Urban One Inc (UONE) 2005 Q2 法說會逐字稿

Ladies and gentlemen, thank you for standing by and welcome to the Radio One 2005 second quarter earnings conference call. At this time all participants are in a listen-only mode. Later we will conduct a question and answer session. Instructions will be given at that time. If you should require assistance during this call please press star then zero. As a reminder, this call is being recorded.

I would now like to turn the conference call over to our host, President and CEO of Radio One, Mr. Alfred Liggins. Please go ahead, sir.

Thanks. Good morning everyone. This is Alfred Liggins. With me today is Scott Royster, EVP and Chief Financial Officer, and Mary Catherine Sneed, our Chief Operating Officer. We released our results as you know, we're pleased with our results. We outpaced our markets and this is our first full quarter with Reach Media which continues to grow rapidly, and we're excited about that acquisition and what it does for our platform and, in particular, for our growth in a number of key radio markets for us with the switch over of Tom Joyner.

And also TV One continues to do very well for us we'll talk more about all three of these things in the question and answer period, but at this point I'm going to throw it right over to Scott.

Thanks, Alfred. Good morning everybody. Radio One had a highly respectable second quarter. We outgrew our markets by 600 basis points, posted solid profit growth, began our share repurchase program, fully-integrated Reach Media for our first full quarter together, entered into a new bank credit facility at highly attractive terms, and saw TV One continue to build its business at a rapid clip across various metrics.

Our strong performance answer very broad based in Q2. National and local both performed very well with national growing faster than local by a healthy margin. We outpaced growth in 75% of our markets and where we didn't it was mostly due to format changes or was otherwise very close to market pacing performance. In other words, there were no big misses other than in Los Angeles, but as most of you know we have taken measures to turn that market around.

From a category perspective, every major category showed growth other than food and beverage which was flat, and telecom which was down 8% mostly because of tough comps. Retail, entertainment, health care and travel all were particularly strong, and perhaps most importantly, average unit rates increased 11% from last year's second quarter and 26% sequentially from this year's first quarter while spot loads were down 5% year-over-year. This ability to generate price increases on our inventory is perhaps the best sign of health in our business, and bodes well for our future performance.

As for the numbers, net revenue increased 18% to 101.5 million due to the inclusion of Reach Media, as well as radio station revenue growth of just over 7%. Strong markets for us are too numerous to mention, but the five best performers relative to their market's growth were Charlotte, Columbus, Houston, Louisville and Minneapolis, so it's good to see the heart of America, the Midwest, helping drive our business this past quarter.

Operating expenses excluding depreciation, amortization and noncash compensation increased 21% overall mostly dual to the inclusion of Reach Media, while at the radio station level those expenses grew approximately 5%. This performance led station operating income to grow approximately 15% to 55.3 million, and 9% at the radio station level where margins improved to 56.4% up from 55.7% in last year's second quarter. Adjusted EBITDA grew approximately 12% overall to 49.8 million and this was up approximately 8% at the radio station level. Net income attributable to common stockholders was 19.8 million or $0.19 per share, up 60% from last year.

There is a fair amount of noise in the net income result, as we took a 2.1 million write-off for capitalized interest from our previous bank deal that we refinanced during the quarter, which is included in interest expense. Additionally, our tax provision is significantly below our standard effective rate because of a tax law change in Ohio from income based to franchise based. Since we have been accruing income taxes on a deferred basis since we entered the Ohio market we operated four markets in Ohio, that accrual was reversed in this quarter, leading to a significant reduction in our income tax provision.

Going forward, independent of any similar one-time adjustments, the correct effective rate for the Company remains approximately 40% but as we state every quarter, we do not expect to be a significant cash taxpayer for a while, perhaps another two years or so. Net debt was approximately $908 million at the end of the quarter and leverage was approximately 5.5 times. Also during the month of June we bought back approximately 1.1 million shares of class A and class B common stock for approximately $15 million, utilizing available cash balances.

Looking forward, business is good. We are guiding to mid to high teens net revenue growth overall, and mid single digit growth for radio, and station operating income growth in the low double digits to mid-teens, and mid single digit growth for radio standalone. Again national and local look pretty balanced, with national doing somewhat better. We would expect to continue to buy back stock in the quarter if market conditions warrant.

Lastly, while it is a bit early to discuss 2006, I would like to provide some early color on Reach. Some of you have expressed misplaced concern about the modest margin contraction we are seeing because of Reach. Now obviously Reach is in a different business ever owning radio stations and they have typical margins of a business of their type, but they also have a fairly high degree of certainty in their business, and they have the ability to leverage their cost structure fairly dramatically.

We had originally guided to Reach doing about $12.5 million of standalone EBITDA this year, and they will do that or better, but for next year, that 12.5 million will probably be north of 16 million if not pushing 17 million, while their corporate expenses will remain virtually flat. So understand that Reach is a relatively young business, and we fully expect to see margins grow at a steady and healthy clip over the next few years, and the benefit that Tom Joyner has brought, and will continue to bring to our radio stations as Alfred said at the outset is unquestionable.

So with that I'd like it turn it back over to Alfred and then we'll open it up for Q&A.

Thank you very much Scott, why don't we just go right to Q&A operator.

Ladies and gentlemen, [OPERATOR INSTRUCTIONS] And our first question comes from the line of Victor Miller with Bear Stearns. Please go ahead.

Good morning, a couple of reach questions. First of all, could you talk a little bit about how you are integrating Tom Joyner into your radio stations, and the success you're seeing there, and on TV One and the internet.

Secondly there was an S-3 filed last night. Inside Radio ran an article suggesting that everyone involved in Reach Media was essentially selling out for $20 something million. Could you comment on that? It sounded like it was a registration statement and nothing else.

And lastly, could you give us a sense, how do we get sense of the seasonality of Reach Media? What percentage of the revenue do they generate in each quarter in a given year? Thanks.

Scott, do you want to handle the filing and the seasonality and I'll talk about the integration.

Sure. The filing was just that. It was a contractual obligation that we had as part of the transaction with Reach Media. In fact, the shareholders of Reach are not in a position to sell Radio One stock until February of 2006, so it's a fairly typical filing when a deal is done for stock in a company, of the company that is the acquiring company, and so there's really nothing more to that than the fact that we have that contractual obligation.

With regard to their seasonality, somewhat like radio, they certainly have -- they see stronger growth in Qs 2, 3 and 4 relative to Q1, also because they do special events at different points in time during the year, you will see spikes in certain quarters, most particularly this year at least, we expect to see spikes in Q3 and Q4 because of some special events business, and also they just have -- they're in a business that's growing. They have an internet business that's growing. Their radio business continues to grow each and every quarter relative to the previous quarter.

They are introducing, you know, certain new special events that will from time to time cause revenue to grow, you know, significantly year-over-year, and then they're actually getting more into the television business, and I don't know how much we want to talk about that, but they certainly have been doing some TV work with TV One, and are focused on developing a show for broadcast television that will start this fall, and so certainly there are some new revenue categories, and some growth that you'll see in the second half of the year relative to the first half, and that's, you know, basically the structure of their business.

And in terms of integrating Tom and Reach into Radio One, we've moved the show in Philadelphia from our competitor to our new station, and it's done exceptionally well. It's made our new station there a top 5, 25 to 54 station we're really happy with our lineup and our cluster right now in the Philadelphia market.

We're out of the modern rock business. All three of our stations are in urban formats, and we think that we've got a real good shot at being the dominant urban player in that market over the next 18 to 24 months. We also recently, about a month ago, moved him in Detroit and we rearranged our signals there, so that our urban adult station with Tom Joyner is on our better signal, and our hip hop station is on our weaker signal. However, we -- you know, again think that Tom is going to do well in that market, because the station that he came off of was #1, 25 to 54 and he had a lot to do with that.

We also moved him into St. Louis. We're experiencing less success in St. Louis but St. Louis is a very, very small part of our operation. In fact, I'm not even sure -- I think St. Louis historically has been about a breakeven EBITDA proposition for us, so we've got some work to do in St. Louis, we've got high hopes for Detroit and Philadelphia.

In terms of integrating him into other parts of the organization, he does do a show on TV One. There's good cross-promotion there. He provides great content and they've got a portal called Black America Web, an internet portal which we are, you know, currently analyzing options for, in terms of integrating the rest of our assets, radio, television, and the Tom Joyner morning show, in order to try to drive traffic to that. We don't know if that's necessarily going to be the vehicle that we use, but we're talking about it.

So long story short, between the three platforms, we have the ability to drive more traffic, more African-American traffic to any internet portal that could be created, and, you know, we plan to figure out a way to exploit that, and hopefully that's an '06 launch for us.

Thank you.

Yep, thank you, Victor.

The next question comes from the line of James Dix from Deutsche Bank. Please go ahead.

Good morning, guys. A couple things. Could you provide any update as to the competitive situation you're seeing in markets where you compete with Clear Channel, namely all of them? Any particular update you could provide on where you stand, in terms of commercial loads versus their stations, where you compete and what the ratings trends are?

Second, if you could provide any comps, Scott, that we should be looking for in the back half of the year, in terms of NTR or political just in terms of assessing the core radio growth that's embedded in your guidance, and what we might be modeling for 4Q.

Competition has not changed. I don't think that we've drawn a competitor in quite a while. We're in pretty competitive situations everywhere we're at for the most part, and actually the places where we don't have competitors generally it's such that the market dictates, you know, that there probably isn't room for a competitor. Spot loads, Mary Catherine, I mean, our spot loads have been -- have been and continue to be consistent and we've held the line, and I think most of the analysts that have actually analyzed spot loads between companies have always rated us as one of the companies with one of the lowest spot loads in the industry. Is that a correct statement, MC?

Well, I think we're probably in the middle of the pack, but we have not reduced spot loads, because we really didn't have to in any of our markets. The one thing that we have done is we've gone to our program directors and asked them to take another look at clutter from the programming standpoint, and they've all done that, and I think that's probably helped us to some degree.

With regard to your question, James, on NTR and political, I mean, obviously, it's a little early and it's such a small part of the business that I'm not sure it's going to move the needle much but for Q3, NTR we're forecasting will grow in the double digits, so NTR is healthy and that's excluding Reach, because obviously reach does a lot of NTR and, you know, we did a few million dollars in political last year, but I think at the end of the day given the health of our business, the fact that we won't probably have much political this year isn't going to be much of a negative impact on our business whatsoever for the back half.

Was the political roughly evenly split between the 3Q and 4Q or more in the 4Q?

Much more in 4Q. Thanks.

Our next question comes from the line of Jonathan Jacoby from Banc of America Securities. Please go ahead.

Good morning. Just three questions here. The first, if you could update us on how the -- the early sort of trends that you're seeing on John Salley in Los Angeles, how that show is progressing.

Second, 30-second spots, everybody wants to know is there any pickup in demand. And then lastly when you look out in terms of just the general market for radio into the third quarter here, other operators have spoken as sort of a sequentially improving quarter. Is that what you're seeing as well? Thanks.

John Salley, in the third trend book, we saw some nice gains with John Salley. You know, it takes a minute-- he just got on at the end of the book, so he didn't have any impact there but our in-house research says that he and that morning show are gaining, and that the audience really likes them. Let's see. What was the second question?

30-second spots.

30-second spots. Yeah, no pickup. As a matter of fact, a couple months ago we did a survey among the entire group and, you know, it's here and there, but no big deal for us. And in markets that are smaller, the medium markets in the Midwest actually there was no pickup to speak of, of 30-second spots. As far as third quarter, Scott

Yeah, I would say, Jonathan, yes, sequentially improving quarter is a good way to describe it. We feel -- I mean, July was a decent month. We feel pretty good about August and September right now.

Great. Thank you so much.

Thanks.

Our next question comes from the line of [Bishop Sheen] from Wachovia Securities.

Good morning, Alfred, Scott, Mary Catherine. Let me go back just for clarity. The first full quarter, the 12.5 guidance back in December of EBITDA, wasn't that supposed to be for a full 12 months, whenever the 12 months start?

Yes -- no, it was for calendar '05.

For calendar '05, all twelve months of calendar '05?

The full calendar, yes.

Okay, that is helpful. And then can you just refresh our memory? I think you also gave guidance at that time on the revenue. Wasn't it like 50?

It was 50.

Okay. And because of the -- you know, the operating leverage, once you hit fixed costs in that kind of business, every incremental dollar flows through to cash flow in general. With that $17 million rise in '06, that implies what kind of level in revenue?

I'm not sure we're prepared to provide specific guidance. I really wanted to just give folks a sense a little bit of operational leverage but suffice it to say that you're going to see fairly significant margin improvement. Certainly the growth in revenue from a percentage basis will be significantly below. It will still be healthy but it will be significantly below the growth in EBITDA. I mean, could it grow double digits? Yes, absolutely it will grow double digits but I don't think we're yet prepared to provide more specific guidance beyond that for '06.

Fair enough. And one bonus question, Black America Web, that's, you know, in our minds, I think that could be an incredibly potent tool. You've been studying it for some time. That's okay. When do you think you're going to be ready to share plans, roll out plans, initiate?

We're still in the process of studying it. It's a somewhat complicated process because you're dealing with three entities, all sort of with different ownership structures, Radio One, Reach Media and TV One. But at the end of the day, we're committed -- the three entities are committed to the fact that there's an opportunity on the internet, and nobody has a better chance of exploiting it than us. We think Black America Web might make a likely vehicle. We'll seeing if we can get there.

If we don't get there with that vehicle then we'll figure out another way. We'll either start from scratch or we'll look at some other opportunity but it's our hope that whatever we launch is -- in '06 is an '06 opportunity, hopefully beginning of '06, and we'll share our plans as we get closer to the beginning of the year.

Fair enough. Thank you.

Thanks.

Our next question comes from the line of Marci Ryvicker with Wachovia, please go ahead.

Hi, good morning. I have three questions. The first is that $50 million for Reach Media that Bishop just asked about, is that still a good number? The second is, are you seeing the same ad increases in the third quarter that you saw in the second quarter? And thirdly, you had mentioned last quarter or at least from March that a lot of the growth that you were seeing was coming from less is more. Is that still the same situation currently? Thanks.

Well, this is Scott. Yeah, the $50 million revenue for Reach is absolutely I still good. Your second question, ad increases, what does that mean?

The ad rate increases you were talking about, the 11%.

It's a little early obviously to sort of drill down into pricing for the quarter, but I would say in general, MC, unless you see something different, I would say that we are still seeing a healthy market for pricing.

Yes, absolutely.

And with regard to less is more, you know, it's hard to -- it's hard to sort of nail this in terms of what the true impact is. All I know is we're growing -- last quarter was 500. This quarter it was 600 basis points faster than our market. How much of that is just us being good operators, and how much of that is us benefit from Clear Channel's less is more initiative, I don't really know.

All the I know is we're growing faster than most of the other radio operators. We're certainly growing faster than Clear Channel. We're growing faster than our market. I'll leave it to folks smarter than me to figure out what percentage of what we're doing is because of what we're doing on our own, and what percentage is based on some help we might be getting from less is more. Is that it? Hello?

Hello.

Did you have another question?

No, that's it.

Thanks very much. Next question, operator.

Next question comes from the line of Eileen Furukawa with CitiGroup. Please go ahead.

Thanks. First I just have some questions on TV One. One, are you still expecting TV One to get rated in the fourth quarter, and you've talked before about moving into the stage of building talent at TV One. I was hoping you could give us just a quick progress update on this.

And finally, given the talk about a programming shake-up at BET and [Beau Roth] and BET as the 2 V-Jays of their #1 rated program, do you think there's an opportunity to woo some talent over from TV One, and then I have a follow-up question?

We do plan to get rated on the fourth quarter on TV One, no on the opportunity to move talent over, because we target two different demographics. They're an 18 to 34 target, we're a 25 to 54 target, so their talent pool probably is not really appropriate for our particular network, and we are developing talent at TV One.

We've got a great celebrity chef, G Garvin is doing well. We've got some new shows that are launching, a financial show with Michelle Singletary. She's an NPR syndicated radio personality. Patty La Belle does a great show on TV One, Living It Up. And we're continuing to develop more personalities as we go along. I mean the network is only a year and a half on the air which is great and it's doing phenomenally well. Did I miss a question?

I think there's a follow-up.

Yes, I have a follow-up. Just on inventory, you talked about your discipline in keeping inventory low despite Clear Channel's inventory reduction, and I'm just wondering would you say your competitors in your market are showing the same type of discipline, or are you seeing now that some folks are actually starting to raise commercial loads, to take advantage of lower supply in your markets?

This is Mary Catherine. I think that there are some competitors in our markets, and I mean competitors as all the radio stations, not just in our format, that really never reduce loads. I think that it's initially Clear Channel said they were, but they -- it would be impossible to get all 1200 stations to do that at once, or to organize that, but as time has gone by, they have stepped to the zone, and I think they are doing a good job but there are other groups and some independent owners, that I see that have not reduced in some of our markets -- well, in a lot of our markets, actually.

Do you see them actually raising commercial loads

Yes, I see that. I see that -- I saw that happening in June and that's actually a month where historically you would see that because, you know, business tends to be, you know, that's a good month for radio historically. And I did see that and we monitor that, but I -- you know, and I will say that, you know, in the past, even we have from time to time, if somebody needed -- they can't do it without permission, but if somebody needed to add one spot, a break in an afternoon drive position, often we would approve that, but it would be sort of a one-time only thing. We did not do that this year. And don't plan on doing that again.

Okay, thank you.

Sure.

Thank you.

Next question comes from the line of Laraine Mancini with Merrill Lynch. Please go ahead.

Thanks. Two questions. Mary Catherine, you said that in June, you saw some of your competitors start to add inventories. At the time that they did that, did you find that it was harder to get rate negotiations at higher rate increases? And similarly, do you think that the rate increases in the quarter, which were really good, were up because of increased demands, maybe from a new category or was there a restriction of 60-second inventory that you felt was make the difference?

And then the second question on TV One, what type of impact do you think moving to having a rated network will have on your advertising?

Go ahead, MC and I'll answer.

By the time I realized it and took a look at it, usually I do at the end beginning of the month, I didn't do it until the middle this time. By that time our June was already done and we continued to push for June, but I will say that there was more pressure on inventory starting sort of mid-May for June which was good and very healthy for us, so, yes, I think that there were many markets where we did end up raising rates for that particular month.

TV One, a rated network, I think it's all going to depend on what the ratings are. If they're bad, it's not going to be helpful and if they're good, it could send it through the roof. You know, I think that they're -- I'm optimistic about our ratings given the fact that our particular target audience watches so much television. And I think that the network overall looks pretty good.

We still got a long way to go and we don't know which of our original shows actually people are going to gravitate towards, and we'll find that out when the ratings kick in, but, you know, ratings are always as in radio, a work in progress and we'll -- but the best thing about getting rated in the fourth quarter is we'll find out what's working for us and what's not, as opposed to just having an an opinion and we can adjust accordingly. But, you know, if we get it right, then, you know, next year it could be really good for us.

And Laraine, just another data point on your question about pricing. If you actually look at it on a month to month basis the price increases that we saw in the second quarter were pretty consistent across all three months.

So it doesn't seem to have made a difference that your competitor started throwing inventory back in?

All I can tell you is the price increases were roughly the same month to month. I don't know if the competitors had an impact on that or not.

Thank you.

Thanks.

Next question comes from the line of Kit Spring from Stifel, Nicolaus. Please go ahead.

Hi, good quarter, guys. Can you discuss your plans for digital radio, whether you plan to multi-cast and what do you think the impact would be, if the industry started multi-casting? Do you think that's positive because of the additional channels and revenue opportunities or does that dilute your existing stations? Thanks.

That's a work in progress right now, sort of a lot of the industry heads are talking about how do we collectively move digital forward? There are no digital radios out there, and we're all starting to broadcast in digital and so we collectively need to figure out how to get the manufacturers moving on providing radios, so that the consumer can actually hear the enhancements that are happening in terrestrial radio.

As far as multi-casting I think that there will be -- absolutely there will be multi-casting. I think the thought process, at least the hope for us is to try to do it in a manner that doesn't cannibalize our existing format offerings, because that doesn't bring any consumer value. So the idea is to offer the consumer what they don't have, as opposed to more of what they already have.

Again that's a work in progress and each company is going to have its own strategy but hopefully there's at least a collective paradigm in the industry that everybody will be moving towards. And if everybody multi-casted and they just did more of the same formats, I think it would be bad for the industry.

Okay, thank you.

Thanks.

Our next question comes from Jason Helfstein from CIBC World Markets. Please go ahead.

Thanks. A few questions in no order. Scott, are there any eliminations that would have to go into those Reach Media numbers?

Yes, absolutely. Absolutely.

Okay. And it's what? The magnitude of a few million dollars? Is that close?

Yes, that's not off base.

Okay. And then that would, I assume, just grow with the growth in Reach Media cash flow, correct?

The eliminations?

Yes.

Well, the eliminations relate to the fact that Radio One -- we're effectively a client of each other, okay, and because we consolidated but we only own 51% of it, it's actually fairly complicated accounting, so I wouldn't say that it naturally would grow as Reach gross. It would only grow if the growth in Reach or the growth in Radio One related to our relationships with each other.

Okay. So probably if we had a generalized probably grow slower than the growth in Reach Media?

That's probably accurate.

Okay. Then for the third quarter guidance that 5% obviously you were implying that perhaps business may be running better than that and you're being conservative. My question is, given the improvements that we're seeing in Philly and Houston with the reformats, are you baking that into that 5% guidance, or would upsides in those markets be upside to that 5%?

Well, there's always upside in the numbers that we put on the Street and those upsides come from various places. Could we see upsides from Philly and Houston? Sure absolutely but we absolutely think that there is potentially upside from a variety of markets, for a variety of different reasons so I don't want to try to drill too deeply into where there might be upside, but logically, given what we've done in Philadelphia and the success we're having in Houston right now, those are two areas, but I don't sort of look at sort of different categories of upside and decide whether or not I bake it into my guidance or not.

Last two questions. Your radio guidance doesn't suggest much operating leverage on the SOI for the fourth quarter but this quarter I think you said that radio SOI was up 9%. Can you talk about kind of the difference between is there increased spending somewhere in the third quarter, and then just lastly, TV One looked like it lost less money this quarter, and I guess this is the third quarter in a row of lower losses. So should we expect that that is running ahead of plan as far as reaching cash flow breakeven? Thanks

In terms of spending at the radio level, I would say philosophically we are spending more marketing money particularly in places like Philadelphia, and we're spending more marketing money in Detroit because we have had Joyner switch overs, and in Philadelphia we had a number of -- we really just totally rearranged that market so we're definitely spending more money there to improve our position.

Yes, but let me build on that, Alfred and let me also give a slightly different perspective. I mean, the way this business works is that one thing that we know is what our expenses are going to be for the most part, right? Because it's a fairly high fixed cost business and we have a very detailed budget.

However, what we don't necessarily know is how the revenue is going to evolve on a monthly and a quarterly basis and so what we tend to do as we go through a quarter is we see how our revenue is tracking, and if revenue is picking up for it's sort of in-line with kind of what we expect it to be, then we'll probably go ahead and execute against our cost structure based on what our budgets say, and what we're otherwise prepared to do. If we see revenue softening or if we're a little concerned and a little uncertain about the future then we have a number of levers in the Company that we can -- that we can sort of have kick in, that will cause us to cut back on certain spending or to otherwise manage certain spending.

So for the most part we tend to go out with guidance that is obviously conservative but there's a lot more certainty over where our expenses are going to come out, and there's certainly a lot more certainty with regard to whether or not we can ratchet expenses down. So revenue is sort of this big uncertain category for the most part and we adjust our expense spending according to how our revenue looks.

Now, if revenue growth falls out of bed, there's only so much we can do, but on the margin, can we impact our expense growth and help drive operating leverage in a quarter, if we choose to do so, the answer is absolutely yes, and I think you saw us do that in the second quarter, and you may see us do that in the third quarter, but it's going to be, you know, partly dependent on what the needs of the business are, A and, B, what the overall performance topline is.

Okay. And then Alfred, TV One?

Yes, the operating results are significantly ahead of plan, which would mean that there's a -- put it this way, -- things are going to depend a lot on the ratings, but there's a strong possibility it will breakeven sooner rather than later.

Okay, thank you.

Our next question comes from the line of Mark [Woinkis] from Goldman Sachs. Please go ahead.

Thanks, good morning. I just have two clarifications. The first is that in the pretty significant 11% price increase you mentioned, I'm trying to make sure none of that was driven by any material mix shifts in 60s, 30s or even shorter spots, and secondly on the expenses that you addressed, you mentioned that last quarter the spending on the new stations and other initiatives probably drove 100 to 200 basis points of expense growth. Was that consistent this quarter?

We didn't say that.

Last quarter?

When you say last quarter, are you talking about Q2? When you referred to last quarter, I consider last quarter being Q2. Do you mean Q1 or Q2.

Q1, sorry.

So you're saying in Q1, the spending on the additional stations, was 100 to 200 basis points so was that consistent in Q2 and I would say, yes, roughly in line with that, absolutely.

And then on the mix shift?

Mary Catherine, I don't think there's been much mix shift because we're not really in the business of selling a lot of 30 second ads

No, we're not. If somebody wants one, we're happy to do that. We'll sell you 13 second ads.

It's pretty comparable in terms of the mix year-over-year, I think

Okay, thank you.

Thanks.

Our next question comes from the line of Spencer Wang with J.P. Morgan. Please go ahead.

Hi, John Blackledge for Spencer Wang. I'm just wondering about CapEx. It was about 5 million in the quarter, comparable quarter was 2.4 million. I'm wondering if that's --

It's timing. It's timing for the most part. We had a lot of build out projects that we wound down in the first half of the year, because if you look at it year to date we're actually fairly significantly ahead of where we were last year. You've also got some HT conversion in there, which is not a big number but it is incremental over the prior year. We are continuing to guide to the sort of 12 to $14 million range for CapEx and you know that is highly manageable. And so you will see CapEx growth come down absolutely in the second half of the year.

Okay. Just wondering of the 12 to $14 million Scott, what percentage of that is HT conversion?

You know what? It's probably a couple million bucks all in.

Okay. All right. Thank you very much.

Yes.

Next question comes from the line of David Bank with RBC Capital Markets. Please go ahead.

Thanks. Great job on the radio growth guys. Just a couple of clarifications. Scott, can you break out -- I think you may have done it in terms of growth but can you give us what Reach SOI versus station SOI was in Q2? And then can you break out corporate between the two? And are those corporate trends probably pretty good in terms of, you know, Q3 and Q4?

And can you also tell us a little bit about how much of the growth is coming from the new station ramp versus the same station bucket, and the last question is, who will be sort of seen in the trades that the Tom Joyner Show has gotten some pretty decent clearance in some major markets recently prior to the launch. Who will be selling the barter advertising time that you guys are -- or that Reach is receiving in exchange for the programming?

Alfred, do you want to take that last question?

Yeah, you know what? I'm not -- I don't know for sure. There's a company called Litton that is clearing the market. They're giving the clearances for the show. I'm not so sure whether or not, they're the same entity that will sell the time. I think it might be but I'd be -- I'd be giving you misinformation if I told you I was sure.

Do you think there's a lot of benefit to you being able to sell that time and blending it with your existing properties?

Here's what I can tell you, is that Reach is also a fairly -- not fairly, a very effective sales organization, because they have a lot of other ancillary things that they sell other than just the commercial time on Tom Joyner show, which is sold by ABC that they sell, and they are actually doing a very good job of selling advertising in this TV show.

In fact, they're booking an awful lot of upfront ad revenue before the thing even launches. So the answer to your question is, yes, when you say we selling it, Reach is active in selling it, and they're doing a good job so far.

Back to your earlier questions, we're trying to meet the market's needs in terms of understanding the growth of the businesses, but we really -- just to be clear, we don't consider Reach a separate entity. I mean, it's basically a programming vehicle for our Company, and so there is a fair amount of overlap and the more integration that we do, the less discrete that asset is going to be, or that entity is going to be.

There is no growth in station operating income to describe to you because, A, we haven't disclosed the result of Reach prior to when we acquired them, and B their accounting as a private company was very different, so it would be apples to oranges. A, it wouldn't be helpful and it would be misinformative. With regard to corporate, and again --

Could you just give the growth on the core station, then? I think you even said what core station operating expenses or income were. Can you just --

For radio?

Yes.

It was -- what did I say? It was -- I'm sorry. I'm looking at the wrong quarter. It was 9%.

9% for SOI growth or expense greet? SOI growth. Okay, thank you.

Okay? And in terms of corporate, Reach's corporate runs in this past quarter, again, it was about a million and a half, but it's very, very, very hard to look at that on a discrete basis, so you should not view that as being highly accurate because there are a lot of assumptions that go into that, but it's a reasonable number.

Okay. Thank you.

Yes.

Our next question comes from the line of Bill Meyers with Lehman Brothers. Please go ahead.

Thanks, just a quick question. Did your second quarter radio growth of 7% include acquisitions? Basically, is there any difference between pro forma same station, and the reported numbers?

Yes, fair question, Bill. There was probably a little over 100 basis points of growth due to new stations.

Great, thank you.

Okay.

[OPERATOR INSTRUCTIONS] We do have a follow-up question from Victor Miller with Bear Stearns. Please go ahead.

Could you guys just talk a little bit philosophically about how you would continue your share repurchase, what makes you choose that option and do you consider the -- you know, the 1.1 million shares you've done today just a starting point? Thanks.

Alfred, do you want me to take that or --

Yes, you I can take it and I'll chime in.

Whether we announced a $150 million stock buyback over 18 months we didn't do that with a view towards executing anything differently than that. We would absolutely expect to buyback about $150 million worth of stock over 18 months. We do not buyback stock during our trading window. When our trading window is closed, excuse me, so the way we sort of think about it is, we've got about two months every quarter to buy back stock and we're probably going to do in such a way that it's fairly consistent over the 18 month timeframe so that we don't stretch the balance sheet. Love to do it out of free cash to whatever extent possible.

Obviously with the stock down where it is here we think that it's probably a good thing to continue to buy back stock. If the stock were to go up and, you know, perhaps we thought that it was fairly valued or even overvalued, we might not be buying back stock but I think we're conceptually absolutely committed to this and we're committed to doing it in the way that we described it when we announced it, which is over an 18-month timeframe, so do the math, if you've got two months a second quarter and you're going to do it evenly over an 18 month timeframe, you should get a general sense of what at least our base expectations are, and then we'll obviously on the margin adjust that depending on market conditions.

Scott, you said that you have a two-month window each quarter so when do you close, for example? Whether does the window reopen?

The window reopens on Monday and it closes just before the end of the quarter.

Okay, thanks very much.

Thank you.

There are no further questions. We return the conference back to your presenters. Please go ahead.

No further questions, we appreciate everybody tuning in, and as always, we're available offline to answer any other questions. Thanks so much.

Thanks very much. Operator, if you can close us out.

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