Entravision Communications Corp (EVC) 2006 Q1 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to the Entravision Communications first quarter 2006 investor conference call.

During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. [OPERATOR INSTRUCTIONS]

As a reminder, this conference is being recorded Thursday, May 4, 2006.

It is now my pleasure to turn the conference over to Mr. Walter Ulloa, Chairman and Chief Executive Officer, Entravision Communications. Please go ahead, sir.

Thank you, Natalie. Good afternoon, everyone, and welcome to our first quarter 2006 teleconference.

Joining me on today's call is Philip Wilkinson, our President and Chief Operating Officer, and John DeLorenzo, our Executive Vice President and Chief Financial Officer.

Before starting this call we must inform that 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 impact actual results.

This call is the property of Entravision Communications Corporation. Any redistribution, retransmission or rebroadcast in this call in any form without the express written consent of Entravision Communications Corporation is strictly prohibited.

In addition, this call includes certain non-GAAP financial measures. These non-GAAP financial measures take into account the pro forma treatment of the Company's sale of its radio assets in San Francisco, California in the first quarter of 2006, whereby the Company has elected to eliminate its broadcasting results from that market for the prior period so that comparisons between the periods will be meaningful.

It also excludes non-cash stock-based compensation expenses related to the Company's adoption of Statement of Financial Accounting Standards No. 123R during the first quarter of 2006.

The Company has previously provided a reconciliation between these non-GAAP financial measures and the most directly comparable GAAP measures. That reconciliation was included in the Company's press release reporting results for the first quarter of 2006, which was posted on the Company's Web site and filed with the SEC under cover of Form 8-K.

For the first quarter, we once again outperformed the industry with solid growth across our asset base. Our ability to consistently outpace the general market is being driven by a vibrant Spanish language media landscape and our strategic focus on the fastest growing Hispanic markets.

Results were led by our Television and Radio divisions, which continue to expand their audience base and benefit from a strong sales performance.

Looking specifically at our consolidated results for the first quarter, pro forma revenue grew 7% to 59.9 million, while broadcast cash flow increased 13% to 19.3 million. Pro forma EBITDA as adjusted increased 17% to 15 million and free cash flow for the quarter grew to 1.8 million, an increase of 2% versus the first quarter 2005.

EPS was $0.11 per share above our guidance of 3 to $0.05 per share.

Breaking down our results by specific operating divisions, our Television segment reported a net revenue increase of 11% for the first quarter. This is an impressive performance given the 12% revenue growth in the prior year period.

Our Television operating results highlight our focus on monetizing our ratings. As you are aware in 2005, we made significant investment at the sales level and I am pleased to report that these efforts continue to bear fruit.

We remain committed to improving our sales initiatives and in this regard, we recently announced the appointment of Susan Knoll as Vice President Director of Research. Susan will oversee audience measurement initiatives for all our divisions ensuring our sales teams have the best data available.

In our Television division, our strongest advertising categories for the quarter were telcom, services, fast food restaurants and political. We signed on 62 new advertisers for our Television group in the quarter.

We also significantly increased advertising commitments for existing advertising clients including Toyota, Nissan, AT&T and McDonald's and Jack In the Box, demonstrating our ability to drive incremental revenue from our existing client base.

Our Univision affiliates had another outstanding quarter driven by strong primetime ratings in all key adult demos during the February 2006 Nielsen sweeps. In the February 2006 survey, nine of our Univision television affiliates ranked number one or two in prime time among adults 18 to 34 regardless of language.

Four of our Univision television stations delivered their highest February 18 to 34 rating ever, and in seven of our Univision markets we ranked number one or two in adults 18 to 49 regardless of language. Additionally, in our metered markets our TeleFutura television affiliate consistently ranked as the number two Spanish language television station.

We also continue to see improvements across our local news platforms as ratings grew 17% among our target 18 to 34 demographic.

10 of our Univision early local news programs ranked number one among adults 18 to 34, and six of our early local news ranked number one in adults 18 to 49 regardless of language. Three of our Univision affiliates enjoyed their highest 18 to 34 demo rating ever for early local news.

Looking at our Radio division, we reported pro forma revenue growth of 3%, exceeding the industry, which saw no growth for the quarter according to the Radio Advertising Bureau. This performance is on top of the 11% revenue growth we delivered in the first quarter of 2005.

Radio's revenue performance was driven by national advertising growth of 17%, while local advertising was flat for the quarter. Industry in comparison had local revenue down 2%, and national up 3%, according to RAB.

Top categories in the quarter were automotive, travel, leisure, and services. These three categories combined grew 14% over first quarter 2005.

The Radio division added 31 new clients and spent more than $10,000 in the quarter.

In the Winter 2006 release, Arbitron introduced a couple of important changes to the radio listening methodology. Arbitron now gives more credit for race, most importantly, added language weighting in 21 metros.

Entravision markets affected by these changes are Los Angeles, Denver, Dallas, Albuquerque, El Paso, McAllen, Phoenix, Miami, Houston, Sacramento, and Tucson. We believe that these improvements in the measurement of radio listening will result in a more reliable measurement of our Spanish language radio stations.

These changes are expected to reduce the ratings bounce from survey to survey.

As of yesterday, Winter ratings have been released in six of our markets and I am pleased to report that we reported significant share increases in our target demo adults 18 to 34, Winter 2005 to Fall 2006 in Denver, Monterey-Salinas, Dallas and Phoenix.

In Los Angeles, Super Estrella continued its rating share growth in the Winter 2006 Arbitron book. Average quarter hour share in our key demo 18 to 34 increased 9% over Fall 2005 and 4% year-over-year.

Oye 97.5 saw ratings gains of 8% Fall 2005 compared to Winter 2006. Oye's average quarter hour share in our key demo 18 to 34 increased 8% over Fall.

Our morning show, La Regadera on KSSE Super Estrella jumped to the number two-ranked morning show in Los Angeles in any language in our key demo adults 18 to 34. This show has increased its ratings by 31% year-over-year and increased 14% over the Fall of 2005.

In Denver our three radio station cluster increased its ratings by 16% over Fall 2005, with the help from a newly introduced show, Fielding for La Manana.

On January 1, we closed the sales of radio stations KVRG and KLOK serving the San Francisco Bay area to Univision Communications Corporation for $90 million. Univision paid for this acquisition with approximately 12.6 million shares of Entravision Class U common stock.

On March 20th, we were the high bidder in an FCC auction for two full-powered television construction permits for approximately 2.6 million per permit. These television construction permits are licensed to the Colorado Springs/Pueblo market in Hispanic Market Number 37, and the Wichita, Kansas Hispanic Market Number 52.

We expect these full-power construction permits to be granted by the end of the year, and plan to have these two Univision television affiliates operating sometime in 2007.

Our Outdoor division posted 3% revenue growth in the first quarter. Although the Outdoor division finished the quarter better than we projected, our results are not as strong as first quarter 2005 due to softness in national revenue.

Local revenue grew 11% in the quarter. Top advertising categories in Outdoor for the quarter were entertainment, automotive, services, financial, and media.

Looking ahead, we remain optimistic about the year as we continue to execute our strategic initiatives. The Hispanic market continues to see strong organic growth and we will benefit from incremental World Cup and political advertising in 2006.

We are actively seeking prudent opportunities to strengthen our asset portfolio which is diversified by market and medium. We remain well positioned to bring additional value to our advertising clients as they expand their outreach to the U.S. Hispanic market.

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, or good morning, depending upon what coast you're on.

I am going to quickly review our broadcasting results and add some additional color on our operating performances. As Walter mentioned, our Television division had an outstanding first quarter as net revenue increased 11% outpacing the industry, which grew only 7%, according to TVB.

Local sales grew 8% versus the industry growth of 7% and our national sales were up 15%, or double the industry growth of 7.5%. Most impressively, our Television division's BCF grew 21%, improving our first quarter margins by 3 percentage points to 41% overall.

Our TV operating results were driven by growth in three of our top four advertising categories including telcom, fast food, and services. The telcom category saw the largest dollar and largest percentage gain of the top four categories and remains strong throughout April and into Q2.

Our local car business was up while our auto overall was flat in Q1, but our local was up, due to the -- it was flat overall, due to the slow down in factory auto spending, or tier one business. We realized this early on in first quarter, so we focused our stations on local car business and dealer group business, or tier two, tier three respectively, which grew 6% in Q1, and which as a result of this focus grew double-digits in April.

We do expect factory tier one dollars to grow in Q2, due to the World Cup soccer sponsorships that we have secured thus far in June. And speaking of World Cup soccer, our sales have reached 3X the 2002 sales figures and we are up to nearly $7 million of which 80% falls in Q2 and 50% is incremental.

As for TV ratings, simply said, we had outstanding February Nielsen ratings growth. Our sign-on to sign-off adult 18 to 34 ratings grew 25% and 29% among adults 18 to 49.

Our early fringe, early news, and late news were all up double-digits in February, that's year-over-year, while we held our prime time aggregate adult 18 to 34 rating of, a two rating, six share in all of our markets.

Looking at our Radio results, we continue to generate industry-leading revenue growth as our first quarter revenue increased 3%, outpacing the industry, which was flat.

Even in the slow local ad environment with the industry at a minus two for the quarter, our local revenue remained flat over last year. However, when we take into consideration a number of accounts that moved from local to national, we actually saw a 2% increase in local revenue, and when we take a more comprehensive look, direct sales had strong revenue growth in each month of the quarter with January increasing 9%, February up 15%, and March up 18%.

Our local agency revenue was affected by a number of mergers in both the grocery category and retail category. Even with these obstacles we were able to improve our performance each month of the quarter.

National revenue increased 17% for the first quarter. We delivered solid national revenue growth in Radio each month of the quarter.

Top advertisers during the quarter included Verizon, McDonald's, Cingular Wireless, Vons Supermarkets and Safeway Stores with specific category strength in services which were up 36%, telcom, which was up 35%, and restaurants, or fast food service restaurants which was up 10%.

We saw double-digit growth in 12 of our top 20 advertisers and new advertisers to our radio division during the first quarter included Bally's Health Clubs, Jiffy Lube, Motorola, Fox Sports en Espanol and Mercedes-Benz.

On April 2nd in eight markets we launched "Piolin por la Manana" the number one Spanish language morning show among adults 18 to 34. However, the only market to date for which Arbitron ratings have been released is Denver, where in only two months, KXPK has increased its average quarter hour per share by 62% overall and in the morning drive by over 300% in the coveted adult 18 to 34-year old demo.

KXPK has the number one morning show and is the number two-ranked radio station in any language with an 8.4 share, which is only two-tenths of a share behind the leader. We expect similar success Piolin ratings success stories when the rest of the markets are released.

We saw double-digit growth in adults 18 to 34 Fall 2005 compared to Winter 2006 in Arbitron with our Super Estrella formats in Dallas, Phoenix, Las Vegas, and Monterey-Salinas. This growth was propelled by our network morning show on Super Estrella that grew more than 40% in markets I just mentioned.

With the Winter book -- that will be the first complete book, for our newly launched Jose format, and we did see in the one market that was released, a 150% increase in Denver for our Jose station year-over-year in adults 18 to 34. And we will update you on the progress of this format on our next earnings call.

We will be broadcasting the World Cup in four of our radio markets, L.A., Dallas, Vegas, and El Paso. We currently have a little over 1.8 million on the books for World Cup advertising commitments, of which 81% of the dollars are incremental.

We anticipate finishing around $2 million in World Cup revenue for Radio through these sponsorships.

In summary, we continue to deliver impressive results on both the top and bottom line. We are effectively managing our costs and driving operating leverage. We remain focused on expanding our relationships with our advertisers and our audience in order to drive additional cash flow improvements.

Now, I'd like to turn the call over to John DeLorenzo for a financial review.

Thank you, Phillip, and good afternoon, everyone.

As Walter and Phillip have discussed, we reported results that exceeded our guidance for the quarter.

Pro forma net revenue was 59.9 million, up 7%. Pro forma broadcast cash flow increased 13% to 19.3 million, and pro forma EBITDA as adjusted increased 17%, to $15 million.

Free cash flow, which we define as EBITDA as adjusted minus capital expenditures, cash interest, cash taxes, plus interest income, was $0.02 per share and EPS was $0.11 per share above our guidance of 3 to $0.05 per share.

Overall our pro forma operating margin for the quarter was 32%, up from 30% last year. TV margin for the quarter was 41% compared to 38% in Q1 '05.

Our pro forma Radio margin was 29% for Q1 '06 compared to 30% in Q1 '05. Our overall margin improvement is a result of increasing revenue while moderating operating cost increases.

Company operating expenses for the quarter increased to $41.5 million an increase of 1.5 million, or 4%. Excluding the operating expenses incurred during the first quarter of 2005 by our radio stations in the San Francisco-San Jose market that we sold in the first quarter of 2006, operating expenses would have increased 2.5 million, or 7%.

However, excluding expenses associated with non-cash stock-based compensation of 800,000, operating expenses increased to 40.7 million from 39 million, an increase of 1.7 million, or 4.5%, which was in line with our expense guidance for the quarter.

Of the 4.5% expense increase, 3.2% is attributable to expenses expanding our businesses such as the 103.1 in Los Angeles, Fox Television station in Matamoras and the Outdoor division in Sacramento. The remaining 1.3% is core expenses.

Corporate expenses for the quarter increased to 4.9 million from 4.4 million, an increase of $500,000. The increase was primarily attributable to increased non-cash stock-based compensation.

Excluding non-cash stock-based compensation of 700,000 and 200,000 for the three-months period ending March 31, 2006 and 2005, respectively, corporate expenses increased 4.2 million from 4.1 million, an increase of $100,000. The increase of $100,000 was primarily attributable to increased expenses, primarily higher wages and expenses associated with our compliance with the Sarbanes-Oxley Act of 2002, including internal controls.

In the quarter we recorded a $5.4 million reduction of interest expense to adjust the value of our swap agreement to fair value, therefore, reducing interest expense by that amount. Cash interest expense for the quarter is $7.1 million net of interest income.

As discussed earlier, non-cash stock-based compensation was higher than projected. We have certain stock rewards that are revalued at each reporting date based on the change in stock trading price of the Company.

Our stock price rose from $7.12 on 12/31/05 to $9.16 on 3/31/06. The increase in our stock price increased the value of certain of our non-cash stock-based compensation expense and the associated liability by $1.2 million.

We have since modified these stock options in the second quarter of 2006 to remove this revaluation requirement, therefore, reducing the volatility of expenses relating to non-cash stock-based compensation.

Free cash flow was 1.8 million, or $0.02 per share for the first quarter of 2006, up from $0.01 per share in the first quarter of 2005.

Turning to our balance sheet, as of March 31, 2006, our total debt was 508 million, our trailing 12-month EBITDA as adjusted was 94.4 million. Our net debt to EBITDA as adjusted was 5.2 times.

Cash on the books was 19.2 million at March 31st. It should be noted that the leverage reflects the repurchase of 19.6 million of the Company's outstanding shares.

The EPS for Q1 '06 was $0.11 per share compared to a negative $0.04 per share in 2005.

In January 2006, we sold the assets of radio station KBRG-FM and KLOK-AM serving the San Francisco-San Jose market to Univision for $90 million. The full amount of the purchase price was paid in the form of shares of the Company's Class U common stock held by Univision.

We received 12.6 million shares that were subsequently cancelled and retired. The sale of the station resulted in an after-tax gain on sale reflected in our results of $11 million.

In March 2006, we repurchased 7 million shares of Class U common stock held by Univision for $51.1 million. We strengthened our balance sheet by reducing our outstanding shares to approximately 105 million shares outstanding.

The transaction reduced Univision's percentage ownership in the Company to just under 15% on a fully diluted basis.

Turing to our outlook for the second quarter of 2006 we are once again providing pro forma guidance information.

With the sale of the Company's radio assets in San Francisco in the first quarter of 2006, the Company no longer has any remaining broadcasting operations in that market. As a result, and in accordance with Company policy, the Company has elected to present its guidance on a pro forma basis, eliminating its broadcasting results from the market for the prior period so that the comparison between the periods will be meaningful.

The amounts excluded from net revenue and operating expenses for the second quarter of 2005 were approximately $1.949 million and $1.219 million respectively.

Similar to the first quarter, corporate expenses will include non-cash stock-based compensation to comply with Statement of Financial Accounting Standards No. 123 share-based payment. The Company expects approximately $150,000 in corporate expenses related to non-cash stock-based compensation in the second quarter.

For the second quarter of 2006, we expect net revenues to increase by mid to high single-digit percentages, and operating expenses to increase by mid single-digit percentages as compared to the second quarter 2005. Excluding the non-cash stock-based compensation, corporate expenses are expected to be flat compared to the second quarter of 2005.

Depreciation and amortization is expected to be between 11 and 11.5 million. Net interest expense for free cash flow purposes, is expected to be between 7.7 and 8 million, and that's before any interest income and we expect Cap Ex to be between 8 and 8.5 million.

As reported on our last call, we will need to finish our digital upgrades by the end of the second quarter. We expect total Cap Ex for the year to be approximately $21 million with maintenance to be around 14 and digital to be around 7 million for the year.

As a result of the sale of our San Francisco-San Jose assets, we had a reduction of the gain on sale of $2.4 million in the second quarter which is related to the disposition of our facilities in that market. Second quarter earnings per share is expected to be in the range of 3 to $0.04 per share based on 105 million shares outstanding.

This concludes our formal remarks. Walter, Philip and I would be happy to take your questions. Operator?

[OPERATOR INSTRUCTIONS] Our first question comes from the line of Victor Miller from Bear Stearns. Please proceed. Your line is now open.

Good afternoon.

Could you give us a sense of 2Q, what percentage your inventory is already sold out in both the TV and the Radio business, especially given the World Cup coming?

And secondly, can you give us -- you did talk about the language use re-weighting that they did -- that Arbitron did. Can you give us the sense of the magnitude of impact you've seen in the markets in which you have seen some results on whatever demographic you think is most relevant? Thanks.

Hi, Victor. It is Philip.

Hi, Philip.

Radio is running about 65% on the sell-outs. We were at 73 all-in in first quarter -- about 65% in second quarter.

TV finished about 71% on the sell-outs in first and it's going a bit higher because of the inventory from World Cup on a daily basis throughout June and all those spots are sold in most markets, so it's going 20 be a little bit higher than that.

So another way of putting it, though, maybe relative to your budget, how far are you along on your sell-outs?

Relative to the budget --

In other words, to your guidance.

We're at 82% of our billing on the books to mid guidance. And we have, you know, had room on the inventory, if that's the question, in terms of making that guidance.

Yep. That's perfect.

And then on the language use weightings, any magnitude, if you’d just share some numbers maybe?

Well, the only numbers we have, Victor, it's Walter, are Los Angeles and the trends in Denver. But we expect that our more higher density Hispanic markets will be impacted positively by the change that Arbitron has made with regard to language weighting.

Okay. Thank you.

Thank you. Our next question comes from the line of Jonathan Jacoby from Banc of America Securities. Please proceed. Your line is now open.

Good afternoon.

Just taking a step back, it seems that core business, if you exclude political, seems to be much stronger in TV as compared to radio. Can you walk us through sort of what's going on there, what you see? I mean obviously, you're having strong outperformance versus the general market in both those sectors, but I'm wondering if you're seeing any differences, perhaps marketers paying more attention on the TV side?

And then secondly, if you can update us on any sort of where you are in assessing some strategic sell-off of assets? Thanks.

With regard to, you know, a strategic sell-off of assets, Jonathan, we continue to review our portfolio, and I've indicated on previous calls that our strategy currently is to focus more on our markets where we have radio, television and radio, so certainly want to continue to strengthen those clusters wherever we can by adding more radio, or by adding TeleFutura if we don't have TeleFutura in a market.

And we will look carefully at markets where we don't have television. If those markets can perform at a level that we certainly expect, then we'll continue on. Certainly Los Angeles is an example of where we've got just radio assets but we certainly are pleased with the performance.

As far as the second part of your question -- ?

The second part I think it was referring to the slower growth in radio as opposed to television relative to the core business. And I think, Jonathan, the simple answer on that is that the biggest categories that have impacted that slower growth in radio are the automotive and grocery store chains.

We've had a number of mergers and acquisitions in grocery and that's the reason that category was down. And that represents about 6% of our total business in radio.

And the automotive was slightly off in low single-digits and that was a result of the slowdown in factory business, and that category represents about 14%. That said, both of those have shown signs of -- and are in positive growth in April, particularly automotive that's turned for us in the radio division.

Thank you.

Thank you. Our next question comes from the line of Marci Ryvicker from Wachovia Securities. Please proceed. Your line is now open.

Hi, thank you.

The national softness that you saw in the Outdoor business, is this indicative of the industry, or is this just specific to Entravision and have trends changed into Q2?

And then secondly, can you tell us what your average inventory load is on your television stations and on your radio stations, and how this compares to your English language peers?

Marci, with regard to the Outdoor question, we saw a slowdown in national in New York City where we have a significant number of Outdoor assets. We are seeing a trend that is improving as we move through the second quarter.

And the second part of your question, was that -- ?

Inventories. Our Univision affiliates, as you may know, we have six minutes of the total 12 minutes that are available for sale in any given hour in primetime, and in our network affiliates, down in McAllen, and in San Diego, during primetime, we only have 2.5 minutes. But all other day parts where we are programming the English language stations ourselves, we have, in the case of news, we have all the inventory.

In case of syndicated properties, it depends but it averages about half, 50%, which is similar to what we have on the Univision side. So the only impact and difference would be the prime time in English language stations versus Univision.

What about on your radio stations?

Well the radio we run the max load of 12 minutes. But for Q1, we had a sell-out rate of about 73% and we average, you know, nine minutes an hour on sell-out. Sold time.

Great. Thank you.

Thank you. Our next question comes from the line of James Dix from Deutsche Bank. Please proceed. Your line is now open.

Good morning, gentlemen. A couple of questions.

Just Phillip, do you have any stats on average unit rates that you saw in TV and what the changes were? I guess for that matter, radio, if you have those in 1Q.

And then looking at the World Cup, I mean what is the difference between, you know, the types of advertisers you're getting on the World Cup, if you try to look at, you know, just the World Cup and break it down in terms of top categories, how does that differ from your regular business on the TV and radio platforms and do you see any carryover from their increased spending going out for the rest of the year?

Yes, thanks, James.

On an AUR basis first quarter, most all of our revenue growth was driven by rate increase. We were up 9% on TV, we're up 4% on radio and we were up double-digits in billboard. I know you didn't ask that, but we had a big bump in rates in billboard.

As far as the World Cup sponsors, most of the inventory was sold to national clients, fast food, automotive, telcom, on both TV and radio. Verizon, Toyota, McDonald's, on radio, we had Budweiser and on radio we also had local banks, but for the most part, they're national advertisers and/or local automotive.

In terms of what I thought I heard the question is somewhat of a -- there has been somewhat of a halo effect in past, and we're hoping that that will continue, we've locked them up for annuals as part of this World Cup sponsorship agreement. So we're hoping that these same advertisers, the momentum will continue.

Just one follow-up on that.

What's your expectation for the auto category for TV for the year given what you've seen in the first quarter and your efforts to get the tier two and tier three business ramped up?

That's a tough one to try to look out for the whole year, but I can tell you that we have seen the U.S. factory auto business spending, it did decline in first quarter, particularly from Ford, Chevy and Dodge, yet auto dealerships such as Toyota, Nissan, Ford and Hyundai, were up in first quarter. The local dealer spending on our TV stations was up 6% in first quarter.

And dealers across the country, especially in high density Hispanic markets are looking to capitalize on the only growth segment in the auto sales industry which is the Hispanic surname customer, the new car buyer, the local have been and will be our number one focus. That's what we can control. Tier two, tier three local dealers and local dealer groups.

In fact, we did have a little bit of an upswing in the factory business in April. It was up 4% but our local auto on TV was up 26%.

And if you look at the list of the biggest spenders, they're all local auto dealers, local Nissan, local Toyota, as I mentioned, local Hyundai and Hyundai has dealer groups as well. I think that that will continue only because we have made such a, you know, a tremendous focus on driving local business when we saw that factory business slowing down.

And just one last thing, what's the basics or the general split between tier one, two, and three across your Television group in terms of where the money is coming from? What is that rough mix? I know it obviously varies but (multiple speakers)

Tier one factory is about 24%, tier two is 35% and tier three, the local dealer group business, is 41% of our almost $10 million first quarter TV auto business.

Okay. Great.

It’s a little bit of a different swing in Radio. I know you didn't ask that, but it is 12% in Radio tier one, 21% in tier two, and 67, two-thirds of our business is local car business in Radio.

And by the way, you know, I mentioned that we're up in April in local significantly, local auto dealers. Now the same thing is holding true for Radio where tier three local auto business was only up 3% in Q1, it's accelerated to double-digits in April.

Okay. Great. That is great color. Thanks a lot, Phil.

Thank you.

Thank you. Our next question comes from the line of Lee Westerfield from Harris Nesbitt. Please proceed. Your line is now open.

Thank you, gentlemen. Good afternoon, or good morning out there.

The question I have really two-fold. The first is on radio. Could I get you to repeat and make sure I have it correct here, La Regadera was up 31% in the quarter. How is that doing in terms of ratings? How is that --in the book, how is that doing in terms of monetizing those ratings?

Additionally, Piolin, I think you said 60% up in Denver in terms of what you've seen so far in that comparable time period, but did I get that right?

And secondly, related to that, what -- could you repeat, which markets, how many markets is Piolin now airing in?

And then the other question relates to the new construction permits in Colorado Springs and Wichita. How much did you pay for those and what's the Cap Ex, or how much will you pay for those and how much is the Cap Ex through construction that you anticipate?

Okay, Lee, I'll go backwards here with your questions and hopefully I can remember them all.

The first question with regard to the construction permits, we paid about 2.6 million per construction permit. And we expect the Cap Ex to be somewhere between a million and a million and a half. And we are planning to have those two stations on the air as Univision affiliates in 2007.

With regards to Piolin, we broadcast Piolin in eight of our markets and the only market we've seen so far with any real information is Denver and we've seen a huge increase in Denver with Piolin. A 300% increase in ratings in our morning show.

With regards to La Regadera in Los Angeles, we saw impressive increases in that show’s popularity in the Winter book. We jumped to the number two-ranked morning show in Los Angeles in any language in adults 18 to 34, thereby increasing our ratings year-over-year by 31% and increasing our ratings over the Fall of 2005 by 14%.

And in terms of monetizing those ratings? Specifically (multiple speakers)

That certainly is one of our drivers of revenue for our Los Angeles cluster, and we'll continue to monetize our ratings and our success in Los Angeles and particularly with Super Estrella as we move through the year.

We'll keep our eye on it. Thank you very much.

Thank you. Our next question comes from the line of Mark Wienkes from Goldman Sachs. Please proceed. Your line is now open.

Thank you.

I was wondering on the Television business, how much of the content is there that's like the Mexican Soccer League that falls outside the PLA and do you think that any of that might be at risk of moving off of the Univision network in light of any potential ownership changes at Univision?

The question was how much of the -- ?

How much of the content on Univision is outside of the PLA but produced or owned or controlled by Televisa?

Liga Mexicana is the only program that we receive outside, from Mexico, outside of the PLA-provided programming from Televisa and I know the last e-mail I saw on that, that was locked up next year. So we can check and find out how long the contract goes for, but I think we're safe for the next year.

The next year? Okay. And then sort of bigger picture, like over the long run, do you think that there's a risk that Televisa's content maybe becomes less relevant to the U.S. viewing base? And if so, how do you hedge against that?

We don't believe that's going to happen. We have been in this business 30 years and if anything, it's become more relevant. So we expect it to increase its relevance as we move through this decade and beyond.

Televisa's programming specifically?

Exactly.

Okay. All right. Thank you.

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

Thanks very much.

Just trying to reconcile what sounds like a really bullish comments about your business, particularly holding up really well with auto and seeing some acceleration into April, it looks as if you're seeing that and then, obviously, you're going to see a nice boost in June, and I'm just wondering how -- or what it is you're seeing that makes you think your revenues should grow mid to high single-digits?

Those items exactly.

I mean why not more if you grew so quickly in Q1 and it looks like some things may be getting even better?

Well, you know, we have pretty consistent growth across all these categories. We mentioned to you in auto we were flat on the TV side in Q1 but we were up on the local tier three business, and [indiscernible]. That has, as you indicated, and as I said earlier, has accelerated in April, both in TV and in Radio.

But we have a spike in June, of course, on the national side for the World Cup sponsorships which 80% of that money will fall into June, 20% in July. Only about 50% of that, as I mentioned, on the TV side is incremental, and 81% on the Radio side of the 2 million is incremental.

But that chews up a lot of inventory. Those games eat up a lot of inventory. So I think fundamentally, all of our categories are growing but we do have a couple that are soft and particularly in the grocery and retail side with these mergers and acquisitions.

And then as far as Piolin goes, it sounds like things are off to a good start there, but I gather you can't -- you're probably less able to convert that to revenues until you've got him up on a couple -- maybe a couple of books. Is that what we should expect -- a reacceleration in radio maybe in the (multiple speakers)

Gordon?

Yes.

As you know, it will probably take us three to six months to convert those ratings to revenue, but we expect, certainly, significant increases across the eight market platform.

Yes, that sounds great. All right. Terrific. Thank you.

Thank you. Our next question comes from the line of David Miller with Sanders Morris Harris. Please proceed. Your line is now open.

Hi. A couple of questions.

Guys, on the Outdoor line, you posted 2% revenue growth and 5% expense growth, which led to a loss on the broadcast [indiscernible] line a little larger than what we had predicted. Is there still something going on there with regard to the Sacramento bus advertising contract or was there other stuff going on operationally that led to, you know, that expense increase? And then I have a follow-up, thanks. Hello?

David, this is John.

I mean there certainly are expense increases. That's been pretty much our run rate. But if you look at Sacramento, that probably accounts for probably a third of the total expense increase.

Of the increase. Okay. Okay. And then just a quick follow-up.

There's some language coming out of Grupo Televisa recently suggesting that if in fact they are successful in taking Univision out at whatever price Jerry Perenchio agrees to sell the Company, that there would be substantial changes in programming, particularly in primetime.

I was wondering what your reaction is to that. Does that affect your business going forward if at all? Thanks very much.

Thank you for the question, David.

Televisa is certainly -- has a tremendous record in Spanish language television programming, both in Mexico and the U.S., and we expect whatever changes they make, if they're successful, will be positive.

Okay. Thanks, guys.

David, one more thing. I actually just looked at the one component. We're actually almost two-thirds of the increase in Outdoor is related to the Sacramento market.

Two-thirds. Okay, good. Thank you very much.

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

Thanks. A couple of questions.

The first on political. When do you expect that will start coming in? And do you have any sense at this point are there going to be some significant battles in Texas and California?

And secondly, if you can just talk about any changes you're seeing in the trends of how soon the business is coming in. Is there something that's been evolving in the sale of the business there?

Just a couple of comments -- I know Phil has some more information as well. The political revenue that we forecasted for the year, I think we looked at around 4 million for the year based upon '02 and '04's results. We're probably going to be below that given the way it's pacing right now.

But we certainly will see that continue to grow as we move into, through the second and certainly the third quarter and early part of the fourth quarter. October will be a big month for political.

And I was wondering if (multiple speakers)

By the way, Texas, certainly will be an important state for us with regards to local revenue, as will California.

And I was wondering if you gather, if there's a sense of greater awareness of needing to advertise on the Spanish language media outlets for political -- this political season versus the other two, and what it if any effects you saw from the strike earlier this week?

Well, a couple of comments on them. We've seen growth in our political revenue every political cycle. We saw a huge bump in '04 compared with '00 of, you know, almost $4 million.

In '02, it was a unique year in that we had a candidate from Texas running for Governor who spent a lot of his own money. But certainly, '02 was bigger than '00 with regards to political.

So we certainly are trending in a positive way with our political revenue. Again, we budgeted 4 -- we might go above that. Right now, we think it might be slightly below that.

With regards to, you know, the recent -- two comments, with regards to the growing political power of the Latino voter and the demonstrations this past week, obviously, the immigration issue's filled with emotion and politics, but I will say that Entravision recognizes the importance of this issue to the Hispanic community, and the right of the community to express itself in a constructive and positive manner. That certainly was demonstrated this week with the demonstrations.

I think flowing from these demonstrations is a greater awareness of the social and political power of the Hispanic community, and we believe that this will result in a greater or larger Latino voting block, thereby increasing our media's importance to the political ad industry.

And another benefit we've seen that's significant from the recent demonstrations and just the immigration issue in general, is that it certainly has spiked our local news viewing due to the community’s interest in this quite complex issue.

And more general business comment, are you seeing any changes in the trends of how soon, or how late you're writing business? Is this any technological change that's altering your visibility on ad sales?

Well, the only comment I'll have is that certainly, you know, the trend is to write business later and later, and I think maybe the technology has contributed to the fact that advertisers and the people that are placing the ad buys have better information later in the cycle and they can place the ad, you know, as late as possible in order to maximize the effectiveness of the ad campaign.

All right. Thank you.

Thank you. [OPERATOR INSTRUCTIONS] We do have a follow-up question and it comes from the line of Victor Miller with Bear Stearns. Please proceed.

John, could you just remind us where, as you do contemplate any potential asset sales, could you remind us of your net operating loss position right now that you could use effectively to offset any gains that you have there?

At the end of the year, we had about 166 million of NOLs. We anticipate using about half of those for the January 1 sale of the San Jose-San Francisco market. That will leave us about $80 million-plus of NOLs at the end of the first quarter.

Thanks very much.

Thank you.

Our next question comes from the line of Anthony DiClemente from Lehman Brothers. Please proceed. Your line is now open.

Hi, thanks for taking the question.

Just a question on, I believe you had mentioned earlier in the call about your radio assets. You know, you mentioned that you would add more radio in markets if you don't have a TeleFutura -- in markets that you don’t have a TeleFutura affiliate. I was just wondering if it makes sense in any markets to divest stations and if so which markets would you consider divesting if any?

And then second question, just with the possibility of the UVN transaction, you know, some people out there think there's a possibility some of these UVN affiliates will be up for sale, and with Entravision a logical potential buyer, I'm just curious, would it be more attractive to buy a Univision affiliate in markets where you already have a TeleFutura or does it still make more sense to buy an English speaking stick station and then convert that to a Univision affiliate in markets that don't have a Univision affiliate? Anyway, hope you can help me out. Thanks.

I'll try to answer your question as best I can, Anthony.

Number one, what we said earlier about our strategy with regards to expanding our media footprint is that we're more focused on markets where we operate television and radio, and we want to do, you know, whatever we can to expand our presence in these markets, you know, either adding more radio, if it's available, or adding a TeleFutura affiliate if we don't already have one. So that's number one.

With regards to any potential acquisition that the new Univision owners may make, if that's possible, if they're television assets, we certainly would be interested in looking at those assets given our expertise and our history in operating Univision and TeleFutura affiliates. Did I answer your question, Anthony?

Sure.

And then how do you stand on your strategies of buying sticks and converting them either to Univision or TeleFutura?

Sure. We certainly continue to do that. I mean we, you know, I just identified two construction permits that we've acquired and those will be sticks soon, and we will operate those as Univision affiliates.

And we continue to look for sticks in emerging Hispanic markets where we could launch first the Univision affiliate, and then at some point add the TeleFutura programming to the market. Right now, we currently operate 23 Univision affiliates and 18 TeleFutura affiliates and certainly that will be growing as we move into 2007.

Okay. I got it. Thanks.

Thank you. We do have a follow-up question, it comes from the line of David Miller from Sanders Morris Harris. Please proceed. Your line is now open.

Oh, yes, sorry, John, I had a follow-up question on the NOLs but you already answered that in your previous remarks. So you can move on to the next question. Thanks very much.

Thank you. Mr. Ulloa, there are no further questions at this time. I would like to turn the call back to you. Please continue with your presentation or closing remarks.

Thank you, Natalie.

This concludes our first quarter investor conference call. We look forward to speaking with all of you in August, when we report our second quarter results. Thank you.

Thank you. Ladies and gentlemen, that does conclude our call for today. We thank you for your participation and ask that you all please disconnect your lines. Have a great day, everyone.