Atresmedia Corporación de Medios de Comunicación, S.A. (A3M) Earnings Call Transcript & Summary

Hi. Good morning, everyone. Thank you for attending this conference call in which we are presenting our financial results for full year 2024. As usual, we will be highlighting the main issues in the year, and we will also go into the strategic overview for the strategic plan '23-'26. The speakers will be, as usual, Silvio González, Vice President of Atresmedia; and Fernando Costi, CFO. And without further delay, I hand over to Silvio who will explain on the results for the year.

Thank you, David. Hello. Good morning to everyone today for attending the meeting. As you see that my voice is a little bit damaged by a cough that I try to go up to be here. Well, I mean we have just to highlight this an outstanding year. I think 2024 has been a very good year for Atresmedia as a group. And let's go through the year and the different items of our business. In terms of audience, I mean this has been a very good year. We have led the year in audience terms, the third year in a row that we are leading with a total audience of 26.4%. And this is the largest gap versus Mediaset we have had all times. Remember also that we have a channel less, so it means that it's been a very good result in terms of audience. We have led not also in the general terms either in audience but also in the prime-time slot where we have had a result of 25.9%, and we have been leaders for the fourth consecutive year. So let's say, very, very good figures in terms of audience for the group. If we go a little bit down to Antena 3, our main channel. We have been the most viewed channel in Spain this year, 2024, with an audience rate of 12.6% in terms of total individuals. And if we go to the prime time, the result has been 13%. LaSexta, our second main channel also got a very good result in terms of volume, 6.4% in total individuals and 7.2% in commercial target. And of course, we have beat our rival, Cuatro, by a [Audio Gap] And if we take in considerations our 4 complementary channels, the result has been 7.5%, which is the best rating since 2020. So very good results in terms of audience for all the channels of the group and the group itself. Going to digital. We have consolidated our leadership on all the national audiovisual players in terms of unit users with an average of 23.8 million in 2024. And we have ranked the ninth of the top most visited sites. On our video-on-demand platform, Atresplayer, 20 million video hours were consumed by the end of 2024, which means an increase of 7%. And attending our subscription VOD, we have the year finished with 677,000 paid subscribers by the end of last year. And so let's say, all the audiovisual business in general has had -- I can see we have good results in every milestone you can see. In terms of radio, we have had an average audience of around 3 million listeners, attending to the last survey of the PGM, which is the best result in the last 3 years. Going to the advertising market. Television, which, as you know, now we consider what we say conventional and digital, the increase of the market has been 2% in the period. And in the case of radio, it means that the increase has been 7.4%. So very good results on radio and also good results in terms of television. Total revenue for the group has been EUR 1.018 billion, which means an increase of 4.8%, which is the best since 2019. Regarding the audiovisual part of the group, the total net revenue has been EUR 943 million with an increase of 4.5% on a year-on-year basis. Atresmedia net advertising revenues in audiovisual content, which means that the old television/digital, was EUR 803 million, which means an increase of 2.5%, which is a significant growth on a year-on-year basis due to the strong audience, the commercial policy and the market positioning in the AVOD, CTV and all other -- and all our digital activities. The content production and distribution division reached EUR 92.5 million, which means an increase of 21.5%. This is based on the higher box office. Also, a very nice increase in subscription VOD subscribers and also some increase in sale of contents to third parties. In the other divisions, the revenues grew by 11% and went up to EUR 48.4 million. That reflects a pretty good level of activity especially in events. And thanks to the incorporation of the new companies to our perimeter, let's say, Waynabox, for example. Going to radio activities. The net revenue for radio was EUR 82.5 million, which means an increase of 7.1%, in line with the radio market, which has been 7.4%. So I mean the radio has performed in the same line as the radio market. The total OpEx for the group has been EUR 840 million, which is an increase of 5.3%, and the EBITDA has reached EUR 177.6 million, which means an increase of 2.6% compared to 2023 and is the best EBITDA since 2019. That implies that the EBITDA margin has been 17.5%. And the net profit came up to EUR 120.3 million, which means an increase of 1.4% compared with the EUR 118.6 million that we obtained in 2023 in a pro forma net profit. So that's out of the, let's say, financial position. Let's have a look to the cash position. By the end of 2024, our net cash position has reached up to EUR 140 million, which means that we have had a very good cash flow conversion, 1x EBITDA. In terms of dividends, we have distributed EUR 101 million in dividends in 2024 or, say, EUR 0.45 per share, which means that it has been EUR 1.24 share as final complementary dividend for 2023 financial year paid in June 2024 and EUR 0.21 per share as 2024 interim dividend paid in December 2024. Estimated total shareholder return in 2024, the share price plus dividend would have exceeded 30%. In relation to the Board of Directors that we had yesterday, it has been approved a complementary dividend for 2024, which would be -- it's finally approved by the general assembly of EUR 0.47 per share that should be paid in June 2025. Therefore, total dividend distribution would reach up to EUR 153 million. That means EUR 0.68 per share, which means an increase of 62% compared with the one we had in 2023. So I think this is very good news for the shareholders of the company. So with this, we have finished the financial results, and let's give a slight overview to the year. And let's do it by following the strategic plan that we showed you by 2023 in the same -- I mean, same date of 2023. So as you know, we have, let's say, 7 pillars, which really we foresee about our group in the [Audio Gap] First of all was about the audience, which is the consolidation of the audience in -- for the group. Well, I think that we have achieved what we committed because I mean we have been the leaders as a group in audience but not [ that in jazz ], also in prime time. We are a leader in news. We have the best program in fiction and entertainment. So let's say, we have got all the results we pursued in 2024. And what has the meaning in terms of financial? Well, we have the premium price of all media in Spain. We have increased our CPM by 5% compared with 2023. And we have been the most innovative company in terms of addressable TV, HDTV. So I think that we are at the front of the innovation in European and Spanish television. So what do we expect for the next year for 2025? I think we will go on with our pricing power and try to increase the price of our digital audiovisual offer. And so we will go for that goal in the future. We also will improve as we increase our bet on enhancing addressable television. And we are also going for the maximizing our value in all the social media so that we go on increasing our revenues for the group in all these new areas of the company. The second one was everything related to digital. We know that the future goes by digital, and that's what we are betting on. On the AVOD, Atresplayer or AVOD, we have increased our revenues by 10%, and we have increased also the cost per thousand by 10% in video. So we are getting what we were following. In terms of the subscription video on-demand platform, Atresplayer Premium, we have finished the year with 677,000 subscribers. By the end of January, we are nearly 700,000. And so we do think that we will get our goal of getting 800,000 subscribers by the end of 2025. As you know, we have a 3-tier offer, and it's doing quite well. And we do think that with this subscription video on-demand platform that allows us to get the full 360-degree circle that we explained to you in some other times. So what do we expect for the next future in 2025 and on? Well, we will go on rising prices that will allow us to exploit our products in a better way, not only in the open television, AVOD, SVOD, but also selling content to third parties. And that will also mean that we could also improve our international operations. I think by the end of 2024, we have something like 150,000 subscribers outside Spain. And that's something that it's going, growing very steadily, and we do think that it will be an important part of the business in the near future. So that's something we will go on, and we do think it's working quite well. On the content exploitation, which is very much related to what I told you about the AVOD and SVOD, I think that we have had a very good result in terms of the exploitation of all our content. We have here 2 examples with these Entre Tierras and Sueños de Libertad, which is products that we have exploited in subscription in the AVOD, in television, and also we have sold that to third parties. So we will go on with this business. It's doing well. It allows us to have very good quality products in our platform but also sell it to third parties with very good results in terms of economic results. So I think that this, what we call the 360-degree strategy is performing quite well. And so we will go on for that in the future. On the content production, well, our business is content because I mean all what we do is exploit the content, and the best content we have, the better we can exploit that in all our platforms. So we will go for this strategy. Now we invest in products something like EUR 400 million per year, and that allows us to be the best company in terms of audience in Spain. I mean there is no secret about that. You have to invest money to have good product. So there's no other way. And what do we do in order to do that? First of all, we have very good relations with all the content producers in Spain with the best talent. We invest in some of this company because we do have very close relations with them. That allows us to be the first in order to have the best ideas in order to invest in that and so launch that in our different platforms. So that's something that we will do that in the future. We will also see and searching what's in the market and try to get closer relations with all these new talents that will be the future of the content production in Spain, and we do want to have them by our side so that we could get profit off from that relation. At the same time, as you know, we have invested in small companies that produce digital-native content like Ac2ality, which is a TikTok -- I mean it has also some Instagram reels. But I mean it's the way we have to get very close to this new native content is doing quite well, and we will also go after that and -- because I mean that's something we can learn about how to do things, which is a new language. And of course, we -- still small money, let's say that, but that allows us to be -- and to know what's going on in all these new platforms. And also, we have been -- we launched the Onda Cero podcast by the 2024. It's doing quite well, but let me say that there's not enough money after podcasts in this very moment. I mean we expect that in the future, this will mean a source of revenues, but from this moment, we can only say that there's people who consume that, but I mean there's not a lot of money about that. But anyway, we do think that we -- because we are audiovisual content producers that we should be in this type of business, and we are. And we are very successful, by the way, but at the same time, we don't invest too much money because there is no enough return in order to do that. So that's the situation in this area. And the last, in terms of diversification, I think that we have had a very, very good year. I mean as you know, we sold part of our stake in Fever, 3% of our stake. We sold that by EUR 58 million, which means 7x the investment. And the rest of the stake we do have in this very moment, the fair value is something like EUR 139 million, so -- and Fever is doing quite well from an operational point of view. It's growing in revenues. It's growing in margin. So I think that Fever has been a very, very good investment, and it has given us good results, and we do expect that in the future, it should go out the same way. With our -- we have also some other companies like Waynabox, which is a surprise travel platform. The revenues increased by 30% in 2024. We are opening new markets in France and Italy, and we do hope this will go on for the future and have good results. So let's say that all this diversification, which is a mix of media for equity and cash in some of the company that we do believe more is doing quite very well. Well, I mean there's a mix of different companies that, well, we can -- David can explain to you more of them afterwards because I mean some of them are a little bit weird to explain now here. But I mean we do think that this type of increasing our perimeter by investment by media or by cash is a way to increase our revenues and increase the value of the company. And so far, it's doing quite well, and we will go on for the future. I mean these are the 5 pillars, which were related, let's say, to the business itself. And if we go to the operations, what we are trying is to begin to implement the AI in the company. We begin starting use cases of use that we think would improve our operations and we implemented in advertising in some recommendation system in Atresplayer. But now in 2025, we are increasing the scope and we have -- we are trying to implement in some other different areas of the company, most of them related with news and with content, so that -- let's see what's the effect. And by the end of 2025, we could see which are the effects of implementing AI in the company. So of course -- and we are on the day-to-day trying to be more efficient in identifying actions and try to increase the results of our processes. And of course, just I mean it's a seventh, but I think it's the first one because it's -- let's say, it's on top of everything, is to maximize the shareholder return. I think that 2024 has been a very good year both in terms of the market cap of the company but also in the dividends that we paid. We paid in 2024 EUR 101 million, which means the final we paid in 2023 and plus the interim in 2024. The dividend yield has been something like 11%, which I think is one of the higher of the Spanish Stock Exchange. So -- and we will go on with the same policy. We expect that the conversion of EBITDA and cash flow will be something like 0.8, which is more or less the average of the company in the long term. And we do think that we will go with the same line. The dividend policy will be more or less the same on top of 80% payout for the company, which means a little bit lower than this year. But remember that this year, we are including the sale of Fever that has -- that meant for us something like EUR 60 million of cash for the company. So that's what we are doing for that. Of course, we are also searching the market if there's any company that could increase our operations and also increase in terms of getting more revenues and more EBITDA. And there are some companies we are looking for them that we have not had any final results in order to say that we are just to invest in anything, but we are very active in searching the market in order to see if there's something that could meet our expectations in terms of low price, good revenues and good EBITDA for the company. And so this is the thing, and let's go to the guidance for 2025. I mean what we do expect for the market? Well, January has not been a good market because I mean it's been slightly negative, but remember that in January 2023, there was a huge increase of the advertising market, nearly by 14%. And so if we add up the 2 years, by the end of 2025, January has grown up by something 12%, so I mean, very high increase in 2024, slight decrease in 2025. So as an average and compared to 2022, January will be something like plus 12%. So that's what we see. I mean the market is a little bit strange because I mean there are a lot of uncertainty in different sectors. The automobile sector has -- there's a lot of uncertainty about which could be the -- helps to the acquisition of electric cars. In this very moment, there is no any subsidy to that. But we do think that in the near future, there will be a government decision in order to subsidy the acquisition of this type of car. But what we expect for revenues of 2025 is a small growth of low single digit. That's what we expect for the whole year. We should maintain the margin in the range of 17% to 18% for 2025. In terms of the net financial position after the acquisition -- after the dividends we are paying and the interim dividend we will pay in '25 in June, we say that it should be in the range of EUR 50 million to EUR 75 million. That's the range that we expect. And we will pay a dividend in June 2025 of EUR 105 million, which means, as I have said, a result of EUR 0.47 per share. So that's what we thought of 2024. It's our guidance for 2025. We should see it as a good year, let's say that, but we don't expect the market to grow very heavily because there -- I think that there is still a lot of uncertainties in the economic world and the geopolitical world, and it's difficult to make any guidance, to make any prophecy of what's going to happen in the future. So I think finish with all of that, and now we are open to your questions. Thank you.

Thank you very much. We will move into the Q&A session. Please ask your question if you have any.

[Operator Instructions] Our first question comes from the line of Alvaro from Alantra.

Just a clarification because I don't think I understand completely, so pardon me if you have mentioned this already. Just looking at the sector trends from the TV ad market in Spain, how they have started the year, I didn't catch you correctly with the 12%. I don't know if you were talking about January in 2025, and how -- and also how it has evolved in February and for the rest of the year.

Thank you, Alvaro. No, it was [ hugely ] -- yes. I mean it was compared with 2023. I mean that January 2024 was a very good month with an increase of 14%, and in January 2025, there has been a slight decrease of 2.4%. So if you take these 2 years, you make the average, I mean January has been 10% on the top of the end of 2023. So that's the result.

Okay. Understood. And regarding February, how is it evolving?

February, it's not doing very well as January. But also remember that in February 2024, the increase was 25%. So I mean we should do the same thing, but I mean now it's a little bit worse than January. The main point here is that automobile sector is doing very, very poorly, as I told you. And when we talk to them and ask why this -- what they tell us is that in this very moment, they don't know what's going on with their sector because I mean electric cars are -- the sales are very poor because there are no subsidy, and beyond type of cars, they have to pay, as you know, a certain tax for the CO emission. So that's what we expect that if the new measures of the government in order to subsidy the electric cars, and they do expect that as well, that it will increase their sales. And so this sector will come back to the, let's say, regular activity, which is not doing that in that very moment. So that's why we do think February is being a poor market, poorer than we expected.

Okay. Understood. I was just trying to get around the guidance of same trend than in 2024, which is a flat market. And it was just puzzling me a bit. I wanted to see how the year was starting. And given that consumption is -- continues to fall, it's hard to see that it stays flat. So it's just the outlook for the full year that surprises me.

Well, yes, I mean when we prepare the budget and after looking what happened in 2024, I mean, and the incredible result of the first quarter with that increase, we expected that the first quarter 2025 will be not that good. And we thought that let's say, the increase will be -- will come more in the fourth quarter of 2025, so -- because I mean remember that also the fourth quarter of 2024 was poorer than we expected. And so that's what -- I mean the thing is that the market is more or less going in line with what we expected. It is true that February is a little bit worse than we expected. But I mean we thought that the first quarter will have a result which will be smaller than it was in 2024 because of the increase in that year that was something that -- I mean it was really exceptional for us because I mean there were increases that we don't expect at all. I mean it was 14% in January, 25% in February, which were incredible results that they were, let's say, not normal for that part of the year.

[Operator Instructions] There are no further questions at this time. I will now hand back to Atresmedia.

Thank you very much. Thank you for your attendance. And if you have any other questions, please just contact the Investor Relations department. Thank you very much.