As filed with
      the Securities and Exchange Commission on June 29,
      2009


Ine`


UNITED
STATES SECURITIES AND EXCHANGE COMMISSION


Washington,
D.C. 20549




Form
20-F





ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d)


OF THE
SECURITIES EXCHANGE ACT OF 1934





for the
fiscal year ended December 31, 2008


Commission
File Number: 1-12090





Grupo
Radio Centro, S.A.B. de C.V.


(Exact
name of Registrant as specified in its charter)




Radio
Center Group


(Translation
of Registrant’s name into English)




United
Mexican States


(Jurisdiction
of incorporation or organization)


Constituyentes
1154 (7° Piso)


Col.
Lomas Altas


C.P.
11950, México, D.F., México


(Address
of principal executive offices)




Alfredo
Azpeitia Mera


Constituyentes
1154 (7° Piso)


Col.
Lomas Altas


C.P.
11950, México, D.F., México


aazpeitia@grc.com.mx


(5255)
5728 48 00


(Name,
telephone, e-mail and/or facsimile number and address of company contact
person)




Securities
registered or to be registered pursuant to Section 12(b) of the
Act:


Title of each class:
                Name of each exchange on which
      registeredSeries
      A Shares, without par value (“Series A Shares”)
                New
      York Stock Exchange*Ordinary
      Participation Certificates (“CPOs”), each CPO representing one Series A
      Share
                New
      York Stock Exchange*American
      Depositary Shares (“ADSs”), each representing nine CPOs
                New
      York Stock Exchange




*Not for
trading, but only in connection with the registration of American Depositary
Shares, pursuant to the requirements of the Securities and Exchange
Commission.




Securities
registered or to be registered pursuant to Section 12(g) of the Act: None




Securities
for which there is a reporting obligation pursuant to Section 15(d) of the Act:
None




Indicate
the number of outstanding shares of each of the issuer’s classes of capital or
common stock as of the close of the period covered by the annual report: 162,724,561 Series A
Shares





Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.   ̈ YesxNo





If this
report is an annual or transition report, indicate by check mark if the
registrant is not required to file reports pursuant to Section 13 or 15(d) of
the Securities Exchange
Act     of 1934.   ̈  Yes    x  No





Indicate by check mark whether the
registrant (1) has filed all reports required to be file 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.xYes ̈No





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate website, 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). N/A





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





Indicate
by check mark which basis of accounting the registrant has used to prepare the
financial statements included in this filing:


U.S. GAAP ̈International Financial Reporting
Standards ̈Otherx





Indicate
by check mark which financial statement item the registrant has elected to
follow:   ̈Item
17xItem 18





If this
is an annual report, indicate by check mark whether the registrant is a shell
company (as defined in Rule 12b-2 of the Exchange Act).   ̈YesxNo










TABLE
OF CONTENTS




PagePART
      I
                3Item
      1.  Identity of Directors, Senior Management and
      Advisers
                3Item
      2.  Offer Statistics and Expected Timetable
                3Item
      3.  Key Information
                3Item
      4.  Information on the Company
                12Item
      4A.  Unresolved Staff Comments
                31Item
      5. Operating and Financial Review and Prospects
                31Item
      6.  Directors, Senior Management and Employees
                40Item
      7.  Major Shareholders and Related Party
      Transactions
                45Item
      8.  Financial Information
                48Item
      9.  The Offer and Listing
                51Item
      10.  Additional Information
                53Item
      11.  Quantitative and Qualitative Disclosures About Market
      Risk
                67Item
      12.  Description of Securities Other than Equity
      Securities
                67PART
      II
                67Item
      13.  Defaults, Dividend Arrearages and
    Delinquencies
                67Item
      14.  Material Modifications to the Rights of Security Holders
      and Use of Proceeds
                67Item
      15.  Controls and Procedures
                67Item
      16A.  Audit Committee Financial Expert
                68Item
      16B.  Code of Ethics
                69Item
      16C.  Principal Accountant Fees and Services
                69Item
      16D.  Exemptions from the Listing Standards for Audit
      Committees
                69Item
      16E.  Purchases of Equity Securities by the Issuer and
      Affiliated Purchasers
                70Item
      16F.  Change in Registrant’s Certifying
    Accountant.
                70Item
      16G.  Corporate Governance
                70PART
      III
                74Item
      17.  Financial Statements
                74Item
      18.  Financial Statements
                74Item
      19.  Exhibits
                74







INTRODUCTION




Grupo
Radio Centro is a corporation organized under the laws of the United Mexican
States.  As used in this Annual Report and except as the context
otherwise requires, the terms “Grupo Radio Centro” and “the Company” refer to
Grupo Radio Centro, S.A.B. de C.V. and its consolidated
subsidiaries.




PRESENTATION
OF FINANCIAL INFORMATION




The
Company publishes its financial statements in Mexican pesos.  Our
financial statements have been prepared in accordance with the Mexican Financial
Reporting Standards, or MFRS, issued by the Consejo Mexicano para la
Investigación y Desarrollo de Normas de Información Financiera (Mexican
Board for Research and Development of Financial Information
Standards).




Through
the end of 2007, MFRS required us to recognize certain effects of inflation in
our financial statements by restating financial statements from prior periods in
constant pesos as of the end of the most recent period presented.  Due
to a change in MFRS effective January 1, 2008, we are no longer required to
recognize the effects of inflation in our financial statements, unless the
economic environment qualifies as “inflationary.”  Because of the
relatively low level of inflation in recent years, the Mexican economy did not
qualify as inflationary in 2008.  As a result, we are presenting our
2008 financial statements without inflation accounting.  We have not
restated financial statements for prior periods; therefore, financial
information for dates and periods prior to 2008 continue to be expressed in
constant pesos as of December 31, 2007.




This
Annual Report contains translations of certain peso amounts into U.S. dollars at
specified rates solely for the convenience of the reader.  These
translations should not be construed as representations that the peso amounts
actually represent such U.S. dollar amounts or could be converted into U.S.
dollars at the rate indicated.  Unless otherwise indicated, such U.S.
dollar amounts have been translated from pesos at an exchange rate of
Ps. 13.832 to U.S.$ 1.00, the noon buying rate for pesos at December 31,
2008, as published by the Federal Reserve Bank of New York.  The
translation to U.S. dollars at the December 31, 2008 exchange rate may not
represent accurately the financial condition of the Company in U.S. dollar terms
as of a subsequent date.  On June 19, 2009, the noon buying rate for
pesos was Ps. 13.34 to U.S.$ 1.00.  See Item 3, “Key
Information—Exchange Rate Information,” for information regarding exchange rates
since January 1, 2004.




In this
Annual Report, references to “pesos” or “Ps.” are to the lawful currency of
Mexico.  References herein to “U.S. dollars” or “U.S.$” are to United
States dollars.




FORWARD-LOOKING
STATEMENTS




This
Annual Report contains words such as “believe,” “expect,” “anticipate” and
similar expressions that identify forward-looking statements that reflect the
Company’s views about future events and financial performance.  Actual
results could differ materially from those projected in such forward-looking
statements as a result of various factors that may be beyond the Company’s
control.  These factors, some of which are discussed in Item 3, “Key
Information—Risk Factors,” include effects on the Company from competition with
its broadcasting operations, material changes in the performance or popularity
of key radio stations or broadcast programs, the loss of one or more key
customers or a reduction in the advertising expenditures of key customers, a
change in the seasonality of the Company’s business, the ability of the Company
to make additional investments in radio operations or renew its broadcasting
licenses, significant developments in the Mexican economic or political
situation, changes in the Company’s regulatory environment or fluctuations in
inflation rates or exchange rates.  Accordingly, readers are cautioned
not to place undue reliance on these forward-looking statements.  In
any event, these statements speak only as of their dates, and the Company
undertakes no obligation to update or revise any of them, whether as a result of
new information, future events or otherwise.




2


PART
I




Item
1.  Identity of Directors, Senior Management and Advisers




Not applicable.




Item
2.  Offer Statistics and Expected Timetable




Not applicable.




Item
3.  Key Information




SELECTED
FINANCIAL DATA




The
following table presents selected consolidated financial information of the
Company and its subsidiaries for each of the periods indicated.  This
information, to the extent applicable, should be read in conjunction with, and
is qualified in its entirety by reference to, the Consolidated Financial
Statements, including the notes thereto, included elsewhere in this Annual
Report.  Grupo Radio Centro’s financial statements are prepared in
accordance with MFRS, which differ in certain respects from generally accepted
accounting principles in the United States (U.S. GAAP).  Note 21 to
the Consolidated Financial Statements provides a description of the principal
differences between MFRS and U.S. GAAP as they relate to Grupo Radio Centro,
including differences related to certain cash flow information and a
reconciliation to U.S. GAAP of operating income, net income and shareholders’
equity.




For dates
and periods prior to 2008, Grupo Radio Centro’s financial statements were
prepared giving effect to Bulletin B-10, Recognition of the Effects of
Inflation, and Bulletin B-12, Statements of Changes in Financial
Position, under MFRS.  Bulletin B-10 provided for the
recognition of certain effects of inflation by requiring Grupo Radio Centro to
restate non-monetary assets and liabilities using the Mexican Consumer Price
Index, or INPC, to restate the components of shareholders’ equity using the
INPC, to restate its fixed assets using the INPC and to record gains or losses
in purchasing power from holding monetary assets or
liabilities.  Bulletin B-12 required that the statement of changes in
financial position reconcile changes from the restated historical balance sheet
for the prior year to the current balance sheet.  For dates and
periods prior to 2008, the selected consolidated financial information set forth
below, and data in the related Consolidated Financial Statements, have been
restated in constant pesos as of December 31, 2007.




Due to
the adoption of MFRS B-10, effective January 1, 2008, inflation accounting
methods do not apply unless the economic environment in which the Company
operates is “inflationary” for purposes of MFRS.  An environment is
considered inflationary if the cumulative inflation rate equals or exceeds an
aggregate of 26% over the three preceding years.  Because of the
relatively low level of Mexican inflation in recent years, the cumulative
inflation rate in Mexico over the three-year period preceding December 31, 2008
does not qualify the Mexican economic environment as inflationary.  As
a result, we have not applied the effects of inflation accounting to our
financial information in 2008.  In our financial information for 2008,
inflation adjustments for prior periods have not been removed from shareholders’
equity and the re-expressed amounts for non-monetary assets and liabilities at
December 31, 2007 became the accounting basis for those assets and liabilities
beginning on January 1, 2008 and for subsequent periods, as required by
MFRS.  See Item 5, “Operating and Financial Review and
Prospects—Effects of Inflation.”




3




Year
      Ended December 31,2008(1)
                
                
                2008
                
                
                2007
                
                
                2006
                
                
                2005
                
                
                2004(in
      thousands, except per ADS data)Operating
      Data:MFRS:Broadcasting
      revenue
                
                US $
                53,145
                
                
                Ps.
                735,105
                
                
                Ps.
                654,760
                
                
                Ps.
                825,590
                
                
                Ps.
                638,204
                
                
                Ps.
                615,389Broadcasting
      expenses(2)(3)
                
                
                32,703
                
                
                
                452,350
                
                
                
                421,970
                
                
                
                460,072
                
                
                
                423,857
                
                
                
                440,397Broadcasting
      income
                
                
                20,442
                
                
                
                282,755
                
                
                
                232,790
                
                
                
                365,518
                
                
                
                214,347
                
                
                
                174,992Depreciation and
      amortization(4)
                
                
                2,293
                
                
                
                31,720
                
                
                
                33,687
                
                
                
                37,183
                
                
                
                39,957
                
                
                
                35,219Corporate, general
      and administrative expenses(3)
                
                
                1,045
                
                
                
                14,461
                
                
                
                14,774
                
                
                
                14,813
                
                
                
                14,575
                
                
                
                23,882Operating
      income
                
                
                17,104
                
                
                
                236,574
                
                
                
                184,329
                
                
                
                313,522
                
                
                
                159,816
                
                
                
                115,891Comprehensive
      cost of financing
                
                
                556
                
                
                
                7,678
                
                
                
                5,850
                
                
                
                39,842
                
                
                
                13,779
                
                
                
                20,277Other
      expenses, net
                
                
                4,112
                
                
                
                56,880
                
                
                
                45,806
                
                
                
                59,511
                
                
                
                52,490
                
                
                
                51,522Extraordinary
      item(5)
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                263,523
                
                
                
                -
                
                
                
                -Net income
      (loss)(6)
                
                
                9,165
                
                
                
                126,765
                
                
                
                91,119
                
                
                
                434,748
                
                
                
                70,099
                
                
                
                22,085Minority
      interest
                
                
                3
                
                
                
                45
                
                
                
                21
                
                
                
                63
                
                
                
                16
                
                
                
                2Net income (loss) per
      ADS(6)
      (7)
                
                
                0.51
                
                
                
                7.01
                
                
                
                5.04
                
                
                
                24.08
                
                
                
                3.88
                
                
                
                1.22Common shares
      outstanding(7)
                
                
                162,725
                
                
                
                162,725
                
                
                
                162,725
                
                
                
                162,500
                
                
                
                162,657
                
                
                
                162,560U.S.
      GAAP:Broadcasting
      revenue
                
                US $
                53,145
                
                
                Ps.
                735,105
                
                
                Ps.
                654,760
                
                
                Ps.
                825,590
                
                
                Ps.
                638,204
                
                
                Ps.
                615,389Operating (loss)
      income(5)
                
                
                12,992
                
                
                
                179,694
                
                
                
                138,523
                
                
                
                517,534
                
                
                
                107,326
                
                
                
                52,581Net income
      (loss)(6)
                
                
                9,162
                
                
                
                126,720
                
                
                
                91,098
                
                
                
                434,685
                
                
                
                70,083
                
                
                
                13,320Net income (loss) per
      ADS(6)
      (7)
                
                
                0.51
                
                
                
                7.01
                
                
                
                5.04
                
                
                
                24.08
                
                
                
                3.88
                
                
                
                0.74Dividends per
      ADS(7)
      (8)
                
                
                0.42
                
                
                
                5.53
                
                
                
                5.53
                
                
                
                4.01
                
                
                
                -
                
                
                
                -Balance
      Sheet Data:MFRS:Working
      capital
                
                US $
                15,382
                
                
                Ps.
                212,776
                
                
                Ps.
                170,056
                
                
                Ps.
                133,545
                
                
                Ps.
                (123,008
                )
                
                Ps.
                (199,557
                )Property
      and equipment, net
                
                
                33,620
                
                
                
                465,034
                
                
                
                461,555
                
                
                
                481,220
                
                
                
                513,259
                
                
                
                545,486Excess
      cost over fair value of assets of subsidiaries
                
                
                59,924
                
                
                
                828,863
                
                
                
                828,863
                
                
                
                828,734
                
                
                
                828,734
                
                
                
                820,367Total
      assets
                
                
                126,057
                
                
                
                1,743,638
                
                
                
                1,700,445
                
                
                
                1,722,173
                
                
                
                1,709,011
                
                
                
                1,656,558Long-term
      debt excluding current portion
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                61,128
                
                
                
                126,331Total debt(9)
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                122,255
                
                
                
                189,495Shareholders’
      equity(10)
                
                
                103,584
                
                
                
                1,432,790
                
                
                
                1,406,025
                
                
                
                1,387,446
                
                
                
                1,081,619
                
                
                
                1,009,971U.S.
      GAAP:Total
      assets
                
                
                130,231
                
                
                
                1,801,377
                
                
                
                1,779,008
                
                
                
                1,763,734
                
                
                
                1,750,572
                
                
                
                1,698,120Shareholders’
      equity(10)
                
                
                102,899
                
                
                
                1,423,305
                
                
                
                1,396,585
                
                
                
                1,378,019
                
                
                
                1,072,255
                
                
                
                1,000,623







(1)
            Peso
      amounts have been translated into U.S. dollars solely for the convenience
      of the reader at the rate of Ps. 13.832 per U.S. dollar, the noon buying
      rate for pesos on December 31, 2008, as published by the Federal Reserve
      Bank of New York.  See “—Exchange Rate
    Information.”


(2)
            Excludes
      depreciation, amortization and corporate, general and administrative
      expenses.


(3)
            Certain
      amounts in the 2005 and 2004 financial statements, as originally issued,
      have been reclassified for uniformity of presentation with the 2008, 2007
      and 2006 financial statements.


(4)
            For
      purposes of uniformity with the presentation of the 2008, 2007, 2006 and
      2005 financial statements, goodwill amortization has been reclassified for
      2004, and the charge to income in 2004 from the amortization of goodwill
      in the amount of Ps. 72.1 million has been
  reversed.


(5)
            The
      extraordinary item recorded in 2006 reflects the reversal in June 2006 of
      a provision for the contingent liability related to an arbitration
      proceeding.  See Item 5, “Operating and Financial Review and
      Prospects—Loss Contingency” and Item 8, “Financial Information—Other
      Information—Legal and Arbitration
Proceedings.”


(6)
            In
      accordance with then-applicable MFRS, net income for dates and periods
      prior to 2008 does not give effect to minority interest.  Net
      income under U.S. GAAP and, for dates and periods beginning in 2008 under
      MFRS, does give effect to minority interest.  See Note 21 to the
      Consolidated Financial Statements.


(7)
            Amounts
      shown are the weighted average number of Series A Shares outstanding,
      which was used for purposes of computing net income per ADS under both
      MFRS and U.S. GAAP and dividends per ADS under U.S.
  GAAP.


(8)
            The
      Company declares dividends in any particular year for the immediately
      preceding fiscal year.  On April 13, 2009, the Company paid
      dividends in the aggregate amount of Ps. 100.0 million with respect to
      2008.  In 2008, the Company paid dividends in the aggregate
      amount of Ps. 100.0 million with respect to 2007.  In 2007, the
      Company paid dividends in the aggregate amount of Ps. 71.9 million with
      respect to 2006.  The Company did not pay any dividends in 2005
      with respect to 2004 or in 2006 with respect to
  2005.


(9)
            Total
      debt consists of bank debt.   On March 26, 2009, the
      Company incurred Ps. 200 million in indebtedness.  See Item 5,
      “Operating and Financial Review and Prospects—Liquidity and Capital
      Resources—Indebtedness—Credit
Facility.”


(10)
            In
      2006, the Company reduced its capital by Ps. 128.5 million (Ps. 120.0
      million nominal amount) through cash payments to its shareholders equal to
      that amount.


4




EXCHANGE
RATE INFORMATION




Mexico
has a free market for foreign exchange, and the Mexican government allows the
peso to float freely against the U.S. dollar.  There can be no
assurance that the government will maintain its current policies with regard to
the peso or that the peso will not appreciate or depreciate significantly in the
future.




The
following table sets forth, for the periods indicated, the high, low, average
and period-end exchange rate for the purchase of U.S. dollars, expressed in
pesos per U.S. dollar.




Period
                
                Exchange
      Rate(1)Year
      Ended December 31,
                
                High
                
                
                Low
                
                
                Average(2)
                
                
                Period
      End2004
                
                
                11.64
                
                
                
                10.81
                
                
                
                11.31
                
                
                
                11.152005
                
                
                11.41
                
                
                
                10.41
                
                
                
                10.87
                
                
                
                10.632006
                
                
                11.46
                
                
                
                10.43
                
                
                
                10.90
                
                
                
                10.802007
                
                
                11.27
                
                
                
                10.67
                
                
                
                10.93
                
                
                
                10.922008
                
                
                13.94
                
                
                
                9.92
                
                
                
                11.21
                
                
                
                13.83Month
      Ended 2008:December
      31
                
                
                13.83
                
                
                
                13.09Month
      Ended 2009:January
      31
                
                
                14.27
                
                
                
                13.35February
      28
                
                
                15.09
                
                
                
                14.19March
      31
                
                
                15.48
                
                
                
                13.91April
      30
                
                
                13.89
                
                
                
                13.05May
      31
                
                
                13.82
                
                
                
                12.88





(1)
            Sources:  Federal
      Reserve Bank of New York and the U.S. Federal Reserve
    Board.


(2)
            Average
      of month-end rates.




On June
19, 2009, the noon buying rate was Ps. 13.34 to U.S.$ 1.00.




Fluctuations
in the exchange rate between the peso and the U.S. dollar will affect the U.S.
dollar equivalent of the peso price of Series A Shares on the Bolsa Mexicana de
Valores, S.A. de C.V. (the Mexican Stock Exchange) and the price of American
Depositary Shares, or ADSs, on the New York Stock Exchange
(NYSE).  The Company pays cash dividends in pesos, and exchange rate
fluctuations will affect the U.S. dollar amounts received by holders of ADSs
upon conversion by Citibank N.A., as depositary for the ADSs (the Depositary),
of cash dividends on the Series A Shares underlying the certificados de participación
ordinaria(ordinary participation certificates, or CPOs) represented by
the ADSs.




5


RISK
FACTORS




Risks
Relating to Our Operations




Increased
competition or a decline in popularity of any of our radio formats could reduce
our audience share and result in a loss of revenue




Radio
broadcasting in Mexico is highly competitive, and programming popularity, an
important factor in advertising sales, is readily susceptible to
change.  There can be no assurance that increased competition within,
or a decline in the popularity of, a given format will not decrease our
aggregate audience share in the future.  In addition, we face strong
competition for advertising revenues from both television and various print
media.  If we are unable to respond to an increase in competition or a
decline in the popularity of any of our radio formats, our revenue and
profitability could suffer material adverse consequences.




If
we lose one or more of our key customers, we could lose a significant amount of
our revenue




Our two
largest individual customers in 2007 and 2008 were Nueva Wal Mart de México,
S.A.B. de C.V. (“Nueva Wal Mart”) and Tiendas Comercial Mexicana, S.A.B. de C.V.
(“Comercial Mexicana”). In 2008, Nueva Wal Mart represented 6.6% and Comercial
Mexicana represented 3.7% of our total broadcasting revenue.  In 2007,
Nueva Wal Mart represented 5.6% and Comercial Mexicana represented 4.2% of our
total broadcasting revenue.  Our two largest individual customers in
2006 were Compañía Cervecera del Trópico, S.A. de C.V. and Comercial Mexicana,
representing 3.7% and 3.4%, respectively, of our total broadcasting
revenue.  In 2006, Gigante, S.A. de C.V. was also a large individual
customer, accounting for 2.3% of our total broadcasting revenue.  The
companies comprising Grupo Cifra and Grupo Carso are also key customers,
representing 7.7% and 7.3%, respectively, of our total broadcasting revenue in
2008.




In
October 2008, Comercial Mexicana’s parent company, Controladora Comercial
Mexicana, S.A.B. de C.V., defaulted on certain of its debt and filed for
bankruptcy protection in the Mexican courts.  Although Comercial
Mexicana has continued to purchase advertising from us, we cannot predict how
the restructuring of Controladora Comercial Mexicana, S.A.B. de C.V. will affect
Comercial Mexicana or its continued relationship with us.  We also
cannot assure you that Nueva Wal Mart, Comercial Mexicana or the companies
comprising Grupo Carso and Grupo Cifrawill continue to
purchase advertising from us at current levels or at all.  The loss of
our relationship with any one of our principal customers could have a material
adverse effect on our results of operations.




The
seasonal nature of our business affects our revenue




Our
business is seasonal.  Our revenue from advertising sales, which we
recognize when the advertising is aired, is generally highest in the fourth
quarter because of the high level of advertising during the holiday
season.  Accordingly, our results of operations depend
disproportionately on revenue recognized in the fourth quarter, and a low level
of fourth quarter advertising revenue could have a material adverse effect on
our results of operations for the year.




The
decrease in advertising expenditures by political campaigns will substantially
reduce our revenue




Historically,
our business has been affected significantly by the advertising expenditures of
political parties during congressional elections that occur every three years,
including 2003 and 2006, and during presidential elections that occur every six
years (coinciding with congressional elections), including in 2000 and
2006.  In 2006, advertising by political parties accounted for 19.0%
of total broadcasting revenue.  Mexico implemented electoral reform by
amending its constitution in November 2007 and adopting an electoral code in
January 2008.  The constitutional amendment and the electoral code
prohibit political parties from directly or indirectly purchasing broadcast time
on any radio or television station.  In addition, private individuals
and entities are prohibited from purchasing advertising on radio or television
aimed at influencing voter preferences.  As a result of this change in
law, we no longer receive revenues from advertising by political campaigns,
which will materially impact our revenues during election years.




6


The
Mexican Federal Competition Commission may prohibit us from making additional
investments in radio operations in Mexico




We, like
all Mexican radio licensees, are subject to regulation by several Mexican
governmental agencies.  As a result of such regulation, radio licenses
are subject to review and possible revocation, and licensees are prohibited from
transferring or assigning their radio broadcasting licenses without prior
governmental approval of both the transfer and its terms.  As a result
of the increase in our share of the Mexico City radio market following the
acquisition of Radiodifusión RED, S.A. in 1996, we are required by the
MexicanComisión Federal de
Competencia (Federal Competition Commission) to seek its prior approval
in connection with any future investments in radio operations in Mexico,
including, without limitation, purchases and leases of radio stations, interests
in other radio concerns or transmission sites, irrespective of the size of such
investments or their related audience share.  To the best of our
knowledge, other Mexican radio broadcasting companies are not generally subject
to this requirement.  No assurance can be given that we will be
permitted by the Federal Competition Commission to make any particular
investment should we desire to do so.




If
the Mexican government does not renew our broadcasting licenses, our business
could be harmed




To
broadcast commercial radio in Mexico, a broadcaster must have a license from the
Secretaría de Comunicaciones y
Transportes(Secretary
of Communication and Transportation, or “SCT”).  Because the SCT
generally grants renewals to licensees that have substantially complied with
applicable law, we expect that our future renewal applications will be
granted.  However, if we were unable to renew these licenses in the
future, our business could be significantly harmed.




We
may be unsuccessful in addressing the challenges and risks presented by our
investment in the United States




We
recently began to provide programming to, and sell advertising time on, KMVN-FM,
a radio station broadcasting in Los Angeles, California, that is owned by Emmis
Communications Corporation.  Our investment in the United States may
involve risks to which we have not previously been exposed and may present
different or greater risks, including from competition and regulation, than
those present in Mexico.  We cannot assure you that this investment
will be successful.




The
current credit crisis and unfavorable general economic and market conditions may
negatively affect our liquidity, business, and results of operations, and may
affect a portion of our client base




We cannot
predict the effect on our customers and us of the continued credit crisis and
related turmoil in the global financial system.  The risks associated
with our business become more acute in periods of a slowing economy or
recession, which may be accompanied by a decrease in advertising.  A
decline in the level of business activity of our advertisers could have an
adverse effect on our revenue and profit margins.  In response to
current market conditions, customers may choose to make fewer expenditures, to
slow their spending on or cancel our services or to seek contract terms more
favorable to them.  Adverse economic conditions may also lead to an
increase in the number of our customers that are unable to pay for
services.  If these events were to occur, it could have a material
adverse effect on our business and results of operations.




7


Many
lenders and institutional investors have reduced and, in some cases, ceased to
provide funding to borrowers. Continued disruption of the credit markets could
adversely affect our borrowing capacity.  Our ability to expand our
business may be limited if, in the future, we were unable to access or increase
our existing credit facilities on favorable terms or at all.  These
disruptions could negatively affect our liquidity, business and results of
operations.




If
we are required by the Mexican courts to pay a pending arbitration award, it may
have a material adverse effect on our financial condition




We are
party to legal proceedings in Mexico relating to an arbitration award granted in
2004 against us in favor of Infored, S.A. de C.V. and Mr. José Gutiérrez
Vivó.  If we are ultimately unsuccessful in challenging the
enforcement of the arbitration award, we will be required to finance all or part
of the amount due.  Our ability to obtain financing is subject to
various factors, including general market conditions, our financial condition
and results of operations and the fact that we have pledged substantially all of
our assets under outstanding indebtedness.  Accordingly, we may not be
able to obtain financing in a timely manner, or on acceptable terms, or at
all.  If we incur additional indebtedness or we are unable to obtain
financing when needed, our financial condition may be materially and adversely
affected.




Risks
Relating to Our Principal Shareholders and Capital Structure




Holders
of ADSs are not entitled to attend shareholders meetings and have no voting
rights




Holders
of the CPOs, and therefore holders of the ADSs, have no voting rights with
respect to the underlying Series A Shares.  Pursuant to the trust
agreement under which the CPOs are issued, the trustee for the CPOs will vote
the Series A Shares held in the trust in the same manner as the majority of
the Series A Shares that are not held in the trust and that are voted at
the relevant shareholders meeting.  Holders of the CPOs are not
entitled to attend or to address our shareholders meetings.




Certain
members of the Aguirre family effectively control our management and the
decisions of the shareholders, and their interests may differ from those of
other shareholders




Certain
members of the Aguirre family have the power to elect a majority of our
directors and control our management because they own a substantial majority of
the outstanding Series A Shares not held in the form of
CPOs.  These Aguirre family members have established a Mexican trust,
which they control, that holds 84,020,646, or 51.6%, of all outstanding
Series A Shares as of June 19, 2009.




Our
bylaws include provisions that could delay or prevent a takeover and, thus,
deprive you of a premium over the market price of the ADSs or otherwise
adversely affect the market price of the ADSs




Our
bylaws include certain provisions that could delay, defer or prevent a third
party from acquiring us, despite the possible benefit to our
shareholders.  These provisions include restrictions on the
acquisition, without the approval of the board of directors, of our shares or
other securities representing 30% or more of our capital stock and restrictions
on agreements and other arrangements, without the approval of the board of
directors, for the exercise of voting rights in respect of shares representing
30% or more of our capital stock.  These provisions may deprive you of
a premium over the market price of the ADSs or otherwise adversely affect the
market price of the ADSs.




8


Future
sales of Series A Shares by the controlling shareholders may affect future
market prices of the Series A Shares, CPOs and ADSs




Actions
by members of the Aguirre family, directly or through the Mexican trust through
which they hold most of their Series A Shares, with respect to the disposition
of their Series A Shares, may adversely affect the trading price of the
Series A Shares or the CPOs on the Mexican Stock Exchange and the price of the
ADSs on the NYSE.  There are no contractual restrictions on the rights
of members of the Aguirre family to sell ADSs, CPOs or Series A Shares,
other than those contained in our U.S.$ 21 million credit facility, which
requires the Aguirre family to maintain 51% of our capital stock.




You
may not be able to participate in any future preemptive rights offering and, as
a result, your equity interest in the Company may be diluted




Under
current Mexican law, if we issue new shares for cash as a part of a capital
increase, we generally must grant our shareholders the right to purchase a
sufficient number of shares to maintain their existing ownership
percentage.  Rights to purchase shares in these circumstances are
known as preemptive rights.  We may not be legally permitted to allow
holders of ADSs in the United States to exercise any preemptive rights in any
future capital increases unless (i) we file a registration statement with the
U.S. Securities and Exchange Commission (SEC) with respect to that future
issuance of shares or (ii) the offering qualifies for an exemption from the
registration requirements of the U.S. Securities Act of 1933.  At the
time of any future capital increase, we will evaluate the costs and potential
liabilities associated with filing a registration statement with the SEC, the
benefits of preemptive rights to holders of ADSs in the United States and any
other factors that we consider important in determining whether to file a
registration statement.




We cannot
assure you that we will file a registration statement with the SEC to allow
holders of ADSs in the United States to participate in a preemptive rights
offering.  Furthermore, under current Mexican law, sales by the
Depositary of preemptive rights and distribution of the proceeds from such sales
to ADS holders are not possible.  As a result, the equity interest of
ADS holders would be diluted proportionately.  In addition, preemptive
rights will not arise under current Mexican law upon the sale of newly issued
shares in a public offering or the resale of shares of capital stock previously
repurchased by us.




Risks
Relating to Mexico




Economic
developments in Mexico may adversely affect our business




Our
financial condition and results of operations are generally affected by the
strength of the Mexican economy, as the demand for advertising, from which we
derive revenue constituting the principal source of our earnings, generally
declines during periods of economic difficulty.




In 2008,
Mexico’s gross domestic product, or GDP, grew by 1.3% and inflation was
6.5%.  In 2007, Mexico’s GDP grew by 3.3% and inflation was
3.8%.  The Mexican economy is experiencing a downturn.  In
2009, according to preliminary estimates of the Mexican government, GDP is
expected to decrease by 5.8% and inflation is expected to be 4.4%.If the Mexican economy
contracts or if inflation and interest rates increase significantly, our
business, financial condition and results of operations could suffer material
adverse consequences.




9


Economic
conditions in Mexico are heavily influenced by the condition of the U.S. economy
due to various factors, including commercial trade pursuant to the North
American Free Trade Agreement (NAFTA), U.S. investment in Mexico and emigration
from Mexico to the United States.  Events and conditions affecting the
U.S. economy may adversely affect our business, results of operations, prospects
and financial condition.  In addition, in the past, economic crises in
Asia, Russia, Brazil and other emerging markets have adversely affected the
Mexican economy and could do so again.




High
levels of inflation and high interest rates in Mexico could adversely affect our
financial condition and results of operations




Mexico
has experienced high levels of inflation and high domestic interest rates in the
past.  The annual rate of inflation, as measured by changes in the
INPC, was 6.5% for 2008.  Inflation for the first quarter of 2009 was
1.03%.  If inflation in Mexico does not remain within the government’s
projections, we may not be able to raise our broadcast advertising rates to keep
pace with inflation.  More generally, the adverse effects of high
inflation on the Mexican economy may result in lower demand for broadcast
advertising.




Interest
rates on 28-day Mexican treasury bills, or Cetes, averaged 7.7% during
2008.  On June 23, 2009, the 28-day Cetes rate was
4.72%.  High interest rates in Mexico could adversely affect our
financing costs, and to the extent that we incur peso-denominated debt in the
future, it could be at high interest rates.




Political
events in Mexico could affect Mexican economic policy and our
operations




Mexican
political events may significantly affect our operations and the performance of
Mexican securities, including our securities.  We cannot assure you
that the current political situation or any future political developments will
not have a broad adverse effect on growth trends in the Mexican broadcasting
industry or in the economy generally, or directly and adversely affect
us.




Depreciation
of the peso relative to the U.S. dollar could adversely affect our financial
condition and results of operations




The value
of the peso has been subject to significant fluctuations with respect to the
U.S. dollar in the past and may be subject to significant fluctuations in the
future.  In 2008, the peso depreciated against the U.S. dollar at
year-end by 26.6%, and the average value of the peso against the U.S. dollar
during 2008 was 2.7% lower than in 2007.  In 2007, the peso
depreciated against the U.S. dollar at year-end by 1.1%, and average value of
the peso against the U.S. dollar during 2007 was 0.3% lower than in
2006.  In 2006, the peso depreciated against the U.S. dollar at
year-end by 1.6%, and the average value of the peso against the U.S. dollar
during 2006 was 0.28% lower than in 2005.  No assurance can be given
that the peso will not depreciate in value relative to the U.S. dollar in the
future.




Fluctuations
in the exchange rate between the peso and the U.S. dollar will affect the U.S.
dollar value of an investment in our equity securities and of dividend and other
distribution payments on those securities.




In 2008,
less than 10% of our operating costs was payable in U.S. dollars.  Our
operating costs payable in U.S. dollars have increased in 2009 due to our new
investment in a radio station in Los Angeles, California.  Although at
December 31, 2008, we had no U.S. dollar-denominated indebtedness, we may incur
U.S. dollar-denominated indebtedness in the future.  Declines in the
value of the peso relative to the U.S. dollar increase our obligations payable
in U.S. dollars, increase our operating costs, increase our interest costs in
pesos relative to any U.S. dollar-denominated indebtedness, result in foreign
exchange losses and could adversely affect our ability to meet our U.S.
dollar-denominated obligations.  Additionally, since substantially all
our revenue is denominated in pesos, increased costs resulting from a decline in
the value of the peso relative to the U.S. dollar will not be offset by any
exchange-related increase in revenue.  In 2008, the decline in the
value of the peso relative to the U.S. dollar increased our operating costs
related to XHFO-FM, a radio station we operate, by 1.9% (Ps. 0.7
million).




10


Severe
devaluation or depreciation of the peso may also result in disruption of the
international foreign exchange markets and may limit our ability to transfer, or
to convert pesos into, U.S. dollars and other currencies for the purpose of
making timely payments of our obligations or operating costs payable in U.S.
dollars.




Developments
in other countries may affect the price of the ADSs




As is the
case with respect to securities of issuers from other emerging markets, the
market value of securities of Mexican companies is, to varying degrees, affected
by economic and market conditions in other countries.  Although
economic conditions in other countries may differ significantly from economic
conditions in Mexico, investors’ reactions to developments in other countries
may have an adverse effect on the market value of securities of Mexican
issuers.  In recent years, for example, economic conditions in Mexico
have become increasingly correlated to economic conditions in the United States
as a result of NAFTA and increased economic activity between the two
countries.  In the second half of 2008, the prices of Mexican
securities decreased substantially as a result of the prolonged decline in the
U.S. securities markets.  Adverse economic conditions in the United
States, the termination of NAFTA or other related events could have a material
adverse effect on the Mexican economy.  Prices of Mexican
securitiesalso
dropped substantially as a result of developments in Russia, Asia, Brazil and
Argentina in the late 1990s.  The Mexican securities markets also have
been adversely affected by ongoing developments in the global credit
markets.  We cannot assure you that events in other emerging market
countries, in the United States or elsewhere, will not have a material adverse
effect on our business, financial condition or results of
operations.




11


Item
4.  Information on the Company




THE
COMPANY




Organization




Grupo
Radio Centro is a corporation (sociedad anónima bursátil de capital
variable) organized under the laws of Mexico.  Grupo Radio
Centro is a holding company that operates through its subsidiaries.




Grupo
Radio Centro’s principal executive offices are located at Constituyentes 1154
(7° Piso), Col. Lomas Altas, C.P. 11950, México, D.F., México.  The
telephone number of Grupo Radio Centro at this location is (525)
55-728-4800.




History




Grupo
Radio Centro is a family-controlled radio broadcasting company with roots in
Mexican radio broadcasting dating back approximately 60
years.  Francisco Aguirre J., the founder of Grupo Radio Centro,
initiated his radio broadcasting activities in 1946.  In 1952, he
founded Organización Radio Centro(“ORC”), the sole owner
and operator of two radio stations, Radio Centro and Radio Exitos.  In
1965, the Company formed Organización Impulsora de Radio (“OIR”), to provide
national sales representation to affiliated radio stations outside Mexico
City.  The Company was incorporated as Técnica de Desarrollo
Publicitario, S.A. de C.V. on June 8, 1971, renamed Grupo Radio Centro, S.A. de
C.V. on July 14, 1992 and renamed Grupo Radio Centro, S.A.B. de C.V. on
July 31, 2006.  The bylaws of the Company provide for its indefinite
existence.




In 1973,
Grupo Radio Centro expanded its broadcasting activities by establishing three
new FM radio stations, thus consolidating its position as the market leader in
Mexico City radio broadcasting.  In 1989, the Aguirre family began a
comprehensive process of corporate reorganization designed to consolidate Grupo
Radio Centro’s radio operations under the common ownership of the Company and
the family’s non-radio-related operations under the common ownership of another
company controlled by the Aguirre family outside Grupo Radio
Centro.  The purpose of the reorganization was to permit Grupo Radio
Centro to focus on radio-related operations and to acquire the balance of shares
of its radio broadcasting subsidiaries that were owned directly or indirectly by
members of the Aguirre family outside Grupo Radio Centro.  As a result
of the reorganization, the Company acquired substantially all of the shares of
its radio broadcasting subsidiaries, with the last transfer of shares occurring
in March 1993.  In the third quarter of 1993, the Company completed an
initial public offering of its ADSs and CPOs, listing these securities on the
NYSE and the Mexican Stock Exchange.  The Company completed a
subsequent public offering of ADSs and CPOs during the third quarter of
1996.  On June 30, 2003, all CPOs held by holders that qualified as
Mexican investors, pursuant to the Company’s bylaws (see Item 10, “Additional
Information—Bylaws and Mexican Law—Limitations Affecting Non-Mexican
Holders—Share Ownership”), were exchanged for Series A Shares held in the CPO
Trust (see Item 9, “The Offer and Listing”).  In connection with the
amended CPO trust arrangement, the Series A Shares commenced trading on the
Mexican Stock Exchange under the symbol “RCENTRO.A” on June 30,
2003.  The Series A Share listing is deemed to include the CPOs,
so the Series A Share trading line reflects trading of both Series A Shares and
CPOs.




12




Capital
Expenditures and Divestitures




Capital
Expenditures




Capital
expenditures were Ps. 26.8 million in 2008, Ps. 14.3 million in 2007 and
Ps. 6.5 million in 2006.  In 2008, 2007 and 2006, capital
expenditures were financed from working capital.  In 2008 and 2007,
the Company’s principal capital expenditures were for transportation equipment,
which consists primarily of promotional trucks and vans.  The increase
in 2008 compared to 2007 was primarily due to increased expenditures related to
the upgrade of the transportation equipment used in certain marketing
subsidiaries and, to a lesser extent, by our executives.  In 2006, the
Company’s principal expenditures were for broadcasting equipment and computer
equipment.




Capital
Divestitures




During
2008, the Company had capital divestitures in the amount of Ps. 3.4 million,
principally related to the sale of transportation equipment.  During
2007, the Company had capital divestitures in the amount of Ps. 0.79 million,
principally related to the sale of transportation equipment.  In 2006,
the Company had capital divestitures in the amount of Ps. 1.1 million,
principally related to the sale of used computer equipment and real
estate.  See Notes 1 and 10 to the Consolidated Financial
Statements.




BUSINESS
OVERVIEW




Grupo
Radio Centro is a leading radio broadcasting company in Mexico. For more than 30
years, the Company has been the leading radio broadcaster in terms of audience
share in Mexico City, the most populous city in North America. Grupo Radio
Centro’s principal activities are the production and broadcasting of music,
entertainment, news and special event programs. The Company’s revenue is derived
primarily from the sale of commercial airtime to advertising agencies and
businesses. According to IBOPE AGB México (IBOPE), the Company’s Mexico City
average audience share for the year ended December 31, 2008 was 42.9%, more than
twice that of the next most popular radio broadcasting company in Mexico City
for the same period. See “—Broadcasting Operations” and
“—Competition.”




In
Mexico, Grupo Radio Centro currently owns eight AM and five FM radio stations.
The Company manages and operates an additional FM station.  Of these
14 radio stations, Grupo Radio Centro operates five AM and six FM stations,
which are all in Mexico City.  The remaining three AM radio stations,
including one in Mexico City, are managed and operated by third parties pursuant
to operating agreements.




The
Company manages the 11 radio stations it operates in Mexico City as a portfolio,
combining in-depth market research and programming innovation with continuous
investment in state-of-the-art technology and human resources to produce
high-quality, popular programs that target substantially all of the demographic
segments of the Mexico City radio audience sought by
advertisers.  According to IBOPE, for the year ended December 31,
2008, Grupo Radio Centro’s radio stations ranked as four of the top 10 FM radio
stations (out of a total of 31 FM stations) and three of the top 10 AM stations
(out of a total of 35 AM stations).  See “—Business
Strategy.”




In the
United States, we recently entered into an agreement with Emmis Communications
Corporation (“Emmis”), a U.S. radio broadcasting company.  We have
agreed to provide programming to and sell advertising time on KMVN-FM for up to
seven years.  KMVN-FM is an Emmis-owned radio station broadcasting in
Los Angeles, California, on the 93.9 FM frequency. We began operating the
station in the contemporary Spanish-language hits format on April 15,
2009.


13


In
addition to its radio broadcasting activities, the Company, under the trade name
Organización Impulsora de Radio, acts as the national sales representative for,
and provides programming to, a network of affiliates in Mexico.  At
December 31, 2008, the Company had 108 affiliates in 76 cities throughout
Mexico.




Business
Strategy




The
Company’s strategy is to optimize cash flow from operations by maintaining its
leading market position.




Maintenance
of Leading Market Position




The
Company is focused on maintaining its current position as the leading radio
broadcaster in Mexico City, offering advertisers top-ranked stations in almost
all major station formats, including the following:




·
            Grupera—Diverse Musical
      Genres,




·
            Juvenil—Youth
      Oriented,




·
            Spanish
      Language—Contemporary Music,




·
            English
      Language—Classic Rock,




·
            English
      Language—Contemporary Music,




·
            Spanish
      Language—Classics, News/Talk Show,
and




·
            English
      Language—Music/News.




By
maintaining a strong presence in the major station formats, management believes
that the Company will maximize its share of total radio advertising
expenditures.  Management bases such belief on the following
rationales:  (i) a broadcaster’s revenue is correlated with its
ability to maximize the number of listeners within an advertiser’s given
demographic parameters, and (ii) the Company’s stations currently cover almost
all of the demographic segments of the radio audience sought by advertisers.
In addition, by
managing its stations as a portfolio and offering a broad range of advertising
packages, the Company believes that it distinguishes itself from its smaller
competitors, who cannot offer as comprehensive coverage of the Mexican radio
audience.  The Company offers advertisers exposure to listening
audiences targeted to correspond with the demographic profiles advertisers seek
and provides advertisers with their choice of either focused or broad audience
exposure across a comprehensive range of income classes and age
groups.




In order
to maximize the audience share of its portfolio of stations, the Company
recognizes the need to be responsive to the requirements of its listeners and
advertisers, tailoring its stations to the changing circumstances of the
market.  The Company seeks to manage its station portfolio by
balancing the mix of its station formats to correspond to the needs of the
overall market and being proactive in the management of each individual station
format and adjusting to the evolution of its particular market
segment.


14


OIR
Network Strategy




As a
complement to its radio-broadcasting activities, Grupo Radio Centro operates and
continues its efforts to expand its OIR radio network.  The Company
simultaneously transmits its news program “La Red de Radio Red” from 5:45 a.m.
to 10:00 a.m. to the 23 largest commercial markets in Mexico outside the Mexico
City metropolitan area.  While increasing programming and service
revenue, the operation of OIR also facilitates the Company’s overall marketing
efforts, offering advertisers access to radio stations on a nationwide
basis.   See “—OIR Network.”


15




Broadcasting
Operations




Radio
Stations




Except as
noted, the following table sets forth certain information about the radio
stations Grupo Radio Centro operates in Mexico City as of December 31,
2008:





Station
                  
                  Frequency
                  
                  Power
                      (Watts)
                  
                  Station
      Format
                  
                  Total
                      Market
                      Rank(1)(2)
                  
                  
                  Total
                      Audience
                      Share(1)(3)
                  
                  
                  Band
                      Rank(1)(4)
                  
                  Target
                      Demographic
                      SegmentsXEQR-FM
                  
                  107.3
      mhz
                  
                  
                  100,000
                  
                  Grupera—Diverse
      Musical Genres
                  
                  
                  1
                  
                  
                  
                  16.2
                  %
                  
                  
                  1
                  
                  13-44
      yearsXERC-FM
                  
                  97.7
      mhz
                  
                  
                  100,000
                  
                  Juvenil—Youth
      Oriented
                  
                  
                  8
                  
                  
                  
                  3.5
                  %
                  
                  
                  7
                  
                  8-34
      yearsXEJP-FM
                  
                  93.7
      mhz
                  
                  
                  100,000
                  
                  Spanish
      Language—Contemporary Music
                  
                  
                  3
                  
                  
                  
                  6.7
                  %
                  
                  
                  3
                  
                  18-44
      yearsXHFO-FM(5)
                  
                  92.1
      mhz
                  
                  
                  150,000
                  
                  English
      Language—Classic Rock
                  
                  
                  5
                  
                  
                  
                  5.2
                  %
                  
                  
                  5
                  
                  18-44
      yearsXHFAJ-FM
                  
                  91.3
      mhz
                  
                  
                  100,000
                  
                  English
      Language—Contemporary Music
                  
                  
                  12
                  
                  
                  
                  2.7
                  %
                  
                  
                  11
                  
                  13-24
      yearsXEQR-AM
                  
                  1030
      khz
                  
                  
                  50,000
                  
                  Spanish
      Language—Talk Show
                  
                  
                  6
                  
                  
                  
                  4.1
                  %
                  
                  
                  1
                  
                  25+
      yearsXEJP-AM
                  
                  1150
      khz
                  
                  
                  50,000
                  
                  Spanish
      Language Classics
                  
                  
                  13
                  
                  
                  
                  2.4
                  %
                  
                  
                  2
                  
                  35+
      yearsXERED-AM
                  
                  1110
      khz
                  
                  
                  100,000
                  
                  News
      / Talk Show
                  
                  
                  30
                  
                  
                  
                  0.7
                  %
                  
                  
                  10
                  
                  25+
      yearsXHRED-FM
                  
                  88.1
      mhz
                  
                  
                  100,000
                  
                  News
      / English Language—Music
                  
                  
                  32
                  
                  
                  
                  0.7
                  %
                  
                  
                  21
                  
                  25+
      yearsXERC-AM
                  
                  790
      khz
                  
                  
                  50,000
                  
                  News
                  
                  
                  41
                  
                  
                  
                  0.4
                  %
                  
                  
                  17
                  
                  25+
      yearsXEN-AM
                  
                  690
      khz
                  
                  
                  100,000
                  
                  News
      / Talk Show
                  
                  
                  43
                  
                  
                  
                  0.4
                  %
                  
                  
                  18
                  
                  25+
      years





(1)
              Source:
      IBOPE.


(2)
              Total
      market rank is determined based on each station’s annual average share of
      the total radio audience.


(3)
              Total
      audience share represents each station’s annual average share of the total
      radio audience.


(4)
              Band
      rank is determined based on each station’s annual average share of the
      radio audience within its broadcasting frequency band (i.e., either AM or
      FM).


(5)
              XHFO-FM
      is operated by Grupo Radio Centro pursuant to an operating agreement that
      was recently renewed for five years ending on January 2,
      2014.  For the year ended December 31, 2008, XHFO-FM accounted
      for approximately 14.9% of Grupo Radio Centro’s broadcasting
      revenue.


16




Programming




The
Company currently produces all of the programming for the stations it owns or
operates.  The Company also provides programming to its network of
affiliates.




The
programming the Company produces includes playing recorded music, covering live
music events (such as concerts), and airing special musical programs and news
and talk show programs.  Through its Noticentro news division, the
Company produces daily news programs consisting of three-minute updates and
10-minute summaries of local, national and international news that are broadcast
through Formato 21, the
Company’s 24-hour all-news station, and the majority of its other stations in
Mexico City.




The
Company’s programming strategy is to tailor the format of each of its stations
to attract targeted demographic segments of the radio audience sought by
advertisers.  To ensure that its programming remains responsive to
shifting demographic trends and audience tastes, Grupo Radio Centro uses its
internal research division (which regularly conducts door-to-door interviews
throughout Mexico City), as well as commercially available data, to assess the
listening habits and tastes of the Mexico City population.  Grupo
Radio Centro conducted approximately 247,000 interviews in 2008 and 231,000
interviews in 2007.  The Company believes that no competitor has
developed an internal research capability as extensive as its own.




Production
and Transmission of Programming




Audio
Engineering.  Grupo Radio Centro has 18 production studios in
which musical material, advertisements, informational messages, news and
promotional spots are recorded on hard drive, compact disk, and DVD-audio
through the Maestro Automation System.  This system permits the direct
transmission of audio recordings to the Company’s 33 workstations, where they
are processed and sent to broadcast sites.




Grupo
Radio Centro also maintains 13 on-air studios, each of which is linked to Grupo
Radio Centro’s automated programming computer network via fiber
optics.  Grupo Radio Centro’s primary studio operations are
substantially fully digital and utilize state-of-the-art computer networks to
record, schedule and play all news, music, promotional and advertising
material.  Currently, the Company has a single high-speed computer
network installed both in on-air studios and in production studios.




Grupo
Radio Centro’s news division uses the News Room system, which enables news
writers to provide radio announcers with information directly through scrolling
text that runs across a flat-panel screen while the announcers are on
air.  The system is used primarily in the Formato 21radio station, but
it also provides information to news centers in other radio
stations.  The News Room system, which receives news reports from the
Associated Press (AP), Agence France-Presse (AFP), Notimex and Reuters, has
reduced considerably the amount of paper used during news programs.




During
the second half of 2007, the Company replaced four analog mixer consoles with
digital mixer consoles. These replacements were made at radio stations XEJP-AM,
XERC-AM (two consoles) and at one studio. In 2008, the Company installed two
digital mixer consoles used by OIR.




Transmission.  Each of
the Company’s radio stations has a main transmitter and two back-up
transmitters.  All AM transmitters incorporate solid-state
design.  Each transmitter site has a diesel generator with automatic
transfer that allows rapid switch to back-up power in case of a power
outage.  In addition, the main FM transmitter facility is equipped
with an uninterruptible power supply to prevent the loss of airtime during the
transfer to back-up power.


17


Grupo
Radio Centro uses multiplexed networks for transmission, which allows five of
its AM stations to operate at three sites, each using one
antenna.  Similarly, five FM stations are multiplexed in a common
panel master antenna on the Cerro del Chiquihuite, which Grupo Radio Centro
believes is ideally located at 540 meters above the average terrain level in
Mexico City.  One FM radio station operated by the Company transmits
from the World Trade Center building in Mexico City.




In 2007,
the Company renovated a location to serve as an alternate transmission site for
the Cerro del Chiquihuite plant and a back-up studio and production
space.  This facility is equipped with two small production studios,
six transmitter booths for talk show or news programs, and five workstations for
music programs.  The facility also has a sophisticated multiplexing
network for up to five stereo channels for the FM stations and six digital
encoders/decoders to connect to the transmitting plants.  If there is
an emergency, the alternate site can be controlled remotely from the XERC-FM,
XEJP-FM and XEQR-FM radio stations in Mexico City.




In 2008,
the Company began renovating an additional alternate transmission site for the
studios of 11 of the Company’s Mexico City radio stations.  The
alternate site, which was completed in 2009, is equipped with two small
production studios, six transmitter booths for talk show and news programs, and
five workstations for music programs.




In
December 2008, the Company obtained authorization from the SCT to increase the
power at two stations: XEDKR-AM (in Jalisco) was increased from one to 10
kilowatts, and XESTN-AM (in Monterrey) was increased from one to five
kilowatts.   In June 2009, the Company completed a new
transmission site and a new building from which XEDKR-AM will
operate.




Investment in
Technology




Grupo
Radio Centro consistently invests in state-of-the-art equipment, the development
and deployment of new operating systems and the training of its engineering and
operating personnel.  The Company believes these investments enable it
to produce high-quality programming with few on-air errors and to broadcast a
superior signal to listeners’ radios.  In addition, Grupo Radio
Centro’s computer system allows it to maintain a certifiable log of advertising
and to generate real-time affidavits certifying that advertisements have been
aired when and as requested, which reduces customers’ monitoring costs and
enhances customers’ goodwill.  The Company believes that its equipment
and engineering staff give it a competitive edge in Mexico City radio
broadcasting.




Currently,
all AM and FM radio broadcast signals in Mexico are analog.  However,
there are various efforts underway to develop, test and implement radio digital
audio broadcasting (DAB), using either the  “on-band” U.S.
broadcasting model or the “out-of-band” European broadcasting
model.  If implemented, DAB would largely eliminate fading, static and
other interference that adversely affects the listening experience.




The Cámara Nacional de la Industria de
Radio y Televisión(National Chamber of the Radio and Television
Industries, or “CIRT”) is in the process of analyzing DAB proposals and has
created a task force with the SCT in order to introduce DAB in Mexico in the
future.  CIRT and the Comisión Federal de
Telecomunicaciones(Mexican Federal Telecommunications Commission or
“Cofetel”) have announced plans to issue digital radio standards in
2009.  However, there can be no assurance as to whether or when DAB
will be introduced.




The
Company actively participates in the analysis of the adoption of DAB in Mexico
through its representation in CIRT and by supporting Cofetel’s Comité Mixto de Tecnologías
Digitales (Mixed Committee on Digital Technology).


18


The
Company has also supported the adoption of DAB in Mexico by installing and
operating advanced digital radio transmission systems on an experimental
basis.  In 2005, the Company temporarily installed a powerful digital
transmission system called the Eureka 147 Digital Audio Broadcasting (DAB) at
its Cerro del Chiquihuite plant.  The Eureka 147 DAB system is
equipped to transmit simultaneously up to five different radio
programs.  In 2005 and 2006, the Company performed tests of the new
system, for representatives of the SCT and CIRT’s Comité de Nuevas Tecnologías(Committee on New Technology), to demonstrate the application and
capabilities of Digital Multimedia Broadcasting (DMB) technology, which enables
a single broadcasting station to transmit video and audio and data for multiple
applications.




In 2007,
the Company tested an upgraded Eureka 147 DAB system in its broadcasting
facilities at the Constituyentes building. The Company operated the upgraded
system, which offered additional channels greater capabilities, until March
2008.




From
October to December 2008, the Company tested a Digital Broadcasting System from
its Constituyentes building. The system’s capabilities included the transmission
on one digital radio channel of two video programs, eight audio CD quality
programs, data, and a webcam signal. The Company demonstrated the system with a
reduced power transmitter during “Radio Week” in October 2008. The
demonstration included more than 20 different types of DAB
receivers.




Sale
of Airtime and Marketing




Commercial
airtime for Grupo Radio Centro’s radio stations is sold both to advertising
agencies and directly to businesses.  The Company’s top 10 customers
in 2008 and 2007 accounted for approximately 30.2% of total broadcasting
revenue.  The Company’s top 10 customers in 2006 accounted for
approximately 37.9% of total broadcasting revenue.  Our two largest
individual customers in 2008 and 2007 were Nueva Wal Mart and Comercial
Mexicana.  In 2008, Nueva Wal Mart represented approximately 6.5% and
Comercial Mexicana represented approximately 3.7% of our total broadcasting
revenue.  In 2007, Nueva Wal Mart represented approximately 5.6% and
Comercial Mexicana represented approximately 4.2% of our total broadcasting
revenue.  Our two largest individual customers in 2006 were Compañía
Cervecera S.A. de C.V., which represented 3.7% of our total broadcasting
revenue, and Comercial Mexicana, which represented 3.4%, of our total
broadcasting revenue.  In 2006, Gigante, S.A. de C.V. was also a large
individual customer, representing 2.3% of our total broadcasting
revenue.




The
companies comprising Grupo Cifra and Grupo Carso also are key
customers.  In 2008, the companies comprising Grupo Cifra accounted
for 7.7% of our total broadcasting revenue, and the companies comprising Grupo
Carso accounted for 7.3% of our total broadcasting revenue.  In 2007,
the companies comprising Grupo Cifra accounted for 7.1% of our total
broadcasting revenue, and the companies comprising Grupo Carso accounted for
8.4% of our total broadcasting revenue.  In 2006, the companies
comprising Grupo Cifra accounted for 3.5% of our total broadcasting revenue, and
the companies comprising Grupo Carso accounted for 6.5% of our total
broadcasting revenue.




Sales of
commercial airtime vary throughout the year and are generally highest in the
fourth quarter of the year and lowest in the first quarter of the
year.  See Item 5, “Operating and Financial Review and
Prospects—Seasonality of Sales.”




Historically,
Mexican political parties accounted for a significant portion of the Company’s
broadcast revenue on a cyclical basis.  The three largest Mexican
political parties, collectively, accounted for 8.18% of the Company’s total
broadcasting revenue in 2006, compared to 2.5% in 2005, reflecting campaign
advertising expenditures in connection with the July 2006 presidential and
congressional elections.  Due to the implementation of the law
prohibiting all paid political advertising, the Company did not earn any revenue
from such broadcasting in 2008.


19




At
December 31, 2008, the Company had a sales force of 30 individuals, of which 15
marketed primarily to advertising agencies and major customer accounts, and 15
marketed to small and mid-sized customer accounts.




Grupo
Radio Centro establishes its advertising rates by considering the cost per
thousand listeners as a reference to ensure that its rates are
competitive.  The Company offers package discounts to customers who
purchase airtime on multiple stations; the largest discounts are offered to
customers who purchase airtime on all of its stations.  The Company
charges higher rates to customers who purchase airtime during “special events,”
such as live concerts and special news features.




The
Company sells some commercial airtime in advance.  The advance-sales
arrangements guarantee the rate in effect at the time of purchase to advertisers
who deposit cash with Grupo Radio Centro in an amount equal to their advertising
commitment for an agreed period.  These advertisers are also granted
bonus advertising time in addition to the time purchased.  The Company
invests cash deposited pursuant to advance sales and includes interest generated
on such investments in broadcasting revenue.  In 2008, revenue
recognized under advance-sale arrangements, including related interest income,
accounted for approximately 33.7% of total broadcasting revenue, compared to
32.5% for 2007 and 29.3%for 2006.  See
Note 13 to the Consolidated Financial Statements.




The
effect of such advance sales is to substitute the increased interest income
earned on the advance sale payments for a portion of the operating income
foregone because of the reduced effective rate on the advertising time sold
subject to the advance-sale arrangements.  The Company believes that
such advance sales are advantageous to Grupo Radio Centro because the interest
income generated by the proceeds of such advance sales offsets, in part, the
effective reduction in advertising rates associated with such sales and because
the bonus advertising time granted to purchasers is “dead time” (i.e., time that
would not otherwise be sold).  The Company also believes that the
benefits of guaranteed rates and bonus airtime under its advance-sales plans
attract advertisers who would not otherwise purchase advertising
time.  However, any decrease in future inflation rates may reduce the
attractiveness of these plans for such advertisers.




OIR
Network




Grupo
Radio Centro, under the trade name OIR, provides national sales representation,
programming and broadcast-related services to a network of
affiliates.  At December 31, 2008, Grupo Radio Centro had 108
affiliates located in 76cities throughout
Mexico.  During the last three years, broadcasting revenue from
OIR-related activities ranged from 3.3% to 2.6% of total broadcasting
revenue.  In 2008, approximately 3.3% of the Company’s revenue was
attributable to its work through OIR, and no single affiliate represented more
than 7.6% of total OIR-related revenue.




At
December 31, 2008, 11 of the Company’s OIR-related affiliates were owned or
controlled by shareholders of the Company.  Except as disclosed
elsewhere (see Item 7, “Major Shareholders and Related Party
Transactions—Related Party Transactions” and Note 6 to the Consolidated
Financial Statements), all commercial relations between such shareholder-owned
or shareholder-controlled stations and Grupo Radio Centro are on an arm’s-length
basis.


20


Outside
Mexico City, virtually all advertising aimed at a national audience is sold
through networks of affiliated radio stations.  Pursuant to its
standard affiliate agreement, which is terminable at will by either party on 60
days’ notice, OIR agrees to purchase commercial airtime from affiliated
stations, compensating such stations for their airtime with a percentage of the
revenue obtained on the resale of commercial airtime to national
advertisers.  The affiliates agree to broadcast certain programs at
specified times with advertising spots of specified
duration.  Compensation paid to each affiliate varies depending on the
size of each affiliate’s market.




OIR
transmits special event programs, including national advertising, directly to
certain affiliates via satellite.  In December 2005, the Company
installed a new satellite up-link system with state-of-the-art technologies,
including Digital Video Broadcasting (DVB) transmission, with 10 digital stereo
channels.  All of our affiliates are able to receive OIR special event
programs via satellite from Mexico City.  Between January and March
2006, we replaced the receivers of our affiliates that obtain OIR programs via
satellite with more cost-effective units.




Competition




Radio
broadcasting in Mexico is highly competitive, and programming popularity, an
important factor in advertising sales, is readily susceptible to
change.  As of December 31, 2008, there were 59 commercial radio
stations in Mexico City (34 AM and 25 FM stations) and eight not-for-profit,
public-service stations (two AM and six FM).  These stations
constitute all of the currently available radio broadcast channels within Mexico
City’s AM and FM frequency spectrum.




Set out
below is a table showing the number of stations in Mexico City operated by Grupo
Radio Centro and each of its six main competitors at December 31, 2008, and a
chart depicting the audience share of each.


21


Operation
of Mexico City Stations by Grupo Radio Centro and its Principal Competitors(1)




AM
      Stations
              
              
              FM
      Stations
              
              
              TotalGrupo
      Radio Centro
              
              
              5
              
              
              
              6
              
              
              
              11Grupo
      Acir
              
              
              3
              
              
              
              4
              
              
              
              7Televisa
      Radio
              
              
              3
              
              
              
              3
              
              
              
              6NRM
      Comunicaciones
              
              
              3
              
              
              
              3
              
              
              
              6Grupo
      Radio Fórmula
              
              
              3
              
              
              
              2
              
              
              
              5Grupo
      Imagen
              
              
              0
              
              
              
              2
              
              
              
              2MVS
      Radio
              
              
              0
              
              
              
              2
              
              
              
              2Total
              
              
              17
              
              
              
              22
              
              
              
              39





(1)   Source:
Grupo Radio Centro.


22


Mexico
City Radio Audience Share (1970-2008)(1)













(1)
            Sources:
      INRA, Arbitron, Inc. and IBOPE.


(2)
            In
      1995, the Company began operating the three stations owned by Radio
      Programas de México.  Accordingly, from 1995, the Company’s
      audience share includes the audience share of these three
      stations.  In 1996, the Company acquired these
      stations.


(3)
            In
      1995, Grupo Acir acquired the three stations owned by Grupo
      Artsa.


(4)
            As
      of 1994, Núcleo Radio Mil (NRM) no longer owns XECO-AM and
      XEUR-AM.  In 1995, NRM purchased
  XHMM-FM.


(5)
            Includes
      average audience share of stations owned by Grupo Imagen until its
      separation from MVS Radio in December
1999.




According
to IBOPE, the Company’s Mexico City audience share increased to 42.9% in
2008.  According to International Research Associates Mexicana, S.A.
de C.V. (INRA), the Company’s average Mexico City audience share increased
slightly from 35.3% in 2006 to 35.9% in 2007.  The Company has
experienced gradual declines in previous years, which were mainly attributable
to increased competition from other radio stations that adopted formats similar
to the Company’s most successful formats, including Juvenil—Youth Oriented, Grupera—Diverse Musical
Genres and News/Talk Show.




The
Company believes that its balanced portfolio of station formats reduces the
impact of a decline in audience share of any one format segment or
station.  For example, the Company’s most popular station, XEQR-FM,
which was the top-ranked station in Mexico City for the year ended December 31,
2008, represented only 16.1% of the Company’s total radio
audience.  However, there can be no assurance that competition within,
or a decline in the popularity of, a given format will not decrease the
Company’s aggregate audience share in the future.




In
addition, the Company faces strong competition for advertising revenue from both
television and various print media.


23




OIR
Network Competition




The
Mexican radio-network market is highly competitive.  As of December
31, 2008, there were 26 radio networks serving 712 AM radio stations and 442 FM
radio stations outside Mexico City.  The Company believes that the
popularity of its programming, its long-standing experience in the Mexican radio
broadcasting market and the quality of its broadcast-related services enable the
Company’s affiliates that are served by OIR to compete
effectively.


24


Significant
Subsidiaries




The
following table sets forth the Company’s significant subsidiaries at December
31, 2008:




Name
      of the Company
              
              Jurisdiction
      of
                  Establishment
              
              Percentage
      of
                  Ownership
      and
                  Voting
      Interest
              
              DescriptionXEQR,
      S.A. de C.V.
              
              Mexico
              
              
              99.9
              %
              Radio
      stationXERC,
      S.A. de C.V.
              
              Mexico
              
              
              99.9
              %
              Radio
      stationXEEST,
      S.A. de C.V.
              
              Mexico
              
              
              99.9
              %
              Radio
      stationXEQR-FM,
      S.A. de C.V.
              
              Mexico
              
              
              99.9
              %
              Radio
      stationXERC-FM,
      S.A. de C.V.
              
              Mexico
              
              
              99.9
              %
              Radio
      stationXEJP-FM,
      S.A. de C.V.
              
              Mexico
              
              
              99.9
              %
              Radio
      stationXEDKR-AM,
      S.A. de C.V.
              
              Mexico
              
              
              99.2
              %
              Radio
      stationXESTN-AM,
      S.A. de C.V.
              
              Mexico
              
              
              99.9
              %
              Radio
      stationRadio
      Red, S.A. de C.V.
              
              Mexico
              
              
              99.9
              %
              Radio
      stationRadio
      Red-FM, S.A. de C.V.
              
              Mexico
              
              
              99.9
              %
              Radio
      stationRadio
      Sistema Mexicano, S.A.
              
              Mexico
              
              
              99.9
              %
              Radio
      stationEstación
      Alfa, S.A. de C.V.
              
              Mexico
              
              
              99.9
              %
              Radio
      stationEmisora
      1150, S.A. de C.V.
                (formerly
      XECMO)
              
              Mexico
              
              
              99.9
              %
              Radio
      stationRadio
      Centro Publicidad,
                S.A.
      de C.V.
              
              Mexico
              
              
              99.9
              %
              Marketing
      companyGRC
      Publicidad, S.A. de C.V.
              
              Mexico
              
              
              99.9
              %
              Marketing
      companyGRC
      Medios, S.A. de C.V.
              
              Mexico
              
              
              99.9
              %
              Marketing
      companyGRC
      Comunicaciones, S.A. de C.V.
              
              Mexico
              
              
              100.0
              %
              Marketing
      companyGRC
      Radiodifusión, S.A. (formerly Aerocer, S.A.)
              
              Mexico
              
              
              99.9
              %
              Marketing
      companyPromotora
      Técnica de Servicios Profesionales, S.A. de C.V.
              
              Mexico
              
              
              99.9
              %
              Service
      companyPublicidad
      y Promociones Internacionales, S.A. de C.V.
              
              Mexico
              
              
              99.9
              %
              Service
      companyTo2
      México, S.A. de C.V.
              
              Mexico
              
              
              100
              %
              Service
      companyPromo
      Red, S.A. de C.V.
              
              Mexico
              
              
              99.9
              %
              Service
      companyUniversal
      de Muebles e Inmuebles, S.A. de C.V.
              
              Mexico
              
              
              99.8
              %
              Real
      estate companyInmobiliaria
      Radio Centro,
                S.A.
      de C.V.
              
              Mexico
              
              
              99.9
              %
              Real
      estate companyDesarrollos
      Empresariales,
                S.A.
      de C.V.
              
              Mexico
              
              
              99.9
              %
              Sub-holding
      companyRadiodifusión
      Red, S.A. de C.V.
              
              Mexico
              
              
              99.9
              %
              Sub-holding
      companyEnlaces
      Troncales, S.A. de C.V.
              
              Mexico
              
              
              99.9
              %
              Sub-holding
      companyMúsica,
      Música, Música, S.A. de C.V.
              
              Mexico
              
              
              90.9
              %
              Non-operating
      companyPromotora
      de Éxitos, S.A. de C.V.
              
              Mexico
              
              
              90.9
              %
              Non-operating
      companyProducciones
      Artísticas Internacionales, S.A. de C.V.
              
              Mexico
              
              
              99.9
              %
              Non-operating
      company


25





On March
31, 2009, the Company merged three of its marketing subsidiaries, Radio Centro
Publicidad, S.A. de C.V., GRC Publicidad, S.A. de C.V., and GRC Medios, S.A. de
C.V., into GRC Comunicaciones, S.A. de C.V.




Property
and Equipment




All of
Grupo Radio Centro’s tangible assets are located in Mexico.  At
December 31, 2008, the net book value of all property and equipment was
approximately Ps. 465.0 million (U.S.$ 33.6 million).




Grupo
Radio Centro’s principal executive offices and studios are located in Mexico
City and are owned by the Company.  In 1992 Grupo Radio Centro
purchased the Constituyentesbuilding, a 102,000
square foot building of which, at December 31, 2008, the Company occupied
approximately 81,000square
feet.  The remainder is available for leasing to third
parties.  In March 1994, Grupo Radio Centro moved its principal
offices and broadcasting operations (excluding transmitter antennae and related
equipment) into the Constituyentes building.  Grupo Radio Centro also
owns the transmitter sites and antenna sites used by most of its Mexico City
radio stations, including related back-up facilities.  In addition,
Grupo Radio Centro currently leases satellite-transmission facilities in Mexico
City from the Mexican government.  As a result of a 1993 change in
Mexican law, Grupo Radio Centro purchased and received authorization from
Telecomunicaciones de México, a state-owned entity, to operate its own up-link
equipment.  This up-link equipment has been operational since the end
of 1994 and was upgraded in December 2005 and the first quarter of 2006 (see
“—Business Strategy—Production and Transmission of
Programming”).


26


Grupo
Radio Centro continues to own the building in which its administrative offices
and studios were located immediately before its move into theConstituyentes
building.  Grupo Radio Centro also owns the land in Mexico City on
which the transmission facilities of XERED-AM are located.  Grupo
Radio Centro believes that its facilities are adequate for its present needs and
are suitable for their intended purpose.




Substantially
all of the Company’s property, excluding its broadcasting equipment, is subject
to a first priority lien under our credit facility.  See Item 5,
“Operating and Financial Review and Prospects—Liquidity and Capital
Resources—Indebtedness—Credit Facility.”




27


REGULATORY
FRAMEWORK




The
business of Grupo Radio Centro is subject to regulation and oversight by the SCT
and Cofetel.  The SCT is part of the executive branch of the Mexican
federal government and Cofetel is a separate administrative agency independent
of the SCT.  Regulation and oversight are governed by the Ley Federal de Radio y
Televisión (Federal Radio and Television Law), the Ley Federal de
Telecomunicaciones (Federal Telecommunications Law), the regulations
issued pursuant to these laws and the licenses granted by the SCT.  We
are also subject to oversight by the Procuraduría Federal del
Consumidor (Federal Agency for Consumer Protection) and the Comisión Federal de Competencia
Económica(Federal Competition Commission).




Regulation
of Radio Broadcasting by Mexico




Licenses.  Under the
Federal Radio and Television Law, amended by the Mexican Congress in April 2006,
owners and operators of radio stations in Mexico must obtain a license from the
Mexican government through the SCT to broadcast over a specified
channel.  After a call for bids and a public bidding process, a
20-year license is granted to the winning applicant upon payment of a
fee.  The SCT through Cofetel, may terminate or revoke the license at
any time upon the occurrence of, among others, the following events: failure to
construct broadcasting facilities within a specific period; changes in the
location of the broadcasting facilities or changes in the frequency assigned
without prior governmental authorization; failure to broadcast for more than 60
days without reasonable justification; and any violation of any of the other
terms of the license.  Under Mexican law, if the Company’s license
were revoked for certain specified reasons, Grupo Radio Centro would forfeit to
the Mexican government its transmission and antenna facilities with respect to
the license.  If the license were terminated early for other causes,
the Mexican government would have a right of first refusal to purchase all these
assets at a price fixed by an independent appraiser.  In addition, if
the SCT, through Cofetel, terminates or revokes a license, the licensee may not
obtain a new license for one to five years and, in some cases, may be forbidden
from obtaining a new license at all.  Under current regulations, we
believe that it is unlikely that additional licenses will be granted in the
Mexico City market.




The
licensee has a preferential right to renew the license for periods of up to 20
years (with most terms for renewal currently being granted for up to 12 years)
under a non-competitive renewal process.  Renewals are generally
granted to licensees that have substantially complied with the applicable law
and the terms of their licenses.  The licenses for nine of Grupo Radio
Centro’s radio stations (XEQR-AM, XERC-AM, XEEST-AM, XEJP-AM, XERED-AM, XEN-AM,
XEQR-FM, XERC-FM AND XHFAJ-FM) were renewed and are now set to expire in
2016.  The license for XHRED-FM was renewed and is now set to expire
in 2019.  The license for XEJP-FM is set to expire in
2012.  The license for XEDKR-AM (in Guadalajara) will expire in
October 2015, and the license for XESTN-AM (in Monterrey) will expire in
November 2015.




The
licenses contain restrictions on the transfer of shares of the licensee,
including the following: the transfer must be to a qualifying Mexican person;
the transfer cannot result in a concentration of radio broadcasting holdings
that may be contrary to the public interest; and the transfer cannot result in a
gain to the seller.  All such transfers are subject to prior notice to
the SCT.  In addition, any transfer of the license is subject to the
prior approval of the SCT.  A license may only be assigned if the
license has been in effect for more than three years, the licensee has complied
with all of its obligations under the license and has obtained a favorable
opinion of the Federal Competition Commission.




Supervision of
Operations.The SCT, through Cofetel, conducts regular
inspections of the operations of the radio stations, and the companies or
persons to whom licenses have been granted must file annual technical,
statistical, financial and legal reports with Cofetel.


28


Under
Mexican law, radio programming is not subject to judicial or administrative
censorship, except that programming is subject to various regulations, including
prohibitions on explicit language and programming that is contrary to the
general principles of right conduct, national security or public
order.




Radio
programming is required to promote Mexico’s cultural, social and ideological
identity, and each licensee is required to make available each day up to 30
minutes of cultural or educational programming, or programming regarding family
counseling or other social matters.  The programming to be used to
fulfill this requirement is provided to the broadcaster by the Mexican
government.




Each
licensee is required to provide a limited amount of broadcasting time free of
charge to all registered political parties and the Instituto Federal Electoral
(Federal Electoral Institute or “IFE”).  See “— Political
Advertising.”




Networks.There are
no Mexican regulations governing the ownership and operation of a radio
broadcasting network, such as OIR’s network, separate from the regulations
applicable to operating a radio station.




Restrictions on
Advertising.Mexican law regulates the type and contents of
advertising that may be broadcast on radio.  Licensees are also
prohibited from broadcasting advertisements that are
misleading.  Advertisements for certain products and services are
subject to restrictions or require government approval before their
broadcast.  Moreover, the Mexican government must approve any
advertisement of lotteries or raffles, or any advertisement that promotes
bonuses to consumers for purchasing products or services.




Mexican
law also regulates the amount of advertising that may be broadcast in any
day.  Under Mexican regulations, no more than 40% of total broadcast
time may be used for advertisements.  That time must be divided
proportionately among broadcasting hours.




The
Company sets its minimum advertising rates and registers such rates with the SCT
through Cofetel.  Commercial airtime may not be sold at lower rates than
those registered with the SCT.  There are no restrictions on maximum
rates that may be charged.




Broadcast Tax.All
radio stations in Mexico are subject to a tax payable by granting the Mexican
government the right to use a portion of broadcast time.  Radio
stations must satisfy this tax by providing the Mexican government with several
advertising spots lasting between 20 to 30 seconds each.  The amount
of broadcasting time allotted to the government is currently fixed at 35 minutes
each day between 6:00 a.m. and midnight.  The use of this time is
not cumulative, and the Mexican government forfeits any time it does not use in
any day.  The Mexican government’s spots must be distributed on a
proportional and equitable basis throughout the relevant programming
period.




Public
service announcements provided by the Mexican government are prohibited from
competing with the licensee’s programming, and Mexican government programming
that promotes the consumption of products or services must be limited to the
general promotion of Mexico’s goods and services.




Political
Advertising.Several articles of the Mexican constitution
relating to political parties and elections were amended in November
2007.  A new electoral code implementing the amendments became
effective on January 15, 2008.  The constitutional amendments and the
electoral code prohibit political parties from directly or indirectly purchasing
broadcast time on any radio or television station.  In addition,
private individuals and entities are prohibited from purchasing advertising on
radio or television aimed at influencing voter preferences.


29


The
Mexican government is allotted a certain amount of time under concession
agreements with broadcasters and, in turn, gives a portion of that time to the
IFE to distribute among the political parties (during election years) and for
the use of the IFE.  The broadcast time that political parties receive
through the IFE is free of charge and airs during primetime
hours.  During campaign season, the IFE is granted 48 minutes of the
65 minutes the Mexican government receives daily as a broadcast
tax.  In other periods, the IFE receives eight minutes.  The
time allocated by IFE to political parties is the only broadcast time at their
disposal as, under the electoral code, political parties are prohibited from
purchasing broadcast time.  IFE has supervisory powers and is able to
administer sanctions for violations of the provisions of the electoral
code.




Other.Mexican
companies are subject to the Ley Federal de Competencia
Económica (Federal Economic Competition Law), which promotes fair
competition and prevents monopolistic practices.




As a
result of the increase in Grupo Radio Centro’s share of the Mexico City radio
market following its acquisition of Radiodifusión RED, S.A. in 1996, the Company
is required by the Federal Competition Commission to seek its prior approval in
connection with any future acquisitions of radio stations in Mexico, including,
without limitation, purchases or leases of radio stations, interests in other
radio concerns or transmission sites, irrespective of the size of such
investments or their related audience share, a requirement to which, to the best
knowledge of the Company, other Mexican broadcasting companies generally are not
subject.  The Company received Federal Competition Commission approval
of its acquisition of XEN-AM in July 2001 because the Company sold two of its AM
stations in 2000.  No assurance can be given that the Federal
Competition Commission will permit the Company to make any additional
investments should it desire to do so.




The
Federal Economic Competition Law was amended in 2006.  These
amendments strengthened the authority of the Federal Competition Commission,
expanded the definition of monopolistic practices, provided a more rigorous
approval process for business combinations and established more stringent
penalties, including substantially higher fines and the divestiture of
assets.  As a result, it is possible that the Federal Competition
Commission will more strictly enforce the Federal Economic Competition Law,
which could restrict our operations.




The
Federal Telecommunications Law was also amended in 2006, and interpretive
regulations were issued in October 2007.  The amendments to the
Federal Telecommunications Law subject radio and television broadcasting
companies such as Grupo Radio Centro to the oversight of Cofetel.  The
Federal Telecommunications Law also covers the transmission of restricted radio
signals and other telecommunications services at certain
frequencies.




The
Federal Telecommunications Law expanded Cofetel’s authority to conduct public
auctions of available radio and television frequencies.  Under this
law, while the SCT retains the ultimate authority to issue licenses, Cofetel is
permitted to engage in granting, prorogation, and completion of concessions,
permissions and allocations to use and operate frequency bands attributed to the
broadcasting service, acting as a branch of the SCT.




Mexican
law prohibits ownership of radio broadcasting companies by non-Mexicans and
Mexican corporations that allow foreign ownership of their voting
securities.  The adoption of the North American Free Trade Agreement
did not change these Mexican regulations.


30


Intellectual
Property




Mexico.Grupo Radio
Centro (directly or through its subsidiaries) has registered or filed for
registration with theInstituto Mexicano de la Propiedad Industrial (Mexican Institute of
Industrial Property) the following service marks (and their corresponding
design, where indicated):







·
            “Radio
    Red”


·
            “Joya”


·
            “El Fonógrafo del
      Recuerdo”


·
            “Variedades”


·
            “Stereo
      Joya”


·
            “NotiCentro” (and
      design)


·
            “Sensación” (and
      design)


·
            “Universal” (and
      design)


·
            “Radio Programas de
      México”


·
            “RPM”


·
            “ALFA
    91.3”


·
            “BANG”


·
            “Stereo
      97.7”


·
            “Alegría”


·
            “Centro”


·
            “Formato
    21”


·
            “Hoy”


·
            “OIR”


·
            “Palco
      Deportivo”


·
            “To2”


·
            “UNIRED”


·
            “SERVIRED”


·
            “AUTORED”




In
addition, Grupo Radio Centro (directly or through its subsidiaries) has
registered or filed for registration the following commercial
slogans:




·
            “CRC Radiodifusión
      Internacional”


·
            “Grupo Radio Centro
      Radiodifusión de México al
Mundo”


·
            “ORC Radiodifusión Valle de
      México”


·
            “OIR Radiodifusión
      Nacional”


·
            “Radio Centro, la Estación de
      la Gran Familia Mexicana”


·
            “SER, Servicios Especializados
      de Radiodifusión”







United
States.Grupo Radio Centro has registered with the United
States Patent and Trademark Office a sound mark consisting of a series of
musical notes and the words “Radio
Variedades.”




Item
4A.  Unresolved Staff Comments




Not
applicable.




Item
5.  Operating and Financial Review and Prospects




The
following discussion should be read in conjunction with the Consolidated
Financial Statements and the notes thereto included elsewhere in this Annual
Report.  Grupo Radio Centro’s Consolidated Financial Statements have
been prepared in accordance with MFRS, which differ in certain respects from
U.S. GAAP.  Note 21 to the Consolidated Financial Statements provides
a description of the principal differences between MFRS and U.S. GAAP, as they
relate to Grupo Radio Centro, including differences related to certain cash flow
information and a reconciliation to U.S. GAAP of operating income, net income
and shareholders’ equity.




Beginning
in 2008, the inflation accounting methods previously required by MFRS no longer
apply, except if the economic environment in which we operate qualifies as
inflationary.  See “—Recent Changes in Inflation
Accounting.”  As a result, the financial information in the
Consolidated Financial Statements and throughout this Annual Report, for dates
and periods after January 1, 2008 has been presented without inflation
accounting.  The financial information for dates and periods prior to
January 1, 2008 has been expressed in constant pesos as of December 31,
2007.


31


General




Grupo
Radio Centro’s operating performance is dependent on a number of factors,
including its ability to produce popular radio programs that attract the
demographic segments of the radio audience sought by advertisers, its share of
the total radio audience, the relative advertising cost efficiency of radio
compared to other media, its competition, the strength of its radio signals and
the quality of its sound, the rate of growth of the local and national economies
and government regulation and policies.  Grupo Radio Centro’s revenue
is generated mainly from the sale of commercial airtime. The primary operating
expenses involved in owning and operating radio stations are employee salaries,
programming expenses, promotion and advertising expenses and depreciation and
amortization.




Seasonality
of Sales




Grupo
Radio Centro’s revenue varies throughout the year.  Sales of
commercial airtime, Grupo Radio Centro’s primary source of revenue, are
generally highest in the fourth quarter of the year and lowest in the first
quarter of the year.  Grupo Radio Centro historically has had
sufficient cash flow from operations to meet its operating needs in all four
calendar quarters.




The
following table sets forth the Company’s broadcasting revenue and broadcasting
income (excluding depreciation, amortization and corporate, general and
administrative expenses) on a quarterly basis, in each case as a percentage of
its respective total, for 2008, 2007 and 2006.




Broadcasting Revenue
                
                
                Broadcasting Income2008
                
                
                2007
                
                
                2006
                
                
                2008
                
                
                2007
                
                
                2006First
      quarter
                
                
                17.4
                %
                
                
                19.1
                %
                
                
                22.2
                %
                
                
                8.5
                %
                
                
                7.7
                %
                
                
                21.6
                %Second
      quarter
                
                
                23.6
                
                
                
                22.2
                
                
                
                29.5
                
                
                
                22.9
                
                
                
                19.2
                
                
                
                31.9Third
      quarter
                
                
                27.5
                
                
                
                27.1
                
                
                
                22.9
                
                
                
                30.8
                
                
                
                31.4
                
                
                
                18.5Fourth
      quarter
                
                
                31.5
                
                
                
                31.6
                
                
                
                25.4
                
                
                
                37.8
                
                
                
                41.7
                
                
                
                28.0Total
                
                
                100.00
                %
                
                
                100.0
                %
                
                
                100.0
                %
                
                
                100.0
                %
                
                
                100.0
                %
                
                
                100.0
                %





Historically,
advertising expenditures by political campaigns have represented an important
part of the Company’s total broadcasting revenue during the congressional
elections that occur every three years, including 2006, and during presidential
elections that occur every six years (coinciding with congressional elections),
including 2006.  However,Mexico implemented electoral reform by
amending its constitution in November 2007.  Since January 2008,
Mexican law has prohibited political parties and private individuals from
directly or indirectly purchasing broadcast time for political advertising on
any radio or television station.  As a result of this change in law,
we no longer receive revenues from advertising by political campaigns.See Item 4, “Information on the
Company—Business Overview—Broadcasting Operations—Sale of Airtime and
Marketing.”




The
following table sets forth the Company’s broadcasting revenue from political
parties for 2000 through 2008, reflecting higher revenue from political parties
during the elections in 2006, 2003 and 2000 and no revenue from political
parties in 2008 following the electoral reform.


32




2008
                
                
                2007
                
                
                2006
                
                
                2005
                
                
                2004
                
                
                2003
                
                
                2002
                
                
                2001
                
                
                2000Broadcasting
      revenue
                  from
      political parties
                
                
                —
                
                
                
                0.2
                %
                
                
                19.0
                %
                
                
                2.3
                %
                
                
                0.06
                %
                
                
                21.1
                %
                
                
                6.1
                %
                
                
                0.1
                %
                
                
                20.9
                %




Economic
Conditions in Mexico




Grupo
Radio Centro’s financial condition and results of operations are generally
affected by the strength of the Mexican economy, as demand for advertising,
revenue from which is the principal source of the Company’s earnings, generally
declines during periods of economic difficulty.




Mexico
began to enter a recession in the fourth quarter of 2008 during which GDP fell
by approximately 1.6%.  In the first quarter of 2009, GDP fell by
approximately 8.2%.  If the Mexican economy continues to experience a
recession or the existing recession becomes more severe, if inflation or
interest rates increase significantly or if the Mexican economy is otherwise
adversely impacted, our business, financial condition or results of operations
could be materially and adversely affected.




The
annual rate of inflation in Mexico, as measured by changes in the INPC, was 6.5%
for 2008.  Inflation for the first quarter of 2009 was
1.03%.  The adverse effects of high inflation on the Mexican economy
might result in lower demand for broadcast advertising.




Loss
Contingency




In 2002,
Infored, S.A. de C.V. (“Infored”) and José Gutiérrez Vivó initiated an
arbitration proceeding against us, seeking the rescission of a production
contract and damages.  In March 2004, an arbitration panel of the
International Chamber of Commerce notified us of its decision to rescind the
contract and award Infored and Mr. Gutiérrez Vivó, collectively, U.S.$ 21.1
million.  As a result of the damages award, we recorded a provision
for this contingent liability in the amount of U.S.$ 21.1 million as of
December 31, 2003.  For the year ended December 31, 2005, we
recorded Ps. 14.3 million and, for the year ended December 31, 2004, we recorded
Ps. 7.0 million in interest relating to this provision.  As of
March 31, 2006, the provision amounted to Ps. 253.6 million (nominal
amount).  We challenged the validity of the arbitration award, and on
June 16, 2006, a Mexican court set aside and refused to enforce the
arbitration award in Mexico.  As a result, we reversed the provision
and recorded it as an extraordinary income item in June 2006.




Since the
June 2006 decision, legal proceedings have continued, and on June 12, 2008, the
June 2006 decision was reversed.  We currently do not consider it
necessary to record a provision for this matter because the June 2008 decision
does not impose an obligation to pay the arbitration award and we intend to
continue to challenge the award’s validity in the Mexican courts.  See
Item 8, “Financial Information3⁄4Other Information3⁄4Legal and Arbitration
Proceedings.”




Recent
Changes in Inflation Accounting




Through
the end of 2007, MFRS required us to recognize certain effects of inflation in
our financial statements.  It also required us to restate financial
statements from prior periods in constant pesos as of the end of the most recent
period presented.  As discussed below, due to the current level of
inflation in Mexico, we have not applied the effects of inflation to our
financial information in 2008.


33


Under
Bulletin B-10, which applied through the end of 2007, the effects of inflation
were recognized by presenting financial information in comparable monetary units
to eliminate the distortion otherwise created by inflation in financial
statements.  MFRS additionally required the following to account for
the effects of inflation:




·
            non-monetary
      assets and stockholders’ equity were restated for inflation based on the
      INPC;




·
            the
      gain or deficit from restated stockholders’ equity included the difference
      between the replacement cost method and the gain or deficit that would
      have been obtained based on the
INPC;




·
            gains
      and losses in purchasing power from holding monetary assets and
      liabilities were recognized in the consolidated statement of income under
      comprehensive financing income; and




·
            all
      financial statements were restated in constant pesos as of the most recent
      balance sheet date.




Effective
January 1, 2008, MFRS B-10 replaced Bulletin B-10.  MFRS B-10
establishes that inflation accounting methods no longer apply unless the
economic environment qualifies as “inflationary” for purposes of
MFRS.  An environment is considered inflationary if the cumulative
inflation rate equals or exceeds 26% over the three preceding years (equivalent
to an average of 8% in each year).  Because of the relatively low
level of Mexican inflation in recent years (6.5% in 2008, 3.8% in 2007 and 4.1%
in 2006), the cumulative inflation rate in Mexico over the three-year period
preceding December 31, 2008 does not qualify the Mexican economic environment as
inflationary.




As a
result, we have not applied the effects of inflation to our financial
information in 2008.  In our financial information for 2008, inflation
adjustments for prior periods have not been removed from shareholders’ equity
and the re-expressed amounts for non-monetary assets and liabilities at December
31, 2007 became the accounting basis for those assets and liabilities beginning
on January 1, 2008 and for subsequent periods, as required by MFRS. In this
respect, our financial statements for 2008 are not comparable to those for prior
periods.




In
comparing our results for 2008 and any future periods without inflation
accounting to results for prior periods that used inflation accounting, we
consider that the most important effects of the cessation of inflation
accounting, and of related changes in other accounting standards, to be as
follows:




·
            We
      no longer recognize monetary gains and losses attributable to the effects
      of inflation on our monetary assets and
  liabilities.




·
            We
      have ceased to adjust the carrying values of non-monetary assets for
      inflation.




·
            We
      no longer restate results of prior periods.  Financial
      information for dates and periods prior to 2008 will continue to be
      expressed in constant pesos as of December 31,
  2007.




·
            We
      have ceased to use inflation-adjusted assumptions in determining our
      employee benefit obligations and instead use nominal discount rates and
      other assumptions.




34


Changes
in MFRS




Note 3 to
our Consolidated Financial Statements discusses new accounting pronouncements
under MFRS that came into force in 2008 and that will come into force in
2009.  The 2008 pronouncements have already been fully implemented in
the financial statements included in this Annual Report.  Others will
require us to change our financial presentation in 2009 in ways that we do not
expect to have a material effect on our results of operations and our balance
sheet.




Critical
Accounting Policies




Impairment
Testing




The
Company is required to test for impairment of its long-lived assets in use,
including goodwill and other intangible assets, at least on an annual
basis.  To calculate impairment loss of long-lived assets in use, it
is necessary to determine the asset’s recovery value.  Recovery value
is defined as the greater of the net sales price of a cash-generating unit of
the asset and the asset’s use value, which is the present value of estimated
future cash flows.  The determination of the underlying assumptions
related to the recoverability of long-lived assets, including goodwill and other
intangible assets, is subjective and requires the exercise of considerable
judgment.  Any changes in key assumptions about the Company’s business
and prospects, or changes in market conditions, could result in an impairment
charge.




Employee
Benefits




The costs
related to benefits to which employees are entitled as a result of seniority
premiums and pension plans, in the case of union personnel, or by law or by
Company grant, are recognized in the results of operations at the time services
are rendered by employees, based on the present value of the benefits determined
under actuarial estimates.  The amortization of unrecognized prior
service cost, which represents changes in assumptions and adjustments based on
experience that has not been recognized, is based on the employee’s estimated
active service life.  Other benefits to which employees may be
entitled in accordance with Mexican law are recognized as an expense in the year
in which they are paid.




The
Company records a reserve for the estimated accrued seniority premiums,
severance payments under certain circumstances and pension benefits, the amount
of which is determined through actuarial estimates.




2008
vs. 2007 Results of Operations




For the
year ended December 31, 2008, broadcasting revenue was Ps. 735.1 million,
representing a 12.3% increase compared to the Ps. 654.8 million reported in
2007.  The increase in broadcasting revenue was mainly attributable to
an increase in advertising expenditures by the Company’s customers, who
purchased more airtime in 2008 than in 2007.  This increase in
advertising was the result of a highly competitive environment, in which the
Company sought to gain market share by offering attractive sales packages, as
well as increasing the size of its sales force.




The
Company’s broadcasting expenses (excluding depreciation, amortization and
corporate, general and administrative expenses) for the year ended December 31,
2008 were Ps. 452.4 million, an increase of 7.2% compared to the Ps. 422.0
million reported in 2007.  This increase was primarily due to (i)
expenses related to extensive advertising campaigns undertaken by the Company;
(ii) higher sales commissions to the Company’s sales force, as a result of the
increase in broadcasting revenues; and (iii) higher expenses related to the
Company’s market research in 2008 than in 2007.


35


Broadcasting
income (i.e., broadcasting revenue minus broadcasting expenses, excluding
depreciation, amortization and corporate, general and administrative expenses)
for the year ended December 31, 2008 was Ps. 282.8 million, an increase of 21.5%
compared to the Ps. 232.8 million reported in 2007.  This increase was
mainly attributable to the increase in broadcasting revenue described
above.




Depreciation
and amortization expenses for the year ended December 31, 2008 were Ps. 31.7
million, a decrease of 5.8% compared to the Ps. 33.7 million reported in
2007.  This decrease was due to the Company no longer recording
depreciation on certain Company assets whose useful lives have
ended.




The
Company’s corporate, general and administrative expenses for the year ended
December 31, 2008 were Ps. 14.5 million, a 2.1% decrease compared to the Ps.
14.8 million reported in 2007.




As a
result of the foregoing, the Company reported operating income of Ps. 236.6
million for the year ended December 31, 2008, a 28.3% increase compared to the
Ps. 184.3 million reported in 2007.




Other
expenses, net, for the year ended December 31, 2008 were Ps. 56.9 million, a
24.2% increase compared to the Ps. 45.8 million reported in
2007.  This increase was mainly attributable to higher legal expenses
relating to the arbitration proceeding in 2008 than in 2007.




The
Company’s comprehensive financing cost for 2008 was Ps. 7.7 million, a 30.5%
increase compared to the Ps. 5.9 million reported in 2007.  This
increase was mainly due to fees paid in connection with the amendment of the
Company’s credit facility in 2008.  The increase in comprehensive
financing cost was partially offset by the fact that the Company did not record
a loss on its net monetary position in 2008, due to a change in MFRS regarding
inflation accounting, compared to a loss on net monetary position of Ps. 3.5
million recorded in 2007.




For the
year ended December 31, 2008, the Company reported income before taxes of Ps.
172.0 million, a 29.6% increase compared to the Ps. 132.7 million reported in
2007, mainly due to the increase in broadcasting revenue, described
above.




The
Company recorded income taxes of Ps. 45.3 million for the year ended December
31, 2008, compared to Ps. 41.6 million recorded in 2007, primarily due to higher
taxable income due to an 12.3% increase of income, which was only partially
offset by a 7.2% increase in broadcast expenses.  The Company’s
effective tax rate decreased to 26.3% in 2008 from 31.3% in
2007.  Although after 2007 we no longer recognize the effects of
inflation in our financial statements, we do continue to recognize the impact of
inflation for tax purposes.  This causes our pretax income to be
affected by taxable monetary gain or loss on our net monetary liabilities and by
higher depreciation due to the application of inflation indexation on our
assets.  As a result, our effective tax rate was lower in 2008 than in
2007 because we had a deductible monetary loss on our monetary liabilities
(compared to a monetary gain in 2007) and higher depreciation
costs.




As a
result of the foregoing, the Company reported net income of Ps. 126.8 million
for the year ended December 31, 2008, an increase of 39.2% compared to net
income of Ps. 91.1 million reported in 2007.




2007
vs. 2006 Results of Operations




For the
year ended December 31, 2007, broadcasting revenue was Ps. 654.8 million, a
20.7% decrease compared to the Ps. 825.6 million reported for
2006.  The decrease was mainly attributable to a decrease in
advertising expenditures by political parties, which purchased more airtime in
2006 in connection with the July 2006 presidential and congressional
elections.


36


The
Company’s broadcasting expenses (excluding depreciation, amortization and
corporate, general and administrative expenses) for the year ended December 31,
2007 were Ps. 422.0 million, an 8.3% decrease compared to the Ps. 460 million
reported for 2006.  This decrease was primarily due to (i) a net
decrease in the allowance for doubtful accounts, (ii) a decrease in sales
commissions paid to the Company’s sales force in connection with decreased sales
of airtime, and (iii) a lower provision for severance payments to Company
employees, for the year ended December 31, 2007 compared to 2006.




Broadcasting
income (i.e., broadcasting revenue minus broadcasting expenses, excluding
depreciation, amortization and corporate, general and administrative expenses)
for the year ended December 31, 2007 was Ps. 232.8 million, a 36.3% decrease
compared to the Ps. 365.5 million reported for 2006.  This decrease
was mainly attributable to the decrease in broadcasting revenue described
above.




Depreciation
and amortization expense for the year ended December 31, 2007 was Ps. 33.7
million, a 9.4% decrease compared to the Ps. 37.2 million reported for
2006.  This decrease was attributable to the fact that the Company no
longer recorded depreciation on certain plant and transportation equipment whose
useful lives ended after the fourth quarter of 2006.




The
Company’s corporate, general and administrative expenses for the year ended
December 31, 2007 were Ps. 14.8 million, the same amount that was reported in
2006.




As a
result of the foregoing, the Company reported operating income of Ps. 184.3
million for the year ended December 31, 2007, a 41.2% decrease compared to the
Ps. 313.5 million reported in 2006.




Other
expenses, net, for the year ended December 31, 2007 were Ps. 45.8 million, a
23.0% decrease compared to the Ps. 59.5 million reported for
2006.  This decrease was mainly attributable to a decrease in legal
expenses for the year ended December 31, 2007 compared to 2006, as well as
non-recurring expenses incurred during 2006 in connection with the Company’s
sixtieth anniversary celebration.




The
Company’s comprehensive financing cost for the year ended December 31, 2007 was
Ps. 5.9 million, an 85.3% decrease compared to the Ps. 39.8 million recorded for
2006.  This decrease was mainly due to a decrease in interest expense
for the year ended December 31, 2007 compared to 2006, because (i) the Company
no longer recorded interest on its bank debt after it paid off all outstanding
debt in May 2006, and (ii) after selling certain accounts receivable, the
Company classified as interest expense Ps. 27.8 million, which is equivalent to
the excess of book value over the purchase price of the accounts receivable sold
in December 2006.  See “—2006 vs. 2005 Results of
Operations.”




For the
year ended December 31, 2007, the Company reported income before extraordinary
item and provisions of Ps. 132.6 million, a 38.1% decrease compared to the Ps.
214.1 million reported in 2006. This decrease was mainly attributable to the
decrease in broadcasting revenue described above.




For the
year ended December 31, 2007, the Company reported income before provisions for
income tax and employee profit sharing of Ps. 132.6 million, a 72.2% decrease
compared to the Ps. 477.6 million reported in 2006.  This difference
was attributable to higher broadcasting revenue and an extraordinary item of Ps.
263.5 million, resulting from the reversal of the provision for the contingent
liability related to the arbitration proceeding both reported in
2006.




The
Company recorded provisions for income tax of Ps. 41.5 million for 2007,
compared to Ps. 42.9 million for 2006.


37


As a
result of the foregoing, the Company reported net income of Ps. 91.1 million in
2007, compared to net income of Ps. 434.7 million in 2006.




Liquidity
and Capital Resources




The
Company’s primary source of liquidity is cash flow from
operations.  The Company’s operating activities provided Ps. 69.3
million in 2008, Ps. 153.5 million in 2007, and Ps. 264.8 million in
2006.  Working capital at December 31, 2008 was Ps. 212.8 million and
at December 31, 2007 was Ps. 170.0 million.  Cash flow from
operations historically has been sufficient to cover the Company’s working
capital needs.




The
Company expects to be able to meet its working capital needs in 2009 with cash
flow from operations.  Grupo Radio Centro invests its cash balances,
generally, in short-term peso instruments, including overnight and time
deposits, repurchase agreements, certificates of deposit and commercial paper of
certain Mexican issuers.  The Company has not entered into any
arrangements for the purpose of hedging interest rate or currency
risk.




During
2008, the Company’s principal use of funds, other than for operating purposes
and capital expenditures was the payment of dividends in the amount of Ps. 100.0
million.  In 2007, the Company’s principal use of funds, other than
for operating purposes and capital expenditures was the payment of dividends in
the amount of Ps. 71.9 million.   In 2006, the Company’s
principal use of funds, other than for operating purposes and capital
expenditures, was the payment of its total bank debt in the amount of Ps. 122.3
million (Ps. 113.2 million nominal amount) and the distribution to shareholders
of Ps. 128.5 million (Ps. 120.0 million nominal amount) in the form of a capital
reduction.  In 2006, the Company also repurchased on the open market
918,800 Series A Shares at an aggregate cost of Ps. 9.1
million.  Grupo Radio Centro may from time to time repurchase its
outstanding equity securities if market conditions and other relevant
considerations make such repurchases appropriate.




Indebtedness




Credit
Facility.The Company has entered into a credit facility with
Banco Inbursa S.A., Institución de Banca Múltiple, Grupo Financiero Inbursa for
a secured, guaranteed peso-denominated loan in two tranches having an aggregate
principal amount equivalent to U.S.$ 21.0 million.  We may use the
proceeds of the credit facility for working capital purposes, as well as other
corporate purposes.  On March 26, 2009, the Company drew down on one
tranche, in the amount of Ps. 200 million, to finance the prepayment of the
first two years of fees under the local marketing agreement we entered into with
Emmis.  We are required to repay the outstanding principal amount of
the loan over five years in 20 quarterly installments beginning June 1, 2009 and
make quarterly interest payments at an annual rate of 13%.  The
company expects to meet its principal and interest payment obligations with cash
flow from operations.




The
credit facility will expire on June 16, 2015.  In connection with the
renewal of the credit facility in 2008, the Company agreed to increase the fees
paid to the lenders in U.S. dollars on undrawn amounts from 0.25% to 0.90% for
the first year and to 1.15% for the second year.  Amounts borrowed
under the credit facility are guaranteed by several of our subsidiaries and
secured by a first priority lien on substantially all of our property, including
our corporate headquarters but excluding any equipment used for
broadcasting.  The credit facility provides that, subject to certain
conditions, we may draw down on it at any time before June 4,
2010.  The principal other conditions to drawing down include that
there be no material adverse change resulting in a loss or liability to us
equivalent to 5% or more of our total assets (as such condition is more fully
defined in the credit facility) and no material adverse change in the banking
environment or international capital markets; that the loan be secured by a
first priority lien on substantially all of our property in favor of the
lenders; and that no event of default under the credit facility has
occurred.  The credit facility contains restrictive covenants and
covenants requiring us to maintain quarterly financial ratios (using terms
defined in the credit facility).  The financial covenants include an
interest coverage ratio of at least 2.5 to 1, a total debt to EBITDA ratio of no
more than 3 to 1, a fixed charges coverage ratio of at least 1.75 to 1, a cash
balance of at least U.S.$ 1.75 million, and shareholders’ equity of at least Ps.
850 million.  If any of the condition to draw down is not met, we will
be unable to obtain funds under the credit facility.




38




Capital
Reduction




On
August 1, 2006, we announced a reduction of fixed capital stock by a total
of Ps. 120.0 million through a distribution to shareholders in the amount
of Ps. 0.74016843063 per share.  Ps. 70.0 million, or
Ps. 0.43176491786 per share, was paid to shareholders on August 7,
2006.  The remaining Ps. 50.0 million, or Ps. 0.30840351276
per share, was paid to shareholders on October 2, 2006.




Off-Balance
Sheet Arrangements




In 2008,
the Company had no off-balance sheet arrangements that have or, in the opinion
of the Company, are reasonably likely to have a current or future effect on the
Company’s financial condition.




Contractual
Obligations




As of
December 31, 2008, the Company has no long-term debt, capital lease, operating
lease or purchase obligations.




U.S.
GAAP Reconciliation




Net
income under U.S. GAAP was Ps. 126.7 million for 2008, Ps. 91.1 million for 2007
and Ps. 434.7 million for 2006.  The slight difference between net
income under MFRS and U.S. GAAP for the years ended December 31, 2008, 2007 and
2006 was due to the treatment under U.S. GAAP of a minority interest in
subsidiaries of the Company as a liability.




Operatingincome under U.S. GAAP
was Ps. 179.7 million for the year ended December 31, 2008, Ps. 138.5
million for 2007 and Ps. 517.5 million for 2006.  The differencebetween operating incomeunder U.S. GAAP and MFRS
for the year ended December 31, 2006 was primarily
due to the Company’s reversal of a Ps.263.5 million contingency provision related to an arbitration
proceeding.  Under MFRS, the provision is recorded as an extraordinary
item; under U.S. GAAP, the provision is charged against operating
income.  Upon reversal, the provisioned amount is recorded as
extraordinary income under MFRS.  In addition, for the years
ended December 31, 2008, 2007 and 2006, certain other expenses, net of the
Company that are classified as non-operating charges under MFRS are charged
against operating income under U.S. GAAP.




Shareholders’
equity under U.S. GAAP was Ps. 1,423.3 million at December 31, 2008,
Ps. 1,396.6 million at December 31, 2007 and Ps. 1,378.0 million at
December 31, 2006.  In all years, the difference between shareholders’
equity under MFRS and U.S. GAAP was mainly due to the treatment under U.S. GAAP
of a minority interest in subsidiaries of the Company as a
liability.




Pursuant
to MFRS, for dates and periods prior to 2008, Grupo Radio Centro’s financial
statements recognize certain effects of inflation in accordance with Bulletin
B-10 and Bulletin B-12; these effects have not been reversed in the
reconciliation to U.S. GAAP.  Due to the Company’s adoption of
Bulletin D-4, the Company’s financial statements for 2008, 2007 and 2006 include
an expanded recognition of deferred taxes under MFRS that more closely parallels
U.S. GAAP. Accordingly, there were no differences related to deferred taxes that
had to be reconciled between Mexican and U.S. GAAP for purposes of the
Consolidated Financial Statements.


39


For a
further discussion of the differences between MFRS and U.S. GAAP as they relate
to Grupo Radio Centro, see Note 21 to the Consolidated Financial
Statements.




Item
6.  Directors, Senior Management and Employees




Directors




Management
of the business of the Company is vested in the board of directors and the chief
executive officer.  Our bylaws provide that the board of directors
consist of a minimum of seven and a maximum of 21 directors and an equal number
of alternate directors.  The Company’s shareholders elect each
director and alternate director by simple majority vote at the annual ordinary
general meeting.  Alternate directors are authorized to serve on the
board of directors in place of directors who are unable to attend meetings or
otherwise participate in the activities of the board of
directors.  Directors and alternate directors may be Mexican or
foreign, but both the majority of directors and the majority of alternate
directors must be Mexican.  A person who has acted as an external
auditor of the Company or of companies that form a part of the Company’s
corporate group or consortium during the year prior to appointment may not be a
director.




Of the
total number of directors, and their respective alternate directors, at least
25% must be independent directors.  Independent directors may not be
individuals related to the Company, such as, among others, employees or officers
of the Company, controlling shareholders, important customers, suppliers,
debtors or creditors of the Company, or their respective shareholders, directors
or employees.  Alternate directors only serve in place of their
respective regular directors and, alternates of independent directors, must also
meet the requirements for independent directors.




The board
of directors currently consists of 12 members.  Alejandro Sepulveda de
la Fuente is the secretary to the board of directors.  The current
members of the board of directors were reelected at the annual shareholders
meeting on March 31, 2009 for a one-year term.  Their names,
positions, ages and information on their principal business activities outside
Grupo Radio Centro are listed below.  In addition to the “other
directorships” listed below, two Aguirre members of the board of directors,
Francisco Aguirre and María Adriana Aguirre, sit on the boards of directors of
various radio stations in Mexico.




Name
                
                Position
                
                Age
                
                Yearsas
                    director
                
                Principal
      occupation
                
                Other
      directorshipsFranciscoAguirre
      G.
                
                Chairman
                
                67
                
                9
                
                Private
      investor
                
                Chairman
      of the board
                  of
      Grupo Radio
                  México,
      S.A. de C.V.María
      Esther Aguirre G.
                
                First
      Vice Chairperson
                
                69
                
                9
                
                Private
      investor
                
                –María
      Adriana Aguirre G.
                
                Second
      Vice Chairperson
                
                62
                
                9
                
                Private
      investor
                
                –Ana
      María Aguirre G.
                
                Director
                
                64
                
                38
                
                Private
      investor
                
                –Carlos
      Aguirre G.
                
                Director
                
                54
                
                9
                
                Chief
      Executive
                  Officer
      of Grupo
                  Radio
      Centro
                
                –




40




Name
            
            Position
            
            Age
            
            Years
      as
                director
            
            Principal
      occupation
            
            Other
      directorshipsRafael
      Aguirre G.
            
            Director
            
            51
            
            16
            
            Private
      investor
            
            Director
      of the Quintana Roo branch of HSBC México, S.A. (formerly Banco
      Internacional, S.A.); Director of the Yucatan Peninsula branch of Banco
      Nacional de México, S.A.José
      Manuel Aguirre G.
            
            Director
            
            46
            
            9
            
            Real
      estate investor
            
            –Pedro
      Beltrán N.
            
            Director
            
            65
            
            7
            
            Finance
      & Administrative Director and Chief Financial Officer of Grupo Radio
      Centro
            
            –Luis
      Alfonso Cervantes Muñiz
            
            Director
            
            53
            
            4
            
            Attorney
            
            –Gustavo
      Gabriel Llamas Monjardín
            
            Director
            
            46
            
            4
            
            Public
      accountant
            
            –Thomas
      Harold Raymond Moffet
            
            Director
            
            67
            
            9
            
            President
      of Amsterdam Pacific Capital, LLC (a financial advisory
    firm)
            
            –Luis
      Manuel de la Fuente Baca
            
            Director
            
            63
            
            9
            
            Financial
      advisor
            
            –




Francisco
Aguirre G., María Adriana Aguirre G., María Esther Aguirre G., Ana María Aguirre
G., Carlos Aguirre G., Rafael Aguirre G. and José Manuel Aguirre G. are
siblings. Until she passed away on June 23, 2008, their mother María Esther G.
de Aguirre was the honorary chairperson of the board of directors of the
Company.




Francisco
Aguirre G., María Esther Aguirre G., María Adriana Aguirre G., Ana María Aguirre
G., Carlos Aguirre G., Rafael Aguirre G. and José Manuel Aguirre G. are
shareholders of the Company. Pedro Beltrán N. is an employee of the Company and
Luis Alfonso Cervantes Muñiz is an advisor to affiliates of the Company. Thomas
Harold Raymond Moffet, Gustavo Gabriel Llamas Monjardín and Luis de la Fuente
Baca are independent directors, as defined under the Mexican Securities Market
Law.




The
Company’s bylaws provide that the board of directors shall meet at least four
times during each fiscal year. Each of the chairman of the board of directors,
the chairman of the Audit Committee, the chairman of the Corporate Practices
Committee or at least 25% of the members of the board of directors is entitled
to call a meeting of the Board and to include items in the agenda for each
meeting.




The
bylaws provide that holders of Series A Shares representing 10% of the capital
stock of the Company shall be entitled to appoint one regular member of the
board of directors and such member’s alternate.


41




The
bylaws also provide that the board of directors shall present to the
shareholders at the annual shareholders meeting (i) the report on the
transactions and activities in which it has been involved in accordance with the
Mexican Securities Market Law, (ii) the report on the main accounting and
information policies and criteria employed in the preparation of financial
information, (iii) the reports prepared by the chairpersons of the Audit
Committee and the Corporate Practices Committee and (iv) the report prepared by
the chief executive officer together with the external auditors’ report. The
board of directors shall also present its opinion on the content of the report
prepared by the chief executive officer.




The
bylaws of the Company were amended on April 22, 2005 to provide that,
independently and without prejudice to the exercise of the powers granted to the
board of directors pursuant to Mexican law, the board of directors is entitled
to grant or delegate in favor of the Audit Committee those powers that it deems
necessary or convenient to comply with the legal and regulatory provisions
applicable to the Company, as well as to determine the rules pursuant to which
the Audit Committee shall exercise such powers, including the right to revoke or
modify them.




The
bylaws of the Company were further amended on July 31, 2006 to meet the
requirements of the Mexican Securities Market Law. The amendments granted the
board of directors and the Audit Committee greater authority and provided for
the creation of the Corporate Practices Committee. The amendments to the bylaws
also increased the authority that the board of directors may exert over the
Company’s accounting, auditing and internal control. With prior favorable
opinion from the Audit Committee, the board of directors may approve the
Company’s financial statements, internal control and audit guidelines and
accounting policies. The bylaws of the Company were also amended on December 13,
2006, to increase Company’s minimum capital stock.




Executive
Committee




The
Company’s bylaws provide that at an ordinary general meeting, the shareholders
may elect, by simple majority vote, an Executive Committee of five to seven
members from among the Company’s directors or alternate directors elected or
designated at such shareholders meeting. The bylaws of the Company provide that
the Executive Committee’s operations are subject to the same rules applicable to
the operation of the board of directors. Alternate Executive Committee members
are authorized to serve on the Executive Committee in place of members who are
unable to attend meetings or otherwise participate in the activities of the
Executive Committee.




The
current members of the Executive Committee are José Manuel Aguirre G.
(chairman), Carlos Aguirre G. (vice-chairman), Ana María Aguirre G., María
Esther Aguirre G., María Adriana Aguirre G., Rafael Aguirre G. and Francisco
Aguirre G.




Audit
Committee




The Audit
Committee consists of Thomas Harold Raymond Moffet, Gustavo Gabriel Llamas
Monjardín and Luis Manuel de la Fuente Baca (chairman). All three members of the
Audit Committee also serve on the Company’s board of directors. The shareholders
ratified the appointment of these members to the Audit Committee and Mr. de la
Fuente Baca’s appointment as committee chairman at the annual shareholders’
meeting held on March 31, 2009. As required by our bylaws and applicable law,
all members of the Audit Committee are independent, as defined under Mexican
Securities Market Law and Rule 10A-3 under the Securities Exchange Act of 1934,
as amended (the “Exchange Act”). See Item 16A, “Audit Committee Financial
Expert.” In order for a meeting of the Audit Committee to be valid, the majority
of its members must be present, and the Audit Committee must adopt resolutions
by majority vote.




The
chairman of the Audit Committee may not also be the chair of the board of
directors and is appointed and removed exclusively through a majority vote of
the shareholders. The shareholders base their decision on the experience,
ability and professional prestige of the appointee. The chairman of the
Committee must submit an annual report on the activities of the Audit Committee
to the board of directors.


42




The Audit
Committee is responsible for assisting the Board in overseeing the activities of
the Company. The members evaluate the performance, opinions and reports of the
external auditor. In addition, the Audit Committee is responsible for regulation
within the Company. The Audit Committee investigates possible violations of
internal guidelines and also verifies the establishment of internal controls and
the filing of related information. Additionally, the Audit Committee renders an
opinion on the report regarding the financial information and results of
operations of the Company, which is filed by the chief executive officer, and
provides further information concerning that report to the board of
directors.




The Audit
Committee further assists the board of directors in oversight activities by
requesting periodic meetings with executive officers. The Audit Committee also
monitors the filing of information related to the internal control systems and
internal audits of the Company and is responsible for preparing an opinion on
the report filed by the chief executive officer. Additionally, the Audit
Committee is responsible for verifying that the chief executive officer abides
by the resolutions adopted in shareholder meetings and by the board of
directors.




Corporate
Practices Committee




The
Corporate Practices Committee consists of Thomas Harold Raymond Moffet, Gustavo
Gabriel Llamas Monjardín and Luis Manuel de la Fuente Baca, with Mr. de la
Fuente Baca (chairman). All three members of the Corporate Practices Committee
also serve on the Company’s board of directors. The shareholders ratified the
appointment of these members to the Corporate Practices Committee and Mr. de la
Fuente Baca’s appointment as committee chairman at the annual shareholders’
meeting held on March 31, 2009. As required by our bylaws and applicable law,
all members are independent, as defined by the Mexican Securities Market Law and
Rule 10A-3 of the Exchange Act. In order for a meeting of the Corporate
Practices Committee to be valid, the majority of its members must be present,
and the Corporate Practices Committee must adopt resolutions by majority
vote.




In
accordance with the Securities Market Law, the Corporate Practices Committee is
responsible for rendering opinions to the board of directors and requesting the
opinions of independent experts if the Corporate Practices Committee considers
it necessary. The Corporate Practices Committee assists the board of directors
in generating reports on the main accounting policies and the criteria used to
prepare the financial statements of the Company. The Corporate Practices
Committee also reports on the transactions and activities of the Company in
which the board of directors intervened. The Corporate Practices Committee may
call shareholders’ meetings and contribute items to the agenda when
needed.




The
chairman of the Corporate Practices Committee must submit an annual report on
the activities of the Corporate Practices Committee to the board of directors.
This report includes information regarding related party transactions, waivers
granted and the performance and compensation of the Company’s executive
officers.


43




Executive
Officers




The
executive officers of Grupo Radio Centro are as follows:




Name
                
                Position
                
                Years as
                    officer
                
                Years of
                    serviceCarlos
      Aguirre G.
                
                Chief
      Executive Officer
                
                30
                
                35Pedro
      Beltrán N.
                
                Finance
      & Administrative Director and Chief Financial Officer
                
                23
                
                23Arturo
      Yáñez F.
                
                Auditing
      Director
                
                25
                
                25Sergio
      González L.
                
                Operations
      Director
                
                25
                
                25Luis
      Cepero A.
                
                Audio
      Engineering Director
                
                26
                
                48Eduardo
      Stevens A.
                
                Transmission
      Engineering Director
                
                19
                
                29Gonzalo
      Yáñez V.
                
                Marketing
      Director
                
                9
                
                12Rodolfo
      Nava C.
                
                Treasurer
      and Financial Information Manager
                
                9
                
                23Alvaro
      Fajardo de la Mora
                
                General
      Counsel
                
                24
                
                24Luis
      Miguel Carrasco N.
                
                Commercial
      Director
                
                11
                
                16Alfredo
      Azpeitia Mera
                
                Investor
      Relations Manager
                
                20
                
                16




Compensation




For the
year ended December 31, 2008, the aggregate compensation for the executive
officers of the Company paid or accrued in that year for services in all
capacities was Ps. 25.3 million, of which approximately Ps. 6.5 million was paid
in the form of bonus compensation. The bonus compensation amounts were
determined based on various factors, including quarterly financial results and
station ratings and rankings.




The total
of payments to Executive Committee members for attendance at Executive Committee
meetings during 2008 was Ps. 18.3 million. The total of payments to directors
for attendance at Board of Director meetings during 2008 was Ps. 283,140. The
total payments to Audit Committee members for attendance at Audit Committee
meetings during 2008 was Ps. 497,880.




Board
Practices




None of
the directors have entered into a service contract with the Company that
provides for benefits upon termination of employment.




Employees




At
December 31, 2008, Grupo Radio Centro employed a total of 484 full-time
employees, fewer than half of whom are members of the Sindicato de Trabajadores de la
Industria de Radio y Televisión, Similares y Conexos de la República
Mexicana (Radio and Telecommunications Workers Union, or the “Union”).
The Company employed a total of 458 full-time employees at December 31, 2007 and
a total of 457 full-time employees at December 31, 2006. Grupo Radio Centro also
employs a varying number of temporary employees. During 2008, the Company
employed an average of 93 temporary employees. All employees of Grupo Radio
Centro work in Mexico City.


44




Negotiations
with Union employees are conducted at the industry level pursuant to a national
contract (the “Contrato
Ley”) that is administered by the Union and that provides for general
employment terms applicable to all Union employees, although particular
enterprises within the radio broadcasting industry may negotiate separate
contractual arrangements with the Union if exceptions from the Contrato Leyare desired. All
of Grupo Radio Centro’s current contractual relations with Union employees are
pursuant to the stated terms of the Contrato Ley. The current
Contrato Ley expires on
January 31, 2010; however, salary increases are implemented annually. On
February 1, 2009, the Company and the Union agreed to a 4.7% increase in
salaries. Relations between Grupo Radio Centro, its workers and the Union have
historically been good; there have been no material disputes between any of the
radio broadcasting subsidiaries of Grupo Radio Centro and any of their employees
since the founding of Grupo Radio Centro.




Share
Ownership




As of
December 31, 2008, the Aguirre members of the board of directors had beneficial
ownership, through a Mexican trust through which they hold Series A Shares, of
84,020,646 Series A Shares of the Company, representing 51.6% of the outstanding
Series A Shares. See Item 7, “Major Shareholders and Related Party
Transactions—Major Shareholders.”




None of
the Company’s other directors or officers is the beneficial owner of more than
1% of the Company’s outstanding capital stock.




Item
7. Major Shareholders and Related Party Transactions




Major
Shareholders




The
Company was incorporated as Técnica de Desarrollo Publicitario, S.A. de C.V. on
June 8, 1971, with its principal shareholders being members of the Aguirre
family. The Company has undergone several changes in nominal ownership, but
ultimate control has always resided with the Aguirre family.




On June
3, 1998, all of the Series A Shares and CPOs owned by the Aguirre family, which
had been held in a trust established by the Aguirre family in 1992 (the “Old
Controlling Trust”), were divided into two trusts (the Old Controlling Trust and
the “New Controlling Trust” and, together, the “Controlling Trusts”). Before the
division, 50% of the Series A Shares and CPOs of the Company held by the Old
Controlling Trust was held for the benefit of María Esther G. de Aguirre, with
the remainder divided equally among her children. Simultaneously with the
division, María Esther G. de Aguirre acquired a 50% interest in each of the
Controlling Trusts and transferred those interests to her children in equal
parts, but reserved her rights to vote and receive dividends in respect of the
Series A Shares and CPOs previously held for her benefit (the “reserved
rights”).




On May
25, 1999, four members of the Aguirre family made a gift of their interests in
the Company’s Series A Shares and CPOs held by the Controlling Trusts to María
Esther G. de Aguirre. On the same date, the Aguirre family amended the terms of
the Controlling Trusts to transfer, on such date, the reserved rights held by
María Esther G. de Aguirre to her children in equal parts and to transfer, upon
the occurrence of certain events, the trust interests gifted to her by her four
children to her seven other children—María Esther Aguirre G., Francisco Aguirre
G., María Adriana Aguirre G., Ana María Aguirre G., Carlos Aguirre G., Rafael
Aguirre G. and José Manuel Aguirre G.


45




On April
5, 2000, María Esther G. de Aguirre made a gift of her approximate 36% interest
in the Controlling Trusts to her seven children holding interests in such
trusts. Following this gift and an amendment of the terms of the Controlling
Trusts to remove María Esther G. de Aguirre as grantor and beneficiary, those
seven children owned, in equal parts, 100% of the interests in the Controlling
Trusts. In 2003, all CPOs held by the Controlling Trusts were converted to
Series A Shares.




In 2007,
the Controlling Trusts were amended to change the trustee and consolidate the
Controlling Trusts. Pursuant to agreements dated June 15, 2007, Bancomer, S.A.
was replaced with Banco IXE S.A. as trustee of each Controlling Trust. Pursuant
to an agreement dated June 18, 2007, the New Controlling Trust was dissolved and
all of its assets were transferred to the Old Controlling Trust (now referred to
simply as the “Trust”). The same seven members of the Aguirre family continue to
own, in equal parts, 100% of the interests in the Trust. Under the terms of the
Trust, the Series A Shares held by the Trust are ordinarily voted as directed by
a majority of the beneficiaries of the Trust.




The
following table sets forth certain information regarding the beneficial
ownership of Series A Shares by beneficial holders of more than 5% of the
outstanding Series A Shares as of June 23, 2009.




Name of Person or Group
                        
                        Series A Shares
                            Beneficially Owned
                        
                        
                        Percentage of
                            Series A
                            Shares(1)The
      Trust
                        
                        
                        84,020,646
                        
                        
                        
                        51.6
                        %María
      Esther Aguirre G.
                        
                        
                        84,020,695
                        (2) (3)
                        
                        
                        51.6
                        %Francisco
      Aguirre G.
                        
                        
                        84,020,646
                        (2)
                        
                        
                        51.6
                        %María
      Adriana Aguirre G.
                        
                        
                        84,020,646
                        (2)
                        
                        
                        51.6
                        %Ana
      María Aguirre G.
                        
                        
                        84,020,646
                        (2)
                        
                        
                        51.6
                        %Carlos
      Aguirre G.
                        
                        
                        84,036,846
                        (2) (4)
                        
                        
                        51.6
                        %Rafael
      Aguirre G
                        
                        
                        84,020,646
                        (2)
                        
                        
                        51.6
                        %José
      Manuel Aguirre G.
                        
                        
                        84,020,646
                        (2)
                        
                        
                        51.6
                        %





(1)
            Percentages
      are based on 162,724,561Series A Shares issued and outstanding as of June 23,
  2009.




(2)
            All
      Series A Shares beneficially owned by the Trust (the “Family Shares”) are
      held for the benefit of the Aguirre Family and are deemed to be
      beneficially owned by each member of the Aguirre Family, each of whom is
      deemed to share power to vote or dispose, or direct the vote or
      disposition of, the Family Shares as a member of the Technical Committee
      of the Trust.




(3)
            Includes
      49 Series A Shares beneficially owned by María Esther Aguirre G. in
      addition to Family Shares.




(4)
            Includes 1,800 ADSs beneficially
      owned by Carlos G. Aguirre in addition to Family
      Shares.




The
voting rights of the holders of Series A Shares not held in the form of CPOs or
ADSs are identical.




The
bylaws of the Company prohibit the ownership of Series A Shares by persons who
do not qualify as Mexican investors. See Item 10, “Additional Information—Bylaws
and Mexican Law—Limitations Affecting Non-Mexican Holders—Share Ownership.” At
June 23, 2009, to the best
knowledge of the Company, approximately 3.4% of the outstanding Series A Shares
was represented by ADSs. It is not practical for the Company to determine the
number of U.S. holders of CPOs or ADSs, the portion of each class of securities
held in Mexico or the number of record holders in Mexico.


46


Related
Party Transactions




The
Company engages in a variety of transactions with affiliates. Pursuant to the
Company’s bylaws, the operating rules of the board of directors and Mexican law,
the Corporate Practices Committee of Company’s board of directors must express
an opinion on, and the Company’s board of directors has exclusive power to
approve, any transaction with a related party unless the transaction (i) is
considered to be not material based on the value of the transaction; (ii) is
entered into with a controlled entity, provided that such a transaction is
either in the ordinary course of the Company’s business and carried out at
market price or supported in valuations prepared by external experts; or (iii)
is entered into with employees, provided that the transaction is conducted under
the same conditions as it would be for a client or as a result of general labor
benefits.




Family
Control of OIR Network Affiliates




In
addition to their ownership interest in the Company, members of the Aguirre
family owned or controlled 11 of the 108 affiliates in the network serviced by
OIR at December 31, 2008. Affiliated stations owned or controlled by members of
the Aguirre family accounted for approximately 9.6% of OIR revenue (or 0.3% of
the Company’s total broadcasting revenue) for 2008, 11.7% of OIR revenue (or
0.4% the Company’s total broadcasting revenue) for 2007, and 12% of OIR revenue
(or 0.3% of the Company’s total broadcasting revenue) for 2006. The Company has
provided administrative and other services to such family-owned stations in the
OIR network and under certain circumstances has provided commercial airtime to
related parties, on terms that are more favorable than those provided to
unrelated parties. The Company does not believe that such transactions have been
material.




On May
13, 2009, certain members of the Aguirre family purchased a 49% equity stake in
Grupo Radio Centro LA, LLC, a wholly-owned subsidiary of the Company formed to
provide programming to KMVN-FM pursuant to the local marketing agreement with
Emmis Communications Corporation. In exchange for their 49% equity stake, the
Aguirre family members have agreed to be responsible for 49% of the cost of the
Company’s investment.




Service
Contract




On
January 5, 2000, Grupo Radio Centro entered into a contract with an entity owned
by Francisco Aguirre G., chairman of the board of directors of the Company, for
an indefinite term pursuant to which this entity is compensated for consulting
services and the sale of airtime provided to the Company by Mr. Aguirre. The
Company incurred expenses under this contract totaling Ps. 3.3 million in 2008,
Ps. 3.6 million in 2007 and Ps. 7.9 million in 2006. See Note 6 to the
Consolidated Financial Statements.




Sale
of Doubtful Accounts Receivable




In
December 2006, the Company sold to an entity owned by Francisco Aguirre G. accounts
receivable representing Ps. 40.3 million owed to it mainly by political parties
in connection with purchases of airtime from 2003 to 2005 for a cash purchase
price of Ps. 12.2 million. The Company had been unsuccessful in its attempts to
collect the accounts receivable and, accordingly, increased its allowance for
doubtful accounts beginning in 2005. The Company sold the accounts receivable
because




·
            it
      believed, based on its past efforts, that the accounts receivable were not
      recoverable, and




·
            the
      sale enabled the Company to take a tax deduction in connection with the
      unrecoverable accounts receivable, which deduction otherwise would not
      have been available without bringing legal proceedings against the
      customers. The Audit Committee ratified this transaction on February 19,
      2007.




47


Sale
of Goods and Services




The
Company makes available to employees, including key management personnel, and
directors and directors’ family members goods and services obtained by the
Company in barter transactions. These goods and services are offered to
executive officers and directors at discounts that are comparable to the
discounts offered to the Company’s employees. The Company received a total of
Ps. 3.0 million in 2008, Ps. 1.6 million in 2007 and Ps. 4.7 million in 2006
from executive officers and directors and their families in connection with
these transactions. See Note 6 to the Consolidated Financial
Statements.




Attention
to Aguirre Family Matters




Carlos
Aguirre G., the Chief Executive Officer, Pedro Beltrán, the Chief Financial
Officer, and Alvaro Fajardo, the General Counsel, have spent a portion of their
time on Aguirre family matters for which the Company has not been separately
compensated.




Loans
to Executive Officers and Directors




In
October 2006, the Company extended a loan in the amount of Ps. 3.2 million
(nominal amount) to a company controlled by Ana María Aguirre G., a member of the
board of directors. The loan bore interest at an annual rate of 10.5% and was
repaid in full in May 2007. The proceeds of the loan were used for purposes
unrelated to the business of the Company. Neither the Audit Committee nor the
Corporate Practices Committee was asked to consider this
transaction.




For
further information regarding transactions between Grupo Radio Centro and
related parties, see Note 6 to the Consolidated Financial
Statements.




Item
8. Financial Information




Consolidated
Financial Statements




See Item
18, “Financial Statements” and pages F-1 through F-41.




Other
Information




Legal
and Arbitration Proceedings




Through a
series of transactions effected in 1995 and 1996, the Company acquired five
radio stations owned by Radiodifusión RED, S.A., as well as the exclusive radio
broadcasting rights to Monitor, a news and talk
radio program. On December 23, 1998, the Company entered into an agreement with
Infored and Mr. Gutiérrez Vivó, the principal anchor of Monitor, pursuant to which
they would provide the Company with original news programs and special-event
productions until 2015 (the “Infored Agreement”). The Infored Agreement provided
that Mr. Gutiérrez Vivó would continue as Monitor’s host until at least
the end of 2003.


48




In May
2002, Mr. Gutiérrez Vivó and Infored initiated an arbitration proceeding
pursuant to which they sought rescission of the Infored Agreement and damages.
On March 1, 2004, the International Chamber of Commerce, or the ICC, notified
the Company that, by majority vote of two of the three arbitrators, the ICC
panel held that the Company was in breach of its contract with Infored and Mr.
Gutiérrez Vivó. As a result, the contract was rescinded and Infored and Mr.
Gutiérrez Vivó together were awarded a total of U.S.$ 21.1 million in damages,
which represents the amount the Company would be required to pay under the
contract after taking into account prepayments made by the Company. The Company
challenged the validity of this decision in the Mexican courts and, on November
11, 2004, Civil Judge 63 of the Federal District Superior Tribunal of Justice,
set aside the arbitration award. Infored and Mr. Gutiérrez Vivó initiated an
amparo, which is a type
of proceeding used to challenge the legality of a decision under Mexican law, in
November 2004. On August 11, 2005, District Judge 6 of Civil Matters granted
Infored and Mr. Gutiérrez Vivó an amparo, in effect overturning
the November 2004 decision. On August 25, 2005, the Company challenged District
Judge 6’s ruling in a proceeding before the Federal District’s Thirteenth
Circuit Court of Civil Matters. On June 16, 2006, the Federal District’s
Thirteenth Circuit Court of Civil Matters ratified the decision of the Civil
Judge 63 of the Federal District Superior Tribunal of Justice to set aside the
arbitration award and refused to enforce the arbitration award in
Mexico.




Following
an appeal by Infored and Mr. Gutiérrez Vivó, on January 30, 2007, the Mexican
Supreme Court (Suprema Corte de Justicia de la Nación), in a 5 to 4 decision
based on procedural grounds, reversed the Federal District’s Thirteenth Circuit
Court of Civil Matters’ decision that had ratified a lower court’s decision to
set aside the arbitration award. The Supreme Court remanded the case to the
Thirteenth Circuit Court, instructing the court to reexamine the matter under
different procedural rules, which required the court to review the merits of the
case. On June 12, 2008, the Thirteenth Circuit Court reversed its prior
decision, granted the amparoof Infored and Mr. Gutiérrez Vivó, denied the amparoof the Company, and
remanded the case to Civil Judge 63 of the Federal District Superior Tribunal of
Justice. On July 11, 2008, Civil Judge 63 of the Federal District Superior
Tribunal of Justice ruled that the decision that set aside the arbitration award
was invalid. The July 2008 decision of the Civil Judge 63 of the Federal
District Superior Tribunal of Justice did not constitute an order to pay the
arbitration award, the enforcement of which remains subject to lower court
review.




In August
2008, the Company challenged the arbitration award as unconstitutional in an
amparofiled with
District Judge 6 of Civil Matters. District Judge 6 dismissed the amparobased on procedural
grounds. The Company challenged this action before the Thirteenth Circuit Court,
and in February 2009, that court ruled the Company’s amparo was admissible. The
amparo is currently
pending.




The
Company plans to continue to challenge the validity of the arbitration award in
the Mexican courts. If the Company is ultimately unsuccessful in challenging the
enforcement of the arbitration award in Mexico, it will be required to finance
any amounts due. See Item 5, “Operating and Financial Review and
Prospects—Liquidity and Capital Resources.” The Company’s ability to obtain
financing is subject to various factors, including general market conditions,
the Company’s financial condition and results of operations and the fact that
the Company has pledged substantially all of its assets under its outstanding
indebtedness. Accordingly, the Company may not be able to obtain financing in a
timely manner, or on acceptable terms, or at all. If the Company incurs
additional indebtedness or it is unable to obtain financing when needed, the
Company’s financial condition and results of operations may be materially and
adversely affected.




The
Company is involved in various other legal proceedings related to the Infored
and Gutiérrez Vivó transaction. In 2004, the Company and a subsidiary, along
with four minority shareholders, initiated two lawsuits against Mr. Gutiérrez
Vivó and Ms. María Ivonne Gutiérrez Vivó to seek rescission of the stock
purchase agreement entered into as an “accessory contract” to the Infored
Agreement. One case pertains to the shares of the licensee of the radio station
formerly known as XEJP-AM (now XENET-AM), and the other case pertains to the
shares of the licensee of the radio station formerly known as XEFAJ-AM (now
XEINFO-AM). These proceedings have been suspended pending a final determination
in the arbitration.


49




In
addition, in 2008, Mr. Gutiérrez Vivó and Infored initiated additional claims
against the Company for alleged violations of labor law in connection with the
Infored Agreement. In 2009, Mr. Gutiérrez Vivó and Infored initiated a civil law
suit against the Company and individual members of the Aguirre family, seeking
consequential damages in an amount of approximately Ps. 9.46 billion arising out
of the Company’s alleged wrongful failure to pay the arbitration award. The
Company’s management believes that these cases will be resolved in favor of the
Company.




The
Company is also involved in a variety of labor claims initiated by former
employees between 2000 and 2004 seeking an aggregate amount of approximately Ps.
49.6 million. The Company has not recorded a provision for these claims, as the
Company’s management believes that the cases will be resolved in favor of the
Company.




Other
than proceedings related to labor claims and proceedings related to the
arbitration with Infored described above, neither the Company nor any of its
subsidiaries is currently engaged in any material litigation or arbitration, and
no material litigation or claim is known to the Company to be pending or
threatened against the Company or any of its subsidiaries.




Dividend
Policy




The table
below sets forth each of the dividends paid by the Company during the period
from 2004 to 2008, together with per-Series A Share (in nominal pesos and U.S.
dollars) and per-ADS amounts translated into U.S. dollars at the exchange rate
in effect on each of the respective payment dates.




Date Dividend Paid
                    
                    Fiscal
                        Year with
                        Respect to
                        which
                        Dividend
                        Paid(1)
                    
                    Aggregate Amount of
                        Dividend Paid
                        (Nominal Pesos)
                    
                    
                    Dividend
                        Per Series A
                        Share
                        (Nominal
                        Pesos)(2)
                    
                    
                    Dividend Per
                        Series A Share
                        (U.S. dollars)(2)
                    
                    
                    Dividend Per
                        ADS
                        (U.S. dollars)(2)(3)May
      7, 2007
                    
                    2006
                    
                    Ps.
                    70,000,000
                    
                    
                    
                    0.43
                    
                    
                    
                    0.04
                    
                    
                    
                    0.36March
      14, 2008
                    
                    2007
                    
                    Ps.
                    100,000,000
                    
                    
                    
                    0.61
                    
                    
                    
                    0.06
                    
                    
                    
                    0.51April
      13, 2009
                    
                    2008
                    
                    Ps.
                    100,000,000
                    
                    
                    
                    0.61
                    
                    
                    
                    0.05
                    
                    
                    
                    0.42





(1)
            The
      Company paid no dividends with respect to 2004 and
  2005.


(2)
            Per
      Series A Share and ADS amounts are calculated based on number of shares
      outstanding on the date of payment of the
  dividend.


(3)
            Nominal
      peso amounts have been translated to U.S. dollar amounts at the noon
      buying rate for pesos on the date of payment of the dividend, as published
      by the Federal Reserve Bank of New York and the U.S. Federal Reserve
      Board.




The
amount of future dividends will depend upon Grupo Radio Centro’s operating
results, financial condition and capital requirements and upon general business
conditions. The declaration, amount and payment of dividends are determined by a
majority vote of the holders of the Series A Shares, generally upon the
recommendation of the Company’s board of directors. See Item 10, “Additional
Information—Bylaws and Mexican Law—Dividends.”




On August
1, 2006, the Company reduced its fixed capital stock by a total of Ps. 128.5
million (Ps. 120.0 million nominal amount) through the payment of cash to its
shareholders on August 7 and October 2, 2006. The payment was made with cash
flow from operations. See Item 5, “Operating and Financial Review and
Prospects—Capital Reduction.”


50




Item
9. The Offer and Listing




Since
July 1, 1993, the CPOs have been listed on the Mexican Stock Exchange and the
ADSs have been listed on the NYSE. The ADSs have been issued by the Depositary.
Each ADS represents nine CPOs. Each CPO represents a financial interest in one
Series A Share.




The CPOs
were originally issued by Nacional Financiera, S.N.C., Institución de Banca de
Desarrollo, Dirección Fiduciaria (“Nafin”) as trustee for the trust (the “CPO
Trust”) created by the trust agreement, dated May 24, 1993, as amended, among
the Old Controlling Trust and the Company, as grantors, and Nafin, as CPO
trustee. At a general meeting of the Company’s shareholders on April 25, 2003
and a general meeting of the CPO holders on May 19, 2003, the shareholders and
CPO holders approved several amendments to the CPO Trust. On June 27, 2003, the
parties to the CPO Trust agreement entered into an amended and restated CPO
Trust agreement (the “Amended CPO Trust Agreement”), reflecting those
amendments, including the following:




·
            Nafin
      was replaced as the CPO trustee by GE Capital Bank, S.A., Institución de
      Banca Múltiple, GE Capital Grupo Financiero, División Fiduciaria, as
      successor trustee for the CPO Trust (the “CPO
  Trustee”).




·
            The
      term of the CPO Trust was extended 20 years until June 29, 2023 (which
      term may be further extended).




·
            On
      June 30, 2003, all CPOs held by holders that qualified as Mexican
      investors, as defined in the Company’s bylaws (see Item 10, “Additional
      Information—Bylaws and Mexican Law––Limitations Affecting Non-Mexican
      Holders”), were exchanged for Series A Shares held in the CPO Trust. As of
      June 30, 2003, qualifying Mexican investors held Series A Shares and no
      longer held CPOs. Non-Mexican holders of CPOs as of June 30, 2003
      continued to hold CPOs and, as holders of CPOs, are not entitled to
      withdraw the Series A Shares held in the CPO
  Trust.




In
connection with the Amended CPO Trust, the Series A Shares commenced trading on
the Mexican Stock Exchange under the symbol “RCENTRO.A” on June 30, 2003. The
Series A Share listing is deemed to include the CPOs, such that the Series A
Share trading line will reflect trading of both Series A Shares and
CPOs.




Holders
of CPOs are able to sell their CPOs (i) to a non-Mexican investor, in which
event the non-Mexican investor would receive such CPOs, or (ii) to a Mexican
investor, in which event the Mexican investor would receive the Series A Shares
underlying such CPOs, directly or by keeping them deposited at an account at
Indeval, maintained by such investor or by an authorized institution. Indeval,
or S.D. Indeval, S.A. de C.V., Institución para el Depósito de
Valores,is a privately owned securities depositary that acts as a
clearinghouse for Mexican Stock Exchange transactions.




The 2003
amendments to the CPO Trust did not affect the rights or interests of holders of
ADSs.


51




Price
History




The
following table sets forth, for the periods indicated, the reported high and low
sale prices for the Series A Shares and the CPOs on the Mexican Stock Exchange
(on a nominal basis) and the reported high and low sale prices for the ADSs on
the NYSE.




Mexican
                                Stock Exchange
                              
                              
                              New York
                                Stock ExchangeAmounts per Series A
                                  Share and per CPO
                                  (in nominal pesos)
                              
                              
                              Amounts per ADS
                                  (in U.S. dollars)High
                              
                              
                              Low
                              
                              
                              High
                              
                              
                              Low2004
                              
                              
                              8.48
                              
                              
                              
                              5.30
                              
                              
                              
                              7.14
                              
                              
                              
                              4.052005
                              
                              
                              9.92
                              
                              
                              
                              8.08
                              
                              
                              
                              7.75
                              
                              
                              
                              6.452006
                              
                              
                              13.10
                              
                              
                              
                              7.15
                              
                              
                              
                              10.75
                              
                              
                              
                              5.502007
                              
                              
                              18.95
                              
                              
                              
                              12.30
                              
                              
                              
                              15.65
                              
                              
                              
                              8.90First
      quarter
                              
                              
                              15.60
                              
                              
                              
                              12.30
                              
                              
                              
                              12.62
                              
                              
                              
                              9.67Second
      quarter
                              
                              
                              18.95
                              
                              
                              
                              14.96
                              
                              
                              
                              15.50
                              
                              
                              
                              11.82Third
      quarter
                              
                              
                              18.40
                              
                              
                              
                              15.01
                              
                              
                              
                              15.65
                              
                              
                              
                              12.11Fourth
      quarter
                              
                              
                              16.01
                              
                              
                              
                              14.51
                              
                              
                              
                              13.50
                              
                              
                              
                              8.902008
                              
                              
                              16.00
                              
                              
                              
                              9.50
                              
                              
                              
                              14.14
                              
                              
                              
                              5.21First
      quarter
                              
                              
                              16.00
                              
                              
                              
                              12.00
                              
                              
                              
                              12.58
                              
                              
                              
                              9.63Second
      quarter
                              
                              
                              14.00
                              
                              
                              
                              13.00
                              
                              
                              
                              14.14
                              
                              
                              
                              10.60Third
      quarter
                              
                              
                              13.25
                              
                              
                              
                              11.10
                              
                              
                              
                              11.84
                              
                              
                              
                              10.28Fourth
      quarter
                              
                              
                              14.00
                              
                              
                              
                              9.50
                              
                              
                              
                              10.83
                              
                              
                              
                              5.21Most Recent Six MonthsDecember
      2008
                              
                              
                              14.00
                              
                              
                              
                              9.50
                              
                              
                              
                              8.65
                              
                              
                              
                              5.21January
      2009
                              
                              
                              14.00
                              
                              
                              
                              13.50
                              
                              
                              
                              9.99
                              
                              
                              
                              5.85February
      2009
                              
                              
                              13.50
                              
                              
                              
                              13.50
                              
                              
                              
                              6.50
                              
                              
                              
                              5.50March
      2009
                              
                              
                              13.50
                              
                              
                              
                              7.00
                              
                              
                              
                              5.57
                              
                              
                              
                              2.96April
      2009
                              
                              
                              11.5
                              
                              
                              
                              7.00
                              
                              
                              
                              8.25
                              
                              
                              
                              4.36May
      2009
                              
                              
                              11.5
                              
                              
                              
                              7.25
                              
                              
                              
                              7.15
                              
                              
                              
                              6.10




Trading
on the Mexican Stock Exchange




The
Mexican Stock Exchange, located in Mexico City, is the only stock exchange in
Mexico. Founded in 1907, it is organized as a corporation whose shares are
currently held by brokerage firms that are exclusively authorized to trade on
the Exchange. Trading on the Mexican Stock Exchange takes place through the
Sentra, an automated
system; the Exchange’s opening and closing times are fixed so that the
Exchange’s trading day coincides with the trading day of the NYSE. The Mexican
Stock Exchange operates a system of automatic suspension of trading in shares of
a particular issuer as a means of controlling excessive price volatility, but
under current regulations this system does not apply to securities, such as the
CPOs, that are directly or indirectly (for example, through ADSs) quoted on a
stock exchange (including, for these purposes, the NYSE) outside
Mexico.




Settlement
is effected three business days after a share transaction on the Mexican Stock
Exchange. Deferred settlement, even by mutual agreement, is not permitted
without the approval of the CNBV. Most securities traded on the Mexican Stock
Exchange, including those of Grupo Radio Centro, are on deposit with
Indeval.


52




Item
10. Additional Information




BYLAWS
AND MEXICAN LAW




Set forth
below is certain information concerning the Company’s capital stock and a brief
summary of certain significant provisions of the Company’s bylaws and Mexican
law. This description does not purport to be complete and is qualified by
reference to Mexican law and the bylaws of the Company, which have been filed as
an exhibit to this Annual Report. For a description of the Company’s bylaws
relating to the board of directors, Executive Committee, Audit Committee and
Corporate Practices Committee, see Item 6, “Directors, Senior Management and
Employees.”




The
bylaws of the Company were amended on July 31, 2006 to incorporate provisions
required by the Mexican Securities Market Law. The most recent amendment to the
bylaws was on December 13, 2006.




Mexican
Securities Market Law




On
December 30, 2005, a new Mexican Securities Market Law was enacted. The law
became effective on June 28, 2006 and, in some cases, it provided issuers until
December 2006 to adopt the new corporate governance requirements. The Securities
Market Law introduces significant changes to the regime in which issuers
operate, including:




·
            the
      establishment of the sociedad anónima
      bursátil, a separate corporate form of organization for issuers
      with stock registered with the Comisión Nacional Bancaria y
      de Valores(Mexican National Banking and Securities Commission or
      the “CNBV”) and listed on the Mexican Stock Exchange, which provides for a
      new set of corporate governance
requirements;




·
            the
      redefinition of the functions and structure of the board of directors,
      including (i) increasing the number of members of the board of directors
      (up to 21, with independent members comprising at least 25%) and (ii)
      requiring that the status of members of the board of directors as
      independent be determined by the shareholders’ meeting, subject to the
      CNBV’s authority to challenge such
  determination;




·
            the
      application of a legal framework to the chief executive officer (director general) and
      executive officers (directivos relevantes)
      entrusted with the day-to-day management of the
  issuer;




·
            the
      adoption of a clear definition of fiduciary duties, including but not
      limited to the duty of care and the duty of loyalty, for members of the
      board of directors and, in certain cases to its secretary, the chief
      executive officer and other executive
officers;




·
            the
      increase in liability for members of the board of directors and its
      secretary with respect to the operations and performance of the issuer,
      including (i) payment of damages and losses resulting from the breach of
      their duty of care or loyalty and (ii) criminal penalties from one to 12
      years of imprisonment for certain illegal acts involving willful
      misconduct. Civil actions under (i) above may be brought by the issuer or
      by shareholders that represent 5% or more of the capital stock of the
      issuer; and criminal actions under (ii) above may be brought by the
      issuer, the Secretaría
      de Hacienda y Crédito Público (Mexican Ministry of Finance and
      Public Credit) after consultation with the CNBV, and in certain cases, by
      injured shareholders;




53




·
            the
      elimination of the requirement that the issuer have a statutory auditor
      and the delegation of specific obligations of corporate governance and
      oversight to the audit committee, the corporate practices committee and
      the external auditors;




·
            the
      requirement that all the members of the audit and corporate practices
      committees be independent as such term is defined under the new law,
      except with respect to the corporate practices committee in the case of
      issuers like us that have controlling
  shareholders;




·
            the
      enhancement of the functions and responsibilities of the audit committee,
      including (i) the evaluation of the performance of the external auditor,
      (ii) the review and discussion of the financial statements of the issuer
      and the conveyance to the board of directors of the committee’s
      recommendations regarding the approval of such financial statements, (iii)
      the surveillance of internal controls and internal audit procedures of the
      issuer, (iv) the reception and analysis of recommendations and
      observations regarding the committee’s functions by the shareholders,
      members of the board of directors and senior management, and the authority
      to act upon such recommendations and observations, (v) the authority to
      call a shareholders’ meeting and to contribute to the meeting’s agenda and
      (vi) the oversight of the execution of resolutions enacted at meetings of
      shareholders or the board of
directors;




·
            the
      requirement that the shareholders’ meeting approve all transactions that
      represent 20% or more of the consolidated assets of the issuer within a
      given fiscal year; and




·
            the
      inclusion of a new set of rules requiring an issuer to obtain prior
      authorization from the CNBV to effect public offerings of securities and
      tender offers.




Organization
and Register




The
Company was incorporated on June 8, 1971, as a Mexican limited liability stock
company (sociedad anónima de
capital variable) in accordance with Chapter V of the Ley General de Sociedades
Mercantiles (the “Mexican Companies Law”). It was registered in the Registro Público de Comercio de la
Ciudad de México (the “Public Registry of Commerce of Mexico City”) on
August 28, 1992 under number 20694. Pursuant to the Mexican Securities Market
Law, Grupo Radio Centro adopted the corporate form of sociedad anónima bursátil de capital
variable on July 31, 2006 through an amendment to its
bylaws.




Purpose




The
Company’s purpose is, among others, to market advertising services through media
as well as to represent or act as an agent of all types of associations, civil
or commercial companies, services, industrial or commercial corporations and in
general, Mexican or foreign individuals or entities and to provide consulting
and technical assistance services related to accounting, commercial, financial,
tax, legal or administrative issues for companies in which it is a shareholder
or for other third parties.




Share
Capital




The
capital stock of the Company consists of Series A Shares.  In addition to
Series A Shares, the bylaws permit the issuance, upon the approval of competent
authorities such as the Ministry of Economy and of the CNBV, of special series
of shares including those with limited or no voting rights.


54





Voting
Rights




Each
Series A Share entitles the holder thereof to one vote at any meeting of the
shareholders of the Company. Holders of CPOs are not entitled to exercise the
voting rights corresponding to the Series A Shares held in the CPO Trust. Such
voting rights are exercisable only by the CPO Trustee, which is required to vote
all such Series A Shares in the same manner as the holders of a majority of the
Series A Shares that are not held in the CPO Trust and that are voted at a
shareholders meeting. See “—Limitations Affecting Non-Mexican Holders—Voting
Rights.”




Shareholders
Meetings




General
shareholders meetings may be ordinary meetings or extraordinary meetings.
Extraordinary general meetings are those called to consider certain matters
specified in Article 182 of the Mexican Companies Law and the Company’s bylaws,
including, among others, amendments to the bylaws, liquidation, and merger and
transformation from one form of company to another. In addition, the Company’s
bylaws require an extraordinary general meeting to consider the removal of the
Company’s capital stock from listing on the Mexican Stock Exchange.




An
ordinary general meeting of the holders of Series A Shares must be held at least
once each year to consider the approval of the financial statements of the
Company for the preceding fiscal year, to elect directors for holders of Series
A Shares and members of the Executive Committee, to determine the allocation of
the profits or losses of the preceding year and to consider approval of the
report on the Company’s repurchase and sale of shares and the report on the
actions of the Audit Committee.




The
quorum for an ordinary general meeting of the Series A Shares in first call is
50% of such shares, and action may be taken by a majority of the Series A Shares
present. If a quorum is not available, a second meeting may be called at which
action may be taken by a majority of the Series A Shares present, regardless of
the number of such shares. The quorum for an extraordinary general meeting is
75% of the Series A Shares. If a quorum is not available, a second meeting may
be called, provided that at least 50% of the Series A Shares entitled to vote
are present. Actions at an extraordinary general meeting may be taken by a 50%
vote of all outstanding Series A Shares on first and successive
calls.




Shareholders
meetings may be called by the board of directors, the Audit Committee, the
Corporate Practices Committee or a court. Holders of 10% of the Series A Shares
may require the chairpersons of the board of directors, the Audit Committee or
the Corporate Practices Committee to call a meeting of the shareholders.
Additionally, if holders of shares with full or limited voting rights
representing 10% of the capital stock of the Company do not have sufficient
information on the matters to be voted on, those shareholders may request one
postponement of shareholders’ meetings per matter. These postponements may be
extended for up to three business days if necessary. Notice of meetings must be
published in the Diario
Oficial de la Federación or a newspaper of general circulation in Mexico
City at least 15 days before the meeting. In order to attend a meeting,
shareholders must deposit their Series A Shares with the Company’s secretary at
its office in Mexico City or any appointed registrar, or submit certificates
evidencing a deposit with Indeval. If entitled to attend the meeting, a
shareholder may be represented by proxy. The directors of the Company may not
act as proxies. Holders of the Company’s shares, with full or limited voting
rights, representing 20% of the capital stock of the Company have the right to
seek judicial remedies to block any actions taken by the shareholders with
respect to which such holders have the right to vote. Holders of CPOs and ADSs
representing CPOs are not entitled to call shareholders meetings or seek
judicial remedies to block actions taken by the shareholders.




55




Dividends




At the
annual ordinary general meeting of holders of Series A Shares, the board of
directors submits the financial statements of the Company for the previous
fiscal year, together with a report thereon by the Board, to the holders of
Series A Shares for approval. The holders of Series A Shares, once they have
approved the financial statements, determine the allocation of the Company’s net
profits for the preceding year. They are required by law to allocate at least 5%
of such net profits to a legal reserve, which is not thereafter available for
distribution except as a stock dividend, until the amount of the legal reserve
equals 20% of the Company’s historical capital stock (before effect of
restatement). See Note 17 to the Consolidated Financial Statements. Thereafter,
the shareholders may determine and allocate a certain percentage of net profits
to any special reserve, including a reserve for open-market purchases of the
Company’s Series A Shares. The remainder of net profits is available for
distribution. All Series A Shares outstanding and fully paid at the time a
dividend or other distribution is declared are entitled to share equally in such
dividend or other distribution. Series A Shares that are only partially paid
participate in dividends or other distributions in the same proportion that such
Series A Shares have been paid at the time of the dividends or other
distributions.




Liquidation




Upon
liquidation of the Company, one or more liquidators may be appointed to wind up
its affairs. All fully paid and outstanding Series A Shares will be entitled to
participate equally in any distribution upon liquidation. Series A Shares that
are only partially paid participate in such distribution upon liquidation in the
proportion that they have been paid at the time of liquidation.




Preemptive
Rights




Except as
described below, in the event of a capital increase, a holder of existing Series
A Shares has a preferential right to subscribe for a sufficient number of Series
A Shares to maintain the holder’s existing proportionate holdings of Series A
Shares. Shareholders will not have preemptive rights to subscribe for Series A
Shares issued (i) in connection with mergers or (ii) on the conversion of
convertible debentures, if an extraordinary general shareholders meeting called
for such purpose approved such issuance or conversion and waived preemptive
rights in connection therewith in accordance with the procedures specified in
the Company’s bylaws. Preemptive rights must be exercised within 15 days
following the publication of notice of the capital increase in the Diario Oficial de la
Federación. Under Mexican law, preemptive rights cannot be waived in
advance and cannot be represented by an instrument that is negotiable separately
from the corresponding share. Holders of CPOs or ADSs that are U.S. persons or
located in the United States will be unable to participate in the exercise of
such preemptive rights absent registration of the preemptive rights offering
under the U.S. Securities Act of 1933, which the Company is not obligated to
do.




Under the
new Mexican Securities Market Law, however, if Grupo Radio Centro were to
increase its capital stock to effect a public offering of newly issued shares or
were to resell any repurchased shares, no preemptive rights would be available
to the holders of outstanding shares as a result of the issuance or
resale.




Variable
Capital




Under the
Company’s bylaws and Mexican law, the Company’s capital stock must consist of
fixed capital and may include variable capital. Shares of the Company’s fixed
capital stock are called Class I shares and shares of the Company’s variable
capital stock are called Class II shares. The fixed portion of the Company’s
capital stock may only be increased or decreased by resolution of an
extraordinary general meeting of shareholders, whereas the variable portion of
the Company’s capital stock may be increased or decreased by resolution of an
ordinary or extraordinary general meeting of shareholders. Increases and
decreases in the variable portion of the capital stock must be recorded in the
Company’s book of capital variations.




56




Currently,
the Company’s outstanding capital stock consists only of fixed capital. Should
the Company have any outstanding variable capital, its outstanding shares will
not be specifically assigned to the fixed or variable portion.




Limitations
Affecting Non-Mexican Holders




Share
Ownership




Ownership
by non-Mexican investors of shares of Mexican enterprises is regulated by the
1993Ley de Inversión
Extranjera (Foreign Investment Law), as amended, and the 1998 Reglamento de la Ley de Inversión
Extranjera y del Registro Nacional de Inversiones Extranjeras (Foreign
Investment Regulations) thereunder. The Secretaría de Economía(Ministry of Economy) and theComisión Nacional de Inversiones
Extranjeras (Foreign Investment Commission) are responsible for the
administration of the Foreign Investment Law and the Foreign Investment
Regulations.




The
Foreign Investment Law reserves certain economic activities exclusively for the
state and reserves certain other activities (such as radio broadcasting)
exclusively for Mexican individuals or Mexican corporations the bylaws of which
contain a prohibition on ownership by non-Mexicans of the corporation’s voting
securities. However, the Foreign Investment Law allows foreign investors to own
non-voting securities, such as the CPOs, of companies subject to foreign
investment restrictions.




In
addition to the limitations established by the Foreign Investment Law, the
Federal Radio and Television Law and the licenses granted by the SCT provide
restrictions on ownership by non-Mexicans of shares of Mexican enterprises
holding licenses for radio, such as those held by Grupo Radio
Centro.




In order
to comply with these restrictions, the Company’s bylaws limit ownership of
Series A Shares to qualifying Mexican investors. A holder that acquires Series A
Shares in violation of the restrictions on non-Mexican ownership will have none
of the rights of a shareholder with respect to those shares. The Company,
however, has received approval from the Foreign Investment Commission to have up
to 73.5% of its capital stock represented by CPOs issued by the CPO Trust. The
CPOs do not have any restrictions on non-Mexican ownership, except that foreign
governments or their agencies may not own them. The foregoing restriction does
not prevent foreign state-owned enterprises organized as separate entities with
their own assets to own CPOs. Pursuant to the Amended CPO Trust Agreement, the
CPOs may be owned only by holders that do not qualify as Mexican investors as
defined in the Company’s bylaws. A holder that acquires CPOs in violation of the
restrictions on Mexican ownership will have none of the rights of a CPO holder
with respect to those CPOs.




The
Foreign Investment Law and Foreign Investment Regulations also require that the
Company register any foreign owner of its shares, or the depositary with respect
to ADSs or global depositary shares representing its shares or ordinary
participation certificates representing such shares, with the Registro Nacional de Inversiones
Extranjeras (National Registry of Foreign Investment). A foreign owner of
Series A Shares that has not been registered is not entitled to vote such Series
A Shares or to receive dividends with respect to such Series A Shares. TheDirección General de Inversión
Extranjera (General Directorate of Foreign Investment) has informed Grupo
Radio Centro that it is not required to register any foreign owner of
CPOs.




57




Voting
Rights




Each
Series A Share entitles the holder thereof to one vote at any meeting of the
shareholders of the Company. Holders of CPOs (and holders of ADSs representing
CPOs) are not entitled to exercise voting rights with respect to the Series A
Shares underlying such CPOs. Pursuant to the terms of the Amended CPO Trust
Agreement, the CPO Trustee votes the Series A Shares held in the CPO Trust in
the same manner as holders of a majority of the Series A Shares not held in the
CPO Trust and voted at the relevant shareholders meeting. The Trust holds a
substantial majority of the Series A Shares not held in the form of CPOs. As a
result, the Trust and, indirectly, members of the Aguirre family have the power
to elect a majority of the directors of, and control, the Company. Additionally,
holders of CPOs or ADSs are not entitled to attend or to address the Company’s
shareholders meetings.




Rights
of Appraisal




Whenever
the shareholders approve a change of corporate purpose, change of nationality or
restructuring from one type of corporate form to another, any shareholder who
has voted against such change or restructuring has the right to withdraw from
the Company and receive the amount calculated as specified in Mexican law
attributable to its shares, provided such shareholder exercises its right to
withdraw during the 15-day period following the meeting at which such change was
approved. Because the CPO Trustee is required to vote the Shares held in the CPO
Trust in the same manner as the holders of a majority of the Series A Shares
that are not held in the CPO Trust and that are voted at the shareholders
meeting, under no circumstances will the Series A Shares underlying the CPOs be
voted against any such change and therefore appraisal rights will not be
available to holders of CPOs or ADSs.




Termination
of the CPO Trust




The
Amended CPO Trust Agreement and the CPOs issued under the public deed evidencing
the issuance of CPOs pursuant to the Amended CPO Trust Agreement (which deed is
registered with the Public Registry of Commerce of Mexico City) are scheduled to
expire 20 years after the date of execution of the Amended CPO Trust Agreement.
The CPO Trust may be extended by the CPO Trustee upon receipt six months before
termination of written notice from the technical committee of the CPO Trust. If
no such notice is received, the CPO Trustee will commence the procedure for the
termination of the Amended CPO Trust Agreement. At the time of such termination,
the CPO Trustee will proceed to sell the Series A Shares held in the CPO Trust
and distribute the proceeds of such sale to the holders of the CPOs on a pro
rata basis in accordance with the number of CPOs owned by each holder.
Notwithstanding the foregoing, the Amended CPO Trust Agreement cannot be
terminated if any dividends or other distributions previously received by the
CPO Trustee remain unpaid to the CPO holders.




Upon the
expiration of the Amended CPO Trust Agreement, subject to obtaining the
applicable authorizations from the Mexican government, the CPO Trustee and any
CPO holder may execute a new trust agreement with the same terms as the Amended
CPO Trust Agreement. There can be no assurance that a new trust agreement will
be executed.




Administration
of the CPO Trust




Pursuant
to the terms of the Amended CPO Trust Agreement, the CPO Trust will continue to
be administered by the CPO Trustee under the direction of a technical committee.
The technical committee of the CPO Trust consists of four members and their
respective alternates. Each of the following appoints one member: the Foreign
Investment Commission, the Mexican Stock Exchange, the Asociación Mexicana de
Intermediarios Bursátiles, A.C. (Mexican Association of Securities
Brokerage Firms) and the common representative of the CPO holders (HSBC México,
S.A., Institución de Banca Multiple, Grupo Financiero HSBC). Actions taken by
the technical committee of the CPO Trust must be approved by a majority of the
members present at any meeting of such committee at which at least the majority
of the members are present.




58




Other
Provisions




Redemption




The
Series A Shares are subject to redemption in connection with either (i) a
reduction of share capital or (ii) a redemption with retained earnings, which,
in either case, must be approved by the Company’s shareholders at an
extraordinary shareholders meeting. The Series A Shares subject to any such
redemption would be selected by the Company by lot or, in the case of redemption
with retained earnings, by purchasing Series A Shares by means of a tender offer
conducted on the Mexican Stock Exchange, in accordance with the Mexican
Companies Law.




Purchase
by the Company of its Shares




The
Company generally may not repurchase its shares, subject to certain exceptions.
First, the Company may repurchase shares for cancellation with distributable
earnings pursuant to a decision of an extraordinary general meeting of
shareholders. Second, pursuant to judicial adjudication, the Company may acquire
the shares of a shareholder in satisfaction of a debt owed by such shareholder
to the Company. The Company must sell any shares acquired pursuant to judicial
adjudication within three months; otherwise, the Company’s capital stock will be
reduced and such shares will be cancelled. Third, in accordance with the Mexican
Securities Market Law, the Company is permitted to repurchase its own shares at
their current market price on the Mexican Stock Exchange under certain
circumstances with funds from a special reserve created for such purpose. The
maximum amount that may be authorized by the shareholders to be spent by the
Company for the repurchase of shares (see “—Shareholders Meetings” above) may
not exceed the sum of net income for the prior year plus retained
earnings.




Purchase
of Shares by Subsidiaries of the Company




Subsidiaries
or other entities controlled by the Company may not purchase, directly or
indirectly, shares of the Company, shares of companies that are majority
shareholders of the Company or invest in derivative instruments having shares of
the Company as underlying assets. However, subsidiaries or other entities
controlled by the Company may acquire equity interests in investment companies
that in turn invest in shares of the Company.




Conflict
of Interest




A
shareholder who votes on a business transaction in which its interest conflicts
with that of the Company may be liable for damages, but only if the transaction
would not have been approved without its vote. In accordance with the Securities
Market Law, a conflict of interest is assumed, unless proven otherwise, when a
controlling shareholder votes in favor of or against transactions and in so
doing obtains benefits that not obtained by other shareholders, the Company or
its controlled entities.




Additionally,
any members of the board of directors who have a conflict of interest must
abstain from discussing or voting on any matter. This condition does not affect
the quorum requirement for Board meetings.




59




Duty
of Care




The
members of the board of directors must comply with the duty of care by acting in
good faith and in the best interest of the Company and its controlled entities.
In order to obtain the necessary information to comply with the duty of care,
the members are authorized to request information on the Company and its
controlled entities as well as solicit meetings with executive officers and
other persons that may contribute to the decision-making processes of the
Board.




Duty
of Loyalty




Directors
and the secretary of the board of directors are bound to preserve the
confidentiality of information regarding the Company when such information has
not been made public. As part of the duty of loyalty, directors must inform the
Audit Committee and the external auditor of any irregularities that occurred
during the tenure of former board members as well as any irregularities that
become apparent during their tenure.




Directors
who breach the duty of loyalty may be jointly liable with other directors and
must indemnify the Company against any losses or damages caused by the breach.
Such individuals shall be removed from their positions.




Actions
Against Directors




Actions
for civil liabilities against the directors, the secretary of the board of
directors or executive officers may be initiated by resolution passed at a
general ordinary shareholders meeting. If the shareholders decide to bring such
action, the directors against whom such action is to be brought immediately
cease to be directors. Shareholders representing not less than 5% of the
outstanding Series A Shares may directly bring such action provided that the
claim covers all damages allegedly suffered by the Company or its controlled
entities and not only by such shareholders. Any recovery of damages with respect
to actions for civil liabilities against directors, the secretary of the Board
or executive officers will be for the benefit of the Company or its controlled
entities and not for the shareholders bringing such actions.




Obligations
of Majority Shareholders




If the
Company seeks to cancel the registration of its shares with the Registro Nacional de Valores(National Registry of Securities, or “RNV”) or the registry is cancelled
by the CNBV, shareholders holding the majority of the voting shares or having
the power to control decisions in the general shareholders meeting or appoint
the majority of the board of directors (the “controlling shareholders”) must
offer to purchase all outstanding shares before cancellation. If the controlling
shareholders make such a purchase offer but do not acquire 100% of the shares of
the Company’s capital stock, then before cancellation of the registration of its
securities from the RNV, the controlling shareholders shall place in trust for a
minimum of six months an amount of funds necessary to acquire the remaining
shares at the purchase offer price.




According
to the bylaws of the Company, the price of the offer must be at least the higher
of (i) the average trading price during the previous 30 days on which the shares
may have been quoted for a period up to six months before the effective date of
the offer or (ii) the book value of the shares in accordance with the most
recent quarterly report submitted to the CNBV and the Mexican Stock
Exchange.




60




The trade
value in the Mexican Stock Exchange shall be the average adjusted price per
volume of transactions carried out during the last 30 days in which the shares
of the Company have been traded, before the date of the offer during a period
that cannot exceed six months. If the number the shares were traded for fewer
than 30 days, the actual number of days in which the shares were traded will be
taken into account. If the shares are not traded within such period of time, the
book value of the shares will be used.




The board
of directors of the Company must provide its opinion regarding the price of the
tender offer within the ten business days after the commencement of the offer,
taking into account the opinion of the Corporate Practices Committee, and
disclose its opinion through the Mexican Stock Exchange. The opinion provided by
the board of directors may include the opinion of an independent expert. The
Board must also disclose any conflicts of interests that any director may have
in connection with the offer. The directors and the chief executive officer of
the Company must publicly disclose their decision with respect to whether or not
they will sell any of their own securities issued by the Company.




If the
controlling shareholders obtain the consent of the shareholders representing 95%
of the capital stock of the Company through a resolution adopted at a
shareholders meeting, and the bid price for the shares is less than 300,000
investment units, as defined under Mexican law, the controlling shareholders
will not be required to conduct a tender offer, as long as to obtain the
cancellation, the Company places in trust for a minimum of six months an amount
of funds necessary to acquire the remaining shares at the same price as the
offer price.




Finally,
the bylaws provide that the controlling shareholders may request authorization
from the CNBV to use a different basis for the determination of the price
provided that the board of directors presents a recommendation to establish a
different price, after taking into account the opinion of the Corporate
Practices Committee, together with the report of an independent expert
confirming that the price is reasonably appropriate.




Duration




The
Company’s existence under the bylaws is indefinite.




Anti-Takeover
Provisions




The
bylaws contain certain provisions intended to delay or prevent a takeover of the
Company by any person or persons. The bylaws require the approval of two-thirds
of the members of the board of directors for the (i) acquisition by any person
or related persons, through one or more consecutive transactions of any nature,
of shares or other securities with full voting rights representing 30% or more
of the capital stock of the Company and (ii) entering into by any person or
persons of any agreement or arrangement for the exercise of voting rights in
respect of 30% or more of the capital stock of the Company.




Any
acquisition of shares or other securities of the Company which has not been
approved by the board of directors as required will not be recorded in the stock
registry book of the Company, will not be acknowledged by the Company and will
not entitle the acquiring person to vote or exercise any other rights in respect
of the acquired shares or securities. Similarly, any person entering into any
voting agreement or arrangement which has not been approved by the board of
directors as required will not be entitled to exercise the relevant voting
rights whether in the general shareholders meeting or the board of directors
meetings. In the event of either an acquisition of shares or securities of the
Company or the entering into of a voting agreement or arrangement without the
required approval of the board of directors, the board of directors will have
the right to take certain actions including requiring the acquirer of shares to
sell such shares through a public offering, requiring such acquirer to acquire
all or part of the remaining shares of the Company, the rescission of the
acquisition of shares and the termination of such voting agreement or
arrangement.




61




To the
extent that the board of directors has the right to approve any acquisition of
shares or other securities or any agreement for the exercise of voting rights,
the board of directors shall decide to approve such transaction based on the
following factors: (i) the nationality, moral and financial status and other
characteristics of the contemplated acquirer, (ii) the potential advantages and
disadvantages of the contemplated acquirer’s participation in the Company and
(iii) the contemplated acquirer’s experience in the radio broadcasting
industry.




The
chairman and the secretary of the board of directors must be notified, within
five days, of any acquisition of shares or other securities or the entering into
of any voting agreements or arrangements involving 5% or more of the capital
stock of the Company.




MATERIAL
CONTRACTS




On
October 16, 2008, the Company entered into an agreement to extend the term of
the Operating Agreement, dated as of December 30, 1998, between the Company and
Comercializadora Siete, S.A. de C.V., under which the Company operates the radio
station XHFO-FM. The agreement is scheduled to terminate on January 2, 2014. See
Note 8 to the Consolidated Financial Statements.




For a
description of the Company’s bank credit facility, see Item 5, “Operating and
Financial Review and Prospects—Liquidity and Capital
Resources—Indebtedness.”




On April
3, 2009, the Company entered into a local marketing agreement with certain
subsidiaries of Emmis Communications Corporation, a U.S. radio broadcasting
company. Under the local marketing agreement, the Company has agreed to provide
programming to, and sell advertising time on, KMVN-FM, a radio station
broadcasting in Los Angeles, California, for up to seven years. The Company will
pay Emmis U.S.$ 7 million per year, plus expenses incurred by Emmis with respect
to the station. On April 7, 2009, the Company advanced U.S.$ 14 million
(approximately Ps. 200 million) as prepayment for the first two years of fees
under the local marketing agreement. The Company financed the prepayment with a
bank loan in an aggregate principal amount of Ps. 200 million.




In
connection with the local marketing agreement, the Company also entered into a
seven-year call and put option agreement with Emmis to purchase the assets of
KMVN-FM. Pursuant to the agreement, the Company is entitled to exercise its call
option to purchase the KMVN-FM station assets at any time during its seven-year
term, and Emmis is entitled to require the Company to purchase the station’s
assets during the seventh year of the term. If, at the time of the exercise of
the call or put, the Company is not qualified under U.S. law to own a U.S. radio
station, the Company must assign the agreement to a qualified third party. The
purchase price under this agreement is U.S.$ 110 million.




Other
than the foregoing, the only material contracts entered into by the Company in
the two-year period before this filing have been entered into in the ordinary
course of business.




EXCHANGE
CONTROLS




Mexico
has had a free market for foreign exchange since 1991, and the government has
allowed the peso to float freely against the U.S. dollar since December 1994.
There can be no assurance that the government will maintain its current foreign
exchange policies. See Item 3, “Key Information—Exchange Rate
Information.”




62




TAXATION




The
following summary contains a description of the principal U.S. federal income
and Mexican federal tax consequences of the purchase, ownership and disposition
of CPOs or ADSs by a holder that is a citizen or resident of the United States
or a U.S. domestic corporation or that otherwise will be subject to U.S. federal
income tax on a net income basis in respect of the CPOs or ADSs (a “U.S.
holder”), but it does not purport to be a comprehensive description of all of
the tax considerations that may be relevant to an investment in CPOs or ADSs. In
particular, this summary deals only with U.S. holders that will hold CPOs or
ADSs as capital assets and does not address the tax treatment of U.S. holders
that are subject to special tax rules, that own or are treated as owning 10% or
more of the voting shares (including CPOs) of the Company or that may have
acquired Series A Shares issued by the Company. This summary also includes a
limited description of certain U.S. tax consequences with respect to non-U.S.
holders.




The
summary is based upon tax laws of the United States and Mexico as in effect on
the date of this Annual Report, which are subject to change. Holders of CPOs or
ADSs should consult their own tax advisers as to the U.S., Mexican or other tax
consequences of the purchase, ownership and disposition of CPOs or ADSs,
including, in particular, the effect of any foreign, state or local tax
law.




In
general, for U.S. federal tax purposes, and for purposes of the Convention for
the Avoidance of Double Taxation and the Prevention of Fiscal Evasion and the
Protocols thereto (the “Tax Treaty”) between the United States and Mexico,
entered into force on January 1, 1994, holders of CPOs or ADSs will be treated
as the beneficial owners of the Series A Shares represented by those CPOs or
ADSs.




Taxation
of Dividends




Mexican
Tax Considerations




During
2009, there will be no Mexican income or withholding tax levied on holders of
the CPOs or ADSs who are non-residents of Mexico for tax purposes (as described
below) on dividends paid, either in cash or in any other form, by the
Company.




For
purposes of Mexican taxation, an individual is considered to be a resident of
Mexico if he or she has established a home in Mexico. However, if such
individual has a home in a foreign country as well, he or she will be considered
a resident of Mexico if his or her center of vital interests is located in
Mexico. A Mexican citizen is presumed to be a resident of Mexico for tax
purposes unless such person can demonstrate otherwise. A legal entity is
considered to be a resident of Mexico for tax purposes if its principal
administrative office is located in Mexico.




U.S.
Tax Considerations




The gross
amount of any dividends paid with respect to the Series A Shares represented by
CPOs or ADSs, to the extent paid out of the Company’s current or accumulated
earnings and profits, as determined for U.S. tax purposes, generally will be
includible in the gross income of a U.S. holder as ordinary income on the day on
which the dividends are received by the CPO Trustee and will not be eligible for
the dividends received deduction allowed to corporations under the Internal
Revenue Code of 1986, as amended. Dividends, which will be paid in pesos, will
be includible in the income of a U.S. holder in a U.S. dollar amount calculated
in general by reference to the exchange rate in effect on the day they are
received by the CPO Trustee. U.S. holders should consult their own tax advisors
regarding the treatment of foreign currency gain or loss, if any, on any pesos
received that are converted into U.S. dollars on a date after the date of
receipt by the CPO Trustee.




63




Subject
to certain exceptions for short-term and hedged positions, the U.S. dollar
amount of dividends received by an individual before January 1, 2011 with
respect to the ADSs will be subject to taxation at a maximum rate of 15% if the
dividends are “qualified dividends.” Dividends paid on the ADSs will be treated
as qualified dividends if (i) the ADSs are readily tradable on an established
securities market in the United States and (ii) the Company was not, in the year
before the year in which the dividend was paid, and is not, in the year in which
the dividend is paid, a passive foreign investment company (“PFIC”). The ADSs
are listed on the New York Stock Exchange, and will qualify as readily tradable
on an established securities market in the United States so long as they are so
listed. Based on the Company’s audited financial statements and relevant market
and shareholder data, the Company believes that it was not treated as a PFIC for
U.S. federal income tax purposes with respect to its 2007 or 2008 taxable year.
In addition, based on the Company’s audited financial statements and its current
expectations regarding the value and nature of its assets, the sources and
nature of its income, and relevant market and shareholder data, the Company does
not anticipate becoming a PFIC for its 2009 taxable year. The U.S. Treasury has
announced its intention to promulgate rules pursuant to which holders of ADSs or
common stock and intermediaries though whom such securities are held will be
permitted to rely on certifications from issuers to establish that dividends are
treated as qualified dividends. Because such procedures have not yet been
issued, it is not clear whether the Company will be able to comply with them.
Holders of ADSs or CPOs should consult their own tax advisers regarding the
availability of the reduced dividend tax rate in the light of their own
particular circumstances.




A holder
of CPOs or ADSs that is, with respect to the United States, a foreign
corporation or nonresident alien individual (a “non-U.S. holder”) generally will
not be subject to U.S. federal income or withholding tax on dividends received
on CPOs or ADSs, unless such income is effectively connected with the conduct by
the non-U.S. holder of a trade or business in the United States.




Taxation
of Capital Gains




Mexican
Tax Considerations




Gains
obtained during 2009 on the sale or other disposition of ADSs by holders who are
non-residents of Mexico for tax purposes, will generally not be subject to
Mexican income or withholding tax. Deposits of CPOs in exchange for ADSs and
withdrawals of CPOs in exchange for ADSs will not give rise to any Mexican tax
or transfer duties.




Income
generated on the sale of CPOs during 2009 by individuals or legal entities that
are non-resident of Mexico for tax purposes through the Mexican Stock Exchange
or any other stock exchange or securities market in Mexico that is recognized by
the Mexican Ministry of Finance, are generally exempt from Mexican
taxes.




The tax
exemption described in the previous paragraph will not be applicable to
pre-negotiated trades executed through the Mexican Stock Exchange, which
preclude the holders’ acceptance of offers more competitive than those received
prior to and during the period in which they are offered for sale. The exemption
also will not be applicable in the case of a person or group of persons that,
directly or indirectly, holds 10% or more of the shares representing our capital
stock, or that holds a controlling interest in us, if in a period of 24 months,
a sale of 10% or more of our fully paid shares, or of a controlling interest in
us, is carried out through one or several simultaneous or successive
transactions, including those carried out through derivative instruments or
other similar transactions.




If the
abovementioned requirements are not met, capital gains realized on the
disposition of CPOs by a U.S. holder who is eligible for tax benefits under the
Tax Treaty generally will not be subject to Mexican tax, unless such gains are
attributable to a permanent establishment of such U.S. holder in Mexico or if
the U.S. holder owned, directly or indirectly, 25% or more of the issuer’s
capital stock within the 12-month period preceding such sale or other
disposition.




64




Exemption
under the Tax Treaty requires that the U.S. holder appoint a legal
representative in Mexico for income tax purposes before the sale and provide
such a representative with a U.S. tax residence certificate issued by the U.S.
Internal Revenue Service. Additionally, the U.S. holder must file a notice with
the Mexican tax authorities within 30 days after the appointment has been
made.




Gains on
sales or other dispositions of CPOs made in circumstances other than those
described above, generally would be subject to Mexican tax, regardless of the
nationality or residence of the transferor.




U.S.
Tax Considerations




Gain or
loss realized by a U.S. holder on the sale or other disposition of CPOs or ADSs
will be subject to U.S. federal income taxation as capital gain or loss in an
amount equal to the difference between the amount realized on the disposition
and such U.S. holder’s tax basis in the ADSs or the CPOs. Gain, if any, realized
by a U.S. holder on the sale or other disposition of CPOs or ADSs generally will
be treated as U.S. source income for U.S. foreign tax credit purposes.
Consequently, if a Mexican withholding tax is imposed on the sale or disposition
of CPOs or ADSs, a U.S. holder that does not receive significant foreign source
income from other sources may not be able to derive effective U.S. foreign tax
credit benefits in respect of these Mexican taxes. U.S. holders should consult
their own tax advisors regarding the application of the foreign tax credit rules
to their investment in, and disposition of, CPOs or ADSs.




Gain or
loss realized by a U.S. holder on such sale, redemption or other disposition
generally will be long-term capital gain or loss if, at the time of disposition,
the CPOs or ADSs have been held for more than one year. The net amount of
long-term capital gain recognized by an individual holder is taxed at a reduced
rate.




Deposits
and withdrawals of CPOs by U.S. holders in exchange for ADSs will not result in
the realization of gain or loss for U.S. federal income tax purposes. Such an
exchanging U.S. holder will have a tax basis in the securities received equal to
the basis such holder had in the exchanged securities. A U.S. holder’s holding
period for securities received in such an exchange will include the holding
period such U.S. holder had in the securities before such exchange.




A
non-U.S. holder of CPOs or ADSs will not be subject to U.S. federal income or
withholding tax on gain realized on the sale of CPOs or ADSs, unless (i) such
gain is effectively connected with the conduct by the non-U.S. holder of a trade
or business in the United States or (ii) in the case of gain realized by an
individual non-U.S. holder, the non-U.S. holder is present in the United States
for 183 days or more in the taxable year of the sale and certain other
conditions are met.




Other
Mexican Taxes




There are
no inheritance, gift, succession or value added taxes applicable to the
ownership, transfer, exchange or disposition of CPOs or ADSs by holders that are
non-residents of Mexico for tax purposes. There are no Mexican stamp, issue,
registration or similar taxes or duties payable by holders of CPOs or
ADSs.




65




Unless it
can be proved that the services were not utilized in Mexico, commissions paid in
brokerage transactions for the sale of CPOs on the Mexican Stock Exchange are
subject to a value added tax rate of 15%.




The
Single Rate Business Tax Law establishes that individuals and legal entities
deemed as Mexican residents for tax purposes, as well as foreign residents with
a permanent establishment in Mexico, are obligated to pay this tax, regardless
of where the income is generated, on revenues obtained from engaging in the
following activities: (i) transfer of goods; (ii) rendering of independent
services; and (iii) granting of temporary use or enjoyment of
goods.




In
accordance with the Single Rate Business Tax Law, the sale or other disposition
of CPOs by holders who are non-residents of Mexico for tax purposes are not
considered as taxable transactions.




Additionally,
in accordance with the Single Rate Business Tax Law, dividends (either in cash
or in any other form) earned by the abovementioned holders are also not deemed
as taxable income for purposes of this tax.




U.S.
Backup Withholding Tax and Information Reporting Requirements




In
general, information reporting requirements will apply to payments by a paying
agent within the United States to a non-corporate (or other non-exempt) U.S.
holder of dividends in respect of the CPOs or ADSs or the proceeds received on
the sale or other disposition of the CPOs or ADSs, and a backup withholding tax
may apply to such amounts if the U.S. holder fails to provide an accurate
taxpayer identification number to the paying agent. Amounts withheld as backup
withholding tax will be creditable against the U.S. holder’s U.S. federal income
tax liability, provided that the required information is furnished to the U.S.
Internal Revenue Service.




DOCUMENTS
ON DISPLAY




Grupo
Radio Centro is subject to the information requirements of the Exchange Act. In
accordance with these requirements, Grupo Radio Centro files reports, including
annual reports on Form 20-F, and other information with the SEC. These
materials, including this Annual Report, and the exhibits thereto, may be
inspected and copied at the SEC’s Public Reference Room at 100 F Street, N.E,
Room 1580, Washington, D.C. 20549. Information on the operation of the Public
Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. Any
materials filed by Grupo Radio Centro may also be read and copied at the SEC’s
regional office at Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. As a foreign private issuer, Grupo Radio Centro has
been required to make filings with the SEC by electronic means since November
2002. Any filings the Company makes electronically will be available to the
public over the Internet at the SEC’s website at http://www.sec.gov and Grupo
Radio Centro’s website at http://www.grc.com.mx. (This URL is intended to be an
inactive textual reference only. It is not intended to be an active hyperlink to
our website. The information on our website, which might be accessible through a
hyperlink resulting from this URL, is not and shall not be deemed to be,
incorporated into this Annual Report.)




66




Item
11. Quantitative and Qualitative Disclosures About Market Risk




The
Company is exposed to market risk from changes in currency exchange
rates.




Foreign
Currency Exchange Risk




The
Company’s principal foreign currency exchange risk involves changes in the value
of the peso relative to the U.S. dollar. For the year ended December 31, 2008,
the Company had net foreign currency exposure of U.S.$ 132,000,which consisted of short-term
U.S. dollar-denominated bank deposits. The Company acquired these instruments
for purposes other than trading purposes. See Note 4 to the Consolidated
Financial Statements.




Decreases
in the value of the peso relative to the U.S. dollar will increase the cost in
pesos of the Company’s foreign currency denominated costs and expenses and of
any obligation of the Company with respect to any foreign currency denominated
liabilities. The Company generally does not hedge or enter into derivative
transactions with respect to its foreign currency exposure.




A
hypothetical and unfavorable 10% change in the currency exchange rate would
result in total additional operating expenses of approximately Ps. 3.1 million
in 2008.




Item
12. Description of Securities Other than Equity Securities




Not
applicable.




PART
II




Item
13. Defaults, Dividend Arrearages and Delinquencies




None.




Item
14. Material Modifications to the Rights of Security Holders and Use of
Proceeds




Material
Modifications to Security Holders’ Rights




None.




Use
of Proceeds




Not
applicable.




Item
15. Controls and Procedures




Disclosure
Controls and Procedures




We have
evaluated, with the participation of our chief executive officer and chief
financial officer, the effectiveness of our disclosure controls and procedures
as of December 31, 2008. There are inherent limitations to the effectiveness of
any system of disclosure controls and procedures, including the possibility of
human error and the circumvention or overriding of the controls and procedures.
Accordingly, even effective disclosure controls and procedures can only provide
reasonable assurance of achieving their control objectives. Based upon our
evaluation, our chief executive officer and chief financial officer concluded
that our disclosure controls and procedures were effective to provide reasonable
assurance that information required to be disclosed by us in the reports that we
file or submit under the Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the applicable rules and forms,
and that it is accumulated and communicated to our management, including our
chief executive officer and chief financial officer, as appropriate to allow
timely decisions regarding required disclosure.




67




There has
been no change in our internal control over financial reporting during 2008 that
has materially affected, or is reasonably likely to materially affect, our
internal control over financial reporting.




Management’s
Report on Internal Control over Financial Reporting




Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting, as such term is defined in Rules 13a-15(f) and
15d-15(f) under the Exchange Act. Under the supervision and with the
participation of our management, including our principal executive officer and
principal financial officer, we conducted an evaluation of the effectiveness of
our internal control over financial reporting based on the framework in Internal
Control—Integrated Framework issued by the Committee of Sponsoring Organizations
of the Treadway Commission.




Our
internal control over financial reporting is a process designed to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
Mexican Financial Reporting Standards. Our internal control over financial
reporting includes those policies and procedures that (i) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect
the transactions and dispositions of the assets of the Company; (ii) provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with Mexican Financial
Reporting Standards, and that receipts and expenditures of the Company are being
made only in accordance with authorizations of management and directors of the
Company; and (iii) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use or disposition of the Company’s
assets that could have a material effect on the financial
statements.




Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.




Based on
our evaluation under the framework in Internal Control—Integrated Framework, our
management concluded that our internal control over financial reporting was
effective as of December 31, 2008.




BDO
Hernández Marrón y Cía., S.C., or BDO, an independent registered public
accounting firm, that has audited our financial statements, has issued an
attestation report on management’s assessment of our internal control over
financial reporting, which appears under Item 18 of this Annual Report on Form
20-F.




Item
16A. Audit Committee Financial Expert




Our board
of directors has determined that Luis de la Fuente Baca qualifies as an “audit
committee financial expert” and as independent, as independence is defined under
the Mexican Securities Market Law and the rules of the NYSE that are applicable
to foreign private issuers. Mr. de la Fuente Baca acquired his expertise by
serving as the chief executive officer and chief financial officer of various
Mexican corporations over the last 30 years. See Item 6. “Directors, Senior
Management and Employees—Directors—Audit Committee.”




68




Item
16B.  Code of Ethics




We have
adopted a code of ethics, as defined in Item 16B of Form 20-F under the Exchange
Act.  Our code of ethics applies to our chief executive officer, chief
financial officer and principal accounting officer or persons performing similar
functions.  Our code of ethics is available on our website at
http://www.grc.com.mx.  (This URL is intended to be an inactive
textual reference only.  It is not intended to be an active hyperlink
to our website.  The information on our website, which might be
accessible through a hyperlink resulting from this URL, is not and shall not be
deemed to be, incorporated into this Annual Report.)  If we amend the
provisions of our code of ethics that apply to our chief executive officer,
chief financial officer, principal accounting officer or persons performing
similar functions, or if we grant any waiver of such provisions, we will
disclose such amendment or waiver on our website at the same
address.




Item
16C.  Principal Accountant Fees and Services




Audit
Fees




The
following table sets forth the fees billed to us by our independent registered
public accounting firm, BDO, for the fiscal years ended December 31, 2007 and
2008:




Year
      ended December 31,2007
                
                
                2008(in
      thousands)Audit
      fees
                
                Ps. 1,996
                
                
                Ps.
      1,974Audit-related
      fees
                
                
                320
                
                
                
                320Total
      fees
                
                Ps. 2,316
                
                
                Ps.
      2,294





Audit
fees in the above table are the aggregate fees billed by BDO in connection with
the audit of our annual financial statements and the review of our interim
financial statements and statutory and regulatory
audits.  Audit-related fees in the above table are the aggregate fees
incurred in connection with the evaluation and review by BDO of our internal
control over financial reporting.  BDO has not billed us fees related
to any other services.




Audit
Committee Approval Policies and Procedures




Our audit
committee has not established pre-approval policies and procedures for the
engagement of our independent auditors for services.  Our audit
committee expressly approves on a case-by-case basis any engagement of our
independent auditors for audit and non-audit services provided to our
subsidiaries or to us.




Item
16D.  Exemptions from the Listing Standards for Audit
Committees




Not
applicable.




69




Item
16E.  Purchases of Equity Securities by the Issuer and Affiliated
Purchasers




The
Company did not make any purchases of its equity securities in
2008.





Item
16F.  Change in Registrant’s Certifying Accountant.




Not
applicable.




Item 16G. Corporate
Governance.




Significant
Differences between New York Stock Exchange Corporate Governance Standards and
our Corporate Governance Practices




On
November 4, 2003, the NYSE established new corporate governance rules applicable
to listed companies.  These rules, and the amendments thereto, are
codified in Section 303A of the NYSE’s Listed Company Manual.  Under
these rules, foreign private issuers are subject to a more limited set of
corporate governance requirements than U.S. domestic issuers.  As a
foreign private issuer, pursuant to Rule 303A.11 of the Listed Company Manual of
the NYSE, we must provide a brief description of any significant difference
between our corporate governance practices and those followed by U.S. companies
in accordance with the NYSE listing standards.




The table
below discloses the significant differences between our corporate governance
practices and the NYSE rules.  See Item 6, “Directors, Senior
Management and Employees—Directors.”




Section
      of the
                  NYSE
      Listed
                  Company
                  Manual
              
              New
      York Stock Exchange Corporate
                  Governance
      Rules for Domestic Issuers
              
              Our
      Corporate Governance PracticesDirector
      Independence303A.01
              
              Majority
      of board of directors must be independent. “Controlled companies,” which
      would include our company if it were a U.S. issuer, are exempt from this
      requirement. A controlled company is one in which more than 50% of the
      voting an individual, group holds power or another company, rather than
      the public.
              
              Pursuant
      to our bylaws, our shareholders are required to appoint a board of
      directors of between seven and 21 members, of whom at least 25% must be
      independent.
                
                In
      accordance with the Securities Market Law, our general shareholders’
      meeting is required to make a determination as to the independence of our
      directors, though such determination may be challenged by the CNBV. There
      is no exemption from the independence requirement for controlled
      companies.Executive
      Sessions303A.03
              
              Non-management
      directors must meet regularly without management in executive sessions
      over which a non-management director must preside. The name of the
      non-management director presiding at all such sessions (or the procedure
      by which one is selected for each session) must be disclosed in the
      company’s proxy (or, if no proxy is filed, its Form 10-K / annual report).
      Independent directors should meet alone in an executive session at least
      once a year.
              
              There
      is no similar requirement under our bylaws or applicable Mexican
      law.




70


Section
      of the
                    NYSE
      Listed
                    Company
                    Manual
                
                New
      York Stock Exchange Corporate
                    Governance
      Rules for Domestic Issuers
                
                Our
      Corporate Governance PracticesNominating/Corporate
      Governance Committee303A.04
                
                Nominating/corporate
      governance committee of independent directors is required. The committee
      must have a charter specifying the purpose, duties and annual evaluation
      procedures of the committee. “Controlled companies,” which would include
      our company if it were a U.S. issuer, are exempt from these
      requirements.
                
                We
      currently do not have a nominating/corporate governance
      committee.
                  
                  As
      required under the Mexican Securities Market Law, we have formed a
      corporate practices committee.
                  
                  ·The committee is composed of directors who are appointed by either
      the board of directors after nomination by its chairman or by the
      shareholders at the general shareholders’ meeting.
                  
                  ·Currently, all members of our corporate practices committee are
      independent as defined under the Mexican Securities Market Law and Rule
      10A-3.
                  
                  ·The
      chairman of the committee is appointed and removed exclusively by the
      shareholders at the general shareholders’ meeting.
                  
                  ·Pursuant to our bylaws and to Mexican law, the chairman of our
      corporate practices committee submits an annual report regarding its
      activities to our board of directors, which in turn presents the report to
      our shareholders at the general shareholders’ meeting.Compensation
      Committee§303A.05
                
                Compensation
      committee of independent directors is required, which must approve CEO
      compensation and offer recommendations to the board concerning non-CEO
      executive officer compensation. The committee must have a charter
      specifying the purpose, duties and evaluation procedures of the
      committee.
                
                Our
      bylaws require that our directors’ compensation be determined by the
      shareholders at the general shareholders’ meeting.
                  
                  The
      board of directors is authorized to approve the compensation policies for
      the CEO and other executive
officers.




71


Section
      of the
                    NYSE
      Listed
                    Company
                    Manual
                
                New
      York Stock Exchange Corporate
                    Governance
      Rules for Domestic Issuers
                
                Our
      Corporate Governance PracticesAudit
      Committee303A.06
                  303A.07
                
                Audit
      committee satisfying the independence and other requirements of Rule 10A-3
      under the Securities Exchange Act of 1934, as amended and the more
      stringent requirements under the NYSE standards is
    required.
                
                We
      have been required to comply with Rule 10A-3 since July 31, 2005 and have
      formed an audit committee that satisfies the requirements of Rule 10A-3.
      The audit committee is not required to satisfy the NYSE independence and
      other audit committee standards that are not prescribed by Rule
      10A-3.
                  
                  ·The audit committee is composed of directors who are appointed by
      either the board of directors after nomination by its chairman or by the
      shareholders at the general shareholders’ meeting.
                  
                  ·All members of the audit committee are independent as defined by
      the Securities Market Law and Rule 10A-3.
                  
                  ·The chairman of the audit committee is appointed and removed
      exclusively by the shareholders at the general shareholders’ meeting and
      submits an annual report regarding the activities of the committee to the
      board of directors, which in turn presents the report to the shareholders
      at the general shareholders’ meeting.Equity
      Compensation Plans303A.08
                
                Equity
      compensation plans, and material amendments thereto, require shareholder
      approval, subject to limited exemptions.
                
                Under
      Mexican law, shareholder approval is required for the adoption and
      amendment of an equity compensation plan. We do not currently have an
      equity compensation plan.Code
      of Ethics303A.10
                
                Corporate
      governance guidelines and a code of business conduct and ethics are
      required, with disclosure of any waiver for directors or executive
      officers.
                
                We
      have adopted a code of ethics applicable to our chief executive officer,
      chief financial officer and principal accounting officer or persons
      performing similar functions. We must disclose any waivers granted to such
      persons. A copy of our code of ethics is available on our website at
      www.radiocentro.com.mx.




72


Section
      of the
                    NYSE
      Listed
                    Company
                    Manual
                
                New
      York Stock Exchange Corporate
                    Governance
      Rules for Domestic Issuers
                
                Our
      Corporate Governance PracticesCertification
      Requirements303A.12
                
                CEO
      must (1) certify annually that unaware of any violation of the NYSE
      corporate governance listing standards and (2) notify the NYSE in writing
      after any executive officer becomes aware of any material non-compliance
      with NYSE corporate governance standards. An annual Written Affirmation
      (as well as interim Written Affirmations in certain circumstances) must be
      executed and submitted to the NYSE in the form it
    prescribes.
                
                Mexican
      securities regulations require us to submit annually to the CNBV a report
      and certification of the chairman and secretary of our board of directors
      regarding the degree of our compliance with the provisions of the Mexican
      Code of Best Corporate Practices.
                  
                  The
      NYSE rules require that we execute and submit an annual Written
      Affirmation (as well as interim Written Affirmations in certain
      circumstances) to the NYSE in the form it prescribes and that our CEO
      notify the NYSE in writing after any executive officer becomes aware of
      any material non-compliance with NYSE corporate governance
      standards.


73




PART
III




Item
17.  Financial Statements




Not
applicable.




Item
18.  Financial Statements




See pages
F-1 through F-41, incorporated by reference herein.




Item
19.  Exhibits




Documents
filed as exhibits to this annual report:




(a)
            List
      of Financial Statements




Consolidated
Financial Statements of Grupo Radio Centro, S.A.B. de C.V. for the Years
EndedDecember 31, 2008, 2007 and 2006




Reports
      of independent auditors
                                        
                                        
                                        F-2Consolidated
      balance sheets as of December 31, 2008 and 2007
                                        
                                        
                                        F-5Consolidated
      statements of income for the years ended December 31, 2008, 2007and
      2006
                                        
                                        
                                        F-6Consolidated
      statements of changes in shareholders’ equity for the years endedDecember
      31, 2008, 2007 and 2006
                                        
                                        
                                        F-7Consolidated
      statement of cash flows for the year ended December 31,
    2008
                                        
                                        
                                        F-8Consolidated
      statements of changes in financial position for the years endedDecember
      31, 2007 and 2006
                                        
                                        
                                        F-9Notes
      to the consolidated financial statements as of and for the years ended
      December 31, 2008, 2007 and 2006
                                        
                                        F-10
      to F-41




All other
supplemental schedules relating to the Company are omitted because they are not
required or because the required information, where material, is contained in
the Consolidated Financial Statements or Notes thereto.




(b)
            List
      of Exhibits




Charter
      (Escritura
      Constitutiva), together with an English translation(a)
                                                            
                                                            
                                                            1.1Amended
      and Restated Bylaws of Grupo Radio Centro, S.A.B. de C.V., dated December
      13, 2006 filed as an English translation(l)
                                                            
                                                            
                                                            1.2Deposit
      Agreement, dated June 30, 1993, among Grupo Radio Centro, S.A. de C.V.,
      Citibank N.A. and holders from time to time of American Depositary
      Receipts issued thereunder, including the form of American Depositary
      Receipt(d)
                                                            
                                                            
                                                            2.1




74


Amended
      and Restated Controlling Trust Agreement, No. F/23020-1, dated April 24,
      1992, with amendments dated September 2, 1992, May 18, 1993, September 14,
      1993, May 25, 1999 and April 5, 2000 between certain members of the
      Aguirre family and Bancomer, S.A., as trustee, together with an English
      translation(b)
                                                              
                                                              
                                                              3.1Trustee
      Substitution Agreement with respect to the Amended and Restated
      Controlling Trust Agreement of Trust F/632 (formerly Trust No. F/23020-1),
      dated June 15, 2007, between certain members of the Aguirre family,
      Bancomer, S.A., as the old trustee and IXE Banco, S.A., as the new
      trustee, filed as an English translation
                                                              
                                                              
                                                              3.2Trust
      Agreement, No. F/29307-6, dated June 3, 1998, among certain principal
      shareholders of Grupo Radio Centro, S.A. de C.V., together with an English
      translation(c)
                                                              
                                                              
                                                              3.3Trustee
      Substitution Agreement with respect to the Trust Agreement of Trust F/633
      (formerly Trust No. F/29307-6), dated June 3, 1998, among certain
      principal shareholders of Grupo Radio Centro, S.A. de C.V., Bancomer,
      S.A., as the old trustee and IXE Banco, S.A., as the new trustee, filed as
      an English translation
                                                              
                                                              
                                                              3.4Trust
      Dissolution Agreement with respect to Trust F/633, dated June 18, 2007,
      between certain members of the Aguirre family and IXE Banco, S.A., as
      trustee, filed as an English translation
                                                              
                                                              
                                                              3.5Amended
      and Restated CPO Trust Agreement, dated as of June 27, 2003, between GE
      Capital Bank S.A., Institución de Banca Multiple, GE Capital Grupo
      Financiero, as CPO Trustee, and Grupo Radio Centro, S.A. de C.V., filed as
      an English translation(h)
                                                              
                                                              
                                                              3.6Amended
      and Restated Public Deed, dated as of June 27, 2003 (the “Amended and
      Restated CPO Deed”), filed as an English translation(h)
                                                              
                                                              
                                                              4.1Modifying
      Agreement, dated December 14, 1998, between Grupo Radio Centro, S.A. de
      C.V. and Comercializadora Siete, S.A. de C.V., modifying Service
      Agreement, dated October 2, 1995 with respect to XHFO-FM, together with an
      English translation(e)
                                                              
                                                              
                                                              4.2Modifying
      Agreement, dated June 29, 2001, between Grupo Radio Centro, S.A. de C.V.
      and Comercializadora Siete, S.A. de C.V., modifying Service Agreement,
      dated October 2, 1995, with respect to XHFO-FM, together with an English
      translation(g)
                                                              
                                                              
                                                              4.3Modifying
      Agreement, dated September 7, 2004, between Grupo Radio Centro, S.A. de
      C.V. and Comercializadora Siete, S.A. de C.V., modifying Service
      Agreement, dated October 2, 1995 with respect to XHFO-FM, filed as an
      English translation(j)
                                                              
                                                              
                                                              4.4Programming
      Services Agreement, dated December 23, 1998, among Grupo Radio Centro,
      S.A. de C.V., Infored and José Gutiérrez Vivó, together with an English
      translation(e)
                                                              
                                                              
                                                              4.5


75
  Credit
      Agreement, dated June 4, 2007, among Grupo Radio Centro, S.A. de C.V, as
      borrower; Radio Centro Publicidad, S.A. de C.V., GRC Publicidad, S.A. de
      C.V. and GRC Medios, S.A. de C.V., as several obligors; Desarrollos
      Empresariales, S.A. de C.V., Radiodifusión Red, S.A. de C.V., Inmobilaria
      Radio Centro, S.A. de C.V. and Universal de Muebles e Inmuebles, S.A. de
      C.V., as guarantors; and GE Capital CEF México, S. de R.L. de C.V. and
      Banco Inbursa, S.A., Institución de Banca Múltiple, Grupo Financiero
      Inbursa, as creditors, together with an amendment dated May 16, 2008, a
      second amendment dated June 4, 2008, and a third amendment dated May 14,
      2009, filed as an English translation(k)
                                                                  
                                                                  
                                                                  4.6Amendment
      to the Credit Agreement, dated May 16, 2008, filed as an English
      translation(m)
                                                                  
                                                                  
                                                                  4.7Second
      Amendment to the Credit Agreement, dated June 4, 2008, filed as an English
      translation(m)
                                                                  
                                                                  
                                                                  4.8Third
      Amendment to the Credit Agreement, dated May 14, 2009, filed as an English
      translation
                                                                  
                                                                  
                                                                  4.9Local
      Marketing Agreement, dated as of April 3, 2009,among among KMVN, LLC, KMVN
      License, LLC, Grupo Radio Centro LA, LLC and Grupo Radio Centro, S.A.B. de
      C.V.(n)
                                                                  
                                                                  
                                                                  4.10Put
      and Call Agreement, dated as of April 3, 2009, among KMVN, LLC, KMVN
      License, LLC, Grupo Radio Centro LA, LLC and Grupo Radio Centro, S.A.B. de
      C.V.(n)
                                                                  
                                                                  
                                                                  4.11List
      of Subsidiaries of the Company
                                                                  
                                                                  
                                                                  8.1Certification
      pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
                                                                  
                                                                  
                                                                  12.1Certification
      pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
                                                                  
                                                                  
                                                                  12.2Certification
      pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
                                                                  
                                                                  
                                                                  13.1





(a)
Incorporated by reference to the Company’s Registration Statement on Form F-1
(Commission File No. 333-63878) filed on June 4, 1993.




(b)
Incorporated by reference to the Company’s Annual Report on Form 20-F
(Commission File No. 001-12090) filed on December 31, 1993.




(c)
Incorporated by reference to the Company’s Annual Report on Form 20-F
(Commission File No. 001-12090) filed on June 30, 1998.




(d)
Incorporated by reference to the Company’s Registration Statement on Form F-6
(Commission File No. 333-8224) filed on January 16, 1998.




(e)
Incorporated by reference to the Company’s Annual Report on Form 20-F
(Commission File No. 001-12090) filed on June 30, 1999.




(f)
Incorporated by reference to the Company’s Annual Report on Form 20-F
(Commission File No. 001-12090) filed on May 9, 2001.




(g)
Incorporated by reference to the Company’s Annual Report on Form 20-F
(Commission File No. 001-12090) filed on June 24, 2002.




(h)
Incorporated by reference to the Company’s Annual Report on Form 20-F
(Commission File No. 001-12090) filed on June 30, 2003.




(i)
Incorporated by reference to the Company’s Annual Report on Form 20-F
(Commission File No. 001-12090) filed on July 1, 2004, as amended by
amendment filed on July 2, 2004.




(j)
Incorporated by reference to the Company’s Annual Report on Form 20-F
(Commission File No. 001-12090) filed on June 29, 2005.




76




(k)Incorporated by reference to the Company’s Annual Report on Form 20-F
(Commission File No. 001-12090) filed on June 30, 2006.




(l)
Incorporated by reference to our Annual Report on Form 20-F (Commission File No.
001-12090) filed on July 2, 2007.




(m)
Incorporated by reference to our Annual Report on Form 20-F (Commission File No.
001-12090) filed on July 30, 2008.




(n)
Incorporated by reference to the Form 8-K of Emmis Communications Corporation
(Commission File No. 0-23264) filed on April 8, 2009.




77




SIGNATURE




The
registrant certifies that it meets all the requirements for filing on Form 20-F
and has duly caused and authorized the undersigned to sign this annual report on
its behalf.




Date:  June
26, 2009




GRUPO
      RADIO CENTRO, S.A.B. de C.V.By:
                        /s/
      Pedro Beltrán NasrPedro
      Beltrán NasrChief
      Financial
Officer












GRUPO RADIO CENTRO, S.A.B.
DE C.V. AND SUBSIDIARIES
 
 CONSOLIDATED FINANCIAL
STATEMENTS
 
 AS OF DECEMBER 31, 2008 AND
2007
 
 AND
 
 FOR THE YEARS ENDED DECEMBER
31, 2008, 2007 AND 2006
 
 TOGETHER
WITH
 
 AUDITOR’S
REPORT







INDEX TO THE CONSOLIDATED
FINANCIAL STATEMENTS





PageReports
      of independent registered accounting firm
                                  
                                  F-2
      to F-4Consolidated
      Financial Statements:Consolidated
      Balance Sheets as of December 31, 2008 and 2007
                                  
                                  
                                  F-5Consolidated
      Statements of Income
                                  
                                  
                                  F-6for
      the years ended December 31, 2008, 2007 and 2006Consolidated
      Statements of Changes in Shareholders’ Equity
                                  
                                  
                                  F-7for
      the years ended December 31, 2008, 2007 and 2006Consolidated
      Statement of Cash Flows
                                  
                                  
                                  F-8for
      the year ended December 31, 2008Consolidated
      Statements of Changes in Financial Position
                                  
                                  
                                  F-9for
      the years ended December 31, 2007 and 2006Notes
      to the Consolidated Financial Statements
                                  
                                  F-10
      to F-41




F-1


Report of Independent
Registered Public Accounting Firm
  To
the Shareholders of
 Grupo
Radio Centro, S.A.B. de C.V.
  We have
audited the accompanying consolidated balance sheets of Grupo Radio Centro,
S.A.B. de C.V. and subsidiaries as of December 31, 2008 and 2007 and the related
consolidated statements of income and changes in shareholders’ equity for the
years ended December 31, 2008, 2007 and 2006 as well as the statement of cash
flows for the year ended December 31, 2008 and the statement of changes in
financial position for the years ended December 31, 2007 and 2006. These
consolidated financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
  We
conducted our audits in accordance with generally accepted auditing standards in
Mexico and the standards of the Public Accounting Oversight Board (United
States). These standards require that we plan and perform the audits in order to
obtain reasonable assurance as to whether the financial statements are free of
material misstatements and whether they are prepared according to Mexican
financial reporting standards. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the financial information reporting standards
used, the significant estimates made by the Company’s management and the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
  As
mentioned in Note 3b to the consolidated financial statements, as of January 1,
2008, the Company adopted the financial reporting standard MFRS B-2, Statement of Cash Flows,
which supersedes Bulletin B-12, Statement of Changes in Financial
Position that was in effect through December 31, 2007. As mentioned in
Note 3b, the Company also adopted, as of January 1, 2008, MFRS B-10, Effects of
Inflation.
  In our
opinion, the accompanying consolidated financial statements present fairly, in
all material respects, the financial position of Grupo Radio Centro, S.A.B. de
C.V. and subsidiaries as of December 31, 2008 and 2007, and the consolidated
results of their operations and the consolidated changes in shareholders’ equity
for the years then ended, as well as the consolidated cash flows for the year
ended December 31, 2008 and the consolidated changes in their financial position
for the years ended December 31, 2007 and 2006, in conformity with Mexican
financial reporting standards accepted in Mexico.
  These
consolidated financial statements have been translated into English solely for
the convenience of readers of this language. In all cases where there are any
disagreements between the English and Spanish versions, the Spanish version
shall be considered authoritative and controlling.
  BDO
      Hernández Marrón y Cía., S.C./s/ Bernardo Soto
  PeñafielBernardo
      Soto PeñafielAudit
      Partner
 
 Mexico
City
 February
18, 2009, except for the events described in Note 23, dated June 22,
2009
  F-2




Report
of Independent Registered Public Accounting Firm





The
Board of Directors and Shareholders of


Grupo
Radio Centro, S.A.B. de C.V. and subsidiaries





We have
audited Grupo Radio Centro, S.A.B. de C.V. and its subsidiaries’ internal
control over financial reporting as of December 31, 2008, based on criteria
established in Internal Control - Integrated Framework issued by the Committee
of Sponsoring Organizations of the Treadway Commission (COSO). Grupo Radio
Centro, S.A.B. de C.V.'s management is responsible for maintaining effective
internal control over financial reporting and for its assessment of the
effectiveness of internal control over financial reporting, included in the
accompanying “Item 15, Management’s Report on Internal Control Over Financial
Reporting.” Our responsibility is to express an opinion on the Company's
internal control over financial reporting based on our audit.





We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether effective
internal control over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of internal control over
financial reporting, assessing the risk that a material weakness exists, and
testing and evaluating the design and operating effectiveness of internal
control based on the assessed risk. Our audit also included performing such
other procedures as we considered necessary in the circumstances. We believe
that our audit provides a reasonable basis for our opinion.





A
company's internal control over financial reporting is a process designed to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with Mexican financial reporting standards. A company's internal control over
financial reporting includes those policies and procedures that (1) pertain to
the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (2)
provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with Mexican financial
reporting standards, and that receipts and expenditures of the company are being
made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company's
assets that could have a material effect on the financial
statements.


F-3


Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.





In our
opinion, Grupo Radio Centro, S.A.B. de C.V. and its subsidiaries maintained, in
all material respects, effective internal control over financial reporting as of
December 31, 2008, based on the COSO criteria.





We have
also audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the consolidated financial statements of Grupo
Radio Centro, S.A.B. de C.V. and its subsidiaries as of December 31, 2008 and
2007, and the related consolidated statements of operations, changes in
stockholders' equity and changes in financial position for each of the three
years ended December 31, 2008, 2007 and 2006, and our report dated February 20,
2008, except for Note 23 which is dated as of June 22, 2009.





BDO
      Hernandez Marron y Cia, S.C./s/ Bernardo Soto
  PeñafielBernardo
      Soto PeñafielJune
      22, 2008Mexico
      City




F-4





GRUPO RADIO CENTRO, S.A. B.
DE C.V. AND SUBSIDIARIES


CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2008 AND 2007


(All
amounts bearing the symbol “Ps” are expressed in thousands of Mexican pesos.
The


amounts
bearing the symbol “US$” are expressed in thousands of US dollars - See Note
3a.).





ASSETS
                                        
                                        2008
                                        
                                        
                                        2007CURRENT
      ASSETS:Cash
      and temporary investments (Note 5)
                                        
                                        US$
                                        6,727
                                        
                                        
                                        Ps
                                        93,054
                                        
                                        
                                        Ps
                                        167,011Accounts
      receivable:Clients
      from broadcasting, net of allowance for doubtful accounts of Ps 23,916 in
      2008 and 2007
                                        
                                        
                                        21,768
                                        
                                        
                                        
                                        301,101
                                        
                                        
                                        
                                        195,707Taxes
      recoverable
                                        
                                        
                                        217
                                        
                                        
                                        
                                        3,007
                                        
                                        
                                        
                                        -Others
      (Note 7)
                                        
                                        
                                        450
                                        
                                        
                                        
                                        6,225
                                        
                                        
                                        
                                        4,66322,435
                                        
                                        
                                        
                                        310,333
                                        
                                        
                                        
                                        200,370Advance
      payments
                                        
                                        
                                        2,760
                                        
                                        
                                        
                                        38,179
                                        
                                        
                                        
                                        33,360Total
      current assets
                                        
                                        
                                        31,922
                                        
                                        
                                        
                                        441,566
                                        
                                        
                                        
                                        400,741PROPERTIES
      AND EQUIPMENT, NET (Note 10 )
                                        
                                        
                                        33,620
                                        
                                        
                                        
                                        465,034
                                        
                                        
                                        
                                        461,555DEFERRED
      CHARGES, NET (Note 11)
                                        
                                        
                                        351
                                        
                                        
                                        
                                        4,850
                                        
                                        
                                        
                                        6,047EXCESS
      COST OVER NET BOOK VALUE OF ASSETS OF SUBSIDIARIES, NET (Note
      12)
                                        
                                        
                                        59,924
                                        
                                        
                                        
                                        828,863
                                        
                                        
                                        
                                        828,863OTHER
      ASSETS
                                        
                                        
                                        240
                                        
                                        
                                        
                                        3,325
                                        
                                        
                                        
                                        3,239US$
                                        126,057
                                        
                                        
                                        Ps
                                        1,743,638
                                        
                                        
                                        Ps
                                        1,700,445





LIABILITIES
                      
                      2008
                      
                      
                      2007SHORT-TERM
      LIABILITIES:Advances
      from clients (Note 13)
                      
                      US$
                      10,305
                      
                      
                      Ps
                      142,543
                      
                      
                      Ps
                      124,418Suppliers
      and other accounts payable (Note 14)
                      
                      
                      4,872
                      
                      
                      
                      67,388
                      
                      
                      
                      55,420Income
      tax and other taxespayable (Note 15)
                      
                      
                      1,363
                      
                      
                      
                      18,859
                      
                      
                      
                      50,847Total
      short-term liability
                      
                      
                      16,540
                      
                      
                      
                      228,790
                      
                      
                      
                      230,685LONG-TERM
      LIABILITIES:Labor
      obligations (Note 16)
                      
                      
                      4,358
                      
                      
                      
                      60,276
                      
                      
                      
                      58,605Deferred
      taxes (Note 18)
                      
                      
                      1,575
                      
                      
                      
                      21,782
                      
                      
                      
                      5,130Total
      liabilities
                      
                      
                      22,473
                      
                      
                      
                      310,848
                      
                      
                      
                      294,420SHAREHOLDERS' EQUITY (Note
    17):Capital
      stock
                      
                      
                      81,724
                      
                      
                      
                      1,130,410
                      
                      
                      
                      1,130,410Retained
      earnings
                      
                      
                      18,639
                      
                      
                      
                      257,818
                      
                      
                      
                      231,098Reserve
      for the repurchase of shares
                      
                      
                      3,169
                      
                      
                      
                      43,837
                      
                      
                      
                      43,837Majority
      shareholders' equity
                      
                      
                      103,532
                      
                      
                      
                      1,432,065
                      
                      
                      
                      1,405,345Minority
      interest
                      
                      
                      52
                      
                      
                      
                      725
                      
                      
                      
                      680Total
      shareholders' equity
                      
                      
                      103,584
                      
                      
                      
                      1,432,790
                      
                      
                      
                      1,406,025US$
                      126,057
                      
                      
                      Ps
                      1,743,638
                      
                      
                      Ps
                      1,700,445





The
accompanying notes are an integral part of these financial
statements.




F-5




GRUPO RADIO CENTRO, S.A. B
DE C.V. AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF
INCOME


FOR THE YEARS ENDED DECEMBER
31, 2008, 2007 AND 2006





(All
amounts bearing the symbol “Ps” are expressed in thousands of Mexican pesos.
The


amounts
bearing the symbol “US$” are expressed in thousands of US dollars - See Note
3a.).





2008
                        
                        
                        2007
                        
                        
                        2006Broadcasting
      income
                        
                        US$
                        53,145
                        
                        
                        Ps
                        735,105
                        
                        
                        Ps
                        654,760
                        
                        
                        Ps
                        825,590Broadcasting
      expenses, excludingdepreciation and
    amortization
                        
                        
                        32,703
                        
                        
                        
                        452,350
                        
                        
                        
                        421,970
                        
                        
                        
                        460,072Broadcasting
      income
                        
                        
                        20,442
                        
                        
                        
                        282,755
                        
                        
                        
                        232,790
                        
                        
                        
                        365,518Depreciation
      and amortization
                        
                        
                        2,293
                        
                        
                        
                        31,720
                        
                        
                        
                        33,687
                        
                        
                        
                        37,183-Corporate,
      general and administrative expenses
                        
                        
                        1,045
                        
                        
                        
                        14,461
                        
                        
                        
                        14,774
                        
                        
                        
                        14,813Operating
      income
                        
                        
                        17,104
                        
                        
                        
                        236,574
                        
                        
                        
                        184,329
                        
                        
                        
                        313,522Other
      expenses, net (Note 19)
                        
                        
                        4,112
                        
                        
                        
                        56,880
                        
                        
                        
                        45,806
                        
                        
                        
                        59,511Comprehensive
      cost of financing:Interest
      expense
                        
                        
                        606
                        
                        
                        
                        8,376
                        
                        
                        
                        2,767
                        
                        
                        
                        37,665Interest
      income
                        
                        
                        (16
                        )
                        
                        
                        (228
                        )
                        
                        
                        (399
                        )
                        
                        
                        (480
                        )Foreign
      exchange loss (gain), net (Note 4)
                        
                        
                        (34
                        )
                        
                        
                        (470
                        )
                        
                        
                        5
                        
                        
                        
                        (8
                        )Loss
      from monetary position
                        
                        
                        -
                        
                        
                        
                        
                        
                        
                        
                        3,477
                        
                        
                        
                        2,665556
                        
                        
                        
                        7,678
                        
                        
                        
                        5,850
                        
                        
                        
                        39,842Profit
      before extraordinary item
                        
                        
                        12,436
                        
                        
                        
                        172,016
                        
                        
                        
                        132,673
                        
                        
                        
                        214,169Extraordinary
      item (Note 9)
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        263,523Profit
      before income tax
                        
                        
                        12,436
                        
                        
                        
                        172,016
                        
                        
                        
                        132,673
                        
                        
                        
                        477,692Income
      tax (Note 18)
                        
                        
                        3,271
                        
                        
                        
                        45,251
                        
                        
                        
                        41,554
                        
                        
                        
                        42,944Net
      income
                        
                        US$
                        9,165
                        
                        
                        Ps
                        126,765
                        
                        
                        Ps
                        91,119
                        
                        
                        Ps
                        434,748Net
      income corresponding to:Majority
      shareholders
                        
                        
                        9,162
                        
                        
                        
                        126,720
                        
                        
                        
                        91,098
                        
                        
                        Ps
                        434,685Minority
      interest
                        
                        
                        3
                        
                        
                        
                        45
                        
                        
                        
                        21
                        
                        
                        
                        63US$
                        9,165
                        
                        
                        Ps
                        126,765
                        
                        
                        Ps
                        91,119
                        
                        
                        Ps
                        434,748Net
      income per share
                        
                        US$
                        0.0563
                        
                        
                        Ps
                        0.7790
                        
                        
                        Ps
                        0.5598
                        
                        
                        Ps
                        2.6712





The
accompanying notes are an integral part of these financial
statements.




F-6




GRUPO RADIO CENTRO, S.A. B.
DE C.V. AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF
CHANGES IN SHAREHOLDERS' EQUITY


FOR THE YEARS ENDED DECEMBER
31, 2008, 2007 AND 2006





(All
amounts bearing the symbol “Ps” are expressed in thousands of Mexican pesos.
The


amounts
bearing the symbol “US$” are expressed in thousands of US dollars - See Note
3a.).





Reserve
      for
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    Cumulativerepurchase
                                                    
                                                    
                                                    Excess
      in
                                                    
                                                    
                                                    effect
      of
                                                    
                                                    
                                                    Effect
      fromCapital
                                                    
                                                    
                                                    Retained
                                                    
                                                    
                                                    of
                                                    
                                                    
                                                    restatement
                                                    
                                                    
                                                    deferred
                                                    
                                                    
                                                    labor
                                                    
                                                    
                                                    Minority
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    Comprehensivestock
                                                    
                                                    
                                                    earnings
                                                    
                                                    
                                                    shares
                                                    
                                                    
                                                    of
      capital
                                                    
                                                    
                                                    income
      tax
                                                    
                                                    
                                                    obligations
                                                    
                                                    
                                                    interest
                                                    
                                                    
                                                    Total
                                                    
                                                    
                                                    incomeBalances
      as of December 31, 2005 (see Note 17)
                                                    
                                                    $
                                                    1,258,138
                                                    
                                                    
                                                    $
                                                    (120,608
                                                    )
                                                    
                                                    $
                                                    44,994
                                                    
                                                    
                                                    $
                                                    5,084
                                                    
                                                    
                                                    $
                                                    (106,320
                                                    )
                                                    
                                                    $
                                                    (273
                                                    )
                                                    
                                                    $
                                                    604
                                                    
                                                    
                                                    $
                                                    1,081,619
                                                    
                                                    
                                                    
                                                    (42,710
                                                    )Repurchase
      of shares
                                                    
                                                    
                                                    (5,086
                                                    )
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    (4,031
                                                    )
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    (9,117
                                                    )
                                                    
                                                    
                                                    -Reimbursement
      of capital
                                                    
                                                    
                                                    (128,545
                                                    )
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    (128,545
                                                    )
                                                    
                                                    
                                                    -Effect
      from the additional liability from labor obligations
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    (37
                                                    )
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    (37
                                                    )
                                                    
                                                    
                                                    -Sale
      of shares
                                                    
                                                    
                                                    5,903
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    2,874
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    8,777
                                                    
                                                    
                                                    
                                                    -Net
      gain for the year
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    434,748
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    434,748
                                                    
                                                    
                                                    
                                                    434,748Minority
      interest participation
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    (63
                                                    )
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    63
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -Balances
      as of December 31, 2006 (see Note 17)
                                                    
                                                    
                                                    1,130,410
                                                    
                                                    
                                                    
                                                    314,077
                                                    
                                                    
                                                    
                                                    43,837
                                                    
                                                    
                                                    
                                                    5,084
                                                    
                                                    
                                                    
                                                    (106,320
                                                    )
                                                    
                                                    
                                                    (310
                                                    )
                                                    
                                                    
                                                    667
                                                    
                                                    
                                                    
                                                    1,387,445
                                                    
                                                    
                                                    
                                                    434,748Dividends
      paid
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    (71,934
                                                    )
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    (8
                                                    )
                                                    
                                                    
                                                    (71,942
                                                    )
                                                    
                                                    
                                                    -Reclassification
      of the excess in restatement of capital and the cumulative effect of
      deferred income tax
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    (101,236
                                                    )
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    (5,084
                                                    )
                                                    
                                                    
                                                    106,320
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    -Effect
      from the additional liability from labor obligations
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    (597
                                                    )
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    (597
                                                    )
                                                    
                                                    
                                                    (597
                                                    )Reclassification
      of the effect labor obligations in capital
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    (907
                                                    )
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    907Net
      gain for the year
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    91,119
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    91,119
                                                    
                                                    
                                                    
                                                    91,119Minority
      interest participation
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    (21
                                                    )
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    21
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -Balances
      as of December 31, 2007 (see Note 17)
                                                    
                                                    
                                                    1,130,410
                                                    
                                                    
                                                    
                                                    231,098
                                                    
                                                    
                                                    
                                                    43,837
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    680
                                                    
                                                    
                                                    
                                                    1,406,025
                                                    
                                                    
                                                    
                                                    90,522Dividends
      paid
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    (100,000
                                                    )
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    (100,000
                                                    )
                                                    
                                                    
                                                    -Effect
      from the additional liability from labor obligations
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -Net
      gain for the year
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    126,765
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    126,765
                                                    
                                                    
                                                    
                                                    126,765Minority
      interest participation
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    (45
                                                    )
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    45
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -Balances
      as of December 31, 2008 (see Note 17)
                                                    
                                                    Ps
                                                    1,130,410
                                                    
                                                    
                                                    Ps
                                                    257,818
                                                    
                                                    
                                                    Ps
                                                    43,837
                                                    
                                                    
                                                    Ps
                                                    -
                                                    
                                                    
                                                    Ps
                                                    -
                                                    
                                                    
                                                    Ps
                                                    -
                                                    
                                                    
                                                    Ps
                                                    725
                                                    
                                                    
                                                    Ps
                                                    1,432,790
                                                    
                                                    
                                                    Ps
                                                    126,765





The
accompanying notes are an integral part of these financial
statements.




F-7




GRUPO RADIO CENTRO, S.A. B.
DE C.V. AND SUBSIDIARIES


CONSOLIDATED STATEMENT OF
CASH FLOWS


FOR THE YEAR ENDED DECEMBER
31, 2008





(All
amounts bearing the symbol “Ps” are expressed in thousands of Mexican pesos.
The


amounts
bearing the symbol “US$” are expressed in thousands of US dollars - See Note
3a.).





2008OPERATING ACTIVITIES:Income
      before income tax:
                                                    
                                                    US$
                                                    12,436
                                                    
                                                    
                                                    Ps
                                                    172,016Items
      related to investment activities:Depreciation
      and amortization
                                                    
                                                    
                                                    2,293
                                                    
                                                    
                                                    
                                                    31,720Interest
      income
                                                    
                                                    
                                                    (16
                                                    )
                                                    
                                                    
                                                    (228
                                                    )Other
      items
                                                    
                                                    
                                                    (25
                                                    )
                                                    
                                                    
                                                    (348
                                                    )Pension
      plans
                                                    
                                                    
                                                    121
                                                    
                                                    
                                                    
                                                    1,671Items
      related to financing activities:Interest
      payable
                                                    
                                                    
                                                    606
                                                    
                                                    
                                                    
                                                    8,376Total
                                                    
                                                    
                                                    15,415
                                                    
                                                    
                                                    
                                                    213,207Increase
      in accounts receivable and others
                                                    
                                                    
                                                    (10,175
                                                    )
                                                    
                                                    
                                                    (140,746
                                                    )Decrease
      in suppliers
                                                    
                                                    
                                                    1,242
                                                    
                                                    
                                                    
                                                    17,178Income
      tax paid
                                                    
                                                    
                                                    (2,313
                                                    )
                                                    
                                                    
                                                    (31,988
                                                    )Net
      cash used in operating activities
                                                    
                                                    
                                                    (11,246
                                                    )
                                                    
                                                    
                                                    (155,556
                                                    )INVESTMENT ACTIVITIES:Interest
      expense
                                                    
                                                    
                                                    16
                                                    
                                                    
                                                    
                                                    228Acquisition
      of properties, machinery and equipment
                                                    
                                                    
                                                    (1,696
                                                    )
                                                    
                                                    
                                                    (23,460
                                                    )Net
      cash used in investment activities
                                                    
                                                    
                                                    (1,680
                                                    )
                                                    
                                                    
                                                    (23,232
                                                    )Cash
      to apply to financing activities
                                                    
                                                    
                                                    (1,680
                                                    )
                                                    
                                                    
                                                    34,419FINANCING ACTIVITIES:Interest
      paid
                                                    
                                                    
                                                    (606
                                                    )
                                                    
                                                    
                                                    (8,376
                                                    )Dividends
      paid
                                                    
                                                    
                                                    (7,230
                                                    )
                                                    
                                                    
                                                    (100,000
                                                    )Cash
      used in financing activities
                                                    
                                                    
                                                    (7,836
                                                    )
                                                    
                                                    
                                                    (108,376
                                                    )CASH AND TEMPORARY
    INVESTMENTS:Net
      decrease for the period
                                                    
                                                    
                                                    (5,347
                                                    )
                                                    
                                                    
                                                    (73,957
                                                    )Balance
      at the beginning of the year
                                                    
                                                    
                                                    12,074
                                                    
                                                    
                                                    
                                                    167,011Balances
      at the end of the year
                                                    
                                                    US$
                                                    6,727
                                                    
                                                    
                                                    Ps
                                                    93,054




F-8




GRUPO RADIO CENTRO, S.A. B.
DE C.V. AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF
CHANGES IN FINANCIAL POSITION


FOR THE YEARS ENDED DECEMBER
31, 2007 AND 2006





(All
amounts bearing the symbol “Ps” are expressed in thousands of Mexican pesos.
The


amounts
bearing the symbol “US$” are expressed in thousands of US dollars - See Note
3a.).





2007
                            
                            
                            2006OPERATIONS:Net
      income
                            
                            US$
                            8,347
                            
                            
                            Ps
                            91,119
                            
                            
                            Ps
                            434,748Charges
      (credits) to results not requiring (providing) theoutlay
      of resources:Depreciation
      and amortization
                            
                            
                            3,086
                            
                            
                            
                            33,687
                            
                            
                            
                            37,183Deferred
      income tax
                            
                            
                            (390
                            )
                            
                            
                            (4,259
                            )
                            
                            
                            (34,524
                            )Labor
      obligations (Note 16)
                            
                            
                            302
                            
                            
                            
                            3,302
                            
                            
                            
                            13,158Advance
      payments
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            (15,252
                            )Effect
      from the valuation of properties (Note 10)
                            
                            
                            81
                            
                            
                            
                            881
                            
                            
                            
                            1,93011,426
                            
                            
                            
                            124,730
                            
                            
                            
                            437,243Net
      changes in accounts receivable, accounts payable and other
      assets
                            
                            
                            2,634
                            
                            
                            
                            28,759
                            
                            
                            
                            (172,456
                            )Resources
      generated from the operation
                            
                            
                            14,060
                            
                            
                            
                            153,489
                            
                            
                            
                            264,787FINANCING:Dividends
      paid
                            
                            
                            (6,590
                            )
                            
                            
                            (71,942
                            )
                            
                            
                            -Sale
      of shares
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            8,777Repurchase
      of shares
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            (9,117
                            )Notes
      payable
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            (122,255
                            )Repurchase
      of shares
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            (128,548
                            )Resources
      applied in financing activities
                            
                            
                            (6,590
                            )
                            
                            
                            (71,942
                            )
                            
                            
                            (251,143
                            )INVESTMENT:Goodwill
                            
                            
                            (12
                            )
                            
                            
                            (129
                            )
                            
                            
                            -Deferred
      charges
                            
                            
                            (181
                            )
                            
                            
                            (1,978
                            )
                            
                            
                            537Excluding
      the recognition of the effects from inflation:Equipment
                            
                            
                            (1,314
                            )
                            
                            
                            (14,341
                            )
                            
                            
                            (6,528
                            )Security
      deposits
                            
                            
                            16
                            
                            
                            
                            171
                            
                            
                            
                            -Resources
      applied in investmentactivities
                            
                            
                            (1,491
                            )
                            
                            
                            (16,277
                            )
                            
                            
                            (5,991
                            )Increase
      in cash and temporary investments
                            
                            
                            5,979
                            
                            
                            
                            65,270
                            
                            
                            
                            7,654Cash
      and temporary investments at the beginning of the year
                            
                            
                            9,320
                            
                            
                            
                            101,741
                            
                            
                            
                            94,088Cash
      and temporary investments at the end of the year
                            
                            US$
                            15,299
                            
                            
                            Ps
                            167,011
                            
                            
                            Ps
                            101,741





The
accompanying notes are an integral part of these financial
statements.




F-9


GRUPO RADIO CENTRO, S.A.B.
DE C.V. AND SUBSIDIARIES


NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS


AS OF DECEMBER 31, 2008 AND
2007


AND


FOR THE YEARS ENDED DECEMBER
31, 2008, 2007 AND 2006





(All
amounts bearing the symbol “Ps ” are expressed in thousands of Mexican
pesos.  See Note 3.a.  The amounts bearing the symbol “US$”
are expressed in thousands of US dollars).





NOTE
1LINE OF BUSINESS AND
COMPOSITION OF THE COMPANIES





Grupo
Radio Centro, S.A.B. de C.V. (“Grupo Radio Centro” or “the Company”) was
incorporated on June 8, 1971.





Grupo
Radio Centro is a Mexican commercial broadcasting company whose principal line
of business is the production and radio broadcasting of musical programs, news,
interviews and special events. Its revenues are derived primarily from the sale
of commercial airtime to advertising agencies and businesses. The Company also
operates a radio network in Mexico.





Grupo
Radio Centro owns approximately 99.9% of most of its subsidiaries, which
comprise the following companies:





Companies:
                    
                    
                    2008
                    
                    
                    2007
                    
                    
                    2006Radio
      stations:XEQR,
      S.A. de C.V.
                    
                    
                    
                    X
                    
                    
                    
                    X
                    
                    
                    
                    XXERC,
      S.A. de C.V.
                    
                    
                    
                    X
                    
                    
                    
                    X
                    
                    
                    
                    XXEEST,
      S.A. de C.V.
                    ( a
      )
                    
                    
                    X
                    
                    
                    
                    X
                    
                    
                    
                    XXEQR-FM,
      S.A. de C.V.
                    
                    
                    
                    X
                    
                    
                    
                    X
                    
                    
                    
                    XXERC-FM,
      S.A. de C.V.
                    
                    
                    
                    X
                    
                    
                    
                    X
                    
                    
                    
                    XXEJP-FM,
      S.A. de C.V.
                    
                    
                    
                    X
                    
                    
                    
                    X
                    
                    
                    
                    XXEDKR-AM,
      S.A. de C.V.
                    
                    
                    
                    X
                    
                    
                    
                    X
                    
                    
                    
                    XXESTN-AM,
      S.A. de C.V.
                    
                    
                    
                    X
                    
                    
                    
                    X
                    
                    
                    
                    XRadio
      Red, S.A. de C.V.
                    
                    
                    
                    X
                    
                    
                    
                    X
                    
                    
                    
                    XRadio
      Red-FM, S.A. de C.V.
                    
                    
                    
                    X
                    
                    
                    
                    X
                    
                    
                    
                    XEstación
      Alfa, S.A. de C.V.
                    
                    
                    
                    X
                    
                    
                    
                    X
                    
                    
                    
                    XEmisora
      1150, S.A. de C.V. (formerly XECMQ)
                    
                    
                    
                    X
                    
                    
                    
                    X
                    
                    
                    
                    XRadio
      Sistema Mexicano, S.A.
                    
                    
                    
                    X
                    
                    
                    
                    X
                    
                    
                    
                    X


F-10





Companies:
                          
                          2008
                          
                          2007
                          
                          2006Marketing
      companies:Grupo
      Radio Centro, S.A.B. de C.V.
                          
                          X
                          
                          X
                          
                          XGRC
      Radiodifusión, S.A. (formerly Aerocer, S.A.)
                          
                          X
                          
                          X
                          
                          XGRC
      Publicidad, S.A. de C.V.
                          
                          X
                          
                          X
                          
                          XGRC
      Comunicaciones, S.A. de C.V.
                          (b)
                          X
                          
                          XGRC
      Medios, S.A. de C.V.
                          
                          X
                          
                          X
                          
                          XRadio
      Centro Publicidad, S.A. de C.V.
                          
                          X
                          
                          X
                          
                          XService
      companies:Promotora
      Técnica de ServiciosProfesionales,
      S.A. de C.V.
                          
                          X
                          
                          X
                          
                          XPublicidad
      y PromocionesInternacionales,
      S.A. de C.V.
                          
                          X
                          
                          X
                          
                          XPromo
      Red, S.A. de C.V.
                          
                          X
                          
                          X
                          
                          XTo2
      México, S.A. de C.V.
                          
                          X
                          
                          X
                          
                          XReal
      estate companies:Universal
      de Muebles e Inmuebles, S.A. de C.V.
                          X
                          
                          X
                          
                          XInmobiliaria
      Radio Centro, S.A. de C.V.
                          
                          X
                          
                          X
                          
                          XSub-holding
      companies:Desarrollos
      Empresariales, S.A. de C.V.
                          
                          X
                          
                          X
                          
                          XRadiodifusión
      Red, S.A. de C.V.
                          
                          X
                          
                          X
                          
                          XEnlaces
      Troncales, S.A. de C.V.
                          
                          X
                          
                          X
                          
                          XNon-operating
      companies:Música,
      Música, Música, S.A. de C.V.
                          
                          X
                          
                          X
                          
                          XPromotora
      de Éxitos, S.A. de C.V.
                          
                          X
                          
                          X
                          
                          XProducciones
      Artísticas Internacionales,S.A.
      de C.V.
                          
                          X
                          
                          X
                          
                          X





(a)
              Radio
      station managed and operated by Comercializadora Siete de México, S.A. de
      C.V.(b)
              Subsidiary
      as of January 9, 2007.




The
Company’s radio-station operations include the production and broadcasting of
musical programs, news, interviews, special events and advertising in Mexico
City’s metropolitan area. They are based on limited-term concessions, subject to
renewal, granted by Mexico’s Ministry of Communications and Transportation
(“SCT”). One of the station concessions granted to the Company will expire in
December 2012, nine in July 2016, one in October 2015, one in November 2015 and
one in December 2019.


F-11


The
Company’s marketing companies, are responsible for the programming and sale of
commercial airtime for broadcast by the Company’s radio stations in Mexico City,
the metropolitan area, and the interior of the country.




The
Company’s service companies provide commercial, technical and administrative
services to the companies comprising Grupo Radio Centro.




The
Company’s real estate companies own the land and buildings where the
transmission facilities of the Company’s radio stations and its commercial
companies are located, including the building where the head offices and studios
of Grupo Radio Centro and its subsidiaries are located.




The
Company’s non-operating companies were incorporated for the purpose of
developing new investment projects.





NOTE
2BASIS OF
CONSOLIDATION





The
accompanying consolidated financial statements include the balance sheets of
Grupo Radio Centro and its subsidiaries, listed in Note 1, as of December 31,
2008 and 2007 and the related consolidated statements of income and changes in
shareholders’ equity for the years ended December 31, 2008, 2007 and 2006, as
well as the statement of cash flows for the year ended December 31, 2008 and the
statement of changes in financial position for the years ended December 31, 2007
and 2006. All intercompany balances and transactions have been eliminated in
consolidation.





The US
dollar amounts (denoted by the symbol “US$”) shown in the 2008 financial
statements have been included solely for the convenience of the reader and were
translated at the rate of Ps 13.8320 per US$ 1.00, the noon buying rate of
Mexican pesos on December 31, 2008, as published by the Federal Reserve Bank of
New York. This translation should not be construed as a representation that the
Mexican peso amounts have been or could be converted into US dollars at this or
any other rate.





NOTE
3SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES





The
accompanying financial statements have been prepared in accordance with Mexican
Financial Reporting Standards (MFRS).  MFRS require Company
management, using their professional judgment, to make certain estimates and to
use certain assumptions in order to determine the valuation of certain items
included in its financial statements. Though such estimates and assumptions may
differ from the final result, Company management believes that they are adequate
under the circumstances and as of the date of issue of these financial
statements.


F-12


The most
significant accounting policies followed by Grupo Radio Centro in the
preparation of its consolidated financial statements, which are in compliance
with MFRS, are summarized below:





a.       Basis
of preparation and disclosure:





1.   Monetary
unit of the financial statements:





The
financial statements and footnotes as of December 31, 2008 and for the year then
ended were determined and are presented in nominal Mexican pesos (except for
those non-monetary items that include inflation effects at December 31, 2007)
and the financial statements and footnotes as of December 31, 2007 and 2006 and
for the years then ended are presented in Mexican pesos with purchasing power as
of December 31, 2007.





2.   Classification
by function:





Expenses
are presented based on function to highlight how broadcasting expenses are used,
in contrast to corporate, general and administrative expenses.





3.   Operating
income:





Operating
income is determined by deducting operational and broadcasting expenses,
corporate, general and administrative expenses, and depreciation and
amortization from broadcasting revenues. Even though this is not required by
MRFS B-3, it is included in this line of the consolidated statements of income
presented as it adds to a better understanding of the Company’s economic and
financial performance.





4.   Comprehensive
income:





Comprehensive
income presented in the statement of changes in shareholders’ equity is the
result of the Company’s total performance during the period and is represented
by the year’s net income plus additional liability from retirement payments,
which in compliance with MFRS, is charged directly to shareholders’
equity.





b.      Adoption
of new MFRS:





As of
January 1, 2008, guidelines contained in the following MFRS became effective.
The Company considers that the adoption of the MFRS did not have a material
effect on the financial information presented in its financial statements and
footnotes.





The most
relevant changes are the following:


F-13


1. MFRS B-2,
Statement of Cash
Flows.





MFRS B-2
substitutes Bulletin B-12, Statement of Changes in Financial
Position. It establishes that nominal pesos must be used as the base
monetary unit for the preparation of financial statements, independent of
whether economic conditions would merit the recognition of the effects of
inflation in the financial information. MFRS B-2 further requires the use of the
direct or indirect method in the determination and presentation of cash flows
from operating activities. The Company used the indirect method, which requires
that the statement of cash flows begin with net income or loss before income
taxes, which is reconciled with cash flows from operating
activities.





MFRS B-2
accounting changes are not recognized retroactively. As a result, the Company
has presented its Statement of Cash Flows for the year ended December 31, 2008
and its Statement of Changes in Financial Position for the years ended December
31, 2007 and 2006.





2. MFRS
B-10, Effects of
Inflation.





MFRS B-10
substitutes Bulletin B-10. It establishes that inflation accounting methods
applicable for two economic environments: (a) in an “inflationary” economy, if
the cumulative inflation rate for the three previous years is greater than 26%,
the effects of inflation are recognized on the financial statements for the
period; or (b) in a non-inflationary economy, if the cumulative inflation rate
for the three previous years is less than 26%, the effects of inflation are not
recognized on the financial statements for the period.  In inflation
accounting, the National Consumer Price Index (NCPI) or the Units of Investment
(UDI) may be used to adjust amounts reported in the financial statements. MFRS
B-10 further requires the valuation of inventories at replacement cost and the
valuation of imported assets is eliminated through specific indexing.Consequently, the result
from holding non-monetary assets included in the excess in restatement of
capital must be identified with the assets giving rise to them. As it was not
possible to identify such assets, together with the initial effect from the
adoption of Bulletin B-10, the cumulative result from holding non-monetary
assets amounting to Ps.5,084 were reclassified from accumulated other
comprehensive income to retained earnings in the changes in stockholders’
equity. The Company found it impracticable to quantify the effects of inflation
and the result from holding non-monetary assets in the 2008 income
statement.





Cumulative
inflation for the last three years is 11.56%. Therefore, in compliance with the
new MFRS, the economic environment is considered non-inflationary. Accordingly,
as of January 1, 2008, the Company suspended the recognition of the effects of
inflation in its financial statements. Consequently, assets, liabilities, and
shareholders’ equity as of December 31, 2008 and 2007, include the restatement
effects of inflation recognized only through December 31, 2007.





3. MFRS D-4,
Taxes on
Earnings.





MFRS D-4
removes employee profit sharing (PTU) from the guidelines regarding income
taxes. Further, MFRS D-4 provides that the tax on assets (IMPAC) is recognized
as a tax credit or a deferred tax asset only when there is a probability of
recovery against tax gain in future years. MFRS D-4 also establishes that the
initial application of this standard should be made on a retroactive basis and
that the cumulative effect of income tax on retained earnings must be
reclassified to retained earnings, unless it is identified with other items not
yet taken into income.


F-14


The
balance of the cumulative effect of income tax that was reclassified to retained
earnings amounts to Ps 106,320, as shown in the Statement of Changes in
Shareholders’ Equity at December 31, 2008.





4. MFRS D-3,
Employee
Benefits.





MFRS D-3
incorporates standards relating to accrued and deferred PTU, requiring that
deferred PTU be determined on the income tax assets and liabilities method
established in MFRS D-4, thereby eliminating the practice of considering only
those temporary differences that arise from the reconciliation between
accounting income and the taxable income for PTU purposes.





This new
MFRS also eliminates the recognition of an additional liability because no
salary increase is assumed. It additionally establishes an amortization period
of the lesser of five years and the remaining useful lives of the following
items: a) the initial balance of the transition balance from dismissal and
retirement benefits; b) the initial balance from prior services and changes to
the plan; and c) the initial balance of actuarial earnings and losses from
retirement benefits net of the transition liability. With respect to the latter,
there is an option to amortize the entire balance against other expenses
(income) in the 2008 results from operations. The Company opted to amortize the
balance of this item for an amount of Ps.1,047.





c.      Recognition
of the effects from inflation:





As a
result of the adoption of the MFRS B-10 mentioned in paragraph b above, the
Company suspended the recognition of the effects from inflation in its financial
statements as of January 1, 2008.





Through
December 31, 2007, recognition of the effects of inflation resulted mainly in
earnings or losses on non-monetary and monetary items presented in the financial
statements recognized under the following two categories:





Excess in the restatement of
shareholders’ equity –This classification consists of the accrued result
from monetary position up to the date of the first restatement and the gaining
from holding non-monetary assets that represent the change in the specific level
of prices that increased above the level of inflation.





Results from monetary position –The gain (loss) on net monetary position represents the effects of
inflation, as measured by applying factors from the National Consumer Price
Index (NCPI), on net monetary assets and liabilities at the beginning of each
month. Monetary assets produce a loss while monetary liabilities produce a
gain.





The
percentages of inflation for the years ended December 31, 2008 and 2007 were
6.52% and 3.76%, respectively.


F-15


d.      Temporary
investments:





Temporary
investments consisted primarily of deposits at fixed interest rates and with
maturities of less than 90 days and are valued at cost plus accrued interest,
which does not exceed market value.





e.      Property
and equipment:





Property
and equipment are recorded at acquisition cost. Balances from acquisitions made
through December 31, 2007 are adjusted for the effects of inflation by applying
NCPI factors. Related depreciation is calculated by applying the straight-line
method based on the estimated remaining useful lives of assets, which is
determined by the Company using the depreciation rates discussed in Note
10.





During
2008, 2007 and 2006, the Company recognized an increase (decrease) in the
realizable value of unoccupied properties in the amount of Ps 901, (Ps 881), and
(Ps 1,930), respectively, whose effect was applied to the year’s results (see
Note 19).





f.      Excess
cost over the net value of subsidiaries:





The
excess of the cost over the net value of subsidiaries (goodwill) represented the
excess of the purchase price of the acquired subsidiary over the reasonable
value of its net assets. In order to determine this amount, acquired intangible
assets that have no replacement value are eliminated. Through 2007, the
remainder of the goodwill balance was adjusted to recognize the effect of
inflation by applying factors from the NCPI.





There is
no amortization of goodwill; rather it is subject to impairment testing in
accordance with the guidelines of Bulletin C-15, Impairment in the Value of
Long-Lived Assets and their Disposal.  As of December 31, 2008,
2007, and 2006, there was no goodwill impairment.





g.      Installation
expenses and software licenses:





Installation
expenses are recorded at acquisition cost. Balances from sales made up to
December 31, 2007 are adjusted to recognize the effect of inflation by applying
factors from the NCPI. Amortization is calculated on the straight-line method at
a 5% annual rate (Note 11). Software licenses are recorded at acquisition cost
and amortized according to their duration.





h. Tax
on earnings:





Income
tax (ISR) and the flat rate business tax (IETU) are recorded in the year in
which they are payable. The deferred tax is recognized by applying the
respective tax rate to temporary differences that result from the comparison
made between book and fiscal balances of the assets and liabilities and, if
necessary, the benefits from tax loss carryforwards and tax credits are
included. The deferred tax asset is recorded only when there is a high
probability it will be recovered.


F-16


The
effect of changes in tax rates on deferred taxes is recognized in the results of
the period in which the changes are approved.





The
effect of deferred taxes was a charge to the provision of income taxes of Ps
16,652 in 2008 and a tax benefit of Ps (4,259) and Ps (34,508) in 2007 and 2006,
respectively. Deferred tax liability increased (decreased) for those amounts
(see Note 18).





i.      Employee
profit sharing (PTU):





PTU is
recorded in the year in which it is payable and is presented under the caption
“other income and expenses” in the accompanying statement of income. Deferred
PTU is determined based on temporary differences that result in 2008 from the
comparison of book and tax balances of assets and liabilities and, in 2007, from
the comparison from book income and taxable income that is recognized only when
the liquidation of a liability or the generation of a benefit is probable and
when there is no indication that the situation is going to change in a way that
the liability or the benefit will not be realized.





j.      Advances
from customers:





Advances
from customers are recognized as income when the corresponding airtime is
broadcast.





k.      Labor
liabilities:





Labor
liabilities are divided into three types of employee benefits: direct short and
long-term benefits, termination benefits, and retirement benefits. They are
analyzed as follows:





Direct short- and long-term benefits
-These
benefits are valued in proportion with services rendered, by considering current
wages. These benefits are recognized as a liability as they are incurred and
include mainly PTU payable, paid absences, such as vacations and vacation
premiums, and incentives.





Termination and retirement benefits
-Liability
from seniority premiums, post-retirement benefits, and severance payments from
termination of employment are recorded as they become payable. They are
calculated by independent actuaries based on the projected individual credit
method by using nominal interest rates in 2008 and real interest rates in 2007.
Therefore, the liability is being recognized at current value and it is
estimated it will cover the obligations of these benefits as of the estimated
retirement date of all employees that work at the Company. The cost for
termination amounted to Ps 1,671 in 2008 and Ps 5,118 in 2007. (See actuarial
estimates in Note 16).





Other
payments based on seniority to which employees may be entitled in the event of
separation or death pursuant to the Mexican Federal Labor Law are recorded in
results of the year when such benefits are incurred.


F-17


l.      Earning
per share:





Basic
earnings per common share are calculated by dividing net consolidated income by
the weighted average number of common shares outstanding during the period.
Diluted earnings per share is determined by adjusting net consolidated income
and common shares under the assumption that the entities commitments will be
realized in order to issue or exchange its own shares. For the years ended at
December 31, 2008, 2007 and 2006, there were no diluted earnings per
share.





m.     Comprehensive
result of financing (RIF) and transactions in foreign currency:





RIF - RIF included in the
statements of income, includes interest and foreign exchange differences. It
also included the monetary effect through 2007.





Transactions in foreign currency– Transactions in foreign currency are recorded at the exchange rate
prevailing as of the dates the transactions are entered into and/or settled.
Assets and liabilities in foreign currency are restated at the exchange rate as
of the balance sheet date. The resulting exchange differences are recorded in
results of operations (see Note 4).





n.      Revenue
recognition:





Income is
recognized when the corresponding airtime is broadcast.





o.      Barter
transactions:





From time
to time, the Company receives products and services in exchange for advertising
airtime. Advertising airtime is recognized when the advertising is aired and the
cost when the goods and services are used. The Company’s management estimates
that the value of these transactions does not exceed market value.





p.      Use
of estimates:





The
preparation of financial statements requires management to make estimates and
assumptions that affect the recorded amounts of assets and liabilities at the
date of the financial statements and the recognized amounts of revenues and
expenses during the reported periods. Actual results could differ from those
estimates.





q.      Concentration
of credit risk – Broadcasting revenue:





The
Company’s principal source of revenue is generated by broadcasting advertising
and promotions for its customers. Although the Company has several large
customer accounts, none comprised more than 10% of the Company’s total
broadcasting revenue in 2008, 2007, and 2006.


F-18


r.      Repurchase
of shares:





In
accordance with Mexico’s current Stock Market Law, the Company has created a
capital reserve from retained earnings, called “Reserve for Repurchase of
Shares”, to support trading of its shares in the stock market.  Shares
temporarily acquired by the Company and withdrawn from the market are considered
treasury shares. Should these shares not be offered to the investing public
within one year, they must be canceled, resulting in a reduction of common
stock.





s.      Impairment
of long-lived assets:





The
Company tests goodwill and other long-lived assets for impairment when events or
changes indicate that the recorded book value of these assets might not be
recovered. To test for impairment the Company compares the book value of
goodwill and other long-lived assets with their expected future cash flows,
which are discounted to the present value the Company estimates the asset could
generate in the future, against book value.  If the Company determines
that the value of the asset has been impaired, the reduction in the value is
recognized in the results of operations.  As of December 31,
2008, 2007 and 2006, there was no impairment of these assets.





t.      Reclassifications:





In compliance with MFRS, certain amounts in the 2006
financial statements as originally issued have been reclassified to conform with
the presentation of the 2008 and 2007 consolidated financial
statements.





u.         New
accounting pronouncement – Subsequent event:





As of
January 1, 2009, the following MFRS became effective. The Company considers that
the adoption of these MFRS will not have significant effects on the financial
information presented in the financial statements and the respective footnotes.
The most relevant changes are as follows:





1.
            MFRS
      B-7, Business
      acquisitions. This MFRS requires the method of purchasing
      accounting to be used in the acquisition of businesses and stipulates
      concepts such as the acquirer and what is acquired is classified as a
      business. Moreover, it establishes that the recognition of the assets and
      liabilities assumed at fair value, the accounting treatment of goodwill,
      and the proper financial statement
disclosure.





2.
            MFRS
      B-8, Consolidated and
      combined financial statements.This MFRS substitutes Bulletin B-8.
      It includes additional stipulations on investment and control concepts and
      permits the non-consolidation of sub-holding
  companies.





3.
            MFRS
      C-7, Investments in
      associated companies and other permanent investments. This MFRS
      establishes the accounting treatment applicable to permanent investments
      in associated companies and other permanent investments. Among other
      things, it establishes that the recognition of losses are expensed up to
      the amount of the original investment, except when the holding company has
      incurred labor obligations on behalf of the associated company, in which
      case the respective liability will be
  recognized.


F-19


4.
            MFRS
      C-8, Intangible
      assets. This MFRS substitutes Bulletin C-8. Its main changes and
      characteristics are as follows: a) how they are used for the production or
      supplying of goods or the rendering of services or for administrative
      purposes; the assumption that the useful life may not exceed a period of
      twenty years; b) non-monetary assets are added; subsequent reimbursements
      on a research and development project in the process of being acquired,
      are recognized i) as an expenditure when they are accrued if they are a
      part of the research stage; or ii) as an intangible asset if they meet
      criteria to be recognized as such when research expenses are accrued; c)
      when it is indicated that it must be probable that the future economic
      benefits will be in favor of the entity; and d) when a new treatment is
      detailed for the exchange of an
asset.





NOTE
4ASSETS AND LIABILITIES IN
FOREIGN CURRENCY




The
consolidated balance sheets as of December 31, 2008 and 2007 include the
following assets and liabilities in thousands of US dollars, valued at the
closing year-end foreign exchange rates of Ps 13.8320/US$1.00 and Ps
10.8662/US$1.00, respectively:




2008
                  
                  
                  2007Cash
      and marketable securities
                  
                  US$
                  162
                  
                  
                  US$
                  68Liabilities
                  
                  
                  (30
                  )
                  
                  
                  -Net
      asset position
                  
                  US$
                  132
                  
                  
                  US$
                  68





As of
February 18, 2009, the foreign-exchange rate was Ps
14.6013/US$1.00.





The net
book value of the Company’s property and equipment denominated in foreign
currencies as of December 31, 2008 and 2007 was as follows:





2008
                  
                  
                  2007Plant
      equipment
                  
                  US$
                  1,565
                  
                  
                  US$
                  1,552Studio
      equipment
                  
                  
                  1,386
                  
                  
                  
                  1,051Helicopters
                  
                  
                  504
                  
                  
                  
                  881Others
                  
                  
                  455
                  
                  
                  
                  100US$
                  3,910
                  
                  
                  US$
                  3,584


F-20


NOTE
5CASH AND TEMPORARY
INVESTMENTS




At
December 31, cash and temporary investments consisted of the
following:




2008
                  
                  
                  2007Cash
                  
                  Ps
                  6,081
                  
                  
                  Ps
                  3,102Short-term
      temporary investments
                  
                  
                  86,973
                  
                  
                  
                  163,909Ps
                  93,054
                  
                  
                  Ps
                  167,011





Temporary
investments as of December 31, 2008 and 2007 consisted primarily of deposits at
fixed interest rates and with maturities of less than 90 days. The Company
invests its temporary excess cash in these deposits.





NOTE
6RELATED
PARTIES





In the
normal course of business, the Company purchases and sells broadcast time or
programming services to various other companies that are related through common
ownership. These purchases and sales are recorded at rates not materially
different from those charged to non-related entities for these types of
services.





The
Company may also purchase assets or services from these related parties. Grupo
Radio Centro believes that the costs of such assets or services do not exceed
the prices that could be obtained from non-related entities.





The
Company also provides certain services to affiliated companies on terms that are
more favorable than those available to non-related companies. The Company does
not believe that any such service arrangements with related parties are
material.





The
Company also engages in various leasing activities with such related parties.
The Company believes that the terms of such leasing arrangements do not
significantly differ from the terms which could be obtained from or charged to
non-related companies.





During
the years ended December 31, 2008, 2007, and 2006, the Company conducted the
following transactions with related parties:





2008
                        
                        
                        2007
                        
                        
                        2006Income:Sale
      of customer portfolio(a)
                        
                        Ps
                        -
                        
                        
                        Ps
                        -
                        
                        
                        Ps
                        12,451Sale
      of airtime and services
                        
                        
                        50
                        
                        
                        
                        43
                        
                        
                        
                        55Sale
      of equipment
                        
                        
                        668
                        
                        
                        
                        554
                        
                        
                        
                        1,155Sundry
      income from shareholders(b)
                        
                        
                        3,083
                        
                        
                        
                        1,659
                        
                        
                        
                        4,717Expenses:Purchase
      of airtime and services received
                        
                        
                        (1,597
                        )
                        
                        
                        (869
                        )
                        
                        
                        (1,363
                        )Commissions
      paid and other
      services                                     
           (c)
                        
                        
                        (8,347
                        )
                        
                        
                        (13,755
                        )
                        
                        
                        (17,312
                        )


F-21





(a)
            During
      December 2006, the Company entered into an agreement for the sale of the
      right to collect its past-due customer accounts receivable from 2004, with
      an entity that is owned by Francisco Aguirre Gómez. The portfolio of
      accounts receivable totaled Ps 40,328 and the agreed-upon payment for it
      was Ps 12,151. The resulting loss of Ps 27,877 was recognized as a
      financing cost in the results of operation for
  2006.





(b)
            During
      the years ended 2008, 2007, and 2006, shareholders made personal use of
      goods and services the Company had acquired in barter transactions and
      paid the Company Ps 3,083, Ps 1,659 and Ps 4,717, respectively, for the
      goods and services (see Note 3o).





(c)
            On
      January 5, 2000 the Company entered into a contract with an entity owned
      by Francisco Aguirre Gómez, the president and a shareholder of the
      Company. This entity provides promotional services to the Company. As of
      December 31, 2008, 2007 and 2006, the Company incurred expenses for the
      services under this contract totaling Ps 3,330, Ps 3,604, and Ps 7,888,
      respectively.





In
addition to their ownership interest in the Company, members of the Aguirre
family owned or controlled 11 of the 108 affiliated in the network serviced by
OIR as of December 31, 2008 and 2007. Affiliated stations owned or
controlled by members of the Aguirre family accounted for approximately 9%, 12%,
and 13.7% of OIR revenue (approximately 0.3%,  0.4% and 0.3% of the
Company’s total broadcasting revenue) for the years ended December 31, 2008,
2007 and 2006, respectively. The Company has provided administrative and other
services to such family-owned stations in the OIR network and, under certain
circumstances, has provided commercial airtime to related parties, on terms that
are more favorable than those provided to unrelated parties. The Company does
not believe that such transactions have been material.





NOTE
7OTHER
RECEIVABLES





At
December 31, the balances in other receivables consisted of the
following:





2008
                  
                  
                  2007Officers
      and employees
                  
                  Ps
                  1,929
                  
                  
                  Ps
                  1,322Others
                  (a)
                  
                  4,296
                  
                  
                  
                  3,341Ps
                  6,225
                  
                  
                  Ps
                  4,663





(a) As of
December 31, 2008 and 2007, this amount includes Ps 2,271 and Ps 1,597,
respectively for accounts receivable from shareholders for the use of the
Company’s goods and services (see Note 6b).





NOTE
8SERVICE
AGREEMENTS





In order
to manage the operations of XHFO-FM, S.A. de C.V. (the “Station”), Desarrollos
Empresariales, S.A. de C.V. (“DESA”), a wholly-owned subsidiary of the Company
entered into a Service Agreement on October 2, 1995 (the “Agreement”) with the
Station and with Comercializadora Siete de México, S.A. de C.V.
(“Comercializadora”). Under the terms of the Agreement, DESA was granted the
right to sell the airtime of the Station in exchange for providing operating and
administrative services to Comercializadora and the Station.




F-22


On
December 30, 1998, a rights-ceding contract was signed under which the Company
replaced DESA, in order to continue the operation of the Station. Beginning in
January 1999, various amendments were entered into. As of December 31, 2008, the
currently effective contract was entered into on September 7, 2004 and effective
on January 3, 2005 for a term of 48 months expiring on January 2, 2009. Under
that amendment, the Company is entitled to a monthly fee equal to the income
minus US$ 284 during the period of the agreement. Additionally, guarantee
deposits made pursuant to the original contract and the amendments were
eliminated. For the years ended December 31, 2008, 2007 and 2006 the charge to
the income statement amounted to Ps 43,766, Ps 39,961 and Ps 41,692,
respectively.





On
October 16, 2008, a fourth amendment was signed that will be in effect from
January 3, 2009 to January 2, 2014.





NOTE
9INFORED PRODUCTION
CONTRACT





On
December 23, 1998, in order to continue collaborating in the production of radio
shows and to establish two new joint ventures, the Company signed a new contract
with Infored, the producer at that time of the Monitor news and talk-show, and
Mr. Gutiérrez Vivó, Monitor’s host at that time. Mr. Gutiérrez Vivó and Infored
provided the Company with production services news and special-event radio shows
until June 30, 2015. The Company committed to air these programs on XERED-AM and
XHRED-FM and affiliated radio stations.





The
Production Contract, in addition to requiring the Company to continue paying
Infored for the cost of producing its shows, required the Company to pay Infored
an aggregate amount of approximately US$ 15,400 and Ps  4,003
(historical amount). Of this amount, US$ 4,400 and Ps 5,124 was paid upon
signing the Production Contract, US$ 4,000 was paid on January 31, 1999, and US$
7,000 was paid in eleven equal monthly payments starting February 28, 1999. The
aggregate amount of these advance payments is being amortized in equal monthly
amounts through June 2015. The Company also transferred to Mr. Gutiérrez Vivó
two AM radio stations, XEFAJ-AM, S.A. de C.V. and Emisora 1320, S.A. de C.V., at
book value.


On May 7,
2002, Mr. Gutiérrez Vivó and Infored notified the Company that they were
initiating an arbitration proceeding pursuant to which they sought the
rescission of the Production Contract entered into on December 23, 1998 and
damages for alleged breach of contract, reimbursement of expenses and costs of
the litigation.





On March
1, 2004 the International Chamber of Commerce (“ICC”) notified the Company that
a final decision had been made in the arbitration proceeding initiated in 2002
by Infored and Mr. Gutiérrez Vivó. By a majority vote of two of the three
arbitrators, the ICC panel held that the Company had breached the agreement with
Infored and Mr. Gutiérrez Vivó. As a result, the agreement was rescinded and
Infored and Mr. Gutiérrez Vivó together were awarded Ps 277,112 (US$21,797), in
damages, which represented the amount that the Company would have been required
to pay under the contract, after taking into account prepayments made by the
Company. Accordingly, the Company recorded a contingent liability for Ps 277,112
and the prepayment amount under the agreement, which as of December 31, 2003 was
Ps 122,719 (Ps 104,572 historical amount), was written off. The total amount of
the award amounted to Ps 399,831, which was recorded in the consolidated
statement of income for the year ended December 31, 2003 as an extraordinary
item.




F-23


The
Company has discontinued the production of the news program produced by Infored
and conducted by Mr. Gutiérrez Vivó and has produced the program Monitor on its
own.





On August
6, 2004, the Company challenged the validity of the arbitration award before the
Mexican courts and brought a proceeding to nullify the arbitration award. On
November 10, 2004, a Mexican judge set aside the arbitration award.





On
December 3, 2004, Mr. Gutiérrez Vivó and Infored initiated an amparo proceeding to contest
this ruling. An amparo
is a type of proceeding used to challenge the legality of a decision under
Mexican law. The court ruled in favor of Infored and Mr. Gutiérrez Vivó on
August 10, 2005. The Company filed an appeal for review of this decision, which
was suspended on February 15, 2006 since Infored and Mr. Gutiérrez Vivó
requested the National Supreme Court to exercise its right to appeal from a
majority of votes against the decision. The official publication of the ruling
is expected so that it is returned to the Thirteenth Associate Civil Court of
the First Circuit and the ruling of appeal filed by Grupo Radio Centro is
issued.





On June
8, 2006, a Mexican court nullified and rejected the international arbitration
award in Mexico. As a result, the Company wrote off the liability of Ps 263,523
it had booked through December 31, 2005 and recorded the resulting gain as
aspecial item in
the statement of income for the year ended December 31, 2006. However, in
compliance with the MFRS B-3, effective January 1, 2007, this item has been
reclassified as an extraordinary item in the accompanying statement of income
for 2006. Infored and Mr. Gutiérrez Vivó filed an appeal against this
ruling.





On
January 30, 2007, the Mexican Supreme Court, in a resolution of 5-4 votes based
on the arguments of the proceedings, reversed the decision of the Thirteenth
Associate Civil Court of the First Circuit, which ratified the decision of a
lower court to not consider the arbitration finding. The Mexican Supreme Court
submitted the case to the court for further examination under distinct rules,
which will require the court review the case.





On March
22, 2007, Infored and Mr. Gutiérrez Vivó filed an appeal to have the case
removed from the Thirteenth Associate Civil Court of the First Circuit to
another court whose judges had no knowledge of the case. The Fourth Associate
Civil Court of the First Circuit determined that one of the three judges had a
possible bias in the case and order the judge be replaced specifically for that
reason. On June 20, 2007, the case we returned to the Thirteenth Associated
Civil Court of the First Circuit for a final ruling.





On June
12, 2008, the Thirteenth Circuit Court reversed its prior decision, granted the
amparoof Infored and
Mr. Gutiérrez Vivó, denied the amparoof the Company, and
remanded the case to Civil Judge 63 of the Federal District Superior Tribunal of
Justice.  On July 11, 2008, Civil Judge 63 of the Federal District
Superior Tribunal of Justice ruled that the decision that set aside the
arbitration award was invalid.  The July 2008 decision of the Civil
Judge 63 of the Federal District Superior Tribunal of Justice did not constitute
an order to pay the arbitration award, the enforcement of which remains subject
to lower court review.




F-24


In August
2008, the Company challenged the arbitration award as unconstitutional in an
amparofiled with
District Judge 6 of Civil Matters.  District Judge 6 dismissed the
amparobased on
procedural grounds.  The Company challenged this action before the
Thirteenth Circuit Court, and in February 2009, that court ruled the Company’s
amparo was
admissible.  The amparo is currently
pending.




In
addition, in 2008, Mr. Gutiérrez Vivó and Infored initiated additional claims
against the Company for alleged violations of labor law in connection with the
Infored Agreement.  In 2009, Mr. Gutiérrez Vivó and Infored initiated
a civil law suit against the Company and individual members of the Aguirre
family, seeking consequential damages in an amount of approximately Ps. 9.46
billion arising out of the Company’s alleged wrongful failure to pay the
arbitration award.  The Company’s management believes that these cases
will be resolved in favor of the Company.





NOTE
10PROPERTY AND
EQUIPMENT





At
December 31, the balances in property and equipment consisted of the
following:





2008
                          
                          
                          2007
                          
                          
                          Annual
      depreciation
                            rateBuildings
                          
                          Ps
                          345,693
                          
                          
                          Ps
                          343,505
                          
                          
                          
                          2.22
                          %Broadcasting
      equipment
                          
                          
                          137,141
                          
                          
                          
                          139,108
                          
                          
                          
                          11.87
                          %Studio
      equipment
                          
                          
                          139,824
                          
                          
                          
                          143,469
                          
                          
                          
                          15.94
                          %Office
      furniture and equipment
                          
                          
                          41,055
                          
                          
                          
                          49,850
                          
                          
                          
                          16.48
                          %Computer
      equipment
                          
                          
                          55,451
                          
                          
                          
                          79,311
                          
                          
                          
                          32.22
                          %Transportation
      equipment
                          
                          
                          35,599
                          
                          
                          
                          44,972
                          
                          
                          
                          28.30
                          %Helicopters
                          
                          
                          15,979
                          
                          
                          
                          36,135
                          
                          
                          
                          18.18
                          %Leasehold
      improvements
                          
                          
                          17,107
                          
                          
                          
                          13,322
                          
                          
                          
                          5.00
                          %787,849
                          
                          
                          
                          849,672Less
      – accumulated depreciation
                          
                          
                          (513,895
                          )
                          
                          
                          (574,379
                          )Land
                          
                          
                          149,333
                          
                          
                          
                          149,333Buildings
      held for sale, net
                          
                          
                          35,132
                          
                          
                          
                          35,025Equipment-in-transit
                          
                          
                          6,615
                          
                          
                          
                          1,904Ps
                          465,034
                          
                          
                          Ps
                          461,555





Inmobiliaria
Radio Centro, S.A. de C.V. is the owner of the building in which the main
executive offices and studios of the Company are located. It also leases a part
of the building. Rental income from Maxcom, S.A. de C.V. for 2008, 2007 and
2006, amounted to Ps 261, Ps 254, and Ps 245, respectively.




F-25


During
2008, 2007, and 2006, the Company reviewed the net realizable value of
temporarily unoccupied buildings and determined an increase (decrease) in their
book values of Ps 901, (Ps 1,930), and (Ps 834) in 2008, 2007 and 2006,
respectively.





NOTE
11DEFERRED
CHARGES





At
December 31, this heading consisted of the following:





2008
                          
                          
                          2007Installation
      expenses
                          
                          Ps
                          10,307
                          
                          
                          Ps
                          8,960Licenses
      and patents
                          
                          
                          6,213
                          
                          
                          
                          2,69016,520
                          
                          
                          
                          11,650Less
      accumulated amortization
                          
                          
                          (11,670
                          )
                          
                          
                          (5,741
                          )4,850
                          
                          
                          
                          5,909Labor
      liabilities (see Note 16):Intangible
      asset
                          
                          
                          -
                          
                          
                          
                          138Ps
                          4,850
                          
                          
                          Ps
                          6,047





NOTE
12 EXCESS COST OVER NET BOOK
VALUE OF NET ASSETS OF SUBSIDIARIES





On May
12, 1995 and January 9, 1996, the Company acquired 33% and 67%, respectively, of
the outstanding shares of Radiodifusión Red, S.A. de C.V. The acquisition
resulted in an excess of cost over book value amounting to Ps 498,874 (Ps
146,308 historical amount) and Ps 872,947 (Ps 313,101 historical amount),
respectively. On September 30, 2001, the Company sold these shares to DESA, one
of its subsidiaries.





On
December 31, 2001, the Company acquired Radio Sistema Mexicano, S.A. de C.V.,
which resulted in an excess cost over book value amounting to Ps
58,742.





On March
14, 2001, the Company acquired Palco Deportivo.Com, S.A. de C.V., Palco Shop,
S.A. de C.V., Palco Deportivo Multimedia, S.A. de C.V. and Palco Deportivo
México, S.A. de C.V. On October 1, 2001, these companies were merged with
Enlaces Troncales, S.A. de C.V. On October 2, 2001, Servicios Corporativos
Palco, S.A. de C.V. merged with Promo Red, S.A. de C.V. This acquisition
generated an excess cost over book value amounting to Ps 51,737 (Ps 38,715
historical amount).





On
November, 30, 2005 the Company acquired a 100% holding of GRC Radiodifusión,
S.A. (formerly Aerocer, S.A.), whose business activity is leasing air and ground
equipment to Grupo Radio Centro. This acquisition generated an excess cost of
100% of the entity acquired over the value of the assets acquired and debt
assumed from GRC Radiodifusión, S.A. amounting to Ps 8,349.





Through
December 31, 2004, the excess cost of the determined net book value in the above
mentioned acquisitions, was amortized over 20 years as of the acquisition date.
As of January 1, 2005, the excess cost is no longer amortized but is now subject
to annual impairment testing in compliance with Bulletin C-15.




F-26


As
of  December 31, 2008 and 2007, goodwill recorded in the amount of Ps
828,863 was not subject to impairment and consisted of the
following:





Resulting from the acquisition
      of:
                      
                      2008 and 2007Radiodifusión
      Red
                      
                      Ps
                      744,869Radio
      Sistema Mexicano, S.A.
                      
                      
                      37,927Enlaces
      Troncales, S.A. de C.V.
                      
                      
                      35,321GRC
      Radiodifusión, S.A. (Antes Aerocer, S.A.)
                      
                      
                      8,350Others
                      
                      
                      2,396Ps
                      828,863





NOTE
13ADVANCES FROM
CUSTOMERS





Advances
from customers amounted to Ps 142,543 in 2008 and Ps 124,418 in 2007,
representing future airtime services. These advances are recognized as income
when the corresponding airtime is broadcast. For tax purposes, income is
recognized when the advances are received.





NOTE
14SUPPLIERS AND OTHER ACCOUNTS
PAYABLE





At
December 31, this heading consisted of the following:





2008
                
                
                2007Media
      and service providers
                
                Ps
                56,867
                
                
                Ps
                47,044Salaries
      and fees payable
                
                
                8,197
                
                
                
                7,058Employee
      profit sharing payable
                
                
                2,156
                
                
                
                1,091Others
                
                
                228
                
                
                
                227Ps
                67,388
                
                
                Ps
                55,420




F-27





NOTE 15INCOME TAXES
AND OTHER TAXES PAYABLE





At
December 31, this heading consisted of the following:





2008
                                                        
                                                        2007Taxes
      on wages and salaries
                                                        Ps
                                                        6,017
                                                        
                                                        Ps
                                                        5,092Value-added
      tax
                                                        
                                                        
                                                        11,123
                                                        
                                                        
                                                        24,237Income
      tax
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        20,027Other
      withholdings
                                                        
                                                        
                                                        1,719
                                                        
                                                        1,491Ps
                                                        18,859
                                                        
                                                        Ps
                                                        50,847





NOTE
16SENIORITY PREMIUMS AND
PENSIONS





Through
December 31, 2004, the Company maintained a reserve to cover seniority premiums
and pension plan liabilities. On December 31, 2005, the Company also began
maintaining a reserve to cover, under certain circumstances, severance payments
to cover employee termination. The amount of the reserves is determined through
actuarial studies using the projected unitary cost method, in accordance with
MFRS D-3.





The
actuarial calculations as of December 31, 2008 and 2007 are summarized
below:





2008Seniority
                                                                                                                                                            premium
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          Pension
                                                                                                                                                            plan
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          Severance
                                                                                                                                                            payments
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          Total
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          2007Changes
      in projected benefit liabilities
                                                                                                                                                          
                                                                                                                                                          Ps
                                                                                                                                                          38,899
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          Ps
                                                                                                                                                          766
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          Ps
                                                                                                                                                          17,894
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          Ps
                                                                                                                                                          57,558
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          Ps
                                                                                                                                                          39,167Service
      cost
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          1,786
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          107
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          716
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          2,610
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          2,190Interest
      cost
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          2,247
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          151
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          719
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          3,118
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          1,239Actuarial
      gain (loss)
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          (1,574
                                                                                                                                                          )
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          65
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          (975
                                                                                                                                                          )
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          (2,845
                                                                                                                                                          )
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          4,304Benefits
      paid
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          (525
                                                                                                                                                          )
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          (525
                                                                                                                                                          )
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          (544
                                                                                                                                                          )Projected
      benefit liabilities at the end of the year
                                                                                                                                                          
                                                                                                                                                          Ps
                                                                                                                                                          40,833
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          Ps
                                                                                                                                                          1,089
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          Ps
                                                                                                                                                          18,354
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          Ps
                                                                                                                                                          60,276
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          Ps
                                                                                                                                                          45,311Plan
      assets
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          -Liability
      balance
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          Ps
                                                                                                                                                          45,311Unrecognized
      net actuarial loss
                                                                                                                                                          
                                                                                                                                                          Ps
                                                                                                                                                          40,833
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          Ps
                                                                                                                                                          1,089
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          Ps
                                                                                                                                                          18,354
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          Ps
                                                                                                                                                          60,276
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          -Unrecognized
      prior service costs
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          (12,247
                                                                                                                                                          )Net
      projected asset
                                                                                                                                                          
                                                                                                                                                          Ps
                                                                                                                                                          40,833
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          Ps
                                                                                                                                                          1,089
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          Ps
                                                                                                                                                          18,354
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          Ps
                                                                                                                                                          60,276
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          Ps
                                                                                                                                                          57,558Obligations
      from actual benefits
                                                                                                                                                          
                                                                                                                                                          Ps
                                                                                                                                                          37,908
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          Ps
                                                                                                                                                          2,522
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          Ps
                                                                                                                                                          12,684
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          Ps
                                                                                                                                                          53,114
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          Ps
                                                                                                                                                          42,627Additional
      liability
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          Ps
                                                                                                                                                          1,047Intangible
      assets (see Note 11)
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          Ps
                                                                                                                                                          138Total
      labor liability
                                                                                                                                                          
                                                                                                                                                          Ps
                                                                                                                                                          40,833
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          Ps
                                                                                                                                                          1,089
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          Ps
                                                                                                                                                          18,355
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          Ps
                                                                                                                                                          60,276
                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          Ps
                                                                                                                                                          58,605


F-28





Weighted
average assumptions as of December 31:





2008Seniority
                              premium
                            
                            
                            Pension
                              plan
                            
                            
                            Severance
                              Payments
                            
                            2007Discount
      rate (real rates)
                            
                            
                            8
                            %
                            
                            
                            8
                            %
                            
                            
                            8
                            %
                            4.00%Increase
      in compensation rates
                              (real
      rates)
                            
                            
                            2.59
                            %
                            
                            
                            0.50
                            %
                            
                            
                            0.80
                            %
                            1.00%Amortization
      period of the transition
                              Liability
      (See Note 3b.)
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            6.96
      and
                              12.99
      years





Components
of net cost of benefits for the year:





2008Seniority
                                                                                  premium
                                                                                
                                                                                
                                                                                Pension
                                                                                  plan
                                                                                
                                                                                
                                                                                Severance
                                                                                  payments
                                                                                
                                                                                
                                                                                Total
                                                                                
                                                                                
                                                                                2007Labor
      cost
                                                                                
                                                                                Ps
                                                                                1,786
                                                                                
                                                                                
                                                                                Ps
                                                                                94
                                                                                
                                                                                
                                                                                Ps
                                                                                729
                                                                                
                                                                                
                                                                                Ps
                                                                                2,609
                                                                                
                                                                                
                                                                                Ps
                                                                                2,190Financing
      cost
                                                                                
                                                                                
                                                                                2,247
                                                                                
                                                                                
                                                                                
                                                                                143
                                                                                
                                                                                
                                                                                
                                                                                728
                                                                                
                                                                                
                                                                                
                                                                                3,118
                                                                                
                                                                                
                                                                                
                                                                                1,239Amortization
      of prior year service cost
                                                                                
                                                                                
                                                                                (1,574
                                                                                )
                                                                                
                                                                                
                                                                                82
                                                                                
                                                                                
                                                                                
                                                                                (992
                                                                                )
                                                                                
                                                                                
                                                                                (2,484
                                                                                )
                                                                                
                                                                                
                                                                                1,056Net
      cost for the year
                                                                                
                                                                                Ps
                                                                                2,459
                                                                                
                                                                                
                                                                                Ps
                                                                                319
                                                                                
                                                                                
                                                                                Ps
                                                                                465
                                                                                
                                                                                
                                                                                Ps
                                                                                3,243
                                                                                
                                                                                
                                                                                Ps
                                                                                4,485





NOTE 17SHAREHOLDERS’
EQUITY





The
shareholders of the Company approved the following changes in the Company’s
capital structure.





During
2008:





a)
            Payment
      of dividends in the amount of Ps
100,000.





During
2007:





b)
            Payment
      of dividends in the amount of Ps
71,934





During
2006:





c)
            Repurchase
      on the open market for Ps 9,117 of 918,800 shares, which represent 0.564%
      of outstanding shares.





d)
            Sale
      on the open market for Ps 0.459 of 918,800 shares, which represent 0.564%
      of outstanding shares.





e)
            Capital
      reduction of Ps 120,096 (historical amount), with no cancellation of the
      respective shares.





f)
            Increase
      of fixed capital stock with no new stock issues through the capitalization
      of restatement effects of the capital stock for Ps
  337,060.


F-29





After the
aforementioned changes, as of December 31, 2008, the capital stock of the
Company was comprised of 247,414,768 authorized common shares, representing the
minimum fixed capital with no withdrawal rights, of which 162,724,561 shares
were outstanding and fully paid and 84,690,207 shares were treasury shares.
Shares of stock may be owned by Mexican investors only. Capital stock is
represented by shares with no par value as follows:





Number
      ofsharesAuthorized
      capital stock
                                  
                                  
                                  247,414,768Treasury
      shares
                                  
                                  
                                  (84,690,207
                                  )Total
      outstanding capital stock
                                  
                                  
                                  162,724,561Fixed
      capital stock, subscribed and paid
                                  
                                  Ps
                                  1,059,962Increase
      from restatement to express in Mexican pesos
                                    with
      purchasing power as of December 31, 2007
                                  
                                  
                                  70,448Ps
                                  1,130,410





As of
December 31, 2008 and 2007, the number of outstanding shares was as
follows:





2008 and 2007Shares
      outstanding at the beginning of the year
                                
                                
                                162,724,561Shares
      outstanding at the end of the year
                                
                                
                                162,724,561Capital
      stock at the end of the year expressed in Mexican pesos with purchasing
      power as of December 31, 2007 (See Note 3a.)
                                
                                Ps
                                1,130,410





Net
income for the year is subject to a legal requirement that 5% thereof be
transferred to a legal reserve each year until the reserve equals 20% of the
capital stock. The legal reserve included as part of retained earnings as of
December 31, 2008 and 2007 was Ps 53,284 and Ps 48,729, and represents 5% and 4%
of the capital stock, respectively.





If
earnings for which no corporate tax has been paid are distributed, the Company
must pay corporate tax on such earnings upon the distribution of the dividends
(see discussion of CUFIN in Note 18).





NOTE 18TAX ON
EARNINGS





In
accordance with tax legislation prevailing through December 31, 2007, companies
must pay the greater of income tax (ISR) and taxes on assets (IMPAC). The ISR
rate for 2007 was 28%. The IMPAC rate for 2007 was 1.25% on restated assets with
no deductions.


In
accordance with tax legislation prevailing through December 31, 2008, companies
must pay the greater of ISR and the flat rate business tax (IETU). The ISR rate
for 2008 and 2009 is 28%. The IETU rate is 16.5% for 2008, 17% for 2009, and
17.5% for 2010 and subsequent years.


F-30


For the
years ended December 31, 2008, 2007 and 2006, the Company had ISR.





a)           Income
tax and tax on assets





The
Company has authorization to consolidate its financial statements with its
subsidiaries for tax purposes. Therefore, taxable income is determined on a
consolidated basis in compliance with guidelines set forth in Mexico’s Income
Tax Law.





Book
income differs from taxable income due primarily to the effect of permanent
differences between items included in the income statement to reflect the
effects of inflation and temporary differences affecting accounting and taxable
income in different periods.





Through
December 31, 2007, any accrued IMPAC in excess of the ISR may be recovered in
any one of the ten years following their generation, restated from inflation,
provided that during any one of those year ISR exceeds IMPAC. During the year
ended December 31, 2007, the Company accrued IMPAC of Ps 28,286 that was
completely offset by ISR accrued in excess of the year’s IMPAC.





Provisions
for income tax for the years ended December 31, 2008, 2007 and 2006 are as
follows:





2008
                    
                    
                    2007
                    
                    
                    2006Current
      income tax payable
                    
                    Ps
                    28,599
                    
                    
                    Ps
                    45,813
                    
                    
                    Ps
                    77,452Deferred
      income tax (benefit) expense
                    
                    
                    16,652
                    
                    
                    
                    (4,259
                    )
                    
                    
                    (34,508
                    )Total
      income tax
                    
                    Ps
                    45,251
                    
                    
                    Ps
                    41,554
                    
                    
                    Ps
                    42,944





The tax
expense (benefit) from the gain (loss) was different from that which would
result by applying the 28% ISR rate to the gain (loss) before the tax on
earnings, as a result of the following items:





2008
                    
                    
                    2007ISR
      rate
                    
                    
                    28
                    %
                    
                    
                    28
                    %Expected
      expense (benefit)
                    
                    $
                    48,165
                    
                    
                    $
                    37,184Increase
      (decrease) resulting from:Effect
      from inflation, net
                    
                    
                    (1,221
                    )
                    
                    
                    1,354Non-deductible
      expenses
                    
                    
                    1,860
                    
                    
                    
                    1,848Others,
      net
                    
                    
                    (3,553
                    )
                    
                    
                    1,168ISR
      expense (benefit)
                    
                    $
                    45,251
                    
                    
                    $
                    41,554Effective
      tax rate
                    
                    
                    26.32
                    %
                    
                    
                    31.32
                    %





The tax
effects from temporary differences that result in deferred taxes as of December
31, 2008 and 2007 are as follows:


F-31





2008
                    
                    
                    2007Deferred
      assets:Advances
      from customers
                    
                    $
                    39,912
                    
                    
                    $
                    40,124Other
      advances
                    
                    
                    -
                    
                    
                    
                    21,481Liability
      from pension plan
                    
                    
                    17,827
                    
                    
                    
                    16,035Liability
      provisions
                    
                    
                    149
                    
                    
                    
                    4,298Deferred
      assets, net
                    
                    
                    57,888
                    
                    
                    
                    82,298Deferred
      liabilities:Cumulative
      effect from the difference in book and taxdepreciation
      rates
                    
                    
                    73,493
                    
                    
                    
                    74,480Advance
      payments
                    
                    
                    6,177
                    
                    
                    
                    10,962Others
                    
                    
                    -
                    
                    
                    
                    1,986Total
      gross deferred liabilities
                    
                    
                    (79,670
                    )
                    
                    
                    (87,428
                    )Deferred
      liability, net
                    
                    $
                    (21,782
                    )
                    
                    $
                    (5,130
                    )





The net
fiscal profit account (the “CUFIN”) represents the amount of retained earnings
that may be distributed without additional corporate tax charge to the Company.
As of December 31, 2008, this account amounted to Ps 303,341.





As of
December 31, 2008, capital stock, restated for tax purposes, which constituted
the paid-in account, amounted to Ps 1,365,503.





On April
15, 2008, Company management recovered the credit IMPAC balance of Ps 5,628
(including Ps 90 from the restatement effect) from 2004.





b) Flat
rate business tax





During
the fall of 2007, new tax laws were enacted, existing tax laws were amended and
a presidential decree regarding the tax legislation was issued. Effective on
January 1, 2008, the new tax legislation (i) replaced the tax on assets and (ii)
established a new tax, the Flat Rate Business Tax (IETU). The IETU is based on
cash flows and certain restrictions for authorized deductions in addition to the
granting of tax credits mainly in connection with inventories, salaries taxed
for income tax purposes, social security contributions, tax losses arising from
accelerated deductions, recoverable asset tax, and deductions related to fixed
asset investments and deferred charges and expenses.





Accordingly,
beginning in 2008, companies were required to pay the greater of IETU and ISR.
In case IETU is incurred, the payment will be regarded as final, not subject to
recovery in subsequent years.





Based on
Company estimates, the tax payable in upcoming years will be income tax (not
IETU). Deferred taxes as of December 31, 2008 and 2007 were recorded on an
income tax basis.


F-32


NOTE
19OTHER EXPENSES,
NET





During
the years ended December 31, 2008, 2007, and 2006, the principle transactions
that generated other revenues and expenses were as follows:





2008
                                                        
                                                        2007
                                                        
                                                        2006Income:Sale
      of suppliers and recovery of expenses
                                                        
                                                        Ps
                                                        3,747
                                                        
                                                        Ps
                                                        2,197
                                                        
                                                        Ps
                                                        5,381Leasing
      and maintenance of properties
                                                        
                                                        
                                                        264
                                                        
                                                        
                                                        255
                                                        
                                                        
                                                        306Recovery
      of taxes
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        2,771Gain
      from sale of fixed assets
                                                        
                                                        
                                                        1,704
                                                        
                                                        
                                                        641
                                                        
                                                        
                                                        263Others
                                                        
                                                        
                                                        1,565
                                                        
                                                        
                                                        2,324
                                                        
                                                        
                                                        2,187Total
      other income
                                                        
                                                        Ps
                                                        8,181
                                                        
                                                        Ps
                                                        5,417
                                                        
                                                        Ps
                                                        10,908Expenses:Fees
      to the Executive Committee
                                                        
                                                        Ps
                                                        (18,865
                                                        )
                                                        Ps
                                                        (17,308
                                                        )
                                                        Ps
                                                        (18,387
                                                        )Maintenance
      and leasing cost
                                                        
                                                        
                                                        (12,506
                                                        )
                                                        
                                                        (9,509
                                                        )
                                                        
                                                        (8,494
                                                        )Arbitration
      cost                                                          (a)
                                                        
                                                        
                                                        (15,286
                                                        )
                                                        
                                                        (5,598
                                                        )
                                                        
                                                        (7,128
                                                        )Compliance
      with securities regulations andcorporate
      restructuring expenses
                                                        
                                                        
                                                        (7,536
                                                        )
                                                        
                                                        (6,887
                                                        )
                                                        
                                                        (5,250
                                                        )Others
                                                        
                                                        
                                                        (6,347
                                                        )
                                                        
                                                        (6,338
                                                        )
                                                        
                                                        (9,530
                                                        )Expenses
      related to the celebration of the Company’s 60th
      anniversary
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        (5,575
                                                        )Representation
      expenses
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        (9,856
                                                        )Internet
      subscription
                                                        
                                                        
                                                        (2,391
                                                        )
                                                        
                                                        (3,599
                                                        )
                                                        
                                                        (3,346
                                                        )Effect
      of valuing properties at net realizable value(see
      Note 10)
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        (881
                                                        )
                                                        
                                                        (1,930
                                                        )Employee
      profit sharing (see Note 3i)
                                                        
                                                        
                                                        (2,130
                                                        )
                                                        
                                                        (1,103
                                                        )
                                                        
                                                        (923
                                                        )Total
      other expenses
                                                        
                                                        
                                                        (65,061
                                                        )
                                                        
                                                        (51,223
                                                        )
                                                        
                                                        (70,419
                                                        )Other
      expenses, net
                                                        
                                                        Ps
                                                        (56,880
                                                        )
                                                        Ps
                                                        (45,806
                                                        )
                                                        Ps
                                                        (59,511
                                                        )





(a)
            In
      2008, 2007, and 2006, the Company paid legal fees in connection with the
      arbitration proceeding commenced by Infored and Mr. Gutiérrez Vivó in May
      2002.





NOTE
20CONTINGENCY





As of
December 31, 2008, Grupo Radio Centro, S.A.B de C.V. is involved in various
legal proceedings related to labor claims initiated by former employees between
2000 and 2004, which are still in process. In the event there is a ruling
against the Company, its approximate liability would be Ps 49,666. The Company
has not recorded a provision for these claims as the Company’s management
believes that these cases will be resolved in favor of the
Company.


F-33





See Note
9 for a description of the legal proceedings related to an arbitration
proceeding commenced against the Company by Infored and Mr. Gutiérrez Vivó in
2002.  In the event there is a final judgment against the Company
regarding the arbitration, the Company’s, its approximate responsibility would
be US$21,797.  The Company has not recorded a provision for this claim
due to the fact that this not constitute an order to pay the arbitration
award.





NOTE
21 SIGNIFICANT DIFFERENCES
BETWEEN MEXICAN AND US GAAP





The
accompanying financial statements of the Company are presented on the basis of
MFRS.





MFRS are,
in general terms, similar to generally accepted accounting principles in the
United States (“US GAAP”). However, there are some areas in which MFRS differs
from the requirements of US GAAP.





The major
differences between MFRS and US GAAP are as follows:





Recognition
of the effects of inflation on financial information:





The
provisions of the MFRS B-10 (see Note 3b point 2) relating to the recognition of
the effects of inflation on financial information have no counterpart under US
GAAP. However, even though the financial statements prepared under MFRS include
the restatement effects recognized through December 31, 2007, the US Securities
and Exchange Commission does not require the reversal of the restatement of the
financial statements recognizing the effects of inflation.





Deferred
income taxes:





Under
MFRS the Company is required to recognize the income tax effects of the
differences in bases of assets and liabilities for financial accounting and
accounting for tax reporting purposes, similar to US GAAP.





MFRS
requires that all deferred taxes be classified as long-term on the balance
sheet; however, under US GAAP, balances of deferred taxes are classified as
either current or non-current, based on the classification of the related asset
or liability for financial reporting purposes. An analysis of the balance of
deferred taxes in accordance with US GAAP, as of December 31, 2008 and 2007, is
as follows:




F-34




2008
                                                              
                                                              
                                                              2007Current
      deferred tax:Advances
      from customers
                                                              
                                                              US$
                                                              2,885
                                                              
                                                              
                                                              Ps
                                                              39,912
                                                              
                                                              
                                                              US$
                                                              4,120
                                                              
                                                              
                                                              Ps
                                                              56,990Prepaid
      expenses and provisions
                                                              
                                                              
                                                              (435
                                                              )
                                                              
                                                              
                                                              (6,028
                                                              )
                                                              
                                                              
                                                              (676
                                                              )
                                                              
                                                              
                                                              (9,351
                                                              )Net
      current deferred asset
                                                              
                                                              US$
                                                              2,450
                                                              
                                                              
                                                              Ps
                                                              33,884
                                                              
                                                              
                                                              US$
                                                              3,444
                                                              
                                                              
                                                              Ps
                                                              47,639Non-current
      deferred taxRecoverable
      tax on assets
                                                              
                                                              US$
                                                              
                                                              
                                                              
                                                              Ps
                                                              
                                                              
                                                              
                                                              US$
                                                              400
                                                              
                                                              
                                                              Ps
                                                              5,538Labor
      liabilities
                                                              
                                                              
                                                              1,289
                                                              
                                                              
                                                              
                                                              17,827
                                                              
                                                              
                                                              
                                                              1,159
                                                              
                                                              
                                                              
                                                              16,035Property
      and equipment, net
                                                              
                                                              
                                                              (5,314
                                                              )
                                                              
                                                              
                                                              (73,493
                                                              )
                                                              
                                                              
                                                              (5,375
                                                              )
                                                              
                                                              
                                                              (74,342
                                                              )Net
      non-current deferred tax liability
                                                              
                                                              US$
                                                              (4,025
                                                              )
                                                              
                                                              Ps
                                                              (55,666
                                                              )
                                                              
                                                              US$
                                                              (3,816
                                                              )
                                                              
                                                              Ps
                                                              (52,769
                                                              )





Statement
of cash flows:





As
described in Note 3b, the Company adopted MFRS B-2 Statement of Cash Flows on
January 1, 2008.  The cash flow statement as prepared under MFRS for
the year ended December 31, 2008, complies with IAS 7, as issued by the
International Accounting Standards Board, and thus, no reconciliation would be
needed.





Under
MFRS, the Company presents statements of changes in financial position for the
years ended December 31, 2007 and 2006 in constant Mexican pesos. This
presentation identifies the generation and application of resources resulting in
differences between beginning and ending financial statement balances in
constant Mexican pesos.





The
changes in the consolidated financial statement balances included in this
statement constitute cash-flow activity stated in constant Mexican pesos
(including monetary gains, which are considered cash gains in the financial
statements presented in constant Mexican pesos).





In
accordance with MFRS, the reduction in current and long-term debt due to
restatement in constant Mexican pesos is presented as a resource applied to
financing activities, and the gain from monetary position is presented as a
component of operating activities. SFAS   No. 95, “Statement of
Cash Flows,” under US GAAP, however, does not provide guidance with respect to
inflation-adjusted financial statements. If the gain from the restatement of
current and long-term debt and net monetary position were treated as a component
of financing activities for US GAAP purposes, funds (applied) provided by
operating and financing activities would be as follows:




2007
                                
                                
                                2006Operating
      activities:Resources
      (applied) provided by operations, per MFRS
                                
                                Ps
                                153,489
                                
                                
                                Ps
                                264,788Less
      - gain on monetary position on current and long-term debt
                                
                                
                                -
                                
                                
                                
                                (4,763
                                )Resources
      provided by operations, per US GAAP
                                
                                Ps
                                153,489
                                
                                
                                Ps
                                260,025Financing
      activities:Resources
      (provided) applied to financing activities, per MFRS
                                
                                Ps
                                (71,942
                                )
                                
                                Ps
                                (251,143
                                )Plus
      — gain on monetary position on current and long-term debt
                                
                                
                                -
                                
                                
                                
                                (4,763
                                )Resources
      applied to financing activities, per US GAAP
                                
                                Ps
                                (71,942
                                )
                                
                                Ps
                                (255,906
                                )Supplemental
      cash-flow information:Interest
      paid
                                
                                Ps
                                1,517
                                
                                
                                Ps
                                11,189Taxes
      paid
                                
                                Ps
                                63,412
                                
                                
                                Ps
                                34,043




F-35





Personnel
compensation and seniority premiums:





Under
MFRS, vacation expense is recognized when taken rather than in the period it is
earned by the employee, as is required under US GAAP.





The
Company is required under the Mexican Labor Law to pay seniority premiums to
certain employees upon termination of employment. Additionally, the Company has
established a pension plan for unionized personnel. The Company determines its
liabilities with respect to such benefits based upon actuarial studies, which is
similar to the US GAAP criteria of SFAS 87, “Employee Accounting for Pensions”
and SFAS 158 “Employers Accounting for Defined Benefit Pension and Other
Postretirement”.





Minority
interest:





Under
MFRS, the minority interest in subsidiaries must be included as a separate
component of shareholders’ equity in the consolidated balance sheet. In the
consolidated statement of income, the minority interest is included in
consolidated net income and the distribution between majority and minority
interests is presented under consolidated net income in the consolidated
statement of income.





In
accordance with US GAAP, minority interest in subsidiaries is generally
presented separately between total liabilities and stockholders’ equity in the
consolidated balance sheet. In the consolidated statement of income, the
minority interest in the net earnings of consolidated subsidiaries is excluded
from consolidated net income.





Goodwill:





Under
MFRS and US GAAP, the excess of cost over net fair value of the net assets in
subsidiaries acquired is recognized as an intangible asset (“goodwill”). Unlike
under MFRS, under US GAAP, however, goodwill arising from entities under common
control is not recognizable. In addition, under MFRS and US GAAP, goodwill is
tested for impairment at least annually. However, under MFRS, goodwill is also
subject to a subsequent reversals of such impairment losses.





The
Company performed an analysis for impairment of its goodwill as of December 31,
2008, 2007 and 2006. There was no impairment charge required under MFRS or US
GAAP at December 31, 2008, 2007 and 2006.




F-36




Book
value of buildings held for sale:





Under the
MFRS, the Company reviews the net realizable value of the temporarily unoccupied
buildings and records an impairment or an increase in the value. Under US GAAP,
impairments on long-lived assets must be recorded and any increases in the value
of such assets may not be recorded. Such assets also need to be classified
separately on the balance sheet.





Other
expenses, net:





Under
MFRS, certain other (income) expenses, net are classified as non-operating on
the Company’s consolidated statement of income. Under US GAAP, most of these net
expenses are classified as operating expenses.





Convenience
statements:





The 2008
US dollar amounts (denoted by the symbol “US$”) shown in the financial
statements have been included solely for the convenience of the reader and were
translated at the rate of Ps 13.8320/US$ 1.00, the noon buying rate of Mexican
pesos on December 31, 2008, as published by the Federal Reserve Bank of New
York. Such translation should not be construed as a representation that the
Mexican peso amounts have been or could be converted into US dollars at this or
any other rate.





The
following is a summary of the estimated adjustments to net income and
shareholders’ equity that would have been required had the Company applied US
GAAP instead of MFRS:




2008
                                                                                                                            
                                                                                                                            
                                                                                                                            2008
                                                                                                                            
                                                                                                                            
                                                                                                                            2007
                                                                                                                            
                                                                                                                            
                                                                                                                            2006Net
      income reportedunder
      MFRS
                                                                                                                            
                                                                                                                            US$
                                                                                                                            9,165
                                                                                                                            
                                                                                                                            
                                                                                                                            Ps
                                                                                                                            126,765
                                                                                                                            
                                                                                                                            
                                                                                                                            Ps
                                                                                                                            91,119
                                                                                                                            
                                                                                                                            
                                                                                                                            Ps
                                                                                                                            434,748US
      GAAP adjustments:Minority
      interest
                                                                                                                            
                                                                                                                            
                                                                                                                            (3
                                                                                                                            )
                                                                                                                            
                                                                                                                            
                                                                                                                            (45
                                                                                                                            )
                                                                                                                            
                                                                                                                            
                                                                                                                            (21
                                                                                                                            )
                                                                                                                            
                                                                                                                            
                                                                                                                            (63
                                                                                                                            )Net
      income under USGAAP
                                                                                                                            
                                                                                                                            US$
                                                                                                                            9,162
                                                                                                                            
                                                                                                                            
                                                                                                                            Ps
                                                                                                                            126,720
                                                                                                                            
                                                                                                                            
                                                                                                                            Ps
                                                                                                                            91,098
                                                                                                                            
                                                                                                                            
                                                                                                                            Ps
                                                                                                                            434,685Net
      income per share(basic
      and diluted) underUS
      GAAP
                                                                                                                            
                                                                                                                            US$
                                                                                                                            0.05
                                                                                                                            
                                                                                                                            
                                                                                                                            Ps
                                                                                                                            0.77
                                                                                                                            
                                                                                                                            
                                                                                                                            Ps
                                                                                                                            0.55
                                                                                                                            
                                                                                                                            
                                                                                                                            Ps
                                                                                                                            2.67Average
      common sharesoutstanding
      (000’s)
                                                                                                                            
                                                                                                                            
                                                                                                                            162,724
                                                                                                                            
                                                                                                                            
                                                                                                                            
                                                                                                                            162,724
                                                                                                                            
                                                                                                                            
                                                                                                                            
                                                                                                                            162,724
                                                                                                                            
                                                                                                                            
                                                                                                                            
                                                                                                                            162,500
 
 2008
                    
                    
                    2008
                    
                    
                    2007
                    
                    
                    2006Shareholders’
      equity reported underMFRS
                    
                    US$
                    103,584
                    
                    
                    Ps
                    1,432,790
                    
                    
                    Ps
                    1,406,025
                    
                    
                    Ps
                    1,387,446US
      GAAP adjustments:Increase
      in book value ofbuildings
      held for sale(Note
      10)
                    
                    
                    (633
                    )
                    
                    
                    (8,760
                    )
                    
                    
                    (8,760
                    )
                    
                    
                    (8,760
                    )Cumulated
      minority interest
                    
                    
                    (52
                    )
                    
                    
                    (725
                    )
                    
                    
                    (680
                    )
                    
                    
                    (667
                    )(685
                    )
                    
                    
                    (9,485
                    )
                    
                    
                    (9,440
                    )
                    
                    
                    (9,427
                    )Shareholders’
      equity underUS
      GAAP
                    
                    US$
                    102,899
                    
                    
                    Ps
                    1,423,305
                    
                    
                    Ps
                    1,396,585
                    
                    
                    Ps
                    1,378,019




F-37




In the
income statement certain other (income) expenses, net are classified as
non-operating under MFRS. Under US GAAP, these items should be included or
excluded as a component of operating expenses, as applicable.





As
mentioned in Note 9, the Company reversed the contingency provision, including
accrued interest, which totaled Ps 263,523 (Ps 253,976 nominal amount) at
December 31, 2006. In accordance with the MFRS, this reversal was recorded
classified as a special non-operating item in the Company’s consolidated
statement of income for the year ended December 31, 2006. However, in compliance
with the MFRS B-3, this item has been reclassified is now classified as an
extraordinary non-operating item. In accordance with US GAAP, this reversal
would be recorded as an operating income.





The
following is a reconciliation of operating income:





2008
              
              
              2008
              
              
              2007
              
              
              2006Operating
      income reported under MFRS
              
              US$
              17,104
              
              
              Ps
              236,574
              
              
              Ps
              184,329
              
              
              Ps
              313,522Other
      expenses, net
              
              
              (4,112
              )
              
              
              (56,880
              )
              
              
              (45,806
              )
              
              
              (59,511
              )Special
      item (Note 9)
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              263,523Operating
      income underUS
      GAAP
              
              US$
              12,992
              
              
              Ps
              179,694
              
              
              Ps
              138,523
              
              
              Ps
              517,534





Under
MFRS and U.S. GAAP, the basic net income per common share is computed by
dividing the net income available to common shareholders by the weighted average
number of common shares outstanding. Diluted net income per common share is
computed by dividing the net income available to common shareholders, adjusted
on an “as if” converted basis, by the weighted average number of common shares
outstanding plus potential dilutive securities.





For the
years ended December 31, 2008, 2007 and 2006, there were no outstanding
potential dilutive securities of the Company.





Recognition
of tax uncertainties





Under US
GAAP, FIN No. 48 requires a company to recognize the financial statement impact
of a tax position when it is more likely than not that the position will be
sustained upon examination. If the tax position meets the more-likely-than-not
recognition threshold, the tax effect is recognized at the largest amount of the
benefit that is greater than 50% likely of being realized upon ultimate
settlement. Any difference between the tax position taken in the tax return and
the tax position recognized in the financial statements using the criteria above
results in the recognition of a liability in the financial statements for the
unrecognized benefit. MFRS does not have any equivalent rule. Under FIN 48,
there was no impact on the financial statements of the Company.




F-38




Effect
of recently issued U.S. Accounting Standards:





New
accounting standards have been issued under U.S. GAAP, the application of which
is required as indicated.





In
September 2006, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 157, “Fair Value Measurements” (SFAS No.
157). SFAS No. 157 defines fair value, establishes a framework for measuring
fair value in generally accepted accounting principles, and expands disclosures
about fair value measurements. The provisions of this standard apply to other
accounting pronouncements that require or permit fair value measurements. This
Statement was effective for the Company’s year ending December 31, 2008. Upon
adoption, the provisions of SFAS No. 157 are applied prospectively with limited
exceptions.  This Statement did not have a significant impact on the
Company’s financial statements as a difference between MFRS and US
GAAP.





In
December 2007, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 141R, “Business Combinations” (SFAS No.
141R). The objective of SFAS No. 141R is to improve the relevance,
representational faithfulness, and comparability of the information that a
reporting entity provides in its financial reports about a business combination
and its effects. The new standard requires (a) the acquiring entity in a
business combination to recognize all (and only) the assets acquired and
liabilities assumed, and any noncontrolling interest in the acquiring entity as
of the acquisition date; (b) establishes the acquisition-date fair value as the
measurement objective for all assets acquired and liabilities assumed; (c) an
acquirer in preacquisition periods to expense all acquisition-related costs; and
(d) the acquirer to disclose to investors and other users all of the information
they need to evaluate and understand the nature and financial effect of the
business combination. SFAS No. 141R also requires that any adjustments to an
acquired entity’s deferred tax asset and liability balance that occur after the
measurement period be recorded as a component of income tax expense. This
Statement will be effective for the Company’s year ending December 31, 2009.
Company management does not expect this Statement to have a significant impact
on the Company’s financial statements as a difference between MFRS and US GAAP.
However, the impact cannot be determined until such time as a business
combination transaction occurs.





F-39





In
December 2007, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 160, “Noncontrolling Interests in
Consolidated Financial Statements - an amendment of ARB No. 51”, (SFAS No. 160).
The objective of SFAS No. 160 is to improve the relevance, comparability, and
transparency of the financial information that a reporting entity provides in
its consolidated financial statements by establishing accounting and reporting
standards requiring all entities to report noncontrolling (minority) interests
in subsidiaries in the same way - as equity in the consolidated financial
statements. Moreover, Statement 160 eliminates the diversity that currently
exists in accounting for transactions between an entity and noncontrolling
interests by requiring that they be treated as equity transactions. This
Statement will be effective for the Company’s year ending December 31, 2009.
Company management does not expect this Statement to have a significant impact
on the Company’s financial statements as a difference between MFRS and US
GAAP.





The
Financial Accounting Standards Board, the Emerging Issues Task Force (EITF) and
the Securities and Exchange Commission have issued certain other accounting
pronouncements and regulations as of December 31, 2007 that will become
effective in subsequent periods; however, Company management does not believe
that any of those pronouncements would have significantly affected the Company’s
financial statements or disclosures had they been in effect during 2008 and
2007, and it does not believe that any of those pronouncements will have a
significant impact on the Company’s financial statements at the time they become
effective as a difference between MFRS and US GAAP.





NOTE
22 AUTHORIZATION FOR THE
ISSUING OF THE FINANCIAL STATEMENTS





The
accompanying consolidated financial statements were issued with the
authorization of Mr. Pedro Beltrán Nasr, Chief Financial Officer, on February
18, 2009, except for the Note 21 and 23, which were authorized by Mr. Pedro
Beltran on June 22, 2009.  These consolidated financial statements are
subject to approval at the ordinary stockholders’ meeting, where they may be
modified based on provisions set forth by the Mexican General Corporate
Law.





NOTE 23 SUBSEQUENT
EVENT





The
following are  events that occurred subsequent
to   December 31, 2008 which had no effect on the Company’s
consolidated financial statements as of and for the year ended December 31,
2008:





1.
            On
      March 12, 2009, the Company incorporated a subsidiary company named Grupo
      Radio Centro LA, LLC with a capital stock of US$3.0 million in Los
      Angeles, California, United States of America. The main activity of this
      subsidiary company is programming to, and selling advertising time on
      KMVN-FM (see item 2. of this Note).





2.
            In
      order to promote the business strategy by allowing the Company an
      opportunity to leverage its international programming success despite the
      current recession, on April 3, 2009, Grupo Radio Centro, S.A.B. de C.V.,
      through its subsidiary company, Grupo Radio Centro LA, LLC, signed a
      “Local Programming and Marketing Agreement” (the “LPMA”) with Emmis
      Communications Corporation (“Emmis”), a U.S. radio broadcasting
      company.  Under the LPMA, the Company will provide programming
      to, and sell advertising time on, KMVN-FM, Emmis’s radio station
      broadcasting in Los Angeles, California on the 93.9 FM frequency for up to
      seven years.  The Company also entered into a seven-year “Put
      and Call Agreement” (the “Option Agreement”) with Emmis to purchase the
      assets of the radio station KMVN-FM. The purchase price under the Option
      Agreement is US$ 110 million.




F-40




Under the
LPMA, the Company will pay Emmis US$ 7 million per year, plus expenses incurred
by Emmis with respect to the radio station, and the Company has agreed to
advance US$ 14 million (approximately Ps 204 million) as prepayment for the
first two years.  The Company financed the advance payment made in
April 2009 with a bank loan with Inbursa in an aggregate principal amount of Ps
200 million (see item 3. of this Note).





The
Company is entitled to exercise its call option to purchase the KMVN-FM radio
station assets under the Option Agreement at any time during its seven-year
term, and Emmis is entitled to require the Company to purchase the station
assets during the seventh year of the term.  If, at the time of the
exercise of the call or put, the Company is not qualified under U.S. law to own
a U.S. radio station, the Company must assign the Option Agreement to a
qualified third party.





3.
            The
      Company has entered into a credit facility with Banco Inbursa S.A.,
      Institución de Banca Múltiple, Grupo Financiero Inbursa for a secured,
      guaranteed peso-denominated loan in two tranches having an aggregate
      principal amount equivalent to US$ 21 million.  The credit
      facility was scheduled to expire on June 16, 2008, but the Company renewed
      it on similar terms through June 16, 2015. The Company may use the
      proceeds of the credit facility for working capital purposes, as well as
      other corporate purposes. On March 26, 2009, the Company drew down the
      equivalent in Mexican pesos (approximately Ps 200 million) to US$ 14.0
      million to finance the advance payment for the first two years of fees
      under the LPMA mentioned in item 2. of this
  Note.





The
Company will be required to repay the outstanding principal amount of the loan
in 20 quarterly installments beginning June 1, 2009 and make quarterly interest
payments at an annual rate of 13%.





4.
            In
      an Extraordinary Shareholders’ Meeting of the subsidiary company GRC
      Comunicaciones, S.A. de C.V. held on March 31, 2009, Grupo Radio Centro,
      S.A.B. de C.V. agreed that as of March 31, 2009 GRC Comunicaciones, S.A.
      de C.V. would absorb, by merger, the following subsidiary companies: Radio
      Centro Publicidad, S.A. de C.V., GRC Medios, S.A. de C.V. and GRC
      Publicidad, S.A. de C.V. As a result, these companies would cease to exist
      as of that date.





As a
result of the merger, all assets, liabilities, and shareholders’ equity of the
companies mentioned above were passed on to GRC Comunicaciones, S.A. de C.V.
(surviving company), by taking over the ownership of all agreements the merged
companies had entered into. GRC Comunicaciones, S.A. de C.V. remains required to
comply with all existing civil, mercantile, fiscal and other responsibilities of
the merged companies.





F-41