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Univision prepares to push subs to other distributors as DISH impasse lingers

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Univision prepares to push subs to other distributors as DISH impasse lingers

With a dispute triggered by retransmission-consent woes and a two-month-old blackout that DISH Network Corp. executives believe could be permanent, Univision Communications Inc. is ready to deploy its portfolio to direct the distributor's subscribers to other providers.

New Univision CEO Vincent Sadusky informed analysts on the company's Aug. 9 earnings call that it seems like DISH is "pretty well dug-in. We take their comments at face value. So far, we haven't really promoted and utilized the full strength of all our networks to convert their subscribers to other providers. But we are fully prepared to do that."

Sadusky said messaging would change to let subscribers know, as DISH has, that the dispute could be long-term and that "it benefits us to move those subscribers as quickly as possible to alternative services," either to its direct-to-consumer Univision Now offering or one of the distributors in the marketplace.

Disagreeing on the value of retransmission-consent and other carriage fees, the parties disconnected on June 30, with Univision (US), UniMás (US) and cable channel Galavision (US) remaining dark on the satellite service since then. Those properties, as well as dedicated sports cable service Univision Deportes (US), El Rey Network (US), Univision tlnovelas (US) and FOROtv (US), remain off on virtual provider Sling TV.

Speaking on its Aug. 3 earnings call, DISH executives reiterated that the parties remain far apart on price, with the distributor saying Univision is seeking a 75% increase, despite significant ratings erosion. DISH Chairman Charlie Ergen said this is "probably an inflection point, at least in our company. I believe this one, personally, is probably permanent."

Sadusky countered on Univision's call saying the company has the second-most-viewed network and the third-most-viewed sports channel across DISH's entire customer base, regardless of language. "I think the bottom line is you can't have a Hispanic service without us," he said.

Univision has tried to make DISH recognize that the expired deal is over half a decade old, according to Sadusky: "We're not asking them to do anything outrageous in terms of being an outlier with our per-sub fee based upon the programming and the audience we deliver."

If DISH doesn't start to negotiate in "a real serious way, we are ready to go in terms of using the full promotional capabilities of our company, which are very significant and begin to convert what we believe is well over 1 million DISH Latino subscribers." That total excludes Hispanics subscribing to the non-Latino service.

CFO Peter Lori called DISH "an important customer, our top seven distributor." He said Univision has distribution revenue exceeding $1 billion, "so it's an important component of our overall results." But to the extent that "we are not able to maintain the flow of subscriber fees from DISH, we'll be working to convert that over to other distributors."

Univision has received more than 100,000 phone calls from customers over the blackout, according to Sadusky, who also noted there has been a "significant uptick" in Univision Now customers since the networks went dark.

The carriage standoff comes as Univision has encountered a number of issues. The U.S. Spanish-language media leader has seen turnover in its executive suite with the recent departures of top programmer Isaac Lee and Chief Revenue Officer Tonia O'Connor.

The company has laid off a number of employees and put digital assets under the Gizmodo Media Group and The Onion portfolio up for sale to concentrate more resources on its core businesses.

During the second quarter ended June 30, Univision reported a 2% decline in total revenues to $749.8 million from $764.9 million in the prior-year period. Advertising revenues declined 7.3% to $434.0 million, while nonadvertising revenues, comprising contributions from subscriber fee revenues, content licensing and other revenues, was up 6.5% to $315.8 million.

Media networks ad revenue declined 7.9% to $372.3 million, reflective of declines in spending by packaged goods, retail and restaurant brands, softness with the auto category at its local stations, and the impact of the 2018 FIFA World Cup, which aired on rival Telemundo Deportes.

Nonadvertising media networks revenue grew 6.5% to $312.8 million, with contributions from subscriber fees ahead 7.9% to $279.6 million, largely due to the timing of distribution renewals and contractual rate increases.

Net income attributable to Univision and subsidiaries was $114.3 million, compared with $106.1 million in the second quarter of 2017.