Hemisphere Media Group Announces Fourth Quarter and Full Year 2013 Financial Results

  Hemisphere Media Group Announces Fourth Quarter and Full Year 2013 Financial
  Results

Business Wire

MIAMI -- March 10, 2014

Hemisphere Media Group, Inc. (NASDAQ:HMTV) (“Hemisphere” or the “Company”),
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 fourth quarter and full year ended December 31, 2013.

Alan Sokol, CEO of Hemisphere, stated, “We are very pleased with our full year
results, our first as a public company. Our results underscore both the
strength and unique position of our platform, which will be significantly
bolstered following the closing of our acquisition of three major
Spanish-language cable television networks from Media World, LLC. Further, we
have continued to demonstrate robust growth of our retransmission and
subscriber fees.

WAPA-TV delivered its highest ratings of the year in the fourth quarter, and
its dominant market position ensures its continued strong revenue performance,
even in a challenging environment. Cinelatino continued to demonstrate ratings
leadership across key demographics while simultaneously expanding its
subscriber growth by 10% from the prior year. Further, the Company plans on
subscribing to Nielsen ratings for WAPA America in 2014, which the Company
believes will be attractive to national advertisers and will help to build on
its strong performance in 2013.”

On April 4, 2013, Hemisphere completed a series of mergers pursuant to which
WAPA 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 was the accounting
acquirer and predecessor, whose historical results became the historical
results of Hemisphere. The operating results presented in this release reflect
the operating results of all the businesses acquired in the Transaction since
April 4, 2013.

Net revenues for the three months ended December 31, 2013 was $25.9 million,
an increase of 12%, compared to net revenues of $23.1 million for the same
period in 2012. Net revenues for the full year ended December 31, 2013 was
$86.0 million, an increase of 21%, compared to net revenues of $71.4 million
for the same period in 2012. This increase is primarily a result of the
inclusion of the net revenues of Cinelatino since the consummation of the
Transaction in 2013, offset in part by loss of political advertising revenue.

Pro forma for the Transaction occurring on January 1, 2012, and excluding
political advertising revenue in the 2012 period, net revenues for the year
ended December 31, 2013, increased by $2.3 million, or 3%. This increase was
driven by growth in subscriber fees, offset in part by the loss of advertising
revenue resulting from the cancellation of one of WAPA-TV’s television
programs, SuperXclusivo.

Operating expenses were $20.9 million for the three months ended December 31,
2013, an increase of 48% from operating expenses of $14.1 million in the year
ago quarter. Operating expenses were $78.3 million for the full year ended
December 31, 2013, an increase of 55% from operating expenses of $50.5 million
in the year ago period. This increase in operating expenses was due to the
inclusion of Cinelatino’s operating expenses and corporate overhead, offset in
part by lower programming costs at WAPA due primarily to the cancellation of
SuperXclusivo. We also incurred in the 2013 periods, non-cash charges
comprised primarily of stock compensation expense, and one-time charges
comprised primarily of fees and expenses related to the Transaction and the
expected acquisition of the Media World networks.

Net income was $2.6 million for the three months ended December 31, 2013, a
decrease of $3.9 million compared to net income of $6.6 million for the same
period in 2012, and net loss was $4.3 million for the full year ended December
31, 2013, a decrease of $15.3 million compared to net income of $11.0 million
for the same period.

Adjusted EBITDA decreased $0.2 million, or 2%, to $10.3 million for the three
months ended December 31, 2013, and increased $7.7 million, or 30%, to $33.8
million for the full year ended December 31, 2013. Pro forma for the
acquisition of Cinelatino occurring on January 1, 2012 and excluding political
revenue in 2012, the Company’s Adjusted EBITDA increased approximately $4
million, or 12%, to $38.1 million.

The Company is forecasting 2014 full year Adjusted EBITDA of $49 to $51
million, assuming the inclusion of the operating results of the Media World
networks as of April 1, 2014.

The Company believes that WAPA-TV’s overall percentage share of upfront buys
in 2014 will increase from the prior year. Additionally, the Company believes
that WAPA-TV’s strong ratings will enhance the network’s ability to capture
significant retransmission fee growth.

As of December 31, 2013, the Company had $172.5 million in debt and $176.6
million of cash. The Company’s leverage ratio was approximately 4.5 times. As
previously announced, the $102.2 million purchase price, subject to
adjustments, for the acquisition of the Media World networks will be funded
with cash on hand and is expected to lower the Company’s leverage ratio on a
pro forma basis as of December 31, 2013, to approximately 3.3 times.

The following tables set forth the Company's financial performance for the
three months and year ended December 31, 2013 and 2012 and selected balance
sheet data for the year ended December 31, 2013 and 2012 ($ in thousands):

                              Three Months Ended      Year Ended
                               December 31,              December 31,
                             2013       2012          2013       2012
                               (Unaudited)               (Audited)
                                         
Net Revenues                   $25,876   $23,091      $86,005   $71,367 
Operating Expenses:
Cost of revenues               10,133      9,151         33,950      32,409
Selling, general and           7,107       3,752         29,678      13,667
administrative
Depreciation and               2,585       981           8,762       3,723
amortization
Other expenses                 900         188           5,694       703
Loss (gain) on disposition     132       49           199       (1      )
of assets
Total operating expenses       20,857    14,120       78,284    50,501  
Operating income               5,019     8,971        7,720     20,866  
                                                                     
Other Expenses:
Interest expense, net          (2,967  )   (775    )     (7,177  )   (3,501  )
Loss on early extinguishment   -           -             (1,649  )   -
of debt
Other expense, net                       (13     )     (63     )  (50     )
                               (2,967  )  (787    )     (8,888  )  (3,551  )
Income (loss) before income    2,052       8,183         (1,167  )   17,315
taxes
Income tax benefit (expense)   587       (1,634  )     (3,130  )  (6,285  )
Net income (loss)              $2,639    $6,550      ($4,297 )  $11,030 
                                                                     
Reconciliation of net income (loss) to Adjusted
EBITDA:
Net income (loss)              $2,639      $6,550        ($4,297 )   $11,030
Add (deduct):
Income tax (benefit) expense   (587    )   1,634         3,130       6,285
Other expenses, net            2,967       787           8,888       3,551
Loss (gain) on disposition     132         49            199         (1      )
of assets
Depreciation and               2,585       981           8,762       3,723
amortization
Stock-based compensation       1,574     -            7,192     -       
EBITDA                         9,310       10,001        23,874      24,589
Transaction expenses           900         188           5,694       703
Non-recurring expenses         74          152           4,206       152
Management fees                -         156          -         625     
Adjusted EBITDA                $10,284   $10,497      $33,774   $26,069 


Selected Balance Sheet Data

               Year Ended
         
               December 31,
         2013         2012
               (Audited)
Cash           $176,622     $10,084
Debt           $172,481         $57,012


Non-GAAP Reconciliations

Within Hemisphere’s fourth quarter and full year 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 fourth quarter and
full year 2013 financial results at 10:00AM ET on Monday, March 10, 2014. 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) 515-2908, or from outside the United States at (617) 399-5122, at least
five minutes prior to the start time. The conference ID for the call is
20351823.

A replay of the call will be available beginning at approximately 2:00PM ET
March 10 by dialing (888) 286-8010, or from outside the United States by
dialing (617) 801-6888. The conference ID for the replay is 58593238.

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. Such risks, uncertainties and assumptions include: (1)
risks relating to any unforeseen liabilities of Hemisphere and the acquired
assets in the Media World acquisition, (2) future capital expenditures,
expenses, revenues, earnings, synergies, economic performance, indebtedness,
financial condition, losses and future prospects, businesses and management
strategies and the expansion and growth of the operations of Hemisphere; (3)
Hemisphere's ability to successfully integrate the acquired assets in the
Media World acquisition and achieve anticipated synergies; (4) the risk that
disruptions from the Media World transaction will harm Hemisphere's business;
and (5) Hemisphere's, plans, objectives, expectations and intentions
generally. Additionally, 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 Reports on Form
10-Q, 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 13 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
 
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