ITEM 1. BUSINESS

Overview

Entravision Communications Corporation and its wholly owned subsidiaries, or Entravision, is a diversified media company utilizing a combination of television, radio, outdoor and publishing operations to reach Hispanic consumers in the United States. We operate in 33 of the top 50 U.S. Hispanic markets. We currently own and operate television stations in 22 U.S. markets. We are the largest Univision-affiliated station group in the United States. Univision Communications Inc., or Univision, is a key source of programming for our television broadcasting business and we consider them to be a valuable strategic partner of ours. We also own and/or operate 58 radio stations in 25 markets, including Spanish-language stations in Los Angeles, San Francisco, Phoenix and Dallas-Ft. Worth. Our outdoor operations consist of approximately 11,200 advertising faces concentrated primarily in high-density Hispanic communities in Los Angeles and New York. We also own El Diario/la Prensa, the oldest major Spanish-language daily newspaper in the United States.

Significant Transactions in 2000

The LCG Acquisition. Through our acquisition of Latin Communications Group Inc., or LCG, on April 20, 2000 for approximately $256 million, we added 17 radio stations to our existing radio stations and LCG's publishing operations. LCG's radio stations are located in nine radio markets, including Los Angeles and San Francisco, which are two of the top ten U.S. Hispanic markets.

Initial Public Offering. On August 2, 2000, we completed an initial public offering, or IPO, of our Class A common stock. We sold 46,435,458 shares of our Class A common stock to the underwriters at a price of $16.50 per share. We also sold 6,464,542 shares of our Class A common stock directly to Univision at a price of $15.47 per share. The net proceeds to us after deducting underwriting discounts and commissions and offering expenses were approximately $814 million.

Reorganization. On August 2, 2000, we completed a reorganization from a limited liability company to a corporation. As a result of this reorganization, prior to the closing of the IPO, the beneficial ownership of Entravision was virtually identical to the beneficial ownership of Entravision Communications Company, L.L.C., our predecessor, immediately before the reorganization. This reorganization occurred as follows:

. Walter F. Ulloa, Philip C. Wilkinson and Paul A. Zevnik and each of their trusts and other controlled entities exchanged their direct and indirect ownership interests in our predecessor for newly-issued shares of Class B common stock;

. each of the stockholders in the seven corporate member entities of our predecessor (other than Messrs. Ulloa, Wilkinson and Zevnik and their trusts and related entities) exchanged their shares in such corporate members for newly-issued shares of Class A common stock;

. each of the remaining individuals, trusts and other entities holding direct membership interests in our predecessor exchanged such interests for newly-issued shares of Class A common stock; and

. Univision exchanged its subordinated note and option in our predecessor for shares of Class C common stock.

The Z-Spanish Acquisition. Through our acquisition of Z-Spanish Media Corporation, or Z-Spanish Media, on August 9, 2000 for approximately $462 million, including approximately $110 million of debt, we became the largest group of Spanish-language radio stations and the largest centrally programmed radio network in the United States targeting primarily Hispanic listeners. Z- Spanish Media also operates one of the largest outdoor advertising companies in the United States focusing on the Hispanic market.

Acquisition of Radio Stations KACD-FM and KBCD-FM. On August 24, 2000, we acquired the Federal Communications Commission, or FCC, licenses relating to the operations of radio stations KACD-FM, Santa Monica, California, and KBCD- FM, Newport Beach, California, from Citicasters Co., a subsidiary of Clear Channel Communications, Inc. for $85 million.

Acquisition of Radio Stations KFRQ-FM, KKPS-FM, KVPA-FM and KVLY-FM. On September 12, 2000, we acquired certain assets relating to the operations of radio stations KFRQ-FM, KKPS-FM, KVPA-FM and KVLY-FM in the McAllen, Texas market from Sunburst Media, LP for $55 million.

Acquisition of Infinity Broadcasting Outdoor Advertising Assets. On October 2, 2000, we acquired certain outdoor advertising assets located primarily in high-density Hispanic communities in New York City from Infinity Broadcasting Corporation, or Infinity, for a total of approximately $168 million.

The Hispanic Market Opportunity

Although Hispanics represent approximately 12.5% of the U.S. population, the U.S. Hispanic population is growing seven times faster than the non- Hispanic population. Consequently, advertisers have recently begun to direct more advertising dollars toward U.S. Hispanics. We believe that we have benefited and will continue to benefit from the following industry trends and attributes in the United States:

Spanish-Language Use. Approximately 68% of all Hispanics, regardless of income or educational level, speak Spanish at home. This percentage is expected to remain relatively constant through 2020. The number of Hispanics who speak Spanish in the home is expected to grow from 22 million in 2000 to 36.3 million in 2020. We believe that the strong Spanish-language use among Hispanics indicates that Spanish-language media will continue to be an important source of news, sports and entertainment for Hispanics and an important vehicle for our marketing and advertising.

Hispanic Population Growth and Concentration. Our audience consists primarily of Hispanics, one of the fastest-growing segments of the U.S. population. The overall Hispanic population is growing at approximately seven times the rate of the non-Hispanic U.S. population and is expected to grow to 55.2 million (17% of the total U.S. population) by 2020.

Increasing Hispanic Buying Power. The Hispanic population accounted for total consumer expenditures of $444 billion in 2000, an increase of 106% since 1990. Hispanics are expected to account for $2.1 trillion in consumer expenditures by 2020. We believe these factors make Hispanics an attractive target audience for many major U.S. advertisers.

Spanish-Language Advertising. According to published sources, nearly $2.4 billion of total advertising expenditures in the United States were placed in Spanish-language media in 2000. Approximately 52% of that nearly $2.4 billion was placed in Spanish-language television advertising. We believe that major advertisers have found that Spanish-language media is a more cost-effective means to target the growing Hispanic audience than English-language broadcast media.

Attractive Profile of Hispanic Consumers. We believe the demographic profile of the Hispanic audience makes it attractive to advertisers. The larger size and younger age of Hispanic households (averaging 3.4 persons and 26.2 years of age as compared to the general public's average of 2.5 persons and 36.1 years of age) lead Hispanics to spend more per household on many categories of goods and services. Although the average U.S. Hispanic household has less disposable income than the average U.S. household, the average U.S. Hispanic household spends 21% more per year than the average non-Hispanic U.S. household on food at home, 91% more on children's clothing, 52% more on footwear and 25% more on laundry and household cleaning products. We expect Hispanics to continue to account for a disproportionate share of growth in spending nationwide in many important consumer categories as the Hispanic population and its disposable income continue to grow.

Business Strategy

We seek to increase our advertising revenue through the following strategies:

Effectively Use Our Network and Media Brands. We are the largest Univision television affiliate group, the largest operator of Spanish-language radio stations and the largest centrally programmed Spanish-language radio network in the United States. Univision reaches 92% of all Hispanic households and has an approximately 84% household share of the U.S. Spanish-language network television prime-time audience. Univision makes available to our television stations 24 hours a day of Spanish-language programming including a prime time schedule of substantially all first-run programming (i.e., no reruns) throughout the year. We operate our radio networks using four primary formats designed to appeal to different listener tastes. We format the programming of our network and radio stations to capture a substantial share of the U.S. Hispanic audience.

Invest in Media Research and Sales. We believe that continued use of reliable ratings and surveys will allow us to further increase our advertising rates and narrow the gap which has historically existed between our audience share and our share of advertising revenue. We use industry ratings and surveys, including Nielsen, Arbitron, the Traffic Audit Bureau and the Audit Bureau of Circulation, to provide a more accurate measure of consumers that we reach with our operations. We believe that our focused research and sales efforts will enable us to continue to achieve significant revenue growth.

Continue to Build and Retain Strong Management Teams. We believe we have one of the most experienced management teams in the industry. Walter F. Ulloa, our Chairman and Chief Executive Officer, Philip C. Wilkinson, our President and Chief Operating Officer, Jeanette Tully, our Chief Financial Officer, Jeffery A. Liberman, the President of our Radio Division, and Glenn Emanuel, the President of our Outdoor Division, have an average of 20 years of media experience. We intend to continue to build and retain our key management personnel and to capitalize on their knowledge and experience in the Spanish- language markets.

Emphasize Local Content, Programming and Community Involvement. We believe that local content in each market we serve is an important part of building our brand identity within the community. By combining our local news and quality network programming, we believe we have a significant competitive advantage. We also believe that our active community involvement, including station remote broadcasting appearances at client events, concerts and tie-ins to major events, helps to build station awareness and identity as well as viewer and listener loyalty.

Increase In-Market Cross Promotion. Our strategy is to cross-promote our television and radio stations, outdoor and publishing properties. In addition, we believe we will add significant value to our advertisers by providing attractive media packages to target the Hispanic consumer.

Target Other Attractive Hispanic Markets and Fill-In Acquisitions. We believe our knowledge of, and experience with, the Hispanic marketplace will enable us to continue to identify acquisitions in the television, radio and outdoor markets. Since our inception, we have used our management expertise, programming and brand identity to improve our acquired media properties.

Television

Overview

We own and operate Univision-affiliated stations in 21 of the top 50 Hispanic markets in the United States. Our television operations are the largest affiliate group of Univision stations. Univision is the leading Spanish-language broadcaster in the United States, with broadcast coverage reaching more than 92% of all Hispanic households, which represents an approximately 84% market share of the U.S. Spanish-language network television primetime audience as of December 2000. Univision is the most-watched television network (English- or Spanish-language) among Hispanic households and makes available to our Univision-affiliated stations

24 hours a day of Spanish-language programming. Univision's prime time schedule is all first-run programming (i.e., no reruns) through the year. We believe that the breadth and diversity of Univision's programming, combined with our local news and community-oriented segments, provide us with an advantage over other Spanish-language and English-language broadcasters in reaching Hispanic viewers. Our local content is designed to brand each of our stations as the best source for relevant community information that accurately reflects local interests and needs. As a result, all but one of our Univision- affiliated stations rank first in Spanish-language television viewership in their markets.

Television Programming

Univision Network Programming. Univision directs its programming primarily toward its young, family-oriented audience. It begins daily with Despierta America and other talk and information shows, Monday through Friday, followed by novelas. In the late afternoon and early evening, Univision offers a talk show, a game show, a news-magazine and national news, in addition to local news produced by our television stations. During prime time, Univision airs novelas, variety shows, a talk show, comedies, news magazines and lifestyle shows, as well as specials and movies. Prime time is followed by late news and a late night talk show. Overnight programming consists primarily of repeats of programming aired earlier in the day. Weekend daytime programming begins with children's programming, followed by sports, variety, teen lifestyle shows and movies.

Approximately eight to ten hours of programming per weekday, including a substantial portion of weekday prime time, are currently programmed with novelas supplied primarily by Grupo Televisa and Venevision. Although novelas have been compared to daytime soap operas on ABC, NBC or CBS, the differences are significant. Novelas, originally developed as serialized books, have a beginning, middle and end, generally run five days per week and conclude four to eight months after they begin. Novelas also have a much broader audience appeal than soap operas, delivering audiences that contain large numbers of men, children and teens in addition to women.

Entravision Local Programming. We believe that our local news brands each of our stations in the market. We shape our local news to relate to our target audiences. In nine of our television markets, our local news is ranked first among viewers 18-34 in any language. We have made substantial investments in people and equipment in order to provide our local communities with quality newscasts. Our local newscasts have won numerous awards, and we strive to be the most important community voice in each of our local markets.

Network Affiliation Agreements. All but two of our television stations are Univision-affiliated stations. Our network affiliation agreements with Univision provide each station with the exclusive right to broadcast the Univision network programming in its respective market. These long-term affiliation agreements expire in 2021. Under the affiliation agreements, Univision retains the right to sell approximately six minutes per hour of the advertising time available during the Univision schedule, with the remaining six minutes per hour available for sale by our stations.

Our network affiliation agreement with the United Paramount Network, or UPN, gives us the right to provide UPN network programming for a ten year period expiring in October 2009 on XUPN-TV serving the Tecate/San Diego market. A related participation agreement grants UPN a 20% interest in the appreciation of XUPN-TV above $35 million upon certain liquidity events as defined in the agreement. XHAS-TV broadcasts Telemundo network programming serving the Tijuana/San Diego market pursuant to a network affiliation agreement.

Our network affiliation agreement with Telemundo Network Group LLC, or Telemundo, gives us the right to provide Telemundo network programming for a six year period expiring in July 2007 on XHAS-TV serving the Tijuana/San Diego market. The affiliation agreement grants Telemundo a 20% interest in the appreciation of XHAS-TV above $31 million, plus capital expenditures and certain other adjustments. We also granted Telemundo an option to purchase our ownership interest in KTCD-LP at a purchase price equal to our cost for such interest.

                               Market Rank
                                   (by
                                Hispanic     Total     Hispanic  % Hispanic
             Market            Households) Households Households Households Call Letters, Channel
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  Harlingen-Weslaco-                 9       256,810   209,240      81.5%   KNVO-TV, Channel 48
   Brownsville-McAllen, Texas
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  San Diego, California             11       996,220   193,110      19.4%   KBNT-LP, Channel 17
                                                                            KSZZ-LP, Channel 19
                                                                            KTCD-LP, Channel 46 (1)
                                                                            KHAX-LP, Channel 49 (1)
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  Albuquerque-Santa Fe,             12       570,460   190,010      33.3%   KLUZ-TV, Channel 41
   New Mexico                                                               KLUZ-LP, Channel 48
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  El Paso, Texas                    15       275,850   177,580      64.4%   KINT-TV, Channel 26
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  Denver-Boulder, Colorado          16     1,312,300   147,640      11.2%   KCEC-TV, Channel 50
                                                                            KUVC-LP, Channel 36
                                                                            K03EM, Channel 3
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  Washington, D.C.                  18     2,047,340   109,240       5.3%   WMDO-CA, Channel 30 (2)
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  Tampa-St. Petersburg              19     1,507,790   105,090       7.0%   WVEA-TV, Channel 62
  (Sarasota), Florida                                                       WVEA-LP, Channel 61
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  Corpus Christi, Texas             20       185,570    99,950      53.9%   KORO-TV, Channel 28
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  Boston, Massachusetts             23     2,242,240    96,760      4.38%   WUNI-TV, Channel 27
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  Orlando-Daytona Beach-            24     1,126,000    83,060       7.4%   WVEN-TV, Channel 26
   Melbourne, Florida                                                       WVEN-LP, Channel 63
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  Las Vegas, Nevada                 25       559,330    82,910      14.8%   KINC-TV, Channel 15
                                                                            KELV-LP, Channel 27
                                                                            KNTL-LP, Channel 47
                                                                            KWWB-LP, Channel 45 (3)
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  Monterey-Salinas-Santa Cruz,      26       223,650    59,780      26.7%   KSMS-TV, Channel 67
   California
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  Hartford-New Haven,               28       923,740    55,910       6.0%   WUVN-TV, Channel 18
   Connecticut
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  Laredo, Texas                     31        57,270    52,990      92.5%   KLDO-TV, Channel 27
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  Colorado Springs-Pueblo,          33       298,600    47,840      16.0%   KGHB-CA, Channel 27 (2)
   Colorado
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  Santa Barbara-Santa               36       227,240    44,130      19.4%   KPMR-TV, Channel 38 (3)
   Maria-San Luis Obispo,
   California
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  Yuma, Arizona-El Centro,          37        88,530    43,230      48.8%   KVYE-TV, Channel 7
   California
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  Odessa-Midland, Texas             38       138,300    41,950      30.3%   KUPB-TV, Channel 18 (3)
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  Lubbock, Texas                    39       141,990    38,440      27.0%   KBZO-LP, Channel 51
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  Palm Springs, California          42       118,330    35,230      29.8%   KVER-CA, Channel 4 (2)
                                                                            KEVC-CA, Channel 5 (2)
                                                                            KVES-LP, Channel 28
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  Amarillo, Texas                   43       189,880    31,820      16.7%   KEAT-LP, Channel 22
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  San Angelo, Texas                 66        51,370    13,910      27.1%   KEUS-LP, Channel 31
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  Tecate, Baja California,         --            --        --        --     XUPN-TV, Channel 49 (4)
   Mexico
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  Tijuana, Mexico                  --            --        --        --     XHAS-TV, Channel 33 (4)

Source: Nielsen Media Research 2001 universe estimates.
(1) We own a 47.5% equity interest in the entity that holds the FCC license to this station, with an option to acquire an additional 47.5%. We provide substantially all of the programming and related services available on this station pursuant to a time brokerage agreement.
(2) "CA" in call letters indicates station is under Class A television service.
(3) Regular broadcast operations not yet commenced.
(4) We hold a minority, limited voting interest (neutral investment stock) in the entity that directly or indirectly holds the broadcast license for this station. We have been retained to provide the programming and related services available on this station under a time brokerage agreement. The station holds absolute control on the contents and other broadcast issues.

Television Advertising

In 1999, national advertising revenue accounted for 39%, local advertising accounted for 57% and network compensation for 4% of our total television advertising revenue. In 2000, national advertising accounted for 37%, local advertising accounted for 58% and network compensation for 5% of our total television advertising revenue.

National Advertising. National advertising revenue represents commercial time sold to a national advertiser within a specific market by Univision, our national representative firm. For these sales, Univision is paid a 15% commission on the net revenue from each sale (gross revenue less agency commission). We target the largest national Spanish-language advertisers that collectively purchase the greatest share of national advertisements through Univision. The Univision representative works closely with each station's national sales manager. This has enabled us to secure major national advertisers, including Ford Motor Company, General Motors, Southwestern Bell, McDonald's and Burger King. We have a similar national advertising representative arrangement with Telemundo. UPN is represented by Petry Television Inc.

Local Advertising. Local advertising revenue is generated from commercial airtime and is sold directly by the station to an in-market advertiser or its agency.

Network compensation. Network compensation revenue represents compensation from Univision in exchange for broadcasting their programming in certain television markets.

Television Audience Research

We derive our revenue primarily from selling advertising time. The relative advertising rates charged by competing stations within a market depend primarily on four factors:

. the station's ratings (households or people viewing its programs as a percentage of total television households or people in the viewing area);

. audience share (households or people viewing its programs as a percentage of households or people actually watching television at a specific time);

. the time of day the advertising will run; and

. the demographic qualities of a program's viewers (primarily age and gender).

Nielsen ratings provide advertisers with the industry-accepted measure of television viewing. In recent years, Nielsen began a special service to measure Hispanic viewing. Nielsen is now introducing improved methodology to its general market service that more accurately measures Hispanic viewing by using language spoken in the home in its metered market sample. We believe that this new methodology will result in substantial ratings gains and allow us to further increase our advertising rates and narrow the gap which has historically existed between our audience share and our advertising revenue. We have made significant investments in experienced sales managers and account executives and have provided our sales professionals with research tools to continue to attract major advertisers.

The various Nielsen rating services that we use are described below:

Nielsen Hispanic Station Index. This service measures Hispanic household viewing at the local market level. Each sample also reflects the varying levels of language usage by Hispanics in each market in order to more accurately reflect the Hispanic household population in the relevant market. Nielsen Hispanic Station Index only measures the audience viewing of Hispanic households, that is, households where the head of the household is of Hispanic descent or origin. Although this offers improvements over previous measurement indices, we believe it still underreports the number of viewers watching Entravision programming because we have viewers who do not live in Hispanic households.

Nielsen Station Index. This service measures local station viewing of all households in a specific market. We buy these reports in all of our markets to measure our viewing against both English- and Spanish-language competitors. This rating service, however, is not language-stratified and generally under- represents Spanish-speaking households. As a result, we believe that this typically under-reports viewing of Spanish-language

television. Despite this limitation, the Nielsen Station Index demonstrates that many of our full-power broadcast stations achieve total market ratings that are fully comparable with their English-language counterparts, with eight of our full-power television stations ranking as the top station in their respective markets from sign-on to sign-off among adults 18-34.

Television Competition

We compete for viewers and revenues with other Spanish-language and English-language television stations and networks, including the four principal English-language television networks, ABC, CBS, NBC and Fox, and in certain cities, UPN and WB. Certain of these English-language networks and others have begun producing Spanish-language programming and simulcasting certain programming in English and Spanish. Several cable broadcasters have recently commenced, or announced their intention to commence, Spanish-language services as well.

Telemundo is a large competitor that broadcasts Spanish-language television programming. As of December 31, 2000, Telemundo served 64 markets in the United States and Puerto Rico, with broadcast coverage reaching approximately 85% of all Hispanic households in those areas. In some of our markets, we compete directly with stations affiliated with Telemundo. We also compete for viewers and revenues with independent television stations, other video media, suppliers of cable television programs, direct broadcast systems, newspapers, magazines, radio and other forms of entertainment and advertising.

Radio

Overview

We currently own and/or operate 58 radio stations in 25 markets. Our radio stations cover in aggregate approximately 58% of the Hispanic population and 56 of our stations are located in the top 50 Hispanic markets. We also provide programming to 39 affiliate stations in 38 markets. Our radio operations combine network programming with local time slots available for advertising, news, traffic, weather, promotions and community events. This strategy allows us to provide quality programming with significantly lower costs of operations than we could otherwise deliver solely with independent programming.

Radio Programming

Radio Networks. Through our radio network, we have created the single largest U.S. Hispanic radio market, currently with over 17 million potential listeners. Our networks allow clients with national product distribution to deliver a uniform advertising message to the fast growing Hispanic market around the country in an efficient manner and at a cost that is generally lower than our English-language counterparts.

Although our networks have a broad reach across the United States, technology allows our stations to offer the necessary local feel and to be responsive to local clients and community needs.

Designated time slots are used for local advertising, news, traffic, weather, promotions and community events. The audience gets the benefit of a national radio sound along with local content. To further enhance this effect, our on-air personalities frequently travel to participate in local promotional events. For example, in selected key markets our on-air personalities appear at special events and client locations. We promote these events as "remotes" to bond the national personalities to local listeners. Furthermore, all of our stations can disconnect from the networks and operate independently in the case of a local emergency or a problem with the central satellite transmission.

Our network format "La Zeta" is currently used by Jones Satellite Network and served by 39 affiliates located in 38 markets across the United States. These affiliates receive our programming in exchange for two minutes per hour for network commercials. Affiliates are allowed up to 16 minutes per hour for local

advertisements and content. Our affiliates receive quality programming at a significantly lower cost than they could produce themselves. We benefit by having extended national coverage without the capital expenditures necessary to buy and manage stations in those markets. The extended coverage also allows the network to charge higher rates as its delivery to the U.S. Hispanic market grows.

Radio Formats. We produce programming in a variety of music formats that are simultaneously distributed via satellite with a digital CD-quality sound to our owned and affiliated stations. We offer four primary formats which appeal to different listener preferences:

. Radio Romantica is an adult-contemporary, romantic ballads/current hits format, targeting Hispanics 18-49 (primarily females).

. Radio Tricolor is a personality-driven, Mexican country-style format, targeting Hispanics 18-49 (primarily males).

. Super Estrella is a music-driven, pop and alternative Spanish rock format, targeting Hispanics 18-34 (males and females).

. La Zeta is a top hits Spanish format with recognizable radio personalities. The music is primarily from the northern and central regions of Mexico, targeting Hispanics 18-49 (primarily males).

                             Market Rank
                             (by Hispanic
            Market           Households)  Station Frequency              Format
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  Los Angeles, California        1        KSSC-FM 103.1 MHz   Super Estrella(2)
                                          KSSD-FM 103.1 MHz   Super Estrella(2)
                                          KSSE-FM 97.5  MHz   Super Estrella
  Riverside-San Bernardino,               KCAL-AM 1410  kHz   Radio Tricolor
   California                             KSZZ-AM 590   kHz   Radio Tricolor
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  Miami-Ft. Lauderdale-          3        WLQY-AM 1320  kHz   Time Brokered (1)
   Hollywood, Florida
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  San Francisco-San Jose,        4        KBRG-FM 100.3 MHz   Radio Romantica
   California                             KLOK-AM 1170  kHz   Radio Tricolor
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  Chicago, Illinois              5        WRZA-FM 99.9  MHz   Super Estrella(2)
                                          WZCH-FM 103.9 MHz   Super Estrella(2)
                                          WNDZ-AM 750   kHz   Time Brokered (1)
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  Houston-Galveston, Texas       6        KGOL-AM 1180  kHz   Time Brokered (1)
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  Dallas-Ft. Worth, Texas        8        KRVA-FM 106.9 MHz   Super Estrella (2)(3)
                                          KRVF-FM 107.1 MHz   Super Estrella (2)(3)
                                          KZMP-FM 101.7 MHz   Radio Tricolor (2)
                                          KRVA-AM 1600  kHz   Radio Romantica
                                          KXGM-FM 106.5 MHz   Time Brokered (1)
                                          KZMP-AM 1540  kHz   Radio Tricolor (2)
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  Harlingen-Weslaco-
   Brownsville-McAllen,          9        KFRQ-FM 94.5  MHz   Classic Rock (English)
   Texas                                  KKPS-FM 99.5  MHz   Tejano
                                          KVLY-FM 107.9 MHz   Adult Contemporary (English)
                                          KVPA-FM 101.1 MHz   Top 40 (English)
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  Phoenix, Arizona               10       KLNZ-FM 103.5 MHz   Radio Tricolor
                                          KVVA-FM 107.1 MHz   Radio Romantica (2)
                                          KUET-AM 710   kHz   -- (4)
                                          KDVA-FM 106.9 MHz   Radio Romantica (2) (3)
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  Albuquerque-Santa Fe, New
   Mexico                        12       KRZY-FM 105.9 MHz   Radio Romantica
                                          KRZY-AM 1450  kHz   Radio Tricolor
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  Fresno, California             13       KZFO-FM 92.1  MHz   Super Estrella
                                          KHOT-AM 1250  kHz   La Zeta
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  Sacramento, California         14       KRRE-FM 104.3 MHz   Radio Romantica
                                          KRCX-FM 99.9  MHz   Radio Tricolor
                                          KCCL-FM 101.9 MHz   Oldies (English)
  Stockton, California                    KMIX-FM 100.9 MHz   Radio Tricolor
                                          KCVR-AM 1570  kHz   Radio Romantica (2)
  Modesto, California                     KTDZ-FM 98.9  MHz   Radio Romantica (2)
                                          KZMS-FM 97.1  MHz   Super Estrella
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  El Paso, Texas                 15       KINT-FM 93.9  MHz   La Caliente (Top 40)
                                          KHRO-FM 94.7  MHz   80's (English)
                                          KOFX-FM 92.3  MHz   Oldies (English)
                                          KSVE-AM 1150  kHz   Radio Unica
                                          KBIV-AM 1650  kHz   -- (5)
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  Denver-Boulder, Colorado       16       KJMN-FM 92.1  MHz   Radio Romantica
                                          KMXA-AM 1090  kHz   Radio Tricolor
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  Tucson/Nogales, Arizona        22       KZLZ-FM 105.3 MHz   Radio Tricolor
                                          KZNO-FM 98.3  MHz   Radio Tricolor (3)
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  Las Vegas, Nevada              25       KRRN-FM 105.1 MHz   Super Estrella
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  Monterey-Salinas-Santa
   Cruz, California              26       KLOK-FM 99.5  MHz   Radio Tricolor
                                          KSES-FM 107.1 MHz   Super Estrella (2)
                                          KSES-AM 700   kHz   Super Estrella (2)
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  El Centro, California          37       KSEH-FM 94.5  MHz   Super Estrella
  Brawley, California                     KWST-AM 1430  kHz   Country (English)
  Imperial, California                    KMXX-FM 99.3  MHz   Radio Tricolor
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  Lubbock, Texas                 39       KBZO-AM 1460  kHz   Radio Tricolor
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  Palm Springs, California       42       KLOB-FM 94.7  MHz   Radio Romantica
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  Reno, Nevada                   48       KRNV-FM 101.7 MHz   Radio Tricolor
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  Chico, California              70       KHHZ-FM 97.7  MHz   La Zeta (2)
                                          KEWE-AM 1340  kHz   La Zeta (2)

Source: Nielsen Media Research 2001 universe estimates.
(1) Operated pursuant to a time brokerage agreement under which we grant to a third-party the right to program the station.
(2) Simulcast station.
(3) Operated pursuant to a time brokerage agreement under which we receive from the licensee the right to program the station.
(4) Under a FCC construction permit.
(5) Not yet operating--expanded band for Station KSVE-AM.

Radio Advertising

Substantially all of the revenue from our radio operations is derived from local, national and network advertising.

Local. This form of revenue refers to advertising usually purchased by a local client or agency directly from the station's sales force. In 2000, local radio revenue comprised 70% of our total radio revenue.

National. This form of revenue refers to advertising purchased by a national client targeting a specific market. Usually this business is placed by a national advertising agency or media buying services and ordered through one of the offices of our national sales representative, Caballero Spanish Media. The national accounts are handled locally by the station's general sales manager and/or national sales manager. In 2000, 26% of our total radio revenue was from national radio advertising.

Network. This form of revenue refers to advertising that is placed on one or all of our network formats. This business is placed as a single order and is broadcast from the network's central location. The network advertising can be placed by a local account executive that has a client in its market that wants national exposure. Network inventory can also be sold by corporate executives, by our national representative or by two other entities with whom we have network sales arrangements, the Jones Radio Network and the Hispanic Broadcasting Company Radio Network. In 2000, network radio revenue accounted for 4% of our total radio revenue.

Radio Marketing/Audience Research

We believe that radio is an efficient means for advertisers to reach targeted demographic groups. Advertising rates charged by our radio stations are based primarily on the following factors:

. the station's ability to attract listeners in a given market;

. the demand for available air time;

. the attractiveness of the demographic qualities of the listeners (primarily age and purchasing power);

. the time of day that the advertising runs;

. the program's popularity with listeners; and

. the availability of alternative media in the market.

In the smaller and mid-sized markets, Spanish-language radio continues to be more of a concept sale. In the larger markets, Arbitron provides advertisers with the industry-accepted measure of listening audience classified by demographic segment and time of day that the listeners spend on particular radio stations. Radio advertising rates generally are highest during the morning and afternoon drive-time hours which are the peak times for radio audience listening.

We believe that having multiple stations in a market is desirable to enable the broadcaster to provide alternatives and to command higher advertising rates and budget share. Historically, advertising rates for Spanish-language radio stations have been lower than those of English-language stations with similar audience levels. We believe we will be able to increase our rates as new and existing advertisers recognize the growing desirability of targeting the Hispanic population in the United States.

Each station broadcasts an optimal number of advertisements each hour, depending upon its format, in order to maximize the station's revenue without jeopardizing its audience listenership. Our owned stations have up to 15 minutes per hour for commercial inventory and local content. Our network has up to four additional minutes of commercial inventory per hour. The pricing is based on a rate card and negotiations subject to the supply and demand for the inventory in each particular market and the network.

Radio Competition

Radio broadcasting is a highly competitive business. The financial success of each of our radio stations and markets depends in large part on our audience ratings, our ability to increase our market share of the overall radio advertising revenue and the economic health of the market. In addition, our advertising revenue depends upon the desire of advertisers to reach our audience demographic. Each of our radio stations competes for audience share and advertising revenue directly with both Spanish-language and English- language radio stations in its market, and with other media within their respective markets, such as newspapers, broadcast and cable television, magazines, billboard advertising, transit advertising and direct mail advertising. Our primary competitors in our markets in Spanish-language radio are Hispanic Broadcasting Corporation, Radio Unica Communications Corp. and Spanish Broadcasting System, Inc. Several of the companies with which we compete are large national or regional companies that have significantly greater resources and longer operating histories than we do.

Factors that are material to competitive position include management experience, the station's rank in its market, signal strength and audience demographics. If a competing station within a market converts to a format similar to that of one of our stations, or if one of our competitors upgrades its stations, we could suffer a reduction in ratings and advertising revenue in that market. The audience ratings and advertising revenue of our individual stations are subject to fluctuation and any adverse change in a particular market could have a material adverse effect on our operations.

The radio industry is subject to competition from new media technologies that are being developed or introduced, such as:

. audio programming by cable television systems, direct broadcast satellite systems, Internet content providers and other digital audio broadcast formats;

. satellite digital audio service, which could result in the introduction of new satellite radio services with sound quality comparable to that of compact disks; and

. In-Band On-Channel(TM) digital radio, which could provide multi-channel, multi-format digital radio services in the same bandwidth currently occupied by traditional AM and FM radio services.

Outdoor Advertising/Publishing

Overview

Our outdoor and publishing operations complement our television and radio businesses and will allow for cross-promotional opportunities. Because of its repetitive impact and relatively low cost, outdoor advertising attracts national, regional and local advertisers. We offer the ability to target specific demographic groups on a cost-effective basis as compared to other advertising media. In addition, we provide businesses with advertising opportunities in locations near their stores or outlets.

Our outdoor portfolio adds to our television and radio reach by providing local advertisers with significant coverage of the Hispanic communities in Los Angeles and New York. Our outdoor advertising strategy is designed to complement our existing television and radio businesses by allowing us to capitalize on our Hispanic market expertise. The primary components of our strategy are to leverage the strengths of our inventory, continue to focus on ethnic communities and increase market penetration.

Outdoor Advertising Markets

We own approximately 11,200 outdoor advertising faces located primarily in high-density Hispanic communities in Los Angeles and New York, the two largest Hispanic markets in the United States. We believe our outdoor advertising appeals to both large and small businesses.

Los Angeles. The greater Los Angeles market has a population of approximately 15.6 million, of which approximately six million or 39% are Hispanic. As such, Los Angeles ranks as the largest Hispanic advertising market in the United States. Approximately 87% of our billboard inventory in Los Angeles is located in neighborhoods where Hispanics represent at least 30% of the local population, based on the 1990 Census Report. We believe that this coverage of the Hispanic population has increased significantly since 1990 as the Hispanic community continues to grow into communities previously populated by other demographic groups. The Los Angeles metropolitan area has miles of freeways and surface streets where the average commuter spends in excess of 75 minutes per day in the car.

New York. The greater New York City area has a population of approximately 18.4 million, of which approximately 3.3 million or 18% are Hispanic. As such, New York ranks as the second largest Hispanic advertising market in the United States. We have consolidated substantially all of the 8-sheet and 30-sheet outdoor advertising faces in New York.

Inventory Type                                              Los Angeles New York
--------------                                              ----------- --------
8-sheet posters............................................    6,000     3,500
City-Lights................................................      250         0
30-sheet posters...........................................        0     1,075
Wall-Scapes................................................        5       187
Bulletins..................................................       20       164
                                                               -----     -----
Total......................................................    6,275     4,926
                                                               =====     =====

Our inventory consists of the following types of advertising faces that are typically located on sites that we have leased or have a permanent easement:

8-sheet posters are generally 6 feet high by 12 feet wide. Due to the smaller size of this type of billboard, 8-sheet posters are often located in densely populated or fast growing areas where larger signs do not fit or are not permitted, such as parking lots and other tight areas. Accordingly, most of our 8-sheet posters are concentrated on city streets, targeting both pedestrian and vehicular traffic and are sold to advertisers for periods of four weeks.

City-Lights is a product we created in 1998 to serve national advertisers with a new advertising format visible both during the day and night. The format is typically used by national fashion, entertainment and consumer products companies desiring to target consumers within proximity of local malls or retail outlets. A City-Lights structure is approximately 7 feet by 10 feet set vertically on a single pole structure. The advertisement is usually housed in an illuminated glass casing for greater visibility at night and is sold to advertisers for a period of four weeks.

30-sheet posters are generally 12 feet high by 25 feet wide and are the most common type of billboard. Lithographed or silk-screened paper sheets, supplied by the advertiser are pre-pasted and packaged in airtight bags by the outdoor advertising company and applied, like wallpaper, to the face of the display. The 30-sheet posters are concentrated on major traffic arteries and space is usually sold to advertisers for periods of four weeks.

Wall-Scapes generally consist of advertisements ranging in a variety of sizes (from 120 to 800 square feet) which are displayed on the sides of buildings in densely populated locations. Advertising formats can include either vinyl prints or painted artwork. Because of a Wall-Scape's greater impact and higher cost relative to other types of billboards, space is usually sold to advertisers for periods of six to 12 months.

Bulletins are generally 14 feet high and 48 feet wide and consist of panels or a single sheet of vinyl that are hand painted at the facilities of the outdoor advertising company or computer painted in accordance with design specifications supplied by the advertiser and mounted to the face of the display. Because of painted bulletins'

greater impact and higher cost relative to other types of billboards, they are usually located near major highways and are sold for periods of six to 12 months.

Outdoor Advertising Revenue

Advertisers usually contract for outdoor displays through advertising agencies, which are responsible for the artistic design and written content of the advertising. Advertising contracts are negotiated on the basis of monthly rates published in our "rate card." These rates are based on a particular display's exposure (or number of "impressions" delivered) in relation to the demographics of the particular market and its location within that market. The number of "impressions" delivered by a display (measured by the number of vehicles passing the site during a defined period and weighted to give effect to such factors as its proximity to other displays and the speed and viewing angle of approaching traffic) is determined by surveys that are verified by the Traffic Audit Bureau, an independent agency which is the outdoor advertising industry's equivalent of television's Nielsen ratings and radio's Arbitron ratings.

In each of our markets, we employ salespeople who sell both local and national advertising. Our 2000 outdoor advertising revenue mix consisted of approximately 70% national advertisers and 30% local advertisers. We believe that our local sales force is crucial to maintaining relationships with key advertisers and agencies and identifying new advertisers.

Outdoor Advertising Competition

We compete in each of our outdoor markets with other outdoor advertisers including Infinity Broadcasting Corporation, Clear Channel Communications, Inc., ArtKraft Strauss, Medallion Financial Corp., Ackerley Communications, Inc. and Regency Outdoor. Many of these competitors have a larger national network and may have greater total resources than we have. In addition, we also compete with a wide variety of out-of-home media, including advertising in shopping centers, airports, stadiums, movie theaters and supermarkets, as well as on taxis, trains and buses. In competing with other media, outdoor advertising relies on its relative cost efficiency and its ability to reach a segment of the population with a particular set of demographic characteristics within that market.

Publishing

We publish El Diario/la Prensa, the oldest major Spanish-language daily newspaper in the United States and one of only two Spanish-language newspapers in New York. The newspaper reports news of interest to the Hispanic community, focusing primarily on local news events and daily occurrences in Latin America. El Diario/la Prensa has a daily paid circulation of approximately 55,000 as of December 31, 2000, up from 52,000 as of December 31, 1999.

The majority of El Diario/la Prensa's revenue comes from circulation sales and the sale of local, national and classified advertising. Our top ten newspaper advertisers by dollar volume accounted for 8.5% of El Diario/la Prensa's total advertising revenue in 2000. Circulation revenue comes almost exclusively from sales at newsstands and retail outlets, rather than mailed subscriptions.

Our primary Spanish-language publishing competitor is a new publication called Hoy. Our publishing operations also compete with English-language newspapers and other types of advertising media, many of which reach larger audiences and have greater total resources than we have.

Most of our publishing employees are represented by the Newspaper and Mail Deliverers' Union of New York and Vicinity and the Newspaper Guild of New York. Our collective bargaining agreement with the Newspaper Guild of New York expires on June 30, 2002 and our agreement with the Newspaper and Mail Deliverers' Union of New York and Vicinity expires on March 30, 2004.

Material Trademarks, Trade Names and Service Marks

In the course of our business, we use various trademarks, trade names and service marks, including our logos, in our advertising and promotions. We believe the strength of our trademarks, trade names and service marks are important to our business and intend to protect and promote them as appropriate. We do not hold or depend upon any material patent, government license, franchise or concession, except our broadcast licenses granted by the FCC.

Employees

As of December 31, 2000, we had approximately 1,000 full-time employees, including 447 full-time employees in television, 414 full-time employees in radio, 46 full-time employees in outdoor and 160 full-time employees in publishing. As of December 31, 2000, 108 of our publishing employees were represented by labor unions that have entered into collective bargaining agreements with us. As of December 31, 2000, 3 of our full-time outdoor employees were represented by labor unions that have entered into or are currently in negotiations for collective bargaining agreements with us. We believe our relations with our employees are good.

Regulation of Television and Radio Broadcasting

General. The FCC regulates television and radio broadcast stations pursuant to the Communications Act of 1934, as amended, or the Communications Act. Among other things, the FCC:

. determines the particular frequencies, locations and operating power of stations;

. issues, renews, revokes and modifies station licenses;

. regulates equipment used by stations; and

. adopts and implements regulations and policies that directly or indirectly affect the ownership, changes in ownership, control, operation and employment practices of stations.

A licensee's failure to observe the requirements of the Communications Act or FCC rules and policies may result in the imposition of various sanctions, including admonishment, fines, the grant of renewal terms of less than eight years, the grant of a license with conditions or, in the case of particularly egregious violations, the denial of a license renewal application, the revocation of an FCC license or the denial of FCC consent to acquire additional broadcast properties.

Congress and the FCC have had under consideration or reconsideration, and may in the future consider and adopt, new laws, regulations and policies regarding a wide variety of matters that could, directly or indirectly, affect the operation, ownership and profitability of our television and radio stations, result in the loss of audience share and advertising revenue for our television and radio broadcast stations or affect our ability to acquire additional television and radio broadcast stations or finance such acquisitions. Such matters may include:

. changes to the license authorization and renewal process;

. proposals to impose spectrum use or other fees on FCC licensees;

. changes to the FCC's equal employment opportunity regulations and other matters relating to involvement of minorities and women in the broadcasting industry;

. proposals to change rules relating to political broadcasting including proposals to grant free air time to candidates, and other changes regarding program content;

. proposals to restrict or prohibit the advertising of beer, wine and other alcoholic beverages;

. technical and frequency allocation matters, including a new Class A television service for existing low-power television stations and a new low-power FM radio broadcast service;

. the implementation of digital audio broadcasting on both satellite and terrestrial bases;

. the implementation of rules governing the transmission of local television signals by direct broadcast satellite services in their local areas, and requiring cable television and direct broadcast satellite to carry local television digital signals;

. changes in broadcast multiple ownership, foreign ownership, cross- ownership and ownership attribution policies; and

. proposals to alter provisions of the tax laws affecting broadcast operations and acquisitions.

We cannot predict what changes, if any, might be adopted, nor can we predict what other matters might be considered in the future, nor can we judge in advance what impact, if any, the implementation of any particular proposal or change might have on our business.

FCC Licenses. Television and radio stations operate pursuant to licenses that are granted by the FCC for a term of eight years, subject to renewal upon application to the FCC. During the periods when renewal applications are pending, petitions to deny license renewal applications may be filed by interested parties, including members of the public. The FCC is required to hold hearings on renewal applications if it is unable to determine that renewal of a license would serve the public interest, convenience and necessity, or if a petition to deny raises a "substantial and material question of fact" as to whether the grant of the renewal applications would be inconsistent with the public interest, convenience and necessity. However, the FCC is prohibited from considering competing applications for a renewal applicant's frequency, and is required to grant the renewal application if it finds:

. that the station has served the public interest, convenience and necessity;

. that there have been no serious violations by the licensee of the Communications Act or the rules and regulations of the FCC; and

. that there have been no other violations by the licensee of the Communications Act or the rules and regulations of the FCC that, when taken together, would constitute a pattern of abuse.

If as a result of an evidentiary hearing, the FCC determines that the licensee has failed to meet the requirements for renewal and that no mitigating factors justify the imposition of a lesser sanction, the FCC may deny a license renewal application. Historically, FCC licenses have generally been renewed. We have no reason to believe that our licenses will not be renewed in the ordinary course, although there can be no assurance to that effect. The non-renewal of one or more of our stations' licenses could have a material adverse effect on our business.

Ownership Matters. The Communications Act requires prior approval of the FCC for the assignment of a broadcast license or the transfer of control of a corporation or other entity holding a license. In determining whether to approve an assignment of a television or radio broadcast license or a transfer of control of a broadcast licensee, the FCC considers a number of factors pertaining to the licensee including compliance with various rules limiting common ownership of media properties, the "character" of the licensee and those persons holding "attributable" interests therein, and the Communications Act's limitations on foreign ownership and compliance with the FCC rules and regulations.

To obtain the FCC's prior consent to assign or transfer a broadcast license, appropriate applications must be filed with the FCC. If the application to assign or transfer the license involves a substantial change in ownership or control of the licensee, for example, the transfer or acquisition of more than 50% of the voting stock, the application must be placed on public notice for a period of 30 days during which petitions to deny the application may be filed by interested parties, including members of the public. If an assignment application does not involve new parties, or if a transfer of control application does not involve a "substantial change" in ownership or control, it is a pro forma application, which is not subject to the public notice and 30 day petition to deny procedure. The regular and pro forma applications are nevertheless subject to informal objections that may be filed any time until the FCC acts on the application. If the FCC grants an assignment or transfer application, interested parties have 30 days from public notice of the grant to seek reconsideration of that grant. The FCC

has an additional ten days to set aside such grant on its own motion. When ruling on an assignment or transfer application, the FCC is prohibited from considering whether the public interest might be served by an assignment or transfer to any party other than the assignee or transferee specified in the application.

Under the Communications Act, a broadcast license may not be granted to or held by persons who are not U.S. citizens, by any corporation that has more than 20% of its capital stock owned or voted by non-U.S. citizens or entities or their representatives, by foreign governments or their representatives or by non-U.S. corporations. Furthermore, the Communications Act provides that no FCC broadcast license may be granted to or held by any corporation directly or indirectly controlled by any other corporation of which more than 25% of its capital stock is owned of record or voted by non-U.S. citizens or entities or their representatives, or foreign governments or their representatives or by non-U.S. corporations, if the FCC finds the public interest will be served by the refusal or revocation of such license. Thus, the licenses for our stations could be revoked if more than 25% of our outstanding capital stock is issued to or for the benefit of non-U.S. citizens in excess of these limitations. Our first restated certificate of incorporation restricts the ownership and voting of our capital stock to comply with these requirements.

The FCC generally applies its other broadcast ownership limits to "attributable" interests held by an individual, corporation or other association or entity. In the case of a corporation holding broadcast licenses, the interests of officers, directors and those who, directly or indirectly, have the right to vote 5% or more of the stock of a licensee corporation are generally deemed attributable interests, as are positions as an officer or director of a corporate parent of a broadcast licensee.

Stock interests held by insurance companies, mutual funds, bank trust departments and certain other passive investors that hold stock for investment purposes only become attributable with the ownership of 20% or more of the voting stock of the corporation holding broadcast licenses.

A time brokerage agreement with another television or radio station in the same market creates an attributable interest in the brokered television or radio station as well for purposes of the FCC's local television or radio station ownership rules, if the agreement affects more than 15% of the brokered television or radio station's weekly broadcast hours.

Debt instruments, non-voting stock, options and warrants for voting stock that have not yet been exercised, insulated limited partnership interests where the limited partner is not "materially involved" in the media-related activities of the partnership and minority voting stock interests in corporations where there is a single holder of more than 50% of the outstanding voting stock whose vote is sufficient to affirmatively direct the affairs of the corporation generally do not subject their holders to attribution.

However, the FCC now applies a rule, known as the equity-debt-plus rule, that causes certain creditors or investors to be attributable owners of a station, regardless of whether there is a single majority stockholder or other applicable exception to the FCC's attribution rules. Under this new rule, a major programming supplier (any programming supplier that provides more than 15% of the station's weekly programming hours) or a same-market media entity will be an attributable owner of a station if the supplier or same-market media entity holds debt or equity, or both, in the station that is greater than 33% of the value of the station's total debt plus equity. For purposes of the equity-debt-plus rule, equity includes all stock, whether voting or nonvoting, and equity held by insulated limited partners in limited partnerships. Debt includes all liabilities, whether long-term or short-term.

Generally, the FCC only permits an owner to have one television station per market. A single owner is permitted to have two stations with overlapping signals so long as they are assigned to different markets. Recent changes to the FCC's rules regarding ownership now permit an owner to operate two television stations assigned to the same market so long as either:

. the television stations do not have overlapping broadcast signals; or

. there will remain after the transaction eight independently owned, full power noncommercial or commercial operating television stations in the market and one of the two commonly-owned stations is not ranked in the top four based upon audience share.

The FCC will consider waiving these ownership restrictions in certain cases involving failing or failed stations or stations which are not yet built.

The FCC permits a television station owner to own one radio station in the same market as its television station. In addition, a television station owner is permitted to own additional radio stations, not to exceed the local ownership limits for the market, as follows:

. in markets where 20 media voices will remain, an owner may own an additional five radio stations, or, if the owner only has one television station, an additional six radio stations; and

. in markets where ten media voices will remain, an owner may own an additional three radio stations.

A "media voice" includes each independently-owned and operated full-power television and radio station and each daily newspaper that has a circulation exceeding 5% of the households in the market, plus one voice for all cable television systems operating in the market.

The FCC has eliminated the limitation on the number of radio stations a single individual or entity may own nationwide and increased the limits on the number of stations an entity or individual may own in a market as follows:

. In a radio market with 45 or more commercial radio stations, a party may own, operate or control up to eight commercial radio stations, not more than five of which are in the same service (AM or FM).

. In a radio market with between 30 and 44 (inclusive) commercial radio stations, a party may own, operate or control up to seven commercial radio stations, not more than four of which are in the same service (AM or FM).

. In a radio market with between 15 and 29 (inclusive) commercial radio stations, a party may own, operate or control up to six commercial radio stations, not more than four of which are in the same service (AM or FM).

. In a radio market with 14 or fewer commercial radio stations, a party may own, operate or control up to five commercial radio stations, not more than three of which are in the same service (AM or FM), except that a party may not own, operate, or control more than 50% of the radio stations in such market.

The FCC staff has notified the public of its intention to review transactions that comply with these numerical ownership limits but that might involve undue concentration of market share.

Because of these multiple and cross-ownership rules, if a stockholder, officer or director of Entravision holds an "attributable" interest in Entravision, such stockholder, officer or director may violate the FCC's rules if such person or entity also holds or acquires an attributable interest in other television or radio stations or daily newspapers, depending on their number and location. If an attributable stockholder, officer or director of Entravision violates any of these ownership rules, we may be unable to obtain from the FCC one or more authorizations needed to conduct our broadcast business and may be unable to obtain FCC consents for certain future acquisitions.

The Communications Act requires broadcasters to serve the "public interest." The FCC has relaxed or eliminated many of the more formalized procedures it developed to promote the broadcast of certain types of programming responsive to the needs of a broadcast station's community of license. Nevertheless, a broadcast licensee continues to be required to present programming in response to community problems, needs and interests and to maintain certain records demonstrating its responsiveness. The FCC will consider complaints from the public about a broadcast station's programming when it evaluates the licensee's renewal application, but complaints also may be filed and considered at any time. Stations also must pay regulatory and application fees, and follow various FCC rules that regulate, among other things, political broadcasting, the broadcast of obscene or indecent programming, sponsorship identification, the broadcast of contests and lotteries and technical operation.

The FCC requires that licensees must not discriminate in hiring practices.

The FCC rules also prohibit a broadcast licensee from simulcasting more than 25% of its programming on another radio station in the same broadcast service (that is, AM/AM or FM/FM). The simulcasting restriction applies if the licensee owns both radio broadcast stations or owns one and programs the other through a local marketing agreement, provided that the contours of the radio stations overlap in a certain manner.

"Must Carry" Rules. FCC regulations implementing the Cable Television Consumer Protection and Competition Act of 1992 require each television broadcaster to elect, at three year intervals beginning October 1, 1993, to either:

. require carriage of its signal by cable systems in the station's market, which is referred to as "must carry" rules; or

. negotiate the terms on which such broadcast station would permit transmission of its signal by the cable systems within its market which is referred to as "retransmission consent."

We have elected "must carry" with respect to each of our full-power stations.

Under the FCC's rules currently in effect, cable systems are only required to carry one signal from each local broadcast television station. As our systems begin broadcasting digital signals in 2002, the cable systems that carry our stations' analog signals will not be required to carry such digital signal until we discontinue our analog broadcasting. Also, under current FCC rules, the cable systems will be required to carry only one channel of digital signal from each of our stations, even though we may be capable of broadcasting multiple programs simultaneously within the bandwidth that the FCC has allotted to us for digital broadcasting.

Time Brokerage Agreements. We have, from time to time, entered into time brokerage agreements, generally in connection with pending station acquisitions, under which we are given the right to broker time on stations owned by third parties. By using time brokerage agreements, we can provide programming and other services to a station proposed to be acquired before we receive all applicable FCC and other governmental approvals. We have also, from time to time, entered into time brokerage agreements giving third parties the right to broker time on stations owned by us.

FCC rules and policies generally permit time brokerage agreements if the station licensee retains ultimate responsibility for and control of the applicable station. We cannot be sure that we will be able to air all of our scheduled programming on a station with which we have time brokerage agreements or that we will receive the anticipated revenue from the sale of advertising for such programming.

Stations may enter into cooperative arrangements known as joint sales agreements. Under the typical joint sales agreement, a station licensee obtains, for a fee, the right to sell substantially all of the commercial advertising on a separately-owned and licensed station in the same market. It also involves the provision by the selling party of certain sales, accounting and services to the station whose advertising is being sold. Unlike a time brokerage agreement, the typical joint sales agreement does not involve programming.

As part of its increased scrutiny of radio and television station acquisitions, the Department of Justice has stated publicly that it believes that time brokerage agreements and joint sales agreements could violate the Hart-Scott-Rodino Antitrust Improvements Act of 1976 if such agreements take effect prior to the expiration of the waiting period under such Act. Furthermore, the Department of Justice has noted that joint sales agreements may raise antitrust concerns under Section 1 of the Sherman Antitrust Act and has challenged them in certain locations. The Department of Justice also has stated publicly that it has established certain revenue and audience share concentration benchmarks with respect to television and radio station acquisitions, above which a transaction may receive additional antitrust scrutiny.

Digital Television Services. The FCC has adopted rules for implementing digital television service in the United States. Implementation of digital television will improve the technical quality of television signals and provide broadcasters the flexibility to offer new services, including high- definition television and data broadcasting.

The FCC has established service rules and adopted a table of allotments for digital television. Under the table, certain eligible broadcasters with a full-power television station are allocated a separate channel for digital television operation. Stations will be permitted to phase in their digital television operations over a period of years after which they will be required to surrender their license to broadcast the analog, or non-digital television signal. Our stations must be on the air with a digital signal by May 1, 2002. We must return one of our paired channels for each station to the government by 2006, except that this deadline will be extended until at least 85% of all U.S. households own a television set with a digital tuner.

Digital Radio Services. The FCC currently is considering standards for evaluating, authorizing and implementing terrestrial digital audio broadcasting technology, including In-Band On-Channel(TM) technology for FM radio stations. Digital audio broadcasting's advantages over traditional analog broadcasting technology include improved sound quality and the ability to offer a greater variety of auxiliary services. In-Band On-Channel(TM) technology would permit an FM station to transmit radio programming in both analog and digital formats, or in digital only formats, using the bandwidth that the radio station is currently licensed to use. It is unclear what regulations the FCC will adopt regarding digital audio broadcasting or In-Band On-Channel(TM) technology and what effect such regulations would have on our business or the operations of our radio stations.

Equipment and other costs associated with the transition to digital television, including the necessity of temporary dual-mode operations and the relocation of stations from one channel to another, will impose some near-term financial costs on television stations providing the services. The potential also exists for new sources of revenue to be derived from digital television. We cannot predict the overall effect the transition to digital television might have on our business.

Radio Frequency Radiation. The FCC has adopted rules limiting human exposure to levels of radio frequency radiation. These rules require applicants for renewal of broadcast licenses or modification of existing licenses to inform the FCC whether the applicant's broadcast facility would expose people or employees to excessive radio frequency radiation. We believe that all of our stations are in compliance with the FCC's current rules regarding radio frequency radiation exposure.

Satellite Digital Audio Radio Service. The FCC has allocated spectrum to a new technology, satellite digital audio radio service, to deliver satellite- based audio programming to a national or regional audience. The nationwide reach of the satellite digital audio radio service could allow niche programming aimed at diverse communities that we are targeting. Two companies that hold licenses for authority to offer multiple channels of digital, satellite-delivered radio could compete with conventional terrestrial radio broadcasting. These potential competitors are expected to begin operations no later than 2001.

Low-Power Radio Broadcast Service. On January 20, 2000, the FCC adopted rules creating a new low- power FM radio service. The low-power FM service consists of two classes of radio stations, with maximum power levels of either 10 watts or 100 watts. The 10 watt stations will reach an area with a radius of between one and two miles and the 100 watt stations will reach an area with a radius of approximately three and one-half miles. The low-power FM stations are required to protect other existing FM stations, as currently required of full-powered FM stations, under a law passed by Congress in 2000.

The low-power FM service will be exclusively non-commercial. Current broadcast licensees or parties with interests in cable television or newspapers will not be eligible to hold low-power FM licenses. It is difficult to predict what impact, if any, the new low-power FM service will have on technical interference with our stations' signals or competition for our stations' audiences. Because of the legislation passed by Congress in 2000 which protected incumbent radio broadcasters on frequency three channels away, we expect that low-power FM service will cause little or no signal interference with our stations.

Other Pending FCC and Legislative Proceedings. The Satellite Home Viewer Act allows satellite carriers to deliver broadcast programming to subscribers who are unable to obtain television network programming over the air from local television stations. Congress in 1999 enacted legislation to amend the Satellite Home Viewer Improvement Act to facilitate the ability of satellite carriers to provide subscribers with programming from local

television stations. These policies do not achieve "must-carry" status until January 1, 2002, when any satellite company that has chosen to provide local- into-local service must provide subscribers with all of the local broadcast television signals that are assigned to the market and where television licensees ask to be carried on the satellite system.

On November 29, 1999, Congress enacted the Community Broadcasters Protection Act of 1999, which provides for a new Class A television service, consisting of certain low-power television stations. Low-power television stations that qualify for Class A status are no longer secondary in nature and are protected against certain full-power stations. The existence of Class A stations impacts the ability of full-power stations to modify their facilities. As the owner of both full-power and low-power stations, we are not certain as to whether the creation of the Class A service will, on balance, be beneficial or detrimental to us.

Regulation of Outdoor Advertising

Outdoor advertising is subject to governmental regulation at the federal, state and local levels. Federal law, principally the Highway Beautification Act of 1965 regulates outdoor advertising on federally aided primary and interstate highways. As a condition to federal highway assistance, the Highway Beautification Act requires states to restrict billboards on such highways to commercial and industrial areas and imposes certain additional size, spacing and other limitations. All states have passed state billboard control statutes and regulations at least as restrictive as the federal requirements, including removal of any illegal signs on such highways at the owner's expense and without compensation. We believe that the number of our billboards that may be subject to removal as illegal is immaterial. No state in which we operate has banned billboards, but some have adopted standards more restrictive than the federal requirements. Municipal and county governments generally also have sign controls as part of their zoning laws. Some local governments prohibit construction of new billboards and some allow new construction only to replace existing structures, although most allow construction of billboards subject to restrictions on zones, size, spacing and height.

Federal law does not require the removal of existing lawful billboards, but does require payment of compensation if a state or political subdivision compels the removal of a lawful billboard along a federally aided primary or interstate highway. State governments have purchased and removed legal billboards for beautification in the past, using federal funding for transportation enhancement programs, and may do so in the future. Governmental authorities from time to time use the power of eminent domain to remove billboards. Thus far, we have been able to obtain satisfactory compensation for any of our billboards purchased or removed as a result of governmental action, although there is no assurance that this will continue to be the case in the future. Local governments do not generally purchase billboards for beautification, but some have attempted to force the removal of legal but nonconforming billboards (billboards which conformed with applicable zoning regulations when built but which do not conform to current zoning regulations) after a period of years under a concept called "amortization," by which the governmental body asserts that just compensation is earned by continued operation over time. Although there is some question as to the legality of amortization under federal and many state laws, amortization has been upheld in some instances. We generally have been successful in negotiating settlements with municipalities for billboards required to be removed. Restrictive regulations also limit our ability to rebuild or replace nonconforming billboards.

Under the terms of a settlement agreement among U.S. tobacco companies and 46 states, tobacco companies discontinued all advertising on billboards and buses in the 46 participating states as of April 23, 1999. The remaining four states had already reached separate settlements with the tobacco industry. We removed all tobacco billboards and advertising in these states in compliance with the settlement deadlines.

In addition to the above settlement agreements, state and local governments are also considering regulating the outdoor advertising of alcohol products. Alcohol related advertising represented approximately 9.4% of the total revenue of our outdoor billboard business in 2000. As a matter of both company policy and industry practice (on a voluntary basis), we do not post any alcohol advertisements within a 500 square foot radius of any school, church or hospital.

FORWARD-LOOKING STATEMENTS

This document contains forward-looking statements, including statements under the captions "Business," "Management's Discussion and Analysis of Financial Condition and Results of Operation" and elsewhere in this document, concerning our expectations of future revenue, expenses, the outcome of our growth and acquisition strategy and the projected growth of the U.S. Hispanic population. Forward-looking statements often include words or phrases such as "will likely result," "expect," "will continue," "anticipate," "estimate," "intend," "plan," "project," "outlook," "seek" or similar expressions. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and other factors, some of which are beyond our control, are difficult to predict and could cause actual results to differ materially from those expressed in the forward-looking statements. Factors which could cause actual results to differ from expectations include those in the "Risk Factors" section of our Registration Statement on Form S-1, No. 333-35336, filed with the Securities and Exchange Commission, or SEC, on April 21, 2000, and all amendments thereto, and our Quarterly Report on Form 10-Q for the quarter ended June 30, 2000, filed with the SEC on September 15, 2000. Our results of operations may be adversely affected by one or more of these factors. We caution you not to place undue reliance on these forward-looking statements, which reflect our management's view only as of the date of this document.