Facing a tough year in 2018 because of rising programming costs and lower advertising revenue with no major soccer tournaments on the schedule, Univision said it plans to build up its advanced advertising and direct to consumer businesses.
Speaking on Univision’s fourth-quarter earnings call with analysts CEO Randy Falco called enhancing the company’s advertising capabilities a key area of focus.
Fourth quarter TV advertising revenue was down 20%.
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“The competitive advertising environment requires differentiated offerings,” Falco said. “To start we will continue to increase our capabilities in producing branded content and data-enabled selling. In addition we will increasingly offer advertisers more dynamic packages that capitalize on our unique multiplatform portfolio of network, digital and local assets.
Falco said that in 2017, Univision offered local TV inventory at its upfront for the first time. “We plan to expand on these offerings at our upfront this year,” he said.
Univision also plans to expand its targeted experiential events around sports and music, areas that are passion points for Univision viewers.
“We believe these enhancements in our advertising offerings will allow us to engage with CMOs that are not currently advertising with Univision,” he said.
Falco said Univision will also focus on subscriber revenue and putting content wherever it can be consumed.
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“We will expand our investment in our own direct to consumer platform, Univision Now. This year we also plan to announce an exciting new investment in direct to consumer focused on the passion points of our audience,” he said.
Univision is expecting 2018 to be challenging financially, CFO Francisco J. Lopez-Balboa said on the call.
The payments Univision makes to Televisa for programming are going up. Univision pays Televisa a percentage of its media network revenue and that percentage increased to 16.45% from 11.84% this year.
Lopez-Balboa said that at this year’s revenue levels, Univision would be paying $115 million in additional costs to Televisa.
He added that the combination of the higher programming payments “with no major soccer tournaments airing on Univision in 2018, which we expect will impact total advertising revenue, will create tough year-over-year comparisons.”
The World Cup, which has aired on Univision for many years, this year will be broadcast on rival Comcast NBCUniversal owned Telemundo, which will draw ad dollars from Univision.
Univision is also feeling the effects of the Olympics, being broadcast on NBCU networks
So far in the first quarter, media networks core advertising is pacing down in the high-single digit rate, Lopez-Balboa said.