Entravision Communications Corp (EVC) 2006 Q2 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to the Entravision Communications Second Quarter 2006 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 today, Thursday, August 3rd, 2006.

I would now like to turn the conference over to Mr. Walter Ulloa, Chairman and Chief Executive Officer. Please, go ahead, sir.

Thank you, Susan. Good afternoon everyone and welcome to our second quarter 2006 teleconference. Joining me on today's call is Phillip Wilkinson our President and Chief Operating Officer, and John DeLorenzo, our Executive Vice President and Chief Financial Officer. Before starting the call, we must 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 impact actual results. In addition, this call is property of Entravision Communications Corporation. Any redistribution, retransmission or rebroadcast of this call in any form without the expressed or written consent of Entravision Communications Corporation is strictly prohibited.

Also this call includes certain nonGAAP financial measures. These nonGAAP financial measures have taken into account the pro forma treatment of the Company's sale of it's radio assets in San Francisco, California in the first quarter of 2006. Whereby the Company has elected to eliminate it's broadcasting results from that market for the prior year period, so that comparisons between the periods will be meaningful. It also excludes noncash stock-based compensation expenses related to the Company's adoption of Statement of Financial Accounting Standards number 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 measure. That reconciliation was included in the Company's press release reporting results for the second quarter of 2006, is posted on the Company's website and filed with the SEC in a Form 8-K.

Our results for the second quarter highlight the momentum we continue to experience across our media asset platform. We once again exceeded our guidance and outpaced the general market. As a result of our strong media asset base and the increasing demand for Spanish-language media content among advertisers and consumers. All of our divisions experienced solid revenue growth during the quarter. As we monetized our ratings gains and commanded higher rates across our television, radio, and outdoor businesses. Looking specifically at our consolidated results for the second quarter, pro forma revenue grew 8% to 79.3 million. Consolidated adjusted EBITDA increased 15% to 31 million. And free cash flow for the quarter grew to 15 million, an increase of 9% over the second quarter 2005. Earnings per share was negative $1.60 per share for the second quarter. However, excluding the impairment loss and related income taxes earnings per share for the quarter was $0.04 per share exceeding guidance by $0.01 per share.

Taking a look at our specific operating segments, our television division reported a net revenue increase of 12% for the second quarter compared to an 8% increase in the same quarter, 2005. Our revenue growth exceeded the television industry, which grew by 5% during the second quarter, according to the Television Advertising Bureau. Excluding political revenue, the television industry as a whole grew by 2% as reported by TVB. Local revenue in our television division grew 4% in the quarter, and national revenue was up 23%. Top advertising categories in our television division in the second quarter included automotive, services, telecom, fast-food restaurants, and retail. Four of our top five television advertising categories were up double digits over second quarter 2005.

Automotive, our largest advertising catagory, continued to thrive with 29% growth over last year's comparable quarter. The Hispanic new car buyer continues to be the star demographic in the automotive industry. Our top line revenue growth at our television division was primarily driven by our focus on monetizing television station ratings, gains(ph) and our ability to command higher rates. Our average unit rate for the television business was up 13% in the quarter. Our research and sales teams have been working diligently to ensure we are optimally positioned to capitalize on the continued growth of our audience base. The efforts of our sales teams are being supported by Univision's inclusion in the NTI, which has helped create a more level playing field with the English language networks. In fact, last week in prime time the Univision Network averaged more viewers nationally in the 18 to 34 demo than any other network except Fox. Given this increased attention at the national level, we are expecting a halo effect to our local markets.

Our performance in the quarter also benefited from the broadcast of the 2006 World Cup in June on our Univision and Telefutura television stations. Total World Cup advertising on our television stations for the second quarter 2006 represented about 6.3 million of gross revenue, 5.4 million net revenue, versus about 1.6 million of gross revenue, 1.4 million of net revenue for the division from the 2002 World Cup. The Univision Network saw a 118% increase in overall household viewing from the 2002 World Cup. Entravision's [indiscernible] market saw an overall increase of 103% in World Cup household viewing over 2002. In Las Vegas, one of our fastest growing markets in every category, we saw 121% ratings increase in the 2006 World Cup versus 2002. Washington, D.C., another terrific Entravision market, also saw triple digit growth since the 2002 global sporting event, increasing its World Cup ratings 166%, not surprising given it's diversity that our nation's capitol has a strong appetite for World Cup soccer.

New business is the life blood of growth. During the second quarter, we added over 150 new advertisers who spent more than $10,000 each with our television properties. We're also pleased to report that we continue to see increased advertising spending from existing clients including General Motors, [inaudible] Insurance, Verizon Wireless, Jack in the Box, and Western Union, highlighting the value proposition our television assets continue to offer advertisers. We continue to see outstanding results from our Univision affiliates group as reported most recently by the Nielsen May 2006 sweeps where our ratings sign on to sign off groups 13% in the key adult 18 to 34 demographic.

Looking at our local news franchise, we continue to generate strong ratings across our newscasts. 13 of our early newscasts ranked number 1 or 2 among adults 18 to 34 regardless of language. And 9 of our early newscasts ranked number 1 or 2 in their time period among adults 18 to 49 regardless of language. This ratings success positions us well as we move into the height of the political season. Local news programming is essential content for the political industry.

Turning to our radio division, we reported pro forma revenue growth of 4%, outperforming the industry which reported a loss of 1% according to the Radio Advertising Bureau. Once again, our radio division has exceeded the performance of the industry and their peers. Radio's outstanding performance during the second quarter was attributable to local advertising growing 6% while national advertising was down 2% for the quarter. The industry reported an increase of 1% for local and a decrease of 2% for national as reported by the RAB. We saw positive growth in each of our top five categories. Automotive, travel and leisure, retail, services, and telecommunications. These 5 categories represent 57% of the total revenue for the quarter.

Automotive was once again our number 1 radio advertising category. We saw a 31% increase in tier II auto dealer association spending. We also saw significant growth of 17% in the product brand name category led by Casseeky(ph) cheese, Coke Cola, and Dr. Pepper. In addition, we broadcasted the World Cup on radio stations in Los Angeles, Las Vegas, Dallas, and El Paso. We generated $1.7 million of gross revenue and $1.4 million of net revenue from advertising sponsorships of the broadcast. Our radio division added 37 new clients during the quarter that spent more than $10,000 each in the quarter.

Looking at the recently announced spring book for the markets that have been released to date, I am pleased to report a 5% share increase from adults 18 to 34 over our winter 2006 book. Those ratings reflect Arbitron's new radio listening methodology. Entravision's markets affected by Arbitron's changes in methodology are Los Angeles, Denver, Dallas, Albuquerque , El Paso, McAllen, Phoenix, Miami, Huston, Sacramento and Tuscon.

On February 2nd, we launched Piolin Por La Manana in eight markets. The spring Arbitron's book is the first completed ratings period since the launch of Piolin . As we expected, we saw solid ratings growth in the spring 2006 book in 5 markets released to date. In Denver, Palm Springs, and Stockton, Piolin 's morning show is number 1 in our key demo 18 to 34 regardless of language. In both Sacramento and Modesto, the morning show is number 1 in Spanish and number 3 regardless of language. Piolin 's strong performance has helped us increase our Monday through Sunday 6 a.m. to 12 midnight average quarter hour share on adults 18 to 34 on each of our radio stations that broadcast Piolin Por La Manana, compared to spring 2005. We have experienced 194% ratings increase on KXPK, The Peak, in Denver and a 64% ratings increase on KMIXFM in Stockton, California as a result of the Piolin 's show. The amazing performance by Piolin has generated increased average quarter hour share throughout the week and this growth will lead to better revenue opportunities for our radio business in the future.

In Los Angeles, the number 1 Hispanic market in the country, we saw slight ratings decline in the just released spring Arbitron book. However, revenue growth in Los Angeles remains strong, and the ratings results for our Los Angeles cluster is not inconsistent with other spring ratings books as most of our promotional dollars are invested in the summer around our major annual promotion Reventon Super Estrella. This years Reventon, held last Saturday, broke all records including attendance, revenue and profit. Almost 50,000 Super Estrella's attended this year's Reventon at the Los Angeles coliseum.

Yesterday we entered into an agreement to sell our Dallas radio stations to Lieberman Broadcasting for $95 million, this is a highly accretive transaction for us as we exit a noncore market. We expect this transaction to close during the fourth quarter, 2006. In the meantime, we will examine the best use of the proceeds from the sale of the Dallas assets, including select acquisitions, debt repayment, share repurchases, and other forms of returning capital to the shareholders. As you know, we have been active buyers of our stock in the recent past.

Our outdoor division reported revenue growth of 7% in the second quarter churned by local revenue which increased 8% and national revenue which was up 7%. Top performing categories for outdoor during the quarter included services, food products and auto manufacturers. New billboard advertisers for the quarter included Radio Shack, Visa, Mercedes Benz, and the Cartoon Network. Sales from the top 10 new clients during the quarter represented approximately $995,000 or 10% of our total revenue for the period. Average unit rates were up 18% in outdoor during the quarter compared to the same period last year. We are pleased with the performance of our outdoor business in the second quarter after a sluggish first quarter.

We attribute our continuing revenue and cash flow growth in all of our divisions to a number of factors, including more intensive sales training for our sales management and the sellers whereby our sales trainers have significantly expanded the number of weeks dedicated to our markets and divisions. Additionally, for the second consecutive year we have instituted a client incentive program that motivates clients to increase their advertising expenditures with Entravision year-over-year. But most importantly our success is a result of leadership by example as our general managers spend the majority of their work week in front of advertisers and not behind the desk.

In conclusion, the steps we have taken to further strengthen our content and sales and marketing resources have produced steadily improving results, well ahead of the general market. Coupled with our focus on controlling costs, we are delivering very healthy cash flow gains. The recent changes in audience measurement and the broadcast of the World Cup have further highlighted the power of Spanish language media content to the advertising community. We will continue to seek opportunities to best position our assets within the fastest growing Hispanic markets to take advantage of the growing demand among advertisers to reach Hispanic consumers. Overall we remain optimistic about the second half of 2006 given the current strength we are seeing from our television and radio station groups as well as incremental political revenue we expect to generate this fall.

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. As Walter discussed, our second quarter was strong indeed, and we are seeing that strength continue in Q3. With our TV revenue up 12% in Q2, we outperformed the industry growth of 4.6 by over 250%. And, the main takeaways for our TV business in Q2 were; TV local sales grew 4% and national sales were up 23%, up to $22 million an all-time record in national sales. TV ratings growth in May of 13% overall sign on to sign off among adults 18 to 34 and our news ratings showed tremendous growth among adults 18 to 34 up 25% year-over-year. Also successful World Cup broadcasts producing hugh audiences and big sponsorships from clients like, GM, Verizon, SBC, Toyota, Jack in the Box and others, as mentioned spending $5.4 million in all of which 40% was incremental revenue. Then lastly, the biggest takeaway from Q2 TV was that our auto category grew 29% in revenue year over year.

While World Cup soccer helped drive national automotive revenue in June, local automotive experienced solid consistent growth throughout Q2, up 30% in April, 18% in May, and 40% in June and the trend continues. We are up 21% in July for auto advertising. In radio, we saw 4% growth versus the industry of minus 1. World Cup soccer radio sales capped at $2.1 million in gross of which 1.5 was incremental. And all top five advertising categories were up in revenue in Q2. Our local revenue, which is 77% of the total revenue for radio was up 6% in Q2. We had double digit growth from our group of top 20 advertisers.

And the really positive takeaway from our Q2 radio business is that our commitment to providing our listeners with top rated radio personalities and developing unique radio formats is paying off. Most notably, Piolin which launched in eight of our markets last February, has become the number 1 Spanish language show in morning drive in all markets where Arbitron has released to date. Super Estrella ratings saw double digit growth in Denver, Palm Springs, Sacramento, and Modesto, Tricalora(ph) stations in Phoenix, Dallas and Monterey grew significantly. And our newly launched Jose format was greeted with more than 100% growth in Sacramento, Monterey, Denver, and is trending number 1 in El Paso. And all this in the first complete book among adults 18 to 34 in Arbitron.

In summary, as we entered the second half of the year with considerable momentum and with our focus on monetizing our recent rating successes, we will continue to fuel our cash flow performance.

And now I'd like to turn the call over to John DeLorenzo, our CFO, for his comments on our great quarter and our positive outlook.

Thank you, Philip, and good afternoon everyone. As Walter and Philip have discussed, we reported results that exceeded our guidance for the quarter. Pro forma net revenue was $79.3 million, up 8%. Pro forma consolidated adjusted EBITDA increased 15% to $31 million. Free cash flow, which we define as consolidated adjusted EBITDA minus capital expenditures, cash interest, cash taxes plus interest income was $0.14 per share. Company operating expenses for the quarter increased to $44 million, an increase of 0.8 million or 2%. Excluding the operating expenses incurred during the second quarter 2005, on our radio stations in the San Francisco, San Jose market, that we sold in the first quarter of 2006, operating expenses would have increased 2.1 million or 5%, which was in line with our expense guidance for the quarter. Of the 5% expense increase, 1% is attributable to expenses expanding our business such as the Fox station in Matamorris(ph) and the outdoor division in Tampa and 1% relates to expenses associated with radio stations sold. The remaining 3% is core expenses.

Corporate expenses for the quarter increased to $4.4 million, from 4.3 million an increase of $100,000. The increase was primarily attributable to increased noncash stock-based compensation. Excluding noncash stock-based compensation of 200,000 and 100,000 for the three-month period ended June 30th, 2006 and 2005 respectively, corporate expenses were flat, which was in line with our expense guidance. It should be noted that in furtherance of general SEC guidelines requiring the use of non-GAAP measures, the Company no longer provides broadcast cash flow margins.

As we reported in our press release, we entered into an agreement to sell the assets of our Dallas radio cluster to Lieberman Broadcasting for $95 million, and we expect to close the transaction in the fourth quarter of 2006. Included in the sale is station KBOC a recently acquired move-in station that was completed on July 26th, 2006 at which time the company made a payment of $8 million to finalize the purchase. As a result of the sale of our Dallas cluster, the Company conducted an appraisal of our radio division for the purpose of determining impairment under a statement of financial accounting standards number 142, goodwill and other intangible assets. As the Dallas sales price was lower than the amount of our previous appraisal.

Based upon the results of the appraisal, the Company determined that an impairment at the radio segment as the fair market value of the radio segment assets were below the carrying value of those assets. The company reduced the amount of intangibles associated with the radio assets, resulting in an expense impairment of approximately $190 million.

Free cash flow, which was $15 million or $0.14 per share in the second quarter of 2006 up from $0.11 per share in the second quarter of 2005. The EPS for Q2 '06 was negative $1.60 per share compared to $0.03 per share in 2005. Adjusted for the impairment expense and the associated income tax effect, EPS for the quarter was $0.04 per share exceeding guidance by $0.01 per share.

Turning to our balance sheet, as of June 30th, 2006 our total debt was $506 million, and our trailing 12-month EBITDA consolidated adjusted EBITDA was 101 million. Our net debt to EBITDA was 4.8 times. Cash on the books was 20.3 million at June 30th, 2006.

Turning to our outlook for the third quarter, 2006, we are once again providing pro forma guidance information. With the sale of the Company's radio assets in San Francisco, San Jose California, in the first quarter of 2005, the Company no longer has any remaining broadcasting operations in that market. As a result, in accordance with company policy, the Company has elected to present its guidance on a pro forma basis by eliminating its broadcasting results for that market for the prior period, so that comparisons between the periods will be meaningful. Amounts excluded from net revenue and operating expense for the third quarter, 2005 are approximately 1,825,000 and 1,250,000 respectively.

Similar to the first and second quarters, expenses for Q3 '06 will include noncash stock-based compensation to comply with statement of financial accounting standards number 123 share based payment. The Company expects approximately 200,000 in operating expenses and 300,000 in corporate expenses related to stock option compensation in the third quarter of 2006. For the third quarter 2006, we expect net revenues to increase by mid single digit percentages and operating expenses to increase by low to mid single digit percentages as as compared to third quarter 2005. Excluding the noncash stock based compensation, corporate expenses are expected to be flat compared to the third 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 7.8 and 8.2 million. We currently anticipate additional noncash interest expense of $3 million related to a decrease in the value of our interest rate swap agreements. We expect CapEx to be between 7 and 7.5 million, as reported on our last call, we finished our digital upgrades by the end of the second quarter. We expect total CapEx for the year to be in the low $20 million range with digital upgrades to be $8 million, including 1 million for the radio, HD digital, with the remainder being maintenance CapEx. Third quarter, earning per share is expected to be in the range of $0.05 per share based on 105.4 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.

John, these are essentially for you, could you talk a little bit about, as we look forward and we try to pro forma numbers, essentially what the multiple was from the seller side for Dallas, what the net proceeds are? I guess you have substantial NOLs. And then, maybe you could talk us through where your debt would be pro forma? And then, John, you had a $14 million change in deferred taxes, I guess, I noticed in the cash flow statement. Could you could you talk a little bit about what happened with that swing in the quarter? Maybe you already mentioned it. But, if you could go through that, thanks.

First off, the multiple is a little bit deceiving because we just, as I mentioned, put on the station KBOC, which is a station that we've been trying to move into the market for -- since we've actually got into the Dallas market. So that station will be included in the purchase price. However, it just went on the air this past week, so there's no cash flow associated with it. From a perspective of total multiple based on the existing cash flow, which I said doesn't include the KBOC, we're looking at about 33 times.

What's the revenue associated with that cluster right now?

On a trailing basis, we're about $7.5 million and about $4.7 million of OE.

And that's on a trailing basis as of the second quarter?

As of the end of the second quarter, yes.

And so -- and I imagine with NOLs you've got substantial NOLs and net proceeds will be --

Right. We'll have that covered. There some money for alternative minimal tax. But, it should be more than 1 million or 2 dollars I would think, if there's any.

So the total proceeds will almost be dollar for dollar?

Almost. There's a little bit of closing expenses and some brokerage expenses, but it'll be higher than 90.

Where is your debt now? What did you have [inaudible] --

We're at 506 with $20 million in the bank. But as I mentioned in my prepared remarks, we spent $8 million for the final payment towards that KBOC. So figure about $12 million cash in the bank and $506 million of debt. So you can assume that about $90 million will go. We'll be in the low 4s.

Just a comment on the reversal in deferred taxing, the $14 million change there?

That's just related to the writeoff.

So it's not cash?

Yes. It's the writedown of the intangibles due to the impairment.

Victor, it's Walter. If you separate out KBOC, the multiple on the existing stations is about 23 times.

Thank you.

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

A couple questions. First, I know you gave your comparisons in the second quarter versus the industry, but do you have any sense as to what your markets grew, the general market grew for TV and radio in just your markets? I'm just trying to get a sense as to whether there's much diversion there versus general industry growth. As you look forward in the third quarter, obviously you don't have so much World Cup that came in in July, but just in terms of any changes you're seeing in terms of underlying trends by segments? And I guess finally, given the strong news performance that you're seeing, any update as to what you think your political revenue expectations might be this year?

I'll try to take that one, James. It's Philip. We see the same kind of trends nationally. The TVB reported 750 television stations across the country had 4.6 growth for Q2, that's all in national local. As we just finished telling you, we finished up here at 12%, and that's -- that pretty much tracks the regions and the markets. I mean, we have some softer situations in certain parts of the country, but as we go, so goes the market. The other stations in those markets. As far as kind of ringing through that World Cup revenue and headed into July, we had very strong -- continue to have very strong growth in the automotive category, the telecom category, retail category on both TV and radio on the broadcast side. We had a great June as a result, as we indicated in the prepared remarks, and on the national side for TV due to World Cup.

But the interesting thing for us and the encouraging thing for us is actually we're kind of bucking the trend here with the industry. Everybody's talking about how automotive category is soft across the country, and, in fact, we're seeing several pockets of success for the domestic guys. They kind of track our markets. I mean, we have -- Hispanic share of new car sales were up in Vegas and San Diego and major brands in Orlando and McCowan. Lo and behold, those markets were up significantly in terms of our auto business. As we indicated overall in Q2. But in July, we see that continuing. Each of the markets, I just mentioned, we were up north of 20% in our auto category, starting in Q2 and that's rolled over into July. So we're hopeful for the rest of Q3, as we go in here, that will continue in that most important category of ours which, as you know on the radio side represents about 15% of our revenue and, on the TV, it's a little over 30%. But we're still, we're holding strong in travel and leisure, and retail and telecom. Hopefully that answers that question. Then the last part was?

Political. One follow-up. How much World Cup actually gets booked in the third quarter for radio and TV now that that's done?

We have roughly 20% of the overall cup money come into July for those nine days on the calendar.

So that's 20% of the numbers you gave before?

Right. Right. And then on the political side, we finished about $500,000 to the net on second quarter on TV, and we have roughly 250 on the books in third quarter. We've got hard pennies of another 3 to $500,000. It's kind of a wild card in third. We're in front of a lot of campaign managers. And we're expecting a little bit better political advertising client here coming up in the next couple of weeks. We've just got some avail on a couple pieces of business in Colorado -- or New Mexico and California, and so it's hard to pick that third quarter number but, we think it might end up somewhere around $1 million. Just to back up again, we had about 500,000 in TV in Q2 and 156 in radio. So call it 650. And the current BOB for third is about 350. But again, I think it could go as high as 8, 900, maybe a million dollars given some of these races and how they're starting to stack up and the penny we're looking at.

James, it's Walter, the total number of World Cup revenue, net revenue in our books in the second quarter is about 6.8 million. That's about 5.4 on the TV side and about 1.4 on the radio side.

Great.

As Phil said, that's about 80% of the total World Cup revenue for the Company. The remaining 20% will hit in the third quarter in July.

Great. That's what I was looking for.

This is John deLorenzo. Back on Victor's question, you were asking about multiples on the Dallas stations. The existing cash flow which doesn't include cash flow [inaudible] KBOC, would be at 33 times trailing multiple. If you were to back out our purchase price of KBOC, it would be in the high 20s. 26, 27 times.

Our next question comes from the line of Jonathan Jacoby from Banc of America Securities.

Good afternoon. Thanks for taking the question. First maybe a little bit more color as we head to the third quarter. Radio and outdoor showed some nice improvements in 2Q over 1Q, I was wondering if that's the trend going into the third quarter? Also, have you had any discussions with the I guess the new owners of Univision? How do you think this could impact your operation? And then lastly I haven't really run through this but back of the envelope, I'm curious how your core TV business is doing? It seems like all the growth came from -- and I know there's a squeeze-out effect but came from political and World Cup in Q2. Thanks.

This is Walter. The first part of the question, Jonathan -- or the second part of the question was about any discussion with the World Cup owner -- I mean, with the new Univision owners?

Right.

And the answer is no. We've had some informal talks but nothing formal. And your follow-up to that was how do we expect this new ownership to impact Entravision?

Right. Is there any --

No. It's business as usual. There's no change of -- any change of control with regards to Univision does not affect our affiliation contract. And the second part of the question?

Our pacing.

Not how you're pacing. I'm just curious sort of if you can give a little bit more color -- we saw some sequential improvements in radio and outdoor and I'm wondering if that's continuing into the third quarter.

Well, I'll just say this, and maybe Philip has some follow-up. It's still early in the quarter. We just finished July. We've got relatively good momentum. We think the third quarter is always one of our toughest quarters for a loft reasons, including weather, vacations and all the distractions that come from back to school. It's going to be -- it's going to be a tough quarter like all of them are.

And then just the core TV business sort of, it looks like if you backed out -- and part of the problem is that you have all this squeeze out. But if you backed out World Cup and political in 2Q, I'm wondering sort of how you feel your core business is growing?

You mean the television business?

Yes. The core TV business, yes.

Well, like I said, we've got momentum in television, and we think that we'll be able to grow our business in third quarter, but I don't think we want to speculate beyond that.

As we said earlier, the July here -- rolling into July here the beginning of the quarter, absent of the World Cup revenue in all the categories we talked about, we're seeing strength. In fact in automotive, we're seeing double digit strength. One thing that needs to be pointed out, Jonathan, I think it's crucial, you talked about the squeeze down, is the World Cup is a terrific broadcast event like no other sporting event in the word. The fact of the matter is, those first two weeks, those two games on Univision, one game Prime Repeat and Telefutura, that's our inventory backed during those 6 hours by 60%. We run the calculation backwards and forwards, and we're 38, 40% incremental, and that's the plain facts.

So -- we did do quite a bit in terms of the overall revenue in Q2 and a lot of that in June for World Cup. It buoyed the national business, and as Walter said, and we talked about 20% rolling over into July, but it really took away a lot of inventory, and so we had to push a lot of local advertisers out who couldn't afford, certainly to be in that day part when we were running the World Cup. You you have got to consider that, A. B, when we look, again, to wash out the World Cup revenue we look at July, we've got strong business in our TV business.

Our next question comes from the line of Marci Ryvicker of Wachovia Securities.

Hi. First, two questions. The first, can you repeat what arled World Cup is incremental? I think you said it's 40% for Tv and I missed what you said for radio and also talk about how incremental political is? And secondly, on CapEx, I think, John, you said that 8 million released to digital for the year on your [inaudible] in Q2. I think you did 3.3 million in Q1. Does that mean you did 4.7 in Q2 and then you're done?

As regards to the first question, Marci, we stated earlier that about 40% of the World Cup revenue was incremental for television. And over 50% for radio.

What about political?

The political question was?

How much of political is incremental?

Oh. Political incremental, we figure about 50%.

For both?

For both, yes.

Radio and TV?

And on the CapEx question, about 2.3 million in Q2.

OK.

Some of the bills obviously come later, and CapEx is based on cash, when we pay them, so even though it was due to be completed by the second quarter, we're still paying some bills coming in. Plus there's also radio HD which doesn't have that July 1st deadline. The televise does. So there will be some spending under the third and fourth quarter as well as into next year on digital for radio.

Great. Thank you.

One last comment on the incremental political. We're not yet into the height of the season, which will come in October. September, October, so that's when we'll have a more difficult time clearing inventory, and that's when we'll get a better sense of how much is truly incremental. But just as a rule of thumb, we look at about 50% to be the number.

Great. Thank you very much.

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

Thanks for taking the question. With the sale of your Dallas station now done, do you expect that there's going to be further trimming of your assets or are you at this point pretty comfortable with your portfolio of radio and TV assets? And, on outdoor, you mentioned in your release that part of the 7% year-over-year growth was due to your expansion into Tampa. I was just wondering what would be the revenue growth in your outdoor business in 2Q if you excluded Tampa? So more of a same station number, thanks.

Eileen, as to the first question, this is Walter, we -- back to [inaudible] want to take the second question about Tampa?

Yes. We had about a little less than a quarter of the total revenue growth, was the result of all of the recent bus deals, including Fresno, Sacramento, and Tampa.

Okay.

Eileen, as to any further divestitures, we're pretty comfortable right now with our portfolio. We have announced the sale of a Tuscon, which is a minor noncore market for us, but we're quite comfortable right now with our portfolio and the divestiture of Dallas.

Thank you very much.

Our next question comes from the line of Lee Westerfield from BMO Capital Markets.

Good afternoon. Walter, I had three questions and wanted just to clarify. I would take it from your last comment you're not actively looking into television [indiscernible] station in Puerto Rico at this point?

No, we're not, Lee.

The second question relates to the radio, and specifically the Piolin syndicated. The ratings again here in the second quarter, which is 60-plus percent ratings increases, when should we begin to see revenue conversion of some of those ratings in ball park terms? How much impact at this stage could we be looking forward to as we turn the corner into 2007? And then I have one follow-up question, please.

To your question about the revenue impact, I think the full impact will come -- probably four to six months from now. But we're seeing an impact already in some of our markets. For example, in Denver where we just had just amazing performance in that market with our ratings in the morning up 194%, we're already seeing that rating success being converted to revenue. We have great momentum going right now in the Denver market with our radio business.

And I just wanted to clarify one final point, and I understood you saying that you'd had no formal conversations with the prospective new owners at Univision. In terms of business that they've done for you in the past selling national spot television, would you expect that Univision would still be doing that for you or would that be outsourced or how would that be conducted over time?

We expect Univision to continue to do the national spot representation for the Company. We don't see any change in that area. They do a terrific job for us, so we don't see that changing.

That's helpful clarification, gentlemen. Thank you very much.

Our next question comes from the line of Kit Spring from Stifel Nicolaus

Any interest in the potential Univision radio sales if they happen? And maybe a better question is, why don't you sell more stations considering you've got such a high multiple? It's a pretty high multiple. Just on the political, can you remind us what political was in 2004 overall? Thank you.

The total political in 2004 -- that's a presidential year, and that was over $7 million. I'm sorry. $6.4million total for 2004. But again that was not a presidential year. The closest, I'll call it, comparable that we have to 2006 would be 2002, and that year we had about 5.5 of political, but we don't expect this year to be as big a year in political. We were looking more like around 4 million this year, 3.5 of television and about 500 of radio. And that's because 2002 was a bit of an anomaly. You had a Mexican-American running for governor in the state of Texas, and he spent a lot of his own money.

And how would that 4 million be split out amongst the quarters?

That 4 million amongst the quarters, will, I'll give it to you this way. Probably about 2.2 through June 30th and about -- and the remainder through the rest of the year. So 1.8 from now through November the 4th or 6th, 7th.

And why was it so much? Isn't it unusual to have it weighted toward the first half?

Well, that number that I gave you, that 2.1 in the first half, also includes money that has been booked in third, so that was like our BOB through June 30th but also included money in third. But it will be weighted. It should be weighted more towards the second half, but again we don't know. In fact we were having discussions about that earlier. Just our uncertainty with regards to political revenue and how it might come in. It could be bigger than 4, we could be surprised. But we like to be conservative about those estimates because they are a little tricky. And you had another question?

Yes. On the radio station sales, any interest if Univision assets come for sale? Why wouldn't you try to sell more assets at such high multiples that you got for the Dallas station?

Well, as far as the potential radio divestiture by Univision, it's all speculation, and I really don't want to comment on any speculation with regards to that. We think it's tremendous -- radio division, and we think they should keep it. But as far as selling any further divestitures, we certainly are pleased with the multiple that we gained from the sale of the Dallas assets, but we are -- as I said earlier, quite comfortable right now with our media asset base, and we have no other plans right now to divest in anything assets beyond Dallas and Tuscon.

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

Hi. Thank you. Just on the stock, I mean, you continue to outperform in your markets and I think make pretty disciplined and rational decisions on capital. I mean, the sale being one of them. I guess my question is just now, I guess pro forma, the sale, I'm getting a leverage ratio of closer to four times. And I think your balance sheet is strengthening. At what point do you decide that maybe you look at buying back your stock at these levels as opposed to saving your dry powder for acquisitions or using it for anything else?

This is John. Well, fortunately, because we don't close the Dallas deal until the end of the year, we have plenty of time to make our decisions and see what comes between now and then and see what the market conditions are and our stock prices at the end of the year, so it's a decision we just don't have to make today.

Our next question comes from the line of David Joyce from Tabak, please proceed.

I was wondering if you can talk about any assumptions that were used in the valuation of [inaudible] , and secondly, if you have any material on line [inaudible] at this point related to your stations.

The first part of the question, basically, as you know, you look at your assets on an annual basis and, if there's any kind of a trigger event, you may do it more regularly. We had an appraisal done at the end of October last year for our year end, and the Dallas assets were sold or appraised higher than the sale price, so it triggered the reason why we went out and hired BIA. So the answer to your question is, the valuation was based upon what we received from a third party, a nationally known independent appraiser to tell us what they believe our assets are worth.

And, David, as to the internet question, at this time, we have no material internet revenue to report, and I don't think that any of the media companies in America have any material revenue to report from their internet business. It is a growing business, and we expect to certainly grow that side of the business.

Thank you.

Our next question comes from the line of Mark Wienkes from Goldman Sachs.

Can you quantify the incremental benefit you think Entravision derives from owning outdoor in addition to radio and TV? So whether it's like the amount of revenue you get from bundled sales or cross asset deals or intercompany revenues? Or, I guess, more broadly, what is it that makes outdoor a critical strategic asset to Entravision?

This is John. I don't think we've ever made -- I think we've also said that the outdoor division is complimentary. It's not strategic to our core business, and we maintain that. We like the business. We believe there's opportunities within that business to continue to improve the value of that asset. So it's our goal to achieve that value through various means of what we can do with the asset as it currently sits and what we can increase the value of. As far as synergy, we did move the outdoor sales group into our radio operation in Mid Wilshire in Los Angeles, and we're working very hard to cross promote the two mediums between radio and outdoor.

We've also in Sacramento we've moved our outdoor sellers into our office, our radio sales office in Sacramento, and that's proven to be a plus for both radio and outdoor in terms of the exchange of information and sales leads. We're also doing the same in Tampa, where we moved our outdoor sales operation into our television operation in Tampa, and that's also benefiting from both the television experience and information in Tampa as well as the outdoor exchanging information with television.

Great. Just a quick follow-up. How many other bidders were there, if you can tell us, for the Dallas assets and how competitive were their bids across the group versus the winning bid?

I don't think we need to comment on that. It was an active process. We started it early in the year, and we talked to many different potential buyers along the way.

Thank you.

Our next question comes from the line of John Klim of Credit Suisse.

Good afternoon. Could you give us a sense as to how the advertising sale cycle has changed, if at all, over the past year or so? By that, I mean are you seeing buys closer and closer to air date? And, if so, why is that? Do you think?

Yes, hi, John, this is Philip. We have seen the actual start dates between the time the advertising starts and the time the order is placed really closed down quite a bit, which has hampered our visibility, and I think the reason for it is simply that the technology has allowed that. Everything that we use in the sales process from the avails to negotiating the rates is all going to be done electronically, and then you convert your proposal to your avail and your avail to your order all electronically and it can happen pretty quickly. We're seeing business, we just got a big piece of business out of an agency today and today's Thursday and it starts Monday. Typically, a year or two ago, that would have been booked a month, two months, possibly even further out in advance. It kind of hampers our visibility, but the fact of the matter remains the business is coming in. It's just coming in later and later.

Another trend -- and I saw a recent report that you wrote there about general market and particularly radio and the feeling that things are slowed down in general market, there's a price integrity, and softer auto and retail consolidation, but our business, despite those orders coming in slower and slower or later and later, our rates are up and our markets 3.5%. Our auto business has increased in the second quarter, and our retail ad category is up 3, 4% in the second quarter. So, we really don't trend like the general market absent how it's coming in.

Thank you very much.

Ladies and gentlemen, as a reminder, to register for a question or a comment, please press the 1 followed by the 4 on your telephone. Our next question comes from the line of Gordon Hodge from Thomas Weisel Partners.

Actually, I'm all set. Thanks. Nice quarter.

Thanks, Gordon.

At this time, sir, there are no further questions or comments.

Thank you, Susan. Ladies and gentlemen, this concludes our second quarter investor conference call. We look forward to announcing our third quarter results to all of you in early November. Thank you.

Ladies and gentlemen, that does conclude the conference call for today. We'd like to thank you for your participation and ask that you please disconnect your lines. Thank you, and have a great day everyone.