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Dan Harris - Brainerd Communicators

William L. Stakelin - President, Chief Executive Officer, Director

Tony Vasconcellos - Executive Vice President, Chief Financial Officer


David Miller - SMH Capital

Jim Boyle - C.L. King

Lee Westerfield - BMO Capital Markets

Michael Kupinski - Noble Financial Group

Wall Street Breakfast

Regent Communications (RGCI) Q2 2007 Earnings Call August 7, 2007 9:00 AM ET


Good morning, ladies and gentlemen and welcome to the Regent Communications second quarter 2007 conference call. (Operator Instructions) It is now my pleasure to turn the floor over to your host, Mr. Dan Harris. Sir, the floor is yours.

Dan Harris

Thank you, Operator and good morning. Welcome to Regent's second quarter 2007 earnings teleconference. You should have all received our second quarter earnings release. If not, please visit our website at for a copy.

For a reconciliation of all non-GAAP measures to the most comparable GAAP measures, please refer to the earnings press release.

Before we begin this morning’s call, please be aware that today’s call will contain forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ. Please refer to Regent's most recent filings with the SEC, as well as the earnings press release that accompanies today’s call, for a list of risks and uncertainties that could impact actual results.

I would now like to turn the call over to Bill Stakelin, CEO of Regent Communications. Please go ahead, Bill.

William L. Stakelin

Thanks a lot, Dan and good morning, everybody and welcome to Regent's second quarter earnings conference call. During the call this morning, I’ll provide an overview of our operating performance for the quarter as well as an update on the implementation of our strategic plan. Our Executive Vice President and Chief Financial Officer, Tony Vasconcellos, will then follow with a thorough review of our second quarter financial results and give you some insight into our third quarter of 2007.

During the second quarter, we continued to execute our strategy that maximizes the value proposition of our platform to both our advertisers and our listeners, with the goal of course of improving our ability to generate increased revenues and cash flow for the company and our shareholders.

As you’ve heard us say previously on these calls, our primary focus in 2007 is all about execution as we seek to fully extract the complete benefits of our very enhanced asset base. We continue to improve our content, strengthen our marketing and promotional resources, and we continue to build on our integrating online platform that you’ll hear more about in just a little bit, creating larger audiences, better opportunities for our advertisers to spend advertising dollars. And I might say in my own view, I think we are progressing extremely well in all of these categories to date.

For the second quarter, our net revenues and station operating income climbed 25.3% and 36.9% respectively compared to the same quarter last year. This of course is driven in part by the inclusion of the Buffalo cluster.

On a same station basis, our revenues once again outperformed the industry, as well as the majority of our peers with a growth rate of 1.4%. That means that we have now outperformed the industry in 13 of the last 14 quarters and we continue on track to exceed $100 million in revenue for the full year.

We continue to prudently transform this company as we capitalize on our increased scale, our stronger asset base, and our new online platform. As a result of the M&A steps we engaged in during the past year, as well as our operating strategy that we continue to execute, our strategic position continues to improve.

While most of our markets, the ad growth continues to be -- I guess I’d use a word like tepid, we continue to outperform locally in those markets. We continue to outperform the markets totally and have posted I think some very impressive growth in a number of our markets, which in second quarter was led again by our stations in Lafayette, Louisiana, that achieved an 11% revenue increase over prior year. This was followed by our second-largest market, Albany, New York, with an approximately 7% growth rate; Evansville, 6%; Flint, 3.4%; and St. Cloud and Watertown markets posted approximately a 5% growth rate.

I would point out that in Albany and in Lafayette, Evansville and Flint, those growth rates that I just gave you are more than three times the market growth rates -- some outstanding performance from the Regent pros in those markets in driving revenues over prior year.

Obviously we continue to have markets with business being as tepid as it is from an overall standpoint that challenge us, and we have listed those markets again as El Paso, Grand Rapids, and Peoria, and we’ll speak more about Peoria in just a few moments.

As we take a look at our second quarter, the categories that continue to be strong for us included entertainment, telecommunications, insurance, restaurants, and local auto dealers. As a matter of fact, over half of the Regent markets saw an increase quarter to quarter in advertising from the auto dealers.

Let me just call from the past, a couple of you have asked me, how do you account for the fact that Regent seems to have a little better rapport with the local auto dealers than some of the other companies that we are hearing about? How do you account for that?

Well, we took a look at that during second quarter and I think what we came up with, in our markets, anyway, is when ad spending is decreased during any period of time, as it is now, advertisers usually don’t walk away in total from any category, whether it be radio or any other medium. What we’ve done in our markets is because of our strong franchises, because of the position of the stations that dominate the demographic consumers that the automobile dealers are looking for, because our stations are so strong and dominant in our market, then usually we are the last one to see the decreases.

In other words, if an automobile dealer or agency used to buy six, seven stations in a market, today what you are finding is perhaps they are buying only three stations. And because of our strength and dominance in those markets in the categories that they are looking for, we seem to be experiencing any decreases that would happen to a lesser degree.

I mentioned Albany growing at approximately 7%. As you know in 2007, we earmarked that market as a developmental year, with a lot of product changes, additional new radio station, creation of new format on the FM band and we are more than pleased with the results to date. As a matter of fact, the decision to create the only FM all sports station in the state of New York has yielded wonderful results early on and we are very excited about that.

Our other format changes in the AC areas and the rock areas continue also to improve in both ratings and revenues, and our anchor station, WGNA, the number one station in that marketplace, continues to be very dominant and very strong.

We are pleased with the latest ratings that have come out. As you know, they are coming out even as we speak but we got a peek at Peoria, Bloomington, Flint, Grand Rapids and Buffalo and we are seeing some outstanding rating results in those marketplaces.

I want to mention Peoria just for a minute in that regard, because as you know last year, we did a big strategic purchase. We bought two radio stations that greatly improved coverage in the marketplace with enhanced signals over the stations that we divested, and now we are beginning to see that that strategy was exactly the right strategy.

Peoria is a two-book market, which means of course we only have the advantage of ratings twice a year, and in the spring ratings that just came out, which we believe are the first ones to truly reflect the changes that we put in place in Peoria, we saw some tremendous results in our strategy to try to dominate the younger 18 to 34 demo, where prior to our changes Regent had not really been very strong.

We took our alternative format on WIXO radio and moved it to the stronger signal. What we have seen in the spring rating books is validation of that move in that the ratings are more than 3.5 times improved over what it was on the other signal. So you are talking about over a 25 share, 18 to 25 versus about a 8.5 share before our change.

The other move that was combined with that was buying from Triple A Entertainment a rhythmic CHR station, Power. That station also grew and when you combine those two executing our 18 to 34 strategy, you’ll now find us totally dominating the 18 to 34 demographic in Peoria with well over a 35 share. So it’s good to finally get validation of that strategy and see the execution carried out so well by our professionals in the field in Peoria.

As I said, the ratings to date in the other markets are extremely strong, especially in Bloomington and Flint, great ratings in Grand Rapids and Buffalo, as you know, is probably the base of our asset group right now, and the ratings are extremely good for our largest market of Buffalo, especially where we put some investment money to improve what we said the upside was when we did that acquisition, which as you know was accretive from day one.

We said we thought we could improve the AC and bring it back to an area prominent to the marketplace. That’s been achieved in the spring rating book that was just released, and we said that we thought that the Jack format could be improved and have upsides for the cluster. It pretty much had been a stepchild by the former owner. We put some investment money behind it, both in research and promotion, and the results validate that strategy of the spring Arbitron that was just released.

So we are very pleased with all those markets that we’ve talked about so far. The strategy that was executed, beginning back in 2006, we continue to be very impressed with the operating savvy of our team in the field, especially in our largest market in Buffalo. So we are happy to be able to report those improvements going forward, which better positions this company to increased value, increased advertising dollars, increased value for our shareholders.

To sum up, I guess I’d say that our operating performance for the quarter is a result of us continuing to drive strong audience shares across the entire group. We continue to outpace growth for the radio industry and for all of our markets, and we are moving forward in implementing our strategy to capitalize on our enhanced portfolio to drive future revenues and future cash flow for the company.

Now, you’ve heard us talk a lot in the last couple of calls about moving forward with our integrated online strategy in an effort to expand our brands and content into the digital world. This cross-platform opportunity is a very exciting gateway to the future for us, in not only this industry but certainly within Regent Communications.

This initiative, which blends our content and sales resources, will further strengthen our audience shares and offer more dynamic opportunities and larger greater opportunities for advertising dollars to be garnered by Regent Communications. The new content, the larger audiences of consumers, will be very attractive to our advertising base.

Our Chief Financial Officer, Tony Vasconcellos, has been heading up our interactive strategy. I am going to ask him when he makes his comments to give you more details on that exciting part of our future growth pattern.

So in closing my remarks, I think I would say even though we continue to experience flat to slightly up advertising growth in our markets, we at Regent continue to outperform those markets, even increasing our share of that advertising dollar base in a down market place, as we continue to focus on the execution of the operating strategy that invests in our content and increases our relationships with our advertisers and our audiences, especially as we continue building the integrated online performance.

While the overall industry continues certainly to face growth challenges, we will remain optimistic about our future in radio as well as this company. Further, we are confident that we are taking the right steps right now to improve the value proposition of our brands and to strengthen our ability to continue to drive revenue and cash flow to the benefit of our shareholders.

As a direct result of the strategy being executed, Regent's asset base will become increasingly valuable in the year ahead.

So at this point, I would like to take time and turn it over to Tony, who will not only talk to you about the interactive aspect of Regent Communications but also will take an in-depth review of our financials and our future outlook for you.

Tony Vasconcellos

Thanks, Bill. I’ll begin with a report on the progress in interactive, as Bill mentioned, and talk about what has happened in the last 90 days.

We are in high gear in fully integrating our stations with rich web destinations that capitalize our brands. We are adapting the online world in a prudent and opportunistic manner, with a goal of capturing more interactive participants, both at work and at home.

We’ve made significant progress on three critical fronts since we last spoke to you in early may -- personnel and training, technical infrastructure build out, and website standardization and sales.

On the personnel front, we have now hired all of the key employees we need in order to implement our plan. From a leadership perspective, we are very pleased to announce that we’ve hired a long-time industry expert in the interactive space to head up our efforts. Larry Downs has just joined Regent Communications as Vice President of Technology and Digital Media. Larry has been in radio since 1993 and has held interactive roles with two different national companies for most of that time. For the last four years, he’s actually held group level leadership positions. We look to Larry to continue to push our success in this area.

In addition, we’ve hired an interactive program director for each of our six markets where we rolled out Regent Interactive, along with an interactive sales manager in every one of those markets. Additionally, we provided onsite training to the sales force in each of those markets tailored to our core interactive products.

From a technical standpoint, we upgraded the infrastructure that our platform runs on. We moved our streaming vendor to Akamai because we want the top provider in the industry. We are a product driven business and this move will ensure that the quality of our stream will be as close to our over-the-air broadcast as possible.

Finally, we have standardized our website and improved upon the look, design and usability of the sites.

Now, over the next 90 days our focus will be to continue to train our sales and marketing teams on the platform and then really focus on further enhancing the content of the website, which will make them stickier and provide even more revenue opportunities.

Overall, we remain confident that our interactive strategy will allow us to build on our already large, local market audience. Our efforts have a meaningful impact on revenue beginning in the second half of 2007 as we unlock additional sources of organic growth and position Regent as the leading innovator.

On our next conference call, we’ll continue to update you on how our interactive initiatives are progressing.

Turning to our second quarter results, for the second quarter of 2007 net revenues increased 25.3% to $26.4 million from $21.1 million. Station operating income increased 36.9% to $9.5 million from $7 million in 2006. As Bill previously noted, these increases are primarily attributable to our Buffalo market acquisition.

On a same-station basis, which includes results from stations operated during the entire second quarter for both the 2007 and 2006 periods, excluding barter, net broadcast revenue for the second quarter increased 1.4% to $20.5 million, compared to $20.2 million for the second quarter of 2006.

Same-station operating income was flat at $7.1 million for the second quarter of both years.

For the second quarter, corporate overhead increased to $2 million. Approximately $230,000 of this cost was related to the retirement of a senior executive. Interest expense increased to $4.3 million, attributable to rate increases and acquisitions completed in the second half of ’06.

Net income for the quarter was $3 million, which was boosted by a $3.1 million pretax increase in the value of our swap contracts.

Earnings per share for the quarter was $0.08 on total shares outstanding of approximately 38.3 million shares.

Free cash flow for the second quarter was approximately $2.8 million, a decrease from the second quarter 2006 of approximately $600,000. Approximately half of that increase was the direct result of the increase in interest rates net of the benefit of our hedges.

Looking at our balance sheet at June 30, 2007, leverage for borrowing purposes is now at 7.0 times total debt to trailing 12-month EBITDA. Outstanding debt was $215.4 million at June 30th, and our cash balance was approximately $1.3 million.

Turning to our outlook, Regent expects third quarter reported net revenues and station operating income of approximately $26.2 million to $26.8 million, and $9.3 million to $9.7 million respectively. On a same-station basis, revenues are expected to be flat to down low single digits in the third quarter.

For the third quarter, we expect corporate overhead to be approximately $1.9 million, which will include approximately $130,000 of non-cash expense from restricted stock. We expect earnings per share to be approximately $0.04.

CapEx for the third quarter will be approximately $900,000, of which about $700,000 is maintenance CapEx and the other $200,000 is related to conversions of stations to HD.

Looking at the full year 2007, we continue to expect cash taxes to be at $200,000 and maintain our corporate expense estimate of $7.9 million, of which approximately $520,000 pertains to non-cash expense related to the restricted stock.

Expected CapEx for the full year of 2007 remains approximately $4.1 million, of which $1.8 million is maintenance CapEx and $1.1 million is related to the conversion of stations to HD.

With that, we would like to open the floor to questions.

Question-and-Answer Session


(Operator Instructions) Your first question comes from David Miller of SMH Capital.

David Miller - SMH Capital

Good morning. Congratulations on the stellar results. That’s absolutely an outstanding performance all the way around. Bill, I have it that about 14% of your portfolio is still developing and has not yet reached a margin band that can be considered mature. Is that the correct number? The reason I ask is just because just awesome SOI performance from a margin standpoint in the quarter, but obviously we’re looking for more so I want to understand what percentage of the portfolio is still developing, and then I have a follow-up. Thanks.

William L. Stakelin

David, we join you in looking for more, trust me. We’re with you 100% on that desire.

I think when you take a look at developmental, your number may be close to about right. Certainly the entire market in Albany, with the exception of WGNA, continues to be developmental, as does Peoria, to a large part, as does Fort Collins to a large part, other than our two basic foundation stations out there.

So while I don’t have in my mind the exact percentage, and I’ll get that for you if you need it, I don’t think you are too far off on that 14%.

Tony Vasconcellos

I think the other thing we throw in there is obviously the JACK station in Buffalo where we’ve had the recent upgrades and programming dollars we put in there. I think that is pretty much right on.

David Miller - SMH Capital

Okay, great, and then just as a follow-up, obviously a certain activist shareholder, or an activist-oriented shareholder, has called for a special meeting of shareholders to take place in Cincinnati on September 3rd with regard to the notion of adding more director seats. I don’t know if you guys have responded to that or not. If you did respond to it, how did you respond to it and do you have any comment for the audience on the call today with regard to that letter? Thank you.

William L. Stakelin

David, I would say that the company is currently evaluating the latest filings from selected shareholders. You can be assured that our management and board remain committed to maximizing the value for all of our shareholders, those that are short-term, those who have been with us for a very long time, large shareholders, small shareholders.

As we execute the strategy that we talked about this morning, you can be assured that we will continuously evaluate in conjunction with our legal and financial advisors all stockholder proposals that may be presented at any time to this company.

David Miller - SMH Capital

Thank you.


Thank you. Your next question comes from Jim Boyle of C.L. King.

Jim Boyle - C.L. King

Good morning. In Q3 versus the first half of the year, has there been any change in the late timing of buys, any change in the length of schedules placed, any change in ad rates?

William L. Stakelin

Primarily ad rates are driven by demand. The demand has been weak all year, Jim. I’d say in most of our markets, we’re not really seeing deceleration. We’re certainly not seeing a whole lot of acceleration. We don’t see a lot of improvement but I think the news there may be that we are not experiencing additional deceleration of what we’re seeing.

Visibility has not improved, continues to be very short with buys being made at the last minute. Our local, especially direct advertising efforts, which are working the best for us in this type of marketplace, continue to be very important to us and keeps us selling in the month longer than maybe the traditional model over the years would, but I haven’t seen a lot of difference in the request of the length of spots, the timeline on which we are getting the buys into the house, and we are not really experiencing what I would call noticeable deceleration in the market for third quarter.

Jim Boyle - C.L. King

Has there been any change in the typical number of units and spot loads by competitors in CCU markets versus non-clear channel markets?

William L. Stakelin

I’ll be real honest and say that, and I’m speaking on behalf of the managers and the regional Vice President, but I don’t think that we really have focused too much on that because of the lack of demand. I mean, when there is more demand there, or I guess when there is total no demand there is when you see people adding units for different reasons. But I don’t think that we have any noticeable differences as to people loading up with more spots trying to sell quantity because they can’t drive their unit rate.

Jim Boyle - C.L. King

Bill, you’ve been in radio much longer than many of the young CEOs. Would you say after six plus years of slow to no growth in radio, this is still a cyclical down draft, or do you think this is more of a long-term situation, given the new landscape?

William L. Stakelin

Well, I’m not sure I’m smart enough to really analyze that and speak to it except drawing back on the years of experience that you point out, it is my personal feeling that we basically are not into a normal cyclical situation here. I think with the introduction of new media, new technology and the opportunities it presents us, the business model for us going forward as to how we generate ad dollars, how we take the new technology of our interactive platform and really enhance the traditional business that we’ve had, we don’t see that as a totally separate business. We see it as a great opportunity that enhances and is based in a foundation of very large audiences that these radio stations bring, so I think we are seeing the model really change, Jim, for advertising expenditures, media use, and for the way that we run and conduct traditional media, whether it be radio, television, newspaper or others.

I can’t just say hey, nobody is going to say this is cyclical, don’t worry about it. The exciting thing for us is that we think we see the landscape out in front of us and we want to take advantage of it because we think that in the future, there’s gold in them there hills, and we think we are good enough to mine it on behalf of our shareholders.

Jim Boyle - C.L. King

Bill, if you could take your region hat off for the moment, you have in the past sat in industry trade association seats, you’ve been in small, mid, large markets, so you have a fairly broad experience and expertise in the business. Looking long-term, do you expect radio revenue growth to rebound to 1% to 2% average growth, 3% to 4% average growth, or 5% to 6% average growth?

William L. Stakelin

I’m still holding out for the 3% to 4% right now and I think when the larger markets and all of us regain our focus on the fact that this is a local base, local driven advertising medium, and we get back to the basics of selling our local markets and serving the advertisers and their needs in those markets, be it in Buffalo or be it in Watertown, New York, than I think we will have more control over our own destiny as to how we can drive revenues and increase profit and get more free cash flow to continue to make this a business that people are going to want to be involved in and invest in in the future.

Jim Boyle - C.L. King

Final question; Tony, roughly what percentage of revenue do you invest in sales people training?

Tony Vasconcellos

That’s a tough question because -- I mean, obviously the sales training is buried into various expense line items and there is a lot of training that is less than formal. For example, we just -- Mike Grimsly, our RVP that is heading up the sales effort on the interactive side, he just toured most of the country last week and was in-house in every one of our trailblazer markets, which we call the first six markets rolling out, and that’s capture nowhere other than in his T&E cost. Obviously there’s a pretty big effort there that goes behind that.

So that’s really hard for me to say, Jim, just because it’s buried in so many different places. It is very important to us.

William L. Stakelin

We have a whole lot of multi-tasking, Jim, and we are very fortunate a company this size to have some very, very talented people with a lot of experience that we can draw on, like Mike Grimsly in the interactive area, to make sure that we have continuous training.

In the traditional model, when you get into our markets, and you are looking for a percentage and as Tony has said, I’m not sure we can nail that down for you but I can assure you that from the newcomer to radio in the local markets, to the senior managers, the continuous training that is received is ongoing and very heavily thought of in this company.

As a matter of fact, one of our small market managers up in St. Cloud, Minnesota, just returned from Georgetown University in Washington where he was enrolled for a week in a very senior management strategy training course. So we try to take advantage and keep our people trained and re-train them, because right now, as you we said in your last question, it is not a matter of just basic training on the old model. There’s a whole lot of brand new training and techniques that we are bringing to the table that even the veterans have to be introduced to as they face tomorrow’s marketplace.

Jim Boyle - C.L. King

Thank you.


Thank you. (Operator Instructions) Your next question comes from Lee Westerfield of BMO Capital.

Lee Westerfield - BMO Capital Markets

Gentlemen, good morning. Sorry for what’s going to seem like a slew of questions here, but hopefully they are quick ones. There will be four here. First, in Albany, 7% growth I think is what you quoted in the quarter and I wonder how much of that may have been attributable to specifically to the new ESPN station versus the others in that market.

Second, Tony, on the debt side, 7.0 times leverage I believe you quoted. Are you entirely fixed out at this point and can you make a comment about the derivative gain in the quarter, which we all I think expected, but $3.1 million.

Third question is on HD radio. I think you said the last of your HD radio upgrades or CapEx investments, correct?

Fourth, sorry for so many, if you have the number anyway, at this point, the current or cash tax number in the second quarter. Sorry for so many, but thank you.

Tony Vasconcellos

I’m sorry, Lee, I didn’t catch the last one.

William L. Stakelin

Cash tax on the quarter. Lee, on your first one with Albany, I don’t have the percentage in front of me. I can get it for you if you need it. I will say that the revenue stream has doubled when we took our format and launched it on FM. As you know, we had it on small AM radio station, and a large part of that growth certainly is being driven by the team as well as by our new AC, the Buzz in that marketplace. Those two are primarily driving that increase.

Tony Vasconcellos

Lee, just on the rest of the question, our leverage, you said is it seven times and I think you were asking what percentage of that is fixed and what floats. The fixed component is $165 million of the 215, and that’s fixed just under 7% at a blended rate. The derivative gain obviously was pretty significant but we struck those swaps and it was a series of them last December when it was extremely advantageous, and what you are seeing now is that the debt markets reversed, there’s real value there and that flows through the P&L. Frankly, it will create volatility each quarter for those of you that try to peg the EPS number. It’s just a difficult thing and obviously we’re on the positive side of that and hope to continue to be.

CapEx, as far as the HD upgrades, we just have a couple hundred thousand dollars more this year but as you know, with an annual commitment, and I think that that commitment will run for about another three years and will probably increase slightly, our run-rate the last couple of years has been about $1 million a year. I think that is going to go up because the number of stations we convert will go up, although costs do seem to be coming down a little bit.

I guess ongoing for the next three years, you can expect somewhere between $1 million and $1.5 million.

Lee Westerfield - BMO Capital Markets

That’s what I thought. That’s why the comment I wanted to -- thank you.

Tony Vasconcellos

And then cash taxes, it’s about $50,000 a quarter.

Lee Westerfield - BMO Capital Markets

Gentlemen, thank you.


Thank you. Your next question comes from Michael Kupinski of Noble Financial.

Michael Kupinski - Noble Financial Group

Thank you for taking the question. You have such a dichotomy with strong stations and those not performing well. Have you been able to determine what differentiates some of the stronger markets from the weaker ones? Is it just format changes and a ratings, or is there something more endemic to some of your markets?

William L. Stakelin

You know, Michael, even in the markets that are weak at the current time because of ad spend, we pretty well have dominant franchises in the marketplace. So I think the real differential right now is the economy or the market growth that is in these different marketplaces.

Down in Lafayette where, you know, I told you they grew quarter to quarter by 11%, I mean, you know the situation that national business is in. In Lafayette, national business, even though it is only about 7% of our business in Lafayette, you know, that market was up 17% in national business. Well, that is totally out of kilter with the rest of the country.

I think as I look at this, the real differentials, it is the money in the markets, the growth rate or the money that we are able to compete for because even in the weak markets, we have very strong franchises.

Michael Kupinski - Noble Financial Group

What was national in terms of some of those other stronger markets, like Albany, for instance? You were mentioning -- was national a differentiating factor there as well?

William L. Stakelin

You know, Lafayette is about the third fastest growing or fourth fastest growth rate for national. Again, it is only 7% of our revenue stream but it is out of culture if you look at the whole nation and the growing rate. But you take a look at a market like El Paso, while you have Lafayette up 16 or over 16%, El Paso is down 14.1%. Up in Grand Rapids, our third largest market, it is down at 8.5%. Albany was down 6% in national. So national continues to not perform well at all and right now, we don’t see that in our markets, especially. And again, we are talking about maybe 13%, 14% of our revenue stream but we don’t see that improving over the year. That’s why that we certainly are totally focused on our direct sales efforts especially and the local agency transitional business.

Michael Kupinski - Noble Financial Group

Bill, were there any particular, in terms of national ad categories, have you noticed any particular strength in those markets where you saw a very strong national advertising? Was it auto, for instance or was it something else?

William L. Stakelin

No, you know, the national -- the auto -- the reason we do so well and the reason that these markets beside do pretty good right now with auto is because we are dealing directly with the auto dealers and you’re not going to see any corporate money. There are three pools of money basically we focus on. The corporate money out of Detroit, you’re not going to see any in our markets, primarily.

The dealer associations primarily are in your larger areas and would affect markets on the top side for us, like our top three or four, and we are seeing decrease there. And your top markets across the country are seeing a decrease there, but we are really focused on the local dealer because that really is the automotive stream for this size market.

Michael Kupinski - Noble Financial Group

Okay, great. Thank you.


Thank you. Your next question is a follow-up from Jim Boyle of C.L. King.

Jim Boyle - C.L. King

Good morning, again. Roughly what percentage of your revenue is NTR/miscellaneous? And within that, what percentage would be from the Internet?

William L. Stakelin

Well, we said with the interactive that I think this year, Tony, correct me, but I think we were at 1% to 2% for --

Tony Vasconcellos

Yes, we’re at 1% on the interactive side, and on the NTR side, we’re at about 3%, so the total is 4% between the two.

Jim Boyle - C.L. King

Okay. Thank you.


Thank you. There are no further questions at this time.

William L. Stakelin

Well, if there are no further questions, I want to thank everybody for taking time and the interest in the company to be on the call. As we always say, you can rely on us not to limit our options on behalf of our shareholders. We will take a look at any and all opportunities on a continuous basis to try to figure out a way to grow shareholder value and we appreciate your interest and we appreciate your support. Have a nice day.


Thank you. This concludes today’s conference call. You may now disconnect.

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