Univision Swings to Quarterly Loss Amid Dish Dispute, Higher Expenses

Univision Communications CEO Vincent Sadusky
Courtesy of Univision Communications

Univision Communications CEO Vincent Sadusky

The Spanish-language media giant reported lower revenue, but CEO Vince Sadusky on an analyst call lauded a recent "ratings resurgence" while also addressing his battle with Dish.

Spanish-language media giant Univision Communications on Thursday said it swung to a fourth-quarter loss amid lower revenue, including from a carriage dispute with Dish, and higher expenses, as well as higher impairment losses.

The company's financials continued to be affected by a carriage dispute with Dish Network and the resulting lower viewership despite recent ratings improvements. Univision also recently had a step-up in the rate it pays Mexican TV giant Televisa under a long-term content deal.

During a morning analyst call, Univision CEO Vince Sadusky addressed his company's battle with Dish, which has disrupted the distribution of Univision networks and stations. He echoed Dish president and CEO Erik Carlson's comments a day earlier that there had been little movement in talks to resolve and end their contract dispute.

"We continue to have discussions with Dish. It's clear that not doing a deal for both companies is harmful to both companies. It's just down to a matter of value," he said. Sadusky, citing Dish's last two earnings releases, added that the satellite TV provider continued to bleed subscribers after Univision TV channels and stations were taken down from Dish's satellite services and Sling TV.

"We believe it's sustainable," the exec said about the ongoing subscriber losses at Dish as he urged Univision TV viewers to jump to a rival TV provider that continued to carry Univision’s Spanish-language programming. "There's no reason for our viewers to continue to pay for a service that's inferior, and woefully inferior, when you consider that the concentration of viewership to our networks is between 50 to 60 percent of viewership to all Spanish-language television."

Univision also had an idea through ratings research where its viewers are going as they leave Dish behind. "We believe a large number of those viewers are migrating over to competing services, which makes sense. ... Our other partners that are paying us a fair amount, we have a good relationship with and believe continue to benefit from the migration of Dish viewers," said Sadusky, who last year took over from Randy Falco.

Also on the analyst call, Sadusky said Univision's ratings resurgence was driven by a more "diversified, modernized programming lineup," which included significant investment in new soccer rights and local news coverage. The CEO previously promised a "singular focus on our core business and mission." 

Univision on Thursday reported a fourth-quarter loss from continuing operations of $40.2 million, including a non-cash pretax impairment loss of $106.0 million due to the write-down of radio broadcast licenses and restructuring/severance charges worth $8.1 million. That compared with a year-ago profit of $390.0 million, which included more than $400 million in one-time gains, a non-cash pretax impairment loss of $85.6 million and $30.4 million in restructuring/severance charges. 

Quarterly adjusted operating income before depreciation and amortization, another profitability metric, dropped 34 percent to $229.0 million.

Fourth-quarter revenue dropped 8.9 percent to $688.5 million, with core advertising revenue down 9.4 percent to $372.3 million. A portion of Univision's decline in TV networks advertising revenue "was attributable to the non-cash impact of audience guarantees from viewership declines," the company said. "These audience guarantees are expected to be fulfilled in subsequent periods and, excluding the effect of these audience guarantees, media networks' advertising revenue for the fourth quarter 2018 would have been comparable with the same prior period."

Non-advertising revenue, including carriage fees and content licensing, fell 7.6 percent to $286.7 million in the fourth quarter. 

Meanwhile, operating expenses rose, driven by newly acquired UEFA soccer rights, an increased number of Mexican soccer league matches and the higher Televisa licensing fee. Direct operating expenses jumped 11 percent to $287.6 million, with selling, general and administrative expenses up another 11 percent to $176.5 million.

Univision last year cut jobs, scrapped plans for an initial public offering and replaced its CFO. Over the summer, it also tapped Morgan Stanley to explore the sale of its former Gawker assets, which include the Gizmodo Media Group and The Onion. Univision said Thursday that the results of the English-language digital businesses have been excluded from its continuing operations.

The firm said its loss from discontinued operations, net of income taxes, for the fourth quarter amounted to $32.5 million, compared to $3.0 million for the same period in the year-ago period.

Feb. 14, 12:30 p.m. Updated with comments by Univision Communications CEO Vince Sadusky made during an analyst call.