Spanish Broadcasting System (SBSAA) 10-Q 2010 Q1 Quarterly report

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 March 31, 2010

or

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 000-27823

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 2

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. Yesþ Noo

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). Yeso Noo

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 filero	Accelerated filero	Non-accelerated filero	Smaller reporting companyþ
		(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). Yeso Noþ

As of May 11, 2010, 41,596,513 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		3
Unaudited Condensed Consolidated Balance Sheets as of March 31, 2010 and December 31, 2009		3
Unaudited Condensed Consolidated Statements of Operations for the Three-Months Ended March 31, 2010 and 2009		4
Unaudited Condensed Consolidated Statement of Changes in Stockholders’ Deficit and Comprehensive Income for the Three-Months Ended March 31, 2010		5
Unaudited Condensed Consolidated Statements of Cash Flows for the Three-Months Ended March 31, 2010 and 2009		6
Notes to Unaudited Condensed Consolidated Financial Statements		8
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		15
ITEM 4. Controls and Procedures		20
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings		20
ITEM 1A. Risk Factors		20
ITEM 6. Exhibits		21
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements — Unaudited

SPANISH BROADCASTING SYSTEM, INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Balance Sheets

	March 31,			December 31,
	2010			2009
	(In thousands, except share data)
Assets
Current assets:
Cash and cash equivalents	$	60,603			53,580
Receivables, net of allowance for doubtful accounts of $1,098 in 2010 and $1,247 in 2009		20,929			24,800
Prepaid expenses and other current assets		2,988			3,439
Total current assets		84,520			81,819
Property and equipment, net of accumulated depreciation of $51,107 in 2010 and $49,560 in 2009		44,190			45,365
FCC broadcasting licenses		312,623			312,623
Goodwill		32,806			32,806
Other intangible assets, net of accumulated amortization of $223 in 2010 and $214 in 2009		1,211			1,220
Deferred financing costs, net of accumulated amortization of $5,293 in 2010 and $5,028 in 2009		2,308			2,574
Other assets		2,323			2,386
Total assets	$	479,981			478,793
Liabilities and Stockholders’ Deficit
Current liabilities:
Accounts payable and accrued expenses	$	18,239			18,211
Accrued interest		8,864			5,608
Unearned revenue		532			570
Other liabilities		345			602
Derivative instruments		3,016			5,863
Senior credit facility revolver due 2010		15,000			15,000
Current portion of the senior credit facility term loan due 2012		3,250			3,250
Current portion of other long-term debt		448			447
Series B cumulative exchangeable redeemable preferred stock dividends payable		9,514			7,032
Total current liabilities		59,208			56,583
Other liabilities, less current portion		392			405
Derivative instruments		696			612
Senior credit facility term loan due 2012, less current portion		305,500			306,313
Other long-term debt, less current portion		6,493			6,605
Deferred income taxes		73,152			71,408
Total liabilities		445,441			441,926
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 March 31, 2010 and December 31, 2009, 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 March 31, 2010 and December 31, 2009, respectively		4			4
Class A common stock, $0.0001 par value. Authorized 100,000,000 shares; 41,596,513 and 41,542,513 shares issued and outstanding at March 31, 2010 and December 31, 2009, respectively		4			4
Class B common stock, $0.0001 par value. Authorized 50,000,000 shares; 23,403,500 shares issued and outstanding at March 31, 2010 and December 31, 2009, respectively		2			2
Additional paid-in capital		525,065			525,026
Accumulated other comprehensive loss		(1,569	)		(2,513	)
Accumulated deficit		(581,315	)		(578,005	)
Total stockholders’ deficit		(57,809	)		(55,482	)
Total liabilities and stockholders’ deficit	$	479,981			478,793

See accompanying notes to the unaudited condensed consolidated financial statements.

3

SPANISH BROADCASTING SYSTEM, INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Operations

	Three-Months Ended
	March 31,
	2010			2009
	(In thousands, except per share data)
Net revenue	$	30,846			27,794
Operating expenses:
Engineering and programming		9,874			11,005
Selling, general and administrative		12,789			11,362
Corporate expenses		2,221			2,861
Depreciation and amortization		1,556			1,593
Total operating expenses		26,440			26,821
Loss on the disposal of assets, net		—			11
Impairment of assets and restructuring costs		—			10,616
Operating income (loss)		4,406			(9,654	)
Other (expense) income:
Interest expense, net		(6,303	)		(6,417	)
Change in fair value of derivative instrument		2,847			2,856
Income (loss) before income taxes		950			(13,215	)
Income tax expense (benefit)		1,778			(2,269	)
Net loss		(828	)		(10,946	)
Dividends on Series B preferred stock		(2,482	)		(2,482	)
Net loss applicable to common stockholders	$	(3,310	)		(13,428	)
Basic and diluted net loss per common share	$	(0.05	)	��	(0.19	)
Weighted average common shares outstanding:
Basic and Diluted		72,600			72,502

See accompanying notes to the unaudited condensed consolidated financial statements.

4

SPANISH BROADCASTING SYSTEM, INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statement of Changes in Stockholders’ Deficit
and Comprehensive Income for the Three-Months Ended March 31, 2010

	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, 2009		380,000	$	4		41,542,513	$	4		23,403,500	$	2	$	525,026	$	(2,513	)	$	(578,005	)	$	(55,482	)
Issuance of Class A common stock from vesting of restricted stock		—		—		54,000		—		—		—		—		—			—			—
Stock-based compensation		—		—		—		—		—		—		39		—			—			39
Series B preferred stock dividends		—		—		—		—		—		—		—		—			(2,482	)		(2,482	)
Comprehensive loss:
Net loss		—		—		—		—		—		—		—		—			(828	)		(828	)
Amounts reclassified to earnings during the period		—		—		—		—		—		—		—		1,028			—			1,028
Unrealized loss on derivative instruments		—		—		—		—		—		—		—		(84	)		—			(84	)
Comprehensive income																						116
Balance at March 31, 2010		380,000	$	4		41,596,513	$	4		23,403,500	$	2	$	525,065	$	(1,569	)	$	(581,315	)	$	(57,809	)

See accompanying notes to the unaudited condensed consolidated financial statements.

5

SPANISH BROADCASTING SYSTEM, INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Cash Flows

	Three-Months Ended
	March 31,
	2010			2009
	(In thousands)
Cash flows from operating activities:
Net loss	$	(828	)		(10,946	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Loss on the sale of assets		—			11
Impairment of assets		—			10,123
Stock-based compensation		39			71
Depreciation and amortization		1,556			1,593
Net barter income		(46	)		(31	)
Provision for trade doubtful accounts		282			(130	)
Amortization of deferred financing costs		266			269
Deferred income taxes		1,744			(2,408	)
Unearned revenue		37			120
Change in fair value of derivative instrument		(1,819	)		(1,614	)
Amortization of other liabilities		—			(17	)
Changes in operating assets and liabilities:
Trade receivables		3,560			5,841
Prepaid expenses and other current assets		451			(351	)
Other assets		63			262
Accounts payable and accrued expenses		41			(326	)
Accrued interest		3,256			2,147
Other liabilities		(270	)		—
Net cash provided by operating activities		8,332			4,614
Cash flows from investing activities:
Purchases of property and equipment		(385	)		(289	)
Proceeds from the sale of property and equipment and insurance recoveries		—			163
Net cash used in investing activities		(385	)		(126	)
Cash flows from financing activities:
Payment of senior secured credit facility term loan 2012		(813	)		(813	)
Payment of Series B preferred stock cash dividends		—			(2,482	)
Payments of other long-term debt		(111	)		(109	)
Net cash used in financing activities		(924	)		(3,404	)
Net increase in cash and cash equivalents		7,023			1,084
Cash and cash equivalents at beginning of period		53,580			32,852
Cash and cash equivalents at end of period	$	60,603			33,936
Supplemental cash flows information:
Interest paid	$	1,758			2,760
Income taxes paid, net	$	8			22
Noncash investing and financing activities:
Accrual of Series B preferred stock cash dividend	$	2,482			—
Unrealized (loss) gain on derivative instruments	$	(84	)		388

See accompanying notes to the unaudited condensed consolidated financial statements.

6

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, 2009, and those described from time to time in our future reports filed with the Securities and Exchange Commission (the SEC).

7

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 March 31, 2010 and December 31, 2009 and for the three-month periods ended March 31, 2010 and 2009 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 U.S. 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, 2009, included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2009. 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. Additionally, we evaluated subsequent events after the balance sheet date of March 31, 2010 through the financial statements issuance date. The results of operations for the three-month period ended March 31, 2010 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. Certain prior year amounts have been reclassified to conform with the current year presentation.

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 (i) 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). 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.

8

(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.

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 vest according to the terms determined by the compensation committee of our board of directors, and have a contractual life of up to ten years from the date of grant. Options granted under the 1999 NQ Plan 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.

Stock Options and Nonvested Shares Activity

Stock options have only been granted to employees and directors. 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, 2009 and March 31, 2010, and changes during the three-months ended March 31, 2010, 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, 2009		2,057		$	6.41
Granted		—			—
Exercised		—			—
Forfeited		(8	)		2.55
Outstanding at March 31, 2010		2,049		$	6.43	$	108		4.6
Exercisable at March 31, 2010		1,987		$	6.59	$	93		4.5

During the three-months ended March 31, 2010 and 2009, 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.

9

The following table summarizes information about stock options outstanding and exercisable at March 31, 2010 (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		630		62	$	2.23		6.8		630	$	2.34
5.00 – 9.99		1,159		—		8.19		3.2		1,159		8.19
10.00 – 11.78		198		—		10.79		4.5		198		10.79
		1,987		62	$	6.43		4.6		1,987	$	6.59

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.

A summary of the status of our nonvested shares, as of December 31, 2009 and March 31, 2010, and changes during the three-months ended March 31, 2010, is presented below (in thousands, except per share data):

				Weighted
				Average Grant-
				Date Fair Value
	Shares			(per Share)
Nonvested at December 31, 2009		127		$	1.73
Awarded		—			—
Vested		(54	)		2.78
Forfeited		—			—
Nonvested at March 31, 2010		73		$	0.96

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.

Common stock equivalents were not considered in the calculation for the three-month periods ended March 31, 2010 and 2009, since their effect would be anti-dilutive. If included, the common stock equivalents for these periods would have amounted to 154 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):

	Quarter Ended
	March 31,
	2010			2009
Net revenue:
Radio	$	27,080			24,176
Television		3,766			3,618
Consolidated	$	30,846			27,794
Engineering and programming expenses:
Radio	$	5,790			7,391
Television		4,084			3,614
Consolidated	$	9,874			11,005
Selling, general and administrative expenses:
Radio	$	10,871			9,152
Television		1,918			2,210
Consolidated	$	12,789			11,362
Operating income before depreciation and amortization, (gain) loss on the disposal of assets, net, and impairment of assets and restructuring costs:
Radio	$	10,419			7,633
Television		(2,236	)		(2,206	)
Corporate		(2,221	)		(2,861	)
Consolidated	$	5,962			2,566
Depreciation and amortization:
Radio	$	733			813
Television		562			538
Corporate		261			242
Consolidated	$	1,556			1,593
(Gain) loss on the disposal of assets, net:
Radio	$	—			(8	)
Television		—			19
Corporate		—			—
Consolidated	$	—			11
Impairment of assets and restructuring costs:
Radio	$	—			10,548
Television		—			24
Corporate		—			44
Consolidated	$	—			10,616
Operating income (loss):
Radio	$	9,686			(3,720	)
Television		(2,798	)		(2,787	)
Corporate		(2,482	)		(3,147	)
Consolidated	$	4,406			(9,654	)
Capital expenditures:
Radio	$	59			178
Television		295			98
Corporate		31			13
Consolidated	$	385			289
	March 31,			December 31,
	2010			2009
Total Assets:
Radio	$	428,202			425,565
Television		45,357			45,811
Corporate		6,422			7,417
Consolidated	$	479,981			478,793

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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-months ended March 31, 2010 and 2009, respectively, was as follows (in thousands):

	Three-Months Ended
	March 31,
	2010			2009
Net loss	$	(828	)		(10,946	)
Other comprehensive income (loss):
Amounts reclassified to earnings during the period		1,028			1,242
Unrealized (loss) gain on derivative instruments		(84	)		388
Total comprehensive income (loss)	$	116			(9,316	)

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 the tax amortization of our FCC broadcasting licenses, 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 2006 through 2009. The tax years that remain subject to assessment of additional liabilities by the Puerto Rico tax authority are 2004 through 2009.

Based on our evaluation, we have concluded that there are no significant uncertain tax positions requiring recognition in our consolidated financial statements as of March 31, 2010 and December 31, 2009.

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.

8. Derivative and Hedging Activities

At March 31, 2010, derivative financial instruments are comprised of the following (in thousands):

	Fixed
	interest			Expiration	Notional		Fair
Agreement	rate			date	amounts		value
Interest rate swap		5.98	%	June 2010	$	308,750	$	3,016
Interest rate swap		6.31	%	January 2017		6,681		696
					$	315,431	$	3,712

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 will 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.

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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, 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 being recorded in earnings as a “Change in fair value of derivative instrument.” For the three-month periods ended March 31, 2010 and 2009, the change in the fair value of derivative instrument totaled $2.8 million and $2.9 million, respectively.

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. For the three-month periods ended March 31, 2010 and 2009, $1.0 million and $1.2 million were reclassified and recorded as interest expense, respectively. For the fiscal year 2010, we estimate that $1.9 million will be reclassified and recorded as interest expense.

As a result of the Lehman bankruptcy filings, a dispute has arisen with respect to payments under the swap agreement. We have agreed to non-binding mediation of our dispute with the counterparty and we believe we will be able to resolve the dispute without litigation.

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.

9. Fair Value Measurement Disclosures

Fair Value of Financial Instruments

Cash and cash equivalents, receivables, as well as accounts payable, and other current liabilities, as reflected in the consolidated balance sheets, 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):

	March 31, 2010				December 31, 2009
	Gross				Gross
	Carrying				Carrying
Description	Amount		Fair Value		Amount		Fair Value
Senior credit facility term loan	$	308.8		274.0		309.6		255.9
103/4% Series B cumulative exchangeable redeemable preferred stock		92.3		63.5		92.3		57.9
Promissory note payable, included in other long-term debt		6.7		6.4		6.8		6.5

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.

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Fair Value of Derivative Instruments

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

			Fair value measurements at March 31, 2010
			Liabilities
	March 31, 2010		Quoted prices in		Significant
	carrying value and		active markets		other		Significant
	balance sheet		for identical		observable		unobservable
	location of derivative		instruments		inputs		inputs
Description	instruments		(Level 1)		(Level 2)		(Level 3)
Derivative designated as a cash flow hedging instrument:
Interest rate swap	$	696		—		696		—
Derivative no longer designated as a cash flow hedging instrument:
Interest rate swap		3,016		—		3,016		—
Total	$	3,712		—		3,712		—
			Fair value measurements at December 31, 2009
			Liabilities
	December 31, 2009		Quoted prices in		Significant
	carrying value and		active markets		other		Significant
	balance sheet		for identical		observable		unobservable
	location of derivative		instruments		inputs		inputs
Description	instruments		(Level 1)		(Level 2)		(Level 3)
Derivative designated as a cash flow hedging instrument:
Interest rate swap	$	612		—		612		—
Derivative no longer designated as a cash flow hedging instrument:
Interest rate swap		5,863		—		5,863		—
Total	$	6,475		—		6,475		—

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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 March 31,
Interest rate swaps	2010			2009
(Loss) gain recognized in other comprehensive loss (effective portion)	$	(84	)		388
Loss reclassified from accumulated other comprehensive loss into interest expense	$	1,028			1,242
Gain recognized in change in fair value of derivative instrument	$	2,847			2,856

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 6.5 million households throughout the U.S., including Puerto Rico.

The success of each of our stations depends significantly upon its audience ratings and its 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. 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. 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, current 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.

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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.

Comparison Analysis of the Operating Results for the Three-Months Ended March 31, 2010 and 2009

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

	Quarter Ended
	March 31,
	2010			2009
Net revenue:
Radio	$	27,080			24,176
Television		3,766			3,618
Consolidated	$	30,846			27,794
Engineering and programming expenses:
Radio	$	5,790			7,391
Television		4,084			3,614
Consolidated	$	9,874			11,005
Selling, general and administrative expenses:
Radio	$	10,871			9,152
Television		1,918			2,210
Consolidated	$	12,789			11,362
Operating income before depreciation and amortization, (gain) loss on the disposal of assets, net, and impairment of assets and restructuring costs:
Radio	$	10,419			7,633
Television		(2,236	)		(2,206	)
Corporate		(2,221	)		(2,861	)
Consolidated	$	5,962			2,566
Depreciation and amortization:
Radio	$	733			813
Television		562			538
Corporate		261			242
Consolidated	$	1,556			1,593
(Gain) loss on the disposal of assets, net:
Radio	$	—			(8	)
Television		—			19
Corporate		—			—
Consolidated	$	—			11
Impairment of assets and restructuring costs:
Radio	$	—			10,548
Television		—			24
Corporate		—			44
Consolidated	$	—			10,616
Operating income (loss):
Radio	$	9,686			(3,720	)
Television		(2,798	)		(2,787	)
Corporate		(2,482	)		(3,147	)
Consolidated	$	4,406			(9,654	)

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The following summary table presents a comparison of our results of operations for the three-months ended March 31, 2010 and 2009. Various fluctuations 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
	March 31,
	2010			2009
	(In thousands)
Net revenue	$	30,846			27,794
Engineering and programming expenses		9,874			11,005
Selling, general and administrative expenses		12,789			11,362
Corporate expenses		2,221			2,861
Depreciation and amortization		1,556			1,593
Loss on disposal of assets, net of disposal costs		—			11
Impairment of assets and restructuring costs		—			10,616
Operating income (loss)	$	4,406			(9,654	)
Interest expense, net		(6,303	)		(6,417	)
Change in fair value of derivative instrument		2,847			2,856
Income tax expense (benefit)		1,778			(2,269	)
Net loss	$	(828	)		(10,946	)

Net Revenue

The increase in our consolidated net revenue of $3.1 million or 11% was mainly due to the increase in our radio segment net revenue. Our radio segment net revenue increased $2.9 million or 12%, primarily due to special events and local sales, as economic conditions continue to improve. The increase in special events occurred in our Puerto Rico and Los Angeles markets and the increase in local sales occurred in all of our markets, with the exception of our Chicago market. Our television segment net revenue increased $0.2 million or 4%, primarily due to an increase in local spot sales and integrated sales, offset by a decrease in paid programming.

Engineering and Programming Expenses

The decrease in our consolidated engineering and programming expenses of $1.1 million or 10% was due to the decrease in our radio segment expenses. Our radio segment expenses decreased $1.6 million or 22%, primarily related to decreases in compensation and benefits for technical and programming personnel due to headcount reductions. Our television segment expenses increased $0.5 million or 13%, primarily due to an increase in broadcasting rights fees for our new Puerto Rico, New York and Chicago outlets, offset by a decrease in acquired and original produced programming content.

Selling, General and Administrative Expenses

The increase in our consolidated selling, general and administrative expenses of $1.4 million or 13% was due to the increase in our radio segment expenses. Our radio segment expenses increased $1.7 million or 19%, primarily due to increases in special event expenses and the allowance for doubtful accounts. Our television segment expenses decreased $0.3 million or 13%, primarily due to a decrease in 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 decreases in compensation and benefits for our corporate personnel due to headcount reductions and professional fees.

Operating Income (Loss)

The increase in operating income was mainly due to the increase in our net revenue and a decrease in our impairment of assets and restructuring costs of $10.6 million.

Income Taxes

The income tax expense of $1.8 million arose primarily from the income tax expense resulting from the tax amortization of our FCC broadcasting licenses.

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Net Loss

The decrease in net loss was primarily due to the increase in operating income related primarily to the increase in net revenue and the decrease in the impairment of assets and restructuring costs.

Liquidity and Capital Resources

Our primary sources of liquidity are cash and cash equivalents ($60.6 million as of March 31, 2010) 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 broadcasting 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 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 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. We incurred expenses related to the termination of various programming contracts and personnel and a loss on a sublease of office space. As of March 31, 2010, the total accrued expenses on our consolidated balance sheet related to restructuring activities were $0.6 million, which was included in other liabilities.

We evaluate strategic media acquisitions and/or dispositions and strive to expand our media content through distribution and affiliations in order to achieve a significant presence with clusters of stations in the top U.S. Hispanic markets. We engage in discussions regarding potential acquisitions and/or dispositions and expansion of our content through media outlets 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 three-months ended March 31, 2010 and 2009, 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.

	Three-Months Ended
	March 31,						Change
	2010			2009			$
	(In thousands)
Capital expenditures:
Radio	$	59			178			(119	)
Television		295			98			197
Corporate		31			13			18
Consolidated	$	385			289			96
Net cash flows provided by operating activities	$	8,332			4,614			3,718
Net cash flows used in investing activities		(385	)		(126	)		(259	)
Net cash flows used in financing activities		(924	)		(3,404	)		2,480
Net increase in cash and cash equivalents	$	7,023			1,084

Net Cash Flows Provided by Operating Activities

Changes in our net cash flows from operating activities were primarily a result of the increase in sales and 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 increase in our capital expenditures.

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 January 15, 2010.

Recent Developments

NASDAQ Notification Letters

NASDAQ Compliance Letter

On April 30, 2010, we received notification from NASDAQ that we regained compliance with the $1.00 minimum closing bid price requirement in accordance with NASDAQ Listing Rule 5450(a)(1). The NASDAQ Hearings Listing Qualifications Panel has determined to continue the listing of our securities on The NASDAQ Stock Market.

Additionally, our Board of Directors have decided to abandon the proposed reverse stock split, which, as explained in our Information Statement on Schedule 14(C) filed with the Securities and Exchange Commission on April 26, 2010, was approved by written consent on April 13, 2010 by our majority stockholder for the sole purpose of regaining compliance with the NASDAQ Listing Rule.

NASDAQ Audit Committee Compliance Letter

On August 14, 2009, we notified NASDAQ that due to the vacancy created by Antonio Fernandez’s voluntary resignation as a member of the Board and the Audit Committee, we were no longer in compliance with NASDAQ Rule 5605(c)(2) pertaining to audit committee requirements. Mr. Fernandez, who was one of our independent directors and a member of our Audit Committee, resigned from the Board.

As a result, on August 27, 2009, we received a letter from NASDAQ notifying us that we are not in compliance with the audit committee requirements as set forth in NASDAQ Listing Rule 5605(c)(2). NASDAQ’s letter advises us that, consistent with NASDAQ Listing Rules 5605(b)(1)(A) and 5605(c)(4), NASDAQ will provide us a cure period to regain compliance until the earlier of our next annual shareholders’ meeting or August 11, 2010. Our Annual Meeting is scheduled for June 3, 2010; therefore, we have until June 3, 2010 to comply with NASDAQ’s audit committee requirements. We are actively seeking a third independent director to serve on the Audit Committee and anticipate being able to comply with NASDAQ’s audit committee requirements within the cure period allowed by NASDAQ.

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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 10³/4% per year, of the $1,000 liquidation preference per share, payable quarterly.

During the fiscal year 2009, our Board of Directors, under management’s recommendation, determined that based on, among other things, the then 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.

On April 13, 2010, the Board of Directors declared the April 15, 2010 cash dividend of approximately $2.5 million, which was subsequently paid on April 15, 2010.

Currently, our Board of Directors has not yet determined whether to pay the scheduled July 15, 2010 dividend. In determining whether to declare and pay any future cash dividends, our Board of Directors will consider management’s recommendation, our financial condition, as well as whether, under Delaware law, sufficient surplus or net profits exist to pay such dividends.

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.

Item 4. 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.

Changes In Internal Control Over Financial Reporting.There has been no change in our internal control over financial reporting during the fiscal quarter ended March 31, 2010 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, 2009, which could materially affect our business, financial condition or future results. Other than the modification to the risk factor set forth below, there have been no material changes to the Company’s risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2009. The below risk factor and the risk factors described in our Annual Report on Form 10-K for the year ended December 31, 2009 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.

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The liquidity of our common stock could be adversely affected if we are delisted from the NASDAQ Global Market.

Due to the vacancy created by Antonio Fernandez’s voluntary resignation as a member of the Board and the Audit Committee, we were no longer in compliance with NASDAQ Rule 5605(c)(2) pertaining to audit committee requirements. The NASDAQ Stock Market, or NASDAQ, has granted us additional time to try to regain compliance with the audit committee requirements. We have until the earlier of our next annual shareholders’ meeting or August 11, 2010 to regain such compliance. Our Annual Meeting is scheduled for June 3, 2010; therefore, we have until June 3, 2010 to comply with NASDAQ’s audit committee requirements. Failing to comply with NASDAQ’s audit committee requirements will cause our Class A common stock to be delisted.

Delisting from NASDAQ would make trading our common stock more difficult for investors, potentially leading to further declines in our share price. Without a NASDAQ listing, stockholders may have a difficult time getting a quote for the sale or purchase of our stock, the sale or purchase of our stock would likely be made more difficult and the trading volume and liquidity of our stock would likely decline. Delisting from NASDAQ would also result in negative publicity and would also make it more difficult for us to raise additional capital. The absence of such a listing may adversely affect the acceptance of our common stock as currency or the value accorded by other parties. Further, if we are delisted, we would also incur additional costs under state blue sky laws in connection with any sales of our securities. These requirements could severely limit the market liquidity of our common stock and the ability of our stockholders to sell our common stock in the secondary market.

If our common stock is delisted by NASDAQ, our common stock may be eligible to trade on the OTC Bulletin Board, an over-the-counter quotation system, or on the pink sheets where an investor may find it more difficult to dispose of or obtain accurate quotations as to the market value of our common stock. We cannot assure you that our common stock, if delisted from the NASDAQ Global Market, will be listed on a national securities exchange, a national quotation service, the OTC Bulletin Board or the pink sheets.

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).

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Exhibit
Number			Exhibit Description
	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 9 5/8% Senior Subordinated Notes due 2009 with The Bank of New York as Trustee, dated November 2, 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 9 5/8% 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).

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Exhibit
Number			Exhibit Description
	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: May 12, 2010

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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).

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Exhibit
Number			Exhibit Description
	4.8	—	Indenture with respect to 9 5/8% Senior Subordinated Notes due 2009 with The Bank of New York as Trustee, dated November 2, 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 9 5/8% 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.

26