Annual Report2020
Total Page:16
File Type:pdf, Size:1020Kb
ANNUAL REPORT 2020 Dear ENTRAVISION SHAREHOLDERS, $OWKRXJK ZDV DQ XQSUHFHGHQWHG DQG FKDOOHQJLQJ \HDU WKDQNV WR WKH LQFUHGLEOH HRUWV RI WKH HQWLUH Entravision team, we enter 2021 primed for growth. With each quarter that transpired, we saw sequential revenue improvements driven by a combination of our television, audio and digital segments. For the year, Entravision achieved record revenues of $344 million and Adjusted EBITDA of $60 million, up 26% and 47% \HDURYHU\HDUUHVSHFWLYHO\2ISDUWLFXODUQRWHZHFRQWLQXHGWRH[SDQGRXUGLJLWDORHULQJVZLWKDPDMRULW\ investment in Cisneros Interactive, positioning our combined platforms to be one of the largest, premier digital advertising companies serving the U.S. Hispanic and Latin American markets. Cisneros Interactive was LPPHGLDWHO\DGGLWLYHWRRXU(%Ζ7'$DQGFDVKȵRZDQGZHKDYHWKHXWPRVWFRQȴGHQFHWKDWWKH\ZLOOFRQWLQXH to successfully execute against their business plan in 2021. 6SHDNLQJRIFDVKȵRZVWURQJIUHHFDVKȵRZJHQHUDWLRQKDVKLVWRULFDOO\EHHQDFRUQHUVWRQHRI(QWUDYLVLRQȇV EXVLQHVVPRGHO'XHWRGLɝFXOWPDUNHWFRQGLWLRQVWKURXJKRXWWKH\HDUZHGHSOR\HGDQXPEHURIVWUDWHJLF steps to limit our expenses while at the same time maintain the strength of our balance sheet and encourage IUHHFDVKȵRZJHQHUDWLRQ:HHQGHGWKHIRXUWKTXDUWHUZLWKIUHHFDVKȵRZWRWDOVMXVWVK\RIGRXEOLQJRXUSULRU UHFRUGVHWLQWKHVHFRQGTXDUWHURIDQGZHH[SHFWWKLVKLJKFRQYHUVLRQRI(%Ζ7'$WRFDVKȵRZIRUWKH IRUHVHHDEOHIXWXUHDVZHRSHUDWHDVDOHDQHUPRUHHɝFLHQWEXVLQHVV ΖQDGGLWLRQWRRXUVWURQJIUHHFDVKȵRZJHQHUDWLRQSROLWLFDOUHYHQXHZDVDKLJKOLJKWRIRXUSHUIRUPDQFH For the year, we generated record political ad sales of $28 million, an increase of 65% from our prior record set in 2012. These compelling political revenues demonstrate the growing importance of the Latino voter, who exhibited strength even beyond our initial expectations in the 2020 Presidential Election. In support of the /DWLQRYRWHUEDVH(QWUDYLVLRQFROODERUDWHGZLWKWKH1DWLRQDO3DUWQHUVKLSIRU1HZ$PHULFDQȇVȊ9RWD&RQPLJR 2020” public service campaign, providing education and resources through broadcast and digital service announcements to hundreds of thousands of newly naturalized Americans of Hispanic heritage. While FHUWDLQO\QRWWKHRQO\UHDVRQIRUWKHVWURQJ+LVSDQLFYRWHUWXUQRXWWKLVSDVW\HDUHRUWVOLNH9RWD&RQPLJR demonstrate the importance of working together for a common cause. In my opinion, the Latino voter is only going to become more prominent. 7HOHYLVLRQDQGDXGLRKDYHWUDGLWLRQDOO\EHHQWKHIRXQGDWLRQRI(QWUDYLVLRQȇVEXVLQHVV:HFRQWLQXHWRDGYDQFH RXURHULQJVLQWKHVHSULQFLSDOEXVLQHVVVHJPHQWVWRUHȵHFWRXUFXVWRPHUVȇHYROYLQJGHPDQGVΖQWKHȴQDO quarter of the year, for example, we launched our new audio streaming destination, El Botón. Listeners can now stream their favorite Entravision radio shows and stations directly on their mobile phones or desktops. (O%RWµQȴWVSHUIHFWO\ZLWKRXUJURZLQJGLJLWDOSRUWIROLR 7KURXJKRXWWKHSDVW\HDUZHPDGHDQXPEHURIVWUDWHJLFPRYHVDLPHGDWIXUWKHULQJ(QWUDYLVLRQȇVGLJLWDO capabilities and portfolio of leading digital assets. Beginning in May, we brought all of our digital assets under one awning – Entravision Interactive – to provide advertisers and agencies a single source to engage consumers globally. Then in October, we made a majority investment in Cisneros Interactive, a leading digital advertising company serving over 2,000 brands and agencies across the U.S. and Latin America. Through this majority LQYHVWPHQWZHQRZUHSUHVHQWVRPHRIWKHZRUOGȇVOHDGLQJGLJLWDOWHFKQRORJ\DQGVRFLDOPHGLDFRPSDQLHV 8QGHU &LVQHURV ΖQWHUDFWLYH &(2 9LFWRU .RQJȇV OHDGHUVKLS DQG WKH GLUHFWLRQ RI RXU YHU\ RZQ &KLHI 'LJLWDO 6WUDWHJ\DQG$FFRXQWDELOLW\2ɝFHU-XDQ6DOG¯YDURXUGLJLWDOUHYHQXHVLPSURYHG\HDURYHU\HDULQWKH fourth quarter. Our digital segment is now our largest segment by revenue, and going forward, we will look to JURZRXUGLJLWDORHULQJERWKRUJDQLFDOO\DQGWKURXJKDFTXLVLWLRQV When I wrote to shareholders last year, I mentioned that Entravision was taking the steps necessary to weather WKH&29Ζ'VWRUP:HGLGQRWNQRZDWWKDWWLPHKRZORQJWKHJOREDOSDQGHPLFZRXOGODVWRUZKDWWKH impact would be on the overall economy or our business. Nevertheless, we did know that when we emerged on the other side of the pandemic, we would be well positioned with unique content and creative programmatic VROXWLRQVWRVXSSRUWRXUJOREDOFOLHQWEDVH:LWKUHFRUGUHYHQXHVLQΖDPFRQȴGHQWLQVD\LQJWKDWZHGLG just that, and then some. On behalf of all of our employees, our incredible on-air talent, and our Board of Directors, we thank you for your continued support of Entravision. While the challenges facing the world are not yet behind us, progress is being made, and we have positioned Entravision very strongly for continued growth and success. Walter Ulloa &KDLUPDQDQG&KLHI([HFXWLYH2ɝFHU UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended December 31, 2020 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period from to Commission File Number 1-15997 ENTRAVISION COMMUNICATIONS CORPORATION (Exact name of registrant as specified in its charter) Delaware 95-4783236 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 2425 Olympic Boulevard, Suite 6000 West Santa Monica, California 90404 (Address of principal executive offices, including zip code) Registrant’s telephone number, including area code: (310) 447-3870 Securities registered pursuant to Section 12(b) of the Act: Trading Title of each class Symbol(s) Name of each exchange on which registered Class A Common Stock EVC The New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer Emerging growth company Smaller reporting company If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No The aggregate market value of the voting and non-voting common equity held by non-affiliates as of June 30, 2020 was approximately $96,767,128 (based upon the closing price for shares of the registrant’s Class A common stock as reported by The New York Stock Exchange for the last trading date prior to that date). As of April 5, 2021, there were 60,765,450 shares, $0.0001 par value per share, of the registrant’s Class A common stock outstanding, 14,927,613 shares, $0.0001 par value per share, of the registrant’s Class B common stock outstanding and 9,352,729 shares, $0.0001 par value per share, of the registrant’s Class U common stock outstanding. Portions of the registrant’s Proxy Statement for the 2020 Annual Meeting of Stockholders scheduled to be held on May 27, 2021 are incorporated by a reference in Part III hereof. ENTRAVISION COMMUNICATIONS CORPORATION FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 2020 TABLE OF CONTENTS Page PART I ITEM 1. BUSINESS....................................................................................................................................................................... 4 ITEM 1A. RISK FACTORS ............................................................................................................................................................. 33 ITEM 1B. UNRESOLVED STAFF COMMENTS .......................................................................................................................... 46 ITEM 2. PROPERTIES.................................................................................................................................................................. 46 ITEM 3. LEGAL PROCEEDINGS...............................................................................................................................................