OVERVIEW



Our Company



We are a leading U.S. Spanish-language media company serving the fast growing
and highly attractive U.S. Hispanic and Latin American markets with streaming,
broadcast and cable television platforms including five Spanish-language cable
television networks distributed in the U.S., two Spanish-language cable
television networks distributed in Latin America, the #1-rated broadcast
television network in Puerto Rico, the leading Spanish-language subscription
streaming service in the U.S., a leading distributor of content to television
and digital media platforms in Latin America, and have an ownership interest in
a leading broadcast television network in Colombia.

Headquartered in Miami, Florida, our portfolio consists of the following:

Cinelatino: the leading Spanish-language cable movie network with approximately

3.6 million(1) subscribers in the U.S. and 13.9 million(1) subscribers across

Latin America and Canada. Cinelatino is programmed with a lineup featuring the

? best contemporary films and original television series from Mexico, Latin

America, and the United States. Driven by the strength of its programming and

distribution, Cinelatino is the highest rated Spanish-language original movie

network in the U.S.

WAPA: the leading broadcast television network and television content producer

in Puerto Rico. WAPA has been the #1-rated broadcast television network in

Puerto Rico since the start of Nielsen audience measurement eleven years ago.

? WAPA is Puerto Rico's news leader and the largest local producer of news and

entertainment programming, producing over 67 hours in the aggregate each week.

Additionally, we operate WAPA.TV, a leading news and entertainment website in

Puerto Rico, as well as mobile apps, featuring content produced by WAPA.

WAPA Deportes: through its multicast signal, WAPA distributes WAPA Deportes, a

? leading sports television network in Puerto Rico, featuring MLB, NBA and

professional sporting events from Puerto Rico.

WAPA America: a cable television network serving primarily Puerto Ricans and

other Caribbean Hispanics living in the U.S. WAPA America's programming

? features news and entertainment programming produced by WAPA. WAPA America is

distributed in the U.S. to approximately 3.4 million(1) subscribers, excluding

digital basic subscribers.

Pasiones: a cable television network dedicated to showcasing the most popular

telenovelas and serialized dramas, distributed in the U.S. and Latin America.

Pasiones features top-rated telenovelas from Latin America, Turkey, India, and

? South Korea (dubbed into Spanish), and is currently the highest rated

telenovela cable television network in primetime. Pasiones has approximately

3.8 million(1) subscribers in the U.S. and 15.6 million(1) subscribers in Latin

America.

Centroamerica TV: a cable television network targeting Central Americans living

in the U.S., the third largest U.S. Hispanic group and the fastest growing

segment of the U.S. Hispanic population. Centroamerica TV features the most

? popular news and entertainment from Central America, as well as soccer

programming from the top professional soccer leagues in the region.

Centroamerica TV is distributed in the U.S. to approximately 3.3 million(1)

subscribers.

Television Dominicana: a cable television network targeting Dominicans living

in the U.S., the fifth largest U.S. Hispanic group. Television Dominicana airs

? the most popular news and entertainment programs from the Dominican Republic,

as well as the Dominican Republic professional baseball league, featuring

current and former players from MLB. Television Dominicana is distributed in


   the U.S. to over 2.2 million(1) subscribers.


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   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

Latin America and the U.S. including original productions from Pantaya's

? 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 August 2017.

On March 31, 2021, the Company acquired the remaining 75% equity interest from

Lionsgate, and Pantaya is now a consolidated subsidiary of the Company. As of

September 30, 2021, Pantaya had 1.0 million subscribers.

Snap Media: a distributor of content to broadcast and cable television networks

and OTT, SVOD and AVOD platforms in Latin America. On November 26, 2018, we

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 July 15, 2021,

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 Colombia. We own a 40%

interest in Canal 1 in partnership with leading producers of news and

entertainment content in Colombia. The partnership was awarded a 10-year

renewable broadcast television concession in 2016. The partnership began

? operating Canal 1 on May 1, 2017 and launched a new programming lineup on

August 14, 2017. In July 2019, the Colombian government enacted legislation

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

April 30, 2037 and is renewable for an additional 20-year period.

REMEZCLA: a digital media company targeting English speaking and bilingual U.S.

? Hispanic millennials through innovative content. On April 28, 2017, we acquired

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 in Puerto Rico will be in 2024.



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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 subscribers who 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 in Puerto 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 in Puerto 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-language U.S. broadcast network in the U.S., CBS, and higher than the
combined ratings of CBS, 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 the U.S. As a
result, management believes our U.S. cable networks are well-positioned to
benefit from growth in both the growing national advertising spend targeted at
the highly sought-after U.S. Hispanic audience, and growth in the U.S. Hispanic
population, which is expected to continue its long-term upward trajectory.



Hispanics represent over 18% of the total U.S. population and 11% of the total
U.S. buying power, but the aggregate media spend targeted at U.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,
but U.S. Hispanic cable advertising still under-indexes relative to its
consumption.



Management expects Pantaya and our U.S. television networks to benefit from
growth in the U.S. Hispanic population, as it continues its long-term growth.
The U.S. Census Bureau estimated that nearly 60.5 million Hispanics resided in
the 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 in
Latin America. Pay-TV subscribers in Latin America (excluding Brazil) are
projected to grow from 55 million in 2020 to 60 million by 2025. Furthermore, as
of December 31, 2020, Cinelatino and Pasiones were each distributed to only 26%
of total pay-TV subscribers throughout Latin America (excluding Brazil).



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Colombia, 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 of December 31, 2020, the second largest in Latin
America (excluding Brazil). According to IBOPE, the three major broadcast
networks in Colombia 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 to U.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 in
Mexico, 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




In March 2020, the World Health Organization characterized the coronavirus
("COVID-19") as a pandemic, and the President of the 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 in March 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 through September 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 in Colombia, has also been negatively impacted. Colombia's
President Ivan Duque declared a state of emergency, locking down the country on
March 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 to November 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 hit Colombia severely in May of 2021, the situation has
been progressively improving with positivity rates around 4% through September
of 2021. As of September 30, 2021, 44 million vaccine doses have arrived, and
48% of the population target have received the full vaccination cycle.



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Comparison of Consolidated Operating Results for the Three and Nine Months Ended
September 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 to
Hemisphere 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 ended September 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 on March
31, 2021, as well as contractual rate increases and new launches of our
television Networks, offset in part by a decline in U.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%.

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Net revenues were $138.8 million for the nine months ended September 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 on March
31, 2021, as well as contractual rate increases and new launches of our
television Networks, offset in part by a decline in U.S. cable subscribers.
Advertising revenue increased $8.6 million, or 21%, primarily due to growth in
the Puerto 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 ended
September 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 ended September 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 ended September 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 ended September 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 ended September 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 ended September 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 ended September 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 ended
September 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 ended September 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 ended September 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 ended
September 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.



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Other Expenses



Interest Expense and other, net: Interest expense and other, net for the three
and nine months ended September 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 ended September 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 on U.S. dollar denominated obligations. Gain on equity method
investment activity for the nine months ended September 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 on March 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 of Equity Method Investment: In March 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 ended September
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 ended September 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 ended September 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 ended September 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 ended September 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 ended September 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.





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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. On July 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 ended September 30, 2021. Net loss
attributable to non-controlling interest for the three months ended September
30, 2020, was $0.1 million and for the nine months ended September 30, 2021 and
2020, was $0.0 million and $0.1 million, respectively.

Net (Loss) Income Attributable to Hemisphere Media Group, Inc.


Net loss attributable to Hemisphere Media Group, Inc. for the three months ended
September 30, 2021, was $14.8 million as compared to net income of $5.3 million
for the comparable period in 2020. Net income attributable to Hemisphere Media
Group, Inc. for the nine months ended September 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. At September 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 $ (79,791) $ 25,590

Comparison for the Nine Months Ended September 30, 2021 and September 30, 2020





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.



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Net cash provided by operating activities for the nine months ended September
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 ended September 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 ended September
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.

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