##### Table of Contents



UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
  Form 10-Q
  (Mark One)þ

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended
    September 30, 2006oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission file
    number 33-82114
  
  Spanish Broadcasting System,
    Inc.
 (Exact name of registrant as
    specified in its charter)
  Delaware

13-3827791(State or other jurisdiction
    of
    incorporation or organization)

(I.R.S. Employer
    Identification No.)   2601 South Bayshore Drive, PH II
 Coconut Grove, Florida 33133
 (Address of principal executive
    offices) (Zip Code)
  (305) 441-6901
 (Registrants telephone
    number, including area code)
  (Former name, former address and
    former fiscal year,
 if changed since last
    report)
  þ o
  Rule 12b-2
 o þ o
  Rule 12b-2 o þ
  APPLICABLE
    ONLY TO CORPORATE ISSUERS:




---



##### 



SPANISH
    BROADCASTING SYSTEM, INC.
    INDEX
  PagePART I.
    FINANCIAL INFORMATIONITEM 1.


Financial
    Statements  Unaudited


3Unaudited Condensed
    Consolidated Balance Sheets as of September 30, 2006 and
    December 31, 2005


3Unaudited Condensed
    Consolidated Statements of Operations for the Three- and
    Nine-Months Ended September 30, 2006 and 2005


4Unaudited Condensed
    Consolidated Statement of Changes in Stockholders Equity
    and Comprehensive Income for the Nine-Months Ended
    September 30, 2006


5Unaudited Condensed
    Consolidated Statements of Cash Flows for the Nine-Months Ended
    September 30, 2006 and 2005


6Notes to Unaudited
    Condensed Consolidated Financial Statements


7ITEM 2.


Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations


17ITEM 3.


Quantitative and
    Qualitative Disclosures About Market Risk


25ITEM 4.


Controls and
    Procedures


25PART II.
    OTHER INFORMATIONITEM 1.


Legal
    Proceedings


26ITEM 1A.


Risk
    Factors


26ITEM 6.


Exhibits


26EX-31.(i)1 Section 302 Certification of CEOEX-31.(i)2 Section 302 Certification of CFOEX-32.1 Section 906 Certification of CEOEX-32.2 Section 906 Certification of CFO   1




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##### Table of Contents



Special
    Note Regarding Forward-Looking Statements
  Form 10-Q Form 10-K
 2




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##### Table of Contents



PART I 
    FINANCIAL INFORMATION  Item 1.
    Financial
    Statements  Unaudited  SPANISH
    BROADCASTING SYSTEM, INC. AND SUBSIDIARIES
 Unaudited Condensed Consolidated Balance Sheets  September 30,


December 31,2006


2005(In thousands, exceptper share data)ASSETSCurrent assets:Cash and cash equivalents

$
66,788



125,156Receivables, net of allowance for
    doubtful accounts of $4,316 in 2006 and $3,832 in 2005


32,943



34,269Prepaid expenses and other current
    assets


3,887



3,635Assets held for sale






65,109Total current assets


103,618



228,169Property and equipment, net of
    accumulated depreciation of $32,632 in 2006 and $30,335 in 2005


27,285



22,973FCC licenses


749,864



710,410Goodwill


32,806



32,806Other intangible assets, net of
    accumulated amortization of $97 in 2006 and $70 in 2005


1,337



2,580Deferred financing costs, net of
    accumulated amortization of $1,470 in 2006 and $749 in 2005


6,193



8,744Other assets


675



596Derivative instrument


7,846



6,939Total assets

$
929,624


$
1,013,217LIABILITIES AND
    STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable and accrued
    expenses

$
16,792



21,487Accrued interest


106



1,426Deposits on sale of stations






55,000Unearned revenue


3,420



263Deferred commitment fee


394



450Current portion of the senior
    credit facility term loan due 2012


3,250



3,250Current portion of the senior
    credit facility term loan due 2013






100,000Current portion of other long-term
    debt


78



75Series B cumulative
    exchangeable redeemable preferred stock dividends payable


2,013



2,014Total current liabilities


26,053



183,965Senior credit facility term loan
    due 2012, less current portion


316,875



319,313Non-interest bearing note payable
    due 2009, net of unamortized discount of $3,022 in 2006


15,478



Other long-term debt, less current
    portion


433



492Deferred income taxes


151,373



144,163Unearned revenue, less current
    portion


2,541



Other long-term liabilities


99



525Total liabilities


512,852



648,458Cumulative exchangeable redeemable
    preferred stock:103/4%
    Series B cumulative exchangeable redeemable preferred
    stock, $0.01 par value, liquidation value $1,000 per
    share. Authorized 280,000 shares; 89,932 shares issued
    and outstanding at September 30, 2006 and December 31,
    2005


89,932



89,932Stockholders equity:Series C preferred stock,
    $0.002 par value and liquidation value. Authorized
    600,000 shares; 380,000 shares issued and outstanding
    at September 30, 2006 and December 31, 2005


1



1Class A common stock,
    $0.0001 par value. Authorized 100,000,000 shares;
    40,277,805 shares issued and outstanding at
    September 30, 2006 and December 31, 2005


4



4Class B common stock,
    $0.0001 par value. Authorized 50,000,000 shares;
    24,503,500 shares issued and outstanding at
    September 30, 2006 and December 31, 2005


2



2Additional paid-in capital


521,963



520,421Accumulated other comprehensive
    income


7,846



6,939Accumulated deficit


(202,976
)


(252,540
)Total stockholders equity


326,840



274,827Total liabilities, cumulative
    exchangeable redeemable preferred stock and stockholders
    equity

$
929,624



1,013,217    3




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##### Table of Contents



SPANISH
    BROADCASTING SYSTEM, INC. AND SUBSIDIARIES
 Unaudited Condensed Consolidated Statements of Operations  Three-Months


Nine-MonthsEnded


EndedSeptember 30,


September 30,2006


2005


2006


2005(In thousands, except


(In thousands, exceptper share data)


per share data)Net revenue

$
45,891



43,047



132,507



122,961Operating expenses:Engineering and programming(1)


12,739



8,292



37,544



24,609Selling, general and
    administrative(1)


17,879



15,683



54,305



47,859Corporate expenses(1)


3,125



3,154



10,314



10,588Depreciation and amortization


968



867



2,800



2,521Loss (gain) on the sales of
    assets, net of disposal of costs


6







(50,787
)


Total operating expenses


34,717



27,996



54,176



85,577Operating income


11,174



15,051



78,331



37,384Other (expense) income:Interest expense, net


(4,840
)


(8,021
)


(15,195
)


(28,837
)Loss on early extinguishment of
    debt






(29,443
)


(2,997
)


(32,597
)Other, net


16



(8
)


(7
)


1,792Income (loss) before income taxes
    and discontinued operations


6,350



(22,421
)


60,132



(22,258
)Income tax expense


5,507



10,618



3,317



10,618Income (loss) before discontinued
    operations


843



(33,039
)


56,815



(32,876
)Income on discontinued operations,
    net of tax






3







Net income (loss)

$
843



(33,036
)


56,815



(32,876
)Dividends on Series B
    preferred stock


(2,417
)


(2,406
)


(7,251
)


(7,031
)Net (loss) income applicable to
    common stockholders

$
(1,574
)


(35,442
)


49,564



(39,907
)Basic and diluted (loss) income
    per common share:Net (loss) income per common share
    before discontinued operations

$
(0.02
)


(0.49
)


0.68



(0.55
)Net income per common share from
    discontinued operations

$












Net (loss) income per common share

$
(0.02
)


(0.49
)


0.68



(0.55
)Weighted average common shares
    outstanding:Basic


72,381



72,381



72,381



72,381Diluted


72,381



72,381



72,386



72,381Supplemental information:(1) Stock-based compensation
    expenses:Engineering and programming expense

$
178







533



Selling, general and
    administrative expense


92







266



Corporate expenses


192







743



Total stock-based compensation
    expenses

$
462







1,542



    4




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##### Table of Contents



SPANISH
    BROADCASTING SYSTEM, INC. AND SUBSIDIARIES
 Unaudited Condensed Consolidated Statement of Changes in

Stockholders Equity and Comprehensive Income

for the Nine-Months Ended September 30, 2006  Class C


Class A


Class B





AccumulatedPreferred Stock


Common Stock


Common Stock


Additional


Other





TotalNumber


Par


Number


Par


Number


Par


Paid-In


Comprehensive


Accumulated


Stockholdersof Shares


Value


of Shares


Value


of Shares


Value


Capital


Income


Deficit


Equity(In thousands, except per share data)Balance at December 31, 2005


380,000


$
1



40,277,805


$
4



24,503,500


$
2


$
520,421


$
6,939


$
(252,540
)

$
274,827Stock-based compensation


























1,542











1,542Series B preferred stock
    dividends


































(7,251
)


(7,251
)Comprehensive income:Net income


































56,815



56,815Unrealized gain on derivative
    instrument






























907







907Comprehensive income






































57,722Balance at September 30, 2006


380,000


$
1



40,277,805


$
4



24,503,500


$
2


$
521,963


$
7,846


$
(202,976
)

$
326,840    5




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##### Table of Contents



SPANISH
    BROADCASTING SYSTEM, INC. AND SUBSIDIARIES
 Unaudited Condensed Consolidated Statements of Cash Flows  Nine-Months EndedSeptember 30,2006


2005(In thousands)Cash flows from operating
    activities:Net income (loss)

$
56,815



(32,876
)Adjustments to reconcile net income
    to net cash provided by operating activities:Loss on early extinguishment of debt


2,997



32,597Gain on the sales of assets, net of
    disposal costs


(50,787
)


Depreciation and amortization


2,800



2,521Net barter income


(135
)


(241
)Provision for doubtful trade
    accounts receivable


1,273



527(Gain) loss on disposal of fixed
    assets






14Amortization of debt discount






717Accretion of the time-value of
    money component related to unearned revenue


170



Amortization of non-interest
    bearing note payable


700



Stock-based compensation


1,542



Amortization of deferred financing
    costs


906



1,400Increase in deferred income taxes


3,361



10,923Increase in unearned revenue


170



Amortization of deferred commitment
    fee


(56
)


(56
)Changes in operating assets and
    liabilities:Decrease in trade receivables


208



955Increase in prepaid expenses and
    other current assets


(252
)


(677
)Increase in other assets


(79
)


(701
)Decrease in accounts payable and
    accrued expenses


(4,701
)


(9,306
)Decrease in accrued interest


(1,320
)


(4,287
)Net cash provided by continuing
    operations


13,612



1,510Net cash used in discontinued
    operations






(291
)Net cash provided by operating
    activities


13,612



1,219Cash flows from investing
    activities:Proceeds from sale of radio
    stations, net of closing costs


64,751



Acquisition of television stations


(18,537
)


(750
)Deposit on sale of radio stations






35,000Additions to property and equipment


(6,670
)


(2,590
)Net cash provided by investing
    activities


39,544



31,660Cash flows from financing
    activities:Payment of senior credit facility
    term loan due 2009






(123,750
)Payments of senior credit facility
    term loan due 2012


(2,438
)


(1,625
)Payment of senior credit facility
    term loan due 2013 (including prepayment premium of
    $1.0 million)


(101,000
)


Payments of Series B preferred
    stock dividends


(7,252
)


Payments of other long-term debt


(482
)


(3,468
)Payments of deferred financing costs


(352
)


(9,043
)Payment of the
    95/8% senior
    subordinated notes, due 2009 and related premiums






(351,124
)Proceeds from senior credit
    facility term loan due 2012






325,000Proceeds from senior credit
    facility term loan due 2013






100,000Net cash used in financing
    activities


(111,524
)


(64,010
)Net decrease in cash and cash
    equivalents


(58,368
)


(31,131
)Cash and cash equivalents at
    beginning of period


125,156



132,032Cash and cash equivalents at end of
    period


66,788



100,901Supplemental cash flows information:Interest paid during the period


17,315



33,469Income taxes paid during the
    period, net


313



1,613Non-cash investing and financing
    activities:Unrealized gain on derivative
    instrument

$
907



4,380Unearned revenue (advertising given
    as consideration for acquisition of television stations)

$
5,338



Non-interest bearing note payable
    issued for the acquisition of television stations

$
14,778



Accrual of Series B preferred
    stock as payment of preferred stock dividend

$




5,018    6




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##### Table of Contents



SPANISH
    BROADCASTING SYSTEM, INC. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS
  1.
    Basis of
    Presentation  Form 10-Q Rule 10-01 Regulation S-X. Form 10-K.
    2.
    Assets
    Held for Sale  KZAB-FM KZBA-FM,
    KZAB-FM KZBA-FM
  KZAB-FM KZBA-FM KZAB-FM KZBA-FM
 7




---



##### Table of Contents



SPANISH
    BROADCASTING SYSTEM, INC. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  3.
    Stockholders
    Equity  (a)
    Series C
    Preferred Stock          (b)
    Class A
    and Class B Common Stock  3 4
  (c)
    Warrants  KXOL-FM,
 8




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##### Table of Contents



SPANISH
    BROADCASTING SYSTEM, INC. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  (d)
    Shared-Based
    Payment Plans  Background
    of the 2006 Omnibus Equity Compensation Plan
    Background
    of the 1999 Stock Option Plans
    Impact of
    the Adoption of SFAS No. 123(R) Share-Based
    Payment
   9




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##### Table of Contents



SPANISH
    BROADCASTING SYSTEM, INC. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Nine-MonthsThree-Months


EndedEnded


September 30,Stock-Based Compensation Expense:

September 30, 2006


2006Engineering and programming
    expenses

$
178



533Selling, general and
    administrative expenses


92



266Corporate expenses


192



743Total

$
462



1,542       Valuation
    Assumptions
    Three-Months


Nine-MonthsEnded


EndedSeptember 30,


September 30,2006


2005


2006


2005Expected life


7 years



5 years



7 years



5 yearsDividends


None



None



None



NoneRisk-free interest rate


4.60
%


4.18
%


4.85
%


4.14
%Expected volatility


66
%


69
%


66
%


71
%    10




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##### Table of Contents



SPANISH
    BROADCASTING SYSTEM, INC. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Stock-Based
    Payment Award Activity
    WeightedWeighted


AverageAverage


Remaining


AggregateExercise


Contractual


IntrinsicShares


Price


Term


ValueOutstanding at December 31,
    2005


2,939


$
11.54Granted






Exercised






Forfeited


(10
)


8.21Outstanding at September 30,
    2006


2,929


$
11.55



6.0


$
Exercisable at September 30,
    2006


2,387


$
12.11



5.5


$
     WeightedWeighted








AverageAverage


Weighted





ExerciseRemaining


Average


Number of


Price ofVested


Unvested


Contractual


Exercise


Exercisable


ExercisableRange of Exercise Prices

Options


Options


Life (Years)


Price


Options


Options$ 0 - 4.99


100







4.2


$
4.81



100


$
4.815 - 9.99


1,415



419



7.0



8.70



1,415



8.7410 - 14.99


146



122



7.6



10.95



146



11.0415 - 19.99


16







5.6



15.48



16



15.4820 - 24.99


710







3.1



20.00



710



20.002,387



541



6.0


$
11.55



2,387


$
12.11   Pro forma
    Information for Periods Prior to the Adoption of
    SFAS 123(R)
   11




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##### Table of Contents



SPANISH
    BROADCASTING SYSTEM, INC. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Three-Months


Nine-MonthsEnded


EndedSeptember 30,


September 30,2005


2005Net loss applicable to common
    stockholders:As reported

$
(35,442
)


(39,907
)Deduct: total stock-based employee
    compensation expense determined under fair value based method
    for all awards, net of tax


(670
)


(1,999
)Pro forma net loss

$
(36,112
)


(41,906
)Net loss per common share:As reported: Basic and Diluted

$
(0.49
)


(0.55
)Pro forma: Basic and Diluted

$
(0.50
)


(0.58
)   4.
    Operating
    Segments    Radio broadcasting.
  Television broadcasting.
    Three-Months Ended





Nine-Months EndedSeptember 30,


Change


September 30,


Change2006


2005


$


%


2006


2005


$


%(In thousands)


(In thousands)Net revenue:Radio

$
44,552



43,047



1,505



3
%

$
129,339



122,961



6,378



5
%Television


1,339







1,339



100
%


3,168







3,168



100
%Consolidated

$
45,891



43,047



2,844



7
%

$
132,507



122,961



9,546



8
%Engineering and programming
    expense:Radio

$
8,520



7,960



560



7
%

$
25,276



24,277



999



4
%Television


4,219



332



3,887



1171
%


12,268



332



11,936



3595
%Consolidated

$
12,739



8,292



4,447



54
%

$
37,544



24,609



12,935



53
%Selling, general and
    administrative:Radio

$
16,231



15,111



1,120



7
%

$
48,573



47,287



1,286



3
%Television


1,648



572



1,076



188
%


5,732



572



5,160



902
%Consolidated

$
17,879



15,683



2,196



14
%

$
54,305



47,859



6,446



13
% 12




---



##### Table of Contents



SPANISH
    BROADCASTING SYSTEM, INC. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Three-Months Ended





Nine-Months EndedSeptember 30,


Change


September 30,


Change2006


2005


$


%


2006


2005


$


%(In thousands)


(In thousands)Operating income (loss) before
    depreciation and amortization and gain on sales of assets,
    net:Radio

$
19,801



19,976



(175
)


(1
)%

$
55,490



51,397



4,093



8
%Television


(4,528
)


(904
)


(3,624
)


401
%


(14,832
)


(904
)


(13,928
)


1541
%Corporate


(3,125
)


(3,154
)


29



(1
)%


(10,314
)


(10,588
)


274



(3
)%Consolidated

$
12,148



15,918



(3,770
)


(24
)%

$
30,344



39,905



(9,561
)


(24
)%Depreciation and
    amortization:Radio

$
643



621



22



4
%

$
1,866



1,758



108



6
%Television


76



1



75



7500
%


206



1



205



20500
%Corporate


249



245



4



2
%


728



762



(34
)


(4
)%Consolidated

$
968



867



101



12
%

$
2,800



2,521



279



11
%Operating income
    (loss):Radio

$
19,152



19,355



(203
)


(1
)%

$
104,411



49,639



54,772



110
%Television


(4,604
)


(905
)


(3,699
)


409
%


(15,038
)


(905
)


(14,133
)


1562
%Corporate


(3,374
)


(3,399
)


25



(1
)%


(11,042
)


(11,350
)


308



(3
)%Consolidated

$
11,174



15,051



(3,877
)


(26
)%

$
78,331



37,384



40,947



110
%Capital expenditures:Radio

$
2,116



500



1,616



323
%

$
3,639



2,015



1,624



81
%Television


101



49



52



106
%


2,542



49



2,493



5088
%Corporate


148



54



94



174
%


489



526



(37
)


(7
)%Consolidated

$
2,365



603



1,762



292
%

$
6,670



2,590



4,080



158
%   September 30,


December 31,2006


2005Total Assets:Radio

$
882,154



1,010,020Television


47,470



3,197Consolidated

$
929,624



1,013,217   5.
    Litigation     13




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##### Table of Contents



SPANISH
    BROADCASTING SYSTEM, INC. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      6.
    Repayment
    of Second Lien Senior Secured Credit Facilities    7.
    Television
    Station Acquisition  WSBS-TV WDLP-TV), WSBS-TV-DT
 14




---



##### Table of Contents



SPANISH
    BROADCASTING SYSTEM, INC. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      8.
    New
    Accounting Pronouncements  Accounting for Uncertainty in Income Taxes
  Fair Value
    Measurements
  Considering the Effects of
    Prior Year Misstatements when Quantifying Misstatements in
    Current Year Financial Statements
 15




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##### Table of Contents



SPANISH
    BROADCASTING SYSTEM, INC. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   9.
    Income
    Taxes  Goodwill
    and Other Intangible Assets
  10.
    Comprehensive
    Income    Three-Months


Nine-MonthsEnded


EndedSeptember 30,


September 30,2006


2005


2006


2005Net income (loss):

$
843



(33,036
)


56,815



(32,876
)Other comprehensive income (loss):Unrealized (loss) gain on
    derivative instrument


(6,800
)


2,628



907



2,628Total comprehensive (loss) income

$
(5,957
)


(30,408
)


57,722



(30,248
)   11.
    Subsequent
    Event         16




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##### Table of Contents



Item 2.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  Overview
  LaMusica.com
  WSBS-TV WDLP-TV) 18-to-49 year
      Comparison
    Analysis of the Operating Results for the Three-Months Ended
    September 30, 2006 and 2005
    17




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##### Table of Contents



Three-MonthsEndedSeptember 30,


Change2006


2005


$


%(In thousands)Net revenue:Radio

$
44,552



43,047



1,505



3
%Television


1,339







1,339



100
%Consolidated

$
45,891



43,047



2,844



7
%Engineering and programming
    expense:Radio

$
8,520



7,960



560



7
%Television


4,219



332



3,887



1171
%Consolidated

$
12,739



8,292



4,447



54
%Selling, general and
    administrative:Radio

$
16,231



15,111



1,120



7
%Television


1,648



572



1,076



188
%Consolidated

$
17,879



15,683



2,196



14
%Operating income (loss) before
    depreciation and amortization and gain on sales of assets,
    net:Radio

$
19,801



19,976



(175
)


(1
)%Television


(4,528
)


(904
)


(3,624
)


401
%Corporate


(3,125
)


(3,154
)


29



(1
)%Consolidated

$
12,148



15,918



(3,770
)


(24
)%Depreciation and
    amortization:Radio

$
643



621



22



4
%Television


76



1



75



7500
%Corporate


249



245



4



2
%Consolidated

$
968



867



101



12
%Operating income
    (loss):Radio

$
19,152



19,355



(203
)


(1
)%Television


(4,604
)


(905
)


(3,699
)


409
%Corporate


(3,374
)


(3,399
)


25



(1
)%Consolidated

$
11,174



15,051



(3,877
)


(26
)%  18




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##### Table of Contents



Three MonthsEndedSeptember 30,


Change2006


2005


$


%(In thousands)Net revenue

$
45,891



43,047



2,844



7
%Engineering and programming
    expense(1)


12,739



8,292



4,447



54
%Selling, general and
    administrative expense(1)


17,879



15,683



2,196



14
%Corporate expenses(1)


3,125



3,154



(29
)


(1
)%Depreciation and amortization


968



867



101



12
%Loss on sales of assets, net of
    disposal costs


6







6



100
%Operating income

$
11,174



15,051



(3,877
)


(26
)%Interest expense, net


(4,840
)


(8,021
)


3,181



(40
)%Loss on early extinguishment of
    debt






(29,443
)


29,443



(100
)%Other income (expense), net


16



(8
)


24



(300
)%Income tax expense


5,507



10,618



(5,111
)


(48
)%Income on discontinued operations,
    net of taxes






3



(3
)


(100
)%Net income (loss)

$
843



(33,036
)


33,879



(103
)%     (1) Stock-based compensation
    expenses:Engineering and programming expense

$
178







178



100
%Selling, general and
    administrative expense


92







92



100
%Corporate expenses


192







192



100
%Total stock-based compensation
    expenses

$
462







462



100
%   Net Revenue.
  Engineering and Programming Expenses.
  Selling, General and Administrative
    Expenses.
 19




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##### Table of Contents



Corporate Expenses.
  Operating Income.
  Interest Expense, net.
  Income Taxes.
  Net Income.
  Comparison
    Analysis of the Operating Results for the Nine-Months Ended
    September 30, 2006 and 2005
    Nine-Months EndedSeptember 30,


Change2006


2005


$


%(In thousands)Net revenue:Radio

$
129,339



122,961



6,378



5
%Television


3,168







3,168



100
%Consolidated

$
132,507



122,961



9,546



8
%Engineering and programming
    expense:Radio

$
25,276



24,277



999



4
%Television


12,268



332



11,936



3595
%Consolidated

$
37,544



24,609



12,935



53
%Selling, general and
    administrative:Radio

$
48,573



47,287



1,286



3
%Television


5,732



572



5,160



902
%Consolidated

$
54,305



47,859



6,446



13
% 20




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##### Table of Contents



Nine-Months EndedSeptember 30,


Change2006


2005


$


%(In thousands)Operating income (loss) before
    depreciation and amortization and gain on sales of assets,
    net:Radio

$
55,490



51,397



4,093



8
%Television


(14,832
)


(904
)


(13,928
)


1541
%Corporate


(10,314
)


(10,588
)


274



(3
)%Consolidated

$
30,344



39,905



(9,561
)


(24
)%Depreciation and
    amortization:Radio

$
1,866



1,758



108



6
%Television


206



1



205



20500
%Corporate


728



762



(34
)


(4
)%Consolidated

$
2,800



2,521



279



11
%Operating income
    (loss):Radio

$
104,411



49,639



54,772



110
%Television


(15,038
)


(905
)


(14,133
)


1562
%Corporate


(11,042
)


(11,350
)


308



(3
)%Consolidated

$
78,331



37,384



40,947



110
%     Nine MonthsEndedSeptember 30,


Change2006


2005


$


%(In thousands)Net revenue

$
132,507



122,961



9,546



8
%Engineering and programming expense


37,544



24,609



12,935



53
%Selling, general and
    administrative expense


54,305



47,859



6,446



13
%Corporate expenses


10,314



10,588



(274
)


(3
)%Depreciation and amortization


2,800



2,521



279



11
%Gain on sales of assets, net of
    disposal costs


(50,787
)






(50,787
)


100
%Operating income

$
78,331



37,384



40,947



110
%Interest expense, net


(15,195
)


(28,837
)


13,642



(47
)%Loss on early extinguishments of
    debt


(2,997
)


(32,597
)


29,600



(91
)%Other (expense) income, net


(7
)


1,792



(1,799
)


(100
)%Income tax expense


3,317



10,618



(7,301
)


(69
)%Net income (loss)

$
56,815



(32,876
)


89,691



(273
)%     (1) Stock-based compensation
    expenses:Engineering and programming expense

$
533







533



100
%Selling, general and
    administrative expense


266







266



100
%Corporate expenses


743







743



100
%Total stock-based compensation
    expenses

$
1,542







1,542



100
%  21




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##### Table of Contents



Net Revenue.
  Engineering and Programming Expenses.
  Selling, General and Administrative
    Expenses.
  Corporate Expenses.
  Gain on sales of assets, net. KZAB-FM KZBA-FM,
  Operating Income.
  Interest Expense, net.
  Loss on early extinguishment of debt. 5 8
  Income Taxes. KZAB-FM KZBA-FM,
 22




---



##### Table of Contents



Net Income.
  Liquidity
    and Capital Resources
      Nine MonthsEndedSeptember 30,


Change2006


2005


$(In thousands)Capital expenditures

$
6,670



2,590



4,080Net cash flows provided by
    operating activities

$
13,612



1,219



12,393Net cash flows provided by
    investing activities


39,544



31,660



7,884Net cash flows used in financing
    activities


(111,524
)


(64,010
)


(47,514
)Net decrease in cash and cash
    equivalents

$
(58,368
)


(31,131
)   Net Cash Flows Provided by Operating
    Activities.
  Net Cash Flows Provided by Investing
    Activities. KZAB-FM KZBA-FM, KZAB-FM KZBA-FM,
  Net Cash Flows Used In Financing
    Activities. 5 8
    
    the demand for advertising within the broadcasting industry and
    economic conditions in general will not deteriorate in any
    material respect;
    we will continue to successfully implement our business
    strategies; and 23




---



##### Table of Contents




    we will not incur any material unforeseen liabilities, including
    environmental liabilities and legal judgements.    KZAB-FM KZBA-FM,
    WSBS-TV WDLP-TV), WSBS-TV-DT
       24




---



##### Table of Contents



New
    Accounting Pronouncements
    Item 3.
    Quantitative
    and Qualitative Disclosures About Market Risk  Form 10-K
  Item 4.
    Controls
    and Procedures  Evaluation Of Disclosure Controls And
    Procedures. Rule 13a-15(e)
 25




---



##### Table of Contents



Changes In Internal Control Over Financial
    Reporting.
 PART II 
    OTHER INFORMATION  Item 1.
    Legal
    Proceedings  Form 10-Q
 Item 1A.  Risk
    Factors  Form 10-Q, Form 10-K Form 10-K and/or
  Item 6.
    Exhibits  Exhibits
  3
.1



Third Amended and Restated
    Certificate of Incorporation of Spanish Broadcasting System,
    Inc. (the Company), dated September 29, 1999
    (incorporated by reference to the Companys 1999
    Registration Statement on
    Form S-1
    (Commission File
    No. 333-85499)
    (the 1999 Registration Statement)) (Exhibit A
    to this exhibit is incorporated by reference to the
    Companys Current Report on
    Form 8-K,
    dated March 25, 1996 (the 1996 Current Report).3
.2



Certificate of Amendment to the
    Third Amended and Restated Certificate of Incorporation of the
    Company, dated September 29, 1999 (incorporated by
    reference to Exhibit 3.2 of the Companys 1999
    Registration Statement).3
.3



Amended and Restated By-Laws of
    the Company (incorporated by reference to Exhibit 3.3 of
    the Companys 1999 Registration Statement).3
.4



Certificate of Elimination of
    141/4% Senior
    Exchangeable Preferred Stock, Series A of the Company,
    dated October 28, 2003 (incorporated by reference to
    Exhibit 3.3 of the Companys Quarterly Report on
    Form 10-Q,
    dated November 14, 2003 (the 11/14/03 Quarterly
    Report)).4
.1



Article V of the Third
    Amended and Restated Certificate of Incorporation of the
    Company, dated September 29, 1999 (incorporated by
    reference to Exhibit 3.1 of the Companys 1999
    Registration Statement).4
.2



Certificate of Designations dated
    October 29, 2003 Setting Forth the Voting Power,
    Preferences and Relative, Participating, Optional and Other
    Special Rights and Qualifications, Limitations and Restrictions
    of the
    103/4%
    Series A Cumulative Exchangeable Redeemable Preferred Stock
    of Spanish Broadcasting System, Inc. (incorporated by reference
    to Exhibit 4.1 of the Companys 11/14/03 Quarterly
    Report).4
.3



Certificate of Designations dated
    October 29, 2003 Setting Forth the Voting Power,
    Preferences and Relative, Participating, Optional and Other
    Special Rights and Qualifications, Limitations and Restrictions
    of the
    103/4%
    Series B Cumulative Exchangeable Redeemable Preferred Stock
    of Spanish Broadcasting System, Inc. (incorporated by reference
    to Exhibit 4.2 of the Companys 11/14/03 Quarterly
    Report).4
.4



Indenture dated June 29, 1994
    among the Company, IBJ Schroder Bank & Trust Company,
    as Trustee, the Guarantors named therein and the Purchasers
    named therein (incorporated by reference to Exhibit 4.1 of
    the Companys 1994 Registration Statement on
    Form S-4
    (the 1994 Registration Statement). 26




---



##### Table of Contents



4
.5



First Supplemental Indenture dated
    as of March 25, 1996 to the Indenture dated as of
    June 29, 1994 among the Company, the Guarantors named
    therein and IBJ Schroder Bank & Trust Company, as
    Trustee (incorporated by reference to the 1996 Current Report).4
.6



Second Supplemental Indenture
    dated as of March 1, 1997 to the Indenture dated as of
    June 29, 1994 among the Company, the Guarantors named
    therein and IBJ Schroder Bank & Trust Company, as
    Trustee (incorporated by reference to the 1996 Current Report).4
.7



Supplemental Indenture dated as of
    October 21, 1999 to the Indenture dated as of June 29,
    1994 among the Company, the Guarantors named therein and IBJ
    Schroder Bank & Trust Company, as Trustee (incorporated
    by reference to the Companys 1999 Registration Statement).4
.8



Indenture with respect to
    95/8% Senior
    Subordinated Notes due 2009 with The Bank of New York as
    Trustee, dated November 2, 1999 (incorporated by reference
    to the Current Report on
    Form 8-K
    dated November 2, 1999 (the 1999 Current
    Report)).4
.9



Indenture with respect to
    95/8% Senior
    Subordinated Notes due 2009 with the Bank of New York as
    Trustee, dated June 8, 2001 (incorporated by reference to
    the Companys Registration Statement on
    Form S-3,
    filed on June 25, 2001 (the 2001
    Form S-3).4
.10



Form of stock certificate for the
    Class A common stock of the Company (incorporated by
    reference to the Companys 1999 Registration Statement).4
.11



Certificate of Elimination of
    141/4%
    of Senior Exchangeable Preferred Stock, Series A of the
    Company, dated October 28, 2003 (incorporated by reference
    to Exhibit 3.3 of the Companys Quarterly Report on
    Form 10-Q
    filed November 14, 2003).4
.12



Certificate of Designation Setting
    Forth the Voting Power, Preferences and Relative, Participating,
    Optional and Other Special Rights and Qualifications,
    Limitations and Restrictions of the Series C Convertible
    Preferred Stock of the Company (Certificate of Designation
    of Series C Preferred Stock) (incorporated by
    reference to Exhibit 4.1 of the Companys Current
    Report on
    Form 8-K
    filed on December 27, 2004).4
.13



Certificate of Correction to
    Certificate of Designation of Series C Preferred Stock of
    the Company dated January 7, 2005 (incorporated by
    reference to Exhibit 4.13 of the Companys Annual
    Report filed on
    Form 10-K
    for the fiscal year 2004).10
.1



Agreement for Purchase and Sale
    dated August 24, 2006, by and between 7007 Palmetto
    Investments, LLC., a Florida limited liability company
    (Seller), and Spanish Broadcasting System, Inc., a
    Delaware corporation (the Company) (incorporated by
    reference to Exhibit 10.1 of the Companys Current
    Report of
    Form 8-K
    filed on October 30, 2006 (the 10/30/06 Current
    Report)).10
.2



Amendment to Purchase and Sale
    dated September 25, 2006, by and between Seller and the
    Company (incorporated by reference to Exhibit 10.2 of the
    10/30/06 Current Report).10
.3



Second Amendment dated
    October 25, 2006, by and between Seller and the Company
    (incorporated by reference to Exhibit 10.3 of the 10/30/06
    Current Report).10
.4



Assignment and Assumption
    Agreement dated October 25, 2006, by and between the
    Company and SBS Miami Broadcast Center, Inc., a Delaware
    corporation (SBS Miami Broadcast Center)
    (incorporated by reference to Exhibit 10.4 of the 10/30/06
    Current Report).10
.5



Lease dated October 25, 2006,
    by and between the Seller and SBS Miami Broadcast Center
    (incorporated by reference to Exhibit 10.5 of the 10/30/06
    Current Report).14
.1



Code of Business Conduct and
    Ethics (incorporated by reference to Exhibit 14.1 of the
    Companys 2004
    Form 10-K).31(i)
.1



Chief Executive Officers
    Certification pursuant to Section 302 of the Sarbanes-Oxley
    Act of 2002.31(i)
.2



Chief Financial Officers
    Certification pursuant to Section 302 of the Sarbanes-Oxley
    Act of 2002.32
.1



Chief Executive Officers
    Certification pursuant to 18 U.S.C. Section 1350, as
    adopted pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002.32
.2



Chief Financial Officers
    Certification pursuant to 18 U.S.C. Section 1350, as
    adopted pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002.  27




---



##### Table of Contents



SIGNATURES
      By:
    /s/  JOSEPH
    A. GARCÍA    Executive Vice President, Chief Financial Officer and
    Secretary (principal financial and accounting officer and duly
    authorized officer of the registrant)
   28




---



##### Table of Contents



Exhibits
  3
.1



Third Amended and Restated
    Certificate of Incorporation of Spanish Broadcasting System,
    Inc. (the Company), dated September 29, 1999
    (incorporated by reference to the Companys 1999
    Registration Statement on
    Form S-1
    (Commission File
    No. 333-85499)
    (the 1999 Registration Statement)) (Exhibit A
    to this exhibit is incorporated by reference to the
    Companys Current Report on
    Form 8-K,
    dated March 25, 1996 (the 1996 Current Report).3
.2



Certificate of Amendment to the
    Third Amended and Restated Certificate of Incorporation of the
    Company, dated September 29, 1999 (incorporated by
    reference to Exhibit 3.2 of the Companys 1999
    Registration Statement).3
.3



Amended and Restated By-Laws of
    the Company (incorporated by reference to Exhibit 3.3 of
    the Companys 1999 Registration Statement).3
.4



Certificate of Elimination of
    141/4% Senior
    Exchangeable Preferred Stock, Series A of the Company,
    dated October 28, 2003 (incorporated by reference to
    Exhibit 3.3 of the Companys Quarterly Report on
    Form 10-Q,
    dated November 14, 2003 (the 11/14/03 Quarterly
    Report)).4
.1



Article V of the Third
    Amended and Restated Certificate of Incorporation of the
    Company, dated September 29, 1999 (incorporated by
    reference to Exhibit 3.1 of the Companys 1999
    Registration Statement).4
.2



Certificate of Designations dated
    October 29, 2003 Setting Forth the Voting Power,
    Preferences and Relative, Participating, Optional and Other
    Special Rights and Qualifications, Limitations and Restrictions
    of the
    103/4%
    Series A Cumulative Exchangeable Redeemable Preferred Stock
    of Spanish Broadcasting System, Inc. (incorporated by reference
    to Exhibit 4.1 of the Companys 11/14/03 Quarterly
    Report).4
.3



Certificate of Designations dated
    October 29, 2003 Setting Forth the Voting Power,
    Preferences and Relative, Participating, Optional and Other
    Special Rights and Qualifications, Limitations and Restrictions
    of the
    103/4%
    Series B Cumulative Exchangeable Redeemable Preferred Stock
    of Spanish Broadcasting System, Inc. (incorporated by reference
    to Exhibit 4.2 of the Companys 11/14/03 Quarterly
    Report).4
.4



Indenture dated June 29, 1994
    among the Company, IBJ Schroder Bank & Trust Company,
    as Trustee, the Guarantors named therein and the Purchasers
    named therein (incorporated by reference to Exhibit 4.1 of
    the Companys 1994 Registration Statement on
    Form S-4
    (the 1994 Registration Statement).4
.5



First Supplemental Indenture dated
    as of March 25, 1996 to the Indenture dated as of
    June 29, 1994 among the Company, the Guarantors named
    therein and IBJ Schroder Bank & Trust Company, as
    Trustee (incorporated by reference to the 1996 Current Report).4
.6



Second Supplemental Indenture
    dated as of March 1, 1997 to the Indenture dated as of
    June 29, 1994 among the Company, the Guarantors named
    therein and IBJ Schroder Bank & Trust Company, as
    Trustee (incorporated by reference to the 1996 Current Report).4
.7



Supplemental Indenture dated as of
    October 21, 1999 to the Indenture dated as of June 29,
    1994 among the Company, the Guarantors named therein and IBJ
    Schroder Bank & Trust Company, as Trustee (incorporated
    by reference to the Companys 1999 Registration Statement).4
.8



Indenture with respect to
    95/8% Senior
    Subordinated Notes due 2009 with The Bank of New York as
    Trustee, dated November 2, 1999 (incorporated by reference
    to the Current Report on
    Form 8-K
    dated November 2, 1999 (the 1999 Current
    Report)).4
.9



Indenture with respect to
    95/8% Senior
    Subordinated Notes due 2009 with the Bank of New York as
    Trustee, dated June 8, 2001 (incorporated by reference to
    the Companys Registration Statement on
    Form S-3,
    filed on June 25, 2001 (the 2001
    Form S-3).4
.10



Form of stock certificate for the
    Class A common stock of the Company (incorporated by
    reference to the Companys 1999 Registration Statement).4
.11



Certificate of Elimination of
    141/4%
    of Senior Exchangeable Preferred Stock, Series A of the
    Company, dated October 28, 2003 (incorporated by reference
    to Exhibit 3.3 of the Companys Quarterly Report on
    Form 10-Q
    filed November 14, 2003). 29




---



##### Table of Contents



4
.12



Certificate of Designation Setting
    Forth the Voting Power, Preferences and Relative, Participating,
    Optional and Other Special Rights and Qualifications,
    Limitations and Restrictions of the Series C Convertible
    Preferred Stock of the Company (Certificate of Designation
    of Series C Preferred Stock) (incorporated by
    reference to Exhibit 4.1 of the Companys Current
    Report on
    Form 8-K
    filed on December 27, 2004).4
.13



Certificate of Correction to
    Certificate of Designation of Series C Preferred Stock of
    the Company dated January 7, 2005 (incorporated by
    reference to Exhibit 4.13 of the Companys Annual
    Report filed on
    Form 10-K
    for the fiscal year 2004).10
.1



Agreement for Purchase and Sale
    dated August 24, 2006, by and between 7007 Palmetto
    Investments, LLC., a Florida limited liability company
    (Seller), and Spanish Broadcasting System, Inc., a
    Delaware corporation (the Company) (incorporated by
    reference to Exhibit 10.1 of the Companys Current
    Report of
    Form 8-K
    filed on October 30, 2006 (the 10/30/06 Current
    Report)).10
.2



Amendment to Purchase and Sale
    dated September 25, 2006, by and between Seller and the
    Company (incorporated by reference to Exhibit 10.2 of the
    10/30/06 Current Report).10
.3



Second Amendment dated
    October 25, 2006, by and between Seller and the Company
    (incorporated by reference to Exhibit 10.3 of the 10/30/06
    Current Report).10
.4



Assignment and Assumption
    Agreement dated October 25, 2006, by and between the
    Company and SBS Miami Broadcast Center, Inc., a Delaware
    corporation (SBS Miami Broadcast Center)
    (incorporated by reference to Exhibit 10.4 of the 10/30/06
    Current Report).10
.5



Lease dated October 25, 2006,
    by and between the Seller and SBS Miami Broadcast Center
    (incorporated by reference to Exhibit 10.5 of the 10/30/06
    Current Report).14
.1



Code of Business Conduct and
    Ethics (incorporated by reference to Exhibit 14.1 of the
    Companys 2004
    Form 10-K).31(i)
.1



Chief Executive Officers
    Certification pursuant to Section 302 of the Sarbanes-Oxley
    Act of 2002.31(i)
.2



Chief Financial Officers
    Certification pursuant to Section 302 of the Sarbanes-Oxley
    Act of 2002.32
.1



Chief Executive Officers
    Certification pursuant to 18 U.S.C. Section 1350, as
    adopted pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002.32
.2



Chief Financial Officers
    Certification pursuant to 18 U.S.C. Section 1350, as
    adopted pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002.  30