Entravision Communications Corp (EVC) 2005 Q4 法說會逐字稿

Welcome to the Entravision Communications fourth quarter and full year 2005 conference call. [OPERATOR INSTRUCTIONS] As a reminder, this conference is being recorded this, Thursday, February 23, 2006. I would now like to turn the conference over to Walter Ulloa, Chairman and Chief Executive Officer. Please go ahead, sir.

Thank you, good afternoon everyone, and welcome to our fourth quarter and full year 2005 teleconference. With me today is Philip Wilkinson our President and Chief Operating Officer, and John DeLorenzo our Executive Vice President and Chief Financial Officer. We understand there is a technical difficulty at the point of distribution of the company's press release. We apologize for the delay; you should have received the press release by now. And if you haven't, it should arrive shortly.

Before starting the call, Entravision [inaudible] inform you that this 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 affect actual results. In addition, this call is a property of Entravision Communications Corporation, any redistribution, retransmission, or rebroadcast of this call of any form without the express written consent of Entravision Communications Corporation is strictly prohibited.

For the fourth quarter and the full year 2005, once again outperformed industry. Led by strength across all three of our operating divisions. We ended the year with solid growth in both our television and Radio divisions., exceeded our fourth quarter guidance. Our outdoor hit the top end of our range. We continue to benefit from the healthy Hispanic market which is being driven by multiple growth drivers including population and purchasing power expansion, strong ratings increased interest from both current and new advertisers. In addition, our strategic position in the fastest growing Hispanic market of not only today, but tomorrow places us at the center of these trends.

In the fourth quarter, total revenue grew 8% to 73.2 million. Broadcast cash flow increased 10% to 29 million. EBITDA abducted increased 12% to 24.9 million and free cash flow reached 11.6 million an increase of 8 % over the fourth quarter 2004. For the year, our total revenue increased 9%, to 284.9 million Broadcast capital increased 13% to 119.2 million. EBITDA abducted increased 16% to 92.4 million. And free cash flow reached, 40.1 million an increase of 3% over 2004.

Looking at our television growth, we had another exceptional year. In the fourth quarter, television revenue was up 8%, verses an industry that was down approximately 7%. For the year, our television revenue also grew 8% while the industry was negative 6%. In the fourth quarter local revenue was up 9% and national was up 8%. The fourth quarter turned out to be our strongest of national television sales quarter in 2005.

For the year, local revenue increased 13% while national was up 2%. In the fourth quarter, we replaced 2.6 million of political advertising. This replacement revenue was driven by growth in automotive, services, telecommunications, health care, and finance. Overall, our fourth quarter television performance, represents outstanding growth against our 15% revenue increase in the fourth quarter of 2004. Over the past year, we have made significant investments in our television sales function including a more in-depth sales training program for our executives and managers, which are producing tangible returns.

In 2005, we brought in over 600 new clients to our television business highlighted by gains in the automotive, retail, and service categories. In addition, we successfully penetrated, existing advertising accounts, increasing our share of the overall budget, these accounts include the Toyota, Ford, and Dodge [inaudible] association, Quest and Verizon, just to names a few. Rating trends remain strong for our Univision affiliates, in the November 2005 survey versus last November, our stations were ranked number one or two in prime time and [inaudible] among adults 18 to 34, regardless of language.

Also, five stations delivered their highest November 18 to 34 demo rating ever. Our other local news programming, also remains very popular. Ten of our Univision television stations ranked number one or two in their time period, among adults 18 to 34, regardless of language. We have also seen a 22% increase in local news ratings in our 18 to34 target demo with five other stations delivering their highest November, 18 to 34 news ratings in three-years. Turning to our Radio division, we had an incredible year with revenues up 10% on a pro forma basis verses an industry that was essentially flat according to the Radio advertising bureau. Radio cash flow increased 15% for the year.

For the fourth quarter, Radio revenue increased 6% exceeding our previously issued guidance by four points. Industry was estimated to be down 3% according to the ARB. Radio cash flow in the fourth quarter was up 7%. Local revenue was up 7% and national was up 2% in our Radio division in the fourth quarter. For the year, local was up 12% and national was up 4%. Industry in comparison with local revenues of 1% and national down 2%. Top categories in the fourth quarter were automotive, grocery stores and entertainment. Our performance in the quarter was attributable to a concentrated effort by our local sales departments and getting our management teams in each market in front of our advertisers. In the fall book, we saw a [inaudible] of the summer ratings period an increase over of 2.8% in our key demo 18 to 34, even though we had seen new competitors and or formats in 7 out of the 10 markups for which we receive Arbitron ratings for this period.

In Los Angeles, our morning show, La Regadera or ESSC Super Estrella remained number two ranked among Spanish Language Radio stations and number 4 overall in our key demo adult 18 to 34. This show has increased by 10%, over the summer Arbitron Survey. Overall, the main focus of maximizing the value of each of our stations and continued to evaluate and change formats to meet listener demands. In October, we launched our newest format called Jose and [inaudible] added to El Paso and Salina, during the first week in January, targeted at [inaudible] at 25 to 54. Since we launched the format in the middle of the fall, Arbitron book we will not see the ratings results until the winter 2006 book. But initial sales success indicates that the new format has been well receive by both our audience and clients. In addition, these format changes we recently added the number one Spanish language morning shows for adults 18-34, [inaudible] in 8 of our markets.

In addition, [inaudible] immediately brings a tremendous amount to these Radio stations from both a listener and advertiser standpoint, we anticipate significant ratings increases in all 8 markets where we launched [inaudible] , particularly in Denver, Sacramento, Stockton, and Palm Springs. At our Outdoor division, we posted revenue growth 11% for the year and 9% in the quarter. Hitting the high end of our guidance. Cash flow increase 27% for the year in outdoor. Results of the quarter were driven by a local revenue of 33%. National revenue in outdoor was flat. Top growth advertising categories in the fourth quarter were fast food and restaurants, healthcare, financial, entertainment, and services.

In 2005, all three of our divisions posted significant top line growth lifted by operating and ratings improvement. This momentum is expected to continued in 2006, a year that will benefit from incremental World Cup conference with local advertising. Advertising in world conference is forecasted to increase well above the level of in 2002 in both of our television and Radio divisions. Demand for World Cup Inventory is at an all time high. Currently we have booked almost 4 times the revenue in the World Cup our television and Radio divisions than actual sales revenue from the gains in 2002. About 56% of the total World Cup revenue on the books is incremental. Political advertisement from a historical perspective has seen significant change over the past several election cycles. The role of the Hispanic voting block has increased substantially with both political parties, specifically targeting the Hispanic community.

Since 2002, we've seen increase in every election cycle and expect this trend to continue in 2006 highlighted by races in California, Texas, and New Mexico.. New businesses is a [inaudible] in all of our divisions is a theme we discussed regularly with all of our sales executives, we are constantly developing new methods, systems, training and research to better equip ourselves with more effective -- tools to increase new business. In 2005 in our television and Radio divisions we attracted over 750 new clients to Spanish Language television and Radio. Each of these new clients spent over $10,000 with the Median vision properties. We have built a high profile portfolio that is fueled by a dynamic position within the Hispanic markets. With a [inaudible] In which we manage cost and leverage our operating footprint, we should continue to expand our cash flow generating ability. This growth, finding sufficient capacity to invest in our current businesses and explore strategic opportunities to expand our reach and strengthen existing market clusters. We remain committed to our financial discipline and building long-term values with our shareholders.

Before turning the call over to Philip, we just want to take a moment to review our agreement with Univision, we are the largest affiliate group with Univision television affiliates in 23 markets and the largest Telefutura for this group was Telefutura [inaudible] with 18 markets. Our Univision television stations are compromised of approximately 25% of Univision total broadcast reach and 21% of Telefutura total broadcast reach. We exclusive 25-year affiliation agreements for the Univision and Telefutura programming, both of which expire in 2021. Now, I would 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 a few key performance area's for the company and fourth quarter and year-end and underscore some of those that he just mentioned. Starting with television the fourth quarter revenue increased 8%, BCF was up 12%, our BCF margin improved a point, at 46%, again up one percentage point over prior year fourth quarter.

For the full year revenues were up 30%, BCF was up 11% and we added a point to our BCF margins from the prior year again. Q4 local business for TV was up 9% compared to the TV industry that was flat and local. Our national grew 8% in Q4, our best for the year. While the industry was down 16% for national according to TVB. Q4 marked the eight conservative quarter of plus 9% growth or better for our local TV sales.

For the year, our TV business grew 13% local, 2% national while the industry finished minus two local and minus 12 national overall in 2005 our TV business grew 8% as mentioned, while industry was minus six. Clearly 14 points ahead of the industry. We saw a strength in auto, services and telecom in Q4, as well as for the year, the out [inaudible] category which represents about 30% of our TV revenue grew 22% in Q4 and showed the highest dollar volume increase of any category. Higher spending in Q4 from GM, Toyota, Dodge, Nissan, also help fuel our year-over-year, 20% growth in the auto spending. The service category grew 8% in Q4, 12% for the year. And really law firms were the biggest gainers in the service category, followed by mortgage brokers. But the biggest growth category for TV in terms of percentage growth was telecom, which grew 30% for the quarter and year, actually over 30%. On increased spending from all major telecommunications companies and cellular providers. In fact, Nine of the top ten Telecom category advertiser spent more in '05 than they did in '04.

Telecom represents now to the TV division, 7% of the total revenue. Our TV division outperformed the industry in revenue growth which was driven by key advertiser growth and by audience growth. We saw many of the stations audience grow at double-digit percentages, while key competitors in the market did not.

In El Paso, KINT grew 38% year-over-year, in this past November Nielson sweep among adults 18 to 34 in prime time. In Vegas, KINC TV was up 14%, in Denver, KCEC increased their prime time audience also by 14%, again amongst adults 18 to 34. Our key demo in the November book. And Washington, D.C., our Nation's Capitol a very important market for us, ratings for WFDC, the Univision affiliate were up over 300% in prime time, among adults 18 to 34. All of these audience increases are helping drive solid first quarter revenue increases.

Turning to Radio highlights, revenue increased 6% well ahead of the industry as well as guidance as Walter mentioned. We outperformed the industry in every month of the quarter. Our revenues in October were flat while the industry decreased 7%. We saw an increase of revenue by 7% in November and an increase of 10% in December, when the industry was flat in November and down 1% in December. For an overall increase for the industry minus 3%, for the quarter. According to Radio advertising bureau. BCF for the quarter increased 7%, our BCF margin for the quarter was 38% for the Radio division.

And for the full year revenue increased 10% and the BCF was up 15%. BDF margin for the full year, were also 38% up 2 points of 2004. Results continue to be driven by local sales, which for the quarter increased 7 %, and represented 75% of our total revenue. National was up 2% in the quarter. This compares to decrease of 1% for local revenue and a decrease of 9% for national revenue according to R&D again for the quarter.

Our top advertiser in the quarter, advertisers were Verizon Wireless, JC Penny, McDonalds, Safeway, and Albertson, just to name a few. We saw double-digit growth in 12 of our top 20 advertisers. And we were successful in attracting 33 new advertisers who have spent more than $10,000, for the quarter. New advertisers for the quarter included American Express, Arizona Milk Producer, All State Insurance, and [Finance Ceria Day Maco]. Looking at our top categories for Radio, Telecom increased by 6% for the quarter and 8% for the entire year. Growth in the quarter was led by Quest, LoVita, which is a prepay cellular phone company, and Cricket. Our top advertisers in this category for the year were, Verizon, Sprint, and SPC. Auto expenditures for the quarter were up 16%, and 14%, for the entire year.

Our growth was driven by Ford, Chevy, Dodge Dealer Association, in Southern California Ford Dealers. And Payless Shoes, Akia, and Maceys were the clients that led the growth in our retail category, which is up 9% for the year and 6% for the quarter. But in summary, 8% revenue growth in 2005 verses the industry of minus 16% for our TV, and 10% Radio growth, 10% Radio revenue growth verses the industry that experienced no growth demonstrate continued ability to well outperform the broadcast industry. Achieving double-digit BCF growth in margin expansion year-over-year, further demonstrates our operating capabilities, as we continue to capitalize on the exceptional growth of the Hispanic Marketplace.

Now I'd like to, at this time, turn it over to John DeLorenzo for a financial review of the company.

Thank you, and good afternoon everyone. As Walter and Phil have discussed we reported results that exceeded our guidance for the quarter. Net revenue was 73.2 million up 8%. [inaudible] cash flow increased 10% to 29 million and EBITDA had an adjustable increased 12% to $24.9 million. Free cash flow, which we define as EBITDA as adjusted minus capital expenditures, cash interest, cash taxes, plus interest income was $0.09 per share and EPS was $0.03 per share above our guidance of $0.01 per share.

For the full year, pro forma net revenue was $281 million, up 9%, broadcast cash flow increased 13% to 109.2 million, EBITDA has adjusted, increased 16%, to $92.4 million. Overall our operating margin for the quarter was 43% up from 39 last year. TV margin for the quarter was 46%, compared to 45% in Q4, 2004. Our Radio margin was 38% for Q4 '04 and Q4 '05.

For the year, our pro forma operating margin was 39%, up from 37% last year. TV and Radio margins for the year were 45% and 38% respectively up from 44% and 36% respectively. Our margin improvement is the result of increasing revenue, while moderating operating cost increases. Operating expenses for the quarter increased 6.1%, which was above the high end of our guidance for the quarter that was due to higher variable expenses associated with our revenue performance above the high-end of our guidance. Of the 6.1% expense increase 3.2 is the attributable to expenses expanding our businesses such as the 1031 in Los Angeles, the Fox Station in Madera, and the outdoor division in Sacramento. The remaining 2% is core expenses.

Pro forma operating expenses for the year, increased 6.2% , excluding the prior year recovery of $1 million in expenses, in accordance with the terms of an amendment to our marketing and sales agreement with Univision, expenses would of increase 5.6 %. Of that 5.6% Univision, expenses would have increased 5.6%. Of that 5.6% 3% is attributable to expense expanding our business such as the 1031 in Los Angeles, the acquisition of KBMB in Sacramento, the FOX Station in Madamaris, and the outdoor advertising division in Sacramento. The remaining 2% is corporate expenses.

Corporate expenses were flat at 4.2 million, for the quarter, Corporate expenses for the year were also flat at approximately 16.8 million. We experienced increased expenses primary attributable to higher wages and expenses associated with our compliance with Sarbanes Oxley Act of 2000, which were offset by lower legal and Insurance expense. Free cash flow was11.6 million or $ 0.09 per share in the fourth quarter of 2005. In with $0.09 per share in the fourth quarter of 2004. For the full year, free cash flow 40.1 million or $.032 per share, off from 38.9 or $0.31 per share in 2004 Based on including Univision's Series U preferred stock as common stock outstanding, in 2004. Turning to our balance sheet.

As of December 31, 2005, our total debt was $507 million, and our trailing 12 month EBITDA as adjusted was 92.4 million. Our net debt to EBITDA has adjusted was 4.8 times. Cash on the books was $66 million as of December 31, 2005. The EPS for 2005, was negative $0.08 per share compared to a negative $ 0.09 per share in 2004. A loss for the year was attributable to a charge of $28 million, related to the cost for the extinguishment of debt related to the reduction of our senior's subordinated notes and the refinancing of our senior credit facility.

Pro forma eliminating the cost associated with the extinguishment of debt, total EPS for the year would have been a positive $ 0.06 per share. In July, the company entered into an deferment agreement to sell the assets of Radio stations KPRG, and KROK serving the San Francisco, San Jose market, to Univision for $ 90 million. The transaction closed, January 1, 2006, and Univision paid the purchase price in form of shares of the company's Class U common stock held by Univision. The company received 12.6 million shares that were subsequently canceled and retired. The transaction reduced Univision percentage ownership in the company to approximately 19.8%.

Turning toward the outlook for 2006, we are once again providing pro forma guidance information. With the sale of the company's Radio assets in San Francisco, California, and the first quarter of 2006. The company no longer has any remaining broadcast operations in that market.

As a result, in accordance with company policy, the company has elected to present this guidance on a pro forma basis by eliminating its broad casting results from that market for the prior year so that the comparison between the periods will be meaningful. The amounts excluding from revenue and operating expense of the first quarter of 2005 were $1 million, 217,000 and $1 million, 57,000, respectively.

Beginning in 2006, operating expenses and corporate expenses will include non cash stock-based compensation to comply with Statement of Financial Accounting Standards, Number 123 share based payments. The company expects approximately $150,000, in operates expenses and $250,000, in corporate expenses related stock based compensation in the first quarter of 2006.

For the quarter of 2006, first quarter, we expect net revenue to increase by mid single digits percentages and operating expenses to increase by low to mid single digits percentages as compared to the first quarter of 2005. Excluding the non cash stock based compensation corporate expense are expected to be flat compared to the first quarter of 2005. Depreciation of amortization expected to be between 11.45 and $12 million. Net interest expense for free cash flow purposes expected to be $7.5 to $8 million.

We expect CapEx to be between 5.5 and $6 million for the quarter. Reported in our last call, we will need to finish our digital upgrades by the end of the second quarter, we expect total CapEx, for the year to be approximately $20 million with maintenance to be around $13 million and digital to be $17 million for the year.

First quarter earnings per share is expected to be in the range $ 0.03 to $0.05 per share, including the after tax gain on the sale of the San Jose assets, of $8.5 million, that's to gain. Based on 111.8 million shares outstanding. This concludes our formal remarks, Walter, Phil and I will be happy to take your questions. Operator?

Yes, thank you. [OPERATOR INSTRUCTIONS] Our first question comes from the line of Victor Miller with Bear, Stearns. Please proceed.

Good afternoon. In the life of the company you've always given guidance by division. Perhaps you can tell us why you've decided to deviate from that. Secondly, it looks like you're saying that your EBITDA should be up in the 8% range or so, probably 10-11% if you set aside the stock options, consensus for the year is about 13% growth for the year. Are you expecting that you'll see an acceleration of EBITDA for the year because of the World Cup and political? Lastly, this share overhang, of 7.6 million shares given your leverage, could you simply buy those shares in from Univision? Thank you.

Victor, this is John. The last question certainly we have the capability, we're at a net debt to EBITDA of 4.8 at the end of the year, we have $65 million in cash. Certainly that would increase our leverage because some of the cash offsets the total leverage, but yes we definitely have the capability to buy the shares when it's made available to us. The second question you asked is about the acceleration, but certainly in the first quarter is always our weakest quarter of the year. And so therefore, our EBITDA growth will probably be at the smallest because the revenue is the least amount in the first quarter. But also aside from just general seasonal nature, we expect our revenue to grow with the World Cup and with political as the year goes on.

Is there a reason why you didn't provide guidance by a division this go around?

Yes, we've contemplating for a long time. And we've been probably more detail than probably most of our peers, and we just basically decided to be more consistent with our peers in the marketplace and do it similar to the way that's done. Even that being said, I would say that the guidance we provided today is probably on the more informative side than what we're seeing with our peers out there.

Okay, thank you.

Our next question comes from the line of John Jacoby with Bank of America. Please proceed.

Good afternoon. If you can give, with the mid single digit expense guidance is that true across all sort of sectors, is there anything we should know about this quarter? Thanks.

Well, we've chosen to provide our guidance, the way we've got it here and if I start answering all of these questions, I'll basically be going back to giving our guidance the way we would of given it with the amount of detail on it. This is a fair representation of guidance going forward.

Okay, then, how about this? It looks like things have perhaps accelerated at least in the Telecom category, can you give us any sort of overall category color for the first quarter?

No, there's nothing outstanding and there's nothing that's being masked in the change of guidance. I can say that. Besides we don't want to give explicit guidance by each business line. But the answer to your question, no there's nothing being masked.

I just thought maybe one time in terms of just --

There's nothing specific.

Okay. And just on trends and the categories?

Jonathan, this is Phillip. Let me just go back a minute, the industry was minus 16, and actually as we said earlier it's minus six. Our TV grew last year plus eight in revenue versus the industry of minus six. We saw strength in fourth quarter and for the entire year last year in Auto, Telecom, Finance is a big positive for us in TV and Radio. Entertainment on billboards, so we we see the same categories pacing well, Telecom is strong in first quarter, our automotive is positive paced through January and today as, into the third week of February. We think we've got great up side on the Automotive still, we said it represents 30% of our TV revenue but it's only 24% of our local revenues. And we, we see a lot of up side there. Particularly with the local dealers and the dealer associations which we're still cracking a lot of new advertisers in that area. So a lot of the same categories that have been doing well for us is a categories including retail. Showing strong signs in first quarter, as well.

Thank you.

Our next question comes from the line of Lee Westerfield with Harris Nesbitt. Please proceed.

Thanks very much gentlemen. Two questions, actually. When I looked back to 2002 World Cup. The second and third quarters you grew by 19 and 28% pro forma your TV groups, but I think that was a little bit of a distortion against 2001. So I wondered if you could first remind the audience here what you generated in terms of World Cup revenue back four- years-ago so there is some basis to think about that. And the second question, Walter and Phillip, relates to your network television agreements and the two parts. Are there any elements of range of control where the contracts can be renegotiated? and secondly, when in general do you retransmission contracts come up in many markets if you can help us with those?

Okay, I'll answer the second part of the question and Phillip will respond to the first part of the question. The change of control provisions in our Univision contracts provide that the power pipes under those contracts [inaudible], that our rights under those contracts of the Univision company, so we believe that we are a well-protected with the agreements that we currently have with Univision should there be a change in ownership. And was there a second part of that question?

It's not with the networks, but retrains--

Our retrans-agreements, Sun Set in December 2008, December 31.

Okay and back to the World Cup.

This is Phillip. For the World Cup. As you recall we may have talked about this a couple of calls back. Back in 2002, we did approximately $2 million in television revenue in sponsorship. We didn't have any Radio coverage so we had zero in 2002 for Radio. And this year as you know it starts in June, early June through July, and this year we have a targeted $7 million -- a little over $7 million in revenue, and we have $6 million on the books year-to-date. We've been successful in selling packages to General Motors, Verizon, SPC, Jack in the Box, to name a few. That's a targeted 7 million TVs, 6 on the books and a targeted $2 million in Radio World Cup revenue with $1.7 million on the books so we're well on our way to meeting that little over $9 million in revenue goal for both TV and Radio for World Cup. And that will hit mainly in May, June, and July.

Okay, we'll all root for Mexico to advance, I appreciate your help.

Yes, absolutely.

We all will.

Our next question comes from the line of James Dix with Deutsche Bank. Please proceed.

Good afternoon, gentlemen. A couple questions. First, if you could provide any color on the expected economics of the [KIA Lean] deal. Just how should we be thinking about that? Terms of potential revenue impact and maybe operating expense? Then I guess, secondly, also in Radio, I think you mentioned Walter, the experience you've seen of English stations flipping to Spanish in a number of your markets and assess the impact they're having and where you seem to be having more success in competing there. And I guess, finally for John, are there any -- we talked a little bit about the World Cup coming in and political. Anything else in terms of one-time, either revenue or expense items that we should be looking for in comparisons verses last year as we roll through our quarterly models?

Before I do that, I'll give you the cost side of [KIA Lean] and let Walter and Phillip talk about the revenue opportunities. For the market is approximately $700,000, and there's so that's the cost side of and when I finish the other part of your question, I'll let Walter and Phillip talk about the revenue opportunities there. Regarding one-time only, on the revenue side between political and World Cup, that's probably it for one time; however, on the expense side if you take the numbers that we gave you for stock options that are new this year, they're not going to be shown against a similar number next year. Looking at $250,000 of corporate expense, and $150,000 per quarter of operating expense relating to stock-based compensation. And that should be about it.

Okay. Great.

As you may remember, we aired [KIA Lean] a few years back in several of our markets. And now he's returned. And we had great results within him in four of the current market that you'll be airing in now, including Denver, Sacramento, Stockton, and Reno. We estimate that the incremental revenue we expect to see in Denver, as a result of increased ratings from [KIALean] should pay for the additional, or should pay for the consideration that we committed to as a result of the contract dealing. So we feel that the up side of this contract will certainly be more than substantially more than what the cost is.

Okay. Great. Thanks.

Our next question comes from the line of Marci Ryvicker with Wachovia Securities. Please proceed with your question.

Hi, I have two questions. In the fourth quarter what changed in your Radio division from when you gave guidance. Basically, what happened in October that didn't happen in November and December? Are the November and December trends continuing into 2006? My second question is you mention that had the auto category compromises 30% of your TV revenue, I believe it's a pretty significant portion of your Radio revenue, we're seeing what's happening with the broadcasters with a weak auto category, is there something that you could or should be doing now to make sure you don't end up in that same boat, and so reliant on auto going forward?

To your question about our performance in Radio in the fourth quarter, when we went to our call in early November, we were certainly concerned about the pace in the quarter, October was flat, but it seemed like as soon as we came out of the call our business started to improve and to pick up and we grew the business in November and plus in December, we had a very strong December. So we certainly are pleased with the quarter for Radio plus six, given the fact, I think we guided one to two. And you know, we used every opportunity we had available to drive our sellers to increase our revenue for the fourth quarter. As far as, the first quarter is concerned, we've given our guidance as John reviewed it with you, so I'll just let that stand.

Marcy, as far as the question related to the automotive category, let me try to answer that for you. Clearly the hangover from this past summer huge incentive driven selling events is still there. The higher gas prices, the more competition from imports, particularly in the truck category, we've all read about GM and Ford having more competition in that category. That's really. Despite that the advertisers continue to increase their spending and marketing efforts towards Hispanic consumers. I think that more and more mindful of the fact that in according, they all use it as the bible in terms of new car sales, they're much more mindful that customers are in many cases the only growing segment of the new car and truck buyers, and as far as being proactive and we've when it comes to this category in the last two quarters and I think we'll continue to do that, all year. Last year GM was up 22%, they made it a major initiative to go after the Hispanic consumer, and the spending by Dodge, Chrysler, and Jeep, and Toyota, were double that. So I think that they all understand that it's a great growth opportunity to reach out to the Hispanic new car buyer on Spanish-language television and as I mentioned to you, as you repeated there, it's 30% of our TV total revenue, but it's only 24 to 23% of our local revenue. For the category. And we do have a lot of up side and we're continuing to see that in the first quarter on the local side, with local car dealers and with local dealer associations, so we feel really good at the way we're approaching this category and the amount of focus we've put on new business in this category and I think that's going to pay off through this year and beyond.

Just to add what Phillip said, Marcy, most of the information you hear in the news about the reduction in automotive advertising is what we call tier 1 category, which is mostly corporate advertising coming out of the auto dealers, and that's not the most significant portion of our automotive revenue, most of our revenue in automotive is being driven by as Phillip pointed out local car dealers and dealer associations and that's the up side of our business.

Great, thank you very much.

Our next question comes from the line of Anthony DiClemente with Lehman Brothers. Please proceed.

I noted you had a sequential decline in your interest expense which is encouraging and from what you said on the debt levels, it didn't seem like the debt level changed that much, so I'm just trying to understand why interest expense is actually improving the way it is because I had a bigger number in the model. Along those same lines, as you continue to pay down debt headed into '06 and your leverage ratio gets a little bit more reasonable or comfortable, at level do you start to say, maybe we use free cash flow for share buy backs or something other than a deleveraging, or does this continue to be first and foremost a deleveraging story, as far as the use of free cash flow goes. Thanks for the question.

I wouldn't call it a deleveraging story, we've always said we're comfortable in the low to mid-five range. And actually, we are below that at 4.8. From a net debt standpoint, but there is that potential for us to be able to buy back additional shares or other shares, so we'll always be looking at the opportunity to repurchase our own shares, and probably keep our debt leverage in the five to five and half range. If we don't have that opportunity, whether it be acquisition opportunity or doesn't make sense to buy back our own shares, then we'll look at deleveraging. Regarding the interest cost, you can blame the changes on GAAP accounting which requires us every quarter to look at the value of our swap. We have a $500 million notional value swap. On our term loan. And at the end of each quarter we need to look at the value, what the book value is of that swap. And in effect reflect that in our interest expense, so if the swap becomes more valuable because interest rates go higher, our interest goes down because our swap, which we own is more valuable to us. The reality is were paying 5.96%. which is our swap price that we are locked in at but we record, like I said is contingent on the value of that swap.

So just in case I'm not smart enough to do all of that math for interest for the full year '06 which is a strong likelihood, can you guide us towards a number for an interest expense?

The cash number is $500 million times 5.96%, but I don't know the other number until the end of the quarter and where interest rates go, but we can do a basic round about and that's why I think we show an $8.5 million to $9, was our interest expense for the first quarter.

Okay, thanks.

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

Not many questions left to ask, but just curious, the station in L.A., the 103.1, just curious if you could give us a sense of how that performance of the station was in 2005, and whether you consider that a core asset or an asset that you might divest at some point down the road. And then update us maybe on any other divestiture [inaudible] Thanks.

Well, Gordon, as you know we with Clear Channel ended at the, in April of '05 and then we began programming the station, and we're quite pleased with the results that we produced in '05 with the 103.1s and in both in ratings and revenues. We kept the same format. Existed on the station when the L.A. terminated and we're certainly pleased with how the station has performed. And I will tell you that going into the first quarter of 2006, we're also seeing a strong performance from that Radio station. We've also found that it's a good informational tool with regards to what is going on in the general market and we've been able to convert some general market business to Spanish Language Radio business on our other two Radio stations in Los Angeles, which are both Spanish as you know Super Estrella and KBKLY. With regards to any divestitures, we completed the sales to Univision of the San Francisco assets on January 1, and that turned out to be, we think, a significant transaction, both Univision and for us. We were able to receive it as consideration of about 13 million of our shares from Univision for the purchase price of the San Francisco assets But that's all we have to report on it at this time. We continue to review all of our asset across the country. And we're always looking for ways to improve our performance. If we see the market is not performing the way we like it to, then we take a look at exiting the market, which we did in San Francisco.

Thank you.

Our next question comes from the line of Kit Spring with Stifel Nicolaus. Please proceed with your question.

What's causing the sequential slow down, I think it's 8% revenue growth for 4Q in the period, going the 5% and during the same period I think the Radio and TV industries have improved sequentially.

Well, we really don't review it as a slow down to the market. It's difficult out there, but we continue to outperform the industry and put up strong revenue growth and strong EBITDA results. We were up plus 16% in EBITDA last year. It's fourth quarter for TV, I mentioned the industry finished minus 6%. They had backwards revenue growth, we finished plus 7%. In Radio, the industry was flat, we finished plus 10%. Actually, flat to minus 3, but we finished plus 10%.

But why do you slow down? Is it an economy thing or is just tougher comparisons how would you characterize the change?

Political last year, and yes it's a difficult environment out there. What we're seeing is a tough advertising environment, but despite that no matter where the general market comes in, we seem to be consistently maintaining our out performance over the general market.

Okay. Thanks.

Our next question comes from the line of David Joyce with Miller Park. Please proceed with your question.

Thank you. We're hearing that on the Radio side that the quarter started off strong in January, then very strong and then I was just wondering if you're seeing any trends like that, and secondly, I was wondering if there are significant outdoor contracts expiring this year, thanks.

Well, on the first question we didn't see -- I wouldn't say there's an extraordinary, and I kind of listen to the guidance that's been coming out of our peers and from what we see, I don't see strong, particularly strong January. So I think the answer is we don't see a strong January, it's January and it's not particularly strong going into February and March either. And it's another one of those tough environments in the first quarter and we're doing everything we possibly can to continue to outperform the general market and put as much revenue on the books as we can for the first quarter. Regarding the outdoor, as far as the outdoor is concerned, there are a couple of contracts that are in the first quarter this year that were there last year, but that's typical of all of our provisions.

Anything significant expiring during the year or is it pretty stable?

It appears right now that the environment is, relatively stable.

How much do you have on the books for Radio and TV for the quarter?

Well, this is Phillip, David. If you look to our, oh boy, if you look actually to our BOB today to our guidance, our TV is almost 90%, about 87 to 88 %, our Radio is 86%, and our outdoor division actually has 97% of its total billing on the books to guidance.

We're a little bit later in this quarter in our call that we are typically in other quarters.

Okay. Thank you.

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

Hi, thanks for taking the call. Can you characterize what the biggest contributor of your revenue out performance was in the fourth quarter in TV and separately in Radio; was it new advertisers, increased rates? Increase self-threat existing advertiser? Also, does your first quarter revenue guidance contemplate the same spread of out performance you saw in the fourth quarter. And finally, do you think you can continue at the same magnitude of out performance ex-World Cup throughout 2006, especially given the trouble that we're seeing in the general Radio industry as a whole. What do you see that gives you confidence that you can do that? Thanks.

Well, going to the question of out performance, it is pretty difficult to a judge what our, were judging our guidance based on where we see our business based on our pacing, not relative to what the general markets doing so we never really know our out performance until the general market closes and we know specifically what they have done. Like I said most of our forecasting is done on our pacing and where we see future potential. Orders coming down. The other question, Eileen was?

What do you think the biggest contributor to your revenue growth question?

It was [Wright] for Radio, for the fourth quarter and for Television it was also, [Wright].

Do you expect for those to be the big drivers of the first quarter? [Wright]?

We do and we do expect that the same as I mentioned earlier, fill up the categories there in the fourth quarter we mentioned it was pushing T.V., six of top ten growing advertisers in T.V. were Auto. The other four were [Telcreek]. Were getting higher rate in all of new and were doing a better job getting a higher rate and all of our returning business for both the business and as well as all three divisions. I think that those same dynamics will carry into first quarter and help us continue to, again it's all relative. But to out perform and to answer your question, to the last question 2006, we will out perform that same test , same ratio.

Eileen this is Walter, Through all of our division through out the year we emphasis increasing local revenue and we were successfully in all three divisions and that was certainly one of the key drivers of our success, in ' 05. We have continue to, as I said in my remarks we continue to provide better training, better tools to our sellers, particularly our local sales team and continue the success that we generated in local sales in '05 on into ' 06.

Okay. Thank you.

Are next question comes from the line of Mark Wienkes of Goldman Sachs. Please proceed.

Great, Thank you. The margin expanded 200 Fifths, in '05, I was just wondering how much of that expansion to you expect to continue into '06 and then if you go just sort of talk to what portion of the uplift do you think will come from revenue growth versus just holding a line on cost?

While, basically, we are looking at maintaining our 5 to 6 % expense growth, throughout 2006 year, so therefore we expect to see margin improvement , because we certainly expect to grow our revenues at a greater pace than 5 or 6 %, being more specific with than that we will probable be guiding for the year. By quarter but certainly as a company we expect to increase our margins, so we certainly expect to increase our revenue higher. at a higher rate thatn expected.

And just to support that Mark we have margins in the mid to high 30's, low 40's in some of our markets where we had the potential for revenue growth. This is really going to drive the overall average margin of each division. Our Denver, Orlando's, Tampa's, Boston, Hartford, Stagus, these are major, major markets where we have margins that have not creeped in to 40's or mid 40's yet and some of them are as low as 30, We expect a large margin expansion in many of those markets based on driving revenue, which will float the entire boat in the harbor over there.

Great. Thank you.

[OPERATOR INSTRUCTIONS] We have a follow-up question from the line of Victor Miller with Bear, Stearns.

First of all, just as a reminder so we can all have the right base. Can you tell us what the pro forma revenue expense and adjusted EBITDA would be for Radio Division for the year, taking out San Francisco and I have a follow-up.

Yes, Give me the follow-up while I'm pulling that one out.

The second one, Walter for, Do you see potential playing any role in the Univision Strategic decision to explore a sale and lastly a have -- do you expect any LPM markets and LPM to come into your markets and what have you, have you seen their similar kind of results that maybe Univision had in those markets, where the LPM has come into the market? Thanks.

Well, the first part of the question, Victor, monetary the Univision potential sale like everyone and we receive that same public information that everyone has received and we continue to weight any option we might have with regards to that sale. But that's the only problem a I have at this time, with regards to the LPM and so Philip will follow up on that question. The only market that we introduced to those, two markets. Washington D.C. is the most recent. Which was introduced last year, late last year.

Two of them last year and of course we were one of the first broadcast group to sign up for the very first, LPM market that Nielson launched in Boston,back two years. In both case's we have seen marked improvement in the overall measurement in terms of the sample in terms of the Hispanic audience, and our numbers. We mentioned earlier in our prepared remarks, the Washington D.C. Station, the Univision of WWFTC, has gone through the roof in terms of rating in the last few months. Largely due to the fact that it's the LPM sample and it probable the most represented sample of the Hispanic population in any market in the country. We do not currently have any word form Nielson as to additional markets that will be launched their kind of holding back as to which time they decide what to do with the Arbitron joint venture with their people meters. So were waiting to hear from that but we expect with the integration and the conversion of this NTINHT one sample through out the country, nationally, I doubt will have an impact on further roll out on the markets in the U.S. So wherever we see it and subscribed to it in our markets we had very favorable results.

Your first question Victor, which was the total San Francisco for the year, it's 6.8 million against 4.65 million of OE. An ETF of 2.160 for the year. I'll repeat what I gave for the first quarter which was 1.2 million, net revenue OE 1.5 million, ETF 160,000.

Do they make any since to break it out by quarter at this time or is that not possible?

Considering that were just guiding by quarter but each quarter we give it to you.

Okay.

There are no further questions at this time. I will now turn the call back to you. Please continue with your presentation .

Thank you. This concludes our fourth quarter and full year 2005 investor conference call. We look forward to reporting to all of you on our first quarter 2006 results. That will be on May investor conference call. That's all we have, Thank you for participating.

Thank you, Good afternoon.

Ladies and gentlemen that concludes the conference call for this afternoon.