Entravision Communications Corp (EVC) 2013 Q3 法說會逐字稿

Good afternoon, and welcome to the Entravision Communications third-quarter 2013 earnings conference call and webcast.

(Operator Instructions)

Please note, this event is being recorded. I would now like to turn the conference over to Mr. Walter Ulloa, Chairman and Chief Executive Officer. Please go ahead, sir.

Thank you, Laura. Good afternoon, everyone, and welcome to Entravision's third-quarter 2013 earnings conference call. Joining me today is 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 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 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 on a form 8-K.

During the third quarter, we generated strong core advertising growth at our television and radio stations, reflecting the health of our brands in the nation's most densely populated Latino markets. We also made further progress in extending our online presence, building our research capabilities, and providing cross-platform opportunities to our advertising clients. Advertiser interest in reaching the Latino population continues to expand. We are making good progress in leveraging our sales force and developing opportunities that integrate our online, mobile, and social media assets into our broadcast media offerings. Consolidated third-quarter revenue $57.8 million, down 1% compared to the third quarter of last year, which included $4.9 million of political revenue. Year over year decline in political revenues is partially offset by strong local advertising performance at our core television and radio properties.

Now, moving on to our operating highlights for the third quarter. Our television revenue increased 3% during the third quarter due to the absence of political revenue this year, compared to the third quarter of 2012. Excluding retransmission fees, TV revenues increased 4% compared to the third quarter of last year. Local television revenues increased 16% in the quarter, while national TV revenues declined 21%. The decrease in national revenues was driven primarily by the impact of higher political television advertising sales of approximately $4.4 million in the third quarter of 2012. Excluding retransmission and the impact of political advertising sales, core TV revenues increased 8% compared to the third quarter of last year. Core local television revenue grew 16%, while core national revenue decreased 1% during the quarter. Overall, our television revenue performance continues to outperform the broader television industry. The Television Advertising Bureau currently estimates that the core television industry fell 5% in the third quarter compared to core growth of 8% of our television stations. We have now significantly exceeded the industry's core growth projections for eight consecutive quarters.

A key contributor to our core television performance was the automotive category, which faced the quarter up 19% compared to last year. Automotive spending growth at our TV stations has now posted double-digit increases in 14 consecutive quarters. Importantly, the growth in automotive continues to be broad based. We saw growth in six of our top eight auto brands during the third quarter. 97.5% of our automotive television revenue is generated from our top eight automotive brands. And Ford and Chrysler Group were the only two automotive brands where ad spending with Entravision Television went down year to year. On a tier basis, we saw strong growth at all three levels, with tier 1 up 25%, tier 2 up 8%, and tier 3 up 42% in the third quarter, and we continue to be optimistic about the automotive sector going forward. Automotive sales on a national basis were up 11% in October, despite the disruption of the government shutdown debt ceiling crisis.

Looking now at other television advertising categories, we experienced growth in 7 of our top-10 categories during the third quarter, including strong performance from automotive; healthcare up 28%, retail up 14%, and grocery convenience stores up 14%, services up 6%, travel and leisure plus 5%, and telecom up slightly. Our declining categories in the third quarter were product name brands, media, and fast food restaurants. During the third quarter we added 28 new television advertisers who invested $10,000 or more with our television properties. New television clients included Franklin D. Azar & Associates, WellPoint, Nevada Health Link, Aetna, and Dick's Sporting Goods.

Turning to our television ratings performance, our Univision affiliates extended their ratings leadership position in the July 2013 sweeps. Among all adults 18 to 49, regardless of language, 11 of our Univision television affiliates ranked number 1 or 2 sign-on to sign-off. Additionally, 9 of our Univision affiliates are either number 1 or 2 among all adults 18 to 34. Five of our UniMas television affiliates are the number-2 ranked Spanish language television stations in their markets in adults 18 to 49. Five also ranked number 2 among adults 18 to 34.

During the our prime time Novela block, Entravision Univision affiliates delivered higher ratings among adults 18 to 49 in 14 markets than at least one of the big four English networks. In 12 markets, our Univision affiliates beat ABC and CBS. In early network news, 14 of our Univision affiliates are number 1 or 2, regardless of language, adults 18 to 49. 14 of our Univision affiliates are number 1 and 2 in early local news, and 9 are number 1 or 2 in late local news, adults 18 to 49, again regardless of language.

Moving over to radio division, revenues increased 3% in the third quarter compared to last year. Our station group once again outperformed the broader radio industry, which Miller Kaplan estimates grew 2% during the third quarter in the 12 markets in which we subscribe. Local revenue, which represents 69% of our total radio revenue, increased 10% during the quarter, while national revenue, which represents 31%, declined 10% due to reduced political advertising compared to the prior-year quarter. Net political revenue in the third quarter was $39,000, compared to $540,000 in the third quarter of last year.

On a core basis, excluding political advertising, total revenue finished up 6%. Revenues at our Entravision Solutions audio network increased 34% during the quarter and are up 18% year to date. This revenue growth is attributable to the strong interest we are securing from major advertisers as they seek effective ways to target Latinos across our markets. This increase is supported by the robust year over year growth in network advertising. During the third quarter, we had a total of 32 Entravision Solutions network advertisers, compared to just 19 during the same period last year. Our top three advertisers were Mars, JCPenney, Walmart, and Sears.

Our radio division continues to generate balanced growth across key advertising categories. We recorded revenue growth in 7 of our top 10 categories in the third quarter. The auto category, which is our second largest category in the quarter, ended with revenue up 8%. Tier 1 decreased 2%, this decrease was a result of a reduction of spending by Dodge, partially off set by increased spending from Ford. We saw a 5% reduction in tier 2 spending, and tier-3 local car dealerships saw an increase of 21% in the quarter due to Mike Shaw Automotive, Nissan of Duarte, and Charlie Clark Nissan.

In addition to automotive, our strong growth categories in the third quarter were services, which is our top category for the quarter, it increased 6%. This increase was a result of Farmer Insurance increasing their spending by 155%. Travel and leisure increased 5%. Retail saw a 27% increase. We saw increased revenue in the telecom category of 12%. And the healthcare category was up 14% in the third quarter.

Fast food restaurants, media, and product brand names were down in the quarter. We added 34 new radio advertisers who spent more than $10,000 during the third quarter, which resulted in approximately $800,000 in revenue. In the third quarter of 2013, our Los Angeles radio cluster generated a 4% increase in total revenue. Entravision's Los Angeles radio cluster continues to perform in line with its peers. According to revenue date from Miller Kaplan, the Los Angeles radio market total revenue for the third quarter increased 5%. Our Los Angeles revenue growth continues to be propelled by solid growth in both local and national revenue from our three Spanish language formats in the number one radio market in the nation.

Our cluster increased local revenue by 5% for the quarter by focusing on local direct business. In addition, we are continuing to focus on intensive cold-call strategies and the training of our account executives to take advantage of exciting new commission incentives to help grow new business. These initiatives seem to be working as we're seeing a steady improvement in billing for our Los Angeles cluster locally. National revenue decreased by 1% in the quarter over the same period last year. Over the past few quarters, we have implemented strategies with Entravision Solutions to further target differences in our cluster formats and provide an integrated marketing solution and leading with idea driven strategies.

On July 20, we continued our tradition of producing one of the largest Latino concerts in the United States with our 15th annual Reventon Super Estrella. Once again, this event exceeded all of our expectations. This year's Reventon featured an all-Spanish rock lineup. More than 15,000 fans enjoyed their favorite artists at Staples Center for a six-hour concert. We also had a number of sponsors for this year's event, including Bud Light, AT&T, McDonalds, MundoFOX, Vallarta Supermarkets, Toyota, E&J Brandy, Los Defensores, and La Opinion.

And as in the years past, we used both Facebook and our mobile platform to conduct our presales of concert tickets. We asked our listeners to either like us on Facebook or text in Reventon to our short code for the exclusive sale code. We sold over 60% of our tickets in the presale, and we sold out the event within a week of going on sale. For the summer 2013 radio ratings, our stations continue to be ranked among the leaders in adults 18 to 49 against all competitors, regardless of language. Among the 10 Entravision markets released by Arbitron in the summer survey, 6 of our markets are in the top 10 in their markets.

Let me now turn to our digital business. We continue to leverage our strong brands and revenue teams to deliver attractive integrated marketing solutions. Now our clients can connect with our audiences across TV, radio, online, mobile, and social for greater aggregated impact with new, attractive, multi-platform advertising campaigns. Third quarter was a new all-time revenue record for our digital ventures. Our interactive revenues have grown year over year for 21 straight quarters, including strong growth of 44% during the third quarter over the same period last year. We launched our digital ventures in 2009. We have experienced solid revenue growth with a compounded annual growth rate of 49% since 2009.

We continue the ramp-up of our digital video operations. During the third quarter, we published more than 10,000 local news stories online across our markets. We are investing in our former radio production facility in Los Angeles. We plan to leverage all the great talent and celebrities that visit our new media center in Los Angeles to produce video for evergreen content categories like entertainment, sports, wellness, and others. Our audio live streaming operations showed solid performance during the third quarter as we streamed 5.2 million hours of audio content, a growth of 45% over the same period last year. We now have every month an average of 700,000 unique audio streamers, with an average session length of one hour.

Our mobile operations continue to grow at a fast pace as well. In the third quarter, our mobile revenues increased 24% over the same period last year, as usage trends remained at record levels. During the third quarter, we sent over 6 million text messages to our mobile audiences on behalf of advertisers like Toyota, Ford, AT&T, Coors, Comcast, McDonald's, Bud Light, State Farm Insurance, and many others. We also see search as an important driver of growth for Entravision because search represents 48% of all online advertising.

EntraLeads is an online Latino search platform that delivers customer calls and other high-quality lead forms to our national and local advertising clients. 10% of all search querying are Spanish language key words, and EntraLeads was created to connect potential Latino customers with clear purchasing intent and advertisers. This digital product identifies key details of customer interactions, measures the outcomes, and optimizes yield. This unique automated platform continues to produce positive results for our clients. We have 200 clients advertising with this digital product, and it is becoming an important revenue driver for our Company.

We are driving increased engagement across social media as our radio and television websites continue growing their Facebook and Twitter audiences. We finished the third quarter 550,000 followers on our social media channels, which is up 74% over the third quarter of last year. We also deployed a new enterprise social marketing platform that allows us to integrate our social media campaigns into our traditional advertising offerings to drive social media engagement and revenue. We are diversifying beyond traditional media into areas of high growth to bring new opportunities to our current and future client roster. We are also focused on capturing nontraditional broadcasting clients with new complimentary digital products and services. We are actively looking to diversify by forming new partnerships and acquiring new digital assets targeting the Latino consumer.

A good example of our digital initiative is our big-data unit. In August 2012, we launch Luminar as the first big-data analytics business intelligence and modeling provider to focus on the Latino consumer. Luminar's big-data platform and analytics provide actionable Latino consumer growth strategies for Fortune 1,000 companies. Luminar continues to make significant progress with marketers and national advertising agencies. In a little over a year since its launch, Luminar has been retained to perform Latino consumer insight analysis for national brands, including Carnival Cruise, Valvoline, Nestle, Publishers Clearing House, Target, and the California Milk Advisory Board, and is working diligently with other potential national brand clients. Luminar now collects and analyzes data for 15 million US Latino adults, which represents 70% of the US Latino population -- adult population.

As a logical extension of our big-data unit, we are pleased to announce the launch of the Luminar Audience Platform or LAP. LAP is a technology platform that organizes display mobile video and social ad inventory using data from numerous sources, including Luminar's transactional data. That enables advertisers to set customized specifications about the type of customers they want to attract. LAP delivers immediate buying platform at big-data scale. It is designed to use the power of analytics to improve the return on investment of marketers targeting the Latino consumer for growth.

Luminar is not only allowing us to deliver strategies of growth for our clients, but increasingly is transforming our whole operation into a more data-driven organization. This transformation is leading us to better cost efficiencies and revenue growth by dynamically managing our yield management practices. We are transforming Entravision. We used to be a broadcast group. Now we see ourselves as an integrated media and information technology company serving the Latino market. We will continue to invest in our digital platform, and our goal is to drive our digital and information technology businesses to produce at least 20% of our total revenues by 2016.

Turning to our pacings, while we do not provide specific guidance, in October, we continued to see positive trends across our television, radio, and digital businesses. Entravision's total core revenue through October is plus 12%, with television core pacing at plus 17% and radio core at plus 3%. That said, we are seeing anticipated healthcare spending in the quarter slow down due to the difficulties surrounding the Affordable Care Act rollout.

In summary, we are pleased with our third-quarter results, which demonstrated continued strength in core advertising as well as notable progress building our digital platform. Interest in reaching the nation's Latino population remains high, and we are attracting new clients through our multi-platform opportunities and strong audience shares. Core advertising pacings in October are demonstrating continued growth, and we are focused on further executing our strategy and delivering increasing returns to shareholders. I will now turn the call over to Chris Young, our Chief Financial Officer, for a review of our financial information.

Thank you, Walter. Good afternoon, everyone. As Walter has discussed, net revenue for the quarter was $57.8 million, down 1%. Operating expenses increased 3% to $34 million, and consolidated adjusted EBITDA decreased 8% to $19.9 million. Our senior note refinancing was completed on August 2, 2013. Our new interest rate is LIBOR plus 2.5% with a 1% LIBOR floor. As a result of our senior note refinancing, we recorded a loss on debt extinguishment of $29.4 million related to the premium associated with the redemption of our notes, the unamortized bond discount, and finance costs.

Television net revenue was down 3% to $39.7 million for the quarter, compared to $40.9 million in the same quarter of last year. Radio net revenue was up 3% to $18 million for the quarter, compared to $17.6 million in the same quarter of last year. The decrease in our TV segment was primarily attributable to a decrease in political advertising revenue, which was not material in 2013, partially offset by increases in local advertising revenue and retransmission consent revenue. The increase in our radio segment was primarily attributable to an increase in local advertising revenue, partially offset by a decrease in political advertising revenue, which was not material in 2013. Excluding retransmission consent revenue and political advertising revenue, core TV advertising revenue was up 8% for the quarter, versus TV industry core [SPUT] revenue of minus 5%. This is the eighth consecutive quarter where our core TV revenue has significantly outperformed that of the TV industry.

Core radio advertising revenue for the quarter was up 6%. Retransmission consent revenue for the quarter was $5.3 million, compared to $4.9 million in the same quarter of last year. Operating expenses for the quarter were $34 million, up 3%. Excluding non-cash compensation expense of $0.3 million, operating expenses for the quarter were $33.7 million, up 3%. The increase was primarily attributable to an increase in salary expense and an increase expenses associated with the increase in local advertising revenue. Corporate expenses for the quarter were up 12%, to $5 million, compared to $4.5 million in the same quarter of last year. Excluding non-cash compensation expense of $1 million, corporate expenses for the quarter were $4 million, up 2%.

Earnings per share for the third quarter of 2013 applicable to common stockholders was negative $0.24 per share, compared to an EPS applicable to common stockholders of a positive $0.08 per share in the third quarter of 2012. Excluding the one-time loss on debt extinguishment of $29.4 million, EPS for the third quarter of 2013 applicable to common shareholders would be $0.09 per share. Free cash flow, as defined in our earnings release, increased 13% to $11.9 million, or $0.14 per share for the quarter, compared to $10.5 million, or $0.12 per share, for the same quarter last year. Cash interest expense for the quarter was $4.9 million. Cash capital expenditures for the quarter was $3 million. CapEx for the year will be approximately $9.5 million.

Turning to our balance sheet, as of September 30, 2013, our total debt was $375 million, and our trailing 12-month consolidated adjusted EBITDA was $78.6 million. Cash on the books was $53.5 million at September 30, 2013. Net of $20 million of unrestricted cash on our books, our total leverage, as defined in our new 2013 credit agreement, was 4.5 times as of September 30, 2013. This concludes our formal remarks. Walter and I would be happy to take your questions. Laura, I'll hand it over to you.

(Operator Instructions)

Our first question is from Michael Kupinski of Noble Financial.

Thanks for taking the question. First, did I understand right that the core national advertising was down in the quarter? I think you said it may have been down like 1%. Was there any particular category or advertiser that would have accounted for it being down in the quarter?

Core national for -- are your talking TV or for radio, Michael?

For TV.

For Television? Core was a minus 1%. Auto was our driving category, but I think retail was strong, healthcare was strong. Just looking across the quarters here.

We had seven of the top 10 categories that were up. Automotive, of course; services, retail, telecom was up slightly. Let's see, what did I leave out here? Oh, healthcare, of course. That was up 28% I think.

Yes. Fast food and restaurants, that's always been -- for the past couple quarters, fast food and restaurants has been somewhat problematic, and that's the real reason why you had some softness on the national side. (Multiple speakers)

I'm sorry, go ahead, Michael.

I was just wondering if that was -- you were seeing any improvement there as you go into the next quarter, or is it --what might be happening there?

Well, the big, I'll call it challenge, for us in the third and fourth quarter, especially the fourth quarter, is political. The non-returning of almost $5 million in Q3 and about $9 million in Q4. But that said, our core categories and our core television growth and radio growth in the third quarter was strong, as you can tell by our numbers, and that core growth continued into October of the fourth quarter.

Okay. And in terms of World Cup, do you have any visibility on that yet?

Well, the visibility we have is the following. We are much farther along in our pacings for World Cup than we were at this same time in 2009. We've got a significant amount of investment by advertisers in World Cup already circled, I'll call it. Univision is sold out in every category. In fact, they increased the allocation of inventory for automotive because there was so much demand.

We continue to see strength in automotive, both in radio and television, so we think that for sure that automotive demand for our television properties that will air the World Cup will be very strong. And I've got to say also that the Team has done just a fantastic job of organizing our World Cup materials, and I think that is certainly what has contributed to our success so far in identifying World Cup commitments for 2014.

And then finally, can you talk a little bit about your interest in maybe looking at acquisitions at this point, and what are the transaction multiples in television, particularly any thoughts on being a little bit more aggressive on acquisitions?

I'll just say that acquisitions is something that we look at, and by that, I'm including traditional broadcasting assets as well as new media digital assets. In fact, I would say that our focus is probably more on new media digital assets that are targeting the Latino consumer than traditional broadcast assets.

But we have -- from time to time, we get opportunities to look at broadcast assets. We'll look at them. We, unlike English language broadcasters, don't see the kind of inventory that the big TV companies are seeing, including Sinclair, Nexstar. They're going out and buying companies.

And although in some instances we see some assets in these companies that might be important to our growth in markets like El Paso, South Texas, high-density Latino markets, usually, our ability to capture those assets is almost impossible because you've got these consolidators, like I mentioned, buying companies, so it makes it difficult for us.

But in terms of Spanish language media assets, there's not really a lot for us to look at. We've seen a few things here and there and some ideas people come up with, but certainly, our focus is to invest in areas of strong growth to capture the migration of advertising dollars into digital dollars -- or traditional advertising dollars into digital.

And in terms of with the spectrum options coming up, any thoughts on how you plan to participate in those?

I'll just say we've done some work in that area, but right now, certainly no public plans in terms of how we plan to participate. We're just looking at it. It's still a ways away. We don't see anything happening until 2015. And then we'll see what -- how the final rules and how the FCC plans to actually conduct both the reverse and the forward auction.

Okay, great. That's all I had for now. Thank you.

Thanks, Michael.

The next question comes from Tracy Young of Evercore.

I had two questions. You gave October pacing of plus -- I guess it was past, but October core TV growth of 17%. I know you don't give guidance, but was the driver in that the healthcare? Is that your point, that maybe some of that will have subsided for rest of the quarter?

And also, can you put into context for the tier-3 auto spend. Obviously, it was huge for the you in terms of growth on the TV side. What was it in Q2? And how sustainable do you think that is? Thanks

Let me just address the question about the healthcare category. At the beginning of the year, we told our investors and the market that we thought that the healthcare category would produce incremental revenue as a result of the Affordable Care Act of $2.5 million to $3 million. Then midway through the year, we decided, well, maybe it will be a little better than that.

But now that we've -- the healthcare enrollment has actually started, and we see all the difficulties surrounding the launch of the Affordable Care Act, we now believe that the total number for the year in terms of incremental healthcare money due to the rollout of the Affordable Care Act will be closer to $2 million, and that's because we certainly have seen a slowdown in fourth quarter with all of the controversy surrounding the rollout.

And advertisers are, I think if anything, taking a pause to see how the restructuring of the technology surrounding the launch of the Affordable Care Act, how it improves here at the end of the month. I will say, though, that whatever is not spent in Q4, we expect to see that money certainly return in Q1. We're expecting now, at this point, I'll call it, a robust first quarter around healthcare.

I'd also add that that plus 17% on the TV side is also in part a result of just the displacement of a lot of core advertisers last year during the political season. Remember, Tracy, we did close to $5 million in political in that month alone last year, so I don't think that's uncommon. I think you're seeing it with other broadcasters as well who had a lot of political activity last year. So don't use that 17% as the benchmark for the quarter.

And then also could you talk about the tier 3 please?

You mentioned automotive. And our automotive in Q3 for television was plus 19%. I believe radio was plus 8%. And what was the question?

You mentioned it was very helpful the tier 1, tier 2, tier 3. And so if you could just give us -- that's a huge number for the tier-3 growth. If you could give us some context as to last quarter or what you -- how sustainable you think that type of growth is.

Well, Q3 is always traditionally our strongest tier -- I'm sorry -- Q3. Tier 3 is always our strongest tier when it comes to automotive. It's the local dealership, and it's where we have the most input, the most ability to sell through our media products. And both for TV and radio, how we do in automotive usually depends on how well we do with tier 3. And so I believe in radio, automotive was up plus 8%, but most of that growth was coming from tier 3. In fact, 1 and 2 were down.

And then in television, we saw growth across all three categories, with tier 1 up 25%, tier 2, which is a dealer association, up 8%, and then tier 3 up 42%. And of course, the good news is that national sales for automotive across the country were up 11%. And so we believe that the growth we've strung together here over the last however many quarters, at least 12 quarters, in automotive should continue, certainly, through the rest of the year and then into 2014. Now, will it continue at the levels we just announced or gave you for Q3? It's still too early to tell.

Okay, thank you.

Thank you.

Our next question will come from John Kornreich of J.K. Media.

Let me just clarify. You said that October alone, the TV was up 18?

Core October --

Core. Yes, core, which means (multiple speakers) -- what? (Multiple speakers)

Go ahead.

No retrans; no political.

Correct. That's right.

Okay. And radio was 8?

No, plus 3.

Plus 3.

That's October.

Yes. That's excluding political.

Right. How do you view the 17? Are you disappointed with it? It is an easy comparison, obviously, for that month since so much inventory was shoved aside a year ago.

Right.

Do you feel that business really is that strong or getting stronger, or is this just an aberration of year-over-year numbers?

Well, John, it's Walter. As you know, you started out by pointing out the fact that there was a lot of displacement last October by advertisers as a result of the huge political advertising that went through our TV and radio properties. But specifically talking about television, overall, our categories in television are relatively strong, with 7 of the 10 being up in the third quarter, but certainly, I think a result -- or the huge increase in TV for October has to be as a result of some of the displacement we saw in last year's October.

As an early look, are you confident that December will be up? Forget about how much. Are you confident the core will be up?

I think that's called guidance, John.

Okay.

John, I think the takeaway is you look at the rest of the industry who's in the middle of reporting now, I haven't heard anybody talk about a pace that's as high on a core basis, even with all the displacement as a good explanation. So we feel good about the number. Just as we look at, for comparison purposes, everyone else in the space, it seems like a continuation of the same story we've been seeing now for the past eight quarters.

I agree because I think up 18 is more than the -- I'm seeing 7 to 15.

17.

Yes, but I'm seeing in other companies 7 to 15 for October, and they had relatively more political a year ago. So they had (multiple speakers) --

Yes, their political will be (multiple speakers) --

They should be even easier comparisons, but you're still pacing ahead of them.

Correct.

Retrans, remind me, I forgot. Is this the last year of the agreement, or is it next year?

One more year. Next year.

Next year is the last year. That's it. Thanks a lot.

Thanks, John.

(Operator Instructions)

Our next question is from James Dix of Wedbush Securities.

Hello, good afternoon, guys. I had two questions for you. For the Affordable Care Act spending, I appreciate the color on what you're looking at now. I'm just wondering, given the way the rollout has occurred and what you're hearing from advertisers, do you think -- are you revising at all your expectations for what it could mean to you longer term over the next couple of years, or do you still think it's probably a multi-year process by which you're going to be getting the spending?

And I'm just curious as to how you think it's going to be budgeted. When do you think you're going to know the budgets for this type of spending as you go forward the next couple of years?

And then just secondly, for next year, how do you think about the diversification of growth across your ad categories? Auto has obviously been huge this year. I'm just wondering. I know before the recession, oftentimes auto and telecom would drive almost all of your growth.

Telecom not as big a category now. And I'm just wondering, how much growth do you think you can get from categories outside of auto on a more steady-state basis next year?

Thanks.

Let me just answer the first question, James, about healthcare and the Affordable Care Act. We see this as a multi-year opportunity. Call it the next four years. But certainly, the -- and we base that on a couple things. One is just the mere size and breadth of the Affordable Care Act and the rollout.

And then also the fact that Latinos will play a very important role in the success of the Affordable Care Act in California and Texas, two of our biggest states. Latinos represent about 50% of our eligible enrollees in the Affordable Care Act. So just by the mere size of the two states and the large population of Latinos that live in California and Texas, and of course, you've got Nevada and Colorado, other important states. Florida where we have strong media clusters, and they will be important as well in terms of the success of the Affordable Care Act.

So we see an important opportunity here for -- not only for us as a media company, but also for the Latino community, to access health services that they haven't had. And the second question --

Second question was just category-wise, how do we look at next year? Does it continue to be just a one or two-category growth model driven by primarily but auto?

Look, auto was up 19% for TV. I know, James, you've been pushing back at the continuation of that growth rate, but we continue to see it come in quarter in quarter out. Now, it's already -- as far as a percentage of our TV revenue, 27%. We've been talking about that creeping back up to the English language broadcaster levels of where I think they are is, in general, about 30%. So we're coming in on that number.

I think it's safe to say -- we had 7 of our top 10 categories produce growth. Four out of those top 10 produced growth in excess of 20%. So I think it's safe to say, as far as we're looking at it, you'll probably see a broader based growth profile of all of our categories, as opposed to just auto driving, being the dominant force in our numbers. That's with way we're looking at it for next year. Did we lose you?

I believe he has dropped from the queue. Our next question will be Aaron Syvertsen of Sidoti.

Just a couple questions. First, you spoke a lot about the interactive growth, solid numbers there in the quarter. Chris, do you have the number that interactive was as a percentage of total ad revenue for the quarter?

Percentage of total ad revenue, we don't give out the interactive -- interactive is all embedded in both TV and radio as reporting segments, so we don't really give any more detail typically because we can't.

Okay. And then is the mobile revenue, is that rolled into the interactive? Or is that a different --?

It's rolled into the interactive. At some point down the line, we'll start to break it out as a separate reporting segment, but we're not there yet.

And could you just remind me on the retrans for next year, are you still looking for maybe a $4 million to $5 million bump in 2014? Could you just remind me on the number there?

Yes, well, I can't remind you because we really haven't walked your through 2014 numbers yet. So we'll give guidance on retrans on our next quarterly call for fourth quarter, but we don't guide that far out as far as retrans is concerned.

Then lastly, you've done a special dividend the last couple of years. I know, obviously, you can't give too much insight into what the Board is planning on deciding, but with the more cash on the balance sheet this year than this time last year, what are the possibilities of another special dividend, and thoughts on a quarterly dividend for next year?

Our preference is to reinvest in our business. But beyond reinvestment, we could look at shareholder-friendly actions such as dividends and share repurchases in addition to continued debt paydown in the future. But we're not prepared to address that now.

Okay, thanks, guys.

Thanks, Aaron.

(Operator Instructions)

And showing now further questions, that will conclude our Q&A session. I would like to turn the conference back to Management for any closing remarks.

Thank you, Laura. This concludes our third-quarter investor call. We look forward to speaking to all of you in 2014 when we will report our fourth-quarter and full-year 2013 earning results. Thank you for participating.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.