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

Good afternoon. Welcome to this conference call, for the presentation of the financial results for the year 2025. The presentation will be given in Spanish, and there is translation service available into English as well as a translation service for the questions. The presentation summarizes the semester prepared by the Executive Chairman, Silvio González. And then we will also have a round of questions with Fernando Costi and also the person responsible for this area. I would now like to give the floor to Silvio González to give the presentation.

Good afternoon. Thank you for attending this conference call presenting the financial results of the semester. As always, we will present a summary and overview of the group's activity, beginning with audience figures in a very complicated context, both in terms of the context, but also audience and also the important context, the first half 2025 has ended with a total audience of 26.4% for the entire group, which is 1.5 points ahead of Mediaset against again -- once again, it was the most watched TV group, and we've been leading 7 consecutive semesters over Mediaset, particularly in television formats despite the fact that we have one channel less. We also lead in prime time and also daytime audience figures were also leaders in the time slot with highest revenues with a prime time figure of 25.7% share, which is 2 points ahead of Mediaset. In addition, it continues to be the TV group that most people pass through every day with almost 17 million unique daily viewers. If we now look at each of the individual channels, then Antena 3 was the most watched channel for the seventh consecutive semester with an audience share of 12.8%, which is 2.9 points above Telecinco. In prime time, with 13.5% share, we're also 3.7 points ahead of our main competitors. La Sexta, which is our second channel, ended the semester with an important market share figure as well, 48 months ahead of its -- that's 48 consecutive months as the third most watched private channel ahead of its newest competitor. And in the 4 complementary additional channels, we've had an overall share of 7%. In digital, Atresmedia consolidated its leadership among national audiovisual players in unique visitors according to the [ Comscore ] survey with a total of 23.1 million in the semester. And we are ranking seventh place in the top 10 of the most visited sites. This means that 5 -- you have to remember that 5 of those companies are companies not related to the audiovisual industry. And in terms of our video-on-demand platform, Atresplayer, we reached a figure of 20 million hours of video and exceeded 700,000 paying subscribers by the end of June 2025. We currently have 710,000 paying subscribers. For Atresmedia Radio, we consolidated the almost 3 million listeners according to the last EGM survey with Onda Cero achieving its record in the last decade. And all of this -- well, these are exceptional achievements in terms of audience figures in terms of our listeners and also our viewers, which have responded favorably with respect to the group's offer, bearing in mind that the context has been very complex. Firstly, due to economic uncertainty, largely fueled by the decisions of the U.S. government and also uncertainty, which has also occurred in the first semester in Spain in relation to mobility, for example, which have not helped the performance, for example, of the stock markets. And if we were to compare the figures with last year, you may remember in the first quarter -- or the first semester of last year -- the first quarter of last year was exceptionally good, where the conditions were particularly favorable for these results. If we now look at the economic magnitude of figures, total revenues for the group in this semester amounted to EUR 507 million, which is down 3.2% with respect to those obtained in 2024. In the audiovisual segment, the audiovisual production revenues stood at EUR 469 million, which is down 3.8% year-on-year. Net advertising revenues of Atresmedia in audiovisual content, as you know, we now present this communication, we defended the theory that we cannot separate, for example, TV and digital. Now the development of all of these products is carried out jointly. And these revenues amounted to EUR 391 million, which is down 5.1%. This is largely due to lower advertising investment, where the CPM value that they seek is greater, particularly in the -- particularly active in the same period of the previous year, such as automotive, telecommunications, beauty and hygiene. In any case, thanks to our audience position and our commercial policy, we have managed to ensure that the price levels have remained at historical highs. Therefore, the downturn or the decrease in turnover was largely due to a lower volume of product than to a decrease in price levels. We also continued to increase our market share in TV and AVOD, advertising-driven video-on-demand, in all of our markets, increasing our shares. The content production and distribution division, as you know, is an emerging area, which in recent years has achieved significant growth, and it continues to do so. This semester, we achieved revenues of EUR 52 million, which is plus 5.1%, driven largely to increase in the number of SVOD subscribers in Atres Premium in the last 12 months with 80,000 new subscriptions in that period and also on the sale of content to third parties. In what we call the other division, revenues reached EUR 26 million, which is largely in line with last year's figure, reflecting slightly lower activity in this area in events in the semester, although this was offset by the increase in turnover in the corporate ventures perimeter with Waynabox [ and Pazy ]. Radio activities is the next point, 2.5% increase -- or there's been 2.5% growth in the radio market with total revenues of EUR 43 million, which is 4.7% up on the previous year. As regards total spend, total OpEx stood at EUR 4,222 million (sic) [ EUR 422 million ], which is 0.1% up on last year. And this reflects the group's efforts to offset inflation or, let's say, the increase in spend with savings measures. EBITDA for the semester stands at EUR 85 million and net profits reached EUR 64 million. Furthermore, another relevant point is our positive net cash position at the end of the semester, standing at EUR 65 million. And that's after the payment of the complementary dividend and the extraordinary dividend payment, which was largely as a result of the sale of our participation in Fever. This cash position -- well, our forecast at least is that this cash position will improve in the second half of the year, largely because of the discrepancies that existed with respect to the deduction of tax losses. As you know, in the Supreme Court, we won the case in this regard. And as a result, a payment of EUR 36.9 million for the period 2016 to 2022 has been ruled in favor of Atresmedia and also the amount of EUR 8.7 million. This amount of EUR 8.7 million has been accounted for in this first semester, but this is not reflected as cash because we haven't received the payment yet. And this has also been done because the auditors recommended that we should follow this criteria. Furthermore, we're also awaiting a positive decision in relation to an additional EUR 37 million -- EUR [ 97 ] million corresponding to the tax losses that we were unable to deduct as a result of the Montoro Royal Decree. And there was interest in our favor of approximately EUR 2 million, which we are looking to receive in this respect. As regards the shareholder return, the semester results have been very good with share value increasing by 50%. If we can also take into account the dividends that have been paid out in this period, shareholders would have received a return of almost 29%. To continue describing some of the lines of activity and some of the decisions that we've taken, which were notified yesterday, we have continued along the line of trying to reinforce and bolster our traditional business. We are on the right track in our opinion. As you know, the audiovisual market has suffered a little in the first semester of the year. We have acquired a 70% stake with a -- in Last Lap S.L. with an option of acquiring the remaining 25%. Last Lap S.L. is an important Spanish benchmark company in the management's organization of large-scale events in what we refer to as the experiences market. It has a turnover of more than EUR 30 million in 2024 with an EBITDA of over EUR 3 million with growth in revenues of 45% in the last 5 years. And our idea with Last Lap is to forge an integration with our events area between now and next year to ensure that we have another company with prospects of achieving EUR 50 million in turnover. And this will make it one of the most important entities in the events sector in Spain. A large number of the clients of Last Lap S.L. are not customers of our group. So these revenues are not concurrent. So this offers good prospects for growth in both directions. And it also engages in international operations, which account for 16% of its operations fundamentally in Portugal and Dubai, but its growth has always been customer-driven. We do not have any interest in opening up delegations or offices. So I think in this respect, in places where we already have a high level of activity in this area. Another important acquisition has been Atresmedia's increased position in Ac2ality, a digital media outlet that seeks to inform through social networks, largely news driven. We've increased our stake from 34% to slightly over 50%, making us one of the majority shareholders. And we've also acquired 15% of [ PLAY’ N' SABADO ]. Also, as part of our strategic plan in the context area, we aim to participate more in small production companies, which will allow us, first of all, to be close to talent and support talent in this respect. And this will also be supportive for our series production because it means that we have these companies close to our activity. We've also acquired 15% of PLAY’ N' SABADO. This is actually a production company, and our interest in PLAY’ N' SABADO is to, let's say, increase our penetration in the new production companies' areas. We've got a 15% stake at the moment. But we consider this to be one of the most valuable sort of assets, let's say, that's increasing its value. They have a good knowledge of the content's ecosystem. And in addition to being profitable through these type of acquisitions, it also ensures that we are close to content or the content segment. And following on from this analysis of the first semester of 2025, and now we can look at what our forecasts are or outlook is for the rest of the year. It's obviously not very difficult because things occur from day to day, which increased the volatility of the system. We believe that the second half of the year will have some positive things for us because you have to remember that there was a very negative impact of the flash floods or the DANA as they are known in Spain last year in the autumn period. And this affected the audiovisual sector and television sector in the specific area. So we believe that, that segment will recover in the final quarter of next year. And we believe that the second semester of this year will be significantly better than the first half of 2025. We expect that certain regulatory aspects will be clarified, particularly in relation to mobility and the automotive segment. And we'll have to determine exactly what their communication decisions are on which type of products those industries would like to commercialize or market. But in this respect, one thing that we have to do is to improve in the second semester. Along similar lines, we have to continue to be very rigorous in cost management terms. In a less buoyant market, we have to be capable of adapting to the needs of that market. And from a financial perspective, we consider that the group's financial position will continue to be very good. And the forecast is to remain close to a position of EUR 50 million to EUR 70 million by the end of the year with a dividend charged and also the dividend that will be paid in December, an interim dividend. We have to remember the disbursement of July EUR 17 million for the acquisition of 75% of Last Lap. We obviously hope to significantly improve our cash position if, of course, you receive the payments from the tax authorities of EUR 37 million plus an additional EUR 8 million corresponding to financial expenses because we haven't received those, and they're not reflected as part of our cash accounts at present. So again, the idea is to maintain our audience figures, our quality products and reinforce our position as benchmark leaders in the Spanish media market, placing great importance on our quality, on media position, particularly in the contents area. And we are aware of the importance that we have and also our responsibility with this obligation within the Spanish society, which is a democratic, which is ruled by -- is a democracy, which is ruled by the rule of law. So we have developed a strategy which reflects our understanding of content production and distribution as a digital channel. Without divisions between analog and digital, we believe that our transition to digital is something that we've already completed, and this is an essential part of our strategy and that our Atresplayer platform in the AVOD market and also the SVOD offer is fundamental to ensure that we can provide quality contents and at the same time, generate broader revenues in broader markets. So that is basically our position, a position that we have communicated with the area. And although there's not much more information I can give you, by December, we will be in a position to be able to sign an agreement with one of the main important streaming providers in the U.S., in the Americas with integration in Atresplayer. This will be very much in line with what is happening in other European audiovisual organizations. So by December, we hope to be in a position to communicate the agreement that we're about to conclude. What else? In radio, we consider that Onda Cero is a benchmark radio platform, radio channel. Radio has been operating excellently in terms of revenues. We don't envisage any changes, and we expect that the market will continue to respond positively, and we hope to continue to move forward in line with that market. And we will also try to see whether we're able to improve our strategic position and reduce our dependence on traditional business. And this is also reflected by our investment in OHS and our most recent investments. As regards to cyber, well, that is proceeding on course in accordance with our strategic plan, and our position is currently at approximately 6%. We'll have to see how that evolves and also look at what type of possibilities Fever offers us in the future. But with Fever, we will continue to be a benchmark investor, the idea being to help the company to grow, become bigger and also more profitable. We believe that important synergies exist between Fever, which will develop further in the future. So that is the position of the situation as we see it. It's true that the first semester wasn't perhaps as we had hoped, but I think that we can be a little bit more positive with a view to the second semester because the comparison with respect to last year, well, it was very good in the months of November and December due to the impact of the flash floods in certain parts of Spain and the impact on certain business segments. Thank you very much. We'll now move on to the Q&A session. If there are any questions or comments from the participants.

[Operator Instructions] And our first question comes from [indiscernible] from Bestinver Securities.

I have various questions. And I've got one doubt. The first question is, you haven't included the EUR 47 million, EUR 48 million that you will obtain in the lawsuit with the tax agency in the net cash guidance. Do you expect to collect this amount in the short term?

Thank you for the question. We've only included -- in the income statement, we've only included the interest, and the collection forecast includes the interest plus the other amount. Once the tax agents settles this amount, it will have to include both amounts. Unfortunately, the audio is cutting out to me, I'm not receiving the audio correctly. We're not exactly sure when we will collect these or receive these figures. Once we collect the full amount from the tax agency of EUR 47 million, we will record this as a payment in cash in our accounts. Do you have another question?

In the communication -- well, the second question I have is when you collect this amount, what plan do you have? What do you plan to do with this EUR 48 million as the distribution as an extraordinary remuneration or something or undertake new acquisitions?

Well, the Board of Directors will have to decide once that occurs. Since we don't have the cash yet, we're not exactly sure what we'll do with that. We haven't had that discussion, but the corresponding decision will be taken, whether we will consider undertaking an investment and the option that we will offer to shareholders. But again, we will report back to the shareholders because it's a decision that has to be taken by the Board once the time comes, and we haven't any decision taken yet.

And as regards to the M&A, do you continue to see important opportunities in this regard regarding mergers and acquisitions for the second semester?

Yes. We have seen some operations that for us could be relevant and important for the group. But at this moment in time, we're unable to give any further details or any assessment of those opportunities.

And 2 additional questions, if you'll allow me. You talked about market recovery in the second semester of the year. With the recovery forecast, do you think that you will be able to achieve what you've indicated in the guidance regarding revenues and expenditure?

Yes. The market is currently 4.6% lower than we initially forecast because July wasn't a good month or it hasn't been a good month so far. With a decrease of between -- there has been a decrease, and this has been -- had a relevant impact across the board. But what we do forecast for the period September to December is that growth in the audiovisual market will increase or will be at around 5%. Why do we believe this? Well, because the impact of the flash floods in the Spain last year was very significant. This year, we don't expect that to happen with -- it had an impact last year in the months of November, December that was very strong, leading to a 7% decrease in activity revenues. That impact won't occur this year. We hope it doesn't occur this year. And in terms of our conversations with advertisers, particularly from the automotive and telecommunications segments, they also reported a very severe impact of the bad weather last year. And they've informed us that they expect the investments that were made in the first semester that were not -- or that were planned for the first semester and were not undertaken will be carried out in the second semester of the year. So for those 2 reasons, we believe that we will end the year with a slight increase in potential revenues compared with last year.

[Operator Instructions] It seems there are no further questions at this moment. I will hand the floor to David.

Thank you very much. Thank you very much for following this conference call, for connecting. And if you have any questions or any doubts or require any additional information, then you can contact the investment department, and they would be delighted to attend and help you. Well, Atresmedia would like to wish you a good holiday, and we'll see you when we come back from the holidays. Thank you very much indeed. [Statements in English on this transcript were spoken by an interpreter present on the live call.]