MediaCo Holding Inc. Financial Report Summary and Analysis

Overview of the Company MediaCo Holding Inc. is a media company that owns and operates two radio stations in New York City and a network of television stations and digital channels serving Hispanic audiences across the United States. The company’s primary revenue sources are advertising sales for its radio, TV, and digital platforms, as well as events, licensing, and syndication.

In April 2024, MediaCo completed the acquisition of Estrella, a major Hispanic media network. This significantly expanded MediaCo’s national footprint and diversified its content portfolio, establishing the company as a leading multi-platform media network serving U.S. Hispanic audiences.

Financial Performance In 2024, MediaCo reported total net revenues of $95.6 million, a 195% increase from $32.4 million in 2023. This was primarily driven by the Estrella acquisition, which added substantial new radio, TV, and digital operations to the company’s business.

However, the company also reported an operating loss of $28.2 million in 2024, up from a $6.8 million operating loss in 2023. This was due to higher operating expenses, including a $74 million increase in operating expenses excluding depreciation and amortization, as well as a $6.4 million increase in corporate expenses.

The net loss from continuing operations decreased from $7.4 million in 2023 to $1.3 million in 2024. This was largely due to a $38.4 million gain from the change in fair value of the company’s warrant shares liability.

Segment Performance MediaCo reports its results in two business segments: Audio and Video.

The Audio segment, which includes the company’s radio, digital, and events operations, saw revenues increase by $25.1 million to $57.5 million in 2024, primarily due to the Estrella acquisition. However, the segment’s operating loss increased slightly from $1.3 million in 2023 to $1.5 million in 2024 as the higher revenues were offset by increased operating expenses.

The Video segment, which includes the EstrellaTV network and Estrella’s television operations, generated $38 million in revenues and had an operating loss of $14.9 million in 2024. This segment was entirely new in 2024 as a result of the Estrella acquisition.

Strengths and Weaknesses A key strength for MediaCo is its expanded national footprint and diversified content portfolio following the Estrella acquisition. The company now has a stronger presence in major Hispanic media markets like Los Angeles, Houston, and Dallas, and can leverage Estrella’s popular TV network and digital channels.

Another strength is the company’s focus on digital and streaming initiatives, which saw a 452% increase in revenue in 2024. This demonstrates the company’s ability to adapt to changing consumer habits and monetize its content across multiple platforms.

However, a weakness is the company’s significant operating losses, which increased in 2024 due to higher expenses related to the Estrella integration. The company will need to effectively manage costs and realize anticipated synergies to improve profitability.

Additionally, the traditional radio and TV broadcasting industries that MediaCo operates in are facing headwinds, with new media and audience fragmentation creating challenges. The company will need to continue innovating and diversifying its business model to stay competitive.

Outlook and Risks Looking ahead, MediaCo’s management is optimistic about the company’s future prospects. The Estrella acquisition has significantly expanded the company’s reach and content offerings, positioning it as a leader in Hispanic media.

The company also expects to realize further cost synergies and operational efficiencies from the Estrella integration in 2025, which should help improve profitability.

However, the company faces several risks and uncertainties:

• The rising interest rate environment could increase the company’s borrowing costs on its variable-rate debt.
• Persistent inflation may continue to drive up costs for employee compensation, equipment, and services.
• Audience fragmentation and the continued growth of digital media platforms could further erode traditional radio and TV advertising revenues.

To mitigate these risks, MediaCo will need to closely monitor macroeconomic conditions, effectively manage its capital structure, and continue investing in digital transformation and diversification of its business model.

Overall, MediaCo’s financial performance in 2024 was mixed, with strong revenue growth offset by higher expenses related to the Estrella acquisition. The company’s expanded national footprint and focus on digital initiatives are strengths, but it will need to navigate industry headwinds and manage costs to improve profitability going forward.