Updated from 3:49 p.m. EDT
A rough week for Spanish language broadcaster
Univision (UVN Quote - Cramer on UVN - Stock Picks) got rougher Wednesday.
The Los Angeles-based company, whose president and chief operating officer
resigned Monday, saw its shares fall nearly 16%, despite achieving record advertising sales for the upcoming television season.
Univision finished down 19 11/16 at 100.
The company reported "upfront" sales -- advertising time on its networks sold before the TV season begins -- of $501 million from 92 advertisers. The figure is an 18% increase over the $425 million it collected from 79 advertisers last season. Analysts were looking for upfront sales closer to 20%-25%. Last year, the company posted a 42% year-over-year surge in ad sales.
The disappointing upfront sales come as most advertising-dependent media companies have benefited mightily from the surging U.S. economy.
Univision said the telecommunications sector was particularly soft heading into the coming season, although the company did its best to spin the disappointing news.
"This year's record half a billion dollar upfront is especially impressive in light of the fact our number one category, telecommunications, considerably reduced their spending due to a shift in certain segments of their business," said Dennis McCauley, co-president of network sales, in a statement. "However, we are confident that they will return in the near-term to support our market with new products."
The telecom category got hit by the decisions of
AT&T(T Quote - Cramer on T - Stock Picks) and
Worldcom's(WCOM Quote - Cramer on WCOM - Stock Picks) MCI brand to reduce their "10-10" collect-call advertising, according to
Jessica Reif Cohen,
Merill Lynch's media analyst. Cohen, in a report issued Wednesday, said the shifts by AT&T and MCI cost Univision $31 million in ad spending.
Cohen downgraded her intermediate and long-term ratings on the company from buy to accumulate.
"In terms of total advertising dollars, we had been expecting the company to register a bigger take of upfront advertising commitments," she wrote in a report released Wednesday. "Although up strongly, we had expected [Univision] to far outperform the general-market broadcast networks."
Cohen added that, because Univision and its main network,
Telemundo, sells its upfront ad inventory later then most of its competition, it may have suffered as a result of the Olympics. "We believe that [
General Electric(GE Quote - Cramer on GE - Stock Picks)unit]
NBC sold, at the last minutes, about $100 million of inventory related to its Olympics coverage, which may have slowed Univision's total dollar gains," Cohen wrote.
On Monday, Henry Cisneros, the former secretary of housing and urban development in the Clinton administration, said he was leaving the company to focus on developing housing in neglected urban neighborhoods around the country.
Justin Dini
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