Overview

We are a diversified Spanish-language media company with a unique portfolio of television and radio assets that reach Hispanic consumers across the United States, as well as the border markets of Mexico. We operate in two reportable segments: television broadcasting and radio broadcasting. Our net revenue for the three-month period ended September 30, 2008 was $61 million. Of that amount, revenue generated by our television segment accounted for 61% and revenue generated by our radio segment accounted for 39%.

As of the date of filing this report, we own and/or operate 51 primary television stations that are located primarily in the southwestern United States, including several key U.S./Mexican border markets. Entravision is the largest affiliate group of both the top-ranked Univision television network and Univision's TeleFutura network, with television stations in 20 of the nation's top 50 U.S. Hispanic markets. We also operate one of the nation's largest groups of primarily Spanish-language radio stations, consisting of 48 owned and operated radio stations (37 FM and 11 AM) located primarily in Arizona, California, Colorado, Florida, Nevada, New Mexico and Texas.

We generate revenue from sales of national and local advertising time on television and radio stations. Advertising rates are, in large part, based on each medium's ability to attract audiences in demographic groups targeted by advertisers. We recognize advertising revenue when commercials are broadcast. We do not obtain long-term commitments from our advertisers and, consequently, they may cancel, reduce or postpone orders without penalties. We pay commissions to agencies for local, regional and national advertising. For contracts directly with agencies, we record net revenue from these agencies. Seasonal revenue fluctuations are common in the broadcasting industry and are due primarily to variations in advertising expenditures by both local and national advertisers.

Our primary expenses are employee compensation, including commissions paid to our sales staff and amounts paid to our national representative firms, as well as expenses for marketing, promotion and selling, technical, local programming, engineering, and general and administrative. Our local programming costs for television consist primarily of costs related to producing a local newscast in most of our markets.

The comparability of our results between 2008 and 2007 is affected by acquisitions and dispositions in those periods. In those years, we primarily acquired new media properties in markets where we already owned existing media properties. While new media properties contribute to the financial results of their markets, we do not attempt to measure their effect as they typically are integrated into existing operations.

Highlights

During the third quarter of 2008, we were confronted with a weak advertising environment due to general economic conditions, both in television and radio. Nevertheless, we continued to invest in our broadcasting assets to build audience shares and maintain our disciplined cost approach. In addition, our balance sheet remains strong and we have ample financial flexibility.

Our television segment generated $37.5 million in net revenue in the third quarter of 2008 as we sustained solid ratings across this segment. Our television results were driven by continued growth in our top advertising categories, including healthcare, grocery and convenience stores, finance and fast food and restaurants, as well as political advertising related to the general election. We continued to enjoy revenue growth from certain of our television stations located in markets with rapidly growing Hispanic populations. Notwithstanding the net revenue growth in these particular areas, net revenue for our television segment as a whole decreased by $2.4 million or 6% for the third quarter of 2008 from $39.9 million for the third quarter of 2007. This decrease in net revenue was primarily due to a significant decrease in the automotive advertising category, as well as an overall decrease in national advertising sales and national advertising rates primarily due to the weak economy.

Our radio segment generated $23.5 million in net revenue in the third quarter of 2008. We concentrated our efforts on local sales, which accounted for 75% of total radio segment sales in the third quarter of 2008. Our radio results were driven by continued growth in some of our top advertising categories, including services and fast food and restaurants, as well as political advertising related to the general election. In addition, we benefited from revenue from our annual Los Angeles promotional event during the

third quarter of 2008. During 2007 this event was held during the second quarter, and, as a result, we did not generate revenue from this event in the third quarter of 2007. Our radio results were also partly due to revenue growth from our radio stations that broadcast the "Piolin por la Maņana," syndicated morning show, one of the highest-rated Spanish-language radio programs in the country, and have seen solid ratings growth in a number of these stations. Notwithstanding growth in these particular areas, net revenue for our radio segment as a whole decreased by $0.7 million or 3% for the third quarter of 2008 from $24.2 million for the third quarter of 2007. The decrease in net revenue was primarily due to a decrease in local advertising sales and local advertising rates, which in turn was primarily due to the weak economy.

Pursuant to a stock repurchase plan authorized by the Board of Directors on November 1, 2006, we repurchased a total of 13.0 million shares of Class A common stock for $100 million, the maximum amount authorized by the Board of Directors under this plan. On April 7, 2008, the Board of Directors approved the repurchase of an additional $100 million of the Company's Class A common stock. Under this new plan, we purchased 3.1 million and 4.2 million shares of Class A common stock for approximately $10.1 million and $15.6 million during the three- and nine-month periods ended September 30, 2008, respectively. We purchased a total of 17.2 million shares of Class A common stock for approximately $115.6 million under both plans from inception through September 30, 2008.

In addition, we have taken steps to reduce operating and corporate expense throughout the company.

Acquisitions and Dispositions

In a strategic effort to focus our resources on strengthening existing clusters and expanding into new U.S. Hispanic markets, we regularly review our portfolio of media properties and seek to divest non-core assets in markets where we do not see the opportunity to grow to scale and build out clusters. In accordance with this strategy, we sold our outdoor advertising operations in May 2008 to Lamar Advertising Co. for $101.5 million and the Company no longer has outdoor advertising operations. Accordingly, our financial statements reflect the outdoor advertising operations as discontinued operations; we have presented the related assets and liabilities as assets held for sale and reclassified the related revenue and expenses as discontinued operations.

Relationship with Univision

Univision currently owns less than 15% of our common stock on a fully-converted basis. In connection with its merger with Hispanic Broadcasting Corporation in September 2003, Univision entered into an agreement with the U.S. Department of Justice, or DOJ, pursuant to which Univision agreed, among other things, to ensure that its percentage ownership of our company would not exceed 15% by March 26, 2006 and will not exceed 10% by March 26, 2009.

During the nine-month period ended September 30, 2008, we repurchased 1.5 million shares of Class U common stock held by Univision for $10.4 million.

Univision is the holder of all of our issued and outstanding Class U common stock. The Class U common stock has limited voting rights and does not include the right to elect directors. However, as the holder of all of our issued and outstanding Class U common stock, Univision currently has the right to approve any merger, consolidation or other business combination involving our company, any dissolution of our company and any assignment of the Federal Communications Commission, or FCC, licenses for any of our company's Univision-affiliated television stations. Each share of Class U common stock is automatically convertible into one share of our Class A common stock (subject to adjustment for stock splits, dividends or combinations) in connection with any transfer to a third party that is not an affiliate of Univision. Pursuant to an investor rights agreement, as amended, between Univision and us, Univision has a right to demand the registration of the sale of shares of our Class U common stock that it owns, which may be exercised on or before March 26, 2009.

Univision acts as our exclusive sales representative for the sale of all national advertising aired on Univision-affiliate television stations. During the three-month periods ended September 30, 2008 and 2007, the amount we paid to Univision in this capacity was $2.5 million and $2.6 million, respectively. During the nine-month periods ended September 30, 2008 and 2007, the amount we paid to Univision in this capacity was $7.1 million and $7.6 million, respectively.

Goodwill and Other Intangible Assets

Goodwill and indefinite life intangibles are not amortized but are tested annually on October 1 for impairment, or more frequently, if events or changes in circumstances indicate that the assets might be impaired. Based on adverse market conditions, decline in prevailing broadcast transaction multiples, deterioration in broadcasting industry revenues, and the significant decline

in the Company's stock price, we concluded that, in connection with preparing its financial statements for the period ended September 30, 2008, an interim valuation of goodwill and other intangible assets pursuant to SFAS No. 142 was appropriate. In assessing the recoverability of goodwill and indefinite life intangible assets, we must make assumptions about the estimated future cash flows and other factors to determine the fair value of these assets.

We have identified each of our two operating segments to be separate reporting units: radio broadcasting and television broadcasting. The carrying values of the reporting units are determined by allocating all applicable assets (including goodwill) and liabilities based upon the unit in which the assets are employed and to which the liabilities relate, considering the methodologies utilized to determine the fair value of the reporting units.

We conducted a review of the fair value of the radio reporting unit in the third quarter of 2008. The fair value was primarily determined by evaluating discounted cash flow models. The assumptions in the models were based on the reporting unit's projected ability to generate cash flows in various cities or nearby cities, which we refer to as market clusters, based on signal coverage of the markets and on the reporting unit's actual historical results and expected future cash flows in each market cluster. In order to corroborate the fair market value estimated by the discounted cash flow analysis, the review considered recent comparable sales. Based on the assumptions and projections, the radio reporting unit's fair value was less than its carrying value. In accordance with the provisions of SFAS No. 142 "Goodwill and Other Intangible Assets" ("SFAS 142"), we recognized impairment losses of $54 million relating to goodwill and $332 million relating to FCC licenses in the radio reporting unit.

We also conducted a review of the fair value of the television reporting unit in the third quarter of 2008. The fair value was primarily determined by evaluating discounted cash flow models. The assumptions in the models were based on the market clusters' projected ability to generate cash flows in various cities or nearby cities based on signal coverage of the markets and on the market clusters' actual historical results and expected future cash flows in each market cluster. In order to corroborate the fair market value estimated by the discounted cash flow analysis, the review considered recent comparable sales. Based on the assumptions and projections, the television reporting unit's fair value was greater than its carrying value and goodwill for this reporting unit was not impaired. In accordance with the provisions of SFAS 142, we recognized impairment losses of $54 million relating to FCC licenses in the television reporting unit.

Recent Accounting Pronouncements

In February 2008, the FASB issued FASB Staff Position No. FAS 157-2 ("FSP 157-2"), "Effective Date of FASB Statement No. 157" which defers the effective date of SFAS 157 for nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). SFAS 157 for items within the scope of FSP 157-2 is effective beginning in the first quarter of 2009. We are currently evaluating the impact of adopting SFAS 157 for items within the scope of FSP 157-2 on the financial statements.

In December 2007, the FASB issued SFAS No. 141R ("SFAS 141R"), "Business Combinations", which requires an acquirer to measure the identifiable assets acquired, the liabilities assumed and any noncontrolling interest in the acquiree at their fair values on the acquisition date, with goodwill being the excess value over the net identifiable assets acquired. SFAS 141R is effective beginning in the first quarter of 2009. We are currently evaluating the impact of adopting SFAS 141R on the financial statements.

In December 2007, the FASB issued SFAS No. 160 ("SFAS 160"), "Noncontrolling Interests in Consolidated Financial Statements", which clarifies that a noncontrolling interest in a subsidiary should be reported as equity in the consolidated financial statements The calculation of earnings per share will continue to be based on income amounts attributable to the parent. SFAS 160 is effective beginning in the first quarter of 2009. We are currently evaluating the impact of adopting SFAS 160 on the financial statements.

In March 2008, the FASB issued SFAS No. 161, "Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133" ("SFAS 161"), which requires enhanced disclosures for derivative and hedging activities. SFAS 161 will become effective beginning in the first quarter of 2009. We are currently evaluating the impact of adopting SFAS 161 on the financial statements.

In April 2008, the FASB issued FASB Staff Position ("FSP") No. FAS 142-3, "Determination of Useful Life of Intangible Assets" ("FSP 142-3"). FSP 142-3 amends the factors that should be considered in developing the renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS 142, "Goodwill and Other Intangible Assets"

("SFAS 142"). The intent of this FSP is to improve the consistency between the useful life of an intangible asset determined under SFAS 142 and the period of expected cash flows used to measure the fair value of the asset under SFAS 141R. FSP 142-3 is effective for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. We are currently evaluating the impact of adopting FSP 142-3 on the financial statements.

Three-and Nine-Month Periods Ended September 30, 2008 and 2007

The following table sets forth selected data from our operating results for the
three- and nine-month periods ended September 30, 2008 and 2007 (unaudited; in
thousands):



                                        Three-Month Period                       Nine-Month Period
                                       Ended September 30,          %           Ended September 30,          %
                                        2008          2007        Change         2008          2007        Change
Statements of Operations Data:
Net revenue                          $   60,988     $  64,101         (5 )%   $  179,573     $ 187,532         (4 )%

Direct operating expenses                25,583        25,204          2 %        76,258        74,429          2 %
Selling, general and
administrative expenses                  11,394        10,734          6 %        33,026        33,327         (1 )%
Corporate expenses                        3,772         3,682          2 %        12,703        12,684          0 %
Depreciation and amortization             5,998         5,670          6 %        17,185        16,993          1 %
Impairment charge                       440,020            -           *         440,020            -           *

                                        486,767        45,290          *         579,192       137,433        321 %

Operating income (loss)                (425,779 )      18,811          *        (399,619 )      50,099          *
Interest expense                         (8,172 )     (18,304 )      (55 )%      (27,595 )     (31,221 )      (12 )%
Interest income                             622         1,325        (53 )%        1,339         3,891        (66 )%

Income (loss) before income taxes      (433,329 )       1,832          *        (425,875 )      22,769          *
Income tax (expense) benefit             78,847          (831 )        *          76,167        (9,248 )        *

Income (loss) before equity in net
income (loss) of nonconsolidated
affiliate and discontinued
operations                             (354,482 )       1,001          *        (349,708 )      13,521          *
Equity in net income (loss) of
nonconsolidated affiliate                    (9 )         245          *            (173 )         405          *

Income (loss) from continuing
operations                             (354,491 )       1,246          *        (349,881 )      13,926          *
Loss from discontinued operations            -         (2,623 )        *          (1,573 )      (9,992 )      (84 )%

Net income (loss) applicable to
common stockholders                  $ (354,491 )   $  (1,377 )        *      $ (351,454 )   $   3,934          *

Other Data:
Capital expenditures                 $    5,022     $   4,008                 $   13,495     $  11,437
Consoldated adjusted EBITDA
(adjusted for non-cash stock-based
compensation) (1)                                                             $   60,156     $  69,497
Net cash provided by operating
activities                                                                    $   33,019     $  40,386
Net cash provided by (used in)
investing activities                                                          $   64,804     $ (14,733 )
Net cash used in financing
activities                                                                    $  (67,194 )   $ (40,500 )

* Percentage not meaningful.

(1) Consolidated adjusted EBITDA means operating income (loss) plus (gain) loss on sale of assets, depreciation and amortization, non-cash impairment loss, non-cash stock-based compensation included in operating and corporate expenses and syndication programming amortization less syndication programming payments. We use the term consolidated adjusted EBITDA because that measure is defined in our syndicated bank credit facility and does not include (gain) loss on sale of assets, depreciation and amortization, non-cash impairment loss, non-cash stock-based compensation, net interest expense, income tax expense (benefit), equity in net income (loss) of nonconsolidated affiliate, loss from discontinued operations and syndication programming amortization and does include syndication programming payments. The definition of operating income (loss), and thus consolidated adjusted EBITDA, excludes (gain) loss on sale of assets, depreciation and amortization, non-cash impairment loss, non-cash stock-based compensation, net interest expense, income tax expense (benefit), equity in net income
(loss) of nonconsolidated affiliate, loss from discontinued operations and syndication programming amortization.

Since our ability to borrow from our syndicated bank credit facility is based on a consolidated adjusted EBITDA financial covenant, we believe that it is important to disclose consolidated adjusted EBITDA to our investors. Our syndicated bank credit facility contains certain financial covenants relating to maximum net debt ratio, senior debt ratio, maximum capital expenditures and fixed charge coverage ratio. The maximum net debt ratio, or the ratio of consolidated total debt minus cash, up to a maximum of $20 million, to consolidated adjusted EBITDA, affects our ability to borrow from our syndicated bank credit facility. Under our syndicated bank credit facility, our maximum net debt ratio may not exceed 7.0 to 1 on a pro forma basis for the prior full four quarters. The actual maximum net debt ratios were as follows (in each case as of September 30): 2008, 5.5 to 1; 2007, 5.1 to 1. Therefore, we were in compliance with this covenant at each of those dates. The maximum net debt ratio also affects the interest rate charged for revolving loans, thus affecting our interest expense.

While many in the financial community and we consider consolidated adjusted EBITDA to be important, it should be considered in addition to, but not as a substitute for or superior to, other measures of liquidity and financial performance prepared in accordance with accounting principles generally accepted in the United States of America, such as cash flows from operating activities, operating income and net income. As consolidated adjusted EBITDA excludes non-cash (gain) loss of sales of assets, non-cash depreciation and amortization, non-cash impairment loss, non-cash stock-based compensation, net interest expense, income tax expense (benefit), equity in net income
(loss) of nonconsolidated affiliate, loss from discontinued operations and syndication programming amortization and includes syndication programming payments, consolidated adjusted EBITDA has certain limitations because it excludes and includes several important non-cash financial line items. Therefore, we consider both non-GAAP and GAAP measures when evaluating our business. We also use consolidated adjusted EBITDA, along with other factors, to make executive compensation decisions.

Consolidated adjusted EBITDA is a non-GAAP measure. The most directly comparable GAAP financial measure to consolidated adjusted EBITDA is cash flows from operating activities. A reconciliation of this non-GAAP measure to cash flows from operating activities follows (unaudited; in thousands):