Entravision has spent the past several months unwinding a global digital footprint that took the company long known for its Spanish-language radio and television stations to the far corners of the globe. The result is a new priority for Entravision, one that is not new at all.
“These actions represent a positive step forward for Entravision,” CEO Michael Christenson said. “We now have the opportunity to focus on our core U.S. media business at a critical time as we navigate the unprecedented changes in the broadcast industry,” he told investors during the company’s quarterly earning call.
It has been several months of dramatic change for Entravision, which had in recent years shifted its focus away from the radio and TV businesses to build a global footprint in the digital ad sales business. But after Facebook parent Meta announced in March that it was winding down its program working with authorized sales partners by July 1, the broadcaster reviewed its digital strategy, operations and costs, and made the decision to reverse course.
In the past several months Entravision has disposed of most of its digital business. At the end of June, it closed on its $16.4 million deal to sell Entravision Global Partners, its digital commercial partnership business unit, to Aleph Group, including all of the company’s digital sales rep operations in 33 countries, including in Latin America and Asia. Entravision also sold a controlling 51% equity interest in Adsmurai back to its founders for about $16.2 million. And it sold its entire stake in Jack of Digital back to its founder for $100,0000. The change in focus also shook up the C-suite. Entravision parted ways with CFO Chris Young and Chief Digital Officer Juan Saldivar in May.
While $4.9 million of the sale proceeds went to make a mandatory loan repayment, Entravision says it is using the proceeds from the sale to put its strategic focus back on the media business.
“We have made significant investments this year to expand our news production capabilities and the amount of news that we provide for our audience,” Christenson told investors. “We have also invested in our sales organization to build a team that can engage directly with political decision makers and educate them about our audience and how Entravision can help them reach our audience.” He noted that one in five U.S. Hispanics live in a market where the company owns either radio or TV stations.
But even as Entravision has downsized its digital ad sales business, it continues to own Smadex, the programmatic ad purchasing platform, and Adwake, the mobile growth solutions business. Christenson said they will continue to make “significant investments” in its remaining advertising technology and services businesses to improve their platforms and operational capabilities. “Both of these businesses are now growing faster than their industry growth rates and they are profitable,” he said.
Entravision had $41.1 million in digital revenue during the second quarter, a 36% increase compared to the second quarter of 2023. CFO Mark Boelke said the jump was driven primarily by Smadex and Adwake. And digital revenue is tracking up 17% in the current quarter. The improvement was attributed to Smadex and Adwake.
Looking ahead to the third quarter, digital revenue is pacing plus 17% compared to 2023.
Investing In Audio
Entravision’s 44-radio station group had revenue of $13 million during Q2, as gains in political ad revenue failed to overcome a weaker ad market. But the audio business remains solidly profitable. It reported a $1.9 million operating profit for the audio segment during the quarter, which was a 21% improvement from the prior year.
Boelke said the increase was primarily due to savings in rent expense related to a decision to move from a standalone audio operations center into the corporate headquarters.
“We’ve taken steps to strengthen our audio content and radio station footprint that we believe will provide stronger ratings in advertising revenue,” Boelke told investors. He pointed to a three-year extension of their deal with the NFL to make Entravision the league’s exclusive Spanish-language audio home as an example. “We believe the NFL continues to see the value and power of connecting with our audiences,” Boelke said.
For the third quarter, Entravision says audio segment revenue is pacing flat compared to last year. It expects that pace to increase as political advertising picks up throughout the quarter. But in the long-term, Entravision says the audio business will continue to require additional attention from management as changing habits of listeners and advertisers in favor of digital media will need to be addressed.
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