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 March 31, 2009 was $41.7 million. Of that amount, revenue generated by our television segment accounted for 68% and revenue generated by our radio segment accounted for 32%.

As of the date of filing this report, we own and/or operate 50 primary television stations that are located primarily in the southwestern United States. We own and operate 48 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 2009 and 2008 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 first quarter of 2009, we continued to face a significant advertising downturn, both in television and radio, primarily as a result of the ongoing global financial crisis and continuing recession. Nevertheless, our audience shares remained strong in the nation's most densely populated Hispanic markets.

Net revenue for our television segment decreased to $28.3 million in the first quarter of 2009, from $36.1 million in the first quarter of 2008. This decrease of $7.8 million, or 22%, in net revenue was primarily due to a decrease in local and national advertising rates, which in turn was primarily due to the continuing weak economy. Nevertheless, we sustained solid ratings across this segment and experienced growth in the health care, services and telecommunications advertising categories.

Net revenue for our radio segment decreased to $13.4 million in the first quarter of 2009, from $19.5 million in the first quarter of 2008. The decrease of $6.1 million, or 31%, in net revenue was primarily due to a decrease in local and national advertising sales and advertising rates, which in turn was primarily due to the continuing weak economy. Nevertheless, we

experienced growth in the health care and grocery advertising categories. In addition, we continued to concentrate our efforts on local sales, which accounted for 77% of total radio segment sales in the first quarter of 2009. We have seen solid ratings growth in our markets where we broadcast "José: Nunca Sabes Lo Que Va A Tocar" ("You never know what he'll play"), which features a mix of Spanish-language adult contemporary and Mexican regional hits from the 1970s through the present, as well as our stations that began broadcasting the "Piolin por la Mañana," syndicated morning show, one of the highest-rated Spanish-language radio programs in the country. In January 2009, we introduced a new format on one of our Los Angeles radio stations, "El Gato," an upbeat and energetic regional Mexican format, and our ratings for this station have since increased by 138% year over year for adults 18-34 years of age.

In response to declining revenue during 2008, primarily as a result of decreased advertising during the global financial crisis and recession, we implemented significant cost-saving measures in the fourth quarter of 2008, including personnel reductions and reductions in executive bonuses, employee benefits, general corporate expenses and capital expenditures. Because we continue to face a challenging advertising marketplace due to the ongoing global financial crisis and continuing recession, we implemented significant additional cost-saving measures beginning in the first quarter of 2009. These cost-saving measures included, among other things, reductions in certain salary expenses, promotional expenses for both of our television and radio segments, bonuses, general corporate expenses and capital expenditures. We intend to continue to evaluate the extent and effectiveness of our cost-saving measures based on changing future economic conditions and our achieving or not achieving 2009 budgeted revenues, and intend to take additional measures if and as circumstances warrant.

On March 16, 2009, we amended our syndicated bank credit facility agreement, which, among other things, requires us to comply with certain quarterly leverage ratio covenants and other financial ratios, including a maximum allowed leverage ratio covenant, calculated as the ratio of consolidated total debt outstanding to trailing-twelve-month consolidated adjusted EBITDA. In addition, the amendment imposes certain additional restrictions on our liquidity and operations, including a significantly higher interest rate on outstanding principal, a reduction in the revolver facility from $150 million to $50 million, a mandatory prepayment for 100% of the proceeds of certain asset dispositions, a restriction from making acquisitions and investments depending upon the leverage ratio, a sweep of 75% of quarterly excess cash flow to repay principal on the outstanding consolidated debt, limitations on capital expenditures in 2009 and 2010, and restrictions on repurchasing shares of our common stock and debt. At the time of entering into this amendment, we made a prepayment of $40 million to reduce the outstanding amount of its term loans and paid our lenders an amendment fee.

We repurchased 0.4 million shares of Class A common stock for approximately $0.5 million for the three-month period ended March 31, 2009. We have repurchased 20.8 million shares of Class A common stock for approximately $120.3 million since the inception of our stock repurchase plans, from November 1, 2006 through March 31, 2009.

Relationship with Univision

Based on our review of public filings made by Univision, we believe that Univision currently owns approximately 10% 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. In February 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.

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 March 31, 2009 and 2008, the amount we paid to Univision in this capacity was $1.5 million and $2.2 million, respectively.

In August 2008, we entered into an agreement with Univision pursuant to which we granted Univision the right to negotiate the terms of agreements providing for the carriage of our Univision- and TeleFutura-affiliated television station signals by cable, satellite and internet-based television service providers. The agreement also provides terms relating to compensation to be paid to us with respect to agreements that are entered into for the carriage of our Univision- and TeleFutura-affiliated television station signals.

Recent Accounting Pronouncements

In April 2009, the FASB issued FASB Staff Position ("FSP") No. FAS 107-1 and APB 28-1, "Interim Disclosures about Fair Value of Financial Instruments", which requires disclosures about the fair value of our financial instruments for which it is practicable to estimate that value, whether recognized or not recognized in the balance sheets, in the interim reporting periods as well as in the annual reporting periods. This FSP is effective beginning in the second quarter of 2009. We are currently evaluating the impact of adopting FSP No. FAS 107-1 and APB 28-1 on our financial statements.

In April 2009, the FASB issued FSP No. FAS 157-4, "Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly", which provides additional guidance for estimating fair value in accordance with SFAS No. 157, Fair Value Measurements (SFAS 157). This FSP states that a significant decrease in the volume and level of activity for the asset or liability when compared with normal market activity is an indication that transactions or quoted prices may not be determinative of fair value because there may be increased instances of transactions that are not orderly in such market conditions. Accordingly, further analysis of transactions or quoted prices is needed, and a significant adjustment to the transactions or quoted prices may be necessary to estimate fair value. This FSP is effective beginning in the second quarter of 2009. We are currently evaluating the impact of adopting FSP No. FAS 157-4 on our financial statements.

In April 2009, the FASB issued FSP No. FAS 115-2 and FAS 124-2, "Recognition and Presentation of Other-Than-Temporary Impairments", which establishes a new method of recognizing and reporting other-than-temporary impairments of debt securities and requires additional disclosures related to debt and equity securities. This FSP does not change existing recognition and measurement guidance related to other-than-temporary impairments of equity securities. This FSP is effective beginning in the second quarter of 2009. We are currently evaluating the impact of adopting FSP No. FAS 115-2 and FAS 124-2 on our financial statements.

Three-Month Periods Ended March 31, 2009 and 2008

The following table sets forth selected data from our operating results for the
three-month periods ended March 31, 2009 and 2008 (unaudited; in thousands):



                                                            Three-Month Period
                                                             Ended March 31,             %
                                                           2009           2008         Change
Statements of Operations Data:
Net revenue                                              $  41,715      $  55,653         (25 )%

Direct operating expenses                                   21,861         24,734         (12 )%
Selling, general and administrative expenses                 9,952         10,675          (7 )%
Corporate expenses                                           3,873          4,454         (13 )%
Depreciation and amortization                                5,430          5,545          (2 )%

                                                            41,116         45,408          (9 )%

Operating income                                               599         10,245         (94 )%
Interest expense                                            (5,061 )      (22,595 )       (78 )%
Interest income                                                248            431         (42 )%
Loss on debt extinguishment                                 (4,716 )           -            *

Loss before income taxes                                    (8,930 )      (11,919 )       (25 )%
Income tax (expense) benefit                                (5,410 )        4,995           *

Loss before equity in net loss of nonconsolidated
affiliate and discontinued operations                      (14,340 )       (6,924 )       107 %
Equity in net loss of nonconsolidated affiliate, net
of tax                                                        (154 )         (126 )        22 %

Loss from continuing operations                            (14,494 )       (7,050 )       106 %
Loss from discontinued operations                               -            (654 )         *

Net loss applicable to common stockholders               $ (14,494 )    $  (7,704 )        88 %

Other Data:
Capital expenditures                                         1,730          4,029
Consolidated adjusted EBITDA (adjusted for non-cash
stock-based compensation) (1)                                6,716         16,663
Net cash provided by operating activities                      205         11,825
Net cash used in investing activities                       (5,200 )      (26,928 )
Net cash used in financing activities                      (42,523 )      (42,421 )

* Percentage not meaningful.

(1) Consolidated adjusted EBITDA means net income (loss) plus loss (gain) on sale of assets, depreciation and amortization, non-cash stock-based compensation included in operating and corporate expenses, net interest expense, loss on debt extinguishment, loss from discontinued operations, income tax expense (benefit), equity in net income (loss) of nonconsolidated affiliate 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 non-cash stock-based compensation, loss (gain) on sale of assets, depreciation and amortization, net interest expense, loss on debt extinguishment, loss from discontinued operations, income tax expense (benefit), equity in net income
(loss) of nonconsolidated affiliate and syndication programming amortization and does include syndication programming payments.

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 the maximum allowed leverage ratio, maximum capital expenditures and minimum fixed charge coverage ratio. The maximum allowed leverage ratio, or the ratio of consolidated total debt to trailing-twelve-month consolidated adjusted EBITDA, affects our ability to borrow from our syndicated bank credit facility. The maximum allowed leverage ratio also affects the interest rate charged for revolving loans, thus affecting our interest expense. Under our syndicated bank credit facility, our maximum allowed leverage ratio may not exceed 6.75 to 1. The actual leverage ratio was as follows (in each case as of March 31): 2009, 5.7 to 1; 2008, 5.3 to 1. Therefore, we were in compliance with this covenant at each of those dates. We entered into an amendment to our credit facility agreement in March 2009, so we were not subject to the same calculations and covenants in prior years. However, for consistency of presentation, the foregoing historical ratios assume that our current definition had been applicable for all periods presented.

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 on sale of assets, non-cash depreciation and amortization, non-cash stock-based compensation awards, net interest expense, loss on debt extinguishment, loss from discontinued operations, income tax expense (benefit), equity in net income (loss) of nonconsolidated affiliate 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. Consolidated adjusted EBITDA is also used 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):