Note 7. Equity Method Investments

The Company makes investments that support its underlying business strategy and enable it to enter new markets. The carrying values of the Company’s equity method investments are typically consistent with its ownership in the underlying net assets of the investees, with the exception of Canal 1 and Pantaya. Due to losses in excess of capital contributions, the Company has recorded nearly 100% of the losses on Canal 1. The Company has also recorded losses in excess of the amount invested in Pantaya. Certain of the Company’s equity investments are variable interest entities, for which the Company is not the primary beneficiary.

On November 3, 2016, we acquired a 25% interest in Pantaya, a newly formed joint venture with Lionsgate, to launch a Spanish-language OTT movie service. The service launched on August 1, 2017. The investment is deemed a variable interest entity (“VIE”) that is accounted for under the equity method. As of December 31, 2018, we have funded $4.7 million in capital contributions to Pantaya. In accordance with U.S. GAAP, since we are committed to provide future capital contributions to Pantaya, we continue to record our proportionate share of losses on a one quarter lag. For the years ended December 31, 2018 and 2017, we have recorded $6.9 million and $2.8 million, respectively in loss on equity method investments related to Pantaya, which is presented as a liability in the accompanying consolidated balance sheets. The net balance recorded in investee losses in excess of investment related to Pantaya joint venture was $5.0 million and $2.8 million at December 31, 2018 and 2017, respectively, and is included in the accompanying consolidated balance sheets.

On November 30, 2016, we, in partnership with Colombian content producers, Radio Television Interamericana S.A., Compania de Medios de Informacion S.A.S. and NTC Nacional de Television y Comunicaciones S.A., were awarded a ten (10) year renewable television broadcast concession license for Canal 1 in Colombia. The partnership began operating Canal 1 on May 1, 2017. On February 7, 2018, Colombian regulatory authorities approved an increase in our ownership in the joint venture from 20% to 40%. The joint venture is deemed a VIE that is accounted for under the equity method. We earn a preferred return on the capital funded, which is recorded quarterly as an offset to the loss on the investment. As of December 31, 2018, we have recorded $84.1 million in equity method funding related to Canal 1. We record the income or loss on investment on a one quarter lag. For the years ended December 31, 2018 and 2017, we recorded $28.3 million and $9.1 million, net of preferred return, in loss on equity method investments, respectively. The Canal 1 joint venture losses to date have exceeded the capital contributions of the common equity partners and in accordance with equity method accounting, equity losses in excess of the common equity have been recorded against the next layer of the capital structure, in this case, preferred equity. The Company is currently the sole preferred equity holder in Canal 1 and therefore, the Company has recorded nearly 100% of the losses of the joint venture. For the years ended December 31, 2018 and 2017, we recorded $8.4 million and $1.7 million of preferred return, as an offset to losses incurred in loss on equity method investments, respectively. The net balance recorded in equity method investments related to Canal 1 joint venture was $46.7 million and $25.9 million at December 31, 2018 and 2017, respectively, and is included in equity method investments in the accompanying consolidated balance sheets.

On April 28, 2017, we acquired a 25.5% interest in REMEZCLA, a digital media company targeting English speaking and bilingual U.S. Hispanic millennials through innovative content. As of December 31, 2018, we have recorded $5.0 million in equity method funding related to REMEZCLA. We record the income or loss on investment on a one quarter lag. Additionally, we earn a preferred return on the capital funded, which is recorded quarterly as an offset to the loss on the investment. For the year ended December 31, 2018, we recorded a $0.1 million loss, net of preferred return, in loss on equity method investment. For the year ended December 31, 2017, we recorded a $0.0 million gain inclusive of the preferred return, as an offset to loss on equity method investment. For the years ended December 31, 2018 and 2017, we recorded $0.6 million and $0.4 million of preferred return, as an offset to the loss on equity method investments, respectively. The net investment recorded in Equity method investments was $5.0 million at December 31, 2018 and 2017, and is included in equity method investments in the accompanying consolidated balance sheets. We have no additional commitment to fund the operations of the venture, which limits the maximum exposure to loss on our investment in Remezcla to our investment of $5.0 million.

The Company records the income or loss on investment on a one quarter lag. Summary unaudited financial data for our equity investments as of and for the twelve months ended September 30, 2018 are included below (amounts in thousands):


	Equity
	Investees
Current assets	$	20,999
Non-current assets		53,453
Current liabilities		53,145
Non-current liabilities		90,731
Redeemable stock and non-controlling interests		14,187
Net revenue		21,703
Operating loss		(57,387)
Net loss	$	(66,819)