Univision Earnings Rise, Execs Predict Strong 2020 Political Ad Revenue

Courtesy of Univision Communications
Univision Communications CEO Vincent Sadusky

CEO Vincent Sadusky forecast "a record first quarter in political advertising revenue, as candidates understand that 32 million eligible U.S. Hispanics will be the largest racial or ethnic minority group in the electorate."

Spanish-language media giant Univision Communications, a couple of days after unveiling a deal that will see an investor group led by former Viacom CFO Wade Davis acquire a 64 percent stake in it, on Thursday said it swung to a fourth-quarter profit amid higher revenue and lower expenses.

During its latest quarter, Univision posted earnings of $94.4 million, compared with a year-ago loss of $72.7 million. Focusing on earnings from continuing operations, the latest figure reached $93.9 million, compared with a year-ago loss of $40.2 million. The latest figure included a non-cash impairment loss of $29.5 million, restructuring, severance and related charges of $8.4 million and losses primarily related to the investment in the El Rey network, of $52.2 million.

The year-ago period includes a non-cash impairment loss of $106.0 million, restructuring and severance charges of $8.1 million and investment and other losses of $19.7 million. Quarterly adjusted operating income before depreciation and amortization (OIBDA), another profitability metric, edged up one percent to $230.4 million.

Univision CEO Vincent Sadusky on a morning analyst call called Univision a "re-energized company" after its strategic review and unveiling a deal to sell a majority stake to a new consortium of private investors. And he confirmed Wade Davis will replace him as CEO once the transaction is completed.

"Until then, I'll work to help ensure a smooth transition and continue to build on Univision's momentum and executing on our strategic plan to provide the best and most relevant news, sports and entertainment content to Hispanics and to provide the most robust platform for brands looking to reach this large market," Sadusky said.

Univision execs also talked on the analyst call about a boost in political and advocacy advertising in the run up to the 2020 U.S. presidential election as a financial shot in the arm to the company's bottom line. "In terms of political, we're very confident that it's going to be a record quarter. We're off to a very strong start relative to where we've been historically. ... That's boding well for how we're going to land for the year," Univision CFO Peter Lori reported.

The forecast of a record first quarter in political advertising revenue comes as candidates are expected to pitch to a sizable U.S. Hispanic block of voters. Said Sadusky in a statement that accompanied the company's financial results: "We have begun the year with the largest ratings lead over our competitors in years and anticipate a record first quarter in political advertising revenue as candidates understand that 32 million eligible U.S. Hispanics will be the largest racial or ethnic minority group in the electorate."

Lori also told analysts he envisioned no big rise in 2020 content expenditures as the Univision transaction gets set to close later this year as the company is underpinned by its Televisa content supply deal. "I don't see any big incremental investments in content necessary to fill out our grid, especially given how well the Televisa programming has been faring, which has fueled a lot of our strong ratings performance," Lori said.

Sadusky added Univision's content expenditures have already risen since 2018 as the company reinvested in its news, sports and entertainment divisions as part of a strategic review.

During the latest financial quarter, fourth-quarter revenue rose one percent to $692.9 million, with core revenue down one percent to $676.6 million. Univision reported a 2 percent revenue increase at its media networks unit where advertising revenue climbed 1 percent to $340.3 million. Media networks unit non-advertising revenue, including carriage fees and content licensing, rose 2 percent to $286.5 million in the latest period, driven by higher subscriber fee revenue.

Quarterly direct operating expenses related to programming, excluding variable program license fees, decreased 8 percent to $161 million due to "decreases in sports programming costs of $18.9 million resulting from both a lower number of games in 2019 and favorable playoff economics, partially offset by increases in entertainment programming costs of $3.9 million and news programming costs of $0.5 million."

Feb. 27, 8 a.m. Updated with comments by top Univision execs made during a morning analyst call.