Entravision Communications Corp (EVC) 2010 Q1 法說會逐字稿

Hello, this is the Chorus Call operator. Welcome to the Entravision Communications Corporation First Quarter 2010 Earnings Conference Call. As a reminder, all participants will be in listen-only mode. There will be an opportunity for you to ask questions at the end of today's presentation. (Operator Instructions). For your information, this conference is being recorded.

I would like to turn the conference over to Walter Ulloa, Chairman and Chief Executive Officer. Mr. Ulloa, please begin.

Thank you, Andrew. Good afternoon, everyone, and welcome to Entravision's first quarter 2010 earnings conference call. Joining me today is Chris Young, our Executive Vice President and Chief Financial Officer, and Philip Wilkinson, our President and Chief Operating 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 a list of risks and uncertainties that could impact actual results. This call is the property of Entravision Communications Corporation. Any redistribution, retransmission or rebroadcast of this call in any form without the expressed or written consent of Entravision Communications Corporation is strictly prohibited.

Also, this call will include certain non-GAAP financial measures. The company has 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 the Form 8-K.

In the first quarter, we returned to growth as we delivered improvements in our consolidated revenue, cash flow and EBITDA performance. Our television and radio operations are benefiting from the improving economic and advertising environment, which has continued into the second quarter. In fact our revenue pacings for the second quarter are in low double digits for television and high single digits for radio.

We have seen these improvements build in our largest markets first, and they have been broad-based across a number of advertising categories. Our performance is also benefiting from our proactive cost-control efforts and we remain focused on managing our expenses and driving efficiencies across our operations.

Overall, we remain optimistic for the rest of the year given the trends we are seeing. Our opterations are well positioned with some of the most dynamic Hispanic markets in the United States and we remain poised to benefit from World Cup, political advertising and the 2010 census campaign. We are especially excited about our prospects for advertising in the 2010 World Cup games. Starting on June 11, we will televise 64 World Cup Soccer matches on our Univision and Telefutura affiliates, as well as broadcast the World Cup games in 14 of our radio markets.

Turning to our financial results for the quarter, our consolidated first quarter revenue was up 3% versus the same period in 2009 to $43.1 million. Operating expenses decreased 6% to $29.8 million in the quarter. Consolidated adjusted EBTIDA improved 42% to $9.5 million versus last year, while free cash flow per share increased 200%.

Turning to our Television division, excluding retransmission fees, revenue was flat in the quarter versus the year ago period. Local revenue grew 2% and national revenue fell 1%. Political revenue in the quarter was approximately $800,000 in line with our expectations.

Overall, there were several encouraging signs within our first quarter 2010 television group results. First, our growth has been broad-based as we experienced growth in six of our top 10 advertising categories including auto and retail compared to the first quarter 2009. Additionally, we're seeing improved results across our television group with our largest markets leading the turnaround. And finally, we feel that these improvements are sustainable into the foreseeable future.

The auto category improved 6% overall despite the absence of any activity from Dodge, Chrysler, Jeep due to their lack of Spanish language creative. The category rebounded as a result of increased Tier 2 investments from General Motors, Toyota and Nissan. We expect to see slow steady growth from Tier 3 local dealers as dealer inventories are turning faster and factory orders are improving.

We are equally encouraged by the early results by Retail category, a category that declined 20% in 2009. As a result of increased expenditures from Ashley Furnitures, CVS Pharmacy, Rooms To Go and several others, the retial category grew 14% over our first quarter 2009.

services up 6%, healthcare up 7%, grocery convenience stores category up 28%, and our political category was way up over last year's comparable quarter. Texas primary rates help generate $800,000 in net political advertising with our television group, while the census 2010 campaign contributed approximately $200,000 to our first quarter results for our TV business.

Our largest category decliners were Telecom and Travel & Leisure. The Telecom category was primarily a result of AT&T Mobility pushing all Entravision spot TV activity into only three quarters starting on April 26, 2010. We expect to see significant improvement in this key advertising category in the second quarter. Travel & Leisure category was a direct result of significant budget cuts at the various state lotteries, including California, Florida, Texas and Virginia.

We successfully added 48 new advertisers who invested $10,000 or more in the first quarter with our television group, almost $1 million in new advertisers in the first quarter generated by our television sellers. Our sales teams have been re-energized by the recent operating trends and with the firming of the economy and advertising market we're seeing additional opportunities to secure new clients and categories.

Turning to our television ratings performance, our Univision affiliates extended the ratings leadership positions in the February 2010 sweeps with seven of our Univision affiliates ranked number one or two among adults 18 to 34 sign-on to sign-off regardless of language.

Univision's prime-time novela block continues to draw more and more viewers among adults 18 to 34. We are either number one or two regardless of language in six of our markets including Las Vegas, McAllen, Monterey/Salinas and Palm Springs, El Paso and Laredo.

Our high performance is even more striking given that NBC aired the Winter Olympic Games throughout much of the February survey in prime-time. Our local news programming continues to perform extremely well, enhancing our value to the community and creating attractive opportunities for advertisers. 12 of our affiliates are a number one or two in their markets for early local news among adults 18 to 34 regardless of language. In early network news, 14 of our Univision television affiliates are ranked number one or two in their markets among adults 18 to 34 regardless of language. In late local news, eight of our television stations are ranked number one or two in their markets among adults 18 to 34, again regardless of language.

All of our news products are important programs for the political category this year. Univision's annual awards special, Premio Lo Nuestro, was aired in February once again delivered the highest audience for a Spanish language television program in our markets. In fact, in our combined Entravision, Univision television markets, our Univision affiliates aired all the top 25 Spanish language television programs in the February sweeps.

Turning to our Radio division, our radio division revenues were flat in the first quarter, national was up 24%, while local was down 7%. Trends during the quarter improved each month with January local down 15%, while national was up 4%, February local down 2% while national was up 29%, and March local was down 5% while national was up 34%.

Our second quarter local radio pacings continued to improve, and our national pacings for radio continued their solid performance into the second quarter. We saw growth in 8 of our 10 categories in our radio division. Our top categories for the quarter was services up 95% over Q1 2009, travel and leisure increased 6%, automotive increased 56% over last year's first quarter, fast food restaurants up 2%, telecommunications up 3%, and retail up 40%. We saw double-digit growth from grocery, media, direct marketing, political and beverages.

In the quarter we added 51 new advertisers who spend more than $10,000. New advertisers included US census, 411 Pain, Florida Injury & Rehab, Cost-U-Less Insurance, Titan Insurance and JP Morgan Chase Bank. These 51 advertisers combined represented approximately $1.2 million for the quarter.

We are especially proud of the success we had in the first quarter across our three media platforms of television, radio and interactive in generating significant revenue from the 2010 census campaign. Almost $500,000 in incremental revenue in the first quarter from the 2010 census campaign and most importantly, our staff has done an excellent job of tracking the census response rate on a daily basis within the Latino communities in our 26 markets to ensure that Latinos are properly counted.

We are working closely with national organizations like NALEO as well as with our local, state and federal elected officials in every one of our markets to ensure that hard-to-count communities within our markets are aware of the importance of being counted in the 2010 census. We expect the 2010 census campaign will have an even greater impact on our second quarter results.

Looking at the latest ratings released to-date, our stations continue to perform well in the quarter, continue to perform well in the quarter. Overall, our adults 18 to 34 audience is up 3% in the seven Arbitron markets that had been released. Entravision radio reached nearly 3.9 million persons in all seven markets in the Winter Arbitron Survey. We have top five radio stations among adults 18 to 34 in Denver, where KXPK is the number two radio station regardless of language; Riverside/San Bernardino, with KLYY FM is number two position in the market and the leading Spanish language radio station; and KLOK FM is the number three radio station in the Monterey/Salinas; and KBMP FM is probably number four in Sacramento.

Our Tricolor Mexican regional format continues to perform exceptionally well. KLNZ FM in Phoenix is the number one Spanish language radio station with a 5.5 share of adults 18 to 34, up 10% from the previous book. Since converting to PPM, KLNZ's total reach has more than doubled up 107%. In Las Vegas, KQRT FM has a 3.1 share, and it's the number two Spanish language radio station in the market. Sacramento's KRCX FM is tied to the number six station in the market regardless of language with a 4.2 share. KRCX's total audience [cume] has grown 49% since the conversion to PPM last year.

Our Jose format has had significant success as well. In Sacramento, KXSE FM is the number four radio station in the market regardless of language and the top Spanish language radio station with a 5.8 share. KLYY FM in Riverside/San Bernardino continues its high ratings. In addition to being the number two station and though our core demo of adults 18 to 34 and number one ranked Spanish language radio station, it is tied in average quarter our rating as the market's leading station regardless of language among adults 18 to 49 and adults 25 to 54.

The audience growth experienced with the winter book keeps Entravision clusters in excellent competitive positions. Among adults 18 to 34, our cluster share is up over the prior book in Los Angles by 4% to 5.7 share; Entravision Denver is up 3% to 14.5 share; Sacramento's cluster is up 2% to 16.6 share, and Entravision Phoenix is up 1% to an 8 share; and our cluster in Monterey/Salinas is up 29% over the fall 2009.

Los Angeles is always a key focus for our radio division. Among adults 18 to 34, our El Gato radio station KDLD FM continues to perform very well. KDLD FM has a 2.4 share up 20% book-to-book, and it's the number five Spanish language radio station in a market of 13 Spanish language radio outlets.

Turning to our Interactive division, we continue to execute on our interactive and digital initiatives, building out our footprint and integrating our interactive media assets with our traditional broadcasting assets. In the last year, we have built one of the top Hispanic media destinations in the US, generating more than a million visits and a million hours of streaming per month.

In the future, we continue to see digital as growth driver and a critical part of our success. If we isolate our interactive revenue, it is growing at healthy rate and it's becoming more material to our overall company results everyday. However, we do not look at our interacted division as a segregated entity. We see ourselves increasingly as an integrated media company. We engage our audience across multiple platforms. This makes our model far more compelling, unique, and richer in terms of the new marketing programs we can offer our advertisers. With interactive, we're becoming a one-stop marketplace for advertisers they want to target Latino consumers. Although interactive revenue is still less than 2% of our total revenue, we grew interactive 11% in the first quarter versus last year's comparable quarter.

A key element of our interactive growth strategy is to expand beyond our television and radio websites into other vertical local sites. In the first quarter we launched our new Busca marketplace platform. Busca is a national and local interactive destination for Latino consumers, searching for businesses that cater to our local Hispanic communities. Busca offers robust microsites in Spanish with video, photo galleries, user testimonials, ratings, coupons, blogs, maps and much more. All these sites are optimized to increase the search engine traffic that leads to our advertisers. This product is a great complement to our on-air branding opportunities and capabilities.

We expect it to be fully launched in all of our 26 markets by this year's third quarter. In less than two months, we have launched this exciting new marketing product in four of markets -- Los Angles, Denver, Sacramento and San Diego. In that short time period, we have already booked $250,000 in incremental annual revenue for the company. We are excited about launching this product throughout the United States and beyond.

During the first quarter we completed with great success the positive CarrosYA.com in El Paso and Orlando. CarrosYA is Entravision's local Latino online automotive marketplace. In less than two months, we secured the participation of practically all local auto dealers in each pilot market. CarrosYA helped increase our share of automative advertising in our pilot markets by tracking new automotive advertisers as well as reducing the churn of existing automotive advertisers. We are now deploying CarrosYA to all of our top key markets.

In the first quarter, we launched our interactive World Cup 2010 Soccer lounge on all our TV and radio websites. This channel brings our visitors all the excitement of the 2010 World Cup with the latest news, pictures, and video. It is also designed to encourage discussion and engagement around the number one sporting event in the world. Advertisers are on our local World Cup Soccer lounges include Nissan, Hyundai, Budweiser and [Bevaline].

We continued the development of our national and local classified platform, where we believe they are significant opportunity for US Hispanics. The users of this site will be able to post listings for free, while upgraded listings in key category postings like jobs, real estate and others will be offered for a fee. We expect to launch this initiative during the second quarter.

Toyota, McDonald's, AT&T Mobility, PizzaHut, Metro PCS and many more.

Also we launched radio streaming mobile apps in our top 12 markets. Our mobile apps received five-ratings in the Apple iTunes Store and they were downloaded more than 30,000 times. We believe radio on mobile phones provides a great future for our radio broadcast assets and a new potential source of interactive revenue opportunities.

As you see, we are excited about the revenue potential for our interactive media assets. So we've built this interactive business from the ground up and we will continue leveraging the mass reach of our core broadcast television and radio assets to drive traffic to our online and mobile interactive properties, creating engagement, new opportunities for advertisers and growth for the company.

In conclusion, we are executing on our business plan, actively managing our expenses and remained focused on driving our free cash flow performance. We are benefiting from improving trends across our asset base and our second quarter is pacing strongly. We remain in a unique position to continue to capitalize on the growth of the Hispanic markets and remain optimistic about our ability to create long-term value for our shareholders.

At this time, I will turn the call over to Chris Young, our Chief Financial Officer, for a review of our financials.

Thank you, Walter, and good afternoon everyone. As Walter has discussed, net revenue for the quarter was $43.1 million, up 3%, operating expenses decreased $2 million to $29.8 million and consolidated adjusted EBITDA increased 42%, $9.5 million.

Free cash flow, which we define as consolidated adjusted EBITDA minus capital expenditures, cash interests, cash taxes plus interest income, was negative $2.6 million or negative $0.03 per share.

Operating expenses for the quarter decreased to $29.8 million from $31.8 million, a decrease of $2 million or 6%. Excluding non-cash compensation expense, operating expenses for the quarter decreased to $29.6 million from $31.4 million, a decrease of $1.8 million or 6%. The decrease was primarily attributable to a decrease in salary expense due to reductions of personnel and salary reductions, along with other costs control measures we implemented back in 2009.

Corporate expenses for the quarter decreased to $3.7 million from $3.9 million, a decrease of $0.2 million or 3%. The decrease was primarily attributable to a decrease in non-cash stock-based comp of $0.2 million. Excluding non-cash comp expense, corporate expenses for the quarter remained flat at $3.5 million for both quarters.

Free cash flow for the quarter was negative $2.6 million or a negative $0.03 per share. Cash interest expense for the quarter was $9.8 million. Cash CapEx for the quarter was $2.7 million. CapEx for the year will be approximately $7 million.

Earnings per share for the first quarter of 2010 applicable to common stockholders was negative $0.03 per share compared to an EPS applicable to common stockholders of negative $0.17 per share in the first quarter of 2009.

Turning to our balance sheet, as of March 31, 2010, our total debt was $360.5 million, and our trailing 12-month EBITDA as adjusted was $58.1 million. Our total debt to EBITDA as adjusted was 6.20 times versus the maximum leverage covenant of 6.50 times at 3/31/10. Cash on the books was $26.5 million at the end of the quarter.

This concludes our formal remarks. Walter, Philip and I would be happy to take your questions. Andrew, I'll turn it over to you.

(Operator Instructions). The first question comes from Marci Ryvicker of Wells Fargo. Please go ahead.

Thanks. I'm a little confused with some of your opening comments. As radio was flat in the quarter, but you gave all this great pacing data for services, and travel and leisure, and auto and fast food restaurants and all that stuff, is that just national pacings for the quarter?

What we said about pacings for the quarter, for second quarter, is that we're pacing right now in high single digits for radio.

Well, I'm sorry I guess my question was about the ad categories, but the performance for the first quarter where you gave all that categories....

We said we were flat in the first quarter in our performance.

Then you gave all these specific ad category performances? The confusion is you said eight of our ten categories grew in first quarter for radio, yet radio was still flat, that's what I'm having in...?

Correct, Marci. This is Philip. We had some significant categories that did drop, healthcare and finance, among others. That did bring that in flat.

Okay.

That was a combined both to be clear -- both local and national.

Okay. And then, can you talk about for you pacing data for Q2, how much is World Cup related?

Marci, we don't have that broken out. But we do know, I can tell you that there is still a significant amount of World Cup revenue we believe to add for radio in Q2, as well as television.

Okay. And there is a strength in radio related to the fact that you're doing 14 markets versus, I guess you did two or three before?

We did two in 2006 and we did about $2 million in those two markets and we certainly expect to -- well, we expect to do better. We expect to do better in a very tough environment or a much tougher environment than we saw in 2006.

And one last one.

In 2006, one of our major advertising categories in our TV business was automotive. We don't expect that to be the case this year and the same holds for radio. We don't expect automotive to be as robust as it was in the World Cup of '06. But, we have other categories that we're developing.

Okay. That's great. Thank you.

Marci, we also -- it is important to note that as you know from past World Cups, about 80% of the revenue falls in June and about 20%, a little over 20% falls in July. The quarter finals start in, I think July 1 for the calendar. But we have a pace, for example, on the TV side in April of plus 11%, so that low double digits applies to the pace in the first couple of months and then it bumps up in June.

Yeah, that's a good point. We said low single-digit pace for TV and high single-digit pace for radio in Q2, but yet as Philip just pointed out, almost actual for April is about 10%, plus 10%.

Low double-digit.

Yeah. And, obviously there is no World Cup in that month.

Right, okay.

We won't see any World Cup until June 11.

The next question comes from John Kornreich of Sandler Capital. Please go ahead.

Yeah. Hi, I have a lot of questions. What was the cash position at the end of March?

$26.5 million, John.

Okay. Your cost of debt is 11%. When does that ratchet back down?

The cost of debt actually is just a hair over 10%, because of the swaps we have. The swaps unwind on...

I am taking $40 million dividing by 360.

Right, you've got to factor in -- you got to factor in valuation of the swap if you want to break-out the interest expense.

Okay.

You have basically got -- the bank deal is LIBOR Plus 525 and then on top of that you get a swap, and generally that swap results in an all income costs with debt of about 10.10% I think.

Okay. And when does that ratchet back down?

It ratchets back down on October.

In October. Assuming you don't do any refinancing what might it look like?

You're talking about something in the -- we'll always have to have half of our debt swapped out.

Right,

LIBOR is at 40 bips on a three-month basis, then if you lock-in half the debt which is the bank requirement, you're probably going to pay, if you're at 575 without a swap you probably have to pay an extra call it a point on the swap if it's just half the debt all in on the average.

So it would be what, more like 6.5%?

Call it 6.5%, close probably to 7%. If adjusted to minimum holding on a swap or half the debt.

Because that's really clobbering your free cash flow.

The swap?

The whole $9.7 million per quarter.

We don't disagree.

Yeah. Okay, that answers that. On retrans, you mentioned that it was up $1.3 million to what?

Total retrans was just the hair over $3 million.

Up, I know you said $1.3 million.

Right versus....

Have we got our stride now in the $3 million a quarter?

More or less, there will be minor fluctuations just due to way the agreement is structured, but more or less we're hitting our stride now.

Okay. And getting back to prior question about radio, I think Marci didn't understand why so many categories are up and yet you are flat. But I'll go one step further. I don't understand radio ratings are up 3%, I think you said LA was up 6%, Denver is very strong, those are two of your really big radio markets. You have $1.2 million of new business, I mean, I can only assume if you're flat that you must have lost $1.2 million of business also, otherwise how could you be flat? And everything is working and you're still flat, I don't understand that.

Well, John I mean when you say everything is working, I just wanted to remind you what happened in 2009.

Yeah. Your comparison is....

Things are starting to come together for us in 2010. The industry is projected to be flat for the quarter. We're flat for the quarter. We believe the Spanish language radio has rebounded slower than English language radio. We haven't had the benefit of automotive the general market has had in the first quarter. And we think that our pace for second quarter is very strong and revenue follows ratings by about three or four months.

You said auto was up 6% for TV and 50% for radio?

56% for radio, but remember there is much smaller base for radio than there is for television.

I'm sorry, you said radio was up, how much?

56%.

Okay. And 6% for TV?

And 6% for television.

And what is television is....

Most of that was Tier 2.

And total auto was what percentage of ad revenue?

About 15%.

Okay, Okay. So, I mean basically if you look back a year or so, we've gone -- in TV, we've gone from double-digit declines to single-digit declines. This quarter if you take out retrans increase and political, it looks like that it may be flat maybe down 1% or something. But now the second quarter is going to be first -- you're saying break-out quarter.

We think so, from what we're seeing we believe that will be first break-out quarter.

Okay. Last question, CapEx, so you're saying CapEx will only be about $4.5 million for the rest of the year?

That's right.

Okay. Thanks a lot.

The next question comes from Jim Boyle of Gilford Securities. Please go ahead.

Good afternoon, again, Walter and Philip.

Good afternoon. Good to hear your voice.

Still in one piece. With the census coming up one thinks about the last census and how the Hispanic population was perceived to have likely have grown quite bit, but then when the numbers were counted and at least people thought they did count, it was a huge upside surprise. Do you think the census bureau this time as well as with your efforts and other people's efforts are going to have, one, a better count even if it won't perfect and two, will it be just as dramatic on the upside when the final numbers come out?

Well, I'll answer that question in two parts. I do think -- we do think that the Hispanic market will be better counted and we base that upon the all the work that we and others have done to ensure that. And frankly, we've seen a great deal of revenue flow into our company in the first quarter, and we expect that number to be as big or bigger in the second quarter and that is because of the amount of investment that the government is making and making sure that all of our citizens are properly counted.

We have done some heavy lifting with regard to that. We've worked with local agencies, national agencies, non-profits. We've worked with our federal elected officials as well as state and local. So we've done a great deal of work in this area. And if you look at the work we've done and you look at the amount of investment that's been made in our markets, it is a lot more than was done in the year 2000.

And as you just stated, the 2000 number that was projected when the final census came in, the Hispanic community was much greater than what was originally projected. I think it came in at about 36 million, and I think they were projected 32 million. In 2010, everyone expects the count to be 50 million or more for the Latino community. And we believe that over 50% of all the growth in the United States will have come from Latino community, as it did in 2000 and as it did in 1990. So we're expecting a robust census count for the Latino community when everything is rolled up.

Hey, another question on the radio front and on the pacings front. From what we've heard from other markets, that's general interest and niche formats, as well as what you've just noted and some of your peers have just started to talk up, is it likely that you're seeing a decent April, but it's really two monster months in May and June that are accounting for your high single-digit pacings to-date for the quarter?

Well, like I said I don't believe all of the money is in for World Cup. I think we're -- maybe for TV, we're two-thirds of the way there and for radio we're half of the way there. So I think there's still more revenue to come in for World Cup. I mean, you could draw that conclusion that you just outlined, but we're up plus 10% in April as a company for our TV and radio divisions combined, and you still have May which is traditionally a pretty strong month and then you've got June which as Philip pointed out 80% of the games are going to fall into June. We're pretty -- we feel pretty good about our prospects for the quarter and beyond.

Understood, I was just actually asking about radio, not at the whole company or TV. One final question for you and once again, it's probably more on the radio front than the TV front. Are you finding as the economy is reviving and advertising is coming out of its '09 depression that the agencies and the clients are starting to place budgets earlier, and are the budgets on average tending to be bigger, as well as earlier now that we're into mid-year?

Well, I don't think that the ad buys and the commitments are coming in any earlier. I think that because of the technology mostly that advertisers and agencies are able to wait until every late to place their buys and to get a good sense of where they want to invest their money. As for bigger budgets, slightly, slightly bigger.

Okay. Thank you.

(Operator Instructions). The next question comes from James Dix of Wedbush. Please go ahead.

Thanks very much. Good afternoon guys. Couple of questions. Just one more on the World Cup. Regardless of exactly how much ends up coming in, do you have a sense as to how incremental it's going to be to your overall revenue this year? I mean does it seem like it's going to be more or less than it would be in I guess the non-recovery year? I have a couple of others but I might as well just go kind of back --

Do you want to take from James --

(Inaudible--multiple speakers) one I could see that, Phil.

Yeah, we had calculated in '06 we were roughly 50% and we were shooting for that goal this year. But as you know, things are tough. So we're getting a little bit more aggressive here now with six weeks to go and it's going to be a little bit less than that. But, when it's all blended in we hope to have 30%, 40% incremental. It remains to be seen once we are in thick of it in June and how everything shuffles up. But as Walter said, we are about half way -- half way there, well over about two-thirds of the way there on the TV and about half way on the radio. So, right now, we will start getting a little bit more aggressive with the packages.

And do you think that 30% to 40%, does that apply to radio as well or is it a little different there because there is just more inventory?

Yes. No, I was referring to a blended rate across the board.

Across the board, okay. And would you say, I mean versus the general market in television, I mean do you think you are growing slower than the overall market at the moment or in line?

We have look at -- look we had -- the TVB had on the television side, January plus 7% and as you know, February plus 29% and March plus 20%, and that was really driven by political and Olympics. And we didn't share any Olympics and we don't have any NBC affiliates. In the political side, relative to the general marketplace, we don't get a lot of political in the primaries that we had Texas, most of that money came out of Texas, $800,000 of net revenue. So I think those were two big factors.

So you think if you looked at the TV numbers stripping out political, you would be growing more in line?

Stripping political, stripping Olympics on those two [Oddball 7] March and come back down here on April, May, exiting out the political, I think we are right in line or better and we are plus 11% here on the TV side in April and that's looking better than that in May/June.

Okay. And then I guess related to that, I mean how do you think your power ratios are now kind of post recession versus where they were pre-recession. I mean do you think they have changed much, you share that revenue versus your [plotting] share because it seems like your audience continues to grow pretty well. But I just want to see whether you've taken a look at that to see...

Let me answer it this way. Last year the market on the television side was down 22%, we were down 21% and our ratings held there up a little bit. So, the power ratios would have been in a holding pattern. This first quarter we just finished the February book year-over-year and we held our sign on/sign off, we held our prime time. So -- and revenues bumping up. Again I think absent political and Olympics at/or better than the TVBs and industries at so. But again the power ratios will be hopefully inching up.

Okay, sounds good. And then one last one, on the operating expense side, at what point do you start lapping kind of the cost cuts that you really phased in last year and do we start to perhaps start seeing positive operating expense growth, because they are down, which is pretty impressive?

We're there. Q1 if you recall, our round three of expense cuts that we executed last year were effective in April. So we're there, so beginning second quarter we will have lapped and we will now be on an apple to apples comparison basis for expenses. There will be some leakage of some of the cost cutting that we put into place. There will also be some incremental, let's call it variable expenses as a result of revenue, sales commission one that comes to mind along with bonuses and [markets that are based] on sales performance comping against the year last year where very little of that money was actually paid out. That's just two examples.

Okay. So I mean if you go to kind of high single-digit or close to double-digit growth, I mean do you start getting expenses growing more in that kind of mid -- low to mid single-digit range kind of for the rest of the year?

Well, gee, it's really a function of revenue, and it's tricky to answer that question without giving guidance, right. But as you factor in a higher variable cost along with some incremental leakage, you are not talking about double-digit OpEx gains but -- it's really a function of revenue. We'll have to see how revenue plays out.

Okay, I guess, another way of getting at. You are just looking at your fixed cost base. What now that you've lapped the cuts you made last April, what do you think your fixed cost base would be increasing this year kind of going forward?

Well, I think, again you are putting me in a spot to give you a number for an annual figure that is akin to guidance and we're not going to go there.

Okay, fair enough.

Sorry to make it a bit more difficult.

Okay. Thanks very much.

Sure.

The next question comes from Robert Nicholson of Pine Cobble Capital. Please go ahead.

Hi guys. One follow up question for you. On the auto side could you give us a little color for why auto has been so slow to come back in your format. I mean we are seeing from other, particularly on the TV side from other local broadcasters extremely strong increases in Q1 and going into Q2. Can you give us some color on what's going on for your business, particularly on the auto side?

Well, we said earlier that Chrysler Jeep did not come back in the first quarter or did not I should say advertise in our TV business in the first quarter, but that we've been told the creative is still being worked on and we expect to see that business return in the second quarter.

I think the other point is that general market automotive recovered, appears to have recovered faster than automotive advertising that is directed at the Hispanic market. We saw very little if any Tier 1 manufacturing advertising in Q1. Most of our automotive revenue came from the Tier 2 dealer group category. And we didn't see a lot of Tier 3 in our television business as well, which is a local dealer. Now, we are starting to see more local dealer business coming into our markets. So again, a little slower in the recovery here for Spanish language television and for automotive that is directed at Latino consumers, but I think those are probably two of the more important reasons.

Phil, you have anything to add here on this issue?

No, I think you covered it. The one thing I might add is that Tier 1 is about 38% of our revenue, I am sorry, 14% of our revenue, and that was down the largest drop to your point that the -- and that was mainly from the Ford that last year this time had a, I believe it was an F150 campaign.

We actually saw Tier 2 of the dealer groups up 60%. So the other two dragged it down to an overall plus 6% and you blend TV - radio we're up 16%, but that was mainly the Chrysler, Dodge, Jeep business which switched agencies and they didn't have Spanish language creative. So that was a bit of a disappointment.

But the Tier-3 is slowly returning now, the individual auto dealers and they are slowly putting their toes in the water and they don't buy 4 or 5, 6 stations deep typically when they start out, they gradually work their way to that. So, we expect that to continue to improve.

You've also seen with other larger market English language broadcasters a product mix difference, some of the higher end vehicle models, Lexus Mercedes, Acura, big driver of some of the growth than some of our English language broadcaster competitors and those aren't big advertisers in that space.

Okay. So, it sounds like there are some one-time specific stuff, but there is -- in terms of the fundamental structure of the auto manufacturers, and the large dealer groups wanting to reach your target market, you don't see anything structurally that's changed. It's just lagging a little bit.

No, we just see a lag.

Okay, great. Thank you.

The next question comes from Mark Fisher of Ahab Capital. Please go ahead.

It seems like outside auto for some of your competitors and other broadcasters, the recovery hasn't been as broad-based, focused more on big events, you mentioned the Olympics. To what extent do you think some of your advertisers in the conversation that you had pushed off advertising in the first quarter because they are awaiting to fill their Spanish budget around the World Cup?

Well, let me see if I understand the question. We did comment AT&T Mobility was a big advertiser for us in Q1 of '09. And that is a -- the telecom categories is also another robust category for us. So, we didn't see any AT&T in the first quarter this year. And we have been told that that -- we haven't been told -- we believe and based upon the information we have, we are going to see AT&T return in the second quarter. So that would certainly explain why our telecom category was down significantly in Q1 2010 versus Q1 '09.

And was that a decision by them to -- are they actually shrinking their overall budgets here or they condensed all four quarters into three quarters?

We believe that they are shifting their strategy to Qs 2, 3 and 4. There maybe a drop-in in investment by that particular client this year, but we certainly worked hard to try to maintain our share.

Okay. And I'm sorry if you have mentioned this before, you mentioned April very strong, how did that compare to March and what did you see is kind of the cadence through the quarter?

This is Philip. The question was April versus March comp, we finished April and it's unofficial, but we finished at plus 10%, so...

Yeah. I was wondering kind of how that compared to margin and really through the quarter January, February, March, did you see an increase?

April has an increase over March which finished TV plus 6%, radio plus 4%.

I see. So you have seen that increase as we have gong along. What is political for the quarter?

It's about $1 million TV and radio.

Okay.

We have seen improvement. We started out slowly as a company in January and we continued to build through the quarter and we finished the quarter with momentum, hadn't seen that in quite a while and we are seeing that momentum carry into Q2.

Okay. And is this broad based kind of throughout all your regions or are you still seeing the difference between the I guess economically troubled regions that you have underperforming some of the others?

It's pretty broad-based. If you look at across our markets, TV and radio, it's broad-based, especially in second quarter. There have been markets that have been hit harder than others, Las Vegas is a good example. Stockton-Modesto, even Los Angeles, which is the largest Hispanic market in the country, has been hit hard as a result of this deep, deep recession.

Okay. Great, thanks.

(Operator Instructions). We have a follow-up question from John Kornreich of Sandler Capital. Please go ahead.

Okay. Thank you. When does your Univision affiliation agreement expire?

2021, John.

Wow. So, I was going to ask you about retransmission sharing. I'll be retired by then so, doesn't matter.

I'm not so sure, John. That won't be possible for you.

Right. So the only other thing I have is the bulk, 90% of the $360 million in debt aside from a little tiny bit of amortization will be due on what date?

It is June 2013.

Okay. So can you share some thoughts with us about why you haven't yet pulled the trigger on refinancing even though people like Gray and Sinclair and almost everybody already has?

Well, it's obviously a scenario that we've discussed over several conference calls here and John, it continues to be something that we are looking at very very carefully. So it's been a very busy past couple of quarters for us and we will continue to look at that situation.

Your leverage -- allowable leverage ratio steps down to what at the end of this calendar year?

It steps down to I believe it is six times at yearend.

No problem. Okay. Thank you.

Okay. Thanks, John.

At this time, I would like to turn the conference back over to Entravision Communications Corporation management for closing comments.

Thank you, Andrew. And thank you everyone for participating in our first quarter conference call. We look forward to reporting to all of you our second quarter results in August of this year. Thank you.

Thank you for participating in the Entravision Communications Corporation conference call. This concludes today's event.