Hello. This is the Chorus Call operator. Welcome to the Entravision Communications Corporation Fourth Quarter and Full Year 2011 Earnings Conference Call. [Operator Instructions] For your information, today's conference call is also being recorded. At this time, I would like to turn the conference call over to Mr. Walter Ulloa, Chairman and Chief Executive Officer. Sir, you may begin.

Thank you, Jamie. Good afternoon, everyone, and welcome to Entravision's fourth quarter 2011 earnings conference call. Joining me today is Chris Young, our Executive Vice President and Chief Financial Officer; and Philip Wilkinson, our Chief Operating 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 a property of Entravision Communications Corporation. Any redistribution, retransmission or rebroadcast of this call in any form without the express written consent of Entravision Communications Corporation is strictly prohibited. Also, this call will include certain non-GAAP financial measures. The company has provided a reconciliation of these non-GAAP financial measures to their most directly comparable GAAP measures in today's press release. The press release is available on the company's website and was filed with the SEC in a Form 8-K. We are pleased with our financial performance during the fourth quarter and for the full year. Our results reflect the ongoing stabilization of the advertising markets, the strength of our brands and our ability to successfully execute our strategy. During 2011, our television and radio assets continued to rank among the leading platforms in delivering Latino audiences. We also took steps to further enhance our interactive capabilities and are continuing to capture growing and highly engaged audience across our online and mobile platforms. Our outlook remains strong, given the ongoing growth for audience and their increasing place of importance and influence in the U.S. economy and political environment. Turning to our financial results for the fourth quarter, our consolidated revenue was $50 million, down 1% versus the same period in 2010. Excluding political and…

Thank you, Walter, and good afternoon, everyone. And as Walter has discussed, net revenue for the quarter was $50 million, down 1%. Operating expenses increased 4% to $32.1 million, and consolidated adjusted EBITDA decreased 14% to $14.3 million. Net revenue for the year was $194.4 million, down 3%. Operating expenses increased 2% to $125.1 million, and consolidated adjusted EBITDA decreased 13% to $55.5 million. As we announced in our 8-K filing during the fourth quarter of 2011, we repurchased $16.2 million in aggregate principal amount of our 8 3/4% senior secured first lien notes due 2017 in open market transactions. We also declared and paid a special cash dividend of $0.06 per share to shareholders of our Class A, Class B and Class U common stock during the fourth quarter of 2011. The total amount of cash disbursed for the special dividend was $5.1 million. Net revenue for the quarter was down 1% to $50 million compared to $50.6 million in the same quarter last year. TV revenue net was up 1% to $34.1 million for the quarter, compared to $33.8 million in the same quarter of last year. Radio net revenue was down 6% to $15.8 million for the quarter, compared to $16.9 million in the same quarter of last year. The decrease in net revenue at both divisions were primarily attributable to the decrease in political advertising revenue, partially offset by an increase in local advertising revenue and retransmission revenue. Excluding political and retrans revenue, core TV advertising revenue was up 8% for the quarter. Excluding political, core radio advertising, revenue was up 1% for the quarter. Net revenue for the year was down 3% to $194.4 million compared to $200.5 million in 2010. TV net revenue was down 1% to $131.5 million for the year, compared to…

[Operator Instructions] And our first question comes from Anil Gupta from Imperial Capital.

So I had a few for you. One was, I guess starting with political, is there any way you could either talk about what you're seeing in the first quarter for political, and just kind of your outlook, I guess, for the rest of the year as qualitatively or quantitatively as you could?

Anil, the -- as I said in my earlier remarks, the -- our political projections for first quarter had started out slowly. The fact that we -- at least, the growth that we showed in January and February in our core advertising segments, we're certainly pleased with that growth. But the -- but political did start out slowly and most of that was due to the movement of the Texas primary from the first quarter to the second quarter. We had budgeted or projected a significant amount of political revenue in the first quarter from Texas. So now, that will be moved to second quarter, and we expect to capture most of that revenue from the Texas primary in the second quarter. We -- our total political revenue in 2008, which is the comparable cycle -- presidential cycle, was about $8 million, with about $6 million coming from television and about $2 million coming from radio. About 75% of that revenue was booked in the third and fourth quarters of 2008. So we expect pretty much the same type of, I'll call it, billing across the year in political like we saw in 2008, with the exception of what we've seen so far in Q1. But we expect our Q2 to be much more robust than our Q2 of 2008. Additionally, we were looking at -- we still continue to look at 2011 -- or '12, I should say, as a year where we expect to do somewhere between $10 million and $12 million of political revenue. So we -- and we based that upon a couple of data points. One, the importance of the 4 swing states that we occupy or have large Spanish-language media clusters: Colorado, Nevada, New Mexico and Florida. And the second data point is the increased importance of the Latino voter electorate. I'm sure you just saw the recent, I think it was Newsweek or TIME, where it had talked about how important the Latino vote is going to be to the outcome of this year's presidential election. So even though 2008, the Latino voter electorate played an important role in the election of President Obama, we think that in 2012, the Latino voter electorate will be even more important. And thirdly, we expect to see a lot more spending in our markets in 2012 from political campaigns, and we based that on all the information that's available that you're well aware of, the increased spending by the Super PACs, et cetera. And then finally, we put -- I think we're better prepared, better organized. We've got a better team than we ever had in terms of circling all the vertical revenue that's out there, and we're working closely with Univision as well. They have increased the people on their political team that are addressing this important revenue category.

Great, a very good color. One more question. So in terms of additional networks coming into the industry, obviously, there was the MundoFox announcement earlier this year. And then there were some rumors about Disney potentially getting into the Hispanic markets. So any thoughts on that? And are you guys seeing any increased competition for advertisers? Any pricing pressure, obviously, with the trends that you've seen so far in the first quarter, it would seem that potentially your visibility is becoming a little bit better. But any sort of industry dynamic info you could give us there in terms of other people getting into the broadcast space?

Well, I don't know about visibility getting better. I mean, it's pretty much has remained the same in this quarter and in the fourth quarter of 2011 as it has over the past couple of years. But the increased competition you refer to, MundoFox, what -- the hope is that this new competition will increase the size of the advertising pie directed at the growing important Latino consumer, which is now a $1 trillion market and growing to $1.5 trillion a year in the next few years. That is what the hope is. But as far as competition's concerned, we've got great assets. The Univision brand is the #1 brand in Spanish-language television and has been for many, many years, and we've got solid positions in all of our markets, and we expect to continue to be the #1 Spanish-language television in every one of our markets through our Univision affiliations.

Okay. And then in terms of, I guess kind of coupling on that, in terms of your growth over the past, I would say 2 to 3 quarters, I think you guys have commented a few times about some potential M&A opportunities that you've looked at again over the past few quarters. So the question would be how does that landscape look? Are you seeing anybody having difficulties or any sort of stations that you think may be coming up for sale or any sort of attractive opportunities on the interactive side?

To the broadcast question, M&A activity, there's -- every once in a while, we see an opportunity come across our desk here. We take a look at it. We see it, first of all, if it has any strategic relevance, and of course, then we look at the pricing and then how it might work through our different financial models that we have in place. I guess if we ran across an asset that could significantly help or support, improve one of our existing important media clusters, we certainly would look at it. A lot of our time right now is being spent on the latter question you asked, which is interactive and digital. And we're looking at ways that we might be able to add complementary businesses to our existing platform that provide advertising services, information and data to CMOs and marketers that want to reach the Latino consumers. So we're spending a lot of time there. And we hope to come up with some new ideas here that we might be able to talk about later in the year.

And then the last question and I'll stop. Your bonds become callable, I believe, August of 2013. As we approach that date or as this year progresses, how do you guys think about what your position needs to be to get more favorable rates? Is there a certain leverage ratio you want to be at by then? Should we look for the company to kind of consider debt redemptions, either I mean, I guess at this point primarily through your 103 provision? And then any thoughts on doing another cash dividend at some point?

Anil, we'll look at uses of cash as we get deeper into the year here. We do have the triggers of the $40 million at 103. We've got the second window of 3 windows that closes on us, August 1, and then the third window opens up August 2. So there's always that option. And ultimately, from a leverage standpoint, the goal I think initially is to get below 6, and then ultimately live somewhere between the 4x to 5x range. So as far as dividends are concerned, we'll look at all options with respect to use of cash as we go.

Our next question comes from James Dix from Wedbush.

Just a couple. It sounds to me like your business so far in the first quarter is pacing on a core basis fairly similar to the way you finished in the fourth. And I was wondering, based just on what we've seen with some of the other TV and radio station groups talking about maybe some slowdown and then pickup, whether you've seen any real significant fluctuations in your business over the past 5 months, or whether it's been fairly steady. And then I had a follow-up.

Yes. James, it's Philip. We felt pretty good about fourth quarter and performed pretty well for us, both TV and radio, on the core side. And we saw that continue here year-to-date for the first 2 months. I think the only kind of blip on the screen was that January was a little bit softer than we expected. But February came roaring back back on the core side and our local actually finished up on TVs up 17%, and on radio, our Feb was up 9, almost 10 points on local. So I mean, the takeaway is that we're very bullish about how well we're doing in local. That continues to be holding strong. Again, mid-teens in growth in TV and high single-digits in radio. And I think we're outperforming the market when I look at the TV [indiscernible]. R&D numbers aren't out yet. So we believe that will continue to grow. And auto really has been roaring back. We're up -- I guess Walter said, plus 39% and all makes are up on the TV side as a big growth category. We are seeing the telecom still slow, a couple of major advertisers. But the interesting thing is we're seeing healthcare grow, all but replacing that telecom drop. So we hope that continues, and the retail and the QSR continues to improve. So overall, good trends, I think for the top 10 TV stations out there in terms of billing for us, 8 are double-digit growth and all 10 are up. And I don't think we've seen that for a number of quarters.

Okay, great. That's very useful. And then, I guess maybe for you, Chris, any sense as to kind of the initial take at what operating expenses should be expected to grow in this environment, kind of for the full year? Are we kind of in a 2% to 4% zone or is it a little higher because you have costs in covering from news in this political cycle? Or anything else that you can add on just in terms of the cost outlook.

James, I'd put it somewhere in the 3% to 5% range, all in. There's obviously a variable function to what revenue does that will impact the total operating expenses, but that's a good range to use for the year.

Okay. And do you think there's any seasonality to it, just reflecting a little bit -- maybe a little bit more in the heavy political season? Or is it more just revenue-driven?

Yes, it's more revenue driven. I'm just looking at the balance of the year. Maybe some of that gets front-loaded a bit in the first half of the year compared to the second. Maybe, but again, it's a function of what revenue will do.

Okay. And then just 2 others. You talked about a number of your interactive initiatives, and I guess there's a number of different sides to them; displays, search, mobile, Busca. I mean, if you look -- if you put them all together, any sense of what the total revenue do you have from all of those initiatives combined is at this point?

Yes. We're -- it's not a separate reporting segment, so we're not going to break out the revenue yet. I mean, it's still less than 2.5% of our revenue and the goal. As we've said before is once it kind of crosses that threshold, we'll start breaking it out as a separate segment so...

Okay. And then with your debt, I just want to do one housekeeping thing. Expectations for kind of your interest expense run rate on a cash and a book basis going forward?

Interest expense, with the adjustment of $16.2 million, should be in kind of the, call it, the $34 million range for the year, if there are no changes to debt for the balance of the year.

[Operator Instructions] And our next question comes from Michael Kupinski from Noble Financial.

I was just wondering, in terms of your pacing data that you provided us x political, seems pretty strong for the TV group. With the improving health of the TV advertising market, what is the lag time that you start to see radio pacings improve? Particularly, you indicated that local TV is showing the growth and certainly, radio gets most of its revenues from its local advertising, I would expect that at some point, we'd start to see some improvement in the piece and data for radio. Can you give us your thoughts on that?

Mike, the lag time is generally 3 to 6 months. And we're starting to see our radio business -- certainly local has been the strongest component of radio, and that's about 75% of the total revenue. National is lagging a little behind, at least farther behind than we'd like. But local remains very strong, effecting both from our TV and radio divisions. Local is leading the total company effort.

And the direct operating expenses in your television seemed a little higher than I expected. Maybe it's just my modeling, but I was just wondering if maybe some of your digital initiatives kind of hit in the quarter and what are your thoughts heading into the first quarter on direct operating expenses, particularly in television?

Well, operating expenses, for interactive, most of the operating expenses that go into interactive are running through radio. So that's not really going to be a big mover. I mean, we did have some incremental expense with respect to the change in the agreement with Univision. That's probably the biggest reason for the expenses being a little higher than they should normally be during the quarter.

Okay. And then SG&A was actually a little lighter. can you -- was there anything in that number that would have accounted for the being a little bit lighter? Or any unusual moving parts in that number?

No. I think you had the -- in the fourth quarter last year, the comps were a bit higher. We had some bad debt numbers that were a little higher this time last year that comped favorably against this time around so...

Our next question comes from John Kornreich from J.K. Media.

A couple of real quickies. What could CapEx be this year? I mean, yes, 2012, sorry.

CapEx will be in the range of about $9 million.

Okay. If there's a pretty big step up in EBITDA these year, which it will be, could the $1.2 million in cash taxes jump as--to as high as $5 million?

No. I mean, the tax is there, basically driven off local and state. The federal NOLs that we've got are more than sufficient to carry the federal number on the expense side that's close to zero for the balance of the year.

Okay. So maybe $2 million or $3 million?

No. I didn't say $2 million or $3 million. I basically said -- I don't expect cash taxes to be anything material over what they were this year.

Okay. Could you just say again what is the maximum amount of bonds you could repurchase this year if you had the cash flow to do it, what?

$40 million through August at 103.

Okay. Is there any hope of getting the banks to look at net leverage?

Well, we changed -- we did an amendment to our credit facility about 1.5 weeks ago, and if we had drawn on the line, there's applications. But there are no covenants if we don't draw on the line. It's kind of moot.

Okay. So between the $60 million of cash and my estimate, the $50 million of free cash flow, there's -- I would think there's no reason you couldn't try to get to the max $40 million repurchase?

Using your numbers and your math, there's no reason we couldn't in theory.

Walter, you've heard from -- this from me before, and so has Chris ad nauseam, but on the subject of nauseam, how a company at a 6.9 leverage, 0.1 point off of a potential ceiling can even be discussing M&A is absolutely beyond me and I think it scares investors like crazy. That's my comment.

Okay, John. Thank you for your comment.

And our next question comes from Bishop Cheen from Wells Fargo.

Actually, if you found the right kind of acquisition, I'm not saying you could, you can be de-levering. At least that's been the mantra from Lew Dickey. But that is another story for another time. Okay, you guys have given great color, so just a few quickie questions because we all want to go home. The buyback in Q4, $16.2 million face, how much did you pay for that $16.2 million in bonds?

The all-in price was just a hair above $99.

So it was close. They were all priced above $99?

No. There was some below $99. All, in the average, was just a hair over $99.

Just a hair over $99, right okay. And does that count for the 103 provision for the -- in an LTM period, $40 million goes through August, right?

Yes, that's right. And it does not count towards that $40 million basket.

Okay. And the reason you did it that way, well obviously, because you bought it below 103.

Yes, I mean, there was a market opportunity, and we wanted to take advantage of it. We've done it before and seemed make sense.

I don't blame you. Okay. And in the current Q1, have you repurchased any more bonds in the open market?

We have not.

Okay. Your revolver capacity still remains at $50 million. I think you got that small amendment or waiver back in January.

Yes. The capacity is actually $25 million if our leverage is over 6.5x, but we have access to $25 million of the $50 million and correct that amendment basically allows the financial covenants not to apply if the line's not drawn.

Right. So it's a glass covenant. We see it, but we really don't touch it. Even if the step-downs go into effect, theoretically remain the same. I think you are now into a step-down...

No. Step-down has changed. So the total step-down bond was supposed to be 6.75x. And that will stay at 7 for the life of the facility.

So there's no more 6.75 and then 6.25 thereafter?

They're gone.

Okay, alright. And then a housekeeping thing on retrans, I think I've got this 13.7 in 2010. What was retrans in 2011?

17.1.

17.1.

Correct.

And then as I remember, I think you still have some room for upside in that. Aren't you still have some other contracts that ramp up and that you're inking?

Well, we've -- let me answer it this way. We do expect some upside this year in our retrans revenue growth, somewhere in the neighborhood of 10% is kind of where we think we'll wind up. But we -- our proxy's with Univision and so as the contracts come up, they'll be working with the MVPDs and with us to reach a satisfactory negotiation. We also have some retrans agreements outside of our Univision stations and proxy with Univision that we negotiate separately, including a couple of Fox affiliates that we own in South Texas.

Okay. And last, look, I know digital is important and you are not unlike any other savvy media company that tries to focus on it, talk about it and think about it. But just so I know how things are developing, at this point, the actual EBITDA contribution, I mean, you don't even really break out the revenue contribution of digital. So we're still in a single-digit mode on the top line and probably de minimis in terms of a cash flow? Is that a safe...

Bishop, we're not going to break out any components of -- It's got to be a separate reporting segment for us to really clarify those issues, so stay tuned.

And at this time, I'm showing no additional questions. I'd like to turn the conference call back over to management for any closing remarks.

Thank you, Jamie. This concludes our fourth quarter and full year 2011 earnings conference call. Thank you, everyone, for your participation. We look forward to reporting our 2012 first quarter earnings results in May of this year. Thanks again. Goodbye.

We thank you for participating in the Entravision Communications Corporation Conference Call. This concludes today's event. You may now disconnect your telephone lines.