Entravision Communications Corp (EVC) 2002 Q3 法說會逐字稿

Ladies and gentlemen welcome to the Entravision Communications Corporation third quarter 2002 earnings teleconference call. Copies of the release have been sent to you for your information and reference during this call. If you have not received the release, please call Brainerd Communicators at 212-986-6667. If you become disconnected during the teleconference please hang up and dial 212-896-6091 to be reconnected. At this time all participants are in a listen-only mode. We will be conducting a question and answer session later on in the conference. At that time if you have a question, you will need to press the 1 followed by the 4 on your push-button telephone. The conference is being recorded today.

At this time, I would like to turn the conference over to Walter Ulloa, Chairman and Chief Executive Officer of Entravision. Please go ahead sir.

Thank you operator. Good afternoon everyone and welcome to our 2002 third quarter conference. With me today is Philip Wilkinson 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 for the quarter as well as recent developments. Philip will then discuss specific performance at our Television, Radio and Outdoor divisions. Jeanette will then highlight in more detail selected aspects of our overall numbers as well as comment on our guidance. We will then be available to answer if any question.

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 filings for a list of those risks and uncertainties that could impact actual results. In addition this call is a property of Entravision Communications Corporation. Any redistribution, retransmission or rebroadcast of this call in any form without the expressed written concern of Entravision Communications Corporation is strictly prohibited.

Turning to our results. Our financial and operating performance during the third quarter and year-to-date period has been exceptional. A double-digit revenue and cash flow growth rate are among the strongest in the broadcasting industry reflecting the stability of our business model and the solid strategic position of our assets. The strength of our business model is demonstrated in our consistent performance over the past year, which includes the worst advertising recession in decade.

A double-digit same-station growth in revenue and cash flow in the third quarter was achieved on top of revenue and broadcast cash flow growth of 4% for the third quarter, 2001 unlike the majority of broadcasters we did not have the benefit of easy comps to enhance our results. On a pro forma basis which includes all of our 2001 acquisitions such as [Inaudible] from January 1st, 2001, our third quarter was revenue up 19%, broadcast cash flow increased 26% and the EBITDA increased 35%. After-tax cash flow was 9 cents per share compared to 7 cents per share in the 3Q last year, a 27% improvement. Pro forma peak cash flow is $10.7m in 3Q as compared to negative cash flow of $500,000 last year. Results for the quarter are once again led by the performance of our television and radio groups, which significantly outpaced the general market. Our television group posted revenue gains of 28% and a broadcast cash flow increase of 32%.

Our radio group also continued to show positive momentum posting a revenue gain of 21% in a broadcast cash flow increase of 25% and at our outdoor division we have turned the quarter as we returned positive revenue growth led by our New York boards. Revenue in our outdoor division was up 2% and cash flow grew 14% in the third quarter.

We now have all of our 4 divisions generating positive top line growth and have seen these results continue into October with solid rating, revenue gain, EBITDA, and free cash flow growth. Preliminary results for October show our total revenue up almost 30% versus the last year.

Turning to recent developments at our television division, our Univision and Telefutura combination continues to dominate Hispanic viewers in our market with both station groups strengthening their viewers' shares. With the recent July performance of our Albuquerque Univision affiliate, we are the number one television station in prime time in 8 of our markets in any language. Our Telefutura is currently benefiting from strong ratings and our ability to leverage the operating and sales infrastructure of our Univision's solid base.

Let me illustrate how our Univision and Telefutura duopoly strategy is performing. In our [Inaudible] markets in July 2002 Univision survey versus July 2001. Our Univision television stations increased our top the ratings (ph) by 12% and in adults 18 to 34 our prime time range grew 19%. Further given the strength of our duopoly strategy in July survey our Telefutura station tells us a 7% outpost here at prime time that is live as television viewing. Our Univision and Telefutura combination and our overnight leader markets achieved approximately a 90% share of Spanish language prime time television viewing.

As we deliver this impressive ratings and so we continued to focus on closing the revenue gap. It is part of our ongoing efforts to address this opportunity and in August, we appointed Eddie Melendez, the Vice President of New Business Development. Eddie is responsible for spending current national advertiser accounts and attracting new national advertisers to our Univision and Telefutura affiliates. Eddie is working closely with Entravision national sales manager, and Univision national sales Rep in the development of national sales account. After only two months in this new position, Eddie has already been responsible for the expansion of national automotive business to new Entravision television markets.

Turning to radio, our rating success story has continued into the 3Q. In the summer Arbitron added quarter [hour person] increased 12% versus the spring in 2002. Adults 18 to 34, increased 21% over the 2001 summer Arbitron book of the same demo. This rating success and the strong efforts of our sales group had clearly transferred ratings growth for the top line as we posted a 21% increase in revenue for the third quarter. Our revenue growth in the radio division continues to be driven by the conversion of our strong ratings gains into revenue led by the outstanding performance of local Entravision reps. As you recall, we formed LER a little over a year ago and the national radio sales effort saw immediate improvement. The success of LER in growing our national radio sales continues. We are pleased to report our third consecutive quarter of double-digit growth.

We saw an improvement in national radio sales in the first quarter of 11% revenue growth followed by 24% revenue growth in the second quarter and an amazing 65% increase in national radio sales in the third quarter. In August, we closed on our purchase of KTCY-FM in Dallas from Spanish Broadcasting. We had been operating KTCY-FM with an LMA since June. This brings the total number of stations that we operate to five in this market, 3 FM and 2 AM. This is a strategic acquisition for us as we build on an established cluster in the Dallas market, with sixth largest Hispanic market in United States and the nation's fifth fastest growing Hispanic market and seeking ability to separate clusters. At the beginning of the third quarter, we launched KXPK in Denver market, with our [Inaudible] Tricolor (ph) , Mexican regional format.

In the first complete Arbitron period, summer of 2002, this acquisition along with our two existing Spanish language radio properties in Denver [Inaudible] pound ratings and revenue growth. In first of 12 plus our combo increased 111% in an average quarter of our share, summer 2002 versus summer 2001. Our listing share increased a 152% in adults 18 to 34 and 114% in adults 18 to 49 during this same time period. At the same time, our net revenue for the three Denver properties in the third quarter increased 32% over last year, while the market increased at a rate of 9.8% according to Myron Kaplan (ph) .

These trends continued in October for our [Inaudible] finished the month with an increase in net revenue of 82%. This is an example of how strategic acquisition where we currently operate radio stations can solidify our revenue and rating position.

At our outdoor division, we have turned the quarter after a difficult year. This is driven by a solid improvement in local sales, slightly offset by continued sluggish national advertising environment during the quarter. Based on a current paces, we anticipate revenue growth in our outdoor division of 10 to 12% in the fourth quarter and our cash flow growth should be extremely strong.

In conclusion, Entravision is benefiting from a diversified footprints of media assets focused on reaching the rapidly growing Hispanic market with an asset based position in the fastest growing and most gently (ph) top of the Hispanic markets and our outdoor division returning to revenue growth. We now have all four divisions contributing to the top line. Our television and radio stations are increasing their market shares, strengthening what is in many cases, a market leading position. Our management is focused on driving operating efficiencies and controlling costs. While our sales teams are aggressively working to penetrate existing account and secure new advertisers on both the local and national advertising funds. We are firing on all cylinders and expect to pose strong results for the fourth quarter.

Now, I would like to turn the call over Phillip Wilkinson, our President and Chief Operations Officer.

Thank you Walter. And my welcome to all of you as well. As Walter mentioned and as you can see from the press release, our Q3 was great and I am going to run through some of the primary performance areas of each of the three media divisions, starting with Television. Third quarter revenues for the television stations grew in industry leading 28%, this is 2% point better than our guidance we gave you about three months ago. Television results continued to be fueled by the ratings success at our Univision and Telefutura affiliates and strong sales efforts. It is very well in the July Nelson Suits. In fact, overall in primetime our Univision affiliates basis grew a 11% household ratings and adults 18 to 34 ratings, and we also grew 6% in adults 18 to 49 versus a Nielsen July '01 book.

Our local newscast again delivered strong ratings. The rating number one in early news among adults 18 to 34 in any language in seven markets and we are adults (ph) number one and number two in 11 of our 15 news markets. In key individual station highlights are as follows; KLUV in Albuquerque enjoyed its best ratings suites ever growing up to normal 215% among adults 18 to 34 over the July '01 book. KLUV ZTV now rates number one among all stations in adults 18 to 34 ratings for the total day. In Tampa WVEA TV jumped 133% among adults 18 to 34 versus the last July book. In Colorado Springs our station KGHB now rates number one in the market among adults 18 to 34 over the 4.8 rating came out of nowhere. And in Denver our Univision affiliate KCEC tried for second place among adults 18 to 34 in early and now in late news and its primetime ratings for adults 18 to 49, were up 9% July '02 versus July '01.

And finally in El Paso KINT, another one of our large markets, the market leader increased 42% over July '01 in primetime among adults 18 to 34. For our TV group overall, third quarter national advertising increased 57%, while local is up 14%. All of our key top 10 add categories are up including automotive, retail, fast food and telecom.

Our largest advertising category automotive close to the highest dollar increase among the top 10 advertising categories followed by fast food, services, retail, political, and financial institutions.

In fact General Motors, Ford Motor Company, and Toyota all had strong spending increases with our station. In the past two categories, our TV stations saw increased from McDonalds, Jack In The Box, Carl's Jr., Taco Bell, and Subway to name a few. And our new business efforts are paying off in the financial services category, which shows the highest%age growth among the top 10 categories as a results of significant increases in budgets from B of A and Wells Fargo. Pacings remains strong in the fourth quarter and with 84% of our forecast unbooked as of today Q4 is showing strong growth with auto, retail, and fast foods, along with unprecedented spending levels from political advertisers.

At our radio division, revenue increased 21% in the third quarter, continuing the momentum started 9 months ago. National sales increased 65% and local sales, which represents 73% of our total, increased 15%. We've experienced growth in each of the top 10 categories. The fastest growing categories were wireless communications, financial institutions and furniture stores. And once again automotive, restaurants, and beverages made up the top three advertising categories. We also had more than 100 new advertisers this past quarter in our radio division. They included T-Mobile, Volkswagen, Farmer's insurance, Guerrera (ph)Foods and Mitsubishi motors. In terms of ratings, we've experienced an increase of over 12% as mentioned for all of our properties combined in the summer book versus spring '02. That's an average quarter hour adults 18 to 34. When we look at summer '01 to summer '02, overall ratings grew 21% also an average quarter our adults (ph) 18 to 34.

Our three-radio format continues to pose strong results. Our Radio Romantica, stationed in San Francisco, KDRG among adults stations of 34, as the number one Spanish-language radio station in the markets and it’s tied for fourth in the total market. KRRE in Sacramento has increased its share 86% in adults 18 to 34 from spring '02 to summer ‘02.

And highlighting Radio Tricolor, our regional Mexican format KVMT in Dallas, increased in adults 18 to 34, its share, by a 160% over the summer '01. In mornings in the same demo, the station increased by 228% over the summer '01 to a 5.9 average quarter our share. Our new station in Denver, KSPK debuted among Spanish-language radio station, as the number one station in all [Inaudible] demos versus 12 plus adults 18 to 34 and 25-54. Our phoenix Radio Tricolor station KLNV, has increased by 33% in persons 12 plus, that's summer '02 versus spring '02 and it is up 90% over summer '01. Looking at Super Estrella, our pop-rock format KDFO, our Fresno station, has increased in ratings in each of the survey periods since it's upgrade. Shares in adults 18 to 34 have grown by a 157%. KSES, in Salinas, grew more than 57% in adults 18 to 34 (that's the summer versus spring '02) an increase by 32% in same period in adults 18 to 49.

In our passive our station KINC, which broadcasts Mexican regional music, grew 64% in people 12 plus summer to spring '02 and the same period the station increased 61% in adults 18 to 34 and 77% in adults 18 to 49. Our stations in Los Angeles saw a decrease in ratings like most other Spanish-language stations in the market, although it's 2/10th of the point in adults 18 to 34, but we have continued to maintain our informat (ph) rank advantage over the competition for the --and have done so for the last three years. Turning to our outdoor division, we reported the third quarter revenue increase of 2% and I should say it was increase of 2% in line with our guidance. We are up 2% in Europe and we are up 1% in Los Angeles. National revenue was down 1% while local continued to be at positive trend up 10% in our Billboard Division.

We remain focused on driving local sales specifically we have Spanish-based revenue, which shot (ph) 24% for the quarter and as part of total. In addition, national continues to show positive momentum and we expect to see improvement in the fourth quarter. New Billboard advertisements for the quarter including Washington Mutual, VIM, which is an athletic retail chain and Wrigley's Gum.

Top two categories for the quarter included entertainment up double digits in third quarter, General services, financial, and healthcare all of double digits. On a product basis, revenue from our posting business, that’s our 8-sheet (ph) 30-sheet in LA City Lights (ph) grew approximately 15%.

In summary, we are very proud of the tremendous efforts of every one in Entravision and the success of all three of the core media segments. Based on pacing, we are well on a way to delivering strong growth in the fourth quarter and into 2003.

And now I would like to turn the call over to Jeanette Tully for the financial review.

This is Jeanette and good afternoon everyone. On a pro forma basis third quarter net revenues were $64.7m up 19% and pro forma broadcast cash flow increased 26% to $21.8m. Our EBITDA was $17.2m, a 35% increase over the prior year. And it excludes the one time only charge in the third quarter 2001 as a $625,000 settlement of the arbitration. Our EBITDA increase was 29%. As Walter mentioned earlier these results are very strong as we were one of the only broadcast to support same station revenue in cash flow growth in the third quarter of 2001. Our after-tax cash flow for the quarter was 9 cents a share up from 7 cents a share from quarter three of 2001.

Now I would like to comment on free cash flow, which we define as EBITDA minus capital expenditures, cash interest, cash factors plus interest income. Free cash flow for the third quarter was $8m or 7 cents per share showing a growth over third quarter of last year of 335%. More importantly, free cash flow on the first nine months of 2002 through from a negative $500,000 to $10.7m. Overall our margin for the quarter was 34% with TV margins of 38% and radio margins of 36%. Segment pro forma revenue growth rates for the quarter were as follows: TV led the way with 28%, radio had a strong 21% growth, outdoor was up 2%, and print was up 3%.

The break down of our pro forma revenue growth for the quarter was 46% of the revenue came from television, 33% came from radio and 21% came from our outdoor and publishing division. Turning to our pro forma guidance for the fourth quarter, we expect revenues in the range of $61.4m to $62.7m, representing 15 to 17% increase. Broadcast cash flow in range of $19.9m to $21m, up 16% and EBITDA in the range of $15.2 to $16.3m, up 11 to 18%. After-tax cash flow will be approximately 7 cents to 8 cents per share for the quarter and our free cash flow will be approximately 7 to $8m, or 7 cents per share, up from $2m or 2 cents a share in quarter 4Q of '01, a 350 to 400% increase. The expense growth of 16% reported for the third quarter is made up of the following. Variable cost represents 7 of the 16, start-up cost represents 5 of the 16, and other costs represent 4 of the 16.

The expense growth of 16% guided for fourth quarter is as follows. Variable cost represents 7 of the 16. Start-up station costs represent 4 of that total and other costs represent 5 of the total cost. Finally, turning to our balance sheet. We had approximately $310m in debt and $12m in cash at the end of the quarter. On a pro forma basis, this gives us a conservative debt to cash flow multiple of 5.3 times. By factoring in the EBITDA guidance we provided for fourth quarter, our net debt to cash flow multiple at year-end will be approximately 5.1 to 5.2 times. This concludes our formal remarks. Operator, we will take questions now.

Thank you ladies and gentlemen, if you would like to register a question, please press the 1 followed by the 4 on your telephone. You will hear a 3 tone prompt to acknowledge your request. If your question has been answered and you would like to withdraw your registration please press the 1 followed by the 3. If you are using a speakerphone, please lift your handset before entering your request. One moment please for the first question. Paul Sweeney with CS First Boston, please go ahead with your question.

Thanks very much. Good evening everyone.

Hi Paul.

Three questions, if you don't mind. First Jeanette, just following up on your last point about the expenses in the fourth quarter little bit higher than what we are looking for and not seeing the operating leverage that we've seen earlier, still in the third quarter. So, wondering if there is you know, why perhaps are the expenses little bit higher than what you had originally thought and if so, there is any way to take a look at this fourth quarter expenses because they are not really giving you the operating leverage that I think, we are used to? Then I'll have a couple of follow-ups after that.

Okay Paul, I think couple of things is there, in start-up station costs, which were a little bit higher than we expected and then we had some promotion dollars, especially in radio that we spent in the fourth quarter because -- with the kind of competition we are having in some of our markets, we thought it was the right thing to do position us better for 2003 forward. So, little more dollars there and then we had to look at historically that the right dollars to be spent.

Going forward, just a follow-up on that I mean, again, how do you think about operating leverage in your model, I mean, historically you've, -- converted your revenue growth by at least 1.5 times the cash flow growth knocking (ph) that into the fourth quarter, as you think forward is there any reason from the competitive perspective and your promotional spending perspective that would change?

No, I don't think so, I think this is the one time only -- besides the start-up station costs, the variable costs that are associated with sports, we had some additional bonuses, that because of the good news and both especially in TV and radio, we are having is that, these bonuses we've have a bonus plan that allows them to make additional bonuses and because of the numbers that are being generated. I think you can look at this as a fourth quarter only and then you'll start to look at it return back to normal in the first two -- the quarters next year.

Right okay, then just a follow-up Philip or Walter just on the LA ratings that you guys, as you mentioned seem to escape kind of unscathed (ph) versus some of your Hispanic competition in LA, I appreciate your perspective on what do you think Arbitron did or did not do in LA with the most recent ratings books, is it something that Hispanic broadcasting community can remedy or is this going to be an ongoing problem that ultimately might impact -- the ability of Hispanic broadcasting radio stations to kind of continue to grow in LA?

I feel that this is Philip; we do believe that there was under representation in terms of the diary in depth diary among Hispanics and we do believe it can be remedy, there is a meeting coming up this month with Arbitron to talk specifically about this issue at the radio broadcasters here in Los Angeles. But we are also encouraged by I don't know, if you caught the press release from Nielson and the reason I bring this up is I hope that our channel will follow soon that Nielson has announced as of December 30th, that they are going to wait for language spoken in their own. That means that if there is an under representation in tab (ph) household leaders in Spanish community (ph) at home, they will wake up the grading's to negate that under representation. So, we think that by that move that should at least help draw more attention to the issues that Arbitron is experiencing and hope this does stay well and as well as we are asking for the same as radio as the [Inaudible] business they won't come, they will follow soon (ph) .

Great. Thanks very much.

Thank you.

Thank you Paul.

Our next question comes from the line Lee Westerfield with UBS Warburg. Please go ahead with your question.

Thank you, good evening all. Really one straightforward question if I may and this is for Walter and Jeanette. As you look at the 2003 and follow on the expense ratio question for a moment, you never saw it as station how much is that start-up and if you can measure in terms of dollar terms drops-off next year, Jeanette and then following on that, you know, Walter, what do you see as your outlook on the portfolio going into next year?

Lee, I will take the first part of that question. I think you are going to see, you know, once we kind of lapse as they start-up stations, part of them are Telefutura and part of them are other start-up stations that we have both in the radio and television, but I think you see that happen towards the latter part of second quarter of next year. Think it to have a little bit in first quarter because of the way first quarter falls out and because Telefutura didn't start there and some of the stations didn't come on until later in the year. But I think by second quarter you can't lapse that, but you need to understand that even the startup cost in early part of next year is going to be a lot less simply because of the way you build on your stations that as you bring them into you know the kind of size and structure you want them to be.

Lee, in answer to your question about I think there was work plans that we have regards our portfolio you know in '03.

I am really specific about it. How do you think about the Telefutura versus your Univision affiliate properties comparing against one another or competing I suppose in many ways in terms of the growth rate through to the next year and then do you see markets that you really wanted you know leverage yourself back into with your [Inaudible] television or radio?

You know, with regard to our Univision television station group, you know, we have looked at expanding that group in emerging Spanish market that also happen to be a large general market. Seattle will be a good example that we talk about in the past. With regard to our Telefutura station group, we continue to look to find [Inaudible] and the group beyond the current 15 to our 22 Univision television station market. So, perhaps we have got seven markets so we can add Telefutura stations to and in operate well with all of our Univision [Inaudible] Telefutura market. With regard to our radio, we will get at strengthen our Boston, [Inaudible] in Denver and Dallas, we also look at an emerging market that fit our satellite expanse strategy.

Thanks very much everyone.

Thank you.

Thank you.

Our next question comes from the line of Alissa Goldwassar with William Blair & Co. Please go ahead.

Hi, good afternoon.

Hi.

I was wondering if you could talk a little bit about your Bay Area Radio Stations, the snack (ph) has come in and made some changes there and I am curious what impacted that had on your stations and then what actions you might be taking in that market?

Well, let's us say a couple of things and I am sure Philip has more information concerning [Inaudible] , -- it's sure that we have a little more competition than that in the past. We've done some changes to not only hold our shares but increase our share since ACC came into the market about 5 months ago and we've been able to maintain our share. We've done that in a couple of ways, we've done that by improving our program and strategy, which was done very successfully as well as increasing our promotion in the market.

How's pricing holding up in the market?

Our pricing is increasing. In fact, the power station cluster (ph) in San Francisco perform extremely well throughout the last three quarters building its revenue, --- every quarter.

Great and then also maybe can you explain the increase in depreciation and amortization expense from the second quarter to the third quarter?

Yes Alissa, we had most of the discounting offer about outdoor list and you know that's when where there was the potential of a write down and so when we went back, we had to adjust the amortization on it for this quarter. So, it's mainly coming from outdoors and obviously from the new acquisitions we have, you know, that have come through both certainly on the radio side.

So, we would expect the D&A number to come down in the fourth quarter?

Yeah, I think when you look at, it is about $11m of D&A going forward, $5m of depreciation, $6m of amortization and I think you can use that as a guidance, -- for future until we start making additional acquisitions.

All right. Thank you very much.

I am sorry 6 in depreciation and 5 in amortization I missed those, I got those numbers backwards.

And Alissa, just as an add on to that, this is Philip, out of the top 10 largest new business advertisers in third quarter, five of those accounts that we've been able to put on our San Francisco combination [Inaudible] . So, in addition to what Walter has explained to, we've made a concern to that, but and I think that the competition has helped the market overall grow and it's evidenced [Inaudible] five top new accounts on the station.

Okay. Thank you.

Our next question comes from the line of Keith Fawcett with Merrill Lynch. Please go ahead with your question.

Hi, good evening. Philip, you mentioned that the political dollars came in better than you expected. I was wondering, if you could talk a little bit about the full-year and the quarter on the political side and secondly, if you could remind me as to what the incremental impact was of the World Cup revenue in the second quarter?

World Cup ended up at 2 million, Q2, that is an [Inaudible] every four years and I am going to stop, we are all going to stop trying to predict political because we blew through our number months ago. We ended up, we thought we would do roughly 3 and we are over 4.5 to $4.4m. I think it will end up -- I'm sorry, $5.44m and we think it will end up at $5.5m after the account is done today as of yesterday. Roughly, it breaks out at $1.3m in the first quarter, political this year for TV and I'm just talking about the 5.5 is TV. There is another 600,000 in radio political. So, between broadcasts, we had, we were up 6.1 for the year. Q1 TV political was 1.3, Q2 was $500,000 roughly, a little under a million roughly between $800,000 and $900,000 in the third quarter, and in the fourth quarter, it is looking just about, just slightly under $3m and about 94% of that money came from four states.

Texas had over half of our television political money, 55% to be exact. California had 22% and then, Florida and New Mexico each had 8 and 9% respectively rather and that assumes 95% from four states. It is where we expected, where the heated governor's (ph) races were and there were a lot of the state officials and Senate seats etc., that heated up. It's interesting that we did have radio political, a significant increase in political dollars from radio. We had $600,000 as I mentioned for the year and roughly 180,000 of that was in third quarter and 420,000 has fallen already in fourth quarter.

You know what? Just two years from now and [Inaudible] again because we saw a heavy political spending by both parties, but particularly by the Republican Party as to Senate (ph) and early information from Texas and Florida that [Inaudible] Republic in the past elections. So, we think this will help the spending for both parties as they go forward to attract the Hispanic voters. So, we are meanwhile moved from way way through our projections and it really helps on the revenue side.

I think our success in this political revenue was a result of a) the political issues (ph) recognition of the importance of the Senate (ph) for their success and this is the result of the industry's tracking of the growth of the Hispanic voter base. Second, I think that there was an unprecedented Hispanic voter registration drive this cycle and then, that coupled with some very competitive races in Texas where you had Hispanic candidates running for governor and then, just races in important states like California and Texas where they had issues [Inaudible] . That is only to continue, as the Hispanic voter base becomes more -- recognized by the industry, in terms of measuring success. You are going to see more dollars devoted to Hispanic media.

Something made from (ph) significant progress in that area this year. It's the second question; I think I heard two different numbers when you were talking about the July sweeps year-over-year. When you were identifying the adults 18 to 49, there was a 19% increase and a 6% increase? Was the 19, the Univision?

18 to 34, 19%.

That was 18 to 34. And the 6% increase you talked about for the adults 18 to 49, was that just the Univision affiliates or was that the combined Univision and Telefutura impact?

Are you sure you are not referring to the Denver [Inaudible] adults 18 to 49 prime time July book ratings?

Maybe that is it. Could you give me the year-over-year again for July across your group, if you have it?

Across the group and prime time for our Univision affiliate, our household ratings were up 11%. Our adults 18 to 34 were up 11%. And our 18 to 49 was at 17 (ph) less 6%. That's prime time.

Okay. Great. Thank you very much.

Our next question comes from the line of David Joyce with Guzman & Co. Please go ahead with your question.

Thank you. Couple of questions. Why is the revenue appear to be flat to down in the fourth quarter, even with some vertical spending? Is it related to some of the lower ratings and some of the general market trends? Secondly, I was wondering if there is any progress report on Univision converting its shares to non-voting status?

I will answer the second part of your question first. David, there -- the only progress we have with regard to the Univision Hispanic merger and how it may impact Entravision [Inaudible] we continue to review that merger and that is all we have to say. Second, the first part of your question was with regard to our revenue growth?

Sequentially, the revenues look flat to down even though there are lot of political (ph) spending in this quarter. I was wondering if you had given any explanation that I have missed during the call?

No, I will take the first part and then Philip may want to follow-up on it. Revenues we are projecting for fourth quarter are on the high end 29.8 over 24.7, over $5m increase. I think Philip's number for political on the TV side in the fourth quarter was two-thirds of that. So, I think what you don't have is flat or down. You have continued up. Part driven off political and part driven off of just the continued rating success that we are seeing. I guess I am confused about your flat to down number because it is just not there.

Are you referring to TV?

Well, overall the total revenue of 61.4 to 62.7 is down from this quarter up 64.7?

It is down from third quarter.

Correct, I am just talking sequentially.

Okay. I am sorry. I misunderstood your numbers.

Came up [Inaudible] last year in fourth quarter. We had a good quarter.

Traditionally our third quarter is not as strong as this one was. Generally our business -- our second quarter is the highest and then we drop a bit and it goes back up. This time we saw little different page with our [Inaudible] of the year. Fourth quarter we have grown.

Okay. Fourth quarter last year was getting some benefit from the start-ups, I guess, why it was strong?

Yeah, but the bulk of the revenue came from the existing stations. We are guiding up 18 to 20% on the TV and pacing far above that right now.

All right thank you.

Our next question comes from the line of Victor B. Miller with Bear Stearns & Company. Please go ahead with your question.

Good afternoon. Jamey Kellner recently in the ACME call mentioned that the Nielsen had finally adapted the demographic information and that cost him $30m for the network, specifically we were talking about 3.5% revision in the 18-49 (ph) year-old demo and 5% revision upward in the 18-49 year-old women demo. 50% of the women's increase was Hispanic and almost 80% of that 3.5% increase in men was Hispanic population growth. Are you seeing any potential upside in your local numbers as Nielsen starts to trickle this numbers down into individual markets on demo level? Secondly, could you talk about comparing the margins of Telefutura and Univision stations? Can you give us a sense of how the developmental or newer stations are doing relative to your more mature stations? Thanks.

It will help us when Nielsen reaches that. They have already published January 2003 demo off of the 2000 census. As those go into a new universe, we have the same returns in terms of diaries of viewers against a larger universe, you are going to have a larger number of people viewing, larger value. It is a big benefit to us. In fact, we saw big jump from 2002 to 2003 universe in our markets among Hispanic adults 18 to 34, which is our strongest demo. Also, jumped 18 to 49. We were hoping that 30 that cost him would come to us, in part because we see the benefit more than any other broadcaster out there or non-Hispanic or Spanish-language broadcaster out there. Second question, to Jeanette.

On margin percentages, Univision affiliates on high-end run high margins percentages and on younger stations are in the teens, 20s and 30s. Our top end Univision stations are in the 40s and 50s. So, they're hard to compare against Telefutura which is a brand new start-up network. Therefore, we think we run them well because of the cost structure we have got in those markets. You know, we are looking at getting them to break even and this is starting to grow margin. We have a lot of upside from Telefutura in the future. The real growth is coming from our big Univision station.

Thanks.

Just a point of information. The 2003 universe estimates for total [Inaudible] in the United States, will grow and is expected - the new Nielsen universe numbers plus 23.5% over 2002. So, look for that to help bolster our ratings in all of our markets.

Thanks Phil.

Ladies and gentlemen as a reminder to register for a question, press the one, four. Our next question comes from the line of Gordon Hodge with Thomas Weisel Partners. Please go ahead with your question.

Yeah, just a couple. One, I was wondering if you could break out the revenue contributions from the Telefutura stations in the quarter? And then also if you could talk about pacings? It sounds like they are really strong in the fourth quarter, but if you could break it out pre and post-elections that would be helpful and also just lastly a percentage of your business, that is auto category? Thanks.

One percent Telefutura on an operated stations represent 1% of the revenue.

Of total?

Of total TV revenue.

Total TV, okay.

Pacings on the TV are very strong. Pacings today at a [Inaudible] 29% on TV, 27% on Radio for fourth quarter and then you have a third part of that question.

While, I was just curious what I gather that is from today going forward, so, that would be sort of a - that would be a post-election look at pacings are not or was that for the full fourth quarter?

Actually, last Thursday forward, most of the political had come in already for fourth quarter, the three million we mentioned to you in TV. And then another 420 in Radio. The week prior to that they were four points higher on the TV and roughly the same on the radio. But, you know, surprised to say, we are pacing very strong in broadcast in fourth quarter and we are seeing business increases from the automotive division and we have had [Inaudible] of huge increases in third. We have got forward increase, another number one advertiser for TV; just beat out General Motors as of today in the book. Nissan doubled their budget over from Q3 to Q4. Jack and [Inaudible] up, Pesky is up (ph) Sony Pictures is now in the top 10 advertising for TV. So, we are seeing great strength across all categories. We don't see it slowing down.

So, your guidance of 18 to 20 on TV, I gather is the rational for that versus who you are pacing today is just either conservatism or you got more revenue on the books than you did last year given all the disruption last year, is that right?

We are being conservative. December is always a difficult month to estimate. It can get a little strange, as you move towards the holiday.

Yeah.

I think your question there also, part of it was less percentage as the automotive category represents the total on TV, its 23%, 22% last third quarter and 23% in fourth. And it's roughly 20%, but we'll get you the exact number on the Radio side.

Great, thank you.

Thank you Gordon.

Our Next question comes from the line of David Miller with Sanders Morris Harris. Please go ahead with your question.

Yeah. Hey guys. Congratulations.

Thank you.

[Inaudible] David, back on TV yesterday on CNBC?

You're too kind. Couple of questions, Jeanette, on the current net debt figure, can we assume that given the Fed action earlier today that you will be fairly aggressive in current refinancing, at least a portion of that debt and then also, Walter, given that the Univision-HSP merger looks to be on track to being approved, have you made any programming changes and any other stations in markets where you'll be essentially competing against Hispanic, if you haven't done that yet, what would be the timing in doing so? Thanks a lot.

Well, the approval of that merger shouldn't impact any of our programming decisions, I mean, we evaluate the performance of our broadcast group for television and radio [Inaudible] units, weekly, daily and monthly basis...

Fine.

....and with regard to programming, I have made a change in Albuquerque. This last week, we converted our FM there to AM, national regional format. A part of that was due to the fact we weren't pleased with the way our romantica format was competing and as well as additional competition with the entry of Univision-HBC into our present market. But, we look at them like we do call for competition and we will take whatever steps we have to improve our position in all times.

Okay. Then Jeanette on the debt?

David, the other part of your question on the debt action today which was kind of a nice surprise for all of us, I kind of thought like a lot of people did that into 25 and, so 50 basis points was a little bit wild. A part of that debt we have is about 70m of revolver and it's on 30-day LIBOR just because we figured you are just going to take some thing down. So, we are going to get the immediate break for that in the next two weeks.

Right.

It was, the majority of our other debt is the high yield and I guess at this kind of rate now 50 basis points being taken down. We have to look at the cost of doing a reverse swap on our high yield. Certainly, the 50 basis points today make to a little more attractive to at least look at. And so it, since it came about two hours ago, I guess we got some work to do.

Okay. Fair enough. Thanks very much.

Okay.

Thank you, back to to Victor's question before I, the auto represents 23% as that as mentioned on the TV, 15% of radio.

Next question comes from the line of Rich Rosenstein with Goldman Sachs. Please go ahead with your question.

Thank you. Good afternoon. How have your cost per points in radio evolved over the past couple of years? Are you closer to parity with other stations in your markets? Given the time you closed a lot of acquisitions, I think you were able to increase them pretty significantly. Have you cycled through all of those comparisons or is there still room to go on that? Thanks.

We crack every book. And our cost per point for third quarter is still below the total aggregate for the markets that we compete in. If you take a shot in time anywhere from 13 to 20% below market, that is we are not getting our fair revenue share versus [Inaudible] share. It becomes through in terms of the PPP (ph) , is evident in terms of PPP (ph) . As ratings push up and down, each book, we try to look at it on a cumulative basis for our clusters in each market over a cyclical period or four-book period for a total year. Roughly, a gap of 20% on the radio. 30% on the TV.

How large of a gap was that in some of the stations you acquired when you first acquired them?

Well, we can go back and do an analysis, [Inaudible] tell you that based on our experience; we have pushed rates up in every one of our markets when we acquire a station. We go in and promote heavily and push ratings up through promotion and types of programming strategy that we talked about here earlier and with that over the rates. So, we narrowed the gap in general on our new properties in radio and television.

Great Thank you.

Our next question comes from the line of David Miller with Sander Morris. Please go ahead with your follow up.

Follow-up question. You guys mentioned net revenue figure for the Denver properties in radio increased 32% year-over-year. Do you have an organic growth number for that excluding [Inaudible] tax?

David, we will have to get back to you on that. If we get the numbers, we will get it for you. We don't have it at our hands today.

No problem. Thanks a lot.

Our next question comes from Alissa Goldwasser with William Blair and company. Please go ahead with your question.

Hi, just following up on gordon's question earlier about Telefutura's revenue contribution in the quarter. Did you say 1% TV revenue about 300,000?

1% was little over 4. I think it was 4. Around that 1%, but I believe that there are [Inaudible] the number was 420.

Where do you stand with regard to break-even on the Telefutura properties?

Alissa, the one the 420,000 because of the way we operate. We think we will get there by year-end, which is what our plans were by year-end. In fourth quarter, we are looking at a potential break-even for the Telefutura stations we own.

Okay. Thanks.

I am showing no further questions at this time. Please continue.

This concludes our call. Thank you for participating and we look forward to meeting with you on our next conference call. We will again keep you abreast of progress and our growth. Thank you.

Ladies and gentlemen, that does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your line.