Entravision Communications Corp (EVC) 2010 Q2 法說會逐字稿

Welcome to the Entravision Communications Corporation second 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 second quarter 2010 earnings conference call. Joining me today is Chris Young, our Executive Vice President and Chief Financial Officer, and Phillip 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 and 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. 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 a Form 8-K.

We had a very solid second quarter performance and delivered growth in all of our key performance metrics, specifically revenue, cash flow and EBITDA. Results were driven by a broad-based improvement across our markets and advertising categories. We also benefited from an outstanding 2010 World Cup broadcast.

We continue to execute on our operating plan. Costs remain under control, and we are prudently driving efficiencies across our businesses. Last week, we successfully recapitalized our balance sheet with the closing of our bond offering and new credit agreement, which extends the maturity of our debt and provides additional financial flexibility to execute on our strategic initiatives.

Turning to our financial results for the quarter, our consolidated second quarter revenue was up 10% versus the same period in 2009 to $53.4 million. Operating expenses increased 5% to $31.1 million in the quarter. Consolidated adjusted EBITDA improved 16% to $19 million versus last year, while free cash flow per share increased 33%.

Turning to our Television division, total television revenue grew 10% in the quarter. Excluding retransmission, fees our television revenue was up 9% for the second quarter. Local revenue grew 5%, and national revenue improved 15%. World Cup revenue was $4 million in the quarter, and political was $300,000. Excluding incremental World Cup and political revenue, our core television revenue grew 6% in the second quarter. We are very pleased with the progress of Television division, and had a solid World Cup sales cycle. We are seeing promising results across our Television station group, with several of our key advertising categories showing improvement.

2010 World Cup revenue for our Television group totaled $5.3 million net, with 75% or $4 million of that being booked in the second quarter. Our top three advertising categories in World Cup were automotive 21%, telecom represented 21% and fast food 19%. Our top World Cup advertisers were McDonald's, Toyota dealers, Verizon Wireless, MetroPCS, Castro Motor Oil and AT&T. 70% of our 2010 World Cup inventory was sold to national advertisers. On the heels of the World Cup comes Univision's new broadcast rights to the Mexican national team, will provide additional sales opportunities for our affiliates, including the August 10th match between Mexico and World Cup champion Spain.

The service category was the number one revenue generator for our Television group in the quarter. However, the automotive category again led all category growth, posting an impressive 27% over the prior year. While the gains in the automotive segment were led by Tier 2 dealer association spending, we are encouraged by the slow but consistent growth from our Tier 3 local auto dealers. The auto category posted its first $4 million quarter with our Television group since 2008, with strong growth from Toyota, General Motors and Honda.

Overall, our Television division experienced revenue growth in five of our top ten advertising categories, including automotive, up 27%; fast food, up 24%; services, up 16%; product brand names, up 16%; and retail, plus 7%. Our sales teams continue to expand our client roster, as we successfully added 39 new advertisers who invested $10,000 or more in the second quarter with our Television group. New clients included Direct Energy in Texas, Washington, D.C. Toyota dealers, Central Florida Ford dealers, Elitch Amusement Park in Denver, Virgin Mobile, [Kuni] Honda in Tampa, and CenturyLink Telecom in Las Vegas, just to name a few.

Turning to our ratings performance, our Univision affiliates extended their ratings leadership position in the May 2010 sweeps. In our key demo among all adults 18 to 34, regardless of language, seven of our Univision affiliates ranked number one or two sign on to sign off. During our primetime novella block, our Entravision Univision television stations are either number one or two in six markets, adults 18 to 34.

12 of our Univision affiliates are number one or two in early local news markets, regardless of language. Ten of these 12 are the number one-rated early newscasts in the markets, again adults 18 to 34. In early Univision network news, nine out of our stations are ranked number one or two in their markets, regardless of languages. And in our late local news, eight of our television stations are ranked either one or two, regardless of language, adults 18 to 34. In Entravision markets combined, our Univision and TeleFutura affiliates aired 24 of the top 25 Spanish language programs among adults 18 to 34, 18 to 49 and 25 to 54. In fact, in 11 of our markets, our TeleFutura affiliate is the number two-rated Spanish language television station behind our dominant Univision affiliate.

Univision and TeleFutura aired all 64 games of the World Cup from June 11th to July 11th, with enormous ratings successes that far outpaced our 2006 levels. In our LPM markets, here we see our audience figures compared to the 2006 World Cup telecast. Denver's household ratings increased 69%; Boston was up 38%; Tampa gained 30%; Las Vegas was up 24%; Washington, D.C. increased 17%; and Orlando gained 14%. The 2006 World Cup tournament was held in the same time zone, and matches were the same times in both World Cup years.

The final match alone saw some of the largest ratings Entravision stations have ever achieved. In households, Las Vegas garnered an 8.1 rating, 47% higher than the final in 2006, and the highest rating KINC has ever achieved. Among person's 18 to 34, Washington D.C.'s 5.5 rating was the highest in our markets, and up 41% over the 2006 final. In persons 18 to 49, Washington, D.C. got a 3.8, double the rating they achieved in the 2006 final. Among persons 25 to 54, Orlando's 4.0 rating was the highest in our markets, followed closely by a 3.8 rating in Denver, that Denver received for the Mexico/Argentina quarter final match on June 27. Our Tampa Univision affiliates over-delivered their 2006 ratings in every round of the tournament.

Turning to our Radio division, revenues were up 10% in the second quarter. National was up 31%, while local was plus 3%. We had positive growth in each month of this quarter, and five out of the first six months this year. When you excluded incremental -- when you exclude incremental spending from World Cup and political, the core revenue of the radio division increased 4% for the quarter. The top five categories for second quarter were services, which was up 79%; automotive, up 87%; travel and leisure saw a reduction in spending of 12%; retail decreased by 2%; and telecom recorded a 34% increase. We also saw double-digit growth in alcoholic benches, healthcare and product brand names.

We are particularly pleased with the performance of our Radio division, given the absence of approximately $500,000 in network clearance revenue that we did not renew with the Citadel networks this year. This negative network comparable will cycle through the remaining quarters in 2010 at about the same amount as in the second quarter. Auto continues to turn the corner in terms of revenue growth, with a second quarter increase of 87% for our Radio division. Tier 1 was up 100%, Tier 2 was up 500%, Tier 3 was up 14%, and auto-related products was up 156%. However, please keep in mind this category was down 62% in the second quarter of 2009.

In the quarter we added 45 new advertisers who spent more than $10,000, which in total represented $1.5 million in revenue for the quarter. New advertisers included Valvoline, Gatorade, Southern California Toyota dealers, Elitch Gardens in Denver, and Mi Abogado.

Entravision radio was the exclusive Spanish-language broadcaster in 14 of our markets for the 2010 World Cup, and results are in for most of the first round matches from our PPM markets. The beginning matches of the 2010 World Cup produced unprecedented ratings for Entravision radio. The three Mexico matches for which we have results delivered, among adults 18 to 34, a 44 share in Los Angeles, and a 45 share in Riverside/San Bernardino. Denver reported a 32 share, Phoenix a 47 share, Las Vegas a 52 share, and our smallest share was in Sacramento, with a 30 share.

Just to give you an idea of the power of World Cup soccer, the three Mexico preliminary matches delivered an average CUM of 409,000 Hispanic, 18 to 49, radio listeners in Los Angeles. This average CUM was three times greater than the LA radio CUM for the 2010 Super Bowl for all persons 18 to 49, and almost two times greater than the LA radio average CUM for the 2010 NBA Finals with the Lakers and Celtics for all persons 18 to 49.

Overall, our World Cup revenue for radio was $2.5 million, with 79% of the total booked in the second quarter. The best performing categories for radio World Cup were automotive with 37% of total revenue; beverages, 17%; telecom,13%; services, 12%; and finance, 11%. The top radio advertisers in the World Cup for Entravision Radio were Valvoline Motor Oil, Anheuser-Busch, McDonald's, Gatorade, and Adrianas Insurance. Valvoline and Gatorade were new advertisers to our Radio division as a result of their spending in the World Cup. Please note that we have exclusive rights to the 2014 World Cup in Brazil in the same 14 Entravision markets that aired the games this year.

Los Angeles is always a key focus for our radio division. Among adults 18 to 34, all three of our cluster stations increased over the prior quarter. El Gato, KDLD FM continues to perform very well, with a 2.8, share up 17% book to book, and it is the number five Spanish language station in a market with 13 Spanish outlets. KLYY FM, Jose, is up 40% over the prior quarter, and KSSE FM Super Estrella is up 18%. Our Los Angeles radio cluster share is up 19%, to a 6.8 share over the prior book.

Other EVC radio clusters that showed significant increased shares among adults 18 to 34 over the prior book include San Bernardino/Riverside up 28% to an 8.8 share; and our Phoenix cluster, up 10% to an 8.8 share. Overall, our adult 18 to 34 audience is up 8%, and our total audience is up 10% in the most recent Arbitron quarterly data from the markets that have been released. Entravision's Radio's audience growth in the most recent quarter keeps our clusters in excellent competitive positions, and the increases we saw from the World Cup broadcast demonstrate continued strength throughout this quarter and the next.

Other performance highlights for our Radio division include, we have top five stations among adults 18 to 34, regardless of language, in Riverside/San Bernardino, where KLYY FM is the leading radio station.. KMIX FM is also the leading station in Stockton. KXPK FM is number two in Denver. KLOK FM in Monterrey/Salinas is number three. KLOB FM is number three in Palm Springs. In Sacramento, KXSC is number four. And in Phoenix, KLMZ FM is number four. This is all regardless of language.

Our Tricolored Mexican regional format continues to perform exceptionally well. KMIX FM in Stockton is the number one Spanish language radio station, with a 14.2 share, up 35% over Fall 2009. KLNZ FM in Phoenix is the number two Spanish radio station, with a 6.1 share of adults 18 to 34, up 9% from the previous book. Denver's KXPK FM is the leading Spanish radio station, with a 9 share. In Las Vegas, KQRT FM has a 5 share, and is the number three Spanish radio station in the market. Sacramento's KRCX FM is the number two Spanish language radio station in the market, behind our own Entravision KXSE FM, which is with a 2.3 share.

Our Jose format had significant success as well in the Spring Arbitron survey. KLYY FM in Riverside/San Bernardino continues its high ratings, and is the number one radio station in the market among adults 18 to 34. In Sacramento, KSSE FM is the number four station in the market, and the top Spanish radio station, with a 6.8 share. Denver's KGMN FM is the number two Spanish radio station in the market, behind only Entravision's KXPK FM, with a 3.8 share, up 3% from the prior quarter.

The book with the first quarter with ratings for our Spanish easy listening Maria format in Las Vegas on KRRN FM had our share of adults 18 to 34 boost 26% to a 2.4 share. Maria also airs on KCBR in Modesto, where the share is up 225% over the prior book to a 3.9.

We continue to execute on our interactive and digital initiatives, building our our footprint and integrating our interactive efforts with our traditional broadcast assets. We engage our loyal broadcast audience through multiple platforms, and a key element of our interactive growth strategy is to expand beyond our Television and Radio websites into other vertical local sites. These initiatives reflect our ongoing commitment to being a multi-platform provider, and we are pleased with the progress, development and positive feedback we have received from our partners, advertisers and audiences on each of these projects thus far.

We know opportunities for growth come from innovation and disruption. We were able to put in place a new process to test innovative ideas that are synergistic to our core. We invest carefully, and with discipline, with a strong focus on expense control. In many cases, we lower development costs and time to market by partnering with strategic technology partners. Although we select projects that we believe have a great chance to scale big and fast, our acid test for these projects is profitability. We know some projects will be successful and drive growth, and some won't; we will invest in interactive projects that show revenue promise, and discontinue projects that don't. We have our Latino Media Idea Lab already working.

Beyond our TV and Radio sites, our key digital initiatives underway are Busca, the first Spanish language online local business directory; [TotalLocale.com], the first local and national Spanish online classified website. [Car Roja], the first and only online automotive marketplace in Spanish. And strategic partnerships with critical media to utilize its [syndicasts] or broadcast to online video technology service to create a more robust video platform, to centralize digital content and extend our news beyond broadcasting.

2010 World Cup soccer sports section, available on our all our websites, was very successful in attracting audience, as well as providing us with incremental avenue. We are now working to extend the enthusiasm of the World Cup in our new soccer section to focus on the Mexican league, US soccer, and the rest of Latin American soccer.

Although still than less than 2% of our total revenue, interactive revenue grew in the second quarter 55% over Q2 2009, and is expected to probably double this year over last year. Q2 was an all time record quarter for the interactive revenue for the Company. Also in Q2, we observed an increase over the first quarter of 39% in total online add impressions delivery, a 31% increase in our click-through rates, and a 32% increase in our online video ads delivered.

In the second quarter we launched our national and local classified platform, where we believe there is significant opportunities for US Hispanics. Users of this site are posting listings for free, while upgraded listing and key category postings like jobs, real estate and others will be offered for a fee. As of today, we have more than 3.2 million classified listings.

Our mobile platform continues to generate increased interest from our advertisers, and good engagement with our audience. We delivered over 35 mobile campaigns in the second quarter. Going forward, we continue to see digital as a growth driver. While we can focus on isolated interactive revenue and say yes, it is growing, and will become material, we do not look at it as just 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 now put together for our advertisers. With interactive, we become a one-stop destination for marketers targeting the Latino consumer. We have 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 operating in an improving business environment, and are seeing pacings up in the mid single digits for the Company in the third quarter. We expect to see additional political revenue in the third and fourth quarters. While we do not anticipate that 2010's political spending will match the Presidential 2008 cycle, our EVC media properties are strategically positioned to play a key role in deciding the outcomes of several key high profile Gubernatorial, Senate and Congressional races in California, Nevada, Colorado, Texas and Florida, where Latinos represent between 12% to 20% of the previously-mentioned states' electorate.

We remain focused on proactively managing our business, and driving free cash flow growth. We continue to make prudent investments in our sales teams, and in the build-out of our digital and interactive marketing initiatives. Our assets are positioned in some of the most dynamic Hispanic markets in the United States, and we are well positioned to capitalize in an improving economy.

The wind in our sails continues to be the astounding growth of the Latino population. The 2010 Census is expected to count a record 50 million Latinos this year, or one in every six US residents; meaning that the US Latino population will have increased a whopping 42% from the 2000 Census. By comparison, the US non-Hispanic population will have increased only about 5% in the last decade.

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

Thank you, Walter, and good afternoon, everyone.

On July 27, 2010, the Company completed the offering and sale of 400 million new senior secured first lien notes. The notes were issued at a discount of 98.722 of their principal amount, and will mature on August 1st, 2017. Interest on the notes will accrue at a rate of 8.75% per annum from the date of original issuance, and is payable semi-annually in arrears on February 1st and August 1st of each year, commencing on February 1st, 2011. The notes are guaranteed on a senior secured basis by all of the Company's existing and future wholly-owned domestic subsidiaries.

Net proceeds from the notes were used to pay all indebtedness outstanding under the Company's syndicated bank credit facility, terminate the related interest swap agreements, pay fees and expenses related to the offering of notes, and for general corporate purposes.

On July 27, 2010, the Company also entered into a new $50 million revolving credit facility, and terminated the then existing syndicated bank credit facility. The new revolving credit facility expires on July 27th, 2013, and is guaranteed on a senior secured basis by all of the Company's existing and future wholly-owned domestic subsidiaries, which are also the guarantors of the notes. Pricing on future borrowings mad on the revolved will be at LIBOR plus 4.375, with no LIBOR floor. To date, the Company has not drawn on the revolving credit facility.

These transactions are more fully described in the Company's current report on Form 8-K, filed with the US Securities and Exchange Commission on July 27th, 2010.

As Walter has discussed, net revenue for the quarter was $53.4 million, up 10%, operating expenses increased $1.5 million to $31.1 million, and consolidated adjusted EBITDA increased 16% to $19 million. Free cash flow, which we define as consolidated adjusted EBITDA minus capital expenditures, cash interest, cash taxes, plus interest income, was $7.1 million or $0.08 per share.

Operating expenses for the quarter increased to $31.1 million from $29.6 million, an increase of $1.5 million or 5%. Excluding non-cash comp expense, operating expenses for the quarter increased to $30.8 million from $29.3 million, an increase of $1.5 million or again 5%. The increase was primarily attributable to an increase in sales commission, national [rep] fees and other expenses associated with the increase in net revenue. Corporate expenses for the quarter increased to $3.5 million from $3.4 million, an increase of $0.1 million. Excluding noncash comp expense, corporate expenses for the quarter increased to $3.2 million from $3.0 million, and increase of $0.2 million or 5%. The increase was attributable to an increase in professional fees, primarily legal.

Free cash flow for the quarter was $7.1 million or $0.08 per share. Cash interest expense for the quarter was $9.2 million. Cash capital expenditures for the quarter were $2.1 million. Capital expenditures for the first six months of the year were $4.8 million. CapEx for the year will be approximately $7 million.

Earnings per share for the quarter applicable to common shareholders was $0.08 per share, compared to an EPS applicable to common shareholders of negative $0.02 per share in the second quarter of last year.

Turning to our balance sheet, as of June 30, 2010, our total debt was $359.5 million, and our trailing 12-month EBITDA as adjusted was $60.8 million. Our total debt to EBITDA, as adjusted, was 5.9 times, versus a maximum leverage covenant in the now-terminated credit facility of 6.5 times at June 30, 2010. Cash on the books was $25.7 million at June 30, 2010.

This concludes our formal remarks. Walter, Phillip and I will be happy to take your questions at this time. Andrew?

(Operator Instructions)

The first question comes from John Kornreich of Sandler Capital.

Help me with some numbers I probably missed. On the television side, the total World Cup revenue was what?

$5.3 million.

TV.

TV.

$5.3 million. And what was the retrans for the quarter?

Retrans for the quarter was $4 million -- no, $3 million; is that right, Chris?

Retrans was $3.3 million.

Versus what?

Last year, I believe it was $2.9 million.

Okay. If you take half of the soccer as incremental, and retrans, I don't see how you get a core add growth of 6%. I get a core add growth of nothing.

John, let me just say something, I said $5.3 million, but that's total World Cup. We had $4 million of World Cup in the second quarter, and we should report $1.3 million in the third quarter for TV.

Right. But if I take half of the $4 million, that's $2 million, and then you take the $400,000 increase in retrans; that's $2.4 million.

But we are only reporting 22% incremental for our World Cup.

I see. Okay, 22% incremental.

Correct.

That answers it. You haven't drawn down any of the $50 million, have you?

No, we haven't.

Okay. On the radio side, with auto up 87% and the total up 4%, it looks like -- my sense is everybody else was zero? That has to be about right?

We said that auto was up 79% -- 87%. Retail -- telecom was up 34%.

What was down for the quarter?

We had telecom -- retail was down by 2%, and travel and leisure was down 12%.

You also had that issue with respect to the Citadel ABC Networks comp, there was about $500,000 in revenue last year in the quarter that was not here this year.

The big overall question to ask is, why is your business so soft? I mean, it is soft. Every non-Hispanic TV company that has reported so far had much higher advertising revenue than you did, and they didn't have World Cup, okay? And in the third quarter, [Lynn] 25% third quarter, CBS 25%, and on and on, and you are talking about mid-single digits?

Two comments, John, and Phillip has some more to add. Number one, we were -- when the automotive decline came, the crash, we were late going into the dump. In fact, we probably were late by five or six months. When the automotive recovery came at the end of the fourth quarter, into the first quarter, we were five or six months behind general market. One of the key categories or key tiers that we don't see much of yet, if any, is at Tier 1, manufacturing money. A lot of that early manufacturing money, or most of it, went into general market. There may be creative reasons that caused that to happen, but that's what happened.

The other thing that you are not counting is political. Political is huge for general market television. It gets bigger every year by a factor of three or four times. We don't see the kind of growth in political that general market does. I don't know if you were able to drill down into the general market television groups' second quarter but I'm sure you will see the political was a significant amount of their total revenue, and we will -- we saw $5.3 million of political in 2006, and that is the equivalent mid-term election cycle to this year. We had hoped to see at least that much this year. But again, we are not trending the way general market is when it comes to political. Phil, you want to add something to that?

No, I think you covered it. We slightly outperformed the industry in TV last year, slightly under performed radio. Bun the first half of 2010, our TV and Radio divisions both underperformed, and for those very reasons. TV was mid-single digit growth for us, and the industry was mid-teen, absent political, which as you correctly pointed out, we don't participate in near the volume that the general market does. We got a $100,000 from the California Governor's campaign for the primary, and one candidate spent $90 million.

So we operate in some of the harder-hit markets in the country, with higher unemployment and slower economic recovery, and that's part of it as well. That, and the Tier 1 has really dried up for us, both in TV and radio for the first half of the year. So we cycle through things later than the general market. But the positive thing here is we are seeing all three tiers on auto, which is a big category, all three tiers in July were up in spending. A lot of very great, positive growth drivers.

The big story was a shift from non-Hispanic TV advertising to Hispanic. That was the big macro story. It is not there anymore. I don't see it. Next year, you will tell us about how World Cup distorted the numbers.

I believe, John, you will find that the Hispanic market will continue its explosive growth, and it will be a very attractive market for many years to come. The Census is expected to come out and show over 50 million Hispanics in this new number, it is over 42% growth since 2000, and Hispanics are the driving growth of the population. Over half of the growth of the population in the last ten years is coming from Hispanics; a $1 trillion purchasing power segment. So I believe you are going to find that the market is a very, very attractive one to advertisers. We are just cycling through slower than the general market.

We have outperformed general market TV and radio for a long time, you know, many, many, many, quarters, and to say that our growth is not there anymore, I don't think is a fair statement. We are only into the year two quarters. I think we have given you a pretty good explanation of why we believe we are trailing general market in growth here in the first half of the year.

Okay, thanks. I will let it go.

The next question from Jim Boyle of Gilford.

Good afternoon. Chris, as you potentially delever, what might be your leverage range aim in the out-years when we are all well out of the recession?

Jim, I think internally here, it is our goal to get down to 4 to 5 times leverage range over the next couple of years, and the plan to do that is by growing EBITDA.

For 2010, what sort of interest expense are you ballparking and writing in?

For 2010, you can just run rate that 8.75%. You should come up with an interest expense in the ballpark of the mid-$30 million range.

Okay. And Phillip, as well as Chris, if you both could do it for your respective positions, some of the other media seemingly have been looking at most of the first two quarters, and apparently the third quarter of each month is better than the month that follows. Was that your case in Q2 in TV and radio? And does that seem to follow in Q3?

Well, we did have improvement in each month. Actually several categories, including auto, since February we have had improvement, double-digit growth, except for one, I think it was March was under that. But overall for the business on the books, we see TV, April, May improvement, and then June, of course. But you had the benefit of the World Cup in June. And for the radio side, five of the last six months performed better than previous year-over-year.

How does Q3 look so far in terms of blow by blow, month by month, compared to prior months.

We don't give guidance or pacing on Q3. But we are mid-single digits for the quarter, but we don't break out by month.

Okay. And Walter, have you seen any sign of an economic slowdown in Q3 that might hamper the ongoing add recovery; that seems to be the conventional wisdom, that this gradual recovery has stalled out.

Jim, I believe that the recovery continues into Q3. I think the expectations may be that they -- they may still be out there that there is going to be this rapid recovery, and we are not seeing that. We are seeing a slow recovery, month to month, and we are tracking every category carefully, but the recovery we believe will continue in the second half for us. But it will be slow. It will not be this overnight recovery that I believe expectations have been set for. But I think that may be starting to change.

Finally, have there been any advertising categories that have surprised you in Q3, whether to the positive or to the negative?

No. It is all about the same. Our categories that have improved and continue to improve, I would say all ten of our top categories have improved through the year. Obviously, some are improving more than others, but the progression continues from Q2 into Q3. Automotive, as we pointed out, continues to improve. A big category for us, both in TV and radio. We are still looking for category -- or Tier 3 to improve, and we are starting to see signs, credit is starting to loosen. General Motors just I guess bought AmeriCredit, which should also help grease the credit market for new automotive purchases. More inventory is coming online from the manufacturers. The prices for the used market are starting to drop, as more new cars come onto the market. So a lot of positive signs out there that we will continue to see improvement in our top ten categories.

Okay, thank you.

(Operator Instructions)

The next question is from James Dix of Wedbush.

Good afternoon. I had three questions. I guess we can take them one at a time. First, how should we think about margins going forward, or otherwise put operating expense growth, and is there any way of differentiating between what you expect on a normalized basis for TV and radio? I guess you saw 10% top line growth, around 5% expense growth. Just wondering whether 5% is the top end that we will see? I guess I will leave it on that on that question.

James, it is Chris. I think as we mentioned in the last quarter, we cycled through all the cuts we made in the prior year. We [could] expect to see expense growth in kind of the same range on kind of the same range on a percentage basis from here on out, obviously depending on what revenue does, but all things being equal with respect to revenue, we will probably see the same range on a percentage basis.

Would it be similar for TV and radio? That growth rate?

Generally, yes.

Okay. I guess the next question relates to your revenue base. Looking back to where your stations were two years ago in 2008, and looking at the various markets, where have you made the most progress to getting back to where you were, and where have you made the least? And why do you think there is that difference, or is there not that much difference among markets, in terms of returning back to your prior highs?

We are seeing -- in our TV business, we aer seeing very strong growth in central Florida. I think overall we -- Phil did point out earlier that we have media in many markets that have been hard hit, Nevada for example, is a good example. We have had some challenges there. But like I said, overall, I was going through our TV group, and most of our markets are up for third quarter; very few are flat or down, and the same thing applies for radio. That wasn't the case a quarter or two quarters ago, for sure.

But if you looked at a market which is at the top end of getting back to where it was two years ago, roughly what was its revenue base now versus where it was, and then just conversely on the lower end, like if you have a particularly depressed market, what percentage of its prior revenue base is it at right now?

If you are talking about the overall TV market revenue or radio market revenue --

More specific to you, however you want to look at it, obviously, but I guess I was in particular interest to you. If you have TV market data, that would also be interesting.

I will say this, we have markets that have dropped, that were $250 million markets two or three years ago, are now $180 million markets. We have maintained our share, but overall actually our ratio is up, but our overall dollars are down, but not as hard hit as many of the other competitors in the marketplace. It's a good question as to when the markets will return to the levels of 2008, but specific, that is an analysis that we would have to do and get back to you.

I guess my last one, now that you've done your financing and changed your capital structure, what opportunities are now open to you that you are considering to pursue, ways of creating shareholder value, whether its through acquisitions or potentially buying back shares, or other potential options, and how are you prioritizing those?

Well, Jim, we haven't spent much time thinking about that. We just closed our deal less than a week ago, or over a week ago. You know, we want to invest in the business, interactive is certainly an important division for us. We want to continue to meld our interactive and broadcast assets together. We want to develop new interactive products, so we can promote with our broadcast assets.

As far as acquisitions, there is nothing specific that we are looking at right now, but from time to time we do get information that comes through here about acquisitions that may be strategic to our business. But right now, like I said, we are focused on growing the business, investing in the business. If there are acquisitions that could help grow our business, we will look at them. No discussion about stock buyback or dividend of any kind.

Okay. Great. Thanks very much.

The next question comes from Tim [Daggett] of Citigroup.

What's the current cash balance after completing the refinancing?

About $40 million.

$40 million? Okay, thanks.

That concludes the question-and-answer session. I would like to turn the conference back over to Walter Ulloa for any closing comments.

Thank you, Andrew, and thank you everyone for participating on our second quarter investor conference call. We look forward to speaking to all of you in November, when we will announce the results for our third quarter.

Thank you again for joining us. Thank you for participating in the Entravision Communications Corporation conference call. This concludes today's event. You may now disconnect your line.