Univision IPO – Profitable?

If there is a Univision IPO in 2017 then will it be profitable or not? This is a question asked, or at least the latter part has been asked with some variants ever since the giant Spanish-language broadcaster announced that it had filed for an IPO back in 2015. Events at the end of 2016 and the early months gave some indications for what the next year might hold and are definitely worth considering if you are interested in the prospect of a Univision IPO. It is a truism to say that matters such as the profitability or otherwise of any IPO depends on market conditions and recent business performance but in this instance, the indications seem to be strong. So let us consider the factors which we mentioned earlier in our search to find an answer to the question that was posed in the title of this article. Do remember though that as always no guarantee of what the future holds and the events of early 2017 may not mirror those prevailing in later parts of the year.

Questions about the profitability of a Univision IPO were certainly influenced by the company’s strong performance in the last quarter of the preceding year, 2016. Univision announced higher earnings altogether, which in part included proceeds of US$376 from the important FCC spectrum auction. 2016 also saw a 15% rise in revenue and a 7.8% rise in advertising revenue, the respective figures for each of these being $US846.6 million for revenue, of which US$541 million came from advertising. Revenues from non-advertising activities, such as content licensing and carriage fees, also rose by 30.6% to US$305 million. The metrics also looked good, particular attention being drawn to the OIBDA, or Operating Income before Depreciation and Amortisation, which showed a rise of an impressive %16.4, up to US$390.1 million. This was the result of Univision’s media outlets and also its radio division both performing strongly, with gains of over 15% for each. These promising signs might seem to indicate the likelihood of a positive answer to our question in the event of a Univision IPO. We should remember, however, that there is always another side to any story.

The other factors affecting the profitability or otherwise of a Univision IPO are concerned with matters relating to Univision’s audience and in particular, how it is performing in one all-important demographic, that is the 18-49-year-old watchers of Spanish-speaking broadcasts. The same year that saw the impressive figures noted above, also saw Univision lose its leading position with that demographic to Telemundo, which is owned by NBC Universal. Is this perhaps a blip, or is it the sign of things to come, a portent of a future in which Univision continues to lose its position in this demographic?  It is too early to say at the time of writing, but certainly, such a fact cannot be ignored if we a concerning ourselves with the question of the potential profitability of a Univision IPO. However, Univision does remain the most watched of the Spanish networks.

(Simon Topliss, Research)

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