Entravision Communications Corp (EVC) 2005 Q3 法說會逐字稿

Welcome to the Entravision Communications third quarter 2005 conference call. During the presentation, all participants will be in a listen-only mode. Afterwards we'll conduct a question-and-answer session. At that time if you have a question please press the one followed by the four on your telephone. As a reminder, this conference is being recorded Thursday, November 3, 2005. I would now like to turn the conference over to Walter Ulloa, Chairman and Chief Executive Officer. Please go ahead, sir.

Thank you, operator and good afternoon, everyone, and welcome to our third quarter 2005 teleconference. With me today is Phillip Wilkinson, our president and chief operating officer and John DeLorenzo, our executive vice-president and chief financial officer. Before starting the call, I have to inform you that today'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 the property of Entravision Communications Corporation. Any redistribution, retransmission or rebroadcast of this call in any form without the express written consent of Entravision Communications Corporation is strictly prohibited.

Overall results for the third quarter were in line with our guidance as all three divisions once again showed impressive gains that were among the strongest in the industry. Overall revenue increased 8% to $75.5 million, broadcast cash flow increased 11% to $31 million and EBITDA as adjusted increased 14% to $26.7 million. Free cash flow for the quarter was $12.9 million. Our television group had another strong quarter with revenue growth of 4% versus an industry that was down 8.5%. These results include the replacement of $1.5 million in political revenue from last year. Our ongoing investment in our sales organization is continuing to pay dividends as we introduced over a hundred new clients to Spanish language advertising. Local revenue continued to drive results in our television division with an increase of 15% in the quarter highlighted by gains in automotive, services, media and healthcare.

The automotive growth was due in large part to General Motors' employee pricing campaign as well as significant increases we received from the Ford Dealer Association, and from local Nissan, Toyota, and Dodge Chrysler Jeep dealers. The services category received a big push from two key segments -- insurance and mortgage. The media category was driven almost exclusively by the increased competition in the satellite service sector primarily with our East Coast stations. And the healthcare category benefited from our focus on health issues that impact our community. National television advertising decreased -7 in the quarter driven by the post-merger inactivity from the Telecom industry, and $1.5 million in nonreturning political.

Ratings trends remain strong at our Univision affiliates. In the July 2005 Nielsen survey versus the prior year, our television group posted strong year-over-year ratings gains in our target adult 18-to-34 demo as well as the 18-to-49 and 25-to-54 demographic. From sign on to sign up we increased 29% in adults 18 to 34, 17% in adults 18 to 49, and 20% in adults 25 to 54. In primetime we showed outstanding rating increases of 69% in adults 18 to 34, 45% in adults 18 to 49, and adults 25 to 54.

One notable highlight is a tremendous 18-to-34 delivery of WVEA, our Tampa Univision affiliate. For the first time in the television station's history, in our target demographic, WVEA ranked as Tampa's number one primetime station regardless of language. In total 11 of our Univision television stations ranked number one or two in prime time among adults 18 to 34 regardless of language. Our Univision affiliates in [inaudible] markets also delivered a strong performance with increases of 77% in adults 18 to 34, 54% in adults 18 to 49 and 40% in adults 25 to 54. Our Univision and TeleFutura affiliates ranked as the number one and number two Spanish language television stations respectively in six of our markets.

Our early local news group performed well by increasing 9% in our target adult 18 to 34 demo. In nine news markets we ranked as the number one or number two local newscast in the time period regardless of language. Seven of these nine newscasts ranked as the overall number one program in the time period, beating all programming competition including news and entertainment. We are forecasting revenue growth in the fourth quarter for our television division of 5 to 6%. This solid growth includes the replacement of $2.6 million in political revenue from the same period last year. This would again place the Entravision television group well ahead of the general market quarterly forecast. General market television is expected to be down high single digits in the fourth quarter.

Turning to radio, revenue increased 12% in the third quarter substantially outpacing the industry. Results for the quarter were on top of the 7% gain we recorded in last year's third quarter. In addition, our radio division’s cash flow increased 17%. Results continue to be driven by local advertising which increased 14% while national advertising increased 6%. Our top advertising categories for the quarter in radio included automotive, grocery stores, beverages, financial services, and entertainment. In the summer book we maintained our year over year share in both persons 12-plus and in adults 18 to 34, even though we have seen new competition and/or format changes in 6 out of the 10 markets for which we receive Arbitron ratings. Year-over-year in our key demographic adults 18 to 34, we saw increases in Denver, Albuquerque, Salinas, Monterey, Sacramento, Dallas and Phoenix.

In Los Angeles, our morning show, La Regadera, on KSSE, Super Estrella, jumped to the number two position among Spanish-language radio stations and number five overall against all radio stations in the Los Angeles market in our key demo adults 18 to 34. On October 20 we launched a new network format in Sacramento, Stockton, Modesto, Denver, and Albuquerque. This new format, Jose, consists of top regional Mexican and contemporary hits from the '70s, -- '70s, '80s, 90s and today.

At our Outdoor division we posted revenue growth of 13% in the quarter in line with our guidance. Local revenue increased 26% and national revenue increased 7% in the quarter. Year-to-date the Outdoor division has posted revenue growth of 11%. Cash flow growth for the Outdoor division grew 13% in the third quarter versus last year and year-to-date the Outdoor division's cash flow is up 39%. Top categories in the third quarter driving our growth in Outdoor were media, entertainment, services, and healthcare.

In summary we delivered impressive top line growth across all of our divisions with our radio and outdoor operations posting double digit gains in the third quarter. This impressive top line growth is despite the significant challenges of a sluggish advertising environment. Keep in mind while looking at our forecast for the fourth quarter that we are facing strong comparable growth from 2004. Last year in the same quarter our television division reported growth of 15%, our radio division was up 11%, and outdoor was up 8%. While we're pleased with our television and outdoor projected growth for the current quarter in light of last year's comparables, we are disappointed in our radio pacings, but we are optimistic that our radio division will bounce back to historic growth levels in the first quarter of the new year.

Our entire management team remain focused on cost controls and bringing our revenue gains to the bottom line. We continue to review our asset base to ensure we are in a unique position to leverage our operating infrastructure and capitalize on the continued growing of the Hispanic marketplace. Now I'd like to turn the call over to Philip Wilkinson our President and Chief Operating Officer.

Thank you, Walter, and good afternoon everyone. I'll cover some chief performance areas as well, starting with television. As our TV revenue increased 4% the total TV industry as mentioned and as reported by TVB was down 8.5 percentage points. This revenue increase of 4% came on top of a million and a half in nonreturning political ad dollars from Q3 a year ago and absent those political ad dollars our revenues were actually up 8%. Our local revenue grew 15% and it represents 54% of the total TV billing. Our national billing decreased to 7%, mainly due to that $1.5 million in nonreturning political that we spoke of, plus a little less financial services and telecom business than a year ago. Our TV BCF was up 6%, and our margins for the quarter were 46% versus 45% a year ago improving by one percentage point. Ratings were up considerably for TV in the July book as Walter reviewed, highlighted by our aggregate ratings increase of 69% in primetime for adults 18 to 34. And these numbers help us better position our stations for increased -- increases from our core business accounts as well as helping to drive new business to our stations. It is important to note that in Boston and in Washington, D.C., where we operate stations and the new Nielsen LPM service has been introduced, we are over-indexing and pacing growth as our ratings have improved significantly over the previous metered market diary services.

On to the radio highlights where we continue our industry-leading performance gaining 12% in Q3 revenue versus an overall industry growth of 1% again according to RAB. We outperformed the industry in each month of the quarter with July our business was up 8% while the industry was down 2. August revenue was up 15% when the radio market only grew plus 2 and in September, our radio revenue grew 14% while the industry was also up plus 2%. Our radio division BCF in Q3 increased 17% pushing margins up two points to 42% with still a lot of room to grow leverage. Local sales grew 14% and local comprised 77% of total sales. National sales were up 6% which was impressive when you consider the industry was flat in national sales. We saw local sales success come from increased business from our existing core accounts as well as from new business. Our top advertisers in the quarter were Verizon Wireless, up mid-single digits, Budweiser, McDonald's, Albertson's, and Wells Fargo all up double-digits in spending with our radio stations. We saw double-digit growth in 13 of the top 20 advertisers and new advertisers for the quarter in radio included Alaskan Airlines, Saturn, and DeWalt tools.

On the ratings front again, as Walter mentioned earlier for our key demo of adults 18 to 34, we maintained our year-over-year average quarter hour share. We saw double digit growth -- ratings growth in Denver, Sacramento, and Albuquerque and just as important as ratings are the results that our clients experience and to help drive those results we have stepped up the number of remotes and promotions that we're offering clients to help sell more of their products or services.

In summary our divisions continued to over -- outperform the industry and with radio growing 12% versus 1% for the industry, TV up 4% versus the TV industry overall decrease of 8.5 points and our outdoor business bringing in strong 13% growth, we do remain very optimistic about our growth story as we continue to capitalize on the growth of the Hispanic marketplace in all of our markets. Now I'd like to turn the call over to John DeLorenzo for our financial review.

Thank you, Philip and good afternoon, everyone. As Walter and Philip have discussed we reported results that were in line with our guidance for the quarter. Net revenue was $75.5 million up 8%. Broadcast cash flow increased 11% to $31 million and EBITDA as adjusted increased 14% to $26.7 million. Free cash flow which we define as EBITDA as adjusted minus capital expenditures, cash interest, cash taxes plus interest income was $0.10 per share and EPS was negative $0.10 per share. However, adjusted for costs associated with our recent refinancing and tender offering for our subordinated notes, EPS was $0.03 per share above our guidance of $0.02 per share.

Overall, our operating margins for the quarter was 41% up from 40% last year, TV margin for the quarter was 46% compared to 45% in Q3 '04, radio margin for the quarter was 42% compared to 40% in Q3 2004. Our margin improvement is the result of increasing revenue while moderating operating cost increases. Operating expenses for the quarter increased 6% which was below the low end of our expense guidance for the quarter. Of the 6% increase 3.9% is attributable to expenses expanding our businesses, such as the 1031s in Los Angeles, the acquisition of KBMB in Sacramento, the Fox television station in Matamoros and the expansion of our outdoor division in Sacramento. The remaining 2.1% is core expenses.

Corporate expenses decreased 5% to $4.2 million for the quarter. The decrease was primarily attributable to higher legal expenses relating to refinancing the -- financing the repurchase of our Series A preferred stock in the prior year, partially offset by higher wages and expenses associated with our compliance with the Sarbanes-Oxley Act of 2002.

Turning to our balance sheet as of September 30, 2005, our total debt was $507 million and our trailing 12 month EBITDA as adjusted was $89.8 million. Our net debt to EBITDA as adjusted was 5.1 times and cash on the books was $49 million at September 30, 2005. As I referred to earlier, on September 29, 2005, we replaced our existing $400 million senior secured bank credit facility with a new $650 million senior secured bank credit facility. Our new credit facility consists of a seven and a half year $500 million term loan and a six and a half year $150 million revolving credit facility. Due to strong market demand, our $500 million term loan was attractively priced at LIBOR plus 150. We successfully executed a $500 million notional amount amortizing swap converting our $500 million floating-rate term loan into a fixed-rate obligation at a rate of 5.96% for a five-year period. At the same time we successfully completed our tender offer for $225 million aggregate principal amount of 8 1/8 senior subordinated notes due 2009. The purchase price for our notes was $1,057.61 per thousand, which included a consent payment of $20 per thousand principal amount of notes for a total of approximately $238 million.

[We paid] the aggregate purchase price with borrowings made under our new credit facility. Moody's Investors Services assigned a Ba3 rating to our new credit facility, an upgrade to our previous rating of B1 while Standard & Poor's issued a B-plus rating. In addition, Moody's upgraded our corporate family rating to a Ba3 from B1. We have recorded the bond premium, the existing capitalized bank and bond costs, and the new bank fees as loss on debt extinguishment in the income statement in accordance with EITF 96-19 and 98-14. As I mentioned previously, EPS for the quarter ending September 30, 2005 was negative $0.10 per share. Excluding the debt extinguishment charges, EPS would have been $0.03 per share, above our guidance of $0.02 per share.

The company entered into a definitive agreement to sell the assets of radio stations, KBRG-FM, and KLOK-AM serving the San Francisco-San Jose market to Univision for $90 million. It is anticipated that Univision will pay the purchase price in the form of shares of the company's Class U common stock held by Univision. This disposition is currently expected to close during the first quarter of 2006 and is currently expected to reduce Univision's percentage ownership in the company to approximately 20% which is based on our current capitalization and is subject to the price of the Class A common stock at the closing of the transaction.

Turning to our outlook, for the fourth quarter of 2005, based on the current pacings we are seeing, we expect to report fourth quarter net revenues of $70.8 to $71.4 million, an increase of 4% to 5%. Television division is expected to be up 5% to 6%, radio up 1% to 2%, and outdoor up 7% to 8%. Operating expenses are expected to be $43.7 to $43.9 million, an increase of approximately 5.3%, of that 5.3%, 2.6% is attributable to expenses expanding our businesses such as the 1031's in Los Angeles, the acquisition of the television station for Fox in Matamoros and the expansion of our outdoor division in Sacramento. The remaining 2.7% is core expenses. For the fourth quarter we expect corporate expense to be approximately $4.2 to $4.25 million, flat compared to prior year's fourth quarter. Depreciation and amortization is expected to be between $11.5 and $12 million. Interest expense is expected to be between $8 and $8.4 million and net interest expense for free cash flow purposes is expected to be between $7.9 and $8.3 million. We expect CapEx to be between $5 and $5.5 million.

As reported on our last call, because it is unlikely that the FCC will extend the deadline to convert television stations to full power digital, we'll need to complete our digital upgrades by mid next year. We expect total CapEx for the year to be approximately $20 million with maintenance to be around $12 million, which is reduced from $15.4 million and digital to be approximately $8 million for the year. Fourth quarter earnings per share is expected to be $0.01 per share and free cash flow is expected to be $0.08 per share based on an estimate of 124.4 million shares outstanding. This concludes our formal remarks. Walter, Philip and I would be happy to take your questions. Operator, we're prepared for 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 three-tone prompt to acknowledge your request. If your question has been answered and you would like to withdraw your registration please press the one followed by the three. If you're using a speaker phone please lift your handset before entering your request. One moment, please, for the first question. Our first question comes from the line of Victor Miller from Bear Stearns. Please proceed with your questions.

Thanks, good afternoon. Two things we haven't seen in a while. First of all, expenses growing faster potentially than the revenue. Could you talk a little bit about that? As you look at the incremental margin for third quarter it was about 54%. You got about $3 million of incremental BCF for the $5.5 million in net revenue. Your guidance suggests that that rate would fall to about half that, about 27%, so maybe you could talk about that dynamic. Secondly you did allude to it a little bit on the radio but maybe you could talk a little bit about the deceleration from plus-12 to plus one and a half. Univision seemed to be implying they were mid-single digit or better for the fourth quarter. I just wondered what you might be seeing in your radio markets that are maybe different than they are, thanks.

Victor, this is John. First question. We basically broke out the expenses for the fourth quarter and after we take the year-over-year one-time events such as Fox and Matamoros, the conversion of the 1031s to Entravision operated from the JSA that we had with Clear Channel, the last quarter KBMB, in the loss of third quarter and the expansion of the bus advertising in Sacramento, our core expenses, quarter-over-quarter, is about 2.7% so it's well below -- anything related to our revenue growth and, therefore, the 6% that we're projecting is really over half of it associated with the -- with new business ventures.

The core was what, 2.1 in the third quarter, so it’s slightly elevated. But that’s not that much.

Yes, I mean, it's a multitude like rating contracts kicking in, and expansions there, and different leases at outdoor come due year-over-year.

Thanks. Any color on the radio that could be helpful?

I'm going to pass on to Walter for that one.

Yes, Victor. It's Walter. With regards to the deceleration in radio in second quarter, we're seeing weakness mostly in three categories. Four actually. Telecom as a result of the mergers, finance, we think as a result of perhaps housing slowdown or higher interest rates. This is the first quarter that we've seen it in the year I should say, the first quarter this year that we've seen such a slowdown in the financial department. And retail also is showing a significant weakness, and we're seeing that not only in radio but also in television. And finally, political. There's about $300,000 of nonreturning political. All together when you look at what we have on the books today and what -- where we finished last year's fourth quarter, with regards to those four categories, we're negative about $2 million. So the quarter's not over yet, but still, you know, we're almost halfway there. So we don't know how much we'll be able to make up.

Great, thanks.

Thank you, our next question comes from the line of James Dix from Deutsche Bank, please proceed with your question.

Good afternoon, gentlemen. Just following up a little bit more on radio. Is there any impact from the format flips on your revenue growth in the fourth quarter that you can detail, and also you indicated you're somewhat confident it'll bounce back in the first quarter. You know, is there anything in the monthly pacings or anything like that in the fourth quarter for radio that's giving you that confidence? And then on the TV side, Walter, do you have the -- was most of the growth in third quarter from average unit rates? And that's it.

Okay. James, it's Walter. I'll answer the radio part of the question and then I'll switch it to Phil for the television question. As for format changes, we don't believe that any of that is due to the weakness in our revenue growth for radio. And the second part of that question had to do with--

Just the prospect of a bounceback in the first quarter monthly pacings you're seeing.

Oh, yeah. We are seeing -- we're seeing stronger pacings for the upcoming quarter, meaning the first quarter. Now, we saw, you know, at this same point in the cycle before we entered the fourth quarter.

Okay. Any particular categories where you're seeing that? Any of the ones that look weak now that seem to be bouncing?

No. It's too early to tell but I would say to you that you know everything appears to be a little stronger right now -- at this time for first than it appeared at the same time in the quarterly cycle for fourth.

Okay.

And James, this is Philip, how are you today?

Pretty good. How are you?

Good, good. TV inventory sellouts did increase. That was the majority of our revenue bump in third quarter. We have a little bit of better AUR on average unit rate but it was mainly the sellouts were up.

Are you expecting the same thing for the fourth quarter or is that dynamic changed a little bit because of the political?

No, I think that -- well, we are experiencing some political in fourth quarter more than we expected on the TV side going into the quarter, so it's probably going to be a combination, if I had to lay a bet down, of an AUR increase as well as an inventory increase and certainly in October where we're getting most of this political for California.

Do you have a sense of what the political number is going to be for the quarter for TV now?

We're right today as we speak on the books at about $550,000. We told you political last year from fourth quarter was about $2.6 million. So the difference is a little over $2 million, it looks like, in nonreturning political for fourth quarter this year.

And then just one last one. Anything on the radio side in terms of the political this quarter or is it kind of de minimus?

[$50,000] on the books for radio. It's really not a big number. It's interesting to note though, James, that five to six that Walter mentioned on our guidance for TV for fourth is really a 12 to 13 absent political.

Right. Okay, thanks a lot.

The other thing on radio I just want to mention, you know, not being defensive but there's very little radio guidance out there for the fourth quarter so you know -- what we're seeing out there is a pretty difficult market across-the-board not just Entravision.

Okay.

Thank you. Our next question comes from the line of Eileen Furukawa from Citigroup. Please proceed with your question.

Hi, I just have a couple of quick questions. Is auto continuing to drive the strength in your TV business like it did last quarter and does it still represent roughly 29% of total revenue? And do you expect this strength to continue throughout 2006 or are there any signs of it weakening? And similarly on the radio side, can you give us some color on how auto performed recently and how you expect for it to perform over the next six months? Thanks.

In television, you know, the growth in automotive was certainly strong. Double-digit growth in third quarter. And it represents about the same percentage you indicated in terms of total television revenue, about 29, 30%. In radio, it softened in third over fourth -- I mean, over last year's third quarter. We were minus mid-single digits. But in television we do expect radio -- I mean, automotive to be a strong category for us not only in fourth but also in 2006.

And how about in radio?

You know, we expect to bounce back certainly.

Okay, but it may not be strong yet?

We don't have -- it's too early to give you any indication of what that number, you know, might be in terms of growth for that category. You know, we're seeing certainly better pacings right now for first than we saw for fourth. But I can't, you know, I can't give you a pacing number for automotive for first. It's just too early.

No. That's fine, thanks a lot. I appreciate it.

Okay.

Thank you. Our next question comes from the line of Jonathan Jacoby from Banc of America Securities. Please proceed with your question.

Good afternoon, just three questions here. The first is probably beating on a dead horse in radio but John, I think you mentioned the overall weakness in the marketplace. Could you give us any color how you think sort of the general market is so we get a sense of the spread that we normally see, is it probably still a pretty healthy spread? And just, you know, on San Francisco, is there, you know, ratings seemed to be little bit weak there. Curious if it's related to some competition from Spanish broadcasting. And then the second question is if you can update on your preselling on World Cup and how it compares at this point versus the 2002 World Cup? Lastly any further update on how you're going to reduce the other 5% share of the Univision stake? Thanks.

The first part of the question is, you know what I said before we certainly have our channel checks as well and through our rep and seeing what's going on out there but there basically we're guiding one to two. If you notice this year nobody's got -- we've got no guidance from Clear Channel; we've got no guidance from Viacom; we've got no guidance from Citadel, so my guess tells me that there's a reason why we're not getting any guidance. Plus [that's with our channel] checks and our national sales that's why we have a sense that it's a difficult quarter across the radio spectrum. I don't think we can attribute anything specific to our business such as competition from somebody. Our ratings are fine in radio, and we're in the best position we've ever been to sell. And therefore, it's -- I think we'll know three months from now when people issue the ratings, but I have a strong suspicion that it’s pretty weak across-the-board in radio. I think the third question, I might as well as jump into, which is you were asking about the Univision stake?

Yeah.

Well, certainly once we close the transaction which we're expecting in the early first quarter, they’ll be down to 20%. They have another 5% to go. You know, due to our refinancing of the company we're certainly in a position to buy-back additional shares should they offer to sell them to us, and we'll make that decision when the time comes based on basically the analysis, the, you know, crunching of the numbers and the combination if it makes sense for us to do it at the time. But we're in a position to do it. I didn't get the middle question.

The second question was on sort of the preselling -- I know it's a small business but the World Cup that you're going to have in '06 and how it compares to where you were at this point for the 2002 World Cup?

John, I'll take that. This is Philip. We're doing quite well actually. We did about $2 million in 2002. As you know, it's a difficult challenging time period overnight. Next year from Germany, we'll have day afternoon early fringe time period. We are currently at about 85% sellout and we expect to do a little over $6 million, call it $6 million. We're about 5.2 on the books to date and we have about 2/3 of that is incremental business from GM, Verizon, SBC, McDonald's as well as others. So we're pretty happy with the way it's coming together.

Great, thank you.

Thank you. Our next question comes from the line of David Miller from Sanders, Morris, Harris. Please proceed with your questions.

Hi, good afternoon. Philip, it looks like your television revenue line missed guidance by about 112 basis points, I know you guys were brushing up against a difficult political comp but the results are somewhat surprising at least to me, given all the activity from General Motors in the quarter. Did you guys expect other auto manufacturers to sort of match the volume of activity that General Motors did, and that's why there was the slight shortfall there or was there another category that just didn't come through? And then I have a follow-up. Thanks.

Well, thanks for pointing that out. We were short by about $150,000, and we didn't expect that to happen and really what it was when it comes down to it, it was tough to make up that difference, the delta in the political nonreturning of $1.5 million. We were optimistic going in. In the automobile category did not soften on us actually. It was very strong up 14% as Walter mentioned in third quarter. And it's pacing even higher than that in October. What we saw was a little slower financial category with BofA changing agencies and buying, I think it was Fleet Bank, with Western Union spending less as a result of an operational issue. You know, agency changes or hiatuses as a result of something going on beyond our control softened up that category by about 600 grand and then the other one was telco. And telco, you understand again with all that’s going on, SBC buying AT&T Long Distance, Cingular bought AT&T Wireless, Nextel merges into Sprint, and what happens is they all retract; they slow down; they take a look at how they're going to position and market their products and their names -- in the case of SBC, a name change -- and we, we see a little bit softer telco category than we had expected. But all that said, James, recognize that the overall industry was down 8.5%, and I don't think they started there when they started talking about the third quarter, back in mid-second quarter.

Okay, it's Dave Miller, by the way, not--

I'm sorry, Dave.

And then, John, just refresh me on the debt. On the $507 million in debt, what portion of that is fixed versus floating or is it all fixed?

500.

So basically all of it is fixed?

Yes, the rest is other debt related to LMA, long-term LMA [inaudible].

Going into 2006, we can expect you know some constancy or some degree of consistency in that interest expense line on a quarterly basis, is that fair to assume?

Absolutely, unless we draw down on the revolver.

All right. Thanks very much.

Our next question comes from the line of Gordon Hodge from Thomas Weisel Partners. Please proceed with your questions.

Good afternoon, a couple questions. One is on the -- just on the TV pacings, it sounds like you're having a strong October with political. I'm just curious if you could break out how October's pacing versus, say, November to get a sense for what the normalized rate might be. The World Cup numbers you just mentioned and the political numbers, are those net or gross, in other words, net agency commissions off those numbers you're talking about. And then lastly on the TV ratings, Philip, the extraordinary ratings in primetime. I'm just wondering if you could give us a little more of a sense in terms of are you -- is that news or, you know, any kind of programming elements that are driving that or maybe just a little bit more on that.

Okay. All right, Gordon. The first part of your question related to Q4 pacings and, you know, it kind of surprised us. Our October as you would imagine, is off in national business because of that overwhelming amount of political we had last year, October, and the first week of November. So we’re minus 7 on national for October, but we're up plus-13 which is very consistent with the way we've been growing our local business over the last three quarters. But the surprise is November is a plus-19 in local and national is a plus-20 right now. With a total for November pace TV plus 18. December hasn't really materialized yet and local's a plus-4, national's a plus-6 and total's a plus-3. We do have a little bit, I mentioned, a little bit of political about -- a little over $500,000. That's mostly October money. But it's the difference between that 2.6 last year and the 500 this year is over $2 million of nonreturning political and that's what dragging the October national down. But we're having a strong November and again a December plus-3 overall but it hasn't really started to build yet. And the second part of your question and the answer is simple. Those are net numbers.

Okay. Good.

And the third part was, yeah, we had a phenomenal July book. One of our better books in many, many years, and we had a better sample in two or three markets which really helped spike that plus-69% primetime adult 18-34 growth, which is really our key demo, with over 70% of the Hispanic population under the age of 35. So we did do very nicely and in the news ratings, which tell -- you know, those of us who subscribe to the fact that as the news goes, so goes the station, it's a wonderful lead-in to prime and it certainly helped a great deal. But we saw strength in day; we saw strength in our news; we saw strength in all three of the Novella hours in primetime block of the Univision Novellas, and we're very, very pleased with the growth and so hopefully we'll be able to turn that into revenue in short order. As you know we sell third quarter off of May and July really impacts early fourth quarter sales.

Great, thank you.

Thank you, Gordon.

Thank you. Our next question comes from the line of David Joyce from Miller Tabak. Please proceed.

Thanks for taking the question. Ex-political, do you see any shift in the mix of local and national on radio and TV for the fourth quarter?

Not ex-political, no, not a big change. We're creeping up in TV on the local side a point or two a quarter. We're up to 54% as I mentioned, but the overwhelming majority of our radio business is still local -- remains local, about 77%.

So the weakness in retail and financials isn't, that's kind of based on the consumer expenditures and it isn't trickling to the local?

Not, not nearly like it is with national.

Okay. Thanks.

Thank you. Ladies and gentlemen, as a reminder to register for a question, please press the 1 followed by the 4 on your telephone. And our next question comes from the line of Marci Ryvicker from Wachovia. Please proceed with your question.

Hi, just a real quick question, Walter. You mentioned in your upfront comments that you're seeing additional competition on the radio side. Where's this competition coming from? Is it new players or is it existing players? And can you talk a little bit about Clear Channel?

Well, you know, we're seeing in radio, we're seeing new competitors from Clear Channel, from Infinity, certainly we've -- we have competition from Clear Channel in Las Vegas. We have them as a competitor in Denver, in San Francisco, in Dallas, and in Phoenix we're seeing an independent competitor. In Sacramento, we're seeing more competition from another independent, so we have seen, we've certainly witnessed more competition in Spanish language radio than ever before. The good news it just validates our -- our strategy, and we expect our Spanish language radio budgets over time to grow. And, as a result, we'll see more English language radio dollars converting to Spanish language radio dollars.

Okay. And just a follow-up. Do you have any other anecdotal evidence you can give us other than pacings that gives you confidence that radio is going to bounce back in early next year? Anything--

I'm glad you asked that question because there was one point that I neglected to make when Eileen asked her question. You know, automotive as a category was negative mid-single digits in third quarter. But currently we are seeing positive pacing in that important category for us. It's the number one category for radio. So we are seeing positive pacing in fourth quarter. And we expect that to extend into first quarter and beyond in '06.

Okay. Thank you very much.

Thank you.

Thank you. Mr. Ulloa, there are no further questions at this time. I'll now turn the call back to you.

Thank you, operator. Ladies and gentlemen, thank you for participating on our third-quarter investor conference call. We look forward to speaking with you again in the first quarter of the new year when we will report our fourth quarter actuals and 2005 results. Good-bye.

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 lines.