Hemisphere Media Group, Inc.

good day ladies and gentlemen and welcome to the hemisphere media group incorporated third quarter 2020 financial results conference call my name is John and I will be your operator today our weekly of the call will be available beginning at approximately one o'clock p.m. Eastern Time today Monday November 9 2020 by dialing eight seven seven four nine seven one four three six or from outside of the United States by dialing in 262-558-6292. The conference ID for the replay is 936-5609. I will now turn the call over to Danielle O'Brien. You may begin.

Thank you, Operator, and good morning, everyone. I'd like to welcome everyone to today's conference call. I'm Danielle O'Brien, and I'm with Edelman Financial Communications Hemisphere's outside investor relations firm. Today's announcement and our comments may contain certain statements about Hemisphere that are forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These statements are based on the current expectations of the management of Hemisphere and are subject to uncertainty and changes in circumstance which may cause actual results to differ materially from those expressed or implied in such forward-looking statements. In addition, these statements are based on a number of assumptions that are subject to change. Please refer to our company's most recent annual report on Form 10-K and our other public filings for a more complete discussion of forward-looking statements and the risk factors applicable to our company. Forward-looking statements included herein are made as of the date hereof and Hemisphere undertakes no obligation to update publicly such statements to reflect subsequent events or circumstances. During today's call, in addition to discussing results that are calculated in accordance with generally accepted accounting principles, we will refer to adjusted EBITDA, which is a non-GAAP financial measure. A reconciliation of GAAP to non-GAAP information is included in our earnings press release, which was issued earlier this morning. Management believes that this non-GAAP information is important to investors' understanding of our business. I will now turn the call over to Alan.

Thank you, Danielle, and good morning, everyone. I hope you and your families and colleagues are staying healthy and safe. We delivered outstanding results in the third quarter in the face of the pandemic. Overall, our net revenues increased by 4%, driven by 27% growth in advertising revenue, and our adjusted EBITDA grew by 6%. Our advertising growth significantly outpaced the advertising markets in both Puerto Rico and the U.S., and is a direct result of our strong ratings, growing viewership, and compelling value proposition. In Puerto Rico, we saw a solid rebound in consumer spending and business activity and a healthier advertising environment, with the overall TV ad market up 12% versus 2019, excluding political. The advertising recovery in Puerto Rico coincided with the resumption of economic activities and strong consumer spending fueled by the government stimulus. WAPA received a bulk of this higher spending, increasing its share of the advertising market and driving its robust year-over-year growth. WAPA was able to achieve this growth as a result of its continued dominant ratings performance, delivering the highest third quarter ratings in its history in the key advertiser demographics of adults 18 to 49 and 25 to 54. For the fourth consecutive quarter, WAPA's ratings were higher than Univision and Telemundo combined, the first time this level of sustained dominance has occurred since Nielsen commenced ratings measurement in Puerto Rico. With the rescheduling of Puerto Rico's gubernatorial primaries from June to August, political spending was deferred from the second to third quarter. WAPA secured over $1 million of political spending in Q3, consistent with our original expectation. In the fourth quarter, we are building on our third quarter momentum, and our performance to date has been tremendous. October represented the highest ad revenue month for WAPA in its history and helped make it Hemisphere's all-time highest month in ad revenues. Even when excluding political revenue, October was among the highest ad revenue months in our history. I'm happy to announce that we've entered into a retransmission renewal agreement with the largest MVPD in Puerto Rico, effective as of January 2021. This renewal will result in a substantial increase in our retransmission fees and reflects WAPA's market strength and unique value proposition. It's also worth noting that Puerto Rico cable subscribers saw a slight increase in Q3. One final note on WAPA. WAPA's president, Javier Mainolet, will resign at the end of the year. Javier's wife and children live in Miami, and he has decided to relocate back to Florida to be able to spend more time with them. Javier did great work at WAPA, and we wish him the best. Fortunately, we have a terrific replacement for Javier in Jorge Hidalgo. Jorge has a long and very successful track record in Spanish TV, including executive vice president in charge of the news and sports divisions at Telemundo. and has worked closely with WAPA's news and production teams in the recent relaunch of our signature newscast. Turning to our cable channels, as I noted in our second quarter earnings call, we began to see a strong rebound in ad sales in July, which continued through the third quarter. Overall, we saw meaningful ad sales growth in Q3, driven by strong viewership at all of our networks. Our continued ratings growth and differentiated and valuable audiences have enabled higher sellout and increased pricing even in a uniquely challenging environment. Pasiones increased its ratings by 17% versus third quarter of 2019, its 15th consecutive quarter of year-over-year growth. Centro Latino grew its ratings by 11% over 2019, and Centro America TV's ratings increased by an impressive 38%, its ninth consecutive quarter of year-over-year growth. WAP America continued as a top five rated Spanish cable channel, delivering large and loyal audiences with its unmatched coverage of the Puerto Rico elections and the COVID-19 crisis. While our US subscriber numbers declined in third quarter, we have seen a sequential improvement in subscriber losses in the past two months, particularly as it relates to one of our largest distributors. Although too soon to know if this is a long-term trend, we are encouraged by these results. In addition, We continue to be in discussions with various MVPDs about launching a Spanish language package. With the proliferation of numerous AVOD platforms, we believe that we will be able to generate meaningful revenue from licensing our deep library of content. As I previously noted, we've already entered into partnerships with Amazon in Latin America and Tubi and Pluto in the US and Latin America. In addition, we now have agreements with Roku, Zumo, and the Spanish-language platforms Canela and VIX, while negotiating with others. Turning to Colombia and our investment in Canal Uno, the market remains challenged by the pandemic. However, most restrictions on business activity have been lifted, and economic metrics are improving. The advertising market has grown sequentially every month since May, and we are optimistic that by year-end, spending will rebound to normalized levels. Canal Uno continues to outperform the overall TV market while concurrently reducing costs to offset the revenue declines. Pantaya continues to grow its subscriber base as the first and dominant SVOD offering dedicated to premium Spanish-language movies and series. Pantaya currently has 825,000 paying subscribers. Certain of Pantaya's productions were impacted by the pandemic. However, production has largely resumed, including the next two seasons of Pantaya's blockbuster series El Juego de las Llaves as season two of Derbez Family Vacation, starring superstar Eugenio Derbez. We are very excited about and confident in the growth of Fantaya. In addition to Fantaya, we're exploring various direct-to-consumer opportunities, leveraging our content ownership, production capabilities, a unique understanding of the U.S. Hispanic and Latin American markets. The pandemic has also created a number of intriguing potential M&A opportunities, which are directly in our wheelhouse. In closing, we are extremely pleased with our performance under challenging conditions. We are proud of our market leadership and our ability to significantly outperform the overall ad market while closely managing our costs. Thank you, everyone. I'll now turn the call over to Craig.