Good afternoon and welcome to the Entravision Fourth Quarter 2016 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions]. After today's presentation, there will be an opportunity to ask questions. [Operator instructions] Please note this event is being recorded. I would now like to turn the conference over to Walter Ulloa, Chairman and CEO. Please go ahead, sir.

Thank you, Gary. Good afternoon everyone and welcome to Entravision's fourth quarter 2016 earnings conference call. Joining me on the call 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 subjected 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 the 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 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 on Form 8-K. The fourth quarter marked a strong end to another successful year for Entravision. During 2016, consistent execution of our multiplatform strategy, drove audience share gains as we continue to invest and engage in content or while also further strengthening our digital platform and reach. We greatly expanded our mobile capabilities and offerings as well as the breadth of opportunities for our advertising partners to connect with highly engaged Latino consumers, while our Univision affiliates and radio stations continue to be well positioned in the nation's largest Latino markets. We also continue to return capital to our shareholders through our quarterly dividend while at the same time further strengthening our capital structure via $20 million prepayment of term loans under our secured -- senior secured term loan credit facility. Today, we also announced results of our participation in the FCC TV…

Thank you, Walter and good afternoon, everyone. As Walter, has discussed, net revenue for the quarter was up 7% at $70.3 million compared to $65.4 million in the same quarter last year. Operating expenses increased 4% to $41.1 million and consolidated adjusted EBITDA was $20.6 million. Net revenue for the year was up 2% at $258.5 million compared to $254.1 million in the prior-year. Operating expenses increased 5% to $160.2 million and consolidated adjusted EBITDA was $69.2 million. During the fourth quarter of 2016, the company paid cash dividend of $0.03125 per share to shareholders of the company's Class A, Class B and Class U common stock. The total amount of the cash disbursed with the dividend was $2.8 million. The company also announced today that the Board of Directors has declared a quarterly cash dividend of $0.03125 per share to shareholders of the company's common stock, payable on March 31, 2017. The total amount of cash to be dispersed for this quarterly dividend will be approximately $2.8 million. As previously announced we currently anticipate making cash dividends on a quarterly basis in future periods. In addition, during the fourth quarter of 2016, the company voluntarily prepaid $20 million of term loans under the company's senior secured term loan credit facility. During the year, the company made principle term loan payments of $23.8 million. The ending balance of the term loans as of December 31, 2016 is $292.8 million. For the quarter, TV net revenue was up 9% to $43.4 million compared to $39.8 million in the same quarter of last year. The increase in our TV segment revenue was primarily attributable to an increase in political advertising revenue, which was not material in 2015, partially offset by decreases in local and national advertising revenue. Political revenue for the quarter…

We'll now begin the question-and-answer session. [Operator instructions] The first question comes from James Dix with Wedbush Securities. Please go ahead.

Good afternoon, gentlemen. Couple questions, I guess first on the auction since it's topical, Walter you mentioned the $264 million doesn't include potential economics of other agreements like channel sharing, which you might conclude. Any color on the potential impact there and the likely timing of when we'll kind of have the final economics related to that and one follow-up on the auction?

James, thank you for the question. No color, no additional color on any negotiations we might be involved with regarding channel sharing. We were talking to different parties and we expect that something might happen in this area later in the second or third quarter, but that's really all I can say that or I should say that our plans. We're pleased with the results and it wasn’t what anybody anticipated, but we're certainly pleased with the additional $264 million. Our goal is to use a portion of these proceeds to pay down debt. Our goal is to have our debt-to-EBITDA ratio somewhere in between two and three times and we'll continue to evaluate M&A opportunities as well as shareholder returns with some of the proceeds.

Great. And then just concerning the proceeds which you are going to get, any outlook as to when you're actually going to receive those proceeds, over what time period and then are there any like kind exchanges or other transactions potentially to minimize taxes, something which is on the table and when would you need to finalize and announce those?

Right. Well, we have sufficient NOLs to cover all of the proceeds, but there might be some like kind of exchanges we don't know yet. We've talked about it and there are some opportunities out there that we're looking at, but nothing definitive to announce certainly today. I think we'll be seeing the proceeds probably, it's a staged I understand, staged release of funds. I think we'll start seeing funds released probably early in the third quarter and on into late third quarter and probably fourth is kind of how we see it playing out given the information we have today.

Okay. Great.

And as the cash comes in I think you had this question, the timing if you're going to look for like kind of exchange ruling, once the cash arrives, you get 45 days to list your targets and then you have a 180 days to close to get that tax treatment that we're after. So, we already have our qualified intermediary set up, which is necessary as the first step. So, that's all-in process and we'll see how it goes.

Okay. So, it's 180 days from the time you receive your cash to closing date. Okay. Okay. Great. And then just on the fundamentals, I may have missed it, what was the auto category for radio or radio/audio in the fourth quarter? What was the growth in that?

Auto was plus 3 for both radio and our TV segments.

Okay. And then what is the outlook for the auto category across your properties this year and is there any color in particular manufactures, I know some companies have talked about what Ford is doing and some cuts they're making at least at the national level or reallocations. So, any outlook you could give there on that category and anything you're seeing in particular by nameplate or Tier that stands out to you would be helpful. Thank you.

Well, what grew out auto at 3% in the last quarter was really the Tier 1 was the national Tier. Look for the outlook for this coming year, still you got 75 new vehicle models scheduled to be launched. There's still a lot of clearing of existing inventory campaigns that are going on and we're getting some benefit on. If we look into Q1 right now, auto still piecing positive in the low single digits. Particular for TV, it's slightly negative for radio. So, it's a bit of a mixed bag. As far as any particular brands are concerned, I would expect the current folks who were the expenders, the pickup truck manufacturers will continue to be the drivers of -- our auto category. We're still expecting certainly much more modest growth than we've seen historically just given where we are in the cycle and where auto revenue is as far as percentage of our revenue, but we're still -- the expectation is still for modest growth.

Okay. Great. Thanks very much.

Thanks James.

Thanks James.

The next question comes from John Kornreich with JK Media. Please go ahead.

Hi, back to the spectrum. Did I hear you correctly that NOLs will cover any tax liability?

Yes, that's correct John.

What were the NOLs going into '17?

$309 million.

Wow! And roughly what level of BCF would you be giving up in this transaction?

No material BCF is going to be given up in the transaction. No change in our day-to-day operations John.

Okay. Maybe I am misreading this because of expectations, but to me this number is a monster number okay, but you downplayed it so much, there was no press release as every other company did announcing those results and which led a lot of people to think you got nothing because why would you be so silent about it? What was the thinking here about downplaying this so much?

Well John you have to keep in mind, there are still a lot of conversations going on in this space that are related to the auction and we felt why not give this more time to shake through some of the deals that we're still talking about and perhaps give some color on the call date and unfortunately, we're not across the finish line with anything yet.

The $264 million should have a plus sign with it maybe.

It could possibly.

Okay. The Headway acquisition I assume under $10 million.

Right about.

Okay. And radio rebounded a little bit in the fourth quarter, but it looks like a short-term aberration. Why is it returning to weakness again?

Well it did rebounded, and we've started out slowly here in the first quarter. National has been a little slower to develop than we had planned, but we still expect a good year in radio despite a bit of a slow start and it has been a mixed bag this quarter.

January was a rough start to the year and I think the industry saw that, it's slowly progressing deep into the quarter and then Q2 numbers look even better. So, I don't think it's beginning of a new trend.

The total political for the year was 5.5 correct.

It was 10.6 all in.

Oh, so the 5.5 was just the quarter. The 10.6 broke down TV versus radio out.

Sure, it did. The five -- TV was $8.6 million for the year, radio was $2.1 million and the rounding gets you to call it $10.7 million and $10.6 million.

Right. I think that's it. Re-trends to the new year 30-31 a good number.

Yeah you expect the kind of a run rate, quarter in, quarter out of about $7.8 million kind of in the mid-single digit.

Okay. $31 million and excuse me, something else. Lastly the digital revenues that you forecast for a quarter of total revenue. is that for '17 or sort of just next year Q3.

I think you're talking about the 20% number that Walter threw out earlier.

The 20% yes.

That 20% growth, that's our goal to reach John in 2018 and this acquisition of Headway will certainly help us, will put us on the path to…

I hope you get there the good way.

To reaching that goal. Pardon me.

That's a pretty big number because you're going to have may be another political balance in '18.

And we're on the road to doing that. We're 10% at the end of this year and the goal is to be at 20% by next year.

Okay. Last question, Chris I just remembered, am I right in saying I assume I am right that your re-trans of $30 million carries no expense.

It does not carry any expense. You're correct.

Okay. Thanks a lot. I'll see you down in Boca.

Thanks John. See you there.

[Operator instructions] The next question comes from Michael Kupinski with Noble Financial. Please go ahead.

Thank you. Just a couple of quick questions. How much of the spectrum proceeds are going to be put into escrow for the prospect of lifetime exchange provision?

Upfronts, all of them. All of the proceeds are going to be filed away with qualified intermediaries and then we'll see what we can do about finding targets to apply the usage.

Got you. And in terms of the 20% goal of digital, would that also include acquisitions in digital?

Yeah, the like kind of exchange will not apply to digital. You have to buy FCC broadcasting at related assets to be able to qualify for the 1031. There is a 1033 optionality which involves the acquisition of stock of a broadcast company, which is also something we're looking at.

Got you. And were any of the stations that were sold underperforming, it could actually help with the total company performance?

No, I think the right way to think about this is that there will be no material change in our broadcasting cash flow as a result of this transaction.

And realizing that retransmission is net of network comp because this is the payment to you from Univision, but retransmission growth of 1%, I guess if you want to look at it from that perspective could be well below that of broadcast industry and I was wondering where the company stands with its proxy agreement with Univision and will the company be able to negotiate retransmission on its own? Is that a prospect?

Well, we've always felt that the better arrangement for both companies is to sit down and work through with Univision and that's what we continue to work through with Univision. So, those conversations are ongoing. The 1% comment is that that's a fact but what you have to look at is that the last year, the prior-year number that you were comping up against was a bit higher because there were some true up payments made in the prior year. So, if you would normalize for that, you were talking about a mid-single-digit growth rate, which is basically what I think you should pencil in for this year until we have news as far as the proxy negotiations are concerned.

Got you. And then in terms of obviously starting up a little slow in the first quarter, but can you give you thoughts about the prospect of cutting some expenses particular in television in light of little lackluster first quarter, a little lackluster start to the year. And what your expense outlook might be for the television and radio segment for 2017?

Sure Mike. So, I can give you a bit of guidance which is a bit out of the ordinary because we don't guide revenue but I can help you out with expense a little bit. So, for the year, TV expenses will be flat to slightly negative that's quarter in quarter out and then for radio, it's kind of a two-piece equation here. For the first half of the year, expenses will be low to mid-single-digit growth and then the backend of the year will be low single-digit growth.

Okay. And then can you give us some thoughts on ratings for your stations particularly just on the -- maybe on accumulative type basis, how your stations are performing in terms of ratings versus what I guess the network, Univision network might be seeing in terms of its rating? Can you just give us a flavor of the direction at least?

Well, our news had a good -- we had a good fall of suites and it's been showing contingent improvement. We put that into the script there. So, you may want to go back and read through it, but generally the news rating story is very positive. And I think if you go back, Univision had their call earlier last week, the Univision network rating story is one that's improving. They’ve made some organizational changes as far as people running the show over there on the content side and it seems to me we're seeing it in the numbers an improvement and some traction with respect to the ratings nationwide, which is all good.

I also commented Michael that with our Univision and UniMas television affiliates, we have a combined cumulative audience of 3.1 million. Latinos in our market footprint compared to Telemundo's 2 million Hispanics. So, we have 51% more viewers in Telemundo in our footprint and this has been consistent for a number of quarters.

Okay. Great. That's all I have. Thank you, guys.

Thank you, Michael.

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

Thank you, Gary and thank you everyone for participating in our fourth quarter 2016 investor conference call. We look forward to talking to all of you again in May when we'll announce our first quarter 2017 results. Thank you.

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