Entravision Communications Corp (EVC) 2003 Q1 法說會逐字稿

Ladies and gentlemen, welcome to the Entravision Communication Corporation first quarter 2003 earnings teleconference call. Copies of the release have been sent to you for your information and refers during this call. If you have not received the release, please call [inaudible] communicator at 212-986-6667. If you do become disconnected during the teleconference, please hang up and dial 415-537-1859 to be reconnected. At this time all participants are in a listen-only mode. We welcome a question-and-answer session later on in the conference. At that time, if you have a question, you will need to press the one, followed by the four on your push button phone. This conference is being recorded today, Wednesday, May 7, 2003. 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 morning, everyone. Welcome to our 2003 first quarter teleconference. With me today is Philip Wilkinson, our president and Chief Operating Officer and John DeLorenzo, 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 discuss specific performance in our television, radio and outdoor division. John will highlight in more detail selected aspects of our numbers as well as comment on your guidance. We will then be available to answer any questions you may have.

Before starting the call, I have to inform you this morning'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 uncertainty that is could impact actual results. In addition, this call is the property of Entravision Communications Corporation. Any distribution, retransmission or broadcast of this call without the expressed written consent of Entravision Communications Corporation is prohibited. Despite the impact of the war, for the first quarter, we continued to produce solid revenue growth. Revenues increased 8%, broadcast capital decreased 1%, and EBITDA increased 10%.

Free cash flow improved from a negative 1 cent per share to zero cents per share. Once again, these were led by the television and radio group with the outdoor group seeing growth momentum. We surpassed expectations with regard to managing operating costs in a quarter in which we operated the big city Los Angeles station under a time brokerage agreement and launched two formats in the greater Los Angeles area. We have several television and radio stations not in operation in the comparable quarter last year. In the February 2003 Nielsen sweep, the television extended their reign as market leaders, with five stations delivering the number one ranking in the market. That's against all Spanish and English language competition. As a television group in prime time, our Univision grew 8%, in adult 8 to 34 and 10% in adults 18 to 49 in the February 2003 Nielsen sweep over February 2002.

In our markets our prime time ratings gains were substantial, growing 17% in adults 18 to 34 and 23% in adults 18 to 49, and, as a result of our successful newest performing, eight of our Univision television stations were the market in leading news, including the top three revenue producing affiliate in El Paso, San Diego and McAllen Texas. We benefit from the strategy as we leverage the infrastructure of our established Univision television. Rating extend into the increased by 33% over February 2002. We are seeing virtually no cannibalization of our new Univision in these markets. In fact in one year, the Telefutura television stations tied or beat the competition in five of the do-opoly markets.

We saw toned -- continued growth despite the war. We saw increase in 10% of the our sales force is doing an excellent job of driving local and national advertising revenue. Local sales increased revenue by 5% and lotus Entravision reps increased by 5% as compared to an overall industry increase of 11.8% in national revenue in our radio markets, according to (inaudible) we had the successful [inaudible] of the greater Los Angeles cluster we have. We operate three for fat in the number one radio market, 97.5 and 107.1 Super Estrella. We entered into a time brokerage agreement with big city and began broadcasting our super strong pop rock format over all six stations in our cluster informing our audience that Super Estrella could be heard would be would soon be heard on the 107.1 frequency.

In mid-January we debuted 103.1 with ten songs in a row. 103.1 KDL case air itself to the diverse Los Angeles market. In March we launched 10.5 as the first station in the United States. Despite the fact that our primary format super station switched frequencies in the quarter and we launch td commercials for approximately half the quarter, overall revenue for the increased 27% over last year's comparable quarter. This trend continues in April with a 33% increase in net revenue for the cluster. Initial ratings indicate we are well on our way to achieving our market share goals. In the winter 2003 Arbitron book in our key 18 to 34 year old, Super Estrella averaged three share up from 1.9. This is an increase of 58% and our total people listening to the station was up 31%. Our format 97.5 got off to a strong start with 1.3 average quarter hour share in adults 18 to 34 for the entire winter rating book. This 1.3 average quarter hour share for adults 18 to 34 was achieved despite being on the air with this new format for only 5 of the 12 weeks winter book. Our other new format [inaudible] 103.1 KDL got off to a great start with 1.5 average quarter hour share in adults 18 to 34. Our Los Angeles clusters (ph) generated a combined 12 plus average quarter hour share of 3.6. We are well under way to achieve our projected share in person 12 plus for the Los Angeles cluster by the close of the year.

In our outdoor division, our revenues increased 14% in the first quarter of last year. The primary driver behind the division overall improvement was a continued of national advertising in the New York market. We continue to make considerable progress in driving Hispanic targeted advertising sales up 35% in the first quarter 2003 versus last year's first quarter. With our outdoor business continuing to show signs of strength, we anticipate a continuation of double digit growth and division into the second quarter of 2003. In summary, all of our divisions are showing momentum despite the current economic environment with our ratings improving, we are focused on capturing a greater share of the advertising pie. We expect to show improved operating leverage as our revenues increased and we control our costs. With the diversified asset base strategically positioned in the nation's fastest growing and most densely populated market, our long-term outlook remains strong. I would like to turn the call over to Philip.

Thank you, Walter. I will run through some of the primary performance high lights in our three immediate divisions starting with television. Our first quarter revenues for television stations grew 6% and BTF grew 2%. The success of our television group is driven by sole soled ratings growth and strong national sales. We experienced solid TV rating growth in Nielsen Report. In prime time in February 2003 we ranked number one in five markets regardless of language in adults 18 to 34. Compared to February a year ago, our stations had strong prime time adult 18 to 34 ratings growth across many markets. In Denver, KCEP grew 27%, in Vegas, one of our stronger stations KINP grew 16% and ranked number two in total market overall.

Two of the east coast stations that continue to show enormous growth are WBEN in Orlando, grew 75% and WMBO in Washington, DC, which grew three fold. We make improvements in our local news cast which have resulted in audience growth. We are ranked number one in adults 18 to 34 in any language in eight markets and number two in four markets. As our television grew for all markets for our news viewing audience increased 23% among adults 18 to 34, up 25% in adults 18 to 49 year old demo for the TV group, our first quarter national at advertising increased by 23%. A local was down 1% due to the impact of the war in Iraq. Our key advertising category continued to show strong growth. Automotive was up 30%, our biggest advertising category. Was over Q1 with Nissan, Ford and GM leading the way. Nissan double their expenditure over the prior year.

Telecom came in strong over last year's first quarter spending, as a result of the local long distance wars going on. We showed double digit growth thanks to McDonald's, Denny's and Subway. After March we saw a pull back resulting form the war, April finished stronger than expected for TV and is May looks very strong. This is after considering the $2.5 million of non-returning [inaudible] and political dollars from the prior year. Turning to the radio division, revenue increased 10% in the first quarter. National sales increased 25% and local sales, which represents 74% of our total sales in radio, increased 5%. Our top three categories were automotive, restaurants and telecommunications. Automotive, once again, was our top category as it was in television, and this category increased 6% in radio and represented 14% of the total gross revenue for the division. Growth was led by the grocery store category. That increased by 58%. Telecom increased over 50% and to see those reports (inaudible) recorded 50% as well. New accounts for radio included Food for Less, Kellymore Paints (ph) and Harvey's Casino as well as Rainbow Bread.

After ten consecutive ratings period of growth, we saw a slight decrease in ratings of 5.3% in average quarter hour share among adults 18 to 34. That's the winter 2003 compared to fall 2002. When we look at winter 2002, moving forward to compare to winter 2003, we saw an increase of 13.8% overall for adults 18 to 34 for the radio division. We did anticipate a short-term impact on our railings as a result of the decision not to retain morning news show personalities in an effort to control our costs on radio lower network. Our new host, Guerimmo Nava (ph), another experienced morning personality who has working with [inaudible] division in the past and we're able to retain most of the other team members of the morning show. More importantly, the person that is developing coached the previous morning personality, Oz Montana (ph) the VP of programming is working on a daily basis with our new host to create another morning show.

We do anticipate improvement in ratings in the near future. Our radio markets continue to post strong results in adults 18 to 34 winter 2003 compared to the prior year, and in Denver our cluster increased by 54% as a result of our continued growth in our recent acquisition of KXPK-FM. In El Paso, we increased by 41% on the outstanding performance of KINT-FM and KHRO-FM. We saw increase in Dallas of 24% on the strength of KPCY our Super Estrella (ph) format and continued success at KKDL-FM. In November of 2002 we debut our radio format in Las Vegas, which resulted in the cluster growth by 27%. Finally, turning to our bill board division, revenue totaled $6.5 million in Q1, up 14% over the comparable period last year. On a market by market basis, revenues for the New York operations was up 19%, while L. A. revenue was flat.

The primary driver was the continued strengthening of the national advertising in New York. Major advertisers increased in the bill board spending included Glaxo, Advert (ph), Warner Brothers and Proctor & Gamble. We combined increased spending of the three top advertiser, advertiser categories, entertainment, health and retail represented $1.2 million in incremental revenue in the quarter over the comparable period last year. We made progress this quarter in driving Hispanic targeted sales on our board with consolidated Hispanic revenue in the quarter increasing by 35% to $1.4 million versus a million dollars during Q1 ‘02. With national advertising showing strengthening in the near term, we anticipate the continuation for our double digit growth in the second quarter, which has occurred for 2003. In summary, the entire company had a strong first quarter despite the effects of the war in Iraq and the non-returning political dollars from the prior year. Our revenues was up 8% and is significantly ahead of the industry. Now, I would like to turn the call over to John for our financial review.

Thank you, Philip morning, everyone. Before I begin, I would like to point out that in the past -- as in past practice, we had elected to include non-GAAP financial measures we believe are useful it our investor, broadcast cash flow, EBITA as adjusted and free cash flow. In today's release, in accordance to the adoption of regulation G by the SEC, for historical information we provided the reconciliation of each of these non-GAAP measures to net loss, the most comparable GAAP measure. Continuing with the first quarter 2003 we reclassified certain expenses that is were reported as corporate expenses that should have been classified as operating expenses for the radio division and television division. The first quarter, $430,000 was reclassified to radio and television operating expense from corporate expense.

On a comparative basis, corresponding expenses in the first quarter 2002 were $250,000. As Phil and Walter have discussed, Entravision reported solid revenue growth in a difficult quarter. Net revenues were $53 million, up 8%. Forecast cash flow decreased 1% to $11.8 million and EBITDA was $9.3 million, a 10% increase over the prior year. It should be noted that if we added back lost revenues associated with cancellations and postponements of advertising as a result of the war in Iraq, as well as exclude the nonrecurring political revenues from the prior year, total revenues would have increased 13% and EBITDA as adjusted would have increased 42% over the same period in 2002. Free cash flow, which we define as EBITDA minus capital expenditures, cash interest, cash taxes, plus interest income, was negative 1,000 or zero cents per share for the first quarter 2003, up from negative $1 million or negative 1 cent per share in 2002. Overall, our margin for the quarter was 22%. TV and radio margins for the quarter were 31% and 22% respectively. Operating expenses increased 11%, of which 3% of the increase is variable expenses such as national sales representation fees and sales commissions associated with increased revenues during the quarter as well as revenues sharing leases in the outdoor division. 3% of the increase was associated with start-up costs, which include the big city and other radio division.

The remaining 5% of the increase includes increased expenses for insurance, JSA costs, additional news casts, ratings services, and employee upgrades. Corporate expenses decreased to $2.4 million for the quarter, from $3.4 million for the first quarter 2002, a decrease of $1 million or 29%. The decrease was primarily attributable to a $1.5 million reimbursement from Univision have vision for legal and other costs associated with the third-party information request that we received in connection with the proposed merger between Univision and Hispanic broadcasting corporation. Turning to our balance sheet, as of March 31st, 2003, the total net debt was $302.7 million and the EBITDA as adjusted was $9.3 million on a trailing 12 months, this yields a ratio of debt to EBITDA of 5.1 times. At year end, we expect to be in the low 5 range. It should be noted the big city acquisition did not close until the second quarter of 2003. An additional acquisition debt is not included in total debt as of March 31st, 2003.

Turning to our outlook for the second quarter of 2003, based on the current pagings (ph) we are seeing, we expect to report net revenues of $67.6 million to $68.8 million, an increase of 9% to 11%. It should also be noted that $2.1 million of revenue from World Cup and political advertising in the second quarter in 2002 will not be returning in the second quarter 2003 making comparisons more difficult. Operating expenses are expected to be $44.4 million to $44.8 million, an increase of 67%. On a comparative basis, second quarter 2002 included a one-time charge for a settlement for the formal at radio national representative for $1.6 million. Excluding the one-time charge from second quarter 2002, operating expenses for the second quarter 2003 would increase 10% to 11%. Broadcast cash flow is expected to be in the range of $23.2 million to $24.1 million, an increase of 14% to 19%, and EBITDA, as adjusted, in the range of $19.2 million to $20 million, also up 14% to 19%.

Free cash flow is expected to be approximately $5.7 million to $6.6 million or 5 cents to 6 cents per share, compared to 5 cents per share in the prior quarter. For the second quarter, we expect corporate expense to be in the range of $4.1 million. Historically, depreciation and amortization has been $11 million quarterly. However, the company needs to conduct an appraisal of its big city acquisition prior to providing the depreciation and amortization guidance for the second quarter. Interest expense is expected to be between $7 million to $7.5 million in capital expenditures in the $6 million to $6.5 million range. This concludes our formal remarks. Walter, Phil, and I will be happy to take your questions.

Ladies and gentlemen, if you would like to register a question, press the one, followed by the four. You will hear a three-tone prompt to acknowledge your request. If your question has been answered and you would like to withdraw, press the one followed by three. If you are using a speaker phone, pick up your hand set before entering your request. One moment for the first question. The first question comes from the line of Paul Sweeney from Credit Suisse First Boston. Please go ahead with your question

Thanks. Good morning. A couple questions. I guess on the ratings coming out of the radio business, obviously the loss at Pelene(ph) last year affected the winter book not just in San Francisco in the markets he was syndicated in. Do you consider your winter book to be the trough for those affected markets so, therefore in the spring or summer, we can expect to see a rebound or is this something that can take longer than this? Second, in terms of the operating costs, looks like the growth rate peaked in Q1. Should we expect to moderate during the remainder of the year? You suggested that in the past. Is that something you feel comfortable with? Third, in terms of Telefutura, Walter, can you update us? You launched 12 to 14 Telefutura stations over the last 18 months. How many do you plan on launching this year?

Okay, Paul. As to the first part of your question, as we indicated on the call, you know, we made a decision not to retain the morning personality in order to better control the costs. We do believe that what we have seen in this winter book is the bottom of our range or the trough, as you described it. We expect our ratings in our Mexican morning show to grow from here and continue to move in a normal direction. We've got the same team that was responsible for the success of our prior morning show. The Oz Montana Vice President of programming is working daily with the team. We expect, as I said earlier, for those ratings to continue to increase. What was the second part of your question?

It was operating expenses and Telefutura.

With regard to Telefutura, we launched 15 new Telefutura affiliates last year, and the question was how many do we expect to launch this year. We're at 22 Univision markets, and we -- our goal is to launch [inaudible] with Telefutura in every one of our television markets. That said, I think probably this year we're going to launch two or three additional Telefutura affiliates.

With regard to operating expenses, absolutely, Paul. We stand by our moderating down to get us to the point of mid-next year where we'll be normalized expense growth. We projected and guided early on we would do a 12% increase in the first quarter. We came in at 11%. The second quarter, we're guiding at 6% to 7%, albeit there was a one-time charge last year of a million six for settlement with the previous rep firm. That would have moved the number from 10% to 11%. It's coming down from what was 12% in the first quarter to probably closer to 10% in the second quarter. We expect to continue to moderate and be normalized by mid-next year. The only extraordinary thing we see coming up, and it's not that significant, is in the fourth quarter, we'll be moving our radio division to Los Angeles. There will be some a one-time cost associated with that move. We stand by our moderation of the operating costs

Great. Thanks very much.

Thanks, Paul.

The next question comes from the line of David Miller from Sanders Morris and Harris. Please go ahead with your question

Yeah. Good morning. A couple questions. I wanted to make sure I heard you correctly when you said Q1 TV related auto to advertising was up 30%. Is that what you guys just said?

Correct.

Okay. Great. Also, if you could just comment on how that might be comping in the current quarter, because it seems to me the year-over-year comparisons are going to become much more difficult as we get into the meat of the year. Also, John, if you could comment, if you're welling to, how much of the guidance you just gave or how much of that internal forecast is already in the books for the current quarter. Thanks very much.

Well, we don't have a full picture on the second quarter, but we do have a prediction for April. It is up 20%. We expect to continue that way. We're doing a terrific job in adding new brands and new markets for existing brands. Our automotive business is healthy, and the auto to makers are continuing to have the zero down, zero interest programs to help fuel that

Right.

I'll let John answer the second half of that question

Yeah. Looking at our outdoor, we’re probably 93% to 96% booked. All in across the company W's probably 75% there, but -- I think it's higher. We're probably in the 85% on television and low 80s on radio compared to last year with outdoor in the mid-90s.

Thanks very much.

the next question comes from the line of Michael Russell from Morgan Stanley. Please go ahead with your question.

Great. Thank you. On the $2.1 million World Cup, is that incremental or 60% incremental? Can you give us an idea on the TV side how we should look at normalized television rate without the World Cup impact?

We had $2.1 million roughly in revenue last year. The bulk fell in June and, roughly , 75% of that is non-returning dollars that were targeted specifically for that effort.

Okay. On the total day sweeps, I wasn't sure if I caught it right. 18 to 49 ratings growth. What was the increase you saw in February? Could you remind us what you saw in November?

TV or radio?

TV, 18 to 49.

25% 18 to 49, 23% of 18 to 34.

That was in February. In November was similarly high, if I recall?

Correct. I don't have that in front of me, but we've shown gains every book. We've had help by the increase in the UE, but, you know, frankly, the programming becomes more and more popular. More people are watching the news casts. We've had a big, big gain in terms of the local news casts in the 13 markets. It's helped fuel our lead-in into the prime. I will make available after the call the November increase to February

And is your experience on prime time different than that of Univision in terms of the ratings group?

We are -- it's fair to say in terms of their overall dominance of Spanish television viewing nationally versus our markets, we do over-index in 10 or 11 of our markets. That has to do we're in the 13 of 15 largest fastest growing Hispanic markets and 12 of the top 15 highest density markets

Michael Russell Could you help me understand how, then, if the ratings have been up 20%, 25% in the past two sweeps books, look goes past the first quarter, which has the war and other strange things in it. If we look at the non-World Cup television guidance, that would be something that's up more, like, 10% to 13%. Why isn't it higher? What's the difference? Is there a sell-out issue? Is there a pricing issue? How do we take a 13% pro forma second quarter guidance number and apply that against the above 20% ratings growth? Where is the disconnect there?

the World Cup and the political. Both things created difficult comps for us in first and, obviously, the World Cup will create difficult comps in the second quarter versus prior year. It was political in first quarter. We expect to be back in the normalized absence of comps in that mid-teen, high teens growth in the television division. The general softness in the first quarter of the overall television industry.

It sounds like maybe it's softness you have seen on the reduced sell-out ratio and pricing?

Pricing is up in the second quarter. Our first quarter sell-outs were down and political was down from the previous year. Our rates were up high single digits. Our second quarter is firming up. It continues to firm up ever since the end of the war in Iraq. Does that answer your question?

Yes, it does. Thank you very much

Thank you.

the next question comes from Kit Spring with Stifel Nicholas. Go ahead with your question

Good morning. Any update on the Univision stake, number one? The on the publishing division, I think you've, in the past, have said that maybe non-core. Wondering if there's something you can do with that within the next six months. How much corporate expense is allocated to publishing that could be eliminated? Last question for John is, corporate expense seems to be trending up a little bit in the second quarter, even though you're taking expenses out of corporate into the operating expense line. I'm wondering if there's something one time in the Q2 corporate expense. Thanks

Kit, with regard to the first question, I believe it was related to the Univision station in Entravision. As you probably know, the Univision has, through the years, determined the divestiture of the Entravision stakes. That three year period just started last month. I think we're a long result from Univision determines the divestiture of that. The second question, I believe, was related to the newspaper, and the answer is yes. We do have plans -- it is non-core, as you stated earlier. We are in compliance to do something with that as of this year. I would say the next six months is a good time. Any questions regarding expenses

On the corporate, there is no publishing. There is nothing in corporate for publishing, and on the second quarter guidance for corporate, you know, the bulk of it is two items. D&O is 5% of the increase and bonus is(ph) accrued in the second quarter of 2003 as opposed to 2002. So, basically, bonuses that is weren't accrued last year and are accrued this year and D&O makes up half of the increase for the corporate in the second quarter

Thank you.

the next question comes from the line of Bishop Sheen (ph) from Wachovia Securities.

Bishop Sheen; Good morning. Nobody could accuse you guys of being shy with numbers. That's a good thing. That's great to have all these numbers. The two that I'm still looking for, John, the cash that you have on the balance sheet at March 31st, and then let me pro forma rebuild the balance sheet for big city. I believe you closed April 17th on the big city acquisition?

Right.

I may be wrong. How much more debt should I be adding to the balance sheet pro forma for March 31?

$100 million

Right. Okay.

On the revolver to close the big city transaction

Got it. You didn’t use any cash. You took it off the revolver

That's what we needed

Okay. And how much cash? Negligible cash on hand pro forma?

Yeah, exactly. We took what we needed. You know, having a revolver, there's no need to have more operating cash on hand

And then let's go to availability and capacity of your credit facility

Between now and the end of the year we have $237.5 million of availability. We have $166 million outstanding post big city acquisition

Okay. The last is to your dilution. $3.77 million shares used in the big city acquisition?

Right.

So shares outstanding for --

You figure about $120 million outstanding. You're adding 3.7%. It's 3%, a little less than 3%.

Okay. Thank you, gentlemen

Thank you.

the next question comes from the line of Bill Meyers from Lehman Brothers. Please go ahead with your question

Thanks. If you could comment on radio pricing in Los Angeles. It is an increasing market with a lot of promotional spending. On the TV side, what were the Telefutura losses in the first quarter and do you expect positive cash flow by midyear?

What was the question with regard to LA?

If you could comment on radio pricing in the Los Angeles market.

Radio pricing in the LA market. It is, generally, right now, for us priority pretty strong. We have always been very aggressive we regards to pricing in LA. It is competitive as you can tell from the results, we're doing quite well.

How does it compare to pricing, I guess, in your other markets if you were to isolate Los Angeles?

It's tighter. It's firmer because of the size of the market. It is the number one market in the country. It is a little more sturdy in Los Angeles than other radio markets.

In terms of Telefutura?

Bill, on Telefutura, as I talk about at various investor conferences, we're not breaking out net loss or net gains from Telefutura. As I explained, the entire cost structure is integrated into the do-opoly (ph). It would be an arbitrary allocation of costs. As far as Telefutura is concerned, the station is -- the stations we have are, basically, at a break-even point and turning to profitability now. The losses incurred are the larger market JSAs because we assumed the cost structure and shares going forward that Univision is acquisition costs. We expect through the middle of the year to continue to, probably, assume some losses in the JSA’s and turn positive in the second half of the year. So, you know, we're not breaking out from a P&L perspective, but eyeballing it, it looks like it will be at the end of the year positive on the Telefutura stations.

Just one fellow up. Which of your radio markets are you currently running live programming?

Approximately four markets. We have a live programming as opposed to the network fees

Thank you.

the next question comes from the line of Richard Rosenstein (ph) from Goldman Sachs.

Hi. It's Lee Chavez. In your 12% to 14% radio guidance, can you tell how much is attributable to big city and what kind of growth are you seeing in the second quarter for your co-rated portfolio ie., acquisitions we've seen over the last year…

I'm sorry. Let's take it slower. I'm not following you. Let me answer the first question. We're not guiding -- we're guiding by division. We're not going to break out the second quarter between Los Angeles and the rest of the radio group. I totally missed your second question

I'm trying to get a feel for where radio is in your core assets and your (inaudible) for what you've done. Is it high single digits compare to what we're seeing in the market now, which is flat to up to 2% to 3%. I'm going to get a feel for this. Any guidance would be would be very helpful there. Also, you have sold out a lot of your inventory compared to other competitors. I'm wondering whether you're helping control pricing by holding back inventory. So you can make sure your rates are stable?

That's a difficult question. What we've done is, we report by cluster. We, basically, include the cost structure into the existing cost structures. You're asking for guidance on same station versus new station. First off, we don't have a new station analysis because every market that we've acquired in the last 18 months has been into an existing cluster. So we don't consider that same station. We don't report same station. Also, we're not -- basically, the guidance we have is guidance by division. We're in the going to split the guidance between same station and -- if you want to give a feel of radio in same station -- in other words, it's pretty much pacing along at probably --

It is the same as the new stations. If you blended the whole thing, lock at the total radio revenue increase, the first quarter was 10%, and for the stations out there, it's roughly the same kind of increase. As to your sell-out question, I'm not sure I understood that. As we indicated in the first quarter for the radio division, we ran at roughly 70% sellout. We can bump it up. It is about three points higher first quarter. Does that answer your question?

Yeah. That's fine. I understand. It's probably pricing pressure is a lot less.

The next question comes from the line of Keith Fawcett from Merrill Lynch. Go ahead

Hi. When you give the rating of 1.3 in LA, for 5 of 12 weeks, that represents the absolute level and not an extrap? If we did an extrapolation that would be close to three share?

That's the absolute level, yes

It struck me as curious that your national is up 23% in the first quarter and local was down 1% and you attribute that to the war. I would have expected more cancellations on the national front than the local or shifting of bad spots. Can you talk about that, the dynamic that went on there?

Well, we've got both sides, local and national. Local retailer have the jitters and held on, expecting business to be placed in March, and a lot of existing business that would have already been on the book or actually was on the book from national on our TV books actually was -- the schedules were adjusted and or cancelled altogether. It comes from both ends. Obviously, we were higher than the local percent gain higher prior to the war and higher on the national sides. It was more on the national side, but we were in low single digit growth in the local side. When it hit us locally, it created that minus 1RS.

Philip, when you said April being up 20%, was that the auto to category or TV in total?

Our auto category for first quarter was up 30%. We're at plus 20%, actually mid-20s in your auto in April. Which is a good indication of how we expect our auto to second quarter to go in TV. Our pacing, I think what you're looking for overall, our pacings in April were very strong. We continued strong in May in both television and in radio as well as great pacings in outdoor.

One final question for John. The effective tax rate of 20% in the first quarter. Is that your full-year forecast?

No. It's 40 for the full year

Okay. Thank you.

Thank you.

the next question comes from the line of Gordon Hodge from Thomas Weisel Partners. Go ahead with your question

Good morning. Just to follow on Keith's question about the TV pacings. So if TV is up, say, 20% in April and doing as well in May, the guidance would reflect, then, your assumption hitting to comps with the World Cup in June? Is that right?

That's part of it, Gordon, but, also, you know, the visibility is still not very strong or very good. So we're being cautiously optimistic here

Okay. Fair enough. Also, I think the press release indicated an increase in national rep fees. Is that related to just radio, or is that a change in the relationship with Univision or a shift in the business going more national?

It is the latter. It is increased business, not great issues

Terrific. Thank you.

Ladies and gentlemen, as a reminder, to register a question, press one four on your telephone. The next question comes from the line of Alissa Goldwassar from William Blair & Company. Go ahead with your question

Hi. Good morning

Hi

The first question for John. The $4.1 million in corporate expense for the second quarter. Is that a good number to use in the back half or a bump up in the fourth quarter?

We late to guide beyond the quarter. There could be, as I mentioned, some spike in the fourth quarter relative to radio, which is consolidated into our corporate. Radio overhead or radio corporate expense, which is moving down to Los Angeles in the fourth quarter

Okay. And then in both the TV and radio divisions in national in the first quarter was much stronger than local. I'm wondering if you could elaborate on the reason for that. Are you generally satisfied with your local sales effort?

Well, I think on the television side, one of the reasons for increase in national was, certainly, the much stronger sales effort we got this year in our national sales team, including the addition of Eddie Melendez to our staff and the great job he's done with regard to coordinating national sales throughout the television group. And the great job Univision has done by adding more people in the field and strengthening their efforts as well. As well as the performance of our television station. It is incredible the ratings increases that we continue to see. In our radio business, it certainly, you know, the implementation of the rep team into our national selling effort, that's been great. We created that division or that unit about a year and a half ago, and the results have been significant ever since we put that team together and we continue to grow our national sales and radio quarter after quarter by some pretty impressive numbers. Full, want to add to that?

Yeah. (Inaudible) we're push tog do more, particularly in the area of new business development. So it's something we're always looking at and trying to improve.

Thank you.

the next question comes from the line of David Joyce from Guzman and Company. Please go ahead with your question

Thank you. Are you comfortable with all of your markets of operation now, or is there anywhere where you would pull back from at this point?

What was the first part of your question, David?

Are you comfortable with all of the markets in which you operate, or now that you've put together the large footprint? Do you want to back away from anything?

Well, you know, we continue to look at all of our markets and see which ones are performing and maybe ones that aren't doing as well as we'd like. In television, I would suggest to you there's not any market that we'd change with regard to how it sits. In radio, we don't have enough markets to scale. We believe we may not be able to be as competitive as we'd like as a result of all the consolidation that is have taken place in radio. We are looking at some radio markets to see if maybe she would be better served by us by doing (inaudible)

Okay. When do you see LA outdoor business turning positive again?

We expect to see the LA outdoor business -- we are seeing it improve as we speak, and we certainly believe that the second half would be stronger for the LA outdoor business.

Finally, relating to the big city acquisition, when would you expect to be burning off the start-up costs or the lower margins there? Is that also in line with your statement that you would be expecting normalized margins by the middle of the next year?

Absolutely. That includes -- you know, I think the LA market has big potential. We are doing margins in the very, very high 40s, close to 50 before the big city. Once you integrate that into the -- into our existing cost structure and then improve our revenue by having formats and improved ratings, we should improve our margins there

Okay. Thank you.

the next question comes from Chris Ensley from Bear, Stearns

With the national stronger than local TV and radio, was it doing better than small markets or large markets? Did you see regional trends with your California markets doing better than your Texas markets? I'm wondering if there's any trends in general you're seeing both in TV and radio. As a follow up, you talked about rolling out maybe Telefutura in two or three markets. Are there any other markets that you're eyeballing right now, whether TV or radio, where you'd like to expand your platform or should we think of 2003 as being more of an operational year?

I'll take the first part of the question. The smaller, more developing markets are going to have greater percentage gains because they're increasing relative to a smaller revenue base. The real driver and the reason for a lot of that growth national side was the big three categories, primarily came down nationally. Automotive, you know, Telco and fast food and grocery. In the cases of television, would be the automotive, food services, and retail where we had that gain, those gains. Those just happen to be national accounts. We're still out there pushing local. The last run appears to be coming from the big national categories

Just to add to what Philip said with regard to national on the television side. I think what we've seen over the last years is more national advertisers entering the Hispanic market with bigger budgets. As they do that, it goes across our market, which is market 15 through 50. These are fast-growing high density percentage markets. As a result, we continue to see increase in national beyond what you see with other media companies. That, coupled with the great ratings we book after book and the great job we're doing with the local news product. With regard to Telefutura, as I said earlier, we want to put our ad in every one of our Univision markets. We've got 15 right now in operation. We expect two or three this year. Certainly, this year, our focus is on improving the margins and producing better leverage for the company

You're not targeting any new Univision markets?

Well, you know, we're always looking at the merging markets for Univision. I can't say we're targeting any particular market, but we are -- we're always paying attention to emerging markets and seeing whether introducing an affiliate in a particular market makes sense

Thank you

Thank you.

The next question comes from the line Bishop Sheen from Wachovia Securities

Sorry, guys. On Q2, CAPEX expenditures -- for give me if you gave this. I didn't hear it. And cash taxes, cash interest. A little guidance would be helpful

Hello. Bishop?

Yeah.

We're losing you on the call

For Q2, a little guidance on CAPEX, cash interest --

Let me give it to you. The CAPEX or Q2, looking at $6.2 million. On a full-year basis, we expect to be below where we were last year, which was in the $18 million range. And you asked about cash interest? Cash interest -- in front of me I got the first quarter. You know, it's probably just as easy -- ask your third question.

You know, John, I can follow up with you on email

It is $225 million it is 166 at 4.6% and $10 million at about 10%.

So it's not going to matter much for book interest?

Yeah. There are other interest expense, which is amortization of loan costs

And how about taxes? You guys going to pay income taxes in cash?

Yeah. We're going to pay about $400,000 in cash taxes, basically, state taxes. That should take us out a few years

I wouldn’t expect you to pay more. Thank you very much.

All right. Thank you.

General Gentlemen, there are no further questions. Please continue with any closing remarks

Thank you, operator. Thanks all of you for participating on our call. We look forward to keeping you abreast of our progress in our second quarter conference call. Good-bye.

Ladies and gentlemen, is that does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your lines. Gentlemen, your--- 0