Hemisphere Media Group Announces First Quarter 2016 Financial Results

– Q1 2016 Net Revenues Increased 5.1% Year-over-Year –

– Q1 2016 Adjusted EBITDA Increased 4.4% Year-over-Year –

– Continued Strong Subscriber Growth –

– Affirms Full-Year Adjusted EBITDA Guidance –

MIAMI–(BUSINESS WIRE)–Hemisphere Media Group, Inc. (NASDAQ:HMTV) (“Hemisphere” or the
“Company”), the only publicly traded pure-play U.S. media company
targeting the high growth Spanish-language television and cable networks
business in the U.S. and Latin America, today announced financial
results for the first quarter ended March 31, 2016.

Alan Sokol, CEO of Hemisphere, stated, “Our business performed very well
in the first quarter. Our results delivered on our expectations, and we
are on track to achieve our 2016 financial objectives. We continued to
experience meaningful organic subscriber growth, in contrast to the
overall U.S. pay-TV ecosystem. Our retransmission and subscriber fees
also continued to drive strong growth. Importantly, despite anticipated
declines in the Puerto Rican advertising market due to continued
macroeconomic headwinds, WAPA delivered record ratings in the first
quarter and continued to outperform the market through gains in
advertising market share. In addition, the launch of advertising on
Cinelatino, while early, is progressing nicely. With a strong slate of
new and innovative programming and the positive impact from the
investments we have made in our channels, we are pleased with where our
business stands and the opportunity for robust growth.”

Net revenues were $31.0 million for the three months ended March 31,
2016, an increase of $1.5 million, or 5.1%, as compared to net revenues
of $29.5 million for the same period in 2015. This increase was
primarily driven by growth in subscriber and retransmission fees, due to
subscriber growth and rate increases, as well as increases in
advertising revenue at the Company’s U.S. cable networks. Net revenues
were negatively impacted by the high single-digit contraction in the
Puerto Rico television advertising market in the first quarter of 2016,
consistent with the year-over-year declines in the first quarter of
2015. The effect of the decline in the advertising market was offset in
part by growth in WAPA’s share of the market.

Operating expenses were $23.8 million for the three months ended March
31, 2016, an increase of 6.2%, as compared to operating expenses of
$22.4 million for the same period in 2015. The increase was driven
primarily by increased investment in programming and higher sales and
marketing costs, consistent with the Company’s efforts to drive
advertising sales across its networks, including the launch of
advertising on Cinelatino.

Net income was $2.7 million for the three months ended March 31, 2016,
an increase of $0.2 million, as compared to net income of $2.5 million
for the same period in 2015.

Adjusted EBITDA was $13.3 million for the three months ended March 31,
2016, an increase of 4.4%, as compared to Adjusted EBITDA of $12.8
million for the same period in 2015.

The Company affirms its forecast of a low double-digit percentage
increase in Adjusted EBITDA for 2016 driven by strong growth in
subscriber and retransmission fees and advertising revenue.

As of March 31, 2016, the Company had $211.7 million in debt and $170.1
million of cash. The Company’s leverage ratio was approximately 3.6
times, and net leverage ratio was approximately 0.7 times. During the
three months ended March 31, 2016, the Company made a mandatory
principal payment of $8.3 million on its term loan pursuant to the
excess cash flow provision. Additionally, the Company repurchased
975,000 warrants for a total cost of $1.0 million and 100,000 shares of
Class A common stock for a total cost of $1.3 million. The following
tables set forth the Company’s financial performance for the three
months ended March 31, 2016 and 2015 as well as select balance sheet
data as of March 31, 2016 and December 31, 2015:

HEMISPHERE MEDIA GROUP, INC.
Comparison of Consolidated Operating Results for the
Three Months Ended March 31
(amounts in thousands)
			Three Months Ended March 31,
			2016			2015
			(Unaudited)
Net revenues			$	30,971		$	29,471
Operating Expenses:
Cost of revenues				10,183			9,453
Selling, general and administrative				9,256			8,584
Depreciation and amortization				4,356			4,381
Other expenses				13			–
Gain on disposition of assets				(1	)		(3	)
Total operating expenses				23,807			22,415
Operating income				7,164			7,056
Other Expenses:
Interest expense, net				(2,956	)		(2,983	)
Income before income taxes				4,208			4,073
Income tax expense				(1,508	)		(1,611	)
Net income			$	2,700		$	2,462
Reconciliation of net income to
Adjusted EBITDA:
Net income			$	2,700		$	2,462
Add (deduct):
Income tax expense				1,508			1,611
Interest expense, net				2,956			2,983
Gain on disposition of assets				(1	)		(3	)
Depreciation and amortization				4,356			4,381
Stock-based compensation				1,399			1,325
Transaction & non-recurring
expenses				403			–
Adjusted EBITDA			$	13,321		$	12,759

Selected Balance Sheet Data:
			As of					As of
(amounts in thousands)			March 31, 2016					December 31, 2015
			(Unaudited)					(Audited)
Cash			$ 170,123					$	179,532
Debt			$ 211,739					$	219,923
Leverage ratio (a):			3.6x					3.8x
Net leverage ratio (b):			0.7x					0.7x

(a)		Represents the sum of debt and the unamortized balance of original issue discount of $1.6 million as of March 31, 2016 and $1.7 million as of December 31, 2015, divided by Adjusted EBITDA for the last twelve months. This ratio differs from the calculation contained in the Company’s amended term loan.
(b)		Represents the sum of net debt and the unamortized balance of original issue discount of $1.6 million as of March 31, 2016 and $1.7 million as of December 31, 2015, divided by Adjusted EBITDA for the last twelve months. This ratio differs from the calculation contained in the Company’s amended term loan.

The following table presents estimated subscriber information
(unaudited):

		Subscribers (a)
		(amounts in thousands)
		March 31, 2016		December 31, 2015
U.S. Cable Networks:
WAPA America (b)		5,218		5,158
Cinelatino		4,482		4,443
Pasiones		4,417		4,374
Centroamerica TV		3,990		3,967
Television Dominicana		3,041		2,991
Total		21,148		20,933
Latin America Cable Networks:
Cinelatino		12,331		11,891
Pasiones		10,609		10,198
Total		22,940		22,089

(a)		Amounts presented are based on most recent remittances received from the Company’s distributors as of the respective dates shown above.
(b)		Excluding digital basic subscribers, subscribers to WAPA America on Hispanic programming tiers increased 0.7% from December 31, 2015 to March 31, 2016.

Non-GAAP Reconciliations

Within Hemisphere’s first quarter 2016 press release, Hemisphere makes
reference to the non-GAAP financial measure, “Adjusted EBITDA.” Whenever
such information is presented, Hemisphere has complied with the
provisions of the rules under Regulation G and Item 2.02 of Form 8-K.
The specific reasons why Hemisphere’s management believes that the
presentation of this non-GAAP financial measure provides useful
information to investors regarding Hemisphere’s financial condition,
results of its operations and cash flows has been provided in the Form
8-K filed in connection with this press release.

Conference Call

Hemisphere will conduct a conference call to discuss its first quarter
results at 10:00 AM ET on Friday, May 6, 2016. A live broadcast of the
conference call will be available online via the Company’s Investor
Relations website located at http://ir.hemispheretv.com/.
Alternatively, interested parties can access the conference call by
dialing (877) 497-1436, or from outside the United States at (262)
558-6292, at least five minutes prior to the start time. The conference
ID for the call is 43956816.

A replay of the call will be available beginning at approximately 12:00
PM ET on Friday, May 6, 2016 by dialing (855) 859-2056, or from outside
the United States by dialing (404) 537-3406. The conference ID for the
replay is 43956816.

Forward-Looking Statements

This press release may contain certain statements about Hemisphere that
are “forward-looking statements” within the meaning of the U.S. Private
Securities Litigation Reform Act of 1995. These include, but are not
limited to, statements relating to Hemisphere’s future financial and
operating results (including growth and earnings), plans, objectives,
expectations and intentions and other statements that are not historical
facts. These statements are based on the current expectations of the
management of Hemisphere and are subject to uncertainty and changes in
circumstance, which may cause actual results to differ materially from
those expressed or implied in such forward-looking statements. Without
limitation, any statements preceded or followed by or that include the
words “targets,” “plans,” “believes,” “expects,” “intends,” “will,”
“likely,” “may,” “anticipates,” “estimates,” “projects,” “should,”
“would,” “expect,” “positioned,” “strategy,” “future,” or words, phrases
or terms of similar substance or the negative thereof, are forward-
looking statements. In addition, these statements are based on a number
of assumptions that are subject to change. Factors that could cause
actual results to differ materially from those expressed or implied by
the forward-looking statements are discussed under the heading “Risk
Factors” and “Forward-Looking Statements” in Hemisphere’s most recent
Annual Report on Form 10-K, filed with the Securities and Exchange
Commission (“SEC”), as they may be updated in any future reports filed
with the SEC. If one or more of these factors materialize, or if any
underlying assumptions prove incorrect, Hemisphere’s actual results,
performance, or achievements may vary materially from any future
results, performance or achievements expressed or implied by these
forward-looking statements. Forward-looking statements included herein
are made as of the date hereof, and Hemisphere undertakes no obligation
to update publicly such statements to reflect subsequent events or
circumstances.

About Hemisphere Media Group, Inc.

Hemisphere Media Group (NASDAQ:HMTV) is the only publicly traded
pure-play U.S. media company targeting the high growth Spanish-language
television and cable networks business in the U.S. and Latin America.
Headquartered in Miami, Florida, Hemisphere owns and operates five
leading U.S. Hispanic cable networks, two Latin American cable networks,
and the leading broadcast television network in Puerto Rico.
Hemisphere’s networks consist of:

• Cinelatino, the leading Spanish-language movie channel with over 16
  million subscribers across the U.S., Latin America and Canada,
  including 4.5 million subscribers in the U.S. and 12.3 million
  subscribers in Latin America, featuring the largest selection of
  contemporary Spanish-language blockbusters and critically-acclaimed
  titles from Mexico, Latin America, Spain and the Caribbean.
• WAPA, Puerto Rico’s leading broadcast television network with the
  highest primetime and full day ratings in Puerto Rico. Founded in
  1954, WAPA produces more than 75 hours per week of top-rated news and
  entertainment programming.
• WAPA America, the leading cable network targeting Puerto Ricans and
  other Caribbean Hispanics living in the U.S., featuring the
  highly-rated news and entertainment programming produced by WAPA. WAPA
  America is distributed in the U.S. to 5.2 million subscribers.
• Pasiones, dedicated to showcasing the most popular telenovelas and
  drama series, distributed in the U.S. and Latin America. Pasiones has
  4.4 million subscribers in the U.S. and 10.6 million subscribers in
  Latin America.
• Centroamerica TV, the leading network targeting Central Americans
  living in the U.S., the third-largest U.S. Hispanic group, featuring
  the most popular news, entertainment and soccer programming from
  Central America. Centroamerica TV is distributed in the U.S. to 4.0
  million subscribers.
• Television Dominicana, the leading network targeting Dominicans living
  in the U.S., featuring the most popular news, entertainment and
  baseball programming from the Dominican Republic. Television
  Dominicana is distributed in the U.S. to 3.0 million subscribers.

Contacts

Sloane & Company
Erica Bartsch, 212-446-1875
ebartsch@sloanepr.com