Grupo Televisa S.A.B.

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.

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.

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.