Hemisphere Media Group, Inc. (NASDAQ: HMTV), the only publicly traded pure-play US media company targeting the high growth US Hispanic and Latin American markets with broadcast and cable television and digital content platforms, has announced financial results for the fourth quarter and full year ended December 31, 2017, the company said.
WAPA suffered significant declines in revenues in the fourth quarter due to the loss of power and services in Puerto Rico. Revenues did improve over the course of the fourth quarter reflecting the progress in restoring power. Notwithstanding the challenging business environment, we successfully executed a new multi-year retransmission agreement at the largest fee increase in our history–a testament to the power of WAPA´s brand and its high-quality programming.
With respect to our US cable channels, we continue to defy overall subscriber trends by delivering strong organic subscriber growth. WAPA America´s authoritative coverage of Hurricane Maria resulted in an expansion of distribution across multiple operators. In addition, the fourth quarter was the strongest advertising quarter in the history of both Cinelatino and WAPA America and we are excited about our advertising momentum for 2018.
Net revenues were USD 24.0 million for the three months ended December 31, 2017, as compared to net revenues of USD 39.4 million for the comparable period in 2016. The decrease in the three months ended December 31, 2017 was due to an USD 11.6 million decline in advertising revenue driven by the negative impact of Hurricane Maria, particularly the widespread loss of power.
Net revenues were USD 124.5 million for the twelve months ended December 31, 2017, as compared to net revenues of USD 138.5 million for the comparable period in 2016. The decrease in the twelve-month period was due to a USD 14.5 million decline in advertising revenue driven by the impact of Hurricanes Irma and Maria on the television advertising market in Puerto Rico.
Operating expenses were USD 24.6 million for the three months ended December 31, 2017, as compared to operating expenses of USD 26.8 million for the comparable period in 2016. The decrease in the three months ended December 31, 2017 was due to lower programming and production costs, as WAPA implemented cost savings measures following Hurricane Maria, and lower stock-based compensation expense, offset in part by incremental Hurricane Maria related expenses of USD 0.8 million.
Operating expenses for the twelve months ended December 31, 2017 were USD 99.1 million, as compared to USD 98.5 million for the comparable period in 2016. The increase for the twelve-month period was due to incremental costs related to Hurricane Maria, and higher transaction costs incurred in connection with the refinancing of the company´s Term Loan in the first quarter of 2017, partially offset by lower stock-based compensation expense.
Due to the effects of Hurricane Maria, the company withdrew previously issued guidance for the year ending December 31, 2017. Given the uncertainty around the recovery in Puerto Rico, the company is not in position to issue 2018 guidance at this time.
Headquartered in Miami, Florida, Hemisphere owns and operates five US Hispanic cable networks, two Latin American cable networks, and the broadcast television network in Puerto Rico, and has ownership interests in a new broadcast television network in Colombia and a Spanish-language OTT service in the US.