TelevisaUnivision Shows Advertising Strength In First Full Quarterly Report Since Merger, But Bottom Line Takes Hit From Streaming
In its first full quarter of results, TelevisaUnivision reported a modest uptick in revenue and reiterated its belief in having a unique market opportunity, though its adjusted income faltered due to investments in streaming.
The earnings report reflected operations during the quarter ending June 30. On January 31, Univision and the media division of Mexico-based Televisa completed a $4.8 billion merger, creating the world’s top Spanish-language media company and keeping it privately held. That transaction followed the December 2020 close of the acquisition of a controlling stake in Univision by a consortium of investors. Quarterly comparisons with the year-ago period were made on a pro-forma basis.
Revenue in the quarter ticked up 7% to $747.5 million. Adjusted operating income before depreciation and amortization slipped 8% from a year ago to $373.3 million. The company noted the hit to the bottom line created by an investment in streaming, though CEO Wade Davis has also emphasized that the company views streaming as incremental to its still-viable linear business. Operating expenses increased 24% to $723 million, mainly due to investments in Vix and Vix+, which have launched in recent months.
Repeatedly in a one-hour conference call with Wall Street analysts, Davis pointed to the launch of streaming service Vix and Vix+. The free, ad supported former went live in March and the subscription tier debuted last week. The company did not offer any early subscriber numbers or other metrics, but CEO Wade Davis asserted that the offering is unique in the marketplace and that TelevisaUnivision would benefit as a result.
Davis also pointed to the company’s “fabulous” result in the recently concluded 2022-23 upfront sales process, with volume increases in the mid-to-high-teens (“probably 3x what the rest of the market got”) and record pricing. “We have now reset pricing for Univision,” he said, with pricing “at or above the general market” over the past two upfronts. The Hispanic network’s ratings came in flat in the quarter as U.S. broadcast nets saw their viewership plummet by double digits, he said.
With triple-digit growth in streaming in this year’s upfront compared with a year ago, he added, “this is not a share-shift for us in the same way it is for other people. Streaming is incremental. We grew the network alone by double digits in linear.”
Political advertising for this year’s mid-terms as well as the presidential cycle in 2024 will provide a significant boost, Davis said. Hispanic viewers served by the company are also “the swing vote for both Republicans and Democrats.” With healthy demand thus far on the part of advertisers seeking those voters, Davis said TelevisaUnivision is “just as bullish, if not more bullish” as in past election years.
As far as macroeconomic challenges, which have shown up in some companies’ reports at the early stages of earnings season, Davis said the company isn’t seeing any reason not to be “incredibly optimistic about the second half of the year.” Although there were “slightly above-average” rates of advertisers canceling their ad buys in the second quarter, he added, the trend was “category-specific.” About 70% of those cancellations were in the auto, consumer packaged goods, food and retail categories, the exec estimated, and while third-quarter cancellations have continued, they are showing about a percentage point of sequential improvement from the prior quarter.
The second quarter was “the best quarter we’ve had in five years, period, in terms of overall volume,” the exec said, returning to the main thrust of the company’s pitch to the marketplace. “The mega-opportunity that exists here is the fact that only about a third of U.S. TV advertisers are advertising today to the U.S. Hispanic population. And of those who are advertising, about half of them are under-indexing their spend relative to the audience and the size of the economy that they represent. So, the billion-dollar U.S. advertising opportunity is simply for us to get a fair share of marketing spend relative to the size and purchasing power of our audience.”
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