Entravision Communications Corp (EVC) 2010 Q4 法說會逐字稿

Hello. This is the Chorus Call Operator. Welcome to the Entravision Communications Corporation fourth quarter and year-end 2010 earnings conference call. As a reminder, all participants will be in a 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 now like to turn the conference over to Walter Ulloa, Chairman and Chief Executive Officer. Mr. Ulloa, the floor is yours, sir.

Thank you, Michael. Good afternoon, everyone, and welcome to Entravision's fourth-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 certain 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 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.

Overall we had a solid year in 2010 as we executed on our strategic plan and delivered growth in all of our profitability metrics. Our performance reflects the continued improvement in the economic environment, a strengthening advertising market, our commitment to cost management and the leadership position of our broadcast outlets and interactive platforms which remain among the most engaged local media properties in their markets regardless of language. Census data is being released on a rolling basis through March with the first in-depth reports confirming the strength of the US Hispanic market, specifically in regard to its youth population. The continued growth of our target markets and its expanding purchasing power represents an attractive opportunity for advertisers and a powerful catalyst for our future growth.

Turning to our financial results for the quarter, our consulted revenue was $50.6 million up 5% versus the same period in 2009. Operating expenses increased 2% to $30.7 million in the quarter. Consolidated adjusted EBITDA improved 11% to $16.7 million versus last year, while free cash flow increased 30% to $6.2 million. For the full year, our consolidated revenue was $200.5 million, up 6% over 2009. Operating expenses increased 1% to $122.8 million in the year. Consolidated adjusted EBITDA improved 15% to $63.6 million versus last year while free cash flow per share increased 35% in 2010 to $18.9 million.

Our Television division total revenue grew 4% in the quarter to $33.8 million. Excluding retransmission fees, our Television revenue was flat for the quarter. Local revenue fell 1% and national revenue improved 2%. For the year, total Television revenue grew 7% to $132.6 million, expenses were up 1% to $72.1 million and total broadcast cash flow for our Television group grew 14% in 2010. We had a solid quarter across our Television station group with growth in 6 of our top 10 advertising categories, reflecting a broad base improvement in a number of key advertising categories while maximizing the impact of the mid-term elections. 2010 was a record mid-term political cycle for us. In the quarter we generated $2.8 million in political revenue, bringing our annual political advertising to $5.1 million in 2010 for our Television group. In recent elections the Latino vote has played an increasingly active role and that was certainly the case in 2010.

Our local news organizations have expanded their coverage of the entire electoral process and are a critical component of our success in attracting additional political business. Total political revenue for the Company in 2010 was $7.1 million, a 34% increase in political revenue over the comparable mid-term political cycle of 2006.

Automotive continued its strong year-over-year growth generating 17% growth over last year's fourth quarter for our Television group. This marks the third consecutive double-digit growth quarter for the automotive segment and set the annual growth rate for the category at 19%. While our automotive growth has been primarily the result of significant increase from our tier 2 dealer association advertising in 2010, we saw a 15% spike in tier 3. Local dealer advertising in the quarter compared to fourth quarter of 2009, we believe this is a strong sign that local dealer confidence is on the rise and that Hispanic customers are becoming an increasing-- an increased priority for local automotive dealers.

Total automotive revenue for the Company grew 25% in 2010 versus 2009, and represented 12% of total revenue in 2010 versus 10% in 2009. Although the growth and rebound of our automotive category trails our general market peers, this important advertising sector continues to strengthen as we move to the first quarter of 2011. The automotive growth previously for Entravision in the fourth quarter in 2010 was a result of increased expenditures from 4 of our top 5 automotive brands including Toyota, Nissan, General Motors and Honda. Only Ford experienced year to-year budget declines in fourth quarter and the year.

In addition to automotive and political, we also experienced year to-year revenue growth in the healthcare product brand names, travel and leisure and retail advertising categories in fourth quarter 2010 for our Television group. For the full year 2010, only the telecommunications, grocery, convenience stores and travel and leisure categories were down in our TV group compared to 2009 among our top 10 advertisers. The top growth categories for 2010 for our Television division were automotive plus 19%, product brand names plus 14%, retail plus 10% and healthcare plus 7%. Our sales teams continue to expand our client roster as we successfully added 22 television advertisers, these are all new, who invested $10,000 or more in the fourth quarter with our Television group. New clients included Veterans Affairs, Rug Doctor, Zales, Bravo, Health and Preferred Care partners just to name a few.

Turning to our ratings performance, our Univision affiliates extended their ratings leadership positions in the November 2010 sweeps. Among all adults 18 to 34 regardless of language, 7 of our Univision television affiliates ranked number 1 or 2 sign on to sign off. Additionally 7 of our Univision television stations are either number 1 or 2 among adults 18 to 49 sign on to sign off. 9 of our TeleFutura affiliates are the number 2 ranked Spanish language television stations in their markets and in both adults 18 to 34 and 18 to 49. In the prime time Novella block, Entravision Univision television stations were either number 1 or 2 in 7 of our markets. 12 of our Univision affiliates were number 1 or 2 in early local news. In early network news, 12 of our Univision television stations were ranked either number 1 or 2 regardless of language. And in late local news, 8 of our television stations are ranked number 1 or 2 regardless of language.

In the November sweep our Univision and TeleFutura affiliates aired 49 of the top 50 Spanish language television programs among adults 18 to 34. Among adults 18 to 49 and adults 25 to 54, we aired 47 of the top 50 Spanish language television programs. The Latin Grammys were again a huge ratings hit and the number 1 Spanish language television program in all of our Entravision markets in the November Nielsen survey. The prime time developed block and showed growth year over year in 9 of our Univision television markets.

Turning to our Radio division, revenues were up 8% in the fourth quarter to $16.9 million, national was up 37% while local was down 3%. 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 continue to be choppy. Total revenues increased in 9 of the 12 months this year for our Radio division. For the full year, our Radio revenue grew 5% to $67.9 million, expenses were up 1% to $49.4 million and broadcast cash flow for the Entravision Radio group was up 17% to $18.6 million. We saw revenue growth in 8 of our top 10 categories in the fourth quarter for our Radio group.

Our top 5 categories in the quarter were in order of total expenditures, service increased by 25%, auto increased by 58%, travel and leisure saw a 15% increase, retail was flat and telecommunications saw an increase of 33% over the fourth quarter of 2009. For 2010 our top 5 categories in order of spending were services, automotive, travel and leisure, retail and telecom. Political advertising in the quarter was $1.2 million and $1.9 million for the full year. As mentioned earlier, the auto category once again generated strong growth with a fourth quarter increase of 58% in our Radio division. Tier 1 increased 65%, tier 2 up 286%, tier 3 saw an increase of 19% and auto-related advertising increased by 37%. For the full year, our Radio division experienced an increase of 46% in the automotive category. This growth for the year was propelled by the increase of tier 2 dollars which were up 197% for the year. The auto category represented 13% of total revenue in both the fourth quarter and for the year for the Radio group.

In the quarter we added 48 new advertisers who spent more than $10,000 which in total represented $1.2 million in revenue for the quarter. New advertisers for our Radio group included Squirt, Einstein Bagels, Auto Zone, Wisk Detergent and American Airlines. Los Angeles is always a key focus for our Radio division. Among adults 18 to 34 our clients-- our cluster share increased by 24% over the same quarter last year. El Gato KDLD FM continues to perform well with a 2.9 share, up 45% year to year and is the number 5 rated Spanish language radio station in a market of 13 Spanish outlets. KSSE FM Super Estrella has a 2.1 share, up 24% over last year. Total revenue for our Los Angeles radio cluster was up 9% in the fourth quarter. We continued to outperform our peers on a total revenue basis in the Los Angeles market.

Local direct business continues to be the area of the business that is challenging, that said, we have initiatives in place to improve our local sales performance such as a streamlined commission structure, additional training for our account executives and the institution of new bonus incentives to help grow our business. These initiatives seem to be working as we are seeing a steady improvement in local building for our cluster. Our LA radio cluster led the Entravision Radio division in digital sales again and expects to continue the trend with a new dedicated Internet sales manager hired to lead the charge. This digital revenue number does not take into consideration the incremental shares of additional radio dollars that were generated by putting together a 360-degree creative advertising and marketing solution for local and national advertisers.

Overall, our (inaudible) cume in adults 18 to 34 is up 6% over last year in the most recent Arbitron quarterly data. Entravision Radio reached 44% of all Hispanic persons and 46% of all Hispanic adults 18 to 34 in the fourth quarter Arbitron results.

In January we acquired the remaining 56 -- 50% stake in Lotus Entravision Reps making it a wholly owned subsidiary in 2011. LER was formed in August of 2001 as a national sales organization specializing in Spanish language media. It has grown to more than 156 radio stations which reach approximately 68% of the US Hispanic market. We obviously know the company very well and believe this was an attractive opportunity to acquire the remaining stake which will allow us to continue to grow national business not only from a spot basis but also let us grow our revenue in a number of other areas including our unwired network, advertisers, online and mobile. LER will continue to be under the direction of Phil Woodie, an experienced and successful Media Executive who joined LER in September of 2009.

We have strategically positioned our digital efforts as an integral part of our sales platform. We now provide our advertising clients a multi-channel approach that incorporates new media to engage with our audience with traditional media, social media, online and mobile. This makes our model far more compelling, unique and richer in terms of the new 363 marketing programs we can now implement for our advertisers. Interactive creates new opportunities for growth. Equally important, it also supports our broadcasting core. It broadens and deepens our relationship with current clients. It helps to minimize turn and provide opportunities to attract new clients that historically have not utilized our Television or Radio assets. Although still less than 2% of our total revenue, we continue to make significant progress with our interactive and digital initiatives.

In the fourth quarter we achieved several benchmark records. The fourth quarter of 2010 marked the first quarter since we launched our interactive vision that we over achieved our aggressive interactive revenue objectives. Our interactive division achieved revenue growth in the quarter of 90% over the 2009 comparable period. Besides the revenue growth in 2010, we accomplished several other important milestones. We grew interactive revenue over 50% year over year, we launched TV 2.0, a major redesign of all our television station websites, the new sites better feature our local content, are more engaging for our users and allow for content syndication beyond our sites. We launched Busca, our Hispanic local directory in all our markets. In a very short period, we have more than 300 new advertisers and we are well on our way to our first $1 million in pure incremental Busca revenue.

We launched our nationwide Latino classified platform, [Total Local], and this platform has more than 6 million classified postings and traffic is growing at a 25% average monthly rate. As a way of increasing improving the local content on our digital platforms we secured a web -- we secured web content publishers in our top 12 revenue markets. In order to better drive interactive revenue growth, we hired dedicated interactive sales managers for our top revenue markets. We ramped up our social media efforts and launched Companion, Facebook and Twitter profiles for all our local stations' websites. We now have more than 100,000 followers on our social media channels.

We launched the Syndicaster video platform, our partnership with Critical Media to utilize it's Syndicaster broadcast to online and mobile video technology service. Gives us a more robust video platform to centralize digital content and extend our news content beyond broadcasting. We revamped our mobile platform to include MMS, Multi-Media Messaging Services which compliment our texting capability. We also partnered with the biggest US text mobile aggregator for carrier connectivity. And in order to expand our local content beyond news we launched the Entravision blogging network. These initiatives reflect our ongoing commitment to being a multi-platform provider and we are pleased with the progress, development and positive feedback we received from our partners, advertisers and audience on each of these projects 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 advertisers and growth for the Company.

In conclusion, we had a successful 2010 and are well positioned as we enter the new year. Our media assets are strategically located in the fastest growing and most densely populated Latino markets in the United States and in many of our markets that we are the leading television station regardless of language. The census results are reconfirming the rapid growth of the Latino population and are a further validation of the value we can provide advertisers as in targets this expanding consumer market. In fact in the Entravision markets released to date by the census bureau, 59% of the combined total population growth is driven by the Latino population. We continue to execute on our business plan, we are seeing a broad-based recovery and remain optimistic about the outlook for the overall economy. We are leveraging our core traditional broadcast platform to launch new digital initiatives all which are generating incremental revenue and contributing to our bottom line performance. I will now turn the call over to Chris Young for a review of our financials.

Thank you, Walter, and good afternoon, everyone. As Walter has discussed, net revenue for the quarter was $50.6 million, up 5%. Operating expenses increased $0.6 million to $30.7 million and consolidated adjusted EBITDA increased 11% to $16.7 million. Free cash flow, which we defined as EBITDA less CapEx, cash interest, cash taxes plus interest income was $6.2 million, or $0.07 per share. Net revenue for the year was $200.5 million, up 6%. Operating expenses increased $0.6 million to $122.8 million and consolidated adjusted EBITDA increased 15% to $63.6 million. Free cash flow, which we define as consolidated adjusted EBITDA less CapEx, capital interest, cash taxes plus interest income, was $18.9 million, or $0.22 per share.

Total political revenue for the quarter was $4.0 million compared to $0.1 million in the same quarter last year. Political revenue for the year was $7.1 million compared to the $0.2 million in 2009. World Cup revenue was $7.4 million for the year. Retransmission consent revenue for the quarter was $3.6 million compared to $2.3 million in the same quarter of last year. Retransmission consent revenue for the year was $13.7 million compared to $9.5 million in 2009. In 2010, retransmission consent revenue accounted for approximately 10% of our total Television revenue versus 8% in 2009.

Operating expenses for the quarter increased to $30.7 million from $30.1 million, an increase of $0.6 million, or 2%. Excluding non-cash compensation expense, operating expenses for the quarter increased to $30.1 million from $29.3 million, an increase of $0.8 million, or 3%. The increase was primarily attributable to an increase in national rep fees and other expenses associated with the increase in net revenue. Operating expenses for the year increased to $122.8 million from $122.2 million, an increase of $0.6 million, or 1%. Excluding non-cash compensation expense, operating expenses for the year increased to $121.5 million from $120.2 million, an increase of $1.3 million, or 1%. The increase was primarily attributable to an increase in national rep fees and other expenses associated with the increase in net revenue, partially offset by a decrease in salary expense due to reductions of personnel and salary reductions implemented in 2009.

Corporate expenses for the quarter increased to $7.4 million from $4.3 million, an increase of $3.1 million. The increase was primarily attributable to the creation of a reserve for $3.0 million note receivable relating to the sale of our Publishing segment in 2003, excluding this one-time charge and excluding non-cash compensation expense, corporate expenses for the quarter increased 6%. Corporate expenses for the year increased to $18.4 million from $14.9 million, an increase of $3.5 million. The increase again was primarily attributable to the creation of the reserve for -- of $3 million for the note receivable that originated from the sale of our Publishing segment in 2003. Excluding the expenses related to the note receivable reserve and non-cash compensation expense, corporate expenses for the year increased 7%.

In the fourth quarter of 2010, the Company recorded a non-cash impairment charge of $36 million as a result of the annual impairment testing conducted per ASC 350. The impairment primarily relates to the carrying value of Mexican border TV station licenses and radio goodwill. Free cash flow for the quarter was up 30% to $6.2 million, or $0.07 per share. Cash interest expense for the quarter was $8.8 million. Free cash flow for the year was up 35% to $18.9 million, or $0.22 per share. Cash interest expense for the year was $36.4 million. Cash CapEx for the quarter was $1.6 million. CapEx for the year was $7.4 million.

Earnings per share for fourth quarter of 2010 applicable to common shareholders was negative $0.35 per share compared to an EPS applicable to common shareholders of negative $0.41 per share in the fourth quarter of 2009. Excluding the non-cash impairment charge and the note receivable reserve, EPS for the fourth quarter of 2010 was $0.12 per share. EPS for the year applicable to common stockholders was negative $0.21 per share compared to an EPS applicable to common stockholders of negative $0.60 per share in 2009. Excluding again non-cash impairment-- the non-cash impairment charge and the note receivable reserve, EPS for the year was $0.25 per share.

Turning to our balance sheet as of 12/31/2010 our total debt was $401 million and our trailing 12-month EBITDA as adjusted was $63.6 million. Our total debt to EBITDA as adjusted was 6.3 times versus a maximum leverage covenant in our revolving credit facility of 7.25 -- 7.25 times. Cash on the books as of 12/31 was $72.4 million. This concludes our formal remarks. Walter, Philip and I would be happy to take your questions. Mike, I'll turn it over to you.

Thank you, sir. We will go ahead and proceed with the question-and-answer session. (Operator Instructions)The first question we have comes from Jim Boyle of Guilford. Please go ahead, sir.

Good evening. Walter, in the odd chronological year of TV's 2-year cycle, what are your plans for free cash flow, is it going to be mostly deleveraging in 2011?

Jim, we're still looking at that issue. I-- that's one possibility certainly, is to deleverage, but I wouldn't say it's our top priority right now. I think we'll continue to hold onto our cash and then see what-- see how the year flows, see what opportunities are out there to -- that we may be able to strategically grow our business in the future.

Okay. Chris, in the 2 chronological years prior to the big recession, Entravision's EBITDA margin was approximately 36%. Can you get anywhere near shouting distance of that margin in 2011 or is it really just maintained 2010's margin of give or take roughly 32%?

Well, I certainly think there's upside with respect to we've taken $24 million some odd expenses, fixed costs out of our structure over the past 2 years, and maybe $4 million of that will creep back in over time. So to the extent that-- it's really a function of revenue, to the extent that we do have some tough comps this year but to the extent that we hold the line on expenses and revenue, it's driven accordingly I think it's not -- it's not out of hand to consider another 1% or 2% -- percentage point jump in margins provided revenue is there.

Okay. And on the division front, Philip and Jeff, is there any sort of early feel for your top 3 ad categories in Q1 bookings to date?

This is Philip. We actually are up in 3, 4 or 5 of the top 5 so far and we're just looking at January and February and the encouraging one here is the automotive continues to grow. We're up as I think Walter told you overall in 2010 as a Company, we're up 25% in that division and we're seeing 23%, 24% if my numbers are correct here, on January, February numbers (inaudible).

Okay. And on the Radio side?

That was a combined number.

Oh, combined number. Okay. Thanks. And finally, and once again, Philip, on the TV side in 2011, is there any chance that the TV revenue sees positive growth versus 2010 or is it really just trying to hold onto what you did in 2010?

Well, it's going to be tough to replace that political, which was about 3.8%, I think as Chris said of the total revenue growth in 2010. But the World Cup, which was about a little over 2 points, we do see some of that money coming back, some of those budgets that went towards the World Cup sponsorships we have Mexican National League, we have the Copa de Oro, we have the Copa America June, July soccer events, South and Central America events, so we see some of that money coming back, we're encouraged by that. We just sold big packs Toyota dealers. Remember on the political side, although $7 million for mid-term was a big number, again, about 3.8% of the total Company revenue, the core advertisers do pull back in political windows, so don't count on that money going away completely. We do -- we have seen in the past and we do believe we'll see in the future those core advertisers coming back and since there is no political window to run from, the retrans 2.2% of the revenue, that's a growing part of the business.

So, yes, we're encouraged that we can get past those -- primarily those 2 issues, the political up 7 and the world cup we call incremental of about 2 points. So we've got about 5, 6 points to make up but we're encouraged by that, particularly since we've seen, and I think as Walter mentioned there is-- we're lagging behind a little bit on the auto side versus general market and of course 7--, 19% is nothing too, that's an impressive number, but the general market was up 70% growth depending upon whose report you're looking at in automotive. And we see a couple of things happening that gives us confidence that our dealer business will continue to grow, the tier 2 and that our local dealer business will continue to grow. So I think it's going to be key to our growth and we see all positive signs on that category.

Jim, as we pointed out, our automotive business or at least the Spanish -- that part of the automotive business that is being devoted to Spanish language advertising, we believe is lagging general market by about 6 months. And we're slowly-- even though we didn't have the recovery in 2010 that the general market did, we did see some strong growth as Phil pointed out and we continue to see that pace and growth into the first quarter. There was a report published in 2009 by the Bureau of Labor Statistics Consumer Expenditure Survey and it pointed out that the Hispanics actually increased their auto category spending excuse me by 29% or $3.2 billion compared to the same period in 2008, and that by comparison, the non-Hispanic segment was down 3% or $4.1 billion during the same time period. So we believe that Hispanic auto spending will continue and that we will be the beneficiaries of that spending through increased auto advertising with our media properties.

So does that mean in 2011 TV is flat to down?

Well, I still pointed out, we've got a couple of significant comparables to overcome, political being one.

Correct.

Incremental World Cup being another. I think that if automotive continues to grow and expand the way it has so far, that I think we have a good chance of at least-- at least meeting our 2010 number if not exceeding it.

And, Jim, just a minute on the -- not only the continuing auto advertising growth which I said 23% blended, it's 23% TV, 20% Radio. But we have the retrans growth. We have-- we look at our trailing 12-months on the power ratios and we haven't realized half of our potential revenue growth. And then you have the gradual economic recovery where we've had some challenges in the mountain states, the Colorado, New Mexico, Arizona, Nevada and we see that improvement there and that economy will help our properties in those markets, so we are positive.

Okay, finally, Chris, a free trans in 2009 was 8% of rev and 10% of TV rev in 2010, should investigators expect steady growth in 2011, 2012 or better than that as the cycles keep kicking in?

It'll continue to grow, Jim. 2011 retran should be in the $16 million range when it's all said and done. So given we're not guiding revenue so it's a percentage of revenue, we can't really give you that but we can give you the retran number based on our estimates today.

Okay, thank you.

The next question we have comes from James Dix of Wedbush.

Good afternoon, gentlemen. Just a couple questions, not to go too much more into depth on the revenue outlook, but just in terms of the first quarter versus how you saw the fourth quarter ended up, it may look like TV revenue finished X retrans, I think you said Walter roughly flat. It looked like Radio, if you pulled out political, was roughly flat in the fourth quarter. I mean, how do you see the trends continuing in the first and if you see any differences, what's accounting for those? And then secondly, just in terms of your outlook, I mean, is it your view you think your auto categories is going to grow faster than the general market in 2011? I mean, that kind of sounds like what you're implying, Walter, with 6 month delay in the cycle but I just want to make sure I'm understanding. And I have 2 follow ups.

Well, we expect our automotive growth rate to catch up with general market. There is a big gap as far as we can tell in 2010 being between what the automotive category invested in in Spanish language media versus the general market, but we are seeing a steady increase in that category as we move into 2011. It's still unclear whether we are going to be able to outpace the general market in 2011, but we are seeing steady gains. There was another part of your question I believe about, oh, pacing overall for the quarter.

Yes, just how things were changing from what looked to be relatively flat ad growth for TV and Radio in the fourth quarter, and if there were changes like what do you think is accounting for the change in your outlook for the first quarter?

Well, we have -- we've got about $1 million of political in Q1 that we need to overcome. That certainly is challenging. But I'll just say that overall across our advertising categories, we're seeing improvement, 6, 10 of the TV and I think 7 of 10 of the Radio categories were up in 2010. We continue to see that kind of improvement and as we move through the quarter but as Warren Buffett said today I think that the economy is inching along so we're right there with it.

Okay. I missed that one so I'm glad you're on top of what Mr. Buffett is saying. And then 2 follow ups. Just any estimate you can give on what the impact of the consolidation of Lotus Entravision Reps will be on full year revenue and EBITDA now that you've pulled it all in and then --

Yes, Jim, historically you're talking it's not a lot of dollars here. It's about $2 million in rev and $2 million in expense. That's what it did approximately last year and we're not going to guide for this coming year but that's kind of for purposes of coming up with the pro forma schedules that's what you should work off of.

That's what we should add. Okay, great. And then finally just in terms of the outlook for M&A, I think you hinted that that might be one of the things you might -- you're keeping cash for. Anything in particular you're looking at and then any impression you had about sales price of the -- of KY in Los Angeles and whether that has any broader implications for where values are for TV stations relative to your expectations?

Well, I guess as far as M&A is concerned, we're looking at TV first, Radio second. There's stuff swirling around out there that it's like we're looking at more and more often these days. As far as KY is concerned, that price was -- that was a stick value. It's tough to put a mark on what that multiple was against cash flow. So obviously the price has come down somewhat significantly since the last transaction for that station. I don't have the exact number with me as far as what the original purchase price of that station was years and years ago but it's obviously a different world.

Well just to add to what Chris has said, Jim, I mean, just as it relates to KY, that was kind of a unique situation. It was a television station that NBC had made a commitment to the FCC to dispose of so it had some distress, I'll call it a distress [that near] around it, but I -- we continue to look at opportunities that might be strategic to our growth going forward and that'll be how we -- how we process the year and how we look at assets. It might be available.

But I take it the priority is for TV first and then Radio second?

Well, I would say probably that that's the priority to look at the Television business and see how we might be able to add to it and grow it, but by the same token, we look at Radio assets as well. I think we've done a pretty good job of integrating radio and television together in 11 of our markets I think we have been pretty successful as a Company and we've developed the things to do and things not to do and it always is-- integration is always harder than it looks but I think we've got a good handle on it now so if there were some Radio assets that fit our strategy in our high density fast growing Hispanic markets, then we'd look at them.

Okay. Great. Thanks a lot.

(Operator Instructions)The next question comes from Bishop Cheen of Wells Fargo.

Hi, Walter, Philip, Chris, thanks for the update. Let me go to the balance sheet first. Your debt is up $5 million and your cash is up $17 million but you generated $6.2 million of free cash flow in Q3. So I'm trying to figure out how you got your cash up to $17 million on $6.2 million of free cash flow and your debt went up $5 million. Was there an inflow that I'm missing here?

Yes, there was no interest payment. Remember the bond deal is a 6-month pay as you go so we didn't make an interest payment in the fourth quarter, we made it actually in February. That's why you've seen the spike up in cash.

Okay.

Right because the cash continues to build but you expense it as if you paid it but you actually --

Got it. So it's the incurred versus the reality, debt versus the real world. Okay. That makes sense. And then going to World Cup, are there any soccer tournaments that you have that could bring some chunky economics to you in calendar 7/11?

Yes, actually, as I mentioned before, Bishop, we have acquired the rights for all the national Mexican national team games this year.

Right so you're going to participate in that?

Opposed to splitting them last year.

Okay.

Which is a big deal. Huge deal. We've got 3 coming up, 3 friendly games coming up in March, 2 of them Mexican national team, 1 of them the US team. You have the Copa America and the off year of the World Cup and you have the Copa de Oro, now those are 2 tournaments, month long tournaments, one in June one in July, that incorporates some of the biggest teams in Central America and then later in South America. So those are big 10 poles, soccer sponsorship events that we have to do. And we have on the Radio side, that's Television, on the Radio side we have all the same, the Mexican national team, the Gold Cup, of course we acquired the rights-- secured the rights of a 2014 World Cup and a number of other friendly games. So we do have soccer sponsorship promotional events that we can recoup a lot of that World Cup money.

Okay. All right. So by scale, just remind me again, Q4 World Cup revenue and this is net of gross in numbers you --

Nothing in Q4.

Oh, okay. So there was nothing gapped in Q4?

Prior year, all June, July.

It was all-- and what was the total number for World Cup?

$7 million-- $7.4 million.

Okay. All right. And but I mean, these will pale in comparison but will-- could they contribute in total $1 million or $2 million?

Absolutely.

Okay. All right. Let's talk about local, because that seems to have been a rub through all of last year in Radio. And under the theory that there is a lag time in the Hispanic marketplace to the mainstream non-Hispanic marketplace, your local is still struggling, Radio and TV. Now, we can talk about some of that was crowding out but what can you tell us it might be green shoots or something more positive about what local might look like in 2011?

I think we've pointed out that in the fourth quarter we saw tier 3 grow by 15% in our Television business.

Oh, was that across -- I thought that was just in auto?

That is automotive, right. But I just wanted to use 1 category, one important category that is starting to come back. [More] about lows of 2009 and we're continuing to see more tier 3 business as we move into Q1, both Television and Radio.

Okay. And again, you think that that is a leading indicator for the recovery of local?

I think so. We think it's a leading indicator. I mean at one point the automotive category was 25% to 30% of our total TV and 20% of our Radio, so to see it continuing to grow steadily, I think gives us confidence that these are green chutes we're seeing and that the economy is coming back ever so slowly.

Clearly, Bishop, it's one of our greatest focus, the local car dealers and the dealer groups which has grown and grew a lot last year. But we, and as Walter said, any typical market in the good days, 2006, 2007, we'd have 2 dozen car dealers, local car dealers spending on the stations in a particular market and cluster and it slowed down to the point where as last year we'd have less than half a dozen. So this is a priority for us and we see it start to come back and grow as mentioned up 15% which is encouraging. On the Radio side, Jan and February up 23% for tier 3.

All right. So up 23% for --

2 months. First 2 months of --

For Jan and Feb and this is Radio only we're talking about or Radio --

It's Radio.

Radio. Okay. And just this tier 3 category or local in general on the Radio?

Tier 3 is what we consider local car dealers. Tier 2 would be the groups, the dealer groups.

Right.

And tier 1 of course is the factory.

Okay. All right. Let's talk about the census. Any way you slice it it's gang busters.

Huge, huge.

So -- and we suspected when, Chris, when you and I sat down at our conference and talked, we talked about that. We thought it might be big, so can you share your thoughts about how you're going to go about marketing this and harvesting it if it can be? I know that not all the numbers will be out until late in the year, but I suspect the marketing has already begun.

Well, what we're going to see for sure, I think, is an increase in the Latino population in our already fastest growing highest density markets that we operate in, Nevada, the Latino population, Nevada appears to be up 82%. Those numbers are already in. Texas is -- it was -- increased 42%, now almost 38% of the total Texas population, which is the second largest state in the Union, is now of Latino decent. Colorado, another very important state for us was up 41% in its Latino population growth. We-- California is due next week and we expect California, which is also very important state for Entravision, to show significant Hispanic population growth. So it takes a while for these numbers to -- I mean, for these numbers and growth to seed in, but the higher density, the Latino population in any of our markets, the more investment we're likely to see from every advertising category. So we're quite excited about what we've seen so far in terms of the census numbers.

All right. So the way that you harvest it, I mean, what's the words I should be thinking, ramp up? Do we start to see evidence of the census helping you lift-- that tide lift your ship in Q2 and then continue to ramp up more in Q3 and Q4?

Probably likely to see more, more of an effect of the census growth into Q3 and Q4.

Okay.

Because the numbers are still coming out and now we're getting close to the second quarter. So I think by the second half of the year we're going to be able to go out and effectively sell these -- this new census information. I think Nielsen will also have to adjust, Arbitron will have to adjust, so it'll take time. So fall probably is the best -- because if you have to look at a period when we'll start to see the positive effect of the census numbers and the huge Hispanic population growth in the last 10 years, probably be fall fourth quarter of 2011.

All right. Two last questions, I'll try and make them quick. When did you think you'll be filing the K?

K will be filed in I believe the -- I think we are targeting the twelfth.

Okay. And then --

The fourteenth, I'm sorry.

Remember me, you know I'm old and I'm slow so I missed some numbers here. Retrans political and World Cup, Q4 for retrans?

Okay.

3.7 I think is the number for retrans for Q4.

For Q4?

Right.

And for the full year?

No, $13.7 million was the full year.

$13.7 million for the year.

$13.7 million for retrans for the year?

That's right.

Okay. And just pretty much quarterly pretty even?

It's been-- it was $3.1 million Q1, $3.3 million in Q2, $3.7 million in Q3 and $3.6 million in Q4.

Okay. All right. And then on political, I think we said $7.1 million for the year?

For the year, $7.1 million.

All right. And for Q4?

Q4 was $4 million call it, $3.8 million for Television and $1.2 million for Radio.

Okay. $1.2 million for Radio?

Correct.

Okay. And then is that net or gross?

Those are net numbers.

All net. That's $2.8 million for TV.

All right. And then World Cup was $7.4 million for the year?

$7.4 million for the year.

$7.4 million for the year.

Got it. That's it. Thank you very much.

Thanks, Bishop.

The next question we have comes from Michael Kupinski with Noble Financial.

Thanks and thanks for taking the question. I just have a couple quick questions, most of them have already been answered. In terms of the fourth quarter Radio, what is the percentage of your non-traditional revenues in -- as a percent of total for the fourth quarter and if you could give it to me for full year 2010?

So you're looking for the political breakout for fourth quarter, Michael?

No. The non-traditional revenues, like if you were to take in whatever concerts or digital revenues and so forth as a percent of total Radio revenue.

Yes, that's all rolled into local-- scrambling to get you a number here, may have to cover it offline.

We don't really break it out that way.

No, we don't break it out that way.

Okay, yes, I was just kind of checking in terms of obviously you had very strong growth in digital, were there any particular other non-traditional revenues in that number that would have accounted for the fact that aside from the political, that would have been a flattish revenue number for the fourth quarter? That's all I was leading to.

No, there's really nothing there that's a needle mover with the exception of political that's in the Radio number for fourth quarter.

Okay. And in terms of there's other Radio operators out there looking at different types of ancillary and non-traditional revenues including Intercom looking at like Groupon couponing type business strategies and things like that are-- that would seem to be a prospect for you, it might be attractive to some of your demographic groups and so forth. Is it something that you might be exploring as well in terms of a Groupon type model in your markets?

Absolutely. We're testing a Groupon type product called Busca Oferta, which one of our suite of Busca products and we're testing it in El Paso, and we've been in a test mode there for over a month and we're certainly tweaking the product as we go here week to week. But we're quite excited about our prospects for digital and our Busca product is certainly one of the key components of that strategy.

And that does carry a little bit lower margin as well, kind of like what others have been saying?

No. We're looking at to establishing 50% margins in our digital business and that is clearly the goal and we're close to that now.

Okay. All right. Fair enough, that's all I had. Thank you.

Thank you.

The next question we have comes from [Tim Daggett] of Citi.

Hello, guys. Do you have any plans to use the special call feature in the bonds at the 103 take out price?

Well, it's an option Tim, but we don't have to really make that decision until the first anniversary, which is the end of August. So it's an option we will keep at hand and we will call the shots later on during the year.

Okay. Thanks.

It appears that we have no further questions at this time. We will go ahead and conclude our question-and-answer session. I would like to turn the conference back over to Management for any closing remarks. Gentlemen?

Thank you, Michael. Thank you, everyone for participating on our fourth quarter and full-year 2010 call. We look forward to talking to all of you in May and we will then announce our first-quarter 2011 financial results. Thank you.

And we thank you, sir, for your time and we thank you all for attending today's conference call with Entravision Communications Corporation. This concludes today's event. Thank you and take care.