Entravision Communications Corp (EVC) 2006 Q3 法說會逐字稿

Ladies and gentlemen, thank you for standing by and welcome to the Entravision Communications Third Quarter 2006 Conference Call. [OPERATOR INSTRUCTIONS] I'd now like to turn the conference over to Walter Ulloa. Please go ahead, sir.

Thank you, Frank. Before we start the call, there appears to be a technical difficulty with the transmittal of our press release. We apologize for that technical glitch. We understand that the press release should be out momentarily. Good afternoon, everyone, and welcome to our third quarter 2006 earnings conference call. Joining me today is Philip Wilkinson, our President and Chief Operating Officer, and John DeLorenzo, our Executive Vice President and Chief Financial Officer.

Before beginning the call, we must inform you that this conference call will 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 the actual results. In addition, this call is the property of Entravision Communications Corporation. Any redistribution, retransmission or rebroadcast of this call in any form without the express written consent of Entravision Communications Corporation is strictly prohibited.

Also, this call will include certain non-GAAP financial measures. These non-GAAP financial measures have taken into account the pro forma treatment for the Company's sale of its radio assets in San Francisco, San Jose, California in the first quarter of 2006 and our Tucson radio asset in the third quarter, whereby the company has elected to eliminate its broadcasting results from those markets for the prior year period so that year-over-year comparisons will be meaningful.

Pro forma results also include non-cash 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 provided a reconciliation of these non-GAAP financial measures to their most directly comparable GAAP measures in its press release reporting results for the second quarter of 2006. The press release is available on the Company's Web site and was filed with the SEC in Form 8-K.

Our operating performance in the third quarter highlights the unique position of our asset platform, which is located in the fastest growing and most densely populated US Hispanic markets, the continued growth of the US Hispanic population and increasing demand among the advertising community to reach our audience. We have benefited from the impact of the World Cup, the adoption of new audience measurement methodologies and political advertising in the third quarter. In addition, our investment in our asset base, specifically our sales and marketing functions continue to pay dividends as we capitalize on our increasing audience share.

Overall, our results for the third quarter outpaced the general market and exceeded our guidance. All three of our operating segments outperformed our internal expectations. Looking at our consolidated results, third quarter pro forma revenue increased 6% to $78.3 million, consolidated adjusted EBITDA increased 9% to $28.5 million, and free cash flow per share increased $0.02.

Our television division reported a net revenue increase of 8% for the third quarter versus a 4% increase in 2005. Excluding political revenue, our television revenue grew 6%. Our revenue growth, excluding political revenue, exceeded the industry's which was flat during the third quarter according to the Television Advertising Bureau.

Local revenue at our television division increased 2% in the quarter, while national revenue increased 20%. For the industry, local revenue grew 2% and national was up 14.7%. Strong top line growth at our television division was attributable to our ability to command higher prices for our ad units. Our prudent investment in our research teams and sales staff training programs continue to show progress quarter after quarter.

Looking specifically at the third quarter, our top advertising categories included auto, services, fast food restaurants, telecom and retail. Auto, our largest advertising category, increased 12% driven by General Motors, Ford, Toyota, Chrysler, Dodge, Jeep and Nissan. Our television performance, specifically national advertising in the quarter, also benefited from the broadcast of the 2006 World Cup in July on our Univision-affiliated television stations.

Total World Cup advertising spend for the third quarter 2006 was approximately $1.2 million. World Cup revenues for both the second and third quarter totaled $8 million, an increase of 400% from 2002. The Univision network saw a 118% increase in overall household viewing from 2002 and an 80% increase since the 1998 World Cup. Entravision's World Cup [media] market saw an overall 103% increase in household viewing from 2002. For example, Las Vegas, a market on the rise in every category, saw a 121% increase in World Cup viewership. Washington, D.C. also saw triple-digit growth since the 2002 event, increasing viewership 166%.

Looking at new business, we added over 236 new advertisers during the quarter that spent more than $10,000 with our television properties.

Turning to the network performance, our Univision affiliate group continues to report share gains and increased viewership across our station portfolio. In the July sweeps from sign on to sign off in the 18-to-34 demographic, our ratings were up 13% and in the 18-to-49 demo, our ratings grew 17% over the 2005 summer book.

Investments in our local news franchises also continue to bear fruit as we strengthened our ratings in key demographics. For the July period, 14 of our Univision affiliates ranked Number 1 or Number 2 in primetime among adults 18-to-34, regardless of language, while three of our Univision affiliates delivered triple-digit ratings growth for adults 18-to-34, including Orlando, where year-to-year ratings increased 200%. Our early tracking for the November book indicates continued solid ratings growth in overall viewing, primetime and early news based on household viewing.

Looking at our local news franchises, we continue to generate strong ratings across our newscast, and nine of our early newscasts ranked Number 1 in adults 18-to-34 regardless of language, with six of these affiliates also ranking Number 1 adults 18-to-49 regardless of language. Overall, Entravision's early news ratings were up 18% adults 18-to-34, versus a year go and up 10% adults 18-to-49 during the same period. Local news is an important product for political advertising.

Turning to our radio division, we reported third quarter pro forma revenue growth of 4%, outperforming the industry which was flat according to the Radio Advertising Bureau. In addition, our revenue growth was even more impressive because we were up against tough comparisons from the third quarter of last year when our radio revenue increased 12%.

Radio's outperformance during the third quarter was attributable to national advertising growth of 3%, while local advertising was up 4%. Local revenue represented 78% of total revenue for the radio division in the third quarter. For the industry, local revenue was negative 2% and national was up 5% as reported by the RAB. Revenue was driven by solid growth from the automotive, travel and leisure, retail, services and finance categories, which are our top-five categories and represented 61% of total revenue for our radio division in the quarter. We saw continued strength in automotive advertising, up 23% from the third quarter 2005 based on increased spending by Chevrolet, General Motors, Toyota, BMW and Hyundai, as well as strong ad spending from advertisers including Wells Fargo and AT&T.

As noted during our second quarter conference call, we also broadcasted the World Cup games on our radio stations in Los Angeles, Las Vegas, Dallas and El Paso. During the third quarter, we generated approximately $300,000 of net revenue from advertisers based on six out of the 64 games airing in July. During the quarter, our radio division added 35 new clients who spent more than $10,000 each in the quarter. These 35 new advertisers represented over $1 million of new revenue in the quarter.

Turning to the summer ratings book, we saw a slight decrease in listening in our key demo adults 18-to-34, year-over-year in spring compared to summer. Looking specifically at some key areas in our summer book performance, we saw continued ratings increases in our Piolin Por La Manana markets. In the eight markets that we broadcast Piolin Por La Manana, Arbitron measured only summer ratings in Denver and Sacramento, two important Entravision radio markets. In Denver, Piolin is the Number 1 morning show regardless of language, in adults 18-to-34, 18-to-49 and 25-to-54. We have seen a 140% increase year-over-year in adults 18-to-34. Sacramento has seen its 515% increase year-over-year in the same demo, and Piolin is the Number 2 morning show regardless of language in adults 18-to-34, 18-to-49 and 25-to-54.

In Los Angeles, the Number 1 Hispanic market in the country, we saw a slight ratings decline in the just released summer Arbitron book. Although the Los Angeles radio market saw a decline in revenue in the third quarter, our cluster experienced strong revenue growth in the quarter. Also noted in our second quarter release and call, we have agreed to sell our Dallas radio properties to Lieberman Broadcasting of Dallas, Inc. At this time, we still expect this deal to close in the fourth quarter 2006.

Turning to outdoor -- for the quarter, our outdoor operating division reported 7% revenue growth driven by local revenue, which increased 30%. This strong growth in the third quarter for our outdoor division is on top of a 13% increase in revenue in the comparable quarter of 2005. Top performing categories included services, entertainment, healthcare, automotive and food. Our automotive category grew 92% in the quarter compared to last year's comparable quarter. The new advertisers for the quarter included Abbott Labs, Mercedes-Benz, Corporate, Movado Group Inc., Kern's juices and GEICO just to name a few.

Our top 10 new advertisers represented approximately $1 million in third quarter revenue. We also today announced that our Board of Directors has authorized a $100 million share repurchase program. This authorization increases our strategic flexibility as we seek to enhance shareholder value.

In conclusion, we believe we are well positioned to capitalize on the growing demand from advertisers and viewers for Spanish language media. We continue to actively invest in and pursue new opportunities to strengthen our media assets and are committed to our core strategy of operating television and radio stations in the same market. We are investing in our research and sales initiatives and remain focused on monetizing the recent ratings gains. With prudent cost controls and our ability to leverage our operating platform, we are in a strong position to generate additional cash flows. Driven by our sound operating fundamentals and the growth of the Spanish language media market, we expect to continue to outperform our industry segments.

At this time, I will turn the call over to John DeLorenzo, our Executive Vice President and Chief Financial Officer.

Thank you, Walter, and good afternoon everyone. As Walter has discussed, we reported in line with our guidance for the quarter. Pro forma net revenue was $78.3 million, up 6%. Pro forma consolidated adjusted EBITDA increased 9% to $28.4 million. Free cash flow, which we define as consolidated adjusted EBITDA minus capital expenditures, cash interest, cash taxes, plus interest income, was $0.12 per share.

Company operating expenses for the quarter increased to $45.7 million, an increase of $1.1 million or 3%. Excluding the operating expenses incurred during the third 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 to $2.4 million or 5.6% which was in line with our expense guidance for the quarter. Of the 5.6% expense increase, 2.6% relates to variable expenses associated with the increase in revenue and the remaining 3% is core expenses.

Corporate expenses for the quarter increased to $4.6 million from $4.3 million, an increase of $300,000. The increase was primarily attributable to increase in non-cash stock-based compensation of $200,000. Remaining increase of $100,000 was primarily attributable to higher wages and expenses associated with our compliance with the Sarbanes-Oxley Act of 2002, including internal controls.

Free cash flow was $12.4 million or $0.12 per share in the third quarter of 2006, up from $0.10 per share in the third quarter of 2005. Subject to a possible change pending the assessment of a potential error in our income tax provision in connection with the pending disposition of our radio assets in Dallas, the EPS for Q3 2006 was $0.00 per share compared to negative $0.10 per share in 2005. The EPS is inclusive of income tax expense on the sale of the Dallas radio assets. Net of the tax on the sale of the Dallas radio assets, EPS would have been $0.04 per share.

In connection with the preparation of our financial statements for the second quarter ending June 30, 2006, we are assessing whether there may have been an error in the calculation of our income tax provision in connection with the pending disposition of our radio assets in Dallas. We are still assessing whether there was an error and the amount of any such error.

Accordingly, certain numbers presented here are subject to change upon the conclusion of such assessment. If there were an error, it was an understatement of income tax expense in the second quarter in the amount of approximately $0 to $6.5 million, based upon our current best estimates, which would have resulted in a net loss applicable to common shareholders being overstated by such amount for the three and six-month period ending June 30, 2006, as previously reported.

The correction of any such error in the third quarter would result in income tax expense that would be larger by such amount and result in net loss applicable to common shareholders being understated by such amount for the three and nine-month periods ending September 30, 2006, as reported herein.

Any error and any related correction would only affect income tax expense and net loss, which does not affect operating income. In connection with the ongoing assessment of any such adjustment, we are still evaluating whether this will result in a restatement of our second quarter financial statements including an evaluation of whether this matter is material to the Company's financial statements for the three and nine-month periods ending September 30, 2006, or whether the Company will reflect the correction of any error in its results for the third quarter ending September 30, 2006 alternatively.

Solely as a result of the foregoing, we are also in the process of assessing the impact of this matter on management's assessment of internal controls over financial reporting related to current and prior periods. In connection with this assessment as of December 31, 2005, management had concluded that the Company maintained effective internal controls over financial reporting at such date.

We intend to complete the assessments described above in time to permit a timely filing of our quarterly financials report for the period ending September 30, 2006. The Company will make additional disclosures related to this matter as may be necessary or appropriate.

Turning to our balance sheet, as of September 30, 2006, our total debt was $504 million and our trailing 12-month consolidated adjusted EBITDA was $98.8 million. Our net debt to consolidated adjusted EBITDA was 4.9 times. Cash on the books was $21 million at September 30, 2006.

Turning to our outlook for the fourth quarter 2006, we are once again providing pro forma guidance information. With the sale of the Company's radio assets in San Francisco and Tucson markets in the first and third quarters of 2006, respectively, and the likely sale of the Dallas radio assets in the fourth quarter of 2006, the Company no longer will have any remaining broadcasting operations in those markets.

As a result, in accordance with the Company policy, the Company has elected to present its guidance on a pro forma basis by eliminating its broadcasting results from these markets for the period so that the comparison between the periods will be meaningful. The amounts excluded from net revenue and operating expenses for the fourth quarter of 2005 were $3.724 million and $2.335 million, respectively.

Similar to the first, second and third quarters, expenses for Q4 '06 will include non-cash stock-based compensation to comply with the Statement of Financial Accounting Standards 123 share-based payment. The Company expects approximately $300,000 in operating expenses and $400,000 in corporate expenses related to stock option compensation in the fourth quarter of 2006. For the fourth quarter of 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 compared to the fourth quarter of 2005. Excluding the non-cash stock-based compensation, corporate expenses are expected to be flat compared to the fourth quarter '05.

Depreciation and amortization is expected to be between $11 million and $11.5 million. Net interest expense for free cash flow purposes is expected to be between $7.5 million and $7.9 million. We currently anticipate additional non-cash interest expense of at least $1.5 million related to a decrease in the value of our interest rate swap agreements. We expect CapEx to be between $4.7 million and $5.2 million. As reported on our last call, we are finishing our digital upgrades this year. We expect total CapEx for the year to be in the low-to-mid $20 million range, with digital upgrades to be approximately $8 million, including $500,000 for radio HD digital, with the remainder being digital CapEx. We expect to close the sale of the Dallas radio assets to Lieberman Broadcasting during Q4 '06. Based on the proceeds, we have estimated pretax gain on sales to be recorded in Q4. It is expected to in the $8 million range.

Fourth quarter earnings per share is expected to be in the range of $0.10 per share based on 105.4 million shares outstanding, exclusive of the gain on the sale of the Dallas assets. Inclusive of the gain on the sale of the Dallas assets, EPS is expected to be in the range of approximately $0.14 per share.

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

Yes, sir. [OPERATOR INSTRUCTIONS] Our first question comes from the line of Victor Miller of Bear Stearns. Please go ahead.

Good afternoon. I appreciate you taking the call. A couple of things. The expenses, when you say low-to-mid single-digit, is that a bit of a tick-up in terms of what we've seen in the low single-digit kind of reported level for the year? And secondly, September, did you see the struggle in September that the radio and TV industry seemed to experience? And lastly, what leverage are you comfortable with in terms of actually utilizing that 100 million share repurchase program? Thanks.

Victor, the first question regarding the operating expenses, I mean, basically low-to-mid is probably in the 4% range and that's what we're looking at. That's fairly consistent. We've had some new initiatives, particularly in the television station in Matamoros [technical difficulty] is a Fox station that affected the last couple of quarters in outdoor plus advertising. But in general, like I've always said, I expect our operating expenses on a core basis to be in the 4% to 5% range on a long-range basis.

Victor, it's Walter. With regard to the question as to the leverage that we might reach as we execute the share repurchase program, our initial plan is to use the proceeds or a portion of the proceeds that we expect to flow from the close of the Dallas FM transaction.

Okay. How about September? It seemed like a lot of people were disappointed with September. Were you as well? Hello?

I'm sorry. Can you hear me now?

Yes, we can.

Victor, this is Philip. How are you? We did see a slowdown. I wouldn't say the brakes were completely on, but we saw a slowdown in September both for TV and radio. We ended up about plus one in radio for September and plus two, significantly below the July/August for both. The good news is that we've seen things improved since then and we actually - we've taken a hard look at our business in December, which as you know, there's no political in December. We're pacing up high single-digits, actually 10% on the TV side on local and mid-to-high single-digits in the other divisions.

Thank you very much, Phil.

You're welcome.

Our next question comes from the line of Jonathan Jacoby of Banc of America. Please go ahead.

Thank you for taking the question. One thing that -- as we're trying to jot everything down, I believe you said that autos for radio is up 23% as a category, then the whole category is only up 4. Am I missing something? I mean is there something that's very weak behind the auto strength? And then, secondly, if you can give us a little color as to how the fourth quarter is playing out between the categories. I know you don't want to give specific guidance, but is television much stronger than radio, or are TV and outdoor stronger than radio, just maybe relative basis between the three?

Well, I think we said that automotive was up 23% but we had our top advertising categories besides automotive included services, fast food restaurants, telecom and retail. And auto only represents about 17% of our total radio revenue.

Was anything down -- I mean --

Our beverage category was down slightly.

Okay.

And telecom.

Okay. And then into the fourth quarter?

Well, this is Philip. We see our core business still strong. We don't see it obviously -- sure domestic spending is not as robust as it's been in the past. We've got Chrysler/Dodge only up two points there in the third quarter. Ford was down a point in the third quarter. Both of those are soft again in the fourth quarter, but fortunately, we have on the auto side for both TV and radio, we have import spending to offset that -- increased import spending. We did -- as Walter mentioned, we saw growth in all but one of our top-five categories for TV, and retail was the only one that was off slightly due to the mergers on the TV side. We had four of the five or actually all of the five up in radio, but we had a little softer, which doesn't make the top five, telecom on radio. But the Q4 TV pace in mid-single digits is improving, as I mentioned. Our local was up 12% because of auto services and political, which is only about a quarter of that growth, of that 12% in local TV October, national is up 2%.

But, again, as we turn the corner here, we're looking at December, a month without political spending, we are seeing strong local and national, both high single-digits on the TV side. In fact - in a way, we expected this, we believe that things are going to pick up even more after next Tuesday's election and we're hoping that, and we saw evidence of that today and yesterday in fact, we moved up a whole full point on the pace on the broadcast side, two points on the Company. And we did receive a nice ad to order from both Verizon and Nissan for November and December and we also received in the last two days a Safeway order for six markets. So, we see improvement on the back part of November here and certainly December is strong.

The radio pacing, I think I mentioned, is high single-digits in Q4 and that's based on pretty strong auto services. On the local side, travel and leisure is up and then on the national side, we have the finance categories and the media category doing well and of course, some political for the entire quarter is helping. But those are only about 500 basis points on the 17% growth on the national side, where we're pacing so far in the fourth quarter. So, TV, radio, outdoor, mid-to-high single-digits on the pace and improving as I mentioned and particularly improving this week, looking beyond next Tuesday's election.

Just a quick follow-up question. You guys are very successful with the sale of the Dallas cluster. Are there any other non-core assets that you might look at to monetize in the portfolio?

Jonathan, at this time, we have no plans to monetize any other assets.

Thank you.

Thank you.

Our next question comes from the line of Anthony DiClemente of Lehman Brothers. Please go ahead.

Thank you. Our questions have been answered. Thanks.

Our next question comes from the line of John Klim. Please go ahead.

Hi, good afternoon. Could you give us an idea as to what percent of total Q4 TV and radio inventory have been sold to date? And then, I know you hit on the M&A market generally and so -- that you wouldn't be interested in divesting any other non-core assets. But would you consider purchasing any assets that could be for sale over the next 12 to 18 months? Thanks.

I'll take the latter question and then turn it over to Philip for the former question. This is Walter. We continue to look at assets that might be -- that will strengthen our existing clusters. Certainly, that's our focus. So the answer is yes, anything that might come up that is part of some either minor divestiture or major divestiture, we certainly would look at.

And the question on inventory, I'm not sure if you were looking for an average inventory sellout or if you were looking for what we actually have on the books.

What you have on the books - the forecast.

Books?

Yes.

We're 82%, 83% radio-TV respectively and 96% on the billboard division. That will be the forecast.

Got you. And then Walter, if I could just follow up on the M&A question, what have you -- have you seen multiples on radio assets come down recently? Have they stayed in the same range that you've seen over the last 12 to 18 months?

I'll answer it this way. My analysis is that in the bigger markets, markets 1 through 10, that the multiples have held up better than in the smaller markets -- 1 through 20.

Okay. Great. Thank you.

Below 20, it gets a little - there's more volatility.

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

Hi, thanks for taking the question. I have a couple. I'm just wondering if, like some of your non-Hispanic radio peers like Clear Channel and Radio One, if you are also seeing an increased demand for shorter-length ads and what is your desire to sell shorter-length ads? Also an update on what you're expecting exactly for political in TV and radio in the fourth quarter? And finally, in the last call you said you hadn't had any real formal talks with the new proposed owners of Univision. I'm wondering if that's changed and if the dialog is increasing there? Thanks a lot.

Eileen, the contact that we've had with the new owners of Univision has been mostly, I'll call it, social. They are certainly involved in weaving their acquisition through the regulatory channel, so I'm sure that at some point here in the near future, we'll have more formal talks with them. As to the question about radio inventory, we'll sell 60s, 30s and 10s. But we see most of our demand come in the form of 60s.

So you haven't really seen an increase for the shorter-length ads there?

Not necessarily. Not like maybe English language radio has experienced.

And then, finally, the political guidance for the fourth quarter? What you're expecting for political dollars?

Sure.

This is Philip. On an incremental basis, we're looking at a little bit over $2 million on net for fourth quarter between TV and radio.

Thanks a lot.

Next question comes from the line of James Dix. Please go ahead.

Good afternoon gentlemen. A couple of questions. First, in terms of the out performance you're seeing in the auto category, could you give any more color as to how you're able to grow so much faster in that category than your English language peers, and how long do you think that divergence can continue? And then, secondly, I don't know whether you've done any assessment of your revenue gap, I know several calls ago I think you might have laid out what you thought the difference was between your fair share of audience and fair share of revenue in your markets. I mean obviously, you're seeing some huge audience increases. I don't know whether you have any further color you can provide on that. And then, I guess, when do you think we start lapping -- I mean how much of your audience gains comes from new measurement techniques that are rolling out in your markets and when do we start lapping some of that impact?

That's a lot of questions.

Yes. But, you can just call it one.

Okay. We -- the last time we looked at our power ratios, audience to rev, we were still at about a 30% on the TV side. That gap is smaller certainly on the radio side because they are the beneficiary of the new measurement in a few markets where there is now weighting for language in Arbitron. But on the TV side, we haven't had that bump. We have a few markets, as you know that have launched LPM. We have one market where we think there's a terrific or at least a solid sample, but there's one or two markets where we're still struggling with samples. So we haven't really seen the -- I think all the -- certainly the audience gains have been improved or more popular programming and it hasn't been a result of better measurements.

The question as to can we sustain that automotive outperform vis-a-vis the industry is a good one. No doubt, we have seen -- as I mentioned earlier, we have seen a slowdown in the domestic spending, particularly on the national side with Tier I and Tier II. I think I mentioned Chrysler, Dodge was up only two points overall and it was primarily because of our ability to increase the Tier III local business. Ford was off 1% overall, but that would've been down more than that had we not had better Ford Tier III sales locally. But again, the import spending has offset that.

12% growth is very solid and we hope that we can maintain high single-digit growth. It has been a result though, we'll tell you our experience, it has been a result of our stations doing a better job of increasing budgets from existing auto advertisers, as well as attracting new ones. Radio alone on Tier III, which is all local, was up 23%, and local in radio represents 81% of our total revenues. So we've done a good job with the local dealers and hopefully, our people will continue that to offset what we see, an overall sluggish or slowdown on the domestic, national front.

Okay. Very helpful. Thank you.

Thank you.

Our next question comes from the line of Lee Westerfield. Please go ahead.

Thank you gentlemen. Good evening. Really, two questions. One on ad rev and one on radio if I may. And the first on radio, to try to bring granularity here. But maybe Philip, if you can help us understand the mid-to-upper single-digit pacing as you see it right now in the radio division, is that predominantly coming out of Los Angeles? Is that coming out of Piolin networked elsewhere? Where is that incremental stimulus coming from? And on the outdoor side, if you can make some comments as to the business performance that may be different between Los Angeles and New York?

Lee, this is Walter. The pace that we're seeing in radio is not coming from any one category. It's coming from, again, the strength is coming from the same five top categories that I referred to in the third quarter. So it's across the board.

Really, I was referring to markets more so than drivers.

And it's geographically as well, as Philip pointed out. We've got -- most of our markets are performing well. You have to have that kind of strength in the pacing. As for outdoor, our New York outdoor operation performed -- was stronger than our LA operation. I think that was the question.

That was in the third quarter. And subjectively in the fourth quarter, if you can give some --

It's about the same in the fourth quarter.

Okay, thank you. That's exactly -- thank you very much.

Our next question comes from the line of John Kornreich. Please go ahead.

Yes, hi. Two questions. First on LA, what were the audience ratings down year-over-year in LA? Secondly on LA, without Dallas and Tucson, would I be in the ballpark thinking that LA accounts for close to half the radio revenues? And thirdly, on radio, I mean on LA, with the ratings down but the revenue good, when do the revenues start catching up as they normally do with a lag to the ratings which would probably cause you a one or two quarter problem? And staying on LA, if you don't mind, what are you doing about the falling ratings? And I'll give you the last -- these are pretty quick. So, I'll give you a real quickie. On the share repurchase, what's the time parameter if there is any?

John, this is Walter. There's no time parameter on the share repurchase that we announced. As to Los Angeles, just give us a couple of minutes here, you asked about the ratings? They were down --

How much were they down year-over-year?

Year-over-year, we were down about 15%. And book-to-book, we were down about 14%. And then, you asked another question about what percentage of our radio revenue for the third quarter was LA?

No, no. Pro forma for Dallas and then Tucson being out, what would it be? Half?

It's still significantly below. It's nowhere near 50%

Okay, significantly below. Okay. And what -- most importantly, what is the problem in LA and what are you doing about it?

Well we've done a couple of things. We seem -- their analysis appears to show that our morning show slipped and so we're retooling our morning show to get it back to the record numbers that it was enjoying in previous books.

When did you start to retool it?

We started the process about 45 days ago.

Okay. And the last question I asked you, I mean if you're down 15% and it takes time to turn around that morning show, I mean it's usually an axiom of truth in the radio business that your revenues lag your ratings by three to six months, so I would assume you're going to have some flattening out in revenues in LA, probably starting in the fourth or first quarter. Is that correct?

Well, we haven't seen it. We're not seeing a slowdown in revenue as a result of a decline in ratings in the summer book. We have an excellent team in Los Angeles. We've got have a great show with two great formats, particularly the Super Estrella and we're the only one in LA in that format. And we've got a very passionate, loyal listener base and we're going after share. We continue to go after share.

Walter, last thing, getting back to the share repurchase, I know that you said there's no explicit time parameter. But if stock were to remain in this 8-ish area, is it possible that you would try to complete this within 12 to 18 months?

I think that's a fair statement, John. I think 12 to 18 months is a good timeline.

Okay. It's a very impressive, sizable share repurchase by the way. Very impressive.

Thanks a lot. Appreciate that.

Our next question comes from the line of Gordon Hodge. Please go ahead, sir.

Good afternoon. I too am happy to see an aggressive share buyback. I think that's a great idea. A couple of questions. One, as it relates to the buy back, is it likely that - and you do have a potential overhang, I think, at Univision as they fulfill their consent decree commitments and you may have a buyer of Univision that may not consider the Entravision shares as core. Would you look to sort of save dry powder, I guess, to handle that situation if and when it arises? I guess that's question number one.

Question number two is, the World Cup numbers that you mentioned for the third quarter, were those your estimate of the incremental amount or was that the total dollar amount?

And then last question, if I look at your comments about fourth quarter pacings and then your revenues on the books to forecast, it would seem to me pretty hard to imagine your revenue growth only being 5%. And I'm just wondering, are you being conservative? Are you contemplating the possibility of cancellations or whatever?

And then lastly, on the EPS guidance, I just wanted to understand it. It's $0.10 a share GAAP EPS. Is there any one-time items or any kind of tax issues other than the gain which you excluded on Dallas? Thanks. Sorry, it's a mouthful.

Gordon, it's Walter. I'm going to answer the first two questions and turn it over to John here for the question regarding the share repurchase and EPS. The question about World Cup, that was total revenue. And about one half of that was incremental.

Got it. Thanks.

With regards to the -- there was another question that you asked, an operational question.

Fourth quarter pacings?

Fourth quarter, and that was what?

Just it sounds like you're pacing --

Oh, that's right -- that we were being conservative. We try to do the best we can to measure our expectations for a coming quarter. That's a science and art. And we push ourselves to try to come as close as we can to where we think we're going to wind up. Quarters change on you from week to week. And so we think we're being somewhere between conservative and assertive with regards to how we're guiding for the quarter. We feel comfortable with what we've given all of you.

I guess I was thinking if you have 80% of your revenue on the books and you're pacing up high single-digits, that's like -- it would seem you'd have 7% in the bag -

We said mid-to-high single-digits. We said our television was mid-single digits. And we said our --

Okay, sorry.

-- we said our -- in the outdoor divisions are mid-to-high single-digits.

Got it. Okay, I think maybe I was just --

Our radio and outdoor divisions, right. So the largest part of our business, our television business, that's mid [audio skip] and then, the TV and radio are, I'll call it, high single-digits.

Okay. Terrific, thanks. And then John, on the other things.

Yes, Gordon, regarding the EPS, EPS will be projected to be $0.14 a share. If we were to exclude the gain on Dallas, it would be $0.10 a share. So, Dallas is the one-time item in the fourth quarter.

All right. Are you anticipating a drop in -- maybe I'll cover it offline. I'm having a hard time getting that high of a number given your revenue and EBITDA guidance. But, that's okay. We can work through that. Just on the buyback, and sort of --

Yes, on the buyback. Any material repurchase of shares would probably put Univision below the 15% threshold that they have to maintain between now and '09. So certainly it's our intentions to talk to Univision about our plans on a share purchase buyback and I think that'll probably create opportunities to talk about what they may or may not want to do. They may want to just stay below -- stay at the 15% mark or we can have further conversations. But we'll certainly be talking to them as our partners about the fact that it's going to affect their 15% threshold if we start buying back shares.

Got it. Thanks a lot.

Our next question comes from the line of David Joyce. Please go ahead.

Thanks. I had some problem hearing you John, when you were starting to give some of the fourth quarter guidance. You talked about the amount that we excluded in revenues and expenses for the assets that won't be there.

Right. Let me pull that again. The expense that I think off the top of my head is $2.335 million and the revenue - let me look that up - is $3.724 million.

Okay. And that's what was in 4Q '05?

That was in 4Q '05 for the three markets, Tucson, San Francisco and Dallas.

Okay. Now, your guidance is pretty healthy on ad revenues - that probably - as long as you're answering the question - but have you seen any inroads from the proliferation of the various Spanish language cable networks or Hispanic-focused English language networks in your viewing?

David, could you repeat the question about --

I was just wondering if you'd seen any inroads of the proliferation of new cable networks in the viewing of Hispanics, either those that are in English or in Spanish language formats.

No, we have not seen any impact, David, in any of our markets from these new either Spanish language or English language programming services that are targeting the Hispanic market.

Okay, great. Thanks.

[OPERATOR INSTRUCTIONS] Our next question comes from the line of Mark Wienkes. Please go ahead.

Thanks. Good afternoon. What's the mix between bulletins and posters in your outdoor division? And then, could you give us an update on any plans for converting to digital? And then second, there's been a renewed focus on removing illegal boards in New York specifically, but I think also LA. I was wondering if that -- how much do you think that might help tighten up the markets and how does that affect your platform?

Well, I'll start - this is Walter - I'll start with the latter part of the question first, which is with regards to the regulations in New York and Los Angeles. We are aware of the recent regulations that were announced in New York and subject to that, there's been some litigation we understand. We're not involved in that, but we don't see any impact from the regulation -- the New York regulations on our business. And in Los Angeles, we settled with the city a long time ago and we already have an agreement with them and we're moving forward. We think that for us that -- have been in the business for some time and have established a track record and work well with both cities, we think this will probably -- these new regulations will probably be a good way to identify who the responsible companies are in the industry. The question about our inventory and how it's classified, our posting, our [eight sheets] represent about 48% of our total revenue, our large format or bulletins about 42% and our transit about 10%.

Okay. And then digital plans?

Digital plans, I think we talked about that earlier. We're still working on that. We're about to start our budgeting process here next week and we're going to certainly spend a lot of time discussing how we might digitize some of our inventory.

How much illegal supply do you think is in the LA market? Like, how much do you think might go away and help you guys -- just help tighten up the market for you?

You mean in terms of just the industry in general?

Yes, like the LA market in general?

I don't know. I don't think we can give you that information. It's hard to say.

All right. Okay. Thank you.

Okay.

Our next question comes from the line of Marci Ryvicker. Please go ahead.

Thank you. Clear Channel mentioned that they're seeing some erosion in their Hispanic radio formats. Are you seeing any benefit from this? And then, the second question, do you have any thoughts on why My Network TV programming has not been as well received as expected, since these are English-language telenovellas?

Well, I'll just give you my opinion with regards to the English-language telenovellas. First of all, it's a format that has just been initiated by the English-language networks. And I think with anything that's new, it takes time, particularly in programming to work out the bugs and the wrinkles and to get to the kind of the core of what people find attractive in the format. I think it's a great format and I think that the Spanish-language telenovellas speak to the fact that it's a terrific format. I think within time, you're going to see My Network TV, their ratings with regards to the telenovellas turn around. A good example, I think, is Ugly Betty, which is on NBC, which is doing quite well, I understand. So it will -- I'm sure that that English-language format will improve. And the other part of the question was --?

Clear Channel had said they're seeing erosion in their Hispanic radio format, so I wanted to see if you were seeing any benefits from that?

Well, we continue to go after share and we think that if they're seeing a decline in their Hispanic radio station's performance and we'll benefit from that.

Thank you.

The other thing I might add too is, they're only operating one radio station per market, whereas we're operating clusters in -- with television and radio. I think we're in a much better position.

Thanks.

There are no further questions at this time. I'll turn the call back to you, sir.

Well, thank you, Frank. And thank you everyone for participating with us on our third quarter investor conference call. We look forward to speaking to all of you in the first quarter of the new year, when we'll announce our fourth quarter results as well as our 2006 year results. Again, thank you for participating. Good-bye.

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