Question-and-Answer Session
Operator
(Operator Instructions) Our first question is from Victor Miller. You may ask your question.
Victor Miller – Bear Stearns & Co.
On national advertising the large market versus the smaller market gap seems to be widening pretty substantially in terms of performance national not being as healthy in the large market. Do you think Jeff this from the number of alternatives in those markets or is money starting to go more into the radio network business? Or are you just seeing the rates coming down more because everyone can just wait for the last minute and then panic sets in and you can be very aggressive for the advertiser on the rate side.
Jeffrey H. Smulyan
I think it’s all of the above. I’ve said, we as an industry has lost our cache. The thing that is most frustrating and I’ve talked about eastern Europe and Paul Fiddick and I were comparing consumption levels and consumptions levels of radio in eastern Europe are actually less than they are here. You see that again, validation of the consumption levels with the staggering PPM numbers. The perception is radio is yesterday’s news and I think a lot of advertisers has said, ?Well if radio is yesterday’s news let me allocate dollars.? I think the reason is so much better in small markets is because this is an industry that makes the cash register ring. And, I don’t dare what perception is on Madison Avenue when you’re in Bismarck, North Dakota and you’re an auto dealer and your radio spots keep getting you results, you keep doing it and I think that’s been the strange dichotomy between large and small markets. I think we have to point out to major national advertisers and I think that’s what we’re going to do, that this is a very vibrant medium. We have lost that battle.
Victor Miller – Bear Stearns & Co.
The second question obviously you spent Between Bulgaria and Orange Coast about $17 million. Why have you decided to use capital there instead of really reinvigorating that share repurchase and only doing 400,000 shares in the quarter when that seems to be also important element on your value creation.
Jeffrey H. Smulyan
There are tradeoffs Vic and what we’ve said is we want to go to areas where we can grow disproportionately. And you’re right probable the best place to grow disproportionably is buying our own shares back. But we also feel that when there’re opportunities - in both those situations Bulgaria rounded out our existing stations and it was a case where we thought 1 + 2 equals more than three. By adding the third station in Bulgaria it made a big difference to our two existing stations. The same with Orange Coast, where Orange Coast makes us much stronger with Los Angeles Magazine, those were unique. But clearly we’re going to allocate capital. We’re very, very protective of our capital. We’re going to allocate where we absolutely think there is a better rate of return than buying back shares.
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