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If you need assistance during today's program, please press star zero. Welcome to the Televisa Univision first quarter 2024 earnings call. At this time, all participants have been placed in a listen-only mode. Following the management's prepared remarks, we will open the call for questions. If you would like to ask a question at that time, please press star one on your telephone keypad. If you wish to remove yourself from the queue, press star two. We ask that when you pose your question, you pick up your handset to allow for optimal sound quality. Today's call is being recorded, and I would now like to turn the call over to Betsy Frank, Head of Investor Relations. Please go ahead.

Thank you, and welcome, everyone, to Televisa Univision's first quarter 2024 earnings call. I'm joined today by Wade Davis, CEO, and Carlos Ferreira, CFO. This morning we issued an earnings press release, which can be found at investors.teledisaunivision.com. A few notes about the content of our remarks today. We will refer to adjusted OIDDA as EBITDA. U.S. ratings and market share figures refer to prime time audiences ages 18 to 49, and Mexico figures refer to prime time audiences P4+. 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. We are 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.

On behalf of myself and my partners, Alfonso and Bernardo in Mexico, thanks for joining us. This quarter was a great start to our third year operating as a combined company, a company that has a special and important mission, a company that has a unique set of businesses delivering on a massive market opportunity. With nearly 600 million Spanish speakers worldwide and a combined GDP of $9 trillion, And our two core markets, the U.S. and Mexico, are number one and number two in both population and economic size and represent well over half of this global opportunity. We are the only large-scale company laser-focused on serving this market and capturing this enormous opportunity. And delivering on this unique opportunity continues to yield above-market financial performance. BICS on a global basis and our Mexico networks delivered exceptional results that contributed to overall global revenue growth of 7%. Our Mexico region had a particularly strong quarter with 23% growth inclusive of the benefit of FX. This was led by advertising, where we saw growth in the number of clients, growth in pricing, and growth in scatter volume. And we continue to have significant room to run with this business as we are delivering this level of growth and are still well below 60% sellout across our properties. Our U.S. region had a more mixed quarter with some non-recurring items contributing to a more muted consolidated top line, which was flat for the quarter. Despite a competitive programming environment in Q1, we were able to maintain our position as the number one Spanish-language network in primetime. And we're excited about what's to come. Our programming slate will continue to strengthen over the course of the year while we expect the competitive environment to shift materially as the key third-party franchises that are now performing well will be ending in the next few weeks. On the bottom line, We're continuing the march to D2C profitability, which is on track to happen in the second half of this year. Q1 was the smallest D2C loss we've had since the launch of VIX. Overall, EBITDA was down 9%, but about half of that decline was a function of a bad debt accounting change a year ago. Excluding this, our EBITDA declined 5% in improvement over the previous quarter. Operationally, 2024 is shaping up to be a pivotal year for us. Our success will be driven by relentless execution day in and day out across the entirety of our business. But in particular, there are three key areas of focus that will stand on the shoulders of this great holistic execution to deliver an exceptional set of outcomes for 2024. First, continued penetration of the U.S. advertising market. Second, record U.S. ad sales in the 2024 political cycle. And third, the continued scaling of our D2C business and associated profitability. The delivery on these initiatives will allow us to hit our overall objective of full-year EBITDA growth and organic deleveraging, which is a critical element of our continued focus on strengthening our balance sheet. Let me dig into these strategic priorities, starting with our focus on driving incremental penetration in the U.S. advertising market. Despite the massive demographic, cultural, and economic momentum associated with the U.S. Hispanic audience, about half of major U.S. television advertisers are not yet advertising in Spanish on our platform. We are the leading Spanish-language media business in the U.S. by far, We have the largest Spanish language audio business. We have the number one Spanish language broadcast and cable platforms. And we have the largest dedicated Spanish language streaming service in the world. Closing the gap in terms of spend and pricing based on our current levels of reach represents a $700 million incremental opportunity in the U.S. alone. The progress we're making in closing this gap is what has allowed us to deliver above market U.S. ad sales growth for three years in a row. But we can do better. We're continuing to invest in and evolve the people, processes, capabilities, and solutions aimed at activating and scaling the huge base of advertisers that are not currently enjoying the tailwinds associated with speaking to our audience in language and in culture this expanded team under new leadership with a refined category focused go-to-market approach is showing really encouraging early indicators new client activation is largely though not entirely a scatter endeavor and sales cycles are longer than those associated with existing clients scatter business So we expect to see the fruits of our expanded client activation group scaling over the course of the year. That said, we've already seen results with Q1 being the highest Q1 scatter in our history. And in addition to the volume associated with new activations, we're also able to close the pricing gap as new advertisers come on at prices that are in line with the general market, driving growth in overall portfolio price. In Q1, we grew upfront pricing, and we grew scatter premiums over upfront on both linear and on streaming, which is a great reflection of a cautiously improving ad market. Nowhere is the gap between U.S. Hispanic relevance and Spanish-language ad spend more acute than in the political sphere. In the 2020 U.S. election cycle, about $9 billion was spent in total. But we estimate that only 5% of that was spent in Spanish language, despite the U.S. Hispanic population representing 15% of the electorate. In all seven swing states, the U.S. Hispanic registered voters exceeded the margin of victory from the last presidential election. In 13 of the hotly contested Senate races, the same is true. where a net pickup of only two Republican seats would swing control of the Senate. U.S. Hispanic registered voters exceeded the prior margin of victory in at least 45 House races, where a net pickup of just two Democratic seats would swing the House majority. The U.S. Hispanic electorate are potentially the largest, if not only, swing vote at play in the 2024 elections. 62% of U.S. Hispanics say they'll vote based on their view of a candidate's position on issues rather than political party alignment. The candidates recognize this. And they recognize that Univision is the most powerful platform to reach this electorate. Univision is the only U.S. broadcast network to host major news specials with both former President Trump and President Biden. thus far in this presidential cycle. We're confident that Democrats and Republicans understand Hispanic voters will be determinative of both the presidential race and control of Congress, and that Univision is the platform to reach them. And although there was a historically low level of Q1 political spend across the industry as a result of the presidential primary cycle not materializing, The current pace of fundraising suggests that the overall 2024 election cycle is on pace to set new records with over $10 billion in total spent. We've made significant investments to ensure that we can deliver insights, products, and solutions to political advertisers that will allow them to achieve their objectives. As we've said on previous earnings calls, we began building the first census-level U.S. Hispanic household graph in 2021. This graph now maps nearly 100% of U.S. Hispanic households in the country. And to supplement this for the upcoming political cycle, in 2023, we began recruiting a panel of 30,000 U.S. Hispanics that are now on a platform that allows us to do near real-time sentiment analysis. And that can then be applied back to the broader census level household graph for advertisers to know where and how to reach voters and how to talk to them on the level of persuadability. On top of these tools, we've doubled our political sellers and doubled our consultants. We're confident that all of these factors will allow us to achieve record levels of political ad sales this cycle. Our third objective is to deliver our D2C business to profitability in the second half of this year. In the second half of 2022, we launched the full VIX service. By the second half of 2024, we will be positioned to achieve direct to consumer profitability. And this profitability will be a pure reflection of the PLL of our streaming service, with all corporate overhead fully allocated and no revenue from traditional linear businesses allocated to D2C. The only other company that has achieved this in the industry is Netflix. Our Q1 momentum was incredibly strong, and we're only a few months from achieving our profitability objectives. All aspects of the business are delivering above our KPI expectations for the quarter. The hits we're churning out of our content factory in Mexico drove massive engagement gains across both free and premium tiers. Our differentiated content proposition in combination with product and feature improvements is driving churn on the premium service to pace well below our targets for the quarter. And the combination of our free and premium tiers continue to work together to deliver subscriber acquisition and churn management benefits, where we now see around 70% of our subscribers coming from our free funnel and creating a significant reduction to our blended SAC. One of a number of examples of how the system we've built yields a structurally more efficient and profitable streaming business. On top of the huge scale and momentum from existing VIX tiers, we will shortly be launching a new ad-supported premium tier, which we expect to further accelerate our growth. This tier will be priced below our current premium tier and carry a limited ad load. The lower subscription price will make the service even more accessible and further open up our addressable market. given the huge success we've seen monetizing the existing ad supported part of our business we're optimistic that the launch of this tier will allow us to lift our crew across the entire service and create the opportunity for our first price increase for the ad free premium tier and of course we're excited about our expanded partnership with charter and are going to be looking forward to the broad launch of VIX's ad-supported premium tier across the entire spectrum expanded basic subscriber base in July. This is going to supercharge the growth of this tier with limited launch and limited subscriber acquisition cost to us. Lastly, The successful delivery of these initiatives, in concert with great execution across the entirety of our business, will yield progress against our overall objective of strengthening our balance sheet. Deleveraging the company has been a priority since the Univision acquisition at the end of 2020, when we inherited leverage of 7.2 times. We've obviously made significant progress since then, but the past couple quarters have seen some modest compression in EBITDA related to the ramping of VIX, that has caused leverage to tick back up slightly. As we move into the second half of the year, we expect a return to EBITDA growth driving overall leverage below six times by the end of the year. In addition to the organic deleveraging that will come from our EBITDA growth, we're also working on a number of initiatives that will further accelerate this process. Q1 was a great quarter for us and it set the stage for a very exciting 2024. Our strategy to create the first global scale company serving the massive Spanish-speaking consumer by combining the leading Spanish language media business in the U.S. with the leading media company in Mexico is working and could not have been better timed. Our two core markets, the U.S. and Mexico, are now the two largest Spanish-speaking markets in the world, and combined represent more than half of the $9 trillion GDP opportunity. These markets have been culturally aligned for decades, but we're seeing the economic alignment and relevance of this corridor reach new heights. This is the backdrop against which our unique company is able to deliver such impressive growth. We're operating TU with an incredibly high level of integration. Integration across all of our businesses, audio, live events, national networks, local broadcasts, feature films, and streaming. And again, integration across these lines of business in both of our core geographies. The operating systems we've created across the entire enterprise is yielding synergies that allow us to produce industry-leading margins. and a strategic approach to streaming that we believe yields a business that is fundamentally more profitable than the industry at large. We're excited about our accelerating momentum and look forward to the dialogue around the results we expect from these exciting initiatives that are in flight at TU. Thanks so much for joining us. Thanks for your interest in and support of our amazing company. Before taking Q&A, Let me hand the call over to Carlos to take you through our financials in more detail.

Thanks, Wade, and good morning, everyone. It's great to be here with all of you discussing our first quarter results. We had a good start to 2024, both operationally and financially. We generated revenue growth of 7% or 4% excluding FX to $1.15 billion. with growth across all lines of our business. Consolidated advertising revenue grew 7% in the quarter to $648 million. U.S. ad revenue was flat at $399 million as growth in BPC was offset by some softness in our linear networks. In BPC, we posted exceptional growth as we very effectively monetized the growing engagement on VIX, with strong sell-through rates north of 80% and significant CPM premiums to linear. In linear, our results were mixed. We saw strength in sports and certain categories where we had traditionally had very low penetration, namely financials and pharma. That contributed to very healthy scatter volumes. Offsetting that was some softness in the CPG retail and tech categories, along with some pressure from rating declines that were not fully offset by price. In Mexico, our advertising business generated growth of 19% or 9% excluding FX to $249 million. Starting this quarter, we scaled our ad sales business in Mexico by acquiring ad inventory from third parties. This strategic inventory allows Televisa Univision ad sales force in Mexico to sell a more robust multi-platform offering. This contributed approximately 500 basis points of growth and is expected to be accretive to the bottom line. While the public sector was impacted by advertising restrictions ahead of the presidential election in June, it was offset by strength from private sector sales as we continue to add new clients and also by strong growth in DTC. Moving to subscription and licensing, where consolidated revenue grew 9% to $473 million. In the U.S., revenue was flat at 327 million as growth from VIX's premium tier was offset by linear subscription revenue decline. In Mexico, subscription and licensing revenue grew 34% or 24% excluding FX to 147 million driven by VIX and content licensing. Opportunities to license content outside of our core markets continues to grow for both our sports rights and our premium original content created for VEX. Slightly offsetting growth from BTC and content licensing, linear subscribers decline, but we're partially offset by price increases that track inflation. turning to expenses which grew 16% or 12% excluding FX to $821 million. Expense growth reflects continued investment in VIX, an increase related to our third-party rest strategy in Mexico, and the clump of a non-recurring bad debt expense reversal in 2023. Adjusted EBITDA of $329 million declined 9%, or down 11% XFX. Excluding the bad debt reversal, adjusted EBITDA would have declined 5%. Our DP losses continue to improve this quarter, and we are nearing our goal of profitability. Now let's cover the balance sheet. We ended the quarter with $225 million of cash, a slight increase versus the prior quarter. with incremental liquidity available through credit lines of around $900 million. Our capex this quarter was $40 million compared to $52 million last year. We continue to expect to reduce capex for the full year 2024 by roughly 25% as we lap integration-related costs and continue to drive efficiencies in our business. Our leverage ratio ended the quarter at 6.1 times, a slight uptick from six times at the end of the prior quarter. I want to reiterate that leverage remains elevated as we work our way through DTC losses. However, as Wade outlined, we expect it to reduce by year end. We continue to prudently manage our debt portfolio, and at the beginning of the year, we refinanced all of our 2025 maturity. We now have nothing due until 2026, and our debt portfolio has an average maturity of four years. As always, we will continue to be opportunistic in addressing maturity. In summary, we're optimistic about the remainder of the year as we have several tailwinds in our favor. First, We expect DTC to reach profitability in the second half of the year. Second, U.S. advertising is positioned to benefit significantly from Politico. And third, we expect to continue to make progress with advertisers who under-index to Spanish language. Based on this, and as mentioned by Wade, we expect full-year EBITDA to grow and result in organic deleveraging. And with that, let's take your questions. Operator, please open the line.

Thank you. At this time, if you would like to ask a question, please press the star and 1 on your telephone keypad now. You may remove yourself from the queue at any time by pressing star 2. And once again, that is star and 1 if you'd like to ask a question. And we will take our first question from Jessica Ehrlich with Bank of America Securities.

Thank you. I have a, I guess, four-part advertising question. First, on the first quarter, it's kind of unusual for you to have flat U.S. advertising. So how much do you think was just the weakness in the market? And you alluded to competition, so clearly there's rating issues. Can you talk, second part is, can you talk about some of the trends you're seeing in Q2? Third, upfront is coming up in a few weeks. Just wondering if you could kind of give us your outlook for that and maybe your approach. Is there anything different? And then finally, on political, Wade, you sound really confident. You gave all the reasons why. And I'm just wondering, like, what are your initial, are you having initial conversations? Do you expect to gain share? Thank you.

Good morning, Jessica. Thanks for the question. I'll try and keep all four parts straight and organized. So on U.S. advertising being flat, look, I would say that in reality, the momentum in our U.S. ad business is great. Obviously, a flat Q1 doesn't really illustrate that on the surface. But for your purposes, when you're looking at your models, what I would say is that the real growth underlying under the surface in Q1 was probably more like a plus 5%. Let me kind of unpack that a little for you. It's principally driven by one thing, which frankly I'm pretty proud of, which is the level at which we're operating our linear and our AVOD business on an integrated basis. So, you know, in the 22-23 upfront, one of our big priorities was to drive integration between those two businesses. And, you know, we were really successful in negotiating fluidity provisions that allow us to satisfy under-delivery of linear with streaming inventory. And that's really, really important for us because it allows us to do, you know, really effectively yield optimize between the two platforms when we have, you know, kind of capacity issues in one place or another. And so the first time that that really came online at scale was in Q1 23. And so that enabled us to really flush a huge amount of accumulated ADU into revenue in the first quarter of 23. And so we're really comping a big kind of one-time processing of ADU liability from linear onto VIX in the prior first quarter. And if you adjusted that out and you just look at the kind of pure cash parts of the business, the revenue growth in the U.S. would have been 5%, which is a super healthy number. You asked about the outlook. I think the outlook for us is great. You're going to see momentum in U.S. ad sales growth build quarter over quarter. You know, as I said in my remarks, the marketplace really, you know, at least for us, is kind of cautiously improving. And some of those green shoots for us really manifested themselves, you know, in the kind of leading indicators are scatter and pricing. Scatter for us was a record first quarter in the history of the company. Pricing was up across all sales cycles. It was up and up front. Scatter premiums were up, and DR pricing was up. One of the things that you touched on was ratings issues, which definitely Q1 was a competitive quarter for us. But by the way, Q1 has been a competitive quarter for us for the last three years. You know, our primary competitor basically releases all of their franchises, their two franchises, in Q1. And for the past, you know, the two previous years, they kind of, those franchises end, and we see about a 400 to 500 basis point swing. So for sure, in terms of share. So for sure, you know, some of the increased competition in Q1 did have an impact, you know, on linear ad sales. But, you know, our programming slate is going to continue to build over the course of the year. You know, we've seen this happen before. The pendulum is going to swing back in the other direction in mid-May, and it's going to hold for the balance of the year. So beyond the unwind of that, I guess other things that are going to drive the Q2 trends that you asked about and building momentum a year, VIX is going to continue to scale. Obviously, just underlying VIX is scaling incredibly rapidly. But the big thing that's going to lay in over the course of a year is just the launch of the ad-supported tier, which is not only going to be a source, like a whole new source of capacity, But it's also, for the first time, going to open up the opportunity for advertisers to advertise against the premium VIX original content that, you know, up until the launch of this service will have only been behind the paywall on an ad-free basis. So we think that's going to be exciting for advertisers. And then upfront. You asked about upfront. That's going to be another piece of the accelerating momentum over the course of the year. Obviously, we'll pick that up in the fourth quarter of 2024. But the upfront for us is always exciting because it's another opportunity for us to close the gap in terms of share of ad dollars relative to the share and power of our audience. We do that by bringing new advertisers to the platform, which we've talked about. We do that by growing overall volume with existing advertisers through new products and solutions that we've brought to market. And then, obviously, it's an opportunity to continue to improve portfolio pricing and closing the gap relative to general market. We've been able to accomplish all of these things in the prior upfronts. The most recent upfront, we were able to deliver linear volume growth in the high single-digit range in a market that was probably up only in low single digits. We grew linear pricing, and we brought a record number of advertisers to the platform. And that's going to continue this year. You know, I'd say there's a couple other things just to really reiterate and point to that are unique about this upfront, one of which I just talked about, which is the VIX ad support is here. You know, we think that's going to be exciting for advertisers in the upfront, in addition to just the fact that we're at a fundamentally different level of scaling capabilities for that business. The last thing that is super, super important about this coming up front is that we are going to switch from Nielsen panel only as a currency to Nielsen panel plus big data as our exclusive currency for demographic segments. So let me just take a minute on that. I've said this, I think I said it on the last earnings call, but last fall, Nielsen introduced Panel Plus Big Data, which is a modernized version with modern technology and modern data sources to correct the antiquated panel-only measurement. And when this happened, we saw empirically for the first time, in black and white, what we'd known intuitively for a long time, panel-only data systematically and structurally under represents minority audiences and as a result that creates unacceptable biases in programming and investment and advertising this more modern methodology delivers about 20% uplift for our audience and significant uplift for other minority audiences and It has no material change for general market white English-speaking audiences. And so it's at the core of our mission to support our audience, and it is essential for us to be definitive that we will no longer support antiquated measurement methodologies and currencies that bias against our audience. This is going to be – this is important for our audience. It's important for our upfront. It's important for the industry. And, you know, for the reasons that I described associated with the accurate measurement of our audience, these uplifts will obviously have capacity impacts for us, which will be a tailwind. So, look, those are the things driving – you know, that are going to drive the mounting momentum Q2, Q3, Q4.

um and then you had a question on political um could you just remind me the specifics of the question on political yeah and you sound really pick it up you sound really confident in in being able to capture share i'm just wondering have you had conversations do you seem confident in in just in in having a good outcome um have you had conversations do you expect to take share from english language or from other competitors

I mean, of course. Look, I am incredibly confident. I'm confident for a number of reasons. By the way, this goes back to just strategic decisions that we made going all the way back to 2022 to bring Univision News to the center and increase the relevance of Univision News. Over the course of that period of time, we're the only news outlet that has grown the volume of news production anywhere close to what we've done, which is close to doubling across all the platforms. In making that investment in expanding news coverage, we also made what we believe is a really important investment. strategic decision, which is to bring Univision News to the center, create more, and in creating more news capacity, create more space for a diverse set of perspectives, which are increasingly reflective of our underlying audience. And one of the implications of that is actually making the Univision News platform more welcome to both political parties. You've seen that happen. You know, as we've come in over the entirety of the time that I referenced, but probably most notably, as I said in my prepared remarks, with the Republican candidate and the current president, coming on our air, which is really the only place that both candidates have come on to a broadcast platform in this cycle. So first and foremost, Univision is a place that is probably now perceived by both parties as a place where they can either properly highlight their perspectives. Second, this is the swing audience. So many elections, so many down-ballot issues have never been this close or have issues that have such significant implications with the general electorate so polarized and immobile. Our audience is the swing vote. In the last cycle, there were 15 million registered voters. We're making a huge investment in voter activation and registration, and we expect there's going to be 17 million U.S. Hispanic registered voters by the time of the election. Our research shows that 62 percent of them are going to vote based on issues, not political parties. So this is the most mobile and most important audience to activate to win the elections. that are important. Third, we have new capabilities, new capacity that we didn't have in 2020. We have more sophisticated products, greater ability to reach the right voters with the right message in the right geographies, and none of that existed in 2020, which is why we think this is going to be by far the biggest election, the biggest political outcome for TU as a whole.

Thank you so much. Very detailed. Thank you.

And we have our next question from Rich Greenfield with LightShed Partners.

Hey, Wade. Thanks for taking the question. When you think about where the bundle goes, your video bundles, Charter just announced sort of a smaller Hispanic bundle, and I'm just you know, you struck a new deal with VIX, you know, the new VIX hybrid being included. I'm just would love sort of your high level view of like, how do you think distributors move forward? And do we see more of these, you know, Charter seems like they've been sort of a leader on trying to rethink what the bundle looks like, as well as sort of Hispanic only, you know, we haven't really seen that like from a YouTube TV or a Hulu live. And I'm just As you look out over the course of the next couple of years, how do you think the video marketplace evolves? I'd love your thoughts. Thanks.

Sure. So as you say, Charter recently announced the Stream Latino, their skinny Spanish, their kind of smaller Spanish bundle, which is equivalent to their English language essentials. They launched that only after doing, you know, expanding the partnership with us. So I would say at the core of the Charter, the early renewal and partnership expansion we did with Charter was we gave them the rights to do that because it is not possible to launch a Spanish language bundle without our services, which as you know represent around 60% of Spanish language viewership over a very consistent and long period of time. So without those services, number one entertainment, number one sports, number one news, that product's not viable. So I think your question is really, if I can interpret it that way, it's really about the packaging and whether we're going to see more of these bundles, and it's about what's going to happen with the D to C bundle that the charter is. Is that really those two things the essence of your question, Rich?

Yeah, I mean, I guess the point is Charter's doing this. You know, they've obviously struck a deal with Disney to reformat. They've struck a deal with you that enables new things. But we really haven't, you know, I just listened to a Comcast earnings call. They're certainly not talking about these things the way Charter has. And I'm just curious, like, whether you think we'll see this from more players or there is something specific to Charter that they see something others don't and maybe even why Charter is doing this and others aren't.

Well, look, I can't speak for Charter, but I do believe that Charter is going to reset the market in this regard. You know, I think their strategy to expand the value of the bundle, particularly by bringing together the D2C services, which are additive to the linear channels bundle like Disney and like VIX, that's going to significantly enhance consumer value, which is the number one reason that you see cord cutting. I mean, people don't feel like there's a great value proposition. And so what Charter's doing is significantly enhancing the consumer value proposition. As you know, Charter's the largest video distributor in the U.S. now. And so I do think that Charter is going to reset the market. It doesn't necessarily mean that everybody is going to have exactly the same product. But, you know, I do think Charter heading in this direction will go a long way to, you know, defining the industry as a whole. And I think we are going to go to a place where the bundle continues. particularly the larger MVPV bundles, are going to grow and be inclusive of those programmers' B2C options. The reason you haven't seen it, as you know, is that these are long-term deals, and it's very unusual for people to – change the deals mid-cycle. And so, you know, this is something that's going to evolve as those deals come due. I think Charter has more significant programmer deals that expire this year. And so, I think you'll – I believe you'll see the market head in that direction. On the packaging point, I think that also goes to value. We know through our own research that there are low single-digit millions of Spanish-speaking Americans who are Spanish dominant. They watch very little content in English language. They principally get their television free over the air. And they would very much like to be pay television customers, but they're not going to be pay television customers at a $60, $80, or $100 price point where the predominance of the programming proposition is English language. they are much more interested in a product that is sub 30 sub 20 and is spanish only and so if you can deliver to those people that a value proposition that kind of fits into what they're looking for um i think you're going to see a very significant opportunity for kind of net new ads to the pay television universe um you know again i think charter with you know as Now the largest video distributor in the country has a lot of leverage around that. They see the opportunity. And I'm optimistic that as new deals come online, people are going to follow because they can't launch a service without us. As I said, we're 60% of whatever a Spanish-only bundle looks like. And so that's going to be a huge opportunity for us both on rate and in terms of new subs.

And we do have our next question from Tyler Seidman with BMO Capital Markets.

Hi. Thanks for taking my question. I want to dig a little deeper on our broader AVOD thesis for a few moments. Our sense is as streaming, you know, TV platforms build out their base of AVOD inventory, Netflix, Amazon Prime, for example, The next 12 to 24 months can bring more meaningful linear TV disruption. And potentially, you know, this could lead to larger ad dollars fleeing traditional linear ad buckets. And given linear is still, you know, $150 billion globally, it's a potential material amount that could come online. And, you know, it would be great to get your thoughts on how this plays out, how generally amused you may be to this broader trend, as well as hedged with it. Thanks.

Great. Thanks for the question. For us, in general, we agree with your thesis. For us, it's a little bit different. For our audience, TV remains very strong. But importantly, when you think about our strategy, remember that we built a streaming strategy and a programming approach in which linear and streaming are complementary to one another. So we've created a streaming product. that allows us to access new audiences that are not currently on television platforms, and it allows us for people who are currently watching TV to supplement their viewer experience. We do that from a programming standpoint in a way that allows us to kind of enhance viewership, cross-promote linear on VIX, and vice versa. A good example of that is sports. Take, for example, European tournament play, where we have UEFA. It's a massive volume of games, a lot of which happen during prime time in Europe, which is during the day here, so it's not a great TV experience. We have the rights to all of those games. A lot of the preliminary games being programmed on VIX, where we have super soccer fans, on a mobile device where they can access it during the middle of the day instead of on a television set during prime time. That's a fabulous way to build engagement in the tournament. And then we push that to the big event programming on the television platform by programming the finals on TV. So that's a good example of how we're able to leverage rights that we have across both platforms, but think strategically about how we do it in a way to enhance the viewership experience and rise both platforms. Our ad products are built that way, too. They're built to be complimentary. At the core of the ad-supported VIX service are 15 and 30-second units, the same as TV. As you heard me describe to Jessica, a big part of how we do our deals are to ensure that we have fluidity provisions that allow us to yield-optimize the inventory across those two platforms. We have targeted solutions on both linear and TV. TV, though, continues to offer unique things that streaming is not great at, the biggest of which is concurrent viewership. And so that's really important for certain categories. Movies are a good example, right? You want to cue concurrent viewership on a Thursday night if you're opening a movie on a Friday to get weekend attendance to the movie theaters. So TV continues to be very important and relevant and offer unique things. But they work together for us. For us, we think about it as a holistic business. And with streaming, we're going to grow supply faster for obvious reasons. We're going to continue to evolve the types of advanced units and capabilities that we have on the streaming platform. TV is going to continue to offer concurrent reach, big events, and really great content adjacency. to those big events. So, you know, for us, we think we're going to be, you know, as you heard me tell Jessica, we think the entire system that we've built from an ad sales standpoint will be able to continue to grow at above market rates as it has for the past three years, you know, as we continue to invest in and evolve both platforms together. So for us, it's slightly different and a little bit more positive than it is for kind of the rest of the industry in the U.S.

And we do have our next question from David Joyce with Seaport Research Partners.

Thank you. I wanted to see if you could dive into the Mexican ad markets and that new strategy a bit more. What would the underlying growth be looking like going forward? Is there some seasonality involved, and how does this new trend

inventory and perhaps impact the you know the relationships and seasonality going forward yeah why don't I start Carlos Carlos can jump in and add an ad as well but I assume you're referring to the ad representation that we talked about is that correct yes that's right so so we have the largest and most effective Spanish language ad sales force on the planet We have that in the U.S. We have that in Mexico. In certain cases, with key partners, it is going to make sense for us to leverage this asset to drive revenue and EBITDA growth. To be clear, this is by definition going to be lower margin EBITDA, but our focus, as we've said in our remarks and the answers to questions, our focus is on overall absolute EBITDA growth, not just pure margin optimization. From a strategic standpoint, you'll likely see us selectively do more of this. We have strategic partners in the U.S. that we represent their inventory. And in Mexico, this is a big strategic deal with one of our most important strategic partners. But we're going to be very selective about these representation partnerships. to be able to find the type of partnerships that allow us to fulfill strategic objectives, not just scaling a lower-margin third-party web business. So you can assume that these are going to be much more partnership-oriented and strategic in nature, not just a cumming of third-party inventory at all. We have these relationships in the U.S., We're building it out in Mexico. Now, you asked a question about seasonality. I don't think that there's necessarily anything seasonal about this that's different than the rest of the business. It's just that they came online in this quarter and so provided kind of a one-time uplift. I don't know, Carlos, is there anything you want to add to the rep question?

Sure. Just to add, we put this arrangement in place starting January 1st of 24th. This created a 500 basis point boost to our Mexico advertising revenue. And of course, we will continue to benefit from this growth throughout the year. As Wade mentioned, I want to reiterate that we're expecting this agreement to be EBITDA-creative for the year. And just as a summary, we are convinced that this strategic inventory provides our sales force certain outlets that allow us to attract either new clients or increase investment from current advertisers.

Thank you very much.

And it appears we have reached our allotted time for the Q&A session. I will now turn the call back over to today's presenters for any closing remarks.

I don't think we have any closing remarks beyond just thanking everybody for the questions and for joining us. Have a great day.

Thank you. This does conclude today's Televisa Univision First Quarter 2024 earnings call. You may now disconnect your line and have a nice day.