Univision Earnings Fall on Dish Dispute, Soccer World Cup Move to Telemundo

Courtesy of Univision Communications
Univision Communications CEO Vincent Sadusky

"Longer term, our refocused mission is gaining momentum," says Vince Sadusky, the CEO of the Spanish-language media giant after a quarter that was also affected by higher Televisa content costs.

Spanish-language media giant Univision Communications on Thursday posted lower third-quarter earnings as a carriage dispute with Dish Network, the fact that rival Telemundo aired the soccer World Cup and weaker ratings were a drag on the company's financials.

The company also cited a step-up in the rate it pays Mexican TV giant Televisa under a long-term content deal.

"Third-quarter financial results were impacted by headwinds including our dispute with Dish, the World Cup’s impact on advertising, lower ratings and the 2018 Televisa program licensing agreement rate increase," said CEO Vince Sadusky, who earlier this year took over from Randy Falco. "Longer term, our refocused mission is gaining momentum evidenced by Univision being on pace to win the November sweeps in Spanish language even without carriage on Dish."

Sadusky has promised a "singular focus on our core business and mission." On Wednesday, he said: "Our teams are rededicated to the company’s core mission of serving Hispanic America and with many structural and organizational changes now in place, I am optimistic about our strategy going forward. We have the number one Spanish-language network, the number one Spanish-language sports network, and many of our local TV and radio stations are number one in local news and entertainment, English or Spanish. We have a great base to build from."

Discussing the Dish dispute during a conference call on Wednesday, Sadusky mentioned that Dish dropped the Univision Deportes sports network this week as well, saying it had been one of Dish’s top sports channels and "one of the last reasons for Dish Latino subscribers to continue with the service." He estimated that Dish lost hundreds of thousands of subs in the quarter alone due to not carrying the Univision networks and suggested the lack of Dish carriage was "likely permanent."

"Getting a deal done would have been best for both companies," Sadusky said, signaling talks have continued, but with declining hopes for a successful resolution. "However, Dish has been unwilling to pay fair market rates. … We will not do a deal that undermines the value of our services." While this will mean short-term operational and financial headwinds for Univision, he argued that the long-term impact for Dish would be "more significant." He mentioned that U.S. Hispanics produced at least $1 billion in revenue annually and hundreds of millions in earnings before interest, taxes, depreciation and amortization for Dish. "We would expect a significant portion of Dish’s approximately 1 million remaining Dish Latino subscribers will migrate to other [pay TV] partners," he concluded.

The company this summer tapped Morgan Stanley to explore the possible sale of its former Gawker assets, which include the Gizmodo Media Group and The Onion. Univision has also cut jobs, scrapped plans for an initial public offering and replaced its CFO.

The company on Wednesday reported third-quarter earnings from continuing operations of $12.4 million, compared with a year-ago profit of $109.6 million. Quarterly adjusted operating income before depreciation and amortization, another profitability metric, fell 33.7 percent to $231 million.

Third-quarter revenue dropped 17.3 percent to $628.2 million, with advertising revenue down 16.6 percent to $378.7 million. Non-advertising revenue, including carriage fees and content licensing, fell 18.3 percent to $249.5 million. 

Dish Network last week said it lost 341,000 net pay TV subscribers in the third quarter, citing a carriage dispute with Univision and increased competition. It said subscriber momentum was "negatively impacted by Univision’s removal of certain of its channels from our Dish TV and Sling TV programming lineup."