Entravision Communications Corporation
Q1 2008 Earnings Call Transcript

Published: 14 May 2008

[Operator:]

Ladies and gentlemen, thank you for standing by and Welcome to the Entravision Communications Corporation First Quarter 2008 Earnings Conference Call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. (Operator Instructions). As a reminder, this conference is being recorded Thursday, May 1, 2008. I would now like to turn the conference over to Walter Ulloa, Chairman and Chief Executive Officer. Please go ahead sir.

[Walter Ulloa:]

Thank You, Ken. Good afternoon everyone and welcome to Entravision's first quarter 2008 earnings conference call. Joining me today on the call Philip Wilkinson, our President and COO and John DeLorenzo, Executive Vice President and CFO, and Chris Young the President of our Outdoor Division, who will succeed John as Executive Vice President and CFO after May 9th. Before we begin, I must inform you that this conference 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 the list of those risks and uncertainties that could impact actual results. In addition, this call is a property of Entravision Communications Corporation. Any redistribution, or 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 the 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. In addition with the announced sale of the Company's Outdoor Division at March 31, 2008. Outdoor was classified as a discontinued operation and the results of operations are separately reported for all periods presented. We began 2008 in a challenging environment for our Television and radio businesses, due to a difficult advertising market and strong comparisons from the year-ago period, when our television and radio revenue was up 8% and 14% respectively. Despite these challenges, we remained uniquely positioned to capitalize on the expanding power of the US expanding consumer market and have proactively undertaken a number of revenue and cost initiatives to ensure we are maximizing our cash flow performance. We continue to prudently invest in our television and radio businesses to drive our audience shares. On March 24th, we closed on the acquisition of WNUE-FM in Orlando, Florida. This is the 11th market place where Entravision owns both television and radio assets. Our sales teams are working hard in this market to further penetrate existing accounts and are actively targeting new advertisers who have yet to directly participate in Spanish language advertising. As previously announced during the quarter, we entered into an agreement to divest our outdoor assets which assets which we expected to close in the second quarter of 2008 for $100 million. We believe this sale unlocks value to our shareholders and its proceed will improve our financial flexibility as we continue to execute on our strategic plan. Our Board of Directors recently approved a buy back program of the $100 million of common stock, which is an addition to the $100 million that was previously authorized in November 2006. This new repurchase program underscores the financial strength of Entravision and our commitment to returning value to our shareholders. Our strong cash flow and the proceeds from the sale of our outdoor unit have enabled us to fund the significant capital program, which we believe is a prudent avenue to deploy our cash. Turning to our financial results for the first quarter. Our consolidated first quarter revenue fell 2% versus the same period in 2007 to 55.7 million. Consolidated adjusted EBITDA decreased 13% to 15 million versus last year, while free cash flow per share decreased 50%. Earnings per share in the first quarter was negative $0.08 per share excluding the decrease in fair value of our interest rate swap agreements, earnings per share was positive $0.01 per share. Turning to our television segment. Revenue decreased 2% which is inline with the overall industry according to the TAB. Local revenue grew 2% and national revenue fell 5%. In the year ago period over all revenue increased by 8% where the local television revenue increasing 6% and national up 11%. Our television division posted revenue of 36.1 million versus 36.8 million in the 2007 period. The revenue decline was primarily due to attrition in our Automotive, Fast food, Health Care and Financial services advertising categories, as well as a soft advertising environment. In the Automotive Category for our television division we saw about an 18% drop in revenue for the quarter. Most of that decline was a result of a decrease in Tier-1 advertising, due primarily to creative delays from Ford and nationwide agency review at GM. Although it is early in the second quarter, this important category is improving. Our sales and marketing team were hard at work trying to monetize rating gains and broaden our advertising client base. In the first quarter 82 new clients advertised with our television division, spending over $10,000 each. Our strongest categories for the quarter included Telecommunications, Grocery convenience stores and Political. In the first quarter, our largest advertisers were Ford, Toyota, AT&T, GM, Chrysler, Dodge, McDonald and Nissan, Verizon Wireless. New advertisers include the Royal Caribbean Cruise, Tyson Foods, Sport Auto Group, Las Vegas Honda Dealers, Casino Palma, and (inaudible). Political advertise on our television stages was particularly strong driven by Indian Gaming Initiatives in California and the Democratic Primary in Texas. Total television political revenue for the quarter was about $1.5 million, which was double the amount we generated in the first quarter of 2004. Turning to our ratings performance our Univision Affiliates extended their ratings leadership positions with February 2008 sweeps. Our Univision Affiliate Group continues to dominate ratings in their respective markets with nine of our Univision affiliates, #1 or 2 adults 18 to 34 sign on to sign off, regardless of language. Our Local news programming continues to perform extremely well. It enhances our value to the community and creates an attractive opportunity for advertisers. In addition, it has played a critical role in our ability to attract political and issues specific advertising and should represent an attractive platform for election spending during the remainder of 2008. Our local early news programming had triple-digit growth in four of our markets for adults 18 to 34 year-over-year. Additionally in 12 of our local new markets, our television stations were either #1 or 2, adults 18 to 34 regardless of language. Our local late news showed similar success as six of our affiliates were either #1 one or two, adults 18 to 34 regardless of language. The group ratings for our late local news grew 17% for adults 18 to 34 and 8% for adults 18 to 49. Taking a look at our National News 11 of our television affiliates ranked #1 or 2 with adults 18 to 34 regardless of language. Our Telefutura Group in many of our markets continues to post impressive ratings gains, and the majority of our markets they are the second most watched Spanish language television station right behind our Univision Affiliate. Our radio division had a soft quarter as revenues decrease 3%, while the overall industry is projected to be down 5%, according to an average of the three months in the quarter by the radio advertising bureau. It is important to point out that in the first quarter of 2007 the radio division grew revenue by 14%, which created a difficult comparison for 2008 as well as the challenge of a softer advertising environment this year. National revenues was up 12% while local advertising which represents76% of our total radio revenue was down 7%. In light of the revenue weaknesses that we are seeing across all our markets, according to Miller Kaplan we continues to outperform that market and key markets such as Denver, Albuquerque, Las Vegas and Sacramento. Our Top five categories for the quarter were Automotive, Services, Travel and leisure, Retail and Fast foods. Within the top five categories we saw 19% gain in the service category and 11% gain in revenue in fast food. In addition to these two categories we saw growth in the grocery category. We experienced softness in the automotive category as a whole with the overall category decreasing by 22% in our radio business. Auto was our top category and represented 18% of our total radio revenue in the quarter down four points over first quarter of 2007. Tier-1 and Tier-3 spending were down 47% and 25% respectively, but on a positive side we saw revenue increases in both Tier-2 were spending was up 10% and on automotive related products, which increased by 13%. Within Tier-1 we saw reduction by most automotive manufactures except for Honda, Ford, Hyundai and Saturn. With respect to political revenues our radio division recognized $191,000 during the first quarter. For the quarter, we welcomed 32 advertisers to Entravision radio, who spent more than $10,000. First time advertisers included the Big O Tires, Advanced Auto Parts, [City Best Insurance], Compass Bank and Nationwide Insurance. We experienced double-digit growth in eight of our Top 10 advertisers. The largest increases came from Burger King, Cricket Wireless and Farmers Insurance. Los Angeles remains a very competitive markets, we believes that the programming changes we initiated in January are starting to generate positive results. For KSSE Super Estrella, which is also the flagship station of our Super Estrella network, we experienced a total weak increase of 35% fall 2007, compared winter 2008 in our key demo adults 18 to 34. The total (inaudible) from KSSE increased 9% and the stations time spent listening increased an hour to six and half hours per week. La Regadera, La Chokolata which debut on January 7th grew 44% in same time period and demo. This shows was hosted by Oswaldo Diaz, who performs the roles of lead character and is joined by Super Estrella's morning jockey Yssac for a truly unique morning show. With this new lead-in Super Estrella increased -- experienced a 52% increase in mid-days, an increase in afternoon drive of 32% in average quarter hour persons in our key demo. As we stated in our last conference call, the morning show will continue to accelerate, our ability to grow on listener base, not only KSSE but for all our Super Estrella stations. To conclude, the overall economic slowdown in the softer television, radio advertising market has had an affect on results. However, ongoing focus on the revenue and cost side of business will ensure we are maximizing the value of our assets and operating as efficiently as possible. We continue to believe that our unique focus on Spanish language media with assets strategically positioned in the nations fast growing and most densely populated Hispanic markets places us in an ideal position to capture future growth and create value for our shareholders. According to new census data released yesterday, the US Hispanic population continues to surge. And as a results we remained confident about our future prospects, despite the current economic slowdown we are facing. Latinos now represent 15% of the total US population, up from 12.6% in 2000, or an increase in the Latino population in the US of over 10 million people in less than eight years. We're off to a strong start with our political revenue goals for the year. The power of the Hispanic vote continues in this year's presidential contest as the Latino voter continues to receive a great deal of attention and recognition. In the southwest, particularly in California, Texas, Colorado, New Mexico, Nevada, we expect the Hispanic vote to significantly impact, which presidential candidate wins those important states. And as a result determine the outcome of the presidential election. As all of you know, we operate important media clusters in everyone of these key southwestern states. Now I'm going to turn the call over to John DeLorenzo our Executive Vice President and Chief Financial Officer. This is John's last Investor Call with Entravision. As he's moving back east, to be closer to family. John has been a great friend and colleague of the company for over five years. John will be missed, but Chris Young, who I introduced earlier as our new Executive Vice President and CFO is ready to go, John?

[John DeLorenzo:]

Thank you, Walter and good afternoon everyone. The company previously announced that it entered into a definitive agreement to sell it's Outdoor Advertising Division to Lamar Advertising Company for $100 million. The transactions which is subject to customary closing requirements is expected to close this month. Upon closing of the transaction, the company will no longer have outdoor operations. In accordance with SFAS 144, accounting for the impairment on disposal of long lived assets, the company reported results of our outdoor operations and discontinued operations within the statement of operations. As the outdoor unit, has been included in discontinued operation, the following results do not include the Outdoor segment. As Walter has discussed, net revenue for the quarter was $55.7 million down 2%. Operating expenses increased 1% to $35.4 million and consolidated adjusted EBITDA decreased 13% to 15 million. Free cash flow, which we defined as consolidated adjusted EBITDA minus capital expenditures, cash interest, cash taxes, plus interest income was $0.03 cents per share. Operating expenses increased to $35.4 million for the quarter from 35 million an increase of $400,000. The increase was primarily attributable to an increase in wages, syndication amortization and rent expense partially offset by a decrease in national representation fees and other expenses associated with the decrease in net revenue. Corporate expenses decreased to $4.5 million for the quarter from $4.6 million a decrease of 100,000. The decrease is primarily attributable to a decrease in non-cash stock based compensation. Free cash flow for the first quarter of 2008 was $2.7 million or $0.03 per share. EPS for the first quarter of 2008 was negative $0.08 per share compared to an EPS of negative $0.03 per share in the first quarter of '07. The negative $0.08 per share was lower than our guidance of [zero cents] per share primarily due to the decrease in the value of our swap agreements as is interest rates had declined. Excluding the decrease in the value of our swap agreement the EPS for the first quarter was $0.01 per share. Turning to our balance sheet. As of March 31, 2008 our total debt was $474 million in our trailing 12-month EBITDA is adjusted was 92 million. Out net debt to EBITDA is adjusted was 4.8 times, cash on the books was 29.5 million at March 31, 2008. The company also announced that it repurchased 3.4 million shares of Class A common stock for approximately 22.4 million in the first quarter of 2008. Additionally, the company announced that it repurchased 1.3 million shares of Class A common stock for approximately $8.4 million in the second quarter of 2008, complete the $100 million repurchase program authorized on November 1, 2006. The Company's Board of Directors approved the repurchase of an additional $100 million of the company's common stock on April 7, 2008. For the second quarter of 2008, the company expects net revenues to decrease by low to mid single-digit percentages, and operating expenses to be approximately flat to low single-digit percentages as compared to the second quarter 2007. Excluding non-cash compensation, corporate expenses are expected to be approximately flat as compared to the second quarter of 2007. The company expects approximately 400,000 operating expenses and 500,000 in corporate expenses relating to stock option compensation in the second quarter of 2008. Depreciation and amortization is expected to be between 5.5 and $6 million. We no longer are depreciating or amortizing our outdoor assets as they've been classified as held for sale. Net interest expense for the free cash flow purposes is expected to be between 7.5 and $7.8 million. We expect CapEx to be between 4.5 and $5 million for the second quarter '08. We have budgeted for a total of $16 million of CapEx in 2008. The $16 million CapEx figure includes CapEx for the remaining digital television conversions and HD upgrades at our radio division. Second quarter earnings per share is expected to be $0.05 per share, free cash flow to be $0.11 per share, and its based on 92 million shares outstanding. As Walter had mention, I will be leaving my position of Chief Financial Officer for the company after filing the Company's 10-Q for Q1, in order to move East to be closer to family. I wish my colleagues at the company good luck and I will miss them. I also wished to thank you, the investors of our company for a wonderful experience. This concludes our formal remarks Walter, Philip and I will be happy to take your questions. Operator?

[Operator:]

Thank you very much. (Operator Instructions). Our first question comes from the line of Victor Miller of Bear Stearns. Please go ahead.

[Victor Miller:]

Good morning. Thanks for taking the call. Thank you John for your service. The auto, in terms of Tier-1, Tier-2, Tier-3 as you go into second quarter, it seems to be -- people of the other TV companies are saying that they are seeing anywhere between -- obviously no improvement in the auto category, but maybe some modest improvement. I just wanted to see what you are see there? Secondly, can you talk about your ratings in LA, specifically in the radio stations there and the impact that might be having on 1Q and 2Q? And lastly, any process updates on retransmission consent negotiations which you're going to work with maybe with Univision? Thanks.

[Walter Ulloa:]

Victor, it’s Walter. I'll take the first two -- the last two parts of the question, then Phil is going to comment on the automotive business. As far as the retransmission agreement process goes, we've had several discussions with Univision related to our retransmission strategy for this next cycle starting in 2009. Although we have not reached an agreement with Univision to join with them in this effort we have made a lot of progress in this endeavor. We continue to believe that working with Univision will result in an even more successful retransmission negotiation with both companies. We expect to have more to report on this issue later on in the second quarter or by our next investor conference call in August. Just to comment on Los Angeles that was a question you asked about and we are talking about the winter book, was that the question?

[Victor Miller:]

Yeah, just the ratings trends there and what impact it might have had on the overall radio numbers?

[Walter Ulloa:]

Well, there's no question that our radio numbers were impacted in the first quarter by prior ratings. That said, we believe we're certainly on the right track as we speak here with the changes that we've made in Los Angeles, particularly as it relates to Super Estrella. We're facing a tough television, I mean radio environment in Los Angeles. We believe the markets have been impacted by a decrease in spot radio revenue. The competition is fierce and therefore, we are working ourselves and all of the people that we work with, as hard as possible to get back on track with our ratings in Los Angeles. We have seen improvement as a result of this last book in every one of our demos and we think that these improvements are significant. As you know, it takes about six months to generate, anywhere from three to six months to generate, revenue as a result of the increase in ratings but we believe that we're on the right track and on the road to getting Super Estrella particularly turned around. Phillip, you want to comment on the automotive?

[Phillip Wilkinson:]

Thanks, Walter. Hi Victor.

[Victor Miller:]

Hi Wilkinson.

[Phillip Wilkinson:]

I think you had a question about tier 1, 2, 3 and the impact or if we see any improvement and the answer is, yes. On the TV side, we had a tough first quarter than the auto industry. I think as Walter had mentioned, we had a difficult start. Ford had a creative delay and GM had a national agency review for the Chevy dealers association. So we really had a soft January national as a result, it kind of set us back, but we've seen improvement in April. And I can only give you up through as of today's numbers, but we've -- we're still in the negative on the auto side, but we saw about a 12, 13% point improvement. And we're single, low single, mid-digits on negative on the auto. So it has improved but it's still very tough out there. We track the Polk data, which is the new car registrations, and we see about a little over two-thirds of all of our markets where we do business. As of February, year-over-year, auto sales are down double digits in a lot of our markets. So absent New England, which is kind of a useless situation, and Boston, Harford, and absent the kind of that oil booming cities of Texas where they're selling a lot of cars. But aside from those markets, we see that the sales are down and the sales impact the ad budget clearly so, but we do see a bit of improvement. It's not as dismal as it was in first quarter and we hope that continues, certainly April has improved significantly.

[Victor Miller:]

And just a reminder, your auto business was up significantly I believe last year in 1Q and 2Q. Is that right and really started to tail off third and fourth?

[Walter Ulloa:]

Yeah, exactly. We had tough comps first and second quarter on auto, but we…

[Victor Miller:]

And you were plus about 20 in TV in both quarters I remember something like that?

[Walter Ulloa:]

That number I'd have to look up for you and get it back to you. I don't think it was that strong, but it was very positive story in the first half of the year and then we saw, of course, the subprime thing slow quite a bit down and all categories and consumer spending and by August, September. But the first…

[Victor Miller:]

Thank you.

[Walter Ulloa:]

But the first, tier 1, tier 2, and tier 3 here in April have all shown improvements across the board. Okay, operator?

[Operator:]

Thank you very much. Our next question comes from the line of Tony Wible of Citigroup. Please go ahead.

[Tony Wible:]

Good evening gentlemen. I was hoping we could just dig into I guess the radio EBITDA being down. Is that just a function of weakness on the revenue side or was there anything else within that that would have caused some of the margin pressure?

[Walter Ulloa:]

That's a function of the weakness on the revenue side. John, you want to comment?

[John DeLorenzo:]

Yes, it was basically all weakness there. We had a little bit of -- pretty much our expenses were below what they typically would have been. We've been managing them into the bad quarters. So no, it's completely about revenue.

[Tony Wible:]

Got you. And is there any way to explain some of the difference, I guess, between the TV and the radio side with the national because I think I heard you correctly that TV national is down 5, but radio national was up 12. Is that just a function of comps being a little bit different in the radio side?

[John DeLorenzo:]

Yeah, I don't think it's so much a difference of comps. Both divisions had strong first quarters in 2007. In our television business, national is a much bigger factor, it's about 50% of our total revenue. And in our radio business, local is a much bigger factor and national is only about 25% of our total revenue. So even though they're both media, they target the Hispanic market, they're different in terms of how national business comes in.

[Phillip Wilkinson:]

We're also seeing a number of new accounts on the national radio side as a result of shoring up our sales effort in the different offices around the country and taking advantage of some national dollars out there that we perhaps didn't, well I know that we didn't get in the past.

[Tony Wible:]

Got you. And Walter, what are your thoughts on PPM as we head into the LA market in September '08? Are you anticipating the rate benchmarking in that market to account for the demo?

[Walter Ulloa:]

Well, we're concerned about the challenges that have come to surface with PPM. We still believe that this electronic measurement is a far better method of measuring audience than the diary, but we're particularly concerned about the Hispanic panel size, sample performance, fluctuations, language waiting and the metrics that Arbitron is using to determine what is acceptable panel performance. Our challenge is that, while Houston most closely mirrors our markets, the methodology being used is different than that used in New York, Philadelphia and any of the to-be-released markets. So we're certainly monitoring the process. As I indicated to you, we are concerned. Jeff Lieberman, our President is involved or he is going to participate in a couple of committees here to better monitor how PPM is implemented in Los Angeles.

[Tony Wible:]

Okay. Last question is, any color you can shed on the Televista Univision dispute? And in particular what I am trying to figure out is I know you can't provide comments specifically, but is there kind of a contingency plan or how we can think about best case, worst case scenario?

[Walter Ulloa:]

Well, as you know we're not a part of that litigation. We're optimistic that the parties can resolve the matter in a favorable way and we still believe that will happen. We don't know anything about the details, but certainly the fact that the trial has been postponed, I think it is a good sign. So, we remain optimistic that will be resolved and that there won't be any issues related to programming going forward.

[Tony Wible:]

Great, thank you.

[Operator:]

Thank you very much. Our next question comes from the line of Marci Ryvicker. Please go ahead.

[Marci Ryvicker:]

Thank you, John, you will be missed. Thank you for your services also. I have two questions. The first is your guidance for the second quarter is basically the same as it was for the first quarter with revenue expected to decline by low to mid-single digits. Now given that you're down 2% in the first quarter and I take that to be low single digits, is there anything you're seeing right now that would suggest you would come in at the low end of range for the quarter? Are you building in cushion for weaker economy or is there something else? I know that there was the LA concert that was in Q2 of last year and Q3 of this year, so there's a tough comp, but is there anything else?

[Walter Ulloa:]

That's where I was going to go with the, it's basically about the comp at Reggaeton in the second quarter last year, which is typically in the third quarter. But other than that, that's just about where we see the market in terms of pacing and where we think we'll be. But hopefully that'll change by the quarter is over and we'll be a able to surprised.

[Marci Ryvicker:]

Okay. And is there any change in your free cash flow priorities between share repurchases, M&A, debt pay down? Anything else?

[Walter Ulloa:]

We mentioned we did finish our $100 million stock buy back that was initiated in November '06 and we put a brand new one in place in April this year. And we have been buying in the second quarter and we hope to aggressively still find opportunities to buy back our shares at reasonable prices. And as you know, we're always looking to enhance our existing cluster and more radio where we have television radio. So we're still looking and hopefully we'll be able to see some opportunities as the M&A market is a little soft out there.

[Marci Ryvicker:]

Thank you.

[Operator:]

Thank you. Our next question comes from the line of Lee Westerfield of BMO Capital. Please go ahead.

[Lee Westerfield:]

Yeah, thanks gentlemen. Good evening. Actually I wanted to just follow up and that's almost housekeeping now and follow onto the bit about the Reggaeton. So what was the impact last year in the second quarter specifically from the LA concert that shifted in Q3?

[Phillip Wilkinson:]

1.2 million of revenues that is moving this year to Q3.

[Lee Westerfield:]

And any significant margin difference that we should take into account for that same shift in revenue?

[Phillip Wilkinson:]

Well, we're looking at probably the margin on that was probably about 40%.

[Lee Westerfield:]

Yeah.

[Phillip Wilkinson:]

On that [$8 million].

[Lee Westerfield:]

Okay. You touched on everything else. So thank you gentlemen, thank you very much.

[Walter Ulloa:]

Thanks Lee.

[Operator:]

Thank you very much. Our next question comes from the line of Mark Wienkes of Goldman Sachs.

[Mark Wienkes:]

Great, thank you. What's if you could tell us your approximate book to budget right now and how it's comping versus the past couple of quarters? Has it changed at all? And then just digging into that local versus national issue some more. I guess outside of auto can you speak to any different trends that you're seeing again local versus national from the different categories?

[Walter Ulloa:]

The first question Mark was how is our pacing?

[Mark Wienkes:]

Yeah. Like how much business is on the books today versus over the past few quarters?

[Walter Ulloa:]

As a last year?

[Mark Wienkes:]

Net booking earlier or later?

[Walter Ulloa:]

Our forecast or I should say our guidance what we call our low and high or about 79% of our guidance and that's where we were last year.

[Mark Wienkes:]

Okay.

[Walter Ulloa:]

And the second part of the question?

[Mark Wienkes:]

Just on local versus national. I guess you talked about last year, local TV, radio, local part of outdoors really strong. National is weak. This year seems to be reversed. I guess the drivers that are causing that disparity across the businesses? And then if you could comment on outdoor, I know it's now in discontinued ops, but are the trends there the same with respect to a weak local or strong national or stronger national?

[Phillip Wilkinson:]

Well, this is Phillip, Mark. As far as the TV local, we obviously finished a little better than our national we are plus two, international ended up minus five and as I mentioned to you we have kind of a tough start particularly on the auto side and into that specifically two major US auto makers that kind of drag us down there in January for national, but all in all that minus 2 was plus 2 local and a minus 5 national for the quarter on TV at first. Pace wise, we're showing continued growth and strength in local. And local is really where we have the relationships with the local retailers and clients and we can impact the business a less of a process there with the agencies. It's more of a relationship sale with the clients that our ample pace is high single digits on the local side, but we did see national come back here for the TV side of single mid digits. So it's a marked improvement over first that’s the trend that’s for April, and then on the radio side, it's much of the same that we saw in first. We've got a stronger national story than we do local, but I think as Walter had mentioned to you, it's a smaller part of our overall mix of the business, so it's a little bit easier to impact the smaller number and positive growth.

[Walter Ulloa:]

And in regards to outdoor, we had actually a terrific quarter in both local and national and outdoor. And that's outdoor.

[Mark Wienkes:]

Okay. That's great. Thank you.

[Operator:]

Thank you very much. Our next question comes from the line of David Miller of SMA Capital.

[David Miller:]

Hey guys, good afternoon. Walter, I just wanted to make sure I'm clear on what you guys intend to do with the windfall from the Lamar sale? I was under the impression three months ago when you guys issued your fourth quarter numbers that at least directionally the way you were thinking about it was that you were going to use at least a very large percentage of the net proceeds for debt reduction, you seemed to have backed off from that in your prepared remarks. I am wondering if you can comment, I just want to make sure I heard you correctly? Thank you.

[Walter Ulloa:]

I think the debt reduction comment was more by the analyst side than the company side. I mean the company is always put all of the options on the table, debt reduction being a possibility, but that's a possibility if we continue going down the road and we don't find other opportunities to invest those dollars. I mean, we're not going to have those dollars on the books forever indefinitely. But our goal is obviously to grow our clusters and to buy back shares at opportunistic prices and as long as we believe the price is opportunistic, we're going to continue to buy back shares and we're constantly looking at acquisitions. If we don't find any, if we don’t have any alternative buy stock, certainly we'll visit the debt, but I don't think the company has changed the position at all in terms of what the plans are?

[Victor Miller:]

If you do in fact go out and acquire assets, is the number one priority within that to acquire assets where you already operate a television duopoly?

[Walter Ulloa:]

Right. Our goal is to grow our radio clusters where we have television. But also as important as a goal that is to expand our Univision footprint, which is our core business, and has been since we started the company is right there at the top of the list. So we continue to look at opportunities in our television business to grow our Univision and Telefutura footprint. And we launched another Telefutura station this year in Colorado Springs Pueblo that will be our 19th Telefutura alongside our 23 Univision affiliates and we're also looking at opportunities to expand our Univision footprint.

[Victor Miller:]

Okay. Thank you.

[Operator:]

Thank you. I have no further questions at this time.

[Phillip Wilkinson:]

Okay, thank you Kim. Ladies and gentlemen, this concludes our first quarter investor conference call. We look forward to speaking with all of you in early August when we will give you our second quarter results. Thank you.

[Operator:]

Ladies and gentlemen, that does conclude today's conference call. We thank you for your participation, and we ask that you please disconnect your lines.