As Entravision heads into the fourth quarter, it is network and national spot business that is driving it radio division. While the Spanish-language broadcast and digital company has been making headlines lately with its aggressive digital acquisition strategy, it has also turned around the performance of its 49-station radio division.
Speaking with media analyst Aaron Watts at Deutsche Bank’s 29th Annual Leveraged Finance Conference last week, Chief Financial Officer Chris Young chalked up the solid performance in network and national to Chris Munoz, who joined the company as Executive VP of National Sales in June 2020 from a similar position at Univision. “There's no magical ad category that's been driving that performance other than just a consistent performance out of the national team that we have,” Young explained.
With listening back on track after the pandemic shut down workplaces and paused the commuting ritual for many, Young said the radio business is turning around. Like others in the media business, Entravision made significant cost cuts to preserve cash during the depths of the 2020 ad pullbacks. Now Young is betting that investors will like the profit margins the company will be reporting in its third quarter results. “Because of the cost cuts, you're gonna see margins unlike any margins we've produced out of that that division for years, he said. Entravision’s profit margins for its radio unit are expected to be in the low-to-mid 30% range. That’s a major turnaround from what Young said was a break-even radio business two years ago.
Putting some numbers on the cost cuts Entravision enacted last year, Young said its radio and TV workforce went from 1,000 full-time employees across both platforms to 600 today. “We've learned to do a lot more with less,” he said. “As business builds, we've been bringing some people back, but we're never going to get back to pre-COVID levels as far as the employee base is concerned.” The workforce reduction allowed Entravision to take “at least $10 million and change out of the radio business and probably about $5 million and change out of the TV business over the past 24 months,” Young said. “And those costs for the most part are permanent.”
Last fall, Entravision fired up a new streaming platform to aggregate all of its radio stations and programs. Branded as El Botón (The Button), the platform is complemented by a mobile app which includes functionality for live chats, while offering podcasts, playlists and social media platform access. Young said they are currently seeing about 3.5 million stream downloads per month with an expectation that will double in the next 12 to 24 months. While it is derived from the company’s radio stations and other digital-only content, the revenue doesn’t show up on the radio division side of the ledger but instead filters into the digital side of the company’s revenue stream. “It is a medium of growing importance for our overall business,” Young said.