**As****f****iled with the Securities and Exchange
          Commission on July 2, 2007.**   **UNITED
          STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


Washington,
      D.C. 20549




**Form
      20-F**


o
            REGISTRATION
                STATEMENT PURSUANT TO SECTION 12(b) OR (g)
              OF
                THE SECURITIES EXCHANGE ACT OF 1934
              ORx
            ANNUAL
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
              SECURITIES
                EXCHANGE ACT OF 1934
              **For
                the fiscal year ended December 31, 2006**
              ORo
            TRANSITION
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF
              THE
                SECURITIES EXCHANGE ACT OF 1934
              ORo
            SHELL
                COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
              THE
                SECURITIES EXCHANGE ACT OF 1934
              Date
                of event requiring this shell company report
              for
                the transition period
                from         to




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)




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


**Title
                of each class:**
            
            **Name
                of each exchange on which registered****Series
                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.


o Yes x  No




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.


o Yes x  No




Note
      -
      Checking the box above will not relieve any registrant required to file reports
      pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from
      their obligations under those Sections.




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.


x Yes o  No


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 o Accelerated
      filer o Non-accelerated
      filer x




Indicate
      by check mark which financial statement item the Registrant has elected to
      follow:


o Item
      17  x Item
      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).


o Yes x  No







**TABLE
      OF CONTENTS**


**Page**PART
                  I
              2Item
                  1. Identity of Directors, Senior Management and Advisers
              2Item
                  2. Offer Statistics and Expected Timetable
              2Item
                  3. Key Information
              2Item
                  4. Information on the Company
              10Item
                  4A. Unresolved Staff Comments
              27Item
                  5. Operating and Financial Review and Prospects
              27Item
                  6. Directors, Senior Management and Employees
              37Item
                  7. Major Shareholders and Related Party Transactions
              42Item
                  8. Financial Information
              45Item
                  9. The Offer and Listing
              47Item
                  10. Additional Information
              59Item
                  11. Quantitative and Qualitative Disclosures About Market
                  Risk
              62Item
                  12. Description of Securities Other than Equity Securities
              62PART
                  II
              62Item
                  13. Defaults, Dividend Arrearages and Delinquencies
              62Item
                  14. Material Modifications to the Rights of Security Holders and
                  Use of
                  Proceeds
              62Item
                  15. Controls and Procedures
              63Item
                  16A. Audit Committee Financial Expert
              64Item
                  16B. Code of Ethics
              64Item
                  16C. Principal Accountant Fees and Services
              65Item
                  16D. Exemptions from the Listing Standards for Audit
                  Committees
              65Item
                  16E. Purchases of Equity Securities by the Issuer and Affiliated
                  Purchasers
              65PART
                  III
              66Item
                  17. Financial Statements
              66Item
                  18. Financial Statements
              66Item
                  19. Exhibits
              67





**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 pesos. Pursuant to the Mexican
      Financial Reporting Standards (“MFRS”) issued by the *Consejo
      Mexicano para la Investigación y Desarrollo de Normas de Información
      Financiera* (the
      Mexican Board for Research and Development of Financial Information Standards),
      financial data for all periods in the financial statements included in Item
      18
      (the “Consolidated Financial Statements”) and, unless otherwise indicated,
      throughout this Annual Report, have been restated in constant pesos (having
      the
      same purchasing power for each period indicated taking into account inflation)
      as of December 31, 2006.




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. 10.80 to U.S.$1.00,
      the noon buying rate for pesos at December 29, 2006, as published by the Federal
      Reserve Bank of New York. The translation to U.S. dollars at the December 29,
      2006 exchange rate may not accurately represent the financial condition of
      the
      Company in U.S. dollar terms as of a subsequent date. On June 22, 2007, the
      noon
      buying rate for pesos was Ps. 10.80 to U.S.$1.00. See Item 3, “Key
      Information—Exchange Rate Information,” for information regarding exchange rates
      since January 1, 2002.




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.











**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 25 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.




Grupo
      Radio Centro’s financial statements were prepared giving effect to Bulletin B-10
      and Bulletin B-12 under MFRS. Generally, Bulletin B-10 is designed to provide
      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 (the “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 requires 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. Pursuant to MFRS, the selected consolidated
      financial information set forth below, and all data in the related Consolidated
      Financial Statements, have been restated in constant pesos at December 31,
      2006.
      The effect of the inflation accounting principles described above has not been
      reversed in the reconciliation to U.S. GAAP. See Note 25 to the Consolidated
      Financial Statements.




2




**Year
                  Ended December 31,****2006**(1)
              
              **2006**
              
              **2005**
              
              **2004**
              
              **2003**
              
              **2002****(in
                  thousands, except per-ADS data)****Operating
                  Data:***MFRS:*Broadcasting
                  revenue
              
              
              U.S.$73,677
              
              
              Ps.
                  795,680
              
              
              Ps.
                  615,083
              
              
              Ps.
                  593,095
              
              
              Ps.
                  933,183
              
              
              Ps.
                  835,120Broadcasting
                  expenses (2) (3)
              
              
              41,058
              
              
              443,404
              
              
              408,501
              
              
              424,609
              
              
              568,279
              
              
              550,045Broadcasting
                  income
              
              
              32,619
              
              
              352,276
              
              
              206,582
              
              
              168,486
              
              
              364,904
              
              
              285,075Depreciation
                  and amortization(4)
              
              
              3,318
              
              
              35,836
              
              
              38,509
              
              
              35,733
              
              
              40,121
              
              
              45,190Corporate,
                  general and administrative expenses(3)
              
              
              1,322
              
              
              14,276
              
              
              14,047
              
              
              23,017
              
              
              58,053
              
              
              45,478Operating
                  income(5)
              
              
              27,979
              
              
              302,164
              
              
              154,026
              
              
              111,694
              
              
              266,730
              
              
              194,407Comprehensive
                  cost of financing
              
              
              3,555
              
              
              38,399
              
              
              13,280
              
              
              19,542
              
              
              37,207
              
              
              60,181Other
                  expenses, net
              
              
              5,228
              
              
              56,465
              
              
              50,588
              
              
              49,655
              
              
              74,627
              
              
              59,364Extraordinary
                  item(5)
              
              
              23,517
              
              
              253,976
              
              
              0
              
              
              0
              
              
              385,346
              
              
              0Net
                  income (loss)(6)
              
              
              38,798
              
              
              418,998
              
              
              67,559
              
              
              21,285
              
              
              (189,860
              )
              
              84,424Minority
                  interest
              
              
              6
              
              
              61
              
              
              15
              
              
              2
              
              
              5
              
              
              16Net
                  income (loss) per ADS(6)(7)
              
              
              2.15
              
              
              23.21
              
              
              3.74
              
              
              1.18
              
              
              (10.50
              )
              
              4.64Common
                  shares outstanding(7)
              
              
              162,500
              
              
              162,500
              
              
              162,657
              
              
              162,560
              
              
              162,705
              
              
              163,783*U.S.
                  GAAP:*Broadcasting
                  revenue
              
              
              U.S.$73,677
              
              
              Ps.
                  795,680
              
              
              Ps.
                  615,083
              
              
              Ps.
                  593,095
              
              
              Ps.
                  933,183
              
              
              Ps.
                  835,120Operating
                  (loss) income(5)
              
              
              (848
              )
              
              (9,167
              )
              
              103,151
              
              
              50,676
              
              
              (372,954
              )
              
              136,733Net
                  income (loss)(6)
              
              
              38,792
              
              
              418,937
              
              
              67,544
              
              
              12,837
              
              
              (369,386
              )
              
              86,200Net
                  income (loss) per ADS(6)(7)
              
              
              2.15
              
              
              23.20
              
              
              3.74
              
              
              0.72
              
              
              (20.43
              )
              
              4.74Dividends
                  per ADS(7)(8)
              
              
              0.36
              
              
              3.87
              
              
              -
              
              
              -
              
              
              3.53
              
              
              0**Balance
                  Sheet Data:***MFRS:*Working
                  capital
              
              
              U.S.$11,918
              
              
              Ps.128,707
              
              
              Ps.
                  (118,552
              )
              
              Ps.
                  (192,327
              )
              
              Ps.
                  (143,301
              )
              
              Ps.
                  (356
              )Property
                  and equipment, net
              
              
              42,945
              
              
              463,786
              
              
              494,665
              
              
              525,724
              
              
              531,458
              
              
              560,919Excess
                  cost over fair value of assets of subsidiaries
              
              
              73,958
              
              
              798,710
              
              
              798,710
              
              
              790,647
              
              
              861,939
              
              
              951,872Total
                  assets
              
              
              153,691
              
              
              1,659,782
              
              
              1,647,097
              
              
              1,596,544
              
              
              1,756,859
              
              
              2,023,120Long-term
                  debt excluding current portion
              
              
              -
              
              
              -
              
              
              58,913
              
              
              121,754
              
              
              192,110
              
              
              186,380Total
                  debt(9)
              
              
              -
              
              
              -
              
              
              117,826
              
              
              182,630
              
              
              256,146
              
              
              401,447Shareholders’
                  equity(10)
              
              
              123,819
              
              
              1,337,181
              
              
              1,042,438
              
              
              973,382
              
              
              1,103,453
              
              
              1,439,632*U.S.
                  GAAP:*Total
                  assets
              
              
              U.S.$157,400
              
              
              Ps.
                  1,699,837
              
              
              Ps.
                  1,687,152
              
              
              Ps.
                  1,636,600
              
              
              Ps.
                  1,754,383
              
              
              Ps.
                  2,082,847Shareholders’
                  equity(10)
              
              
              122,977
              
              
              1,328,095
              
              
              1,033,413
              
              
              964,372
              
              
              994,416
              
              
              1,419,424





(1)
                Peso
                    amounts have been translated into U.S. dollars solely for the
                    convenience
                    of the reader at the rate of Ps. 10.80 per U.S. dollar, the noon
                    buying
                    rate for pesos on December 29, 2006, 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
 2006
                  financial statements. For purposes of presentation, the financial
                  data for
                  2003 and 2002 were also
                  reclassified.


(4)
              For
                  purposes of uniformity with the presentation of the 2006 and 2005
                  financial statements, goodwill amortization has been reclassified
                  for
                  2004, 2003 and 2002, and the charge to income in 2004, 2003 and
                  2002 from
                  the amortization of goodwill in the amounts of Ps. 69.5 million, Ps.
                  88.1 million and Ps. 81.8 million, respectively, have been
                  reversed.


(5)
              Extraordinary
                  item in 2003 reflects a provision of Ps.385.3
                  million for the contingent liability related to an arbitration
                  proceeding.
                  See Item 5, “Operating and Financial Review and Prospects—Loss
                  Contingency.” Unlike treatment under MFRS, for purposes of U.S. GAAP, such
                  provision is charged against operating income. See Notes 10 and
                  25 to the
                  Consolidated Financial
                  Statements.


(6)
              In
                  accordance with MFRS, net income does not give effect to minority
                  interest. In contrast, net income under U.S. GAAP does give effect
                  to
                  minority interest. See Note 25 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. The Company did not pay any dividends in
                  2002 with
                  respect to 2001, in 2004 with respect to 2003, in 2005 with respect
                  to
                  2004 or in 2006 with respect to 2005. In 2007, the Company paid
                  dividends
                  in the aggregate amount of Ps. 70.0 million with respect to 2006.


(9)
              Total
                  debt consists of bank debt.


(10)
              In
                  2006, the Company reduced its capital by Ps. 120 million through
                  cash
                  payments to its shareholders equal to that amount.




3





**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
                End**2002
            
            
            10.43
            
            
            9.00
            
            
            9.75
            
            
            10.432003
            
            
            11.41
            
            
            10.11
            
            
            10.85
            
            
            11.242004
            
            
            11.64
            
            
            10.81
            
            
            11.31
            
            
            11.152005
            
            
            11.41
            
            
            10.41
            
            
            10.87
            
            
            10.632006
            
            
            11.46
            
            
            10.43
            
            
            10.90
            
            
            10.80**Month
                Ended 2006:**December
            
            
            10.99
            
            
            10.77**Month
                Ended 2007:**January
            
            
            11.09
            
            
            10.76February
            
            
            11.16
            
            
            10.92March
            
            
            11.18
            
            
            11.01April
            
            
            11.03
            
            
            10.92May
            
            
            10.93
            
            
            10.74June
                (through June 22)
            
            
            10.98
            
            
            10.71







(1)
            Source:
                Noon buying rate for pesos reported by the Federal Reserve Bank of
                New
                York.


(2)
            Average
                of month-end rates.




On
      June
      22, 2007, the noon buying rate was Ps. 10.80 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 ADSs on
      the New York Stock Exchange (the “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 CPOs represented by the ADSs.





4





**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. Our
      average Mexico City audience share has increased during recent years, including
      an increase from 31.4% in 2002 to 32.0% in 2003 and to 34.7% in 2004. Following
      a slight decline in 2005 to 34.6%, our average Mexico City audience share
      increased to 35.3% in 2006, according to International Research Associates
      Mexicana, S.A. de C.V. (“INRA”). There can be no assurance that increased
      competition within, or a decline in the popularity of, a given format segment
      will not decrease our aggregate audience share in the future. In addition,
      we
      face strong competition from both television and various print media for
      advertising revenues. 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 2006 were Compañía Cervecera del Trópico, S.A.
      de C.V. (“Compañía Cervecera”) and Tiendas Comercial Mexicana, S.A. de C.V.
      (“Comercial Mexicana”), representing 3.7% and 3.4%, respectively, of our total
      broadcasting revenue. In 2005 and 2004, our two largest individual customers
      were Gigante, S.A. de C.V. (“Gigante”) and Comercial Mexicana. In 2005 and 2004,
      Gigante accounted for 4.4% and 5.6%, respectively, of our total broadcasting
      revenue, while Comercial Mexicana accounted for 4.1% and 4.9%, respectively,
      of
      our total broadcasting revenue. In 2006, Gigante accounted for 2.3% of our
      total
      broadcasting revenue.




The
      companies comprising Grupo Carso and Grupo Cifra are also key customers. In
      2006, Grupo Carso accounted for 6.5% of our total broadcasting revenue, and
      Grupo Cifra accounted for 3.5% of our total broadcasting revenue. In
      2005,
      Grupo Carso accounted for 6.8% of our total broadcasting revenue. In 2004,
      the
      companies comprising Grupo Gigante accounted for 7.0% of our total broadcasting
      revenue .




We
      cannot
      assure you that Compañia Cervecera, Comercial Mexicana and Gigante or the
      companies comprising Grupo Carso, Grupo Cifra **** or
      Grupo
      Gigante will continue to purchase advertising from us at current levels. The
      loss of our relationship with any one of our principal customers could have
      a
      material adverse effect on our results of operations.




***A
      decrease in advertising expenditures by political campaigns could substantially
      reduce our revenue***




Our
      business is significantly affected by the advertising expenditures of political
      parties during election campaigns in Mexico. While our revenue has increased
      significantly during the congressional elections that occur every three years,
      including in 2003 and 2006, our revenue has increased even more significantly
      during presidential elections, which occur every six years (coinciding with
      congressional elections), including in 2000 and 2006. In 2004, 2005 and 2006,
      advertising by political parties accounted for 0.06%, 2.3%, and 19% of total
      broadcasting revenue, respectively. A decrease in advertising expenditures
      by
      political campaigns during an election year could have a material adverse impact
      on our results of operations.




5




***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
      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 in 1996, we are required by the Mexican Comisión Federal de
      Competencia (the “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 ** ( the
      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.




**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 two Mexican trusts, which they control, that
      together hold 84,020,646 Series A Shares, or 51.6% of all outstanding
      Series A Shares as of June 21, 2007. Some of these Aguirre family
      members own Series A Shares and/or ADSs in addition to the Series A
      Shares held by the Mexican trusts.




6




***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 shares or other securities of the Company 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 the Company’s
      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.




***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 two Mexican trusts
      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 an undrawn 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
      (the “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 (the “Securities Act”). 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 in
      the
      Company 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.




7




**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
      2005
      and 2006, Mexico’s gross domestic product, or GDP, grew by 3.0% and 4.8%,
      respectively, and inflation was 3.33% and 4.05%, respectively. In 2007,
      according to preliminary estimates of the Mexican government, GDP is expected
      to
      grow by 3.1% and inflation is expected to be 3.5%. 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.




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, 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 National
      Consumer Price Index, was 4.05% for 2006. Inflation for the first quarter of
      2007 was 1.02%. If inflation in Mexico does not remain within the government’s
      projections, we might 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 might result in lower demand for broadcast
      advertising.




Interest
      rates on 28-day Mexican treasury bills, or Cetes, averaged 7.19% during 2006.
      On
      June 21, 2007, the 28-day Cetes rate was 7.18%. High interest rates in
      Mexico could adversely affect our financing costs.




***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. Presidential elections in Mexico
      occur every six years, and the most recent election occurred in July 2006.
      Elections to both houses of the Mexican Congress also occurred in July 2006.
      The
      new administration and the new distribution of seats in Congress will influence
      regulatory policy and the overall management of the Mexican economy in future
      years. 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 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. In 2005, the peso appreciated against the U.S. dollar
      by year-end by 4.66%, and the average value of the peso against the U.S. dollar
      during 2005 was 3.89% higher than in 2004. In 2004, the peso appreciated against
      the U.S. dollar by year-end by 0.8%, and the average value of the peso against
      the U.S. dollar during 2004 was 4.24% lower than in 2003. N o
      assurance can be given that the peso will not depreciate in value relative
      to
      the U.S. dollar in the future.




8




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.




A
      small
      portion of our operating costs is payable in U.S. dollars. Although at December
      31, 2006, 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.




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 our operating costs payable in
      U.S.
      dollars.




***Developments
      in other emerging market 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 emerging market countries. Although
      economic conditions in these countries may differ significantly from economic
      conditions in Mexico, investors’ reactions to developments in any of these other
      countries may have an adverse effect on the market value of securities of
      Mexican issuers. In past years, for example, prices of both Mexican debt
      securities and Mexican equity securities dropped substantially as a result
      of
      developments in Russia, Asia, Brazil and Argentina.




9




**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. It 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, such that
      the Series A Share trading line reflects trading of both Series A Shares and
      CPOs.




10




**Capital
      Expenditures and Divestitures**




***Capital
      Expenditures*** ****




Capital
      expenditures were Ps. 6.6 million in 2006, Ps. 7.7 million in 2005 and
      Ps. 22.3 million in 2004. In 2006, 2005 and 2004, capital expenditures were
      financed from working capital. In 2006, the Company’s principal expenditures
      were for broadcasting equipment and computer equipment. In 2004, the Company
      spent approximately U.S.$1 million to update its main computer and digital
      storage system and also purchased automobiles and motorcycles for the news
      program *La
      Red de Radio Red* . The
      balance of the Company’s capital expenditures during the 2004-2006 period was
      primarily for broadcasting equipment.




***Capital
      Divestitures***




During
      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.
      The
      Company had no significant capital divestitures in 2005. Capital divestitures
      were Ps. 8.5 million in 2004, reflecting the sale of used Company
      automobiles and used computer equipment (see Notes 1 and 11 to the Consolidated
      Financial Statements).




**BUSINESS
      OVERVIEW**




Grupo
      Radio Centro is a leading radio-broadcasting company in Mexico and for over
      30
      years 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 musical and
      entertainment programs, 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 INRA, the Company’s Mexico City average audience
      share for the year ended December 31, 2006 was 35.3%, more than twice that
      of
      the next most popular radio-broadcasting company in Mexico City for the same
      period. See “—Broadcasting Operations” and “—Competition.”




Grupo
      Radio Centro currently owns eight AM and five FM radio stations, and manages
      and
      operates an additional FM station. Of the 14 radio stations it owns or operates,
      Grupo Radio Centro operates five AM and six FM stations 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
      INRA, for the year ended December 31, 2006, Grupo Radio Centro’s radio stations
      ranked as four of the top 10 FM radio stations out of a total of 29 FM stations,
      and two of the top 10 AM stations out of a total of 34 AM stations. See
“—Business Strategy.”




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,
      2006, the Company had 108 affiliates in 73 cities throughout
      Mexico.




11




**Business
      Strategy**




The
      Company’s strategy is to optimize cash flow from operations by maintaining its
      leading market position, offering advertisers top-ranked stations in almost
      every major station format and continuing its focus on operating efficiency
      and
      cost control.




*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 of the major station formats, including:




·
            *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 rationale: (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 differentiates itself from
      its smaller competitors, who cannot offer as comprehensive coverage of the
      Mexican radio audience. The Company is able to offer advertisers exposure to
      listening audiences targeted to correspond with the demographic profiles they
      seek and is able to provide advertisers with their choice of either focused
      or
      broad audience exposure across a comprehensive range of income classes and
      age
      segments.




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 (i) balancing the mix
      of its station formats to correspond to the needs of the overall market and
      (ii)
      being proactive in the management of each individual station format and
      adjusting to the evolution of its particular market segment.




*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 22 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.”




12




**Broadcasting
      Operations**




*Radio
      Stations*




Except
      as
      noted, the following table sets forth certain information about the Mexico
      City
      radio stations operated by Grupo Radio Centro as of December 31,
      2006:




**Station**
            
            **Frequency**
            
            **Power**
              **(Watts)**
            
            **Station
                Format**
            
            **INRA****(1)**
              **2006
                Total**
              **Market**
              **Rank****(3)**
            
            **INRA****(1)**
              **2006
                Total**
              **Audience**
              **Share****(4)**
            
            **INRA****(1)**
              **2006**
              **Band**
              **Rank****(5)**
            
            **Arbitron****(2)**
              **2006
                Total Market Rank****(3)**
            
            **Arbitron****(2)**
              **2006
                Total Audience Share****(4)**
            
            **Arbitron****(2)**
              **2006**
              **Band
                Rank****(5)**
            
            **Target**
              **Demographic**
              **Segments**XEQR-FM
            
            
            107.3
                mhz
            
            
            100,000
            
            
            *Grupera*—Diverse
                Musical Genres
            
            
            1
            
            
            11.4
            %
            
            1
            
            
            1
            
            
            18.7
            %
            
            1
            
            
            13-44
                yearsXERC-FM
            
            
            97.7
                mhz
            
            
            100,000
            
            
            *Juvenil*—Youth
                Oriented
            
            
            2
            
            
            5.4
            %
            
            2
            
            
            4
            
            
            5.3
            %
            
            4
            
            
            8-34
                yearsXEJP-FM
            
            
            93.7
                mhz
            
            
            100,000
            
            
            Spanish
                Language—Contemporary Music
            
            
            4
            
            
            4.9
            %
            
            4
            
            
            3
            
            
            6.6
            %
            
            3
            
            
            18-44
                yearsXHFO-FM(6)
            
            
            92.1
                mhz
            
            
            150,000
            
            
            English
                Language—Classic Rock
            
            
            6
            
            
            3.8
            %
            
            6
            
            
            6
            
            
            4.6
            %
            
            6
            
            
            18-44
                yearsXHFAJ-FM
            
            
            91.3
                mhz
            
            
            100,000
            
            
            English
                Language—Contemporary Music
            
            
            10
            
            
            2.9
            %
            
            10
            
            
            10
            
            
            2.3
            %
            
            9
            
            
            13-24
                yearsXEQR-AM
            
            
            1030
                khz
            
            
            50,000
            
            
            Spanish
                Language—Talk Show
            
            
            15
            
            
            2.4
            %
            
            2
            
            
            9
            
            
            3.1
            %
            
            1
            
            
            25+
                yearsXEJP-AM
            
            
            1150
                khz
            
            
            50,000
            
            
            Spanish
                Language Classics
            
            
            19
            
            
            2.0
            %
            
            3
            
            
            14
            
            
            2.1
            %
            
            4
            
            
            35+
                yearsXERED-AM
            
            
            1110
                khz
            
            
            100,000
            
            
            News
                / Talk Show
            
            
            34
            
            
            0.7
            %
            
            13
            
            
            33
            
            
            0.5
            %
            
            13
            
            
            25+
                yearsXHRED-FM
            
            
            88.1
                mhz
            
            
            100,000
            
            
            News
                / English Language—Music
            
            
            28
            
            
            1.0
            %
            
            21
            
            
            29
            
            
            0.7
            %
            
            19
            
            
            25+
                yearsXERC-AM
            
            
            790
                khz
            
            
            50,000
            
            
            News
            
            
            41
            
            
            0.5
            %
            
            15
            
            
            44
            
            
            0.3
            %
            
            19
            
            
            25+
                yearsXEN-AM
            
            
            690
                khz
            
            
            100,000
            
            
            News
                / Talk Show
            
            
            43
            
            
            0.4
            %
            
            17
            
            
            37
            
            
            0.4
            %
            
            15
            
            
            25+
                years







(1)
            Source:
                INRA.


(2)
            Source:
                Arbitron Inc.


(3)
            Total
                market rank is determined based on each station’s annual average share of
                the total radio audience.


(4)
            Total
                audience share represents each station’s annual average share of the total
                radio audience.


(5)
            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).


(6)
            XHFO-FM
                is operated by Grupo Radio Centro pursuant to an operating agreement
                that
                will terminate on January 2, 2009. For the year ended December 31,
                2006,
                XHFO-FM accounted for approximately 10.24% of Grupo Radio Centro’s
                broadcasting revenue.





13




*Programming*




The
      Company currently produces all of the programming for the stations it owns
      or
      operates. Prior to March 3, 2004, however, the *Monitor* news
      program and *Red
      Vial* ,
      a
      Mexico City traffic report, were produced by Infored, S.A. de C.V. The news
      program that replaced *Monitor* and the
      traffic report that replaced *Red
      Vial* are
      produced by the Company. In addition, the Company provides programming to its
      network of affiliates.




Programming
      produced by the Company includes playing recorded music, coverage of live music
      events (such as concerts), special musical programs and news and talk show
      programs. For example, 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 a majority of its other stations in
      Mexico City.




Grupo
      Radio Centro’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. In 2006, Grupo Radio Centro
      conducted approximately 224,000 interviews. Grupo Radio Centro believes that
      no
      competitor has developed an internal research capability as extensive as its
      own.




*Production
      and Transmission of Programming*




**Transmission
      Plants** .
      In
      October 2003, the SCT granted the Company permission to install a digital radio
      transmission system called the Eureka 147 DAB system in its Cerro del
      Chiquihuite plant. During 2005, the Company installed, on an experimental basis,
      a powerful Eureka 147 DAB System transmission station in its Cerro del
      Chiquihuite plant. This system simultaneously transmits programming of Radio
      Red-FM, Alfa Radio and of a broadcasting station of the HD Radio-AM transmission
      station (or “IBOC-AM,” an in-band on-channel AM system for transmitting digital
      information over existing stations), which transmitted programming of *La
      69* .
      In
      2005, the Company demonstrated, for the benefit of CIRT and SCT representatives,
      the application and capabilities of DMB (Digital Multimedia Broadcasting)
      technology, which enables a single broadcasting station to transmit video and
      audio and data for multiple applications.




In
      2006,
      the Company installed and operated a radio-broadcasting transmission station
      with the Eureka 147 DAB system operating at 1,468.368 MHz in Mexico City. This
      installation and operation was performed for the *Comité
      de Nuevas Tecnologías de la Cámara Nacional de la Industria de Radio y
      Televisión* (Committee of New Technology of the National Chamber of the Radio and Television
      Industries, or CIRT), to demonstrate the capacities of the system. Through
      representation in CIRT, and by supporting the *Comité
      Mixto de Tecnologías Digitales de la Secretaría de Comunicaciones y Transportes* (Mixed
      Committee on Digital Technologies of the Secretary of Communication and
      Transport) and the Comisión Federal de Telecomunicaciones ** (the
      Federal Telecommunications Commission, or Cofetel), the Company has actively
      participated in Cofetel’s consideration of the analysis of the adoption of radio
      digital broadcasting in Mexico.




**Audio
      Engineering** .
      Grupo
      Radio Centro has 18 production studios in which musical material,
      advertisements, informational messages and promotional spots are recorded on
      digital audio tape (“DAT”). In addition, Grupo Radio Centro maintains 13 on-air
      studios, each of which is linked to Grupo Radio Centro’s automated programming
      computer network via optical fiber. In most cases, Grupo Radio Centro has
      maintained a consistent design for both production and on-air studios to provide
      a familiar work environment for employees and reduce the risk of error. Grupo
      Radio Centro’s primary studio operations are substantially all digital and
      utilize state-of-the-art computer networks for the recording, scheduling and
      playing of all news and music, as well as promotional and advertising material.
      Currently, the Company has a single high-speed computer network with a
      transmission speed measured in gigabytes per second installed in both on-air
      studios and production studios. The Company has a total of 30
      workstations.




14




During
      2005, Grupo Radio Centro updated the Digital Recording System, which records
      and
      copies music, news, and commercials as well as promotional and advertising
      material. This system uses the Windows based program *Maestro* with
      sufficient storage capacity for all the Company’s music, news and advertising.
      Also, every recording studio, transmission station and editing room at Grupo
      Radio Centro is equipped with a personal computer, which runs the *Maestro* program
      that is connected to the Company’s network.




In
      July
      2004, Grupo Radio Centro’s news division installed and began operating a “News
      Room” system that enables news writers to provide radio announcers with
      information by creating a text crawl that runs across a flat-panel screen while
      the announcers are on air. The system is used primarily by *Formato
      21* ,
      although it also provides information to news centers in other radio stations.
      This upgrade has reduced considerably the amount of paper used during news
      programs.




During
      the second half of 2007, the Company plans to replace six analog mixer consoles
      with digital mixer consoles. The replacements will be made at radio stations
      XEJP-AM, XERC-AM (two consoles) and at one studio and two transmitter cabins
      used by OIR.




Each
      station 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 switchover to back-up power in the
      event of power outages. In addition, the main FM transmitter facility is
      equipped with an uninterruptible power supply to prevent the loss of airtime
      during a transfer to back-up power. Grupo Radio Centro uses sophisticated
      multiplexing networks for transmission, which allows five of its AM stations
      to
      operate at three sites, each site using one antenna system. Similarly, five
      FM
      stations are multiplexed into a common twenty-four radiator elements master
      antenna situated on the Cerro del Chiquihuite plant, which Grupo Radio Centro
      believes is ideally located at 540 meters above the average terrain level in
      Mexico City. A sixth FM station operated by the Company transmits from the
      World
      Trade Center building in Mexico City.




Currently,
      all AM and FM radio broadcast signals in Mexico are analog. There are various
      efforts underway around the world to develop, test and implement radio digital
      audio broadcasting (“DAB”). If implemented, DAB would largely eliminate fading,
      static and other interference that adversely affects the listening experience.
      Various DAB proposals have been made in Mexico that focus upon either the United
      States “in-band” broadcasting model (using existing allocations of AM or FM
      spectrum) or the European “out-of-band” broadcasting model. The Cámara Nacional
      de la Industria de Radio y Televisión (the Mexican Trade Association for
      Broadcasters, or “CIRT”), of which the Company is a member, is in the process of
      analyzing such proposals. The Company is an active participant in CIRT’s efforts
      to obtain favorable regulation of DAB when, and if, such technology is
      implemented in Mexico. CIRT has created a task force with the SCT in order
      to
      introduce DAB in Mexico in the future. There can be no assurance, however,
      as to
      whether or when DAB will be introduced.




In
      2004,
      Grupo Radio Centro obtained authorization from the SCT to increase the
      broadcasting power of the stations XERED-AM, XEJP-AM and XEN-AM - from 50 to
      100
      kilowatts, 20 to 50 kilowatts and 50 to 100 kilowatts, respectively. The
      objective of this effort is to improve the stations’ presence, coverage and
      quality of reception in Mexico City’s metropolitan area.




15




*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,
      thereby reducing clients’ monitoring costs and enhancing client goodwill. Grupo
      Radio Centro believes that its state-of-the-art equipment and engineering staff
      give it a competitive edge in Mexico City radio broadcasting.




We
      have
      completed an alternate transmission site that can be controlled remotely in
      case
      of an emergency at the radio stations XERC-FM, XEJP-FM and XEQR-FM.




*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 top 10 customers in each of 2006,
      2005
      and 2004 accounted for approximately 37.9%, 33.0% and 33.1%, respectively,
      of
      total broadcasting revenue of the Company. Our two largest individual customers
      in 2006, Compañía Cervecera and Comercial Mexicana, accounted for 3.7% and 3.4%,
      respectively, of our total broadcasting revenue. In 2005 and 2004, Gigante
      accounted for 4.4% and 5.6%, respectively, of our total broadcasting revenue,
      while Comercial Mexicana accounted for 4.1% and 4.9%, respectively, of our
      total
      broadcasting revenue and Compañía Cervecera accounted for 2.1% and 4.6%,
      respectively, of our total broadcasting revenue. The companies comprising Grupo
      Carso, collectively, and Grupo Cifra, collectively, also are key customers.
      In
      2006, the companies comprising Grupo Carso, collectively, accounted for 6.5%
      of
      our total broadcasting revenue, while the companies comprising Grupo Cifra,
      collectively, accounted for 3.5% of our total broadcasting revenue. In 2005,
      Grupo Carso accounted for 6.8% of our total broadcasting revenue, while in
      2004,
      Grupo Gigante collectively accounted for 7.0% 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.”




In
      addition to the Company’s corporate clients, the three largest Mexican political
      parties, the Partido de la Revolución Democrática (PRD), Partido Revolucionario
      Institucional (PRI) and the Partido Acción Nacional (PAN), 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.




At
      December 31, 2006, the Company had a sales force of 26 individuals, of which
      12
      marketed primarily to advertising agencies and major customer accounts, and
      14
      marketed to small and mid-sized 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 its clients who purchase airtime on multiple
      stations, offering the largest discounts to clients who purchase airtime on
      all
      of its stations. Higher rates apply to clients who purchase commercial airtime
      for “special events,” such as live concerts and special news
      features.




16




In
      addition, the Company sells commercial airtime in advance under a plan pursuant
      to which advertisers who deposit cash with Grupo Radio Centro in an amount
      equal
      to their advertising commitment for an agreed period are guaranteed the rate
      in
      effect at the time of the purchase for the agreed period, and are 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 2006, revenue recognized under
      advance-sale arrangements, including related interest income, accounted for
      approximately 29.3% of total broadcasting revenue, as compared to
      36.0% **** for
      2005
      and 36.2% for 2004. See Note 15 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 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 its
      advance-sales plan attracts advertisers who would not otherwise purchase
      advertising time because of the benefits of guaranteed rates and bonus 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, 2006, Grupo Radio Centro had 108 affiliates located in
      73 **** cities
      throughout Mexico. During the last three years, broadcasting revenue from
      OIR-related activities ranged from 2.5% to 2.8% of total broadcasting revenue.
      In 2006, approximately 2.6% of the Company’s revenue was attributable to its
      work through OIR, and no single affiliate represented more than 7.0% of total
      OIR-related revenue.




At
      December 31, 2006, 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.




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 of 2005, the Company installed
      a
      new satellite up-link system with state-of-the-art technologies, including
      Digital Video Broadcasting, or DVB transmission, with 10 digital stereo
      channels. As of December 31, 2005, all of our affiliates were 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.




17




**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, 2006, there were 51 commercial radio stations in Mexico City (28
      AM
      and 23 FM stations) and 12 not-for-profit, public-service stations (six AM
      and
      six FM). These 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, 2006, and
      a
      chart depicting the audience share of each.




18




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




**AM
                Stations**
            
            **FM
                Stations**
            
            **Total**Grupo
                Radio Centro (GRC)
            
            
            5
            
            
            6
            
            
            11Grupo
                Acir (ACIR)(2)
            
            
            3
            
            
            4
            
            
            7Televisa
                Radio (TVR)
            
            
            3
            
            
            3
            
            
            6NRM
                Comunicaciones (NRM)
            
            
            3
            
            
            3
            
            
            6Grupo
                Radio Fórmula
            
            
            3
            
            
            2
            
            
            5Grupo
                Imagen
            
            
            0
            
            
            2
            
            
            2MVS
                Radio (MVS)
            
            
            0
            
            
            2
            
            
            2Total
            
            
            17
            
            
            22
            
            
            39







(1)
              Source:
                  Grupo Radio Centro.


(2)
            In
                September 2000, Grupo Televisa S.A.B. offered to acquire a 50.05%
                interest
                in Grupo ACIR. As of May 2001, the Federal Competition Commission
                had
                rejected the proposed acquisition and a subsequent appeal of that
                rejection by Grupo Televisa. Grupo Televisa has appealed the rejection
                in
                the Mexican courts, which have not decided the matter.





19




**Mexico
      City Radio Audience Share (1970-2006)**












(1)
            Source:
                INRA.


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


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


(4)
            In
                1994, NRM no longer owned XECO-AM and XEUR-AM, and in 1995, NRM purchased
                XHMM-FM.


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





The
      Company’s average Mexico City audience share decreased slightly from 34.7% in
      2004 to 34.6% in 2005, but increased to 35.3% in 2006. 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 following the
      RED acquisition 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, 2006, represented only 12.0% of the total radio audience. However,
      there can be no assurance that competition within, or a decline in the
      popularity of, a given format segment will not decrease the Company’s aggregate
      audience share in the future. In addition, the Company faces strong competition
      from both television and various print media for advertising
      revenue.




20




*OIR
      Network Competition*




As
      with
      radio broadcasting, the Mexican radio-network market is highly competitive.
      As
      of December 31, 2006, there were 29 radio networks serving 716 AM radio stations
      and 431 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 serviced by OIR to compete
      effectively.




21




**Significant
      Subsidiaries**




The
      following table sets forth the Company’s significant subsidiaries at June 21,
      2007:




**Name
                of the Company**
            
            **Jurisdiction
                of Establishment**
            
            **Percentage
                of Ownership and Voting Interest**
            
            **Description**XEQR,
                S.A. de C.V.
            
            México
            
            99.9%
            
            Radio
                stationXERC,
                S.A. de C.V.
            
            México
            
            99.9%
            
            Radio
                stationXEEST,
                S.A. de C.V.
            
            México
            
            99.9%
            
            Radio
                stationXEQR-FM,
                S.A. de C.V.
            
            México
            
            99.9%
            
            Radio
                stationXERC-FM,
                S.A. de C.V.
            
            México
            
            99.9%
            
            Radio
                stationXEJP-FM,
                S.A. de C.V.
            
            México
            
            99.9%
            
            Radio
                stationXEDKR-AM,
                S.A. de C.V.
            
            México
            
            99.2%
            
            Radio
                stationRadio
                Red, S.A. de C.V.
            
            México
            
            99.9%
            
            Radio
                stationRadio
                Red-FM, S.A. de C.V.
            
            México
            
            99.9%
            
            Radio
                stationRadio
                Sistema Mexicano, S.A.
            
            México
            
            99.9%
            
            Radio
                stationEstación
                Alfa, S.A. de C.V.
            
            México
            
            99.9%
            
            Radio
                stationEmisora
                1150, S.A. de C.V.
            
            México
            
            99.9%
            
            Radio
                stationRadio
                Centro Publicidad,
              S.A.
                de C.V.
            
            México
            
            99.9%
            
            Marketing
                companyGRC
                Publicidad, S.A. de C.V.
            
            México
            
            99.9%
            
            Marketing
                companyGRC
                Medios, S.A. de C.V.
            
            México
            
            99.9%
            
            Marketing
                companyGRC
                Comunicaciones, S.A. de C.V.
            
            México
            
            100.0%
            
            Marketing
                companyPromotora
                Técnica de Servicios Profesionales, S.A. de C.V.
            
            México
            
            99.9%
            
            Service
                companyPublicidad
                y Promociones Internacionales, S.A. de C.V.
            
            México
            
            99.9%
            
            Service
                companyPromo
                Red, S.A. de C.V.
            
            México
            
            99.9%
            
            Service
                company




22




**Name
                of the Company**
            
            **Jurisdiction
                of Establishment**
            
            **Percentage
                of Ownership and Voting Interest**
            
            **Description**GRC
                Radiodifusión, S.A.
              (formerly
                Aerocer, S.A.)
            
            México
            
            99.9%
            
            Marketing
                companyUniversal
                de Muebles e Inmuebles, S.A. de C.V.
            
            México
            
            99.8%
            
            Real
                estate companyInmobiliaria
                Radio Centro,
              S.A.
                de C.V.
            
            México
            
            99.9%
            
            Real
                estate companyDesarrollos
                Empresariales,
              S.A.
                de C.V.
            
            México
            
            99.9%
            
            Sub-holding
                companyRadiodifusión
                Red, S.A. de C.V.
            
            México
            
            99.9%
            
            Sub-holding
                companyEnlaces
                Troncales, S.A. de C.V.
            
            México
            
            99.9%
            
            Sub-holding
                company




**Property
      and Equipment**




All
      of
      Grupo Radio Centro’s tangible assets are located in Mexico. At December 31,
      2006, the net book value of all property and equipment was approximately
      Ps. 463.8 million (U.S.$42.9 million).




Grupo
      Radio Centro’s principal executive offices and studios are located in Mexico
      City and are owned by Grupo Radio Centro. In 1992 Grupo Radio Centro purchased
      the *Constituyentes* building,
      a modern, 102,000 square foot building of which, at December 31, 2006, the
      Company occupied approximately 81,000 **** square
      feet **** with
      the
      remainder 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 applicable 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—Programming”). Grupo Radio
      Centro continues to own the building in which its administrative offices and
      studios were located immediately prior to its move into the *Constituyentes* 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, may become
      subject to a first priority lien under our credit facility. See “Operating and
      Financial Review and Prospects—Liquidity and Capital
      Resources—Indebtedness—Undrawn Credit Facility.”




23




**REGULATORY
      FRAMEWORK**




The
      business of Grupo Radio Centro is subject to regulation and oversight by the
      SCT
      through the *Comisión
      Federal de Telecomunicaciones* (the
      Federal Telecommunications Commission or “Cofetel”). The SCT is part of the
      executive branch of the Mexican federal government and Cofetel is an agency
      of
      the SCT. Regulation and oversight are governed by the *Ley
      Federal de Radio y Televisión* (the
“Federal Radio and Television Law”), the *Ley
      Federal de Telecomunicaciones* (the
“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* (the
      Federal Agency for Consumer Protection) and the *Comisión
      Federal de Competencia Económica* (the
      “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, applications are submitted to Cofetel and,
      after
      a public bidding process, a license is granted to a winning applicant with
      a
      specific term of 20 years. 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 time 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, in the event of revocation of the
      license for certain specified reasons, Grupo Radio Centro would forfeit its
      transmission and antenna facilities with respect to the license. In the event
      of
      early termination of the license 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, in the event that the SCT, through
      Cofetel, terminates or revokes a license, the licensee may not obtain a new
      license for five years and, in some cases, may be forbidden from obtaining
      a new
      license. 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 is set to expire in 2007, and the renewal has been requested. The
      license for XEJP-FM is set to expire in 2012. The licenses for XEDKR-AM (in
      Guadalajara) and XESTN-AM (in Monterrey) will expire in October and November
      2015, respectively.




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 it has been in effect for more than
      three
      years, the licensee has complied with all of its obligations under the license
      and having obtaining favorable opinion of the Federal Competition
      Commission.




Certain
      provisions of the 2006 amendments to the Federal Radio and Television Law are
      subject to constitutional challenge and are being reviewed by the Mexican
      Supreme Court.




24




**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 the
      SCT.




Under
      Mexican law, radio programming is not subject to judicial or administrative
      censorship, except that programming is subject to various regulations, including
      prohibitions on foul 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, during political campaigns, to provide a limited amount
      of
      broadcast time free of charge to all registered political parties.




**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. In addition, licensees are prohibited from broadcasting advertisements
      that are misleading. The advertisements of certain products and services are
      subject to restrictions or require government approval prior to 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 broadcast total time may be
      used
      for advertisements, divided proportionately among broadcasting
      hours.




The
      Company sets its minimum advertising rates and registers such rates with the
      SCT
      through Cofetel. There are no restrictions on maximum rates that may be
      charged.




**Broadcast
      Tax.**Since 1969, all radio stations in Mexico have been subject to a
      tax payable by granting the Mexican government the right to use a portion of
      broadcast time. Currently, radio stations must satisfy this tax by providing
      the
      Mexican government 35 minutes of broadcasting time between the hours of
      6:00 a.m. and midnight, in spots lasting between
      20 to 30 seconds. The use of this time is not cumulative and any time not used
      by the Mexican government in any day is forfeited. The time must be distributed
      on a proportional and equitable basis throughout the relevant programming
      period. The programming of public service announcements provided by the Mexican
      government is prohibited from competing with the licensee’s programming and, if
      it is made to promote the consumption of products or services, must be limited
      to general promotions of Mexico’s goods and services.




**Other.** In
      1993,
      the *Ley
      Federal de Competencia Económica* (“Federal Economic Competition Law”), a law to promote fair competition and to
      prevent monopolistic practices, became effective, and regulations thereunder
      were published in March 1998. ****




As
      a
      result of the increase in Grupo Radio Centro’s share of the Mexico City radio
      market following the RED acquisition, 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.
      Although 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 Company will be permitted
      by the Federal Competition Commission to make any additional investments should
      it desire to do so.




25




The
      2006
      amendments to the Federal Economic Competition Law have 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 of these amendments,
      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 became effective in Mexico on June 8, 1995 and
      was amended by the Mexican Congress in April 2006, at the same time that the
      Congress amended the Federal Radio and Television Law . The amendments to both
      laws 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 radio signals and other telecommunications services
      at certain frequencies.




The
      Federal Telecommunications Law and the Federal Radio and Television Law expanded
      Cofetel’s authority to conduct public auctions of available radio and television
      frequencies. Under these laws, 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.




***Intellectual
      Property***




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




·
            
            “*Radio
                Red*”
            
            ·
            
            “*Stereo
                97.7*”·
            
            “*Joya*”
            
            ·
            
            “*Alegría*”·
            
            “*El
                Fonógrafo del Recuerdo*”
            
            ·
            
            “*Centro*”·
            
            “*Variedades*”
            
            ·
            
            “*Formato
                21*”·
            
            “*Stereo
                Joya*”
            
            ·
            
            “*Hoy*”·
            
            “*NotiCentro*”
                (and design)
            
            ·
            
            “*OIR*”·
            
            “*Sensación*”
                (and design)
            
            ·
            
            “*Palco
                Deportivo*”·
            
            “*Universal*”
                (and design)
            
            ·
            
            “*To2”*




26




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*”




Grupo
      Radio Centro also obtained the following service marks in connection with the
      acquisition of RED:




·
                *“Radio
                    Programas de México”*
                
                ·
                *“UNIRED”*·
                *“RPM”*
                
                ·
                *“SERVIRED”*·
                *“ALFA
                    91.3”*
                
                ·
                *“AUTORED”*·
                *“BANG”*





**United
      States.** Grupo
      Radio Centro has registered on the principal register of the United States
      Patent and Trademark Office (the “USPTO”) the following service marks:


·
              “*Radio
                    Éxitos*”
              
              ·
              “*Frente
                    a Frente . . . Fuera Máscaras*”·
              “*Radio
                    Centro*”
              
              ·
              “*Radio
                    Sensación*”·
              “*En
                  Concierto*”
              
              ·
              “*Radio
                    Variedades*”·
              “*Reinas
                    de la Popularidad*”
              
              ·
              “*Cadena
                  Radio Centro CRC*”


Grupo
      Radio Centro has also registered on the principal register of the USPTO 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 25 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.




Among
      other things, MFRS requires that financial statements recognize certain effects
      of inflation. In accordance with these requirements, the Company has restated
      non-monetary assets and liabilities using the INPC, restated the components
      of
      shareholders’ equity using the INPC, restated its fixed assets using the INPC,
      recorded gains or losses in purchasing power from holding monetary assets or
      liabilities and restated financial data for all periods in the Consolidated
      Financial Statements, and throughout this Annual Report, in constant pesos
      as of
      December 31, 2006. See Item 3, “Key Information—Selected Financial
      Data.”




27




**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. In
      2006,
      the general pattern changed as revenue from the sale of commercial airtime
      was
      highest in the second quarter due to increased advertising expenditures related
      to presidential and congressional political campaigns. Grupo Radio Centro
      historically has had sufficient cash flow from operations to meet its operating
      needs in all four calendar quarters.




Advertising
      expenditures by political campaigns represent an important part of the Company’s
      total broadcasting revenue. While the Company’s revenue increases significantly
      during the congressional elections that occur every three years (including
      in
      2003 and 2006), an even more significant increase in revenue results from
      presidential elections, which occur every six years (coinciding with
      congressional elections), including the years 2000 and 2006. In connection
      with
      the July 2006 presidential and congressional elections, political advertising
      accounted for 19.0% of the Company’s total broadcasting revenue in 2006. In
      2005
      and 2004, years in which no elections occurred, advertising by political parties
      constituted only 2.57% and 0.06 %,
      respectively, of total broadcasting revenue. 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 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 2006, 2005 and 2004.




**Broadcasting
                Revenue**
            
            
            **Broadcasting
                Income****2006**
            
            
            **2005**
            
            
            **2004**
            
            
            **2006**
            
            
            **2005**
            
            
            **2004**First
                quarter
            
            
            22.2
            %
            
            18.0
            %
            
            21.1
            %
            
            21.6
            %
            
            9.7
            %
            
            2.5
            %Second
                quarter
            
            
            29.5
            
            
            23.8
            
            
            21.1
            
            
            31.9
            
            
            19.8
            
            
            17.0Third
                quarter
            
            
            22.9
            
            
            27.3
            
            
            24.2
            
            
            18.5
            
            
            31.8
            
            
            23.4Fourth
                quarter
            
            
            25.4
            
            
            30.9
            
            
            33.6
            
            
            28.0
            
            
            38.7
            
            
            57.1Total
            
            
            100.0
            %
            
            100.0
            %
            
            100.0
            %
            
            100.0
            %
            
            100.0
            %
            
            100.0
            %





**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. The annual rate of inflation
      in
      Mexico, as measured by changes in the National Consumer Price Index, was 4.05%
      for 2006. Inflation for the first quarter of 2007 was 1.02%. The adverse effects
      of high inflation on the Mexican economy might result in lower demand for
      broadcast advertising.




28




**Cost-Control
      Measures**




Part
      of
      the Company’s operating strategy is cost control. In 2005 and in 2006,
      production costs for news programming produced by the Company decreased 18.4%
      and 2.6%, respectively, primarily due to reductions in the total compensation
      paid to on-air personalities and their production crews.




**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, which
      represents the amount we would have been required to pay under the contract.
      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
      years ended December 31, 2005 and 2004, we also recorded Ps. 13.8 million and
      Ps. 6.8 million, respectively, 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 in Mexico the arbitration award.
      As a result, the provision was reversed and recorded as an extraordinary income
      item in June 2006. See Item 8, “Financial Information 3⁄4 Other
      Information 3⁄4 Legal
      and
      Arbitration Proceedings.”




**Recent
      Accounting Pronouncements**




*MFRS*




In
      March
      2003, the *Instituto
      Mexicano de Contadores Públicos* (the
      “IMCP”) issued Bulletin C-15 “ *Deterioro
      en el Valor de los Activos de Larga Duración y su Disposición* ”
      (Impairment of the Value of Long-Lived Assets and their Disposal or “C-15”),
      which must be applied to financial statements for periods beginning January
      1,
      2004. C-15 sets forth, among other things, new rules for the calculation and
      recognition of impairment losses, including any subsequent reversals. C-15
      establishes the criteria used to determine whether impairment of a long-lived
      asset in use, either tangible or intangible (including goodwill), has occurred.
      To calculate impairment loss, 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. In accordance with C-15, the
      Company conducted impairment analysis for the year ended December 31, 2006
      of
      its Ps. 1.2 billion of long-lived assets, including goodwill, and this
      analysis resulted in no impairment.




In
      March
      2004, the IMCP issued Bulletin B-7 “ *Adquisiciones
      de Negocios* ”
      (Business Acquisitions or “B-7”), which must be applied to financial statements
      for periods beginning January 1, 2005. B-7 establishes that the purchase price
      method is the only permissible method to account for business combinations,
      including acquisitions, investment in the shares of an associated entity and
      combinations accomplished by transferring cash, assets, debt issuances or
      shares. The goodwill of an acquired entity is no longer amortized; rather it
      is
      subject to impairment testing, in accordance with Bulletin C-15, on at least
      an
      annual basis. B-7 requires that goodwill still being amortized on its effective
      date cease amortization and be subject to impairment testing. As a result of
      the
      adoption of B-7, the Company’s Ps. 798.7 million of goodwill as of December
      31, 2006 was subject to impairment testing, and this testing resulted in no
      impairment. For impairment evaluation purposes, we have only one operating
      segment, which consists of one reporting unit, and all goodwill is allocated
      to
      that operating segment.




29




Effective
      January 1, 2005, the Company adopted amendments to Bulletin D-3, “Labor
      Obligations,” which sets forth guidelines relating to the recognition of a
      liability for severance payments at the end of a work relationship for reasons
      other than restructuring. The severance payments are recorded in accordance
      with
      actuarial calculations based on the Company’s severance indemnity history over
      the last three years. The liability recorded by the Company for the year ended
      December 31, 2006 as a result of adopting the amendments to this bulletin was
      Ps. 17.6 million.




As
      of
      January 1, 2006, MFRS issued by the Mexican Board for Research and Development
      of Financial Standards (CINIF) became effective. MFRS are based on and replace
      the generally accepted accounting principles in Mexico (Mexican GAAP), which
      were in effect through December 31, 2005.




The
      MFRS
      consist of standards and interpretations issued by the CINIF, Mexican GAAP
      bulletins that have not been replaced or repealed by the new MFRS and
      International Financial Reporting Standards (IFRS), which are applicable as
      a
      supplement to MFRS.




The
      adoption of the MFRS had no material effect on the Company’s Consolidated
      Financial Statements as of December 31, 2006. The principal differences between
      Mexican GAAP and MFRS are:




·
            NIF
                B-13*Events
                Subsequent to the Date of the Financial Statements.*This
                section establishes that the restructuring of assets and liabilities
                as
                well as the waivers which assert the right of creditors to make payable
                indebtedness in the event of an entity’s non-compliance with commitments
                of debt contracts which occur between the date of the financial statements
                and the date of issue need not be incorporated in the financial
                statements.




·
            NIF
                B-3*Statement
                of Income.*This
                section classifies income, costs and expenses as either ordinary
                or
                extraordinary and thereby eliminates the classification of certain
                extraordinary items established by Mexican GAAP. Additionally, the
                new
                section specifies the levels and headings to be included in the income
                statement.




·
            NIF
                C-13*Related
                Parties.*This section expands the classification of related parties to include,
                among others, close family members of key management personnel and
                directors. Also, the section specifies additional disclosure requirements
                for the notes to financial
                statements.




·
            NIF
                D-6*Capitalization
                of the Comprehensive Result of Financing.*This section requires the comprehensive result of financing to be
                capitalized under certain
                circumstances.




**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.




30




***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 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 and pension benefits, the amount of which is determined
      through actuarial estimates.




As
      of
      December 31, 2005, the Company adopted the new Bulletin D-3, which sets forth
      guidelines related to the recognition of payments upon the termination of a
      labor relationship. As a result, the Company recognized a liability and net
      cost
      for 2005 amounting to Ps. 9.01 million.




**2006
      vs. 2005 Results of Operations**




For
      the
      year ended December 31, 2006, broadcasting revenue was Ps. 795.7 million, a
      29.4% increase from Ps. 615.1 million reported for the same period of 2005.
      This increase was mainly attributable to an increase in advertising expenditures
      by political parties in connection with the presidential and congressional
      elections that took place on July 2, 2006, as well as higher advertising
      expenditures by the Company’s commercial clients compared to the same period of
      2005.




The
      Company’s broadcasting expenses (excluding depreciation, amortization and
      corporate, general and administrative expenses) for the year ended December
      31,
      2006 were Ps. 443.4 million an 8.5% increase from the Ps. 408.5
      million reported for the same period of 2005. This increase was primarily due
      to
      (i) an increase in sales commissions paid to the Company’s sales force, outside
      agents and affiliated stations in connection with increased sales of airtime,
      (ii) a net increase in the allowance for doubtful accounts, and (iii) increased
      expenses related to additional advertising and marketing campaigns.




Broadcasting
      income ( *i.e.* ,
      broadcasting revenue minus broadcasting expenses, excluding depreciation,
      amortization and corporate, general and administrative expenses) for the year
      ended December 31, 2006, was Ps. 352.3 million, a 70.5% increase from
      Ps. 206.6 million reported for the same period of 2005. This increase was
      mainly attributable to the increase in broadcasting revenue, which more than
      offset the increase in broadcasting expenses.




Depreciation
      and amortization expense for the year ended December 31, 2006 totaled
      Ps. 35.8 million, a 7.0% decrease from Ps. 38.5 million reported for
      the same period of 2005. This decrease was mainly attributable to the fact
      that
      the Company no longer recorded depreciation for certain Company vehicles whose
      useful lives ended in the second quarter of 2006.




The
      Company’s corporate, general and administrative expenses for the year ended
      December 31, 2006 were Ps. 14.3 million a slight increase from
      Ps. 14.0 million reported for the same period of 2005.




As
      a
      result of the foregoing, the Company reported operating income of Ps. 302.2
      million for the year ended December 31, 2006, a 96.1% increase from
      Ps. 154.0 million reported for the same period of 2005.




31




The
      Company’s comprehensive financing cost for the year ended December 31, 2006 was
      Ps. 38.4 million, a 190.9% increase from Ps. 13.3 million recorded for
      the same period of 2005. This increase was primarily due to:




·
            the
                cost attributable to the sale of certain accounts receivable described
                below, which was classified as interest
                expense,




·
            a
                decrease in gain on net foreign currency exchange, which was Ps. 0.8
                million in 2006 compared to Ps. 10.9 million in 2005, due to the
                cancellation of a U.S. dollar-denominated contingent liability in
                2006,
                and




·
            a
                loss on net monetary position of Ps. 2.6 million in 2006 compared to
                a gain of Ps. 7.0 million in 2005, due to the fact that the Company
                repaid its bank debt in May 2006 and cancelled a contingent liability
                in
                June 2006, thus significantly reducing its monetary liabilities during
                the
                year.




The
      interest expense described in the prior paragraph resulted from the Company’s
      sale in December 2006 for Ps. 12 million in cash of accounts receivable
      representing Ps. 38.9 million owed to it mainly by political parties in
      connection with purchases of airtime from 2003 to 2005. The Company had been
      unsuccessful in its attempts to collect the accounts receivable and,
      accordingly, had increased its allowance for doubtful accounts beginning in
      2005. Following the sale, the Company classified as interest expense Ps. 26.9
      million (which is equivalent to the difference between the book value and the
      purchase price of the accounts receivable), and reduced its allowance for
      doubtful accounts from Ps. 29.4 million to Ps. 12.8 million. 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
      accounts receivable were sold to a company controlled by Francisco Aguirre
      G.,
      Chairman of the Board of Directors of Grupo Radio Centro. See Item 7, “Major
      Shareholders and Related Party Transactions——Related Party Transactions—Sale of
      Doubtful Accounts Receivable.”




Other
      expenses, net, for the year ended December 31, 2006 were Ps. 56.5 million,
      an 11.7% increase from Ps. 50.6 million reported for the same period of
      2005. This increase was mainly attributable to higher legal expenses during
      2006
      compared to 2005 and expenses related to the Company’s 60th anniversary
      celebration during 2006.




As
      a
      result of the foregoing, the Company reported income before extraordinary item
      and provisions for income tax and employee profit sharing of Ps. 207.3
      million for the year ended December 31, 2006, a 129.6% increase from
      Ps. 90.3 million reported for the same period of 2005.




During
      2006, the Company recorded extraordinary income of Ps. 254.0 million due to
      the reversal of a contingent liability provision recorded by the Company in
      2003
      minus accumulated foreign exchange loss and interest recorded by the Company
      in
      2006 related to the provision.




For
      the
      year ended December 31, 2006, the Company reported income before provisions
      for
      income tax and employee profit sharing of Ps. 461.3 million, a 410.9%
      increase from Ps. 90.2 million reported for the same period of 2005, due to
      both the increase in operating income and the recording of extraordinary income.




32




For
      the
      year ended December 31, 2006, the Company recorded provisions for income tax
      and
      employee profit sharing of Ps. 42.3 million, an 87.2% increase from
      Ps. 22.6 million reported for 2005. This increase was primarily due to the
      increase in taxable income during 2006 compared to 2005.




As
      a
      result of the foregoing, the Company reported net income of Ps. 418.9
      million for the year ended December 31, 2006, a 518.9% increase from
      Ps. 67.5 million reported for the same period of 2005.




**2005
      vs. 2004 Results of Operations**




For
      the
      year ended December 31, 2005, broadcasting revenue was Ps. 615.1 million, a
      3.7% increase compared to the Ps. 593.1 million reported for 2004. This
      increase was mainly attributable to higher advertising expenditures by the
      Company’s clients, which purchased more airtime during the year ended December
      31, 2005 compared to 2004.




The
      Company’s broadcasting expenses (excluding depreciation, amortization and
      corporate, general and administrative expenses) for the year ended December
      31,
      2005 were Ps. 408.5 million, a 3.8% decrease compared to the Ps. 424.6
      million reported for 2004. This reduction in broadcasting expenses was primarily
      attributable to (i) lower news programming costs, which resulted from the
      termination of news programming produced for the Company by a third party at
      the
      end of the first quarter of 2004, and (ii) lower costs for the production
      of news programs produced by the Company during the year ended December 31,
      2005
      compared to 2004. These two factors were partially offset by an increase in
      the
      allowance for doubtful accounts and the creation of a reserve covering severance
      payments to the Company’s terminated employees as required under Bulletin D-3
“Labor Obligations.”




Broadcasting
      income ( *i.e.* ,
      broadcasting revenue minus broadcasting expenses, excluding depreciation,
      amortization and corporate, general and administrative expenses) for the year
      ended December 31, 2005 was Ps. 206.6 million, representing an increase of
      22.6% compared to the Ps. 168.5 million reported for the same period of
      2004. This increase was attributable mainly to the increase in broadcasting
      revenue and the decrease in broadcasting expenses described above.




The
      Company’s gross margin (broadcasting income divided by broadcasting revenue) for
      2005 was 33.6%, an increase of 18.3% compared to the gross margin of 28.4%
      for
      2004. This increase was mainly attributable to an increase in broadcasting
      revenue from 2004 to 2005 and a decrease in broadcasting expenses from 2004
      to
      2005 for the reasons described above.




For
      the
      year ended December 31, 2005, depreciation and amortization was Ps. 38.5
      million, an increase of 7.8% compared to the Ps. 35.7 million reported for
      2004. For purposes of uniformity with the presentation of the 2006 and 2005
      financial statements, goodwill amortization has been reclassified for 2004
      and
      the charge to income made in 2004 from the amortization of goodwill in the
      amount of Ps. 69.5 million has been reversed.




The
      Company’s corporate, general and administrative expenses for the year ended
      December 31, 2005 totaled Ps. 14.0 million, a decrease of 39.1% compared to
      the Ps. 23.0 million reported for the same period of 2004, which resulted
      primarily from the Company no longer recording the compensation of an executive
      officer in corporate, general and administrative expenses, but rather in costs
      of personnel, which is included in broadcasting expenses.




33




The
      Company reported operating income of Ps. 154.0 million for 2005, an
      increase of 40.3% compared to operating income of Ps. 109.7 million
      reported for 2004, principally due to an increase in broadcasting income, which
      primarily resulted from the increase in broadcasting revenue and the decrease
      in
      broadcasting expenses described above, and the decrease in depreciation and
      amortization.




The
      Company’s comprehensive cost of financing for the year ended December 31, 2005
      was Ps. 13.2 million, a decrease of 32.7% compared to a comprehensive cost
      of financing of Ps. 19.5 million for 2004. This change is mainly
      attributable to a gain on foreign currency exchange, net of Ps. 10.9
      million for 2005, which resulted from the appreciation of the peso against
      the
      U.S. dollar in 2005, compared to a loss on foreign currency exchange, net of
      Ps. 2.7 million reported for 2004. The effect of this difference was
      partially offset by a gain on net monetary position of Ps. 7.0 million for
      the year ended December 31, 2005 compared to a gain on net monetary position
      of
      Ps. 16.6 million for 2004, which resulted primarily from (i) a lower
      rate of inflation for 2005 compared to the rate of inflation for 2004 and
      (ii) lower net monetary liabilities in 2005 compared to net monetary
      liabilities in 2004.




Other
      expenses, net for the year ended December 31, 2005, were Ps. 50.6 million,
      a 1.8% increase compared to Ps. 49.7 million reported for 2004. Although
      there was a decrease in other expenses in 2005 compared to 2004 due to a
      reduction in 2005 of legal fees related to the arbitration with Infored and
      Mr. Gutiérrez Vivó, this was more than offset by a decrease in other income
      in 2005 compared to 2004. In 2004, the Company recorded higher other income
      primarily due to the reappraisal of certain real estate assets of the Company.




For
      the
      year ended December 31, 2005, the Company reported income before provisions
      for
      income tax and employee profit sharing of Ps. 90.2 million compared to an
      income before provisions for income tax and employee profit sharing of
      Ps. 40.5 million for 2004 as a result of the factors described
      above.




During
      2005, the Company recorded provisions for income tax and employee profit sharing
      of Ps. 22.6 million compared to provisions for income tax and employee
      profit sharing of Ps. 21.2 million for 2004. This increase was primarily
      due to the increase in taxable income for the year ended December 31, 2005
      compared to 2004, which offset the effect of the Company’s application of tax
      loss carryforwards.




As
      a
      result of the foregoing, the Company reported net income of Ps. 67.6
      million for the year ended December 31, 2005 compared to a net income of
      Ps. 19.3 million for the same period of 2004.




**Liquidity
      and Capital Resources**




The
      Company’s primary source of liquidity is cash flow from operations. The
      Company’s operating activities provided Ps. 254.4 million in 2006, 144.4
      million in 2005, and Ps. 25.9 million in 2004. Working capital at December
      31, 2006 was Ps. 128.7 million. Cash flow from operations historically has
      been
      sufficient to cover the Company’s working capital needs. Nevertheless, at
      December 31, 2005 and 2004, the Company had a working capital deficit of
      Ps. 118.5 million and Ps. 192.3 million, respectively, due to the recorded
      provision for the contingent liability in connection with the arbitration
      proceeding with Infored and Mr.
      Gutiérrez Vivó.




The
      Company expects to be able to meet its additional working capital needs in
      2007
      with cash flow from its 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.




34




During
      2006, the Company’s principal use of funds, other than for operating purposes
      and capital expenditures, was the payment of its total bank debt for an amount
      of Ps. 117.8 million (Ps. 113.2 million nominal amount) and the distribution
      to
      shareholders of Ps. 123.9 million (Ps. 120.0 million nominal amount) in the
      form
      of a capital reduction. In 2006, the Company repurchased on the open market
      918,800 Series A Shares at an aggregate cost of Ps. 8.8 million. During
      2005, the Company’s principal use of funds, other than operating purposes and
      capital expenditures, was the payment of indebtedness totaling Ps. 64.8
      million (Ps. 56.6 million nominal amount) and the acquisition of all the
      outstanding shares of Aerocer, S.A., an aircraft service company, for a total
      cash purchase price of Ps. 11.2 million (Ps. 10.8 million nominal
      amount), which includes Ps. 8.0 million (Ps. 7.7 million nominal
      amount) in excess book value. In 2005, the Company repurchased on the open
      market 133,300 Series A Shares at an aggregate cost of Ps. 1.5 million
      (Ps. 1.2 million nominal amount). During 2004, the Company’s principal use
      of funds, other than operating purposes and capital expenditures, was the
      payment of indebtedness totaling Ps. 73.5 million. In 2004, the Company
      repurchased on the open market 357,600 Series A Shares at an aggregate cost
      of
      Ps. 2.7 million (Ps. 2.6 million nominal amount). 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***




**Undrawn
      Credit Facility.** On May
      16, 2006, we entered into a credit facility with GE Capital CEF México, S. de
      R.L. de C.V. and Banco Inbursa S.A., Institución de Banca Múltiple, Grupo
      Financiero Inbursa for a secured, guaranteed peso-denominated loan in a
      principal amount equivalent to U.S.$21.0 million. As of the date of this Annual
      Report, we have not drawn down on the line of credit. Amounts borrowed under
      the
      credit facility will be guaranteed by several of our subsidiaries and secured
      by
      a first priority lien on substantially all of our property, including our
      corporate headquarters and 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 May 16, 2008, provided that a final judgment has been
      rendered in connection with the execution of the arbitration award in favor
      of
      Infored and Mr. Gutiérrez Vivó. 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); 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 3 to 1, a total debt to EBITDA ratio of no more than 2 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 conditions to draw down is not met, we will be unable to obtain funds
      under the credit facility.




We
      may
      use the proceeds of the credit facility for working capital purposes in an
      amount up to Ps. 100 million, with the remaining amount, upon the lenders’
approval, for other corporate purposes. If we draw down on the credit facility,
      we will be required to repay the principal amount of the loan in 10 semi-annual
      installments and make quarterly interest payments at an annual rate equal to
      the
      28-day Mexican Interbank Equilibrium Interest Rate ( *Tasa
      de Interés Interbancaria de Equilibrio* or *TIIE* )
      plus
      2.75%.




**Capital
      Reduction**




On
      August
      1, 2006, we announced a reduction of its 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.




35




**Off-Balance
      Sheet Arrangements**




In
      2006,
      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 conditi on.




**Contractual
      Obligations**




As
      of
      December 31, 2006, we had no long-term debt obligations, capital lease
      obligations, operating leases, purchase obligations or other long-term
      obligations.




**U.S.
      GAAP Reconciliation**




Net
      income under U.S. GAAP was Ps. 418.9 million for 2006, Ps. 67.5 million for
      2005, and Ps. **** 12.8 million
      for 2004. The slight difference between net income under MFRS and U.S. GAAP
      for
      the years ended December 31, 2006, 2005 and 2004 was due to the treatment under
      U.S. GAAP of a minority interest in subsidiaries of the Company as a liability.
      For the year ended December 31, 2004, the difference between net income under
      MFRS and U.S. GAAP was also attributable to an increase
      in the book value of temporarily unoccupied buildings held for sale under MFRS,
      which is not recognized under U.S. GAAP .




Operating (loss) **** income
      under U.S. GAAP for the years ended December 31, 2006, 2005 and 2004 was Ps.
      (9.2 )
      million, Ps. 103.2 million and Ps. 50.7 million, respectively. The principal difference **** between
      operating (loss) income **** under
      U.S. GAAP and MFRS for
      the
      year ended December 31, 2006 was due to the Company’s reversal of a Ps. 254.0
      million contingency provision related to an arbitration proceeding. Under MFRS,
      the provision is recorded as an extraordinary item and 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, with
      respect to all periods, 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. 1,328.1 million at December 31, 2006,
      Ps. 1,033.4
      million at December 31, 2005 and Ps. 964.4 million at December 31, 2004. 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. For the year ended December 31,
      2004, the difference between net income under MFRS and U.S. GAAP was also
      attributable to increase under MFRS in book value of temporarily unoccupied
      buildings held for sale, which is not recognized under U.S. GAAP.




For
      a
      further discussion of the differences between MFRS and U.S. GAAP as they relate
      to Grupo Radio Centro, see Note 25 to the Consolidated Financial Statements.
      Pursuant to MFRS, 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 2006,
      2005 and 2004 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 (see Note 25 to the
      Consolidated Financial Statements).




36




**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 their
      respective 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. Persons who have acted as external
      auditors 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 clients, 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, in the case of alternate directors 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 April 26, 2007.
      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**
            
            **Years
                as director**
            **Principal
                occupation**
            
            **Other
                directorships**Francisco
                Aguirre G.
            
            Chairman
            
            65
            
            7
            Private
                investor
            
            Chairman
                of the board of Grupo Radio México, S.A. de C.V.María
                Esther Aguirre G.
            
            First
                Vice Chairperson
            
            67
            
            7
            Private
                investor
            
            -María
                Adriana Aguirre G.
            
            Second
                Vice Chairperson
            
            60
            
            7
            Private
                investor
            
            -Ana
                María Aguirre G.
            
            Director
            
            62
            
            36
            Private
                investor
            
            -Carlos
                Aguirre G.
            
            Director
            
            52
            
            7
            Chief
                Executive Officer of Grupo Radio Centro
            
            -Rafael
                Aguirre G.
            
            Director
            
            49
            
            14
            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.




37




**Name**
            
            **Position**
            
            **Age**
            
            **Years
                as director**
            **Principal
                occupation**
            
            **Other
                directorships**José
                Manuel Aguirre G.
            
            Director
            
            44
            
            7
            Real
                estate investor
            
            -Pedro
                Beltrán N.
            
            Director
            
            63
            
            5
            Finance
                & Administrative Director and Chief Financial Officer of Grupo Radio
                Centro
            
            -Luis
                Alfonso Cervantes Muñiz
            
            Director
            
            51
            
            2
            Attorney
            
            -Gustavo
                Gabriel Llamas Monjardín
            
            Director
            
            44
            
            2
            Public
                accountant
            
            -Thomas
                Harold Raymond Moffet
            
            Director
            
            65
            
            7
            President
                of Amsterdam Pacific Capital, LLC (a financial advisory
                firm)
            
            -Luis
                Manuel de la Fuente Baca
            
            Director
            
            61
            
            7
            Financial
                advisor
            
            -




Ms.
      María
      Esther G. de Aguirre is the Honorary Chairperson for life of the Board of
      Directors of the Company and also is the mother of 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.




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; and
      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
      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.




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.




38




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 in order 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 approval from
      the Audit Committee, the Board of Directors may approve the Company’s financial
      statements, internal control and audit guidelines and accounting
      policies.




***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, with Mr. de la Fuente Baca acting
      as committee chairman. All three members of the 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 April 26, 2007.
      As required by our bylaws and applicable law, all members 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.




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 Committee investigates possible violations of internal
      guidelines and also verifies the establishment of internal controls and the
      filing of related information. Additionally, the 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.




39




The
      Audit
      Committee further assists the Board of Directors in oversight activities by
      requesting periodic meetings with executive officers. The 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 acting as committee chairman. All three members of the 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 April 26, 2007. 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 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 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 Committee also reports on the
      transactions and activities of the Company in which the Board of Directors
      intervened. The 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.




**Executive
      Officers**




The
      executive officers of Grupo Radio Centro are as follows:




**Name**
            
            **Position**
            
            **Years
                as officer**
            
            **Years
                of service**Carlos
                Aguirre G.
            
            Chief
                Executive Officer
            
            28
            
            33Pedro
                Beltrán N.
            
            Finance
                & Administrative Director and Chief Financial Officer
            
            21
            
            21Arturo
                Yáñez F.
            
            Director
                of Auditing
            
            23
            
            23Sergio
                González L.
            
            Operations
                Director
            
            23
            
            23Luis
                Cepero A.
            
            Audio
                Engineering Director
            
            24
            
            46Eduardo
                Stevens A.
            
            Transmission
                Engineering Director
            
            17
            
            27Gonzalo
                Yáñez V.
            
            Marketing
                Director
            
            7
            
            10Rodolfo
                Nava C.
            
            Treasurer
                and Financial Information Manager
            
            7
            
            21Alvaro
                Fajardo de la Mora
            
            General
                Counsel
            
            22
            
            22Luis
                Miguel Carrasco N.
            
            Commercial
                Director
            
            9
            
            14





40




**Compensation**




For
      the
      year ended December 31, 2006, the aggregate compensation for the executive
      officers of the Company paid or accrued in that year for services in all
      capacities was Ps. 22.4 million, of which approximately Ps. 5.8
      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 2006 was Ps. 17.2 million. The total of payments to
      directors for attendance at Board of Director meetings during 2006 was
      Ps. 275,880. The total payments to Audit Committee members for attendance
      at Audit Committee meetings during 2006 was Ps. 342,600.




**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, 2006, Grupo Radio Centro employed a total of 457 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* (the
      Radio and Telecommunications Workers Union or the “Union”). The Company employed
      a total of 422 full-time employees at December 31, 2005 and a total of 395
      full-time employees at December 31, 2004. Grupo Radio Centro also employs a
      varying number of temporary employees. During 2006, the Company employed an
      average of 72 temporary employees. All employees of Grupo Radio Centro work
      in
      Mexico City.




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 in the event exceptions from the *Contrato
      Ley* are
      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* will
      expire on January 31, 2008; however, salary increases are implemented annually.
      On February 1, the Company and the Union agreed to a 4.3% 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
      June 21, 2007, the Aguirre members of the Board of Directors had beneficial
      ownership, primarily through the two Mexican trusts through which they hold
      their 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.”




41




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




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




Pursuant
      to Section 303A.11 of the Listed Company Manual of the New York Stock Exchange,
      we have prepared a summary of the ways in which our corporate governance
      practices differ from those of U.S. companies under the NYSE’s corporate
      governance rules. This summary can be accessed on our web site 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 web site. The information on our web site, 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.)




**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
      were 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”). Prior to
      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 interest
      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.




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. Under the terms of the Controlling Trusts, the Series A Shares held
      by
      each trust are ordinarily voted as directed by a majority of the beneficiaries
      of the trust.




42




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 21, 2007. **** All
      CPOs
      previously held by the Controlling Trusts were converted to Series A Shares in
      2003.




**Name
                of Person or Group**
            
            **Series
                A Shares Beneficially Owned**
            
            **Percentage
                of Series A Shares**(1)Old
                Controlling Trust
            
            
            11,669,527
            
            
            7.2
            %New
                Controlling Trust
            
            
            72,351,119
            
            
            44.4
            %María
                Esther Aguirre G
            
            
            84,527,780
            (2)
              (3)
            
            51.9
            %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
            
            
            84,535,413
            (2)
              (4)
            
            52.0
            %Rafael
                Aguirre G
            
            
            84,215,415
            (2)
              (5)
            
            51.8
            %José
                Manuel Aguirre G
            
            
            84,065,646
            (2)
              (6)
            
            51.7
            %







(1)
            Percentages
                are based on 162,724,561 Series A Shares issued and outstanding as
                of
                June 21, 2007.




(2)
            All
                Series A Shares beneficially owned by the Old Trust and the New 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 each of the Technical
                Committees.




(3)
            Includes
                402,374 Series A Shares and 11,640 ADSs beneficially owned by María Esther
                Aguirre G., in addition to the Family
                Shares.




(4)
            Includes
                249,267 Series A Shares and 29,500 ADSs beneficially owned by Carlos
                Aguirre G., in addition to the Family
                Shares.




(5)
            Includes
                21,641 ADSs beneficially owned by Rafael Aguirre G., in addition
                to the
                Family Shares.




(6)
            Includes
                5,000 ADSs beneficially owned by José Manuel Aguirre G., in addition to
                the 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 19 , 2007, to
      the best knowledge of the Company, approximately 6.9% of the outstanding Series
      A Shares were 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.




**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.




43




***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, 2006. Affiliated stations owned or controlled by members
      of
      the Aguirre family accounted for approximately 12%, 13.7% and 18.9% of OIR
      revenue (or 0.3%, 0.3% and 0.5% of the Company’s total broadcasting revenue) for
      the years ended December 31, 2006, 2005 and 2004, 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.




***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. 7.6 million in
      2006, Ps. 5.5 million in 2005 and Ps. 13.7 million in 2004. 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. 38.9 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. 12.0 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.




***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. 4.5 million in 2006, Ps. 2.0 million in 2005 and Ps. 1.4 million in
      2004 from executive officers and directors and their families in connection
      with
      these transactions. See Note 6 to the Consolidated Financial
      Statements.




44




***Attention
      to Aguirre Family Matters***




Carlos
      Aguirre G., the Chief Executive Officer, and to a lesser extent, 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***




From
      January 1, 2004 until June 2005, the Company extended credit to eight of its
      executive officers in compensatory transactions that are customary in Mexico.
      The maximum aggregate amount outstanding during this period was Ps. 0.9
      million (nominal amount), and the loans had an annual rate of interest of up
      to
      12.0%. These loans have been repaid in full.




In
      October 2006, the Company extended a loan in the amount of Ps. 3.2 million
      (nominal amount) to a company controlled by Ana Mar í a
      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 early 1996, the Company acquired
      five radio stations owned by RED 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* ,
      to
      provide the Company with original news programs and special-event productions
      for radio until 2015. The Infored Agreement provided that Mr. Gutiérrez
      Vivó would continue as *Monitor* ’s
      host
      until at least the end of 2003.




In
      May
      2002, Mr. Gutiérrez Vivó and Infored initiated an arbitration proceeding
      pursuant to which they sought rescission of their agreement with the Company
      and
      damages. On March 1, 2004, the International Chamber of Commerce (“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. On August 11, 2005, District Judge
      6
      of Civil Matters granted Infored and Mr. Guitiérrez 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.




45




Following
      an appeal by Infored and Mr. Guttiérrez Vivó, on January 30, 2007, the *Suprema
      Corte de Justicia de la Nación* (the
      Mexican Supreme Court), in a 5-4 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 will
      require the court to review the merits of the case. On March 22, 2007, Infored
      and Mr. Gutiérrez Vivó sought to remove the case from the Thirteenth
      Circuit Court to a new court whose judges had not previously heard the case.
      The
      Federal District’s Fourth Circuit Court of Civil Matters rejected Infored and
      Mr. Gutiérrez Vivo’s removal action, determining that one of the three judges of
      the Thirteenth Circuit Court had a potential bias, ordered that judge be
      replaced by an officer of the court appointed specifically for that purpose
      and
      returned the matter to the Thirteenth Circuit Court for final resolution. The
      Company can give no assurance about the outcome of these proceedings or their
      duration.




The
      Company is involved in various legal proceedings related to the Infored and
      Guiérrez Vivó transaction. These proceedings have been suspended pending a final
      determination on the arbitration results. The Company initiated two lawsuits
      against Mr. Gutiérrez Vivó and Ms. María Ivonne Gutiérrez Vivó. The Company and
      a subsidiary, along with four minority shareholders, brought the suits 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), while
      the other case pertains to the shares of the licensee of the radio station
      formerly known as XEFAJ-AM (now XEINFO-AM).




The
      Company is involved in a variety of labor claims initiated by former employees
      between 2000 and 2004 seeking an aggregate amount of approximately Ps. 44.1
      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
      2002-2006, 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)August
                22, 2003
            
            
            2002
            
            
            Ps.
                55,000,000
            
            
            0.34
            
            
            0.03
            
            
            0.28May
                7, 2007
            
            
            2006
            
            
            Ps.
                70,000,000
            
            
            0.43
            
            
            0.04
            
            
            0.36







(1)
            The
                Company paid no dividends with respect to 2003, 2004 or
                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.




46




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. 120
      million 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—Liquidity and Capital
      Resources—Capital Reduction.”




**Item
      9. The Offer and Listing**




Since
      July 1, 1993, the CPOs and the ADSs have been listed on the Mexican Stock
      Exchange and the NYSE, respectively. 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.




47




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.




**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
                Exchange****Amounts
                per Series A Share and per CPO**
              **(in
                nominal pesos)**
            
            **Amounts
                per ADS**
              **(in
                U.S. dollars)****High**
            
            **Low**
            
            **High**
            
            **Low****2002**
            
            
            6.30
            
            
            2.25
            
            
            6.24
            
            
            1.76**2003**
            
            
            8.50
            
            
            2.40
            
            
            7.45
            
            
            1.61**2004**
            
            
            8.48
            
            
            5.30
            
            
            7.14
            
            
            4.05**2005**First
                quarter
            
            
            9.92
            
            
            8.20
            
            
            7.75
            
            
            6.77Second
                quarter
            
            
            9.30
            
            
            8.08
            
            
            7.50
            
            
            6.45Third
                quarter
            
            
            9.21
            
            
            8.60
            
            
            7.70
            
            
            7.07Fourth
                quarter
            
            
            8.70
            
            
            8.35
            
            
            7.63
            
            
            7.00**2006**First
                quarter
            
            
            8.50
            
            
            7.15
            
            
            7.68
            
            
            5.66Second
                quarter
            
            
            9.50
            
            
            7.15
            
            
            7.00
            
            
            5.50Third
                quarter
            
            
            8.30
            
            
            7.49
            
            
            6.59
            
            
            6.10Fourth
                quarter
            
            
            13.10
            
            
            7.40
            
            
            10.75
            
            
            6.10**Most
                Recent Six Months**December
                2006
            
            
            13.10
            
            
            10.80
            
            
            10.75
            
            
            7.67January
                2007
            
            
            13.50
            
            
            12.55
            
            
            10.99
            
            
            11.05February
                2007
            
            
            13.55
            
            
            12.30
            
            
            10.15
            
            
            10.26March
                2007
            
            
            15.60
            
            
            12.30
            
            
            12.62
            
            
            9.67April
                2007
            
            
            18.95
            
            
            15.55
            
            
            15.50
            
            
            12.85May
                2007
            
            
            16.79
            
            
            16.10
            
            
            13.91
            
            
            13.10




**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.




48




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.




**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 the bylaws of the Company, which have been filed as an exhibit
      to
      this Annual Report, and Mexican law. 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 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;




49




·
            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 new 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.




50




**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.




**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, in the event that 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 prior to 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.




51




**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 19 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 Securities Act, 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.




52




**Variable
        Capital**
  Under
        the
        Company’s bylaws and Mexican law, the Company’s capital stock must consist of
        fixed capital and may have, in addition, 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.


Currently,
      the Company’s outstanding capital stock consists only of fixed capital. In the
      event the Company should 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
      1993 *Ley
      de Inversión Extranjera* (the
“Foreign Investment Law”), as amended, and the 1998 *Reglamento
      de la Ley de Inversión Extranjera y del Registro Nacional de Inversiones
      Extranjeras* (the
“Foreign Investment Regulations”) thereunder. The *Secretaria
      de Economía* (the
      Ministry of Economy) and the *Comisión Nacional de Inversiones Extranjeras* (the
“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. The *Dirección 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.




53




***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 Controlling Trusts
      hold a substantial majority of the Series A Shares not held in the form of
      CPOs.
      As a result, the Controlling Trusts 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 prior
      to termination of written notice from the CPO Technical Committee (as defined
      below). 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.




54




***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 (the “CPO Technical Committee”)
      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.* (the
      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 CPO Technical Committee are required
      to
      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.




**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.




55




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.




***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. In the event 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***




In
      the
      event 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 prior to 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 prior to 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.




56




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 prior to 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.




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, prior to the date of the offer during a period
      that cannot exceed six months. In the event that the number of days in which
      the
      shares were traded is less 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.




In
      the
      event that the controlling shareholders obtain the consent of the shareholders
      representing 95% of the capital stock of the Company by means of 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, it will not be necessary
      for the controlling shareholders to conduct a tender offer, as long as in order
      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 of 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.




57




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
      September 7, 2004, the Company entered into an agreement to extend the term
      of
      the Operating Agreement, dated as of December 14, 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, 2009.
      See
      Note 8 to the Consolidated Financial Statements.




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




Other
      than the foregoing, the only material contracts entered into by the Company
      in
      the two-year period prior to 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.”




**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. This summary also includes a limited description
      of
      certain U.S. tax consequences with respect to non-U.S. holders.




58




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
      2007, 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 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 subsequent to the date
      of receipt by the CPO Trustee.




Subject
      to certain exceptions for short-term and hedged positions, the U.S. dollar
      amount of dividends received by an individual prior to 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
      prior to 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
      2005
      or 2006 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 2007
      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.




59




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
      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 2007 by individuals or legal entities
      that
      are non-residents 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.
      However, sales effected through a public offering must comply with certain
      restrictions set forth in the Mexican Income Tax Law in order to benefit from
      this exemption.




Notwithstanding
      the Mexican taxes on capital gains that could apply in certain cases (as
      described above), 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.




Exemption
      under the Tax Treaty requires that the U.S. holder appoints a legal
      representative in Mexico for income tax purposes prior to the sale and provides
      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.




60




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 prior to 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.




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%.




**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 web site 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 web site. The information on our web site, 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.)




61




**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, 2006,
      the Company had net foreign currency exposure of U.S.$151 thousand, which
      consisted of U.S. dollar-denominated bank deposits. The Company acquired
      these instruments for purposes other than trading purposes. See Notes 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. 2.5
      million in 2006.




**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.




62




**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, 2006. 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 the disclosure controls and procedures, as of December 31, 2006,
      were not effective to provide reasonable assurance that (i) information
      required to be disclosed in the reports we file and submit under the Exchange
      Act is recorded, processed, summarized and reported within the time periods
      specified in the SEC’s rules and forms, and (ii) information required to be
      disclosed in the reports that we file or submit under the Exchange Act is
      accumulated and communicated to management, including our chief executive and
      chief financial officers, or persons performing similar functions, as
      appropriate to allow timely decisions regarding required disclosure .
      This
      conclusion is based solely on the failure of the disclosure
      controls and procedures to detect a loan that we made to a company controlled
      by
      a member of our board of directors. We extended the loan, in the amount of
      Ps.
      3.2 million (nominal amount), in October 2006 and received repayment in full
      in
      May 2007. See Item 7. “Major Shareholder and Related Party Transactions—Related
      Party Transactions—Loans to Executive Officers and Directors.” Section 402 of
      the Sarbanes-Oxley Act of 2002 makes it unlawful for any issuer to extend or
      maintain credit in the form of a personal loan to or for any director or
      executive officer of that issuer. Upon discovering the existence of this loan,
      we investigated the transaction and took steps to ensure that a similar
      transaction would not recur.




There
      has
      been no change in our internal control over financial reporting during 2006
      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.




63




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, 2006.




Our
      management’s assessment of the effectiveness of our internal control over
      financial reporting as of December 31, 2006 has been audited by BDO Hernández
      Marrón y Cía., S.C., or BDO, an independent registered public accounting firm,
      as stated in their report 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.”




**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 web site. The information on our web site, 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.




64




**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, 2005 and
      2006:




**Year
                ended December 31,****2005**
            
            **2006**(in
                thousands)Audit
                fees
            
            
            Ps.
                2,111
            
            
            Ps.
                2,009Audit-related
                fees
            
            
            333
            
            
            320Total
                fees
            
            
            Ps.
                2,444
            
            
            Ps.
                2,329





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.




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




65




Period
            
            (a)
              Total
                # of Shares Purchased(a)
            
            (b)
              Average
                Price Paid per Share
            
            (c)
              Total
                # of Shares Purchased as Part of Publicly Announced Plans or
                Programs
            
            (d)
              Maximum
                # (or Approx. U.S. Dollar Value) of Shares that May Yet Be Purchased
                Under
                the Plans or ProgramsMonth
                # 1
              (Jan.
                1, 2006-Jan. 31, 2006)
            
            
            0
            
            
            0
            
            
            0
            
            
            0Month
                # 2
              (Feb.
                1, 2006-Feb. 28, 2006)
            
            
            0
            
            
            0
            
            
            0
            
            
            0Month
                # 3
              (Mar.
                1, 2006-Mar. 31, 2006)
            
            
            0
            
            
            0
            
            
            0
            
            
            0Month
                # 4
              (Apr.
                1, 2006-Apr. 30, 2006)
            
            
            159,100
            
            
            7.99
            
            
            0
            
            
            0Month
                # 5
              (May
                1, 2006-May 31, 2006)
            
            
            759,700
            
            
            8.99
            
            
            0
            
            
            0Month
                # 6
              (Jun.
                1, 2006-Jun. 30, 2006)
            
            
            0
            
            
            0
            
            
            0
            
            
            0Month
                # 7
              (Jul.
                1, 2006-Jul. 31, 2006)
            
            
            0
            
            
            0
            
            
            0
            
            
            0Month
                # 8
              (Aug.
                1, 2006-Aug. 31, 2006)
            
            
            0
            
            
            0
            
            
            0
            
            
            0Month
                # 9
              (Sept.
                1, 2006-Sept. 30, 2006)
            
            
            0
            
            
            0
            
            
            0
            
            
            0Month
                # 10
              (Oct.
                1, 2006-Oct. 31, 2006)
            
            
            0
            
            
            0
            
            
            0
            
            
            0Month
                # 11
              (Nov.
                1, 2006-Nov. 30, 2006)
            
            
            0
            
            
            0
            
            
            0
            
            
            0Month
                # 12
              (Dec.
                1, 2006-Dec. 31, 2006)
            
            
            0
            
            
            0
            
            
            0
            
            
            0Total
            
            
            918,800
                Series A Shares
            
            
            Ps.8.82
            
            
            0
            
            
            0





(a)  All
      of
      the Series A Shares purchased by the Company during 2006 were purchased in
      open-market transactions on the Mexican Stock Exchange. None of these purchases
      were made pursuant to a publicly announced share repurchase plan or
      program.




**PART
      III**




**Item
      17. Financial Statements**




Not
      applicable.




**Item
      18. Financial Statements**




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




66




**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
                Ended**December
                31, 2006, 2005 and 2004*Report
                of independent auditors
            
            
            F-1Consolidated
                balance sheets as of December 31, 2006 and 2005
            
            
            F-5Consolidated
                statements of operations for the years ended December 31, 2006, 2005
                and
                2004
            
            
            F-6Consolidated
                statements of changes in shareholders’ equity for the years endedDecember
                31, 2006, 2005 and 2004
            
            
            F-7Consolidated
                statements of changes in financial position for the years endedDecember
                31, 2006, 2005 and 2004
            
            
            F-8Notes
                to the consolidated financial statements as of and for the years
                ended
                December 31, 2006, 2005 and 2004
            
            
            F-9
                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.




67




**(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
            
            
            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)
            
            
            2.1Amended
                and Restated Controlling Trust Agreement, No. F/23020-1, dated April
                24,
                1992, with amendments dated September 2, 1992, May 18, 1993 and September
                14, 1993, between certain members of the Aguirre family and Bancomer,
                S.A., as trustee, together with an English translation(b)
            
            
            3.1Amended
                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)
            
            
            3.2Trust
                Agreement, dated June 3, 1998, among certain principal shareholders
                of
                Grupo Radio Centro, S.A. de C.V., together with an English
                translation(c)
            
            
            3.3Amended
                and Restated Public Deed, dated as of June 27, 2003 (the “Amended and
                Restated CPO Deed”), filed as an English translation(h)
            
            
            4.1




Modifying
                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)
            
            
            4.5Credit
                Agreement, dated May 16, 2006, 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, filed as an English translation(k)
            
            
            4.6List
                of Subsidiaries of the Company(k)
            
            
            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.




68




(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.




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




69




**GRUPO
        RADIO CENTRO, S.A.B. DE C.V. AND SUBSIDIARIES**
 
 **CONSOLIDATED
        FINANCIAL STATEMENTS**
 
 **FOR
        THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004**
 
 **TOGETHER
        WITH**
 
 **AUDITOR’S
        REPORT**









**GRUPO
        RADIO CENTRO, S.A.B. DE C.V. AND SUBSIDIARIES**
 
 **INDEX
        TO THE CONSOLIDATED FINANCIAL STATEMENTS**
  PageReport
                    of independent registered accounting firm
                
                
                F-1
                    to F-4Consolidated
                    Financial Statements:Consolidated
                    Balance Sheets as of December 31, 2006 and 2005
                
                
                F-5Consolidated
                    Statements of Income for the years ended December 31, 2006, 2005
                    and
                    2004
                
                
                F-6Consolidated
                    Statements of Changes in Shareholders’ Equityfor the years ended December 31, 2006, 2005 and 2004
                
                
                F-7Consolidate
                    Statements of Changes in Financial Positionfor the years ended December 31, 2006, 2005 and 2004
                
                
                F-8Notes
                    to the Consolidated Financial Statements
                
                
                F-9
                    to F-41
  
  **Report
        of Independent Registered Accounting Firm**
  **To
        the Board of Directors and 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 defined in Note 1 to the consolidated
        financial statements) as of December 31, 2006 and 2005, and the related
        consolidated statements of (loss) income, changes in shareholders’ equity and
        changes in financial position for the years ended December 31, 2006, 2005
        and 2004. 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 applicable in 2006 and Mexican generally accepted
        accounting principles applicable in 2005 and 2004. 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 in 2006, the accounting principles used in 2005
        and
        2004, the significant estimates made by Management and the overall financial
        statement presentation. We believe that our audits provide a reasonable basis
        for our opinion .
  As
        discussed in Note 3d to the consolidated financial statements, effective
        January 1, 2005, the Company adopted the new accounting method prescribed
        by Bulletin B-7, “Business Acquisitions”. Under this new Bulletin,
        amortization of goodwill is no longer permitted under MFRS. This Bulletin
        also
        requires that any unamortized balances in goodwill be 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 a consequence and in
        accordance with the new Mexican financial reporting standards (Bulletin NIF
        B-1), the consolidated statement of income, the consolidated changes in
        shareholders’ equity and the consolidated changes in its financial position for
        the year ended December 31, 2004 have been restated to recognize the effect
        of this new rule (Notes 3 and 3d).
  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, 2006 and 2005, the consolidated
        results of its operations, the consolidated changes in shareholders’ equity and
        the consolidated changes in its financial position for the years ended
        December 31, 2006, 2005 and 2004, in conformity with Mexican financial
        reporting standards and generally accepted accounting principles, respectively.
  F-1
  Mexican
        financial reporting standards vary in certain significant respects from
        generally accepted accounting principles in the United States of America.
        The
        application of the latter would have affected the results from operations
        for
        each of the years ended December 31, 2006, 2005 and 2004 and the
        shareholders’ equity and changes in financial position as of December 31,
        2006, 2005 and 2004, to the extent summarized in Note 25 to the
        accompanying consolidated financial statements.
  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
        Peñafiel
 Bernardo
        Soto Peñafiel, CPA
 Mexico
        City
 February
        2, 2007
 
 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 management's assessment, included in the accompanying Management's
        Report on Internal Control over Financial Reporting, that Grupo Radio Centro,
        S.A.B. de C.V. and its subsidiaries maintained effective internal control
        over
        financial reporting as of December 31, 2006, 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. Our responsibility is to express an opinion
        on
        management's assessment and an opinion on the effectiveness of 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, evaluating management's assessment, testing and evaluating
        the design and operating effectiveness of internal control, and 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.
  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.
  F-3
  In
        our
        opinion, management's assessment that Grupo Radio Centro, S.A.B. de C.V.
        and its
        subsidiaries maintained effective internal control over financial reporting
        as
        of December 31, 2006, is stated fairly, in all material respects, based on
        COSO criteria. Also 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, 2006, 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, 2006
        and
        2005, 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, 2006, 2005 and 2004, and our report dated
        February 2, 2007.
 
 BDO
        Hernandez Marron y Cia, S.C.
  
 /s/
        Bernardo Soto
        Penafiel
 Bernardo
        Soto Penafiel
 
 June
        16,
        2007
 Mexico
        City
 
 F-4
 **GRUPO
              RADIO CENTRO, S.A.B. DE C.V. AND SUBSIDIARIES**
 **CONSOLIDATED
              BALANCE SHEETS AS OF DECEMBER 31, 2006 AND 2005**
 (All
              amounts bearing the symbol “Ps” are expressed in thousands of constant Mexican
              pesos with purchasing power
 as
              of
              December 31, 2006. Amounts bearing the symbol “US$”
              are expressed in
              thousands of US dollars)
 A
                              S
                              S E T S
                      
                      2006
                      
                      2006
                      
                      2005
                      
                      L
                              I
                              A B I L I T I E S
                      
                      2006
                      
                      2006
                      
                      2005CURRENT
                              ASSETS:
                      
                      
                      
                      
                      
                      
                      
                      SHORT-TERM
                              LIABILITIES:Cash
                              and temporary investments (Note 5)
                      
                      US$
                      9,080
                      
                      Ps
                      98,055
                      
                      Ps
                      90,679
                      
                      Notes
                              payable (Note 14)
                      
                      US$
                      -
                      
                      Ps
                      -
                      
                      Ps
                      58,913Advances
                              from customers (Note 15)
                      
                      
                      11,829
                      
                      
                      127,744
                      
                      
                      86,714Accounts
                              receivable:
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      Suppliers
                              and other accounts payable (Note 16)
                      
                      
                      4,217
                      
                      
                      45,544
                      
                      
                      34,410Customers
                              from broadcasting, net of allowance for
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      Income
                              tax and other taxesdoubtful
                              accounts of Ps 24,180
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      payable
                              (Note 17)
                      
                      
                      8,106
                      
                      
                      87,540
                      
                      
                      27,211in
                              2006 and Ps 12,880 in 2005
                      
                      
                      22,900
                      
                      
                      247,305
                      
                      
                      226,331
                      
                      Contingent
                              liability (Note 10)
                      
                      
                      -
                      
                      
                      -
                      
                      
                      256,177Other
                              (Note 7)
                      
                      
                      1,728
                      
                      
                      18,665
                      
                      
                      5,469Income
                              tax to be recovered
                      
                      
                      -
                      
                      
                      -
                      
                      
                      11,583
                      
                      Total
                              short-term liabilities
                      
                      
                      24,152
                      
                      
                      260,828
                      
                      
                      463,42524,628
                      
                      
                      265,970
                      
                      
                      243,383LONG-TERM
                            LIABILITIES:Prepayments
                      
                      
                      2,362
                      
                      
                      25,510
                      
                      
                      10,811
                      
                      Notes
                              payable (Note 14)
                      
                      
                      -
                      
                      
                      -
                      
                      
                      58,913Labor
                              liabilities (Note 18)
                      
                      
                      4,882
                      
                      
                      52,724
                      
                      
                      39,999Total
                              current assets
                      
                      
                      36,070
                      
                      
                      389,535
                      
                      
                      344,873
                      
                      Deferred
                              taxes (Note 20)
                      
                      
                      838
                      
                      
                      9,049
                      
                      
                      42,322Total
                              liabilities
                      
                      
                      29,872
                      
                      
                      322,601
                      
                      
                      604,659SHAREHOLDERS'
                              EQUITY (Note 19):Capital
                              stock
                      
                      
                      100,880
                      
                      
                      1,089,457
                      
                      
                      1,212,561PROPERTIES
                              AND EQUIPMENT, NET (Note 11 )
                      
                      
                      42,945
                      
                      
                      463,786
                      
                      
                      494,665
                      
                      Retained
                              earnings
                      
                      
                      28,029
                      
                      
                      302,699
                      
                      
                      (116,238
                      )Reserve
                              for the repurchase of shares
                      
                      
                      3,912
                      
                      
                      42,249
                      
                      
                      43,364DEFERRED
                              CHARGES, NET (Note 12)
                      
                      
                      413
                      
                      
                      4,463
                      
                      
                      5,498
                      
                      Excess
                              in restatement of capital stock
                      
                      
                      454
                      
                      
                      4,900
                      
                      
                      4,900EXCESS
                                OF COST OF NET BOOK VALUE
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      Cumulative
                              effect of deferredOF
                                SUBSIDIARIES, NET (Note 13)
                      
                      
                      73,958
                      
                      
                      798,710
                      
                      
                      798,710
                      
                      income
                              tax (Note 20)
                      
                      
                      (9,488
                      )
                      
                      (102,468
                      )
                      
                      (102,468
                      )Effect
                              from labor liabilities
                      
                      
                      (28
                      )
                      
                      (299
                      )
                      
                      (263
                      )Majority
                              shareholders' equity
                      
                      
                      123,759
                      
                      
                      1,336,538
                      
                      
                      1,041,856OTHER
                              ASSETS
                      
                      
                      305
                      
                      
                      3,288
                      
                      
                      3,351
                      
                      Minority
                              interest
                      
                      
                      60
                      
                      
                      643
                      
                      
                      582Total
                              shareholders' equity
                      
                      
                      123,819
                      
                      
                      1,337,181
                      
                      
                      1,042,438Total
                              assets
                      
                      US$
                      153,691
                      
                      Ps
                      1,659,782
                      
                      Ps
                      1,647,097
                      
                      
                      
                      
                      US$
                      153,691
                      
                      Ps
                      1,659,782
                      
                      Ps
                      1,647,097
  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, 2006, 2005 AND 2004**
 (All
              amounts bearing the symbol “Ps” are expressed in thousands of constant Mexican
              pesos with purchasing power
 as
              of
              December 31, 2006. Amounts bearing the symbol “US$”
              are expressed in
              thousands of US dollars)
 
 2006
                    
                    2006
                    
                    2005
                    
                    2004
                        (*)Broadcasting
                        revenue
                    
                    US$
                    73,677
                    
                    Ps
                    795,680
                    
                    Ps
                    615,083
                    
                    Ps
                    593,095Broadcasting
                        expenses from station, excluding depreciation andamortization
                        and corporate, general and administrative expenses
                    
                    
                    41,058
                    
                    
                    443,404
                    
                    
                    408,501
                    
                    
                    424,442Broadcasting
                        income
                    
                    
                    32,619
                    
                    
                    352,276
                    
                    
                    206,582
                    
                    
                    168,653Depreciation
                        and amortization
                    
                    
                    3,318
                    
                    
                    35,836
                    
                    
                    38,509
                    
                    
                    33,943Corporate,
                        general and administrative expenses
                    
                    
                    1,322
                    
                    
                    14,276
                    
                    
                    14,047
                    
                    
                    23,017Operating
                        income
                    
                    
                    27,979
                    
                    
                    302,164
                    
                    
                    154,026
                    
                    
                    111,694Comprehensive
                        cost of financing:Interest
                        expense
                    
                    
                    3,361
                    
                    
                    36,301
                    
                    
                    31,948
                    
                    
                    34,060Interest
                        income
                    
                    
                    (43
                    )
                    
                    (463
                    )
                    
                    (754
                    )
                    
                    (600
                    )Foreign-exchange
                        (gain) loss, net (Note 4)
                    
                    
                    (1
                    )
                    
                    (8
                    )
                    
                    (10,940
                    )
                    
                    2,722Loss
                        (gain) from monetary position
                    
                    
                    238
                    
                    
                    2,569
                    
                    
                    (6,974
                    )
                    
                    (16,640
                    )3,555
                    
                    
                    38,399
                    
                    
                    13,280
                    
                    
                    19,542Other
                        expenses, net (Note 21)
                    
                    
                    5,228
                    
                    
                    56,465
                    
                    
                    50,588
                    
                    
                    49,655Income
                        before extraordinary item and provisions
                    
                    
                    19,196
                    
                    
                    207,300
                    
                    
                    90,158
                    
                    
                    42,496Extraordinary
                        item (Note 10)
                    
                    
                    23,517
                    
                    
                    253,976
                    
                    
                    -
                    
                    
                    -Income
                        before provisions
                    
                    
                    42,713
                    
                    
                    461,276
                    
                    
                    90,158
                    
                    
                    42,496Provisions
                        for income tax and employeeprofit
                        sharing (Note 20)
                    
                    
                    3,915
                    
                    
                    42,278
                    
                    
                    22,599
                    
                    
                    21,211Net
                        income
                    
                    US$
                    38,798
                    
                    Ps$
                    418,998
                    
                    Ps
                    67,559
                    
                    Ps
                    21,285NET
                        INCOME APPLICABLE TO:Majority
                        interest
                    
                    
                    38,792
                    
                    
                    418,937
                    
                    
                    67,544
                    
                    Ps
                    21,283Minority
                        interest
                    
                    
                    6
                    
                    
                    61
                    
                    
                    15
                    
                    
                    2US$
                    38,798
                    
                    Ps$
                    418,998
                    
                    Ps
                    67,559
                    
                    Ps
                    21,285Net
                        income per share, net
                    
                    US$
                    0.239
                    
                    Ps$
                    2.578
                    
                    Ps
                    0.415
                    
                    Ps
                    0.129
 
 (*)
                    Restated
                        see Note 3.
 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, 2006, 2005 AND 2004**
 
 (All
                amounts bearing the symbol “Ps” are expressed in thousands of constant Mexican
                pesos with purchasing power
 as
                of
                December 31, 2006. Amounts bearing the symbol “US$”
                are expressed in
                thousands of US dollars)
 Capital
                        stock
                      
                      Retained
                        earnings
                        (deficit)
                      
                      Reserve
                        for
                            the
                        repurchase
                        of
                        shares
                      
                      Excess
                        in
                        restatement
                        of
                            capital
                      
                      Cumulative
                        effect
                            of
                        deferred
                        income
                            tax
                      
                      Effect
                            from
                        labor
                        liabilities
                      
                      Minority
                        interest
                      
                      Total
                      
                      Comprehensive
                        gain
                        (loss)**Balances
                            as of December 31, 2003 prior to the adjustment from
                            the change in
                            particular standard (Note 19)**
                      
                      Ps
                      1,212,274
                      
                      Ps
                      (142,624
                      )
                      Ps
                      42,924
                      
                      Ps
                      4,900
                      
                      Ps
                      (102,468
                      )
                      Ps
                      (263
                      )
                      Ps
                      572
                      
                      Ps
                      1,015,315
                      
                      Ps
                      278,265Effect
                              at beginning year from a change in a particular
                          standard
                            (Note 3)
                      
                      
                      
                      
                      
                      (62,441
                      )
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      (7
                      )
                      
                      (62,448
                      )**Adjusted
                            balances as of December 31, 2003(Note
                            3)**
                      
                      
                      1,212,274
                      
                      
                      (205,065
                      )
                      
                      42,924
                      
                      
                      4,900
                      
                      
                      (102,468
                      )
                      
                      (263
                      )
                      
                      565
                      
                      
                      952,867
                      
                      Ps
                      278,265Repurchase
                            of shares
                      
                      
                      (663
                      )
                      
                      -
                      
                      
                      (107
                      )
                      
                      -
                      
                      
                      -
                      
                      
                      -
                      
                      
                      -
                      
                      
                      (770
                      )
                      
                      -Net
                            adjusted income for the year (Note 3)
                      
                      
                      -
                      
                      
                      21,285
                      
                      
                      -
                      
                      
                      -
                      
                      
                      -
                      
                      
                      -
                      
                      
                      -
                      
                      
                      21,285
                      
                      
                      21,285Holding
                            of minority interest
                      
                      
                      -
                      
                      
                      (2
                      )
                      
                      -
                      
                      
                      -
                      
                      
                      -
                      
                      
                      -
                      
                      
                      2
                      
                      
                      -
                      
                      
                      -**Balances
                            as of December 31, 2004 (Note 19)**
                      
                      
                      1,211,611
                      
                      
                      (183,782
                      )
                      
                      42,817
                      
                      
                      4,900
                      
                      
                      (102,468
                      )
                      
                      (263
                      )
                      
                      567
                      
                      
                      973,382
                      
                      Ps
                      21,285Sale
                            of shares
                      
                      
                      950
                      
                      
                      -
                      
                      
                      547
                      
                      
                      -
                      
                      
                      -
                      
                      
                      -
                      
                      
                      -
                      
                      
                      1,497
                      
                      
                      -Net
                            income for the year
                      
                      
                      -
                      
                      
                      67,559
                      
                      
                      -
                      
                      
                      -
                      
                      
                      -
                      
                      
                      -
                      
                      
                      -
                      
                      
                      67,559
                      
                      
                      67,559Holding
                            of minority interest
                      
                      
                      -
                      
                      
                      (15
                      )
                      
                      -
                      
                      
                      -
                      
                      
                      -
                      
                      
                      -
                      
                      
                      15
                      
                      
                      -
                      
                      
                      -**Balances
                            as of December 31, 2005 (Note 19)**
                      
                      
                      1,212,561
                      
                      
                      (116,238
                      )
                      
                      43,364
                      
                      
                      4,900
                      
                      
                      (102,468
                      )
                      
                      (263
                      )
                      
                      582
                      
                      
                      1,042,438
                      
                      
                      67,559Repurchase
                            of shares
                      
                      
                      (4,902
                      )
                      
                      -
                      
                      
                      (3,885
                      )
                      
                      -
                      
                      
                      -
                      
                      
                      -
                      
                      
                      -
                      
                      
                      (8,787
                      )Capital
                            reduction
                      
                      
                      (123,891
                      )
                      
                      -
                      
                      
                      -
                      
                      
                      -
                      
                      
                      -
                      
                      
                      -
                      
                      
                      -
                      
                      
                      (123,891
                      )Effect
                            of the additional liability from labor obligations
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      (36
                      )
                      
                      
                      
                      
                      (36
                      )
                      
                      (36
                      )Sale
                            of shares
                      
                      
                      5,689
                      
                      
                      -
                      
                      
                      2,770
                      
                      
                      -
                      
                      
                      -
                      
                      
                      -
                      
                      
                      -
                      
                      
                      8,459Net
                            income for the year
                      
                      
                      -
                      
                      
                      418,998
                      
                      
                      -
                      
                      
                      -
                      
                      
                      -
                      
                      
                      -
                      
                      
                      -
                      
                      
                      418,998
                      
                      
                      418,998Holding
                            of minority interest
                      
                      
                      -
                      
                      
                      (61
                      )
                      
                      -
                      
                      
                      -
                      
                      
                      -
                      
                      
                      -
                      
                      
                      61
                      
                      
                      -
                      
                      
                      -**Balances
                            as of December 31, 2006 (Note 19)**
                      
                      Ps
                      1,089,457
                      
                      Ps
                      302,699
                      
                      Ps
                      42,249
                      
                      Ps
                      4,900
                      
                      Ps
                      (102,468
                      )
                      Ps
                      (299
                      )
                      Ps
                      643
                      
                      Ps
                      1,337,181
                      
                      Ps
                      418,962
  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
                STATEMENTS OF CHANGES IN FINANCIAL STATEMENTS**
 **AS
                OF DECEMBER 31, 2006, 2005 AND 2004**
  (All
                  amounts bearing the symbol “Ps” are expressed in thousands of constant Mexican
                  pesos with purchasing power
 as
                  of
                  December 31, 2006. Amounts bearing the symbol “US$”
                  are expressed in
                  thousands of US dollars)
 2006
                        
                        2006
                        
                        2005
                        
                        2004
                              (*)OPERATIONS:Net
                              income for the year
                        
                        US$
                        38,798
                        
                        Ps
                        418,998
                        
                        Ps
                        67,559
                        
                        Ps
                        21,285Charges
                              (credits) to results not requiring (providing)the
                              outlay of cash:Depreciation
                              and amortization
                        
                        
                        3,247
                        
                        
                        35,066
                        
                        
                        38,509
                        
                        
                        33,943Amortization
                              of goodwill
                        
                        
                        -
                        
                        
                        -
                        
                        
                        -
                        
                        
                        -Deferred
                              income tax
                        
                        
                        (3,081
                        )
                        
                        (33,273
                        )
                        
                        2,900
                        
                        
                        8,469Labor
                              liabilities (Note 18)
                        
                        
                        1,174
                        
                        
                        12,681
                        
                        
                        12,801
                        
                        
                        14,515Advance
                              payments
                        
                        
                        (1,361
                        )
                        
                        (14,699
                        )
                        
                        2,520
                        
                        
                        -Effect
                              from the valuation of properties (Note 11)
                        
                        
                        172
                        
                        
                        1,860
                        
                        
                        804
                        
                        
                        (8,443
                        )38,949
                        
                        
                        420,633
                        
                        
                        125,093
                        
                        
                        69,769Net
                              change in accounts receivable, accounts
                              payableand
                              other assets
                        
                        
                        (15,390
                        )
                        
                        (166,208
                        )
                        
                        19,298
                        
                        
                        (43,847
                        )Resources
                              generated from operating activities
                        
                        
                        23,559
                        
                        
                        254,425
                        
                        
                        144,391
                        
                        
                        25,922FINANCING:Repurchase
                              of shares
                        
                        
                        (814
                        )
                        
                        (8,787
                        )
                        
                        1,497
                        
                        
                        (770
                        )Sales
                              of shares
                        
                        
                        783
                        
                        
                        8,459
                        
                        
                        -
                        
                        
                        -Notes
                              payable
                        
                        
                        (10,910
                        )
                        
                        (117,826
                        )
                        
                        (64,803
                        )
                        
                        (73,516
                        )Capital
                              reduction
                        
                        
                        (11,472
                        )
                        
                        (123,891
                        )
                        
                        -
                        
                        
                        -Resources
                              used in financing activities
                        
                        
                        (22,413
                        )
                        
                        (242,045
                        )
                        
                        (63,306
                        )
                        
                        (74,286
                        )INVESTMENTS:Goodwill
                        
                        
                        
                        
                        
                        -
                        
                        
                        (8,063
                        )
                        
                        -Deferred
                              charges
                        
                        
                        48
                        
                        
                        518
                        
                        
                        2,040
                        
                        
                        -Excluding
                              the recognition of inflation effects:Equipment
                        
                        
                        (511
                        )
                        
                        (5,522
                        )
                        
                        (7,725
                        )
                        
                        (13,818
                        )Guarantee
                              deposits
                        
                        
                        -
                        
                        
                        -
                        
                        
                        -
                        
                        
                        7,852Resources
                              used ininvestment
                              activities
                        
                        
                        (463
                        )
                        
                        (5,004
                        )
                        
                        (13,748
                        )
                        
                        (5,966
                        )Increase
                              (decrease) in cash and temporary investments
                        
                        
                        683
                        
                        
                        7,376
                        
                        
                        67,337
                        
                        
                        (54,330
                        )Cash
                              and temporary investments at the beginning of the
                              year
                        
                        
                        8,397
                        
                        
                        90,679
                        
                        
                        23,342
                        
                        
                        77,672Cash
                              and temporary investments at the end of the year
                        
                        US$
                        9,080
                        
                        Ps
                        98,055
                        
                        Ps
                        90,679
                        
                        Ps
                        23,342
 The
                accompanying notes are an integral part of
                these financial statements.
  F-8
 **GRUPO
                      RADIO CENTRO, S.A.B. DE C.V. AND SUBSIDIARIES**
 **NOTES
                      TO THE CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
                      OF DECEMBER 31, 2006, 2005 AND 2004**
  (Unless
                        otherwise specified, all amounts bearing the symbol “Ps” are expressed in
                        thousands of constant Mexican pesos with purchasing power
 as
                        of
                        December 31, 2006. Amounts bearing the symbol “US$”
                        are expressed in
                        thousands of US
                        dollars)


**NOTE
        1****LINE
        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. In accordance with the Mexican Securities Market Law, issuers
        with
        stock registered and listed on the Mexican Stock Exchange must adopt the
        corporate form of a “sociedad anonima bursatil”. For this reason, the Company
        changed its name from Grupo Radio Centro, S.A. de C.V. to Grupo Radio Centro,
        S.A.B. de C.V.
  Grupo
        Radio Centro owns approximately 99.9% of most of its subsidiaries, which
        comprise the following companies:
  **Companies**
                  
                  
                  
                  **2006**
                  
                  **2005**
                  
                  **2004****Radio
                        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
                  
                  
                  
                  
                  
                  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.
                  
                  
                  
                  
                  
                  X
                  
                  
                  X
                  
                  
                  XRadio
                        Sistema Mexicano, S.A.
                  
                  
                  
                  
                  
                  X
                  
                  
                  X
                  
                  
                  X**Marketing
                        companies**Grupo
                        Radio Centro, S.A.B. de C.V.
                  
                  
                  
                  
                  
                  X
                  
                  
                  X
                  
                  
                  XGRC
                        Radiodifusión, S.A. (formerly Aerocer,
                        S.A.)
                  
                  
                  (b)
                  
                  
                  X
                  
                  
                  XGRC
                        Publicidad, S.A. de C.V.
                  
                  
                  
                  
                  
                  X
                  
                  
                  X
                  
                  
                  XGRC
                        Medios, S.A. de C.V.
                  
                  
                  
                  
                  
                  X
                  
                  
                  X
                  
                  
                  X
  F-9
  **GRUPO
              RADIO CENTRO, S.A.B. DE C.V. AND SUBSIDIARIES**
 **NOTES
              TO THE CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
              OF DECEMBER 31, 2006, 2005 AND 2004**
  **Companies**
                  
                  
                  
                  
                  
                  **2006**
                  
                  
                  **2005**
                  
                  
                  **2004****Service
                      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
                  
                  
                  XRadio
                      Centro Publicidad, S.A. de C.V.
                  
                  
                  
                  
                  
                  X
                  
                  
                  X
                  
                  
                  X**Real
                      estate companies:**Universal
                      de Muebles e Inmuebles, S.A. de C.V.
                  
                  
                  
                  
                  
                  X
                  
                  
                  X
                  
                  
                  XInmobiliaria
                      Radio Centro S.A. de C.V.
                  
                  
                  
                  
                  
                  X
                  
                  
                  X
                  
                  
                  X**Sub-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
                  
                  
                  X**Non-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 November 30, 2005 (see Note
                22).  F-10
  **GRUPO
          RADIO CENTRO, S.A.B. DE C.V. AND SUBSIDIARIES**
 **NOTES
          TO THE CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF DECEMBER 31, 2006, 2005 AND 2004**
  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 2007,
        one
        in December 2012, nine in July 2016, one in October 2015 and one in November
        2015.
 
 The
        Company’s marketing companies, which include the parent Grupo Radio Centro,
        S.A.B. de C.V., are responsible for the programming and sale of commercial
        airtime for broadcast by the Company’s radio stations.
 
 The
        Company’s service companies provide commercial, technical and administrative
        personnel 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 and are not currently active.
  **NOTE
        2****BASIS
        OF CONSOLIDATION AND PRESENTATION**
  The
        accompanying consolidated financial statements include the balance sheet
        of
        Grupo Radio Centro and its subsidiaries, listed in Note 1, as of
        December 31, 2006 and 2005, and the statements of income, changes in
        shareholders’ equity and changes in financial position for the years ended
        December 31, 2006, 2005 and 2004. All intercompany balances and
        transactions have been eliminated in consolidation.
  **Convenience
        translations:**
  The
        US
        dollar amounts (denoted by the symbol “US$”) shown in the 2006 financial
        statements have been included solely for the convenience of the reader and
        were
        translated at the rate of Ps. 10.799/ US$ 1.00, the noon buying rate of
        Mexican pesos on December 31, 2006, 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.
  **NOTE
        3****SUMMARY
        OF SIGNIFICANT ACCOUNTING POLICIES**
  As
        of
        January 1, 2006, the Mexican Financial Reporting Standards (MFRS) issued by
        the Mexican Board for Research and Development of Financial Standards (CINIF)
        became effective. The MFRS based on, and replace generally accepted accounting
        principles in Mexico (Mexican GAAP), which were in effect until December
        31,
        2005. These standards basically correspond to the generally accepted accounting
        principles (GAAP) that were issued by the Mexican Institute of Public
        Accountants and were in effect through December 31, 2005.
  F-11
  **GRUPO
          RADIO CENTRO, S.A.B. DE C.V. AND SUBSIDIARIES**
 **NOTES
          TO THE CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF DECEMBER 31, 2006, 2005 AND 2004**
 
 The
        MFRS
        consist of; standards and interpretations issued by the CINIF, Mexican GAAP
        bulletins that have not been changed, substituted or repealed from the new
        MFRS
        and the International Financial Reporting Standards (IFRS), which are applicable
        on a supplemental basis.
  The
        MFRS
        Bulletin NIF B-1, “ *Accounting
        Changes and Corrections of Misstatements”,* establishes that as a result of the issuance, change or derogation of a NIF,
        the
        respective effects should be retroactively applied when the comparative
        financial statements are presented. Therefore, the 2004 financial statements
        have been restated in order to recognize the effects of the following new
        pronouncements that became effective on January 1, 2005:
  1.
            As
                described in Note 3d, effective January 1, 2005, the Company
                adopted the new Bulletin B-7. Under this new pronouncement, the
                amortization of goodwill is no longer permitted and is now subject
                to
                impairment. The effect of this change in the financial statements
                of 2004
                was credited to income of 2004 for an amount of
                Ps. 71,284. 
 2.
            As
                described in Note 3h, as of December 31, 2005, the Company
                adopted the new Bulletin D-3, which establishes the recognition of
                liabilities from employment termination payments under certain
                assumptions. The effect of this change resulted in an additional
                charge to
                income of 2004 of Ps. 8,843. 
 The
        previous effects are shown as follows in the consolidated statements of changes
        in shareholders’ equity, the consolidated statement of income and the
        consolidated statements of changes in financial position:
  Balances
                  as of December 31, 2003 prior to the adjustment for the change
                  in a
                  particular standard
              
              
              Ps.
                  (142,624
              )Effect
                  in prior years from a change in a particular standard
              
              
              (62,441
              )Adjusted
                  balances as of December 31, 2003
              
              
              (205,065
              )Net
                  adjusted gain for the
                  year
              
              
              21,285Holding
                  minority interest
              
              
              (2
              )Balances
                  as of December 31, 2004
              
              
              Ps.
                  (183,782
              )
 
 The
        most
        significant accounting policies followed by Grupo Radio Centro in the
        preparation of its consolidated financial statements, which are in compliance
        with the financial information standards accepted in Mexico, are summarized
        below:
  **a.**
            **Recognition
                of the effects of inflation:** 
 ·
            The
                consolidated financial statements have been prepared in accordance
                with
                the guidelines set out in Bulletin B-10, “Recognition of the Effects
                of Inflation on Financial Information”. Therefore, the consolidated
                financial statements for the years ended December 31, 2006, 2005 and
                2004, are expressed in constant Mexican pesos with purchasing power
                as of
                December 31, 2006, as determined by applying factors derived from
                the
                National Consumer Price Index (“*NCPI*”)
                published by the*Banco
                de México*.   F-12
  **GRUPO
          RADIO CENTRO, S.A.B. DE C.V. AND SUBSIDIARIES**
 **NOTES
          TO THE CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF DECEMBER 31, 2006, 2005 AND 2004**
  2006
              
              2005
              
              2004Restatement
                  factor using Mexican inflation
              
              
              1.04053
              
              
              1.03332
              
              
              1.0519
 
 ·
              Capital
                  stock, cumulative earnings (deficit), reserve for repurchase of
                  shares,
                  cumulative effect on prior years of initial recognition of deferred
                  income
                  taxes and the effect of labor liabilities include their restatement
                  effects, determined by applying factors derived from the NCPI from
                  the
                  date of their contribution or generation of earnings (loss). These
                  restatements reflect the reserves required to maintain shareholders’
                  equity accounts at constant levels.
 
 ·
              Surplus
                  on restatement of capital represents the accumulated gain from
                  holding
                  non-monetary assets. This gain represents the difference between
                  the value
                  of non-monetary assets, recorded at acquisition cost as compared
                  to the
                  value of the assets as restated using factors derived from the
                  NCPI.
 
 ·
              Comprehensive
                  cost of financing consists of interest income and expense, net
                  foreign-exchange gains or losses and the gain or loss on net monetary
                  position.
 
 ·
              (Gain)
                  loss on net monetary position represents the effects of inflation,
                  as
                  measured by the NCPI, on the net monetary assets and liabilities
                  held
                  during the year.
 
 **b.**
            **Temporary
                investments:** 
 Temporary
        investments are stated at cost, plus interest earned, which amount may not
        exceed market value.
 
 **c.**
            **Property
                and equipment:** 
 The
        Company recognizes the effects of inflation through adjustments in general
        price
        levels by applying factors derived from the *NCPI* .
        Related
        depreciation is calculated based on estimated useful lives of assets both
        for
        acquisition costs and restatement increases.
 
 During
                  2006 and 2005, the Company recorded impairment charges in the amounts
                  of
                  Ps. 1,091 and Ps. 804, respectively. During 2004, the Company
                  recorded an increase in the realizable value of temporarily unoccupied
                  buildings in the amount of Ps. 8,443. The amounts have been recorded
                  in the income statement of 2006, 2005 and 2004 (see Note 21).
  F-13
  **GRUPO
          RADIO CENTRO, S.A.B. DE C.V. AND SUBSIDIARIES**
 **NOTES
          TO THE CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF DECEMBER 31, 2006, 2005 AND 2004**
  **d.**
            **Excess
                cost over net book value of net assets of
                subsidiaries:** 
 As
        of
        January 1, 2005, in compliance with the guidelines of Bulletin B-7, *Business
        Acquisitions* ,
        there
        is no amortization of goodwill; rather it is subject to testing in accordance
        with the guidelines of Bulletin C-15, *Impairment
        in the Value of Long-Lived Assets and their Disposal* .
        There
        was no impairment as of December 31, 2006 and 2005. As a consequence of
        this new rule, the 2004 financial statements were restated in order to be
        comparable with the 2005 and 2006 financial statements and in line with the
        new
        MFRS (Bulletin NIF B-1 *Accounting
        Changes and Corrections of Misstatements* ).
        As a
        result of this issue, impairment for 2004 was not determined and the charge
        to
        income made in 2004 from the amortization of Ps. 69,500 of goodwill was
        reversed, see Note 3.
 
 **e.**
            **Installation
                expenses and licenses of
                software:** 
 Installation
        expenses and licenses of software are booked at acquisition cost and are
        restated by applying factors from the NCPI. Amortization is calculated on
        the
        straight-line method at a 5% annual rate (Note 12).
 
 **f.**
            **Income
                Tax (“IT”), Business Assets Tax (“BAT”), Employees Statutory
                Profit-Sharing (“ESPS”) and Deferred Income
                Taxes:** 
 Deferred
                  income tax is determined by applying the statutory income tax rate
                  to
                  temporary differences between the book value and the tax value
                  of assets
                  and liabilities, when applicable and subject to a recoverability
                  analysis
                  of tax loss carryforwards and other recoverable taxes and tax credits.
 
 Deferred
                  statutory employee profit sharing is determined based on temporary
                  differences, which are of a non-recurring nature, arising from
                  the
                  reconciliation of the net income of the period and the taxable
                  income of
                  the period for ESPS. For the year 2006, the Company did not have
                  any
                  non-recurring temporary differences and the effect recognized until
                  2003
                  was written off in the results of operations for 2004.Income taxes are computed based on a consolidated
                  return basis and
                  employee profit sharing is computed on a separate return basis
                  for each
                  entity in the consolidated group. The effect of a statutory income
                  tax
                  rate change is recognized in the income statement of the period
                  in which
                  the rate change officially occurs (see Note
                  20).
  F-14
  **GRUPO
          RADIO CENTRO, S.A.B. DE C.V. AND SUBSIDIARIES**
 **NOTES
          TO THE CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF DECEMBER 31, 2006, 2005 AND 2004**
 
 **g.**
            **Advances
                from customers:** 
 Advances
        from customers are recognized as income when the corresponding airtime is
        transmitted.
 
 
 **h.**
            **Employee
                benefits:** 
 The
        costs
        related to benefits to which employees are entitled as a result of seniority
        premiums, severance payments 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 on the basis of 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 have not been recognized, is based on
        the
        employee’s estimated active service life. Other benefits to which employees may
        be entitled are recognized as an expense in the year in which they are
        paid.
 
 The
        Company has recorded a reserve for the estimated accrued seniority premiums,
        severance payments and pension benefits, the amount of which was determined
        through actuarial estimates (see Note 18).
 
 As
        of
        December 31, 2005, the Company adopted
        the new Bulletin D-3, which sets forth guidelines related to the recognition
        of
        payments upon the termination of a labor relationship. As a consequence of
        this
        new rule, the 2004 financial statements were restated in order to be comparative
        with the 2005 and 2006 financial statements and in line with the new MFRS
        (Bulletin B-3 “Labor liabilities”). The effect of this change resulted in an
        additional charge to income of 2004 of Ps. 8,843, see Note 3.
 
 **i.**
            **Earnings
                per share:** 
 Net
        income per share is computed on the basis of the weighted average number
        of
        shares outstanding for the years ended December 31, 2006, 2005 and
        2004.
 
 **j.**
            **Transactions
                in foreign currencies:** 
 Transactions
        in foreign currencies are recorded at the buying rate published by the Banco
        de
        México (Central Bank), which rate is comparable to the Federal Reserve Bank
        of
        New York, on the dates on which they are entered into and/or settled. Assets
        and
        liabilities in foreign currencies are stated in Mexican pesos at the year-end
        closing rates of exchange. Exchange differences are recorded directly in
        results
        of operations.
 
 **k.**
            **Recognition
                of broadcasting income:** 
 Income
        is
        recognized when the corresponding airtime is broadcast.
  F-15
  **GRUPO
          RADIO CENTRO, S.A.B. DE C.V. AND SUBSIDIARIES**
 **NOTES
          TO THE CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF DECEMBER 31, 2006, 2005 AND 2004**
 
 **l.**
            **Barter
                transactions:** 
 Grupo
        Radio Centro, from time to time, 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 estimates
        that the value of these transactions does not exceed market value.
 
 **m.**
            **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.
 
 **n.**
            **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 2006, 2005 and 2004.
 
 **o.**
            **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 be used to support trading of its shares. Shares repurchased by the
        Company are treated as treasury shares. Should these shares not be offered
        anew
        to the investing public within one year, these shares must be canceled, thus
        resulting in a reduction of common stock.
 
 **p.**
            **Comprehensive
                income:** 
 The
        total
        comprehensive income is presented in the statement of changes in shareholders’
equity, which results from the performance of the Company for the period
        and is
        represented by the net gain (loss), plus the effects from deferred income
        tax
        and the adjustment of the additional liability of retirement payments, which
        in
        accordance with applicable accounting principles, are recorded directly under
        shareholders’ equity.
 
 **q.**
            **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 present value that it estimates that the asset could
        generate in the future, against book value. If it is considered that the
        value
        of the asset has been impaired, the reduction in the value is recognized
        in the
        results of operations.
  F-16
  **GRUPO
          RADIO CENTRO, S.A.B. DE C.V. AND SUBSIDIARIES**
 **NOTES
          TO THE CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF DECEMBER 31, 2006, 2005 AND 2004**
   **r.**
            **R****eclassifications:** 
 Certain
        amounts in the 2 005
        and
        2004 consolidated financial statements as originally issued have been
        reclassified for uniformity of presentation with the 2006 consolidated financial
        statements.
 
 **s.**
            **Financial
                reporting standards:** 
 On
        January 1, 2007, guidelines contained in the following MFRS, issued by the
        CINIF, became effective. The Company considers that the adoption of the MFRS
        will not have a material effect on the financial information presented in
        its
        financial statements and footnotes. The most relevant changes in comparison
        with
        the Mexican GAAP they supersede are the following:
 
 1.
            NIF
                B-13*Events
                Subsequent to the Date of the Financial Statements*.
                Establishes that the restructuring of assets and liabilities and
                the
                waiver from creditors to exercise their right to accelerate the payment
                of
                indebtednesses in the event of the entity’s default, which occur between
                the date of the financial statements and their date of issue, will
                not be
                incorporated in the financial statements. 
 2.
            NIF
                B-3*Statement
                of Income*.
                The new approach is incorporated to classify income, costs and expenses
                as
                ordinary or extraordinary, replacing the classification of certain
                special
                or extraordinary items that Mexican GAAP established. Additionally,
                items
                and headings that must be presented in the statement of income are
                specified. 
 3.
            NIF
                C-13*Related
                Parties*.
                The term related parties is expanded to include, among others, close
                family members, of key management personnel and directors and additional
                disclosure is required in the footnotes to the financial
                statements. 
 4.
            NIF
                D-6*Capitalization
                of the Comprehensive Result of Financing*.
                Establishes the mandatory capitalization of the comprehensive result
                of
                financing under certain circumstances. 
 
 **NOTE
        4****ASSETS
        AND LIABILITIES IN FOREIGN CURRENCIES**
  The
        consolidated balance sheets as of December 31, 2006 and 2005, include the
        following assets and liabilities in thousands of US dollars, valued at the
        closing year-end foreign exchange rates of Ps. 10.8755/US$1.00 and
        Ps. 10.628/US$1.00, respectively:
  F-17
  **GRUPO
          RADIO CENTRO, S.A.B. DE C.V. AND SUBSIDIARIES**
 **NOTES
          TO THE CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF DECEMBER 31, 2006, 2005 AND 2004**
   2006
              
              2005Cash
                  and marketable securities
              
              US$
              151
              
              US$
              40Liabilities
              
              
              -
              
              
              (22,843
              )Net
                  assets (liabilities)
              
              US$
              151
              
              US$
              (22,883
              )
 
 The
        liabilities as of December 31, 2005 include a contingent liability (see Note
        10).
  As
        of
        February 2, 2007, the foreign-exchange rate was
        Ps. 11.0382/US$1.00.
  The
        net
        book value of the Company’s property and equipment denominated in foreign
        currencies as of December 31, 2006 and 2005 was as follows:
  2006
              
              2005Transmission
                  equipment
              
              US$
              1,867
              
              US$
              2,315Studio
                  equipment
              
              
              1,313
              
              
              2,288Helicopters
              
              
              1,131
              
              
              1,373Other
              
              
              767
              
              
              810US$
              5,078
              
              US$
              6,786
  **NOTE
        5****CASH
        AND TEMPORARY INVESTMENTS**
  At
        December 31, cash and temporary investments consisted of the
        following:
  **2006**
              
              **2005**Cash
              
              Ps.
              4,671
              
              Ps.
              4,441Short-term
                  temporary investments
              
              
              93,384
              
              
              86,238Ps.
              98,055
              
              Ps.
              90,679
 
 Temporary
        investments as of December 31, 2006 and 2005 consisted primarily of deposits
        at
        fixed interest rates and with maturities of less than 90 days. Grupo Radio
        Centro invests its temporary excess cash in such deposits.
  **NOTE
        6****RELATED
        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.
  F-18
  **GRUPO
          RADIO CENTRO, S.A.B. DE C.V. AND SUBSIDIARIES**
 **NOTES
          TO THE CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF DECEMBER 31, 2006, 2005 AND 2004**
  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, 2006, 2005 and 2004, the Company conducted the
        following transactions with related parties:
  **2006**
              
              **2005**
              
              **2004****Income**:Sale
                  of customer portfolio
              (a)
              Ps.
              12,000
              
              Ps.
              -
              
              Ps.
              -Sale
                  of airtime and services rendered
              
              
              53
              
              
              227
              
              
              125Sale
                  of equipment
              
              
              1,113
              
              
              44
              
              
              1,727Leases
              
              
              -
              
              
              302
              
              
              312Sundry
                  income from shareholders
              (b)
              
              4,546
              
              
              2,035
              
              
              1,103**Expenses**:Purchase
                  of airtime and services received
              
              
              (1,314
              )
              
              (7,715
              )
              
              (1,922
              )Commissions
                  paid and other services
              (c)
              
              (16,
                  685
              )
              
              (5,561
              )
              
              (13,654
              )
 
 (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. 38,867 and the agreed-upon payment for it was
        Ps. 12,000. The resulting loss of Ps. 26,867 was recognized as a
        financing cost in the results of operation for 2006.
 
 (b)  
        During the years ended 2006, 2005, and 2004, shareholders made personal use
        of
        goods and services the Company had acquired in barter transactions and paid
        the
        Company Ps. 4,546, Ps. 2,035 and Ps. 1,103, respectively for the
        goods and services (see Note 3L).
 
 (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,
        2006, 2005 and 2004, the Company incurred expenses for such services under
        this
        contract totaling Ps. 7,602 (Ps. 7,380 historical amount),
        Ps. 5,536 (Ps. 5,320 historical amount) and Ps. 13,654
        (Ps. 12,699 historical amount), respectively.
  F-19
  **GRUPO
          RADIO CENTRO, S.A.B. DE C.V. AND SUBSIDIARIES**
 **NOTES
          TO THE CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF DECEMBER 31, 2006, 2005 AND 2004**
  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, 2006. Affiliated stations owned or controlled by
        members of the Aguirre family accounted for approximately 12%, 13.7% and
        18.9%
        of OIR revenue (or 0.3%, 0.3% and 0.5% of the Company’s total broadcasting
        revenue) for the years ended December 31, 2006, 2005 and 2004 respectively.
        The Company has provided administrative and other services to such family-owned
        stations in the OIR network on terms that are more favorable than those provided
        to unrelated parties. The Company does not consider these transactions to
        have
        been material.
  **NOTE
        7****OTHER
        RECEIVABLES**
  At
        December 31, the balances in other receivables consisted of the following:
 
 **2006**
              
              **2005**Related
                  parties (1)
              
              Ps.
              15,150
              
              Ps.
              -Officers
                  and employees
              
              
              1,021
              
              
              2,796Other(2)
              
              
              2,494
              
              
              2,673Ps.
              18,665
              
              Ps.
              5,469
 
 (1)  
        As of December 31, 2006, this balance is made up as follows: (a) according
        to Note 6a, an account receivable from the entity that is owned by Francisco
        Aguirre, chairman of the board of directors, for Ps. 12,000, which was
        collected in January 2007; and (b) account receivable from Zeus
        Construcciones, S.A. de C.V., a company controlled by Ana María Aguirre, a
        member of the board of directors, for a Ps. 3,150 loan bearing interest at
        10.5% per annum, which was repaid in full in May 2007.
 
 (2)  
        At December 31, 2006 and 2005, the amounts include Ps. 1,564 and
        Ps. 862 respectively, for receivables from the chairman of the Company (see
        Note 6(c)).
  **NOTE
        8****SERVICE
        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-20
  **GRUPO
          RADIO CENTRO, S.A.B. DE C.V. AND SUBSIDIARIES**
 **NOTES
          TO THE CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF DECEMBER 31, 2006, 2005 AND 2004**
 On
        December 30, 1998, a rights-ceding contract was signed in which the Company
        replaced DESA, in order to continue the operation of the Station. Beginning
        in
        January 1999, various amendments were entered into, the last of which 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 the amended, the
        Company will be 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.
  **NOTE
        9****ACQUISITION
        OF RADIODIFUSION RED**
  Through
        a
        series of transactions effected in May 1995 and January 1996, the Company
        acquired from Corporación Medcom, S.A. de C.V. all of the outstanding capital
        stock of Radiodifusión Red. The purchase price consisted of US$ 23,000
        (Ps. 146,308 historical amount) paid in May 1995 and a fixed payment of
        Ps. 241,610 (historical amount) and a contingent payment of Ps. 80,500
        (historical amount) paid in January 1996. The contingent payment was subject
        to
        the attainment by the radio stations owned by Radiodifusión Red of certain
        audience-share targets.
  For
        the
        years ended December 31, 1998, 1997 and 1996, the audience-share targets
        were reached. Therefore, the Company was not entitled to any refund of the
        contingent payment for those years. In December 1998, in connection with
        the
        Company’s programming-services agreement with Infored, S.A. de C.V. (“Infored”)
        and José Gutiérrez Vivó (“Mr. Gutiérrez”) (see Note 10), the Company
        surrendered its rights to any refund of the remaining contingent payments
        for
        2000 and 1999. The aggregate amount of Ps. 80,500 corresponding to the
        contingent payments was capitalized as part of the purchase price and included
        in goodwill.
  On
        September 30, 2001, the Company sold its shares of Radiodifusión Red to DESA, a
        subsidiary of the Company. This sale resulted in a loss for tax purposes
        of
        Ps. 188,836 (Ps. 159,805
        historical amount) (see Note 20).
  F-21
  **NOTE
        10****INFORED
        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, Monitor’s host at that time.
  Mr. Gutiérrez
        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. 4,938
        (Ps. 4,003 historical amount). Of this amount, US$ 4,400 and
        Ps. 4,938 (Ps. 4,003 historical amount) 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. In addition, the Company
        paid Infored monthly production fees based on the revenues derived from Monitor
        and the amount of budgeted expenses, which generally reflected increases
        due to
        Mexico’s inflation rate, to cover Infored’s radio programming operations.
  The
        Company also transferred to Mr. Gutiérrez two AM radio stations, XEFAJ-AM, S.A.
        de C.V. and Emisora 1320, S.A. de C.V., at book value. The Company continues
        rendering maintenance and transmission engineering services and leasing a
        broadcasting building for these stations under separate agreements.
  On
        May 7,
        2002, Mr. Gutiérrez 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. 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. As a result, the agreement was rescinded and Infored
        and Mr. Gutiérrez together were awarded Ps. 267,073 (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. 267,073 and the prepayment amount under the agreement, which as of
        December 31, 2003 was Ps. 118,273 (Ps. 104,572 historical amount), was
        written off. The total amount of the award amounted to Ps. 385,346, which
        was recorded in the consolidated statement of income for the year ended December
        31, 2003 as an extraordinary item.
  F-22
  **GRUPO
          RADIO CENTRO, S.A.B. DE C.V. AND SUBSIDIARIES**
 **NOTES
          TO THE CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF DECEMBER 31, 2006, 2005 AND 2004**
  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.
  Mr.
        Gutiérrez and Infored, initiated an *amparo* proceeding on December 3, 2004 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 on August 11, 2005.
        On August 25, 2005, the Company filed an appeal for review of this decision.
  On
        June 8, 2006, a Mexican court nullified and rejected the international
        arbitration award. As a result, the Company reversed the contingency provision,
        including accrued interest, which totaled to Ps. 253,976 (nominal amount)
        at December 31, 2006 and recorded such reversal as an extraordinary item in
        the Company’s consolidated statement of income for the year ended
        December 31, 2006.
  Following
        an appeal by Infored and Mr. Guttiérrez Vivó, on January 30, 2007, the *Suprema
        Corte de Justicia de la Nación* (the
        Mexican Supreme Court), in a 5-4 decision based on procedural grounds, reversed
        the decision of the Federal District’s Thirteenth Circuit Court of Civil
        Matters, which 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 will require the court to review the merits of the case. On March 22,
        2007, Infored and Mr. Gutiérrez Vivó sought to remove the case from the
        Thirteenth Circuit Court to a new court whose judges had not previously heard
        the case. The Federal District’s Fourth Circuit Court of Civil Matters
        determined that one of the three judges of the Thirteenth Circuit Court had
        a
        potential bias, ordered that judge be replaced by an officer of the court
        appointed specifically for that purpose and returned the matter to the
        Thirteenth Circuit Court for final resolution. The Company can give no assurance
        about the outcome of these proceedings or their duration.
  **NOTE
        11****PROPERTY
        AND EQUIPMENT**
  At
        December 31, 2006 and 2005, the balances in property and equipment
        consisted of the following:
  **2006**
              
              
              **2005**
              
              
              **Depreciation
                  (annual rate)**Buildings
              
              Ps
              330,352
              
              Ps
              331,230
              
              
              2.22
              %Transmission
                  equipment
              
              
              133,366
              
              
              132,650
              
              
              11.87
              %Studio
                  equipment
              
              
              136,684
              
              
              134,859
              
              
              15.94
              %Office
                  furniture and equipment
              
              
              47,697
              
              
              47,452
              
              
              16.48
              %Computer
                  equipment
              
              
              73,790
              
              
              70,486
              
              
              32.22
              %Transportation
                  equipment
              
              
              38,933
              
              
              38,552
              
              
              28.30
              %Helicopters
              
              
              34,826
              
              
              34,826
              
              
              18.18
              %Leasehold
                  improvements
              
              
              12,589
              
              
              12,589
              
              
              5.00
              %808,237
              
              
              802,644Less
                  accumulated depreciation
              
              
              (524,775
              )
              
              (491,041
              )283,462
              
              
              311,603Land
              
              
              143,922
              
              
              143,924Buildings
                  held for sale, net
              
              
              35,304
              
              
              37,164Equipment
                  in transit
              
              
              1,098
              
              
              1,974Ps.
              463,786
              
              Ps.
              494,665
 
 During
        2006, 2005 and 2004, Inmobiliaria Radio Centro, S.A. de C.V. rented to Maxcom,
        S.A. de C.V., a service supplier, part of the building in which the main
        executive offices and studios of the Company are located. Rental income for
        2006, 2005 and 2004 amounted to Ps. 245, Ps. 236 and Ps. 241,
        respectively.
  During
        the years ended December 31, 2006, 2005 and 2004, the Company reviewed the
        net
        realizable value of the temporarily unoccupied buildings and determined an
        impairment charge was required in their book values for 2006 and 2005 in
        the
        amount of Ps. 1,091 and Ps. 804, respectively and for 2004, an
        increase in the amount of Ps. 8,443, which is recognized in other income
        and expenses for each of the years then ended (see Note 21).
  **NOTE
        12****DEFERRED
        CHARGES**
  At
        December 31, 2006 and 2005, deferred charges consisted of the
        following:
  **2006**
              
              
              **2005**Installation
                  expenses
              
              Ps.
              9,454
              
              Ps.
              9,474Licenses
                  of software
              
              
              805
              
              
              1,20310,259
              
              
              10,677Less
                  accumulated amortization
              
              
              (5,804
              )
              
              (5,279
              )4,455
              
              
              5,398Labor
                  liabilities - intangible assets(see
                  Note 18)
              
              
              8
              
              
              100**Ps.**
              **4,463**
              
              **Ps.**
              **5,498**
  F-23
  **GRUPO
          RADIO CENTRO, S.A.B. DE C.V. AND SUBSIDIARIES**
 **NOTES
          TO THE CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF DECEMBER 31, 2006, 2005 AND 2004**
  **NOTE
        13****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. 480,401 (Ps. 146,308 historical amount) and Ps. 841,322
        (Ps. 313,101 historical amount), respectively (see Note 9). On September
        30, 2001, the Company sold these shares to DESA, a subsidiary.
  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. 56,614.
  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. 49,863
        (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 and GRC Publicidad, S.A. de C.V. 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. 8,047.
  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.
  The
        Company performed an analysis for impairment of its goodwill as of
        December 31, 2006, 2005 and 2004. There was no impairment charge required
        under MFRS at December 31, 2006, 2005 and 2004.
  F-24
  **GRUPO
          RADIO CENTRO, S.A.B. DE C.V. AND SUBSIDIARIES**
 **NOTES
          TO THE CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF DECEMBER 31, 2006, 2005 AND 2004**
  As
        of
        December 31, 2006 and 2005, goodwill consisted of the following in both
        years:
  Resulting
                  from the acquisition of:
              
              
              AmountRadiodifusión
                  Red, S.A. de C.V.
              
              Ps.
              717,884Radio
                  Sistema Mexicano, S.A.
              
              
              36,553Enlaces
                  Troncales, S.A. de C.V.
              
              
              34,041GRC
                  Radiodifusión, S.A. (formerly Aerocer, S.A.)
              
              
              8,047Others
              
              
              2,185Ps.
              798,710
 
 **NOTE
        14****NOTES
        PAYABLE**
  At
        December 31, 2006 and 2005, notes payable consisted of the
        following:
  2006
              
              
              2005**Short-term**:Scotiabank
                  Inverlat, S.A.
              
              Ps.
              -
              
              Ps.
              58,913**Long-term**:Scotiabank
                  Inverlat, S.A.
              
              
              -
              
              
              58,913Ps.
              -
              
              Ps.
              117,826
 
 On
        May 17, 2006, the Company repaid its debt to Scotiabank
        Inverlat.
  **NOTE
        15****ADVANCES
        FROM CUSTOMERS**
  Advances
        from clients amounted to Ps. 196,877 in 2006 and to Ps. 86,715 in
        2005, 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
        16****SUPPLIERS
        AND OTHER ACCOUNTS PAYABLE**
  At
        December 31, 2006 and 2005, suppliers and other accounts payable consisted
        of
        the following:
  F-25
  **GRUPO
          RADIO CENTRO, S.A.B. DE C.V. AND SUBSIDIARIES**
 **NOTES
          TO THE CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF DECEMBER 31, 2006, 2005 AND 2004**
  **2006**
              
              
              **2005**Media
                  and service suppliers
              
              Ps.
              35,595
              
              Ps.
              24,241Salaries
                  and fees payable
              
              
              8,808
              
              
              6,497Interest
              
              
              -
              
              
              2,057Employee
                  profit sharing payable
              
              
              885
              
              
              285Other
              
              
              256
              
              
              1,330Ps.
              45,544
              
              Ps.
              34,410
  **NOTE
        17****INCOME
        TAXES AND OTHER TAXES PAYABLE**
  At
        December 31, 2006 and 2005, income tax and other taxes payable were comprised
        of
        the following:
  **2006**
              
              
              **2005**Taxes
                  on wages and salaries
              
              Ps.
              5,210
              
              Ps.
              5,187Value-added
                  tax
              
              
              39,248
              
              
              21,191Income
                  tax
              
              
              41,836
              
              
              335Other
                  withholdings
              
              
              1,246
              
              
              498Ps.
              87,540
              
              Ps.
              27,211
  **NOTE
        18****SENIORITY
        PREMIUMS AND PENSIONS**
  Through
        December 31, 2004, the Company maintained a reserve to cover seniority premiums
        and pension plan liabilities. Beginning in 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 Bulletin D-3.
  F-26
  **GRUPO
          RADIO CENTRO, S.A.B. DE C.V. AND SUBSIDIARIES**
 **NOTES
          TO THE CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF DECEMBER 31, 2006, 2005 AND 2004**
  The
        actuarial calculations as of December 31, 2006 and 2005, are summarized
        below:
  2006Seniority
                  premium
              
              
              Pension
                  plan
              
              
              Severance
                  payments
              
              
              Total
              
              
              2005Changes
                in projected-benefit
                  liabilities
              
              Ps.
              27,935
              
              Ps.
              1,525
              
              Ps.
              7,890
              
              Ps.
              37,350
              
              Ps.
              28,577Service
                  cost
              
              
              1,591
              
              
              90
              
              
              480
              
              
              2,161
              
              
              10,446Interest
                  cost
              
              
              859
              
              
              61
              
              
              238
              
              
              1,158
              
              
              1,146Actuarial
                  gain
              
              
              (2,033
              )
              
              (20
              )
              
              (344
              )
              
              (2,397
              )
              
              (2,297
              )Benefits
                  paid
              
              
              (469
              )
              
              (55
              )
              
              
              
              
              (524
              )
              
              (566
              )Projected-benefit
                  liabilities at the end of the year
              
              Ps.
              27,883
              
              Ps.
              1,601
              
              Ps.
              8,264
              
              Ps.
              37,748
              
              Ps.
              37,305Plan
                  assets
              
              Ps.
              -
              
              Ps.
              -
              
              Ps.
              -
              
              Ps.
              -
              
              Ps.
              -Benefit
                  liabilities
              
              Ps.
              27,883
              
              Ps.
              1,601
              
              Ps.
              8,264
              
              Ps.
              37,748
              
              Ps.
              37,305Unrecognized
                  net actuarial loss
              
              Ps.
              -
              
              Ps.
              -
              
              Ps.
              -
              
              Ps.
              -
              
              Ps.
              (1,120
              )Unrecognized
                  prior service costs
              
              
              (5,800
              )
              
              166
              
              
              (1,416
              )
              
              (7,050
              )
              
              (1,572
              )Additional
                  provision (1)
              
              
              -
              
              
              -
              
              Ps.
              7,883
              
              Ps.
              7,883
              
              
              -Net
                  projected asset (liability)
              
              Ps.
              (33,683
              )
              Ps.
              (1,435
              )
              Ps.
              (17,563
              )
              Ps.
              (52,681
              )
              Ps.
              (39,999
              )Obligations
                  from actual benefits
              
              Ps.
              26,247
              
              Ps.
              1,443
              
              Ps.
              7,795
              
              Ps.
              35,485
              
              Ps.
              35,048Additional
                  liability
              
              Ps.
              35
              
              Ps.
              8
              
              Ps.
              -
              
              Ps.
              43
              
              Ps.
              151Intangible
                  assets (see Note 12)
              
              Ps.
              -
              
              Ps.
              8
              
              Ps.
              -
              
              Ps.
              8
              
              Ps.
              100Total
                  labor liabilities
              
              Ps.
              33,719
              
              Ps.
              1,443
              
              Ps.
              17,562
              
              Ps.
              52,724
              
              Ps.
              39,999
  (1)
        Compa ny
        management recorded an additional liability for severance payments as a portion
        of Company personnel is at retirement age.
  **Weighted-average
        assumptions as of December 31,**
 
 2006Seniority
                  premium
              
              Pension
                Plan
              
              Severance
                  payments
              
              2005Discount
                  rate (real rates)
              
              
              4.00
              %
              
              4.00
              %
              
              4.00
              %
              
              4.00
              %Increase
                  in compensation rates (real rates)
              
              
              1.00
              %
              
              1.00
              %
              
              1.00
              %
              
              1.00
              %Amortization
                  period of the transition liability (years)
              
              
              -
              
              
              -
              
              
              6.96
                  & 12.99
              
              
              6.96
                  & 12.99
  F-27
  **GRUPO
          RADIO CENTRO, S.A.B. DE C.V. AND SUBSIDIARIES**
 **NOTES
          TO THE CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF DECEMBER 31, 2006, 2005 AND 2004**
 **Components
        of net cost of benefits for the year**
  2006Seniority
                  premiums
              
              Pension
                Plan
              
              Severance
                  payments
              
              Total
              
              2005Labor
                  cost
              
              Ps.
              1,591
              
              Ps.
              90
              
              Ps.
              480
              
              Ps.
              2,161
              
              Ps.
              10,445Financing
                  cost
              
              
              859
              
              
              61
              
              
              238
              
              
              1,158
              
              
              1,146Amortization
                  of prior year service cost
              
              
              2,033
              
              
              20
              
              
              -
              
              
              2,053
              
              
              2,059Adjustment
                  to the liability not derived from the actuarial
                  calculation
              
              
              -
              
              
              -
              
              
              7,883
              
              
              7,883
              
              
              -Net
                  cost for the year
              
              Ps.
              4,483
              
              Ps.
              171
              
              Ps.
              8,601
              
              Ps.
              13,255
              
              Ps.
              13,650
  **NOTE
        19****SHAREHOLDERS’
        EQUITY**
 
 The
        shareholders of the Company approved the following changes in the Company’s
        capital structure.
  **During
        2006** **:**
  a)
            Repurchase
                on the open market of 918,800 shares, which represent 0.564% of
                outstanding shares for Ps. 8,787. 
 b)
            Sale
                on the open market of 918,800 shares, which represent 0.564% of
                outstanding shares amounting to Ps. 8,459. c)
              Capital
                    reduction of Ps. 120,096 (historical amount), with no cancellation of
                    the respective shares. d)
                Capitalization
                      of restatement effects, which caused an increase in nominal
                      capital stock
                      for Ps. 324,849.  **During
            2005** **:**
 a)
              Sale
                  on the open market of 172,000 shares, which represent 0.001% of
                  the
                  outstanding shares for
                  Ps. 1,497
  **During
        2004** **:**
  a)
            Repurchase
                on the open market of 357,600 shares, which represent 0.002% of the
                outstanding shares for Ps. 770. 
 After
        the
        aforementioned changes, as of December 31, 2006, 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 for and 84,690,207 shares were treasury shares.
        Shares of stock may be owned only by Mexican investors. Capital stock is
        represented by shares with no par value and valued as follows:
  F-28
  **GRUPO
          RADIO CENTRO, S.A.B. DE C.V. AND SUBSIDIARIES**
 **NOTES
          TO THE CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF DECEMBER 31, 2006, 2005 AND 2004**
  Number
                  of SharesTotal
                  authorized capital stock
              
              
              247,414,768Treasury
                  shares
              
              
              (84,690,207
              )Total
                  outstanding capital stock
              
              
              162,724,561Fixed
                  capital stock, subscribed and paid for
              
              Ps.
              1,059,962Increase
                  from restatement to express in constant Mexican pesos with purchasing
                  power as of December 31, 2006
              
              
              29,495Ps.
              1,089,457
 
 The
        changes in the number of outstanding shares as of the years ended
        December 31, 2006 and 2005, were as follows:
  **2006**
              
              
              **2005**Shares
                  outstanding at the beginning of the year
              
              
              162,724,561
              
              
              162,552,561Shares
                  outstanding at the end of the year
              
              
              162,724,561
              
              
              162,724,561Capital
                  stock at the end of the year expressed in constant Mexican pesos
                  with
                  purchasing power as of December 31, 2006
              
              Ps.
              1,089,457
              
              Ps.
              1,212,561
 
 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, 2006 and 2005 was Ps. 26,208.
  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 20).
 
 **NOTE
        20****INCOME
        TAXES**
  Taxable
        income differs from accounting income due both to (i) permanent
        differences, principal among which are the treatment of non-deductible expenses
        (primarily for goodwill) and the reflection in the income statement of the
        effects of inflation and (ii) timing differences affecting accounting and
        taxable income in different periods.
  F-29
  **GRUPO
          RADIO CENTRO, S.A.B. DE C.V. AND SUBSIDIARIES**
 **NOTES
          TO THE CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF DECEMBER 31, 2006, 2005 AND 2004**
  A
        reconciliation of the statutory rate to the effective income tax rate for
        the
        years ending December 31, 2006 and 2005 is as follows:
  **2006**
              
              **2005**Statutory
                  tax rate
              
              
              29.0
              %
              
              30.0
              %Difference
                  between the annual inflation adjustment and the effects of net
                  monetary
                  position
              
              
              (1.25
              )
              
              (10.8
              %)Write-off
                  of liabilities
              
              
              (15.48
              )
              
              -Tax
                  losses
              
              
              (3.69
              )
              
              -Other
              
              
              (1.18
              )
              
              -Nondeductible
                  expenses
              
              
              1.76
              
              
              5.8
              %Effective
                  income tax rate
              
              
              9.16
              %
              
              25.0
              %
 
 Provisions
        for income tax and employee profit sharing for the years ending December
        31,
        2006 and 2005 are as follows:
 
 **2006**
              
              **2005**Current
                  income tax payable
              
              Ps.
              74,646
              
              Ps.
              31,758Amortization
                  of tax losses
              
              
              -
              
              
              (12,346
              )Deferred
                  income taxes
              
              
              (33,258
              )
              
              2,900Total
                  income tax
              
              
              41,388
              
              
              22,312Current
                  employee profit sharing
              
              
              890
              
              
              287Ps.
              42,278
              
              Ps.
              22,599
 
 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 the Mexico’s
        Income Tax Law.
  In
        accordance with Mexico’s Income Tax Law, the income tax rate was 30% for 2005
        and 29% for 2006. The income tax rate will then decrease to 28% for 2007
        and
        subsequent years.
  Deferred
        income tax is determined by comparing the bases of assets and liabilities
        for
        financial accounting purposes to those for tax reporting purposes. Temporary
        differences, to which the corresponding tax rates are applied, result from
        this
        comparison.
  As
        of
        December 31, 2006 and 2005, the balance of deferred taxes (income tax and
        employee profit sharing), consists of the following components:
  F-30
  **GRUPO
          RADIO CENTRO, S.A.B. DE C.V. AND SUBSIDIARIES**
 **NOTES
          TO THE CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF DECEMBER 31, 2006, 2005 AND 2004**
  **2006**
              
              
              **2005**Property
                  and equipment
              
              Ps.
              (72,175
              )
              Ps.
              (80,171
              )Tax
                  on assets
              
              
              5,337
              
              
              5,337Advances
                  from customers
              
              
              55,125
              
              
              25,148Labor
                  liabilities
              
              
              14,750
              
              
              13,433Tax
                  loss carryforwards
              
              
              -
              
              
              9,025Prepaid
                  expenses and other items
              
              
              (12,086
              )
              
              (15,094
              )Net
                  deferred tax liability
              
              Ps.
              (9,049
              )
              Ps.
              (42,322
              )
 
 In
        accordance with Mexico’s Income Tax Law, tax loss carryforwards are subject to
        restatement for inflation and may be used to offset taxable income over the
        ten
        years following their generation. As of December 31, 2006, the tax on assets
        paid in excess of income tax was as follows:
 
 **Fiscal
                  year incurred**
              
              **Amount**
              
              **Expiration
                  year**1997
              
              
              550
              
              
              20072004
              
              Ps.
              5,337
              
              
              2010Ps.
              5,887
 
 During
        2005, the Company amortized tax losses on a consolidated basis amounting
        to
        Ps. 39,550 (historical amount) from the year ended December 31,
        2001.
  The
        net
        fiscal profit account for tax purposes (the “ *CUFIN* ”)
        represents the amount of accumulated earnings that may be distributed without
        additional corporate tax charge to the Company. As of December 31, 2006,
        this account amounted to Ps. 311,209.
  As
        of
        December 31, 2006, capital stock, restated for tax purposes, which
        constituted the capital contributions account, amounted to
        Ps. 1,235,588.
  **NOTE
        21****OTHER
        EXPENSES, NET**
  The
        components of other expenses, net, during the years ended December 31, 2006,
        2005 and 2004 were as follows:
  F-31
 **GRUPO
            RADIO CENTRO, S.A.B. DE C.V. AND SUBSIDIARIES**
 **NOTES
            TO THE CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
            OF DECEMBER 31, 2006, 2005 AND 2004**
 **2006**
                      
                      **2005**
                      
                      **2004****Income**:Sales
                          of supplies and recovery of expenses
                      
                      Ps.
                      5,186
                      
                      Ps.
                      2,083
                      
                      Ps.
                      4,803Leasing
                          and maintenance of properties
                      
                      
                      295
                      
                      
                      324
                      
                      
                      319Tax
                          recoverable
                      
                      
                      2,671
                      
                      
                      588
                      
                      
                      2,830Gain
                          from fixed asset sales
                      
                      
                      253
                      
                      
                      278
                      
                      
                      -Other
                      
                      
                      2,108
                      
                      
                      1,582
                      
                      
                      605Effect
                          of valuing properties at net realizable value (see Note
                          11)
                      
                      
                      -
                      
                      
                      -
                      
                      
                      8,443Total
                          other income
                      
                      Ps.
                      10,513
                      
                      Ps.
                      4,855
                      
                      Ps.
                      17,000
  **2006**
              
              **2005**
              
              **2004****Expenses**:Fees
                  to Executive Committee
              
              Ps.
              (17,720
              )
              Ps.
              (17,870
              )
              Ps.
              (19,152
              )Maintenance
                  and leasing cost
              
              
              (8,186
              )
              
              (10,139
              )
              
              (10,671
              )Arbitration
                  cost
              (a)
              
              (6,870
              )
              
              (8,560
              )
              
              (19,251
              )Compliance
                  with securities regulations and corporate restructuring
                  expenses
              
              
              (5,060
              )
              
              (7,116
              )
              
              (4,576
              )Other
              
              
              (9,954
              )
              
              (9,090
              )
              
              (8,806
              )Expenses
                  related to celebration of the Company’s 60thanniversary
              
              
              (14,872
              )
              
              -
              
              
              -Loss
                  on sale of equipment
              
              
              -
              
              
              -
              
              
              (1,943
              )Internet
                  subscription
              
              
              (3,225
              )
              
              (1,864
              )
              
              -Effect
                  of valuing properties at net realizable value (see Note
                  11)
              
              
              (1,091
              )
              
              (804
              )
              
              -Uncollectible
                  accounts
              
              
              -
              
              
              -
              
              
              (2,256
              )Total
                  other expenses
              
              
              (66,978
              )
              
              (55,443
              )
              
              (66,655
              )Other
                  expense, net
              
              Ps.
              (56,465
              )
              Ps.
              (50,588
              )
              Ps.
              (49,655
              )
 
 a)
            In
                2006, 2005 and 2004, the Company paid legal fees in connection with
                the
                arbitration proceedings commenced by Infored and Mr. Gutiérrez in May
                2002. 
 
 **NOTE
        22**  **INVESTMENT
        IN AEROCER, S.A.**
  As
        mentioned in Note 1(b) and Note 13, on November 30, 2005, the
        Company acquired 100% of the shares of Aerocer, S.A. for a purchase price
        in
        cash of Ps. 11,262.
  As
        of
        November 30, 2005, GRC Radiodifusión, S.A. (formerly Aerocer, S.A.) had
        Ps. 120,035 (Ps. 61,572 historical amount) of tax loss carryforwards,
        of which as of December 31, 2006 and 2005, Ps. 57,527 and Ps. 62,508,
        respectively, were used to offset GRC Radiodifusión, S.A. taxable income
        generated in those years.
  F-32
 
 **GRUPO
            RADIO CENTRO, S.A.B. DE C.V. AND SUBSIDIARIES**
 **NOTES
            TO THE CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
            OF DECEMBER 31, 2006, 2005 AND 2004**
 **NOTE
        23****CONTINGENCY**
  The
        Company is involved in various legal proceedings related to labor claims
        initiated by former employees between 2000 and 2004 seeking payment of
        approximately Ps. 44,150. 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.
  
 **NOTE
            24** **AUTHORIZATION
            FOR THE ISSUING OF THE FINANCIAL
            STATEMENTS**
  The
        accompanying financial statements were issued with the authorization of Mr.
        Pedro Beltrán Nasr, CFO, on February 2, 2007.
  
 **NOTE
        25****SIGNIFICANT
        DIFFERENCES BETWEEN MEXICAN AND****US
        GAAP**
 
 The
        accompanying financial statements of the Company are presented on the basis
        of
        MFRS.
  Except
        for inflation accounting, 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 differ 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 Bulletin B-10 and its amendments relating to the recognition
        of
        the effects of inflation on financial information have no counterpart under
        US
        GAAP. However, as MFRS include the effects of inflation in the primary financial
        statements, 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:
  In
        1999,
        the Company elected to adopt early the provisions of Bulletin D-4, which
        requires recognizing 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.
  F-33
 **GRUPO
          RADIO CENTRO, S.A.B. DE C.V. AND SUBSIDIARIES**
 **NOTES
          TO THE CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF DECEMBER 31, 2006, 2005 AND 2004**
 As
        under
        US GAAP, the Company recognized deferred taxes in prior years for MFRS purposes
        for certain timing differences, such as advances from customers and certain
        prepaid expenses, expected to reverse over a definite period of time (see
        Note
        20).
  As
        a
        result of the Company’s early adoption of Bulletin D-4 in 1999, there were no
        differences related to deferred taxes that had to be reconciled between MFRS
        and
        US GAAP for financial statement purposes for the years ended December 31,
        2006
        and 2005, except for the balance sheet classification of deferred taxes,
        under
        US GAAP, as current and non-current.
  MFRS
        require 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. An analysis of the balance of deferred
        taxes
        in accordance with US GAAP, as of December 31, 2006 and 2005, is as
        follows:
 **2006**
                
                **2006**
                
                **2005**
                
                **2005**Current
                    deferred tax:Advances
                    from customers
                
                US$
                5,104
                
                Ps.
                55,125
                
                US$
                2,328
                
                Ps.
                25,148Prepaid
                    expenses
                
                
                (2,101
                )
                
                (22,708
                )
                
                (2,026
                )
                
                (21,890
                )Allowance
                    for doubtfulaccountants
                
                
                627
                
                
                6,780
                
                
                345
                
                
                3,735Other
                    liability provisions
                
                
                355
                
                
                3,842
                
                
                283
                
                
                3,061Net
                    current deferred asset
                
                US$
                3,985
                
                Ps.
                43,039
                
                US$
                930
                
                Ps.
                10,054Non-current
                    deferred taxTax
                    loss carryforwards lessallowance
                
                US$
                -
                
                Ps.
                -
                
                
                836
                
                Ps.
                9,025Recoverable
                    tax on assets
                
                
                494
                
                
                5,337
                
                
                494
                
                
                5,337Labor
                    liabilities
                
                
                1,366
                
                
                14,750
                
                
                1,244
                
                
                13,433Property
                    and equipment, net
                
                
                (6,683
                )
                
                (72,175
                )
                
                (7,423
                )
                
                (80,171
                )Net
                    non-current deferred tax liability
                
                US$
                (4,823
                )
                Ps.
                (52,088
                )
                US$
                (4,849
                )
                Ps.
                (52,376
                )
  **Statement
        of changes in financial position:**
  Under
        MFRS, the Company presents statements of changes in financial position 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 net monetary position were treated
        as a
        component of financing activities for US GAAP purposes, funds provided by
        operating and financing activities would be as follows:
 **2006**
                
                **2006**
                
                **2005**
                
                **2004**Operating
                    activities:Resources
                    provided by operations, per MFRS
                
                US$
                23,559
                
                Ps.
                Ps.
                    254,425
                
                Ps.
                Ps.
                    144,391
                
                Ps.
                Ps.
                    25,922Less
                    — gain on monetary position on current and long-term debt
                
                
                (425
                )
                
                (4,590
                )
                
                (5,890
                )
                
                (13,202
                )Resources
                    provided by operations, per US GAAP
                
                US$
                23,134
                
                Ps.
                Ps.
                    249,835
                
                Ps.
                Ps.
                    138,501
                
                Ps.
                Ps.
                    12,720Financing
                    activities:Resources
                    applied to financing activities, per MFRS
                
                US$
                (22,413
                )
                Ps.
                Ps.
                    (242,045
                )
                Ps.
                Ps.
                    (63,306
                )
                Ps.
                Ps.
                    (74,286
                )Plus
                    — gain on monetary position on current and long-term debt
                
                
                425
                
                
                4,590
                
                
                5,890
                
                
                13,202Resources
                    applied to financing activities, per US GAAP
                
                US$
                (21,988
                )
                Ps.
                Ps.
                    (237,455
                )
                Ps.
                Ps.
                    (57,416
                )
                Ps.
                Ps.
                    (61,084
                )Supplemental
                    cash-flow information:Interest
                    paid
                
                US$
                999
                
                Ps.
                10,784
                
                Ps.
                Ps.
                    16,923
                
                Ps.
                Ps.
                    21,528Taxes
                    paid
                
                US$
                3,039
                
                Ps.
                32,810
                
                Ps.
                Ps.
                    39,989
                
                Ps.
                Ps.
                    31,084
 F-34
 **GRUPO
            RADIO CENTRO, S.A.B. DE C.V. AND SUBSIDIARIES**
 **NOTES
            TO THE CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
            OF DECEMBER 31, 2006, 2005 AND 2004**
  **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. Beginning in 2000, the
        Company
        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”.
        Regarding SFAS No. 158, which amended SFAS 87, see the paragraph below regarding
        the effect of recently issued U.S. accounting standards.
  **Minority
        interest:**
  Under
        MFRS, the minority interest in subsidiaries must be included as a component
        of
        shareholders’ equity. In accordance with US GAAP, minority interest in
        subsidiaries is generally shown below liabilities on the balance
        sheet.
  **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”). Under
        US GAAP, however, goodwill arising from entities under common control is
        not
        recognizable. In addition, under US GAAP, effective January 1, 2002, goodwill
        is
        no longer amortized but instead is tested for impairment at least annually.
        For
        MFRS purposes, through December 31, 2004, goodwill was amortized based on
        the estimated useful lives of the assets calculated on the straight-line
        method.
        Bulletin C-15 took effect on January 1, 2005 and establishes, among
        other things, new principles for the calculation and recognition of impairment
        losses for long-lived assets, including any subsequent reversals of such
        impairment losses. Effective January 1, 2005, MFRS is consistent with US
        GAAP in that amortizing goodwill is no longer permitted.
  The
        Company performed an analysis for impairment of its goodwill as of
        December 31, 2006, 2005 and 2004. There was no impairment charge required
        under MFRS or US GAAP at December 31, 2006, 2005 and 2004.
  **Book
        value of buildings held for sale:**
  Under
        the
        MFRS, the Company reviewed the net realizable value of the temporarily
        unoccupied buildings and recorded an impairment or an increase in the value.
        Under US GAAP the Company only applied the impairment of the buildings; it
        is
        not permitted to apply the increase the value.
 F-35
 **GRUPO
            RADIO CENTRO, S.A.B. DE C.V. AND SUBSIDIARIES**
 **NOTES
            TO THE CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
            OF DECEMBER 31, 2006, 2005 AND 2004**
 
 **Other
        expenses, net:**
  Under
        MFRS, certain net expenses are classified as non-operating on the Company’s
        statement of income. Under US GAAP, most of these net expenses are classified
        as
        operating expenses.
  **Convenience
        statements:**
  The
        2006
        US dollar amounts (denoted by the symbol “US$”) shown in the financial
        statements have been included solely for the convenience of the reader and
        were
        translated at the rate of Ps. 10.7995/US$ 1.00, the noon buying rate of
        Mexican pesos on December 31, 2006, 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 (loss)
        and
        shareholders’ equity that would have been required had the Company applied US
        GAAP instead of MFRS:
  **2006**
              
              **2006**
              
              **2005**
              
              **2004**Net
                  income (loss), as recorded under MFRS
              
              US$
              38,798
              
              Ps.
              418,998
              
              Ps.
              67,559
              
              
              Ps.21,285US
                  GAAP adjustments:Increase
                  in book value of buildings held for sale (Note 11)
              
              
              -
              
              
              -
              
              
              -
              
              
              (8,443
              )Minority
                  interest
              
              
              (6
              )
              
              (61
              )
              
              (15
              )
              
              (5
              )Net
                  income under US GAAP
              
              US$
              38,792
              
              Ps.
              418,937
              
              
              Ps.67,544
              
              
              Ps.12,837Net
                  income per share (basic and diluted) under US GAAP
              
              US$
              0.24
              
              Ps.
              2.58
              
              
              Ps.0.42
              
              
              Ps.0.08Average
                  common shares outstanding (000’s)
              
              
              162,500
              
              
              162,500
              
              
              162,657
              
              
              162,560
 F-36
 **GRUPO
              RADIO CENTRO, S.A.B. DE C.V. AND SUBSIDIARIES**
 **NOTES
              TO THE CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
              OF DECEMBER 31, 2006, 2005 AND
              2004**
 (1)
        As
        mentioned in Notes 3h and 18, in accordance with MFRS the Company has adopted
        the new guidelines of Bulletin D-3 related to the recognition of payments
        upon
        termination of the labor relationship (severance payment provision).
  2006
              
              2006
              
              2005
              
              2004Shareholders’
equity
                    under MFRS
              
              US$
              123,819
              
              Ps.
              1,337,181
              
              Ps.
              1,042,438
              
              Ps.
              973,382US
                    GAAP adjustments:Increase
                    in book value ofbuildings
                    held for sale (Note 11)
              
              
              (782
              )
              
              (8,443
              )
              
              (8,443
              )
              
              (8,443
              )Minority
                    interest
              
              
              (60
              )
              
              (643
              )
              
              (582
              )
              
              (567
              )(842
              )
              
              (9,086
              )
              
              (9,025
              )
              
              (9,010
              )Shareholders’
equity
                    under US GAAP
              
              US$
              122,977
              
              Ps.
              1,328,095
              
              Ps.
              1,033,413
              
              Ps.
              964,372
 
 In
        the
        income statement, employee profit sharing is classified as a component of
        the
        tax provisions and certain net expenses are classified as non-operating under
        MFRS. Under US GAAP, these items should be included or excluded as operating
        expenses, as applicable.
  As
        mentioned in Note 10, the Company reversed the contingency provision, including
        accrued interest, which totaled Ps. 253,976 (nominal amount) at December
        31, 2006. In accordance with the MFRS, this reversal was recorded as an
        extraordinary item in the Company’s consolidated statement of income for the
        year ended December 31, 2006. In accordance with US GAAP, this reversal should
        be record as an operating expense.
  
 The
        following is a reconciliation of operating (loss) income:
 2006
              
              2006
              
              2005
              
              2004Operating
                  income under MFRS
              
              US$
              27,979
              
              Ps.
              302,164
              
              Ps.
              154,026
              
              Ps.
              111,694Other
                  expenses, net
              
              
              (5,228
              )
              
              (56,465
              )
              
              (50,588
              )
              
              (49,655
              )Increase
                  in book value of buildings held for sale
              
              
              -
              
              
              -
              
              
              -
              
              
              (8,443
              )Extraordinary
                  item (Note 10)
              
              
              (23,517
              )
              
              (253,976
              )
              
              -
              
              
              -Employees
                  profit sharing
              
              
              (82
              )
              
              (890
              )
              
              (287
              )
              
              (2,920
              )Operating
                  (loss) income under US GAAP
              
              US$
              US
                  (848
              )
              Ps.
              (9,167
              )
              Ps.
              103,151
              
              Ps.
              50,676
 
 F-37
 
 **GRUPO
              RADIO CENTRO, S.A.B. DE C.V. AND SUBSIDIARIES**
 **NOTES
              TO THE CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
              OF DECEMBER 31, 2006, 2005 AND 2004**
 The
        basic
        net (loss) income per common share is computed by dividing the net income
        (loss)
        available to common shareholders by the weighted average number of common
        shares
        outstanding.
  Diluted
        net (loss) income per common share is computed by dividing the net (loss)
        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, 2006, 2005 and 2004, there were no outstanding
        potential dilutive securities of the Company.
  **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.
  **“Fair
        Value Measurements,” or SFAS No. 157** This
        statement establishes a framework for measuring fair value and expands
        disclosures about fair value measurements.
  SFAS
        No. 157 clarifies the definition of exchange price as the price between
        market participants in an orderly transaction to sell an asset or transfer
        a
        liability in the market in which the reporting entity would transact for
        the
        asset or liability, that is, the principal or most advantageous market for
        the
        asset or liability. The changes to current practice resulting from the
        application of this statement relate to the definition of fair value, the
        methods used to measure fair value, and the expanded disclosures about fair
        value measurements. SFAS No. 157 is effective for fiscal years beginning
        after
        November 15, 2007 and interim periods within those fiscal years. The Company
        is
        in the process of determining the impact of adopting this new accounting
        principle on its consolidated financial position and results of
        operations.
  **“Employers
        Accounting for Defined Benefit Pension and Other Postretirement Plans—an
        amendment of FASB Statements No. 87, 88, 106, and 132(R),” or SFAS No. 158**
  This
        statement requires companies to (1) fully recognize, as an asset or liability,
        the over funded or under funded status of defined pension and other
        postretirement benefit plans; (2) recognize changes in the funded status
        through
        other comprehensive income in the year in which the changes occur; (3) measure
        the funded status of defined pension and other postretirement benefit plans
        as
        of the date of the company’s fiscal year-end; and (4) provide enhanced
        disclosures. The provisions of this statement are effective for an employer
        with
        publicly traded equity securities, or controlled subsidiaries of such companies,
        in fiscal years ending after December 15, 2006. In addition, a company must
        now
        measure the fair value of its plan assets and benefit obligations as of the
        date
        of its year-end balance sheet. A company is no longer permitted to measure
        the
        funded status of its plan(s) by being able to choose a measurement date up
        to
        three months prior to year end. This provision within the standard is effective
        for all companies in fiscal years ending after December 15, 2008, however
        this
        provision does not impact the Company as its measurement date is the same
        as its
        fiscal year end. This new Bulletin will not have an impact on the financial
        statements, since the Company has not established any fund for labor
        obligations. Similarly, the Company does not have a benefit plan or other
        post-retirement plans. The only benefits are those established by the Mexican
        Federal Labor Law, which are the seniority premiums and severance liabilities
        mentioned above.
 F-38
 
 **GRUPO
                RADIO CENTRO, S.A.B. DE C.V. AND SUBSIDIARIES**
 **NOTES
                TO THE CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
                OF DECEMBER 31, 2006, 2005 AND 2004**
 **“Accounting
        for Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109,” or
        SFAS Interpretation (“FIN”) No. 48**
  This
        interpretation provides detailed guidance for the financial statement
        recognition, measurement and disclosure of uncertain tax positions recognized
        in
        a company’s financial statements in accordance with SFAS No.109, Accounting for
        Income Taxes. 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. Similarly, if a tax position fails
        to
        meet the more-likely-than-not recognition threshold, the benefit taken in
        tax
        return will also result in the recognition of a liability in the financial
        statements for the full amount of the unrecognized benefit. FIN No. 48 will
        be
        effective for fiscal years beginning after December 15, 2006 (including the
        first interim period for calendar year companies) and the provisions of FIN
        No.
        48 will be applied to all tax positions under SFAS No. 109 upon initial
        adoption. The cumulative effect of applying the provisions of this
        interpretation will be reported as an adjustment to the opening balance of
        retained earnings for that fiscal year. The Company is in the process of
        determining the impact of adopting this new accounting principle on its
        consolidated financial position and results of operations.


F-39





**SIGNATURE**




Pursuant
      to the requirements of Section 12 of the Exchange Act, 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:
      July 2, 2007




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




70


**Exhibit
      Index**




ExhibitNumber
            Description
                of Exhibit1.1
            Charter
                (*Escritura
                Constitutiva*),
                together with an English translation (incorporated by reference to
                our
                Registration Statement on Form F-1 (Commission File. No. 333-63878)
                filed on June 4, 1993).1.2
            Amended
                and Restated Bylaws of Grupo Radio Centro, S.A.B. de C.V., dated
                December
                13, 2006 filed as an English translation.2.1
            Deposit
                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 (incorporated by reference to our Registration Statement
                on Form
                F-6 (Commission File. No. 333-8224) filed on January 16,
                1998).3.1
            Amended
                and Restated Controlling Trust Agreement, No. F/23020-1, dated
                April 24, 1992, with amendments dated September 2, 1992, May 18, 1993
                and September 14, 1993, between certain members of the Aguirre family
                and
                Bancomer, S.A., as trustee, together with an English translation
                (incorporated by reference to our Annual Report on Form 20-F (Commission
                File No. 001-12090) filed on December 31, 1993).3.2
            Amended
                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 (incorporated by reference to our Annual Report
                on
                Form 20-F (Commission File No. 001-12090) filed on June 30,
                2003).3.3
            Trust
                Agreement, dated June 3, 1998, among certain principal shareholders
                of
                Grupo Radio Centro, S.A. de C.V., together with an English translation
                (incorporated by reference to our Annual Report on Form 20-F (Commission
                File No. 001-12090) filed on June 30, 1998).4.1
            Amended
                and Restated Public Deed, dated as of June 27, 2003 (the “Amended and
                Restated CPO Deed”), filed as an English translation (incorporated by
                reference to our Annual Report on Form 20-F (Commission File No.
                001-12090) filed on June 30, 2003).4.2
            Modifying
                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 (incorporated by reference to our Annual Report
                on
                Form 20-F (Commission File No. 001-12090) filed on June 30,
                1999).4.3
            Modifying
                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 (incorporated by reference to our Annual Report on Form
                20-F
                (Commission File No. 001-12090) filed on June 24,
                2002).4.4
            Modifying
                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 (incorporated by reference to our Annual Report
                on
                Form 20-F (Commission File No. 001-12090) filed on June 29,
                2005).




71




ExhibitNumber
            Description
                of Exhibit4.5
            Programming
                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 (incorporated by reference to our Annual Report on Form
                20-F
                (Commission File No. 001-12090) filed on June 30,
                1999).4.6
            Credit
                Agreement, dated May 16, 2006, 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, filed as an English translation (incorporated
                by
                reference to our Annual Report on Form 20-F (Commission File No.
                001-12090) filed on June 30, 2006).8.1
            List
                of Subsidiaries of the Company (incorporated by reference to our
                Annual
                Report on Form 20-F (Commission File No. 001-12090) filed on June 30,
                2006).12.1
            Certification
                pursuant to Section 302 of the Sarbanes-Oxley Act of
                2002.12.2
            Certification
                pursuant to Section 302 of the Sarbanes-Oxley Act of
                2002.13.1
            Certification
                pursuant to Section 906 of the Sarbanes-Oxley Act of
                2002.







72