CONFERENCE CALL SCRIPT UNIVISION COMMUNICATIONS INC. Good Morning and Welcome to Univision's Fourth Quarter 2016 Earnings Call
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CONFERENCE CALL SCRIPT UNIVISION COMMUNICATIONS INC. 4Q16 Script February 16, 2017 11:00 a.m. ET PRE-RECORD OPENING SCRIPT Operator: Good morning and welcome to Univision’s fourth quarter 2016 earnings call. I would now like to turn the call over to Rainey Mancini, Senior Vice President of Finance and Head of Investor Relations. Go ahead, Ms. Mancini. Rainey Mancini: Thanks and good morning, everyone. This morning we issued a press release detailing our fourth quarter and full year 2016 results. Before we begin, there are several items I need to cover. First, some of the information discussed today will contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements, including those relating to Univision’s potential future performance, success, and growth involve risks and uncertainties. Actual results may differ materially from these statements due to these risks and uncertainties. We have highlighted the material risks and uncertainties that could impact Univision’s future success and growth in the forward-looking statements portion of our Earnings Release. Univision is under no obligation to update forward-looking information discussed on this call. Second, we will refer to adjusted OIBDA in our prepared remarks as EBITDA. Adjusted OIBDA includes several expense items that are eliminated from the bank credit adjusted OIBDA calculation. Bank Credit Adjusted OIBDA is determined in accordance with the definition of EBITDA in the Company’s senior secured credit facilities and the indentures governing the Company’s senior notes except as further detailed in the Earnings Release. CONFERENCE CALL SCRIPT UNIVISION COMMUNICATIONS INC. The Earnings Release also details the reconciliation of adjusted OIBDA and bank credit adjusted OIBDA to GAAP net income or loss attributable to Univision Communications Inc. which we refer to as net income or loss. Third, for the fourth quarter results we will refer to revenue excluding political/advocacy and content licensing revenue as core revenue and advertising revenue excluding political/advocacy as core advertising revenue. For the full year results, we will refer to revenue excluding political/advocacy, content licensing, estimated incremental Major Soccer advertising revenue which includes the June Copa America Centenario Tournament and the Gold Cup in 2015, non-recurring revenue related to support services provided to Fusion prior to the acquisition in 2016 and non-recurring revenue associated with the concurrent use of adjacent spectrum in one of our markets in 2015, as core revenue, and advertising revenue excluding estimated incremental Major Soccer advertising revenue and political/advocacy as core advertising revenue. Fourth, when we address revenue or EBITDA as adjusted for comparability for the fourth quarter and full year results, we will refer to revenue or EBITDA as adjusted to exclude the impacts of the items excluded from revenue for such periods set forth. Fifth, we will refer to all variable program licensing fees as PLA. Sixth, unless we say otherwise, we are providing year over year comparisons and for T.V. ratings, it is among adults 18 to 49 in primetime. Finally, with me on today’s call are Randy Falco, President and Chief Executive Officer; Frank Lopez-Balboa, Chief Financial Officer; and Peter Lori, Deputy Chief Financial Officer and Chief Accounting Officer. I will now turn the call over to Randy. Randy Falco: Thank you, Rainey and welcome, everyone, to our fourth quarter 2016 earnings call. I am pleased to announce that we had strong financial results CONFERENCE CALL SCRIPT UNIVISION COMMUNICATIONS INC. for the fourth quarter and full year 2016. In the fourth quarter, total revenue grew by 15 percent. Advertising revenue including political/advocacy grew by 8 percent and EBITDA grew by over 16 percent. For the full year, we achieved the highest revenue and EBITDA in the history of our company with revenue crossing the $3 billion threshold for the first time ever. And we generated EBITDA of over $1.3 billion, our fifth consecutive year of EBITDA growth. We accomplished that while continuing a focus on our multiyear transformation of diversifying and strengthening our portfolio and strengthening our balance sheet through several efforts. First, we continued to diversify our revenue streams. In 2016, non- advertising revenue represented approximately 34 percent of our total revenue, up from 24 percent in 2012. We expect this trend to continue as we work towards maximizing the license fee for the distribution of our content, stations, and networks. Recent notable wins included the distribution renewals of AT&T and Comcast in the fourth quarter. And our must-see content has been included on new virtual MVPDs and over the top offerings including DirecTV Now. We have also established our own over the top offering with Univision Now, where we launched exclusive VOD content for the first time in the fourth quarter. Second, we have continued to acquire and develop relevant content so that we can continue to position our networks as the Spanish language ratings leader. The Univision Network finished the 2015/16 broadcast season as the number one network for U.S. Hispanics for the 24th consecutive year, outperforming our nearest Spanish language competitor by over 33 percent. We also had strong performance at UniMas, Galavision, and Univision Deportes. All three networks experienced season over season growth. We are the number one Spanish language network in primetime, number one in early morning, and number one in total day. We have the number one nightly newscast, the number one cable entertainment network, and the CONFERENCE CALL SCRIPT UNIVISION COMMUNICATIONS INC. number one cable sports network in Spanish language. At the end of 2016, Univision Deportes was the only cable sports network to achieve ratings growth in each of the last four years and was the fastest growing sports network regardless of language –up 33 percent. Across our linear assets – combined -- we achieved nearly 60 percent of all Spanish language television viewing in the ’15/’16 broadcast season. Our strategic investments in popular sports rights and related content has not only driven ratings on the Univision Deportes Network, but has also had a positive impact on the ratings for our other networks. In 2016, ratings for our Copa Centenario broadcast exceeded our World Cup 2014 ratings and outperformed the equivalent English language broadcast across all 33 tournament matches. In addition, we continued to acquire more rights for Liga MX, the most watched soccer league in the United States regardless of language, and Univision now has a majority of these rights in the U.S. With these expanded rights, in 2016 we launched Sabado Futbolero, our Saturday nights soccer franchise which features the best Liga MX matches across approximately 40 Saturday nights per calendar year. And just this week we announced a deal that will bring the live stream of select Liga MX matches directly to fans in English via Facebook Live. Kicking off this Saturday and continuing throughout 2017, fans can stream Liga MX matches in the United States in real time on the Univision Deportes Facebook page and via Facebook’s video tab. Facebook represents the next wave of T.V. distribution and given its scale, Facebook is an ideal partner to distribute our Liga MX matches. Third, in 2016, we significantly expanded our digital footprint. We have grown our digital portfolio through a strategic investment in the Onion, the acquisition of the former Gawker Media digital assets which are now part of our Gizmodo Media Group and the acquisition of Disney’s interest in Fusion, including Fusion digital. CONFERENCE CALL SCRIPT UNIVISION COMMUNICATIONS INC. These investments have expanded our reach across new, young and diverse audiences, regardless of their ethnicity and language as well as with U.S. Hispanics who we weren’t previously reaching. As a result, we estimate our average monthly unduplicated media reach, grew approximately 33 percent to over 93 million across the full year and grew nearly 40 percent to over 106 million in the fourth quarter across our portfolio including T.V., Digital, and Radio assets. As a result of our acquisitions and growth in our legacy digital business, Media Networks core digital advertising grew 66 percent in 2016. With all these digital assets now operating under the Fusion Media Group, our company has access to popular content verticals including satire, tech, food and female to name a few, which we can leverage across our entire portfolio. Since we have acquired these assets, the company has been busy integrating, identifying synergies and developing a cross platform content strategy for 2017 and beyond. Fourth, we continue to build on the strength of our powerful brand within the U.S. Hispanic community. In 2016, we remained the number one news destination for U.S. Hispanics and were a frequent resource for U.S. Hispanics during the 2016 election cycle. We believe that when important events happen in our communities, such as election cycles, a Pope visit, Fidel Castro’s death or updates on immigration reform, U.S. Hispanics come to Univision more than any other media platform. This is why it’s no surprise that once again in 2016 we were recognized for our efforts. In 2016 we won 115 Emmys across our local and national assets, a 16 percent increase from 2015. As a mission driven company, we continued to deliver on our promise to our viewers, to not only entertain and inform them but also to empower the community. During 2016, we organized hundreds of events in our local T.V. and radio markets, focused CONFERENCE CALL SCRIPT UNIVISION COMMUNICATIONS INC. around health, education, civic participation, and upward mobility. And over 4 million people attended these events. We also raised nearly $16 million for children in need, with the broadcast of Teleton USA fundraiser in December, as well as over $4 million for St Jude’s.