Conference Call Transcript Univision Communications Inc
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CONFERENCE CALL TRANSCRIPT UNIVISION COMMUNICATIONS INC. February 21, 2013 4:00 p.m. ET Operator: Please stand by. Welcome to Univision’s Fourth Quarter and Full-year 2012 Earning’s Call. Today’s call is being recorded. 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 involve risks and uncertainties including those related to Univision’s future success and growth. Actual results may differ materially due to risks and uncertainties, the material of such risks and uncertainties are highlighted in the Forward-Looking Statements portions of our earnings release. Univision assumes no obligation to update forward-looking information discussed on this call. On today’s call, are Randy Falco, President and Chief Executive Officer, Andy Hobson, Senior Executive Vice President and Chief Financial Officer, and Peter Lori, Executive Vice President of Finance. I will now turn the call over to Mr. Falco. Randy Falco: Thank you Operator. Good morning everybody and thanks for joining us. First off, I’m going to provide a brief review of our operations for the fourth quarter and full year, and then turn it over to Andy who will discuss our financials, after which we’ll be happy to take any questions that you have. Fourth quarter of 2012 was a very busy one for us as we launched several key initiatives to round out 2012 as a game-changing year for the Company. In the fourth quarter alone, we launched UVideos, the first bilingual digital network with the most comprehensive social experience available in any language. We underwent some significant brand enhancements, launching our new Univision logo and tag line, our new sonic brand, the rebranding of TeleFutura as UniMás and introducing a new logo for Galavisión. And we took several steps closer to the launch of our joint venture with ABC News for a new English language cable network just to name a few. Just last week, we announced that this joint venture will be called Fusion, which is set to launch in the second half of 2013. Already five major cable distributors have agreed to CONFERENCE CALL TRANSCRIPT UNIVISION COMMUNICATIONS INC. carry the network including Cablevision, Charter, Cox, AT&T, U-verse and Google Fiber. These things show, in keeping with our culture of innovation, that we acted with nimbleness and resolve to take advantage of every opportunity to build upon and enhance our position in the media landscape. In 2012, we were driven by our goal of being everywhere our audience is. And now with 12 cable networks, 69 radio stations, 62 television stations and a host of online and social media options including UVideos – we’re confident that we are. With that being said, this is not a static business and we are not standing still. Our audience’s preferences will continue to change and we will never stop evolving to stay ahead of the curve. Univision was named the 2012 Multiplatform Broadcaster of the Year by Broadcasting & Cable for a reason. We’re rapidly expanding more than ever before, providing U.S. Hispanics with the most popular and best available content across all platforms and devices. In addition to the fourth quarter initiatives that I already mentioned, in 2012 we launched three new cable networks – Univision Deportes, Univision tlnovelas and ForoTV – and Univision America, the Company’s AM radio network. We also significantly invested in and built upon our news division both nationally and locally. Importantly, it’s not only the quality and magnitude of our expansion efforts, but also the depth of our relationship with our audience and the trust that our community places in the Univision brand that sets us apart. Our viewers are a part of the youngest and fastest growing demographic in the U.S., an audience that appreciates our commitment to both innovation and authentic, quality programs and offerings. They trust us to have the “cultural fluency” that others in the U.S. media universe just don’t have. It is with this trust that Univision has built its sterling brand over the last 50+ years. So with our ever expanding portfolio of networks and platforms, it has become more important than ever for Univision’s brands to speak with one voice and one vision across all properties. This “One Company” approach is reflected by our new brand identity launched this past October, as well as the relaunch of TeleFutura as UniMás and the introduction of Galavisión’s new logo. In unifying all of the company’s offerings and media properties under a comprehensive Univision umbrella, advertisers and the overall marketplace are better able to recognize the value of our time-honored brand across multiple platforms. CONFERENCE CALL TRANSCRIPT UNIVISION COMMUNICATIONS INC. Building on that even further, just a few weeks ago we launched the Univision Agency to define the promotional priorities and drive the creative advertising strategy and execution for the entire Univision family of networks. The Univision Agency will oversee a media inventory of more than $500 million across all of Univision’s broadcast, cable and radio properties and be responsible for all cross- channel promotions, as well as research and creative services and internal divisions. This is something that no other media company has done and represents a strategic step towards developing a promotional and creative vision that will set the standard in our industry. I would like to turn now to our strong fourth quarter and full-year results, which are also setting the standard in our industry. The Univision Network increased its ranking among the major U.S. networks in 2012 by beating CBS to take the number four spot for the year in broadcast primetime among Adults 18-34. In the fourth quarter, we maintained our position as the fifth most watched network in primetime regardless of language among Total Viewers 2+, Adults 18-34 and Adults 18- 49. Plus UniMás, formerly known as TeleFutura, was the fastest growing broadcast network during the fourth quarter, outpacing all other broadcast networks in percentage growth among all key demographic groups during broadcast primetime. Our other television and radio properties achieved significant rating victories throughout the quarter and full-year over peers in key day parts, demographics and metrics, as well. Yet it is our digital and social media engagement throughout 2012 that deserves special note. Univision.com continues to be the number one most-visited Spanish-language website among U.S. online Hispanics with more than 255 million digital video streams and 542 million mobile site visits – signifying a 55% growth in 2012 over 2011. We continue to have a strong social media base as our Facebook and Twitter following grew by more than 25% in the fourth quarter alone, with the Univision account breaking one million followers in early January. Overall, the momentum we built in 2012 has set the tone for 2013. In fact, we are on pace to end the current February sweeps as the number four network ahead of NBC for the first time ever in a sweeps period. Univision has beaten NBC every night so far this sweep in the key Adult 18-49 demo. CONFERENCE CALL TRANSCRIPT UNIVISION COMMUNICATIONS INC. So you can see we are on track to deliver good things in the year ahead. I’m extremely confident of what we’ll accomplish in order to make 2013 an ever greater year than last. And with that I’ll turn the call over to Andy who will discuss our financials. Andy? Andy Hobson: Thank you Randy. In order to report our results on a comparable basis, EBITDA is presented consistent with adjusted operating income before depreciation amortization, in accordance with the definition in the Company’s senior secured credit facilities, except that for the three months and twelve months ended December 31, 2011, EBITDA does not include the benefit for certain income taxes or the provision of a fixed amount reflecting a tax benefit under GAAP that was included in calculating adjusted operating income before depreciation amortization under the Company’s senior secured credit facilities, as amended. The earnings release details the reconciliation to GAAP net income or loss. The company experienced an increase in net revenue of 8.9% for the fourth quarter of 2012. EBITDA for the fourth quarter 2012 increased 4.9%. EBITDA growth for the fourth quarter 2012 was negatively impacted by approximately $14 million of one-time, non-recurring and other timing items that were concentrated in the quarter. Political net revenue for the fourth quarter was $22.5 million, an increase of $21 million over the fourth quarter 2011. Political net revenue for the year 2012 was $37.2 million, an increase of $32.2 million over 2011. For the year ended December 31, 2012, net revenue and EBITDA both increased by 7.4%, respectively. Excluding political net revenue of $37.2 million in 2012, and $5 million in 2011, respectively, and major soccer tournament revenue of $56.5 million in 2011, net revenue for the year ended December 31, 2012 increased 8.7%. Direct operating expenses for the fourth quarter of 2012, excluding those items used to reconcile EBITDA to operating income as set forth on pages 12 and 14 of the press release, which totaled $10.4 million in 2012 and $500,000 in 2011, were approximately $1.2 million lower than last year primarily related to lower programming costs of $8.3 million, partially offset by higher program license fees of $5.9 million due to higher revenue and other cost increases of $1.2 million. SG&A expenses for the fourth quarter of 2012, excluding those items used to reconcile EBITDA to operating income as set forth on pages 12 and 14 of the press release, which totaled $31.4 million in 2012 and $24.7 million in 2011, were approximately $34.3 million higher than last year primarily due to the $14 million of one-time, non-recurring, and other items discussed above, $8.8 million of higher discretionary and variable CONFERENCE CALL TRANSCRIPT UNIVISION COMMUNICATIONS INC.