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.
incentive compensation, $5 million of higher contractual costs primarily related to our new agreement with Nielsen, and $6.5 million of other increases.
For the fourth quarter of 2012, our television segment experienced a net revenue increase of 5.1% and EBITDA decreased by 3.4%. The revenue increase was driven by the continued strong revenue performance of our television networks and stations, while the EBITDA decrease reflects the aforementioned one-time, non-recurring and other timing items discussed above which were primarily concentrated in our television segment.
For the fourth quarter, excluding political net revenue of $15.7 million in 2012 and $1.1 million in 2011, our television segment experienced a net revenue increase of 2.2%.
In the fourth quarter, excluding political net revenue, our local television stations outperformed the market according to Television Bureau of Advertising by approximately 540 basis points.
For the year ended December 31, 2012, our television segment experienced a net revenue increase of 6.3% and an EBITDA increase of 4.2%.
For the year ended December 31, 2012, excluding major soccer tournament revenue of $56.5 million in 2011 and political net revenue of $25.4 million in 2012 and $3.8 million in 2011, respectively, our television segment experienced a net revenue increase of 8.4%.
For the fourth quarter of 2012, Univision Radio experienced a net revenue and EBITDA increase of 7.3% and 18.1%, respectively.
For the fourth quarter, excluding political net revenue of $5.6 million in 2012 and $400,000 in 2011, Univision Radio experienced a net revenue increase of 1%.
In the fourth quarter, our radio stations outperformed the market according to Miller Kaplan by approximately 650 basis points.
For the year ended December 31, 2012, Univision Radio experienced a net revenue increase of 4.1% and EBITDA increased 6.9%.
For the year ended December 31, 2012, excluding political net revenue of $10.2 million in 2012 and $1.2 million in 2011, Univision Radio experienced a net revenue increase of 1.4%.
For the fourth quarter of 2012, our Digital business benefited from our video content monetization initiatives and experienced a net revenue increase of 134% or $22.6 million and EBITDA increased by $16.9 million.
For the fourth quarter, excluding political net revenue of $1.1 million, our Digital business experienced a net revenue increase of 127%. CONFERENCE CALL TRANSCRIPT UNIVISION COMMUNICATIONS INC.
For the year ended December 31, 2012, our Digital business experienced a net revenue increase of 59% and EBITDA increased by $27.3 million.
For the year ended December 31, 2012, excluding political net revenue of $1.5 million, our Digital business experienced a net revenue increase of 56.2%.
The tax provision for the quarter and year ended December 31, 2012, was approximately $52.3 million and $58.9 million, respectively. At December 31, 2012 the Company had approximately $1.5 billion of NOL carry forwards to offset future taxable income.
Capital expenditures for the quarter and year ended December 31, 2012, totaled $52.1 million and $99.5 million, respectively.
At December 31, 2012, outstanding indebtedness as defined by the bank credit agreement, net of cash and cash equivalents of $35.1 million, totaled approximately $9.2 billion.
For the first quarter 2013, we currently forecast net revenue growth to be in the mid to high single digits range and EBITDA growth to be in the high teens range.
In 2013, we expect operating expenses to increase $35 to $40 million primarily due to increased costs of sports rights, particularly the costs associated with the Copa Oro and Confederations Cup soccer tournaments. These projected cost increases exclude (1) the variable program license fee and other variable sales costs and (2) the expenses of the Company’s unrestricted subsidiaries, which are estimated to be between $30 million and $35 million and are included in the Company’s GAAP financial statements.
However, the EBITDA loss of the unrestricted subsidiaries is excluded from EBITDA under the Company’s senior secured credit facilities.
For the fourth quarter, the unrestricted subsidiaries had net revenue of $7.9 million, operating expenses of $13.5 million and an EBITDA loss of $6.7 million.
For the year ended December 31, 2012, the unrestricted subsidiaries had net revenue of $20.3 million, operating expenses of $40.8 million and an EBITDA loss of $23.4 million.
Before I turn the call over to the Q&A, I suppose I should provide an update to our term loan financing that we’re currently undertaking. The bankers and lawyers are collecting the signature pages for the 1,200+ individual accounts that own our term loan, which is somewhat time consuming to collect them all and reconcile them.
So we expect to close the term loan extension sometime near the end of next week, and we expect the final quantum to be around $3.25 billion plus or minus. It’s a little hard to be precise, depending if all the signature pages come in or not. And that would represent an extension to March of 2020, approximately two-thirds of the overall term loan outstanding. CONFERENCE CALL TRANSCRIPT UNIVISION COMMUNICATIONS INC.
So that concludes our prepared remarks for this afternoon. Operator, would you please instruct our guests on how to ask questions?
Operator: Thank you. For the members of our telephone audience, if you would like to ask a question today, you can do so by pressing star 1 on your telephone keypad. If you are using a speakerphone, please ensure that your mute function is off so we can receive your signal.
Once again that is star 1 for a question today. We’ll pause one moment while we assemble our roster.
Our first question today will come from Aaron Watts, Deutsche Bank.
Aaron Watts: Good afternoon guys.
Andy Hobson: Good afternoon Aaron.
Randy Falco: Hi.
Aaron Watts: Andy, you wanted to focus kind of looking forward, correct me if I’m wrong, but I thought maybe just a week or two ago when you launched the loan extension process that you had provided some first quarter guidance. It sounds like to me now that your guidance has improved a little bit. Can you talk about what’s changed since then?
Andy Hobson: Guidance is raised mostly because of revenue improvements. We just pulled a formal re-estimate which we do every month here, and that came in with higher revenues than we had expected a couple of weeks ago when we informally gave guidance for the term loan process.
Aaron Watts: Okay, and as we think about that today, can you help us kind of break it down a little bit between the TV stations and the network and maybe also radio?
Andy Hobson: So I’ll do revenue pacing as opposed to guidance. But on a pacing basis, the TV business is pacing kind of mid-single digits; radio, low-single digits; digital, mid-teens; the subscriber fee business, mid-teens. And if you blend all that together, you get somewhere between mid-single and high-single digits depending on how that shakes out.
Aaron Watts: Okay, got it. And thinking about sort of the cash movements throughout 2013, can any of you maybe talk about how much cash outlay there’s going to be and the timing of that for the World Cup in 2014, and then also maybe how you’re thinking about capital expenditures?
Andy Hobson: Okay, so substantially all the costs of the 2014 World Cup will be paid on a cash basis during 2013 – and that’s roughly $160 million.
CONFERENCE CALL TRANSCRIPT UNIVISION COMMUNICATIONS INC.
Aaron Watts: Okay.
Andy Hobson: Capital expenditures for 2013 are estimated to be at approximately $200 million which I understand is an outrageous number, but it does reflect the building of our facility for our news network which will house both our news and sports operations.
That facility is effectively – I think it was a loan to the state of Florida, because the state of Florida has given us tax incentives, which will substantially pay for that entire facility over time, but we have to put the money upfront and then we get paid back over time.
Our net present value basis, it ends up being zero or even slightly positive to us, but there is a timing associated, which is not good for this one year.
Aaron Watts: Okay, understood. And last one for me - I appreciate you taking these.
Maybe this is directed more at Randy, but how do you feel going into the Upfront process this year? It sounds like you’re expecting a very good first quarter on the TV side, maybe you can kind of compare it to how you felt entering the process last year and what that could mean for kind of price and volume? Thank you.
Randy Falco: Very difficult to say, it’s very early in the process. You really have to see second quarter pricing – it’s much more of a lead indicator on the Upfront than anything that happens in the first quarter.
I feel very good about where we are. As I mentioned, actually in the February sweeps, which is the most important sweeps of the year for our local television stations – but also going into an Upfront – being able to say that you beat one of the major English-language networks for the very first time is a good indicator for us.
Aaron Watts: Okay, thanks guys.
Operator: Next we will take a question from Avi Steiner with JP Morgan.
Avi Steiner: Thanks - a couple here. One, if you touched on this all ready I apologize. Can you remind us how much money is left to contribute to the ABC JV, timing around the launch of Fusion and remind us how that’s going to be accounted for?
Andy Hobson: Okay, so we contributed – we have an obligation to contribute $25 million to the ABC joint venture. We funded $11 million, I believe this quarter, our fourth quarter 2012, and the other $14 million I believe comes in sometime this fiscal year.
Fusion is expected to launch the linear service in the third quarter of 2013. And it will be accounted for on the equity method.
Avi Steiner: I’m sorry?
CONFERENCE CALL TRANSCRIPT UNIVISION COMMUNICATIONS INC.
Randy Falco: The JV will be accounted for on the equity method.
Avi Steiner: Thank you. And then Andy, if I heard you correctly, the other channels unrestricted subs, $30-35 million – did I hear that correctly? And just maybe how we think of that progressing for the year – thoughts on that turning break even, if I heard those numbers right, and when it flips back or may flip back into the restricted group.
Andy Hobson: So the unrestricted subs are supposed to have expenses of $30-35 million.
Avi Steiner: Thank you for correcting me.
Andy Hobson: And really the whole unrestricted subs, really is basically Deportes network. And the Deportes network is expected to become profitable with the next major distribution agreement that it signs. So, if that signs and launches by the middle of the year, it should be profitable in the quarter that it launches. So then it kind of moves out of the unrestricted to the restricted around that time frame.
So it’s a little bit variable based on when the next big distribution deal gets launched. But you know, in the quarter that it’s launched or for the three months – the first full quarter after it’s launched – depending on when – after that it will move back into the restricted group.
Avi Steiner: Okay, and on that point could you just remind us – obviously, not specifically you won’t give us – but how many contracts or distribution deals are potentially up for review this year?
Andy Hobson: So we have two of the major nine distribution deals which are expiring this calendar year.
Avi Steiner: Okay, and then just the last one. Obviously Digital benefited from a deal I think you talked about two quarters ago, do you think it might be right that it’s going to be bumpy or lumpy rather, depending on what type of deals you sign or is it more linear based on what you’ve done the last half of the year?
Andy Hobson: So the content monetization business in general – on a quarterly basis will be extremely lumpy. On an annual basis it should, you know, if you build the right book of business with the right terms, we should have a nice progression of steady earnings out of that business.
Once we get distributed with, you know, all the over-the-top distributors and then get into a renewal cycle thereafter. But on a quarterly basis, because you recognize the income when you deliver the product, you can get these big quarterly fluctuations, but over years, it should look pretty nice.
Avi Steiner: Okay, and then I promise I’m done. Just the $14 million of one-time items you called out as it related to EBITDA, can you give us a little more color around that? CONFERENCE CALL TRANSCRIPT UNIVISION COMMUNICATIONS INC.
Andy Hobson: So you know, they kind of fall in a few buckets. Last year we had a bunch of items which benefited 2011. Now that we have the pain of not having those benefits this year, that’s a big chunk of the 14.
And the other chunk is mostly kind of one-time accrual true-ups, the marketing campaign around the rebranding of UniMás, stuff like that. It’s just things that we accelerated in our discretion, because we thought it made the right business sense, but this just kind of affects the fourth quarter.
There’s probably two other items that affect the fourth quarter television business. As you may recall on the third quarter conference call, we talked about how $10 million of network money shifted from fourth quarter to third quarter, so we have that effect.
And then in the fourth quarter we managed our under-delivery liability a little bit differently than we have in the past. As we re-projected our expected audience deliveries in 2013 – because we sell network guaranteed audience so you recognize revenue based on the audience, so it’s not about the cash cost of the spots that air.
We had an under-delivery liability of about $10 million in the fourth quarter, but based on our audience projections, and you can tell by what Randy talked about in the February sweeps – we’re beating NBC – we’re beating our audience expectations in 2013. So rather than give advertisers free weight, we’re just going to make our over-delivery in 2013 make-up for our under-delivery in the fourth quarter of 2012. So say about $10 million of revenue that moved between fourth quarter 2012 and the first three quarters of 2013.
Avi Steiner: Thanks for the color guys.
Operator: As a reminder to our telephone audience, star 1 for a question today.
Next we’ll hear from Davis Hebert, Wells Fargo Securities.
Mr. Davis Hebert, your line is open, please go ahead. And if you are on a speakerphone, please pick up your handset or press your mute function.
Davis Hebert: Can you hear me?
Operator: Go ahead, your line is open.
Davis Hebert: I apologize for that. I just wanted to touch back on the capex number, the $200 million. Do we know, you know, the timing of that spend throughout this year?
Andy Hobson: On a quarterly basis, I don’t have it.
Peter Lori: But it will be more heavily weighted in the second and third quarter. CONFERENCE CALL TRANSCRIPT UNIVISION COMMUNICATIONS INC.
Davis Hebert: Okay, I guess I was just trying to get a sense of what maintenance capex was versus the building?
Andy Hobson: The maintenance is around $100 and the building and other projects – there’s a few other projects besides the building as we move from distributed to shared services for editing, master control, arts, graphics, etcetera, which has some accelerated capex associated with it. That’s about $100 combined with the building.
Davis Hebert: Okay, got it. And then on the change of control language, just wondered if you could touch on the thought process there and how it works with Televisa – maybe just detail that a little bit.
Andy Hobson: So Televisa invested $1.25 billion in this company, which that money all went out to pay back the lenders in one tranche of securities. They are a strategic investor and are a great partner to this business. And their feeling is that they are going to be a custodian of this business in perpetuity, and the sponsors run businesses where it is as certain as death that they will one day sell.
And Televisa feels that if they continue to be the custodian and they bring a replacement in for the sponsors and that transaction doesn’t lever the company, so the lenders are in the exact same or probably a better place, because that will probably be a strategic investor since there is no private equity firm that could put up the money, not being able to leverage it to take out the sponsors, that the debt should be able to be outstanding.
So they asked for the extension and it’s been granted. They asked for the amendment to clarify that and it’s been granted.
Davis Hebert: Okay, makes sense. And then, you know, as far as any, you know, what your outlook is on foreign ownership rules of media. I mean do you sense that can change at any point?
Andy Hobson: Randy, do you want to take that or do you want me to take it?
Randy Falco: You can take it, I mean I think it’s something that’s, you know, is under discussion right now and it’s a long, long process as you know dealing with the regulators in Washington. So it’s a little unclear of how that will ultimately end up.
Andy Hobson: It’s kind of an arcane rule in our point of view that Al Qaeda could own CNN legally but, you know...
Randy Falco: You mean Al Jazeera.
Andy Hobson: No, I mean Al Qaeda. Al Jazeera is a nice company compared to Al Qaeda if they had money. But they could own a network and propagandize to the entire country, CONFERENCE CALL TRANSCRIPT UNIVISION COMMUNICATIONS INC.
but a Mexican or any other foreign national couldn’t own a TV station in Laredo, Texas. It’s just an arcane rule that goes back to the Cold War or before.
So I think that the FCC in order to get to capital into the broadcasting business may reconsider before an ownership rule, to say if they think it’s wise. And we encourage them to do so.
Davis Hebert: Well Andy, I think you should make a visit to Capitol Hill soon and make that same argument.
And just finally on the soccer tournaments, I believe you have a couple this year. Could you remind us what the Copa Oro did in 2011 and, you know, what your outlook might be for 2013?
Andy Hobson: So Copa Oro in 2011 did $56.5 million of revenue.
Peter Lori: That’s a combined Copa Oro and Copa America.
Andy Hobson: That’s the two – Copa Oro and Copa America – to $56.5 million and contributed about $15 million in EBITDA.
Davis Hebert: Okay.
Andy Hobson: So I guess the Copa Oro – it’s probably half and half roughly.
Davis Hebert: And then you have the road to the World Cup, is that the second tournament?
Andy Hobson: Yes, the Confederation Cup, which is the second tournament.
Davis Hebert: And is there a timing difference between ‘11 and ‘13 for the Copa Oro or is it in the same quarter?
Andy Hobson: So one of the tournaments is in the second quarter and the other one is in the third quarter this year, and I forget which one is which.
Davis Hebert: Okay, I can get that.
Andy Hobson: I can call you on that later today.
Davis Hebert: Yes, no worries – that’s fine. Thank you.
Operator: And next is Andrew Finkelstein, Barclays.
Andrew Finkelstein: Hey guys, thanks. I jumped on a little bit late. Did you say the financing for the term loan was $3.25 billion? That’s up from the original I think.
CONFERENCE CALL TRANSCRIPT UNIVISION COMMUNICATIONS INC.
Andy Hobson: That’s up from the original $1.5 billion. The $3.25 is not finalized because they’re still collecting, you know, 1,200-odd signature pages, so it may flux, you know, $50 million up or down from there. But it’s roughly $3.25 billion.
Andrew Finkelstein: So the decision to push more of the debt out now – can you talk more about that and what you have left, I guess?
Andy Hobson: So that leaves about $1 billion – between about $1 billion to $1.6 billion behind. I don’t know how much is in the ‘14 and the ‘17 maturity of that. I just haven’t seen that level of detail from the bankers or the lawyers.
And in the ordinary course we should be able to pay for that with free cash flow, although you know, that’s assuming we could run right up to maturity which we never can, so we probably will do some other transaction down the road.
Andrew Finkelstein: Okay. And then the $30-35 million, was that the negative EBITDA off of the restricted sub or was that just the expenses?
Andy Hobson: That’s the expenses in the restricted subs for the calendar year 2013.
Andrew Finkelstein: And so do you have an estimate for what revenues might be or that depends on…
Andy Hobson: It depends on the timing of the distribution deal, so I’m not going to project that.
Andrew Finkelstein: Okay, so just the expenses, okay. Okay, got it.
And then just the rest of the expense base, you know, from the guidance in the first quarter, and I think you mentioned this before, expenses are basically going to be flat I think to hit those numbers.
Andy Hobson: So other than the $35-40 million of cost increases related to the two soccer tournaments and little other sports rights – what we spend on the unrestricted subs, expense base will be flat with exceptions of maybe some variable expenses for the program license fees for higher revenues.
Andrew Finkelstein: Right. And you think for the rest of ‘13 you can keep expenses maybe not flat but keep expense growth to a minimum?
Andy Hobson: For 2013, other than those...
Andrew Finkelstein: Okay, sorry.
Andy Hobson: ...the variable program license fees put the unrestricted subs over on the side, expenses will be flat other than that.
CONFERENCE CALL TRANSCRIPT UNIVISION COMMUNICATIONS INC.
Andrew Finkelstein: Right. Okay, that’s it. Thanks Andy.
Operator: Currently we have no questions in the queue. I will now turn the conference over to our host for any closing or additional remarks.
Andy Hobson: Okay, thank you all for participating in today’s call. If you have any questions you can call me in my office. Have a good evening.
Operator: And that does conclude today’s conference call. Thank you for your participation.
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