2009-01-06 - Broadcast & Outdoor 2009 Outlook (WACH)

8/3/2019 2009-01-06 - Broadcast & Outdoor 2009 Outlook (WACH)

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Please see page 9 for rating definitions, important disclosures and required analyst certifications.

WCM does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest

that could affect the objectivity of the report andinvestors should consider this report as only a single factor in making their investment decision.

A publication of

WACHOVIA CAPITAL MARKETS, LL

Equity Research

Broadcast/Outdoor 2009 Outlook--Lowering

Industry, Company Ests

Sector Rating: Outdoor, Market WeightSector Rating: Radio, Market WeightSector Rating: Television, Market Weight

FY FCF FY P/FCF

Stock Chng. Price Chng. Chng.

Ticker Rating Y/N 01/05/09 2008E Y/N 2009E Y/N 2008 2009

OutdoorLAMR 2 V N $14.75 $1.58 Y $2.31 Y 9.3x 6.4xRadioCDL 2 V N 0.21 0.41 Y 0.10 Y 0.5x 2.1x

CMLS 2 V N 2.79 0.80 Y 0.58 Y 3.5x 4.8xCXR 2 N 6.40 1.03 Y 0.67 Y 6.2x 9.6xEMMS 2 V N 0.40 0.54 N 0.16 Y NM NMETM 2 V N 1.36 2.38 Y 1.43 Y 0.6x 1.0x

ROIAK 2 V N 0.32 0.05 Y (0.11) Y 6.4x NMSGA 2 V N 1.69 0.80 Y 0.49 Y 2.1x 3.5x

TelevisionCBS 2 N 8.70 2.21 Y 1.81 Y 3.9x 4.8xEVC 1 V N 1.51 0.38 Y 0.22 Y 4.0x 6.9xGTN 2 V N 0.43 0.77 Y (0.15) Y 0.6x NMHTV 2 V N 6.26 1.11 N 0.30 Y 5.6x 20.9xSBGI 2 V N 3.32 1.72 Y 0.71 Y 1.9x 4.7xTVL 2 V N 1.46 0.76 N (0.18) Y 1.9x NM

Source: Company data and WCM, LLC estimates NA = Not Available, NC = No Change, NE = No Estimate, NM = Not Meaningful

1= Outperform, 2 = Market Perform, 3 = Underperform, V = Volatile

Note 1: EMMS has a February fiscal year-end

Given the difficult macro environment and budget cuts across all ad categories, weare reducing our company and industry estimates for '09 and adjusting val ranges.

OUTDOOR: LAMR HAS SOME TOUGH QUARTERS AHEAD. GivenLAMR's significant exposure to local advertising (~82% as of 12/31/07), weanticipate significant declines in '09E with rev -11% and EBITDA -22%. While ourrevised model suggests that LAMR is approaching its 6x debt covenant, mgmt mayreduce opex more than our conservative forecast (-1% y/y). We continue to believethat LAMR will be one of the first media stocks to rebound in a recovery, and wewould look to upgrade the stock upon stabilization of rev. and EBITDA declines.

TELEVISION: MACRO AND AUTO TRUMP RETRANS. In addition to theeconomic disaster and absence of political and Olympic rev, broadcasters are gettingslammed by the auto industry, which has historically comprised 25% of TV ad rev.While retrans likely will be a substantial rev stream for most companies in 09, it'snot enough to offset the difficult macro environment, in our opinion. We reduced

company rev and EBITDA estimates by 350bps and 1,120 bps, respectively, on avg.RADIO: WHO WILL SURVIVE? We currently forecast '09 rev. to be -13% for

radio, and even this number may be too optimistic. Radio has, in our view, hitbottom given the various penny stocks, significant debt levels, no M&A, nonexistentcredit and significant rev and EBITDA declines. In 2009, radio groups will focus onavoiding potential delisting and bankruptcies rather than rev. generation. Wereduced co. rev. and EBITDA ests. by 460bps and 1,300bps, respectively, on avg.

January 6, 200

Broadcasting

Marci Ryvicker, CFA, CPA, Senior Analyst(212) 214-5010 / marc i . ryv i cker@wachovia .com

Timothy Schlock, CFA, CPA, Associate Analyst(212) 214-5011 / t imothy.sch lock@wachovia .com


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WACHOVIA CAPITAL MARKETS, LLC

Broadcasting EQUITY RESEARCH DEPARTMENT

2

Wachovia Media Team Advertising Estimates

1960 1970 1980 1990 2000 2005 2006 2007 2008E 2009E

Newspapers 3,681 5,704 14,794 32,280 48,671 49,435 49,275 45,375 37,989 33,100

YoY % Change 0.0% -0.2% 6.7% -0.3% 5.1% 2.5% -0.3% -7.9% -16.3% -12.9%

Magazines 975 1,354 3,279 6,803 12,370 12,847 13,168 13,787 12,960 12,701

YoY % Change 0.0% -3.8% 7.4% -1.8% 8.2% 4.9% 2.5% 4.7% -6.0% -2.0%

Broadcast TV 1,627 3,596 11,416 26,716 44,802 44,293 46,880 44,521 43,872 38,481

YoY % Change 0.0% 0.3% 12.4% 5.3% 12.0% -4.0% 5.8% -5.0% -1.5% -12.3%

Cable TV 0 0 72 2,457 15,455 24,011 24,659 26,375 27,521 26,971

YoY % Change NM NM NM 17.3% 23.0% 11.5% 2.7% 7.0% 4.3% -2.0%

Radio 693 1,308 3,702 8,726 19,819 21,455 21,665 21,310 19,348 16,837

YoY % Change 0.0% 3.5% 11.8% 4.8% 12.1% 7.2% 1.0% -1.6% -9.2% -13.0%

Yellow Pages 0 0 2,900 8,926 13,228 14,229 14,349 14,218 13,676 12,816

YoY % Change NM NM NM 7.2% 4.6% 1.4% 0.8% -0.9% -3.8% -6.3%

Direct Mail 1,830 2,766 7,596 23,370 44,591 55,218 58,643 60,225 59,021 57,545

YoY % Change 0.0% 3.6% 14.2% 6.5% 7.7% 5.8% 6.2% 2.7% -2.0% -2.5%

Business Papers 609 740 1,674 2,875 4,915 4,276 4,447 4,647 4,716 4,716

YoY % Change 0.0% -1.6% 6.3% 4.1% 15.0% 5.0% 4.0% 4.5% 1.5% 0.0%

Billboards 203 260 701 2,600 4,780 6,301 6,806 7,350 7,415 6,848

YoY % Change 0.0% 10.6% 15.9% 74.7% -1.1% 9.2% 8.0% 8.0% 0.9% -7.6%

Internet 0 0 0 0 8,087 12,542 16,879 21,206 23,897 26,287

YoY % Change NM NM NM NM 75.0% 30.3% 34.6% 25.6% 12.7% 10.0%

Miscellaneous 2,342 3,848 7,559 16,452 32,083 36,585 36,478 37,390 36,268 34,817

YoY % Change 0.0% 0.9% -21.5% 5.8% 12.6% 5.6% 4.8% 2.5% -3.0% -4.0%

Total US Advertising 11,960 19,576 53,693 131,205 248,801 281,192 293,249 296,404 286,684 271,120

YoY % Change -- 0.7% 9.9% 4.8% 10.9% 4.7% 4.3% 1.1% -3.3% -5.4%

Source: Wachovia Capital Markets, LLC Media Equity Research Estimates (John Janedis, Marci Ryvicker,Jaime Neuman), NAA, IAB, Universal McCann

We Are Reducing Industry Estimates For 2009

As we enter a new year, we see no reason to be optimistic as significant declines persist across mosteconomic metrics consumer confidence, housing stats, employment, etc. The deep recession and the fear ofdepression has caused consumers and businesses alike to stop spending discretionary dollars, and as a result,

ad budgets are among the lowest levels in decades, particularly among the largest ad categories such as auto,telecom and financials.

We have reduced our 2009 industry estimates for radio, television and outdoor as follows.


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Broadcast/Outdoor 2009 Outlook--Lowering Industry, Company Ests EQUITY RESEARCH DEPARTMENT

3

Wachovia Capital Markets, LLC 2009 Industry Estimate Changes

RADIO New Old

Local -13% -8%

National -17% -15%

Network -10% -5%

NTR -4% -3%TOTAL -13% -8%

TELEVISION New Old

Local -15% -15%

National -25% -20%

Network -5% -3%

Syndicated -3% 0%

Internet 3% 10%

TOTAL -12% -10%

OUTDOOR New Old

Local -9% -3%

National -6% -3%

TOTAL -8% -3%

Source for all charts: Wachovia Capital Markets, LLC estimates ________________________________________________________________________________________

OUTDOOR: LAMR HAS SOME TOUGH QUARTERS AHEAD

Given LAMR's significant exposure to local advertising (~82% as of December 31 st, 2007), we anticipatedeep declines in '09.

We reduced our revenue and EBITDA growth estimates by 260bps and 550bps, respectively. We nowanticipate that consolidated revenue will be -11% vs. -8% and that consolidated EBITDA will be -22% vs.-16%. Our model assumes that LAMR will put up an incremental 100 digital billboards in 2009, resulting ina cumulative 1,166 digital boards (out of ~170,000 in total).

Given our estimate changes, we are now forecasting a year-end debt leverage of 5.7x, which is close toLAMRs 6.0x covenant (this calculation EXCLUDES the converts). However, we may be too conservativewith regard to our opex expectation, which is currently for a -1% y/y decline. To put this in perspective -- forevery 100bps change in opex growth, EBITDA increases/decreases by 200bps, and leverageincreases/decreases by 0.1x. Therefore, should LAMR reduce opex greater than our model indicates,EBITDA and debt leverage could be more favorable than our current forecast implies.

We continue to believe that LAMR will be one of the first media stocks to rebound in an economic recoverygiven its positive secular trends (most pricing power out of all traditional media, lack of technological threats,relatively low CPMs, new measurement system expected in 2009, new media focus with digital boards, etc.).

We would look to upgrade the stock once declines in revenue and EBITDA stabilize.________________________________________________________________________________________


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TELEVISION: MACRO AND AUTO TRUMP RETRANS

In addition to the economic disaster and the absence of political and Olympic revenue, broadcasters aregetting slammed by the auto industry, which has historically comprised 25% of TV ad revenue. Whileretrans likely will be a substantial revenue stream for most companies in 2009 and beyond, we dont think itwill be enough to offset the difficult macro environment, in the near term.

We reduced our 2009 television revenue growth estimates by an average of 350bps and our EBITDA growthestimates by an average of 1,120 bps. Please see page 5 for detailed EBITDA growth estimates.

2009 Television Revenue Growth Estimates

New Old

CBS (4.4%) (4.2%)

EVC (11.0%) (7.9%)

GTN (1) (22.5%) (21.1%)

HTV (22.7%) (19.2%)

SBGI (18.2%) (13.8%)

TVL (22.1%) (13.6%)

Note (1) We increased our retransmission consent revenue estimate for GTN to account for an additional 7 agreements in principle with

large cable MSOs as announced on December 29th. Total retransmission consent revenue is expected to be $14 million, up from $11million as announced on December 15th.

Source: Wachovia Capital Markets, LLC estimates

2009E Revenue Growth

We anticipate the best performers in 2009 to be CBS and EVC.

While CBS has significant exposure to advertising revenue (at approximately 70% of total revenue), italso has a diversified set of revenue streams such as its O&O stations, the CBS network, syndication,Showtime, interactive, outdoor, publishing and radio. Some of these revenue streams are more insulatedfrom economic downturns than others; particularly affiliate fees, syndication and interactive. CBS alsohas an investment grade balance sheet and a lot of cash on hand ($553 million as of September 30 th)which provides it with more flexibility than most of its peers.

EVCs revenue declines should be less significant than its English-language peers given its below-average exposure to political. Political revenue comprised only 4% of total television revenue (per ourestimates) during this past presidential election vs. the ~10% exposure of most English-languagebroadcast groups. We also point out that we have not included a 2009 retrans estimate for EVC for two primary reasons: i) Univision is negotiating with MSOs on EVCs behalf, and there has been nodisclosure as to the economics of this relationship (i.e. what is Univisions cut of EVCs retransrevenue); and ii) unlike its English-language peers, Entravision has not provided any information withregard to the progress of its retransmission consent talks. Therefore, we would rather remain conservative by excluding this revenue stream. That being said, once Univision/EVC complete their retransnegotiations, this revenue stream could be quite significant for EVC. We estimate that 2009 retransrevenue could vary between $10 million to $40 million, which would equate to an additional $2-$5 pershare of equity value.


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RADIO: WHO WILL SURVIVE?

We currently forecast '09 radio industry revenue to be -13%, and even this number may be too optimistic.Radio has, in our view, hit bottom given the various penny stocks, significant debt levels, lack of M&A,nonexistent credit and significant revenue and EBITDA declines. Unfortunately, however, we see no catalystthat will favorably boost the stocks until an economic and/or credit market recovery ensues. By that time,there may be a smaller number of public radio groups given the real potential for delisting and bankruptcies.

We reduced our 2009 radio revenue growth estimates by an average of 460bps and our EBITDA growthestimates by an average of 1,300 bps. Please see page 5 for detailed EBITDA growth estimates.

2009 Radio Revenue Growth Estimates

New Old

CBS (13.9%) (7.9%)

CDL (12.7%) (7.8%)

CMLS (10.6%) (5.4%)

CXR (10.6%) (6.0%)

EMMS (1) (2) (7.5%) (4.6%)

ETM (11.7%) (7.5%)

EVC (11.3%) (6.6%)

ROIAK (11.5%) (7.2%)SGA (3) (7.9%) (3.2%)

Note (1) EMMS has February fiscal year-end; therefore our estimate above is for FY2010

Note (2) EMMS has relatively better performance than its peers for 2 reasons: i) our estimates include the international division

and ii) since EMMS has a February fiscal year-end, our FY2010 estimate includes the months of Jan and Feb 2010, which (hopefully)

includes an economic recovery

Note (3) We assume that SGA will outperform its peers given its small market focus. We also note that SGA announced on December 30th

that its Board of Directors has approved a reverse stock split of not more than one-for-four shares in order to provide listing and trading liquidity.


2009E Revenue Growth

We expect the best performers in 2009 to be EMMS and SGA, with high single digit revenue declines vs. thedouble digit declines we are anticipating for the rest of the groups. Our reasoning for this is as follows:

EMMS has a February fiscal year-end, which includes January and February of 2010. We hope that atthat point, we will be in the midst of an economic recovery; therefore EMMS should benefit from 2months of moderating revenue declines. Unlike its peers, EMMS also has a rather large internationalradio division, which comprises 20% of consolidated radio revenue (per our estimates). We anticipatethat this segment will continue to trend better than EMMS domestic segment just as it has done over thepast several years.

SGA has outperformed the industry for the past several years due to its small-market focus, and weanticipate that this trend will continue throughout the economic downturn.

________________________________________________________________________________________


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CONSOLIDATED ESTIMATES

2009 Consolidated Revenue Estimates

New Old Chg. Consensus New Old Chg. Consensus

CDL $740 $796 (7%) $1,138 CDL (13%) (8%) (492) (5%)

CMLS $275 $295 (7%) $299 CMLS (11%) (5%) (519) (4%)

CXR $366 $387 (5%) $393 CXR (11%) (6%) (463) (5%)

ETM $385 $407 (6%) $409 ETM (12%) (7%) (423) (8%)

EMMS (1) $319 $327 (2%) $334 EMMS (1) (7%) (5%) (215) (4%)

ROIAK $284 $299 (5%) $299 ROIAK (8%) (5%) (350) (5%)

SGA $129 $137 (6%) $137 SGA (8%) (3%) (442) (3%)

GTN $272 $274 (1%) $280 GTN (17%) (16%) (46) (14%)

HTV $596 $619 (4%) $633 HTV (18%) (15%) (306) (14%)

SBGI $654 $681 (4%) $693 SBGI (13%) (9%) (355) (8%)

TVL $330 $360 (8%) $368 TVL (17%) (9%) (757) (7%)

CBS $13,496 $13,892 (3%) $13,605 CBS (4%) (2%) (167) (3%)

EVC $215 $225 (4%) $230 EVC (11%) (7%) (372) (5%)

LAMR $1,092 $1,128 (3%) $1,138 LAMR (11%) (8%) (278) (5%)

2009E Revenue Growth2009E Revenue

2009 Consolidated EBITDA Estimates


CDL $157 $212 (26%) $448 CDL (36%) (19%) (1,716) (11%)CMLS $62 $80 (22%) $81 CMLS (29%) (13%) (1,572) (7%)

CXR $93 $106 (13%) $117 CXR (28%) (19%) (884) (12%)

ETM $98 $119 (17%) $122 ETM (30%) (18%) (1,156) (13%)

EMMS (1) $49 $48 2% $53 EMMS (1) (25%) (27%) 147 (11%)

ROIAK $56 $70 (21%) $79 ROIAK (25%) (10%) (1,497) (13%)

SGA $24 $31 (22%) $30 SGA (27%) (11%) (1,568) (12%)

GTN $70 $71 (2%) $81 GTN (41%) (40%) (108) (28%)

HTV $127 $147 (13%) $149 HTV (41%) (31%) (912) (32%)

SBGI $162 $188 (14%) $184 SBGI (33%) (23%) (1,056) (21%)

TVL $65 $93 (31%) $100 TVL (46%) (22%) (2,405) (18%)

CBS $2,265 $2,331 (3%) $2,291 CBS (17%) (17%) 32 (13%)

EVC $63 $73 (14%) $73 EVC (24%) (14%) (1,089) (9%)

LAMR $399 $429 (7%) $448 LAMR (22%) (16%) (568) (11%)

2009 EPS And FCF/Share Estimates


CDL $0.10 $0.31 (67%) N/A CDL ($0.02) $0.11 (119%) ($0.25)

CMLS $0.58 $0.95 (39%) N/A CMLS $0.17 $0.35 (52%) $0.28

CXR $0.67 $0.80 (16%) N/A CXR $0.45 $0.55 (18%) $0.64

ETM $1.43 $1.99 (28%) N/A ETM $0.55 $0.88 (38%) $0.82

EMMS (1) $0.16 $0.13 23% N/A EMMS (1) ($0.32) ($0.34) (5%) ($0.26)

ROIAK ($0.11) $0.05 (338%) N/A ROIAK ($0.34) ($0.19) 78% ($0.08)

SGA $0.49 $0.86 (43%) N/A SGA $0.21 $0.43 (50%) $0.43

GTN ($0.15) ($0.04) 310% N/A GTN ($0.57) ($0.54) 5% ($0.47)

HTV $0.30 $0.51 (41%) N/A HTV ($0.00) $0.15 (101%) $0.25

SBGI $0.71 $1.00 (30%) N/A SBGI $0.01 $0.18 (92%) $0.24

TVL ($0.18) $0.38 (148%) N/A TVL ($0.22) $0.15 (242%) $0.18

CBS $1.81 $2.07 (12%) N/A CBS $1.01 $1.19 (15%) $1.13

EVC $0.22 $0.33 (34%) N/A EVC $0.03 $0.10 (67%) $0.11LAMR $2.31 $2.63 (12%) N/A LAMR ($0.51) ($0.33) 57% ($0.25)

Note 1 for all charts: EMMS has a February year end. Thus, 2009E represents EMMS' FY '10

Source for all charts: Wachovia Capital Markets, LLC estimates, Thomson One

2009E EBITDA Growth

2009E EPS2009E FCF/Share

2009E EBITDA (excl. FAS123R)

________________________________________________________________________________________

WE HAVE ADJUSTED OUR VALUATION RANGES

Given that it is a new year and an unprecedented time, we have made two significant changes to our 5-yeardiscounted cash flow analyses.


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1) We have rolled our discounted cash flow models over to 2009, and2) We are now using market value of debt rather than book value of debt in the calculation of overall firm

value.

We have also included our 2009E leverage forecasts vs. each companys debt covenants. While some of ourassumptions may indicate a covenant breach, please remember that there are many levers a company can pull

before a potential debt call or bankruptcy occurs (i.e. significant expense cuts, asset sales, refinancing).

Current Rationale Leverage Ratio

Price New Old Implied '09E EBITDA Mult. Terminal FCF Growth WCM Est. Covenant

CDL $0.21 $0-1 $1-2 7.8x (1%) 12.8x 7.75x Note (1)

CMLS $2.79 $2-3 $1-3 9.5x (1%) 10.3x 7.0x

CXR $6.40 $5-7 $6-8 5.7x (1%) 3.8x 5.0x

EMMS $0.40 $0-1 $2-4 6.5x (1%) 7.8x 6.5x Note (5)

ETM $1.36 $1-2 $1-2 6.4x (1%) 7.3x 6.0x

ROIAK $0.32 $0-1 $1-2 5.8x (1%) 12.2x 7.3x

SGA $1.69 $3-4 $3-5 6.3x (1%) 5.2x 4.5x Note (2)

GTN $0.43 $0-1 $1-2 11.0x 1% 8.8x 7.3x Note (4)

HTV $6.26 $5-7 $15-17 7.6x 1% 5.7x 5.0x

SBGI $3.32 $4-5 $4-5 7.5x 1% 4.3x 6.5xTVL $1.46 $1-2 $2-4 7.1x 1% 11.3x 7.0x

CBS $8.70 $8-10 $10-12 7.1x 1% 3.0x 3.0x

EVC $1.51 $2-3 $4-6 7.1x 1% 6.7x 6.8x Note (3)

LAMR $14.75 $14-16 $14-16 8.6x 2% 5.7x 6.0x


Note (1): CDL's covenant steps down to 7.25x on October 1, 2009

Note (2): SGA's covenant steps down to 4.0x on June 30,2009

Note (3): EVC's covenant steps down to 6.5x on October 1, 2009

Note (4): GTN's debt covenant calculation is based on 8 trailing quarters instead of 4

Note (5): EMMS' debt covenant steps down to 6.0x on May 31, 2009.

Source: Wachovia Capital Markets, LLC estimates, FactSet, Bloomberg and company data

Valuation Range

Risks to Valuation Ranges:Risks to achieving our valuation ranges are as follows: Radio One: potential integration difficulties withROIAK's new ventures and longer-than-anticipated economic recession. Emmis: audience share and revenuedeclines that are worse than expected and an increase in debt levels. Cox Radio: a lack of industry pricing power and declining ratings. Lamar: a lack of operating leverage, a slowdown in digital billboarddeployment, and a greater than expected decline in occupancy and/or ad rates. Entercom: integrationdifficulties and format changes not contributing to growth as quickly as anticipated. Entravision: a greaterthan anticipated lag between ratings improvements and associated revenue growth and persistent declines dueto increased competition. Cumulus: above-average debt levels and lack of pricing power. Citadel: increasedmarket competition, potential integration difficulties and a lack of industry pricing power. Saga: a longer-than-anticipated lag between ratings improvement and revenue growth and potential integration difficulties.Gray Television: increased competition from other media, above-average debt levels and persistent

viewership declines at the NBC network. Hearst-Argyle Television, Inc: increased competition from othermedia, continued declines in the auto advertising category, a slower-than-expected comeback from NBC andlower-than-expected revenue and cash flow contributions from HTV's new business initiatives (i.e., localwebsites, IBS, and digital programs). Lin TV Corporation: increased competition from other media,continued declines in the auto advertising category, increasing debt leverage and lower-than-expectedrevenue and cash flow contributions from TVL's new business initiatives. Sinclair Broadcast Group, Inc.:increased competition from other media, continued declines in the auto advertising category and lower-than-expected revenue and cash flow contributions from SBGI's new business initiatives (i.e., digital channels,news sharing, and direct mail). CBS: a fall-off in CBS' ratings, regulatory barriers to CBS' conversion todigital outdoor products and a weak advertising and/or economic environment.


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Comparable Valuations

Note: Radio includes CXR, ETM , ROIAK, CDL, CM LS, SGA. Television includes CBS, TVL, HTV, GTN, SBGI. Tot al includes all of the above.

Sources: Company data and Wachovia Capital Markets, LLC estimates

Comparative EV-to-EBITDA 2009E Multiples

5.4x 5.8x6.4x

7.5x 7.6x 7.8x 7.8x 7.8x8.2x 8.2x 8.5x

8.9x 9.0x 9.2x10.2x 10.6x

10.9x

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

14.0x

16.0x

SGA

CBS

ETM

EVC

SBGI

Radi

oAve

rage

TVL

ROIA

K

Total

Ave

rage

Telev

ision

Ave

rage

LAM

R

EMM

SCX

RHT

VCM

LSCD

LGT

N

EV/EBITDA2

009E

Note: Radio includes CXR, ETM, ROIAK, CDL, CM LS, SGA. Television includes CBS, TVL, HTV, GTN, SBGI. Total includes all of the above.

Sources: Company data and Wachovia Capital Markets, LLC estimates

Comparative FCF Yield 2009E

5%11%

15% 16% 16%20% 21% 21%

26%29%

40%

0%

10%

20%

30%

40%

50%

HTV

CXR

EVC

Telev

ision

Ave

rage

LAM

R

Total

Ave

rage

CBS

SBGI

Radi

oAve

rage

SGA

EMM

S

FCF

Yield2009E


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Required Disclosures

To view price charts for all companies rated in this document, please go to www.wachoviaresearch.com or write to7 Saint Paul Street, 1st Floor, MD5202, Baltimore, MD 21202

ATTN: Research Publications

Additional Information Available Upon Request

I certify that:1) All views expressed in this research report accurately reflect my personal views about any and all of the subject securities or issuers discussed;and2) No part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by me in thisresearch report.

Wachovia Capital Markets, LLC maintains a market in the common stock of Cumulus Media Inc., Emmis Communications Corporation,Lamar Advertising Company, Radio One, Inc., Sinclair Broadcast Group, Inc.

Wachovia Capital Markets, LLC or its affiliates intends to seek or expects to receive compensation for investment banking services in the nextthree months from CBS Corporation, Citadel Broadcasting Corp., Cox Radio, Inc., Cumulus Media Inc., Emmis CommunicationsCorporation, Entravision Communications Corp., Gray Television, Inc., LIN TV Corporation, Radio One, Inc., Saga Communications, Inc.,

Sinclair Broadcast Group, Inc. Wachovia Capital Markets, LLC or its affiliates received compensation for investment banking services from Cox Radio, Inc., Gray

Television, Inc., Lamar Advertising Company in the past 12 months.

Cox Radio, Inc., Gray Television, Inc., Lamar Advertising Company currently is, or during the 12-month period preceding the date ofdistribution of the research report was, a client of Wachovia Capital Markets, LLC. Wachovia Capital Markets, LLC provided investment

banking services to Cox Radio, Inc., Gray Television, Inc., Lamar Advertising Company.

Radio One, Inc., Sinclair Broadcast Group, Inc. currently is, or during the 12-month period preceding the date of distribution of the researchreport was, a client of Wachovia Capital Markets, LLC. Wachovia Capital Markets, LLC provided noninvestment banking securities-relatedservices to Radio One, Inc., Sinclair Broadcast Group, Inc.

Wachovia Capital Markets, LLC received compensation for products or services other than investment banking services from Radio One, Inc.,Sinclair Broadcast Group, Inc. in the past 12 months.

Wachovia Capital Markets, LLC does not compensate its research analysts based on specific investment banking transactions. WCMs researchanalysts receive compensation that is based upon and impacted by the overall profitability and revenue of the firm, which includes, but is notlimited to investment banking revenue.

STOCK RATING

1 = Outperform: The stock appears attractively valued, and we believe the stock's total return will exceed that of the market over the next 12months. BUY

2 = Market Perform: The stock appears appropriately valued, and we believe the stock's total return will be in line with the market over the next12 months. HOLD

3 = Underperform: The stock appears overvalued, and we believe the stock's total return will be below the market over the next 12 months.SELL

SECTOR RATING

O = Overweight: Industry expected to outperform the relevant broad market benchmark over the next 12 months.

M = Market Weight: Industryexpected to perform in-line with the relevant broad market benchmark over the next 12 months.

U = Underweight: Industry expected to underperform the relevant broad market benchmark over the next 12 months.

VOLATILITY RATING

V = A stock is defined as volatile if the stock price has fluctuated by +/-20% or greater in at least 8 of the past 24 months or if the analyst expectssignificant volatility. All IPO stocks are automatically rated volatile within the first 24 months of trading.


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As of: January 6, 2009

41% of companies covered by Wachovia Capital Markets, LLCEquity Research are rated Outperform.

Wachovia Capital Markets, LLC has provided investment banking servicesfor 37% of its Equity Research Outperform-rated companies.

55% of companies covered by Wachovia Capital Markets, LLCEquity Research are rated Market Perform.

Wachovia Capital Markets, LLC has provided investment banking servicesfor 26% of its Equity Research Market Perform-rated companies.

4% of companies covered by Wachovia Capital Markets, LLCEquity Research are rated Underperform.

Wachovia Capital Markets, LLC has provided investment banking servicesfor 32% of its Equity Research Underperform-rated companies.

Important Disclosure for International Clients

The securities and related financial instruments described herein may not be eligible for sale in all jurisdictions or to certaincategories of investors. For certain non-U.S. institutional reader (including readers in the EEA), this report is distributed byWachovia Securities International Limited (WSIL). For the purposes of Section 21 of the UK Financial Services and MarketsAct 2000 (the Act), the content of this report has been approved by WSIL a regulated person under the Act. WSIL does not dealwith retail clients as defined in the Markets in Financial Instruments Directive 2007, therefore clients will automatically be deemedto be a professional or an eligible counterparty. This research is not intended for, and should not be relied upon, by retail clients.

Important Information for Australian Recipients

Wachovia Capital Markets, LLC (WCM) is exempt from the requirements to hold an Australian financial services license inrespect of the financial services it provides to wholesale clients in Australia. WCM is a registered broker-dealer registered with theU.S. Securities and Exchange Commission, and a member of the New York Stock Exchange, the Financial Industry RegulatoryAuthority, and the Securities Investor Protection Corp. WCM is regulated under U.S. laws which differ from Australian laws.Any offer or documentation provided to you by WCM in the course of providing the financial services will be prepared inaccordance with the laws of the United States and not Australian laws.

Important Information for Recipients in the Hong Kong Special Administrative Region of

the People's Republic of China ("Hong Kong")

For recipients resident in Hong Kong, this research is issued and distributed in Hong Kong by Wachovia Securities Asia Limited.

Wachovia Securities Asia Limited is a Hong Kong incorporated investment firm licensed and regulated by the Securities andFutures Commission to carry on types 1, 4, 6 and 9 regulated activities (as defined in the Securities and Futures Ordinance [the"SFO"]). This research is not intended for, and should not be relied on by, any person other than professional investors (as definedin the SFO). The securities and related financial instruments described herein are not intended for sale nor will be sold to any person other than professional investors (as defined in the SFO). Any sale of any securities or related financial instrumentsdescribed herein will be made in Hong Kong by Wachovia Securities Asia Limited. Please consult your Wachovia Securities AsiaLimited sales representative or the Wachovia Securities Asia Limited office in your area for additional information.

Important Information for Japanese Recipients

This material is distributed in Japan by Wachovia Securities (Japan) Co., Ltd., a foreign securities company registered with theFinancial Services Agency in Japan.


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Additional Disclosures

WCM is a U.S. broker-dealer registered with the U.S. Securities and Exchange Commission and a member of the New York StockExchange, the Financial Industry Regulatory Authority and the Securities Investor Protection Corp. Wachovia SecuritiesInternational Limited is a U.K. incorporated investment firm authorized and regulated by the Financial Services Authority.

This report is for your information only and is not an offer to sell, or a solicitation of an offer to buy, the securities or instruments

named or described in this report. Interested parties are advised to contact the entity with which they deal, or the entity thatprovided this report to them, if they desire further information. The information in this report has been obtained or derived fromsources believed by Wachovia Capital Markets, LLC, to be reliable, but Wachovia Capital Markets, LLC, does not represent thatthis information is accurate or complete. Any opinions or estimates contained in this report represent the judgment of WachoviaCapital Markets, LLC, at this time, and are subject to change without notice. For the purposes of the U.K. Financial ServicesAuthority's rules, this report constitutes impartial investment research. Each of Wachovia Capital Markets, LLC, and WachoviaSecurities International Limited is a separate legal entity and distinct from affiliated banks. Copyright 2009 Wachovia CapitalMarkets, LLC.

SECURITIES: NOT FDIC-INSURED/NOT BANK-GUARANTEED/MAY LOSE VALUE


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2009-01-06 - Broadcast & Outdoor 2009 Outlook (WACH)

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