Mega TV Drags On Profits For SBS


Spanish Broadcasting System released its Q2 2017 results following Monday’s Closing Bell on Wall Street, and in doing so revealed a fact that could be vexing to Chairman/CEO Raúl Alarcón Jr.: SBS’s TV division saw local sales decreases that led to a 24% drop in segment net revenue.

If not for its Mega TV operation, SBS would have seen a flat Q2, driven by special events tied to its radio stations.

For the quarter ended June 30, 2017, consolidated net revenues decreased by 3%, to $34.2 million.

But SBS’s net revenue for its radio segment was flat, decreasing by $200,000 to $31.3 million. The decrease was largely due to declines in both national and local revenue. But an event tied to SBS’s regional Mexican KRZZ-FM 93.3 “La Raza” in San Francisco offset those dips.

There were no such positive offsets for Mega TV in Q2, as net revenues for SBS’s TV segment fell by $900,000, to $2.9 million.

Meanwhile, Alarcón explained that SBS’s financial results were also impacted by an accrual of a franchise tax liability.

Even so, Alarcón said, “We continue to make progress from an operational perspective.”

He pointed to SBS’s Nielsen Audio ratings and “further penetration” of the company’s LaMusica mobile entertainment platform.

“We enter the second half of the year with a sharp focus on further leveraging our innovative multi-media platform and capabilities and delivering targeted and engaged Latino audiences to our advertising partners,” Alarcón said.

SBS uses a key non-GAAP measure — adjusted OIBDA — when reviewing its financial health.

In Q2, consolidated adjusted OIBDA fell 34%, to $8.1 million. Radio segment adjusted OIBDA slid by 24%, to $10.7 million.

Meanwhile, radio station operating expenses increased for SBS, mainly due to special events, taxes and licenses, Aire network-related affiliate compensation, Nielsen Audio bills, and the acquisition of digital programming content.

This was partially offset by lower compensation and benefits, commissions, marketing and transmitter rent expenses.