Univision Network. Univision Radio. TeleFutura Network. Univision Music Group. Galavisión. Univision Online. Univision Television Group

Transcription

1 Univision Communications Inc. Annual Report 2005

2 television Univision Network The nation s most-watched Spanish-language broadcast television network, reaching 98% of U.S. Hispanic television households. TeleFutura Network Our second Spanish-language broadcast television network, reaching 86% of U.S. Hispanic television households. Galavisión The nation s leading Spanish-language cable television network, reaching 6.4 million U.S. Hispanic cable households. Univision Television Group The owner and operator of 18 full-power and 8 lowpower television stations that form the core distribution for Univision Network, plus 2 full-power television stations in Puerto Rico and 1 full-power television station that broadcasts UPN. radio Univision Radio The leading U.S. Spanish-language radio group, which owns and/or operates 69 radio stations in 16 of the top 25 U.S. Hispanic markets and 4 radio stations in Puerto Rico. music Univision Music Group The nation s leading Latin music recording company and a publisher of Latin music. internet Univision Online The owner and operator of univision.com, the most-visited U.S.-based Spanish-language Internet portal, with more than 3.2 billion page views in TeleFutura Television Group The owner and operator of 18 full-power and 15 lowpower television stations that form the core distribution for TeleFutura Network.

3 about univision Univision Communications Inc. ( Univision ) is the leading Spanish-language media and entertainment company in the United States. It owns and operates two broadcast television networks, a cable television network, 62 broadcast television stations, a music recording and publishing company, and an Internet portal. Univision also owns and/or operates 73 broadcast radio stations. Univision media reach virtually all of the more than 41 million Hispanics living in the United States. Univision holds a 50% interest in Disa, a company specializing in regional Mexican music. Univision expects to exercise in 2006 its option to acquire the remaining 50% of Disa. Univision holds a minority, non-voting interest in Entravision Communications Corporation, a public, Spanish-language media company that is the largest affiliate of Univision s broadcast television networks. Univision also owns a 50% interest in TuTv, a joint venture with Televisa formed to distribute five of Televisa s pay television channels in the U.S. Univision s headquarters are in Los Angeles, California. The company s stock (UVN) is traded on the New York Stock Exchange.

4 to our shareholders When my partners, Televisa and Venevision, and I bought Univision in 1992, the company s major assets consisted of Univision Network and nine television stations, and we managed a small, Spanishlanguage cable network, Galavisión. With local affiliates throughout the United States, Univision reached approximately 90% of Hispanic television homes. Galavisión was losing money, and Univision s annual net revenues were only $206 million. As we begin our 15 th year of operations, Univision and its entire team have come a long, long way. I am happy to report that each segment of our enterprise, which includes television, radio, music, and Internet, continues to post outstanding results and to maintain its number-one position. In fact, you may get tired of reading the words number one in this annual report. Our Engines of Growth Consider the following. Many of our 62 ownedand-operated television stations are number one in their respective markets. Univision Network is the number-one Spanish-language network in the U.S. and the fifth largest network in the U.S. in any language, reaching 98% of Hispanic television homes. Our TeleFutura Network often runs a close second to Univision Network, reaching 86% of Hispanic television homes. Galavisión, which we now own, is the number-one Spanishlanguage cable television network in the U.S., with ratings exceeding those of some 34 Spanish-language competitors that have emerged to capture a piece of the highly desirable Hispanic audience. And television is just one segment of our company. We also own Univision Radio, the number-one Univision Network is the number-one Spanish-language television network in the U.S. and the fifth largest television network in the U.S. in any language, reaching 98% of Hispanic television homes. Annual Report

5 Univision beat one of the Big 4 networks ABC, CBS, NBC, and FOX nearly 2 out of every 3 nights in In 2005, Univision Network s primetime shows made Univision the #1, #2, #3, or #4 network in the U.S. 237 out of 365 nights for all Adults

6 Univision Radio is the number-one Spanish-language radio group in the U.S., and univision.com is the number-one U.S.-based Spanish-language Internet portal. Spanish-language radio group in the country, with 69 owned-and/or-operated stations in the U.S. and 4 in Puerto Rico. Univision.com, the number-one U.S.-based Spanish-language Internet portal, is twice as large as its nearest Spanish-language competitor. Univision Music Group is the number-one Spanishlanguage music company in the U.S., with such superstar artists as Los Temerarios, Marco Antonio Solís, Los Tigres del Norte, Ivy Queen, Montez de Durango, and Patrulla 81. Univision Music Group labels include Univision, Fonovisa, Disa, and our newest labels, La Calle and SGZ Records. Univision Music Group is among the largest publishers of Latin music in the U.S. In 2003, we joined forces with our partner Televisa to launch TuTv, a joint venture bringing the best of Mexico s movie and music channels to digital cable and satellite television in the U.S. With offerings that include Mexico s number-one-rated movie channel, De Película, we are already reaching more than one million Hispanic television homes. You can review our financial results in detail in this report. Going forward, we are committed not only to generating more revenue, but also to keeping a tight grip on costs. The cost reductions we announced in 2005 follow that plan and reflect our willingness to make tough choices when they are necessary to improve our performance. Certainly from a long-term point of view, our engines of growth are primed and producing. Univision has increased its annual net revenues from $206 million in 1992 when we bought the company to $1.953 billion in Our Mission and Our Strategy We have made tremendous progress. But it is important for all shareholders to understand that our goal is not simply to achieve top market shares Annual Report

7 Univision Network joined the Nielsen National Television Index (NTI) to be measured alongside the Big 4 networks. Now when media buyers look at the top-ranked networks, Univision is right where we belong alongside ABC, CBS, NBC, and FOX.

8 and post high revenues and profits. Our mission is to connect Hispanics to their culture, their community, and the programming that entertains and informs them. Our strategy is to be a link between Hispanics and the culture that is their cornerstone, connecting them to the resources and marketplaces that enrich their lives. Opportunities Ahead Our audience continues to grow. And our revenue growth potential is tremendous, as we are still not being paid for the number of viewers we deliver. There are over 320 national network advertisers in the U.S. English-language television market, and we have only slightly more than half that number. This represents great upside potential as more advertisers tap into the buying power they have been neglecting. This awakening among advertisers is inevitable. Univision is the key and connection to more than 41 million U.S. Hispanics, who represent an estimated $822 billion in annual buying power, and these figures are increasing each year. The big news this year is that Univision Network joined the Nielsen National Television Index ( NTI ). In the past, without NTI, we felt relegated to the kiddie pool. But now that we are in NTI, we are swimming in the adult pool and we re part of the mainstream. When the media buyer looks at the top-ranked networks, Univision Network is right where we belong alongside ABC, CBS, NBC, and FOX. Along with this heightened profile was a series of programming coups in 2005 that further demonstrated our growing power. We beat out NBC/Telemundo to secure the exclusive rights to broadcast in Spanish in the U.S. and Puerto Rico the 2010 and 2014 FIFA World Cup tournaments. And after five years of being broadcast in English We beat out NBC/Telemundo to secure the exclusive rights to broadcast in Spanish in the U.S. and Puerto Rico the 2010 and 2014 FIFA World Cup tournaments. Annual Report

9 Univision is the key to an estimated $822 billion in annual buying power. Univision is the connection to more than 41 million U.S. Hispanics, who represent an estimated $822 billion in annual buying power, and these figures are increasing each year.

10 We broadcast the Latin GRAMMYs for the first time entirely in Spanish, and the show s ratings went through the roof. on CBS, the Latin GRAMMYs moved to Univision Network. We broadcast the Latin GRAMMYs for the first time entirely in Spanish, and the show s ratings went through the roof. We enjoy a long-term contract with the Latin Academy of Recording Arts & Sciences, Inc., for the Latin GRAMMYs. As we enter 2006, Univision, healthier than ever, is poised to deliver even better results. We have great momentum with record Upfront and 2006 World Cup sales, and with our newly announced inclusion in NTI, we will now be measured alongside our main competitors. We look forward to another record-breaking year. I want to recognize our programming partners, Televisa and Venevision, who contribute so much to our success. I also want to thank our Univision family for their loyalty and commitment in 2005, particularly Ray Rodriguez, who has been an important member of management since we acquired Univision in In 2005, Ray moved into the position of President and Chief Operating Officer, where he continues to serve with distinction. And finally, I thank you, our shareholders, for your continued confidence in Univision. A. Jerrold Perenchio Chairman of the Board and Chief Executive Officer Annual Report

11 board of directors corporate information A. Jerrold Perenchio Chairman of the Board and Chief Executive Officer Univision Communications Inc. Ray Rodriguez President and Chief Operating Officer Univision Communications Inc. Anthony B. Cassara Executive Vice President Chartwell Partners LLC Gustavo A. Cisneros Chairman and Chief Executive Officer Cisneros Group of Companies Harold Gaba President and Chief Executive Officer ACT III Communications Holdings, L.P. executive officers A. Jerrold Perenchio Chairman of the Board and Chief Executive Officer Robert V. Cahill Vice Chairman and Secretary of the Corporation Ray Rodriguez President and Chief Operating Officer Alan F. Horn President and Chief Operating Officer Warner Bros. Michael O. Johnson Chief Executive Officer Herbalife Ltd. John G. Perenchio Private Investor McHenry T. Tichenor, Jr. Private Investor Alternate Director Alejandro Rivera Director and President Venevision International Corporation Andrew W. Hobson Senior Executive Vice President and Chief Financial and Strategic Officer C. Douglas Kranwinkle Executive Vice President and General Counsel Corporate Headquarters Univision Communications Inc Avenue of the Stars Suite 3050 Los Angeles, CA (310) Independent Auditors Ernst & Young LLP 5 Times Square New York, NY Transfer Agent and Registrar The Bank of New York Stockholder Relations Church Street Station P.O. Box New York, NY (800) The Class A Common Stock of Univision Communications Inc. ( Univision ) is listed on the New York Stock Exchange under the symbol UVN. As of February 13, 2006, there were 437 Class A, four Class P, two Class T, and two Class V stockholders of record. Stock Prices Below are the New York Stock Exchange high and low sales prices (a) of Univision s Class A Common Stock for each quarter of 2005 and Post-Split Prices 2005 High 2005 Low 2004 High 2004 Low First Quarter $30.20 $25.80 $40.05 $32.00 Second Quarter $28.48 $25.00 $36.79 $29.54 Third Quarter $29.55 $25.15 $35.22 $28.38 Fourth Quarter $31.15 $23.52 $32.94 $27.30 (a) The high and low sales prices are based on intraday trading. Annual SEC and NYSE Certifications Univision has filed with the Securities and Exchange Commission its exhibits to Form 10-K for the year ended December 31, 2005, which include the Chief Executive Officer and Chief Financial Officer certifications required pursuant to Section 302 of the Sarbanes-Oxley Act of Univision also filed with the New York Stock Exchange on June 6, 2005, its annual certification of its Chief Executive Officer for 2004 confirming that Univision was in compliance with New York Stock Exchange corporate governance listing standards. Forward-Looking Statements This annual report contains forward-looking statements that involve risks and uncertainties, including those relating to Univision s future success and growth. Actual results may differ materially due to risks and uncertainties as described in Univision s filings with the Securities and Exchange Commission. Univision assumes no obligation to update forward-looking information contained in this annual report.

12 Univision Communications Inc Avenue of the Stars Suite 3050 Los Angeles, CA