Full Transcript of Univision Communications’ 3Q05 Conference Call — Prepared Remarks (UVN)

Here’s the entire text of the prepared remarks from Univision Communications’ (ticker: UVN) Q3 2005 conference call. The Q&A is here.

November 2, 2005 5:00 p.m. ET
Moderator: Ray Rodriguez

Operator:

Welcome to today’s Univision Third Quarter Earnings 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 relating to Univision’s future success and growth. Actual results may differ materially due to risks and uncertainties described in Univision’s filings with the Securities and Exchange Commission. Univision assumes no obligation to update forward-looking information discussed on today’s call.

On today’s call we have Ray Rodriguez, President and Chief Operating Officer; Andy Hobson, Chief Financial Officer and Chief Strategic Officer; and Diana Vesga, Vice President.

I will now turn the call over to Ray Rodriguez. Please go ahead.

Ray Rodriguez:

Thank you, operator. Good afternoon, everyone, and thank you for joining us today. We’re pleased that our third quarter performance exceeded our expectations. More importantly, we see improving results in the fourth quarter and have great momentum into 2006 with a strong Upfront and record revenues for the World Cup. We ended our Upfront with impressive growth in the mid 20s percent range over the previous year, and as Andy will tell you in a few minutes, we expect to start feeling the positive impact of our strong season in fourth quarter of this year.

In the third quarter, our television and radio businesses turned in improving financial and operational performances, and continued to prove to the marketplace the unmatched reach of our properties to U.S. Hispanics. In a quarter that included the start of the fall season, the Univision Network grew its audiences more than ABC, CBS, NBC or FOX to reach record highs, and our radio group saw growth in key markets as well as at our new Reggaeton-formatted stations.

Earlier today we announced that Univision has obtained the exclusive Spanish-language broadcast rights to the 2010 and 2014 FIFA World Cup tournaments, in addition to 26 other popular FIFA soccer events through 2014, for $325 million. As you know, the World Cup tournaments bring tremendous ratings and revenues to our Company. In fact, our sales of the 2006 World Cup have already reached $180 million, and we still have inventory left to sell.

The sport of soccer is experiencing tremendous growth and popularity in the United States, and we’re thrilled to be part of it. Thirty-five million people watched our World Cup broadcast in 2002, despite the fact that because the games were live from Korea, most of the broadcasts were in the middle of the night. In 2006, we’re expecting more than 50 million fans to tune in. We have been the exclusive U.S. Spanish-language broadcaster of the World Cup since 1978 and we’re pleased to be able to continue our exclusive coverage into the next decade.

Before I provide you with additional third quarter highlights from each of our businesses, I’d like to briefly discuss the actions we are implementing to enhance our financial performance going forward.

As most of you know, our Company has gone through a period of very significant growth in recent years. Since 2000 we have added significant depth and breadth to our brand, growing Univision Communications into the multifaceted media company it is today. Just five years ago Univision Communications owned one broadcast television network, one cable network, and 19 television stations. Today, we own two broadcast television networks, one cable network, 62 television stations, a radio company with 71 radio stations, an AM radio network, a music business with three record labels, a music publishing division, and an Internet destination, all of which are leaders in their segments.

In the wake of this tremendous growth, we see many ways to benefit from increasing synergies among our businesses and enhancing efficiencies, while at the same time driving sales and marketing efforts. To realize cost synergies, we are increasing efficiencies in our administrative and production functions and we’ll reduce our current headcount by approximately 5.9%, while at the same time reinforcing our sales and marketing structure and ensuring no negative effect on our ratings and production quality.

We view this headcount reduction as a difficult but necessary step in the continued growth and development of our Company. By refocusing resources to our sales team, we are confident that we will further improve our financial performance, continue to grow our businesses and reduce our overall cost structure, thereby providing a solid foundation for financial performance. Andy will provide additional detail on the financial impact of these actions as well as our financial results for the third quarter shortly. In the meantime, I will now give you a brief overview of the third quarter performances of each of our divisions.

The Univision Network maintained its impressive trajectory in audience growth in the third quarter, attracting record primetime audience levels and ranking as the #2 network in the country in primetime among all Adults 18-34 years old, Hispanic or non-Hispanic.

Here are the details: while we have been out-delivering at least one of the traditional ‘Big 4 for several quarters now, securing the #2 spot was a terrific first for us. Said another way, for the entire quarter among all 18-34 year-old viewers in the U.S. – not just Hispanics – FOX was #1, Univision was #2, CBS was #3, ABC was #4, and NBC was #5. Who would have ever believed that the #2 network in the U.S. would be a Spanish-language TV network? It says a great deal about the strength and size of this very important demographic group. Now, of course, we have our sights set on #1, and we’re making progress. Out of the 91 nights of the third quarter, we ranked as the #1 network in the country on 25 nights in primetime. In total, we beat at least one of the Big 4 on 71 out of 91 nights, or 3 out of every 4 nights.

Now, switching to Adults 18-49, we turned in another quarter of unmatched audience growth. In fact, in the third quarter, Univision was the fastest growing network in the country. We increased viewership by 19% compared to the same quarter last year, while the Big 4 English-language networks’ average audience decreased 17%.

Locally, during the July Sweeps, Univision was the #1 station in primetime and had the #1 ranked local newscast, out-delivering the local ABC, NBC, CBS and FOX affiliates among all Adults 18-34 in 10 out of the 19 major markets in which we own and operate stations.

As for our second broadcast network, TeleFutura continued to beat Telemundo and maintain its rank as the #2 Spanish-language broadcast network in the third quarter, behind only Univision, in early morning, weekday daytime and weekend daytime among Hispanic Adults 18-49 and 18-34. While TeleFutura experienced audience declines consistent with those of Telemundo in total day in the third quarter, the bigger picture looks very good. In the recently ended 2004-2005 season, TeleFutura either maintained or grew its total day audiences, while Telemundo’s audiences decreased, compared to the previous season. TeleFutura’s total day audience was up 3% among Hispanic Adults 18-34 and remained constant among Hispanic Adults 18-49. Telemundo was down 13% among 18-34 year-olds and 16% among 18-49 year-olds.

Looking at the new ’05-’06 season and the fourth quarter, TeleFutura is showing some promising progress in primetime with our new, first-of-its-kind, live weeknight primetime news and information program, “En Vivo y Directo.