Entravision Communications Corp (EVC) 2010 Q3 法說會逐字稿

Welcome to the Entravision Communications Corporation Third 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?

Thank you, Andrew.

Good afternoon, everyone. Welcome to Entravision's Third Quarter 2010 Earnings Conference Call. Joining me today is Philip Wilkinson, our President and Chief Operating Officer, and Chris Young, 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 risk 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.

The 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. 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.

Our performance in the third quarter was driven by the ongoing recovery process across our markets, as well as the impact of political and World Cup advertising revenues. We generated revenue, cash flow, and EBITDA growth and continue to execute our strategic plan.

Our media properties continued their ratings excellence and with many of our TV stations ranking as the most watched in their market regardless of language.

Our cost management efforts remain on track, and we have further advanced our interactive and multi-platform initiatives. We are well positioned to continue to capitalize on the advertising market recovery given the operating leverage in our business model.

Turning to our financial results for the quarter, our consolidated third quarter revenue was up 5% versus the same period in 2009 to $53.3 million. Operating expenses increased 2% to $31.2 million in the quarter. Consolidated adjusted EBITDA improved 7% to $18.4 million versus last year, while free cash flow per share increased 67%. If you exclude a one-time non-reoccurring corporate expense related to our recent bond offering, EBITDA increased 10% in the quarter.

Turning to our television division, total revenues grew 7% in the quarter. Excluding the retransmission fees, our television revenue was up 4% for the third quarter, local revenue was flat, and national revenue improved 10%.

We continue to see encouraging results across our television station group with several of our key advertising categories showing consistent improvement throughout the quarter. In particular, we were pleased with the growth trends in our automotive, retail, and product brand name advertising categories.

The automotive category grew 26% in the quarter while delivering our second consecutive $4 million quarter for this important category. The automotive category continues to be driven by tier-two or dealer association spending. However, we are seeing steady growth from the tier-three local auto dealers.

Adding to our optimism on the automotive category was a recent report from the Bureau of Labor Statistics Consumer Expenditure Survey showing that during the 2009 economic and automotive recession, Hispanic customers actually increased their automotive spending by 29%, or $3.2 billion, compared to the same period in 2008. By comparison, non-Hispanic customer sales were down 3%, or $4.1 billion, during the same timeframe.

The retail category grew 19% in third quarter 2010 and has shown year-over-year growth in each quarter this year. Leading the category growth in the quarter were advertisers JCPenney, FOMSA, Mattress Firm, and Rooms to Go. The product brand name category grew 15% in the third quarter, led by category advertisers [Yacolt], Bush Brothers Beans, Clorox, and [Ardvis].

Our strong market positions and audience share make our TV assets an attentive platform or attractive platform for political ad dollars.

Political advertising during the quarter was $1.1 million. Our television stations continue to play a very active and civic-focused role in the political process as we keep our viewers informed on the important issues.

During this political cycle, we have benefited from the strength of our media assets and our position in states such as California, Nevada, Colorado, Texas, and Florida, where there were highly contested races and Hispanics make up a sizable section of the electorate.

We are in the process of finalizing our political revenue for fourth quarter, but we can confidently say that our total political revenue for the company will significantly surpass our 2006 mid-term political comparable.

The Latino voter electorate continues to grow with each political cycle. In fact, in today's front page of the Los Angeles Times, the paper proclaimed that it was the strength of the Latino vote that was a key factor in the outcome of Tuesday's elections in California. Latinos made up 22% of the voter pool in California, and in Nevada, where we operate, important media clusters serving the Latino communities across the state, Harry Reid owes his senatorial reelection to the Nevada Latino voter electorate as he seized almost 70% of the Latino vote in Nevada. Latinos made up 15% of the voter electorate in the Nevada midterm elections. And, by the way, Governor-elect Jerry Brown's decisive victory was also driven by that Latino vote in California.

The popularity of World Cup soccer with our television audience held true in 2010 as several Entravision/Univision affiliates delivered their largest ratings ever.

Entravision's television group, World Cup Soccer, revenue totaled $5.3 million, with $1.2 million coming in the third quarter.

Our top three television advertising categories in the 2010 World Cup games were telecom, fast food, and automotive. Soccer's an incredibly popular -- it's incredibly popular among the Hispanic community, and Univision's exclusive broadcast rights to the Mexican national team and the summer 2011 [Copa America and Copa the auto games] provide us with excellent sales opportunity for our Univision affiliates going forward as we look to build our World Cup relationships.

Our television sales teams continue to expand our client roster as we successfully added 24 new advertisers who invested $10,000 or more in the third quarter with our television group. New clients included Vonage, Hard Rock Hotel and Casino, Novartis, and Chili's Restaurant, just to name a few.

Turning to our ratings performance, our Univision affiliates extended their ratings leadership positions in the July 2010 sweeps.

Among all adults 18 to 34 regardless of language, 12 of our Univision affiliates ranked it number one or two sign on to sign on in their markets.

Additionally, seven of our Univision affiliates are either number one or two among all adults 18 to 34, again, regardless of language.

Ten of our TeleFutura affiliates are the number-two ranked Spanish language station in their markets behind our powerhouse Univision affiliates.

During our primetime novella block, our Entravision/Univision affiliates are either number one or two in 12 markets.

13 of our Univision affiliates are number one or two in early local news. 10 of these 13 are number one in local news in any language.

In the early network news, 12 of our Univision affiliates are ranked number one or two in their markets in any language in the July sweeps.

And in the late local news, 10 of our Univision affiliates are ranked either one or two, again, regardless of language.

In Entravision markets combined, our Univision and TeleFutura affiliates aired 47 of the top 50 Spanish language programs among adults 18 to 34.

Among adults 18 to 49 and adults 25 to 54, we aired 46 of the top 50 Spanish language programs in the July sweeps. The primetime Novella block enjoyed growth year over year in nine of our markets.

Turning to our radio division, revenues were up 1% in the third quarter, national was up 25%, while local revenue was down 6%.

We were pleased to see our trend of consistent positive growth continue during the quarter. We generated positive growth in each month of this quarter in national sales while the local sales continued to be choppy.

Total revenues increased in seven out of the first nine months of the year.

The top five categories in order of spending in the third quarter for our radio division were automotive, travel and leisure, retail, telecommunications. We also saw double-digit growth in media, healthcare, political, and direct marketing.

The auto category once again generated strong growth with a third quarter increase of 31% in our radio division. Both tier-two and tier-three automotive increased substantially.

Tier-two automotive revenue increased by 268% in the quarter, which is the third quarter in a row of accelerated growth for the automotive tier-two.

Tier-three business local car dealers saw a 12% increase in revenue for the quarter and have increased in all three quarters so far this year.

Entravision was the exclusive Spanish language broadcaster in 14 of our radio markets for the 2010 World Cup. Revenue for the World Cup in the quarter was approximately $417,000, bringing our total World Cup revenue to $2.1 million.

Given the time zone where the matches took place in South Africa, this year's tournament was a premier radio event. With Arbitron PPM service, we were able to track World Cup performance for the first time and achieved overwhelming success. The last of the matches were played in early July and among Hispanic adults 18 to 34, we averaged as high as a four rating, 25 share for these matches.

During the tournament, the Mexico matches averaged a 5.9 share -- 5.9 rating, 42 share in our six PPM markets. Please note that the same 14 markets that aired World Cup this year have the rights to the 2014 World Cup from Brazil.

Our highest rated matches by market during July were the July 2 Netherlands versus Brazil match, which got a 3.2 share -- a 32 share in Phoenix, the July 3 Argentina versus Germany match, which got a 32.9 share in Los Angeles, and a 51.5 share in Las Vegas, and the final on July 11, which received a 38.7 share in the San Bernardino/Riverside market.

Los Angeles is always a key focus of our radio division. Among adults 18 to 34, our cluster share increased over the prior quarter by 10%.

El Gato KDLD-FM continues to perform very well with a 2.9 share, up 4% book to book, and it's the number five Spanish language radio station in a market of 13 Spanish language outlets.

KLYY-FM [Jose] is up 29% over the prior quarter, and KSSC-FM [Superstrea] remained steady with a 2 share for the second consecutive quarter.

In July, (inaudible) [Superstrea] once again exceeded all of our expectations and was one of our most successful events since it began in 1998. More than 13,000 fans enjoyed their favorite artists from Super Estrella at Staples Center for a six-hour concert that featured top-notch musical artists, such as Enrique Iglesias, Alejandra Guzman, and many more. Some of the sponsors for this year's event were Bud Light, McDonald's, AT&T Wireless, Target, Wrigley's, and Vallarta Supermarkets.

In the quarter, we added 25 new advertisers to spend more than $10,000, which in total represented more than $600,000 in revenue.

New advertisers included California Endowment, Fruit of the Loom, Tampico Plus, Los Angeles, Mayo Medical Clinic, and Tara Networks.

Overall, our reach in total audience and adults 18 to 34 is up 2% in the most recent Arbitron quarterly data. Entravision Radio reached 44% of all Latinos person and 46 of all Latino adults 18 to 34 in the 10 markets where there is third quarter Arbitron results.

We continued to execute on our interactive and digital initiatives, building out our footprint and integrating our interactive media assets with our traditional broadcast assets.

While we can focus on isolated interactive revenue and say yes, it is growing and it will become material, we do not look at our interactive division as a segregated entity. We look at our sales increasingly as an integrated media company that engages our audience across multiple platforms. This makes our model far more compelling, unique, and richer in terms of the new 360 marketing programs we can now put together for our advertisers.

Interactive supports our core broadcasting business, minimizing churn, and developing new business, as well as creating new opportunities for growth. Although still less than 2% of our total revenue, our interactive revenue grew 46% in the third quarter over the comparable quarter in 2009.

In third quarter, we also achieved several important milestones within our interactive digital division. We completed a major redesign of our TD websites with an objective of creating greater engagement with our audience and providing our users with more local news content.

In order to enhance our local news digital content, we launched the [Cindy Castro] Video Platform in four of our markets. We expect to complete the deployment of Cindy Castro in most of our television and some of our radio markets by the end of the first quarter 2011.

Our partnership with Critical Media allows us to utilize a Cindy Castro broadcast to online and mobile video technology, thereby giving us a more robust video platform to centralize digital content and extend our news content beyond our broadcasting platforms.

In the third quarter we finalize launching Busca in all of our markets. Busca is our local digital Latino marketplace. This exciting new digital product created over $500,000 of new incremental interactive revenue in the short time that it has been available.

We have over 200 clients using this new product. Most of them are new and nontraditional broadcasting advertisers. We are having early success in expanding these pure interactive advertisers into television and radio broadcast clients.

This interactive product provides an entry-level relationship with new advertisers and allows us the opportunity to up-sell these digital advertisers to our television broadcast platforms.

In August, we started promoting TotalLocale.com, the first classified Web property targeting US Hispanics. We are experiencing traffic growth every month. We now have close to 5 million listings in key categories like auto, jobs, and homes. We encourage our audience to place their listings for free, and we derive revenue from feature listings, key category postings, and as well as display advertising.

Our mobile platform continues to generate increased interest from our advertisers and strong engagement with our audience.

In the third quarter, we enhanced our mobile platform to include new capabilities and products like MMS video messaging. As a result of this mobile enhancement, we increased our mobile opt-in subscribers 100% over the second quarter.

In the third quarter, we launched approximately 50 mobile advertising campaigns. Most of these mobile campaigns were integrated with our broadcast products. This represents the greatest number of mobile campaigns we have launched in any quarter.

These initiatives reflect our ongoing commitment to being a multi-platform provider. We are pleased with the progress, development, and positive feedback we received from our partners, advertisers, and audience on our digital efforts so far.

Going forward, we continue to see digital as a growth driver. 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 advertiser, and growth for the company.

In conclusion, we're executing our strategic plan and prudently managing our portfolio of attractive broadcasting and interactive digital assets located within key Hispanic markets. We have a strong competitive position in our markets regardless of language and are growing our audience across each and every platform we serve. Our digital interactive marketing initiatives are on track, and they're generating new revenue opportunities for Entravision.

We deliver a strong value proposition to our advertising partners, and we are well positioned for growth as our key advertising categories continue to rebound. We expect to see additional benefit from political advertising in the fourth quarter, as I discussed earlier, given our presence in several key strategic markets.

The improving economic and operating environment is occurring against the backdrop of a rapidly growing Hispanic population. With the 2010 census expected to reach a record 50 million Latinos this year, one in every six US residents, we believe we are well positioned for future growth.

At this time, I'm going to turn the call over to Chris Young, our Executive Vice President and Chief Financial Officer, who will give you a financial overview for the third quarter.

Thank you, Walter, and good afternoon, everyone.

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 November 4, 2010.

As Walter has discussed, net revenue for the quarter was $53.3 million, up 5%.

Operating expenses increased $0.7 million to $31.2 million, and consolidated adjusted EBITDA increased 7% to $18.4 million.

Free cash flow, which we define as consolidated adjusted EBITDA minus capital expenditures, cash interest to cash taxes plus interest income, was $8.1 million, or $0.10 per share.

Operating expenses for the quarter increased to $31.2 million from $30.6 million, an increase of $0.7 million, or 2%.

Excluding non-cash compensation expense, operating expenses for the quarter increased to $31 million from $30.2 million, an increase of $0.8 million, or 3%. The increase was primarily attributable to an increase in national representation fees and other expenses associated with the increase in net revenue.

Corporate expenses for the quarter increased to $3.8 million from $3.4 million, an increase of $0.4 million. The increase was primarily attributable to one-time expenses relating to the issuance of the notes.

Excluding the expenses relating to the issuance of notes and non-cash compensation expense, corporate expenses for the quarter remained the same at $3 million for each of the three months ended September 30, 2010 and 2009.

The cash flow for the quarter was $8.1 million, or $0.10 per share, compared to free cash flow of $5.1 million, or $0.06 per share, for the third quarter of '09.

Cash interest expense for the quarter was $9.1 million. Cash capital expenditures for the quarter was $1.0 million. CapEx for the year will be approximately $7.2 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 $0.01 per share in the third quarter of '09.

Turning to our balance sheet, as of September 30, 2010, our total debt was $401 million, and our trailing 12-month EBITDA as adjusted was $61.9 million. Our total debt to EBITDA as adjusted was 6.47 times versus a maximum leverage covenant in the revolving credit facility of 7.25 times at 9/30/2010. Cash on the books was $55.2 million as of September 30, 2010.

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

(Operator instructions)

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

Good afternoon. Are you seeing in Q4 any revenue acceleration in radio if you exclude political?

We'll just say that our pace in the fourth quarter is good for radio and that if we exclude political, we do see growth.

Okay. And without World Cup and political in 2011, can TV revenue grow, or is it merely you try to get back to flat?

No, we see that -- this is Philip. We see 2011 growing. We're optimistic about the new year. We certainly think the census numbers will be a catalyst.

Clearly ,there's a lot of talk about the strength and the power of the Latino vote. That's going to help, as evidenced by last Tuesday, but I think more and more advertisers are understanding that, as Nielsen recently preached, retail success is driven by local execution and advertisers benefit from the strategies in local media plans, and we deliver a terrific product and an awful lot of Hispanic viewers and listeners that are valuable consumers. So we're optimistic. It will continue to grow.

We had a good year with the World Cup. We had a good year with political, but recognize that political, it kicks out a lot of regular core advertisers. They're squeezed out. Many of them will spend less during a political window, and so it's not -- it's not all incremental. It's probably half incremental on the political side.

Okay.

I think Philip's comment about census is an excellent one. In 2000, it was a catalyst for growth for our industry, and we expect the growth that will be -- of the Latino population that will be announced probably in the third quarter should also provide the kind of spurt that we're looking for that we saw in 2000.

Okay. And at this point, Philip, do you have any feel on early 2011, either bookings to date or renewals of any sort?

You know, it's coming in as slow as it ever has, so it's hard to say. We don't have a great deal of visibility. We have some, but it's such a small number in first quarter, it's hard to kind of tag where we'll be vis--vis the first quarter in terms of growth.

But I will also point out in general this whole discussion of growth for our TV division, I think we ended up up 5%, EVC as a total here, and we're still operating in some pretty tough markets. If you look at the local economies that have slower recovery than the US as a whole, Southern California and Colorado and Arizona and Nevada come to mind and we operate some pretty big stations there.

So if you carve those out, we'd be significantly higher revenue than the 5%. So point being is those will recover. They will rebound. And we're starting to see them slowly, slowly blog out of this difficult economic time.

Okay, finally flipping back to radio for a moment, as the Arbitron PPM rollouts are starting to finish off in most of the top 50 markets, have you noticed roughly how long it may or may not take you to get your initial PPM members in a market and then give an either two, three, four months of tweaking and reacting so as to improve your rank?

Is there kind of an average time lag where you kind of eliminate much or most of the PPM impact that has traditionally plagued certain niche-formatted programs?

Well, I think on average it takes about six months. It's kind of what we're seeing. And I will say that the PPMs, we've benefited from this new technology generally across our markets, so it's been a positive for us so far.

And that positive was before they started to improve the sample or just recently as they've been improving the sample the last six to nine months?

Well, as the sample's improved, it's -- the results are better certainly.

Okay.

It was a bit of a rocky start for this new technology, which is always the case, and they worked through the issues, and the sample is key.

And is it a fact that you're signed up for the PPM and the other large Hispanic radio operator is not, does that help you in any way, or that's a wash?

Well, we think that's a wash.

Okay. Thank you.

The next question comes from Bishop Cheen of Wells Fargo Securities. Please go ahead.

Hi. Hi, Walter. Hi, Chris. Thanks for the detailed rundown. I just have a few questions.

Let's go back to radio, and we have been seeing this over and over, whether Anglo, Latino, African American, local is still just struggling. Do you have any thoughts about when we might see any kind of parody between national and local as the economy slowly bumps its way of, let's say, through recovery?

Bishop, that's a tough question. You are correct that generally local radio has struggled during these difficult economic times. National -- we've had a very strong national year for our radio division, which has helped grow our business here through the four quarters.

So it's hard to say when we'll see local start to get back up to the kind of growth levels that national is currently enjoying.

Well, (inaudible - multiple speakers)

At the national -- in fact, the national rate for us may be -- it's relatively strong, and so it's basically up to the economy for local to come back to where it once was, and I think we'll get there. It's just time. We have to move through here, and we remind ourselves as the economy continues to improve, we continue to see a better -- we continue to see strength in key advertising categories, but it's slow.

And I think we're doing all the right things. I think we're -- we have a better selling or better selling teams than we've ever had on the street. We continue to invest in them. We continue to provide them more training. We're restructuring some of our sales effort as we speak, so we're doing -- we're adjusting and tweaking, doing things all the time to make our sales teams more effective, and we're talking every day to our salespeople about all of the important resources that they have available to them, and we're going to be adding more resources for their benefit probably in 2011, and we're constantly talking to our general managers about the importance of leading their sales teams. That's all we talk about. So it will get better, but it just takes time.

Can you remind us, the $417,000 of radio revenue in Q3 from World Cup, was that disbursed among local or national, or was that all national?

That was mostly national. (Inaudible - multiple speakers)

National was down --

Based on my experience here, I would say it's about 75/25.

Okay.

National, local.

And unless I -- maybe I wrote this down wrong. National was up 1%, local was down 6%?

No. National was -- I just had it here. National was up 25%.

I'm sorry, okay. I thought so.

And local was minus six.

And local was minus six, that's correct.

Okay, so on TV...

Oh, TV.

That was radio. Now let's move to TV.

Local was flat in TV and national was plus 10.

Right. And so not as much GAAP, but there's still -- national has been the lead steerer, and we're seeing that everywhere in the growth.

Right.

And what about auto for TV? I think you said auto was up 31% for radio.

Correct. For TV, it grew 26% in the quarter, and I think the most important metric for us is that this was the second consecutive quarter where we had $4 million of revenue or more in the quarter, and we think we're on track to do that in the fourth quarter, although it's too early to tell, but we like what we see so far. But, again, it's day to day, week to week.

Right. You're referring to Univision. I talked to them about that today, and they said auto was very strong for them Q3 and that GM has been particularly supportive in pushing three models targeted at the Hispanic demographic. So GM has been supporting Novellas, this, that, and the other.

But your auto is -- what's the mix between local and national overall?

Well, the dealer association or what we refer to as tier-two, has been the most -- has shown the most strength throughout the year, both TV and radio, and we've been waiting for tier-three to come alive, and we're starting to see some signs in both divisions for our local dealer advertising.

Phil, you want to add some color here?

Yeah, no -- Bishop, this is Philip, and I heard your question this morning, their answer.

GM's a strong advertiser for us, as well. We're up, as Walter mentioned, 26 TV, 34 radio, blended 28% for the quarter, and we're pacing that strong in fourth quarter. So the dealer groups that Walter mentioned are the biggest part of our growth, up 65% on the TV side, and that represents about 40%. I think you might have been getting at the percentage of local dealers that (inaudible - technical difficulty) about a quarter of our business on the TV side and about 35% is the factory business. And the factory business has bounced back. That was a very positive for us. It's up about 7%.

So we do see it bouncing back, but we will tell you that we don't see what the -- a lot of the general market broadcasters see in terms of luxury brand spending. We don't get quite a lot of that, and hence, we're up 28, and perhaps some of these general market groups are claiming 40 to 50%, and I think that's the real difference between us. But it's bouncing back big.

That's a great point. Let me change topic to Chris's favorite topic, cash. You guys have a lot of it, so normally would you have this much cash at the snapshot of September 30?

Normally would we have this much cash?

Yes.

You have a large part of that cash coming as a result of the add-on to the bond deal.

That's what I thought. So, really, this was just a snapshot and not the pro forma?

I think that's right.

Okay. So pro forma, or more normally, how much cash would you normally have on your balance sheet?

I think normally we would have around 15 to 20 million (inaudible).

Okay. And your free cash flow conversion was 44% for the quarter. And how does -- in your mind, how does that rank in terms of your conversion? I know your cost of capital went up a little bit, but that's still pretty good for a conversion rate.

Yes, it's okay. I mean we kept CapEx down. CapEx -- cash CapEx was about $1 million. That's a little lower than it usually is any given quarter, but the bulk of our CapEx has been historically on the digital conversion with the multiple phases, and that's all kind of phased through.

We have one studio build-out plan over the next 12 months, and that will be about a $2 million item, but yeah, all things considered, it's okay. I mean certainly we're poised for a big conversion improvement as EBITDA improves, as the top line improves.

So CapEx is going to come in 7, 7.2 for the year?

That's right. It should be around $7.2 million.

Okay. And CapEx is expected to be -- did you say 1.1 in Q4?

Yes, that's about right. All in for the year, it will be at about $7.2 million.

Okay. And then last question, and thank you for the answers, the census is going to be released, as you mentioned, probably right around Q3 2011. So as we look out a year from now, how long do we think it will take for the traction, the trickle-down, the perceptions to work its way through the ad buying community?

Well, I think we'll start to see preliminary numbers at the end of the first quarter, and then we'll see the official numbers by, like you pointed out, early Q3. But I think that the momentum from the new census information, which will show significant growth for the Latino population similar to what we saw in the 2000 census on a percentage basis, will provide the catalyst for advertiser interest, and I think that that will start right after the preliminary results are published in the first quarter. So by about midway through the year, we should start to see that filtering down to our business.

Okay. Yes, that's very helpful in that you don't have to wait till 2012 to reap the harvest. Do you think the seeds will drop Q1 and you can start to collect them and get the benefits then in the second half of 2011?

Right.

Okay. Thank you, gentlemen. I appreciate all the answers and your time.

Always good to talk to you.

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

Hi, what was the re-trans in the third quarter versus a year ago?

Re-trends for Q3 was $3.7 million, and last year, it was $2.3 million, John.

Okay, and next year should exceed 15?

Next year -- we'll we're not giving guidance on --

Well, you're annualizing almost that now.

Well, we're annualizing now give or --

You're annualizing 15 --

-- mid-13s, early 13s.

3.7 times 4 is 15 million.

Yes, but there are fluctuations quarter to quarter. Q2 was $3.3 million. So that's not necessarily a run rate number every quarter.

And the political of 1.1 was versus virtually nothing a year ago?

Correct, virtually nothing.

Okay, so re-trend's up 1.4, political up a million. I mean auto up a lot. That tells me since your total TV was up $2.3 million that all other categories were down collectively. I mean that's arithmetic certainty, right? Your core business was down.

Well, John, our core businesses continued to strengthen. Retail, which is certainly an important core business, was up 19% in the third quarter for TV, which is our biggest revenue --

So what was down? You went up 2.3. 1.4 of it is re-trans. Another one of it is political. That leaves nothing for the rest. Then you're telling me retail was up and order was up. So ...

I'm having trouble hearing you, John.

Something was down $2 million.

No, no, no. We didn't have anything like that.

Okay.

I mean there were some categories that were flat and maybe down slightly, but (inaudible - multiple speakers).

Well, I'm suggesting that collectively all other categories were down. I mean I don't understand how you can say it isn't.

Well, we can. I mean --

You reported these numbers. 34.3 versus 32.

I think part of the problem, John, is that you take the full --

34.3 versus 32.0 is $2.3 million. I don't --

I think part of the problem is you take the full face value number on the political, and there are advertisers that get squeezed out during the political window. It is not all incremental year over year.

How much could they be squeezed out if political was 3% of total revenue? I mean how much could you be squeezed?

Incremental is 1.5, 1.6.

Of political?

Yes.

Versus nothing. So it's 1.5 divided by 34 million. I mean how much squeeze-out could there be? There was no big number like the fourth quarter.

(Inaudible) 5% of our total revenue was political if you look at the incremental side.

Right. So if half of it was incremental and half of it wasn't, so then it's 1.2 versus the 1.4 million of re-trans, there's your whole increase for the quarter.

I'm not following your math. If I do the political incremental, it's $870,000.

Okay, and the 800 that isn't. And then the re-trans is incremental 1.4. 1.4 plus 7.50 is 2.2. Your total revenue for the quarter in TV was up 2.3. And if auto was up 26% and retail was up 19, all other categories had to be down significantly.

Well, let's -- do we have the list of the categories? Maybe we can go through them and -- John, if you want, we can go through --

I'll do it offline with you because I don't want to hold other people up.

That's fine.

Also --

Yes, the top five categories combined for our broadcast group, two were up, two were down, and one was flat.

Okay. Chris, when you give us the leverage number of 6.47, why -- that's 401 divided by 61.9 million of trailing 12-month EBITDA. Why aren't you subtracting out the cash, which would bring it down to 5.5?

There's no cash netting in the bank facility.

Okay. (Inaudible) cash.

The cash -- yes, the cash does not get factored in. That's days gone by when banks would allow you to do that.

Okay, thanks. And is there any amortization at all in the bonds that's meaningful at all?

None.

Okay. Thank you.

Thanks, John.

(Operator instructions)

The next question comes from [Jingi Yun] of PIMCO. Please go ahead.

Hi, just a couple of questions. First, did you say what your pacings -- your television pacings were doing in 4Q?

We didn't give pacings for the divisions, but we'll just say that our pacings in total for Q4 are like high single digit as we sit here today.

That's helpful. And then what is political going to be for the whole year?

We estimate it's going to be about 7 million. That's our estimate right now. About five of that would be TV and about two would be radio. That's an estimate, obviously, and we're still going through the numbers and making sure that we haven't missed anything. But we think right now that that would -- that that's where we're going to end up and that is a significant increase over 2006.

Great. Okay. And then you said even without political or without World Cup, you should still be able to grow in 2011. How much of that growth in 2011 do you think will be from like advertising versus re-trans? I'm trying to get a sense of what your assumptions are for advertising re-trans so that I can model whether you'll actually -- because I think those assumptions are reasonable and modeling 2011, whether I should model growth in there or not. So can you give me some more color on that?

Yes, Jingi, this is Chris. Certainly, there will be growth in re-trans. The exact number is a tough one, but I think in addition to the re-trans, there is growth factored in as far as core advertising is concerned over the prior year.

In single digits?

Oh, that's a tough one. It's a 2011 number, and it's something certainly that we anticipate, but to try to peg a number as far as modeling's concerned at this point is, I think, a bit premature.

Okay, great. And then if you have it handy, could you give us the category advertising numbers, auto, retail, if you have that handy? If not, then I can call you for that.

On the third quarter?

(Inaudible - multiple speakers) Yes.

Services were down 3%. This is blended TV radio. Auto was up 28. FSR was down 2. Telecom was flat. Retail is plus 3. Those are the top five. They make up 60 -- over 60% of the total revenue for TV and radio.

Perfect. All right. Thank you.

We have a follow-up from John Kornreich of Sandler Capital. Please go ahead.

Yes, do you have any feel for CapEx for next year?

CapEx for next year will be about the same range where it is now, maybe 8 million.

Where do you have standalone radio stations in, I don't know, "sizable markets?"

Very few markets, John.

What?

Very few. Miami, Houston, Sacramento, Phoenix, LA.

(Inaudible)?

Did you say AMs?

No, I just said radio.

No, he said (inaudible - multiple speakers) stand alone without any TV.

Without TV.

Oh, okay. Yes, sure. Sacramento, Los Angeles, our two biggest. Phoenix would be third. Stockton and Modesto, Houston, and Miami.

And most -- in the first three markets that you mentioned, the pair-up with the TV station, it's beyond your financial capability. So why wouldn't you consider selling those stations and get your ratio -- your leverage ratio down to a point where there's more equity value left over? I mean right now, your stock is 2.5 because people are basically saying, well, the first six multiples belong to somebody else.

Well, I mean --

I think you could supercharge the equity if you could sell LA, sell, I think -- Houston. I mean you're not going to buy a TV station in Houston or LA. It's not going to happen. You have a standalone radio station which might be a nice business, but it could be worth real money.

Well, John, look, we spend time regularly looking at our assets and including our radio division, and I think the easy answer is that right now, the market is not a good one, and I'm not suggesting to you that we would be divesting of any radio assets, but I know enough to know that the market's still very soft and uneven, and I just don't think right now is the time to look at --

Okay.

-- at divesting anything, for that matter. But if someone were to come up to us and say, "Look, I need -- you've got some important radio assets, and I've got a cluster there, as well, and, you know, we'd look a it. Anything that would build the equity, we'll take a look at.

Okay. Thank you.

Thank you, John.

There are no more questions. At this time, I would like to turn the conference back over to Entravision management for closing remarks.

Thank you, Andrew. Ladies and gentlemen, it was a pleasure speaking to all of you and releasing our third quarter results. We look forward to talking to you again in first quarter 2011, where we'll announce our year-end, as well as our fourth quarter results. Thank you.

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