HEMISPHERE MEDIA GROUP, INC. 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 broadcast and cable television networks and digital content 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 #3-rated broadcast television network inColombia , a Spanish-language OTT video subscription service distributed in theU.S. and a leading distributor of content to television and digital media platforms inLatin America .
Headquartered in
Cinelatino: the leading Spanish-language cable movie network with over 18
million subscribers across the
programmed with a lineup featuring the best contemporary films and original
? television series from
the strength of its programming and distribution, Cinelatino is the highest
rated Spanish-language original movie network in the
coverage ratings.
WAPA: the leading broadcast television network and television content producer
in
? is
entertainment programming, producing over 65 hours in the aggregate each week.
Additionally, we operate WAPA.TV, a leading news and entertainment website in
Puerto Rico , featuring content produced by WAPA.
WAPA Deportes: Through its multicast signal, WAPA distributes WAPA Deportes, a
? leading sports television network in
Baseball (MLB),
events fromPuerto Rico .
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
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
cable television network devoted to telenovelas. Pasiones has over 18.2 million
subscribers across theU.S. andLatin 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 subscribers.
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
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programming lineup on
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
Pantaya: is the first-ever premium streaming destination for world-class movies
and series in Spanish offering the largest selection of current and classic
blockbusters and critically acclaimed titles from
? all commercial-free. Pantaya's programming includes content from our library,
Pantelion's
Televisa's theatrical releases in
specials and concerts. We own a 25% interest in Pantaya in partnership with
Lionsgate, which service launched inAugust 2017 .
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.
REMEZCLA: a digital media company targeting English-speaking and bilingual
Hispanic millennials through innovative content. On
a 25.5% interest in REMEZCLA. As of
? caused by the COVID-19 pandemic and the associated going-concern uncertainty,
we recorded a non-cash impairment charge of
write-off of the full carrying amount of our investment. For more information,
see Note 5, "Equity Method Investments" of Notes to Condensed Consolidated
Financial Statements, included elsewhere in this Quarterly Report. Our two primary sources of revenues are advertising revenue and affiliate 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 providing for an agreed upon advertising commitment and price per spot. Our advertising revenue is tied to the success of our programming, including the popularity of our programming as measured by Nielsen and/or comScore. 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 increased advertising sales in an election year. For example, in 2016, we experienced higher advertising sales as a result of political advertising spending during the 2016 gubernatorial elections. The next gubernatorial election inPuerto Rico is scheduled to occur onNovember 3, 2020 . 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 affiliate revenue we earn vary from period to period, distributor to distributor and also vary among our Networks, but are 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 affiliate 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 continued growth in our affiliate 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. Our revenues also benefit from contractual rate increases stipulated in most of our affiliation agreements. WAPA has been the #1-rated broadcast television network inPuerto Rico since the start of Nielsen audience measurement ten 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 affiliate revenue. WAPA's primetime household rating in 2019 was 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 affiliate revenue. 28 Table of Contents 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 cable television audience, and growth in subscribers, as theU.S. Hispanic population continues 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 ourU.S. networks to benefit from growth in subscribers as theU.S. Hispanic population continues its long-term growth. TheU.S. Census Bureau estimated that nearly 60 million Hispanics resided inthe United States in 2018, representing an increase of more than 24 million people between 2000 and 2018, and that number is projected to grow to 75 million by 2030.U.S. Hispanic television households grew by 31% during the period from 2010 to 2020, from 12.9 million households to 16.9 million households. Hispanic pay-TV subscribers increased 2.3% since 2010 to 11.1 million subscribers in 2020. The continued long-term growth of Hispanic television households creates a significant opportunity for all of ourU.S. cable networks. Similarly, management expects Cinelatino and Pasiones to benefit from growth inLatin America . Pay-TV subscribers inLatin America (excludingBrazil ) are projected to grow from 54.8 million in 2019 to 61.5 million in 2023, representing projected growth of 12%. Furthermore, as ofDecember 31, 2019 , Cinelatino and Pasiones were each distributed to only 29% and 30%, respectively, of total pay-TV subscribers throughoutLatin America (excludingBrazil ).Colombia , where we own 40% of Canal 1, the #3-rated broadcast television network, is a large and appealing market for broadcast television.Colombia had a population of 51 million as ofDecember 31, 2019 , the second largest inLatin America (excludingBrazil ). According to IBOPE, the three major broadcast networks inColombia receive a 53% share of overall viewing. These factors resulted in an annual free-to-air television advertising market of approximately$270 million for 2019 (as converted utilizing the average foreign exchange rate during the period) and the third largest Latin American television advertising market overall (excludingBrazil ). 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 novel coronavirus ("COVID-19") a pandemic, and the President ofthe United States declared the COVID-19 outbreak a national emergency. The rapid spread of the pandemic and the continuously evolving responses to combat it have had an increasingly negative impact on the global economy. Even during these unprecedented times, we have continued the production of news and certain programming, as our viewers rely on our Networks to keep them informed. 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 has 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 as ofJune 30, 2020 . The Company is unable to predict the impact that a significant change in circumstances, including portions of our workforce and/or key personnel being unable 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 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 predicted. These factors include the length and 29 Table of Contents severity of the outbreak, the responses of governments and private sector businesses, the impact on economic activity and the impact on our customers, employees and suppliers. For more information on the risks associated with the COVID-19 pandemic, see "Item 1A-Risk Factors" included elsewhere in this Quarterly Report. The ultimate impact of the COVID-19 pandemic, including the extent of any adverse impact on our business, results of operations and financial condition, will depend on, among other things, the duration and spread of the pandemic, the impact of governmental regulations that have been, and may continue to be, imposed in response to the pandemic, the effectiveness of actions taken to contain or mitigate the outbreak, and global economic conditions. The negative effect of the pandemic on the Company's business in the current period was significant and the adverse impact of COVID-19 could be material to the Company's future operating results. The Company believes it has substantial liquidity to satisfy its financial commitments, including its long-term debt. Given the global nature of the COVID-19 pandemic, our investment in Canal 1, which operates inColombia , is also negatively impacted. OnMarch 17, 2020 ,Colombia's PresidentIvan Duque declared a state of emergency and onMarch 20, 2020 announced a nationwide lockdown, which has been extended and is currently in effect throughAugust 31, 2020 . Commercial activities inColombia have been severely curtailed since mid-March, which has had a material adverse impact on advertising, and, accordingly, has had a material adverse impact on Canal 1's advertising revenue. It is unclear when the lockdown will be lifted or when advertising will return to pre-COVID-19 levels. Comparison of Consolidated Operating Results for the Three and Six Months EndedJune 30, 2020 and 2019 (Unaudited) (amounts in thousands) Three Months Ended $ Change % Change Six Months Ended $ Change % Change June 30, Favorable/ Favorable/ June 30, Favorable/ Favorable/ 2020 2019 (Unfavorable) (Unfavorable) 2020 2019 (Unfavorable) (Unfavorable) Net revenues$ 34,735 $ 39,147 $ (4,412) (11.3) %$ 67,144 $ 74,257 $ (7,113) (9.6) % Operating expenses: Cost of revenues 12,560 11,317 (1,243) (11.0) % 23,527 21,531 (1,996) (9.3) % Selling, general and administrative 10,208 10,813 605 5.6 % 21,441 21,714 273 1.3 % Depreciation and amortization 2,794 2,556 (238) (9.3) % 5,925 6,623 698 10.5 % Other expenses 27 422 395 93.6 % 3,048 653 (2,395) NM Loss (gain) from FCC spectrum repack and other 182 (45) (227) NM 173 (1,507) (1,680)
NM
Total operating expenses 25,771 25,063 (708) (2.8) % 54,114 49,014 (5,100)
(10.4) %
Operating income 8,964 14,084 (5,120) (36.4) % 13,030 25,243 (12,213)
(48.4) %
Other expenses, net: Interest expense, net (2,496) (3,005) 509 16.9 % (5,282) (5,965) 683 11.5 % Loss on equity method investments (10,189) (9,784) (405) (4.1) % (17,208) (17,160) (48) (0.3) % Impairment of equity method investment - - - - (5,479) - (5,479) NM Total other expenses, net (12,685) (12,789) 104 0.8 % (27,969) (23,125) (4,844) (20.9) % (Loss) income before income taxes (3,721) 1,295 (5,016) NM (14,939) 2,118 (17,057) NM Income tax expense (2,884) (3,643) 759 20.8 % (1,209) (6,199) 4,990 80.5 % Net loss (6,605) (2,348) (4,257) NM (16,148) (4,081) (12,067) NM Net (income) loss attributable to non-controlling interest (77) (10) (67) NM 38 37 1 (2.7) % Net loss attributable to Hemisphere Media Group, Inc.$ (6,682) $ (2,358) $ (4,324) NM$ (16,110) $ (4,044) $ (12,066) NM NM = Not meaningful 30 Table of Contents Net Revenues
Net revenues were$34.7 million for the three months endedJune 30, 2020 , a decrease of$4.4 million , or 11%, as compared to$39.1 million for the comparable period in 2019. The decline was due to decreases in advertising revenue and affiliate revenue, which were offset in part by increases in other revenue. Advertising revenue decreased$3.3 million , or 21%, primarily due to the negative impact of the COVID-19 pandemic on television advertising and to the postponement or cancellation of Miss Universe Puerto Rico and certain sporting events, which were produced and televised in the second quarter of 2019. Affiliate revenue decreased$2.3 million , or 11%, due to a decline in subscribers across ourU.S. cable networks and a decline in non-U.S. affiliate revenue as a result of subscriber and fee declines, due in part to unfavorable foreign currency movements. Other revenue increased$1.2 million , or 61%, due primarily to the licensing of content to third parties, which is driven by the timing and availability of the titles. Net revenues were$67.1 million for the six months endedJune 30, 2020 , a decrease of$7.1 million , or 10%, as compared to$74.3 million for the comparable period in 2019. The decline was due to decreases in advertising revenue and affiliate revenue, which were offset in part by increases in other revenue. Advertising revenue decreased$4.7 million , or 16%, due to the negative impacts on thePuerto Rico television advertising market as a result of the earthquakes in January and then the COVID-19 pandemic beginning in March, and to the postponement or cancellation of Miss Universe Puerto Rico and certain sporting events, which were produced and televised in the second quarter of 2019. Affiliate revenue decreased$3.8 million , or 9%, due to a decline in subscribers across ourU.S. cable networks, and a decline in non-U.S. affiliate revenue as a result of subscriber and fee declines, due in part to unfavorable foreign currency movements. Other revenue increased$1.3 million , or 52%, due primarily to the licensing of content to third parties, which is driven by the timing and availability of the titles.
The following table presents estimated subscriber information:
Subscribers (a)
(amounts in thousands)
June 30, 2020 December 31, 2019 June 30, 2019
U.S. Cable Networks:
WAPA America (b) 3,847 4,140 4,334
Cinelatino 3,958 4,364 4,611
Pasiones 4,278 4,626 4,842
Centroamerica TV 3,598 3,976 4,210
Television Dominicana 2,213 2,345 2,421
Total 17,894 19,451 20,418
Latin America Cable Networks:
Cinelatino 14,081 16,132 16,872
Pasiones 13,935 16,763 16,194
Total 28,016 32,895 33,066
(a) Amounts presented are based on most recent remittances received from our
Distributors as of the respective dates shown above, which are typically two
months prior to the dates shown above.
(b) Excludes digital basic subscribers.
Operating Expenses
Cost of Revenues: Cost of revenues consists primarily of programming and
production costs, programming amortization and distribution costs. Cost of
revenues for the three months ended June 30, 2020 , were $12.6 million , an
increase of $1.2 million , or 11%, compared to $11.3 million for the comparable
period in 2019. Cost of revenues for the six months ended June 30, 2020 , were
$23.5 million , an increase of $2.0 million , or 9%, compared to $21.5 million for
the comparable period in 2019. These increases were due to higher programming
costs as a result of increased content licensing to third parties, and
production costs related to Guerreros, a daily reality show at WAPA, which
commenced production in May 2019 . These increases were offset in part by the
timing of Miss Universe Puerto Rico and certain sporting events, which were
produced and televised in the second quarter of 2019, but are presently
postponed or cancelled due to the COVID-19 pandemic.
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Selling, General and Administrative: Selling, general and administrative
expenses consist principally of promotion, marketing and research, stock-based
compensation, employee costs, occupancy costs and other general administrative
costs. Selling, general, and administrative expenses for the three months ended
June 30, 2020 , were $10.2 million , a decrease of $0.6 million , or 6%, compared
to $10.8 million for the comparable period in 2019. Selling, general, and
administrative expenses for the six months ended June 30, 2020 , were $21.4
million , a decrease of $0.3 million , or 1%, compared to $21.7 million for the
comparable period in 2019. These decreases were due to lower personnel expenses,
lower ad sales commissions, reduced marketing and research, due in part to the
termination of Nielsen ratings services for Cinelatino in the current quarter,
offset in part by higher stock-based compensation and an increase in the bad
debt reserve.
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 June 30, 2020 , was $2.8 million , an
increase of $0.2 million , or 9%, compared to $2.6 million for the comparable
period in 2019, due to higher depreciation related to new assets placed into
service for the replacement of equipment damaged by Hurricane Maria and
equipment required as a result of the FCC spectrum repack and the amortization
of intangibles recognized from the Snap Media acquisition. Depreciation and
amortization for the six months ended June 30, 2020 , was $5.9 million , a
decrease of $0.7 million , or 11%, compared to $6.6 million for the comparable
period in 2019, due to certain intangible assets that were fully amortizedas of the first quarter of 2019.
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 endedJune 30, 2020 , were$0.0 million , a decrease of$0.4 million , compared to$0.4 million in the comparable period in 2019. Other expenses for the six months endedJune 30, 2020 , were$3.0 million , an increase of$2.4 million , compared to$0.7 million in the comparable period in 2019, due to the pursuit of strategic transactions.
Loss (Gain) from FCC repack and other: Loss (gain) from FCC spectrum repack and other primarily reflects reimbursements we have received from the FCC for equipment we have 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. Loss from FCC spectrum repack and other for the three months endedJune 30, 2020 , was$0.2 million , an increased loss of$0.2 million as compared to the comparable period in 2019, due to the disposal of assets no longer utilized in the operations of the business during the current period. Loss from FCC spectrum repack and other for the six months endedJune 30, 2020 , was$0.2 million as compared to a gain of$1.5 million in the comparable period of 2019, due to reimbursements received in the prior year period from the FCC for equipment purchases required as a result of the FCC mandated spectrum repack. Other Expenses
Interest Expense, net: Interest expense for the three and six months ended
Loss on Equity Method Investments: Loss on equity method investments for the three months endedJune 30, 2020 , was$10.2 million , an increase of$0.4 million , compared to$9.8 million for the comparable period in 2019, due to higher losses at Canal 1. Loss on equity method investments for the six months endedJune 30, 2020 , was$17.2 million , which was flat with the comparable period in 2019 as the higher Canal 1 losses were offset by lower losses at Pantaya. Our pick up of losses at Pantaya declined due to the inception to date losses exceeding our funding commitment, and as a result, we have not recognized our share of the losses following the three month period endedMarch 31, 2019 . For more information, see Note 5, "Equity Method Investments" of Notes to Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report. Impairment ofEquity Method Investment : AtMarch 31, 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. There were no additional equity method impairments recorded during the three months endedJune 30, 2020 . For more information, see Note 5, "Equity Method Investments" of Notes to Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report. 32 Table of Contents Income Tax Expense Income tax expense for the three months endedJune 30, 2020 , was$2.9 million as compared to$3.6 million for the comparable period in 2019. Income tax expense for the six months endedJune 30, 2020 , was$1.2 million as compared to income tax expense of$6.2 million for the comparable period in 2019. The income tax expense decreased due to lower operating income. For more information, see Note 6, "Income Taxes" of Notes to Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report. Net Loss Net loss for the three months endedJune 30, 2020 , was$6.6 million as compared to net loss of$2.3 million for the comparable period in 2019. Net loss for the six months endedJune 30, 2020 , was$16.1 million as compared to net loss of$4.1 million for the comparable period in 2019.
Net (Income) Loss Attributable to Non-controlling Interest
Net income attributable to non-controlling interest, related to the 25% interest in Snap Media held by minority shareholders, was$0.1 million for the three months endedJune 30, 2020 , as compared to$0.0 million for the comparable period in 2019. Net loss attributable to non-controlling interest, related to the 25% interest in Snap Media held by minority shareholders, was$0.0 million for each of the six months endedJune 30, 2020 and 2019.
Net Loss Available to
Net loss available toHemisphere Media Group, Inc. for the three months endedJune 30, 2020 , was$6.7 million as compared to$2.4 million for the comparable period in 2019. Net loss available toHemisphere Media Group, Inc. for the six months endedJune 30, 2020 , was$16.1 million as compared to$4.0 million for the comparable period in 2019.
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 and cash flows from operating activities. AtJune 30, 2020 , we had$105.0 million of cash on hand. 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.
The Company has utilized certain benefits provided under the CARES Act including the deferral of payroll tax payments and the employee retention credits.
Management believes cash on hand and cash flow from operations will be
sufficient to meet our current contractual financial obligations and to fund
anticipated working capital and capital expenditure requirements for existing
operations. Our current financial obligations include maturities of debt,
operating lease obligations and other commitments from the ordinary course of
business that require cash payments to vendors and suppliers.
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Cash Flows
Six Months Ended June 30,
Amounts in thousands: 2020 2019
Cash provided by (used in):
Operating activities $ 21,434 $ 11,831
Investing activities (7,024) (24,688)
Financing activities (1,578) (2,140)
Net increase (decrease) in cash
Comparison for the Six Months Ended
Operating Activities
Cash provided by operating activities was primarily driven by our net 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, loss on equity method investments, impairment of equity method investments, amortization of operating lease right-of-use assets, and provision for bad debts. Net cash provided by operating activities for the six months endedJune 30, 2020 was$21.4 million , an increase of$9.6 million , as compared to$11.8 million in the prior year period, due to increases in non-cash items of$10.4 million and net working capital of$11.3 million , offset in part by an increase in net loss of$12.1 million . The increase in non-cash items is due to a$5.5 million impairment of equity method investment, a decrease in the gain from the FCC spectrum repack of$1.5 million , and increases in programming amortization of$1.8 million , stock-based compensation of$1.3 million , bad debt provision of$0.7 million and loss from disposal of assets of$0.2 million , offset in part by a decrease in depreciation and amortization of$0.7 million . The increase in net working capital is due to decreases in prepaid and other assets of$4.4 million and net due to/from related parties of$1.2 million , and increases in other accrued expenses of$3.7 million , accounts payable of$3.3 million , income taxes payable of$2.3 million and programming rights payable of$1.2 million , offset in part by an increase in accounts receivable of$3.0 million , and a decrease in other liabilities of$1.9 million .
For more information, see Note 5, "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 six months endedJune 30, 2020 , was$7.0 million , an improvement of$17.7 million , as compared to$24.7 million in the prior year period. The improvement is due to a decline in funding of equity investments of$15.5 million and a decrease in capital expenditures of$3.7 million , offset in part by a decline in proceeds received from the FCC related to the spectrum repack of$1.5 million . Financing Activities Net cash used in financing activities for the six months endedJune 30, 2020 , was$1.6 million , an improvement of$0.6 million as compared to$2.1 million in the prior year period. The improvement is primarily due to a decline in the repurchases of our Class A common stock of$0.7 million .
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