Entravision Communications Corporation (EVC) Q2 2012 Earnings Report, Transcript and Summary

Good afternoon, and welcome to the Entravision Communications Corporation Second Quarter 2012 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Mr. Walter Ulloa, CFO (sic) [CEO]. Please go ahead.

Thank you, Andrew. Good afternoon, everyone, and welcome to Entravision's second quarter 2012 earnings conference call. Joining me today is Chris Young, our Executive Vice President and Chief Financial Officer. Before we begin, I must inform you that this conference call will contain forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ. Please refer to our SEC filings for a list of risks and uncertainties that could impact actual results. This call is a property of Entravision Communications Corporation. Any redistribution, retransmission or rebroadcast of this call, in any form, without the express written consent of Entravision Communications Corporation is strictly prohibited. Also, this call will include certain non-GAAP financial measures. The company has provided a reconciliation of these non-GAAP financial measures to their most directly comparable GAAP measures in today's press release. The press release is available on the company's website and was filed with the SEC in a Form 8-K. We generated strong financial results during the second quarter, reflecting the diversity of our revenue streams, strength of our audience shares and focus on monetizing our platform. Our core performance at our radio and television properties is improving, and political spending in our markets continues to build. We are seeing continued positive momentum into the current quarter. In addition, our core radio and television stations are gaining audience in the markets they serve, and we are continuing to enhance and expand our digital and mobile reach. Turning to our financial results for the quarter. Our consolidated revenue was $54.5 million, up 8% over the second quarter of last year. Operating expenses increased only 2% to $32.5 million in the quarter as we continue to prudently manage our expenses. These expense control efforts, along with our top line growth, resulted in a strong consolidated EBITDA performance in the second quarter of $18.3 million, or 17% growth over last year's comparable period. Through the first half of 2012, consolidated EBITDA is up for the company, plus 15%. Free cash flow was $7.2 million in the second quarter compared to $5 million during the second quarter of 2011. In our television division, total revenue was up 13% in the quarter. Excluding retransmission fees, our television revenue rose 12% during the second quarter. Excluding retransmission and political revenues, core TV revenues finished up 6% over last year's comparable period. This improved core performance was driven by broad-based improvement across our markets and advertising categories. Local revenue grew 7%, and national revenue was up 18%. Excluding the quarter's political billing, local TV revenue was up 4%, and national revenue was up 8%. The auto category remained strong during the second quarter, rising a robust 34% over last year's comparable period. The second quarter marked the ninth consecutive quarter of double-digit growth in automotive spending for our television operations. This momentum has carried into the current quarter as well. It's noteworthy that in our auto segment is broad-based -- the growth in our auto segment is broad-based with 6 of our top 9 auto brands showing year-to-year growth in the quarter. We experienced strong growth in the regional dealers association and local dealers. Tier 2 dealer association revenue increased their spending in the quarter on our television platform, 74%, and Tier 3 local dealers television advertising spending was up 35% in the second quarter. Looking beyond the automotive category, our television division experienced growth in 7 of our top 10 categories in the second quarter, including: Grocery, convenience stores, advertising spending, up 32%; healthcare, up 18%; fastfood, up 8%; services, up 7%; and retail, up 2%. We remain optimistic this -- that this broad-based category growth will extend in the third quarter. In fact, in the just-completed month of July, 7 of our top 10 advertising categories are up over July 2011 led by the automotive category, which was up 39% with our television unit in July versus last year's comparable month. Political spending in the second quarter with our television group was up -- was about $1,850,000 compared to $70,000 in 2011 and $195,000 in the second quarter of 2008, the last comparable presidential election cycle. Telecom category continues to be soft across the industry and finished the quarter down 29%. As I mentioned on our call -- on our last call, we do not anticipate a rebound in the telecom category in 2012. However, we do expect our revenue declines in this category to moderate over the second half of the year due to lower comparables in the third and fourth quarters. During the second quarter, we added 41 new advertisers, who invested $10,000 or more in our television business. New clients for our television division include the law offices of Chad Golightly, hhgregg appliances, Sleepy's Furniture and the Healthcare Communications Group. Turning to our ratings performance. Our Univision television stations extended their ratings' leadership positions in the May 2012 suite in our core demographic group. Among all adults 18 to 34, regardless of language, 8 of our Univision television stations ranked #1 or 2 sign-on to sign-off, and 8 of our TeleFutura affiliates are #2-ranked Spanish language television station in their markets in adults 18 to 34. During our prime time novela block Entravision/Univision affiliates ranked either 1 or 2 in 6 markets, adults 18 to 34, regardless of language. In our early national newscast, 12 of our Univision affiliates are #1 or 2, adults 18 to 34, regardless of language. And in our early local newscast, we ranked #1 or 2 in 12 of our markets. In our late local newscast, we were #1 or 2, regardless of language in 10 of our television markets. Another important data point for the May 2012 sweeps is that the ratings of our English language competitors continue to decline, whereas our Spanish language television group increased its share. At our radio division, revenues were flat during the second quarter compared to the same period last year. Local was down 3 points over the same period, while national was up 7 points. National revenue for our radio business decreased 15% in April, but started its recovery in May where we finished up 18%. And this positive trend continued in June with national, up 20%. Our estimates for the just-completed month of July is that national revenue for our radio division will be up at least 20% over last year's comparable month. On the other hand, local revenues rebounding from the sluggish economy more slowly than national revenue. We continue to work closely with our local marketing teams to improve local sales. Net political revenue in the second quarter was $358,000, compared to only $10,000 in 2011 and $36,000 in the second quarter of 2008. When you compare the first half of this year's political spending with our radio group to the same period in the 2008 presidential election, political spending increased by 83% in the second quarter. Core revenues for the quarter were down 2% compared to last year's comparable period, when you exclude political revenue in the quarter. We recorded revenue growth in 5 of our top 10 categories in the second quarter. The automotive category, which is our third largest category in the quarter, ended with a revenue increase of 27%. Tier 1 increased 15%. This increase was propelled by spending from both Dodge and Chevrolet. We saw 127% increase in Tier 2 spending over the second quarter of 2011. Tier 2 saw growth in Southern California Toyota dealers and Nissan regional, just to mention a few. Tier 3 local car dealerships saw an increase of 14% in the quarter. Local automotive dealer advertising spending with our radio unit was led by EZ Auto Solutions, Bert Ogden Nissan and Shamaley Ford. In addition to automotive, our core top advertising categories by spending during the second quarter were services, up 19%, which is our highest-producing radio revenue category for the quarter. We saw -- also saw increased revenue in the telecom categories of 18% with increased spending by both T-Mobile and Cricket Communications. In addition to the above, we saw an increase in healthcare, up 2%, and grocery category finished the quarter with a 12% increase. On the other hand, travel and leisure, retail, beverages and fastfood advertising spending declined in the second quarter compared to last year. During the second quarter, we added 40 new radio advertisers who spent more than $10,000, which amounted to approximately $1.3 million in revenue. The advertisers in the quarter included First 5 California, Obama for America, Motel 6, Inc., BNSF, Denver Health and Bunny -- and Blue Bunny Ice Cream. We completed our upgrade of our Orlando radio station WNUE-FM on May 16. This upgrade moved our tower site 12 miles southwest to better serve Orlando and Central Florida. According to our FCC countor modeling, we gained about 400,000 potential listeners with this upgrade. On the same day, we relaunched our station, Salsa 98.1, among adults, 18 plus. Salsa 98.1 increases total reach by 20%, an additional 20,000 listeners with the upgraded signal during the last 3 weeks of the spring Arbitron Survey. On May 30, we launched KPST-FM with our La Tricolor format in the Coachella Valley. We purchased this station as part of the FCC Auction 91. This additional station complements our cluster of stations in the Palm Springs market. We currently operate Univision, TeleFutura, LATV, José and now, Tricolor in this important Southern California region. KPST showed impressive full week average shares in the spring Arbitron book even though it launched in the last 3 weeks of the spring survey. Our L.A. revenue continues to be propelled by our local revenue from our 3 Spanish-language formats in the #1 radio market in the nation. Our cluster increased local revenue by 11% for the quarter by focusing on local business. In addition [Audio Gap] focused on the Tier 3 automotive business in the quarter and continue to do so in the third quarter. National sales continue to be less or softer than local sales in Los Angeles. Because of this, we have implemented strategies with LER to further target differences in our cluster formats, and we are aggressively targeting the advertisers who still spend, we believe, too much on our competition by providing integrated marketing solutions and leading with idea-driven strategies. For the spring 2012 recently released radio ratings by Arbitron, our radio stations continue to be ranked among the leaders in adults 18 to 34 against all competitors, regardless of language. In a full week, 17 of our radio stations are in the top 10 in their markets. In Morning Drive, El Vacilón del Mandril, on our Mexican regional Tricolor radio stations and El Show del Genio on José stations are in the top 10 in 10 Entravision markets regardless of language. In our Cornerstone Afternoon Drive program, Erazno y La chokolata is the top 10 radio -- is in the top 10 radio stations in 70 EVC markets or Entravision markets. In our Cornerstone Afternoon Drive program, Erazno y La chokolata is also a top 10 radio station in 7 Entravision markets. Moving now to digital. Our efforts have been concentrated on investing in our capabilities and providing our advertising partners with the ability to expand our targeting and reach the rapidly growing Latino populations across all media platforms. Advertisers are increasingly seeking opportunities to connect with Latino consumers through multi-channel advertising campaigns. We continue to focus on capitalizing on the inherent strength of our core radio and television assets and extending our leadership online to social media and mobile. By doing so, we will deliver current and potential clients with the single integrated solution capable of connecting them with our audience across all key media and digital channels, and offering attractive multi-platform advertising opportunities. We continue to make significant progress with our digital initiatives, which currently account for almost 2% of our total revenue. The second quarter was our best revenue quarter ever for our digital platform. Our interactive revenue -- revenues have grown year-over-year, including significant growth of 26% during the second quarter over the same period of last year. Through the first half of 2012, our digital revenues are up 27% over the first half of 2011. One area of our digital business that has generated consistently strong growth is our portfolio of television station, websites, and our video platform. Our video consumption increased 15% during the second quarter. A key driver of this growing online viewing is increasing the amount of video content we publish online. During the second quarter, we published 4,800 local news stories in all of our markets. On our ongoing commitment to expanding our content continues to drive increased viewer engagement, it is also serving to expand our digital network and audience, which increased 19% over the second quarter of 2011. We are also expanding our mobile presence and reach through compelling mobile campaigns and the management of a number of Latino mobile communities that currently have over 200,000 mobile subscribers. We experienced record results and usage in mobile during the second quarter. Mobile revenues were 78% higher than the second quarter of last year, and we sent over 2 million text messages to our mobile audience. Second quarter 2012 was our best mobile quarter ever. Another major initiative is driving increasing engagement to social media. Our television and radio station websites continue to grow their following on Facebook and Twitter. At the end of this quarter, we had over 400,000 total followers on our social media channels, up 115% over the second quarter of last year. In summary, we are steadily advancing our digital initiatives and continuing to grow our online and mobile audiences. We are building a loyal and engaged digital audience and connecting brands of Latino consumers across our station websites with social media and on tablets and smartphones. When taken together with our core portfolio of television and radio stations, we are offering a robust solution to our advertising partners that allows them to reach the rapidly growing Latino population across all major platforms. As we look at the 2012 third quarter, we continue to see positive trends across our television, radio and digital assets. Our second quarter momentum continues to build in the third quarter with actual July top line consolidated results, excluding political and retransmission revenue, to be at plus 8% over July 2011 with our core TV revenue, up 11%, and our core radio revenue, up 3% this past month. In conclusion, we are pleased with our second quarter results. Our radio and television stations provide us with a strong presence in many of the nation's most densely populated Latino markets, and we have further strengthened our digital platform. We are providing our advertising partners with the unique cross-platform opportunity connect with -- to connect with our rapidly growing and highly engaged audience and to promote their brands. We ended the second half of the year with an improved business outlook and are focused on continuing to execute our strategy and drive improved financial results. Our political revenue category is up 19% through the first half of the year versus the last presidential cycle of 2008. It was up 104% in the second quarter versus the comparable period in 2008. We have terrific momentum in this category as we enter the last 100 days before the November election. We operate important Spanish language media clusters in 4 critical swing states: Colorado, Florida, Nevada, New Mexico, where the fast-growing Latino voter electorate may be the deciding vote in this year's presidential election. In the 2008 presidential election, about 9 million Latinos went to the polls. This year, estimates are over 12 million Latino voters will turn out and vote in the November election. Entravision continues to promote robust civic engagement programs with our audience across our media platform -- platforms to ensure the growing importance of the Latino community in the social, political and economic fabric of America. I will now turn the call over to Chris Young for a review of our financials.

Thank you, Walter, and good afternoon, everybody. As Walter has discussed, net revenue for the quarter was $54.5 million, up 8%. Operating expenses increased 2% to $32.5 million, consolidated adjusted EBITDA increased 17% to $18.3 million. Net revenue for the quarter was up 8% to $54.5 million compared to $50.3 million in the same quarter of last year. Television net revenue was up 13% to $37.4 million for the quarter compared to $33.1 million in the same quarter of last year. Radio net revenue was flat at $17.1 million for the quarter. The increase in our TV segment was primarily attributable to an increase in core advertising revenue, political advertising revenue, which was not material in 2011 and retransmission consent revenue. Excluding retransmission consent revenue and political revenue, core TV advertising revenue was up 6% for the quarter. Excluding political revenue, core radio advertising revenue was down 2% for the quarter. Retransmission consent revenue for the quarter was $5.2 million compared to $4.4 million in the same quarter of last year. Retransmission consent revenue for the year will be approximately $20 million. Operating expenses for the quarter were $32.5 million, up 2%. Excluding noncash compensation expense, operating expenses for the quarter were $32.3 million, up 2%. The increase was primarily attributable to variable expenses relating to the increase in net revenue and an increase in salary expense. Corporate expenses for the quarter were up 11% to $4.2 million compared to $3.8 million in the same quarter of last year. Excluding noncash compensation expense, corporate expenses for the quarter were at $3.7 million, up 6% compared to $3.5 million in the same quarter of last year. The increase was primarily attributable to the increase in interactive media-related expenses and an increase in salary expense. Free cash flow, which we define as consolidated adjusted EBITDA less capital expenditures, cash interest, cash taxes and dividend payments plus interest income, for the quarter was $7.2 million or $0.08 per share. Cash interest expense for the quarter was $8.4 million. Cash CapEx for the quarter was $2.5 million. Capital expenditures for the year will be approximately $10 million. On May 30, 2012, we repurchased $20 million, in aggregate principal amount of our 8.75% senior secured first lien notes due 2017, pursuant to the optional redemption provisions in the indenture. Redemption price for the redeemed notes was 103% of the principal amount, plus all accrued and unpaid interests. Approximately $364 million in principal amount of the notes remains outstanding. Turning to our balance sheet, as of June 30, 2012, our total debt was $363.8 million, and our trailing 12-month consolidated adjusted EBITDA was $59.3 million. Our total debt-to-EBITDA, as adjusted, was 6.1x. Cash on the books was $40.8 million at June 30, 2012. Net of this cash on the books, total net leverage was 5.5x. This concludes our formal remarks. Walter and I would be happy to take your questions. And now Andrew, I'll turn it over to you.

[Operator Instructions] The first question comes from Michael Kupinski of Noble Financial.

A couple of them. With the better-than-expected fundamentals in the quarter, what is the company's propensity to redeem more debt at this point?

Well, Michael, that's something we talk about all the time. And I -- it's certainly something that's at the top of our list in terms of priorities. So as we move through the year here, we'll look at that more closely.

I know in the past you've kind of gauged the economic outlook in determining whether or not to build cash or to buy back debt. I was just wondering the fact that the fundamentals are little bit more strong here right now, is it -- it seem more likely that you might be more interested in buying back debt?

That's an excellent point. We just redeemed $20 million of our bond. And we are feeling better about the quarter or about the year, I should say, given our performance in second quarter. And also the momentum that we have as we move into third quarter here, political is going to get even bigger, we believe, in the second half of the year. And what's interesting about this year, I was just thinking about it, we've got Olympics in -- on NBC, and I can remember in the past, I don't know how many years this goes back, but Olympics would start and would just -- or before they started, they would just drain every dollar out of the market. It didn't matter whether it was Spanish language or whatever. But this time around, because of the great platform that we built and the excellent work we're doing in managing our assets, you see the results of second quarter, plus 8%, top line; plus 6%, core in our TV group, excluding retrans and political, and then we've got great momentum going into third with our core advertising categories. So we're confident about a good year.

Not to take anything from you, it seems like Univision ratings are doing quite well against the Olympics anyway, too.

Absolutely. They're doing a great job.

In talking about Univision, any thoughts about swapping stations? I know at one point, that you were thinking that maybe you can accomplish this by year end. Now that it might be a little bit complicated by the fact that there's been some station acquisitions that fairly decent multiples and was wondering if that has complicated anything or you're still on track in terms of swapping stations with them?

We continue to talk to Univision. Haven't here recently, but we have in the past -- this past year about potential asset swaps that might benefit them or us. But we haven't been able to execute on anything yet, but that doesn't mean we won't. I mean, they've got -- they have a great portfolio of assets that we think will be helpful to us. We have some assets that might be helpful to them, so we continue with talk to them. We've got a great relationship with all the people at Univision.

And just couple of 2 quick questions. Then, obviously, the pace of political is really heated up here. And it looks like it -- you're going to exceed my expectations, certainly, at least. When you look at the third quarter, are you having any thoughts on the -- what the political might be in the third quarter and what you might think TV might do in terms of political for the year?

Well, here's what I'll say. We don't give guidance except for we will inform our investors in the market about a month that's closed before we get on the call like we did here with July. But we won't give guidance for the quarter or guidance for the year. But we did say early in the year that we expect to do $10 million of political in 2012 versus $8 million in 2008. That's a 25% increase over 2008, and we still stand by that estimate.

It seems a little conservative now when you guys are repeating that number by almost triple digits.

Yes. But, anyway, we still continue to believe that we'll do well in 2012, and certainly, overachieve the 2008 actual.

And then corporate expenses were just a touch higher than expected, any thoughts on the run rate on corporate expenses?

Yes, corporate expenses were basically, you had salaries, 3%, then you had the other 3% on a cash basis got you to the 6%. That's probably a good run rate number for the balance of the year.

The next question comes from Bishop Cheen of Wells Fargo.

Nobody can ever accuse you guys of not providing granular detail. Okay, so let me pick up on some of the great questions that might be asked. A lot of numbers were thrown out. How much political have you already booked in the first half, total?

In the first half, see, I had the number here.

3 point...

No, no, no.

$2.3 million.

$2.3 million, so far.

$2.2 million in 2Q, and $100,000 in Q1.

But we're not giving you any information on Q3 and Q4.

I understood. And that's a total number. And again, you've been helpful by saying it would be nice if you did $10 million total this year versus $8 million in '08 for total...

What happened this year with political, Bishop, is that if you recall in 2008, we did about $1.7 million. And in 2012, in the first quarter, we did about $100,000. And then we roared back this year in Q2 and did about $2.2 million in total political versus $200,000 in the second quarter of 2008. So it's almost a switch. That said, our political to the first half of the year is up about 19% versus 2008. And the point that we've made here in our remarks already is that the momentum we have going in the third is very strong.

Right. Well, a lot of factors with that, not the least of which we would think as that both parties are taking Latinos a little more seriously this time around. I don't know if you feel it that way.

We like your accent, Bishop. We did.

I've been hanging around, Chris. So housekeeping, the July, plus 8%. I think you said plus 3% in radio. And what percentage did you say for TV?

Plus 11%. That's excluding retrans and political. That's just core.

Core, right, just core. And then what is the visibility feel like to you or the doorstep of August? Do you feel like you're ahead of filling up bookings for August, about the same, behind, and also visibility for September?

Well, visibility is a word we stopped using about 5 years ago. But we prefer momentum. And we have good momentum going into the third quarter as expressed already with our July results. We remain positive about the quarter. We're not quite halfway through it but we're going to be there soon. And we think it's going to be good one.

Okay, all right. Let's go to the balance sheet because I would hate for Chris to feel neglected. Remind us again, if you would, for the 1 on 3 option, I know it's maximum amount each year. It's a 3-year program, if I'm not mistaken. Where are we in the total amount? Where are we in the timeframe for buyback?

So we're in year 3, which started August 1. And we've got $40 million in the bucket that we can take down over the next year.

Okay. So we just started year 3, we have $40 million more to go.

Correct.

All right. And then, GAAP math, I believe you had $380 million of bonds outstanding at Q1, and you brought back $20 million, and now we've got at around $364 million. So I was just wondering if that GAAP premiums it is making $20 million feel like more $16 million.

Yes. Remember, Bishop, back in the fourth quarter, we bought back our bonds at sub-par. So you've got that on discount amortization that took place.

Right. That's where we are on that. And then, if you wanted to devote some buyback to your stock, could you remind us if you have capacity under any of your baskets to do that?

We do.

Okay. About -- you know off-hand how much?

How much as far as the baskets are concerned? What was that...

Yes. How much capacity you have or what the governor is on the covenant and how much...

Sure. It basically comes down to a bond deal where we have a restricted payment basket and as of the end of the second quarter, that was about $19 million.

So your RP basket is at $19 million.

That's correct.

At Q2. All right, that is helpful. And then, turning to competition -- this big picture stuff. So it's great because there's no wrong answer. With Fox Mundo gearing up, we're hearing a lot more chatter. You guys know a thing or 2 about competition. You've been watching it ebb and flow and the thread of it for many years. So when you hear about Fox coming, what do you think? How do you look at that?

Well, we welcome MundoFox in our industry. We're affiliating with MundoFox, and primarily our border markets, 5 important boarder markets: San Diego, Yuma El Centro, El Paso, Laredo, the Rio Grande Valley, and as you know, most of those markets high-density Latino markets. So we believe that this product, MundoFox, will complement our Univision and TeleFutura stations in these high-density Latino border markets. And the reason that we welcome them is because our hope is that Fox brand, as we all know, is a terrific brand and well-known throughout the world, and our hope, anticipation is that Fox will help us grow the Latino, Spanish language advertising pie. When you have a media titan like Rupert Murdoch referring to the Latino community in the United States and the importance of it, not only it is positive for our industry, it's positive for the Latino community, and it's great for America. So it's a new network. It'll take it a while to become competitive. Our key television focus continues to be our dominant Univision and TeleFutura affiliates in every one of our markets, and that's the way it will be here, and we'll continue with that focus. And as MundoFox becomes more competitive, it's stronger.

Okay. Good answer. All right, last is kind of wet your finger, put it in the air, tell me what it feels like for the economy. Headwinds. We've been hearing mixed anecdotal comments about what people feel like things are starting to slow down as the economy started stepping a bit. We see it in some of your numbers in Q2 certainly with the local and radio down with the national, is up like tops. So you see the same disparity, I think, in TV with the national so strong versus the local. So what do you see out there? What does it feel like out there in terms of stable economy or weakening economy?

Well, it's -- the economy, in general, continues to be challenging. I think our success is due to the fact that we've assembled a great team of media executives. We have a plan that we continue to execute. We're doing, I think, a very good job of managing all of our different sales teams and also managing expense. So the economy is one that we're all faced with here, and we're all working through. We're just trying to be better than everybody else, and we think we are.

Okay. So in terms of the local, is that where you feel like it's all -- if there's weakness, it's all in the local?

Well, I just say that local is a little softer than national. National is definitely stronger. And our radio local has been softer than our television local. But national is strong across our television division, and our radio division national is really starting to take hold. We did something last year that we're starting to see the dividends from and we'll see more and stronger results in national in our radio business here, we believe in the second half and that is what we started our own Spanish language radio network, and we have about 130 affiliates as part of that network. And last year was a startup year for that network. And this year, we saw great growth in the first half with that new network. And we think that second quarter will be better, and it's going to propel the growth of our radio business overall, and it will probably increase our national to about 40% of total radio revenue by the end of the year.

Right. Yes, that would great. What's the name of your network?

Well, we refer to it as the LER network.

The next question comes from Howard Rosencrans of Value Advisory.

I -- if you could just give me a race through of few of the numbers quickly. Could you just -- July, you said, is up 8%, and that includes in terms of core, includes TV, up 11% and radio, up 3%.

Correct.

And if you could just give me the breakdowns again on TV and radio in the second quarter in terms of the local and national splits, please?

Okay. Well, our television division was up 13% in the second quarter. And if you exclude our retransmission fees, our TV revenues was up 12%. And if you exclude retrans and political, our core TV finished up 6%. And local revenue grew 7% and national revenue was up 18%. If you exclude the quarter's political billing, local TV was up 4% and national was up 8%. That's for television. And then for radio, we were flat in the second quarter. Local was down 3% over the same period while national was up 7%. But if you exclude political, we were down -- our core was down 2%.

And our local was down 4%, but our national was up 2%.

Okay, great. And the thing you just -- whatever you just alluded to with LER, how meaningful can that be? I mean, just give us a little color on when you say that could propel radio, I mean, are we talking about $1 million, $2 million? What do you figure the increment is either in the second half or in '13, '14, '15?

Well, just to give you a little kind of history here about our business. We -- at one time, we were, for lack of a better word, leasing our radio time to other Spanish language networks. And that was about $3.2 million that we were receiving when we terminated that relationship back in May with Citadel, which is now a part of the Cumulus family. This year, we expect to produce a network revenue for the Entravision radio stations about $5.5 million. So we're going to be to the good, close to 2 million as a result of this direction that we've taken with our network radio business. And we think that 2013, based on talking to all of our people that worked with us closely and who are heading up this effort, we think that 2013 will be better. What number are...

So there's $2 million increment that you alluded to, that's -- you'd pretty much get that all in the second half?

We're going to get -- well, yes, I'd say the majority in the second half, but it's throughout the year. But the second and third, fourth quarters are the stronger quarters for all of our...

Right. But you didn't really have the LER going pretty much in the second half, or is that -- or it wasn't really fully ramped, is that the gist?

Exactly. It wasn't fully ramped, and we were continuing to grow it and build it. And now, we've got some strong momentum for it. I mean, to give you an example, and I don't want to confuse you, but we thought we do about $10 million in network revenue as a network. And again, we don't keep all that. We give about 55% of that of the net dollars, and that's how I get to the -- well, potentially $5.5 million. But we think now that, that number -- that network should produce about $12 million in network revenues. So when we started it in the year, we were looking at $10 million. And now midway to the year, we think $12 million's the number.

Okay, all right. Sounds like you guys should be more aggressively reducing the high-priced debt.

[Operator Instructions] The next question comes from Anil Gupta of Imperial Capital.

So I have 2 questions for you. One was on visibility of political revenues. I know you talked a little bit about the success you're having so far in 2Q. But I just wanted to get a sense as to whether these are -- are political dollars generally booked ahead of time consistent with the rest of the business? Or are these more last minute dollars, and therefore, your visibility is a little bit less? Or just I kind of wanted to get a sense as to your ability to feel when those dollars should hit the P&L?

Well, it's the latter. It's not much visibility as the business comes in 2 weeks at a time, week at a time. It's generally how it works. But we did about $1.5 million in the third quarter of 2008 in political. And we think we're going to go well beyond that in this quarter -- in the third quarter 2012.

Okay. And then just one more balance sheet question for you. We're approaching the point where we're just over a year away from your potential refinancing event where the bonds become callable. How do you think about heading into that opportunity? Is there a target leverage ratio you want to get to, or is there a kind of a total debt level that you think puts you in a good position to refinance? It seems like that could be a good catalyst for increasing your free cash flow. I just wanted to get your thoughts on that?

I think our goal here internally is to get down as close to 5x in the near-term as we can. We'll do that with both debt reduction and EBITDA growth. With respect to the bonds becoming fully callable next year, if you're sitting here with 5x in that neighborhood with respect to potential refinance, obviously, in a much better position. So we got $40 million to go in the current bucket, and we've got a revolver that comes due in the third quarter of next year, and we're looking at all of our options right now with respect to using our revolver capacity to -- perhaps to take down a bigger chunk of the bonds at a cheaper rate.

Are you precluded at all from using your revolver to pay down the notes?

No, we're not. No, this $100 million carve out under the notes deal with respect to a potential revolver. The revolver right now is only $15 million, we can take that up to $100 million.

This concludes our question-and-answer session. I would like to turn the conference back over to Walter Ulloa for any closing remarks.

Thank you, Andrew, and everyone for joining us on our second quarter earnings call. We look forward to addressing all of you in November when we will announce our third quarter results. Thank you.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your line.