SPANISH BROADCASTING SYSTEM INC - Quarter Report: 2009 September (Form 10-Q)

Form 10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)


þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2009


o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 33-82114

Spanish Broadcasting System, Inc.

(Exact name of registrant as specified in its charter)


Delaware		13-3827791
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

2601 South Bayshore Drive, PH II
Coconut Grove, Florida 33133
(Address of principal executive offices) (Zip Code)

(305) 441-6901
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer o	Accelerated filer o	Non-accelerated filer o	Smaller reporting company þ
		(Do not check if a smaller reporting company)

Indicate by a check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

As of November 11, 2009, 41,540,847 shares of Class A common stock, par value $0.0001 per share, 23,403,500 shares of Class B common stock, par value $0.0001 per share and 380,000 shares of Series C convertible preferred stock, $0.01 par value per share, which are convertible into 7,600,000 shares of Class A common stock, were outstanding.

SPANISH BROADCASTING SYSTEM, INC.
INDEX


	Page
PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements — Unaudited		4

Unaudited Condensed Consolidated Balance Sheets as of September 30, 2009 and December 31, 2008		4

Unaudited Condensed Consolidated Statements of Operations for the Three- and Nine-Months Ended September 30, 2009 and 2008		5

Unaudited Condensed Consolidated Statement of Changes in Stockholders’ Deficit and Comprehensive Loss for the Nine-Months Ended September 30, 2009		6

Unaudited Condensed Consolidated Statements of Cash Flows for the Nine-Months Ended September 30, 2009 and 2008		7

Notes to Unaudited Condensed Consolidated Financial Statements		8

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		16

ITEM 4T. Controls and Procedures		23

PART II. OTHER INFORMATION

ITEM 1. Legal Proceedings		24

ITEM 1A. Risk Factors		24

ITEM 6. Exhibits		25

EX-31.1
EX-31.2
EX-32.1
EX-32.2

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Special Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains both historical and forward-looking statements. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are not based on historical facts, but rather reflect our current expectations concerning future results and events. These forward-looking statements generally can be identified by the use of statements that include phrases such as “believe”, “expect”, “anticipate”, “intend”, “estimate”, “plan”, “project”, “foresee”, “likely”, “will” or other words or phrases with similar meanings. Similarly, statements that describe our objectives, plans or goals are, or may be, forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be different from any future results, performance and anticipated achievements expressed or implied by these statements. We do not intend to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In addition, forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our historical experience and our present expectations or projections. These risks and uncertainties include, but are not limited to those described in this report, in Part II, “Item 1A. Risk Factors” and elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2008, and those described from time to time in our future reports filed with the Securities and Exchange Commission (the SEC).

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PART I. FINANCIAL INFORMATION


Item 1.	*Financial Statements — Unaudited*

SPANISH BROADCASTING SYSTEM, INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Balance Sheets


	September 30,			December 31,
	2009			2008
	(In thousands, except share data)
Assets
Current assets:
Cash and cash equivalents	$	45,768			32,852
Receivables, net of allowance for doubtful accounts of $1,302 in 2009 and $1,675 in 2008		28,897			27,580
Prepaid expenses and other current assets		3,765			4,426


Total current assets		78,430			64,858

Property and equipment, net of accumulated depreciation of $46,745 in 2009 and $43,567 in 2008		48,183			52,411
FCC broadcasting licenses		321,101			331,224
Goodwill		32,806			32,806
Other intangible assets, net of accumulated amortization of $205 in 2009 and $178 in 2008		1,229			1,256
Deferred financing costs, net of accumulated amortization of $4,760 in 2009 and $3,956 in 2008		2,841			3,646
Other assets		2,272			3,066


Total assets	$	486,862			489,267

Liabilities and Stockholders’ Deficit
Current liabilities:
Accounts payable and accrued expenses	$	16,647			15,428
Accrued interest		7,952			486
Unearned revenue		467			560
Other liabilities		51			66
Derivative instruments		8,205			—
Senior credit facility revolver due 2010		15,000			—
Current portion of the senior credit facility term loan due 2012		3,250			3,250
Current portion of other long-term debt		445			438
Series B cumulative exchangeable redeemable preferred stock dividends payable		4,550			2,068


Total current liabilities		56,567			22,296

Other liabilities, less current portion		104			139
Derivative instruments		651			12,541
Senior credit facility revolver due 2010		—			15,000
Senior credit facility term loan due 2012, less current portion		307,125			309,563
Other long-term debt, less current portion		6,718			7,052
Deferred income taxes		69,930			68,082


Total liabilities		441,095			434,673


Commitments and contingencies (note 7)
Cumulative exchangeable redeemable preferred stock:
10³/4% Series B cumulative exchangeable redeemable preferred stock, $0.01 par value, liquidation value $1,000 per share. Authorized 280,000 shares; 92,349 shares issued and outstanding at September 30, 2009 and December 31, 2008, respectively		92,349			92,349


Stockholders’ deficit:
Series C convertible preferred stock, $0.01 par value and liquidation value. Authorized 600,000 shares; 380,000 shares issued and outstanding at September 30, 2009 and December 31, 2008, respectively		4			4
Class A common stock, $0.0001 par value. Authorized 100,000,000 shares; 41,540,847 and 41,445,222 shares issued and outstanding at September 30, 2009 and December 31, 2008, respectively		4			4
Class B common stock, $0.0001 par value. Authorized 50,000,000 shares; 23,403,500 shares issued and outstanding at September 30, 2009 and December 31, 2008, respectively		2			2
Additional paid-in capital		524,936			524,722
Accumulated other comprehensive loss		(3,838	)		(8,187	)
Accumulated deficit		(567,690	)		(554,300	)


Total stockholders’ deficit		(46,582	)		(37,755	)


Total liabilities and stockholders’ deficit	$	486,862			489,267

See accompanying notes to the unaudited condensed consolidated financial statements.

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SPANISH BROADCASTING SYSTEM, INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Operations


	Three-Months Ended						Nine-Months Ended
	September 30,						September 30,
	2009			2008			2009			2008
	(In thousands, except per share data)

Net revenue	$	38,582			41,253			103,428			122,866


Operating expenses:
Engineering and programming		9,591			13,992			31,830			44,110
Selling, general and administrative		12,775			16,585			36,600			53,797
Corporate expenses		2,372			2,707			7,545			9,972
Depreciation and amortization		1,574			1,792			4,737			4,596


Total operating expenses		26,312			35,076			80,712			112,475
Gain on the disposal of assets, net		(14	)		(5	)		(29	)		(10	)
Impairment of FCC broadcasting licenses and restructuring costs		—			2,199			10,686			398,451


Operating income (loss)		12,284			3,983			12,059			(388,050	)

Other (expense) income:
Interest expense, net		(6,723	)		(5,686	)		(19,841	)		(16,085	)
Change in fair value of derivative instrument		958			3,585			3,448			3,585
Other, net		—			—			1			1,928


Income (loss) before income taxes		6,519			1,882			(4,333	)		(398,622	)
Income tax expense (benefit)		1,976			2,325			1,611			(98,207	)

Net income (loss)		4,543			(443	)		(5,944	)		(300,415	)
Dividends on Series B preferred stock		(2,482	)		(2,417	)		(7,446	)		(7,251	)

Net income (loss) applicable to common stockholders	$	2,061			(2,860	)		(13,390	)		(307,666	)


Basic and diluted net income (loss) per common share	$	0.03			(0.04	)		(0.18	)		(4.25	)


Weighted average common shares outstanding:
Basic		72,515			72,418			72,507			72,409

Diluted		72,555			72,418			72,507			72,409

See accompanying notes to the unaudited condensed consolidated financial statements.

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SPANISH BROADCASTING SYSTEM, INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statement of Changes in Stockholders’ Deficit
and Comprehensive Loss for the Nine-Months Ended September 30, 2009


	Class C				Class A				Class B						Accumulated
	preferred stock				common stock				common stock				Additional		other						Total
	Number of		Par		Number of		Par		Number of		Par		paid-in		comprehensive			Accumulated			stockholders’
	shares		value		shares		value		shares		value		capital		loss			deficit			deficit
	(In thousands, except share data)
Balance at December 31, 2008		380,000	$	4		41,445,222	$	4		23,403,500	$	2	$	524,722	$	(8,187	)	$	(554,300	)	$	(37,755	)
Issuance of Class A common stock from vesting of restricted stock		—		—		95,625		—		—		—		—		—			—			—

Stock-based compensation		—		—		—		—		—		—		214		—			—			214
Series B preferred stock dividends		—		—		—		—		—		—		—		—			(7,446	)		(7,446	)
Comprehensive loss:
Net loss		—		—		—		—		—		—		—		—			(5,944	)		(5,944	)
Amounts reclassified to earnings during the period		—		—		—		—		—		—		—		4,112			—			4,112
Unrealized gain on derivative instruments		—		—		—		—		—		—		—		237			—			237


Comprehensive loss																						(1,595	)

Balance at September 30, 2009		380,000	$	4		41,540,847	$	4		23,403,500	$	2	$	524,936	$	(3,838	)	$	(567,690	)	$	(46,582	)

See accompanying notes to the unaudited condensed consolidated financial statements.

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SPANISH BROADCASTING SYSTEM, INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Cash Flows


	Nine-Months Ended
	September 30,
	2009			2008
	(In thousands)

Cash flows from operating activities:
Net loss	$	(5,944	)		(300,415	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Gain on the sale of assets		(29	)		(10	)
Impairment of FCC broadcasting licenses		10,123			398,451
Stock-based compensation		214			600
Depreciation and amortization		4,737			4,596
Net barter income		(370	)		(144	)
Provision for trade doubtful accounts		335			717
Amortization of deferred financing costs		805			826
Amortization of non-interest bearing promissory note payable		—			1,047
Deferred income taxes		1,848			(98,350	)
Unearned revenue		116			(1,731	)
Accretion of the time-value of money component related to unearned revenue		—			122
Change in fair value of derivative instrument		664			(3,403	)
Amortization of deferred commitment fee		—			(56	)
Amortization of other liabilities		(50	)		(50	)
Changes in operating assets and liabilities:
Trade receivables		(1,491	)		5,628
Prepaid expenses and other current assets		661			(3,585	)
Other assets		794			(933	)
Accounts payable and accrued expenses		1,355			(5,579	)
Unearned revenue		—			617
Accrued interest		7,466			45


Net cash provided by (used in) operating activities		21,234			(1,607	)


Cash flows from investing activities:
Purchases of property and equipment		(815	)		(9,763	)
Acquisition of a building and its related building improvements		—			(5,828	)
Proceeds from the sale of property and equipment		226			—
Proceeds from an insurance recovery		—			91


Net cash used in investing activities		(589	)		(15,500	)


Cash flows from financing activities:
Payment of senior secured credit facility term loan 2012		(2,438	)		(2,438	)
Payment of Series B preferred stock cash dividends		(4,964	)		(7,251	)
Payments of other long-term debt		(327	)		(321	)


Net cash used in financing activities		(7,729	)		(10,010	)


Net increase (decrease) in cash and cash equivalents		12,916			(27,117	)

Cash and cash equivalents at beginning of period		32,852			61,122


Cash and cash equivalents at end of period	$	45,768			34,005


Supplemental cash flows information:
Interest paid	$	7,467			14,893

Income taxes paid, net		29			22


Noncash investing and financing activities:
Accrual of Series B preferred stock cash dividend not declared	$	4,550			—

Accrual of Series B preferred stock as payment of preferred stock dividend	$	—			2,014

Unrealized gain (loss) on derivative instruments	$	237			(4,460	)

See accompanying notes to the unaudited condensed consolidated financial statements.

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SPANISH BROADCASTING SYSTEM, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation

The unaudited condensed consolidated financial statements include the accounts of Spanish Broadcasting System, Inc. and its subsidiaries (the Company, we, us, our or SBS). All intercompany balances and transactions have been eliminated in consolidation. The accompanying unaudited condensed consolidated financial statements as of September 30, 2009 and December 31, 2008 and for the three- and nine-month periods ended September 30, 2009 and 2008 have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. They do not include all information and notes required by GAAP for complete financial statements. These unaudited condensed consolidated financial statements should be read in conjunction with our consolidated financial statements as of, and for the fiscal year ended December 31, 2008, included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2008. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, which are all of a normal and recurring nature, necessary for a fair presentation of the results of the interim periods. We evaluated subsequent events after the balance sheet date of September 30, 2009 through the financial statements issuance date of November 12, 2009. The results of operations for the three- and nine-month periods ended September 30, 2009 are not necessarily indicative of the results for a full year.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions about future events that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities at the date of the financial statements. Significant items subject to such estimates and assumptions include; the useful lives of fixed assets, allowance for doubtful accounts, the valuation of derivatives, deferred tax assets, fixed assets, intangible assets, stock-based compensation, contingencies and litigation. These estimates and assumptions are based on management’s best judgments. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, which management believes to be reasonable under the circumstances. Management adjusts such estimates and assumptions as facts and circumstances dictate. Illiquid credit markets, volatile equity markets and reductions in advertising spending have combined to increase the uncertainty inherent in such estimates and assumptions. Actual results could differ from these estimates.

2. Stockholders’ Deficit

(a) Series C Convertible Preferred Stock

On December 23, 2004, in connection with the closing of the merger agreement, dated October 5, 2004, with CBS Radio (formerly known as Infinity Media Corporation, CBS Radio), a division of CBS Corporation, Infinity Broadcasting Corporation of San Francisco (Infinity SF) and SBS Bay Area, LLC, a wholly-owned subsidiary of SBS (SBS Bay Area), we issued to CBS Radio an aggregate of 380,000 shares of Series C convertible preferred stock, $0.01 par value per share (the Series C preferred stock), each of which is convertible at the option of the holder into twenty fully paid and non-assessable shares of our Class A common stock, $0.0001 par value per share (the Class A common stock).

Under the terms of the certificate of designation governing the Series C preferred stock, the holder of the Series C preferred stock has the right to convert each share into twenty fully paid and non-assessable shares of our Class A common stock. The shares of Series C preferred stock issued at the closing of the merger are convertible into 7,600,000 shares of our Class A common stock, subject to adjustment.

In connection with the closing of the merger transaction, we also entered into a registration rights agreement with CBS Radio, pursuant to which, CBS Radio may instruct us to file up to three registration statements, on a best efforts basis, with the SEC providing for the registration for resale of the Class A common stock issuable upon conversion of the Series C preferred stock.

We are required to pay holders of Series C preferred stock dividends on parity with our Class A common stock and Class B common stock, $0.0001 par value per share (the Class B common stock), and each other class or series of our capital stock, if created, after December 23, 2004.

(b) Class A and B Common Stock

The rights of the holders of shares of Class A common stock and Class B common stock are identical, except for voting rights and conversion provisions. The Class A common stock is entitled to one vote per share and the Class B common stock is entitled to ten votes per share. The Class B common stock is convertible to Class A common stock on a share-for-share basis at the option of the holder at any time, or automatically upon the transfer to a person or entity which is not a permitted transferee. Holders of each class of common stock are entitled to receive dividends and, upon liquidation or dissolution, are entitled to receive all assets available for distribution to stockholders. The holders of each class have no preemptive or other subscription rights and there are no redemption or sinking fund provisions with respect to such shares. Each class of common stock is subordinate to our 10 ³/4 % Series B cumulative exchangeable redeemable preferred stock, par value $0.01 per share and liquidation preference of $1,000 per share (the Series B preferred stock) and on parity with the Series C preferred stock with respect to dividend rights and rights upon liquidation, winding up and dissolution of SBS.

(c) Share-Based Compensation Plans

2006 Omnibus Equity Compensation Plan

In July 2006, we adopted an omnibus equity compensation plan (the Omnibus Plan) in which grants can be made to participants in any of the following forms: (i) incentive stock options, (ii) non-qualified stock options, (iii) stock appreciation rights, (iv) stock units, (v) stock awards, (vi) dividend equivalents, and (vii) other stock-based awards. The Omnibus Plan authorizes up to 3,500,000 shares of our Class A common stock for issuance, subject to adjustment in certain circumstances. The Omnibus Plan provides that the maximum aggregate number of shares of Class A common stock that may be granted, other than dividend equivalents, to any individual during any calendar year is 1,000,000 shares, subject to adjustments. In addition, the maximum aggregate number of shares of Class A common stock with respect to grants of stock units, stock awards and other stock-based awards that may be granted to any individual during a calendar year is also 1,000,000 shares, subject to adjustments.

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1999 Stock Option Plans

In September 1999, we adopted an employee incentive stock option plan (the 1999 ISO Plan) and a non-employee director stock option plan (the 1999 NQ Plan, and together with the 1999 ISO Plan, the 1999 Stock Option Plans). Options granted under the 1999 ISO Plan will vest according to terms to be determined by the compensation committee of our board of directors, and will have a contractual life of up to 10 years from the date of grant. Options granted under the 1999 NQ Plan will vest 20% upon grant and 20% each year for the first four years from the date of grant. All options granted under the 1999 ISO Plan and the 1999 NQ Plan vest immediately upon a change in control of SBS, as defined therein. A total of 3,000,000 shares and 300,000 shares of Class A common stock were reserved for issuance under the 1999 ISO Plan and the 1999 NQ Plan, respectively. In September 2009, our 1999 Stock Options Plans expired; therefore, no more options can be granted under these plans. Additionally, on November 2, 1999, we granted a stock option to purchase 250,000 shares of Class A common stock to a former director. This option vested immediately, and expired on November 2, 2009.

Stock Options

Stock options have only been granted to employees and directors under our 1999 Stock Option Plans. Our stock options have various vesting schedules and are subject to the employees continuing their service to SBS. We recognize compensation expense based on the estimated grant date fair value using the Black-Scholes option pricing model and recognize the compensation expense using a straight-line amortization method. When estimating forfeitures, we consider voluntary termination behaviors, as well as trends of actual option forfeitures. Ultimately, our stock-based compensation expense is based on awards that vest. Our stock-based compensation has been reduced for estimated forfeitures.

A summary of the status of our stock options, as of December 31, 2008 and September 30, 2009, and changes during the nine-months ended September 30, 2009, is presented below (in thousands, except per share data):


								Weighted
				Weighted				Average
				Average		Aggregate		Remaining
				Exercise		Intrinsic		Contractual
	Shares			Price		Value		Life (Years)
Outstanding at December 31, 2008		2,747		$	10.17
Granted		—			—
Exercised		—			—
Forfeited		(85	)		8.38

Outstanding at September 30, 2009		2,662		$	10.23	$	—		3.6


Exercisable at September 30, 2009		2,584		$	10.49	$	—		3.5

During the nine-months ended September 30, 2009 and 2008, no stock options were exercised; therefore, no cash payments were received. In addition, we did not recognize a tax benefit on our stock-based compensation expense due to our valuation allowance on substantially all of our deferred tax assets.

The following table summarizes information about stock options outstanding and exercisable at September 30, 2009 (in thousands, except per share data):


							Weighted
	Outstanding						Average		Exercisable
					Weighted		Remaining				Weighted
					Average		Contractual				Average
			Unvested		Exercise		Life		Number		Exercise
Range of Exercise Prices	Vested Options		Options		Price		(Years)		Exercisable		Price
$0.20 – 4.99		522		78	$	2.49		7.1		522	$	2.64
5.00 – 9.99		1,159		—		8.19		3.7		1,159		8.19
10.00 – 14.99		198		—		10.79		5.0		198		10.79
15.00 – 20.00		705		—		20.00		0.1		705		20.00

		2,584		78	$	10.23		3.6		2,584	$	10.49

Nonvested Shares

Nonvested shares (restricted stock or restricted stock units) are awarded to employees under our Omnibus Plan. In general, nonvested shares will vest over three to five years and are subject to the employees continuing their service to us. The cost of nonvested shares is determined using the fair value of our common stock on the date of grant. The compensation expense is recognized over the vesting period.

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A summary of the status of our nonvested shares, as of December 31, 2008 and September 30, 2009, and changes during the nine-months ended September 30, 2009, is presented below (in thousands, except per share data):


				Weighted
				Average Grant-
				Date Fair Value
	Shares			(per Share)
Nonvested at December 31, 2008		225		$	1.75
Awarded		—			—
Vested		(96	)		1.77
Forfeited		—			—

Nonvested at September 30, 2009		129		$	1.74

3. Basic and Diluted Net (Loss) Income Per Common Share

Basic net (loss) income per common share was computed by dividing net (loss) income applicable to common stockholders by the weighted average number of shares of common stock and convertible preferred stock outstanding for each period presented, using the “if converted” method. Diluted net (loss) income per common share is computed by giving effect to common stock equivalents as if they were outstanding for the entire period.

During the three-month period ended September 30, 2009, common stock equivalents included in the calculation amounted to 40 thousand for the period. Common stock equivalents were not considered in the calculation for the nine-month period ended September 30, 2009 and for the three- and nine-month periods ended September 30, 2008, since their effect would be anti-dilutive. If included, the common stock equivalents for these periods would have amounted to six thousand, zero, and zero, respectively.

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4. Operating Segments

We have two reportable segments: radio and television. The following summary table presents separate financial data for each of our operating segments (in thousands):


	Three-Months Ended												Nine-Months Ended
	September 30,						Change						September 30,						Change
	2009			2008			$			%			2009			2008			$			%
	(In thousands)												(In thousands)
Net revenue:
Radio	$	34,558			36,411			(1,853	)		(5	%)		91,923			110,445			(18,522	)		(17	%)
Television		4,024			4,842			(818	)		(17	%)		11,505			12,421			(916	)		(7	%)

Consolidated	$	38,582			41,253			(2,671	)		(6	%)		103,428			122,866			(19,438	)		(16	%)


Engineering and programming expenses:
Radio	$	6,478			9,438			(2,960	)		(31	%)		20,973			29,590			(8,617	)		(29	%)
Television		3,113			4,554			(1,441	)		(32	%)		10,857			14,520			(3,663	)		(25	%)

Consolidated	$	9,591			13,992			(4,401	)		(31	%)		31,830			44,110			(12,280	)		(28	%)


Selling, general and administrative expenses:
Radio	$	10,902			13,579			(2,677	)		(20	%)		30,357			45,449			(15,092	)		(33	%)
Television		1,873			3,006			(1,133	)		(38	%)		6,243			8,348			(2,105	)		(25	%)

Consolidated	$	12,775			16,585			(3,810	)		(23	%)		36,600			53,797			(17,197	)		(32	%)


Corporate expenses:	$	2,372			2,707			(335	)		(12	%)		7,545			9,972			(2,427	)		(24	%)

Depreciation and amortization:
Radio	$	781			817			(36	)		(4	%)		2,374			2,397			(23	)		(1	%)
Television		556			578			(22	)		(4	%)		1,646			1,022			624			61	%
Corporate		237			397			(160	)		(40	%)		717			1,177			(460	)		(39	%)

Consolidated	$	1,574			1,792			(218	)		(12	%)		4,737			4,596			141			3	%


(Gain) loss on the disposal of assets, net:
Radio	$	(6	)		(5	)		(1	)		20	%		(26	)		(10	)		(16	)		160	%
Television		—			—			—			0	%		19			—			19			100	%
Corporate		(8	)		—			(8	)		100	%		(22	)		—			(22	)		100	%

Consolidated	$	(14	)		(5	)		(9	)		180	%		(29	)		(10	)		(19	)		190	%


Impairment of FCC broadcasting licenses and restructuring costs:
Radio	$	—			2,191			(2,191	)		(100	%)		10,614			381,606			(370,992	)		(97	%)
Television		—			8			(8	)		(100	%)		24			16,845			(16,821	)		(100	%)
Corporate		—			—			—			100	%		48			—			48			100	%

Consolidated	$	—			2,199			(2,199	)		(100	%)		10,686			398,451			(387,765	)		(97	%)


Operating (loss) income:
Radio	$	16,403			10,391			6,012			58	%		27,631			(348,587	)		376,218			(108	%)
Television		(1,518	)		(3,304	)		1,786			(54	%)		(7,284	)		(28,314	)		21,030			(74	%)
Corporate		(2,601	)		(3,104	)		503			(16	%)		(8,288	)		(11,149	)		2,861			(26	%)

Consolidated	$	12,284			3,983			8,301			208	%		12,059			(388,050	)		400,109			(103	%)


Capital expenditures:
Radio	$	34			326			(292	)		(90	%)		428			2,643			(2,215	)		(84	%)
Television		214			2,826			(2,612	)		(92	%)		338			12,525			(12,187	)		(97	%)
Corporate		20			60			(40	)		(67	%)		49			423			(374	)		(88	%)

Consolidated	$	268			3,212			(2,944	)		(92	%)		815			15,591			(14,776	)		(95	%)


	September 30,		December 31,
	2009		2008
	(In thousands)
Total Assets:
Radio	$	425,101		422,827
Television		54,386		57,225
Corporate		7,375		9,215

Consolidated	$	486,862		489,267

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5. Comprehensive Income (Loss)

Our total comprehensive income (loss), comprised of net income (loss), amounts reclassified to earnings during the period, and unrealized (loss) gain on derivative instruments, for the three- and nine-months ended September 30, 2009 and 2008, respectively, was as follows (in thousands):


	Three-Months Ended						Nine-Months Ended
	September 30,						September 30,
	2009			2008			2009			2008
Net income (loss)	$	4,543			(443	)		(5,944	)		(300,415	)
Other comprehensive loss:
Amounts reclassified to earnings during the period		1,421			—			4,112
Unrealized (loss) gain on derivative instruments		(122	)		(3,200	)		237			(4,460	)

Total comprehensive income (loss)	$	5,842			(3,643	)		(1,595	)		(304,875	)

6. Income Taxes

We have determined that due to a number of reasons, we are no longer able to estimate our annual effective tax rate during our interim periods, which would be applied to our pre-tax ordinary income. We are calculating our effective income tax rate using a year to date income tax calculation. Our income tax expense differs from the statutory federal tax rate of 35% and related statutory state tax rates, primarily as a result of the reversal of our deferred tax liabilities related to our intangible assets, which could no longer be assured over our net operating loss carry forward period. Therefore, our effective tax rate is impacted by the establishment of a valuation allowance on substantially all of our deferred tax assets.

We file federal, state and local income tax returns in the United States and Puerto Rico. The tax years that remain subject to assessment of additional liabilities by the United States federal, state, and local tax authorities are 2005 through 2008. The tax years that remain subject to assessment of additional liabilities by the Puerto Rico tax authority are 2004 through 2008.

Based on our evaluation, we have concluded that there are no significant uncertain tax positions requiring recognition in our consolidated financial statements, as of September 30, 2009 and December 31, 2008.

7. Litigation

We are subject to certain legal proceedings and claims that have arisen in the ordinary course of business and have not been fully adjudicated. In our opinion, we do not have a potential liability related to any current legal proceedings and claims that would individually or in the aggregate have a material adverse effect on our financial condition or operating results. However, the results of legal proceedings cannot be predicted with certainty. Should we fail to prevail in any of these legal matters or should all of these legal matters be resolved against us in the same reporting period, the operating results of a particular reporting period could be materially adversely affected.

Wolf, et al., Litigation

There is a pending litigation claim against us, certain of our former and current directors and officers concerning which such directors and officers may seek indemnification. On November 28, 2001, a complaint was filed against us in the United States District Court for the Southern District of New York (the Southern District of New York) and was amended on April 19, 2002. The amended complaint alleges that the named plaintiff, Mitchell Wolf, purchased shares of our Class A common stock pursuant to the October 27, 1999, prospectus and registration statement relating to our initial public offering which closed on November 2, 1999 (the IPO). The complaint was brought on behalf of Mr. Wolf and an alleged class of similarly situated purchasers against us, eight underwriters and/or their successors-in-interest who led or otherwise participated in our IPO, two members of our senior management team, one of whom is our Chairman of the Board of Directors, and an additional director, referred to collectively as the individual defendants. The complaint was never served upon the individual defendants.

This case is one of more than 300 similar cases brought by similar counsel against more than 300 issuers, 40 underwriters and 1,000 individual defendants alleging, in general, violations of federal securities laws in connection with initial public offerings, in particular, failing to disclose that the underwriters allegedly solicited and received additional, excessive and undisclosed commissions from certain investors in exchange for which they allocated to those investors material portions of the restricted shares issued in connection with each offering. All of these cases, including the one involving us, have been assigned for consolidated pretrial purposes to one judge of the Southern District of New York. The issuer defendants in the consolidated cases (collectively, the Issuer Defendants) filed motions to dismiss the consolidated cases. These motions to dismiss covered issues common among all Issuer Defendants and issues common among all underwriter defendants (collectively, the Underwriter Defendants) in the consolidated cases. As a result of these motions, the Individual Defendants were dismissed from one of the claims against them, specifically the Section 10b-5 claim. On September 21, 2007, Kaye Scholer LLP, on behalf of the individual defendants, executed a tolling agreement with plaintiffs providing for the dismissal without prejudice of all claims against the individual defendants upon the provision to plaintiffs of documentation showing that SBS has entity coverage for the period in question. Documentation of such coverage was subsequently provided to plaintiffs on December 19, 2007.

On August 31, 2005, the Southern District of New York issued an order of preliminary approval of a settlement proposal among the investors in the plaintiff class, the issuer defendants (including us) and the issuer defendants’ insurance carriers (the Issuers Settlement). The principal components of the Issuers Settlement were: 1) a release of all claims against the issuer defendants and their directors, officers and certain other related parties arising out of the alleged wrongful conduct in the amended complaint; 2) the assignment to the plaintiffs of certain of the issuer defendants’ potential claims against the Underwriters; and 3) a guarantee by the insurers to the plaintiffs of the difference between $1.0 billion and any lesser amount recovered by the plaintiffs from the Underwriter Defendants. The payments were to be charged to each issuer defendant’s insurance policy on a pro rata basis.

- 12 -

On October 13, 2004, the Southern District of New York granted plaintiffs’ motion for class certification in six “focus cases” out of the more than 300 consolidated class actions, but on December 5, 2006, the United States Court of Appeals for the Second Circuit (the Second Circuit) reversed the order, holding that plaintiffs could not satisfy the predominance requirement for a Federal Rule of Civil Procedure 23(b) (3) class action. On June 25, 2007, in light of the Second Circuit’s reversal of the class certification order and its subsequent denial of plaintiffs’ petition for a rehearing or rehearing en banc, the Southern District of New York entered a stipulation between plaintiffs and the Issuer Defendants, terminating the proposed Issuers Settlement which the Southern District of New York had preliminarily approved on August 31, 2005. On September 27, 2007, plaintiffs filed a renewed motion for class certification with respect to the six focus cases, based on newly proposed class definitions. On October 10, 2008, at plaintiffs’ request, the Southern District of New York ordered the withdrawal without prejudice of plaintiffs’ renewed motion, which had been fully briefed and was sub judice.

On August 14, 2007, plaintiffs filed amended complaints in the six “focus cases” and amended master allegations in the consolidated actions. On November 13, 2007, the Underwriter Defendants and Issuer Defendants moved to dismiss the amended complaints in the six “focus cases.” On March 26, 2008, the Southern District of New York granted in part the motion as to a subset of plaintiffs’ Section 11 claims, but denied the motion as to plaintiffs’ other claims. We are not named in any of the six “focus cases.”

On January 7, 2008, the Underwriter Defendants filed a motion (in which the issuer defendants joined) to strike class allegations in 26 of the consolidated cases, including the case against us, on the ground that plaintiffs lacked a putative class representative in those cases at the time of their May 30, 2007 oral motion.

On May 13, 2008, the Southern District of New York issued an order granting the motion in part and striking certain of the class allegations relating to the Section 10b-5 claims in 8 of the 26 actions, including the action against us. The order also requires plaintiffs to make certain disclosures with respect to the putative class representatives in the remaining 18 actions. Once the disclosures are filed, Defendants may seek clarification of the Southern District of New York’s May 13, 2008 order with respect to the status of the remaining 10b-5-related class allegations in the other 8 actions, including the action against us, as well as the status of the Section 11-related class allegations.

On June 11, 2009, pursuant to a motion filed on April 2, 2009, the Southern District of New York issued a preliminary order of approval of a settlement of all of the consolidated cases, including the case against us. On September 19, 2009, the Southern District of New York conducted a hearing regarding the final approval of the settlement of all consolidated cases and, on October 5, 2009, issued an opinion finally approving the settlement. The settlement, which is subject to appeal, will result in a release of all claims against the Underwriter and Issuer Defendants, and their officers and directors (the settling defendants), in exchange for an aggregate sum of approximately $600 million (the settlement amount) to be paid into a settlement fund for the benefit of the class plaintiffs. SBS’ and the individual defendants’ share of the settlement amount would be fully funded by insurance. On October 23, 2009, a petition for leave to appeal the Southern District of New York’s class definition for purposes of settlement was filed by Fensterstock & Partners LLP on behalf of Objectors Lester Baum, Mike Hart, and Sue Shadley. Plaintiffs plan to file an opposition to the petition, in which the Issuers and Underwriter Defendants may join. Based on the current developments, we believe that it is unlikely that this litigation will result in any material liability to us or the individual defendants that would not be covered by existing insurance.

8. Impairment of FCC Broadcasting Licenses and Restructuring Costs

FCC Broadcasting Licenses

We generally perform our annual impairment test of our indefinite-lived intangibles during the fourth quarter of the fiscal year but, given the deteriorating economic conditions and revenue declines in the broadcasting industry, we performed an interim impairment test on March 31, 2009.

As a result of our interim impairment testing, for the nine-months ended September 30, 2009, we recorded a non-cash impairment loss of approximately $10.1 million that reduced the carrying values of our FCC broadcasting licenses in our Chicago and San Francisco markets. The tax impact of the impairment loss was an approximate $4.1 million tax benefit, which was related to the reduction of the book/tax basis differences on our FCC broadcasting licenses.

The impairment loss was due to changes in estimates and assumptions which were primarily: (a) lower industry advertising revenue growth projections in our respective markets, and (b) lower industry profit margins.

We adopted the provision of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 350-30-50-2, “Determination of the Useful Life of Intangible Assets” (ASC 350-30-50-2) as of January 1, 2009. ASC 350-30-50-2 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset. More specifically, ASC 350-30-50-2 removes the requirement to consider whether an intangible asset can be renewed without substantial cost or material modifications to the existing terms and conditions and instead, requires an entity to consider its own historical experience in renewing similar arrangements. The adoption of ASC 350-30-50-2 did not have a material impact to our financial statements.

Restructuring Costs

As a result of the continued deterioration of the economy and the decrease in the demand for advertising, we began to implement a restructuring plan in the third quarter of fiscal year 2008 to reduce expenses throughout the Company. We have incurred restructuring costs totaling $3.0 million to date, which include $0.6 million for the nine-months ended September 30, 2009, related to the termination of various programming contracts and personnel. In addition, we will continue to review further cost-cutting measures, as we continue to evaluate the scope and duration of the current economic slowdown and its impact on our operations and financial position.

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9. Derivative Instruments

Accounting for Derivatives and Hedging Activities

We only enter into derivative contracts to hedge against the potential impact of increases in interest rates on our debt instruments. We also only enter into derivative contracts that we intend to designate as a hedge of the variability of cash flows to be paid related to a recognized asset or liability (cash flow hedge).

By using derivative financial instruments to hedge exposures to changes in interest rates, we expose ourselves to credit risk and market risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. We attempt to minimize the credit risk in derivative instruments by entering into transactions with high-quality counterparties whose credit rating is higher than Aa.

Market risk is the adverse effect on the value of a derivative instrument that results from a change in interest rates. The market risk associated with interest-rate contracts is managed by establishing and monitoring parameters that limit the types and degree of market risk that may be undertaken.

For all hedging relationships, we formally document the hedging relationship and its risk-management objective and strategy for undertaking the hedge, the hedging instrument, the hedged item, the nature of the risk being hedged, how the hedging instrument’s effectiveness in offsetting the hedged risk will be assessed prospectively and retrospectively, and a description of the method of measuring ineffectiveness. We also formally assess, both at the hedge’s inception and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting cash flows of hedged items.

We are accounting for our interest rate swaps as cash flow hedges, which requires us to recognize all derivative instruments on the balance sheet at fair value. The related gains or losses on these instruments are deferred in stockholders’ deficit as a component of accumulated other comprehensive income (loss). The deferred gains or losses on these transactions are recognized in income in the period in which the related items being hedged are recognized in expense. However, to the extent that the change in value of the derivative contracts does not offset the change in the value of the underlying transaction being hedged, that ineffective portion is immediately recognized into income. We recognize gains and losses immediately when the underlying transaction settles. For cash flow hedges in which hedge accounting is discontinued because it is determined that the derivative no longer qualifies as an effective cash flow hedge, we continue to carry the derivative instrument at its fair value on the consolidated balance sheet and recognize any subsequent changes in its fair value in earnings (change in fair value of derivative instrument).

Derivatives and Hedging Activities

At September 30, 2009, derivative financial instruments are comprised of the following (in thousands):


			Fixed				Fair
	Notional		Interest			Expiration	Value
Agreement	Amount		Rate			Date	Liability
Interest rate swap	$	310,375		5.98	%	June 30, 2010	$	8,205
Interest rate swap		6,834		6.31	%	January 4, 2017		651

	$	317,209					$	8,856

On June 29, 2005, we entered into a five-year interest rate swap agreement for the original notional principal amount of $324.2 million whereby we pay a fixed interest rate of 5.98%, as compared to interest at a floating rate equal to three-month LIBOR plus 175 basis points. The interest rate swap amortization schedule is identical to the First Lien Credit Facility amortization schedule during June 30, 2005 to June 30, 2010, which has an effective date of June 29, 2005, quarterly notional reductions and an expiration date of June 30, 2010.

In September and October 2008, the counterparty to this interest rate swap, Lehman Brothers Special Financing Inc., and its parent and credit support provider, Lehman Brothers Holdings Inc., each filed for bankruptcy. Based on these bankruptcy filings and the information obtained prior to these filings, this cash flow hedge no longer qualifies for hedge accounting. Therefore, the change in fair value from September 15, 2008, the last time this hedge was determined to be effective, to date, is recorded in earnings as a “Change in fair value of derivative instrument”.

On September 15, 2008, the accumulated other comprehensive loss associated with this hedge was $7.8 million and will be reclassified into earnings (interest expense) over the remaining life of the hedge, which terminates on June 30, 2010. During the three- and nine-months ended September 30, 2009, $1.4 million and $4.1 million, respectively, were reclassified and recorded as interest expense. During the fiscal year December 31, 2009, we estimate that $5.4 million will be reclassified and recorded as interest expense.

On January 4, 2007, we entered into a ten-year interest rate swap agreement for the original notional principal amount of $7.7 million whereby we will pay a fixed interest rate of 6.31% as compared to interest at a floating rate equal to one-month LIBOR plus 125 basis points. The interest rate swap amortization schedule is identical to the promissory note amortization schedule, which has an effective date of January 4, 2007, monthly notional reductions and an expiration date of January 4, 2017.

- 14 -

Fair Value Disclosure of Derivative Instruments

The following table represents required quantitative disclosures regarding fair values of our derivative instruments (in thousands).

Fair Value Measurements at September 30, 2009

Liabilities

Quoted Prices in

Significant

September 30, 2009

Active Markets

Other

Significant

Carrying Value and

for Identical

Observable

Unobservable

Balance Sheet Location

Instruments

Inputs

Description

Derivative instruments

(Level 1)

(Level 2)

(Level 3)

Derivative designated as cash flow hedging instrument:

Interest rate swap

651

—

651

—

Derivative no longer designated as cash flow hedging instrument:

Interest rate swap

8,205

—

8,205

—

Total

8,856

—

8,856

—

The interest rate swap fair value is derived from the present value of the difference in cash flows based on the forward-looking LIBOR yield curve rates, as compared to our fixed rate applied to the hedged amount through the term of the agreement, less adjustments for credit risk.


	Three-Months Ended						Nine-Months Ended
Interest rate swaps	September 30, 2009			September 30, 2008			September 30, 2009		September 30, 2008
(Loss) gain recognized in other comprehensive loss (effective portion)	$	(122	)		(3,200	)	$	237		(4,460	)

Loss reclassified from accumulated other comprehensive loss into interest expense		1,421			—			4,112		—
Gain recognized in change in fair value of derivative instrument		958			3,585			3,448		3,585

10. Fair Value of Financial Instruments

Cash and cash equivalents, receivables, as well as accounts payable, and other current liabilities, as reflected in the consolidated financial statements, approximate fair value because of the short-term maturity of these instruments. The estimated fair value of our other long-term debt instruments, approximate their carrying amounts as the interest rates approximate our current borrowing rate for similar debt instruments of comparable maturity, or have variable interest rates.

Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

The estimated fair values of our financial instruments are as follows (in millions):


	September 30, 2009				December 31, 2008
	Gross				Gross
	Carrying				Carrying
Description	Amount		Fair Value		Amount		Fair Value
Senior credit facility term loan	$	310.4		217.3		312.8		87.6
10³/₄% Series B cumulative exchangeable redeemable preferred stock		92.3		46.2		92.3		23.1

Promissory note payable, included in other long-term debt		6.8		6.7		7.1		7.1

The fair value estimates of these financial instruments were based upon either: (a) market quotes from a major financial institution taking into consideration the most recent market activity, or (b) a discounted cash flow analysis taking into consideration current rates.

- 15 -

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

We own and/or operate 21 radio stations in markets that reach approximately 48% of the U.S. Hispanic population. In addition, we own and operate two television stations and have various affiliation, distribution and/or programming agreements, which allow us to reach approximately 5.3 million households throughout the U.S., including Puerto Rico.

The success of each of our stations depends significantly upon its audience ratings and share of the overall advertising revenue within its market. The broadcasting industry is a highly competitive business, but some barriers to entry do exist. Each of our stations competes with both Spanish-language and English-language stations in its market, as well as with other advertising media, such as newspapers, cable television, the Internet, magazines, outdoor advertising, satellite radio and television, transit advertising and direct mail marketing. Factors which are material to our competitive position include management experience, our stations’ rank in their markets, signal strength and frequency, and audience demographics, including the nature of the Spanish-language market targeted by a particular station.

Our primary source of revenue is the sale of advertising time on our stations to local and national advertisers. Our revenue is affected primarily by the advertising rates that our stations are able to charge, as well as the overall demand for advertising time in each respective market. Seasonal net broadcasting revenue fluctuations are common in the broadcasting industry and are primarily due to fluctuations in advertising demand from local and national advertisers. Typically for the broadcasting industry, the first calendar quarter generally produces the lowest revenue. Our most significant operating expenses are usually compensation expenses, programming expenses, professional fees, and advertising and promotional expenses. Our senior management strives to control these expenses, as well as other expenses, by working closely with local station management and others, including vendors.

Our radio stations are located in six of the top-ten Hispanic markets of Los Angeles, New York, Puerto Rico, Chicago, Miami and San Francisco. Los Angeles and New York have the largest and second largest Hispanic populations, and are also the largest and second largest radio markets in the United States in terms of advertising revenue, respectively. We format the programming of each of our radio stations to capture a substantial share of the U.S. Hispanic audience in their respective markets. The U.S. Hispanic population is diverse, consisting of numerous identifiable groups from many different countries of origin and each with its own musical and cultural heritage. The music, culture, customs and Spanish dialects vary from one radio market to another. We strive to maintain familiarity with the musical tastes and preferences of each of the various Hispanic ethnic groups and customize our programming to match the local preferences of our target demographic audience in each market we serve. Our radio revenue is generated primarily from the sale of local and national advertising.

Our television stations and related affiliates operate under the “MegaTV” brand. We have created a unique television format which focuses on entertainment, events and variety with high-quality production. Our programming is formatted to capture shares of the U.S. Hispanic audience by focusing on our core strengths as an “entertainment” company, thus offering a new alternative compared to the traditional Latino channels. MegaTV’s programming is based on a strategy designed to showcase a combination of programs, ranging from televised radio-branded shows to general entertainment programs, such as music, celebrity, debate, interviews and personality based shows. As part of our strategy, we have incorporated certain of our on-air personalities into our programming, as well as including interactive elements to complement our Internet websites. We develop and produce more than 70% of our programming and obtain other content from Spanish-language production partners. Our television revenue is generated primarily from the sale of local advertising and paid programming.

As part of our operating business, we also operate LaMusica.com, Mega.tv, and our radio station websites which are bilingual (Spanish — English) websites providing content related to Latin music, entertainment, news and culture. LaMusica.com and our network of station websites generate revenue primarily from advertising and sponsorship. In addition, the majority of our station websites simultaneously stream our stations’ content, which has broadened the audience reach of our radio stations. We also occasionally produce live concerts and events throughout the United States, including Puerto Rico.

- 16 -

Comparison Analysis of the Operating Results for the Three-Months Ended September 30, 2009 and 2008

The following summary table presents financial data for each of our operating segments (in thousands):


	Three-Months Ended
	September 30,						Change
	2009			2008			$			%
				(In thousands)
Net revenue:
Radio	$	34,558			36,411			(1,853	)		(5	%)
Television		4,024			4,842			(818	)		(17	%)

Consolidated	$	38,582			41,253			(2,671	)		(6	%)


Engineering and programming expenses:
Radio	$	6,478			9,438			(2,960	)		(31	%)
Television		3,113			4,554			(1,441	)		(32	%)

Consolidated	$	9,591			13,992			(4,401	)		(31	%)


Selling, general and administrative expenses:
Radio	$	10,902			13,579			(2,677	)		(20	%)
Television		1,873			3,006			(1,133	)		(38	%)

Consolidated	$	12,775			16,585			(3,810	)		(23	%)


Corporate expenses:	$	2,372			2,707			(335	)		(12	%)

Depreciation and amortization:
Radio	$	781			817			(36	)		(4	%)
Television		556			578			(22	)		(4	%)
Corporate		237			397			(160	)		(40	%)

Consolidated	$	1,574			1,792			(218	)		(12	%)


(Gain) loss on the disposal of assets, net:
Radio	$	(6	)		(5	)		(1	)		20	%
Television		—			—			—			0	%
Corporate		(8	)		—			(8	)		100	%

Consolidated	$	(14	)		(5	)		(9	)		180	%


Impairment of FCC broadcasting licenses and restructuring costs:
Radio	$	—			2,191			(2,191	)		(100	%)
Television		—			8			(8	)		(100	%)
Corporate		—			—			—			100	%

Consolidated	$	—			2,199			(2,199	)		(100	%)


Operating (loss) income:
Radio	$	16,403			10,391			6,012			58	%
Television		(1,518	)		(3,304	)		1,786			(54	%)
Corporate		(2,601	)		(3,104	)		503			(16	%)

Consolidated	$	12,284			3,983			8,301			208	%

The following summary table presents a comparison of our results of operations for the three-months ended September 30, 2009 and 2008. Various fluctuations illustrated in the table are discussed below. This section should be read in conjunction with our unaudited condensed consolidated financial statements and notes.


	Three-Months Ended
	September 30,						Change
	2009			2008			$			%
				(In thousands)
Net revenue	$	38,582			41,253			(2,671	)		(6	%)
Engineering and programming expenses		9,591			13,992			(4,401	)		(31	%)
Selling, general and administrative expenses		12,775			16,585			(3,810	)		(23	%)
Corporate expenses		2,372			2,707			(335	)		(12	%)
Depreciation and amortization		1,574			1,792			(218	)		(12	%)
Gain on disposal of assets, net		(14	)		(5	)		(9	)		180	%
Impairment of FCC broadcasting licenses and restructuring costs		—			2,199			(2,199	)		(100	%)

Operating income	$	12,284			3,983			8,301			208	%
Interest expense, net		(6,723	)		(5,686	)		(1,037	)		18	%
Change in fair value of derivative instrument		958			3,585			(2,627	)		(73	%)
Other income, net		—			—			—			100	%
Income tax expense		1,976			2,325			(349	)		(15	%)

Net income (loss)	$	4,543		$	(443	)		4,986			(1126	%)

- 17 -

Net Revenue

The decrease in our consolidated net revenue of $2.7 million or 6% was mainly due to the decrease in our radio segment net revenue. Our radio segment net revenue decreased $1.9 million or 5%, primarily due to lower local and barter sales caused mainly by the decline in economic conditions. The decrease in local sales occurred in all of our markets, with the exception of our San Francisco market. The decrease in barter sales occurred in all of our markets, with the exception of our New York and Miami markets. Our television segment net revenue decreased $0.8 million or 17%, primarily due to a decrease in barter sales and local spot sales.

Engineering and Programming Expenses

The decrease in our consolidated engineering and programming expenses of $4.4 million or 31% was due to the decreases in both our radio and television segment expenses. Our radio segment expenses decreased $3.0 million or 31%, primarily related to decreases in compensation and benefits for technical and programming personnel and audience research expenses due to headcount reductions. Our television segment expenses decreased $1.4 million or 32%, primarily due to decreases in original produced programming and compensation and benefits for our technical and programming personnel due to headcount reductions.

Selling, General and Administrative Expenses

The decrease in our consolidated selling, general and administrative expenses of $3.8 million or 23% was due to the decreases in both our radio and television segment expenses. Our radio segment expenses decreased $2.7 million or 20%, primarily due to a decrease in advertising, promotional and marketing costs, compensation and benefits for our selling, general and administrative personnel due to headcount reductions, barter expenses and sales commissions. Our television segment expenses decreased $1.1 million or 38%, primarily due to a decrease in advertising, promotional and marketing costs, barter expenses and compensation and benefits for our selling, general and administrative personnel due to headcount reductions.

Corporate Expenses

The decrease in corporate expenses was primarily a result of a decrease in professional fees and travel and entertainment expenses.

Operating Income (Loss)

The increase in operating income was mainly due to the decrease in our operating expenses. Also contributing to the increase in operating income was a decrease in the impairment of FCC broadcasting licenses and restructuring costs, offset by a decrease in our net revenue.

Interest Expense, Net

In September and October 2008, the counterparty to one of our interest rate swaps, Lehman Brothers Special Financing Inc., and its parent and credit support provider, Lehman Brothers Holdings Inc., each filed for bankruptcy. Based on these bankruptcy filings and the information obtained prior to the filings, this cash flow hedge no longer qualifies for hedge accounting. On September 15, 2008, the Accumulated Other Comprehensive Loss associated with this hedge was $7.8 million and this amount will be reclassified into earnings (interest expense) over the remaining life of the hedge, which terminates on June 30, 2010. During the three-months ended September 30, 2009, $1.4 million was reclassified and recorded as interest expense primarily causing the increase in interest expense, net. Also contributing to the increase in interest expense, net was a decrease in interest income, resulting from a general decline in interest rates on our lower cash balances.

Change in Fair Value of Derivative Instrument

Income Taxes

The income tax expense of $1.9 million arose primarily from the income tax expense resulting from the tax amortization of our FCC broadcasting licenses.

Net Income (Loss)

The increase in net income was primarily due to the increase in operating income related primarily to the decreases in operating expenses and in the impairment of FCC broadcasting licenses and restructuring costs, partially offset by the decrease in the change in fair value of derivative instrument and increase in interest expense.

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Comparison Analysis of the Operating Results for the Nine-Months Ended September 30, 2009 and 2008

The following summary table presents financial data for each of our operating segments (in thousands):


	Nine-Months Ended
	September 30,						Change
	2009			2008			$			%
				(In thousands)
Net revenue:
Radio		91,923			110,445			(18,522	)		(17	%)
Television		11,505			12,421			(916	)		(7	%)

Consolidated		103,428			122,866			(19,438	)		(16	%)


Engineering and programming expenses:
Radio		20,973			29,590			(8,617	)		(29	%)
Television		10,857			14,520			(3,663	)		(25	%)

Consolidated		31,830			44,110			(12,280	)		(28	%)


Selling, general and administrative expenses:
Radio		30,357			45,449			(15,092	)		(33	%)
Television		6,243			8,348			(2,105	)		(25	%)

Consolidated		36,600			53,797			(17,197	)		(32	%)


Corporate expenses:		7,545			9,972			(2,427	)		(24	%)

Depreciation and amortization:
Radio		2,374			2,397			(23	)		(1	%)
Television		1,646			1,022			624			61	%
Corporate		717			1,177			(460	)		(39	%)

Consolidated		4,737			4,596			141			3	%


(Gain) loss on the disposal of assets, net:
Radio		(26	)		(10	)		(16	)		160	%
Television		19			—			19			100	%
Corporate		(22	)		—			(22	)		100	%

Consolidated		(29	)		(10	)		(19	)		190	%


Impairment of FCC broadcasting licenses and restructuring costs:
Radio		10,614			381,606			(370,992	)		(97	%)
Television		24			16,845			(16,821	)		(100	%)
Corporate		48			—			48			100	%

Consolidated		10,686			398,451			(387,765	)		(97	%)


Operating (loss) income:
Radio		27,631			(348,587	)		376,218			(108	%)
Television		(7,284	)		(28,314	)		21,030			(74	%)
Corporate		(8,288	)		(11,149	)		2,861			(26	%)

Consolidated		12,059			(388,050	)		400,109			(103	%)

The following summary table presents a comparison of our results of operations for the nine-months ended September 30, 2009 and 2008. Various fluctuations illustrated in the table are discussed below. This section should be read in conjunction with our unaudited condensed consolidated financial statements and notes.


	Nine-Months Ended
	September 30,						Change
	2009			2008			$			%
				(In thousands)
Net revenue	$	103,428			122,866			(19,438	)		(16	%)
Engineering and programming expenses		31,830			44,110			(12,280	)		(28	%)
Selling, general and administrative expenses		36,600			53,797			(17,197	)		(32	%)
Corporate expenses		7,545			9,972			(2,427	)		(24	%)
Depreciation and amortization		4,737			4,596			141			3	%
Gain on disposal of assets, net		(29	)		(10	)		(19	)		190	%
Impairment of FCC broadcasting licenses and restructuring costs		10,686			398,451			(387,765	)		(97	%)

Operating income (loss)	$	12,059			(388,050	)		400,109			(103	%)
Interest expense, net		(19,841	)		(16,085	)		(3,756	)		23	%
Change in fair value of derivative instrument		3,448			3,585			(137	)		(4	%)
Other income, net		1			1,928			(1,927	)		(100	%)
Income tax expense (benefit)		1,611			(98,207	)		99,818			(102	%)

Net loss	$	(5,944	)	$	(300,415	)		294,471			(98	%)

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Net Revenue

The decrease in our consolidated net revenue of $19.4 million or 16% was mainly due to the decrease in our radio segment net revenue. Our radio segment net revenue decreased $18.5 million or 17%, primarily due to lower local, national, and barter sales caused mainly by the decline in economic conditions. The decrease in local, national and barter sales occurred in all of our markets. Our television segment net revenue decreased $0.9 million or 7%, primarily due to a decrease in barter sales and local spot sales.

Engineering and Programming Expenses

The decrease in our consolidated engineering and programming expenses of $12.3 million or 28% was due to the decreases in both our radio and television segment expenses. Our radio segment expenses decreased $8.6 million or 29%, primarily related to decreases in compensation and benefits for technical and programming personnel and audience research expenses due to headcount reductions. Our television segment expenses decreased $3.7 million or 25%, primarily due to decreases in original produced programming and compensation and benefits for our technical and programming personnel due to headcount reductions.

Selling, General and Administrative Expenses

The decrease in our consolidated selling, general and administrative expenses of $17.2 million or 32% was primarily due to the decreases in both our radio and television segment expenses. Our radio segment expenses decreased $15.1 million or 33%, primarily due to a decrease in advertising, promotional and marketing costs, sales commissions, barter expenses, the allowance for doubtful account provision, and compensation and benefits for our selling, general and administrative personnel due to headcount reductions. Our television segment expenses decreased $2.1 million or 25%, primarily due to a decrease in advertising, promotional and marketing costs and barter expenses.

Corporate Expenses

The decrease in corporate expenses was primarily a result of a decrease in professional fees, travel and entertainment expenses, and compensation and benefits for corporate personnel.

Impairment of FCC Broadcasting Licenses and Restructuring Costs

As a result of our impairment testing of our indefinite-lived intangible assets and goodwill, we recorded a non-cash impairment loss of approximately $10.1 million that reduced the carrying values of our FCC broadcasting licenses in our Chicago and San Francisco markets. The impairment loss was due to changes in estimates and assumptions which were primarily: (a) lower industry advertising revenue growth projections in our respective markets, and (b) lower industry profit margins.

Operating Income

The increase in operating income was mainly due to the decrease in the impairment of FCC broadcasting licenses and restructuring costs. Also contributing to the increase in operating income was a decrease in our operating expenses, offset by a decrease in our net revenue.

Interest Expense, Net

In September and October 2008, the counterparty to one of our interest rate swaps, Lehman Brothers Special Financing Inc., and its parent and credit support provider, Lehman Brothers Holdings Inc., each filed for bankruptcy. Based on these bankruptcy filings and the information obtained prior to the filings, this cash flow hedge no longer qualifies for hedge accounting. On September 15, 2008, the Accumulated Other Comprehensive Loss associated with this hedge was $7.8 million and this amount will be reclassified into earnings (interest expense) over the remaining life of the hedge, which terminates on June 30, 2010. During the nine-months ended September 30, 2009, $4.1 million was reclassified and recorded as interest expense primarily causing the increase in interest expense, net. Also contributing to the increase in interest expense, net was a decrease in interest income, resulting from a general decline in interest rates on our lower cash balances.

Change in Fair Value of Derivative Instrument

- 20 -

Income Taxes

The income tax expense of $1.6 million arose primarily from the tax amortization of our FCC broadcasting licenses, offset by the impact of the reduction of our deferred tax liabilities related to the impairment of our FCC broadcasting licenses of approximately $4.1 million.

Net Loss

The decrease in net loss was primarily due to the decrease in operating loss related primarily to the decrease in impairment of FCC broadcasting licenses and restructuring costs and the decrease in operating expenses, partially offset by the decreases in net revenue and income tax benefit.

Liquidity and Capital Resources

Our primary sources of liquidity are cash and cash equivalents ($45.8 million as of September 30, 2009) and cash expected to be provided by operations. Our cash flow from operations is subject to such factors as overall advertising demand, shifts in population, station listenership and viewership, demographics, audience tastes and fluctuations in preferred advertising media. Our ability to raise funds by increasing our indebtedness is limited by the terms of the certificates of designation governing our Series B preferred stock and the credit agreement governing our senior secured credit facility. Additionally, our certificates of designation and credit agreement each place restrictions on us with respect to the sale of assets, liens, investments, dividends, debt repayments, capital expenditures, transactions with affiliates and consolidations and mergers, among other things.

Our strategy is to primarily utilize cash flows from operations to meet our capital needs and contractual obligations. Management continually projects anticipated cash requirements and believes that cash from operating activities, together with cash on hand, should be sufficient to permit us to meet our operating obligations in the foreseeable future, including, among other things, required quarterly interest and principal payments pursuant to the credit agreement governing our senior secured credit facility revolver due 2010 and senior secured credit facility term loan due 2012, and capital expenditures, excluding the acquisitions of FCC licenses. While not significant to us to date, the disruptions in the capital and credit markets may result in increased borrowing costs associated with our short-term and long-term debt. Assumptions (none of which can be assured) which underlie management’s beliefs, include the following:

•		the demand for advertising within the broadcasting industry and economic conditions in general will not continue to deteriorate further in any material respect;

•		we will continue to successfully implement our business strategy; and

•		we will not incur any material unforeseen liabilities, including but not limited to taxes, environmental liabilities, regulatory matters and legal judgments.

As a result of the decrease in the demand for advertising and the continued deterioration of the economy, we began to implement a restructuring plan in the third quarter of fiscal year 2008 to reduce expenses throughout the Company and have incurred costs totaling $3.0 million to date, which includes $0.6 million for the nine-months ended September 30, 2009, related to the termination of various programming contracts and personnel. In addition, we are reviewing other cost-cutting measures, as we continue to evaluate the scope and duration of the current economic slowdown and its continued impact on our operations.

We continuously evaluate opportunities to make strategic acquisitions and/or dispositions, primarily in the largest Hispanic markets in the United States. We engage in discussions regarding potential acquisitions and/or dispositions from time to time in the ordinary course of business. We anticipate that any future acquisitions would be financed through funds generated from permitted debt financing, equity financing, operations, asset sales or a combination of these or other available sources. However, there can be no assurance that financing from any of these sources, if necessary and available, can be obtained on favorable terms for future acquisitions.

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The following summary table presents a comparison of our capital resources for the nine-months ended September 30, 2009 and 2008, with respect to certain of our key measures affecting our liquidity. The changes set forth in the table are discussed below. This section should be read in conjunction with the unaudited condensed consolidated financial statements and notes.


	Nine-Months Ended
	September 30,						Change
	2009			2008			$
	(In thousands)
Capital expenditures:
Radio	$	428			2,643			(2,215	)
Television		338			12,525			(12,187	)
Corporate		49			423			(374	)

Consolidated	$	815			15,591			(14,776	)


Net cash flows provided by (used in) operating activities	$	21,234			(1,607	)		22,841
Net cash flows used in investing activities		(589	)		(15,500	)		14,911
Net cash flows used in financing activities		(7,729	)		(10,010	)		2,281

Net increase (decrease) in cash and cash equivalents	$	12,916			(27,117	)

Capital Expenditures

The decrease in our capital expenditures is a result of the completion of various capital projects, including the build-out and furnishing of the SBS Miami Broadcast Center that was completed in 2008. For the fiscal year 2009, we are projecting capital expenditures to be in the range of $1.0 to $1.5 million, which is a significant decrease from the prior year.

Net Cash Flows Provided by (Used in) Operating Activities

Changes in our net cash flows from operating activities were primarily a result of the decrease in cash paid to vendors, including interest.

Net Cash Flows Used in Investing Activities

Changes in our net cash flows from investing activities were a result of the decrease in our capital expenditures due to the completion of various capital projects in 2008, primarily the build-out and furnishing of the SBS Miami Broadcast Center.

Net Cash Flows Used in Financing Activities

Changes in our net cash flows from financing activities were a result of our determination that, based on, among other things, the current economic environment and future cash requirements, it would not be prudent to declare or pay cash dividends on our Series B preferred stock which were due on July 15, 2009.

Recent Developments

NASDAQ Notification Letters

NASDAQ Delisting Letter and Temporary Postponement

On August 20, 2008, we received a Staff Deficiency Letter (the Staff Deficiency Letter) from The Nasdaq Stock Market (NASDAQ) indicating that the minimum bid price of our common stock had fallen below $1.00 for 30 consecutive trading days, and therefore not in compliance with NASDAQ Marketplace Rule 4450(b). The Staff Deficiency Letter further provided that in accordance with the NASDAQ Marketplace Rules, we would be provided 180 calendar days, or until February 17, 2009, to regain compliance with the minimum bid price requirement.

On October 22, 2008, we received a notification letter (the Notification Letter) from NASDAQ, notifying us that NASDAQ had suspended the enforcement of the rule requiring a minimum bid price and market value of publicly held shares (the Rule) for a three-month period, effective October 16, 2008. NASDAQ indicated that they would not take any action to delist any security for these concerns during the suspension period. The Notification Letter stated that, given the current extraordinary market conditions, the suspension would remain in effect through January 16, 2009. Subsequently, NASDAQ extended the suspension through July 31, 2009. Upon reinstatement of the Rule, we have 124 calendar days remaining in our compliance period, or until on or about December 4, 2009, to regain compliance. We may regain compliance, either during the suspension or during the compliance period resuming after the suspension, by achieving a $1.00 closing bid price for a minimum of 10 consecutive trading days.

We intend to use all reasonable efforts to maintain the listing of our common stock on the NASDAQ Global Market, but there can be no guarantee that we will regain compliance with the continued listing requirements, or will be able to demonstrate a plan to sustain compliance in order to avoid delisting from the NASDAQ Global Market.

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NASDAQ Audit Committee Compliance Letter

On August 14, 2009, we notified NASDAQ that due to the vacancy in our Audit Committee created by Antonio Fernandez’ voluntary resignation as a member of the Board, we were no longer in compliance with NASDAQ Marketplace Rule 5605 (Rule 5605), which requires that the Audit Committee be comprised of at least three members, each of whom are independent.

As a result, on August 27, 2009, we received a letter from NASDAQ notifying us that we were not in compliance with the audit committee requirements as set forth in Rule 5605 and advising us that, consistent with NASDAQ Marketplace Rule 5605(c)(4)(A), NASDAQ will provide us the following cure period to regain compliance:

•		until the earlier of our next annual shareholders’ meeting or August 11, 2010; or

•		if the next annual shareholders’ meeting is held before February 8, 2010, no later than February 8, 2010.

Since we intend to hold our next annual shareholders’ meeting after February 8, 2010 and before August 11, 2010, we will have until our next annual shareholders’ meeting to regain compliance. An active search for Mr. Fernandez’ replacement is currently underway and we fully intend to regain compliance with Rule 5605 within the cure period allowed by NASDAQ.

Dividend Payment on the Series B Preferred Stock

Under the terms of our Series B preferred stock, the holders of the outstanding shares of the Series B preferred stock are entitled to receive, when, as and if declared by the Board of Directors, dividends on the Series B preferred stock at a rate of 10 ³/4 % per year, of the $1,000 liquidation preference per share, payable quarterly in arrears. On November 10, 2009, August 11, 2009 and May 12, 2009, our Board of Directors, under management’s recommendation, determined that based on, among other things, the current economic environment and future cash requirements, it would not be prudent to declare or pay the January 15, 2010, October 15, 2009 and July 15, 2009 cash dividends in the aggregate amount of approximately $7.5 million. Under the Series B preferred stock certificate of designations, failure to make four consecutive quarterly cash dividend payments will result in the right of the holders of the Series B preferred stock to elect two directors to the board.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our financial condition, changes in financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources.

New Accounting Pronouncements

In the quarter ended September 30, 2009, we adopted the FASB ASC Topic 105 “Generally Accepted Accounting Principles” (ASC 105). ASC 105 does not amend GAAP, but codifies previous accounting literature and revises the GAAP hierarchy to include only two levels of GAAP: authoritative and nonauthoritative. All of the content included in the FASB Accounting Standards Codification will be considered authoritative.

In June 2009, the FASB issued SFAS No. 166, “Accounting for Transfers of Financial Assets — an amendment of FASB Statement No. 140” (SFAS No. 166) which has not yet been codified in the ASC. This statement removes the concept of a qualifying special-purpose entity (QSPE) and eliminates the exception from applying FASB ASC 810-10 Consolidation of Variable Interest Entities, to qualifying special-purpose entities. Furthermore, SFAS No. 166 establishes specific conditions to account for a transfer of financial assets as a sale, changes the requirements for derecognizing financial assets and requires additional disclosure. SFAS No. 166 will be effective as of the beginning of the first annual reporting period that begins after November 15, 2009, which for us will be our fiscal year beginning on January 1, 2010. We do not anticipate that the adoption of SFAS No. 166 will have a significant impact on the Company.

In June 2009, the FASB issued SFAS No. 167, “Amendments to FASB Interpretation No. 46(R)” (SFAS No. 167) which has not yet been codified in the ASC. This guidance is a revision to pre-existing guidance that requires an enterprise to perform an analysis to identify the primary beneficiary of a Variable Interest Entity (VIE), a qualitatively on-going re-assessment on whether the enterprise is the primary beneficiary of the VIE and additional disclosures that will provide users of financial statements with more transparent information about an enterprise’s involvement in a VIE. In addition, this statement revises the methods utilized for determining whether an entity is a VIE and the events that trigger a reassessment of whether an entity is a VIE. SFAS No. 167 will be effective as of the beginning of the first annual reporting period that begins after November 15, 2009, which for us will be our fiscal year beginning on January 1, 2010. We do not anticipate that the adoption of SFAS No. 167 will have a significant impact on the Company.

Item 4T. Controls and Procedures

Evaluation Of Disclosure Controls And Procedures. Our principal executive and financial officers have conducted an evaluation of the effectiveness of the design and operation of our “disclosure controls and procedures,” as such term is defined under Rule 13a-15(e) of the Exchange Act, to ensure that information we are required to disclose in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and include controls and procedures designed to ensure that information we are required to disclose in such reports is accumulated and communicated to management, including our principal executive and financial officers, as appropriate, to allow timely decisions regarding required disclosure. Based on that evaluation, our principal executive and financial officers concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.

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Changes In Internal Control Over Financial Reporting. There has been no change in our internal control over financial reporting during the fiscal quarter ended September 30, 2009 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

The information set forth under Note 7 contained in the “Notes to Unaudited Condensed Consolidated Financial Statements” of this Quarterly Report on Form 10-Q is incorporated by reference in answer to this Item.

Item 1A. Risk Factors

In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2008, which could materially affect our business, financial condition or future results. There have been no material changes from the risk factors described in our Annual Report on Form 10-K for the year ended December 31, 2008, but they are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

- 24 -

Item 6. Exhibits

(a) Exhibits

The following exhibits, which are numbered in accordance with Item 601 of Regulation S-K, are filed herewith or, as noted, incorporated by reference herein:


Exhibit
Number			Exhibit Description

	3.1	—	Third Amended and Restated Certificate of Incorporation of Spanish Broadcasting System, Inc. (the “Company”), dated September 29, 1999 (incorporated by reference to the Company’s 1999 Registration Statement on Form S-1 (Commission File No. 333-85499) (the “1999 Registration Statement”)) (Exhibit A to this exhibit is incorporated by reference to the Company’s Current Report on Form 8-K, dated March 25, 1996 (the “1996 Current Report”).

	3.2	—	Certificate of Amendment to the Third Amended and Restated Certificate of Incorporation of the Company, dated September 29, 1999 (incorporated by reference to Exhibit 3.2 of the Company’s 1999 Registration Statement).

	3.3	—	Amended and Restated By-Laws of the Company (incorporated by reference to Exhibit 3.3 of the Company’s 1999 Registration Statement).

	3.4	—	Certificate of Elimination of 141/4% Senior Exchangeable Preferred Stock, Series A of the Company, dated October 28, 2003 (incorporated by reference to Exhibit 3.3 of the Company’s Quarterly Report on Form 10-Q, dated November 14, 2003 (the “11/14/03 Quarterly Report”)).

	4.1	—	Article V of the Third Amended and Restated Certificate of Incorporation of the Company, dated September 29, 1999 (incorporated by reference to Exhibit 3.1 of the Company’s 1999 Registration Statement).

	4.2	—	Certificate of Designations dated October 29, 2003 Setting Forth the Voting Power, Preferences and Relative, Participating, Optional and Other Special Rights and Qualifications, Limitations and Restrictions of the 103/4% Series A Cumulative Exchangeable Redeemable Preferred Stock of Spanish Broadcasting System, Inc. (incorporated by reference to Exhibit 4.1 of the Company’s 11/14/03 Quarterly Report).

	4.3	—	Certificate of Designations dated October 29, 2003 Setting Forth the Voting Power, Preferences and Relative, Participating, Optional and Other Special Rights and Qualifications, Limitations and Restrictions of the 103/4% Series B Cumulative Exchangeable Redeemable Preferred Stock of Spanish Broadcasting System, Inc. (incorporated by reference to Exhibit 4.2 of the Company’s 11/14/03 Quarterly Report).

	4.4	—	Indenture dated June 29, 1994 among the Company, IBJ Schroder Bank & Trust Company, as Trustee, the Guarantors named therein and the Purchasers named therein (incorporated by reference to Exhibit 4.1 of the Company’s 1994 Registration Statement on Form S-4 (the “1994 Registration Statement”).

	4.5	—	First Supplemental Indenture dated as of March 25, 1996 to the Indenture dated as of June 29, 1994 among the Company, the Guarantors named therein and IBJ Schroder Bank & Trust Company, as Trustee (incorporated by reference to the 1996 Current Report).

	4.6	—	Second Supplemental Indenture dated as of March 1, 1997 to the Indenture dated as of June 29, 1994 among the Company, the Guarantors named therein and IBJ Schroder Bank & Trust Company, as Trustee (incorporated by reference to the 1996 Current Report).

	4.7	—	Supplemental Indenture dated as of October 21, 1999 to the Indenture dated as of June 29, 1994 among the Company, the Guarantors named therein and IBJ Schroder Bank & Trust Company, as Trustee (incorporated by reference to the Company’s 1999 Registration Statement).

	4.8	—	Indenture with respect to 95/8% Senior Subordinated Notes due 2009 with The Bank of New York as Trustee, dated November 8, 1999 (incorporated by reference to the Current Report on Form 8-K dated November 2, 1999 (the “1999 Current Report”)).

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Exhibit
Number			Exhibit Description

	4.9	—	Indenture with respect to 95/8% Senior Subordinated Notes due 2009 with the Bank of New York as Trustee, dated June 8, 2001 (incorporated by reference to the Company’s Registration Statement on Form S-3, filed on June 25, 2001 (the “2001 Form S-3”).

	4.10	—	Form of stock certificate for the Class A common stock of the Company (incorporated by reference to the Company’s 1999 Registration Statement).

	4.11	—	Certificate of Elimination of 141/4% of Senior Exchangeable Preferred Stock, Series A of the Company, dated October 28, 2003 (incorporated by reference to Exhibit 3.3 of the Company’s Quarterly Report on Form 10-Q filed November 14, 2003).

	4.12	—	Certificate of Designation Setting Forth the Voting Power, Preferences and Relative, Participating, Optional and Other Special Rights and Qualifications, Limitations and Restrictions of the Series C Convertible Preferred Stock of the Company (“Certificate of Designation of Series C Preferred Stock”) (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K filed on December 27, 2004).

	4.13	—	Certificate of Correction to Certificate of Designation of Series C Preferred Stock of the Company dated January 7, 2005 (incorporated by reference to Exhibit 4.13 of the Company’s Annual Report filed on Form 10-K for the fiscal year 2004).

	31.1	—	Chief Executive Officer’s Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

	31.2	—	Chief Financial Officer’s Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

	32.1	—	Chief Executive Officer’s Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

	32.2	—	Chief Financial Officer’s Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	SPANISH BROADCASTING SYSTEM, INC.
	By:	/s/ JOSEPH A. GARCÍA
		JOSEPH A. GARCÍA
		Chief Financial Officer, Chief Administrative Officer, Senior Executive Vice President and Secretary (principal financial and accounting officer and duly authorized officer of the registrant)

Date: November 12, 2009

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EXHIBIT INDEX


Exhibit
Number			Exhibit Description

	3.1	—	Third Amended and Restated Certificate of Incorporation of Spanish Broadcasting System, Inc. (the “Company”), dated September 29, 1999 (incorporated by reference to the Company’s 1999 Registration Statement on Form S-1 (Commission File No. 333-85499) (the “1999 Registration Statement”)) (Exhibit A to this exhibit is incorporated by reference to the Company’s Current Report on Form 8-K, dated March 25, 1996 (the “1996 Current Report”).

	3.2	—	Certificate of Amendment to the Third Amended and Restated Certificate of Incorporation of the Company, dated September 29, 1999 (incorporated by reference to Exhibit 3.2 of the Company’s 1999 Registration Statement).

	3.3	—	Amended and Restated By-Laws of the Company (incorporated by reference to Exhibit 3.3 of the Company’s 1999 Registration Statement).

	3.4	—	Certificate of Elimination of 141/4% Senior Exchangeable Preferred Stock, Series A of the Company, dated October 28, 2003 (incorporated by reference to Exhibit 3.3 of the Company’s Quarterly Report on Form 10-Q, dated November 14, 2003 (the “11/14/03 Quarterly Report”)).

	4.1	—	Article V of the Third Amended and Restated Certificate of Incorporation of the Company, dated September 29, 1999 (incorporated by reference to Exhibit 3.1 of the Company’s 1999 Registration Statement).

	4.2	—	Certificate of Designations dated October 29, 2003 Setting Forth the Voting Power, Preferences and Relative, Participating, Optional and Other Special Rights and Qualifications, Limitations and Restrictions of the 103/4% Series A Cumulative Exchangeable Redeemable Preferred Stock of Spanish Broadcasting System, Inc. (incorporated by reference to Exhibit 4.1 of the Company’s 11/14/03 Quarterly Report).

	4.3	—	Certificate of Designations dated October 29, 2003 Setting Forth the Voting Power, Preferences and Relative, Participating, Optional and Other Special Rights and Qualifications, Limitations and Restrictions of the 103/4% Series B Cumulative Exchangeable Redeemable Preferred Stock of Spanish Broadcasting System, Inc. (incorporated by reference to Exhibit 4.2 of the Company’s 11/14/03 Quarterly Report).

	4.4	—	Indenture dated June 29, 1994 among the Company, IBJ Schroder Bank & Trust Company, as Trustee, the Guarantors named therein and the Purchasers named therein (incorporated by reference to Exhibit 4.1 of the Company’s 1994 Registration Statement on Form S-4 (the “1994 Registration Statement”).

	4.5	—	First Supplemental Indenture dated as of March 25, 1996 to the Indenture dated as of June 29, 1994 among the Company, the Guarantors named therein and IBJ Schroder Bank & Trust Company, as Trustee (incorporated by reference to the 1996 Current Report).

	4.6	—	Second Supplemental Indenture dated as of March 1, 1997 to the Indenture dated as of June 29, 1994 among the Company, the Guarantors named therein and IBJ Schroder Bank & Trust Company, as Trustee (incorporated by reference to the 1996 Current Report).

	4.7	—	Supplemental Indenture dated as of October 21, 1999 to the Indenture dated as of June 29, 1994 among the Company, the Guarantors named therein and IBJ Schroder Bank & Trust Company, as Trustee (incorporated by reference to the Company’s 1999 Registration Statement).

	4.8	—	Indenture with respect to 95/8% Senior Subordinated Notes due 2009 with The Bank of New York as Trustee, dated November 8, 1999 (incorporated by reference to the Current Report on Form 8-K dated November 2, 1999 (the “1999 Current Report”)).

	4.9	—	Indenture with respect to 95/8% Senior Subordinated Notes due 2009 with the Bank of New York as Trustee, dated June 8, 2001 (incorporated by reference to the Company’s Registration Statement on Form S-3, filed on June 25, 2001 (the “2001 Form S-3”).

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Exhibit
Number			Exhibit Description

	4.10	—	Form of stock certificate for the Class A common stock of the Company (incorporated by reference to the Company’s 1999 Registration Statement).

	4.11	—	Certificate of Elimination of 141/4% of Senior Exchangeable Preferred Stock, Series A of the Company, dated October 28, 2003 (incorporated by reference to Exhibit 3.3 of the Company’s Quarterly Report on Form 10-Q filed November 14, 2003).

	4.12	—	Certificate of Designation Setting Forth the Voting Power, Preferences and Relative, Participating, Optional and Other Special Rights and Qualifications, Limitations and Restrictions of the Series C Convertible Preferred Stock of the Company (“Certificate of Designation of Series C Preferred Stock”) (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K filed on December 27, 2004).

	4.13	—	Certificate of Correction to Certificate of Designation of Series C Preferred Stock of the Company dated January 7, 2005 (incorporated by reference to Exhibit 4.13 of the Company’s Annual Report filed on Form 10-K for the fiscal year 2004).

	31.1	—	Chief Executive Officer’s Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

	31.2	—	Chief Financial Officer’s Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

	32.1	—	Chief Executive Officer’s Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

	32.2	—	Chief Financial Officer’s Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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SPANISH BROADCASTING SYSTEM INC - Quarter Report: 2009 September (Form 10-Q)

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