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Cites Higher Expenses From World Cup Coverage, TeleFutura Network Launch

By Published on .

NEW YORK (AdAge.com) -- Univision Communications lowered its forecast for the rest of 2002 after announcing on Wednesday a 22% drop in net income to $22.2 million for the second quarter, due to higher expenses.

Andrew Hobson, Univision's executive vice president, said, "The bad news is that while advertisers continue to spend more on Spanish-language TV, it's not increasing at the rate we originally anticipated.

Lowered growth for market
"We thought the

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Spanish-language TV market was going to grow by 15% to 17.5% this year," Mr. Hobson said."Now eight months into this, we think the Spanish-language market will grow by 12.5% to 14.5%."

Univision reported net revenue rose by 36% to $322.8 million in the second quarter from $237.5 million a year earlier. The company said it now expects 2002 revenues to be in the range of $1.10 billion to $1.13 billion rather than $1.13 billion to $1.17 billion as previously forecast. Since announcing its results after the market closed Wednesday, Univision's share price has fallen by almost 25% to $16.50 after closing at $21.90.

Higher expenses
Univision executives said 2002 expenses will increase by as much as $220 million from 2001. They attributed the rise to the launch this year of a second network, TeleFutura ($100 million), costs related to Univision's music group ($65 million) and heavy coverage of the World Cup soccer tournament on Univision, TeleFutura and cable network Galavision ($55 million) -- which Univision said attracted 36 million viewers, including more than 15 million non-Hispanics.

Ron Furman, Univision's vice president of network sales, declined to give sales figures for the U.S. Hispanic upfront TV market, but said it is 80% closed and that there is some growth in specific categories, such as retail, fast food, cars, movies and entertainment.

Radio acquisition
In June, Univision announced plans to acquire the largest U.S. Hispanic radio network, Hispanic Broadcasting Corp., in an all-stock deal valued at about $3 billion. HBC, owner of 55 radio stations, announced second-quarter results Tuesday, with net income rising to $10.4 million from $10.2 million for the second quarter of 2001. Revenue rose by 4.1% to $68.6 million, from $65.9 million a year earlier.

McHenry T. Tichenor Jr., HBC's president-CEO, said, "We anticipate third-quarter revenues will be in the 6% to 8% [growth] range."

Mr. Tichenor said that by working with Univision, the two companies can speed up the influx of new advertisers to the Spanish-language media market.

"Almost two-thirds of the 300 largest national advertisers either don't specifically address the Hispanic markets or do so only in a token fashion," he told analysts. "We know that 10 or 15 years from now, all of these advertisers will be in."

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