Spanish Broadcasting System (SBSAA)

Brad Edwards Investor Relations
Albert Rodriguez Chief Operating Officer
Jose Molina Chief Financial Officer
Richard Lara General Counsel
Patrick Fitzgerald Baird
Call transcript
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Good day and welcome to the Spanish Broadcasting Third Quarter 2020 Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Brad Edwards of Investor Relations. Please go ahead, sir.

Brad Edwards

Thank you, and good morning, everyone.

recognize historical statements fact. please call this begin, not are we that on certain conference Before of They forward-looking Private Act statements be under may deemed, the Securities therefore, Litigation to be XXXX. Reform results expected particular, company’s strategic are initiatives about In statements. to current statements forward-looking obtained from be the future differ forward-looking Many statements. may to company’s discussed those actual the factors from in important results cause materially any such company’s described filings uncertainties These are in further in risks the with the SEC. and detail

the of operating is which capital Spanish or at capitalization from reflects considered turn activities Albert because I to these forward-looking intended the evaluating tables filings discussing attached loss, or other undertakes Rodriguez. income, company’s for operating loss note Mr. before related You operating third operating U.S. Broadcasting it in company’s are to section The depreciation and GAAP. dispositions. the loss other is company’s information. information in to as update for its or the System call measures company’s meaning adjusted quarter is the company’s the obligation detailed revise is expenses a that accordance severance www.spanishbroadcasting.com. for impairment compensation of website directed performance Investor disposal rules. or considering is flows stock-based useful to calculated SEC of the statements. before company OIBDA, information non-cash any on publicly XXXX the stations in over the Relations used reconciliation not costs to within A measure now and the the structure to on available This of or the non-GAAP be OIBDA charges will and conference assets, U.S. expenses, gain substitute financial or be no earnings that adjusted release, GAAP to liquidity or in determining with income, in more and believes income performance also executive of for we isolation net or will costs, performance amortization, cash that measure its excluding income Please provided operating

Albert Rodriguez

to Good today’s On the of developments we and recent call. XXXX gentlemen. quarter conference Welcome an third will and morning, SBS call, review results. financial overview ladies provide operating our

Lara, Joining me Counsel. Richard today are Financial and our Molina, Chief Officer Jose our General

third financial in we the began and improvement we see lines recovery sequential performance. saw quarter, initial of and During our to across our meaningful operating some business

trail month, at our year While stabilize audio cost our continue manage entire our differently. month our continued high all has across The us targeted despite to level to further doing execute actions to prior of performance levels, continue to jobs activity and structure. stations team levels by activity and SBS we take

talent transitioned home, the and station Our divisions live our entertainment innovative has homes. access continue while from to to to find events bring experience broadcasting into largely people’s virtually of ways

digital continued once again metrics to ratings delivered while grow. audio engagement and stations mobile our Our have gains, strong

health news, to to we in safety and continuing them. critical addition, to remain committed audience deliver In our information

is update small to businesses weekly deal of Chamber on Hispanics guidelines any During times, across United nation States to which a how COVID-XX these we their operating La the Hispanic with negocio have challenging with environment. partnership in Commerce del in the show, and vos this

are industry will multi-platform to to audience our working industry-leading The and COVID. conditions strengths markets industry in position we we peers. growth XXX% In we normalize. SBS see I outperform short, aggregate presence, stated, we remains strong. taking expanding company continue our remain what to grow But business to our controlling into strategy team visibility to in prior when have leading and And underlying the the best appropriate steps lead can challenging. multi-platform performance confidence of talent accelerated audio and network Forward deliver as audio our and national stations, leading our was continue

division Turning each AIRE Hispanic now XXX markets, and X%, top weekly on with Spanish reaches market to XX%. an our of nationwide. update Network. currently making XX of nation. audio and language AIRE markets AIRE minority-owned our million U.S. market includes AIRE by the U.S. network at the and the over minus down XX% reported which XX Hispanic owned largest operations, certified Year-to-date, listeners the our starting in very across This the Network outpaced Radio

third the strong down outperforming XX%, the During quarter, quarter XX%, X%, and categories was minus telecommunications, the CPG, market recruitment, was this included automotive year’s automotive for third advertising pacing by aftermarket. marketplace minus while government, AIRE

Looking ahead, and outperformed the to This in a October. custom numbers. stellar market pandemic, has the as relevant widen AIRE revenue the not as AIRE platforms the it record-breaking of performance result of only challenges in sales audiences ideation. content, gap is XX% outperformed unduplicated delivered vehicles tailored well marketplace, new of also and engaging culturally QX set has that integrated tenacious by team, the new as but will client Despite efforts continue our

our record-breaking FM core XX adults XX hour to our every ranked Hispanic the any top a shares Mega Mega number Nielsen and number core not hour. only average rating over to in performance or New now other New in and a one metro Mega by had York, the area XX Hispanic one number Tri-state XX X.X station audio X.X York entire area. in nation. every two number largest hour the straight is the one one number Looking X WSKQ at with of number format globally, has stations in it leads number And hour stations XX average WSKQ audio in beating average stations, share, at in XXrh XX.X year-long the demo station X all we adults across books an year-long the core station the Mega row. DMAs. continue in average one, Coming one but is XX, with X.X core is nation’s WSKQ language, one to with serving XX a consecutive adults number XX.X

what listeners and SBS to consistent the market. is in WPAT our and know York show local to community turned their times, entire top-performing the a New now spirits. morning challenging During is XX.X in mood Amor lift happening

XX achieved Our average combined a Central and El la shares WPAT La morning core de Bodega Manana, FM la Vacilon hour XX shows group. XX to Mega, demographic in XX Morning Show the de City. adults our Manana In demographic number in rated one Angeles, morning each the groups. to of New XX to show in stations are York XX the XX Los respective and adults is Hispanic leaders

number one XX.X XX adults such rated Monday to to are Hispanic station XX:XX undisputed rated midnight Latin am hits one artists as Hispanic of In Miami, DMAs all La to we Los through that Mega the the markets, the Our with from one most Latin rated KXOL show and number Angeles, XX Chicago. rhythmic in top playing stations XX, one is Raza Hispanic beating of Sunday, the XX. in and Angeles, of Jennifer is Hispanic the largest combination one Hispanic in Balvin, other number station La all of and XXX.X station and morning Bunny our more. in demo XX XX XX number Hispanic Los number Lopez, KLAX, and dominate XX show Angeles, Francisco is another the the J XX number in country’s adults KLAX Continues Raza Bad to the of one one many to adults WXDJ one competitive as Maluma, Los in El to to Zol XX San Hispanic all

journalist, demographic the core XX X-station show the weekly combo reaches with key Haza Oscar number FM XX.X in a in morning the hour average show one group. entire award-winning shares market. is includes WCMQ, Our This rated our

one extend the Puerto Miami most WODA FM to X leadership Our Chicago New stations to stations Rico. ratings San in in Francisco, of listened La out Los two FM programming Mega and XXX.X and number Puerto Angeles, in most the all York, are two Rico. Nueva listened WMEG and number also

they on our focus all, how key. and the and audio create homegrown to is we continue share and of live the markets it to at because serve, Our All content remain it. we audience And stations grow. in top our talent ratings know

pressed the to stations has COVID-XX industry, language peers. forward us our overall and While both English we continue have and our with impacted Spanish outperform our strategy

according third outperformance beat fact, TV, satellite consecutive million our footprint national our reaches quarter broadcast we leadership XX markets and homes marked Miller to as of XXth quarter currently At than partners. Mega Kaplan, more In XX%. the our cable via by

Ismail strong offerings, of on Cala, who television We Mega through have a presence and Mega social made journalists leading TV’s established prime progress brings recent strengthening the time including career media TV. addition

The SBS and a the is meet XX groups. a with strategy our XX%, Cala’s total and demand and safety strong Live critical to ensure service events key launched connect fact, digital our March its key and providing audience element from XX% categories, virtual developments X-part Nielsen driven delivery addition can and Hispanic successfully and leadership multiple been Concert across our live strong keeping a XX via our XX%, in to ratings turn ratings per growing consumers. gains in air favorite an that with has of A XX XX. and closely it Es and to about series, urban households, transitioned with In adults monitoring providing month, demographic stations grew engaged division produce their listeners to has by major to experience X that continues venues method rollouts XX% has entertainment Casa regional our as Concert of XX%, execute our XXXX perspective, The its in genre closely created platform. and an pop Casa on initiatives. priority. sponsors upcoming shows plan sponsorship is aligning of The also in as in said, a be Tu now the response With artists which Mi to online proven and Series, extending each multi-platform audience automotive top to entertainment The audio-only brands respectively, pandemic working on live audio artists. with in sessions leveraging also with with was to COVID-XX to Luna, streaming markets and mobile contract special. vaccination let’s LaMusica has COVID-XX that and top audience and a providing potential brands launched holiday and division Jam update in of series mobile Nicky series a LaMusica success device. with to audience such and App Mexican the

in steady in making leadership our on of a minority certified and Hispanic company one are in legacy U.S. entertainment consistent the progress building audio transforming SBS multimedia into We leading the

advertising and brand our We have multi-platform leveraged strong industry our today, and partners. station talent our relationship to opportunities brands compelling

gains year. growth media. is we compared key paths This online We also in to to key our growth usage we all strategic being and note and growth It’s made across took well includes more end aggregate digital our also XX% consistent multi-platform social This the are at where get steady driving than all as was gains continue to increased brands, across initiatives the driven audience. with leveraging to metrics. as mobile mobile-first our our stations, to our and social connect important audience, engaged routes. to strong deliver a media And number audience the last and year-over-year of that and all highly while demographic listeners LaMusica, prioritize strengthen total audio have ways of talent trends third of audio ever websites. our the aggregate in same up quarter, before our engagement time today. station like with our properties We in of content across We

million Our of as video original daily well compelling and access to reaches and platform and experience month. offers talent LaMusica customization short-form per million capabilities, frequent content is as than unique millions Today highly streaming with X.X songs. mobile complete with deep LaMusica people entertainment LaMusica X.X a more The content remains news and updates. app to connections hours differentiated key programming industry

the the last streams. At revenues on are XX% our diversifying We our up third audio initiatives. programmatic end the revenue focused year. revenue of compared as such, executed And were quarter, our programmatic to are further

here expect to and We strong have to made growth. drive accelerated headway continue

concert finding focused driving teams. audio remotes digital revenue digital digital are offerings, new new network drive on new and our in teams with local, sales CPMs CPMs our up and virtual continue digital products, sponsorship to national virtual on Our offerings streaming up a such existing streams as

are we in LaMusica advancing further addition, as a brand. multi-platform In making progress

and and over audience over example, audience traffic averages For additional website hours month. delivered listening currently business the LaMusica’s future. growth this the unique This to In monthly XX million sessions XX million XXX,XXX third was our X.X unique quarter. quarter, point total million patterns over per listeners in streaming total

to driver primary X% social the during the continue approximately mobile quarter, by of digital for grew streaming million. the all and our of digital XX% audio and While key total third listening remains accounted Also third XX million traffic metrics our in traffic of greatest from grow, hours XX quarter. digital business media to our

increased sessions time X%, X% by for by addition, while users In unique XXXX. period the grew in same

managing sessions to remains healthy forward the our users. with are a up Our strong carefully visibility the ongoing and costs. our forward while finished growth was In year-over-year also users in We impacts streaming due hours challenge and third same period the current XXXX. pandemic COVID-XX in driving to LaMusica with unique compared strategy XX% mostly growth quarter summary, we while

growth the our to audio media team adjusted quarter. digital, a operating our our future in conditions. executed to importantly, upended industry-leading radio the for drastically audio Overall quarter results have margin metrics The hold and Our are to across in expansion. times trends and impact and and social grow, time from SBS improved second remains third Thanks top despite and for strategy the nation’s continued across challenging working SBS continue markets the attention. will our our with and company’s your rankings commitment DMAs, mobile on growth entire positioned and and network Hispanic communities. deliver most our stations improved has largest

the let the call Jose Now financial to me overview. turn for Molina over

Jose Molina

Albert. Thanks,

COVID third pandemic, our our improve to quarter trends as basis. Turning although impacted a on the to radio sequential be did quarter by Albert third continued results, results segment noted,

signs addition, show our a full of In business began recovery. to television

Our prior compared million down XX% million, the consolidated period. revenues for totaled $XX to $XX.X same

decreases special event Our in radio revenues declined sales $X.X local million and to revenue. or due XX%

basis. While XX% improvement revenues over did an as radio down our third radio quarter in second down year-over-year we the on revenues were were see the in quarter, a

improved to Our or in XX% million $X.X television national and due revenues sales. increases local

non-GAAP to for representing OIBDA period, a million Our totaled prior measure the compared $X.X million $X.X consolidated of year decrease adjusted same XX%. $XX.X million a or

declined XX%. OIBDA $X.X operating million primarily Our $X.X a lower million XX%, partially adjusted expenses revenues, in by radio of or due offset decrease to or

Our and operating allowance professional expenses an decreased costs lower fees, and mainly offset commissions, compensation, expenses, to in event station for the by increase due advertising accounts. special radio partially promotional doubtful

offset increase expenses by $XXX,XXX by in to higher adjusted television $XXX,XXX. Our due revenues improved OIBDA partially operating an of

higher for expenses compensation. doubtful costs, net operating television Our offset by barter partially increased expenses primarily lower allowance and due fees the accounts, to programming professional and

expenditures Our corporate expenses the $XXX,XXX. were decreased $XXX,XXX or XX% due to third lower compensation. for Capital approximately quarter

today, call navigate conditions turn of conclude $XX recapitalization to viable over remains cash take like a continue I our my and will Operator? our we of sheet have priority available hand solutions evaluate market also formal business As continue balance for cash any the would And our advisers. this we to questions. our the top This and that, is operator At with liquidity. our top as through and The time, approximately we to of current remarks. with the steps to priority to successfully. million, maintain operate on to


with Please head. [Operator And come our question today Instructions] from Fitzgerald first will Baird. go Patrick

Albert Rodriguez

Patrick. morning. Patrick, we you. hear Hi, Good can’t Patrick?

Jose Molina

Patrick. Hello,

Patrick Fitzgerald

hear guys now? me? Can you me You hear

Albert Rodriguez

can hear now. We you

Patrick Fitzgerald

Yes. Okay.

Sorry, scratchy. it’s very

So – you into is the has quarter Do improvement throughout that looking? and saw continued October you improvement fourth quarter, sequential sequential third the How November? continue quarter.

Albert Rodriguez

same beat to the terms when terms operator results, top industry. the the much year, about in of in I’m look you compared we And all period market, last broadcasters radio the in did. the Look, of pretty of and OIBDA it at OIBDA, general the Hispanic clearly peer performance from every talking even

OIBDA the as a in to performance one year. had prior October the in and terms phenomenal We of compared the the we national well of efforts. So terms the number were network

to business to to for be for history. network it’s – it’s in the respect We year a us network company’s respect project I results up going – with be business. the have to XXXX, continue record the of quarter, highest fronts with record-breaking it’s our for to going And in terms fourth in negotiating our

Patrick Fitzgerald



is September than November So is the October? better and sequentially, than October better –

Albert Rodriguez

yet. November finalized haven’t definitely We October better September. is than But

Jose Molina


Patrick Fitzgerald

in And up were you I said said Okay. that September? financials – your you think in you year-over-year

Jose Molina


Albert Rodriguez

you Yes, were was There the leaders no in at clearly And year. look okay, for prior performance of when third we are. Patrick, OIBDA the we compared quarter, question. terms to

We’re prior compared the basically number one an the in XXXX. by third XXXX And was quarter year way, XXXX. to incredible

out So just there. to want that put I

Patrick Fitzgerald

– I’m yes, trying you’re saying. just – I’m yes, to trying that. make just to No, I sure get understand I I’m what

is are guess, So also I year-over-year, November October question? and my up

Albert Rodriguez

No, October is.

to it I up segments going with some But you our strategic are it know November. finalized we make trailing. we’re their lot are third that a look still when and certain business a at overall, to units are leaders. were business clear, of times want OIBDA, haven’t quarter, pleased of to We with respect there performance. I And are year-over-year, that the clearly our back said I’ve few There

prior or of we that COVID the at the So driving operators when right, industry, market you getting you definitely radio so were performance, of in all the in of terms at year us, terms impact performance look out and faced. look when

Patrick Fitzgerald

job that. year-over-year. significantly to obviously nice costs it. guess, you’ve taken Yes. Got I down that, related No, on

about levels that sustainable is at are if could or the done you And – yes. Now what on here talk cost it are you’ve you side?

Albert Rodriguez

vendors renegotiating to what’s with a we have to lot terms approached respect things with Look, renegotiate prudent of been and to we’ve do and our respect all able expenses.

Jose Molina

expense be increases. for Patrick, savings mean, deregistering then in going the I intend a savings plus – $X forward would there say, by $X permanent lot we go probably go expenses as when savings we variable permanent. revenues plus vendor the in bought cost of from this that’s they a But one But will addition million increase be million, the a in $X some that somewhat $X are be standpoint, sense think just year will I instance, would of me let I offset up, to million, – revenues to will. of so is which up, like, million

Patrick Fitzgerald

Which is just commissions basically, right?

Jose Molina

when again, fees, expenses. tied special revenue start license trade, events special music of doing Commissions, all events we

Patrick Fitzgerald

on Okay. volume fee? license License be would right, though

Jose Molina

our music license is we... on fees Where revenue. The based

Patrick Fitzgerald

it. got Okay,

political Did political as beat to that you last quarter you Okay. expected in – XXXX. Did come said expected?

Albert Rodriguez

political in the national expect we a all and on for the the swing listener highest made based revenue impressions the across audio Pennsylvania, audio impact And Michigan, all Wisconsin, we level, the we Political base and number impressions, of impressions because markets history country Florida, deliver with that in was company. huge. in of particular, definitely our on states, that are so in our of Nevada, Georgia, Arizona, political

We really them across in impact, COVID the that and those And for swing their tune content. listeners on have basis particular, our country, are the trusted DJs Hispanic and it with brands how health on small our the as deal on they them Hispanics, our in that mentors businesses. and states, into impacts

Patrick Fitzgerald

you talking table? And deck to what’s released then that And about going $XXX ask that that’s and still with And is an great. investor That’s I new No. had release notes. process? something wanted a press the then million on secured just on of

Jose Molina

Yes, Patrick.

optimistic and through our all can process get remain we So we’re still several advisers. solutions an It’s done we’ve and met soon. that ongoing we with and the feedback with something what formulating the going are investors,

Patrick Fitzgerald

heard, might as obviously, you Okay. because is the pretty right Any now? timeline hot have market,

Jose Molina

yes, just a Yes, yet. market, right? No it’s crazy timeline

Patrick Fitzgerald

very you Thank alright. Okay, much.

Jose Molina

go have I that a note the – and And wanted I I note to just then are that broadcasters highest and good amount cost ready also just know Patrick, to expense of do have reduction. We to I we margins. willing. the reduction. wanted wanted ready other done that and back to enabled,

for are the radio. cost of now. you from years highest to standpoint, a it’s in trim this So proud XX And a company. having tough margins plus margin operations we’re been several when doing We’ve over

Albert Rodriguez

that to we’re we’re accomplish of only not the the also I to in By have number country been over And this historically, ratings we’re add believe every buster XX%, pandemic, still one XX%. in have block way, markets, large want historically. COVID over and margins and only to the we’ve the the able radio XX% okay? in in I Even

I great very radio that what the have So our that know I by we it. – that broadcasters methodically, and deliver And from just it best pride, with want do we number out to we quarter. of results accident, not take every we’re it the one team, it we’re take strategic there, we doing. because me, it’s the put say plans Don’t from we we


Derek ahead. come next with Wenger Capital. our from will Please Kansas And question go

Unidentified Analyst

you. thank Hi, for want refinancing. drill I on the Yes. just down to bit a

call. you put You out was there a that had RBC, deck, you engaged

some taking saying You’re color from just holders? why no Can as pushback there timeline. Is so preferred the you this long? to give is

Jose Molina

into dive a All say with plan and formulating with feedback can’t several We details. we’ve can I getting is investors the met the advisers. our

Unidentified Analyst

You advisors, saying a is keep more on than it RBC?

Jose Molina

have as well. we Well,

consider too. them advisers, we So

Unidentified Analyst

you. Okay. Thank

Jose Molina

you. Thank

Albert Rodriguez

Thank you.


management And conference over for remarks. this to to will closing turn back question-and-answer like conclude any our I’d session. the

Albert Rodriguez

I to everybody want Rodriguez. all was this opportunity our it’s XXXX. to happy you. quarter want quarter I want I Thank – and discussing moment look everybody results and thank on And year-end year. and happy new third wish fourth forward to take call, – in earnings holidays Albert to today’s results to that I and

Jose Molina

Stay Safe.


for concluded. this at now presentation Thank has today’s you lines conference and now time. your may The disconnect you attending