Form 10-Q

Large accelerated filer

Accelerated filer

Non-accelerated filer

x (Do not check if a smaller reporting company)

Smaller reporting company

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ¨ No ¨ (Note: As a voluntary filer, the registrant has filed all reports under Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months, but the registrant is not subject to such filing requirements.)

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “accelerated filer”, “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

As of August 14, 2012, there were 100 shares of common stock, $0.01 par value per share, of LBI Media Holdings, Inc. issued and outstanding.

LBI Media Holdings, Inc. (“LBI Media Holdings”) was incorporated in Delaware on June 23, 2003 and is a wholly owned subsidiary of Liberman Broadcasting, Inc., a Delaware corporation (successor in interest to LBI Holdings I, Inc.) (the “Parent” or “Liberman Broadcasting”). Pursuant to an Assignment and Exchange Agreement dated September 29, 2003, between the Parent and LBI Media Holdings, the Parent assigned to LBI Media Holdings all of its right, title and interest in 100 shares of common stock of LBI Media, Inc. (“LBI Media”) (constituting all of the outstanding shares of LBI Media) in exchange for 100 shares of common stock of LBI Media Holdings. Thus, upon consummation of the exchange, LBI Media Holdings became a wholly owned subsidiary of the Parent, and LBI Media became a wholly owned subsidiary of LBI Media Holdings.

LBI Media Holdings is not engaged in any business operations and has not acquired any assets or incurred any liabilities, other than the acquisition of stock of LBI Media, the issuance and purchase of a portion of its senior discount notes (see Note 5) and the operations of its subsidiaries. Accordingly, its only material source of cash is dividends, distributions and loans from its subsidiaries, which are subject to restrictions by LBI Media’s senior secured revolving credit facility and the indentures governing the senior subordinated notes and senior secured notes, both issued by LBI Media (see Note 5). Parent-only condensed financial information of LBI Media Holdings on a stand-alone basis is presented in Note 12.

LBI Media Holdings and its wholly owned subsidiaries (collectively referred to as the “Company”) own and operate television stations located in California, Texas, Arizona, Utah, New York, Colorado, and Illinois and radio stations in California and Texas. The Company operates its New York television station and three of its radio stations in its California and Texas markets under time brokerage agreements. The Company also owns television production facilities that are used to produce programming for Company-owned and affiliated television stations. The Company sells commercial airtime on its radio and television stations to local, regional and national advertisers.

The Company’s KHJ-AM, KVNR-AM, KWIZ-FM, KBUE-FM, KBUA-FM, KEBN-FM and KRQB-FM radio stations serve the greater Los Angeles, California market (including Riverside/San Bernardino), its KQUE-AM, KEYH-AM, KJOJ-FM, KTJM-FM, KQQK-FM and KNTE-FM radio stations serve the Houston, Texas market and its KNOR-FM, KZMP-AM, KTCY-FM, KZZA-FM, KZMP-FM and KBOC-FM radio stations serve the Dallas-Fort Worth, Texas market.

The Company’s television stations, KRCA, KSDX, KVPA, KETD, KZJL, KMPX, KPNZ, WASA and WESV serve the Los Angeles, California, San Diego, California, Phoenix, Arizona, Denver, Colorado, Houston, Texas, Dallas-Fort Worth, Texas, Salt Lake City, Utah, New York, New York, and Chicago, Illinois markets, respectively.

The Company’s two television studio facilities in Burbank, California, and one each in Houston, Texas, and Dallas, Texas, are owned and operated by LBI Media Holdings’ indirect, wholly owned subsidiaries.

In 2009, the Company began entering into affiliation agreements with certain television stations to broadcast its EstrellaTV network programming on their primary or digital multicast channels. Currently, this affiliate network consists of television stations in various states, and along with the Company’s owned and operated television stations, serves 39 designated market areas, including nine each in California and Texas, four in Florida, three in Arizona, two in Nevada and Oklahoma, and one each in Colorado, Georgia, Illinois, Nebraska, New Mexico, New York, North Carolina, Oregon, Utah, and Washington.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and with the instructions for Rule 10-01 of Regulation S-X promulgated by the Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles (“U.S. GAAP”) for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. The results of operations for interim periods are not necessarily indicative of the results that may be expected for the fiscal year. The condensed consolidated financial statements should be read in conjunction with the Company’s December 31, 2011 consolidated financial statements and accompanying notes included in the Company’s annual report on Form 10-K (the “Annual Report”). All terms used but not defined elsewhere herein have the meanings ascribed to them in the Annual Report.

The condensed consolidated balance sheet at December 31, 2011 has been derived from the audited financial statements at that date but does not include all the information and footnotes required by U.S. GAAP for complete financial statements.

The condensed consolidated financial statements include the accounts of LBI Media Holdings and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated.

As of June 30, 2012, the Company’s total indebtedness was approximately $504.9 million, of which principal of approximately $0.1 million is due in 2012 and $42.0 million is due in 2013. The Company’s primary sources of liquidity are cash from operations and available borrowings under the 2011 Revolver (as defined below). The Company believes that its cash on hand and available borrowings under the 2011 Revolver will be sufficient to permit it to fund its contractual obligations and operations for at least the next twelve months. However, because the Company is highly leveraged, it dedicates a substantial portion of available cash to pay principal and interest on its outstanding debt. Given the challenges in the current economic environment related to advertising revenue growth and the Company’s continued investment in television programming content, it has been experiencing high levels of cash used in operating activities. On July 17, 2012, LBI Media commenced private exchange offers to exchange new notes to be issued by LBI Media for any and all of the 2007 Senior Subordinated Notes (as defined below) and the Senior Discount Notes (as defined below). Concurrently, with the exchange offers LBI Media began soliciting consents from holders of certain of the Company’s indebtedness to certain proposed amendments to and related indentures of such notes. See Note 13 “Subsequent Event.” However, the exchange offers may not be consummated and the Company may need to pursue one or more alternative strategies to pay its significant levels of debt, such as reducing operating expenses, refinancing or restructuring its indebtedness, selling additional debt or equity securities or selling assets. Because LBI Media has also pledged substantially all of its assets to its existing lenders and holders of LBI Media’s 2011 Senior Secured Notes (as defined below), the Company may not be able to refinance its existing debt or issue additional debt or equity securities on favorable terms, if at all, and if the Company must sell its assets, it may negatively affect its ability to generate net revenues.

Accounting Standards Codification Topic 820 “Fair Value Measurements and Disclosures” (“ASC 820”) establishes a framework for measuring fair value and expands related disclosures. The fair value framework requires the categorization of assets and liabilities into three levels based upon the assumptions (inputs) used to price the assets or liabilities. Level 1 provides the most reliable measure of fair value, whereas Level 3 generally requires significant management judgment. The three levels are defined as follows:


Level 1:		Inputs are unadjusted quoted prices in active markets for identical assets and liabilities that can be assessed at a measurement date.

Level 2:		Observable inputs other than those included in Level 1. For example, quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets.

Level 3:		Unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the asset or liability.

In May 2011, the Financial Accounting Standards Board (“FASB”) issued an accounting standard update (“ASU”) ASU 2011-04 to provide guidance on achieving a consistent definition of and common requirements for measurement of and disclosure concerning fair value as between U.S. GAAP and International Financial Reporting Standards. ASU 2011-04 is effective for fiscal years beginning after December 15, 2011. The Company adopted ASU 2011-04 in the first quarter of 2012, and has included the disclosures required by the update within this note (set forth below).

Certain assets and liabilities are measured at fair value on a non-recurring basis. This means that certain assets are not measured at fair value on an ongoing basis but are subject to fair value reviews only in certain circumstances. Included in this category are the Company’s radio and television Federal Communications Commission (“FCC”) broadcast licenses that are written down to fair value when they are determined to be impaired.

As no impairment indicators were noted during the three and six months ended June 30, 2012 and 2011, no such impairment write-downs were required during those periods.

The carrying fair value of the Company’s financial instruments included in current assets and current liabilities (such as cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, and other similar items) approximate fair value due to the short-term nature of such instruments.

The Company’s indefinite-lived assets consist of its Federal Communications Commission (“FCC”) broadcast licenses. The Company believes its broadcast licenses have indefinite useful lives given that they are expected to indefinitely contribute to the future cash flows of the Company and that they may be continually renewed without substantial cost to the Company. In certain prior years, the licenses were considered to have finite lives and were subject to amortization. Accumulated amortization of broadcast licenses totaled approximately $17.5 million at June 30, 2012 and December 31, 2011.

In accordance with Accounting Standards Codification (ASC 350-30) “General Intangibles Other Than Goodwill” (“ASC 350-30”), the Company no longer amortizes its broadcast licenses. The Company tests its broadcast licenses for impairment at least annually or when indicators of impairment are identified. The Company’s valuations principally use the discounted cash flow methodology, an income approach based on market revenue projections, and not company-specific projections, which assumes broadcast licenses are acquired and operated by a third party. This approach incorporates variables such as types of signals, media competition, audience share, market advertising revenue projections, anticipated operating margins and discount rates, without taking into consideration the station’s format or management capabilities. This method calculates the estimated present value that would be paid by a prudent buyer for the Company’s FCC licenses as new radio or television stations. If the discounted cash flows estimated to be generated from these assets are less than the carrying value, an adjustment to reduce the carrying value to the fair market value of the assets is recorded.

The Company generally tests its broadcast licenses for impairment at the individual license level. However, ASC 350-30 states that separately recorded indefinite-lived intangible assets should be combined into a single unit of accounting for purposes of testing impairment if they are operated as a single asset and, as such, are essentially inseparable from one another. The Company aggregates broadcast licenses for impairment testing if their signals are simulcast and are operating as one revenue-producing asset.

As no impairment indicators were noted based on management’s analysis during the three and six months ended June 30, 2012 and 2011, no such impairment tests were conducted during those periods.

In connection with ASC 360 “Property, Plant, and Equipment”, the carrying value of property and equipment is evaluated periodically in relation to the operating performance and anticipated future cash flows of the underlying radio and television asset groups for indicators of impairment. No impairment charges were deemed necessary during the three and six months ended June 30, 2012 and 2011.

Texas Real Property. In April 2012, the Company engaged a real estate agent to sell certain of its real property located in Matagorda County, Jackson County and Brazoria County, Texas. The Company has not entered into any purchase and sale agreement with a buyer. As a result, it cannot predict the amount it will actually receive for such properties and when a sale will be consummated. The carrying value of these related long lived assets, including a building and land, was $0.2 million as of June 30, 2012.

Los Angeles Real Property. As of June 30, 2012, the Company had engaged a real estate agent to sell certain real property owned by the Company located in Los Angeles, CA. The real property consists of land. The Company has not entered into any purchase and sale agreement with a buyer. As a result, it cannot predict the amount it will actually receive for such property and when a sale will be consummated. The carrying value of these related long lived assets was $11.4 million as of June 30, 2012. Based on recent and pending sales of comparable properties, the Company anticipates the fair value to exceed its carrying value as of June 30, 2012.

Costs incurred for the production of the Company’s original television programs are expensed based on the ratio of the current period’s gross revenues to estimated remaining total gross revenues from all sources (“Ultimate Revenues”) on an individual program basis. Costs of television productions are subject to regular recovery assessments, which compare the estimated fair values with the unamortized costs. The amount by which the unamortized costs of television productions exceed their estimated fair values is written off. U.S. GAAP sets forth the requirements that must be met before capitalization of program costs is appropriate, including the ability to reasonably estimate Ultimate Revenues generated from television programming and the period in which those revenues would be realized. The Company has determined, based on an evaluation of historical programming data, that certain of its television programs

have demonstrated the ability to generate gross revenues beyond the initial airing, and accordingly, capitalizes television production costs for certain of its programs, and amortizes those costs to operating expense based on the ratio of the current period’s gross revenues to Ultimate Revenues as described above. Costs related to the production of all other television programs for which the Company does not believe have a useful life beyond the initial airing or does not have revenue directly attributed to production are expensed as incurred. For episodic television series, costs are expensed for each episode as it recognizes the related revenue for the episode. Approximately $13.7 million of original television programming costs were capitalized as of June 30, 2012 and December 31, 2011.

Television program rights acquired by the Company from third-party vendors are stated at the lower of unamortized cost or estimated net realizable value. These program rights, together with the related liabilities, are recorded when the license period begins and the program becomes available for broadcast. Program rights are amortized using the straight-line method over the license term. Program rights expected to be amortized in the next year and program rights payable within one year are classified as current assets and current liabilities, respectively. Approximately $1.7 million and $2.0 million of acquired program costs were capitalized as of June 30, 2012 and December 31, 2011, respectively.

The following table sets forth the components of the Company’s unamortized programming costs that the Company intends to amortize as of June 30, 2012 and December 31, 2011:

Based on current estimates, the Company expects to amortize approximately 41% of its net original programming costs in the remainder of 2012 and approximately 94% by the end of 2014. The acquired programming rights will be amortized through 2016.

On July 17, 2012, LBI Media commenced private exchange offers to exchange new notes to be issued by LBI Media for any and all of the 2007 Senior Subordinated Notes and the Senior Discount Notes. See Note 13. “Subsequent Events” for additional information.

In March 2011, LBI Media refinanced its prior $150.0 million senior secured revolving credit facility and $110.0 million senior secured term loan facility with $220.0 million in senior secured notes (discussed below) and a $50.0 million senior secured revolving credit facility (“2011 Revolver”) pursuant to a new credit agreement. The 2011 Revolver includes a $7.5 million swing line sub-facility and allows for letters of credit up to the lesser of $5.0 million or the available remaining revolving commitment amount. There are no scheduled reductions of commitments under the 2011 Revolver. The 2011 Revolver matures in March 2016.

Borrowings under the 2011 Revolver bear interest based on either, at the option of LBI Media, the base rate for base rate loans or the LIBOR rate for LIBOR loans, in each case plus the applicable margin. The base rate will be the higher of (i) Credit Suisse’s prime rate and (ii) the Federal Funds Effective Rate (as published by the Federal Reserve Bank of New York) plus 0.50%. The applicable margin for loans under the 2011 Revolver is 3.75% per annum for base rate loans and 4.75% per annum for LIBOR loans. Interest on base rate loans is payable quarterly in arrears and interest on LIBOR loans is payable either monthly, bimonthly or quarterly depending on the interest period elected by LBI Media. All amounts that are not paid when due under the 2011 Revolver will accrue interest at the otherwise applicable rate plus 2.00% until such amounts are paid in full. In addition, LBI Media pays quarterly in arrears an unused commitment fee of 0.75% per annum.

The 2011 Revolver is guaranteed on a senior secured basis by all of LBI Media’s existing and future wholly owned domestic subsidiaries. Borrowings under the 2011 Revolver are secured by substantially all of the tangible and intangible assets of LBI Media and its existing and future wholly owned domestic subsidiaries (other than the assets of LBI Media’s subsidiary Empire Burbank Studios, LLC (“Empire”)), including a first priority pledge of all capital stock of each of LBI Media’s domestic subsidiaries. The 2011 Revolver also contains customary covenants that, among other things, restrict the ability of LBI Media and its restricted subsidiaries to: (i) incur or guaranty additional debt; (ii) engage in mergers, acquisitions and asset sales; (iii) make loans and investments; (iv) declare and pay dividends or redeem or repurchase capital stock; (v) transact with affiliates; and (vi) engage in different lines of business. All of these covenants are subject to a number of important limitations and exceptions under the agreements governing the 2011 Revolver. Under the 2011 Revolver, LBI Media must also maintain its material FCC licenses and maintain an amount of revolver facility indebtedness (which, as defined in the credit agreement, includes only amounts outstanding under the 2011 Revolver and does not include LBI Media’s 2011 Senior Secured Notes and the 2004 Empire Note) that would not result in a ratio of revolver facility debt to EBITDA (as defined in the credit agreement) of more than 3.5 to 1.0. As of June 30, 2012, LBI Media was in compliance with all such covenants.

In connection with LBI Media’s entry into the credit agreement relating to the 2011 Revolver and the indenture relating to its 2011 Senior Secured Notes discussed below, LBI Media and the guarantors of the 2011 Revolver and its 2011 Senior Secured Notes also entered into a collateral trust and intercreditor agreement (the “Intercreditor Agreement”). The Intercreditor Agreement defines the relative rights of the lenders under the 2011 Revolver and the holders of the 2011 Senior Secured Notes with respect to the collateral securing LBI Media’s and the guarantors’ respective obligations under the 2011 Revolver and the 2011 Senior Secured Notes. Pursuant to the Intercreditor Agreement, amounts received upon the sale of collateral securing the 2011 Revolver and the 2011 Senior Secured Notes following an event of default will be applied first to repay indebtedness under the 2011 Revolver, and then to repay indebtedness under the 2011 Senior Secured Notes and any future indebtedness sharing priority with the 2011 Senior Secured Notes with respect to such repayments.

The indenture governing LBI Media’s 2007 Senior Subordinated Notes, subject to certain exceptions, prohibits borrowing under the 2011 Revolver, the proceeds of which would be used to repay, redeem, repurchase or refinance any of LBI Media Holdings’ Senior Discount Notes (discussed below) earlier than one year prior to their stated maturity.

As of June 30, 2012, $17.9 million was outstanding under the 2011 Revolver. Since June 30, 2012, LBI Media has not borrowed or repaid any amounts under its 2011 Revolver.

In March 2011, LBI Media issued approximately $220.0 million aggregate principal amount of 9¹/4% senior secured notes due 2019 (the “2011 Senior Secured Notes”). The 2011 Senior Secured Notes were sold at 98.594% of the principal amount, resulting in gross proceeds of approximately $216.9 million. The Company used the net proceeds to repay all outstanding borrowings under its prior $150.0 million senior secured revolving credit facility and $110.0 million senior secured term loan. This transaction resulted in the write-off of $1.0 million of deferred financing costs related to the prior credit facilities.

The 2011 Senior Secured Notes are guaranteed on a senior secured basis by all of LBI Media’s existing and future wholly owned domestic subsidiaries. Subject to certain exceptions and permitted liens, the 2011 Senior Secured Notes and the guarantees are secured on a first priority basis, along with indebtedness under the 2011 Revolver, by liens on substantially all of LBI Media’s and the guarantors’ assets (other than the assets of Empire), including a first priority pledge of all capital stock of each of LBI Media’s domestic subsidiaries. As discussed above, pursuant to the Intercreditor Agreement, amounts received upon the sale of the collateral securing the 2011 Senior Secured Notes following an event of default will be applied first to repay indebtedness under the 2011 Revolver, and then to repay indebtedness under the 2011 Senior Secured Notes and any future indebtedness sharing priority with the 2011 Senior Secured Notes with respect to such repayments.

The 2011 Senior Secured Notes bear interest at a rate of 9¹/4% per annum. Interest payments are made on a semi-annual basis each April 15 and October 15, and payments commenced on October 15, 2011. The 2011 Senior Secured Notes will mature in April 2019. LBI Media may redeem the 2011 Senior Secured Notes at any time on or after April 15, 2015 at redemption prices on redemption dates specified in the indenture governing the notes, plus accrued and unpaid interest. At any time prior to April 15, 2015, LBI Media may redeem some or all of its 2011 Senior Secured Notes at a redemption price equal to 100% of the principal amount of the 2011 Senior Secured Notes plus a “make-whole” amount specified in the indenture. Also, LBI Media may redeem up to 35% of the aggregate principal amount of the 2011 Senior Secured Notes with the net proceeds from certain equity offerings completed prior to April 15, 2015 at a redemption price of 109.25% of the principal amount of the 2011 Senior Secured Notes, plus accrued and unpaid interest, if any; provided that at least 65% of the aggregate principal amount of all 2011 Senior Secured Notes remain outstanding immediately after such redemption, subject to certain exceptions, and that such redemption occurs within 90 days of the date of closing of any such equity offering.

In addition, upon a change of control, as defined in the indenture governing the 2011 Senior Secured Notes, LBI Media must make an offer to repurchase all of the outstanding 2011 Senior Secured Notes, at a purchase price equal to 101% of the aggregate principal amount of the notes repurchased, plus accrued and unpaid interest.

The indenture governing the 2011 Senior Secured Notes contains customary covenants that limit the ability of LBI Media and its subsidiaries to, among other things: (i) incur or guaranty additional indebtedness or issue certain preferred stock; (ii) pay dividends or distributions on, or redeem or repurchase, capital stock; (iii) make investments and other restricted payments; (iv) incur liens; (v) apply the proceeds from certain asset sales; (vi) consummate any merger, consolidation or sale of substantially all assets; (vii) enter into or engage in certain transactions with affiliates; and (viii) engage in certain business or activities. All of these covenants are subject to a number of important limitations and exceptions. For example, LBI Media and its restricted subsidiaries are allowed to incur additional indebtedness, in addition to certain specified debt that is permitted, and issue certain kinds of equity, in each case so long as its leverage ratio (as defined in the indenture) does not exceed 7.0 to 1.0. LBI Media may also incur certain additional senior secured debt so long as after giving effect to the granting of such additional senior secured debt, LBI Media’s consolidated secured leverage ratio (as defined in the indenture) does not exceed (i) 4.0 to 1.0 (excluding certain subordinated and junior secured indebtedness) in the case of certain senior secured debt or other indebtedness of LBI Media or any of its subsidiaries (except Empire) that are pari passu with the 2011 Senior Secured Notes and other senior secured debt or (ii) 5.0 to 1.0 in the case of secured indebtedness that is subordinated or junior to the 2011 Senior Secured Notes and other senior secured debt. As of June 30, 2012, LBI Media was in compliance with all such covenants.

The indenture governing the 2011 Senior Secured Notes and the related security agreement provide for customary events of default (subject in certain instances to cure periods and dollar thresholds), including but not limited to the failure to make payments of interest or premium, if any, on or principal of, the 2011 Senior Secured Notes, the failure to comply with certain covenants for a period of time after notice has been provided, the acceleration of other indebtedness resulting from the failure to pay principal on such other indebtedness prior to its maturity, and certain events of insolvency. If any event of default occurs, the principal, premium, if any, interest and any other monetary obligations on all the outstanding 2011 Senior Secured Notes may become due and payable immediately.

In July 2007, LBI Media issued approximately $228.8 million aggregate principal amount of 8¹/2% senior subordinated notes due 2017 (the “2007 Senior Subordinated Notes”). The 2007 Senior Subordinated Notes were sold at 98.350% of the principal amount, resulting in gross proceeds of approximately $225.0 million. All of LBI Media’s subsidiaries are wholly owned and provide full and unconditional joint and several guarantees of the 2007 Senior Subordinated Notes.

The 2007 Senior Subordinated Notes bear interest at a rate of 8.5% per annum. Interest payments are made on a semi-annual basis each February 1 and August 1. The 2007 Senior Subordinated Notes will mature in August 2017.

LBI Media may redeem the 2007 Senior Subordinated Notes at any time on or after August 1, 2012 at redemption prices specified in the indenture governing its 2007 Senior Subordinated Notes, plus accrued and unpaid interest. At any time prior to August 1, 2012, LBI Media may redeem some or all of its 2007 Senior Subordinated Notes at a redemption price equal to a “make whole” amount as set forth in the indenture governing the 2007 Senior Subordinated Notes.

The indenture governing the 2007 Senior Subordinated Notes contains restrictive covenants that limit the ability of LBI Media and its subsidiaries to, among other things: (i) incur or guaranty additional indebtedness or issue certain preferred stock; (ii) pay dividends or distributions on, or redeem or repurchase, capital stock, (iii) make investments and other restricted payments, (iv) incur certain liens; (v) apply the proceeds from certain asset sales; (vi) consummate any merger, consolidation or sale of substantially all assets, (vii) enter into or engage in certain transactions with affiliates; and (viii) engage in certain business or activities. The indenture governing the 2007 Senior Subordinated Notes prohibits the incurrence of indebtedness, the proceeds of which would be used to repay, redeem, repurchase or refinance any of LBI Media Holdings’ Senior Discount Notes (defined below) earlier than one year prior to the stated maturity of the Senior Discount Notes unless such indebtedness is (i) unsecured, (ii) pari passu or junior in right of payment to the 2007 Senior Subordinated Notes of LBI Media, and (iii) otherwise permitted to be incurred under the indenture governing the 2007 Senior Subordinated Notes. All of these covenants are subject to a number of important limitations and exceptions. For example, LBI Media and its restricted subsidiaries are permitted to incur additional indebtedness, in addition to certain specified debt that is permitted, and issue certain kinds of equity, in each case so long as its leverage ratio (as defined in the indenture) does not exceed 7.0 to 1.0. As of June 30, 2012, LBI Media was in compliance with all such covenants.

The indenture governing the 2007 Senior Subordinated Notes provides for customary events of default, which include (subject in certain instances to cure periods and dollar thresholds): nonpayment of principal, interest and premium, if any, on the 2007 Senior Subordinated Notes, breach of covenants specified in the indenture, payment defaults or acceleration of other indebtedness, a failure to pay certain judgments and certain events of bankruptcy, insolvency and reorganization. The 2007 Senior Subordinated Notes will become due and payable immediately, without further action or notice, upon an event of default arising from certain events of bankruptcy or insolvency with respect to LBI Media and certain of its subsidiaries. If any other event of default occurs and is continuing, the trustee or the holders of at least 25% in principal amount of the then outstanding 2007 Senior Subordinated Notes may declare all of the 2007 Senior Subordinated Notes to be due and payable immediately.

In October 2003, LBI Media Holdings issued $68.4 million aggregate principal amount at maturity of senior discount notes that mature in October 2013 (the “Senior Discount Notes”). The Senior Discount Notes were sold at 58.456% of principal amount at maturity, resulting in gross proceeds of approximately $40.0 million and net proceeds of approximately $38.8 million after certain transaction costs. Under the terms of the Senior Discount Notes, cash interest did not accrue and was not payable on the Senior Discount Notes prior to October 15, 2008 and instead the value of the Senior Discount Notes had been increased each period until it equaled $68.4 million on October 15, 2008. After October 15, 2008, cash interest began to accrue at a rate of 11% per year and is payable semi-annually on each April 15 and October 15. The Senior Discount Notes mature on October 15, 2013.

In 2008, LBI Media Holdings purchased approximately $22.0 million aggregate principal amount of its Senior Discount Notes in various open market transactions at a weighted average purchase price of 43.321% of the principal amount. The total consideration paid (including accrued interest) was approximately $9.9 million. In 2009, LBI Media Holdings purchased an additional $1.0 million aggregate principal of its Senior Discount Notes on the open market at a purchase price of 48.0% of the principal amount. Additionally, in 2010 LBI Media Holdings purchased approximately $3.6 million aggregate principal of its Senior Discount Notes on the open market at a purchase price of 91.5% of the principal amount.

The indenture governing the Senior Discount Notes contains certain restrictive covenants that, among other things, limit LBI Media Holdings’ ability to incur additional indebtedness and pay dividends. All of these covenants are subject to a number of important limitations and exceptions. For example, LBI Media Holdings and its restricted subsidiaries are permitted to incur additional indebtedness, in addition to certain specified debt that is permitted, and issue certain kinds of equity, in each case so long as its leverage ratio (as defined in the indenture) does not exceed 7.0 to 1.0. As of June 30, 2012, LBI Media Holdings was in compliance with all such covenants. The Senior Discount Notes are structurally subordinated to the 2011 Revolver, the 2011 Senior Secured Notes and the 2007 Senior Subordinated Notes.

In July 2004, Empire issued an installment note for approximately $2.6 million (the “2004 Empire Note”) and used the proceeds to repay its former mortgage note. The 2004 Empire Note bears interest at the rate of 5.52% per annum and is payable in monthly principal and interest payments of approximately $21,000 through maturity in July 2019. The borrowings under the 2004 Empire Note are secured primarily by all of Empire’s real property.

As of June 30, 2012, the Company’s long-term debt had scheduled principal repayments for each of the next five fiscal years (and thereafter) as follows:

The above table does not include projected interest payments, unamortized debt discounts, and any repayment premium the Company may ultimately pay.

The Company used an interest rate swap to manage interest rate risk associated with its variable rate borrowings. In connection with the issuance of LBI Media’s former senior revolving credit facility, the Company entered into a fixed-for-floating interest rate swap to hedge the underlying interest rate risk on the expected outstanding balance of LBI Media’s former senior secured term loan over time. Pursuant to the terms of this interest rate swap, the Company paid a fixed rate of 5.56% on the notional amount and received payments based on LIBOR. This swap fixed the interest rate at 7.56% (including the applicable margin). In November 2009, the notional amount was reduced to $60.0 million (from $80.0 million) and remained at this level through expiration of the swap contract in November 2011.

The Company accounted for its interest rate swap in accordance with ASC 815, “Derivatives and Hedging” (“ASC 815”). As noted above, the effect of the interest rate swap was to fix the interest rate at 7.56% on the Company’s variable rate borrowings (including the applicable margin). However, changes in the fair value of the interest rate swap for each reporting period were recorded in interest rate swap income in the accompanying condensed consolidated statements of operations because the interest rate swap did not qualify for hedge accounting. The Company measured the fair value of its interest rate swap on a recurring basis pursuant to ASC 820.

The following table presents the effect of the interest rate swap agreement on the Company’s condensed consolidated statements of operations for the three and six months ended June 30, 2012 and 2011 (in millions):

As a result of the adoption of ASC 820, the Company modified the assumptions used in measuring the fair value of its interest rate swap. Specifically, the Company now includes the impact of its own credit risk on the interest rate swap, which is measured at fair value under ASC 820. Counterparty credit risk adjustments are applied to the valuation of the interest rate swap, if necessary. Because all counterparties do not have the same credit risk, the counterparty’s credit risk is considered in order to estimate the fair value of such an item. In addition, bilateral or “own” credit risk adjustments are applied to the Company’s own credit risk when valuing derivatives measured at fair value. Credit adjustments consider the estimated future cash flows between the Company and its counterparty under the terms of the instruments and affect the credit risk on the valuation of those cash flows. The fair value of the interest rate swap represents the present value of the expected future cash flows that are estimated to be received from or paid to a marketplace participant of the instrument.

WVFW-LD. In July 2011, two of LBI Media Holdings’ indirect, wholly owned subsidiaries, KRCA Television LLC (“KRCA TV”) and KRCA License LLC (“KRCA License”), as buyers, entered into an asset purchase agreement with Claro Communications, LTD., as seller, pursuant to which the buyers have agreed to acquire selected assets of low-power television station WVFW, licensed to Miami, Florida, from the seller. The selected assets will include, among other things, (i) licenses and permits authorized by the FCC for or in connection with the operation of the station and (ii) broadcast and other equipment used to operate the station. The total purchase price will be approximately $0.8 million in cash, subject to certain adjustments, of which $0.1 million has been deposited into escrow. Such escrow amount is included in other assets in the accompanying condensed consolidated balance sheet as of June 30, 2012. Consummation of the acquisition is currently subject to customary closing conditions, including regulatory approval from the FCC. The Company expects to close this acquisition in the third quarter of 2012.

In September 2009, the Company entered into a four-year contract with Nielsen Media Research (“Nielsen”), to provide television programming ratings services for the Company’s EstrellaTV network. In February 2011, the Company entered into an agreement with Nielsen to amend certain payment provisions in the contract. As a result, the aggregate payments remaining under the agreement, as of June 30, 2012 (reflecting the new payment terms), were approximately $6.6 million and will be paid through August 2013.

In June 2009, the Company entered into a network affiliation agreement with a television station whereby the Company is obligated to make cash payments to the affiliate station upon the occurrence of certain events, as outlined below:

The Company terminated this agreement during the quarter ended June 30, 2012. Based on the affiliate station’s calendar year 2012 operating performance, as of June 30, 2012, the Company had reserved approximately $0.1 million with respect to the guarantee outlined in (1) above. However, no reserve has been recorded related to the potential cash obligation specified in (2) above, based on the affiliate station’s expected ratings position for 2012.

In 2008, the Company began negotiations with Broadcast Music, Inc. (“BMI”) relating to disputes over royalties owed to BMI. In October 2009, the Company settled all royalty disputes relating to its television stations as well as royalties owed for periods prior to December 31, 2006 for the Company’s radio stations. In June 2011, the Company settled royalty disputes relating to its radio stations for periods subsequent to January 1, 2010. The remaining outstanding dispute relates to the Company’s radio stations for the period commencing January 1, 2007, through December 31, 2009 (the “post-court period”) for which the Company has filed an application for a reasonable license under BMI’s antitrust consent decree. As of June 30, 2012, the Company had reserved approximately $0.8 million relating to the BMI dispute. Such reserve is included in accrued liabilities in the accompanying condensed consolidated balance sheet. The Company believes this reserve, all of which relates to the post-court period, is adequate as of June 30, 2012.

In March 2011, the Company settled a legal dispute related to the termination of certain of the Company’s operating leases, and recorded a charge of $0.7 million relating to the settlement (including legal and professional fees). Such amount is included in selling, general, and administrative in the accompanying statement of operations for the six months ended June 30, 2011.

In June 2011, the Company settled a legal dispute related to a tortious interference claim, and recorded a $0.9 million gain related to the settlement. Of this amount, approximately $0.6 million was received in cash and the remaining $0.3 million represents the fair value of radio advertising credits which can be used by the Company over a 24-month period. Such gain is included in gain on legal settlement in the accompanying condensed consolidated statements of operations for the three and six months ended June 30, 2011.

The Company is also subject to other pending litigation arising in the normal course of its business. While it is not possible to predict the results of such litigation, management does not believe the ultimate outcome of these matters will have a material effect on the Company’s financial statements.

The Company had approximately $3.7 million and $3.6 million due from stockholders of the Parent and from affiliated companies at June 30, 2012 and December 31, 2011, respectively. These amounts include a $1.9 million loan the Company made to one of the stockholders of the Parent in July 2002. The loans due from the stockholders of the Parent bear interest at the applicable federal rate and currently mature through December 2012. Given the Company’s intention to extend the maturity dates of the loans due from the stockholders of the Parent, such balances totaling $3.0 million have been classified in stockholders deficiency as of June 30, 2012 and December 31, 2011. The following table sets forth the components of the Company’s related party receivable balances as of June 30, 2012 and December 31, 2011:

The Company also had approximately $690,000 due from one of its executive officers and directors at June 30, 2012 and December 31, 2011, which is included in employee advances in the accompanying condensed consolidated balance sheets. The Company made these loans in various transactions in 1998, 2002 and 2006. Except for an advance of $30,000, which does not bear interest and does not have a maturity date, the remaining loans bear interest at 8.0% and mature through December 2012.

In December 2008, stockholders of the Parent and one of the Company’s former executive officers purchased approximately $1.9 million aggregate principal amount of the Senior Discount Notes in open market transactions. In July 2009, stockholders of the Parent purchased approximately $0.8 million aggregate principal amount of the 2007 Senior Subordinated Notes in open market transactions. LBI Media paid an aggregate of $34,000 of interest to these noteholders in each of the six months ended June 30, 2012 and 2011.

One of the Parent’s stockholders is the sole shareholder of L.D.L. Enterprises, Inc. (“LDL”), a mail order business. From time to time, the Company allows LDL to use, free of charge, unsold advertising time on its radio and television stations. The Company had approximately $0.1 million due from LDL as of June 30, 2012 and December 31, 2011, which is included in amounts due from related parties in the accompanying condensed consolidated balance sheets. Such advances are payable upon demand.

In December 2008, the stockholders of the Parent adopted the Liberman Broadcasting, Inc. Stock Incentive Plan (the “Plan”). Grants of equity under the Plan are made to employees who render services to the Company. Accordingly, the Company reflects compensation expense related to the options in its financial statements. The Plan allows for the award of up to 14.568461 shares of the Parent’s Class A common stock and awards under the Plan may be in the form of incentive stock options, nonqualified stock options, restricted stock awards or stock awards. The Plan is administered by the Parent’s Board of Directors. The Board of Directors determines the type, number, vesting requirements and other features and conditions of such awards.

As of June 30, 2012, no options are outstanding. The Company has only granted options to one of the Company’s former executive officers, which was made in December 2008, pursuant to such former employee’s employment agreement. However, in accordance with the terms of the Plan, these options expired in April 2012 as a result of the employee’s resignation. No new options were granted during the six months ended June 30, 2012 or 2011.

Since 2008, the Parent has entered into certain employment agreements whereby it has agreed to grant an aggregate of 10.3436 shares of the Parent’s Class A common stock to certain employees and two executive officers. None of these options have been granted as of June 30, 2012. The options, when granted by the Board of Directors, will have contractual terms of ten years from the date of the grant and vest pursuant to the terms agreed upon in the respective employment agreements.

The Company accounts for stock-based compensation according to the provisions of ASC 718 “Compensation — Stock Compensation” which requires the measurement and recognition of compensation expense for all stock-based awards made to

employees and directors, including employee stock options under the Plan based on estimated fair values. Services required under a certain employment agreement pursuant to which the options were granted are rendered to the Company. Accordingly, the Company reflects compensation expense related to the options in its financial statements.

The fair value of each stock option is estimated on the date of grant using the Black-Scholes option pricing model that uses assumptions for expected term, dividends, risk-free interest rate and expected volatility. For the awards, the Company recognizes compensation expense using a straight-line amortization method. Expected volatilities are based on the historical volatility of the Company’s publicly traded competitors. The Company uses historical data to estimate option exercise and employee termination, including voluntary termination behavior, within the valuation model. The expected term of the option is estimated using the “simplified” method as provided in SEC Staff Accounting Bulletin No. 107 “Share-Based Payment”. Under this method, the expected life equals the arithmetic average of the vesting term and the original contractual term of the options. The risk-free interest rate for periods within the contractual life of the stock option is based on the U.S. Treasury yield curve in effect at the time of grant.

ASC 280 “Segment Reporting” requires companies to provide certain information about their operating segments. The Company has two reportable segments — radio operations and television operations. Management uses operating income or loss before stock-based compensation expense, depreciation and amortization and loss on sale and disposal of property and equipment as its measure of profitability for purposes of assessing performance and allocating resources.

In assessing the realizability of deferred tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. The Company considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. If the realization of deferred tax assets in the future is considered more likely than not, an adjustment to the deferred tax assets would increase net income in the period such determination is made.

Based upon the level of historical taxable income and projections for future taxable income over the periods which the deferred tax assets are deductible, the Company currently believes it is more likely than not that it will not realize the benefits of the majority of these deductible differences. As a result, the Company has established and maintained a valuation allowance for that portion of the deferred tax assets it believes will not be realized.

There was no activity in the Company’s unrecognized tax benefits (“UTB”) during the three and six months ended June 30, 2012 and 2011. The Company files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. The Company is no longer subject to federal or state income tax examinations for years prior to 2008 and 2007, respectively. The Company believes that it has appropriate support for the income tax positions taken and presently expected to be taken on its tax returns.

The terms of LBI Media’s 2011 Revolver and the indentures governing LBI Media’s 2007 Senior Subordinated Notes and 2011 Senior Secured Notes restrict LBI Media’s ability to transfer net assets to LBI Media Holdings in the form of loans, advances, or cash dividends. The following parent-only condensed financial information presents balance sheets and related statements of operations and cash flows of LBI Media Holdings by accounting for the investments in the owned subsidiaries on the equity method of accounting. The accompanying condensed financial information should be read in conjunction with the condensed consolidated financial statements and notes thereto.

On July 17, 2012, LBI Media commenced private exchange offers and consent solicitations, whereby LBI Media offered (i) new 11% senior secured notes due 2019 (the “Senior Priority Secured Notes”) and new 11% junior priority senior secured notes due 2019 (the “Junior Priority Senior Secured Notes”) for any and all 2007 Senior Subordinated Notes and (ii) new Junior Priority Senior Secured Notes or, as necessary, new 11% Senior Subordinated Notes due 2019 (“2012 Senior Subordinated Notes” and together with the Senior Priority Secured Notes and the Junior Priority Senior Secured Notes, the “New Notes”) for any and all Senior Discount Notes (collectively, the “Exchange Offers”). In connection with the Exchange Offers, LBI Media is also soliciting consents to certain amendments to the indentures governing the 2007 Senior Subordinated Notes and the Senior Discount Notes. LBI Media is also soliciting consents from holders of its 2011 Senior Secured Notes to certain amendments to the indenture governing the 2011 Senior Secured Notes (the “Consent Solicitation”). The Exchange Offers are subject to, and conditioned upon, among other things, obtaining the requisite consents to the proposed amendments pursuant to the Consent Solicitation and the consent of the lenders of a majority of the loans, commitments and letters of credit exposure under the 2011 Revolver to certain amendments to the 2011 Revolver. LBI Media has the right to terminate or withdraw any of the Exchange Offers and the Consent Solicitation, including if any of the conditions described in the Offering Memorandum are not satisfied. On August 14, 2012, LBI Media extended the expiration date of the Exchange Offers to August 29, 2012. The Exchange Offers will expire on August 29, 2012, unless it is extended or earlier terminated by LBI Media. No assurance can be given that LBI Media will complete the Exchange Offers or that the terms of the Exchange Offers will not be changed.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the financial statements included elsewhere in this Quarterly Report on Form 10-Q and the audited financial statements for the year ended December 31, 2011, included in our Annual Report on Form 10-K (File No. 333-110122).

We own and operate radio and television stations in Los Angeles (including Riverside and San Bernardino counties), California, Houston, Texas and Dallas, Texas and television stations in San Diego, California, Salt Lake City, Utah, Phoenix, Arizona, New York, New York, Denver, Colorado and Chicago, Illinois. Our radio stations consist of five FM and two AM stations serving Los Angeles, California and its surrounding areas, four FM and two AM stations serving Houston, Texas and its surrounding areas, and five FM stations and one AM station serving Dallas-Fort Worth, Texas and its surrounding areas. Our nine television stations consist of five full-power stations serving Los Angeles, California, Houston, Texas, Dallas-Fort Worth, Texas, Salt Lake City, Utah and Denver, Colorado. We also own four low-power television stations serving the San Diego, California, Phoenix, Arizona, New York, New York and Chicago, Illinois markets.

In addition, we operate two television production facilities in Burbank, California that we use to produce our core programming for all of our television stations. We have television production facilities in Houston and Dallas-Fort Worth, Texas, that allow us to produce programming in those markets as well. We have entered into time brokerage agreements with third parties for three of our radio stations and one of our low-power television stations.

We are also affiliated with television stations in various states which, along with our owned and operated stations, serve 39 designated market areas, or DMAs, including nine each in California and Texas, four in Florida, three in Arizona, two in Nevada and Oklahoma, and one each in Colorado, Georgia, Illinois, Nebraska, New Mexico, New York, North Carolina, Oregon, Utah, and Washington. We distribute our EstrellaTV programming to these stations and we share in the available advertising time to be sold on the affiliate stations while our EstrellaTV programming is broadcasting. Our EstrellaTV network broadcasts in the above 39 DMAs, which in the aggregate comprise approximately 77% of U.S. Hispanic television households. In addition to the advertising time we retain, we also sell national air time for the affiliate stations through our wholly owned national sales organization, Spanish Media Rep Team, and earn a commission based on those sales. In addition, we syndicate and air on our owned and operated radio stations our popular radio morning show, El Show de Don Cheto, in 20 markets.

We operate in two reportable segments, radio and television. We generate revenue from sales of local, regional and national (including network) advertising time on our owned and affiliated radio and television stations and the sale of time to brokered or infomercial customers on our radio and television stations. Since September 2009, we have begun generating advertising sales on our affiliated television stations that broadcast our “EstrellaTV” network programming.

Advertising rates are, in large part, based on each station’s ability to attract audiences in demographic groups targeted by advertisers. Our stations compete for audiences and advertising revenue directly with other Spanish-language radio and television stations, and we generally do not obtain long-term commitments from our advertisers. As a result, our management team focuses on creating a diverse advertiser base, providing cost-effective advertising solutions for clients, executing targeted marketing campaigns to develop a local audience and implementing strict cost controls. We recognize revenues when the commercials are broadcast or the brokered time is made available to the customer. We incur commissions from agencies on local, regional and national (including network) advertising, and our net revenue reflects deductions from gross revenue for commissions to these agencies.

Our primary expenses are interest expense, programming and technical expenses, employee compensation, including commissions paid to our local and national sales staffs, promotion and selling expenses and general and administrative expenses. Our programming expenses for television consist of amortization of capitalized costs related to the production of original programming content, production of local and national newscasts and other daily programs and, to a lesser extent, the amortization of television programming content acquired from other sources.

Because we are highly leveraged, we will need to dedicate a substantial portion of our cash flow from operations to pay interest on our debt. Based on our interest rates as of June 30, 2012 and assuming no additional borrowings or principal payments on LBI Media’s senior secured revolving credit facility until its maturity in March 2016, we will have debt service obligations (principal and interest) of approximately $22.8 million for the remainder of 2012 and $87.4 million in 2013, which includes the repayment of $41.8 million principal amount outstanding (excluding amounts held by us) on our senior discount notes maturing in October 2013. Our cash flow used by operating activities for the year ended December 31, 2011 was $21.3 million. Our Adjusted EBITDA and net loss for the year ended December 31, 2011 were $27.7 million and $33.0 million, respectively. We expect to borrow additional amounts under LBI Media’s senior secured revolving credit facility in the near future to meet some of our ongoing debt and other obligations. Our financial performance and cash generated from operations will need to increase significantly to

meet our cash needs or we will need to seek alternative sources of liquidity, including asset sales or additional debt or equity financing to meet our debt obligations. If we are unable to secure alternative sources of liquidity in sufficient amounts, we may not be able to satisfy our obligations when they become due which would have a material adverse effect on our overall business and financial condition.

On July 17, 2012, LBI Media, Inc., our wholly owned subsidiary (“LBI Media”), commenced private exchange offers and consent solicitations, whereby LBI Media offered (i) new 11% senior secured notes due 2019 (the “Senior Priority Secured Notes”) and new 11% junior priority senior secured notes due 2019 (the “Junior Priority Senior Secured Notes”) for any and all 2007 Senior Subordinated Notes (as defined below) and (ii) new Junior Priority Senior Secured Notes or, as necessary, new 11% Senior Subordinated Notes due 2019 (“2012 Senior Subordinated Notes” and together with the Senior Priority Secured Notes and the Junior Priority Senior Secured Notes, the “New Notes”) for any and all Senior Discount Notes (as defined below) (collectively, the “Exchange Offers”). In connection with the Exchange Offers, LBI Media is also soliciting consents to certain amendments to the indentures governing the 2007 Senior Subordinated Notes and the Senior Discount Notes. LBI Media is also soliciting consents from holders of its 2011 Senior Secured Notes to certain amendments to the indenture governing the 2011 Senior Secured Notes (the “Consent Solicitation”). The Exchange Offers are subject to, and conditional upon, among other things, obtaining the requisite consents to the proposed amendments pursuant to the Consent Solicitation and the consent of the lenders of a majority of the loans, commitments and letters of credit exposure under the 2011 Revolver (as defined below) to certain amendments to the 2011 Revolver. Media has the right to terminate or withdraw any of the Exchange Offers and the Consent Solicitation, including if any of the conditions described in the Offering Memorandum are not satisfied. On August 14, 2012, LBI Media extended the expiration date of the Exchange Offers to August 29, 2012. The Exchange Offers will expire on August 29, 2012, unless it is extended or earlier terminated by LBI Media. No assurance can be given that LBI Media will complete the Exchange Offers or that the terms of the Exchange Offers will not be changed.

WVFW-LD. In July 2011, two of our indirect, wholly owned subsidiaries, KRCA Television LLC and KRCA License LLC, as buyers, entered into an asset purchase agreement with Claro Communications, LTD., as seller, pursuant to which the buyers have agreed to acquire selected assets of low-power television station WVFW, licensed to Miami, Florida, from the seller. The selected assets will include, among other things, (i) licenses and permits authorized by the FCC for or in connection with the operation of the station and (ii) broadcast and other equipment used to operate the station. The total purchase price will be approximately $0.8 million in cash, subject to certain adjustments, of which $0.1 million has been deposited into escrow. Such escrow amount is included in other assets in the accompanying condensed consolidated balance sheet as of June 30, 2012. Consummation of the acquisition is currently subject to customary closing conditions, including regulatory approval from the FCC. We expect to close this acquisition in the third quarter of 2012.

We generally experience lower operating margins for several quarters following the acquisition of radio and television stations. This is primarily due to the time it takes to fully implement our format changes, build our advertiser base and gain viewer or listener support.

From time to time, we engage in discussions with third parties concerning the possible acquisition and/or divestiture of radio or television stations and their related assets. Any such discussions may or may not lead to our acquisition and/or divestiture of broadcasting assets.

In March 2007, our parent, Liberman Broadcasting, sold shares of its Class A common stock to affiliates of Oaktree Capital Management, LLC, or Oaktree, and Tinicum Capital Partners II, L.P., or Tinicum. In connection with the sale of Liberman Broadcasting’s Class A common stock, Liberman Broadcasting and its stockholders entered into an investor rights agreement that defines certain rights and obligations of Liberman Broadcasting and the stockholders of Liberman Broadcasting. Pursuant to this investor rights agreement, certain investors have the right to consent to certain transactions involving us, Liberman Broadcasting, and our subsidiaries, including:

Under the investor rights agreement, our parent has granted the investors and other holders of Liberman Broadcasting’s common stock the right to require Liberman Broadcasting in certain circumstances to use its best efforts to register the resale of their shares of Liberman Broadcasting’s common stock under the Securities Act of 1933, as amended, or the Securities Act. Among other registration rights, Liberman Broadcasting has granted the investors the right to require the registration of the resale of their shares and the listing of our parent’s common stock on an exchange, so long as the holders of a majority of Liberman Broadcasting’s common stock that are held by either Oaktree or Tinicum or their permitted transferees request such registration and listing.

Liberman Broadcasting is responsible for paying all registration expenses in connection with any demand registration pursuant to the investors rights agreement, including the reasonable fees of one counsel chosen by the investors participating in such demand registration, but excluding any underwriters’ discounts and commissions. If after the termination of two best efforts attempts to consummate a demand registration, the investors request another demand registration, the investors that elect to participate in the demand registration will be responsible for paying all above referenced registration expenses in connection with any additional attempt to consummate such demand registration. Liberman Broadcasting has agreed to indemnify each of the investors party to the investors rights agreement against certain liabilities under the Securities Act in connection with any registration of their registrable shares.

Separate financial data for each of our reportable segments is provided below. We evaluate the performance of our reportable segments based on the following:

The table set forth below reconciles net loss, calculated and presented in accordance with GAAP, to Adjusted EBITDA:

Three Months Ended June 30, 2012 Compared to Three Months Ended June 30, 2011

Net Revenues. Net revenues increased by $0.5 million, or 1.6%, to $32.1 million for the three months ended June 30, 2012, from $31.6 million for the same period in 2011. This change was primarily attributable to increased advertising revenue from our television segment, partially offset by decreased advertising revenue from our radio segment.

Net revenues for our radio segment decreased by $0.9 million, or 6.0%, to $14.3 million for the three months ended June 30, 2012, from $15.2 million for the same period in 2011. This change was primarily attributable to a decline in advertising revenue in our Los Angeles, Dallas and Houston markets.

Net revenues for our television segment increased by $1.4 million, or 8.6%, to $17.7 million for the three months ended June 30, 2012, from $16.3 million for the same period in 2011. This increase was primarily attributable to increased advertising revenue from our EstrellaTV national television network.

We currently expect full year net revenues in 2012, as compared to 2011, to increase in both our radio and television segments due to expected increases in advertising time sold and higher advertising rates. We also expect our television segment to continue to benefit from the expansion of our EstrellaTV national television network.

Total operating expenses. Total operating expenses increased by $1.1 million, or 4.4%, to $25.6 million for the three months ended June 30, 2012, as compared to $24.5 million for the same period in 2011. This increase was attributable to a $3.2 million increase in program and technical expenses, resulting primarily from an increase in programming amortization and the absence of a $0.9 million gain related to a legal settlement in the prior year. These increases in operating expenses were partially offset by (a) a $1.9 million gain on sale and disposal of property and equipment during the three months ended June 30, 2012 compared to a $0.6 million loss on sale and disposal of property and equipment during the same period of 2011, a $2.5 million favorable change, (b) a $0.4 million decrease in selling, general and administrative expenses and (c) a $0.1 million decrease in depreciation and amortization expenses.

Total operating expenses for our radio segment decreased by $2.2 million, or 25.3%, to $6.5 million for the three months ended June 30, 2012, as compared to $8.7 million for the same period in 2011. This decrease was primarily attributable to (a) a $1.8 million gain on sale and disposal of property and equipment during the three months ended June 30, 2012, (b) a $0.8 million decline in selling, general and administrative expenses, primarily related to lower legal, lease, bad debt expenses and employee related costs, (c) a $0.4 million decline in program and technical expenses and (d) a $0.1 million decrease in depreciation and amortization expense. These decreases were partially offset by the absence of a $0.9 million gain related to a legal settlement in prior year.

Total operating expenses for our television segment increased by $3.3 million, or 20.9%, to $19.1 million for the three months ended June 30, 2012, from $15.8 million for the same period in 2011. This increase was primarily attributable to a $3.5 million increase in program and technical expenses, primarily related to an increase in programming amortization and a $0.4 million increase in selling, general and administrative expenses, primarily related to an increase in employee related costs. These increases in operating expenses were partially offset by a $0.1 million gain on sale and disposal of property and equipment during the three months ended June 30, 2012 compared to a $0.6 million loss on sale and disposal of property and equipment during the same period of 2011, a $0.7 million favorable change.

We currently anticipate that our total operating expenses will increase in 2012 as compared to 2011. We anticipate higher programming costs for our television segment and increased personnel and promotional expenses relating to the continued expansion of our EstrellaTV network. In addition, our total operating expenses could be impacted by the number and size of additional radio and TV assets that we acquire, including WVFW-LP.

Interest expense and interest and other income. Interest expense and interest and other income decreased by $0.7 million to $11.8 million for the three months ended June 30, 2012, as compared to $12.5 million for the same period of 2011. The decrease is primarily due to the absence of interest expense related to LBI Media’s interest rate swap contract that expired in November 2011.

Interest rate swap income. Interest rate swap income decreased by $0.8 million for the three months ended June 30, 2012, as the interest rate swap contract expired in November 2011.

Exchange offering costs. We recognized exchange offering costs of $1.1 million for the three months ended June 30, 2012, related to legal, accounting and other costs incurred in order to commence our private exchange offers. See “Exchange Offers and Consent Solicitations” above.

Provision for income taxes. We recognized an income tax provision of $0.5 million for the three months ended June 30, 2012, as compared to $0.5 million for the same period of 2011.

Net loss. We recognized a net loss of $7.0 million for the three months ended June 30, 2012, as compared to a net loss of $5.2 million for the same period of 2011, an increase in net loss of $1.8 million. This change was primarily attributable to a $1.1 million increase in operating expenses, as discussed above, a $1.1 million increase exchange offering costs, a $0.8 million decrease in interest rate swap income and a $0.9 million decrease in net revenues in our radio segment. These changes were partially offset by a $1.4 million increase in net revenues in our television segment and a $0.7 million decrease in interest expense and interest and other income.

Adjusted EBITDA. Adjusted EBITDA decreased by $3.2 million, or 31.2%, to $7.1 million for the three months ended June 30, 2012, as compared to $10.3 million for the same period in 2011. This decrease was primarily the result of a $3.2 million increase in program and technical expenses, a $0.9 million decrease in net revenues in our radio segment and the absence of a $0.9 million gain related to a legal settlement in the prior year. These decreases were partially offset by a $1.4 million increase in net revenues in our television segment and a $0.4 million decrease in selling, general and administrative expenses.

Adjusted EBITDA for our radio segment decreased by $0.6 million, or 7.8%, to $7.3 million for the three months ended June 30, 2012, as compared to $7.9 million for the same period in 2011. This change was primarily the result of a $0.9 million decrease in net revenues and the absence of a $0.9 million gain related to a legal settlement in the prior year, partially offset by a $0.8 million decrease in selling, general and administrative expenses and a $0.4 million decrease in program and technical expenses.

Adjusted EBITDA for our television segment decreased by $2.6 million, or 111.1%, to an Adjusted EBITDA loss of $0.3 million for the three months ended June 30, 2012, from an Adjusted EBITDA of $2.3 million for the same period in 2011. This change was primarily the result of a $3.5 million increase in program and technical expenses and a $0.5 million increase in selling, general and administrative expenses and promotional expenses, partially offset by a $1.4 million increase in net revenues.

Six Months Ended June 30, 2012 Compared to the Six Months Ended June 30, 2011

Net Revenues. Net revenues increased by $2.7 million, or 4.7%, to $59.6 million for the six months ended June 30, 2012, from $57.0 million for the same period in 2011. The change was primarily attributable to increased advertising revenue from our television segment, partially offset by a decline in our radio segment.

Net revenues for our radio segment declined by $1.0 million, or 4.0%, to $25.5 million for the six months ended June 30, 2012, from $26.5 million for the same period in 2011. This change was primarily attributable to declines in advertising revenue in our Dallas and Los Angeles markets, partially offset by increases in advertising revenues in our Houston market.

Net revenues for our television segment increased by $3.7 million, or 12.2%, to $34.2 million for the six months ended June 30, 2012, from $30.5 million for the same period in 2011. This increase was primarily attributable to increased advertising revenue from our EstrellaTV national television network.

Total operating expenses. Total operating expenses increased by $3.0 million, or 6.2%, to $51.2 million for the six months ended June 30, 2012, as compared to $48.2 million for the same period in 2011. This increase was primarily attributable to a $4.9 million increase in program and technical expenses, which resulted from (1) an increase in amortization of capitalized costs related to the production of original programming content, (2) incremental costs related to our EstrellaTV network, and (3) the absence in 2012 of the $0.9 million gain related to a legal settlement. These increases in total operating expenses were partially offset by (a) a $1.9 million gain on sale and disposal of property and equipment during the six months ended June 30, 2012 compared to a $0.6 million loss on sale and disposal of property and equipment during the same period of 2011, a $2.5 million favorable change, and (b) a $0.3 million decrease in total depreciation and amortization expenses, selling, general and administrative expenses and promotional expenses.

Total operating expenses for our radio segment decreased by $3.9 million, or 20.3%, to $15.1 million for the six months ended June 30, 2012, from $19.0 million for the same period in 2011. This decrease was primarily attributable to:

These increases were offset by the absence in 2012 of the $0.9 million gain related to a legal settlement.

Total operating expenses for our television segment increased by $6.8 million, or 23.5%, to $36.0 million for the six months ended June 30, 2012, from $29.2 million for the same period in 2011. This increase was primarily due to:

These increases in operating expenses were partially offset by a $0.1 million gain on sale and disposal of property and equipment during the six months ended June 30, 2012 compared to a $0.6 million loss on sale and disposal of property and equipment during the same period of 2011, a $0.7 million favorable change.

Interest expense and interest and other income. Interest expense and interest and other income increased by $1.4 million to $23.7 million for the six months ended June 30, 2012, as compared to $22.3 million for the same period of 2011, as a result of the March 2011 refinancing of LBI Media’s former senior credit facility with $220.0 million of 9¹/4% senior secured notes and a $50.0 million senior secured revolving credit facility. This transaction resulted in (1) the write-off of $1.0 million of deferred financing costs associated with the former senior credit facility and (2) higher weighted average interest rates and outstanding balances on our long-term debt.

Interest rate swap income. Interest rate swap income decreased by $1.5 million for the six months ended June 30, 2012, as the interest rate swap contract expired in November 2011.

Exchange offering costs. We recognized exchange offering costs of $1.1 million for the six months ended June 30, 2012, related to legal, accounting and other costs incurred in order to commence our private exchange offers. See “Exchange Offers and Consent Solicitations” above.

Provision for income taxes. During the six months ended June 30, 2012, we recognized an income tax provision of $1.1 million, as compared to $1.0 million for the same period in 2011.

Net loss. We recognized a net loss of $17.4 million for the six months ended June 30, 2012, as compared to a net loss of $13.0 million for the same period of 2011, an increase in net loss of $4.4 million. This change was primarily attributable to (1) a $3.0 million increase in operating expenses, as discussed above, (2) a $1.5 million decrease in interest rate swap income, (3) a $1.4 million increase in interest expense and interest and other income, (4) a $1.1 million increase in exchange offering costs, (5) a $1.0 million decrease in net revenues in our radio segment, and (6) a $0.1 million increase in provision for income taxes. These changes were partially offset by a $3.7 million increase in net revenues in our television segment.

Adjusted EBITDA. Adjusted EBITDA decreased by $3.0 million, or 20.6%, to $11.6 million for the six months ended June 30, 2012, as compared to $14.6 million for the same period in 2011. The decrease was primarily the result of (1) a $4.9 million increase in program and technical expenses, (2) a $1.0 million decrease in net revenues in our radio segment and (3) the absence in 2012 of the $0.9 million gain related to a legal settlement. These decreases were partially offset by (1) a $3.7 million increase in net revenues in our television segment and (2) a $0.1 million decrease in selling, general and administrative expenses.

Adjusted EBITDA for our radio segment increased by $0.8 million, or 8.2%, to $11.1 million for the six months ended June 30, 2012, as compared to $10.3 million for the same period in 2011. The increase was primarily the result of (1) a $1.9 million decrease in selling, general and administrative expenses, (2) a $0.7 million decrease in program and technical expenses, and (3) a $0.2 million decrease in promotional expenses, partially offset by a $1.0 million decline in net revenues and the absence in 2012 of the $0.9 million gain related to a legal settlement.

Adjusted EBITDA for our television segment decreased by $3.8 million, or 89.4%, to $0.5 million for the six months ended June 30, 2012, from $4.3 million for the same period in 2011. This decrease was primarily the result of (1) a $5.6 million increase in program and technical expenses, (2) a $1.8 million increase in selling, general and administrative expenses, and (3) a $0.1 million increase in promotional expenses, partially offset by a $3.7 million increase in net revenues.

Our primary sources of liquidity are cash from operations and available borrowings under the $50.0 million senior secured revolving credit facility of LBI Media. We believe that our cash on hand and available borrowings under LBI Media’s senior secured revolving credit facility will be sufficient to permit us to fund our contractual obligations and operations for at least the next twelve months. However, because we are highly leveraged we dedicate a substantial portion of available cash to pay principal and interest on our outstanding debt. Given the challenges in the current economic environment related to advertising revenue growth and our continued investment in television programming content, we have been experiencing high levels of cash used in operating activities. On July 17, 2012, LBI Media commenced private exchange offers to exchange new notes to be issued by LBI Media for any and all of the 2007 Senior Subordinated Notes (as defined below) and the Senior Discount Notes (as defined below). Concurrently with the exchange offers, LBI Media began soliciting consents from holders of certain of our indebtedness to certain proposed amendments to, and related indentures of, such notes. See “—Exchange Offers and Consent Solicitations.” However, the exchange offers may not be consummated and we may need to pursue one or more alternative strategies to pay our significant levels of debt, such as reducing operating expenses, refinancing or restructuring our indebtedness, selling additional debt or equity securities or selling assets. Because LBI Media has also pledged substantially all of its assets to its existing lenders and holders of LBI Media’s senior secured notes, we may not be able to refinance our existing debt or issue additional debt or equity securities on favorable terms, if at all, and if we must sell our assets, it may negatively affect our ability to generate net revenues.

LBI Media Senior Secured Revolving Credit Facility. In March 2011, LBI Media refinanced its prior $150.0 million senior secured revolving credit facility and $110.0 million senior secured term loan facility with $220.0 million in senior secured notes (discussed below) and a $50.0 million senior secured revolving credit facility, or 2011 Revolver, pursuant to a new credit agreement. The 2011 Revolver includes a $7.5 million swing line sub-facility and allows for letters of credit up to the lesser of $5.0 million or the available remaining revolving commitment amount. There are no scheduled reductions of commitments under the 2011 Revolver. The 2011 Revolver matures in March 2016.

Borrowings under the 2011 Revolver bear interest based on either, at the option of LBI Media, the base rate for base rate loans or the LIBOR rate for LIBOR loans, in each case plus the applicable margin. The base rate will be the higher of (i) Credit Suisse’s prime rate and (ii) the Federal Funds Effective Rate (as published by the Federal Reserve Bank of New York) plus 0.50%. The applicable margin for loans under the 2011 Revolver is 3.75% per annum for base rate loans and 4.75% per annum for LIBOR loans. Interest on base rate loans is payable quarterly in arrears and interest on LIBOR loans is payable either monthly, bimonthly or quarterly depending on the interest period elected by LBI Media. All amounts that are not paid when due under the 2011 Revolver will accrue interest at the rate otherwise applicable plus 2.00% until such amounts are paid in full. In addition, LBI Media will pay quarterly in arrears an unused commitment fee of 0.75% per annum.

The 2011 Revolver is guaranteed on a senior secured basis by all of LBI Media’s existing and future wholly owned domestic subsidiaries. Borrowings under the 2011 Revolver are secured by substantially all of the assets of LBI Media and the guarantors (other than the assets of LBI Media’s subsidiary, Empire Burbank Studios, LLC, or Empire), including a first priority pledge of all capital stock of each of LBI Media’s domestic subsidiaries. The 2011 Revolver also contains customary covenants that, among other things, restrict the ability of LBI Media and its restricted subsidiaries to: (i) incur or guaranty additional debt; (ii) engage in mergers, acquisitions and asset sales; (iii) make loans and investments; (iv) declare and pay dividends or redeem or repurchase capital stock; (v) transact with affiliates; and (vi) engage in different lines of business. All of these covenants are subject to a number of important limitations and exceptions under the agreements governing the 2011 Revolver. Under the 2011 Revolver, LBI Media must also maintain its material FCC licenses and maintain an amount of revolver facility indebtedness (which, as defined in the credit agreement, includes only amounts outstanding under LBI Media’s senior secured revolving credit facility and does not include LBI Media’s senior secured notes and the mortgage notes of Empire) that would not result in a ratio of revolver facility debt to EBITDA (as defined in the credit agreement) of more than 3.5 to 1.0. As of June 30, 2012, LBI Media was in compliance with all such covenants.

In connection with LBI Media’s entry into the credit agreement relating to the 2011 Revolver and the indenture relating to its 2011 Senior Secured Notes (defined below), LBI Media and the guarantors of the 2011 Revolver and its 2011 Senior Secured Notes also entered into a collateral trust and intercreditor agreement, or the Intercreditor Agreement. The Intercreditor Agreement defines the relative rights of the lenders under the 2011 Revolver and the holders of the 2011 Senior Secured Notes with respect to the collateral securing LBI Media’s and the guarantors’ respective obligations under the 2011 Revolver and the 2011 Senior Secured Notes. Pursuant to the Intercreditor Agreement, amounts received upon the sale of collateral securing the 2011 Revolver and the 2011 Senior Secured Notes following an event of default will be applied first to repay indebtedness under the 2011 Revolver, and then to repay indebtedness under the 2011 Senior Secured Notes and any future indebtedness sharing priority with the 2011 Senior Secured Notes with respect to such repayments.

The indenture governing LBI Media’s 8¹/2% senior subordinated notes prohibits borrowing under the 2011 Revolver, the proceeds of which would be used to repay, redeem, repurchase or refinance any of our senior discount notes (discussed below) earlier than one year prior to their stated maturity.

As of June 30, 2012, $17.9 million was outstanding under the 2011 Revolver. Since June 30, 2012, LBI Media has not borrowed or repaid any amounts under its 2011 Revolver. We expect to continue to make incremental borrowings under LBI Media’s 2011 Revolver to meet ongoing cash obligations in the future.

LBI Media’s 9¹/4% Senior Secured Notes. In March 2011, LBI Media issued approximately $220.0 million aggregate principal amount of 9¹/4% senior secured notes due 2019, or 2011 Senior Secured Notes. The 2011 Senior Secured Notes were sold at 98.594% of the principal amount, resulting in gross proceeds of approximately $216.9 million. LBI Media used the net proceeds from the issuance of the 2011 Senior Secured Notes to repay all outstanding borrowings under its prior $150.0 million senior secured revolving credit facility and $110.0 million senior secured term loan.

The 2011 Senior Secured Notes are guaranteed on a senior secured basis by all of LBI Media’s existing and future wholly owned domestic subsidiaries. Subject to certain exceptions and permitted liens, the 2011 Senior Secured Notes and the guarantees are secured on a first priority basis, along with indebtedness under the 2011 Revolver, by liens on substantially all of LBI Media’s and the guarantors’ assets (other than the assets of Empire), including a first priority pledge of all capital stock of each of LBI Media’s domestic subsidiaries. As discussed above, pursuant to the Intercreditor Agreement, amounts received upon sale of the collateral securing the 2011 Senior Secured Notes following an event of default will be applied first to repay indebtedness under the 2011 Revolver, and then to repay indebtedness under the 2011 Senior Secured Notes and any future indebtedness sharing priority with the 2011 Senior Secured Notes with respect to such repayments.

The 2011 Senior Secured Notes bear interest at a rate of 9.25% per annum. Interest payments are made on a semi-annual basis each April 15 and October 15, and payments commenced on October 15, 2011. The 2011 Senior Secured Notes will mature in April 2019. LBI Media may redeem the 2011 Senior Secured Notes at any time on or after April 15, 2015 at redemption prices on redemption dates specified in the indenture governing the notes, plus accrued and unpaid interest. At any time prior to April 15, 2015, LBI Media may redeem some or all of its 2011 Senior Secured Notes at a redemption price equal to a 100% of the principal amount of the 2011 Senior Secured Notes plus a “make-whole” amount specified in the indenture. Also, LBI Media may redeem up to 35% of the aggregate principal amount of the 2011 Senior Secured Notes with the net proceeds from certain equity offerings completed prior to April 15, 2015 at a redemption price of 109.25% of the principal amount of the 2011 Senior Secured Notes, plus accrued and unpaid interest, if any; provided that at least 65% of the aggregate principal amount of all 2011 Senior Secured Notes remain outstanding immediately after such redemption, subject to certain exceptions, and that such redemption occurs within 90 days of the date of closing of any such equity offering.

The indenture governing the 2011 Senior Secured Notes contains customary covenants that limit the ability of LBI Media and its subsidiaries to, among other things: (i) incur or guaranty additional indebtedness or issue certain preferred stock; (ii) pay dividends or distributions on, or redeem or repurchase, capital stock; (iii) make investments and other restricted payments; (iv) incur liens; (v) apply the proceeds from certain asset sales; (vi) consummate any merger, consolidation or sale of substantially all assets; (vii) enter into or engage in certain transactions with affiliates; and (viii) engage in certain business or activities. All of these covenants are subject to a number of important limitations and exceptions. For example, LBI Media and its restricted subsidiaries are allowed to incur additional indebtedness, in addition to certain specified debt that is permitted, and issue certain kinds of equity, in each case so long as its leverage ratio (as defined in the indenture) does not exceed 7.0 to 1.0. LBI Media may also incur certain additional senior secured debt so long as after giving effect to the granting of such additional senior secured debt, LBI Media’s consolidated secured leverage ratio (as defined in the indenture) does not exceed (i) 4.0 to 1.0 (excluding certain subordinated and junior secured indebtedness) in the case of certain senior secured debt or other indebtedness of LBI Media or any of its subsidiaries (except Empire) that are pari passu with LBI Media’s 9¹/4% senior secured notes and other senior secured debt or (ii) 5.0 to 1.0 in the case of secured indebtedness that is subordinated or junior to LBI Media’s 9¹/4% senior secured notes and other senior secured debt. As of June 30, 2012, LBI Media was in compliance with all such covenants.

The indenture governing the 2011 Senior Secured Notes and the related security agreement provide for customary events of default (subject in certain instances to cure periods and dollar thresholds), including but not limited to, the failure to make payments of interest or premium, if any, on or principal of, the 2011 Senior Secured Notes, the failure to comply with certain covenants for a period of time after notice has been provided, the acceleration of other indebtedness resulting from the failure to pay principal on such other indebtedness prior to its maturity, and certain events of insolvency. If any event of default occurs, the principal, premium, if any, interest and any other monetary obligations on all the outstanding 2011 Senior Secured Notes may become due and payable immediately.

LBI Media’s 8 ¹/2% Senior Subordinated Notes. In July 2007, LBI Media issued approximately $228.8 million aggregate principal amount of 8¹/2% senior subordinated notes, or the 2007 Senior Subordinated Notes, that mature in 2017, resulting in gross proceeds of approximately $225.0 million and net proceeds of approximately $221.6 million after deducting certain transaction costs.

Under the terms of the 2007 Senior Subordinated Notes, it must pay semi-annual interest payments of approximately $9.7 million each February 1 and August 1. LBI Media may redeem the 2007 Senior Subordinated Notes at any time on or after August 1, 2012 at redemption prices specified in the indenture governing its 2007 Senior Subordinated Notes, plus accrued and unpaid interest. At any time prior to August 1, 2012, LBI Media may redeem some or all of its 2007 Senior Subordinated Notes at a redemption price equal to a “make whole” amount as set forth in the indenture governing such senior subordinated notes.

The indenture governing the 2007 Senior Subordinated Notes contains restrictive covenants that limit the ability of LBI Media and its subsidiaries to, among other things: (i) incur or guaranty additional indebtedness or issue certain preferred stock; (ii) pay dividends or distributions on, or redeem or repurchase, capital stock, (iii) make investments and other restricted payments, (iv) incur certain liens; (v) apply the proceeds from certain asset sales; (vi) consummate any merger, consolidation or sale of substantially all assets, (vii) enter into or engage in certain transactions with affiliates; and (viii) engage in certain business or activities. The indenture governing the 2007 Senior Subordinated Notes also prohibits the incurrence of indebtedness, the proceeds of which would be used to repay, redeem, repurchase or refinance any of our senior discount notes earlier than one year prior to the stated maturity of the senior discount notes unless such indebtedness is (i) unsecured, (ii) pari passu or junior in right of payment to the 2007 Senior Subordinated Notes of LBI Media, and (iii) otherwise permitted to be incurred under the indenture governing LBI Media’s 2007 Senior Subordinated Notes. All of these covenants are subject to a number of important limitations and exceptions. For example, LBI Media and its restricted subsidiaries are permitted to incur additional indebtedness, in addition to certain specified debt that is permitted, and issue certain kinds of equity, in each case so long as its leverage ratio (as defined in the indenture) does not exceed 7.0 to 1.0. As of June 30, 2012, LBI Media was in compliance with all such covenants.

The indenture governing these notes also provides for customary events of default, which include (subject in certain instances to cure periods and dollar thresholds): nonpayment of principal, interest and premium, if any, on the notes, breach of covenants specified in the indenture, payment defaults or acceleration of other indebtedness, a failure to pay certain judgments and certain events of bankruptcy, insolvency and reorganization. The notes will become due and payable immediately without further action or notice upon an event of default arising from certain events of bankruptcy or insolvency with respect to us and certain of its subsidiaries. If any other event of default occurs and is continuing, the trustee or the holders of at least 25% in principal amount of the then outstanding notes may declare all the notes to be due and payable immediately.

On July 17, 2012, Media began soliciting consents from holders of the 2007 Senior Subordinated Notes to certain proposed amendments that would eliminate or waive substantially all of the restrictive covenants contained in the indenture governing such notes, eliminate certain events of default, modify certain covenants, and modify or eliminate certain other provisions, including, in some cases, certain provisions relating to defeasance, contained in the indenture governing such notes. See “—Exchange Offers and Consent Solicitations.”

LBI Media Holdings’ Senior Discount Notes. In October 2003, we issued $68.4 million aggregate principal amount at maturity of senior discount notes, or the Senior Discount Notes, that mature in October 2013. Under the terms of the Senior Discount Notes, cash interest did not accrue and was not payable on the Senior Discount Notes prior to October 15, 2008, and instead the accreted value of the Senior Discount Notes increased until such date. Since October 15, 2008, cash interest began to accrue on the Senior Discount Notes at a rate of 11% per year payable semi-annually on each April 15 and October 15. We may redeem the Senior Discount Notes at any time at redemption prices specified in the indenture governing our Senior Discount Notes, plus accrued and unpaid interest.

In 2010, 2009 and 2008, we purchased approximately $3.6 million, $1.0 million and $22.0 million, respectively, aggregate principal amount of our Senior Discount Notes in various open market transactions. As such, the total principal amount due to noteholders, other than LBI Media Holdings was $41.8 million as of June 30, 2012.

The indenture governing the Senior Discount Notes contains certain restrictive covenants that, among other things, limit our ability to incur additional indebtedness and pay dividends to Liberman Broadcasting. All of these covenants are subject to a number of important limitations and exceptions. For example, we and our restricted subsidiaries are permitted to incur additional indebtedness, in addition to certain specified debt that is permitted, and issue certain kinds of equity, in each case so long as our leverage ratio (as defined in the indenture) does not exceed 7.0 to 1.0. As of June 30, 2012, we were in compliance with all such covenants. On July 17, 2012, Media began soliciting consents from holders of Discount Notes to certain proposed amendments that would eliminate or waive substantially all of the restrictive covenants contained in the indenture governing such notes, eliminate certain events of default, modify certain covenants, and modify or eliminate certain other provisions, including, in some cases, certain provisions relating to defeasance, contained in the indenture governing such notes. See “—Exchange Offers and Consent Solicitations.” Our Senior Discount Notes are structurally subordinated to the 2011 Revolver, 2011 Senior Secured Notes and the 2007 Senior Subordinated Notes.

Empire Burbank Studios’ Mortgage Note. In July 2004, one of our indirect, wholly owned subsidiaries, Empire Burbank Studios, LLC, or Empire, issued an installment note for approximately $2.6 million. The loan is secured by Empire’s real property and bears interest at 5.52% per annum. The loan is payable in monthly principal and interest payments of approximately $21,000 through maturity in July 2019.

The following table summarizes our various levels of indebtedness at June 30, 2012.

Cash Flows. Cash and cash equivalents were $12.2 million and $1.2 million at June 30, 2012 and December 31, 2011, respectively. The increase in our cash balances primarily reflects the net proceeds from the $17.9 million draw on the 2011 Revolver, less cash utilized during the quarter.

Net cash used in operating activities was $11.3 million and $6.3 million for the six months ended June 30, 2012 and 2011, respectively. This change was primarily attributable to an increase in television programming cost payments.

Net cash provided by investing activities was $4.6 million for the six months ended June 30, 2012. Net cash used in investing activities was $6.4 for the six months ended June 30, 2011. During the six months ended June 30, 2012, our investing activities primarily consisted of net proceeds from the sale of property and equipment, repayments on notes receivable, offset by fixed asset purchases related to television set construction costs at our production facilities. During the six months ended June 30, 2011, our investing activities primarily consisted of fixed asset purchases related to the build-out of our new television production facility in Burbank.

Net cash provided by financing activities was $17.8 million and $32.0 million for the six months ended June 30, 2012 and 2011, respectively. During the six months ended June 30, 2012, cash provided by financing activities reflected the net proceeds from borrowings under LBI Media’s 2011 Revolver. Cash provided by financing activities during the six months ended June 30, 2011 primarily reflected the net proceeds from the issuance of the 2011 Senior Secured Notes, after the repayment of LBI Media’s former senior credit facilities and transaction costs.

Contractual Obligations. We have certain cash obligations and other commercial commitments, which will impact our short- and long-term liquidity. At June 30, 2012, such obligations and commitments were LBI Media’s 2011 Revolver, 9¹/4% senior secured notes and 8¹/2% senior subordinated notes, our senior discount notes, certain non-recourse debt of one of our indirect, wholly owned subsidiaries, our operating leases and our Nielsen network ratings contract (for a description of this contract, see Note 7 “Commitments and Contingencies — Ratings Services” in our accompanying condensed consolidated unaudited financial statements) as follows (in millions):

The above table includes principal and interest payments under our debt agreements based on our interest rates and principal balances as of June 30, 2012 and assumes no additional borrowings or unscheduled principal payments on LBI Media’s senior secured revolving credit facility until the facility matures in March 2016 and no unscheduled principal payments on LBI Media’s senior secured notes or senior subordinated notes or our senior discount notes. As noted above under “—Overview”, our financial performance and cash generated from operations will need to increase significantly to meet our cash needs. While we have commenced exchange offers of LBI Media’s and our notes, the exchange offers may not be consumated. As a result, we may need to seek alternative sources of liquidity, including asset sales or additional debt or equity financing to meet our debt obligations. If we are unable to secure alternative sources of liquidity in sufficient amounts, we may not be able to satisfy our obligations when they become due which would have a material adverse effect on our overall business and financial condition.

We believe that inflation has not had a material impact on our results of operations for each of our fiscal years in the two-year period ended June 30, 2012. However, there can be no assurance that future inflation would not have an adverse impact on our operating results and financial condition.

Seasonal net revenue fluctuations are common in the television and radio broadcasting industry and result primarily from fluctuations in advertising expenditures by local and national advertisers. Our first fiscal quarter generally produces the lowest net revenue for the year.

We use the term “Adjusted EBITDA.” Adjusted EBITDA consists of net income or loss plus provision for income taxes, interest expense and other income, net, interest rate swap income, depreciation and amortization, loss or gain on disposal of property and equipment, exchange offering costs and stock-based compensation expense.

The term, as we define it, may not be comparable to a similarly titled measure employed by other companies and is not a measure of performance calculated in accordance with GAAP.

Management considers this measure an important indicator of our financial performance, as it eliminates the effects of certain of our non-cash items and our capital structure. In addition, it provides useful information to investors regarding our financial condition and results of operations and our historical ability to service debt. The measure should be considered in addition to, but not as a substitute for or superior to, other measures of liquidity and financial performance prepared in accordance with GAAP, such as cash flows from operating activities, operating income or loss and net income or loss.

We believe Adjusted EBITDA is useful to an investor in evaluating its financial performance because:

The Securities and Exchange Commission, or SEC, has adopted rules regulating the use of non-GAAP financial measures, such as Adjusted EBITDA, in filings with the SEC and in disclosures and press releases. These rules require non-GAAP financial measures to be presented with and reconciled to the most nearly comparable financial measure calculated and presented in accordance with GAAP. We have included a presentation of net loss and a reconciliation to Adjusted EBITDA on a consolidated basis under “Item 2. Results of Operations.”

The discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to acquisitions of radio station and television station assets, allowance for doubtful accounts, television program costs, intangible assets, property and equipment and commitments and contingencies. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

There were no significant changes to our critical accounting policies during the three and six months ended June 30, 2012. Please see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations”, contained in our Annual Report on Form 10-K for the year ended December 31, 2011 for further discussion on our critical accounting policies.

This Quarterly Report on Form 10-Q contains forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995 (the “Act”). You can identify these statements by the use of words like “may,” “will,” “could,” “continue,” “expect” and variations of these words or comparable words. Actual results could differ substantially from the results that the forward-looking statements suggest for various reasons. The risks and uncertainties include but are not limited to:

The foregoing factors are not exhaustive, and new factors may emerge or changes to the foregoing factors may occur that could impact our business. The forward-looking statements in this Quarterly Report, as well as subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf, are hereby expressly qualified in their entirety by the cautionary statements in this Quarterly Report, the risk factors included in our Annual Report on Form 10-K for the year ended December 31, 2011 and other documents that we file from time to time with the SEC, particularly any Current Reports on Form 8-K. We are not obligated to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

In the ordinary course of business, we are exposed to various market risks, including fluctuations in interest rates and changes in general economic conditions. There were no material changes to our quantitative and qualitative disclosures about market risk during

the three and six months ended June 30, 2012. Please see “Item 7A. Quantitative and Qualitative Disclosures about Market Risk”, contained in our Annual Report on Form 10-K for the year ended December 31, 2011 for further discussion on quantitative and qualitative disclosures about market risk.

As required by SEC Rule 15d-15(b), we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer, President and Secretary and our Chief Financial Officer, of the effectiveness of our disclosure controls and procedures as of June 30, 2012. Based on the foregoing, our Chief Executive Officer, President and Secretary and our Chief Financial Officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were not effective at the reasonable assurance level due to the material weakness described below.

As discussed in Part II, Item 9A “Controls and Procedures” of our Annual Report on Form 10-K for the year ended December 31, 2011, we identified a material weakness in our internal control over financial reporting because we did not maintain effective controls over the accounting for impairment of property and equipment. Specifically, we did not have adequate processes to identify and evaluate impairment indicators related to property and equipment that had been taken out of service. In addition, until remediated, this material weakness could result in a misstatement in the property and equipment and impairment of long-lived assets accounts that would result in a material misstatement to our interim or annual consolidated financial statements and related disclosures that would not be prevented or detected.

As of June 30, 2012, we have begun, but have not completely remediated the material weakness in our internal control over financial reporting in connection with the reporting of impairments of property and equipment. Since the above material weakness was identified, we have undertaken an evaluation of our processes over the identification of and accounting for impairment of property and equipment. However, all of the deficiencies have not been remediated as of the date of this filing. The material weaknesses will not be fully remediated until, in the opinion of our management, the revised control procedures have been operating for a sufficient period of time to provide reasonable assurances as to their effectiveness. Other than as described in this Item 4, there have been no significant changes in our internal control over financial reporting identified in connection with the evaluation of such internal control that occurred during our last fiscal quarter, which have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Our dispute with Broadcast Music, Inc. relating to royalties is ongoing. No material developments in these proceedings occurred during the three and six months ended June 30, 2012. For more information on these proceedings, see “Item 3. Legal Proceedings” in our Annual Report on Form 10-K for the twelve month period ended December 31, 2011.

We are subject to pending litigation arising in the normal course of our business. While it is not possible to predict the results of such litigation, management does not believe the ultimate outcome of these matters will have a material effect on our financial statements.

There have been no material changes in our risk factors from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2011 and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2012.

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


LBI MEDIA HOLDINGS, INC.

By:		/s/ Blima Tuller
		Blima Tuller
		Chief Financial Officer (principal financial officer and principal accounting officer)


	Page

PART I. FINANCIAL INFORMATION		3

Item 1. Financial Statements (Unaudited)		3

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		20

Item 3. Quantitative and Qualitative Disclosures About Market Risk		32

Item 4. Controls and Procedures		33

PART II. OTHER INFORMATION		34

Item 1. Legal Proceedings		34

Item 1A. Risk Factors		34

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		34

Item 3. Defaults upon Senior Securities		34

Item 4. Mine Safety Disclosures		34

Item 5. Other Information		34

Item 6. Exhibits		35


	June 30, 2012			December 31, 2011
Assets
Current assets:
Cash and cash equivalents	$	12,219		$	1,162
Accounts receivable (less allowances for doubtful accounts of $3,595 as of June 30, 2012 and $3,576 as of December 31, 2011)		26,172			25,272
Current portion of television program costs, net		1,030			1,091
Amounts due from related parties		663			563
Current portion of employee advances		335			171
Prepaid expenses and other current assets		1,901			2,067
Assets held for sale		11,595			1,614

Total current assets		53,915			31,940
Property and equipment, net		72,907			89,209
Broadcast licenses, net		165,131			165,131
Deferred financing costs, net		10,753			11,528
Employee advances, excluding current portion		882			1,746
Television program costs, excluding current portion		14,305			14,572
Other assets		5,747			7,466

Total assets	$	323,640		$	321,592

Liabilities and stockholder’s deficiency
Current liabilities:
Accounts payable	$	3,445		$	3,359
Accrued liabilities		6,470			6,449
Accrued interest		13,525			13,381
Current portion of long-term debt		178			174

Total current liabilities		23,618			23,363
Long-term debt, excluding current portion		504,759			486,631
Deferred income taxes		27,032			26,181
Other liabilities		3,744			3,593

Total liabilities		559,153			539,768


Commitments and contingencies

Stockholder’s deficiency:
Common stock, $0.01 par value:
Authorized shares — 1,000
Issued and outstanding shares — 100		—			—
Additional paid-in capital		63,020			63,020
Notes receivable from related parties		(2,993	)		(3,035	)
Accumulated deficit		(295,540	)		(278,161	)

Total stockholder’s deficiency		(235,513	)		(218,176	)

Total liabilities and stockholder’s deficiency	$	323,640		$	321,592


	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
Net revenues	$	32,051		$	31,554		$	59,636		$	56,980
Operating expenses:
Program and technical, exclusive of depreciation and amortization shown below		13,261			10,092			24,326			19,401
Promotional, exclusive of depreciation and amortization shown below		722			711			1,199			1,277
Selling, general and administrative, exclusive of depreciation and amortization shown below		11,008			11,389			22,548			22,653
Depreciation and amortization		2,519			2,623			5,034			5,174
Loss (gain) on sale and disposal of property and equipment		(1,929	)		588			(1,920	)		595
Gain on legal settlement		—			(900	)		—			(900	)

Total operating expenses		25,581			24,503			51,187			48,200

Operating income		6,470			7,051			8,449			8,780
Interest expense, net of amounts capitalized		(11,970	)		(12,540	)		(23,788	)		(22,371	)
Interest rate swap income		—			759			—			1,535
Interest and other income		114			31			129			66
Exchange offering costs		(1,060	)		—			(1,060	)		—

Loss before provision for income taxes		(6,446	)		(4,699	)		(16,270	)		(11,990	)
Provision for income taxes		(539	)		(476	)		(1,109	)		(995	)

Net loss	$	(6,985	)	$	(5,175	)	$	(17,379	)	$	(12,985	)


	Six Months Ended June 30,
	2012			2011
Operating activities
Net loss	$	(17,379	)	$	(12,985	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		5,034			5,174
Loss (gain) on sale and disposal of property and equipment		(1,920	)		595
Stock-based compensation		—			13
Write-off of deferred financing costs		—			968
Amortization of deferred financing costs		775			725
Amortization of discount on subordinated and senior secured notes		318			236
Amortization of television program costs		11,627			6,514
Interest rate swap income		—			(1,535	)
Provision for doubtful accounts		366			1,017
Changes in operating assets and liabilities:
Cash overdraft		—			(807	)
Accounts receivable		(1,173	)		(1,552	)
Television program costs		(11,299	)		(10,329	)
Amounts due from related parties		(100	)		(10	)
Prepaid expenses and other current assets		(27	)		(423	)
Employee advances		700			(24	)
Accounts payable		178			757
Accrued liabilities		21			(1,668	)
Accrued interest		144			5,753
Deferred income taxes		1,025			863
Other assets and liabilities		389			446

Net cash used in operating activities		(11,321	)		(6,272	)

Investing activities
Purchases of property and equipment		(1,663	)		(6,494	)
Net proceeds from the sale of property and equipment		4,603			—
Notes receivable issued to related parties, net		—			7
Repayments on notes receivable		1,624			116

Net cash provided by (used in) investing activities		4,564			(6,371	)

Financing activities
Proceeds from bank borrowings		18,400			7,250
Proceeds from issuance of long-term debt		—			216,907
Payment of deferred financing costs		—			(8,950	)
Payments on bank borrowings		(586	)		(183,181	)

Net cash provided by financing activities		17,814			32,026

Net increase in cash and cash equivalents		11,057			19,383
Cash and cash equivalents at beginning of period		1,162			294

Cash and cash equivalents at end of period	$	12,219		$	19,677

Supplemental disclosure of cash flow information:
Non-cash amounts included in accounts payable and accrued liabilities:
Purchase of property and equipment	$	151		$	119
Cash paid during the period for:
Interest	$	22,517		$	14,669
Income taxes	$	54		$	220


	June 30, 2012				December 31, 2011
Description	Fair Value		Carrying Value		Fair Value		Carrying Value
2007 Senior Subordinated Notes due 2017	$	45.6	$	226.4	$	125.8	$	226.3
2011 Senior Secured Notes due 2019		189.2		217.2		195.8		217.1
Senior Discount Notes due 2013		8.4		41.8		37.2		41.8
2011 Revolver due 2016 and 2004 Empire Note due 2019		19.4		19.4		1.6		1.6


	June 30, 2012		December 31, 2011
	(In thousands)
Original television program costs — released	$	13,653	$	13,695
Original television program costs — in production		—		—
Acquired television programming rights		1,682		1,968

	$	15,335	$	15,663


	(in thousands)
Remainder of 2012	$	88
2013		42,016
2014		194
2015		205
2016		18,116
Thereafter		444,318

	$	504,937


Derivatives Not Designated As Hedging Instruments	Location of Gain	Three Months Ended June 30, 2012		Three Months Ended June 30, 2011		Six Months Ended June 30, 2012		Six Months Ended June 30, 2011
Interest rate swap agreement	Interest rate swap income	$	—	$	0.8	$	—	$	1.5


Party	Annual Interest Rate	Maturity Date	Original Loan Amounts		Loan and Accrued Interest Balance at
					June 30, 2012		December 31, 2011
					June 30, 2012		December 31, 2011
					(in thousands)
Stockholder of Parent	0.69% - 0.82%	July to December 2012	$	222	$	273	$	271
Stockholder of Parent	0.82%	July 2012		1,917		2,370		2,362
Stockholder of Parent	0.69% - 0.75%	July to December 2012		275		350		402
Affiliated companies	various	various		various		663		563

					$	3,656	$	3,598


	As of
	June 30, 2012			December 31, 2011
Assets
Deferred financing costs, net	$	154		$	215
Amounts due from subsidiary		5,674			4,211
Other assets		25			25

Total assets	$	5,853		$	4,451

Liabilities and stockholder’s deficiency
Accrued interest	$	971		$	971
Interest due to subsidiary		2,353			1,894
Long term debt		41,833			41,833
Loans payable to subsidiary		36,244			32,481
Losses in excess of investment in subsidiary		156,972			142,413

Total liabilities		238,373			219,592
Stockholder’s deficiency:
Common stock		—			—
Additional paid-in capital		63,020			63,020
Accumulated deficit		(295,540	)		(278,161	)

Total stockholder’s deficiency		(232,520	)		(215,141	)

Total liabilities and stockholder’s deficiency	$	5,853		$	4,451


Issuer	Form of Debt	Principal Amount Outstanding(1)	Scheduled Maturity Date	Interest rate (per annum)
LBI Media, Inc.	$50.0 million senior secured revolving credit facility	$17.9 million (2)	March 18, 2016	LIBOR or base rate, plus an applicable margin
LBI Media, Inc.	Senior secured notes	$220.0 million aggregate principal amount at maturity	April 1, 2019	9.25%
LBI Media, Inc.	Senior subordinated notes	$228.8 million aggregate principal amount at maturity	August 1, 2017	8.5%
LBI Media Holdings, Inc.	Senior discount notes	$68.4 million (3)	October 15, 2013	11%
Empire Burbank Studios LLC	Mortgage note	$1.5 million	July 1, 2019	5.52%


	Payments Due by Period from June 30, 2012
Contractual Obligations	Total		Remaining 2012		1-3 Years		3-5 Years		More than 5 Years
Long-term debt (principal and interest)	$	752.3	$	22.8	$	128.4	$	81.3	$	519.8
Operating leases		14.8		0.9		3.3		2.9		7.7
Nielsen network ratings contract		6.6		2.4		4.2		—		—

Total contractual cash obligations	$	773.7	$	26.1	$	135.9	$	84.2	$	527.5


Exhibit Number		Exhibit Description

3.1		Restated Certificate of Incorporation of LBI Media Holdings, Inc. (1)

3.2		Certificate of Ownership of Liberman Broadcasting, Inc. (successor in interest to LBI Holdings I, Inc.), dated July 9, 2002 (2)

3.3		Amended and Restated Bylaws of LBI Media Holdings, Inc. (1)

4.1		Indenture governing LBI Media Holdings, Inc.’s 11% Senior Discount Notes due 2013, dated October 10, 2003, by and among LBI Media Holdings, Inc. and U.S. Bank National Association, as Trustee (3)

4.2		Form of Exchange Note (included as Exhibit A-1 to Exhibit 4.1)

4.3		Indenture, dated as of July 23, 2007, by and among LBI Media, Inc., the subsidiary guarantors party thereto, and U.S. Bank National Association, as trustee (4)

4.4		Form of 8.5% Senior Subordinated Note due 2019 (included as Exhibit A-1 to Exhibit 4.3)

4.5		Indenture, dated as of March 18, 2011, by and among LBI Media, Inc., the guarantors named therein and U.S. Bank National Association, as trustee (5)

4.6		Form of 9.25% Senior Secured Note due 2019 (included as Exhibit A-1 to Exhibit 4.5)

10.1		Employment Agreement, dated as of July 1, 2012, by and between LBI Media Holdings, Inc. and Blima Tuller. (6)

10.2		Form of Indemnification Agreement. (7)

10.3		Form of Indemnification Agreement (Terence M. O’Toole). (7)

31.1		Certification of Chief Executive Office, President and Secretary pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934*

31.2		Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934*

101		The following financial information from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2012, filed with the SEC on August 14, 2012 formatted in Extensible Business Reporting Language (XBRL): (i) the Condensed Consolidated Balance Sheets as of June 30, 2012 and December 31, 2011, (ii) the Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2012 and 2011, (iii) the Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2012 and 2011, and (iv) Notes to Condensed Consolidated Financial Statements.*