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spk02: Welcome to the Televisa Univision first quarter 2022 earnings call. At this time, all participants have been placed in a listen-only mode. Following management's prepared remarks, we will open the call for questions. If you would like to ask a question, please press the star and 1 on your telephone keypad. If you should need operator assistance at any time, please press star 0. Today's call is being recorded. I would now like to turn the call over to the company. Please go ahead.
spk03: Thank you and welcome everyone to our first quarter earnings call. Joining me today are Wade Davis, CEO, and Carlos Ferrero, CFO. On April 26th, we issued an earnings press release which can be found at investors.univision.net. We will refer to adjusted OIBDA and our remarks today is EBITDA. All financial comparisons on today's call will be on a pro forma year-over-year basis. Proforma comparisons are adjusted to include the Televisa content business for all of Q1 2021 and the entire first quarter of 2022 for equivalent comparative purposes. Unless stated otherwise, our U.S. ratings figures refer to audiences ages 18 to 49, and our Mexico ratings figures refer to audiences ages P2+. Some of the information discussed today will contain forward-looking statements. These statements involve risks and uncertainties, including those highlighted in our press release, and may cause actual results to differ materially from these statements. Televisa Univision is not obligated to update forward-looking information discussed on this call, except as may be required by law. Our press release and reporting package contain definitions and reconciliations of our non-GAAP measures to the most directly comparable GAAP measures. I will now turn the call over to Wade.
spk00: Good morning. Thanks for joining us today. Before we get started, I want to take a moment and introduce Betsy Frank, our new head of investor relations. We're excited to have Betsy join us, and I know she's looking forward to working with many of you. On behalf of myself and my partners, Alfonso and Bernardo in Mexico, I'm thrilled to discuss our first earnings results as the combined Televisa Univision, having successfully closed our transformative merger with Televisa's content business. at the end of January. Our new company is the definitive global leader in Spanish language media and entertainment, reaching over 100 million Spanish speakers every single day across streaming, television, digital, and audio. Building on the success of 2021 and the huge momentum we took into this year, Televisa Univision has delivered an outstanding inaugural quarter. Total revenue was up 12% overall, driven by 12% growth in advertising sales and 14% growth in subscription and licensing revenue, offset in turn by other revenue, which was down 9%. This market-leading top-line growth continued to more than fully fund our investments in the launch of our streaming business, as EBITDA grew by 7%. Getting into the operating highlights, As with last quarter, I'll focus my commentary on the four strategic pillars of our transformation. First, our content transformation. Second, the reinvention of our ad sales business. Third, the expansion of our distribution. And lastly, the evolution of our streaming business, the highlight of which was the much-anticipated launch of our new VIX platform. And then I'll turn it over to Carlos to cover the details of our financial performance. Let's start by focusing on our content and the audience that it's delivering. The fact that we're bucking the trend of ratings declines facing most other networks really underscores how well our content and programming strategy is working. We're growing ratings double digits in both the US and Mexico, taking share in both markets and continuing to build our leadership position on both sides of the border. Leading the way in the U.S. is our flagship Univision network, which grew its prime time audience by a stunning 23% year over year, while delivering its best February sweeps performance ever as the number two ranked network on all of television for the first time in the company's history, trailing only NBC, which carried both the Super Bowl and the Olympics during that time period. Our combined portfolio of broadcast and cable grew prime time ratings by 9% versus the prior year, making us the fastest growing major media company in the country with our highest overall market share in a decade. The highly anticipated finale of Vencero El Pasado topped ratings across the board, making Univision the number one broadcast station in the 9 p.m. hour, regardless of language, outperforming NBC, ABC, CBS, Fox, and all the others. Our market share in Spanish-language primetime was the highest it's ever been for a first quarter, driven by our hit shows Mi Fortuna es el Marte, La Desalmada, and Madre, with our share increasing 430 basis points to 64%. Our prime time market share, regardless of language, improved 100 basis points to nearly 7%. We couldn't be more thrilled with the impressive results our programming has achieved this quarter as a direct result of the Televisa Univision merger. And we're looking forward to how these amazing ratings position us for even greater success in our upcoming upfront, which will take place on May 17th in New York in person for the first time in three years. On the local level, in the U.S., we remain the destination of choice for local news, with our telecast ranked number one or two in seven of our top ten markets. This quarter, our Los Angeles Morning Newscast captured the number one spot for the first time in history. And in a year projected to have the highest midterm political spend ever, We added two markets in Florida, a key battleground state, as well as adding the Washington, D.C. market to our roster. Moving to Mexico, our networks posted their best ratings performance since 2014, with our flagship broadcast channel Las Estrellas audience up 25% year-over-year. Our overall portfolio saw double-digit ratings growth, with ratings up 13%. In the telenovela slot, we increased our audience share a staggering 35% year over year. This amazing performance was driven by an incredible slate across the board, where we had a nearly unprecedented sweep in all of the top 20 weak link programs for the entire quarter, excluding sports. We achieved similar success on the pay TV front, where our networks captured two of the top three network slots, as well as seven of the top 15 network slots overall. Our ratings growth drove a 620 basis points increase in our broadcast weekday market share to 60% for the quarter, far outdistancing our closest competitor. As you can see, the power of unifying our talent, our creativity, our development, our IP, and our production power across the new Televisa Univision is delivering on its promise. We have one global, multi-platform pipeline being produced by the world's most prolific content engine, operating across more than 90 studios in both the U.S. and Mexico, leveraging the highest quality talent, producers, writers, and an unmatched library of intellectual property. And this audience momentum is just part of what's driving our stellar ad sales performance. We're a consolidated revenue group, 12% year over year. In the U.S., we delivered another outstanding quarter with revenue up 14% year-over-year. We're leveraging our audience momentum while we continue to transform the capabilities and product portfolio of our U.S. ad sales business across both streaming and linear. Network ad sales delivered its best quarter in five years with 10% year-over-year growth driven by our historic 21-22 upfront. delivering the highest price growth in the company's history across both upfront and scatter sales cycles. And we now have attach rates of 50% for our new advanced solutions, and these solutions accounted for 13% of national ad sales, nearly doubling from a year ago, and are fueling nearly half the revenue growth in the quarter. The growth on the video side is further bolstered by the market outperformance of our audio group. with advertising revenue of a whopping 17% year-over-year as we grow our overall audience share, benefit from the return of key advertising categories, such as live entertainment and travel, and add new advertisers to the platform. Mexico delivered a stellar quarter as well, with advertising revenue in the aggregate up 7%, both in U.S. dollar and in local currency terms. The growth of core advertising, which excludes third-party representation, was an even stronger 11%. But perhaps even more importantly, I'm happy to report that the 2022 upfront in Mexico, which as you know is a calendar rather than broadcast cycle, closed out at record levels, with volume up 13% year-over-year in local currency and CPM growth of 8% year-over-year. representing the highest growth of the upfront in the company's history, along with a record high number of clients participating. Additionally, virtually every single major ad category increased spending on the platform, and with the World Cup and Q4, we're optimistic about further growth opportunities in the back half of the year. And given that this is our first call as a combined company, one last thing I want to highlight regarding Mexican ad sales. is that with the absolute enormity of our audience delivery in Mexico, we're able to achieve these double-digit growth rates while only utilizing around 50% of our available ad inventory. This excess capacity creates a highly strategic asset for us. Number one, it leaves us the opportunity for huge revenue growth while preserving the integrity of the viewership experience. But secondly, It provides us with an irreplicable promotional platform as we launch VIX in Mexico. Again, without impacting either our revenue growth potential or negatively impacting the experience on the screen. Now moving to subscription and licensing revenue. We saw even stronger consolidated growth at 14%. The U.S. business grew 15%. primarily due to last year's launch of our networks on YouTube TV. And this growth in the virtual MVPD segment more than offset the declines in traditional MVPD subs, leading to total subs being essentially flat year over year. We remain significantly under-penetrated in the key virtual MVPD segment and are highly optimistic about further penetration given how well our networks are performing and the attractiveness of the U.S. Hispanic audience for these virtual MVPDs, which currently have very limited Spanish language offerings. Similarly, our subscription and licensing revenue in Mexico increased 11% year-over-year in U.S. dollars. In local currency, this growth was slightly higher at 12%, driven by growth in pay TV subs, price increases, and higher licensing revenues in Europe, Asia, and Africa. We're excited about the remainder of the year given the upcoming World Cup in Q4 and non-recurring revenue from the licensing of our World Cup rights across the Latin American markets. Lastly, let's get into the progress we're making in our streaming business. The biggest news of the quarter was the much anticipated and hugely successful launch of the free ad-supported tier of VIX on March 31st. In just one year, we've built the best team in the streaming business, and this team has brought to market a completely new platform that we've now transitioned our legacy VIX and Prandeis services onto. The new VIX service is distributed across all major platforms and smart TVs and is available in the U.S., Mexico, and the rest of Spanish-speaking Latin America. VIX's free ad-supported tier is unlike any other free service in the market. We now have 130 virtual linear channels across all genres, including live sports and news, tightly integrated into over 40,000 hours of VOD content. What's really unique relative to other free services is the amount of original and exclusive content that's on VIX. Over half of the content on the platform is exclusive to VIX, and we're producing 12 hours of new original content every single day across news, sports, and daily entertainment. And just like our linear service, VIX highlights the strength of our wholly owned content, which is currently accounting for more than 80% of total hours consumed on the service, led by our original series and news offerings. Obviously, the end-of-quarter launch of VIX was new for us, but we've had our pilot service, Prende, in market, and we've continued to build great ad sales momentum here, handing off to VIX just in time for the 22-23 upfront this month. This quarter, we increased the total number of advertisers on the platform by 38%, with 50% of our linear advertisers now using VIX. Pricing and sellout are also extremely strong. We're selling VIX at significant premiums to linear, which I mentioned earlier is already running at the highest levels in the company's history, and sellout is currently running over 90%. And of course, the VIX launch on March 31st is just a prelude to the launch of a full service in the second half of the year with the introduction of the VIX Plus premium tier. VIX Plus will add an unprecedented amount of premium original content to VIX, which already has more Spanish language content than any other service. VIX Plus will bring another 10,000 hours of super premium entertainment, a blockbuster original movie or series premiere every single week, and over 7,000 hours of live exclusive soccer in the U.S. in year one alone. This launch will be further supported by our acquisition of Pantaya, which we announced earlier this week. And today is the largest Spanish language SVOD service in the US. With this acquisition, we'll add an extremely talented team, additional top tier content, and a significant base of existing subscribers. And before I wrap up, I want to remind everyone that everything we're doing on our streaming business is built to complement the already strong linear business covered earlier. We will continue to invest in the growth of our linear product, which is an exceptional platform super-serving certain segments of our audience and which lends itself well to certain types of viewing experiences. Our streaming product lends itself better to other types of content and other audiences that are either not on our television platform or are looking for more and different content from us. Recognizing the strengths and limitations of the linear and streaming platforms can lead to better outcomes for both platforms where we're able to program and cross-promote in ways that are very synergistic. Even though it's still very early days for our streaming platform, this is really underscored by the fact that we've been able to dramatically grow linear ratings while at the same time attracting millions of users to the VIX platform. Overall, it's been a fantastic quarter to kick off the year, and we're just getting started. I couldn't be more excited for the coming quarters with the combined team who've been working together tirelessly from day one of our merger to deliver this level of outstanding performance and setting us up for further success going forward. We're uniquely positioned with the right team, the right strategy, and the right assets to maximize the massive opportunity we have in front of us. Even these early results look like nothing else in the rest of the media landscape, and the coming quarters are going to continue to build on this momentum over the course of the year. Now I'll turn the conversation over to Carlos, who is going to provide more details on our Q1 financial performance before we wrap up, and then, of course, turn over to Q&A.
spk07: Thanks, Wade, and good morning, everyone. It's great to be here sharing pro forma results for the new Televisa Univision. In our first quarter as a combined company, we delivered double-digit revenue growth with strong performance in all areas of our businesses and regions. Meanwhile, we grew EBITDA while investing in the business, mostly in our streaming platform and in advanced advertising sales capabilities. Total first quarter revenue increased 12% to $1 billion. Moving on to advertising, total ad revenue also grew 12% to $569 million. Looking at performance by region, in the US, advertising revenue grew 14% to $392 million. We had our best first quarter performance in five years, reflecting growth across all divisions, media networks, digital, local TV, radio, and streaming. Networks grew 10% as higher pricing and ratings growth offset lower volumes. We had record pricing in both upfront and scattered sales with the highest scattered premiums in the company's history. Our new advanced advertising solutions, which were in their very early stages a year ago, contributed materially to the double-digit ad revenue growth. In Mexico, Advertising revenue grew 7% to $177 million. On a local currency basis, growth was consistent at 7%. Solid growth in private sector spend more than offset a decline in public sector. Within the private sector, eight of our top ten categories increased their advertising investment with us. Subscription and licensing revenue grew 14% in the quarter to reach $407 million. In the U.S., subscription and licensing revenue grew 15% to $310 million. This reflects higher subscription revenue driven by a 340% increase in virtual MVPD revenue, largely related to our YouTube TV deal, more than upsetting a continued decline in traditional MVPDs. Additionally, we benefited from purchase price accounting adjustments related to last year's reorganizations. In Mexico, subscription and licensing revenue grew 11% to $97 million. On a local currency basis, growth was 11.5% year-over-year. This was driven by higher affiliate fees and an increasing content licensing revenue outside of the US and Mexico. Total operating expenses for the first quarter grew 16% year-over-year to $609 million. The increase reflects investments in our streaming business, our advanced sales capabilities, and sports content with an increase in the number of soccer matches in 2022 versus last year. As a result, we grew EVTA by 7% to $397 million despite substantial investments in our business transformation and most notably the build-out of our new streaming platform. EVITA margin remained solid at approximately 40% in the first quarter of 2022. We ended the quarter with more than $500 million in cash on hand. Our balance sheet improved significantly after closing the Televisa Univision merger. As of March 31, 2022, our net debt leverage ratio was around five times, coming down from seven times before the merger took place. In summary, We are off to a great start as Televisa Univision, and we're most excited about what is ahead. As Wade mentioned, we're optimistic for the rest of the year. We had a record up front in Mexico, and we're approaching the 2022-2023 up front in the U.S. with the highest ratings and audience share we have had in years. I look forward to keeping you appraised of our progress. With that, I'll hand the call back to Wade.
spk00: Thanks, Carlos. Now let's open it up to Q&A.
spk02: At this time, if you would like to ask a question, please press the star and 1 on your touchtone phone. You may remove yourself from the queue at any time by pressing the pound key. Once again, that is star and 1 if you would like to ask a question. And we will take our first question from Aaron Watts with Deutsche Bank.
spk06: Hi, everyone. Thanks for all the detail and appreciate you having me on. I've got a few questions. Perhaps I can start with very current events. You announced the Pentaya acquisition just two days ago. It seems to be a good fit strategically. Are you able to provide any more details around the terms and conditions of that deal?
spk07: Yes, Aaron. Thanks for the question. Happy to give you some details. We will pay $150 million in cash plus non-core radio stations in Puerto Rico. This is an attractive asset for us. It's complimentary to our business. It will accelerate the growth of our streaming platform. And finally, we will generate significant synergies. In summary, we're convinced that this asset makes more sense being managed by Televisa Univision. We're happy with the deal and we believe it's a great deal for us.
spk06: Okay, great. That's helpful. My second question is, I've been following Univision and the media sector broadly for a long time, but I've not been particularly focused on the Mexican marketplace. This is a bit of a broad stroke inquiry here, but any insights you can share around the differences between the Mexican and U.S. market from an advertising perspective, distribution for subscriptions revenues perspective, and drivers of growth between the two markets would be incredibly helpful.
spk00: Sure, I'll take that, Aaron. There's a lot there, so we'll try and keep it straight and cover all your questions. Why don't I start with ad sales? I mean, first of all, Mexico is performing at record levels where we're firing on all cylinders with new world-class ad sales leadership and, as I said in my prepared remarks, just massive content momentum. And we're optimistic with more to come. Obviously, the end of quarter launch of VIX helps us enter a huge, rapidly growing market around premium digital video. And then, obviously, the World Cup in the fourth quarter is going to add momentum. But to get into the differences between the U.S. and Mexican advertising markets, I guess First, I would highlight the fact that the upfront cycle is very different. And this is one of the most important things for people who are new to the Mexican ad sales market to focus on. First of all, the upfront represents about 90% of the total national private sector business. It gets locked in. And in fact, most of that gets paid for upfront, which in times of marketplace uncertainty, obviously, is a huge business. The second thing that's different with respect to Mexico and the US from an upfront standpoint is that the vast majority of this business is on a calendar cycle, not a broadcast year cycle. The second thing is more specific to us, which is that our existing market share is extremely high. Our share of television ad spend with large existing clients is more or less reflective of our share of viewership and therefore represents the majority of their ad spend. And so growing share with those advertisers in television is difficult. The last thing I would highlight is that there's just a smaller number of television advertisers in the Mexican marketplace than there is in the U.S. So there's fewer absolute clients that are currently advertising. And then the categories are different, and in particular, the mix is very different, where The CPG category represents the vast majority of ad spend in Mexico. So those are some of the structural differences in Mexico. But what I would focus you on, given all that, is first the performance of the upfront in the quarter, which was the highest level in the recorded history of Televisa at a rate of change of 14%. And given some of those structural differences that I talked about, you know, really locking that in, again, representing about 90% of the business for the year is obviously hugely important. But when you unpack the performance inside of that upfront, that volume was driven by bringing a record level of new clients into television, into the Televisa Univision platform. which, as I said, when you think about the fact that we already have a very high existing share with large advertisers, it's very important to recruit new advertisers to the platform. The second thing I'll just point out with respect to the success of this year's Upfront is that not only were we able to grow volume, grow the number of new advertisers to the platform, where we were also able to drive price growth. Again, new world-class leadership at ad sales has reversed what historically was really focused on volume at all costs. And over the course of the last four or five years, significant price decreases. If you look at the last four years, actually netting out... 2020, which was a COVID year, the average price decreases were around 9%, whereas this year we saw a two percentage point increase. So really improving our pricing performance by over 11%. So this lays in a huge base for us on linear. And then probably the last thing I'll point out, given everything that I just described in the television markets, is obviously we launched VIX at the end of the quarter. And that is providing us access to a huge, rapidly growing market in premium digital video where we had very limited participation. So the combination of our linear performance in the upfront this year, bringing online new products and solutions, notably VIX, sets us up for a fantastic year, to say nothing of the end of the year World Cup coming online. So that's ad sales. On distribution in Mexico, I'd say the big differences between U.S. probably starts with penetration levels. In the U.S., obviously, we're seeing some declines in traditional paid television subscribers, but that's coming from a place in which paid television was, you know, a few years ago, 80, 90 percent penetrated. And the U.S. pricing for paid television packages have been significantly increasing over the years, getting in a lot of cases, you know, over $120, $130 a month. Obviously, some of the new virtual MVPD packages are changing that trend. But in Mexico, pay television penetration is relatively low at just over 50%. The second thing that's different is that pay television packages are relatively inexpensive and continue to be a very good value proposition. And the third thing is that because broadband penetrations are also relatively low and in comparison to the value proposition that pay television represents, you don't see a lot of the cord cutting that's driving traditional subscriber declines in the U.S. So all of that taken together and The distribution part of our Mexico business is relatively stable, where we're seeing mid to low single-digit increases in both subscribers and rates.
spk06: Does that cover your questions, Aaron? That does, Wade. I feel like I just got a complimentary crash course 101, and that was very helpful. Thank you for going through all that. We're here to help. You know, one follow up on the advertising side, it sounds like the business continues to have a lot of momentum, both in Mexico and in the US. But one of the top questions I get now from investors is whether you're starting to see any red flags or hesitations from your advertising and marketing partners, given the volatile economic backdrop and increasing concerns around an economic pullback more broadly. Anything you're seeing on that front right now?
spk00: No. To the extent that there's any category of softness, it's not really macroeconomic driven. It's really supply chain driven. And so the categories that are soft, in addition to auto, which has been an issue for the marketplace over the past quarters, we're seeing a little bit of softness in food. a little bit of softness in CPG. But outside of that, we're seeing huge strength across the board. I mean, pharma is up 34%. Finance is up almost 60%. Retail is up 40%. Tech up 50%. So for us in particular, we're seeing huge strength across the board. Now, some of that is a function of just the tailwinds and the differences between of our U.S. Hispanic market, which is really an engine of growth in the economy. Also, it's further differentiated by the fact that from a television standpoint, we're growing ratings and capacity unlike most other linear businesses, which are seeing significant declines in ratings and capacity. And as that happens in the extreme for the general markets, you know, television as a concurrent reach vehicle becomes less effective. But for us, obviously, the opposite is happening. So the combination of the tailwinds associated with our demographic as well as some of the performance differences around ratings and our ability to continue to grow television as a powerful reach vehicle is just, I think, you know, some factors that are more specific to us that give us a little bit more resilience intrinsically as we might see broader softening in the macroeconomic environment.
spk06: Okay, great. Thanks for all the time, Wade. I appreciate it.
spk02: We will take our next question from Jessica Rezintwitch with Bank of America. Your line is open.
spk04: Thank you. I have a few questions. The first one As you approach the launch of your premium DTC service, can you talk about any lessons learned or you think you're learning from the English language experience, whether positive or negative?
spk00: Sure. So our market's very different, right? Why don't I start with the fact that our audience, both in the U.S., and Mexico, and of course in the rest of Spanish-speaking Latin America, consumes a much higher percentage of their television free over the air. So that's an important difference. Another important difference is the relatively low level of penetration of financial services, and in particular credit and electronic payments. So that's one of the things that has led us to a hybrid business model in which we have this massive, hugely valuable free ad supported tier that we have in the market right now. Now, your question was specific, I think, to premium and SVOD. But the fact that we're starting with this massive free tier and our premium tier is is going to be inside the same product and sits as a premium tier on top of the free tier is very, very different than general market premium, and particularly represents a very different relationship between free ad supported and premium. Obviously, you're seeing a lot of focus, even over the last couple of days, as Netflix has announced that that they're likely to introduce ads to their service. Now, Netflix potentially doing that and the existing premium services that have some level of ad support to them are very different than how we think about it. And the major difference is that they look at ads as a way to buy down the potential subscription or the subscription price But it's fundamentally against the same content stack and all behind a paywall just at different price tiers. So for us, we leverage our free ad-supported tier as a standalone product, which delivers huge value to our users. And we're happy for those users to always exist on the free tier if they like. We don't use the free tier necessarily as just a little promotional front porch where we're trying to put a little bit of content out there to tease people to go behind the paywall. That said, having that massive standalone valuable free tier does give us the opportunity to develop customer relationships with potential subscribers, better understand their content consumption patterns, and does allow us a very powerful promotional platform, given that it's inside the same product, to, in a very relevant way, promote to people what does exist behind the paywall that might be of value to them. The second difference that is really important to note by having a free and a premium tier inside the same product is When you look at the general market premium subscription products, one of the biggest costs is obviously subscriber acquisition, but very much related to that is the costs that are derived from very high levels of churn. So when people churn out rapidly from the general market subscription packages and kind of go back out into the wild, it's hard to it's hard for those people to get reactivated by those subscription services. For us, by having this hugely valuable free standalone tier inside of the same package, we're able to do some very differentiated things with respect to churn management and reactivation. Because in most cases, they're just churning back out into our environment where we're continuing to deliver value to them and continue to have a much more efficient way to talk to them and ultimately reactivate them as subscribers as we bring on new content that may be relevant to them as a subscriber. So, I mean, I could go on, but those are some of the most important differences that we've built in what's a very unique product proposition that we think is specifically tailored for our audience that addresses some of the shortcomings that the general market service might have you know, when and if they start thinking about the Spanish language market.
spk04: Right. Okay, that's great, Angela. I have a couple more questions. The next one is, can you comment on your overall content spend, what the growth might be, and when you expect to hit your cadence?
spk00: Sure. I mean, I think probably, I mean, we're not breaking that out specifically, but what I can say is, that I'd start by saying that we have just very differentiated economic factors that are structural to us that allow us to think about and build our streaming product as fundamentally complementary to linear. And I just highlight a couple of those businesses, those structural benefits. First, I'd start with just the size, scope, and relevance of our library. I can tie that back to something I said in our prepared remarks, which is we're already seeing the power of that in our free service where our owned and operated content represents about 80% of consumption currently. And because that massive library exists and is not available anywhere else, it represents an extremely low-cost base for us to build on. The second thing I would point out is just the size and scope of our vertically integrated content creation engine. You know, as I said, we're producing in Mexico for the most part at relatively lower costs and exporting that to the other markets. But also, I would just highlight again the fact that Nobody else has a physical production infrastructure as large as ours at over 90 studios across the US and Mexico. Nobody else has the ability to deliver the same vertical integration benefits that we do in Mexico in which we have the talent both in front of the camera and behind the camera that work for us and are able to leverage this huge body of original IP that we have. So those are some of the content advantages that allow us to think about programming. Our streaming platform is fundamentally complementary to our television platform. And I think we've said that we are going to, I'm sorry, the last thing I would just highlight is our sports proposition. Our sports business is different and fundamentally more profitable than the rest of the major sports businesses in the general market. And that's a function of a few things. First of all, the most powerful rights that we have are the Liga MX rights, and those rights are negotiated on a team-by-team basis, not at a league level, and all of those contracts are staggered. And because of the market share that we represent in both U.S. and Mexico, we're able to negotiate very favorable rights. And that market share benefit goes for other rights that we're looking at acquiring, in which if people want to be relevant in the US and Mexico, which are two of the biggest soccer markets in the world, they really can't afford to not be on our platforms. And that gives us further huge advantages. And the last thing with respect to our sports rights is we're cracking open new markets, particularly in streaming. where we have very high passion point niche audiences in the U.S. that before we launch our premium service, they've really never had access to these incredible high passion point niche soccer rights. And because we're cracking those markets open, that allows us to acquire those rights at very efficient price points. So, for example, The millions of Argentines in the U.S. care deeply about Argentine soccer, but Argentine soccer wouldn't work well on a big broadcast platform. Our streaming platform allows us to acquire those rights efficiently and offer them to these niche audiences where there are huge passion points and drivers of the willingness to subscribe. But again, because we're doing something unique and cracking open these audiences in new ways for those rights holders, we're able to acquire them very efficiently. So those are the three biggest things that lead us to very significant content cost advantages relative to the general market competitors.
spk04: Great. And then one last one, but totally switching gears. Can you talk a little bit about the upfront? I mean, it sounds like you're really looking forward to it, given your ratings and share increase, but maybe some color on the market and your positioning and where you expect to take share from. Is it other broadcasters, whether English or Spanish language or other sectors?
spk00: Yeah, so I assume you're, I mean, since I already covered the Mexican up front, I'll go to the U.S. So I would really point to three things. You know, first of all, these enormous ratings we're taking into the upfront, which are really unprecedented for Univision and unique in the television landscape. We have capacity where others are still trying to burn off significant ADUs, and it's very hard when you have a huge ADU balance to try and convince people to pony up new incremental money. That's not the case for us, and because of the ratings growth, as I said before, we represent We continue to represent a huge reach vehicle across linear. The second thing is the new products and solutions that we're bringing to the marketplace. In the last upfront where, as you know, we drove almost 40% volume gains, we were just starting to build those new products and solutions. And as I said in my prepared remarks, those are now coming online, both with respect to linear where we're building advanced data-driven solutions the new branded content studio that we've announced. But obviously, importantly, VIX. In the last upfront, you'll remember we launched Prende just pretty much a year ago. So we were taking a streaming service into the upfront that really didn't exist and didn't have a track record. Now we're taking a streaming service into the upfront that's fully formed, has huge scale and momentum, and a differentiated product proposition. So number two is the fact that we're taking, you know, hugely powerful new products and solutions into the upfront with existing momentum. And the last thing that I'll highlight, which is just a response to your share question, which is a little bit the opposite of what I described in Mexico. You know, in the U.S., for the general market, The general market advertisers are really fighting amongst each other for a shrinking pie to try and shift share between themselves because of their levels of penetration. We have a very small percentage of the overall advertiser base in the U.S. that's currently advertising on our platform. And given the tailwinds of our demographic and the engine of economic growth that they represent for our company, We just have a different proposition and our ability to really recruit the huge volume of existing U.S. advertisers to shift some of their market share away from general market spend where it's becoming increasingly less efficient given the declines in ratings over to our existing market which represents a huge growth opportunity is just a fundamentally different selling proposition and represents a different economic opportunity for us.
spk04: Thank you.
spk02: We will take our next question from Marcello Santelos with J.P. Morgan. Your line is open.
spk05: Hi, good morning. Thanks for taking my questions. I have two. The first is if you could comment about the potential for bringing more advanced advertising solutions to Mexico. So you're having very good results in the United States. I wonder what could you innovate in Mexico in that front? And the second, I know it's very early days. You just launched VIX. But if you could comment, like you had one month and a half, is there anything that you could comment regarding the performance? Thank you.
spk00: Sure. So, excellent questions. In particular, the opportunity for us to bring advanced advertising solutions, new products to the market is huge. First, when we talk about linear, I think Marcelo, since you cover the Mexican market, you're intimately familiar with some of the dynamics that I described. Two of the three biggest opportunities for us to grow linear are number one, our ability to grow price, and number two, our ability to recruit new advertisers to the platform. And the introduction of advanced ad sales products into Mexico helps us with both of those factors. So our ability to introduce at scale things like targeted data-driven linear where in the U.S. we see up to 10x CPM differences between general demo-targeted linear, and in addition to just the absolute CPM differences for advanced products like data-driven linear, we also see in general about a 20% overall yield uplift. And then the second thing is introducing these new products particularly to emerging advertisers you know the biggest emerging categories in Mexico are a lot of the direct-to-consumer and emerging digital services businesses and because those people are really being trained on the power of linear coming from relatively modest spends on digital they're much more accustomed to the way in which a lot of the advanced solutions that will be will be introducing in Mexico works in particular targeting. And then the last thing as it relates to our new solutions really is just VIX. And I'll just repeat what I said earlier, which is we have a fundamentally different opportunity in Mexico. Obviously, we have a huge share of television ad spend. And so that has some different dynamics. With respect to VIX, you have a huge premium digital video marketplace already that's really dominated by two players, Facebook and YouTube. Not only is that existing market really big, but it's growing really rapidly, and advertisers in Mexico are looking for new brand-safe, high-engagement alternatives to Facebook and YouTube, and the introduction to VIX really provides us with that opportunity. So that I think is the answer to your question about the opportunity for new products and solutions in Mexico. And then as it relates to VIX, I guess I would cover three things. First of all, the launch was flawless. This launch represented something that was an extremely high degree of difficulty. First, we were transitioning off of a third-party tech platform onto our O&O tech platform. Secondly, we were transitioning users from three legacy services with three different brands and experiences onto one new unified service. Third, we were launching a new service, a new platform across 19 different territories, U.S., Mexico, and the rest of Spanish-speaking Latin America. And many of those countries we really had no presence in at all. And then fourth, we were launching a new brand across all of these territories. So, you know, given all this complexity, I actually expected some short-term friction and dip in audience and consumption. And in fact, we've seen an explosion of the audience as well as consumption and engagement right out of the gates. You know, the second thing I would just reiterate the amazing content proposition that we have that's unlike anything else in the market. And that's, you know, a second significant factor contributing to this audience and consumption explosion. And then I guess third, the, you know, our advantages in the huge momentum that we have for the free platform really sets us up for the second half launch. of our premium service, whereas Carlos said, you know, the announced Pantaya acquisition is going to be additive. But really in the same way that the free service changed the narrative about what a free ad service can be, the premium tier is going to do the same. I mean, the content offering is going to blow away anything else in Spanish language market where we're going to bring an additional 10,000 hours of premium Spanish language entertainment an unmatched volume of new original content that's made only for VIX. In fact, we have over 60 series, new original series in year one, and over 20 new original movies that's going to lead to our ability to launch an unprecedented level of premieres every week. And then obviously our soccer offerings like nothing else, where in the U.S. alone, we're going to have 7,000 hours of live exclusive soccer in year one behind the paywall. And all of that's going to be at a price point that's at a material discount to everything else in the market. So, you know, we're really excited for the potential of VIX.
spk05: Perfect. Thank you very much, Wade.
spk02: We will take our next question from David Joyce with Barclays. Your line is open.
spk01: Thank you. Two questions, please. First on Pentia, what's Could you please describe what the incremental content rights are that come with that acquisition? And then secondly, could you help describe the ongoing relationship with Televisa from the cost perspective in terms of how you're renting studios there and broadcast facilities? Basically, what portion of your expenses are related to that relationship now? Thank you.
spk00: Sure. Why don't I cover, well, first of all, I'd just like to say I think this is the last question we'll be able to take, just given that we're coming up on the top of the hour here. But why don't I take the Pantaya question and then turn the question with respect to the relationship with Grupo Televisa. Again, we want to distinguish the parent company in Mexico as Grupo Televisa and then the Obviously, we operate the Televisa brand in Mexico around our content assets. So I'll let Carlos cover that second question. But as it relates to Pantaya, as Carlos covered in his answer to the first question on Pantaya, we really see three benefits. First of all, we're going to add an incremental, very high-quality team to our already market-leading team. Second, we're going to take the largest existing base of Spanish language only subscribers in the marketplace and be able to deliver them an even better value proposition at a lower price point. And third, more specific to your question is the content rights. You know, Pantaya has been in the marketplace for a number of years. I'd highlight two specific relationships that they had that powered their content. First of all was the previous joint venture with Televisa and Video Cine and Lionsgate for Pantaleon Films. So that's led, in addition to their operation of the Video Cine pay television channel, to the largest existing base of Spanish language movie rights. The second thing I would highlight is their prior partnership with Amazon. in which they were partnered with Amazon to create new original content in which Pentia took the window in the United States. And Amazon funded a huge portion of that to take the rights outside of the United States. So Pentia historically was able to punch above its weight in terms of the original content pipeline that they were able to create as a result of those benefits. And what I would say is that as we think about strategically leveraging the existing Pantaya library and production pipeline, it's just going to allow us more programming flexibility in delivering the incredible value proposition that I described. In certain circumstances, it may take a little bit of pressure off the delivery time. for some of our original series by being able to swap certain things in. To state the obvious, you know, we announced VIX Plus about a year ago, or actually less than a year ago. And so when you think about the incredible production activities required in order to deliver these 60-plus original series and 20-plus original movies in that timeframe, it's just been an enormous undertaking. And it gives us a little bit, having the additional Pantaya library, gives us a little bit more flexibility around delivery dates for some of that original content slate. So I think that covers the Pantaya part of the question. I'll turn over the cost structure relationship with Grupo to Carlos.
spk07: Hi, David. Well, first of all, we have a lot of contracts with Grupo Televisa. First of all, all of them are arm's length. obviously market terms, and each and every one of these contracts approved by our independent audit committee. So all of them are contracts and relationships that we're both happy to have. These relationships go from the television pay TV operators purchasing or acquiring advertising from us, acquiring our pay TV channels as well, And then we go into contracts that are more operational or administrative that include leases of the studios that we do from them. As I mentioned, all of them on market terms. And when it makes sense for both of us, long-term contracts, where we have some of them that it would make, as I mentioned, sense for both companies. So that's what I can tell you. It's not a... major amount of money that we're discussing here, especially in the operational and administrative contracts. So that's what I can respond, David.
spk01: Okay. Thank you very much.
spk00: So with that, I'd like to thank everybody for joining our first earnings call for the combined Televisa Univision, the first of many to come. We look forward to the quarters for the rest of the year, which, as we said, I think are going to represent building momentum and great things for the combined company.
spk07: Thank you.
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