Hemisphere Media Group CEO Alan Sokol joined Yahoo Finance Live to break down Hemisphere's recent purchase of Lionsgate's stake in streaming service for $124M.
Video Transcript
- Let's talk the big business of streaming hemisphere media buying the rest of Hispanic streaming service Pantaya from Lionsgate for $124 million. We want to bring in Alan Sokol. He is the CEO of Hemispheric Media Group.
And Alan, great to have you. Great to speak with you this afternoon. You initially had a 25% stake in Pantaya. Now you own 100% of the company. First, just talk to us about why this makes sense for Hemisphere Media.
ALAN SOKOL: Good afternoon. Nice to be here. This is a transaction we've been pursuing for a while with Lionsgate. We started this business together with Lionsgate three and a half years ago. And we've had great proof of concept in those three and a half years.
We're now 900,000 subscribers. And we think the ceiling is-- you know, is in the many millions, given the size of the population and the growth. This is a unique audience. This is an underserved audience. This is an audience that is on the front edge of-- adaption of technology.
This is an audience that is hungry for the kind of content that we're providing. It's not available anywhere else.
BRIAN CHEUNG: Hey, Alan. It's Brian Cheung here. And what's really interesting is that it's not necessarily the lack of Spanish language content, but maybe the way that it's being distributed as well. So with this acquisition, what do you hope to deliver in terms of the customer experience, in getting deliver this content? Because as we've seen with Netflix, and Disney Plus, and every other type of streaming service, it seems like delivery is really the biggest attraction point for a lot of consumers.
ALAN SOKOL: Well, I think one of the interesting things, I think, in our space, is that it's really both delivery and the type of content, the quality of the content, the genres that are available. I think we're delivering content that has never-- the kinds of content have never been available to the Spanish speaking audience in the US, premium, high quality, short form series, that really have never been seen before in this market. You know, the staple of Spanish language TV in the US, and in throughout the world, has been the telenovela or the soap opera. And that's typically 100 plus episodes.
What we've been doing is creating short form premium series of eight to 13 episodes per season, that are bingeable, that are beautiful to watch, that have well-known stars, that deal with themes that are more current, and relevant, and real than what you would see on a typical telenovela. And I think the audience finds that refreshing, and has been hungry for this, and it's never been available before.
- Alan, what's your-- going off of that then, talking more about your content strategy going forward, what does that partnership look like between your company, between Lionsgate, between Starz play, and then also, do you have any plans to create your own content in the future?
ALAN SOKOL: Absolutely. We have been creating our own content. And we will actually expand on that going forward.
One of our intentions here is to actually increase investment in content going forward, because we believe that there is such a huge growth opportunity here, that we want to take advantage of that. We have a great relationship with Lionsgate. We will continue, in effect, to expand that relationship going forward. We're going to be co producing with Starz and with Lionsgate. And we-- and we really value the relationship that we have with them. But in those cases, we frankly, are the studio, because we have the expertise and the resources, and know how in Spanish language.
BRIAN CHEUNG: Alan, I want to ask about the kind of fragmentation of the content that you're delivering, because it's my understanding Hemisphere has the leading broadcast television network in Puerto Rico. But you also have a broadcast television network in Colombia. And obviously, those are two different types of groups in terms of what they might like, or not like, on your platform. How do you make sure that you're kind of breaking down the Hispanic monolith, to make sure that you're targeting those subgroups on that level as well?
ALAN SOKOL: Well, one of the things that we understand and know really well, is recognizing that Hispanic population of US is not a monolith, that they come from different places, that they have to face different sensibilities, different likes and dislikes. And we're very attuned to that and aware of that.
We have a leading linear channels in the US targeting Puerto Ricans, Central Americans, and Dominican Americans. The second, third, and fourth largest Hispanic groups in the US. So we are-- you know, it is our DNA to understand that. And we think these groups are big enough and chunky enough, that we can create content targeted at them, or serving them, where they're not currently being served, and use that as a way to drive more subscriptions and more attention.
- Alan, in talking about this large audience, what are your plans for scaling your business, and I mean, specifically, the subscriber numbers? What are you hoping to achieve over the next three to five years?
ALAN SOKOL: Well, we've set a goal for ourselves, a stated goal of two and a half to three million subscribers by 2025. And honestly, we think the ceiling you know, is multiples of that. There are 60 million Hispanics in the US, growing to 75 million by 2030.
We are really the only premium subscription streaming service that is 100% Spanish language, that just is there to serve the Spanish speaking market in the US. And we have a-- we are first mover in the space. We have an advantage-- a huge advantage over everybody else there. We have the deepest and best library and catalog of content in the space. And we feel very positive about the growth opportunity in that regard.
BRIAN CHEUNG: Alan, can you tell us a little bit more about the financials of the deal? I understand that you've got about $50 million in add on from an existing term loan, but you've also got a $30 million revolving facility. First of all, how do you think shareholders have reacted to that? And then, secondly, is this the last acquisition that you'll be doing, or are you still on the hunt for maybe more purchases in the future?
ALAN SOKOL: Right. So we finance this deal with about half cash in our balance sheet, and then about half of it was through an addition to our term loan. And we have plenty of dry powder in our balance sheet in order to fund additional acquisitions.
Right now we are, you know, focused on this. We want to ensure that we make this work, we integrate this properly into our company, and we set it on the right path. But we are always on the lookout for additional acquisitions that make sense for us, that are strategic, that-- where we can go in and add value.
- Alan Sokol, CEO of Hemisphere Media Group. Thanks so much for hopping on here with us.