OVERVIEW Our Company We are a leadingU.S. Spanish-language media company serving the fast growing and highly attractiveU.S. Hispanic and Latin American markets with streaming, broadcast and cable television platforms including five Spanish-language cable television networks distributed in theU.S. , two Spanish-language cable television networks distributed inLatin America , the #1-rated broadcast television network inPuerto Rico , the leading Spanish-language subscription streaming service in theU.S. , a leading distributor of content to television and digital media platforms inLatin America , and have an ownership interest in a leading broadcast television network inColombia .
Headquartered in
Cinelatino: the leading Spanish-language cable movie network with approximately
3.6 million(1) subscribers in the
? best contemporary films and original television series from
America, and
distribution, Cinelatino is the highest rated Spanish-language original movie
network in the
WAPA: the leading broadcast television network and television content producer
in
? WAPA is
entertainment programming, producing over 67 hours in the aggregate each week.
Additionally, we operate WAPA.TV, a leading news and entertainment website in
WAPA Deportes: through its multicast signal, WAPA distributes WAPA Deportes, a
? leading sports television network in
professional sporting events from
WAPA America: a cable television network serving primarily Puerto Ricans and
other Caribbean Hispanics living in the
? features news and entertainment programming produced by WAPA. WAPA America is
distributed in the
digital basic subscribers.
Pasiones: a cable television network dedicated to showcasing the most popular
telenovelas and serialized dramas, distributed in the
Pasiones features top-rated telenovelas from
?
telenovela cable television network in primetime. Pasiones has approximately
3.8 million(1) subscribers in the
America.
Centroamerica TV: a cable television network targeting Central Americans living
in the
segment of the
? popular news and entertainment from
programming from the top professional soccer leagues in the region.
Centroamerica TV is distributed in the
subscribers.
Television Dominicana: a cable television network targeting Dominicans living
in the
? the most popular news and entertainment programs from the
as well as the
current and former players from MLB. Television Dominicana is distributed in
theU.S. to over 2.2 million(1) subscribers. 30 Table of Contents Pantaya: the first ever premium subscription streaming service of Spanish-language offering the largest selection of current and classic,
commercial free blockbusters and critically acclaimed movies and series from
? production arm, Pantelion, and titles from our library, as well as titles from
third party providers such as Lionsgate and Grupo Televisa. The Company formed
Pantaya in partnership with Lionsgate and launched the service in
On
Lionsgate, and Pantaya is now a consolidated subsidiary of the Company. As of
Snap Media: a distributor of content to broadcast and cable television networks
and OTT, SVOD and AVOD platforms in
acquired a 75% interest in Snap Media, and in connection with the acquisition,
Snap Media entered into a joint venture with MarVista, an independent
entertainment studio and a shareholder of Snap Media, to produce original
? movies and series. Snap Media is responsible for the distribution of content
owned and/or controlled by our Networks, as well as content to be produced by
the production joint venture between Snap Media and MarVista. On
the Company entered into an omnibus agreement, pursuant to which, minority
shareholders relinquished the 25% non-controlling interest in Snap Media, at
which point Snap Media became a wholly owned subsidiary of the Company.
Canal 1: the #3-rated broadcast television network in
interest in Canal 1 in partnership with leading producers of news and
entertainment content in
renewable broadcast television concession in 2016. The partnership began
? operating Canal 1 on
resulting in the extension of the concession license for an additional ten
years for no additional consideration. The concession is now due to expire on
REMEZCLA: a digital media company targeting English speaking and bilingual
? Hispanic millennials through innovative content. On
a 25.5% interest in REMEZCLA.
Subscriber amounts are based on most recent remittances received from our
(1) Distributors as of the period end date, which are typically two months prior
to the period end date.
Our two primary sources of revenues are advertising revenue and subscriber revenue. All of our Networks derive revenues from advertising. Advertising revenue is generated from the sale of advertising time, which is typically sold pursuant to advertising orders with advertisers. Our advertising revenue is tied to the success of our programming, including the popularity of our programming with our target audience. Our advertising is variable in nature and tends to reflect seasonal patterns of our advertisers' demand, which is generally greatest during the fourth quarter of each year, driven by the holiday buying season. In addition,Puerto Rico's political election cycle occurs every four years and we benefit from political advertising in an election year. For example, in 2020, we experienced higher advertising sales as a result of political advertising spending during the 2020 Puerto Rico gubernatorial elections. The next election inPuerto Rico will be in 2024. 31 Table of Contents All of our Networks receive fees paid by Distributors, including cable, satellite and telecommunications service providers. These revenues are generally based on a per subscriber fee pursuant to multi-year contracts, commonly referred to as "affiliation agreements," which typically provide for annual rate increases. The specific subscriber revenue we earn varies from period to period, Distributor to Distributor and also varies among our Networks, but is generally based upon the number of each Distributor's paying subscriberswho receive our Networks. The terms of certain non-U.S. affiliation agreements provide for payment of a fixed contractual monthly fee. Changes in subscriber revenue are primarily derived from changes in contractual affiliation rates charged for our Networks and changes in the number of subscribers. Accordingly, we continually review the quality of our programming to ensure that it is maximizing our Networks' viewership and giving our Networks' subscribers a premium, high-value experience. The growth in our subscriber revenue will, to a certain extent, be dependent on the growth in subscribers of the cable, satellite and telecommunication service providers distributing our Networks, new system launches and continued carriage of our channels by our distribution partners. Additionally, our revenues benefit from contractual rate increases stipulated in most of our affiliation agreements. We also generate subscriber revenue from subscriptions to Pantaya, our subscription video on demand ("SVOD") service. The SVOD service is available directly to consumers through our web application as well as through distribution partners. Certain distribution partners charge a fee, which is recorded in cost of revenues. Subscribers are billed at the start of their monthly or annual membership and revenue is recognized ratably over each applicable membership period. Subscriber revenue varies from period to period and is generally based upon the number of paying subscribers to our SVOD service. Estimates of revenue generated but not yet reported by the Company's third party Distributors of our Networks and Pantaya are made based on the estimated number of subscribers using the most recently received remittance reporting from each Distributor, which is consistent with our past practice
and industry practice. WAPA has been the #1-rated broadcast television network inPuerto Rico since the start of Nielsen audience measurement eleven years ago and management believes it is highly valued by its viewers and cable, satellite and telecommunications service providers. WAPA is distributed by all pay-TV Distributors inPuerto Rico and has been successfully growing subscriber revenue. WAPA's primetime household rating in 2020 was nearly five times higher than the most highly rated English-languageU.S. broadcast network in theU.S. ,CBS , and higher than the combined ratings ofCBS ,NBC ,ABC ,FOX and the CW. As a result of its ratings success since the start of Nielsen audience measurement, management believes WAPA is well positioned for future growth in subscriber revenue. WAPA America, Cinelatino, Pasiones, Centroamerica TV and Television Dominicana occupy a valuable and unique position, as they are among the small group of Hispanic cable networks to have achieved broad distribution in theU.S. As a result, management believes ourU.S. cable networks are well-positioned to benefit from growth in both the growing national advertising spend targeted at the highly sought-afterU.S. Hispanic audience, and growth in theU.S. Hispanic population, which is expected to continue its long-term upward trajectory. Hispanics represent over 18% of the totalU.S. population and 11% of the totalU.S. buying power, but the aggregate media spend targeted atU.S. Hispanics significantly under-indexes both of these metrics. As a result, advertisers have been allocating a higher proportion of marketing dollars to the Hispanic market, butU.S. Hispanic cable advertising still under-indexes relative to its consumption. Management expects Pantaya and ourU.S. television networks to benefit from growth in theU.S. Hispanic population, as it continues its long-term growth. TheU.S. Census Bureau estimated that nearly 60.5 million Hispanics resided inthe United States in 2019, representing an increase of more than 25 million people between 2000 and 2019, and that number is projected to grow to 75 million by 2030.U.S. Hispanic television households grew by 36% during the period from 2010 to 2021, from 12.9 million households to 17.6 million households. Similarly, management expects Cinelatino and Pasiones to benefit from growth inLatin America . Pay-TV subscribers inLatin America (excludingBrazil ) are projected to grow from 55 million in 2020 to 60 million by 2025. Furthermore, as ofDecember 31, 2020 , Cinelatino and Pasiones were each distributed to only 26% of total pay-TV subscribers throughoutLatin America (excludingBrazil ). 32 Table of ContentsColombia , where we own 40% of Canal 1, the #3-rated broadcast television network, is a large and attractive market for broadcast television.Colombia had a population of 51 million as ofDecember 31, 2020 , the second largest inLatin America (excludingBrazil ). According to IBOPE, the three major broadcast networks inColombia receive a 59% share of overall television viewing. These factors resulted in an annual market for free-to-air television advertising of approximately$207 million for 2020 (as converted from Colombian Pesos toU.S. dollars utilizing the average foreign exchange rate during the period). MVS, one of our stockholders, provides operational, technical and distribution services to Cinelatino pursuant to several agreements, including an agreement pursuant to which MVS provides satellite and technical support and other administrative support services, an agreement that grants MVS the non-exclusive right to distribute the Cinelatino service to third party distributors inMexico , and an agreement between Cinelatino and Dish Mexico (an affiliate of MVS), pursuant to which Dish Mexico distributes Cinelatino and pays subscriber fees to Cinelatino. COVID-19 Pandemic
InMarch 2020 , theWorld Health Organization characterized the coronavirus ("COVID-19") as a pandemic, and the President ofthe United States declared the COVID-19 outbreak a national emergency. The impact of COVID-19 and measures to prevent its spread have continued to affect our businesses in a number of ways. Beginning inMarch 2020 , the Company experienced adverse advertising revenue impacts. Operationally, most non-production and programming personnel are working remotely, and the Company has restricted business travel. The Company has managed the remote workforce transition effectively and there have been no material adverse impacts on operations throughSeptember 30, 2021 . However, the Company is unable to reasonably predict the impact that a significant change in circumstances, including the ability of our workforce and/or key personnel to work effectively because of illness, government actions or other restrictions in connection with the COVID-19 pandemic, may have on our businesses in the future. The nature and full extent of the impact of the COVID-19 pandemic on our future operations will depend on numerous factors, all of which are highly uncertain and cannot be reasonably predicted. These factors include the length and severity of the outbreak, including the extent of surges in positive cases related to variants of COVID-19, such as the Delta variant, as well as the availability and efficacy of vaccines and treatments for the disease and whether individuals choose to vaccinate themselves, the responses of private sector businesses and governments, including the timing and amount of government stimulus, the impact on economic activity and the impact on our customers, employees and suppliers. The Company has evaluated and continues to evaluate the potential impact of the COVID-19 pandemic on its Condensed Consolidated Financial Statements, including the impairment of goodwill and indefinite-lived intangible assets and the fair value of equity method investments. The ultimate impact of the COVID-19 pandemic, including the extent of any adverse impact on our business, results of operations and financial condition, remains uncertain. The Company believes it has substantial liquidity to satisfy its financial commitments. Given the global nature of the COVID-19 pandemic, our investment in Canal 1, which operates inColombia , has also been negatively impacted.Colombia's PresidentIvan Duque declared a state of emergency, locking down the country onMarch 20, 2020 . Since then, most restrictions have been lifted allowing services to work at full capacity including schools, retail, and mass transportation, however some limitations are still in place for massive public events and the state of emergency declaration has been extended toNovember 25, 2021 . COVID-19 has had a material adverse impact on advertising spending, and accordingly, has had a material adverse impact on Canal 1's advertising revenue. Since the third wave of the pandemic hitColombia severely in May of 2021, the situation has been progressively improving with positivity rates around 4% through September of 2021. As ofSeptember 30, 2021 , 44 million vaccine doses have arrived, and 48% of the population target have received the full vaccination cycle. 33 Table of Contents Comparison of Consolidated Operating Results for the Three and Nine Months EndedSeptember 30, 2021 and 2020 (Unaudited) (amounts in thousands) Three Months Ended $ Change % Change Nine Months Ended $ Change % Change September 30, Favorable/ Favorable/ September 30, Favorable/ Favorable/ 2021 2020 (Unfavorable) (Unfavorable) 2021 2020 (Unfavorable) (Unfavorable) Net revenues$ 50,791 $ 37,172 $ 13,619 36.6 %$ 138,828 $ 104,316 $ 34,512 33.1 % Operating expenses: Cost of revenues 16,024 10,994 (5,030) (45.8) % 42,601 34,521 (8,080) (23.4) % Selling, general and administrative 31,164 10,819 (20,345) NM 67,463 32,260 (35,203) NM Depreciation and amortization 10,861 2,771 (8,090) NM 17,863 8,696 (9,167) NM Other expenses 413 172 (241) NM 8,504 3,220 (5,284) NM Gain from FCC spectrum repack and other (309) (1,004) (695) (69.2) % (2,485) (831) 1,654 NM Total operating expenses 58,153 23,752 (34,401) NM 133,946 77,866 (56,080) (72.0) % Operating (loss) income (7,362) 13,420 (20,782) NM 4,882 26,450 (21,568) (81.5) % Other (expense) income: Interest expense and other, net (3,278) (2,551) (727) (28.5) % (8,801) (7,833) (968) (12.4) % (Loss) gain on equity method investment activity (3,222) (988) (2,234) NM 20,818 (18,196) 39,014 NM Impairment of equity method investment - - - - - (5,479) 5,479 100.0 % Other income (expense), net 540 - 540 NM (128) - (128) NM Total other (expense) income (5,960) (3,539) (2,421) (68.4) % 11,889 (31,508) 43,397 NM (Loss) income before income taxes (13,322) 9,881 (23,203) NM 16,771 (5,058) 21,829 NM Income tax expense (1,479) (4,664) 3,185 68.3 % (4,532) (5,873) 1,341 22.8 % Net (loss) income (14,801) 5,217 (20,018) NM 12,239 (10,931) 23,170 NM Net loss attributable to non-controlling interest - 80 (80) (100.0) % 32 118 (86) (72.9) % Net (loss) income attributable toHemisphere Media Group , Inc.$ (14,801) $ 5,297 $ (20,098) NM$ 12,271 $ (10,813) $ 23,084 NM NM = Not meaningful Net Revenues Net revenues were$50.8 million for the three months endedSeptember 30, 2021 , an increase of$13.6 million , or 37%, as compared to$37.2 million for the comparable period in 2020. Subscriber revenue increased$13.4 million , or 70%, primarily due to the inclusion of Pantaya, which the Company acquired onMarch 31, 2021 , as well as contractual rate increases and new launches of our television Networks, offset in part by a decline inU.S. cable subscribers. Other revenue increased$0.7 million , driven primarily by the timing of the licensing of content and theatrical releases. Advertising revenue decreased$0.4 million , or 2%, primarily due to political advertising revenue in the prior year period. Excluding political advertising, advertising revenue increased$0.9
million, or 6%. 34 Table of Contents Net revenues were$138.8 million for the nine months endedSeptember 30, 2021 , an increase of$34.5 million , or 33%, as compared to$104.3 million for the comparable period in 2020. Subscriber revenue increased$26.4 million , or 45%, primarily due to the inclusion of Pantaya, which the Company acquired onMarch 31, 2021 , as well as contractual rate increases and new launches of our television Networks, offset in part by a decline inU.S. cable subscribers. Advertising revenue increased$8.6 million , or 21%, primarily due to growth in thePuerto Rico television advertising market, coupled with an increase in WAPA's share of the market, as well as an increase in advertising revenue at our Cable Networks, offset in part by political advertising revenue in the prior year period. Other revenue decreased$0.5 million , or 11%, driven primarily by the timing of the licensing of content.
Operating Expenses
Cost of Revenues: Cost of revenues consists primarily of programming and production costs, programming amortization, technical and streaming delivery costs and distribution fees. Cost of revenues for the three months endedSeptember 30, 2021 , were$16.0 million , an increase of$5.0 million , or 46%, compared to$11.0 million for the comparable period in 2020. Cost of revenues for the nine months endedSeptember 30, 2021 , were$42.6 million , an increase of$8.1 million , or 23%, compared to$34.5 million for the comparable period in 2020. These increases were due to the inclusion of Pantaya, and were primarily comprised of programming and technical costs and third party distribution fees. Additionally, programming and production costs increased due to certain programming and sporting events produced and broadcast in the current year periods that were postponed or cancelled in the prior year periods due to the COVID-19 pandemic. Selling, General and Administrative: Selling, general and administrative expenses consist principally of marketing, research, employee costs, stock-based compensation, and other general administrative costs. Selling, general, and administrative expenses for the three months endedSeptember 30, 2021 , were$31.2 million , an increase of$20.4 million , compared to$10.8 million for the comparable period in 2020. Selling, general, and administrative expenses for the nine months endedSeptember 30, 2021 , were$67.5 million , an increase of$35.2 million , compared to$32.3 million for the comparable period in 2020. These increases were due to the inclusion of Pantaya, and were primarily comprised of marketing and personnel expenses, and higher stock-based compensation. The increase in the nine-month period endedSeptember 30, 2021 , was also due to higher advertising sales commissions as a result of the increase in advertising revenue. Additionally, these increases were due to cost reductions implemented in the prior year periods in response to the pandemic, including voluntary salary reductions and employee retention credits, which the Company did not
have in the current year periods. Depreciation and Amortization: Depreciation and amortization expense consists of depreciation of fixed assets and amortization of intangibles. Depreciation and amortization for the three months endedSeptember 30, 2021 , was$10.9 million , an increase of$8.1 million , compared to$2.8 million for the comparable period in 2020. Depreciation and amortization for the nine months endedSeptember 30, 2021 , was$17.9 million , an increase of$9.2 million , compared to$8.7 million for the comparable period in 2020. These increases were due to the amortization of intangible assets recognized as part of the Pantaya Acquisition, offset in part by the amortization of certain intangible assets that were fully amortized during the prior year.
Other Expenses: Other expenses include legal, financial advisory and other fees incurred in connection with acquisitions and corporate finance activities, including debt and equity financings. Other expenses for the three months endedSeptember 30, 2021 , were$0.4 million , an increase of$0.2 million , compared to$0.2 million in the comparable period in 2020, due to expenses incurred in connection with the pursuit of strategic transactions. Other expenses for the nine months endedSeptember 30, 2021 , were$8.5 million , an increase of$5.3 million , compared to$3.2 million in the comparable period in 2020, primarily due to expenses incurred in connection with the Pantaya Acquisition and the incremental borrowing on our Third Amended Term Loan Facility. Gain from FCC repack and other: Gain from FCC spectrum repack and other primarily reflects reimbursements we have received from the FCC for equipment purchased as a result of the FCC mandated spectrum repack, and gain or loss from the sale of assets no longer utilized in the operations of the business. Gain from FCC spectrum repack and other for the three months endedSeptember 30, 2021 , was$0.3 million , as compared to$1.0 million in the comparable period of 2020. Gain from FCC spectrum repack and other for the nine months endedSeptember 30, 2021 , was$2.5 million , as compared to$0.8 million in the comparable period of 2020. These increases were due to reimbursements received from the FCC for equipment purchases required as a result of the FCC mandated spectrum repack and the disposal of assets no longer utilized in the operations of the business during the prior year period. 35 Table of Contents Other Expenses Interest Expense and other, net: Interest expense and other, net for the three and nine months endedSeptember 30, 2021 , increased$0.7 million , or 29% and$1.0 million , or 12%, respectively. These increases were due to incremental borrowing on our Third Amended Term Loan Facility, offset in part by lower average interest rates due to the decline in LIBOR. (Loss) Gain on Equity Method Investment Activity: Loss on equity method investment activity for the three months endedSeptember 30, 2021 , was$3.2 million , an increase of$2.2 million compared to$1.0 million for the comparable period in 2020, due to higher losses at Canal 1, primarily as a result of the unfavorable comparison to the prior year period impact of unrealized foreign currency gains onU.S. dollar denominated obligations. Gain on equity method investment activity for the nine months endedSeptember 30, 2021 , was$20.8 million , as compared to a loss of$18.2 million for the comparable period in 2020, primarily due to a$30.1 million one-time non-cash gain recognized on the existing 25% equity interest in Pantaya upon the step acquisition of the remaining 75% equity interest in Pantaya onMarch 31, 2021 . The improvement was also due to lower losses at Canal 1. For more information, see Note 3, "Business Combination" of Notes to Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report. Impairment ofEquity Method Investment : InMarch 2020 , we deemed our investment in REMEZCLA to be impaired given the uncertainty caused by the COVID-19 pandemic and the associated going-concern risks. As a result, we recorded a non-cash impairment charge of$5.5 million reflecting the write-off of the full valuation of our investment in REMEZCLA. For more information, see Note 6, "Equity Method Investments" of Notes to Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report. Other income (expense), net: Other income for the three months endedSeptember 30, 2021 , was$0.5 million due to the entry into an omnibus modification agreement by the Company and Snap Media's minority holder, whereby the 25% minority holder agreed to waive the remaining consideration due from the Company in respect of the acquisition of Snap Media and relinquish its non-controlling interest. Other expense, net for the nine months endedSeptember 30, 2021 , was$0.1 million due to the write-off of the net book value of programming rights at the Company for content licensed from Pantaya prior to the Acquisition Date, which was offset in part by the waiver of the remaining consideration due from the Company in respect of the acquisition of Snap Media. For more information, see Note 11, "Stockholders' Equity" of Notes to Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report. Income Tax Expense
Income tax expense for the three months endedSeptember 30, 2021 , was$1.5 million as compared to$4.7 million for the comparable period in 2020. Income tax expense for the nine months endedSeptember 30, 2021 , was$4.5 million as compared to income tax expense of$5.9 million for the comparable period in 2020. These decreases were due to lower taxable income in the current year periods. For more information, see Note 7, "Income Taxes" of Notes to Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report. Net (Loss) Income Net loss for the three months endedSeptember 30, 2021 , was$14.8 million as compared to net income of$5.2 million for the comparable period in 2020. Net income for the nine months endedSeptember 30, 2021 , was$12.2 million as compared to net loss of$10.9 million for the comparable period in 2020, as the current year period benefitted from a one-time non-cash gain of$30.1 million recognized on the existing 25% equity interest in Pantaya upon the step acquisition of the remaining 75% equity interest. For more information, see Note 3, "Business Combination" of Notes to Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report. 36 Table of Contents
Net Loss Attributable to Non-controlling Interest
Net loss attributable to non-controlling interest related to the 25% interest in Snap Media held by minority shareholders. OnJuly 15, 2021 , the Company obtained the non-controlling 25% interest in Snap Media that was previously held by minority shareholders, and as a result there is no longer a non-controlling interest in Snap Media for the three months endedSeptember 30, 2021 . Net loss attributable to non-controlling interest for the three months endedSeptember 30, 2020 , was$0.1 million and for the nine months endedSeptember 30, 2021 and 2020, was$0.0 million and$0.1 million , respectively.
Net (Loss) Income Attributable to
Net loss attributable toHemisphere Media Group, Inc. for the three months endedSeptember 30, 2021 , was$14.8 million as compared to net income of$5.3 million for the comparable period in 2020. Net income attributable toHemisphere Media Group, Inc. for the nine months endedSeptember 30, 2021 , was$12.3 million as compared to net loss of$10.8 million for the comparable period in 2020.
OFF-BALANCE SHEET ARRANGEMENTS
We do not have any off-balance sheet financing arrangements.
LIQUIDITY AND CAPITAL RESOURCES
Sources and Uses of Cash Our principal sources of cash are cash on hand, capacity under our Revolving Facility and cash flows from operating activities. AtSeptember 30, 2021 , we had$54.7 million of cash on hand and$30.0 million undrawn and available under our Revolving Facility. Our primary uses of cash include the production and acquisition of programming, operational costs, personnel costs, equipment purchases, principal and interest payments on our outstanding debt and income tax payments, and cash may be used to fund investments, acquisitions and repurchases of common stock. Cash Flows Nine Months Ended September 30, Amounts in thousands: 2021 2020 Cash provided by (used in): Operating activities $ 5,848$ 36,137 Investing activities (127,829) (8,435) Financing activities 42,190 (2,112)
Net (decrease) increase in cash
Comparison for the Nine Months Ended
Operating Activities Cash provided by operating activities was primarily driven by our net income or loss, adjusted for non-cash items and changes in working capital. Non-cash items consist primarily of depreciation of property and equipment, amortization of intangibles, programming amortization, amortization of deferred financing costs, stock-based compensation expense, gain or loss on equity method investment activity, impairment of equity method investments, amortization of operating lease right-of-use assets, provision for bad debts, and other non-cash acquisition charges. 37 Table of Contents Net cash provided by operating activities for the nine months endedSeptember 30, 2021 was$5.8 million , a decrease of$30.3 million , as compared to$36.1 million in the prior year period, due to a decrease in non-cash items of$38.2 million and a decrease in net working capital of$15.3 million , offset in part by an improvement in net income of$23.2 million . The decrease in non-cash items is due to a$39.0 million improvement in gain on equity method investment activity primarily due to a$30.1 million one-time gain recognized on the existing 25% equity interest in Pantaya upon the step acquisition of the remaining 75% equity interest, a$5.5 million impairment of equity method investment related to REMEZCLA in the prior year period, an increase in gain from FCC spectrum repack and other of$1.7 million , and decreases in deferred tax expense of$1.4 million , programming amortization of$1.2 million and provision for bad debt of$0.9 million , offset in part by increases in depreciation and amortization of$9.2 million , other non-cash acquisition related charges of$1.3 million , and stock-based compensation of$0.5 million . The decrease in net working capital is due to increases in prepaids and other assets of$11.2 million , programming rights of$6.7 million , and due to/from related parties of$0.7 million , and a decrease in programming rights payable of$10.5 million , offset in part by a decrease in accounts receivable of$9.1 million and increases in accounts payable of$2.9 million , other accrued expenses of$1.1 million , and income taxes payable of$0.7 million . For more information, see Note 3, "Business Combination" and Note 6, "Equity Method Investments" of Notes to Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report. Investing Activities Net cash used in investing activities for the nine months endedSeptember 30, 2021 , was$127.8 million , an increase of$119.4 million as compared to$8.4 million in the prior year period. The increase was primarily due to the net cash paid for the Pantaya Acquisition of$122.6 million and an increase in capital expenditures of$1.2 million , offset in part by a decline in funding of equity investments of$3.0 million and increased proceeds received from the FCC related to the spectrum repack of$1.4 million . Financing Activities Net cash provided by financing activities for the nine months endedSeptember 30, 2021 , was$42.2 million , an increase of$44.3 million as compared to net cash used of$2.1 million in the prior year period. The increase is due to net proceeds of$47.4 million received from incremental borrowing under our Third Amended Term Loan Facility in connection with the Pantaya Acquisition, offset in part by an increase in repurchases of our Class A common stock of$2.8 million .
For more information, see Note 8, "Long-Term Debt" of Notes to Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report.
© Edgar Online, source