan in 2003, adds up to US$541 million.

Additionally, on July 16, TV Azteca shareholders received one share of Grupo Iusacell per every 96 CPOs of the company. The yield per CPO with this share distribution was 17%, which together with aggregate cash distributions since 2003, represent a 37% yield based on the closing price of the CPO on July 10.

Second Quarter Results

Net sales were Ps.2,238 million, compared with Ps.2,757 million for the same quarter of 2006. Total costs and expenses added up to Ps.1,389 million, from Ps.1,566 million in the same period last year. As a result, TV Azteca reported EBITDA of Ps.849 million, compared with Ps.1,192 million for the second quarter of 2006. The company reported net income of Ps.218 million, from Ps.680 million in the same period of 2006.

2Q 2006 2Q 2007 Change
Ps. %

Net Sales Ps. 2,757 Ps. Ps. -19 %
2,238 (519)

EBITDA Ps. 1,192 Ps. 849 Ps. -29 %
(343)

Net Majority Income Ps. 680 Ps. 218 Ps. -68 %
(462)

Net Income per CPO Ps. 0.23 Ps. 0.07 Ps. -68 %
(0.16)

Million pesos of constant purchasing power as of June 30, 2007.
EBITDA is Operating Profit Before Depreciation and Amortization under
Mexican GAAP.
The number of CPOs outstanding as of June 30, 2007 was 2,994 million.

Net Sales

"The significance of the revenue related to extraordinary events a year ago was crucial for the sales performance this quarter. Nevertheless, the influence of cyclical income will reduce substantially in subsequent months, and our world-class programming-which reached 41% commercial audience share in the full day this quarter-generates unparalleled opportunities for successful advertising campaigns, in an economic environment that is expected to be more favorable," added Mr. San Roman.

Second quarter revenue includes net sales from Azteca America-the company's wholly owned broadcasting network focused on the U.S. Hispanic market-of Ps.141 million, 22% higher than Ps.115 million from the same period a year ago.

TV Azteca also reported programming sales to other countries of Ps.24 million, compared with Ps.25 million recorded in the second quarter of 2006. This quarter's programming exports were driven by the company's novelas Se Busca un Hombre and Mientras Haya Vida, sold in many countries of Latin America.

Barter sales were Ps.61 million, compared with Ps.115 million in the prior year. Inflation adjustment of advertising advances was Ps.19 million, compared with Ps.33 million in the second quarter of 2006.

During the period, the company did not register ad sales to Unefon, while in the second quarter of 2006, such sales were Ps.37 million. As previously announced, during the third quarter of 2006, the company's board of directors approved the cancellation of the ten-year advertising contract with Unefon, which began in 1998.

Costs and Expenses

Costs and expenses decreased 11% as a result of a 14% reduction in the programming, production and transmission costs to Ps.1,104 million, from Ps.1,284 million in the same period of the prior year, and a 1% increase in administrative and selling expenses to Ps.285 million, compared with Ps.282 million in the same quarter of 2006.

The cost reduction reflects the absence this quarter of outlays from exhibition rights and production costs related to the World Cup, which were present a year ago. The reduction was partially compensated by costs related to the generation of successful content for US Hispanic viewerships-focused on further strengthening superior audience levels, and future revenue-as well as higher rent payment of Azteca America's affiliate station in Los Angeles.

As previously announced, the company's costs include an increase in the rent payment for the Los Angeles station KAZA TV of US$2.4 million in the quarter, as a result of Azteca America's agreement with Pappas Telecasting. Starting July 2006, Azteca America makes cash payments equivalent to US$9.6 million annually to Pappas Telecasting for the rent of the station, which is operated and managed by Azteca America.

The 1% increase in administrative and selling expense results form higher operating and service expenses in the period, derived from the increased dimensions of the business in the U.S.

EBITDA and Net Income

The decrease in net sales during the quarter, combined with the lower costs and expenses, generated EBITDA of Ps.849 million, compared with Ps.1,192 million in the same quarter of the prior year.

Below EBITDA, the company recorded depreciation and amortization of Ps.97 million, practically unchanged from Ps.99 million a year ago.

The company recorded other expense of Ps.155 million, compared with Ps.135 million a year ago. Other expense this period was primarily comprised of charitable donations, legal fees, reengineering expenses and other amortizations.

Net comprehensive financing cost during the quarter was Ps.222 million compared with Ps.166 million in the same period of 2006. Interest expense increased Ps.19 million as a result of a higher average debt balance in the period. The debt balance was higher at the beginning of the quarter, and had gradual amortizations, concluding this period with a balance lower than the previous year. Other financial expense rose Ps.2 million due to an increase in the amortization of the expense related to the additional issuance of structured securities certificates that took place in December 2006. Interest income increased Ps.4 million due to a higher average cash balance in the quarter. The company recorded foreign exchange loss of Ps.12 million, compared with a Ps.20 million gain a year ago. The exchange loss this quarter resulted from the combination of a 2% appreciation of the peso against the US dollar in the quarter, and a net asset US dollar monetary position in the period. In the quarter, a Ps.6 million loss in monetary position was recorded derived from a liability monetary position together with deflation in the quarter.

Provision for income tax was Ps.141 million, compared with Ps.96 million in the same period of the prior year, reflecting a larger asset tax provision.

Net income of minority stockholders was Ps.15 million, unchanged from the previous year. Net income of minority stockholders represents 50% of Azteca Web's net income, which TV Azteca consolidates in its results, and that belongs to CNCI, owner of half of that company.

Net income of majority stockholders in the quarter was Ps.218 million, compared with Ps.680 million in the same period of 2006.

Uses of Cash

During the quarter, the company distributed US$46 million in cash to its shareholders. The distribution is part of TV Azteca's plan to allocate a substantial portion of its cash generation in disbursements for an amount above US$500 million, in a six year period that started in June 2003.

The distributions to shareholders made to date under the plan, represent an aggregate amount of US$541 million, and are integrated by the following amounts: US$125 million made 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; US$21 million on December 1, 2005; US$68 million on May 23, 2006; US$22 million on November 22, 2006, and US$46 million on June 6, 2007.

Outstanding Debt

As of June 30, 2007, the company's total outstanding debt was Ps.7,359 million. TV Azteca's cash balance was Ps.1,674 million, resulting in net debt of Ps.5,685 million. The total debt to last twelve months (LTM EBITDA) ratio was 1.9 times, and net debt to EBITDA was 1.5 times. LTM EBITDA to net interest expense ratio was 5.6 times.

Excluding-for analytical purposes-Ps.1,292 million debt due 2069, total debt was Ps.6,067 million, and total debt to EBITDA ratio was 1.6 times.

First Half Results

Net sales in the first six months of the year were Ps.4,011 million, compared with Ps.4,626 million in 2006. Total costs and expenses where Ps.2,570, from PS.2,742 million in the same period a year ago. As a result, TV Azteca recorded EBITDA of Ps.1,441 million, compared with Ps.1,885 million from the first half of the previous year. The company recorded net income of Ps.396 million, from Ps. 988 million in the same period of 2006.

1H 2006 1H 2007 Change
Ps. %

Net Sales Ps. 4,626 Ps. Ps. -13 %
4,011 (615)

EBITDA Ps. 1,885 Ps. Ps. -24 %
1,441 (443)

Net Majority Income Ps. 988 Ps. 396 Ps. -60 %
(592)

Majority Income
per CPO Ps. 0.33 Ps. 0.13 Ps. -60 %
(0.20)

Million pesos of constant purchasing power as of June 30, 2007.
EBITDA is Operating Profit Before Depreciation and Amortization under
Mexican GAAP.
The number of CPOs outstanding as of June 30, 2007 was 2,994 million.

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.

First Call Analyst:
FCMN Contact: msromang@tvazteca.com.mx

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

CONTACT: Investor Relations, Bruno Rangel, +52-55-1720 9167,
jrangelk@tvazteca.com.mx, or Marcia San Roman, +52-55-1720-0041,
msromang@tvazteca.com.mx, or Press Relations, Daniel McCosh,
+52-55-1720-0059, dmccosh@tvazteca.com.mx, all for TV Azteca; or Tristan
Canales, +52-55-1720-1441, tcanales@gruposalinas.com.mx, for TV Azteca

Web site:

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

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