Entravision Communications Corp (EVC) 2007 Q2 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to the Entravision Communications' Corporation second quarter 2007 earnings conference call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question and answer session. (OPERATOR INSTRUCTIONS) As a reminder this conference is being recorded Thursday, August 2, 2007. I would now like to turn the conference over to Mr. Walter Ulloa, Chairman and CEO. Please go ahead, sir.

Thank you, operator. Good afternoon, everyone, and welcome to Entravision's second 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 refer to our SEC filings for our list of risks and uncertainties that could impact 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 sales of its radio assets in Tucson and Dallas during the third and fourth quarters of 2006 respectively whereby the Company has elected to eliminate its broadcasting results from those markets for the prior year periods so that year-over-year comparisons will be meaningful. The Company has provided a reconciliation of the 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 10-Q.

In the quarter, we continued to execute on our business plan and capitalized on the growth of the Hispanic media market. As we noted in our last call, we were up against very difficult revenue comparisons over the year ago period as a result of significant World Cup and political advertising in 2006. Overall, we continue to outpace the general market and are pleased with our results. We remain focused on building our footprint and strengthening our presence in existing markets. We will continue to make prudent investments in organization and are committed to maintaining a disciplined cost approach. Our stations are delivering solid audience share results, and our sales teams are effectively transitioning our rating success into an expanding advertising base. Demand for Hispanic advertising remains very healthy across our media properties, and we remain in a unique position with assets in the fastest growing and most densely populated Hispanic markets. For our consolidated results for the quarter, pro forma revenue decreased 1% to $76 million, adjusted EBITDA decreased 10% to $27 million, and free cash flow increased 2% to $15.3 million. In the comparable period last year we benefited from $7.2 million of non-returning World Cup revenues and about $900,000 of political revenue. Earnings per share for the quarter was a positive $0.08 per share, in line with our expectations.

Turning to our television segment, our division revenues increased--revenues decreased 7%. As a comparable metric, last year's second quarter revenue increased 12%. Results for the quarter were largely impacted by difficult World Cup and political comparisons. Total World Cup advertising on our television stations for the second quarter 2006 represented about $5.4 million in net revenue and political revenue was about $600,000. Taking into account this revenue contribution last year, our relatively strong television business performed well during the quarter. Overall for the quarter, local television revenue increased 1% while national revenue decreased 14%. Our largest categories for the quarter included automotive, services, telecom and fast food. The telecom category recorded a 5% year-to-year increase driven by increased spending from Sprint, Alltel and Cricket Communications. Our fast food category grew 2% due primarily to increases from Subway, Olive Garden and Dairy Queen. Offsetting overall advertising gains were softness in the automotive category minus 13%. Non-returning World Cup comparables were a significant factor in the auto category as General Motors, Chevrolet, Ford dealers and Toyota dealers were each heavy sponsors of last year's World Cup. On a more positive note, in the second quarter we signed on 74 new advertising clients who spend over $10,000 with our television group. The categories for these advertisers include automotive, services and financial as we welcome new advertisers, Volkswagen, Nationwide Insurance and [Ace] Mortgage to our list of active clients.

Turning to out ratings performance for May 2007, our Univision affiliate group continues to dominate ratings in their respective markets and TeleFutura, in many of our markets, is the number two ranked Spanish-language television station. Our Univision audience gains year-over-year were impressive. Sign-on to sign-off, adults at 18 to 49 ratings increased 14%, while adults 18 to 34 grew 11%. Overall, according to the May 2007 survey, seven of our Univision affiliates were ranked number one or two in primetime, adults 18 to 34, regardless of language. Our Univision primetime group ratings increased 27% for adults 25 to 54, 25% for adults 18 to 34 and 15% for adults 18 to 49.

A critical part of our television strategy is our local news offering. Our investments in our television personalities and production teams have clearly paid dividends as our news programming continues to garner greater share. Looking at local early news, our Univision group ratings were up 25% adults 25 to 54, 8% adults 18 to 49 and 7% adults 18 to 34 year-over-year. Additionally, in 13 of our local news markets our stations were either number one or number two regardless of language. Our El Paso Univision affiliate, one of our more mature markets increases local early news ratings by 88% in adults 18 to 34. Taking a look at the Univision national news program, our group ratings rose 17% for adults 25 to 54, 8% for adults 18 to 49 and 7% for adults 18 to 34. In mid-July, we expanded our newscast on our Las Vegas Univision affiliate to seven days a week, adding a 6 P, an 11 P and broadcast on Saturday and Sunday. Our early local newscast is currently the number one rated newscast Monday through Friday in the market. Extending our strong local news brand to the weekends was a logical step for us in Las Vegas as we ha--as we have--as we have in other robust--robust Entravision border markets like San Diego, El Paso and McAllen. Year-over-year our TeleFutura television group doubled their ratings sign-on to sign-off in adults 18 to 34. Three of our local stations also experienced triple digit growth during this time period, Washington, D.C. up 200%, and Las Vegas and Tampa each up 100%. And our El Paso Telefutura affiliate was up 50% year-over-year in adults 18 to 34. Our early check-in for the July book indicates continued solid ratings growth for our Univision and Telefutura affiliates in overall viewing, primetime and early news based on household viewing.

Turning to our radio division, radio had another solid quarter. Our 9% pro forma revenue growth in the quarter once again outpaced the general market, which is expected to be slightly down according to the Radio Advertising Bureau. In the second quarter of 2006, we benefited from the broadcast of the World Cup on our radio stations in Los Angeles, Las Vegas, Dallas and El Paso, which generated about $1.8 million of net revenues. As noted in our last call, we moved KSSE's signature event, Reventon, to the second quarter in order to strengthen the show's lineup and conduct the event during the spring [Arbitron] period. Reventon's super [stray] once again exceeded all of our expectations. More than 15,000 fans enjoyed the six-hour concert that featured top name artists such as Jennifer Lopez, Mark Anthony, [Rick Injaguardes] with special guest (inaudible). Local sales registered solid growth of 12% in the quarter and represented 79% of our total revenue while national sales were flat. We saw strong growth in each month of the quarter registering a 10% increase in April, a 7% increase in May followed by a 10% increase in June. Our monthly performance well outpaced the industry according to the Radio Advertising Bureau. Our local revenue growth was driven by our company's concentration on account executive sales trainings and making sure that our management team--management teams lead by example and spend more than 80% of their time making sales calls. Once again, automotive was our top advertising category in--in radio, which grew 18% over second quarter of 2006. Audio represented 21% of our total radio revenue for the quarter. We have found significant strength in tier 3 spending, local dealers which increased by 43%. We saw strong commitments by both General Motors and Dodge while our sales force continues to generate new relationships with those on the dealer side. Following the automotive category were travel and leisure that increased 6%, services up 8%, and telecom increased a whopping 36%. For the quarter, we welcomed 31 new advertisers to Entravision radio that spent more than $10,000. First time advertisers included both Boost Mobile, LFI Center, Red Earth Casino, [Edo] California and Foster Farms.

Los Angeles remains a very competitive market, and we believe the recent programming changes we initiated are starting to generate results. Besides revamping our morning show, La Regadera, in mid-July we recently announced a bold and innovative programming move. Our radio station KSSE Super Estrella 107.1, along with the rest of our networked Super Estrella stations, added English-language hits to its current contemporary hits radio format. This change brings together a strategic blend of top rated music for our listeners which are are branding Lo Mejor de Los Mundos, or the best of both worlds. We have seen tremendous acceptance from advertisers and a large amount of interest from new clients. By integrating mega-hits from English-language Top-40 artists such as Nellie Furtado, Beyonce, Fergie, Justin Timberlake and Gwen Stephanie into a rotation of Spanish-language power-artists like [Mena], [Juana], Shakira, and Paulina Rubio, Super Estrella is once again pioneering musical innovation. And now more than ever Super Estrella is Numero Uno en Exitos and Number One in Hits. Besides exciting programming enhancements, our engineering staff installed a new booster to cover the San Fernando Valley. From this location, the booster will cover almost 1.2 million listeners, with 46% of those listeners being Hispanic. This is a 48% increase in total potential listeners over our previous Burbank booster site.

Looking at the spring ratings release through yesterday, we continued to grow our share within a number of our markets. This once again--this is once driven by the investments we are making in our programming and formats. [Peolin Por La Manana and Erasmo y Chocolate continue to perform well for us in the three markets that (inaudible) released through yesterday. Sacramento, Stockton and Palm Springs, we have seen a 17% increase average quarter-hour persons in our key demo adults 18 to 34. In addition, Peolin Por La Manana is the number one ranked morning show regardless of language in Stockton and Palm Springs and number one in Spanish in Sacramento. In the same demo, Erasmo y Chocolate has seen a year-over increase of 13% in the market's release through yesterday, Los Angeles, Phoenix, Sacramento, Monterey and Stockton. The [move] Erasmo y Chocolate to afternoon will continue to pay off as Arbitron's personal people meter become the currency in Los Angeles in January. In the Los Angeles spring Arbitron release Monday through Sunday 6 a.m. to midnight in adults 18 to 34 our cluster declined in average quarter hour share over the winter release, but we have seen some very encouraging signs. Indie 103.1 saw 10% and 11% increase in Monday through Sunday average quarter hour share winter release compared to spring in both adults 25 to 49 and adults 25 to 54 respectively. KLYY Oye! saw a 10% increase in our key demo, adults 18 to 34, for the entire week winter release compared to spring. With the changes that I described earlier, KSSE Super Estrella delivered an excellent June in average quarter hour share in adults 18 to 34 compared to May. In morning drive and afternoons we experienced share increases of 45% and 100% respectively, and our total week Monday through Sunday 6 A to 12 midnight increased 39%. We will update with you our ratings results in the next call.

Turning to the outdoor division for the quarter we reported a 2% revenue decline driven by a 26% increase in local revenue offset by an 18% decrease in national revenue. Outdoor markets producing strong revenue performance during the quarter were Los Angeles, Sacramento, Fresno and Tampa. Strong categories for the quarter included services up 28%, retail up 51% and public service up 109%. While national revenue for our process has been sluggish, we are pleased with the progress we have made to date with our expanded local sales effort and remain committed to driving local revenues across all our outdoor markets.

In conclusion, overall, we are optimistic about the second half of 2007, despite about $2.6 million of World Cup and political revenue in last year's comparable quarter and $2.3 million of political revenue in last year's fourth quarter. However, because of our strategically placed growing markets, we do anticipate political activity late in the third quarter and early fourth quarter. We continue to strengthen our program in content offerings and are delivering improved ratings. Our sales teams are expanding our advertising base, and demand for Spanish-language advertising remains strong. In addition, we remain proactive in exploring opportunities to expand our footprint and strengthen our position in existing markets. Our management team is focused on managing our cost structure, driving the top line and creating value for shareholders over the long-term.

With that, I'd like to turn the call over to John DeLorenzo for financial overview.

Thank you, Walter and good afternoon, everyone. As Walter has discussed, pro forma net revenue for the quarter was $76 million, down 1%. Pro forma operating expenses increased 4.7% to $44.8 million, and pro forma consolidated adjusted EBITDA decreased to 10% to $27 million. Free cash flow, which we define as consolidated adjusted EBITDA minus capital expenditures, cash interest, cash taxes plus interest income was $0.15 per share, up 2%. Operating expenses for the quarter increased to $44.8 million, an increase of $800,000 or 2%. 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 million, or 4.7%. Of the 4.7% increase in the expense, $700,000 relates to non-cash stock-based compensation expense associated with the vesting of stock options and restricted stock units, and 1.8 relates to our large promotional events in Los Angeles, Reventon, which we then moved from the third quarter to the second quarter this year. Remaining 2.2% is core expenses such as increased salary expense, increased utility expense associated with [dTV], increased news expense and increased leasing expenses. Excluding the non-cash stock-based compensation expense, corporate expense for the quarter increased to $4.3 million from $4.2 million, an increase of $100,000. The increase was primarily attributable to higher professional fees. Free cash flow was $15.3 million, or $0.15 per share, in the second quarter of 2007 up from $0.14 per share in the second quarter of 2006. The EPS for second quarter 2007 was $0.08 per share compared to a negative $0.016 per share in the second quarter of 2006. The $0.08 per share was higher than our guidance of $0.04 per share due to the increase in value of our swap agreements. We would have been in line with guidance if we exclude the increase in value of our swap agreements.

Turning to our balance sheet, as of June 30, 2007, our total debt was $497 million, and our trailing twelve-month EBITDA, as adjusted, was $98 million. Our net debt to EBITDA as adjusted was 3.7 times. Cash on the books was $134 million at June 30, 2007.

Turning to our outlook for the third quarter 2007, we're once again providing pro forma guidance information, sale of the company's radio assets in Tucson and Dallas in the third and fourth quarters 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 broadcasting results from those markets for the current period and prior period so that comparison between the periods will be meaningful. The amounts excluded from net revenue and operating expenses for the third quarter of 2006 were $1,741,000and $1,195,000 respectively. The Company expects approximately $200,000 in operating expenses and $400,000 in corporate expenses related to stock option compensation in the third quarter of 2007. For the third quarter of 2007, we expect net revenues to be approximately flat and operating expenses to increase by low single digit percentages as compared to the third quarter 2006. It should be noted that while the majority of the World Cup revenues were recorded in the second quarter of 2006, we had approximately $830,000 of TV World Cup revenue and $210,000 of radio World Cup revenue in the third quarter of '06. We also had $1.35 million of revenue associated with our Los Angeles promotional event for radio in third quarter of 2006. We had $725,000 of political TV revenue and $137,000 of radio political revenue. With the exception of a small amount of political revenue, these revenues are nonrecurring in the third quarter of 2007. Excluding the incremental portion of these nonrecurring revenue items, we expect net revenues to increase by low single digit percentages in the third quarter.

Excluding the non-cash stock-based compensation, corporate expenses are expected to increase by low single digits as compared to the third quarter of 2006. Depreciation and amortization is expected to be between $11.4 million and $11.6 million, and net interest expense for free cash flow purposes is expected to be between $7.9 million and $8.1 million. We currently anticipate an additional $4 million non-cash interest expense related to the decrease in the value of our interest rate swap agreements. We expect CapEx to be between $4.5 million and $5 million for the third quarter of 2007. We expect $5 million in digital expenses and approximately $11 million of maintenance CapEx for a total of $16 million of CapEx in 2007. The digital expenses include the remaining digital television conversions, HD upgrades at our radio division and digital board upgrades at outdoor. Third quarter earnings per share is expected to be $0.02 per share and free cash flow to be $0.13 per share based on 104 million shares outstanding. This concludes our formal remarks. Walter, Phillip and I would be happy to take your questions. Operator?

(OPERATOR INSTRUCTIONS) One moment, please, for the first question. And our first question comes from the line of David Miller with SMH Capital. Please proceed with your question.

Hi, guys, good afternoon. I have to admit I was pretty pumped up when I saw the pro forma revenue growth figure for radio, especially in light of the overall general market. And then you guys revealed that you've got 8% expense growth in the quarter, and I guess I'm just wondering what good is that revenue figure when you've got an expense bogey that's just so high? I'm wondering what's going on in--besides new programming, is there anything else going on in terms of the overall piece rate system that you have with regard to sales that might be taking expenses up so high? And is it just a one-time thing, or is this a pattern that we should assume in our models in the future? Thank you.

David, as we talked about in our second quarter or end of our first quarter--second quarter call--first quarter call, we moved our event Reventon from the third quarter in '06 to the second quarter in '07, so we didn't have comps. And we had about $900,000 of Reventon expenses compared to $1.25 million of Reventon revenue, so therefore the event was very profitable. But virtually the entire amount of radio increase and expense was associated with that Reventon. If it wasn't for that, we would be looking at 5%, 3% growth.

Okay. Thank you.

And our next question comes from the line of James Dix with Deutsche Bank. Please proceed with your question.

Good afternoon, gentlemen. A couple questions. I guess just looking at the difference between third quarter outlook and second quarter. Are you seeing any changes in category, pacing, in the third quarter, any sign of any differences in regional pacing, markets that are more affected by real estate type issues? Just trying to get a little bit more color as to the difference in trends for the third quarter, even after excluding the World Cup and political and the concert items. Secondly, any update on the M&A environment or the timing as to when you think you're going to be in a position to make a decision as to what to do with all the cash you have? And I guess, finally, any assessment at this point as to what you think the impact of the pers--portable people meter is going to be in L.A. on the radio environment, and did that have any relationship to your format change or tweak in Los Angeles? And that's it.

James, it is Walter.

Hi, Walter.

Hi. How are you?

Good.

I'll take the middle question first, which is an update on the M&A environment. I mean, we continue to look for opportunities to strengthen our clusters. We have a couple of opportunities right now that we're reviewing, and we have also authorized $100 million buyback program, which we initiated back in November, that continues to be active. And so that certainly is probably at this this time enough to keep us busy with regards to our excess cash. As far as the PPMs are concerned, all formats and demographic groups experienced higher (inaudible) reduced time listening PPM with the personal people meter. Ethnic groups see a larger percentage difference because the [dial] reported a disproportionately higher [TSL] to begin with. The good news for ethnic formats is that TSL is still very high. In fact, the people meter confirms the ethnic audience demonstrates higher TSL and higher station loyalty than any other demographic groups, and people meters confirm that using ethnic-formatted stations are the only way to effectively reach those important demographic segments of the market that we serve. And Phil's going to address the first question that you asked.

Yes. Thank you. Hi, James.

Hi, Phil.

Just kind of add on, the PPMs are going to be a good thing for Spanish-language radio as the LPMs are for Spanish-language TV. We just--we're seeing the LPM launch in Tampa, on the TV side, and we're up 50% in primetime, the LPM versus the metered market methodology that Nielsen's had in place for many, many years. So I think it's a lot less vote casting in the diaries that was going on. And the diary system has a lot more actual viewing being recorded, and they get the samples correct in both radio and TV. We're going to be much better off for it. Significantly better off for it on the radio side. As for, I think, your first part of your three-part question, was the outlook or the pace in third quarter, and frankly we had--we had tough comps, as Walter mentioned in his opening remarks, with the World Cup and political, in second quarter. And the biggest challenges were in the auto categories as well as what's going on in finance and softness across the country with the mortgage business being slowed down. And we saw that again in July, the TV automotive business continued to lag behind due to primarily the World Cup situation, the accounts from last year, but there--we did see a little bit of a softness from domestic auto. It's tough out there on the auto side.

That said, we see a big bump in September for our auto business. It went flat in August, but we have a disproportionate amount of waiting in the quarter going towards September for the domestic auto, and that may have a lot to do with the new model year push, but particularly from GM and Dodge. In fact, I think on TV we're 2.5 times the domestic auto spending on the books for September than we are in August. And on the radio side, similar situation. Radio, the auto, was up 17% in Q2. And then we saw our radio in July was down single digits, but again that was because we had some leftover World Cup--World Cup comps from Toyota dealers and Nissan regional, so once we kind of flush past this World Cup, we feel pretty good about our auto business and basically what we're seeing in September is making us feel pretty good (inaudible) in that category. I don't think we're going to see any turn around in the financial area soon. I think that's with us for a little bit with this mortgage and housing situation, and we're seeing our finance--our finance category soft. We saw it in second, and we're seeing it again in third. We saw it in second for both radio and TV, and (inaudible) outdoors, so that's one that we're going to have to live with for a little bit. But we're encouraged about the auto pickup, and we're very encouraged about the telecom. That has been a strong category throughout second and third.

And one more thing. To reiterate, if we have--if we back out the incremental portion of the one-time revenues from third quarter last year, we will be looking at a low single digit growth rate. And I don't think there's many people projecting overall growth for the third quarter.

That's great. Just one follow-up. Do you have the pacings by month for the third quarter? Just trying to get a sense, given that World Cup hits in July and kind of leaves you in August and September, how that's pacing?

We were down in TV. We're down in radio in July because of that World Cup comp. Basically flat in both for August, and up mid-to-high single digits in September. Actually, I'm looking at a gross, and it's fluctuating between 11% and 13% on a TV side--total TV for September--and it's plus 4 or 5 on radio for September. But that'll--I am telling you that right here and now today. That'll move a point or two given the day or the week. But September to that point, September is very strong.

Okay. Great. Thank you.

And the next question comes from the line of Victor Miller with Bear Stearns. Please proceed with your question.

Morning. Thank you for taking the questions. First of all, could you provide us maybe some--in the past you provided us with some insights on what percentage of the quarter is booked for radio and TV. Secondly, John, maybe you could talk a little bit about how you're handling the repurchase. You had $100 million, I think you did $14.1 million through the first quarter, and you have some potential, the ability to maybe repurchase some shares held by Univision. Maybe talk a little about that. And lastly, when do you think the timing is where you and Univision will work together to execute a [retran] strategy? When do you start actually approaching, even though it's an '08 event? When do you think you'll start that negotiation?

Well, on the stock, we have $100 million authorization out there. As you say, we've done a little over $14 million. We'll be looking at that again. Our window we'll open--we have a [10B5] in place--and our window will open Tuesday of next week, so we'll be looking at the potential to get maybe a little more aggressive there, but we'll be discussing that after this call. However, we don't--we can't control when there is M&A activity. Everybody is aware that Univision talked about selling stations, but they haven't officially but Albuquerque on the market, so if and when they put the rest of them on, we'll be looking at them. But that being said, we'll be looking at our 10B5 and making some adjustments probably early next week.

And, John, you didn't repurchase any stock during the quarter?

No, we didn't.

Victor, with regards to your question about working with Univision, we've had preliminary discussion with them about retransmission strategy, but nothing certainly definitive yet as to how we might work together. But I think--believe that we'll have better information probably as we approach the fourth quarter.

And then maybe you can talk about that question on the percentage.

First question, hi, Victor, this is Phillip. Thanks again, Walter. I think it is pretty common knowledge that they're searching for a new Director of Affiliate Relations which will (inaudible) fill that position as we hear, prior to $4 million of definitive strategy,as go forward with retran. So Walter's right, it's going to be a few months away. As far as the billing on the books to forecast, 80% or better, 80% radio, 81% in TV today, and 94% on the outdoor, which as you know, lays in earlier.

Right. Lays in earlier. Thank you kindly.

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

Thanks. Your guidance for the second quarter was flat, but you were slightly below that, so what segment performed below your expectations? Was it Outdoor? Looks like it may be. I just want to confirm that. And then what's causing the weakness in Outdoor in New York? Is it that you're losing share to other players, or is it something more company specific?

Marci, our outdoor division did perform below expectations. Most of the issues are related to national business in New York. About 70% of our outdoor division's revenue is generated out of New York, and national is down 21% in New York. So--and we believe that the other outdoor companies also encountered the same tough national market in New York that we did. That's basically the issue.

And on the television side, I think we're realizing now that there was more incremental related to World Cup than we originally thought when we were saying 50%. As we look at the quarter, it was probably much more incremental.

John is correct. Television was a little under what we had all wished--what we had initially forecasted.

Okay. And then one follow-up. How much is finance--the finance category--as a percent of revenue for both TV and radio?

Why don't you give us a minute to it look that up and we'll answer that question.

It's 3% on television, and on radio it's 7%.

Thank you.

Our next question comes from the line of Lee Westerfield with BMO Capital. Please proceed with your question.

Thanks, gentlemen. Good afternoon. The question I have--really there are two parts to this one. The first on the radio side. If I could get a little bit more color on the level of ratings, if you will, monetization of both Super Estrella and Peolin. I guess, specifically, I guess we would characterize it as where where we stand on power ratios given the strength that the ratings have been doing for those two sources of programming. And so the second question and, Walter, I think you just touched on it a bit, but if you could go into a little more color as to the outdoor, the national vers--down local up, was that again, as you say, New York versus Los Angeles. But what were the factors that drove national downward overall and local so strong? Thank you.

Well, like I said, it was the national business, Lee, that was down in New York that impacted our performance for the division. The good news is that we're seeing--in the second half of the year--we're seeing national come back in New York, and the numbers we see right now for growth in national are pretty strong. But in the categories that were down in national were automotive, which is down about 29%, and telecom down about 30%. Was there another question, Lee?

Yes, sorry, thanks, the monetization (inaudible) power ratios on Peolin and Delta One Super Estrella programming, if you could give us a better sense about where, I guess, the overall growth in radio, but what the progress is in terms of the selling of the ratings that you've been doing in those--

I understand. The--we just instituted or initiated the changes to Super Estrella, so we think they're all positive changes and we're going to see some ratings growth there that we'll be able to convert to revenue. We're already seeing the growth or the conversion of ratings to revenue in Los Angeles with our Erasmo y Chocolate show as well as Oye! overall. In fact, Oye! had a very strong quarter for the quarter, and the ratings was also strong. As for Peolin and the markets where we air him, the eight markets, we continue to see ratings growth with Peolin. We've seen that now for about two years, four quarters, no, more than four quarters, almost eight quarters. So we are continu--continuing to convert those ratings to revenue, and we're seeing our revenue growth in the the markets where we have Peolin. I don't think there is one market where we air Peolin that we haven't seen strong--strong revenue growth.

Thank you.

Thank you.

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

Yes. Good afternoon. Just a question on the differential, I guess, between your ratings growth and revenue growth. If you could just comment a little bit on pricing trends that you're seeing out there, and I don't know if there is any way to strip out the World Cup from that, but just talk about what the pricing environment is for your inventory both on TV and radio, that would be great. Thanks.

Hi, Gordon, this is Phillip. I'll try to take that one. We had World Cup, so we had a little bit higher rate on an average unit rate in Q2 last year for both TV and radio. Our rates were slightly down one, two points in Q2 this year as a result. But once again, if we--once we flush through the World Cup comps in July here, those are shored back up, and we actually are seeing a little bit of an increase.

Great. Thank you.

And the next question comes from the line of John Klim with Credit Suisse. Please proceed with your question.

Hi. Good afternoon, a large picture question here. There's a pretty substantial difference between Hispanic buying power as a percent of U.S. total buying power and Hispanic ad dollars as a percent of total U.S. ad dollars. What do you think it takes to ultimately close this gap?

Well, I think it takes--there's a number of variables. Certainly, continuing to educate the advertising community about the growth of the Hispanic market, both the population growth as well as the consumption or consumer growth. We continue to see that the population is growing an average of six times faster than the non-Hispanic population, and the consumer buying power is also growing at a much higher rate than the general market, so I think that you will continue to see that gap close. We certainly have seen great strides in the Hispanic buying power. Its growth rate, I think, is about 11% compounded over the last, call it, five years, and that's the anticipated rate for the the next five years. We see Hispanic buying power going to a trillion by the end of this decade, and by 2020 it will be over 2 trillion, so that gap will continue to close. Certainly, Hispanics are attending or gaining higher education at an ever increasing rate, so we're very positive about the growth and prospects for the Hispanic consumer.

And the other thing you need to consider is the buying power over the average household income. The Hispanic population, on average, is almost ten years younger than the the non-Hispanic. And if you were to adjust for that age difference, the average household income is on a par with non-Hispanic. Recognize the older you get the more experience you inevitably would have and therefore your earning capabilities increase. So I think that that's part of the educational process with the advertiser.

Anything else?

No, that's it. Thank you.

Thank you.

(OPERATOR INSTRUCTIONS) And now we have a follow-up question from the line of Victor Miller with Bear Stearns. Please proceed with your question.

Thanks. Just on the auto, a lot of auto numbers have been thrown around, but in first quarter TV you saw a plus 23 as 32% of your business, and radio I think was up 47. You talked about radio being up 43%, auto being down 29 in TV this quarter. Could you just talk about how much--I mean, obviously, I imagine a lot of that is related to the World Cup. Is that true and what does auto look like as a category for the the rest of the year? It sounds a little bit mixed, but improving with September being a high water mark. Is that--I just heard a lot of auto numbers, and just want to make sure I understand what the World Cup impact was on auto last year.

Yes, so, Vic, this is Phillip. We--just real quickly, automotive in second quarter was--for radio--was 20% of total revenue. For TV it was 30%. I think, as we tried to explain, the Q2 auto for TV had dropped about 13%, but that was mainly due to General Motors, two-thirds of the drop in spending year-over-year. But you have to recognize that GM spent $2 million in World Cup for our year on sponsorships. So that pretty much wipes out--their incremental spending pretty much wiped out that drop.

Right.

And if you were to adjust for that World Cup spending last year, or adjusted out, ex it out, GM was basically flat.

And auto would have been what if you had taken out that sponsorship money?

Well, with that particular advertiser, they would have been flat, but I think we can represent that they would have been flat overall. I have--I will definitely do that calculation. I don't have that calculation in front of me.

Thanks.

But, again, our July business, automotive was--continued to lag behind prior year, but that again, as we stated earlier, was due to the World Cup comps, and there was a little bit of softness in domestic auto, admit that, but I think once we pass that June, July World Cup comps we expect to see measured improvement in the auto category. And in fact, I mentioned earlier that the auto has moved up and rebounded nicely in September, and we have again about 2.5 times as much automotive billing on the books books today, domestic and import, for September than we do in August. August is kind of like that transitional month for us on the automotive side, but we have bounced back into strong positive growth territory for auto in September. And we believe that's going to continue into fourth.

Lastly, Vic, you talked about the first quarter. First quarter had no World Cup comps, and first quarter of '06 was actually down in automotive, so we were off a pretty low base without World Cup comps.

I got you.

The other thing I'd like to add about September is that the last couple years we haven't seen that September being as robust as it has in prior years, but this year certainly is shaping up like a--like a very strong September.

John, just one follow-up on the repurchase. Why did you guys choose not to repurchase any shares in the quarter?

Well, Vic, we make a decision early on once we're in a open window, and once we're there, we can't change it. And we had quite a run-up in our stock, so it kind of got ahead of our--of our limit that we put in place at the 10B5. And once it hit that limit, we couldn't buy any more, or we couldn't change the 10B5 plan.

I see. So the--the amount you set for your 10B5 at the beginning of that--beginning of that window was immediately exceeded?

Right, exactly.

But now you can reset if you want.

Once the window opens again we can reset it.

And that window opens when?

Probably this Tuesday, I think.

Thank you, John.

Two business days after the call.

Thank you, John.

And our next question comes from the line of David Joyce with Miller Tabak and Company. Please proceed with your question.

Thank you. As it relates to the up front negotiations, is there anything that you can glean for what you might benefit out of that over the course of the next year for the Univision and Telefutura affiliates? And then secondly, I was wondering if you could give any color on the digital boards, how many you're at? If you're also expecting already getting three to five times the revenue of regular boards, that sort of thing? Thanks.

David, we don't participate in the up fronts, but what we have seen so far is relatively positive in terms of the up fronts for the Hispanic television segment. As far as our boards are concerned, we're in the process of looking at upgrading or digitizing some of our boards in Los Angeles. And we're working on that as we speak and hope to execute on that plan sometime in the fourth quarter.

And do you have any of the LATV digital content running yet?

We do. We have--we're up and running in Laredo, as our first market. And just real quick back to Walter's point, we don't participate in the up front. That's a network issue, but we did have Ford approach us for the first time for an up front buy on an annual '08, and in one market in conjunction with their network up front, and that was in Vegas, and we ended up with about 30% gain over this current year in that forward buy.

Okay, yes, I knew you didn't do anything directly, now-- I was just wondering if there was any color, any feedback from advertisers, any incremental advertisers that would be coming to any of the network market and also could might be buy in addition on your stations?

None more than what Walter just communicated.

Okay. Thanks.

And the next question comes from the line of Mike [Hisenower] with Highland Capital. Please proceed with your question.

Hi. Thanks, guys. I didn't catch before, radio auto performance for the quarter?

Radio for Q2 was up 17%. It was a rough--a little over 20% of our total revenue, and it was driven mainly by GM, Chevy and Nissan.

Okay. Victor covered most of the information I wanted to know, but on prior calls you've kind of broken it up into tiers, OEM versus local dealer. Do you have a sense for performance in various tiers for the quarter? I know you've mentioned GM, but a little more detail if possible?

Well, we know that tier 3 for radio was particularly strong in the second quarter.

And tier 2, which was most of the World Cup money on TV last year, was particularly soft because of the World Cup comp from the prior year. But again, that has bounced back the second part of Q3.

Great. Thanks.

Thank you.

The final question comes from the line of Lee Westerfield with BMO capital. Please proceed with your question.

Sorry, a follow-up and it's a real detail, but as to the third quarter, what offset to the World Cup did, if any, the Copa de Oro provide? Thank you.

I think, Lee, we tried to take a stab at that at the last call, and we were pretty close on the Copa De Oro. Overall, on that event which fell entirely in the second quarter--

Yes, sorry. I misspoke. I meant Copa America, pardon me.

Okay. Yes, cause--the Copa America was roughly $300,000 gross in second quarter, and the other two-thirds fell into most of July, $700,000. We did about a million dollars gross in both Q2 and Q3 Copa America, $300,000, $700,000.

Thank you very much. On the incremental side, however, very little was that was incremental.

We estimated about 20% of that was incremental.

Thank you.

Thank you.

Mr. Ulloa, there are no further questions at this time.

Thank you, operator. This concludes our second quarter investor conference call. We look forward to speaking to all of you in November to report our third quarter results. Thank you for participating.

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