Question-and-Answer Session
Operator
(Operator Instructions)Your first question comes from Bishop Cheen - Wachovia.
Bishop Cheen – Wachovia
Let me focus on the balance sheet, clearly you are 6.5 times [covey] as we get toward year end, that’s the covenant EBITDA, and it looks like you’re going to clear it and I think you already gave guidance on that low 6’s, but as you get to 2009 without the political, I guess the concept here is whether all of the retrans, the e-media, the other things you’re certainly putting in place including cost control can replace the Olympic and the political which were certainly higher margin revenue. Can you give us any color you’re thinking about 2009?
Perry E. Sook
I’ll take a crack and then I’ll turn it over to Matt. We currently forecast substantial growth in both e-media revenues for 2009 and substantial growth in our retrans revenues for 2009 based on the status of contract discussions that some of which have been concluded and some of which are in the mid-stages and we feel that those two revenue sources can basically backfill approximately two-thirds of the political revenue that we had this year. Now, we’ll have political revenue next year probably 10% to 15% of what we end up this year with as we do in every odd numbered year so we think we can backfill about two-thirds of that.
All of that would lead to a high single digit, low double-digit EBITDA decline but from a free cash flow perspective next year, we’ll have back approximately $30 million that we have spent on the digital conversion this year. We’re projecting that even under that scenario and a decline in poor revenue that we’ll have a substantial free cash flow component to use for debt reduction. At this point, all of which is to say, Bishop, is at this point, we do not foresee any covenant issues as the covenant doesn’t step down again until the end of second quarter 2010.
Bishop Cheen – Wachovia
That’s very helpful. One other follow up; since September, October, November, have you bought back any more debt or stock as a company?
Matthew E. Devine
Bishop, we have. In this fourth quarter; let me start it this way, we have a $10 million restricted payment basket that allows us to buy in any of our securities within any calendar year. As we mentioned in this call, we bought in 11 3/8 % notes and we took the balance of that $10 million amount which totaled about $4.8 million and bought in some of our 7% notes at about $0.60 on the dollar. We retired about $8 million of those notes in this quarter and that will also help us as we go into next year in terms of covenant compliance. Again, we’ll have the ability of refreshing that basket on January 1, 2009 and if the market conditions stay the way they are today we’ll be active again in undertaking those types of security buybacks.
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