Univision Earnings Rise Amid Higher Subscriber Fee Revenue

Courtesy of Univision Communications
Univision Communications CEO Vincent Sadusky

The Spanish-language media giant's CEO Vincent Sadusky told analysts he had no news to report after Univision put itself up for sale as part of a strategic review.

Spanish-language media giant Univision Communications, which earlier this year put itself up for sale, on Wednesday reported higher third-quarter earnings from continuing operations amid higher revenue, driven by a gain in subscriber-fee revenue, that was helped by higher pricing and special circumstances, and lower charges and impairment losses.

"This continues to be an Investment year for Univision," Univision CEO Vincent Sadusky told analysts during a morning call, as he mostly steered clear of the continuing sales process for the company. "It's still ongoing. Unfortunately, there's nothing I can say about it. ... We're in the process. Like most companies, we'll report out to you when we have something to report," Sadusky said when asked for an update on his company's current strategic review.

Sadusky added Univision would benefit in terms of scale and leverage from tying up with "a larger media player" but added, "We are full steam ahead as a standalone and are really confident with our business plan."

Univision has been privately owned for over a decade and investors — like Saban Capital Group, Madison Dearborn Partners and Providence Equity Partners — have sought at least a partial exit that might have come via an abandoned initial public offering. Univision was hoping the IPO might have valued the company at $20 billion, and in 2017 it turned down an offer of up to $15 billion from John Malone, who controls Lionsgate, Starz, Sirius XM Radio and other media assets.

Sadusky during the analyst call added Univision was bolstering its advertising division and investing in new originals to get closer to Latin-American viewers. "We are a great value relative to other TV and media outlets and believe we are well positioned to reach our fair share of revenue over time," he insisted.

During its latest financial quarter, Univision posted earnings of $77.4 million, compared with a year-ago loss of $83.7 million. Focusing on earnings from continuing operations the latest figure compared with a year-ago profit of $12.4 million. The latest figure included restructuring, severance and related charges of $11.0 million, compared with $54.9 million in the year-ago period, and a non-cash impairment loss of $2.3 million, compared with $19.7 million.

Quarterly adjusted operating income before depreciation and amortization (OIBDA), another profitability metric, jumped 11.3 percent to $257.0 million.

Third-quarter revenue rose 8.5 percent to $681.4 million, with core revenue up 2.6 percent to $675.1 million, including a 9.7 percent increase at the media networks unit. Networks unit advertising revenue climbed 2.1 percent to $322.4 million, "primarily due to higher digital advertising revenue."

Media networks unit non-advertising revenue, including carriage fees and content licensing, rose 19.4 percent to $293.8 million in the latest period, driven by a 24 percent gain in subscriber fee revenue. "In addition to higher rates partially offset by lower subscribers, the increase in subscriber fee revenue in 2019 benefited from an estimated revenue adjustment from a contractual obligation and the lapse of a distributor’s carriage agreement that resulted in lower revenue in 2018," the company said. "Content licensing and other revenue was $37.2 million in 2019 compared to $39.8 million in the same prior period, a decrease of $2.6 million."

Univision this year had a carriage dispute with Dish Network, which it settled late in the first quarter.

Quarterly direct operating expenses related to programming, excluding variable program license fees, decreased 1.3 percent to $140.4 million due to decreases in entertainment programming costs, driven by "content now produced under the Televisa program license agreement, which was previously produced by the company. That was partially offset by increases in sports programming costs primarily related to Gold Cup and news programming.

Nov. 6, 7:30 a.m. Updated with comments by CEO Vincent Sadusky made during an analyst call.