Entravision Communications Corp (EVC) 2007 Q1 法說會逐字稿

Welcome to the Entravision first quarter 2007 earnings conference call. (OPERATOR INSTRUCTIONS) As a reminder, this conference is being recorded Thursday, May 3, 2007. I would like to turn the conference over to Walter Ulloa, Chairman and CEO. Please go ahead, sir.

Thank you. Good afternoon, everyone and welcome to Entravision's first quarter 2007 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 we begin, I 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 prefer to our SEC filings for a list of risks and uncertainties that could impact actual results. In addition this call is the property of Entravision Communication Corporation. Any redistribution, retransmission, or rebroadcast of this call in any form without the expressed 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 Tucson and Dallas during the third quarter -- third and fourth quarter of 2006 respectively 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. The Company's provided a reconciliation of these non-GAAP financial measures to their most directly comparable GAAP measures in today's press release. The press release is available on the Company's website and was filed with the SEC in a Form 8-K.

We enter 2007 with strong momentum across all our operating segments as we continued to execute on our business plan to maximize the growth potential of our assets. Our robust first quarter results reflect our ability to continue to convert our growing audience shares into increased advertising revenues while maintaining a disciplined focus on managing our costs. As a result of our strong content and the prudent investments we have made across our television, radio and outdoor assets we remain very well positioned to benefit as more and more advertisers seek to reach the growing U.S. Hispanic population.

Looking at our consolidated results for the first quarter, pro forma revenue increased 9% to $63.9 million, adjusted EBITDA increased 17% to $17.2 million, and free cash flow increased 267% to $6.6 million or $0.06 per share versus $0.02 per share in the first quarter of 2006. Earnings per share for the first quarter was negative $0.03 per share in line with our expectations.

Turning to our television division, revenues increased 8%, significantly outpacing the industry which grew minus 3% according to the Television Advertising Bureau. Local television revenue grew 6% and national revenue was up 11% in the quarter. I should also note that our 8% increase was in addition to an 11% increase in the first quarter 2006 for our television division. Results for the quarter were largely driven by our commitment to monetizing the ratings gains we experienced in 2006.

During the quarter we experienced significant demand from both new and established advertisers who continued to aggressively expand their overall Spanish language television budgets. We met this increased demand through increased sellout which reached 75% in the first quarter. More importantly, however, we effectively leveraged the increased demand to improve pricing across the television group. Overall for the quarter local television revenue increased 6% while national revenue increased 11%. Our fastest growing categories for the quarter included auto, fast food, healthcare, and media. Our automotive category reported a 23% year-over-year increase driven by significant increases from Toyota and Nissan. The automotive category represented approximately 32% of our total television revenue for the quarter. In addition we experienced a resurgence from Ford and General Motors whose investments grew 5 and 6% respectively.

Our tier 1 business, factory corporate, grew 69% while tier 2, dealer association, grew a respectable 27% in the quarter. The fast food category grew 21% over Q1 '06 primarily due to significant increases in McDonald's, Kentucky Fried Chicken, Olive Garden, and Dairy Queen. The healthcare category also experienced significant growth by recording a 32% gain over prior year. Contributing to this growth was United Health EverCare and a new category of advertisers including CVS Pharmacy and Bayamar Home Health. During the first quarter we signed on 234 new advertising clients who spent over $10,000 with our television group. The categories for those advertisers included telecommunications, financial, and retail.

Turning to our ratings performance in our television group for February 2007, our Univision affiliate group continues to dominate ratings in our respective markets, and TeleFutura in many of our markets is a number two ranked Spanish language television station. Our audience gains year-over-year were impressive. Sign on to sign off adults 18 to 34 ratings in our Univision affiliates in Washington D.C. increased 100%, Reno rose to 67%, Tampa was up 44%, and Monterey was up 29%. In primetime according to the February survey eight of our Univision television affiliates were ranked number 1 or 2 regardless of language. Our Univision television group primetime ratings saw increases of 5% in adults 18 to 34, 6% ratings growth in adults 18 to 49 and primetime ratings growth of 7% in adults 25 to 54. Our Washington, D.C. Univision affiliate ratings increased in primetime adults 18 to 34, 250%. Boston's primetime ratings grew 100% in the same demo. Other significant primetime ratings gains in the 18 to 34 demo included San Diego, up 44%, Monterey Salinas up 61%, and Reno plus 63%.

Looking at local early news our group ratings were up 13%, adults 18 to 34 and 21% in both adults 18 to 49 and 25 to 54. Additionally in 13 of our local news markets our Univision television stations were either 1 or 2 regardless of language in early local news. Year-over-year three of our Univision television early newscasts evidenced triple digit growth. These shining stars were Santa Barbara up 250%, Orlando increased 200% and Washington, D.C. 100%. Additionally San Diego's early local news was up 83%, Laredo, up 78%, south Texas or McAllen increased 60% and Tampa was up 53%.

Taking a look at the Univision national news our television group ratings in this important program were up 13%, adults 18 to 34, 14% adults 18 to 49 and 25 to 54. Nine of your Univision affiliate national news ranked number 1 or 2 in adults 18 to 34 regardless of language in their respective markets. Two of our Univision television stations experienced triple digit growth in national news. Laredo was up 118% year-over-year and Washington, D.C. was up 100%. Other standouts were McAllen, up 95% and San Diego up 85%.

Our TeleFutura affiliates also continue to gain significant audience share and are consistently ranked the number 2 watched Spanish language television station behind Univision in a majority of the markets where we operate both Univision and TeleFutura. Our TeleFutura group ratings increased 100% in both sign on to sign off, as well as primetime in the February sweeps. Our TeleFutura affiliate saw spectacular prime time ratings gains in adults 18 to 34, in Washington, D.C. up 400%, Albuquerque and Las Vegas up 150%, Orlando up 200%, and our Tampa TeleFutura affiliate saw its primetime ratings increase an astounding 800% in the February book. Our early tracking for the May book indicates continued solid ratings growth in overall viewing, primetime, and early news based on household viewing.

Turning to our radio division we had another outstanding quarter. Our 14% pro forma revenue growth performance once again significantly outpaced the industry which is estimated to be flat to up slightly for the quarter according to the Radio Advertising Bureau. Radio revenue gains for the quarter were driven largely by sellout percentage of 68% which increased 5 points over first quarter of 2006. We also saw a slight increase in average unit rate. We saw positive revenue growth in both local and national sales for the quarter with local up 15% and national increasing by 8%. This growth was driven by strong automotive advertising which was up 47% from Q1 '06 and represented 21% of our overall radio revenue for the quarter.

Our top five categories for the quarter were automotive, services, travel and leisure, telecommunications, and retail. All of the top five categories had growth in the first quarter 2007 compared to the prior year. In addition to automotive, the categories with the largest percentage of growth for the radio division in the quarter were travel and leisure, up 21%, telecommunications up 16%, finance up 22%, and media up 26%.

We experienced exceptional strength across all tiers of automotive advertising. Tier 3 led the growth with a 52% increase compared to Q1 '06. Tiers 1 and 2 followed with 45 and 50% growth respectively. We saw strong commitments in first quarter from GMC, Chevrolet, and Dodge. We are also continuing to go see strong support from the Import Dealers Association including Nissan and Toyota as we continue to harvest relationships on the dealer side. As we saw the tier 1 group soften in prior quarters, we concentrated our efforts on the tier 3 individual auto dealers because we knew that the dealers association groups and manufacturers would return.

For the quarter we welcomed 22 new advertisers that spent more than $10,000 with Entravision radio. These new clients demonstrate our commitment to driving new business and seeking cross-selling opportunities. Some of these advertisers include Qwest, Medved, AutoPlex, West Covina Nissan, Speedy Cash, and SCM Homes. At the time of this call the Los Angeles market is the only Entravision market where their winter ratings have been released. We saw an increase in ratings on each one of our stations in our key demo adults 18 to 34. We experienced a 3% increase on Super Estrella, a 16% increase on KLYY and Indie 103.1 increased 33%.

During the first quarter we made a number of programming changes on each one of our Los Angeles radio stations. On Super Estrella we made strategic modifications to our morning show, La Regadera. The program added Karina Velasco daughter of Raul Velasco, the long time host of Siempre en Domingo. The show also added new segments, imaging and benchmarks to shore up its female ratings and increase time spent listening. Although we saw only a small increase in our ratings it reflects only a couple weeks of the program changes. We're extremely pleased with the direction of the program. We're also moving Reventon, our annual listeners' concert, from the third quarter to second quarter this year in order to better drive ratings as well as strengthen the show's lineup. The event will take place on June 2. Among the 10 acts that will perform at the concert are the rock group Jaguares and Jennifer Lopez. Only KLYY -- on KLYY we moved the show, Erasno y Chocolata, from mornings to a less competitive afternoon drive in February. Ratings in the winter book almost doubled from a 1.6 to 3.5 in our key adults -- in key adults 18 to 34-year-old demo.

Our new program director Max Toloff on Indie 103.1 has made an immediate impact on the stations. His music expertise in alternative music has the station sounding better than it ever has before. We continue to aggressively invest in our content and monitor our performance in a very competitive environment. We anticipate that we will see the full effect of these changes in the spring Arbitron release which will help to us continue to grow revenue share in our markets driven largely by key investments in our brands, content and on air personalities.

For the quarter our outdoor operating division reported 5% revenue growth driven by a 44% increase in local revenue. Outdoor markets that produced strong revenue growth for the division were Los Angeles, Sacramento, Fresno, and Tampa. Strong categories for the quarter included services up 81%, healthcare up 25%, and package goods up 59%. While national revenue has been sluggish, particularly in New York, in our outdoor division we're pleased with the progress we have made to date with our expanded local sales effort and we remain committed to driving local revenues across all of our outdoor markets.

As we look ahead we continue to seek prudent and strategic opportunities to expand our operating footprint in the fastest growing, most densely populated U.S. Hispanic markets. We're confident the decisions and investments we're making today will best position us to maximize operating leverage, drive long-term growth, and create added value for shareholders. Overall we remain optimistic about our growth opportunities in 2007 despite our particularly challenging second quarter due to non-returning World Cup and political revenue. At this time I would like to 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 $63.9 million, up 9%. Pro forma operating expenses increased 6% to $42.8 million, and pro forma consolidated adjusted EBITDA increased 17% to $17.2 million. Free cash flow which we define as consolidated adjusted EBITDA minus capital expenditures, cash interest, cash taxes, plus interest income was $0.06 per share.

Operating expenses for the quarter increased to $42.8 million, an increase of $1.3 million or 3%. Excluding the 2006 operating expenses incurred by our radio stations in the Tucson and Dallas markets that we sold in 2006, operating expenses would have increased by $2.5 million or 6.2%. Of the 6.2% expense increase, 3.5% relates to variable expenses associated with our increase in net revenue, our remaining 2.7 is core expenses such as increased salary expense, increased rent and utility expense associated with DTV, and increased news expense and increased leasing expense. Corporate expenses for the quarter increased to $5 million from $4.9 million, an increase of $100,000. The increase was primarily attributable to higher rent and professional fees partially offset by lower bonuses.

Free cash flow was $6.6 million or $0.06 per share in the first quarter of 2007 up from $0.02 per share in the first quarter of 2006. The EPS for first quarter 2007 was negative $0.03 per share compared to $0.11 per share in the first quarter of 2006. The negative $0.03 per share was in line with our guidance on our last earnings call. It should be noted that we had a gain on sale of $19.3 million in the prior year's first quarter.

We are currently in the process of finalizing our analysis for the new Financial Accounting Standard Board Interpretation FIN 48 accounting for uncertainty in income taxes. We expect to be completed with our analysis next week when we file our first quarter 10-Q.

Turning to our outlook for the quarter, second quarter of 2007 we are once again providing pro forma guidance information. With the sale of the Company's radio assets in Tucson and Dallas markets in the third and fourth quarter of 2006 respectively, the Company no longer will have any remaining broadcasting operations in those two markets. As a result in accordance with Company policy the Company has elected to present its guidance on a pro forma basis by eliminating its broadcast results from those markets for the current and prior period so the comparison between the periods will be meaningful. The amounts excluded from net revenue and operating expenses for the second quarter of 2006 were $2,118,000 and $1,222,000 respectively.

The Company expects approximately $400,000 in operating expenses and $600 million (sic -- see press release) in corporate expenses relating to stock option compensation in the second quarter of 2007. For the second quarter of 2007 we expect net revenues to be flat and operating expenses to increase by low to mid-single digit percentages as compared to the second quarter of 2006. It should be noted, though, that the Company has difficult revenue comparisons over the second quarter of 2006 due to significant revenue earned for World Cup and political in 2006. We had $7.3 million of World Cup revenue and $750,000 of political revenue in the second quarter of 2006. Both of these categories are non-returning in 2007.

Excluding the noncash stock-based compensation, corporate expenses are expected to increase by low single digit as compared to the second quarter of 2006. Depreciation and amortization are expected to be between $11.4 million and $11.7 million. Net interest expense for free cash flow purposes is expected to be between $7.5 million and $8 million. We currently anticipate an additional $1 million of noncash interest expense related to the decrease in the value of our interest rate swap agreements. We expect CapEx to be between $5.1 million and $5.5 million for the second quarter of 2007. As anticipated, we finished a majority of our digital television upgrades in 2006. There is $5.4 million in digital expenses and approximately $10.3 million of maintenance CapEx for a total of $15.7 million in 2007.

The digital expenses include the remaining digital television conversions, HD upgrades at our radio division and the digital board upgrades at outdoor. Second quarter earnings per share is expected to be $0.04 per share and free cash flow to be $0.12 per share based on 104 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 with Bear Stearns. Please go ahead.

Good afternoon. Thanks for taking the questions. The first one is versus first quarter we have revenue deceleration on a pro forma basis by about 900 basis points, expenses down by only about 300 basis points. Maybe you can talk about that dynamic. Secondly, maybe you can talk about the conclusions, Philip, that you're seeing out of the Philadelphia PPM in terms of the conclusion I guess it is not much of a surprise of the reported versus actual listening on the Hispanic demos, it is not that much in that market. It is only about 5% of the population there. And lastly, John, what about the share repurchases? It looks like you only did about just over $2 million of share repurchases. How are you approaching that? Why are you doing them in couple hundred thousand repurchases instead of some larger repurchase? Thanks.

I will answer question three and one first, and then we'll do the radio. The last question you just asked on share repurchase, we have a 10b-5 in place. Unfortunately or fortunately our stock has gone beyond where we had placed it. Therefore we were not able to buy any shares after our first quarter or our year end call. Actually we bought no shares because we were outside of our blackout period. Now the blackout period will open again shortly after this call and we'll reassess. But as I also mentioned previously and in various conferences is that we at the same time we have potential opportunities regarding Univision, we talked about selling some radio stations as a way of paying off their $500 million bridge loan, so there may be opportunities to do some strategic acquisitions there.

People talked about whether they would be selling some stock, that's an opportunity as well. But certainly we do intend to buy stock whether Univision offers stock for sale or whether we do it in the open market, but I think it behooves us to see what comes out of Univision. But we'll look at the 10b-5 as it opens up in the next couple of days and make some adjustments. Regarding operating expenses, our operating expenses are basically fixed, things like salaries, rent, insurance, tower leases, electricity and so on and so forth. The only real expenses that are variable are revenue related, so smaller increases in revenue is not going to move the expense line, And we certainly don't have a lot of opportunity to cut back on expenses because we have a pretty low cost base. We don't spend a lot of money on promotion because we have a great opportunity with our radio stations to cross-promote. And our programming we don't have any real expenses because most of our Univision programming pretty much get 24 hour a day programming from Univision. We don't have a lot of flexibility on cutting back on expenses when revenue falls, but certainly we still do our best and look at it all the time.

Thanks, John. Victor, it is Walter responding to your question about the Philadelphia information. As you pointed out, Philadelphia is not a good measure for the Hispanic radio industry. As you know it has a very small Hispanic market. I think it is less than 5%. I think we'll have a better sense of how the PPM is performing when Houston rolls out here shortly. But so far even though we've seen that radio TSL overall is down, ethnic groups are still seeing a higher percentage of TSL, and this is good news for ethnic formats as TSL still remains high. In fact, PPM confirms that ethnic audiences demonstrate higher TCL and higher station loyalty than any other demographic groups, and PPM confirms that using ethnic formatted stations are the only way we believe to effectively reach those important demographic segments of the markets that we're in.

Thank you.

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

Good afternoon. Thanks for taking the questions. Two questions here. First is, Walter, any more thoughts perhaps about selling outdoor? You guys have done really well with selling assets and driving incremental return to say shareholders. Secondly, on Univision perhaps for John and/or Walter, have you spoken with them? You did mention the bridge loan, but do you have a sense sort of if there will be opportunities on the asset side or the ability to sort of repurchase some shares? Thanks.

Jonathan, it is Walter. Let me take the last question first with regards to Univision. We do speak to them regularly, and we'll be speaking to them more here in the future as they start to come together as a company, as a new company, but we haven't had any discussions with them, anything definitive about any divestitures that they may do in the future. But as I said earlier, we'll be in contact with them, and if anything does come out of those conversations or discussions we'll certainly pass them along to all of you. As for any divestiture that we might do, we're not prepared to talk about that at this time, but I will say we continue to look at all of our assets. And I think that pretty much is our position that we look all of our assets, quarter to quarter, week to week, month to month to see how they're performing, and we make decisions based upon performance.

Thank you.

Our next question comes from the line of James Dix with Deutsche Bank. Please go ahead. Mr. Dix, you're online.

Gentlemen, sorry. Hello. Can you hear me?

Hello, James.

Hey, how are you? Just two questions. First, forgive me if I missed it, but if you have any data on how far you're booked to budget by segments for the second quarter? And then I guess just more generally if you could walk us through your carriage with your cable MSOs, I mean are most of those agreements for analog or do they include analog and digital? When do they generally roll off? Are they mostly month to month? Just trying to get a little bit of sense for when people talk about retransmission fee potential there. Thanks.

Yes, hi, James, this is Philip. In terms of -- I think you asked book to forecast or book to --.

Right.

Budget. We're reporting a little earlier than in past years, past quarters, but suffice to say we're in the high 70s, just bumping up against 80% of BOB today -- that's billing on the books -- to our mid guidance.

And is that similar by segment?

Yes, it is almost identical for broadcast and a little higher -- outdoors laid in a little earlier, and the way the broadcast comes in later and later these days -- a little higher for the outdoors, almost 91%.

Okay.

As far the -- I think you had a cable or a retrans question. We filed in -- filed for must-carry back in the last window -- prior to the last window. This window goes through as you know December 31, 2008, and the only one-offs from that are when we have a new launch of a station. We have to go to the cable companies in those cases and the DBS providers we have been successful in negotiating retransmission agreements. However, we do believe that in the next six to nine months we'll be deeply involved in that all negotiation of retrans come the next '09, 2010, 2011 window.

Okay. Any sense just generally for like on an annual basis how much you're getting right now in retransmission revenue just all across the segment?

Well, since we've filed must-carry on our Univision full powers --.

Nothing for that.

It was nothing for that. However, we have been successful with new agreements going forward with other stations that we've launched, and we believe we'll be successful in the next round in terms of monetizing those retrans.

But in terms of what you're getting now on a run rate from the satellite guys, any sense of that or going to -- not worth splitting out?

We don't want to comment on that right now. Are you looking for a base model for --?

Yes, just like what's in there now for '07 in terms of retrans? I presume that's how we're going to change?

It is really going to kick in '09, we believe.

Okay. Okay. Great. Thanks.

Our next question is from the line of Marci Ryvicker with Wachovia Securities. Please go ahead.

Thank you. I know you have very tough comps for Q2, but can you talk about some of the underlying trends for both television and radio segment just to give us a feel as to whether or not the strength in Q1 has been continuing? And is the best way to look at the tough comps and kind of figure out how to model this by -- is 50% of them basically incremental still or is more incremental?

Yes, Marci, this is Philip again. There is no special or recent circumstances surrounding our soft Q2 business other than the direct effect that this incremental business from last year Q2 World Cup and political spending has had on our year-over-year comps. You hit it. There is no fundamental change in our business trends. Our TV business is outperforming. We just did a study here showing the TV business outperforming the industry 11 out of the last 12 quarters on an average of 620 basis points. That's an average percent increase of 6.2% over the industry. It is similarly the radio division is outperforming the industry every quarter in the year 2004, 2005, 2006, and we don't see anything changing. We're up over 840 basis points on radio versus what RAB reports every quarter, now on an average.

So we have got great assets, good systems, most importantly terrific people, and we're trying to maximize our many initiatives, be it Reventon that Walter spoke of in radio or Copa Oro, Copa America on TV. The fact remains we had, in Q2 of last year World Cup soccer net revenue in TV of $5.5 million, and we have said that that was roughly 50% incremental. But yet we just recently did -- took a hard look at it, and now that the orders are in for Q2 this year from the sponsors that were in World Cup last year, we actually saw that about 61% was incremental. If you look at -- if you add that and the almost $600,000 in political spending last year, that is anywhere between $3.3 million and $3.9 million. Last look. I think it is more $3.8 million, $3.9 million in non-returning revenue. So absent of that, we're projecting our television business to be plus 2, plus 3. It could be as high as plus 4 if you back that out, that 60% incremental, while the industry is expected to be down middle single digits, I haven't seen any report that would tell us differently that the TV business and the industry is going to be positive.

Okay. For your outdoor segment are you seeing some strength in Q2 since that doesn't get impacted by the comparisons?

This is Walter. Marci, for Q2 we're right now our pace is flat. We're being challenged significantly in New York. Our local businesses I mentioned in my remarks is quite strong in New York as well. But it is our national primarily in New York with our poster business that it is soft.

Thank you very much.

You're welcome.

Your next question comes from the line of Lee Westerfield with BMO Capital Markets. Please go ahead.

Thank you, gentlemen. Good afternoon. Not to beat a dead horse, but I wanted to focus on some of the other sporting, specifically soccer events, occurring in the second and third quarters and see whether I could understand a bit of the timing. The World Cup last year was substantially in the second quarter of course, a little bit rolling into July but mostly in the second quarter. This year you have Copa America and some MLS versus Mexico Friendlies, and if I understand the timing of the COPA America, that's a little bit in the second quarter but mostly in Q3. So if I try to blur Q2 and Q3, will you be able to fill most of the comparison challenge versus World Cup with the additional events occurring this year in North and South America soccer time for competitions?

No, I wouldn't use the word most.

Much?

Copa de Oro is June 6 through 24, so it is all second quarter. Copa America as you know starts June 26 -- I'm sorry, June 6, through June 24th on Copa de Oro. June 26th on Copa America through July 15, or actually -- yes, July 14, which is most of the games fall within third quarter. The Copa de Oro, we have roughly four minutes, eight units in the games plus IDs, 20 seconds. So we just tracked our sales there, and we expect that to be a little bit under $0.5 million, and the Copa America is too early to tell. But as you know, World Cup last year in third quarter was about 20% of that total $6.8 million which is roughly $1.3 million, $1.4 million top of my head.

In Q3, yes?

Q3, and I don't expect that we will get replacement dollars in Copa America anywhere near that. If I had to guess right now, and if you're looking for a number, it would be again $250,000, $300,000. A lot of those games are in TF, the majority of them are on TF.

And the second question I have, and this is the final one further out in time but if you can remind me because I am a little fuzzy on the memory here but your Univision contracts actually extend beyond Univision's own Televisa deal, and if I remember right out to 2021 for you?

Correct.

Very long-term programming agreements with your network alliances. Good. Thank you.

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

Good afternoon. Two quick questions. Did you update us on your digital strategy at the outdoor segment and where you are in terms of rolling out digital boards? And then secondly if you could just touch briefly on the M&A market generally? Have you seen multiples hold up? And that's it. Thanks.

John, this is Walter. The first question which is about the digital rollout or potential digital rollout of our outdoor assets, we are working on a plan. We think that the inventory that suits that digital conversion best for us is our City Light inventory which we have about 250 boards in Los Angeles and the right to add another 150 to that base. We're also looking at New York as well for the City Light product, and if we do proceed, we will digitize those boards. The second question was about the M&A.

The M&A market generally and whether or not you've seen multiples hold up?

I would say generally that multiples are holding up in the bigger markets, maybe top 10 markets. We certainly saw that when we divested our Dallas assets in the fourth quarter of '06. There may be some softening in the smaller markets, but certainly television has not -- does not -- even the small markets of television are enjoying some pretty robust multiples given what the CCU television assets went for and some other information that we've looked at lately about the strength of the television asset base including the New York Times television assets.

Great. Thank you very much.

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

Hey, it's actually Ari Danes for Eileen. A couple of questions on outdoor. First can you tell us exactly how your national business in outdoor fared in the first quarter? And then secondly, again, on outdoor can you talk a little bit about what accounts for the difference in margins between your outdoor business and the margins for other public outdoor companies, and what you're doing to improve that? And where you think outdoor margins might go over the next year or two? Thanks.

The first question had to do with national, our local/national split.

Right, in the first quarter?

In the first quarter our national was a minus 18, and --.

Local was up 33%.

The second part of that question?

I will take the second part. The margins I got a sense of where you're coming from. Certainly the larger outdoor companies have had stronger margins than we do. I think it is mostly attributable to the fact that we're in New York, and lease costs are high. Certainly a lot of our inventory is more posters and there's many more leases and maintenance to deal with and having 10,600 faces based on our revenue base is as it exists, so I don't think you can expect us to get margins that would compare to the larger outdoor companies.

Okay. Thanks.

Our next question comes from the line of David Miller with SMH Capital. Please go ahead.

Good afternoon. A couple of questions. I noticed revenue growth on the outdoor segment plus 5%, expense growth plus 8%, so you guys had sort of negative operating leverage in the quarter. Walter, you did touch on the issues with New York and can you just flush out what happened on expenses there in the first quarter? And then John if you could just explain the tax benefit that would be great. Thanks.

On the first question on the outdoor, it is mostly our initiative in Tampa. That's where the overage in the OE came in. We entered into a new transit initiative as we have in Fresno, and that attributed for almost 5% of that expense growth.

The tax benefit?

Well, we had at the end of the year I think about $77 million of NOLs that will be probably a little larger with our amortization in the first quarter. We don't have that number done yet, but our tax rate is pretty much the standard 39%.

Thank you.

(OPERATOR INSTRUCTIONS) Our next question comes from the line of Mark Wienkes with Goldman Sachs.

A lot of the category percentages that you cited were up healthy double-digits. I was just wondering which categories were on the opposite side of that spectrum that brought the overall revenue down to still a good high single digit number?

You're referring to what division?

TV or radio, either one.

Well, most categories were up in the first quarter. First quarter was strong all the way across the board. I am looking at our top 10 advertising categories, and I am looking at finance and television being down 2%. We know what that is, that's mortgages, and fast food and restaurant was a little soft in radio, but other than that -- and finance was very soft in outdoor, but other than that we're looking at positive increases in virtually all of our segments.

In television our retail segment was flat. Finance was down slightly, and the grocery store category was affected by agency change for Albertson and fears of another strike. That category was up slightly, and those are the three categories that were soft.

But there was nothing that was sort of down by equal magnitude, nothing down 10 or 20 or anything?

No, no.

The shift to the concert in L.A. from 3Q to 2Q material at all?

It is about a $1.2 million, $1.250 million in total revenue.

Okay.

Actually third quarter which will be in the first quarter.

Second quarter.

Second quarter. About expense?

Right. The margins will come down because -- not the margins come down, but the EBITDA will be affected because of about $750,000 of expenses associated with that income.

Our next question comes from the line of Gordon Hodge with Thomas Weisel partners. Please go ahead.

Just a couple questions. As far as the share repurchase program goes, if per chance you were to have the opportunity to buy all of Univision's shares, that would be a tab that would run north of your $100 million authorization. I am just curious what the process would be and whether you have a process in mind to get Board authorization for a higher repurchase?

Certainly if we had the opportunity to buy the shares at the right price and we wanted to buy them we would certainly go to our Board and get it done.

Okay. And then curious just about the trends in the TV business in I think you were pacing up double-digits through February when you reported the first quarter. I am just curious if there was a trend in March that took you down to 8% or anything to read into that in terms of just a slowdown? I know there has been signs of economic slowness in markets like California on the retail side and so forth. I am just wondering if you're seeing any trends? It sounds like you're not, but I'd be curious.

Well, typically, Gordon, if you don't maintain the pace that you have earlier in the quarter later. As the quarter gets older you end up with cancellations, and that's why most of the time you see our guidance is lower than our (inaudible).

That was definitely prudent. The last question is just as you look at your pacings this year in the second quarter, obviously my guess is you probably sold the World Cup pretty far in advance, so my guess is it is pretty hard to read the pacings. Do you have -- is there a significant difference in the amount of inventory that you have sold this year versus last year at this time? Or I don't know if you have that at your fingertips.

Gordon, this is Philip. Most of that World Cup sponsorship money was in by now. Actually a lot of it came in in March because we were able to negotiate those deals way up front. So it has thrown our pacing off for second quarter immensely, but we're pretty confident with the guidance numbers we gave you. And again no significant change in our business trend. We're just up against those tough year-over-year World Cup and political comps. We look at all our categories, we ex out that money that's non-returning from those two categories, and business is good and continues to be much better than the industry both on the TV and the radio side.

Terrific. Thank you.

Our next question comes from the line of David Joyce with Miller Tabak, please go ahead.

Can you tell me, and I apologize if I missed it, how much of your outdoor expenses related to the Tampa start-up? And for the incremental World Cup revenue last year I think you said $5.5 million for TV. How much was in radio, please?

The first question, we were up 8 in outdoor. We would have been up 5. I think I may have misspoken earlier when I said 5% was -- I think I may have said 5% was associated with Tampa. Our expenses would have been 5% if we netted out the cost of the Tampa startup.

The question about World Cup for radio, how much was in second quarter? Is that the question?

Yes.

About $1.2 million is in the second quarter.

Okay. Thank you.

There are no further questions at this time. I will turn the conference back to you.

Thank you, operator. That concludes our first quarter investor conference call. We look forward to speaking to all of you in early August when we will report our second quarter results. Thank you again for your participation.

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