Entravision Communications Corp (EVC) 2002 Q2 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to the Entravision Communications Corporation second quarter earnings conference call. During the presentation all participants will be in a listen-only mode. Afterward you will be invited to participate in the question and answer session. At that time if you have a question, please press the 1 followed the by the 4 on your telephone. As reminder this conference is being recorded, Thursday August 8th, 2002. I now would like to turn the conference over to Walter Ulloa, Chairman and CEO with Entravision Communications Corporation. Please go ahead.

Thank you, operator. Good afternoon everyone and welcome to our 2002 second quarter teleconference. With me today is our president and Chief Operating Officer and Jeanette Tully our executive vice-president and Chief Financial Officer. On today's call I will provide an overview of operating results this quarter as well as recent developments. Specific performance at our television radio and Jeanette will highlight in more detail selected aspects of your overall numbers as well as comments on our values. We will then be available to have answer any questions you may have. Before starting the call, I have to inform you that this afternoon's conference call may contain forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ. Please refer to our SEC financial of filings with a list that could impact future results. In addition the call is a property of Entravision Communications Corporation, any redistribution, retransmission or rebroadcast of this call in any form without the written permission is strictly prohibited. This afternoon, we reported financial results for the second quarter in line with our guidance and have given a strong third quarter guidance of my media company in the country. Our impressive steady growth of growth valid dates our strategy highest growing fastest diversity of markets and cash flow from top 10, middle and small Hispanic markets shields us from a competitive and economic swings that our peers are experiencing. Our pro bono basis which includes all of our 2001 acquisitions, January first of 2001 and excluding our settlement with Interrupt (phonetic), plus expenses associated with in a settlement our second quarter revenue us up 10 percent. Each broadcast increased 9 percent and EBITDA increased 10 percent. Pro forma was 5 cents per share compared to last year or 4.of, on a national basis for the quarter net revenue increase the 10 percent broadcast increasing the 1 percent after taking into consideration the 1.6 million for the settlement of the Interrupt (phonetic) contract plus expenses associated with that settlement and EBITDA was flat with last year. One time settlement charge with Interrupt (phonetic) is overshadowed by the tremendous success we have seen through the development of [inaudible]. Our management sales revenue in the second quarter in the second quarter results was over 30 percent over last year and July national radio sales closed at plus 27 percent. Results for the quarter once again led by the performance of our television about radio groups which significantly outpaced the market. Our television revenue gains of 20 percent and broadcast increase of 27 percent. This the seconds consecutive quarter of gains. Performance momentum posting a revenue gain of 15 percent and a broadcast increase of 10 percent. With Interrupt (phonetic) settlement, interrupt settlement included. In July both the visions posted revenue growth as anticipated we are seeing a return to growth at our [inaudible]. Turning to recent developments at our television division, in the recent July survey in our television metered markets our ratings are up 18 percent versus last year. In addition our 14 continued to exceed our rating for the revenue expectations and I am pleased to tell you that these only strengthening our market share while [inaudible] all continued to grow as well. With our television infrastructure we've been able to have leverage our existing base and minimize our [inaudible] operating expenses we have estimated that our affiliate groups will break-even by fourth quarter as a result of the operation of [inaudible] in our television markets. Not had to make huge capital investments. We continue to benefit from our strong relationship with Univision. We are of the largest owner and operating of in the country. With exclusive access to the best Spanish language programs in the world 25 year affiliation agreement. Represents about that 25 percent of Univision's broadcast distribution and approximately 30 percent of its total audience delivery in our television markets we dominate Spanish language viewing with Univision and strong local news and do you to the large number of high density Hispanic markets where we have bright our competition truly is a general market as we accelerate the conversion of English language television dollars to Spanish language dollars. For example in Las Vegas a dynamic the fastest growing market in the world, our affiliate is the #1 testing. We dominate of Spanish language television viewing in this market with our Univision and [inaudible] delivering 8 two percent share of prime time Spanish language television viewing. Our Univision affiliate grew its revenue 24 percent in the fourth quarter and is pacing well above that in the third quarter. Turning to radio we have continued to increase our, reformatted in January 2001 and transferring the gains into top and bottom line growth. The listening share of or radio station is up 7.23 percent. We are [inaudible] 2 verse spring 2002. That ratings growth has continued to support our momentum into the current quarter with [inaudible] our ratings growth has enabled us do advertisers would have otherwise have so on a second tear basis. The secret to our success we [inaudible] the competition our continuous one-on-one meetings with virtually every Hispanic advertising agency has increase the our exposure to revenue growth. Revenue growth in both local and national sales. 7 of our top 10 advertisers in second quarter increased their spending levels with us over the previous year. For example Verizon communication he is increased by 4 two percent and Bank of America increased spending by almost 24 percent. We welcome Univision's entry into Spanish language radio with the acquisition the Spanish broadcasting much corporation. We believe with the tremendous marketing resources they will [inaudible] accelerate the growth of Spanish language radio and the conversion of English roof dollars into Spanish language radio dollars and we will be a huge beneficiary of this growth we believe Univision will give is a entrepreneur assist in convincing [inaudible] more accurate ways than currently exist and they have done with Nielson measurements of Spanish language television viewing and this effort will result in the expansion of the Spanish language revenue pie. In addition we continue to see strategic acquisition is primarily where we can build on cost and create multiple footprints in key Hispanic markets. Converted the peak to our hugely successful. We have supported a long for this full line of FM with our two television station examination our other two radio stations. In early June we entered into a definitive agreement with Spanish of broadcast assistance for 35 million dollars we currently own or operate 3 FM and 2 AM stations. We are operating KPGY FM and with our improvement [inaudible] pop rock format. We expect to close this transaction later this quarter. In early July we announced an agreement to acquire radio station QRTY in Las Vegas for approximately 6 million dollar. This much acquisition will complement our current acquisition, given us two FMs in of this region. So this acquisition is in line with our cost strategy in the nation's most attractive Hispanic markets. In summary, our second quarter highlights - our second quarter results highlight our ability to continue to drive revenue in a week advertising environments. We are benefiting from our diversified base. Continue to post industry leading gains while our stations are ahead of expectations. Our radio group continued to turn the corner posting double digit revenue growth as a result of strong ratings gains. Now we see more. We remain cautious on the near term outlook we expect to see a return to growth in our business in the seconds half of this year. With the [inaudible] of media should produce a strong second half for the company. Given our efforts to control costs and builds efficiencies this puts in a strong position to generate free cash flow and build shareholders much value. Before closing my remarks the recently enacted [inaudible] 2002 requires the chief executive officer and Chief Financial Officer certify the company's periodic financial statements. Accordingly Jeanette Tully our Chief Financial Officer and I will be certifying our second quarter financial statements and we will be filing certification with our 10-Q on or before August 14th, 2002. Furthermore, if we commit to you that we will make sure that our financial information is transparent, easily accessible and complete. Now I will turn the call over to Phillip Wilkinson, our president and chief operations officer.

I'm going to run through the. Starting with our television division. Second quarter revenues for the television station is grew in industry leading 20 percent. This 11 percent better than our guidance that we gave you. TV results continued to be driven by dominant ratings in our high growth, high density Hispanic markets. The addition of Telefutura, are stronger than expected World Cup results and most importantly our focus on new business development. Regarding advertising from [inaudible] continue to dominate share of audience by growing from an 86 percent average share to 88 percent share of household views Spanish TV and prime time. We also added 5 share points to capture a 93 percent share where we've add futura (phonetic) stations this is average share gain where we have both Univision TV stations and Telefutura combo in place. That's a 93 percent share. Telefutura is helping to build our strong competitive position. We early local news where in the May Nielson we ranked #1 or #2 in any lack among adult to 34 in 13 of our 15 markets where we produce news. In prime time we ranked either 1 or 2 in 9 of our 20 measured markets in any language. For our TV group overall second quarter national advertising increased 34 percent. While our local was up 15 percent. And all of our key ad categories including auto and retail, posted double digit sales increases during the quarter. In fact our largest. Auto fister, Ford Motor Company was up over 50 percent in second quarter spending over am year ago. To it quote tap increasing the 45 percent and Nissan was up 27 percent over last year. In the fast food category, McDonald's, Jack in the Box, and Pizza Hut all spent 25 percent more in second quarter this year than they did last year and Verizon was a big spender in our telecom category. Remain very strong in the third quarter and we are on track to reach break-even at our Telefutura stations by year end. In fact pacing total for the television are so strong we have 83 percent of our forecast, for Q3 on the books as of today. Turning to radio. At our radio division, revenue increased 15 percent in the second quarter. This is a dramatic 23 percent pipe swing from the second quarter of 2001. National sales increased by 27 percent. And local sales which represent 74 percent of our total sales increased 14 percent. Revenue was driven by the incredible ratings ex-gains we achieved throughout 2001. And improved sales on the national level, primarily attributable to the formation of LER in August of last year and of strong local sales effort. Radio revenue continued to be broad based. We experienced growth in 8 of our top 10 categories. The fastest growers were telecom and wireless communication at over 107 percent over last years, financial service were up 68 percent, beverages were up 46 percent and auto dealers increased 24 percent over 2001. Our biggest. Categories in E entertainment, restaurants and grocery stores. Our new advertisers included Pepsi, Ford Motor Company, and Greyhound just to name a few. In terms of ratings on the radio side, we experienced an increasing of over 7 percent for all of our properties combined in the spring book versus winter 2002. That's 12 plus Monday through Sunday 6 a.m. to mid. When we look at the spring 2001 to spring 2002 our overall ratings grew, and 11 and a half percent in August 18 to 34 on a combined station basis. Our radio format continue do grow its audience. L every Palm Springs moved in the seconds place in the market. Up 29 percent over last year. And that KBRG in San Francisco they #1 Spanish station in the marketplace in adults 18 to 49. KJMN in Denver continued to be the #1 Spanish station in the second straight survey period. KJMN has grown by 80 percent in the last year in the same area, persons 12 plus: Radio, our regional Mexican format also continues its much success in the Arbitron (phonetic) spring 2002 survey. Dallas remained a strong #2 within Spanish language radio stations and has moved up to 12 overall among adults 18 to 34 in the market. In San Francisco, clock, KLOK, held onto its 1.3 per share and went up an average quarter hour persons plus. KLOK has improved in markets range by 8 place is from a rank of 19 last spring and 11 overall in San Francisco in total adults 18 to 34. Our morning show in San Francisco [inaudible] became the #1 morning show in the entire of Bay area in adults 18 to 34 and 18 to 39 in any language. And finish 96 KLNV continues to be the #1 Spanish radio station. KLNV has increased over 87 percent in persons 12 percent, 57 percent up in adults 18 to 34 in the past year. In our pop rock format continued to grow in most important target demos, its station KSSE here in Los Angeles wide background its leadership format advances 17 percent in persons 12 plus while owner in format competitor fell 25 percent. KSSE in the most competitive Spanish market holds a nearly 2 to 1 share margin over our direct competitor in our core demographic adults 18 to 34. In Chicago, grew by 75 percent in shares in persons 12 plus, 18 to 34 and 18 to 49, again a [inaudible] he will formatted station. It ranked as #3 in the market and all key demos and the #1 in its format. Our stand-alone stations have performed very well also. Our station in make call less than became the #1 station in the entire market in adults 18 to 34 and adults 18 top 49. Also in McCallen in our first rating periods on the air with when it debuted with an incredible 6.8 share in persons 12 plus and now ranks in top 75 in the market in adults 18 to 34. All of this has helped our strong Q3 pacings and will result in Q 3 revenue growth above of that Q2. Turning to our youth to do division, bill board revenue totaled 7.4 million in Q2, down 19.7 percent over the comparable period last year and in line with expectation examination guidance. On a market by market basis revenue for our New York separations was down 18 percent with LA revenues down 20 percent. Revenues mixed basis our national revenue for the quarter was down 28 percent or 4 local based advertisings increased by 5 percent. Despite the overall revenue decline from billboards in the quarter we continued to make progress in driving local sales in New York which went from 1.7 million dollars last year, second quarter, to 1.8 million dollars this year or up 5 percent. For our bill board division as whole local revenue now represents 34 percent of the total revenue versus 26 percent same period last year. Driving that improvement in local sales were the efforts of additional local sales staff in both LA and New York. We also continued to make progress in driving Hispanic based bill board revenue as a percentage of much overall revenue it represented 29 percent of our of total revenue verse only 25 percent last year in Q2. With a very difficult first half of 2002 now behind us, we are beginning to experience a positive shift in momentum in national advertising in both New York and LA. One point evidencing this is the gradual return of a more traditional buying pattern by clients who are now entering the market looking for buys 1 to two months in advance compared to only days or weeks in advance as we have seen during the past 12 months. Based on this and our now new business in the pipeline we anticipate a return to growth of zero to two percent positive growth in Q3 '02 for the revenue in our bill board division. So in summary or television ask radio divisions have continued their revenue momentum into the third quarter, in fact TV revenues in Q3 will be a strong as those in Q two everyone without the 2 million dollars we billed to worlds cup revenue will now be coming back from Q2 and rice having its strongest quarter as we speak. We're also seeing the turn around as we mentioned in outdoor. Exciting point with strong positive growth of the company and we remain well positioned to deliver strong growth throughout this year. And into next year. Now I would like to turn the call over to Jeanette for a financial review.

Thanks, good afternoon everyone. Our pro forma basis I'm happy to report second quarter net revenues were 62.2 million and growth increased 1 percent to 20.6 million as a 16.8 million flat last year. 7 [inaudible] interrupt contacts dispute the revenue increase was 10 percent, [inaudible] and EBITDA was 10 percent. All in line with our guidance. Our [inaudible] for the quarter was 4.5 million or one cents a share also in line with our guidance. I would also like to comments on our free cash flow which we define EBITDA minus capital expenditure, cash interest, capex plus interest income. Free cash flow for the second quarter was 5.7 million, or 5 cents a share. Compared to last year of 4.5 million or 4 cents a share. As you may have noticed we've included this item in our second quarter release and will continued to do so on a going forward basis. Overall our margin for the quarter was 33 percent. 36 percent without the impacts the 1 time on this charge with T V margins of 42 and radio margins of 39 percent: Pro forma growth rates for the quarters were the following, television was up 20 percent, radio was up 15 percent, outdoor was down 20, and print was up two percent. The expense increase on a pro forma basis is 15 percent. This is made up of the following. The settlement makes up 5 percent of the 15. Our variable cost structure makes up 4 percent of that number. The startup costs make up another 4 percent and other costs remaining two percent of the 15 percent growth. The break down of pro forma revenue growths forties quarter was 40 cents,, 33 percent came from radio, and 20 percent came from outdoor and publishing. Now turning to the really good news. Our pro forma guidance for third quarter, we expect third quarter revenues in the range every 62.7 to 64.3 million representing a 16 to 19 percent increase. Our [inaudible] cash flow in the range of 20.Seven-up 20 to 27 percent and EBITDA in the range of 16.1 to 17.4 million up 27 to 37 percent. As you remember last year in quarter 3 our one time only charge of 625,000 settlement arbitration. If you add that one time only charge back our guidance for EBITDA for third quarter of '02 will be 21 percent to 31 percent. Our guidance for cash flow will be approximately 16.5 million to 17.9 million or 14 to 15 cents per share. The expense of 14 percent that isn't related into the guidance for quarter 3 is follows, the [inaudible] represents 7 percent of the 14, [inaudible] represents 4 of the 14 and other costs represents 3 of the 14 and now turning to our balance sheet. We had approximately 275 million dollars of debts and 9 million cash at the end of the quarters. On a pro forma basis, this gives us a conservative debts to cash flee multiple of 5.1 times and if you factor in the EBITDA guidance we just gave you, our net debt to cash flee of multiples will be 4.7 times. This concludes our formal remarks. We would 00:44:56 be happy to take your questions. Operator.

Thank you. Ladies and gentlemen if you wish to register a question for today's question and answer session you will need to press the 1 followed by the 4 on your telephone. You'll hear a 3 tone prompt to acknowledge your question. If you withdraw your polling request you may do so by pressing the 1 followed by the 3. If you are on a speakerphone please pick up your handset before entering your request. Our first question comes from Paul [inaudible] with Credit Suisse First Boston. Please go ahead.

Thanks very much. Good day, everybody. First, Phillip, on that statistic you quoted on the television about the. Percentage booked this year, do you happy to know what know that number would be versus last year? And then second on the radio business, we've waiting for this segment to turn given the reformatting you did last year. Could you give us a sense of where you think you are kind of in the developments of those stations for example I don't know if you want to phrase it in the form of power issues, where some of the power issues are in some of those stations now and versus where you think they can be and where the upside is on radio.

Paul can I jump in on the radio? Not from a power but a margin ratio because I think that's at the moment a really good starting point for us. I when we reformatted the radio station is it went through 2001 these stations are now turning. We have a lot of stations that are below the 30 percent margin levels. And so we believe knowing the way we run our radio process that there is tremendous growth in our radio properties. And so - base we've got some of our biggest stations and our longer stations that we have not reformatted in the 50 plus percent margin ratio. You can look at it that way, say 40 percent or so stations overload, thirties percent margins and some of them, slight and growing everyday. That we can get all of our stations over time up to a 50 percent margin and then incredible growth left in radio and continuing on with radio. It's going to be driven off of the revenue that we can generate but also driven off of the margin efficiencies that we will have.

Far as the percent going on books to forecast year to date, I mentioned to you on the television side we have 83 percent of the books that we forecast for the full quarter, it's the same on the radio, 83 percent, and on the billboards it's 93 percent. Relative to last year, we're ahead of the game on all three divisions. We're seeing very very strong pacing.

Great. Thanks very much.

Thank you.

Our next question comes from Chris [inaudible] with Bear Stearns. Please go ahead.

Hi, good morning. A couple of. Good afternoon I should say. Could you talk about with the inventory, the extra local inventory you're seeing in market places. Will that have any effect on your cost of point on your local stations or are you able to get essentially the same or any impact on the Univision station cost per points? And then can I ask Paul's question from the television aspect? What do the margins look like there in terms. Stations that are - whatever demarcation line you want to identify. How many stations are below that in margins?

As far as the Telefutura (phonetic), obviously price point is lower than the Univision station. Of course it's ratings are lower. On an aggregate, that would drop the overall combined CPP. But we have not - we have not moved our prices down or our pricing down on the Univision properties. In fact we're up on the Univision properties, up 15 percent in Q2. We continue to push our rates on the Univision properties. About the 50 percent of all Univision advertisers all go on Telefutura. We've effectively [inaudible] these two stations in the 14 markets. However, as I mentioned, much different price point on the Telefutura that has not affected our ability to increase price on the Univision station.

On the TV stations, the size the Telefutura station which is up for us, we have stations like in New York City, we have the Boston station, the Hartford station, we have the conversion of the full powers - the low powers to full powers in Orlando and Tampa. To give you an example, three of the largest stations we own, they're doing over 50 percent margin. The stations we described maybe high 20 percent margins so we have a dramatic impact on TV just as we do on radio. Not only to grow revenue and to control costs as we do, but also to grow the margins on these stations and once you reach a point of covering your fixed costs then additional of dollars fall in the bottom around 65 or 70 cents on the dollar. We can builds that's margins up on these stations pretty dramatically.

Thanks very much.

The next question comes from Michael Russell with Morgan Stanley. Please go ahead.

Thank you. And good evening. I was wondering if you could give us an idea of your telecom exposure on the TV side. I know that telecom specifically MCI were large advertisers in Spanish language television and I'm wondering what their exposure was to your business.

Well, the one that got us worried is now worried, is Qwest. We have about 100 something thousand dollars in Q2, trickled into Q3 money. And that's about it. We feel relatively confident in the balance of the telecom, including Verizon which is the biggest telecom spender. Just came off in large World Cup sponsorship package. Southwestern Bell, not a concern, AT and T Wireless, not a concern. This is debt exposure, bad debt exposure. Cingular, not a concern. We feel we'll be able to keep this category on short leash, and making any real potential liability.

And mike, on the radio side, Qwest is not on our radio stations so we have no exposure there. And we're monitoring Qwest very carefully. Obviously they have a great need to continue running advertising we're going to watch the data. I think all companies are doing. But so far they've been paying their bills.

Would you estimate that the World Cup strength in the second quarter stole any thunder from the third quarter?

No. Actually, it's quite a phenomenon. Without the World Cup dollars from returning from second into third as I mentioned we were going to be ahead or as strong in terms of revenue growth in third quarter. We did feel a slight impact of dollars from on the radio side. That moved over to the TV. But it was a slight impact.

And Leslie, is there any update on the labor situation I think with the newspaper?

The unions I think have finally started negotiations. They always wait until the contract is up to do that. This a pretty amicable union to work request. The settlement just as we were buying the paper was going through, we expect to reach some closure with them. As unions they take their time and we're working with them to get that closure. We don't expect any further negative impact from the labor relations at all.

Great. Thanks very much.

Thank you.

The next question comes from Lee land [inaudible] from UBS Warburg. Please go heated.

Thank you, good afternoon. Two questions from me. The first, Walter, the decision of Andy Hobson and Worstman (phonetic) is to step off the board is understandable. What your intention is to replace or how the board composition will look after this. Jeanette or anybody, offer your perspective on the political advertising picture for your TV stations in the latter half of the year. Thank you.

Lee, the answer to your first question is that the Andy and Mike resigned from the board from our board purely as a result of the acquisition of the Hispanic broadcasting corporation by Univision and the potential conflict of the interest that exist was that acquisition. And in our company. As far as replacing them? As you know, there's a draft of rules that are being reviewed by New York Stock Exchange of which we're a member to require that we will as all public companies that are as members, will have to maintain majority of independent or outside directors on their board. And we will wait to see what happens with this rule change. And then if it does go through, which we expect it will, then we will move to increase our board by three independent directors will give us a majority of outside directors.

And as far as the political advertising, TV, we did about a million-3 in the first quarter, 500,000 in last quarter, mile-8, we're projecting roughly that in the next half we should end in the neighborhood of 3.2 million dollars, significantly higher, 3/10ths higher than last big political selection year. And it's been a big help.

Okay. Thank you very much.

Thank you.

The next question comes from Keith Fawcett with Merrill Lynch. Please go ahead. Mr. Fawcett, your line is now open. Pardon me, Mr. Fawcett, your line is open.

Okay. Next question. Operator?

Yes, I'm here.

Is there a problem with the line?

Not as far as I know. Mr. Rosenstein?

Can you hear me?

Sure. Very well.

Good afternoon. I was struck by your comment about Ford increasing their spending by 50 percent on television and being the - one of the biggest new advertisers on radio. Is that a coincidence or is there something that's being done at the corporate level to bring in advertisers across the media? Thanks.

Well, actually, Ford dealer dollars, Ford dealership group dollars, and Ford corporate dollars out of an agency in Miami. So across all three front we've had increases with Ford Motor Company. But the largest increases come on the heels of what I call corporate dollars for Ford Motor Company and it's a results of our strong business development efforts which focused on automotive and retail in our local markets. We've done am tremendous job in second quarter, continue to see it in third and fourth. And in terms of new business with the auto dealers.

This sounds a little bit like Univision strategy a number of years ago in terms of going after lead horse advertisers in certain categories. Do you envision perhaps next year any new business development effort picking one or two other categories and pursuing them in a similar fashion.

I think we have [inaudible] with the top [inaudible] the new business auto targets and retail targets to take us well beyond 2003. And we're not only - if we have most of the major car dealers or Detroit auto makers, Ford, Dodge, with the Chevrolet, the Toyotas, the Nissan,, our business has been to grow share for each of those name plates and grow the number of markets. And that's where our intentions are. We have most of them on the air. But it's a matter of keeping our fair share of the market with them, and adding to new markets, for example, General Motors is now looking at three new markets with us on the west coast. It's phenomenonal if we get two of those. So, yeah. We're going to continue to focus on those two large categories in terms of our new business developments.

Great. Thank you.

Thank you.

Thank, Rich.

The next question comes from Melissa [inaudible] with William Blair and Company.

It looks like you have remarkable visibility on third quarter, understanding the cancellations are theoretically possible. What does your visibility look like on fourth quarter at this point.

I don't know if remarkable, we've got such strong numbers to forecast year to date for third quarter third but we're already, we've got six, seven weeks left in the third. But fourth, [inaudible] it has improved slightly. Radio and television, I mentioned we saw improvement on outdoor. We've got third quarter orders that came in this week, both for third quarter and fourth quarter for the black buster, the Dodge, the Ford, the target stores U Pizza Hut, just to name a few. And typically, they would go quarter by quarter but this week we got the rest of the third quarter and all of the fourth quarter. So that an improvement over our previous visibility so we're encouraged by that. That's why we're able to give you some bold growth numbers for third.

That's great. Really as you are looking out into the latter part of third and into fourth, any signs of an economic slow down that would be affecting business?

No. We're not seeing anything. In fact, we're seeing our new business development efforts pay off with new advertisers. We're very but bullish on the second half the year. We're really different than the total TV industry and radio industry. We're different than them. We're in high growth markets and the fastest in the 12 to 15 fastest growing markets and 12 to 15, highest density markets and we've got constantly imposing our properties. And we've got upside in our new stations, for example we grew 77 percent in or lavender do and 12 percent in Tampa, second quarter, those are [inaudible] last year, and we have 10 more stories like that so we have a lot of great up side in the company. I don't think that come down a notch and it's clear enough for everyone. Television division has grown above the TV industry and above the Spanish TV industry due to the first point I just mentioned about the higher growth and density i good. I think that's very well said. One last question. You mentioned incremental two million dollars from the World Cup. What was the incremental expenses associated with that?

We had no charges from the network on World Cup fees. It came straight through.

Great. Thank you very much.

Thank you.

The next question comes from Bill Meyers with Lehman Brothers. Please go ahead.

Thanks. A couple quick questions. First off, could you break off your same station television station revenue growth. Leave off -

16 percent.

16 percent. Great. And then on the radio side it looks like if you back up the interrupt settlement costs were up 17 percent year-over-year. When should we look for moderation.

Bill, I think I'll get that one obviously. We let me just go to the radio numbers so I can talk about it. In quarter 2, the radio expense number - let me grab my sheets so I can talk to you more intelligently about it. Most of the increase in expenses on radio, 13 percent of it was variable in startup stations and the regulation of it was 2 percent. I'm sorry, 2 percent was programming costs so you've got another 4 percent. The variable is always going to be there and we hope it's always there. I think what you're going to look at it startup station goes away, when they go into the third quarter or fourth quarter and then I think what we will see is a moderation of costs in radio other than startups in variable very shortly. Quite strong, frankly. The variable and startup costs, other cost increases 4 to 5 percent and they're coming down almost every quarter because some of that was at beginning of a new Arbitron (phonetic) contract or things like that. Cost-of-living increases. So I think we're very comfortable that we hope the variable costs keep our costs high because that means we're selling, so we're pleased with that number. But I don't think it will take us long by the end of the year the early part of next year to come to more reasonable cost increases other than the ones always there, like variable costs and we do have any startup station costs

Thank you.

Thank you.

Our next question comes from Gordon [inaudible] with Thomas whites sell parents. Please go ahead.

Good afternoon.

Gordon.

A couple quick ones. Both Hispanic and Univision had experienced softness in July. And then they're seeing improvement in August and I'm just curious, my guess is you're seeing strengths everywhere but I'm curious if you saw that same experience in July. And then your revenue on the books versus budget. I'm curious, obviously we haven't lapped the 9-11 effect yet. Are you factoring into your guidance anticipated acceleration after 9-11? Or is that something that might kick in as well later on? Thanks.

Well, first, the 9-11 impact, we have our guidance taken into consideration. We had about two million bucks on the six days that we were unable to air. But we made good 8 or 900,000 dollars of it so we have that factored in. But as far as the pacing, we are seeing TV has a great August, tremendous August A, helping push our pacing through the quarter to 30 percent. The top 6 existing television station are all up over 20 percent. Radio has tremendous July, a month ago. National. And it's pacing very strongly. Billboards as we mentioned earlier also. We we're very encouraged by each month of the quarter and we took a hard look before we put together this guidance. So that we will deliver.

Terrific. Thank you.

Thanks.

As a reminder if you do have a question please press the 1-4. Our next question comes from David Miller with [inaudible]. Please go ahead.

Yeah. Thanks good afternoon. Hi. In your prepared remarks you had some fairly detailed statistics with regard to the auto guys on TV. You mentioned Ford was up 50 percent year-over-year. If you could repeat that part of the script. That there were some prepared remarks on the radio side you mentioned Pepsi, Bicardi, etcetera. If you could repeat that, that would be nice. And then I have a follow-up.

Do you want me to send it over to you?

That would be great.

We'll get it to you. We have big gains on TV. Auto was very strong in second quarter. And Toyota increased 45 percent, Nissan was up 27 percent over last year, Ford was up 50 percent. Gave some examples of the fast food, McDonald's, Jack in the Box, Pizza Hut over 25 percent growths. We'll fax you over the list.

Great. On the radio Romantica format, tremendous ratings gains there, Palm Springs, Denver and San Francisco. I don't recall hearing that before from you with regard to such dramatic of increases unless rating, in differently in those markets regard to that format?

Well, [inaudible] got great team both on the programming side and on promotions sides. And if anything, in talking to our president of the radio division, Jeff Liberman, we're playing a little bit more Mexican in our selection, proven format. We've been successful. Just 3 or 4 examples of that format how we will we're doing. It's doing extremely well in all of the properties.

Thanks very much.

Thank you.

The next question comes from David Joyce with [inaudible] please go ahead.

Good afternoon.

Hi David.

I just have a couple questions here. Can you comment on the TV and radio inventory that's left in the third quarter and fourth quarter? Also, what the capex plans you have left for the year? And finally, are all the radio stations cash flow positive now??

We run on the sellouts. We run our second quarter averaged about 73 to 75 percent sellout after all is said and done on TV, roughly the same, 71 to 75 percent in radio, that was up about 15 percent from prior years second quarter. We were down in occupancy in the outdoor a little bit. But we do hold back, obviously you have the national advertisers with a little bit more visibility A little sooner. Local are more month to month, week to week. Then we hold back as much as 15 or 20 percent of the inventory for opportunistic buyers that want to pay the fright for it on a Friday afternoon for the weekend. Typically, we're seeing the same time of sellouts for third quarter as well. And the other question, Jeanette.

On the margin percentages we have one radio station that is like am break-even. It has a slight loss but when I say a slight loss I'm talking about a couple grand. I call that a break-even station on the TV side, our only stations that are not as break-even are making money right now are [inaudible] and they're in the brothers of breaking everyone by fourth quarter so we're comfortable. Your other question I believe was on cap sex. The number is shown in the free cash flow for the quarter was 5.7 the total for the June 30 was 10.9 but we have [inaudible] since the early parts of this year we have 12 million of maintenance capex and 5 and a half million of digital capex. Whether we a little of it gets moved to next year we have not sure but welcome within the guidelines we told the street about. We're looking at for the remaining dollars will be spent in third quarter and fourth quarter. I don't yet have a good guidance to tell you. Probably more of it will be in third, most of it in fourth.

Great. Thank you.

You bet.

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