Sinclair Inc (SBGI) 2008 Q4 法說會逐字稿

Ladies and gentlemen, welcome to the fourth quarter 2008 Fisher Communications Inc. financial results conference call. At this time, all participants are in listen-only mode. We will be conducting a question-and-answer session towards the end of this conference. (Operator Instructions). I would like to turn the call over to Joseph Lovejoy, Senior Vice President and Chief Financial Officer. Mr. Lovejoy, please proceed.

Thank you, and good afternoon, everyone. thank you for joining us. Before we get started, let me remind you this call contains forward-looking statements relating to the development of the Company's operations, product and services and anticipated future operating results.

These statements are based on information available at the time they are made, but are necessarily subject to a number of risks and uncertainties and actual results may differ materially from expectations. Factors that could cause actual results to differ materially from those expectations are described in our annual report on Form 10-K and quarterly reports on Form 10-Q as filed periodically with the Securities and Exchange Commission.

The Company undertakes no obligation to update publicly any forward-looking statements due to new information, events, or circumstances after the date of this conference call or to reflect the occurrence of unanticipated events. A web cast of this call is available on the investor relations portion of our web site and will be archived in audio form on the web site for a limited period. With that I will turn the call over to Colleen Brown, our President and Chief Executive Officer.

Thanks Joe. Good afternoon and thanks for joining us. In addition to Joe, I am joined by Rob Dunlop, our Senior Vice President of Operations. Joe and I will deliver some prepared remarks and we will open it up for questions. I hope you have had a chance to review our fourth quarter financial results which were released this morning. As you know, the economy continued to weaken in the fourth quarter with consumer confidence ending the year at an all time low. Combined with declines in the other leading economic indicators, this market softening impacted advertising budgets which in turn negatively affected Fisher. The declines in core advertising categories for the quarter in 2008 as a whole were widespread and significant. Notwithstanding this weakness, Fisher managed to post a positive revenue growth for the year, primarily driven by strong political revenue in the third and fourth quarter and successful integration of our Bakersfield stations, which we acquired in January of 2008.

Despite little presidential candidate advertising in our markets last year, we experienced strong political spending in 2008 with $23 million of political revenue up from $7 million the previous year. This strong political spending offset declines in our core advertising categories. These include auto down 26% year to year, retail, which is down 12% in 2008 and professional services, which was down 6% compared to last year. Advertising spending dropped significantly in the second half of the year as the economy continued to worsen, with the largest declines coming in the fourth quarter. We expect the trends we saw in the back half of 2008 to continue through 2009.

Despite this outlook for advertising, I am pleased to report that we have continued to deliver stronger growth than most of our peers. According to the Television Bureau of Advertising, ad revenue for the industry in 2008 was down by 0.1%. In comparison, our television business reported on a same station gross advertising growth of 2.9%. We have been able to grow on a same station basis while the market as a whole is declining by continuing to focus on delivering quality content and providing advertisers with solutions as partners and not just sellers. As a result we are taking a greater revenue share of market.

Our performance also reflects the benefits of our strategic plan which has helped us earn higher revenue, increase market share, diversify revenue streams and improve margins over the last few years. In 2008 we had a number of operational and financial achievements that will help position us as we head into 2009. These include growing our market share of revenue in majority of markets including a nearly 400 basis point gain at our new Bakersfield duopoly. Continuing to improve our overall ratings and scoring several notable victories in the key November rating period. For example, our stations ranked either number one or number two in prime time in six of our seven markets in early evening news in five of our seven markets in the coveted adult 25-54 demographic. Successfully executing our strategy to expand Fisher's demographic reach to enhance revenue. In 2008 our Spanish language television stations generated strong revenue growth at 24% and broadcast cash flow at these stations increased an impressive 52% over last year.

Leveraging the success of our internet platform, our online business experienced revenue growth of 32% in 2008 while still relatively small internet revenue represents about 3% of gross 2008 TV revenue and continues to grow at a significant rate. On average, monthly unique visitors grew 85% from prior year. In fact, in December 2008, our online audience reached all time high with 30 million page views, an increase of 55% for the month from one year ago. Clearly, a growing number of local residents are turning to our online sites and mobile platforms for the latest news, weather and traffic. Additionally we are focused on increasing our vertical sales and have added automotive online classifieds for local dealers in Seattle and Portland.

We joined the open mobile video coalition to work toward new technology that will provide over the air digital television to millions of consumers. While the revenue models are far from developed, we know that revenues will be enhanced in the future once the technology is launched and the OMBC's goal of never miss a minute is achieved. In fact, the Seattle market has been chosen as one of two launch markets. Despite this progress, we are fully aware of the challenges posed by the current macro economic conditions and without the benefit of political advertising in 2009 and with no immediate signs of turn around in the economy, we recognize this is a difficult period in our industry. Nevertheless, we continue to seek further opportunities to generate new sources of revenue, including expanding our content offering through affiliations on a multi-platform basis with this TV and the CW network and entering into over 50 new retransmission agreements. In fact, we expect total retrans revenue of nearly $30 million over the next three years. Notwithstanding our success in negotiating new retrans agreements, we have not yet concluded a new retransmission agreement with Dish Network.

Our prior agreement expired in December last year, and since that time our stations have been off the Dish platform. While Dish represents approximately 8% of our distribution according to Scarborough Research, we have aggressively attempted to resolve the Dish issues so that our viewers who subscribe to this service may once again enjoy our local and network programming. Despite Dish's claim to the contrary, we are only seeking market terms for the right to retransmit our signals for which they charge their customers. We previously reached an agreement in principal with Dish's negotiators, but Dish leadership refused to consummate the contract. We believe that the real stumbling block is our lawsuit for breech of lawsuit we filed against Dish. At issue is approximately $1 million dollars that Dish owes us under the prior agreement. Our talks with Dish continue. I want to point out that we have not seen a material impact in our rating as a result of the stations being off Dish.

Now turning to expenses, we also remain disciplined in our approach to our cost structure. During 2008 we implemented a number of cost cutting initiatives, such as further centralization of administrative and technical functions and a reduction of virtually all discretionary spending. These measures will result in annualized savings of nearly $10 million in 2009. At part of this effort, we reduced our work force by about 10% or 120 positions. We are also committed to further cost reductions as we evaluate and restructure our operation. And consistent with our strategic plan we continue to seek opportunities to redeploy capital from noncore assets. As you know we sold our remaining holdings in Safeco corporation during the year. At the end of 2008 we had $92 million in cash and short-term investments. Since the end of the year we have been aggressive in taking advantage of opportunities presented by the debt markets to repurchase our senior notes at a significant discount to face value. So far this year we have repurchased approximately 10% of our outstanding senior notes with a face value of slightly more than $15 million at a cost to the Company of approximately $13 million.

Going forward, we will continue to look for other compelling uses of our cash to deliver this kind of value to our shareholders. Strategic use of our cash resources are our highest priority in this environment. Besides debt reductions, capital outlays will be limited to projects that produce a compelling return on investment and immediate DTV completion project. Finally, as I said last quarter this Company and its employees are committed to the long-term success of Fisher. I remain pleased with the wins we have achieved in these troubled economic times and I am confident that when we emerge from this economic slow down we will do so as a stronger media company. I have been deeply appreciative of the employees who volunteered to take a pay reduction to help the Company through these challenging times, especially since many who volunteered were due for an increase based on contractual obligations. I believe this best captures the spirit and the commitment of the people that make up this organization and I greatly value the team effort it takes to not just pursue, but to achieve progress in these difficult times.

While we don't provide guidance, looking at 2009 it is evident that recessionary conditions will continue to challenge our business, resulting in further declines in ad spending. We have taken aggressive steps to reduce or introduce new revenue and programming initiatives multi platforms and 2008 cost management, actions along with further steps we're taking in 2009 will help mitigate some, but not all, of the economic pressure we are facing. We are taking proactive steps to conserve cash for further debt reduction, including significant curtailment in capital spending. And with that I'll turn this back over to Joe.

Thank you Colleen. As Colleen mentioned, we issued our quarterly release of financial results this morning, and we plan to file 10-K on Monday the 16th. Those documents include in-depth information regarding our financial results, so please refer to those sources for additional information. Today I will be discussing certain non-GAAP financial measures such as broadcast cash flow and EBITDA. Definitions and reconciliations of both terms can be found in our press release. I'll focus today on the full year 2008 results. Our fourth quarter results are obviously available in this morning's press release.

As you know, our fourth quarter and full year results were impacted by noncash pretax charge of approximately $78.2 million for impairment of an equity investment as well as goodwill and intangible assets in accordance with statement of Financial Accounting Standing 142 goodwill and other intangible assets. The after tax impairment charge was $51.4 million. Like many companies in recent months, the accounting rules require that we adjust the value of goodwill and intangible assets on our balance sheet to fair value. It's important to noted this adjustment is a noncash item, and has no impact on cash flow, EBITDA,or our debt covenants.

Also, our 2008 results were impacted by severance costs of approximately $750,000, associated with the work force reduction that Colleen just spoke about. To summarize our 2008 financial results, consolidated revenue for the year was $173.8 million, an increase of 7.1% from $162.3 million in 2007. Loss from operation was $72.1 million in the year, primarily due to the noncash impairment charge and lower radio revenues. Excluding the impairment charge the Company would have recorded income from operations of $6.1 million in 2008. Net income was $44.7 million or $5.11 per share for 2008. That's compared to net income of $31.9 million or $3.65 per share in 2007.

Excluding the after tax effects of the gain from the sale of Safeco stock and the noncash charges for impairment, a change in national representation firm and the expiration of a deposit to acquire a TV station, we would have recorded net income of $698,000 in 2008 or $0.08 cents per share. Consolidated EBITDA in 2008 was $25.6 million, a decrease of $1.6 million from 2007. The decrease was largely attributable to weak radio market and our continued investment in our digital initiatives. As you know, we report separate financial information for our three business segments. The television business, radio business, and Fisher Plaza.

Our television segment reported a revenue increase of 12% in 2008 or 2.7% on a same station basis with internet revenue included, and 1.4% without internet revenue. TV BCF was $35.6 million, compared with $32 million in 2007, an 11% increase. Same station TV BCF was $32.9 million compared with $32 million in 2007, an increase of 3%. The Company reported TV BCF margin of 30% in 2008, an increase from 29% in 2007. In our radio segment, revenue decreased 9% from 2007. Broadcast cash flow was negative $1.4 million, compared with TV BCF of $2.4 million in 2007. The decrease was largely attributable to a 12% decline in Mariners-related revenue in the second and third quarters of 2008 and 10% decline in the overall Seattle market revenue number. Without the impact of the Mariners contract we generated a Radio BCF margin of 23% in 2008 compared to 30% in 2007.

As we have previously reported, 2008 was the final year of our broadcasting contract with the Seattle Mariners. Turning to Fisher Plaza, in 2008 our plaza segment reported revenues of $13.1 million, a 16% increase over 2007. EBITDA was $8.7 million in 2008, an increase from the $7.7 million reported in 2007. The increase was largely attributable to higher rent and service fees received from a new tenant that moved in on January 1st, 2008. Fisher Plaza's occupancy has remained about 97% at the end of this year, end of 2008 as well as the year prior. Lastly, as part of our ongoing efforts to provide you more transparency into our business, I would like to report on a couple of key metrics. Our trailing fourth quarter operating cash flow as defined by our debt agreement was $39.4 million, excluding the effect of our discontinued operation. Details of this calculation can be found on our website.

Based on total debt of $150 million, as of year end our total debt trailing fourth quarter operating cash flow ratio was 5.1. Maintain the strength of our balance sheet remains a priority for the Company in 2009 and we ended the year with current assets of $130 million including cash of $31.8 million and short-term investments of $59.7 million. In December, we terminated our $20 million revolving line of credit in order to purchase some of our senior notes. We are in conversation with various lenders to replace this facility and will update you accordingly. As Colleen mentioned, we repurchased $15.15 million of our notes in the first quarter at an average price of $86 or a yield of 12%. With that I'll turn the call back over to Colleen.

Thanks Joe. Before we take your questions, I would like to conclude with a few comments. Like all companies in our sector, we will continue to be tested this year. We are operating in the most difficult economic environment in decades, and the challenges facing our advertising partners have a direct impact on our performance. To help us successfully navigate these challenging times, the management team remains keenly focused on improving our operational performance while continuing a disciplined focus on controlling costs and preserving our cash on hand.

At the same time we have undertaken a number of strategic initiatives to diversify our revenue stream. We have made solid progress in improving our competitive position and overall market share, but we know we must continue to look for opportunities to provide added value to our advertisers, viewers, listeners, and shareholders. While we do not know how deep the recession will be or how long it will last, we remain optimistic about the future. We believe that the changes we are making today will make us stronger and more competitive as well as position us for growth that will be available once the economic recovery takes hold. We remain confident that our stations will continue to be premiere local media franchises in our markets as we adapt to new technologies and new business model realities. Our strength of local brands and the rich view of proposition we offer to viewers on air on demand on the internet and on mobile every day is fundamentally important to our success.

Finally, earlier today we announced that Phelps Fisher is retiring from the board of directors effective April 1st. On behalf of our board, our employees, our shareholders, I would like to thank Phelps for the countless contributions he made to the Company over the past 55 years. His vision and leadership have helped make Fisher a regional leader in the broadcasting industry and an integral part of the communities we serve. We are very grateful and thankful for his service, we wish him only the best in his retirement. With that, we will open the call for your questions. So operator?

Thank you . (Operator Instructions). And your first question will come from the line of Bishop Cheen with Wachovia. Please

Hi Colleen, Joe, Rob, thank you for taking the question. Let me focus first on the balance sheet, I won't take long. As we go forward with Safeco stock now a grand chapter in your history, there should be no difference basically between the operating cash flow metric and the EBITDA metric. Is that correct?

There will be some as you know, at a low interest rate but there will be interest income from the cash and short-term investment that would account for the difference. But you're right most of it was in the form of Safeco dividends that no longer are present.

Okay. And then proforma, by the way thanks for great format on the press release, the transparency is very helpful.

Thank you, thank you.

And the presentation. The cash, $92 million a year rent, and you spent about $13 million in change buying, arbitraging your bonds, so roughly we're looking at about $89 million of cash as we sit today.

That's about --

I mean $79 million of cash on hand?

Well, we're making an interest payment, or we just made one, so that's not quite. But that's proforma the debt repurchase. That's about right.

Got it, all right. The age old debate is, what are you going to do with the cash. Depending on how you read the language of the covenants, you could the (inaudible) bonds for the Safeco asset sale, I believe that timeline begins around June, you could make acquisitions, you could just sit with the cash and sit with the bonds. Can you give us any color on what your thinking is, given the difficult environment we're in.

Yes, sure. Happy to do so. As you mentioned, given the difficult economic environment we're in and the lack of visibility in terms of how deep the recession will go or how long it will last, having more cash than less is paramount now. So we're comfortable despite the low earnings that cash receives these days-- good use of the proceeds is sitting in cash right now. Having said that, we will opportunistically seek further bond repurchases if they make sense. In terms of acquisitions there's nothing on the time line or anything like that.

Okay. That is very helpful. And then two other super quick questions and I'll leave you alone. On Fisher Plaza, I just want to make sure I saw it, you gave $8.7 million versus was it $7.4 million in cash flow in '07 for full year?

That does sound familiar, EBITDA.

EBITDA. Yes. Okay, $8.7 million for '08.

I don't want to misquote, so I just want to go back to that number real quick. $7.7 million in 2007.

All right. And the last question is, speaking of Fisher Plaza, has there been any development or any more color you can share with us on your thinking about exploring strategic alternatives for Fisher Plaza i.e., selling it and monetizing it, has there been any more color on what you're thinking. I know it's not the greatest time to do a real estate deal.

Well, Bishop this is Colleen. As you know we suspended the marketing of the plaza. We had great interest and we were very pleased with the number of individuals who sought information on the plaza, then made it into some of the final rounds. Just as we were finishing up those rounds, and we ended up with about I think there were six in the very final round, we started seeing the softening in the debt market and any kind of financing got suspect. It got softer as we asked for them to indicate guarantee on financing, etc., so we just decided to suspend it rather than continue to incur the cost of what it took to market it as well as the uncertainty in how long this is going to go on.

We are still open to marketing the plaza, but we feel our best and highest use of our attention right now is to run this thing extremely well. And that is what we're doing. We have made some significant changes in the management of the plaza itself, and we believe that we will continue to see improved progress on the performance of the plaza and feel fairly steady that we have got good tenants in here and all of our major leases are signed. So it is our job now to run this extremely well, so when the market strengthens, and we go back out with the marketing of the plaza we will be in great shape.

Well said, that is very helpful. Thank you. I'll pass to Tom.

Thanks Bishop.

Thanks .

And your next question will come from the line of Tom Kerr with Reed Conner, Please proceed.

Hi everybody.

Hi.

Two questions. First a quick one on the retrans numbers that you said were $30 million cumulative I think. Is that start off small in the first year and really ramp up, or is it more like $10 million each year type of thing.

The average is obviously $10 million, but it starts off in the $9 million range, goes to about $10 million, goes to about $11 million average.

So it's pretty close. And then since it's the start of the year, Colleen, can you kind of give us your big picture update on local television industry where it's headed. There's obviously some secular issues going on. How do you offset that? Where is the growth coming from? Is it mobile, is it internet, is it something else we don't think about? How can you make this a steady grower again.

I think that's a great question Tom. Obviously we generate most of our money from the very large amounts of advertising we get in the form of 30 second spots we get on our television stations and on radio as well. But the future is moving away from what we consider the push marketing or the push broadcasting and moving more toward what I term the pole of distribution, and we have to understand better how the consumer uses this personal media and apply that in a way that you can monetize it. It's one thing to have fun with it, but it's another thing to make money off of it. I think that is going to be the revolution. I say that because I do think it's over the next five years. But there's a huge vibrant marketplace, particularly in the local spaces, whether or not it's through twitter or through any of the internet blogging or any of the inner activity that goes on using the internet that I like to call us the mega phone.

We have the opportunity with the mega phone to premiere an awful lot, but we also have the opportunity to pull up information and make the money based on activity and personal media and targetable media and addressability. I think that's going to change a great deal as we move from analog to digital and we are able to track better and be more accountable for our advertising. I think there's a great marketplace for that in this mobile coalition that we are involved in the technology is quite exciting. You will be able to receive television no matter where you are. And so it can be in your car, it can be on your laptop, you can move around and actually see television. I think that's very compelling.

As you know, the broadcast spectrum is the mammoth as far as distribution, and maximizing that distribution is going to be a great opportunity for us. We're just beginning to understand all that that might mean. So in the mobile world, not just one signal, but multiple signals, could be upwards of six to seven signals can be distributed through our pipe out to moving television sets, including cell phones. Chip manufacturers are working with us on this. So it's an exciting time, it's just hard to transition from what I consider the push media to the pull media. But I think both have great validity and we will be moving in that direction as a company and as an industry. Does that answer your question?

Yes, that's a good answer. Just follow up on that, notwithstanding what you just said about preserving cash in this environment, does that transition or process you just described involve acquisitions or development on your own side, or how do you get there financially.

Yes, that's a great question. We have done a lot of exploring, we have done some investing in size appropriate kind of exploration, but I think partnering is our best strength. I can guarantee you being in Seattle is the remarkable wealth of access to great thinking. And it's really created a forward thinking organization at Fisher. We have access to people that just plain are advanced in how they approach the internet and we're benefiting from that. And as a result, I think the mobile technology test is going to be extremely robust and I think that because of the kind of users that exist in this marketplace. In addition, I think that what happens in our activity is we're trying to balance it without spending too much money, but still exploring and monetizing it as quickly as we can.

We have dedicated a business development effort toward this specifically. And everything we do we try to size the marketplace before we go into it. So it's a fine line and it's a balance, but I don't think we can go out and buy large internet acquisitions, but I do think we can partner with folks who are pretty smart in this space. They're all desperate and anxious to explore with us. I also think we can invest where it's size appropriate and it's not significant. Does that help?

Great , that helps a lot, thank

You're welcome.

Your next question will come from the line of [Steven Pfeiffer] with Wells Capital Management. Please proceed.

I have a simple question for you about the bond repurchases. I understand--based on the sale of Safeco stock, are there any requirements in the debt covenants that require you to give an [parpurchases] asset reinvestments within a certain amount of time, asses reinvestment causes, or is it simply just debt prohibited, debt incurinces that prevent you from doing additional debt. Trying to figure out exactly what the various covenants are that restrict the ability to use the cash proceeds.

Steve there are requirements in the indenture as it relates to the use of net proceeds from Safeco or any sale of assets. We have reviewed and analyzed the indenture and concluded that we will not have tender for the notes just based on the past and expected future proceeds use.

You will not have to tender for those proceeds. You will not have to use the asset sale proceeds to tender for the bonds.

That's correct.

Is there any sort of asset reinvestment timeframe then.

Well, a timeframe is 360 days, but again we--based on the review ,we are comfortable with that we will utilize not just acquisitions that are categorized as a use of proceeds that are allowed.

Use of proceeds. So what exactly are the use of the proceeds that you have used with the-- what was the total amounts of Safeco stock that you received and what have the uses been then?

Well, the net proceeds again after tax and such is just over $100 million dollars. You read the indenture, it's expenditures that are useful in the business.

Just regular ongoing operating expenses.

Capital.

Capital expenditures I think would be operating expenses are as well.

Yes.

Okay. That's unusual indenture if it allows operating expenses to count as use of proceeds, okay. Okay. You have 365 days then, you believe there will be no need for tender regardless 365 days measure because of the use of the proceeds through such acceptable measures as operating expenses.

That's correct.

Okay. All right. Thank you .

Thank you.

Your next question will come from the line of Jay [Winestein] with Oak Forest. Please proceed.

Hi, good afternoon. One of my questions was answered, I have two other ones. On an accounting basis-- I've seen this in another company's press release. Did the actual decline of your stock prices-- is that actually part of a trigger of the write down of some of the intangible assets in your own stock price, and if so ,would you refresh my accounting memory and explain to me how that works.

I'd be glad to. This has been near and dear to my heart recently.

Okay good. So it's not a dumb question, thank you.

It's not a direct measure of the amount of impairment but is considered a factor in terms of the triggering event if you read details under FAS 142, which I have many times. There's relevance into market capitalization at year end and even subsequent to year end in the period when you're doing the analysis. So we're mindful of the stock price change and so it wasn't a direct factor into the number, but certainly we need to be recognize the market's assessment of the value.

So in other words the fact that your stock went down that much does sort of prompt you, force you actually is what I'm--to go back and look at goodwill.

It prompts. I'm not going to say force.

Yes, I'm not sure what the standard is exactly. Okay. That actually is a good segue to my more general following question. We all know kind of what's going on in the newspaper industry and the values of newspaper entities, but what I think is a less reported story is the apparent utter collapse in the value of local TV station values, not just your stock price but many others that I follow across the board. These businesses are trading almost as in zero values in some cases. Would you just general view on what's happening in values in those businesses. What's kind of gone on and, why the utter collapse in the value of businesses that have been pretty highly valued for a long period of time, have always traded at strong valuations.

I'll make a few comments, and then Joe, if you want to jump on. I think in general with the--markets don't know how to respond right now based on all that's going on I don't think we're seeing any kind of uniform response to the market other than uncertainty. And as a result, I think that all businesses are being hit. You know better than I do. But I think on top of that there's a secular thought regarding our industry and what does this all mean. Then in addition to that, any time you're dealing with a consumer-based business, particularly advertising, any time there's a war or a consumer-based economic struggle, which is what we're in right now with the housing market situation, which is somewhat more unique than any of these past recessions that we have been in. You're going to see a drop in advertising, and I'm not sure in this environment with all these things coming together including to some degree a shorter term memory of these things, that people know how to react to what's going on in the advertising business and/or what's going on in the broadcasting advertising business. So as a result I think you see utter confusion when it comes to the value of these properties.

I think those companies that have cash on their books do a little bit better, which is part of our situation. I think there are a lot of companies that overleveraged and that's a little scary in this environment, and you get penalized for that. I also think that until the advertising confidence is back, and until there's a belief that that spending is going to happen, some clarity, visibility if you will, on these steps that are being taken to try to fix the economy, I think we're going to continue to suffer as well as any advertising based business. It's not unusual. I remember, back in the early 80s when we were struggling with a very strong recession. We took a nick in the advertising then, but we had strong growth going at the same time. So it was hidden a little bit with the softness in the marketplace. But today we aren't growing as quickly as an industry for a lot of different reasons. The secular part I talked about. So the softness has impacted the industry, and then the confidence factor is absolutely critical in a consumer based advertising business. So I don't know. Joe, if you want to add anything.

Yes, a couple things. I don't think the markets have appreciated or been able to value some of these great initiatives that are out there. I mean they're not quantifiable in the current time, with the mobile and some of the digital spectrum uses, it's still a little too premature. I think that's characterizing the industry as nongrowth. If one or two of those can take off, I think that could impact valuations. More on the private market deals individual stations, again Colleen mentioned leverage, a lot of deals that were out there recently, when I say recently, a year and a half ago now, or more, some of those multiples paid were highly, highly impacted by the level of leverage that was available from financing institutions and such that as you know provided such a low cost to capital that they were able to inflate the multiples and prices paid for those assets. Today as you know that funding is not available or if it is it's at much more conservative leverage levels.

I'm old enough to remember the last crash in asset prices which was basically the '90, '91 period. It was again prices had been high, leverage was plentiful. But this feels different to me, in that at that time it was really just a function of kind of leverage in price, but the underlying mechanics of the business seemed like they kept going, it was just a question what price and cash flow multiple one chose to put on them.

We all know the newspaper business model is destroyed and likely not coming back any time soon and the TV station business is frankly being priced like the asteroid is heading for you next. As I say it doesn't take a rocket scientist to put some reasonable value on Fisher Plaza and back out the cash and subtract the debt and come up with a value for the media properties, and it's not real high. Even at $9.50 or whatever the stock closed today, it's pretty low. That's kind of where I'm getting after. Where's that asteroid headed. Is it headed to you?

Yes, that's always a subject for very robust conversation here. And I imagine in every management committee meeting of our peers. I can say that having spent most of my career side by side with my newspaper peers that the issue with newspapers was really the money coming in from classifieds was monstrous until Monster showed up and took away a lot of the employment advertising, then you got into a lot of the employment advertising, then you got into the cars, then you got into all the competitors that were the category killers that hurt, dramatically hurt, what was going on in newspapers that created the cash flow that paid for the paper itself. Today the value is dramatically impaired because what they have going for them are the inserts.

Sorry to interrupt, because I don't know if you have looked at it, but I can promise you that the value of newspapers and most media companies is not only zero, it's actually quite negative.

Oh yes. I understand.

They're factoring in closing costs, forget any operating profits that are currently be ascribed to it. They literal value negative values by the market right now.

Yes. I fully am aware of that with many of my very close peers dealing with it. What I'm trying to do is answer the question regarding is the asteroid heading for television. I think their circumstances are different. I think that the world is moving in a video space and we are very good in the video space. And I still believe that if anybody is to survive in this changing marketplace, television should be very apt at surviving for a lot of different reasons.

When you go through the television viewing analysis, right now television viewing is up. People love television. And so whether or not it's person to person television or broadcast television people still love television. And there's digital technology that does allow some monetization of this whole change in the world we're dealing with. So is the asteroid headed to us, I don't think it's the same scenario as newspaper. I do think that if anybody is to survive it will be those in the television business. I'm very encouraged by some of these models that I see. Time will tell and I think that's the uncertainty Joe was referring to. That's difficult for investors to understand how to invest in local media companies particularly.

I don't think anyone's harassed you about the stock repurchase. We talked about the bond repurchase which is good and I applaud you for that. The one thing I'll tell you consistently, in all industries is everyone is terrified to repurchase stock even if they have cash as you guys do, they're petrified to do it. You sound like you're probably close to that petrified category, but I'll let you speak for yourself.

No, I think had we-- we were being encouraged strongly a year ago to buy our stock back and had we done that we would be in a world of hurt right now. I think we're very sensitive to understanding that stock repurchase is a riskier venture than just plain reducing debt which is obviously immediate benefit to the Company. The rest is a little bit more uncertain. As far as buying our own stock back, we run the numbers constantly and then the numbers change.

Right, exactly. As I said if I told you a year ago that your stock would trade under $10.00, you would have said even if we had a bad recession, likely would have said, I don't want to put words in your mouth, that's simply not possible, yet here we are.

I would agree. Joe, do you have anything you want to add.

Yes, we continue to analyze it. You did the math and anybody can do the math. We are restricted with the indenture to a certain amount, we're mindful of that, but we continually analyze all options in terms of use of capital.

I actually own some of the stock and the debt, so I'm a little bit of both. My recommendation would probably be do a little bit of both, which is what you have already done on the bond side. I agree, you don't have to put all your eggs in one basket necessarily.

Yes, if we felt things were a little more solid and quit moving around we might consider that. Right now we think our better bet is buy down the debt.

Thanks a lot for your free time.

You're welcome.

Your next question will come from the line of Nicholas [Napsath] private investor. Please proceed.

Yes, my name is Nicholas Napsath, I'm an investor over here in Spokane, Washington. I wanted to just ask a quick question. One of the things that I've kind of been following closely is some of your activity with the no action letters and that kind of thing with the SEC, I wanted to just ask you guys especially in light of Phelps retiring today what your position is on some of those.

I'm not real clear on what you're asking. No action letters with the SEC, yes.

It looks like there's been some shareholder proposals put forth for upcoming --

You're asking about the status of the shareholder proposal?

Yes. And what your position is on them as a Company.

We will be putting out our proxy here in a very short amount of time, I think two weeks or so. So we will have an official position. I'm not going to go into it on this call, but we're fairly clear on how we want to stand on the two shareholder proposals that have been proposed. As far as the other elements on--I believe you're talking about the alternative slate that has been proposed by [DeBelli], we continue to talk with Mario about that, and we're hoping for some sort of resolution, but he has an alternative slate on the docket if you will and hopefully we can resolve that.

I guess my major concern is as a long-term investor we're happy to hold and we enjoy owning stock in a company that's headquartered here in our state. I guess the thing that really kind of concerns us is taking a look at some of the values we have been seen declining and some of that type thing. I guess it would be nice to have a little bit more candor on some of them. I know I've listened to a lot of these meetings as they have kind of gone forward I think it would be good to be forthright in recognizing we probably paid some values that were a little too high in the past as well.

I feel like we have been very candid. There's no issue with us trying to be very transparent. In the ordinary course of business we go through these and you will see this all in writing. Our position, our legal position, and I don't want to get ahead of ourselves here on stating this, because obviously the board is still involved in working through these issues. We're more than happy to have this conversation after the proxy is out if you have any questions.

Sure, I understand. I appreciate your time.

Okay.

And your next question will come from the line of Bishop Cheen, which is a follow up question from Wachovia.

Thanks for taking it. I'll be quick. I'm just trying to figure out on your press release, nonconvergent internet revenue, and I apologize for not being up to speed here. Is that web revenue or is that some sort of specialized treatment of it.

Yes, I'm glad you asked Bishop. One thing that is somewhat unique within Fisher is the definition of revenue they call convergence. In my old world, at other companies, we called that vertical revenue. That is the revenue, convergent revenue is revenue that is driven down by a category like a help fair or help website or car website.

Sure.

It is just strict advertising.

Special event revenue.

Yes, it's called vertical, we create special websites and special editorial and applications for that revenue. Nonconvergent revenue is the typical display and regular advertising that you might anticipate on the internet.

Right. And it can be exclusive to the internet or upsell revenue.

Yes, but we do break them apart.

Okay. All right.

I do want to build on that just for a minute, because the advertiser fan in me wants to make sure you're clear that I think local advertising is particularly effective. We do lots of research and there's a lot of anecdotal information about the 30 second, the 20 second, 15 second and 10 second commercial as being extremely persuasive for pointing out and for bringing to attention advertising share initiatives. So if you're an advertiser and you want to grow your share the best way to do it is still using television. Transactional seems to be where online is making a big difference. And I think both of those categories I'm extremely interested in for Fisher and for the industry. And I think both have a place in the ecosystem at this point, I wanted to point that out. So with that, did you have anything else Bishop.

Yes, just real quick. Look, we have got two new growing (inaudible) revenue streams for you guys, one is retrans and the other is sort of that umbrella we call the web or internet base. I don't know what your treatment's going to look like come Monday in your K, but are you planning to keep the line separate to lump them into a new (inaudible) or digital category or how are you going to give us transparency into the way that's growing.

Yes, Bishop, that's a great question. We're trying to be as transparent as we can. There's a natural accounting threshold that requires us to start separating it. We will continue to give you the information just anecdotal as we go through these reports. Once it starts being broken out it will actually be an accounting threshold. I don't know if you know that off the top of your head, but it's a certain percent of revenue.

I don't know. I mean we don't plan on combining like some do in terms of digital being internet and retransmission, we see them as very distinct revenue streams. Having said that, , we are limited as Colleen mentioned with GAAP with the 10-K some of that we use these phone calls and press releases to elaborate a little more in terms of non-GAAP disclosure to provide a little more insight into what metrics are important to you the

Yes, I would encourage you to break it out regardless of the threshold, because two reasons. Number one if we put them together, you can close our eyes and think of a recovery you can achieve some sort of teenage contribution number. Number two, I think that everyone is very much focused on core business and how bad can it be and then look at the incrementals for adding it back. But it seems to be the analysis deyour of the TV business and it's very helpful to have that. Colleen, I know you have been more savy and early and bullish about so-called new media than other folks. When you look out a few years, as a percentage of your top line. where do you think your digital revenue is going to be as a contribution.

Bishop I have given this a couple of times, so I feel very comfortable restating it since I did it two years ago in front of a very large group talking about the future of the business. I feel very confident that you're going to see the pull type of advertising that we define right now as mobile, digital, transactional the whole accountability and targetability of advertising. I believe very solidly it will be in the 20% range, but we're still working our way toward that number. If you asked me this three years ago we didn't even have any revenue in this category, now it's moving up to 3% of our revenue right now. Can it be more than that, absolutely. How much more, we're still feeling our way through it.

That's twice as good as the poor newspaper business. It seems to have sort of topped out at 7.5%, 8.5%. And that--when you talk about digital, you're separating out that contractual annuity called retrans.

Yes, right.

This is strictly the digital as you described it.

Right, we do not as Joe pointed out we do not combine our retrans with our internet activity. In fact, mobile and the targetability of advertising is something we're going to have to take a look at where that falls once it becomes significant enough. My guess it will be in the internet for awhile. But I have no trouble breaking out any kind of activity as long as it's worth us tracking it. Once it becomes worth us tracking and paying attention, you will hear about it.

Okay. All right. That is very helpful from your lips, someday. Thank you

Someday. Thank you. Thanks everybody.

Thank you .

We have no further questions at this time. I would now like to turn the call back over to Ms. Colleen Brown, President and CEO for closing remarks.

Well I appreciate everybody's time today. It is actually sort of fun to every once in a while get into future of the business and not just backward looking. And I appreciate the insightful questions today. We will continue to work toward transparency. Thank you everybody.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the presentation. You may now disconnect, and have a great day.