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Segment Information | 12 Months Ended
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Dec. 31, 2017
Segment Information |
Segment Information | 25.Segment Information Reportable segments are those that are based on the Group’s method of internal reporting. The Group is organized on the basis of services and products. The Group’s segments are strategic business units that offer different entertainment services and products. The Group’s reportable segments are as follows: Content The Content segment categorizes the Group’s sources of content revenue as follows: (a) Advertising; (b) Network Subscription Revenue; and (c) Licensing and Syndication. Given the cost structure of the Group’s Content business, operating segment income is reported as a single line item. The Advertising revenue is derived primarily from the sale of advertising time on the Group’s television broadcast operations, which include the production of television programming and broadcasting of Channels 2, 4, 5 and 9 (“television networks”), as well as the sale of advertising time on programs provided to pay television companies in Mexico and advertising revenue in the Group’s Internet business and the production of television programming and broadcasting for local television stations in Mexico and the United States. The broadcasting of television networks is performed by television repeater stations in Mexico which are wholly-owned, majority-owned or minority-owned by the Group or otherwise affiliated with the Group’s networks. The Network Subscription revenue is derived from domestic and international programming services provided to independent cable television systems in Mexico and the Group’s direct-to-home (“DTH”) satellite and cable television businesses. These programming services for cable and pay- per-view television companies are provided in Mexico, other countries in Latin America, the United States and Europe. The programming services consist of both programming produced by the Group and programming produced by others. The Licensing and Syndication revenue is derived from international program licensing and syndication fees. The Group’s television programming is licensed and syndicated to customers abroad, including Univision. Sky The Sky segment includes DTH broadcast satellite pay television services in Mexico, Central America and the Dominican Republic. Sky revenues are primarily derived from program services, installation fees and equipment rental to subscribers, and national advertising sales. Cable The Cable segment includes the operation of cable multiple systems covering the Mexico City metropolitan area, Monterrey and suburban areas, and over 200 other cities of Mexico; and the operation of telecommunication facilities through a fiber-optic network that covers the most important cities and economic regions of Mexico and the cities of San Antonio and San Diego in the United States (Bestel). The cable multiple system businesses derive revenues from cable subscribers, principally from basic and premium television services subscription, pay- per-view fees, installation fees, Internet services subscription and telephone services subscription as well as from local and national advertising sales. The telecommunication facilities business derives revenues from providing data and long-distance services solutions to carriers and other telecommunications service providers through its fiber-optic network. Other Businesses The Other Businesses segment includes the Group’s domestic operations in sports and show business promotion, soccer, feature film production and distribution, gaming, radio, publishing and publishing distribution. The table below presents information by segment and a reconciliation to consolidated total for the years ended December 31, 2017, 2016 and 2015:
|  | Total Revenues |  | Intersegment Revenues |  | Consolidated Revenues |  | Segment Income |
2017: |  |  |  |  |  |  |  |  |
Content |  | Ps. | 33,997,220 |  | Ps. | 2,445,233 |  | Ps. | 31,551,987 |  | Ps | 12,825,259 |
Sky |  | 22,196,629 |  | 127,129 |  | 22,069,500 |  | 10,106,623 |
Cable |  | 33,048,310 |  | 225,755 |  | 32,822,555 |  | 14,034,796 |
Other Businesses |  | 8,376,270 |  | 546,077 |  | 7,830,193 |  | 490,106 |
Segment totals |  | 97,618,429 |  | 3,344,194 |  | 94,274,235 |  | 37,456,784 |
Reconciliation to consolidated amounts: |  |  |  |  |  |  |  |  |
Eliminations and corporate expenses |  | (3,344,194 | ) | (3,344,194 | ) | — |  | (2,290,974 | )
Depreciation and amortization expense |  | — |  | — |  | — |  | (18,536,274 | )
Consolidated net sales and income before other expense |  | 94,274,235 |  | — |  | 94,274,235 |  | 16,629,536 | (1)
Other expense, net |  | — |  | — |  | — |  | (2,386,334 | )
Consolidated net sales and operating income |  | Ps. | 94,274,235 |  | Ps. | — |  | Ps. | 94,274,235 |  | Ps. | 14,243,202 | (2)
|  | Total Revenues |  | Intersegment Revenues |  | Consolidated Revenues |  | Segment Income |
2016: |  |  |  |  |  |  |  |  |
Content |  | Ps. | 36,686,676 |  | Ps. | 2,314,419 |  | Ps. | 34,372,257 |  | Ps. | 14,748,037 |
Sky |  | 21,941,247 |  | 70,954 |  | 21,870,293 |  | 9,898,516 |
Cable |  | 31,891,616 |  | 162,364 |  | 31,729,252 |  | 13,236,117 |
Other Businesses |  | 8,828,248 |  | 512,687 |  | 8,315,561 |  | 1,040,571 |
Segment totals |  | 99,347,787 |  | 3,060,424 |  | 96,287,363 |  | 38,923,241 |
Reconciliation to consolidated amounts: |  |  |  |  |  |  |  |  |
Eliminations and corporate expenses |  | (3,060,424 | ) | (3,060,424 | ) | — |  | (2,207,927 | )
Depreciation and amortization expense |  | — |  | — |  | — |  | (16,979,833 | )
Consolidated net sales and income before other expense |  | 96,287,363 |  | — |  | 96,287,363 |  | 19,735,481 | (1)
Other expense, net |  | — |  | — |  | — |  | (3,137,384 | )
Consolidated net sales and operating income |  | Ps. | 96,287,363 |  | Ps. | — |  | Ps. | 96,287,363 |  | Ps. | 16,598,097 | (2)
|  | Total Revenues |  | Intersegment Revenues |  | Consolidated Revenues |  | Segment Income |
2015: |  |  |  |  |  |  |  |  |
Content |  | Ps. | 34,332,572 |  | Ps. | 1,462,004 |  | Ps. | 32,870,568 |  | Ps. | 14,564,225 |
Sky |  | 19,253,526 |  | 107,197 |  | 19,146,329 |  | 8,972,258 |
Cable(3) |  | 28,488,313 |  | 148,887 |  | 28,339,426 |  | 11,405,556 |
Other Businesses |  | 8,124,337 |  | 428,831 |  | 7,695,506 |  | 753,340 |
Segment totals |  | 90,198,748 |  | 2,146,919 |  | 88,051,829 |  | 35,695,379 |
Reconciliation to consolidated amounts: |  |  |  |  |  |  |  |  |
Eliminations and corporate expenses |  | (2,146,919 | ) | (2,146,919 | ) | — |  | (1,960,848 | )
Depreciation and amortization expense |  | — |  | — |  | — |  | (14,660,929 | )
Consolidated net sales and income before other expense |  | 88,051,829 |  | — |  | 88,051,829 |  | 19,073,602 | (1)
Other expense, net |  | — |  | — |  | — |  | (328,477 | )
Consolidated net sales and operating income |  | Ps. | 88,051,829 |  | Ps. | — |  | Ps. | 88,051,829 |  | Ps. | 18,745,125 | (2)
| (1) |  | This amount represents income before other expense, net.
| (2) |  | This amount represents consolidated operating income.
| (3) |  | In 2015, Telecable contributed total revenues and segment income to the Group’s Cable segment for the year ended December 31, 2015, in the amount of Ps.2,106,706 and Ps.1,022,994, respectively, as the Group began to consolidate the Telecable results of operations beginning in January 2015 (see Note 3).
Accounting Policies The accounting policies of the segments are the same as those described in the Group’s summary of significant accounting policies (see Note 2). The Group evaluates the performance of its segments and allocates resources to them based on operating income before depreciation and amortization. Intersegment Revenue Intersegment revenue consists of revenues derived from each of the segments principal activities as provided to other segments. The Group accounts for intersegment revenues as if the revenues were from third parties, that is, at current market prices. Allocation of Corporate Expenses Non-allocated corporate expenses primarily include share-based compensation expense for certain key officers and employees in connection with the Company’s Long-term Retention Plan, as well as other general expenses that because of their nature and characteristics are not subject to be allocated within the Group’s business segments. The table below presents segment information about assets, liabilities, and additions to property, plant and equipment as of and for the years ended December 31, 2017, 2016 and 2015:
|  | Segment Assets at Year-End |  | Segment Liabilities at Year-End |  | Additions to Property, Plant and Equipment |
2017: |  |  |  |  |  |  |
Continuing operations: |  |  |  |  |  |  |
Content |  | Ps. | 96,867,918 |  | Ps. | 44,129,769 |  | Ps. | 1,627,250 |
Sky |  | 27,977,530 |  | 13,333,944 |  | 4,020,282 |
Cable |  | 89,803,959 |  | 22,675,417 |  | 10,615,147 |
Other Businesses |  | 10,350,464 |  | 3,261,984 |  | 496,887 |
Total |  | Ps. | 224,999,871 |  | Ps. | 83,401,114 |  | Ps. | 16,759,566 |
2016: |  |  |  |  |  |  |
Continuing operations: |  |  |  |  |  |  |
Content |  | Ps. | 112,639,928 |  | Ps. | 50,758,643 |  | Ps. | 2,677,448 |
Sky |  | 28,359,148 |  | 14,227,757 |  | 6,297,131 |
Cable |  | 86,194,625 |  | 25,624,966 |  | 18,450,446 |
Other Businesses |  | 10,518,818 |  | 3,529,459 |  | 516,560 |
Total |  | Ps. | 237,712,519 |  | Ps. | 94,140,825 |  | Ps. | 27,941,585 |
2015: |  |  |  |  |  |  |
Continuing operations: |  | . |  |  |  |  |
Content |  | Ps. | 113,461,639 |  | Ps. | 43,668,182 |  | Ps. | 2,641,189 |
Sky |  | 25,199,299 |  | 9,190,384 |  | 5,561,502 |
Cable |  | 66,971,510 |  | 18,222,294 |  | 17,166,959 |
Other Businesses |  | 11,375,305 |  | 3,169,793 |  | 333,419 |
Total |  | Ps. | 217,007,753 |  | Ps. | 74,250,653 |  | Ps. | 25,703,069 |
Segment assets reconcile to total assets as of December 31, 2017 and 2016, as follows:
|  | 2017 |  | 2016 |
Segment assets |  | Ps. | 224,999,871 |  | Ps. | 237,712,519 |
Investments attributable to: |  |  |  |  |
Content (1) |  | 57,206,369 |  | 56,500,230 |
Cable |  | 721,076 |  | 728,775 |
Other Businesses |  | 180,159 |  | — |
Goodwill attributable to: |  |  |  |  |
Content |  | 241,973 |  | 241,973 |
Cable |  | 13,793,684 |  | 13,793,684 |
Other Businesses |  | 76,969 |  | 76,969 |
Total assets |  | Ps. | 297,220,101 |  | Ps. | 309,054,150 |
| (1) |  | Includes goodwill attributable to equity investments of Ps.359,613 in 2017 and 2016 (see Note 10).
Equity method gain recognized in income for the years ended December 31, 2017, 2016 and 2015 attributable to equity investments in Content, was Ps.1,957,544, Ps.1,189,517 and Ps.50,498, respectively. Equity method loss recognized in income for the years ended December 31, 2017, 2016 and 2015 attributable to equity investments in Cable, was Ps.61,930, Ps.49,913 and Ps.15,099, respectively. Segment liabilities reconcile to total liabilities as of December 31, 2017 and 2016, as follows:
|  | 2017 |  | 2016 |
Segment liabilities |  | Ps. | 83,401,114 |  | Ps. | 94,140,825 |
Debt not allocated to segments |  | 114,162,073 |  | 118,628,925 |
Total liabilities |  | Ps. | 197,563,187 |  | Ps. | 212,769,750 |
Geographical segment information:
|  | Total Net Sales |  | Segment Assets at Year-End |  | Additions to Property, Plant and Equipment |
2017: |  |  |  |  |  |  |
Mexico |  | Ps. | 81,308,749 |  | Ps. | 219,206,662 |  | Ps. | 16,709,852 |
Other countries |  | 12,965,486 |  | 5,793,209 |  | 49,714 |
|  | Ps. | 94,274,235 |  | Ps. | 224,999,871 |  | Ps. | 16,759,566 |
2016: |  |  |  |  |  |  |
Mexico |  | Ps. | 82,340,312 |  | Ps. | 229,472,576 |  | Ps. | 27,836,033 |
Other countries |  | 13,947,051 |  | 8,239,943 |  | 105,552 |
|  | Ps. | 96,287,363 |  | Ps. | 237,712,519 |  | Ps. | 27,941,585 |
2015: |  |  |  |  |  |  |
Mexico |  | Ps. | 75,926,603 |  | Ps. | 208,022,938 |  | Ps. | 25,290,033 |
Other countries |  | 12,125,226 |  | 8,984,815 |  | 413,036 |
|  | Ps. | 88,051,829 |  | Ps. | 217,007,753 |  | Ps. | 25,703,069 |
Net sales are attributed to geographical segment based on the location of customers. Disaggregation of Total Revenues The table below present total revenues for each reportable segment disaggregated by major service/product lines and primary geographical market for the years ended December 31, 2017, 2016 and 2015:
|  | Domestic |  | Export |  | Abroad |  | Total |
2017: |  |  |  |  |  |  |  |  |
Content: |  |  |  |  |  |  |  |  |
Advertising |  | Ps. | 20,366,184 |  | Ps. | 262,734 |  | Ps. | 90,164 |  | Ps. | 20,719,082 |
Network Subscription Revenue |  | 2,704,998 |  | 1,353,090 |  | — |  | 4,058,088 |
Licensing and Syndication |  | 949,440 |  | 8,270,610 |  | — |  | 9,220,050 |
Sky: |  |  |  |  |  |  |  |  |
DTH Broadcast Satellite TV (a) |  | 19,810,392 |  | — |  | 1,534,681 |  | 21,345,073 |
Advertising |  | 651,689 |  | — |  | — |  | 651,689 |
Pay-Per-View |  | 199,867 |  | — |  | — |  | 199,867 |
Cable: |  |  |  |  |  |  |  |  |
Digital TV Service (a) |  | 12,978,715 |  | — |  | — |  | 12,978,715 |
Advertising |  | 817,330 |  | — |  | — |  | 817,330 |
Broadband Services (a) |  | 11,357,448 |  | — |  | — |  | 11,357,448 |
Telephony (a) |  | 2,944,263 |  | — |  | — |  | 2,944,263 |
Other Services |  | 522,003 |  | — |  | — |  | 522,003 |
Telecommunications Networks |  | 4,173,146 |  | — |  | 255,405 |  | 4,428,551 |
Other Businesses: |  |  |  |  |  |  |  |  |
Gaming |  | 2,852,013 |  | — |  | — |  | 2,852,013 |
Soccer, Sports and Show Business Promotion |  | 1,447,731 |  | 118,424 |  | — |  | 1,566,155 |
Publishing - Magazines |  | 460,045 |  | — |  | 366,897 |  | 826,942 |
Publishing - Advertising |  | 614,478 |  | — |  | 454,886 |  | 1,069,364 |
Publishing Distribution |  | 286,500 |  | — |  | 62,177 |  | 348,677 |
Radio - Advertising |  | 851,140 |  | — |  | — |  | 851,140 |
Feature Film Production and Distribution |  | 647,730 |  | 45,250 |  | 168,999 |  | 861,979 |
Segment total |  | 84,635,112 |  | 10,050,108 |  | 2,933,209 |  | 97,618,429 |
Intersegment eliminations |  | (3,326,363 | ) | — |  | (17,831 | ) | (3,344,194 | )
Consolidated total revenues |  | Ps. | 81,308,749 |  | Ps. | 10,050,108 |  | Ps. | 2,915,378 |  | Ps. | 94,274,235 |
|  | Domestic |  | Export |  | Abroad |  | Total |
2016: |  |  |  |  |  |  |  |  |
Content: |  |  |  |  |  |  |  |  |
Advertising |  | Ps. | 22,636,449 |  | Ps. | 376,106 |  | Ps. | 210,638 |  | Ps. | 23,223,193 |
Network Subscription Revenue |  | 3,079,041 |  | 1,320,300 |  | — |  | 4,399,341 |
Licensing and Syndication |  | 711,468 |  | 8,352,674 |  | — |  | 9,064,142 |
Sky: |  |  |  |  |  |  |  |  |
DTH Broadcast Satellite TV (a) |  | 19,627,851 |  | — |  | 1,637,774 |  | 21,265,625 |
Advertising |  | 412,512 |  | — |  | — |  | 412,512 |
Pay-Per-View |  | 263,110 |  | — |  | — |  | 263,110 |
Cable: |  |  |  |  |  |  |  |  |
Digital TV Service (a) |  | 13,051,572 |  | — |  | — |  | 13,051,572 |
Advertising |  | 678,816 |  | — |  | — |  | 678,816 |
Broadband Services (a) |  | 9,709,197 |  | — |  | — |  | 9,709,197 |
Telephony (a) |  | 3,103,765 |  | — |  | — |  | 3,103,765 |
Other Services |  | 561,386 |  | — |  | — |  | 561,386 |
Telecommunications Networks |  | 4,409,366 |  | — |  | 377,514 |  | 4,786,880 |
Other Businesses: |  |  |  |  |  |  |  |  |
Gaming |  | 2,653,990 |  | — |  | — |  | 2,653,990 |
Soccer, Sports and Show Business Promotion |  | 1,581,705 |  | 220,319 |  | — |  | 1,802,024 |
Publishing - Magazines |  | 535,478 |  | — |  | 480,101 |  | 1,015,579 |
Publishing - Advertising |  | 769,009 |  | — |  | 691,501 |  | 1,460,510 |
Publishing Distribution |  | 318,924 |  | — |  | 81,645 |  | 400,569 |
Radio - Advertising |  | 814,176 |  | — |  | — |  | 814,176 |
Feature Film Production and Distribution |  | 463,761 |  | 50,762 |  | 166,877 |  | 681,400 |
Segment total |  | 85,381,576 |  | 10,320,161 |  | 3,646,050 |  | 99,347,787 |
Intersegment eliminations |  | (3,041,264 | ) | — |  | (19,160 | ) | (3,060,424 | )
Consolidated total revenues |  | Ps. | 82,340,312 |  | Ps. | 10,320,161 |  | Ps. | 3,626,890 |  | Ps. | 96,287,363 |
|  | Domestic |  | Export |  | Abroad |  | Total |
2015: |  |  |  |  |  |  |  |  |
Content: |  |  |  |  |  |  |  |  |
Advertising |  | Ps. | 22,503,689 |  | Ps. | 344,215 |  | Ps. | 181,418 |  | Ps. | 23,029,322 |
Network Subscription Revenue |  | 2,526,170 |  | 1,069,210 |  | — |  | 3,595,380 |
Licensing and Syndication |  | 751,686 |  | 6,956,184 |  | — |  | 7,707,870 |
Sky: |  |  |  |  |  |  |  |  |
DTH Broadcast Satellite TV(a) |  | 17,419,980 |  | — |  | 1,310,710 |  | 18,730,690 |
Advertising |  | 319,585 |  | — |  | — |  | 319,585 |
Pay-Per-View |  | 203,251 |  | — |  | — |  | 203,251 |
Cable: |  |  |  |  |  |  |  |  |
Digital TV Service (a) |  | 12,203,074 |  | — |  | — |  | 12,203,074 |
Advertising |  | 606,612 |  | — |  | — |  | 606,612 |
Broadband Services (a) |  | 7,617,723 |  | — |  | — |  | 7,617,723 |
Telephony (a) |  | 3,202,670 |  | — |  | — |  | 3,202,670 |
Other Services |  | 441,967 |  | — |  | — |  | 441,967 |
Telecommunications Networks |  | 3,989,715 |  | — |  | 426,552 |  | 4,416,267 |
Other Businesses: |  |  |  |  |  |  |  |  |
Gaming |  | 2,367,190 |  | — |  | — |  | 2,367,190 |
Soccer, Sports and Show Business Promotion |  | 1,132,314 |  | 129,374 |  | — |  | 1,261,688 |
Publishing - Magazines |  | 533,520 |  | — |  | 606,144 |  | 1,139,664 |
Publishing - Advertising |  | 665,296 |  | — |  | 809,882 |  | 1,475,178 |
Publishing Distribution |  | 228,345 |  | — |  | 89,987 |  | 318,332 |
Radio - Advertising |  | 786,735 |  | — |  | — |  | 786,735 |
Feature Film Production and Distribution |  | 558,738 |  | 22,295 |  | 194,517 |  | 775,550 |
Segment total |  | 78,058,260 |  | 8,521,278 |  | 3,619,210 |  | 90,198,748 |
Intersegment eliminations |  | (2,131,657 | ) | — |  | (15,262 | ) | (2,146,919 | )
Consolidated total revenues |  | Ps. | 75,926,603 |  | Ps. | 8,521,278 |  | Ps. | 3,603,948 |  | Ps. | 88,051,829 |
| (a) |  | DTH Broadcast Satellite TV revenues include revenue from leasing set-top equipment to subscribers in the Sky segment in the amount of Ps.9,894,292, Ps.9,266,056 and Ps.8,226,584, for the years ended December 31, 2017, 2016 and 2015, respectively, Digital TV Service revenues include revenue from leasing set-top equipment to subscribers in the Cable segment in the amount of Ps.3,062,826, Ps.3,072,701 and Ps.2,674,947, for the years ended December 31, 2017, 2016 and 2015, respectively. Revenue from leasing set-top equipment to subscribers is recognized when services are rendered to such subscribers. Set-top equipment is part of the Group’s property and equipment and is leased to subscribers through operating lease contracts.
Net sales from external customers for the years ended December 31, 2017, 2016 and 2015 are presented by sale source, as follows:
|  | 2017 |  | 2016 |  | 2015 |
Services |  | Ps. | 70,408,764 |  | Ps. | 72,915,848 |  | Ps. | 67,452,100 |
Royalties |  | 8,533,751 |  | 8,526,197 |  | 7,097,435 |
Goods |  | 2,133,122 |  | 2,317,315 |  | 2,415,371 |
Leases (1) |  | 13,198,598 |  | 12,528,003 |  | 11,086,923 |
Total |  | Ps. | 94,274,235 |  | Ps. | 96,287,363 |  | Ps. | 88,051,829 |
| (1) |  | This line includes primarily revenue from leasing set-top equipment to subscribers in the Sky and Cable segments, which is recognized when services are rendered to such subscribers. Set-top equipment is part of the Group’s property and equipment and is leased to subscribers through operating lease contracts.

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