Hemisphere Media Announces Third Quarter 2013 Financial Results

  Hemisphere Media Announces Third Quarter 2013 Financial Results

Business Wire

MIAMI -- November 13, 2013

Hemisphere Media Group, Inc. (NASDAQ:HMTV) (“Hemisphere”), the only publicly
traded pure-play U.S. media company targeting the high growth Hispanic
TV/cable networks business, today announced financial results for the third
quarter ended September 30, 2013.

On April 4, 2013, Hemisphere completed a series of mergers pursuant to which
InterMedia Español Holdings, LLC, (“WAPA”), which includes WAPA America and
WAPA TV, Cine Latino, Inc. (“Cinelatino”) and Azteca Acquisition Corporation
(“Azteca”), a special purpose acquisition company, each became indirect,
wholly owned subsidiaries of Hemisphere (the “Transaction”). WAPA is the
accounting acquirer and predecessor, whose historical results have become the
historical results of Hemisphere. The operating results presented reflect the
operating results of all the businesses acquired in the Transaction since the
merger date.

Net revenue for the three months ended September 30, 2013 was $23.7 million,
an increase of 35%, compared to net revenue of $17.5 million for the same
period in 2012. Net revenue for the nine months ended September 30, 2013 was
$60.1 million, an increase of 25%, compared to net revenue of $48.3 million
for the same period in 2012. This increase in revenue is primarily a result of
the inclusion of the net revenue of Cinelatino since the date of the merger.
Excluding the acquisition in the 2013 periods and political advertising
revenue in the 2012 periods, for the three and nine months ended September 30,
2013, net revenues increased by $0.5 million, or 3%, and $0.3 million, or 1%,
respectively. The increase in revenue for the current quarter was due to a 15%
increase in retransmission and subscriber fees, and a 1% increase in
advertising revenue, despite the cancellation earlier this year of one of
Puerto Rico’s top-rated television programs, SuperXclusivo. The increase in
revenue for the nine month period was due to a 15% increase in retransmission
and subscriber fees offset in part by a 3% decline in advertising revenue as a
result of the cancellation of SuperXclusivo.

Operating expenses were $19.6 million for the three months ended September 30,
2013, an increase of 41% from operating expenses of $13.9 million in the year
ago quarter. Operating expenses were $56.5 million for the nine months ended
September 30, 2013, an increase of 55% from operating expenses of $36.4
million in the year ago period. The increase in operating expenses were due to
the inclusion in the current quarter of Cinelatino in the operating results
since the consummation of the Transaction, offset in part by lower programming
costs at WAPA due primarily to the cancellation of SuperXclusivo.

Net loss was $4.0 million for the three months ended September 30, 2013, a
decrease of $4.9 million compared to net income of $0.9 million for the same
period in 2012, and net loss was $6.4 million for the nine months ended
September 30, 2013, a decrease of $10.9 million compared to net income of $4.5
million for the same period.

Adjusted EBITDA increased $4.0 million, or 85%, to $8.8 million for the three
months ended September 30, 2013, and increased $7.9 million, or 51%, to $23.5
million for the nine months ended September 30, 2013. We have previously
disclosed Adjusted EBITDA for each of WAPA and Cinelatino for the nine months
ended September 30, 2012, which when aggregated, total $25.5 million. Assuming
Cinelatino was acquired on January 1, 2013, Adjusted EBITDA for the nine
months ended September 30, 2013 was $27.8 million, an increase of $2.3
million, or 9.1%, as compared to the same period in 2012.

Alan Sokol, CEO of Hemisphere, stated, “We are very pleased with our third
quarter performance. Our cable television networks, Cinelatino and WAPA
America, continue to be leaders in U.S. Hispanic television with strong
subscriber revenue growth. WAPA-TV remains the top-rated television network in
Puerto Rico and our ratings showed quarter-over-quarter growth, increasing the
size of our ratings lead over our competitors. Our ratings success and growth
in retransmission and subscriber fees among all of our networks have largely
offset the impact on the advertising market of the well-publicized economic
challenges faced by Puerto Rico. However, given the seasonally higher
advertising dollars in the fourth quarter, and a Puerto Rican television
advertising market that we now believe will be flat with last year, full year
EBITDA performance could be impacted by approximately 5%-7%. We believe that
the Puerto Rican government has taken steps to stabilize the economy, which
combined with growth from retransmission and subscriber fees and advertising
in our other networks, should moderate the impact of any future economic
volatility. We also continue to aggressively pursue acquisitions which will
further expand our revenue base and take advantage of our unique position as
the leading Hispanic network platform.”

The following tables set forth the Company’s financial performance for the
three and nine months ended September 30, 2013 and 2012 ($ in thousands):

                              Three Months            Nine Months
                               Ended                     Ended
                               September 30,             September 30,
                               2013       2012          2013       2012
                                                                     
Revenues                       $23,705     $17,544       $60,129     $48,277
                                                                     
Operating Expenses:
Cost of revenues               10,290      9,234         23,818      23,258
Selling, general and           6,597       3,309         21,670      9,915
administrative
Depreciation and               2,586       920           6,177       2,742
amortization
Other expenses                 122         430           4,794       516
Loss (gain) on disposition     -           -             68          (50     )
of assets
Total operating expenses       19,595      13,893        56,527      36,381
Operating income               4,110       3,651         3,602       11,896
                                                                     
Other Expenses:
Interest expense, net          (2,339  )   (853    )     (4,210  )   (2,727  )
Loss on early extinguishment   (1,649  )   -             (1,649  )   -
of debt
Other expense, net             (37     )   (13     )     (63     )   (37     )
                               (4,025  )   (866    )     (5,922  )   (2,764  )
Income (loss) before income    $85         $2,785        $(2,320 )   $9,132
taxes
Income tax expense             (4,070  )   (1,829  )     (4,064  )   (4,652  )
Net (loss) income              $(3,985 )   $956          $(6,384 )   $4,480
                                                                     
Reconciliation of net (loss)
income to EBITDA:
Net (loss) income              $(3,985 )   $956          $(6,384 )   $4,480
Add (deduct):
Income tax expense             4,070       1,829         4,064       4,652
Other expense, net             2,376       866           4,273       2,764
Loss (gain) on disposition     -           -             68          (50     )
of assets
Loss on early extinguishment   1,649       -             1,649       -
of debt
Depreciation and               2,586       920           6,177       2,742
amortization
Stock-based compensation       1,611       -             4,717       -
EBITDA                         8,307       4,571         14,564      14,588
Transaction expenses           122         13            4,794       516
Non-recurring expenses         332         -             4,132       -
Management fees                -           156           -           468
Adjusted EBITDA                $8,761      $4,740        $23,490     $15,572


Non-GAAP Reconciliations

Within Hemisphere’s third quarter 2013 press release, Hemisphere makes
reference to certain non-GAAP financial measures such as – “EBITDA” and
“Adjusted EBITDA.” Whenever such information is presented, Hemisphere has
complied with the provisions of the rules under Regulation G and Item 2.02 of
Form 8-K. The specific reasons why Hemisphere’s management believes that the
presentation of these non-GAAP financial measures provides useful information
to investors regarding Hemisphere’s financial condition, results of operations
and cash flows has been provided in the Form 8-K filed in connection with this
press release.

Conference Call

Hemisphere will conduct a conference call to discuss its third quarter
financial results at 10:00AM ET on Wednesday, November 13, 2013. A live
broadcast of the conference call will be available online via the company's
Investor Relations website located at http://ir.hemispheretv.com/.
Alternatively, interested parties can access the conference call by dialing
(866) 700-5192, or from outside the United States at (617) 213-8833, at least
five minutes prior to the start time. The conference ID for the call is
77402930.

A replay of the call will be available beginning at approximately 2:00PM ET
November 13 by dialing (888) 286-8010, or from outside the United States by
dialing (617) 801-6888. The conference ID for the replay is 61398608.

Forward-Looking Statements

This press release may contain certain statements about Hemisphere that are
“forward-looking statements” within the meaning of the U.S. Private Securities
Litigation Reform Act of 1995. These statements are based on the current
expectations of the management of Hemisphere and are subject to uncertainty
and changes in circumstance, which may cause actual results to differ
materially from those expressed or implied in such forward-looking
statements.. Without limitation, any statements preceded or followed by or
that include the words “targets,” “plans,” “believes,” “expects,” “intends,”
“will,” “likely,” “may,” “anticipates,” “estimates,” “projects,” “should,”
“would,” “expect,” “positioned,” “strategy,” “future,” or words, phrases or
terms of similar substance or the negative thereof, are forward-looking
statements. In addition, these statements are based on a number of assumptions
that are subject to change. Factors that could cause actual results to differ
materially from those expressed or implied by the forward-looking statements
are discussed under the heading “Risk Factors” and “Forward-Looking
Statements” in Hemisphere’s most recent registration statement on Form S-4
(File No. 333-186210) (the “Registration Statement”), post-effective amendment
No. 1 on Form S-1 to the Registration Statement and Quarterly Report on Form
10-Q for the quarter ended June 30, 2013, each filed with the Securities and
Exchange Commission (“SEC”), as they may be updated in any future reports
filed with the SEC. If one or more of these factors materialize, or if any
underlying assumptions prove incorrect, Hemisphere’s actual results,
performance, or achievements may vary materially from any future results,
performance or achievements expressed or implied by these forward-looking
statements. Forward-looking statements included herein are made as of the date
hereof, and Hemisphere undertakes no obligation to update publicly such
statements to reflect subsequent events or circumstances.

About Hemisphere Media Group, Inc.

Hemisphere Media Group (NASDAQ:HMTV) is the only publicly-traded pure-play
U.S. Spanish-language TV/cable network business serving the high-growth U.S.
Hispanic population. Headquartered in Miami, Florida, Hemisphere owns and
operates Cinelatino, WAPA Television and WAPA America. Cinelatino is the
leading Spanish-language movie channel with more than 12 million subscribers
in the U.S., Latin America and Canada, featuring the largest selection of
contemporary Spanish-language blockbusters and critically-acclaimed titles
from Mexico, Latin America, Spain and the Caribbean. WAPA Television is Puerto
Rico’s leading broadcast station with the highest primetime and full day
ratings in Puerto Rico. Founded in 1954, WAPA Television produces more than 65
hours per week of top-rated news and entertainment programming. WAPA America
is the leading cable network targeting Puerto Ricans and other Caribbean
Hispanics living in the U.S., featuring the highly-rated news and
entertainment programming produced by WAPA-TV. WAPA America has more than five
million U.S. subscribers.

Contact:

For Hemisphere Media Group, Inc.:
Robin Weinberg/Patrick Scanlan, 212-687-8080