Q2 2006 TV Azteca S.A. de C.V. Earnings Conference Call - Final.

Original Source: FD (FAIR DISCLOSURE) WIRE

OPERATOR: Welcome to today's teleconference. At this time all participants are in a listen only mode. Please note this call may be recorded. I would now like to turn the call over to Mr. Bruno Rangel; Mr. Rangel, you may begin.

BRUNO RANGEL, IR DIRECTOR, TV AZTECA S.A. DE C.V.: Thank you very much. Good day everyone, this is Bruno Rangel, Director of Investor Relations of Grupo Salinas. With me today is Mario San Roman, IRO of TV Azteca. On behalf of the company, I would like to cordially welcome you all to TV Azteca's second quarter '06 financial results conference call.

I'd like to remind everyone that some of the comments that we make today, or some answers in response to your questions, may contain forward-looking statements. Such statements may involve risks and uncertainties more fully disclosed elsewhere, and in the company's filings with securities authorities. These risks and uncertainties include, but are not limited to, economic, competitive, legal, governmental, and technological factors. Accordingly, there is no assurance that expectations will be realized.

The company assumes no obligation to revise any forward-looking statements should circumstances change. Additionally, I cannot, and will not, discuss in this conference call any fact or expectation concerning the U.S. and Mexican securities authorities actions in connection with the Vodaphone/Nortel/Calisco transactions of 2003 and related issues. I thank you in advance for your understanding.

Now I will present a brief overview of our financial and operating performance for the quarter, and afterward I will be glad to take your questions.

The company's appealing programming lineup in Mexico complimented this quarter by content associated with the soccer World Cup in Germany was a key factor to capture important ad investments for TV Azteca. Together with our continued top line growth as Azteca America, and revenue associated with political spending, the company was able to deliver a 17% top line increase in the period.

Revenue this time marked the highest level ever for a second quarter, surpassing the prior all time high second quarter sales figure achieved in the same period of '05. Azteca America was a meaningful contributor to the company's overall revenue, we had 22% top line increase in the quarter, and sales from Azteca America represented 4% of TV Azteca's total sales this time.

Azteca America collects the benefits of having a natural network status under Neilson standards, an increasingly popular programming line up from both TV Azteca and its fully digital facilities in Los Angeles, and a world class managing and sales team.

In Mexico, thanks to our competitive programming line up, we gained a 41% commercial audience share for the quarter, both in primetime and for the full day. Audience levels [inaudible] were primarily driven by the primetime and pre-prime programs. Our hit novella, Amor en Custodia, the popular shows [Le Casio de Estrella], [Bentanando], Lo Que Callamos las Mujeres, La Vida Cancion, and Primito, Top 10, Hit M3, our newscasts Hechos Mediano and Hechos Noches, as well as Los [Potagonistas] de la Mana, the coverage of the soccer World Cup in Germany, were important this quarter.

Turning to the demand side in Mexico, our sales showed a positive performance in a number of industries, primarily the beverages sector and the automobile market. We also saw positive advertising investments from players in the food industry this quarter. Further elaborating in our P&L, production, programming and transmission costs increased 36%, mainly as a result of the extraordinary …