Good evening and welcome to the Entravision second quarter 2017 earnings conference call. All participants will be in listen-only mode. [Operator Instructions]. After today's presentation, there will an opportunity to ask questions. [Operator Instructions]. Please note, this event is being recorded. I would now like to turn the conference over to Chris Young, CFO. Please go ahead.

Thank you Brandon. Good afternoon everyone and welcome to Entravision's second quarter 2017 earnings conference call. This is Chris Young, Entravision's CFO. Walter Ulloa, our Chairman and CEO, is under the weather today and won't be joining us on today's call. Walter looks forward to talking with you on our next quarterly earnings call. With me on today's call, in Walter's place, is Jeff Liberman, Entravision's President and COO. 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 the 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 expressed written consent of Entravision Communications 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. Our second quarter results were largely in line with our expectations, stepping down from our political year with decreased revenues at our TV and radio segment offset by higher revenues at our digital segment. At the same time, we carefully managed our cost at our broadcasting operations which allowed us to partially offset the impact on our EBITDA against last year's second quarter which, as mentioned, benefited from political advertising. Overall, we continued to execute on our strategy during the quarter and we remain well-positioned to deliver on our goals in year ahead. Our radio and TV stations delivered healthy audience shares and we are…

Thank you Chris and good afternoon everyone. Looking now at our financial results. Revenue increased 9% to $70.5 million in the second quarter primarily due to the inclusion of a recently acquired digital operation at Headway. Excluding the impact of higher political revenue in the prior year period, core revenue increased 10%. Consolidated adjusted EBITDA was down 18% compared to last year, while free cash flow which we defined in our press release was $5.6 million versus $11.3 million in the prior year. Turning to our television segment operating results. Television revenue was down 4% during the second quarter, primarily due to a soft spot market and the absence of political advertising. National advertising revenue was down 2%, while local advertising revenue was down 8% compared with last year's second quarter period. Retransmission revenues were flat during the second quarter, compared to the prior year period. Excluding retransmission and political revenue, core television revenue was down 3%, with local down 6% and national up 2% during the quarter. Automotive advertising was down 7% for our TV segment and represented approximately 34% of our total TV advertising revenue. Breaking out the various auto tiers, Tier 1 auto revenue was down 1%, while tiers two and three were down 7% and 10% respectively. Key advertising categories that generated growth during the second quarter included media, direct marketing and healthcare. Services and restaurants, two of our top 10 categories for TV were particularly soft in the quarter compared to the second quarter of last year. Overall, we added 34 new advertisers who spent more than $10,000 during the second quarter, which totaled approximately $708,000 in advertising revenue. Notable new brands in the second quarter included Amerigroup Insurance, Gatorade, Purdue Pharmacy‎ and Courtesy Toyota. Turning to our ratings performance. Our Univision television affiliates built…

Thank you Jeff. As Jeff has discussed, net revenue for the quarter was up 9% to $70.5 million compared to $64.8 million in the same quarter last year. OpEx increased 5% to $41.9 million and consolidated adjusted EBITDA was $14.9 million. The company announced today that its Board of Directors has approved a quarterly cash dividend to shareholders of $0.05 per share of the company's Class A, B and U common stock, in an aggregate amount of approximately $4.5 million which represents an increase from the prior quarter's dividend of $0.03125 cents per share. The quarterly dividend will be payable on September 29 to shareholders of record as of the close of business on September 14, 2017 and the common stock will trade ex-dividend on September 12, 2017. On July 13, 2017, the Board of Directors approved the repurchase of up to $15 million of the company's common stock. Under the new share repurchase program, the company is authorized purchase shares from time to time through open market purchases or negotiated purchases, subject to market conditions and other factors. On July 21, 2017, the company received proceeds of $263.6 million related to its participation in the FCC auction for broadcast spectrum. The proceeds reflect the FCC's acceptance of one or more bids placed by the company during the auction to modify spectrum usage rights for certain of the company's television operations. The company does not expect that the modification of spectrum usage rights will result in material changes in the operations or results of the company. The proceeds of the auction were deposited into the account of a qualified intermediary to comply with IRS code Section 1031 requirements to execute a like kind exchange. On July 20, 2017, the company entered into an agreement with OTA Broadcasting to acquire television…

[Operator Instructions]. Our first question comes from James Wilson with Noble Capital Markets. Please go ahead.

Hi, guys. I am representing Michael Kupinski on this call. He was unable to be on, but he still had a few question we would like to ask, if that's all right.

Sure thing, James.

So first off, it seems that there may have been progress on getting an agreement done with Univision. Are you guys still optimistic on that master affiliation agreement that will get signed in the near term?

James, we are continuing to negotiate with Univision on that master affiliation agreement, as well as proxy. The proxy bid has continued to be renewed monthly. You know what, when we have the news of a new deal, we will certainly report it to you. This has been a process that's been ongoing for two-some-odd years now. So you know, we are hopefully not far away but we have no deal yet in hand.

Okay. All right. Thank you. Also, at one point the company seemed potentially interested in buying more radio, especially in your television markets as part of an acquisition strategy. It seems you guys might have soured on radio acquisitions. Can you talk about the reasons for that?

Well, I think generally speaking, James, the radio environment has become a more difficult environment by the quarter to operate in. And you know, at our core, we have historically been a TV business. It is a business we know the best and you know, our comfort zone right now as far as acquisitions are concerned, from a priority standpoint, are TV first. Radio, to the extent that there are tuck-in opportunities in existing markets, certainly that's something that we will take a look at. But as far as the transformative radio transactions that are potentially out there, I think that we are going to focus on TV first, perhaps digital second and radio a distant third as far as M&A is concerned.

Okay. All right. Thank you very much. I think you guys covered all the questions, either just now or on the call. So thank you.

Thanks James. Give Mike our best.

Oh, I will.

[Operator Instructions]. Our next question comes from Amy Yong with Macquarie. Please go ahead.

Hi. This is actually Rachel for Amy. So two quick questions. First on the two stations you just purchased. Can you give us a little bit more detail on the synergies you expect to realize? And then secondly, as you pursue more deals, would you ever consider stations outside of the existing markets.

Okay. So let's cover KMIR first. So that transaction was a $21 million transaction. We stated in our press release that it's going to be approximately at a buyer's multiple of 6.5 times. That yields approximately an incremental $3 million in cash flow. We already have an existing operation in Palm Springs. So we have got a lot of operational synergies and back-office synergies. We have got two operations in two facilities. They are going to be merged into one. We own property in that market that we will likely be selling that will help, as far as the synergies are concerned. So are you looking for a dollar figure? Or are you just looking for some color on what the synergies are?

Really as much clarity as you can give us. So either or.

Well, you know the synergies that we have kind of earmarked are between, I will call it, $500,000 and $750,000. And that's both from the savings coming from operational synergies around the facility as well as various other expenses for both organizations that we are going to harmonize and then save a buck or two.

Yes. This is Jeff. I would also add that this will allow us to go after the entire marketplace. Right now since we only have Spanish language properties in the market, with this acquisition, it will allow us to focus in on going out to every advertiser to advertise with us, regardless of language there. Also with the station, the NBC affiliate, their digital properties were not as strong as we think they should be and we feel bringing our digital platform over to them will help them a lot and be able to increase revenue also.

And Rachel, just to cover your second question. That new markets, sure, I think the caveat behind new market opportunities for us is that they still have to be good strong Latino markets. And what we mean by that is a market that's 40%, 50% plus Latino local population. That's kind of our sweet spot. And can it be English as well as Spanish? Of course, as evidenced by the NBC transaction. But preference, obviously, is Spanish first. But we will do English, if it's in a good Latino market as well.

Okay. Perfect. Thank you so much.

Thank you Rachel.

Our next question comes from Jim Goss with Barrington Research. Please go ahead.

Thanks. I was wondering if you can get any more granular on the TV revenue decline? You mentioned that political impacted a lot. Could you break out how much was political versus other? And within the other, any sense of categories or geographies that had an impact?

Sure Jim. So TV revenue last year for political, Q2, we were up against approximately $700,000 of political.

Okay.

Beyond that political, I will say that the auto sector itself, well, it started out the quarter strong, but at the end of the quarter it started really unwinding on us. And we ended up with the automotive which is approximately 33% of our total TV advertising, ended up at minus 7%.

Okay.

That was probably the biggest. We have also got legal services which is our number two category. That's kind of a cross between immigration attorneys and personal injury lawyers. That business has also seen a decline. And that business was down 16% approximately. So you got your number one and number two categories that were unwinding on us. And I would go on to say that the legal category itself is perhaps attributable to the administration that we have and immigration attorneys, quite frankly, don't need to advertise as much because they have got all of it handled with respect to what's happening with the administration.

Within auto, how does it breakdown in terms of national versus local and regional type the product and between new and used cars? Does that vary and go in and out, depending on the environment, as SAAR has declined?

It does. Let me give you a breakout. The TV advertising landscape generally gets put into three different silos. Tier 1, which is the national, at the national level either Detroit or Tokyo or where have you. Tier 1 revenue represents about 9% of our total auto. Tier 2, which are the co-ops, the co-ops between the dealerships and national, that's 54% of our revenues. And then Tier 3, which is just pure local dealerships, that's about 35% change for total revenue. So that's what we are seeing that the biggest drop off for us this past quarter was definitely in the Tier 1 category.

Okay.

Tier 1 rolls off -- go ahead.

And the last thing I was going to ask was whether there is any timeframe flexibility on your like kind exchanges that you might be able to make?

So the flexibility, yes, you have got two windows that are open now. The cash arrived on July 21. You have six months to close deals with respect to the 1031 like kind exchange. And what you have on top of that is, within 45 days of the July 21 day and you have to name your targets, three targets per station. We sold four stations. So the targets have to be articulated in writing with the IRS and on file within 45 days. So the clock is ticking on that front as well. Now that's 1031. There is another IRS rule called 1033, hires which allows you up to two years from the date of the receipt of cash to go ahead and make acquisition. So that's Plan B. If the 1031 opportunities can't be ceased, for whatever the reason, we will take the cash back at the end of the six month's acquired period as per 1031. The cash will sit in our books and then we will patiently go after or seek 1033 opportunities which allows us again two years, but more importantly also allows you to purchase the stock of a company. It has to be controlling share of 80%. But that's clearly a Plan B that we are looking at as well. So you have got two plans with respect to trying to save on our $309 million of NOLs.

Okay. One last thing. Are there any situations where you might be able to enter a market where you think it could benefit from a Spanish-language station, but there is none, that you could effectively create one out of, they used to call it more stick type situations in radio. But is that even possible in the television where you have a specialized product? Any of the skill set that maybe don't have a signal in your market?

Well, I don't think it's realistic that we are going to after a market that's close to the Canadian border and think that we are going to make a lot of money in Spanish-language programming. But certainly to the extent that a market we feel that the market is under-serviced, as far as Spanish-language media is concerned, either on TV or radio, certainly, I think there are opportunities out there. Jeff, I don't know if you disagree or not, but we have got internally a list of markets that we have prioritized. And within those markets, they been prioritized because we have done our research as far as the market profile is concerned and we think that there is an opportunity over the next 10 years to really make some inroads. And that's how we are going about this process. So the short answer to your question is, I guess, yes.

Jim, I will also add that some of these marketplaces that you maybe talking about can also be served by our digital audio streams and we are looking at seeing how we can expand out and possibly promote to some of these markets that don't have a linear TV or over-the- air radio properties to be able to service them through the Internet. So, I will put that out there also.

Okay. Thanks very much. I appreciate it.

Thank you Jim.

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

Brandon, thank you and thank you everyone who called in. Walter and I look forward to continuing the conversation with you on the next earnings call for third quarter. And everyone have a good day. Thank you.

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