HMTV - Earnings call transcript Q3 2019 | Hemisphere Media Group Inc

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Operator

Good day ladies and gentlemen and welcome to the Hemisphere Media Group Inc.'s Third Quarter 2019 Financial Results Conference Call. My name is Kevin and I'll be your operator today.

A replay of the call will be available beginning at approximately 1:00 PM Eastern Time today, Tuesday, November 5th 2019 by dialing 855-859-2056 or from outside the United States by dialing 404-537-3406. The conference ID for the replay is 4068992.

I will now turn the call over to Ms. O'Brien. Danielle

begin. may You

Danielle O'Brien

firm. and today's everyone. O'Brien conference Financial Investor with operator welcome and like everyone Edelman Relations outside Hemisphere's to call. Communications, good you, I'd morning to I'm Thank I'm Danielle

Chief Joining me on Officer. and call today Financial Fischer, Chief Executive Sokol, Hemisphere's is Craig Officer Alan the Hemisphere's

statements within the may Reform the of current US management in subject Securities Litigation which expressed to our the Today's such expectations uncertainty statements Hemisphere may to meaning announcement comments and from on in that the about materially results of are XXXX. These Act certain contain are are based of forward-looking statements forward-looking and Hemisphere of statements. actual and those circumstance, changes implied differ or cause Private

a on factors the number refer more Form for based are complete of change. that XX-K filings of subject Annual statements and our these our and forward-looking addition, to risk Report are company. Please a applicable discussion most to to company's recent on public assumptions other In statements

Forward-looking the undertakes date reflect statements events publicly update or hereof as statements subsequent such of made obligation to Hemisphere circumstances. no and herein are included to

will which of with A During addition calculated to morning. accordance results Principles, understanding to Generally non-GAAP reconciliation is EBITDA, refer we believes Accepted investors' that that today's included GAAP release, in information business. adjusted in a non-GAAP Accounting this measure. important are discussing in call, is issued information to financial earlier Management of which this to our earnings was press is non-GAAP our

to now turn will call over Alan. I the

Alan Sokol

everyone. Danielle, and you, Thank morning good

leadership expanding positions. the during strongly Our channels performed or maintaining our quarter,

growth and basis. very cost-effective on compelling content We continue to a and innovate for audiences our unique fresh, high create

are the we also progress the our on making are value We strategic initiatives. about in excited building are we

XX showed every increased including Telemundo launch ratings adults unrivaled results new third growth. driven hit Univision QX by in Guerreros ratings during grew to Guerreros. WAPA's prime-time the Guerreros year-over-year XX the series, month higher have WAPA's quarter, and programming to XX% In Puerto May and lineup, among WAPA's since competition ratings reality were rating XX than XX, strong its Rico, adults combined. among by

For several select in [indiscernible] unrest, successor. weeks political resignation experienced culminating and the Rico Governor summer, process significant of the the the during Puerto to

are we will While ensuing result greater short-term instability did these an some accountability, optimistic transparency the in that negative spending. and advertising events impact experience governmental on with island

weaker impacted Television ad results. spending materially in third this our third the than and quarter was quarter expected

we stability do any we of and return However, confidence seeing from and turn in events expect to and not the advertising these are market levels long-term spillover spend. improve

out events, Juan January rate migration levels passenger Notwithstanding has according largely to metrics Puerto released has net economic X.X%, least San been from the below XX the be XX,XXX, time most below at through years unemployment continue data the The and these positive. July was first to it in Airport. to decreased recently Puerto X% Rico, International significantly Rico's of pre-storm

impasse As renewal WAPA WAPA with and agreements. regarding October reached our of we America an XXth, of negotiations DISH

WAPA US. and and Puerto WAPA Deportes the result, WAPA blacked-out a As in America has in DISH Rico

news, with During networks. channels' DISH, blacked-out equitable we frequently believe DISH is properly DISH not has our asked for negotiations lineup but valuing rate, extended a do fair extraordinary and that of programming. and have our entertainment sports

is them. not for this So unusual

to value market in that larger customer responsibly important Rico our Rico, received significantly of a viewers paid this Puerto Despite encourage being rate the our by distributors. which to we the serve from third DISH ranked established tremendous support In Puerto will have the meantime, properly base being the hopeful refuses US, we and outpouring pay distributor are networks. in DISH

channels. US Turning cable our to

XXth, ratings in overall America political seeing Rico. are in see and America's of of date crisis households where on momentum Governor's at we by of ratings coverage protests We delivered driven large summer's the audience unmatched making strong a world networks Spanish-language WAPA resignation, and cable number grew saw rated most quarter marked an America peaking highest impressive this Puerto WAPA America July to XXXX. audience grow. the its ever third over by day. WAPA highest ever, the one the nearly XX% quarter XXX,XXX and that continue declines, WAPA network On

who from outperformed of telenovelas throughout audiences Univision's second XX% and find offering day in ratings. XXth by year-over-year for continued in novelas than network new the world. its total as audience time, first Cinelatino unique more of marked growth, of consecutive its prime-time. cable most delivered highest-rated ratings quarter the continues an telenovelas Pasiones notably impressive language the channel best Pasiones Pasiones coverage Spanish the are attracted in to dramas to Nielsen and the double

Centroamerica This highlighted premiere was XX Our year ratings TV of strong another year-over-year which posted [indiscernible] program hit, total XXXX. ratings robust the represents our the quarter day Mexican growth. box-office quarter growth, was the XX% quarter XX. of third by among adults by the also increasing of of of a quarter to highest-rated over audience

subscription subscriber which Spanish-language subscriber package. our continued largely way, pay driven more the in numbers. one much to This TV it US distributor although outperform subscribe makes difficult overall we process third a a decline the market we sign-up to that small Regarding in to by decline experienced quarter, altered in growth, our was the

are We to which this be and are in they short-term conversations distributor we in nature. issue, believe this addressing with

the action [indiscernible] Viacom. which importantly, template fee Pantaya The a completed have series for The we and our previously for is first joint This MarVista quarter, Cinelatino. we us is the under an During venture a announced series US Snap and MarVista production between works well receive with Snap in our we co-produced venture rights replicate. will very Entertainment. joint to will and which hope comedy production to series Media and

a growth increase with a prime-time. in day total up quarter the ratings Canal strategic XX% our proactive XXXX, again investments. strong Colombia to experienced over Turning Uno in ratings XX% including and third

we announced with entered in Canal Uno October, has content Discovery. ad into sales a As alliance

producing efforts. month This we in programming are should Guerreros. partnership Puerto our Guerreros markets both will the strategic Rico air a Canal and We big This bolster sales this WAPA optimistic be [indiscernible] a that Uno with will event will important event be on crossover based Colombian first and hit. our

subscription Our growth. has streaming service experienced terrific Pantaya

anything and have As hit responded the in a XXX,XXX are recently has service approximately launched of October, enthusiastically. Pantaya which reported series, feel and with seen two the fresh, by Pantaya on has subscribers quarter with Spanish unlike ended television been premium new subscribers. that both modern

the produced streaming services other a the series of were Importantly, on they US. both cost at of on cost-effective a in basis fraction

We library develop are revenue streaming valuable also stream existing a about from recently Latin deep content Pantaya's very in We've platforms excited America. our new and and to future. begun licensing to new

With area the an proliferation of streaming to of be for Latin us. services in we expect growth America, this

the I Thank turn call to now you, over will everyone. Craig.

Craig Fischer

everyone. in decrease Alan the offset revenue, the in decrease of of period. as and good third X% in increase $XX.X was you, advertising net by Thank million Net compared $XX.X revenues for million, decline morning revenue. to revenues part a to affiliate quarter an in were year-ago due The

including Rico was Puerto produced Rico, second or XX% Miss last XXXX the due third the Governor to well the the advertising as broadcast million quarter the unrest, as as quarter $X.X compared to quarter the which noted resignation Puerto declined Universe of political and revenue market the of disruption timing to in caused by of Advertising the of XXXX. as

the advertising ratings response advertising to revenue Affiliate and rate market. strong softness direct the increased period US comparable the primarily saw for increases due Notwithstanding a performance XXXX, of at in Pasiones Spectrum networks, $XXX,XXX quarter due the the X% launch cable in we over on our decline or in to revenue

our million, increase $XXX.X ended of million period. the X% were increased XXXX Advertising driven the XXXX, over Hurricane $X.X revenue by revenue $XXX.X The nine-month growth for period was XXXX, increase September an primarily impacted for to as favorable which negatively or the for X% Net quarter comparison XXth, streams. first the all revenues period in of Maria. million across was year-ago due comparable with nine to months by compared the the of

Affiliate nine-month also increase growth. Media, increased of revenue the contribution over million driven from in or to higher was XXXX comparable increase million, November in due $X.X due for the Snap other to an which revenue The $X.X XX% rate content and licensing acquired period subscriber by and in nine-months the in period we period the increases fees XXXX.

depreciation $XX.X million Puerto due Rico, Operating to higher a offset expenses in decrease expense of to year-ago amortization third and Universe period, million, and of quarter Miss the and stock-based compensation. the production compared were lower for as by X% the timing partially $XX.X

and period, for in amortization compared the expenses incur were $XX.X million, a XXXX did incurred which the to of as lower not due the current depreciation for $XX.X prior-year period as expenses to well X% we period period. in comparable million hurricane-related Operating nine-month expense as in the decrease

benefited from costs Hurricane We year in relative WAPA also programming partially the to prior This the higher to and related spectrum stock-based production period at by the year FCC we incremental compensation and offset Maria. decrease expenses repack. was current higher when reduced gains following

to of The aforementioned Adjusted increase the period the in $XX.X gain X% Adjusted backed an $XX.X period. nine-month compared $XX.X for decrease a comparable EBITDA comparable adjusted included period. third million, was to is in EBITDA million XX% from the operating million the quarter compared of as for EBITDA. million, FCC income, as $XX.X but of spectrum out repack for the was

Turning cash to September million balance the $XX.X debt XXth, million and sheet, as of $XXX.X of had in XXXX. we

ratio times. was leverage gross was net leverage times X.X approximately and approximately X.X ratio Our

of equipment Capital for repack. Maria completed expenditures for is proceeds and by most equipment ongoing we purchases expenditures. reimbursements damaged equipment expect cover were be FCC required these to including anticipate The XXXX. by end replace $XXX,XXX of spectrum Hurricane FCC the insurance and that the will the repack $XXX,XXX to We quarter, in FCC by and

investments. strategic to Turning

the million joint as scale. down from million During the year prior in completion Canal this into year $X.X we needs well build lower funded ventures, earlier considerably to $X.X Uno Canal concession working Uno, including as capital due the payments continues quarter, as of our to

into Additionally, Pantaya. we funded $XXX,XXX

growth. impact advertising As adjusted percentage as previous forecasting political in in market mid-teen Puerto EBITDA increase of low for the the double-digit length a to Alan XXXX blackout, mentioned, are now of we Rico the uncertain guidance unexpected our of compared unrest the the third in percentage and given quarter the DISH

in our we confident remain business are create shareholders. our fundamentals value strong long-term ability to for However, our and

We'll now your to call the open questions.

Operator

Our from with Baker Curry Guggenheim. first [Operator comes Instructions] question

Curry Baker

still you with the scenario question, fourth expect color of to for resolution, starting quarter? case Good base currently morning. there DISH. I provide, guess guys. any more are you Thanks DISH sort talking in Is when any sometime there guess maybe can I is the i.e. and you

Alan Sokol

of us, morning. gap still hopefully get is Hi, done, Curry, that you DISH. until a between we we're two can good so But The done. Yes, have done. conversations with the deal not not significant a deal it's in

Curry Baker

the next And thanks. I Rico broadly market get this speaking as maybe then But guess year, about political Puerto we look year. PR for for noise the Okay, in WAPA just and advertising do front in normalized your the on you environment expectations Puerto Rico year political expect also about maybe Puerto outlook, more Rico? comment next Thanks. then next could you year in a advertising I and for

Alan Sokol

could was third and in something Rico, a scandal not but, real in year scandals certainly of happened in seen little a have significant and been crystal-ball we was and there's this coming, time a listen, a Puerto said, have length a scatter has done advertising could early, lot that but to most history. from have anybody in time was of quarter the But Rico It's anything these any this basis, what Puerto Sure. unprecedented visibility so that that on for because nobody time. happen of predicted never don't

in about That we're market year. firm-up said, good it we carrying seeing are the feeling into over nicely next QX and

have of which be that that into over but We be inflow also would come to by we year next think been very continued hope the that accelerating helped Puerto slow Rico, should government year. funds next

many re-election? how a finally or since to active it, parties going party Again, to bodes think believe contentious be say know So political a that for are little don't be be running having uncertainty a on little whether it typically we in well will incumbent it's to very both year. the any a whether just then I really we there political candidates be don't we side, don't going running. primaries do have Governor. We will very election, spending. but And is know one which for Are we early

Curry Baker

maybe market XXX,XXX total Okay, you you're and maybe future also addressable that's $XXX,XXX you final And any one, down you quarter. funding helpful. that's on this the about I think just good. then a maybe color just talk commitments, subs, there Pantaya. then see Can know, think I on

Alan Sokol

Sure.

On to funding Growth series is going our be not near-term of great feel within the forward, of accelerated and about side, we significant commitments the and do the I we break-even products. feel and introduction has new we with other hitting growth the funding a think that expect the TV reach premium Pantaya.

We and that frankly up. are of efforts Subscriptions retaining a like of are marketing a off in Trials feel of and really seeing we're Pantaya feel our down. and traction are Churn is subscribing and of we it. Pantaya becoming hitting -- the are audience paying to it aware lot critical mass sort up.

are So and looking all metrics the good about great feel it. really we

Pantaya, else Hispanic not competing all them the all a market, high the have where we streaming is a significant to on going like million addressable XX is Hispanic there that It's percentage get subscribe feel the services, offer this of market. can home we of which general just of you because not in content. plethora nothing so top-flight or market but to like terms premium, households priced know US, the of are In there of

great out XX publicly the if were and product product. available, entertainment And look see both which good this a got it's will the Apple and audience. streaming at We ones you of really rankings, are there on Top from we with you the type service are Google. We've only response

the bodes We're excited really So for future of super that all I it. Pantaya. about of think well

Craig Fischer

on add to Curry, funding. the just

$X.X million previously we stated, $X.X funding about committed through we're you so our which another venture. fund into commitments about totals $XX share to million our million, X/XX, As on to the

Curry Baker

maybe speak one all? to maybe point. consolidate last Pantaya. have And some Okay, opportunity a and to service but bring obviously can to, maybe there, appetite is you there that Can quick you on at at that's I maybe then or one it helpful. partner know the an speak you

Alan Sokol

Well, obviously opportunity own if a and would Pantaya there Pantaya it, it think we valuation we I think sense, that that have that. about but we enthusiastic also seriously a like more to about is and positive partner itself makes consider we at that presents

Curry Baker

Great. for Thanks questions, guys. the

Operator

Wells Our next question comes with from Steven Cahall Fargo.

Steven Cahall

days. US are Univision since thanks. you two first, there could fewer sub about the significant count cable or year maybe just how went the there Yeah, ago? big talk in they Maybe on or sub-base or quantify was are Hispanic through DISH is year fees DISH your maybe DISH ago, with significantly a And through so blackout subs today than a

Alan Sokol

going Yeah. morning. had their has that Hi before numbers, specific DISH a bide lost Univision any to percentage blackout. because good confidentialities. they want subscribers of Steve, Without into we significant don't the

them several cost blackout Univision hundred subscribers. thousand The

were significantly are they the were before And a and than smaller In so they distributors smaller than and distributor they Top much they than significantly but significant. are ago, Rico, the year are Puerto they today smaller number still X three the storm.

Steven Cahall

Does a just you distributor mean it a moved there. more maybe or the dialog were tier to that more it give you're that And constructive sign-up. And in like then to harder Got get could a you to us that done. made sounds color you you. expensive mentioned like little

Alan Sokol

and had could been sign-up having become were very the and sign-up, changed subscriptions they outperformed We with it. ourselves performed difficult way somehow they result. I for not to their sort their told numbers of not in them are. way that find historically the wrong very started new honestly start and and We they we mean Hispanic they issues they with the problem. have They realize after find called consistently locate we direction well seeing go overall and the and -- us in Hispanic subscriber

able of they're on prior they So be and believe be that to they working aware it, are resume fixed they system will their practices. it, the will

So case. I it we're mean the fixable a that I be hopeful problem. completely is to think appears

Steven Cahall

why subs subscribe you just of Is explain the mostly kind down that in it what to? year-on-year primarily that does how, So quarter? were

Alan Sokol

sequentially outperformed results. our their other every the of major to-date, versus quarter results, that's We reported terms for results of distributor the in

would positive but So we situation. had yes, for that have results,

Steven Cahall

Got then Liberty. Does Rico AT&T point? some your Rico, you. business Puerto assets on think any at Puerto this I impact selling in is And have or relationships to that in

Alan Sokol

little hasn't The deal early a to so closed yet, tell.

really We with good Liberty. have relationship a

optimistic their we're will a continued that, certainly will more They So the be money investment in in market positive thing. spend advertising.

a them, which represent to -- that we meaningful be will They each rebrand I'm will in have generally signifies means market ways investment they that advertising with help having increased AT&T, in we be-- other. in there'll relaunch and sure and conversations the be so will generally can AT&T

Steven Cahall

Great. me. from And one last then

cable the US some softness the in of network advertising, you On response. mentioned direct

of bit the cable strong just about market still market on the soften is any advertising US this your up really change seen since and you that saw and spot we way that in So the Thanks. spot some have think then were that pricing you despite and ratings kind ended? the dollars little quarter where a

Alan Sokol

We in have were businesses, permanent their but a the own since but but temporary seen accounts went that but little the things which based time-to-time the the these market that major business, there quarter the quarter. a bit individual happen improve not ended, on third thing, dark from impacted quarter, several is our thing, results in a

value that into that That other that the of once we in fine. back these market, should of recognize some be think advertisers and our advertisers there that the come tremendous we doing is that experiencing that and networks strength experiencing that networks are our same not optimistic said, are results going sorts we given networks, most forward negative the we're given of linear

Operator

the I'd host. to to of Ladies back like call our the turn call and over today. gentlemen, portion this our Q&A conclude

Alan Sokol

for further you or joining. No everybody Thank comments questions.

Operator

presentation. this conclude does today's and gentlemen, Ladies

wonderful have disconnect a and may You day. now

Hemisphere Media (HMTV) 10 Nov 192019 Q3 Earnings call transcript