Full Transcript of Univision Communications’ 3Q05 Conference Call — Q&A (UVN)

Here’s the entire text of the Q&A from Univision Communications’ (ticker: UVN) Q3 2005 conference call. The prepared remarks are here.

Operator:

Certainly. Ladies and gentlemen, if you’d like to ask a question, you may do so at this time by pressing the star key followed by the digit one on your touch-tone telephone. If you’re using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. We’ll proceed in the order that you signal us, and we’ll take as many questions as time permits.

Once again, ladies and gentlemen, star one for questions. And we’ll take our first question from Victor Miller with Bear Stearns.

Victor Miller:

Two questions. One, in 2004 and into the first quarter of 2005, expense growth was running in the high single digit, almost low double digit range for the TV business, for example, and the radio business. Third quarter TV is up about 5%. Radio’s down – is less than 1%. And you’ve got the $50 million of cost savings going into ’06. How have you been looking at the expense side and how do we look at core expenses and what you’re trying to accomplish there? And, secondly, is it true basically that when you look at the Upfront, the Upfront gains you have, the 50% of that gain really shows up in the calendar year, 50% shows up in the broadcast year? And if that’s true, then given the guidance you provided, what does that say about the strength of the scatter market? And given what you’re seeing in soccer, what does that mean for the growth going into ’06? Thanks.

Andrew Hobson:

Very complicated questions, Victor.

Victor Miller:

Sorry about that, Andy.

Andrew Hobson:

We have seen a decelerating of our expense growth over the year in our television business, particularly if you look at the expenses excluding the variable programming license fee. It’s important to exclude the variable programming license fee because starting in June it reflects Puerto Rico, which wasn’t included in the prior year. But our operating expenses excluding the programming license fee in the first quarter were up 15% in TV, 2.5% in the second quarter, and 2.7% in the third quarter. So, we have historically been managing our expenses to lower [growth] rates, reflecting lower revenue growth. The reduction in force and the cost reduction charge that we announced reflects a focus on driving efficiencies in our business, and since most of that effect is in the TV business, I think as we go into 2006 you will see modest growth rates in [expenses in] the TV business, putting aside the World Cup, which is a unique situation. As it relates to the revenue gains as we go forward ...

Victor Miller:

And the scatter market.

Andrew Hobson:

... and the scatter market, the fourth quarter increase in revenue growth is driven by the television business, with the stations and the network expected to grow similar percentages. We think that the implied growth rates of high single digit for the business reflects, as you said, a portion of last year’s Upfront and a portion of this year’s Upfront, which on the last call we said, excluding World Cup, was up low double digits. The scatter market remains good and really there’s been no difference over the past few months.

Victor Miller:

Thank you.

Operator:

And we’ll take our next question from Spencer Wang with JP Morgan.

Spencer Wang:

Hi. Good afternoon. Can you talk, maybe this is a question for Ray, a little bit about the impact of the local people meters and maybe talk specifically about how that’s impacting the TV station ratings rather than the network ratings that you’ve given us a lot of detail on? And then the second question is on the $50 million in cost savings, when do you expect to realize that? Do you get a portion in the fourth quarter and you get all $50 million by ’06? Or, if you can just give us some color on the timetable. Thanks.

Ray Rodriguez:

Yes. On the local people meters, I know we didn’t detail it, but the ratings at the local stations are at all-time highs, as you know, we had a period of time where we were discussing with Nielsen better samples and so forth. From the local standpoint we still have a ways to go, but we’re #1 among all stations including the English stations in many, many of our markets. Our local news are #1 in many of the local markets, so, the ratings continue to be strong not only on a national level but on a local level. And as far as the $50 million, that’s an annual estimate of the annual savings so, it’s a year worth of savings.

Spencer Wang:

Can you get there by ’06, Ray?

Ray Rodriguez:

Well, we’re starting immediately, but that would be a full year ’06 effect.

Andrew Hobson:

The $50 million is the annualized effect of the reduction in force plus non-headcount related changes that we’re making in our business.

Spencer Wang:

Great. Thank you very much.

Operator:

And we’ll take our next question from David Miller with Sanders Morris Harris.

David Miller:

Hi. Good afternoon. Andy, on the last quarter’s conference call you had mentioned that there had been returns from a major music industry wholesaler, which slowed sales in that quarter to the tune of about $5 million. What, if anything, did you do differently this quarter? The music numbers look great, by the way. What, if anything, did you do differently to solve that problem? And do you still expect to exercise your option on the other 50% of Disa by the end of next year? Thanks.

Andrew Hobson:

As it relates to Disa, it is our intention to exercise that option, I believe around June 30th of 2006. As it relates to the returns experienced in the music industry, generally we are continuing to experience higher levels of returns than we have experienced historically. We believe it is a result of the big box retailers reducing their inventory levels of recorded music and other boxed home entertainment product. So, I think that once inventory levels stabilize at [their] new lower level, the returns experience is expected to return to our historic normal average. And we’re watching it very, very carefully.

David Miller:

OK, thanks very much.

Operator:

And we’ll take our next question from Marci Ryvicker from Wachovia.

Marci Ryvicker:

Hi. I have a few questions. I was wondering, first, if you can comment on the auto category. A lot of your general interest peers are suffering in that category. I wanted to see if you’re seeing some strength. And I also wanted to know – ABC has started dubbing some of their programs in Spanish. Does this impact you at all either now or in the long-term? And finally, when do you start becoming a full cash taxpayer? Thanks.

Andrew Hobson:

I’ll take two of those, then, Ray, you can take the ABC question.

Ray Rodriguez:

Yes.

Andrew Hobson:

The auto category has continued to show strength for us. In the third quarter it was up high single digits, and going into the fourth quarter it is pacing a similar rate ahead. It’s two – cash taxes – excuse me, Ray, I’m sorry.

Ray Rodriguez:

That’s all right.

Andrew Hobson:

We are pretty much a full cash taxpayer now, but we do have these very long-term deferred tax assets relating to some very large purchases that we had done historically on an asset basis, primarily the USA stations and radio stations that the old Hispanic Broadcasting Corporation purchased.

Ray Rodriguez:

As far as the dubbing, we really believe that language is not what makes a program attractive to our demo. It’s really the content. It’s not the actual language. We don’t believe that this is going to have an impact on our ratings. However, I think it’s a very good sign that people want to get into this growing market. We just don’t believe that dubbing is the way to get any audience.

Marci Ryvicker:

Great. Thank you very much.

Operator:

And we’ll take our next question from Jessica Reif-Cohen with Merrill Lynch.

Jessica Reif-Cohen:

Thanks. I just wanted to hone in a little bit more on the World Cup. With the announcement today, you said the revenues so far [are] $180 million, which is way greater than we expected. How much inventory is left? And is all of the $180 million at the network? And could you outline what do you think the station benefit will be? And then finally, how much of the World Cup buying will benefit ’07? Don’t most of the advertisers have to commit to periods beyond the World Cup? Thanks.

Andrew Hobson:

Ray, do you want me to handle that?

Ray Rodriguez:

Yes. Go ahead, Andy

Andrew Hobson:

The $180 million that was announced in our World Cup press release this morning is gross revenues, incidentally. It reflects both network and station inventory. The inventory split is roughly 80-20, so those revenues are roughly split 80-20. Sellouts, since we’re still selling, Jessica, and it is competitive, I don’t think we care to comment specifically on that. I believe on an intellectually honest basis, though, if you assume approximately two-thirds of the World Cup revenues are incremental it is profitable at the $180 million sales level. And I don’t know, Jessica, how many dollars were carried into 2007.

Jessica Reif-Cohen:

But you can say, when you sell the World Cup you sell it as part of a package, don’t you?

Andrew Hobson:

Generally speaking, for the major advertisers we require a multiyear commitment, including 2007.

Jessica Reif-Cohen:

And then just ...

Ray Rodriguez:

There’s also the effect that we’ve always felt years after a World Cup. One of the great benefits to us of the World Cup is that the budgets grow. So, we normally have very good years after World Cup. A lot of that money that comes in for the first time stays. And we do have other sports properties, and so forth, that we put people in. So, it does have a very beneficial effect, not only in the year that you play but the years that follow.

Jessica Reif-Cohen:

And then just one follow-up on the TV stations. Andy, I just want to make sure I understood what you said. In the guidance it sounds like the stations growth is in line with the network growth of high single digits. Just want to make sure I understood that. And could you comment on radio pacings into the fourth quarter, please?

Andrew Hobson:

That’s correct, Jessica. I said that the stations and the networks are expected to have similar growth rates in the fourth quarter. Radio pacings are less than TV pacings right now.

Jessica Reif-Cohen:

Thanks.

Operator:

And we’ll take our next question from David Bank with RBC Capital Markets.

David Bank:

Thank you. Good afternoon. A couple of questions. First, starting with the Internet business, you have the most popular Latin American website destination in the U.S., and it’s certainly made some improvements in terms of profitability. The last big thing we heard was the Google affiliate deal that you announced during the summer. What do you think your goals are for 2006 in terms of monetizing that platform and getting more active on the entertainment side of the world? And the second thing is, Andy, I’m sorry to make you repeat this, but in the third quarter, could you just repeat the revenue growth in TV between network stations and Galavision? I think you said it already. I’m sorry, I missed it.

Andrew Hobson:

Historically we’ve only broken out networks, which include Galavision, and the stations, and both grew at 5%.

David Bank:

OK. And on the Internet side?

Ray Rodriguez:

Well, that continues to be a growing business, and we’re happy with the continued growth in viewing. We have been starting to monetize that, and we expect that to accelerate as we go forward.

David Bank:

What do you want to do with the portal? I mean, what is your goal for 2006? What kind of initiatives are you thinking about to – specifically, what do you want to do with the portal?

Ray Rodriguez:

Well, this is the same way, to a certain degree, that we’ve grown the television business which is to concentrate on the content to get more and more people to come in, and then the revenues follow, as has been the case so far. We’re happy that we’re breaking even, and we have a lot of potential there going forward. We do cross promote heavily on television and on radio, Internet, so we expect it to continue to grow, and as more page views and so forth, the money will follow.

David Bank:

OK. Thanks, Ray.

Operator:

And we’ll take our next question from Phillip Olsen out of UBS.

Philip Olsen:

Yes. Just a quick question with respect to the share repurchase program announced. In the light of the maybe slightly more aggressive repurchase activity, could you maybe just articulate what the current leverage targets are for the firm? And a related question, I think previously the guidance was that you would look to repay your maturity in ’06 out of cash on hand, implying a permanent reduction in debt. Just want to make sure that that was still the plan.

Andrew Hobson:

Our capital policy is to maintain leverage ratios which are consistent with maintaining and deserving BBB flat or the Moody’s equivalent Baa2 credit ratings.

Philip Olsen:

And in your mind, what are those ratios? Because when you talk to the agencies, it seems to be a moving and tightening threshold.

Andrew Hobson:

I believe it’s high 2.0s to 3.0 times.

Philip Olsen:

OK. And in terms of the ’06 maturity, whether that would be paid down or refinanced?

Andrew Hobson:

I think money is fungible, and I believe we will probably refinance it if we are purchasing more than $250 million of common stock during 2006, as we expect to.

Philip Olsen:

OK, thank you.

Operator:

And we’ll take our next question from James Dix out of Deutsche Bank.

James Dix:

Good afternoon, gentlemen. A couple questions, some are follow-ups. First, Andy, in calculating that rough profitability figure for the World Cup, is it right to assume around a $90 million cost on the World Cup for next year? And then, what’s the difference between net and gross on that $180 million revenue figure that you posted thus far? And then, on the Upfront, if you can give us some color as to the number of advertisers that you’ve got into the Upfront once it had closed and the progress you made in getting additional brands on the air for advertisers who were returning. Finally just in terms of the cost cuts, can you give any split as to what the breakout is between the headcount versus the non-headcount related portions of those and then any possible breakout as to how much is going to the network versus the stations on the TV side?

Andrew Hobson:

OK. The profitability of the World Cup assumes agency commissions of 15%, which is the difference between gross and net sales, and the incremental costs of the World Cup are high $90s millions of dollars. The absolute cost is $100 million of rights fees and $8 million or so of production costs, but we are displacing several hundred hours of programming, which has a savings associated with it. So, I use the high $90s million incremental number.

James Dix:

OK.

Andrew Hobson:

The Upfront, frankly, I don’t think we’ve ever released the number of advertisers, so I don’t think we’re going to. We had 20 new corporate advertisers in the Upfront though. We’ve had recently significant additional brand activity coming out of Procter & Gamble, Unilever and Pfizer, for example. The [breakout of] costs between headcount and non-headcount, I don’t have it in front of me so I’ll have to call you back.

James Dix:

OK. And do you happen to have a rough split between network and stations?

Andrew Hobson:

I don’t because we looked at the TV business as one business unit during the planning process.

James Dix:

OK, thank you. Operator: And we’ll take our next question from Gordon Hodge out of Thomas Weisel Partners.

Gordon Hodge:

Hi. Good afternoon. A couple questions. One, just on the World Cup, Ray, you’ve mentioned that you’re hoping to see about a 43% increase in audience this year. I’m wondering, would that be comparable to the sort of rating guarantees that you are offering as you sell World Cup inventory? And then we’ve got the Latin Grammys, I think, tomorrow night. Is that anticipated to be a meaningful revenue contributor this year? And would that be excluded from the Televisa program license agreements? And then the last question is, Andy, in the past you’ve sometimes talked about pricing versus volume on the network and the stations. Just wondering if you had that data this time. Thanks.

Ray Rodriguez:

Gordon, on the World Cup we are estimating that our total audience is going to be about 50 million, but that audience includes some English, and we don’t sell on that. Our guarantees are consistent with our audience growth. And remember that this World Cup is being played in Europe. So, that means that there’s going to be better time periods, and that is one of the reasons why we’re increasing our estimate, consistent with what we believe will be not only [that] the popularity of the sport is growing in the United States but also the better time periods. As far as the Latin Grammys, it is a very exciting event. Relative to all our big specials, it’s in that level, and because it is a special, we do not pay [Televisa and Venevision] license fees on that.

Gordon Hodge:

Great. And then, Andy, on the ...

Andrew Hobson:

Related to price and volume, I don’t have that data.

Gordon Hodge:

OK, that’s fine.

Operator:

And, Mr. Hodge, does that answer all your questions?

Gordon Hodge:

Yes, that’s great. Thanks.

Operator:

And we’ll take our next question from Jonathan Jacoby out of Banc of America Securities.

Jonathan Jacoby:

Good afternoon. Just two questions here. The first one – with your agreement with Nielsen, should we look perhaps for potential timelines that the Univision Network will be included in the traditional NTI Index? And perhaps you can give us some thoughts, Ray, on what that potential might be from an advertising side. Secondly, just if you can give us a little color on the September filing. I believe it allowed for the separation [of] CEO and president roles. Thanks.

Ray Rodriguez:

Jonathan, we are looking very closely at the NTI, and we’ve been tracking their sample and tracking the results of NTI versus NHTI, which gives us our audience, Hispanic audience. And NTI, as you know, is the total national audience. We want to make sure that the NTI gives us as much audience as the NHTI, which is all Hispanics, it’s a bigger sample, etc. We believe that that is getting closer and closer. At the time that we feel that NTI is giving us the total fair count, we will switch to NTI. We believe it’s going to happen this year coming up. We believe it’ll be very significant to our business because, as you know, some of the buyers go off of NTI and don’t pay attention to NHTI and [in] some of the computer models they use for buying, the NHTI is not in there. So, we don’t even exist as far as many buyers are concerned. Once we enter we believe there’s great opportunity there. Does that answer that question? Jonathan Jacoby: Absolutely. If you could just expand on the September filing.

Ray Rodriguez:

I believe the September filing was just a technical change of the bylaws to allow for separation of certain titles. And that’s all it was.

Jonathan Jacoby:

Thank you.

Andrew Hobson:

It was designed to provide greater flexibility for management in structuring various management responsibilities and roles.

Operator:

And, Mr. Jacoby, does that ...

Jonathan Jacobe:

Yes, thank you.

Operator:

And we’ll take our next question from Eileen Furukawa out of Citigroup.

Eileen Furukawa:

Hi. Thanks. Just two quick questions. First, with a strong presence in Miami in both your TV and radio stations, can you help us get a better understanding of what you think the impact from Hurricane Wilma will be? And can I assume that this is already factored into your guidance? And, second, can you tell us how many different World Cup advertisers you currently have lined up, and what portion of them are new advertisers for you? Thanks a lot.

Andrew Hobson:

OK. As it relates to Miami, we have factored into our guidance revenue that has been lost and it is uncertain whether we’ll be able to re-express it as well as some costs related to the repairs or damage we incurred. We expect in our guidance that [the impact] is approximately less than 1% of revenue and approximately 1.5 to 2% of EBITDA.

Eileen Furukawa:

When you mean less than 1%, that’s how much you’re leaving in there for them?

Andrew Hobson:

That’s [by] how much our guidance has effectively been reduced.

Eileen Furukawa:

OK.

Andrew Hobson:

And because of the leverage of those businesses, 1.5 to 2% of EBITDA.

Eileen Furukawa:

And World Cup advertisers?

Andrew Hobson:

There is between 20 and 25 advertisers on the network. And the stations would have a much greater number of advertisers who not necessarily bought all stations. I do not know the number of new advertisers. I’ll have to calculate that.

Eileen Furukawa:

OK, thanks a lot.

Operator:

And we’ll take our next question from Tuna Amobi out of Standard & Poor’s Financial.

Tuna Amobi:

Hi. This is Tuna from Standard & Poor’s Equity Group. A couple of questions. The first one would be, Andy, as you look at your balance sheet, it seems that the case could be made for maybe taking up the leverage a little bit more in order to perhaps finance a more aggressive return of capital, such as a special dividend. And I know you’ve just announced another $500 [million] share buyback, but I guess it seems like you’re being a little bit more conservative than you can be, even within the leverage targets that you had outlined earlier on the call, which are the high 2’s to 3 times. And, secondly, on the long distance telco issue that adversely impacted the last quarter, the prior quarter, how much of that is still a factor for the fourth quarter? And if you can comment on political as well. And finally how much less commercial units are you running on the radio and the TV side compared to English language? And if you can comment on what your CPMs are today on the radio and TV as well, compared to English, that would be helpful. Thank you.

Andrew Hobson:

OK. Hopefully I got all those down. On the long distance telco and political in the fourth quarter of last year, we [had] about $10.6 million of net revenue, which would be nonrecurring. Keep in mind that in the fourth quarter this year we have received a little bit of long distance, so I’ve netted those against each other. On the balance sheet and leverage, Tuna, I guess it’s a philosophical issue. We’ve [undertaken] a $500 million program before. I believe the board’s view is that that’s an adequate number to progress – or adequate rate to progress at. If we complete that program before the end of ’06 the board will reconsider whether we should ask for more. We don’t think it’s necessary to throw a big number out there just as window dressing. We’d rather put a number out there that we expect to complete in the timeframe that we say.

Tuna Amobi:

Now, if I can interject, is a special dividend something that you might look at possibly under any scenario?

Andrew Hobson:

Our board has decided for the time being that the appropriate way to return capital to shareholders is through managed stock repurchase programs.

Tuna Amobi:

OK.

Andrew Hobson:

On ...

Tuna Amobi:

Sorry, on the rates, on the comparison for the CPM and the ...

Andrew Hobson:

CPMs and CPPs vary by business unit and day part and demo, but generally speaking we are above parity with English-language cost per points and CPMs during daytime. We are at parity in most other day parts, with the exception of primetime, where we’re at a discount ranging from 20 to 30% depending on the business unit. And those are all kind of rough.

Tuna Amobi:

That’s TV, right?

Andrew Hobson:

That’s TV, yes. Radio varies a lot by market. We have many markets where our cost per points are significantly higher than English-language cost per points. And there’s other markets where they’re significantly lower. One point on radio that I want to go back to , I think it was Jessica’s question, where we talked about the radio pacings, people should keep in mind that in the fourth quarter of 2004 political made up about 4% of radio billings. So, we did expect to have lower pacings in the fourth quarter for radio vis-a-vis TV. Did I get all of your questions, Tuna?

Tuna Amobi:

Yes, pretty much, just the commercial units.

Andrew Hobson:

Commercial units are standard load and television is 10 minutes per hour. Radio [varies] by format. With the non-talk news talk formats being 10 to 12 minutes, and since commercials are part of the format in news talk, they are much higher.

Tuna Amobi:

Thanks a lot.

Operator:

And we’ll take our next question from Philip Remek out of Guzman & Company.

Philip Remek:

Good afternoon. I wanted to follow-up a little bit on the discussion of reduction in headcount by about 6%. I wonder if you can flesh out a bit more about what types of employees [are] involved. Are we talking about automation of processes or reduction in sales force of lower performers? It sounds almost like not a restructuring but a kind of thing where it is a certain change in processes and operations. So could you elaborate? Andrew Hobson: That is correct. The changes that have been made in the administrative support function reflect a review of the processes that we undertake, the work that we do, streamlining those processes, and eliminating some of the work that previously had been done.

Philip Remek:

And would there also be a reduction in sales force?

Andrew Hobson:

Absolutely not.

Philip Remek:

OK, thank you.

Operator:

And we’ll take our next question from Lee Westerfield out of Harris Nesbitt.

Lee Westerfield:

Thank you, gentlemen. Good afternoon. My questions are in two areas, one on cable networks, and the other is going back to actually FIFA and the World Cup for 2010, 2014, the new contract. Andy, the question really is, if one was to look at Mas Musica getting a potential purchase over at CBS and also the cable operators in New York, L.A., and especially Miami lowering price for Latino packages, does that change in any way more recently your thinking lately about development of the cable networks or the potential for that as a competitive scenario later on in the decade? And then on the FIFA new contract, understanding that there are a great deal more events that take place in the new FIFA contract out to 2014, the first one is, Women’s World Cup 2007. How will you be amortizing the $325 million contract through the life of it? What should we be assuming for 2007, in other words for the Women’s Cup?

Andrew Hobson:

Well, Lee, on the amortization we’re going to do that as required, which, as you know, is based on revenues. Until we have an estimate of what the revenues are in each of the games, we won’t be able to give you the allocation, but as you know, it’ll be done on a flow of sales or flow of cash basis. And it goes through 2014, so we’ll make our best estimate, and once we have that on the sales, we’ll divide the cost accordingly. Ray Rodriguez: And as far as the cable networks, we currently, as you know, we have Galavision, which is by far the #1 cable network in the U.S., we do have a joint venture with 5 additional channels that are being distributed throughout the U.S. through our TuTV joint venture, and more than that at this point, we don’t think is going to be profitable. Going forward, who knows? At this point we think, with what we have, we’re going to do very well.

Lee Westerfield:

Thank you, gentlemen. Operator: And we’ll take our next question from Jason Helfstein with CIBC World Markets.

Jason Helfstein:

Thanks. Just one question. Given how strong your ratings have been over the last few years and the pressure that has really faced [the] overall broadcast TV as far as pricing, whether or not you disagree with it, I think it’s probably fair to say that you run into pressure pricing where advertisers want to pay less on unit price increases than your audiences, and it’s your goal to try to get them to pay up as much as possible. In years back when you were bringing in more advertisers, that put pressure on inventory. So, my question is, given that some of your largest ad categories have matured and you’re trying to focus on bringing up some of the other ad categories, does some of the expense reduction flow back into increased investments in sales? Thanks.

Ray Rodriguez:

Well, part of the answer is yes on the cost reductions. We are going to focus more energy, more resources on sales and marketing. As far as the strong ratings, we have a situation where we have plenty of inventory. And we manage our pricing not based on the inventory that we have available, but based on the value of the units versus what’s being sold in the broadcast networks and at the stations locally. So, the inventory issue is not really an issue for us as far as pricing. Of course, we get the same pressure that everybody else does. We’re in a unique position where our ratings and our audiences are growing very quickly. So, I believe it’s a little easier for us than for some of the folks that have decreasing audiences.

Jason Helfstein:

OK, thank you.

Operator:

And we’ll take our next question from Gerardo Soto out of Ramirez & Company.

Gerardo Soto:

Good afternoon. Two questions. Can you give us an update on Televisa’s litigation, if possible? And, second, just to clarify on the headcount reduction, we should not expect a reduction in other businesses. Is this accurate?

Ray Rodriguez:

I’m sorry, what did you say about the last part? I’m sorry.

Gerardo Soto:

Yes. Just to clarify on the headcount reduction, we should not expect a reduction in other businesses. Is this right?

Ray Rodriguez:

It’s mostly TV.

Gerardo Soto:

Right. OK. And then on Televisa?

Ray Rodriguez:

There is, I believe, a hearing, if that’s the technical term, on some motions on November 21st, and that’s about as much as we’re going to comment on the lawsuit.

Gerardo Soto:

OK, that’s fair enough. OK, thank you very much.

Operator:

And we’ll take our next question from David Joyce out of Miller Tabak.

David Joyce:

Thank you. Out of the 20 new advertisers you’ve gotten Upfront, how many of those would you characterize as being top 300 type advertisers? The second question is, in Puerto Rico typically the commission structure has been higher than in the U.S., so margins have been a little weaker industry-wide. Do you see any change on the horizon there?

Ray Rodriguez:

Well, our commission structure in Puerto Rico is a bit different than everybody else’s. We pay a little less commission than the rest. It is higher, however, than it is in the United States. And as far as the Upfront, Andy, do you have that?

Andrew Hobson:

Yes, I’m looking at the list. I’m just trying to find the list of new advertisers. I got it. Certainly 18 of the 20 would be top 300 advertisers. The other two may be, but I’m not familiar with them, so that would be a guess. But 18 clearly are top 300 advertisers.

David Joyce:

OK, that’s great. Thank you.

Operator:

And we’ll take our final question, which is a follow-up question, from Jessica Reif-Cohen out of Merrill Lynch.

Jessica Reif-Cohen:

Thanks. Andy, just to go back on political Q4 and maybe ’06 outlook, given the campaigns in New York and New Jersey and the issues in California, are you starting to see the benefit of the dollars? There’s a lot of money being spent here. And could you also discuss expectations for next year?

Andrew Hobson:

As it relates to political?

Jessica Reif-Cohen:

Yes.

Andrew Hobson:

We can never predict political. So, I don’t even want to speculate. We have received money primarily in television in the California stations and, to a lesser extent, in New York. My guess is it’ll end up being 40-ish percent of what we did last year in aggregate.

Jessica Reif-Cohen:

OK, thanks.

Operator:

And that does conclude our question-and-answer session for today. I’d like to turn the conference back over to Mr. Rodriguez for any additional or closing comments.

Ray Rodriguez:

Thank you, operator. I’d like to thank you again for having joined us today. Have a nice evening. Operator: Once again, that does conclude today’s teleconference. We thank you for your participation, and you may disconnect at this time.

Related:

• The prepared remarks from this call are here.
• A list of full conference call transcripts available on the Seeking Alpha Network.
• The complete list of media stocks (and links to articles about them) covered by The Media Stock Blog.