Spanish-language media giant TelevisaUnivision reported higher U.S. revenue of $799 million in the second quarter of 2024 as a 2 percent advertising revenue gain outweighed a 1 percent drop in subscription and licensing revenue, as well as “other” revenue.
The company also reemphasized that its streaming business, which had ended 2023 with more than 7 million subscribers, would indeed turn profitable in the back half of 2024. And it predicted a “great” second half, or H2, of 2024 on that and the U.S. presidential election, which management discussed on its earnings conference call.
TelevisaUnivision’s total revenue in the second quarter grew 3 percent to $1.3 billion, driven by an 8 percent gain in Mexico and a 1 percent increase in the U.S. Operating expenses rose 6 percent to $896 million, weighing on the bottom line. The increase was “driven by continued investments in ViX, investments in the expansion of our third-party advertising sales business in Mexico, and higher sports-related costs with two major soccer tournaments,” the company highlighted.
That led TelevisaUnivision’s quarterly adjusted operating income before depreciation and amortization (OIBDA), a key profitability metric, to drop 3 percent to $362 million.
Advertising revenue jumped 6 percent to $785 million. “In the U.S., advertising revenue growth accelerated to 2 percent to $462 million as growth in direct-to-consumer (DTC) more than offset some softness in linear networks,” TelevisaUnivision said. First-quarter U.S. ad revenue had grown only minimally. “In Mexico, advertising revenue increased 13 percent to $323 million, reflecting growth in the private sector, predominantly driven by linear networks.”
Discussing subscription and licensing revenue trends in the second quarter, the media firm noted a 2 percent drop to $445 million, made up of a 1 percent U.S. decline to $321 million and a 3 percent decrease in Mexico. “These declines were driven by a decline in content licensing and linear platform subscribers, partially offset by growth in ViX’s premium tier,” TelevisaUnivision explained.
The company also touted the success of two recent big soccer events, the Copa America and UEFA Euro tournaments, both of which kicked off in June and drew “record-setting viewership” across TelevisaUnivision platforms. The Copa America final recorded the highest viewership on Univision in the last decade, while the tournament overall outperformed the 2022 World Cup, it said. And the Euro championship, which mostly aired on ViX, drove audience growth, with the final becoming the most-watched Euro telecast ever in the U.S. Spanish-language market.
Excluding 2014, when Univision aired the soccer World Cup and benefited from a midterm election cycle, the latest period brought in what the company described as “the highest U.S. second-quarter revenue in company history.”
TelevisaUnivision didn’t provide a streaming subscriber update in the earnings report for streamer ViX, which fully launched two years ago this month. However, it said that the streamer surpassed 50 million global monthly active users (MAUs) in the second quarter, compared with more than 40 million MAUs as of the end of September.
Touting “building momentum in most areas of our business,” TelevisaUnivision CEO Wade Davis said in the earnings report: “Global ad sales momentum accelerated, driven by a strong marketplace in Mexico and success in the U.S. in attracting new advertisers to our platform. We are looking forward to the second half of the year where the benefits from DTC’s turn to profitability, the U.S. presidential election cycle, and execution across the rest of our business, should yield a great next couple of quarters.”
He also touted the key role TelevisaUnivision plays in reaching Hispanic audiences that are expected to have a key impact on the U.S. presidential election this year. An estimated 36.2 million Hispanics are eligible to vote this year, up from 32.3 million in 2020, according to the Pew Research Center. Research also suggests that the increase in Hispanic voter turnout over 2020 will easily outperform the growth among other voters and could rise by 25 percent.
Davis previously described 2024 as “a historic year for us” as his team looks to drive up political ad revenue, especially in key battleground U.S. states.
On Tuesday’s earnings call, Davis said this year’s presidential election has ended up in “uncharted” territory, but emphasized that trends make him confident the company will report “record” political ad revenue this year.
Addressing the change in the Democratic presidential ticket, with Kamala Harris replacing Joe Biden as the lead candidate, will benefit the company. “We believe that this change, wherever it lands by late August, will further accelerate fundraising and intensify the need for candidates to message to our audience. In addition to the action at the top of the ticket, there is an unprecedented level of focus on Senate and Congressional races and a growing number of down-ballot issues.”
Concluded Davis: “It’s increasingly clear that the Latino vote is likely to be the deciding factor in the most important races up and down the ballot.”
Earlier election year ad trends, the CEO described as “no primary cycle, which led to a depressed level of spending across the industry for the first half of the year.” He continued though: “Notwithstanding this, we believe that the total opportunity has only increased. Fundraising has accelerated, now exceeding the 2020 election cycle. And without competitive primaries, the lion’s share of the money is left to be spent. And spending forecasts have increased now expecting $10.7 billion in total spend versus the original $10.2 billion. And all this is before the historic recent change to the Democratic ticket.”
Discussing this year’s U.S. upfront ad sales momentum, Davis said it has been “slightly slower than in past years,” partly driven by “the marketplace in general,” but particularly the company’s commitment to “move to Nielsen’s panel plus big data as our principal currency.” He explained: “It’s critical for us to lead the market in moving towards more accurate measurements, particularly measurement that properly counts minority audiences. This is the right thing for our business. It’s the right thing for the industry, and it’s the right thing for society. This is our main strategic priority in this year’s upfront.”
His conclusion: “We’re going to take our time to get this right. The benefits of effecting this shift with the agencies will not just flow through the upfront but will flow through the scatter market as well.”
Meanwhile, TelevisaUnivision’s streaming business is tracking “at or ahead” of plans across key performance indicators, with the goal of turning profitable in the second half of 2024. Among others, Davis touted such indicators as average revenue per user (ARPU), churn and engagement as improving. “This quarter we saw an all-time high in terms of ARPU for AVOD, on the subscriber side, we grew subscribers 65 percent,” he said, without mentioning a current user figure or over which quarter or year the 65 percent gain was calculated. “This was driven by both a super strong content slate and a continuously improving marketing machine.”
Asked about his thoughts on streaming bundles, Davis said that the company was “exploring a number of partnerships” in the U.S., Mexico, and Latin America. “We are not competitive with any of these partners,” he argued, adding that such bundles should allow TelevisaUnivision to reach more consumers who are more English-language dominant but still want some Spanish content.
Davis also shared his big-picture take on the broader trend. “For everybody who’s looking at bundling, this is really a marketing efficiency and churn reduction play,” he said. “The dynamics around bundling for us are very favorable for a couple of reasons. Fundamentally, we’re a very low-cost service. But more importantly, we have a completely unique and differentiated content proposition that is super-additive to almost anybody that you can imagine as a bundling partner because we’re the leader in Spanish language, because we not only have a massive volume of exclusive, original entertainment, but we have live news and a massive sports offering.”
Asked by an analyst about reports that at least one sector giant – namely, Warner Bros. Discovery, which the expert didn’t mention by name though – may be looking at splitting its linear TV business from its studio and streaming operations, Davis said he couldn’t comment on what may be driving other companies’ considerations. “We have an amazing portfolio” and expect to increasingly cover linear and streaming services in carriage deals with distribution partners, he highlighted. “Linear and streaming work incredibly well together.” His conclusion: “It’s certainly not something that we are contemplating.”
