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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





FORM 10-Q







|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------

For the quarterly period ended March 31, 2008

OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

For the transition period from
 to

Commission file number 333-110122





LBI MEDIA HOLDINGS, INC.

(Exact Name of Registrant as Specified in Its Charter)







|                                                               |  |                                  
|-------------------------------------------------------------- |  | ---------------------------------
|Delaware                                                       |  | 05-05849018                      
|(State or other Jurisdiction of Incorporation or Organization) |  | (IRS Employer Identification No.)

1845 West Empire Avenue

Burbank, California 91504

(Address of principal executive offices, excluding
zip code) (Zip code)

Registrants Telephone Number, Including Area Code: (818) 563-5722

Not Applicable

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





Indicate by check mark whether
the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.  Yes  x    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   ̈                    |  | Accelerated filer   ̈        
|Non-accelerated filer  x                      |  | Smaller reporting company   ̈
|(Do not check if a smaller reporting company) |  |                             

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

As of May 15, 2008, there were 100 shares of common stock, $0.01 par value per share, of LBI Media Holdings, Inc. issued and outstanding.









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LBI MEDIA HOLDINGS, INC.

FORM 10-Q QUARTERLY REPORT

TABLE OF CONTENTS



|                              |  |          |  |                                                                                       |  |     
|----------------------------- |  | -------- |  | ------------------------------------------------------------------------------------- |  | ----
|                              |  |          |  |                                                                                       |  | Page
|PART I. FINANCIAL INFORMATION |  | 1       
|                              |  |          | 
|                              |  | Item 1.  |  | Financial Statements                                                                  |  | 1   
|                              |  |          | 
|                              |  | Item 2.  |  | Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 15  
|                              |  |          | 
|                              |  | Item 3.  |  | Quantitative and Qualitative Disclosures About Market Risk                            |  | 29  
|                              |  |          | 
|                              |  | Item 4T. |  | Controls and Procedures                                                               |  | 29  
|                              | 
|PART II. OTHER INFORMATION    |  | 30      
|                              |  |          | 
|                              |  | Item 1.  |  | Legal Proceedings                                                                     |  | 30  
|                              |  |          | 
|                              |  | Item 1A. |  | Risk Factors                                                                          |  | 30  
|                              |  |          | 
|                              |  | Item 2.  |  | Unregistered Sales of Equity Securities and Use of Proceeds                           |  | 30  
|                              |  |          | 
|                              |  | Item 3.  |  | Defaults upon Senior Securities                                                       |  | 30  
|                              |  |          | 
|                              |  | Item 4.  |  | Submission of Matters to a Vote of Security Holders                                   |  | 30  
|                              |  |          | 
|                              |  | Item 5.  |  | Other Information                                                                     |  | 30  
|                              |  |          | 
|                              |  | Item 6.  |  | Exhibits                                                                              |  | 31  



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PART I. FINANCIAL INFORMATION



|Item 1. | Financial Statements
|------- | --------------------

LBI MEDIA HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)



|                                                                                                                              |  |               |         |   |                  |   |         |  
|----------------------------------------------------------------------------------------------------------------------------- |  | ------------- | ------- | - | ---------------- | - | ------- | -
|                                                                                                                              |  | March 31,2008 |         |   | December 31,2007 |  
|                                                                                                                              |  | (unaudited)   |         |   | (Note 1)         |  
|Assets                                                                                                                        |  |               |         |   |                  |   |         |  
|Current assets:                                                                                                               |  |               |         |   |                  |   |         |  
|Cash and cash equivalents                                                                                                     |  | $             | 502     |   |                  | $ | 1,697   |  
|Accounts receivable (less allowances for doubtful accounts of $2,192 as of March 31, 2008 and $2,217 as of December 31,
2007) |  |               | 17,530  |   |                  |   | 17,780  |  
|Current portion of program rights, net                                                                                        |  |               | 511     |   |                  |   | 321     |  
|Amounts due from related parties                                                                                              |  |               | 33      |   |                  |   | 14      |  
|Current portion of notes receivable from related parties                                                                      |  |               | 451     |   |                  |   | 449     |  
|Current portion of employee advances                                                                                          |  |               | 115     |   |                  |   | 81      |  
|Prepaid expenses and other current assets                                                                                     |  |               | 1,146   |   |                  |   | 1,166   |  
|                                                                                                                              |  |               |         |   |                  |   |         |  
|Total current assets                                                                                                          |  |               | 20,288  |   |                  |   | 21,508  |  
|Property and equipment, net                                                                                                   |  |               | 96,024  |   |                  |   | 96,990  |  
|Broadcast licenses, net                                                                                                       |  |               | 382,638 |   |                  |   | 382,574 |  
|Deferred financing costs, net                                                                                                 |  |               | 9,152   |   |                  |   | 9,014   |  
|Notes receivable from related parties, excluding current portion                                                              |  |               | 2,354   |   |                  |   | 2,340   |  
|Employee advances, excluding current portion                                                                                  |  |               | 1,223   |   |                  |   | 1,127   |  
|Program rights, excluding current portion                                                                                     |  |               | 1,062   |   |                  |   | 228     |  
|Other assets                                                                                                                  |  |               | 2,450   |   |                  |   | 2,775   |  
|                                                                                                                              |  |               |         |   |                  |   |         |  
|Total assets                                                                                                                  |  | $             | 515,191 |   |                  | $ | 516,556 |  
|                                                                                                                              |  |               |         |   |                  |   |         |  
|Liabilities and stockholders equity                                                                                          |  |               |         |   |                  |   |         |  
|Current liabilities:                                                                                                          |  |               |         |   |                  |   |         |  
|Cash overdraft                                                                                                                |  | $             | 773     |   |                  | $ |        |  
|Accounts payable                                                                                                              |  |               | 2,123   |   |                  |   | 3,739   |  
|Accrued liabilities                                                                                                           |  |               | 3,169   |   |                  |   | 3,642   |  
|Accrued interest                                                                                                              |  |               | 3,416   |   |                  |   | 8,701   |  
|Current portion of long-term debt                                                                                             |  |               | 1,341   |   |                  |   | 1,239   |  
|                                                                                                                              |  |               |         |   |                  |   |         |  
|Total current liabilities                                                                                                     |  |               | 10,822  |   |                  |   | 17,321  |  
|Long-term debt, excluding current portion                                                                                     |  |               | 428,764 |   |                  |   | 421,522 |  
|Fair value of interest rate swap                                                                                              |  |               | 6,862   |   |                  |   | 4,194   |  
|Deferred income taxes                                                                                                         |  |               | 51,896  |   |                  |   | 49,515  |  
|Other liabilities                                                                                                             |  |               | 2,100   |   |                  |   | 1,603   |  
|                                                                                                                              |  |               |         |   |                  |   |         |  
|Total liabilities                                                                                                             |  |               | 500,444 |   |                  |   | 494,155 |  
|                                                                                                                              |  |              
|Commitments and contingencies                                                                                                 |  |               |         |   |                  |   |         |  
|                                                                                                                              |  |              
|Stockholders equity:                                                                                                         |  |               |         |   |                  |   |         |  
|Common stock, $0.01 par value:                                                                                                |  |               |         |   |                  |   |         |  
|Authorized shares  1,000 Issued and outstanding shares  100                                                                 |  |               |        |   |                  |   |        |  
|Additional paid-in capital                                                                                                    |  |               | 63,296  |   |                  |   | 63,298  |  
|Accumulated deficit                                                                                                           |  |               | (48,549 | ) |                  |   | (40,897 | )
|                                                                                                                              |  |               |         |   |                  |   |         |  
|Total stockholders equity                                                                                                    |  |               | 14,747  |   |                  |   | 22,401  |  
|                                                                                                                              |  |               |         |   |                  |   |         |  
|Total liabilities and stockholders equity                                                                                    |  | $             | 515,191 |   |                  | $ | 516,556 |  
|                                                                                                                              |  |               |         |   |                  |   |         |  

See accompanying notes.



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LBI MEDIA HOLDINGS, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands)



|                                                                                                                                                                                                                  |  |                             |        |   |      |   |         |  
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------- | ------ | - | ---- | - | ------- | -
|                                                                                                                                                                                                                  |  | Three Months EndedMarch 31, |       
|                                                                                                                                                                                                                  |  | 2008                        |        |   | 2007 |  
|Net revenues                                                                                                                                                                                                      |  | $                           | 26,407 |   |      | $ | 25,145  |  
|Operating expenses:                                                                                                                                                                                               |  |                             |        |   |      |   |         |  
|Program and technical, exclusive of depreciation and amortization shown below                                                                                                                                     |  |                             | 6,079  |   |      |   | 5,614   |  
|Promotional, exclusive of depreciation and amortization shown below                                                                                                                                               |  |                             | 442    |   |      |   | 389     |  
|Selling, general and administrative, exclusive of deferred compensation benefit of $0 and $(1,132) for the three months ended
March 31, 2008 and 2007, respectively and depreciation and amortization shown below |  |                             | 10,727 |   |      |   | 9,662   |  
|Deferred compensation benefit                                                                                                                                                                                     |  |                             |       |   |      |   | (1,132  | )
|Depreciation and amortization                                                                                                                                                                                     |  |                             | 2,483  |   |      |   | 2,300   |  
|                                                                                                                                                                                                                  |  |                             |        |   |      |   |         |  
|Total operating expenses                                                                                                                                                                                          |  |                             | 19,731 |   |      |   | 16,833  |  
|                                                                                                                                                                                                                  |  |                             |        |   |      |   |         |  
|Operating income                                                                                                                                                                                                  |  |                             | 6,676  |   |      |   | 8,312   |  
|Interest expense, net of amounts capitalized                                                                                                                                                                      |  |                             | (9,149 | ) |      |   | (9,156  | )
|Interest rate swap expense                                                                                                                                                                                        |  |                             | (2,668 | ) |      |   | (280    | )
|Interest and other income                                                                                                                                                                                         |  |                             | 32     |   |      |   | 39      |  
|                                                                                                                                                                                                                  |  |                             |        |   |      |   |         |  
|Loss before provision for income taxes                                                                                                                                                                            |  |                             | (5,109 | ) |      |   | (1,085  | )
|Provision for income taxes                                                                                                                                                                                        |  |                             | (2,543 | ) |      |   | (46,941 | )
|                                                                                                                                                                                                                  |  |                             |        |   |      |   |         |  
|Net loss                                                                                                                                                                                                          |  | $                           | (7,652 | ) |      | $ | (48,026 | )
|                                                                                                                                                                                                                  |  |                             |        |   |      |   |         |  

See accompanying notes.



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LBI MEDIA HOLDINGS, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)



|                                                                                                               |  |                             |         |   |      |   |         |  
|-------------------------------------------------------------------------------------------------------------- |  | --------------------------- | ------- | - | ---- | - | ------- | -
|                                                                                                               |  | Three Months EndedMarch 31, |        
|                                                                                                               |  | 2008                        |         |   | 2007 |  
|Operating activities                                                                                           |  |                             |         |   |      |   |         |  
|Net loss                                                                                                       |  | $                           | (7,652  | ) |      | $ | (48,026 | )
|Adjustments to reconcile net loss to net cash used in operating activities:                                    |  |                             |         |   |      |   |         |  
|Depreciation and amortization                                                                                  |  |                             | 2,483   |   |      |   | 2,300   |  
|Amortization of deferred financing costs                                                                       |  |                             | 362     |   |      |   | 300     |  
|Amortization of discount on subordinated notes                                                                 |  |                             | 62      |   |      |   |        |  
|Amortization of program rights                                                                                 |  |                             | 136     |   |      |   | 178     |  
|Accretion on discount notes                                                                                    |  |                             | 1,691   |   |      |   | 1,519   |  
|Deferred compensation benefit                                                                                  |  |                             |        |   |      |   | (1,132  | )
|Interest rate swap expense                                                                                     |  |                             | 2,668   |   |      |   | 280     |  
|Provision for doubtful accounts                                                                                |  |                             | 245     |   |      |   | 221     |  
|Changes in operating assets and liabilities:                                                                   |  |                             |         |   |      |   |         |  
|Cash overdraft                                                                                                 |  |                             | 773     |   |      |   |        |  
|Accounts receivable                                                                                            |  |                             | 5       |   |      |   | 2,454   |  
|Deferred compensation payment                                                                                  |  |                             |        |   |      |   | (1,374  | )
|Program rights                                                                                                 |  |                             | (1,160  | ) |      |   |        |  
|Amounts due from related parties                                                                               |  |                             | (19     | ) |      |   | 9       |  
|Prepaid expenses and other current assets                                                                      |  |                             | 20      |   |      |   | 38      |  
|Employee advances                                                                                              |  |                             | (130    | ) |      |   | (5      | )
|Accounts payable and accrued expenses                                                                          |  |                             | (1,427  | ) |      |   | (756    | )
|Accrued interest                                                                                               |  |                             | (5,285  | ) |      |   | (3,471  | )
|Deferred taxes payable                                                                                         |  |                             | 2,381   |   |      |   | 46,058  |  
|Other assets and liabilities                                                                                   |  |                             | 806     |   |      |   | 792     |  
|                                                                                                               |  |                             |         |   |      |   |         |  
|Net cash used in operating activities                                                                          |  |                             | (4,041  | ) |      |   | (615    | )
|                                                                                                               |  |                             |         |   |      |   |         |  
|Investing activities                                                                                           |  |                             |         |   |      |   |         |  
|Purchases of property and equipment                                                                            |  |                             | (2,190  | ) |      |   | (5,444  | )
|Acquisition costs (including amounts deposited in escrow for the acquisition of selected radio station assets) |  |                             | (98     | ) |      |   | (273    | )
|                                                                                                               |  |                             |         |   |      |   |         |  
|Net cash used in investing activities                                                                          |  |                             | (2,288  | ) |      |   | (5,717  | )
|                                                                                                               |  |                             |         |   |      |   |         |  
|Financing activities                                                                                           |  |                             |         |   |      |   |         |  
|Proceeds from bank borrowings                                                                                  |  |                             | 20,300  |   |      |   | 11,600  |  
|Payments on bank borrowings                                                                                    |  |                             | (14,709 | ) |      |   | (5,733  | )
|Payments of deferred financing costs                                                                           |  |                             | (455    | ) |      |   |        |  
|Contributions from Parent                                                                                      |  |                             |        |   |      |   | 47,946  |  
|Distributions to Parent                                                                                        |  |                             | (2      | ) |      |   | (1,723  | )
|                                                                                                               |  |                             |         |   |      |   |         |  
|Net cash provided by financing activities                                                                      |  |                             | 5,134   |   |      |   | 52,090  |  
|                                                                                                               |  |                             |         |   |      |   |         |  
|Net (decrease) increase in cash and cash equivalents                                                           |  |                             | (1,195  | ) |      |   | 45,758  |  
|Cash and cash equivalents at beginning of period                                                               |  |                             | 1,697   |   |      |   | 1,501   |  
|                                                                                                               |  |                             |         |   |      |   |         |  
|Cash and cash equivalents at end of period                                                                     |  | $                           | 502     |   |      | $ | 47,259  |  
|                                                                                                               |  |                             |         |   |      |   |         |  
|Supplemental disclosure of cash flow information:                                                              |  |                             |         |   |      |   |         |  
|Non-cash amounts included in accounts payable:                                                                 |  |                             |         |   |      |   |         |  
|Purchase of property and equipment                                                                             |  | $                           | (499    | ) |      | $ | (694    | )
|                                                                                                               |  |                             |         |   |      |   |         |  
|Acquisition costs                                                                                              |  | $                           | (18     | ) |      | $ |        |  
|                                                                                                               |  |                             |         |   |      |   |         |  
|Deferred financing costs                                                                                       |  | $                           | (45     | ) |      | $ |        |  
|                                                                                                               |  |                             |         |   |      |   |         |  
|Cash paid during the period for:                                                                               |  |                             |         |   |      |   |         |  
|Interest                                                                                                       |  | $                           | 12,300  |   |      | $ | 10,928  |  
|                                                                                                               |  |                             |         |   |      |   |         |  
|Income taxes                                                                                                   |  | $                           | 47      |   |      | $ | 25      |  
|                                                                                                               |  |                             |         |   |      |   |         |  

See accompanying notes.



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LBI MEDIA HOLDINGS, INC.

NOTES TO INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



|1. | Description of Business and Basis of Presentation
|-- | -------------------------------------------------

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

LBI Media Holdings is not engaged in any business operations and has not acquired any assets or incurred any liabilities, other than the acquisition of stock of LBI Media, the issuance of senior discount notes (see
Note 4) and the operations of its subsidiaries. Accordingly, its only material source of cash is dividends and distributions from its subsidiaries, which are subject to restriction by LBI Medias senior credit facilities and the indenture
governing the senior subordinated notes issued by LBI Media (see Note 4). Parent-only condensed financial information of LBI Media Holdings on a stand-alone basis has been presented in Note 11.

LBI Media Holdings and its wholly owned subsidiaries (collectively referred to as the Company) own and operate radio and television stations
located in California, Texas and Utah. In addition, the Company owns television production facilities that are used to produce programming for Company-owned television stations. Portions of these facilities are also occasionally rented to
independent third parties. The Company sells commercial airtime on its radio and television stations to local, regional and national advertisers. In addition, the Company has entered into time brokerage agreements with third parties for three of its
radio stations.

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

The Companys television stations,
KRCA, KZJL, KMPX, and KPNZ service the Los Angeles, California, Houston, Texas, Dallas-Fort Worth, Texas and Salt Lake City, Utah markets, respectively. Also, the Companys television station, KSDX, services the San Diego, California market. In
October 2007, wildfires, which affected several parts of Southern California, burned down KSDXs broadcasting facility. In the fourth quarter of 2007, the Company rebuilt this broadcasting facility and resumed service to the San Diego market in
January 2008.

The Companys television studio facilities in Burbank, California, Houston, Texas, and Dallas, Texas, are owned and
operated by its wholly owned subsidiaries, Empire Burbank Studios LLC (Empire), Liberman Television of Houston LLC and Liberman Television of Dallas LLC, respectively.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting
principles for interim financial information and with the instructions for Rule 10-01 of Regulation S-X promulgated by the Securities and Exchange Commission (the SEC). Accordingly, they do not include all of the information and
footnotes required by U.S. generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been
included. The results of operations for interim periods are not necessarily indicative of the results that may be expected for the fiscal year. The condensed consolidated financial statements should be read in conjunction with the Companys
December 31, 2007 consolidated financial statements and accompanying notes included in the Companys annual report on Form 10-K (the Annual Report). All terms used but not defined elsewhere herein have the meanings ascribed to
them in the Annual Report.

The condensed consolidated balance sheet at December 31, 2007 has been derived from the audited financial
statements at that date but does not include all the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. The condensed consolidated financial statements include the accounts of LBI
Media Holdings and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. The accounts of the Parent are not included in the accompanying unaudited condensed consolidated financial statements.



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LBI MEDIA HOLDINGS, INC.

NOTES TO INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



|2. | Recent Accounting Pronouncements
|-- | --------------------------------

In September
2006, the FASB issued Statement of Financial Accounting Standards (Statement) No. 157, Fair Value Measurements (FAS 157). FAS 157 establishes a single authoritative definition of fair value, sets out a framework for
measuring fair value and expands on required disclosures about fair value measurement. The Company adopted on January 1, 2008, certain provisions of FAS 157 related to financial assets and liabilities as well as other assets and liabilities
carried at fair value on a recurring basis, and has determined that such adoption has no effect on its financial position, results of operations and cash flows. The provisions of FAS 157 related to other non-financial assets and liabilities will be
effective on January 1, 2009, and will be applied prospectively. The Company is currently evaluating the impact the provisions of FAS 157 will have on the Companys financial position, results of operations and cash flows as it relates to
other non-financial assets and non-financial liabilities.

In addition, in February 2007, the FASB issued FAS No. 159, The Fair
Value Option for Financial Assets and Financial Liabilities-including an amendment of FASB Statement No. 115 (FAS 159). FAS 159 expands the use of fair value accounting but does not affect existing standards that require
assets or liabilities to be carried at fair value. Under FAS 159, a company may elect to use fair value to measure certain financial assets and liabilities and any changes in fair value are recognized in earnings. This statement was effective on
January 1, 2008. The Company did not elect the fair value option upon adoption of FAS 159.

In December 2007, the FASB issued SFAS
No. 141R (SFAS 141R), Business Combinations, which requires an acquirer to measure the identifiable assets acquired, the liabilities assumed and any noncontrolling interest in the acquiree at their fair values on the
acquisition date, with goodwill being the excess value over the net identifiable assets acquired. SFAS 141R is effective beginning January 1, 2009. The Company is currently evaluating what impact, if any, the adoption of SFAS 141R will have on
the Companys financial position, results of operations and cash flows.

In December 2007, the FASB issued SFAS No. 160
(SFAS 160), Noncontrolling Interests in Consolidated Financial Statements, which clarifies that a noncontrolling interest in a subsidiary should be reported as equity in the consolidated financial statements The calculation
of earnings per share will continue to be based on income amounts attributable to the Parent. SFAS 160 is effective beginning January 1, 2009. The Company is currently evaluating what impact, if any, the adoption of SFAS 160 will have on the
Companys financial position, results of operations and cash flows.



|3. | Broadcast Licenses
|-- | ------------------

The Companys broadcast
licenses are intangible assets with indefinite lives and are reviewed for impairment during the third quarter of each fiscal year, with additional evaluations performed if potential impairment indicators are noted. The Company believes its broadcast
licenses have indefinite useful lives given that they are expected to indefinitely contribute to the future cash flows of the Company and that they may be continually renewed without substantial cost to the Company. In certain prior years, the
licenses were considered to have finite lives and were subject to amortization. Accumulated amortization of broadcast licenses totaled approximately $17.7 million at March 31, 2008 and December 31, 2007.

If indicators of impairment are identified and the undiscounted cash flows estimated to be generated from these assets are less than the carrying value,
an adjustment to reduce the carrying value to the fair market value of the assets would be recorded. The Company completed its annual impairment review of its broadcast licenses in the third quarter of 2007 and conducted an additional review of the
fair value of some of its broadcast licenses in the fourth quarter of 2007. The fair value of the Companys broadcast licenses is determined by assuming that entry into the particular market took place as of the valuation date and considering
the signal coverage of the related station as well as the projected advertising revenues for the particular market(s) in which each station operates. The Company adjusted the projected total advertising revenues in those markets, which was partially
due to greater competition for revenues from non-traditional media, and determined the fair value of each broadcast license primarily from projected total advertising revenues for a given market without taking into consideration the



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LBI MEDIA HOLDINGS, INC.

NOTES TO INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



Companys format or management capabilities. As a result, the downward adjustment in projected revenues resulted in a decrease in the fair value of
certain of the Companys broadcast licenses in the third and fourth quarters of 2007. The Company did not record a non-cash impairment writedown for the three months ended March 31, 2008 and 2007 as no impairment indicators were present.



|4. | Long-Term Debt
|-- | --------------

Long-term debt consists of the
following:



|                                        |  |                |         |   |                  |   |         |  
|--------------------------------------- |  | -------------- | ------- | - | ---------------- | - | ------- | -
|                                        |  | March 31,2008  |         |   | December 31,2007 |  
|                                        |  | (In thousands) |        
|2006 Revolver due 2012                  |  | $              | 20,400  |   |                  | $ | 24,500  |  
|2006 Term Loan due 2012                 |  |                | 117,800 |   |                  |   | 108,075 |  
|2007 Senior Subordinated Notes due 2017 |  |                | 225,168 |   |                  |   | 225,106 |  
|Senior Discount Notes due 2013          |  |                | 64,576  |   |                  |   | 62,885  |  
|2004 Empire Note                        |  |                | 2,161   |   |                  |   | 2,195   |  
|                                        |  |                |         |   |                  |   |         |  
|                                        |  |                | 430,105 |   |                  |   | 422,761 |  
|Less current portion                    |  |                | (1,341  | ) |                  |   | (1,239  | )
|                                        |  |                |         |   |                  |   |         |  
|                                        |  | $              | 428,764 |   |                  | $ | 421,522 |  
|                                        |  |                |         |   |                  |   |         |  

LBI Medias 2006 Revolver and 2006 Term Loan

On May 8, 2006, LBI Media refinanced its then existing senior revolving credit facility with a $110.0 million senior term loan credit facility (as
amended by the term loan commitment increase in January 2008, the 2006 Term Loan) and a $150.0 million senior revolving credit facility (the 2006 Revolver, and together with the 2006 Term Loan, the 2006 Senior Credit
Facilities). The 2006 Revolver includes a $5.0 million swing line subfacility and allows for letters of credit up to the lesser of $5.0 million and the available remaining revolving commitment amount. On January 23, 2008, LBI Media
increased its 2006 Senior Term Loan by $10.0 million. LBI Media has the option to request its existing or new lenders under the 2006 Term Loan and under the 2006 Revolver to increase the aggregate amount of the 2006 Senior Credit Facilities, by an
additional $40.0 million; however, its existing and new lenders are not obligated to do so. The increases under the 2006 Senior Credit Facilities, taken together, cannot exceed $50.0 million in the aggregate (including the $10.0 million increase on
January 23, 2008).

LBI Media must pay 0.25% of the original principal amount of the 2006 Term Loan each quarter plus 0.25% of amounts
borrowed in connection with the term loan increase, and 0.25% of any additional principal amount incurred in the future under the 2006 Term Loan. There are no scheduled reductions of commitments under the 2006 Revolver.

Borrowings under the 2006 Senior Credit Facilities bear interest based on either, at the option of LBI Media, the base rate for base rate loans or the
LIBOR rate for LIBOR loans, in each case plus the applicable margin stipulated in the senior credit agreements. The base rate is the higher of (i) Credit Suisses prime rate and (ii) the Federal Funds Effective Rate (as published by
the Federal Reserve Bank of New York) plus 0.50%. The applicable margin for loans under the 2006 Revolver, which is based on LBI Medias total leverage ratio, will range from 0% to 1.00% per annum for base rate loans and from 1.00% to
2.00% per annum for LIBOR loans. The applicable margin for the original principal amount of the 2006 Term Loan is 0.50% for base rate loans and 1.50% for LIBOR loans. The applicable margin for the $10.0 million increase in the Term Loan that
occurred on January 23, 2008 is 0.75% for base rate loans and 1.75% for LIBOR loans. The applicable margin for any future term loans will be agreed upon at the time those term loans are incurred. Interest on base rate loans is payable quarterly
in arrears and interest on LIBOR loans is payable either monthly, bimonthly or quarterly depending on the interest period elected by LBI Media. All amounts that are not paid when due under either the 2006 Revolver or 2006 Term Loan will accrue
interest at the rate otherwise applicable plus 2.00% until such amounts are paid in full. Borrowings under the 2006 Revolver and 2006 Term Loan bore interest at rates between 4.20% and 4.87%, including the applicable margin, at March 31, 2008.



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LBI MEDIA HOLDINGS, INC.

NOTES TO INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



Borrowings under the 2006 Senior Credit Facilities are secured by substantially all of the tangible
and intangible assets of LBI Media and its wholly owned subsidiaries, including a first priority pledge of all capital stock of each of LBI Medias subsidiaries. The 2006 Senior Credit Facilities also contain customary representations,
affirmative and negative covenants and defaults for a senior credit facility, including restrictions on LBI Medias ability to pay dividends. At March 31, 2008, LBI Media was in compliance with all such covenants.

LBI Media pays quarterly commitment fees on the unused portion of the 2006 Revolver based on its utilization rate of the total borrowing capacity. Under
certain circumstances, if LBI Media borrows less than 50% of the revolving credit commitment, it must pay a quarterly commitment fee of 0.50% times the unused portion. If LBI Media borrows 50% or more of the total revolving credit commitment, it
must pay a quarterly commitment fee of 0.25% times the unused portion.

In connection with the issuance of the 2006 Senior Credit
Facilities, LBI Media entered into an interest rate swap agreement with a notional principal amount of $80.0 million for three years and $60.0 million for the following two years. LBI Media will receive interest at a fixed rate of 5.56% and pay
interest at the base rate for base rate loans or the LIBOR rate for LIBOR loans, in each case plus the applicable margin specified in the agreements governing the 2006 Senior Credit Facilities. As this swap agreement did not meet the requirements
for hedge accounting at its inception, changes in its fair value are recorded into earnings each period, with an offsetting asset or liability reflecting the fair value of the interest rate swap, related to the difference between the fixed rate and
the floating rate of interest on the swap, recorded in the accompanying consolidated balance sheets. Accordingly, during the three months ended March 31, 2008 and 2007, the Company recognized interest rate swap expense of $2.7 million and $0.3
million, respectively, in the accompanying consolidated statements of operations and, at March 31, 2008 and December 31, 2007, the Company recorded a long-term liability of $6.9 million and $4.2 million, respectively, in its
consolidated balance sheets.

LBI Medias 2002 Senior Subordinated Notes

In July 2002, LBI Media issued $150.0 million of senior subordinated notes due 2012 (the 2002 Senior Subordinated Notes). The 2002 Senior
Subordinated Notes bore interest at the rate of 10.125% per annum, and interest payments were made on a semi-annual basis each January 15 and July 15. All of LBI Medias subsidiaries are wholly owned and provided full and
unconditional joint and several guarantees of the 2002 Senior Subordinated Notes.

LBI Media redeemed all of the outstanding 2002 Senior
Subordinated Notes on August 22, 2007 (the Redemption Date) at a redemption price of 105.0625% of the outstanding principal amount, plus accrued and unpaid interest to the Redemption Date (the Redemption).

LBI Medias 2007 Senior Subordinated Notes

On July 23, 2007, LBI Media issued approximately $228.8 million aggregate principal amount of
81/2% Senior Subordinated Notes due 2017 (the 2007 Senior Subordinated Notes). The 2007 Senior Subordinated Notes
were sold at 98.350% of the principal amount, resulting in gross proceeds of approximately $225.0 million. All of LBI Medias subsidiaries are wholly owned and provide full and unconditional joint and several guarantees of the 2007 Senior
Subordinated Notes.

The 2007 Senior Subordinated Notes bear interest at a rate of 8.5% per annum. Interest payments are to be
made on a semi-annual basis each February 1 and August 1, commencing on February 1, 2008. The 2007 Senior Subordinated Notes will mature on August 1, 2017.

The indenture governing the 2007 Senior Subordinated Notes limits, among other things, LBI Medias ability to borrow under the 2006 Senior Credit
Facilities and pay dividends. LBI Media could borrow up to an aggregate of $260.0 million under the 2006 Senior Credit Facilities (subject to certain reductions under certain circumstances) without having to comply with specified leverage ratios
contained in the indenture, but any amount over $260.0 million (subject to certain reductions under certain circumstances) would be subject to LBI Medias compliance with a specified leverage ratio (as defined in the indenture governing the
2007 Senior Subordinated Notes).



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LBI MEDIA HOLDINGS, INC.

NOTES TO INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



The indenture governing the 2007 Senior Subordinated Notes also prohibits the incurrence of
indebtedness, the proceeds of which would be used to repay, redeem, repurchase or refinance any of LBI Media Holdings Senior Discount Notes (defined below) earlier than one year prior to the stated maturity of the Senior Discount Notes unless
such indebtedness is (i) unsecured, and (ii) pari passu or junior in right of payment to the 2007 Senior Subordinated Notes, and (iii) otherwise permitted to be incurred under the indenture governing the 2007 Senior Subordinated
Notes. At March 31, 2008, LBI Media was in compliance with all such covenants.

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

Senior Discount Notes

In October 2003, LBI
Media Holdings issued $68.4 million aggregate principal amount at maturity of senior discount notes that mature in 2013 (the Senior Discount Notes). The notes were sold at 58.456% of principal amount at maturity, resulting in gross
proceeds of approximately $40.0 million and net proceeds of approximately $38.8 million after certain transaction costs. Under the terms of the Senior Discount Notes, cash interest will not accrue or be payable on the notes prior to October 15,
2008 and instead the value of the notes will be increased each period until it equals $68.4 million on October 15, 2008; such accretion (approximately $1.7 million and $1.5 million for the three months ended March 31, 2008 and
March 31, 2007, respectively) is recorded as additional interest expense by LBI Media Holdings. Thereafter, cash interest on the notes will accrue at a rate of 11% per year payable semi-annually on each April 15 and October 15;
provided, however, that LBI Media Holdings may make a cash interest election on any interest payment date prior to October 15, 2008. If LBI Media Holdings makes a cash interest election, the principal amount of the notes at maturity will
be reduced to the accreted value of the notes as of the date of the cash interest election, and cash interest will begin to accrue at a rate of 11% per year from the date LBI Media Holdings makes such election. The Senior Discount Notes may be
redeemed by LBI Media Holdings at any time on or after October 15, 2008 at redemption prices specified in the indenture governing the Senior Discount Notes, plus accrued and unpaid interest. The indenture governing the Senior Discount Notes
contains certain restrictive covenants that, among other things, limits LBI Media Holdings ability to incur additional indebtedness and pay dividends. As of March 31, 2008, LBI Media Holdings was in compliance with all such covenants. The
Senior Discount Notes are structurally subordinated to the 2006 Senior Credit Facilities and the 2007 Senior Subordinated Notes.

LBI
Medias 2004 Empire Note

In July 2004, Empire issued an installment note for approximately $2.6 million (the 2004
Empire Note). The 2004 Empire Note bears interest at the rate of 5.52% per annum and is payable in monthly principal and interest payments of $21,411 through maturity in July 2019. The borrowings under the 2004 Empire Note are secured
primarily by all of Empires real property.



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LBI MEDIA HOLDINGS, INC.

NOTES TO INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



Scheduled Debt Repayments

As of March 31, 2008, the Companys long-term debt had scheduled repayments for each of the next five fiscal years as follows:



|           |  |                |        
|---------- |  | -------------- | -------
|           |  | (in thousands)
|2008       |  | $              | 1,005  
|2009       |  |                | 1,347  
|2010       |  |                | 1,355  
|2011       |  |                | 1,364  
|2012       |  |                | 133,874
|Thereafter |  |                | 291,160
|           |  |                |        
|           |  | $              | 430,105
|           |  |                |        

The above table does not include projected interest payments the Company may ultimately pay.

Interest Paid and Capitalized

The
total amount of interest paid (net of amounts capitalized) was approximately $12.3 million and $10.9 million for the three months ended March 31, 2008 and 2007, respectively. Interest is capitalized on individually significant construction
projects during the construction period. The amount of interest capitalized was approximately $0 million and $0.2 million for the three months ended March 31, 2008 and 2007, respectively.



|5. | Acquisitions
|-- | ------------

On November 9, 2007, two of LBI
Media Holdings indirect, wholly owned subsidiaries, Liberman Broadcasting of California LLC and LBI Radio License LLC, as buyers, entered into an asset purchase agreement with R&R Radio Corporation, as seller, pursuant to which the buyers
have agreed to acquire the selected assets of radio station KDES-FM, located in Palm Springs, California, from the seller. The acquisition is expected to close in 2008. As of March 31, 2008, the Company had incurred approximately $0.6 million
in acquisition costs related to this proposed acquisition, including $0.5 million deposited into escrow. The selected assets will include, among other things, (i) licenses and permits authorized by the FCC for or in connection with the
operation of the station and (ii) transmitter and other broadcast equipment used to operate the station. The Company intends to change the location of KDES-FM from Palm Springs, California to Redlands, California.



|6. | Commitments and Contingencies
|-- | -----------------------------

Deferred Compensation

One of LBI Media Holdingss indirect, wholly owned subsidiaries and the Parent have entered into employment agreements with
certain employees. Services required under the employment agreements are rendered to the Company. Accordingly, the Company has reflected amounts due under the employment agreements in its financial statements. In addition to annual compensation and
other benefits, these agreements provide the employees with the ability to participate in the increase of the net value (as defined in the applicable employment agreement) of the Parent over certain base amounts (Incentive
Compensation). There are two components of Incentive Compensation: (i) a component that vests in varying amounts over time; and (ii) a component that vests upon the attainment of certain performance measures. The time vesting
component is accounted for over the vesting periods specified in the employment agreements. Performance based amounts are accounted for at the time it is considered probable that the performance measures will be attained. Any Incentive Compensation
amounts due are required to be paid within thirty days after the date the net value of the Parent is determined.

The
employment agreements contain provisions, however, that allow for limited accelerated vesting in the event of a change in control of the Parent (as defined in the applicable employment agreement). Unless there is a change in control of the Parent
(as defined in the applicable employment agreement), the net value (as defined in the applicable employment agreement) of the Parent was determined as of December 31, 2005 and December 31, 2006 and will be determined as of
December 31, 2009 (depending upon the particular employment agreement).



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LBI MEDIA HOLDINGS, INC.

NOTES TO INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



Until the net value of the Parent has been determined by appraisal as of each valuation
date, the Company evaluates and estimates the deferred compensation liability under these employment agreements. As a part of the calculation of this Incentive Compensation, the Company uses the income and market valuation approaches to estimate the
net value of the Parent. The income approach analyzes future cash flows and discounts them to arrive at a current estimated fair value. The market approach uses recent sales and offering prices of similar properties to determine
estimated fair value. Each employee negotiated the base amount at the time the employment agreement was entered into. The estimated vested and unpaid amounts are shown as deferred compensation in the accompanying consolidated balance sheets; the
related benefit is shown as deferred compensation benefit in the accompanying consolidated statements of operations; and related cash payments are shown as deferred compensation payments in the accompanying consolidated statements of cash flows.

At March 31, 2008, the Company estimated that no employees had vested in any unpaid Incentive Compensation. In the first quarter of
2007, the Company satisfied its obligations under an employment agreement that had a December 31, 2006 net value determination date with an aggregate cash payment of approximately $1.4 million which was approximately $1.1 million
less than the amount accrued as of December 31, 2006. The Company also has an employment agreement with a net value determination date of December 31, 2009.

Litigation

In June 2005, eight former employees of Liberman Broadcasting of California LLC
(LBI Sub), an indirect wholly owned subsidiary of LBI Media Holdings, filed suit in Los Angeles County Superior Court alleging claims on their own behalf and also on behalf of a purported class of former and current employees of LBI Sub.
The complaint alleged, among other things, wage and hour violations relating to overtime pay, and wrongful termination and unfair competition under the California Business and Professions Code. Plaintiffs sought to recover, among other relief,
unspecified general, treble and punitive damages, as well as profit disgorgement, restitution and their attorneys fees. In June 2007, two former employees of LBI Sub filed another suit in Los Angeles County Superior Court, alleging claims on
their own behalf and also on behalf of a purported class of former and current employees of LBI Sub. The complaint alleged, among other things, violations of California labor laws with respect to providing meal and rest breaks. Plaintiffs sought,
among other relief, unspecified liquidated and general damages, declaratory, equitable and injunctive relief, and attorneys fees.

On
July 13, 2007, LBI Sub entered into a settlement agreement with class action representatives to settle, subject to court approval, these lawsuits. While LBI Sub denied the allegations in both lawsuits, it agreed to the final settlement of both
actions that was approved by the court in January 2008 to avoid significant legal fees, other expenses and management time that would have to be devoted to the two litigation matters. The final settlement provided for a settlement payment of
$469,000 (including attorneys fees and costs and administrative fees). Selling, general and administrative expenses for the three months ended March 31, 2007 include a litigation accrual of approximately $350,000 related to this matter.
The Company recorded an additional accrual of $475,000 in the second quarter of 2007 and reduced the total litigation accrual by $356,000 in the fourth quarter of 2007, reflecting the settlement in January 2008.

In consideration of the settlement payment, the plaintiffs in both cases agreed to dismiss the two class actions with prejudice and to release all known
and unknown claims arising out of or relating to such claims. Because the settlement has received court approval, the settlement has become effective and binding on the parties.

The Company is a party to an ongoing dispute with Broadcast Music, Inc. (BMI) and the American Society of Composers, Authors and Publishers
(ASCAP) related to royalties due to BMI and ASCAP in the amount of approximately $1.3 million. As of March 31, 2008, the Company has reserved approximately $0.5 million related to this dispute. On March 24, 2008, the Company
submitted a formal offer to settle all amounts due related to all disputed matters with BMI and ASCAP totaling approximately $0.3 million. It is the Companys position that the remaining portion of the total disputed amounts is attributable
primarily to billings related to the Companys time-brokered and simulcast stations, as well as other differences, for which the Company was improperly billed. BMI and ASCAP have communicated that they did not believe the Companys
proposal was acceptable. The parties are continuing their discussions.



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LBI MEDIA HOLDINGS, INC.

NOTES TO INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



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



|7. | Related Party Transactions
|-- | --------------------------

The Company had
approximately $2.8 million due from stockholders of the Parent and from affiliated companies at March 31, 2008 and December 31, 2007, respectively. The Company loaned approximately $1.9 million to a stockholder of the Parent in July 2002.
These loans bear interest at the applicable federal rate and mature through July 2009.

The Company also had approximately $690,000 due
from one if its executive officers and directors at March 31, 2008 and December 31, 2007, respectively, which is included in employee advances, excluding current portion, in the accompanying consolidated balance sheets. The Company loaned
approximately $690,000 in various transactions in 1998, 2002 and 2006. Except for $30,000, which does not bear interest and does not have a maturity date, the remaining loans bear interest at 8.0% and mature through December 2010.

One of the Parents stockholders is the sole shareholder of L.D.L. Enterprises, Inc. (LDL), a mail order business. From time to time, the Company
allows LDL to use, free of charge, unsold advertising time on its radio and television stations.



|8. | Segment Data
|-- | ------------

SFAS No. 131, Disclosures
About Segments of an Enterprise and Related Information, requires companies to provide certain information about their operating segments. The Company has two reportable segmentsradio operations and television operations. Management uses
operating income before deferred compensation benefit and depreciation and amortization as its measure of profitability for purposes of assessing performance and allocating resources.



|                                                                                                                                       |  |                             |        |   |      |   |        |  
|-------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------- | ------ | - | ---- | - | ------ | -
|                                                                                                                                       |  | Three Months EndedMarch 31, |       
|                                                                                                                                       |  | 2008                        |        |   | 2007 |  
|                                                                                                                                       |  | (in thousands)              |       
|Net revenues:                                                                                                                          |  |                             |        |   |      |   |        |  
|Radio operations                                                                                                                       |  | $                           | 13,695 |   |      | $ | 12,061 |  
|Television operations                                                                                                                  |  |                             | 12,712 |   |      |   | 13,084 |  
|                                                                                                                                       |  |                             |        |   |      |   |        |  
|Consolidated net revenues                                                                                                              |  |                             | 26,407 |   |      |   | 25,145 |  
|                                                                                                                                       |  |                             |        |   |      |   |        |  
|Operating expenses, excluding depreciation and amortization and deferred compensation benefit:                                         |  |                             |        |   |      |   |        |  
|Radio operations                                                                                                                       |  |                             | 7,713  |   |      |   | 6,552  |  
|Television operations                                                                                                                  |  |                             | 9,535  |   |      |   | 9,113  |  
|                                                                                                                                       |  |                             |        |   |      |   |        |  
|Consolidated operating expenses, excluding depreciation and amortization and deferred compensation benefit                             |  |                             | 17,248 |   |      |   | 15,665 |  
|                                                                                                                                       |  |                             |        |   |      |   |        |  
|Operating income before depreciation and amortization and deferred compensation benefit:                                               |  |                             |        |   |      |   |        |  
|Radio operations                                                                                                                       |  |                             | 5,982  |   |      |   | 5,509  |  
|Television operations                                                                                                                  |  |                             | 3,177  |   |      |   | 3,971  |  
|                                                                                                                                       |  |                             |        |   |      |   |        |  
|Consolidated operating income before depreciation and amortization and deferred compensation benefit                                   |  |                             | 9,159  |   |      |   | 9,480  |  
|                                                                                                                                       |  |                             |        |   |      |   |        |  
|Depreciation and amortization expense:                                                                                                 |  |                             |        |   |      |   |        |  
|Radio operations                                                                                                                       |  |                             | 1,251  |   |      |   | 1,152  |  
|Television operations                                                                                                                  |  |                             | 1,232  |   |      |   | 1,148  |  
|                                                                                                                                       |  |                             |        |   |      |   |        |  
|Consolidated depreciation and amortization expense                                                                                     |  |                             | 2,483  |   |      |   | 2,300  |  
|                                                                                                                                       |  |                             |        |   |      |   |        |  
|Deferred compensation benefit:                                                                                                         |  |                             |        |   |      |   |        |  
|Radio operations                                                                                                                       |  |                             |       |   |      |   | (1,132 | )
|                                                                                                                                       |  |                             |        |   |      |   |        |  
|Consolidated deferred compensation benefit                                                                                             |  |                             |       |   |      |   | (1,132 | )
|                                                                                                                                       |  |                             |        |   |      |   |        |  
|Operating income:                                                                                                                      |  |                             |        |   |      |   |        |  
|Radio operations                                                                                                                       |  |                             | 4,731  |   |      |   | 5,489  |  
|Television operations                                                                                                                  |  |                             | 1,945  |   |      |   | 2,823  |  
|                                                                                                                                       |  |                             |        |   |      |   |        |  
|Consolidated operating income                                                                                                          |  | $                           | 6,676  |   |      | $ | 8,312  |  
|                                                                                                                                       |  |                             |        |   |      |   |        |  
|Reconciliation of operating income before depreciation and amortization and deferred compensation benefit to loss before income
taxes: |  |                             |        |   |      |   |        |  
|Operating income before depreciation and amortization and deferred compensation benefit                                                |  | $                           | 9,159  |   |      | $ | 9,480  |  
|Depreciation and amortization                                                                                                          |  |                             | (2,483 | ) |      |   | (2,300 | )
|Deferred compensation benefit                                                                                                          |  |                             |       |   |      |   | 1,132  |  
|Interest expense, net of amounts capitalized                                                                                           |  |                             | (9,149 | ) |      |   | (9,156 | )
|Interest rate swap expense                                                                                                             |  |                             | (2,668 | ) |      |   | (280   | )
|Interest and other income                                                                                                              |  |                             | 32     |   |      |   | 39     |  
|                                                                                                                                       |  |                             |        |   |      |   |        |  
|Loss before income taxes                                                                                                               |  | $                           | (5,109 | ) |      | $ | (1,085 | )
|                                                                                                                                       |  |                             |        |   |      |   |        |  



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LBI MEDIA HOLDINGS, INC.

NOTES TO INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



|9. | Parent Issuance of Class A Common Stock
|-- | ---------------------------------------

On
March 30, 2007, affiliates of Oaktree Capital Management LLC and Tinicum Capital Partners II, L.P. purchased approximately 113 shares of Class A common stock of the Parent and the stockholders of the Parent. The sale of Class A common
stock by the Parent resulted in net proceeds to the Parent at closing of approximately $117.3 million, after deducting approximately $7.7 million in closing and transaction costs. A portion of these net proceeds were used to repay the Parents
Subordinated Notes and to redeem the related warrants. Approximately $47.9 million of the net proceeds were contributed by the Parent to LBI Media (through LBI Media Holdings). The contribution of $47.9 million was used by LBI Media to repay
outstanding amounts under the 2006 Revolver on April 5, 2007.

In connection with the sale of its Class A common stock, the
Parent and the stockholders of the Parent entered into an investor rights agreement that defines certain rights and obligations of the Parent and its stockholders. Pursuant to this investor rights agreement, the minority stockholders of the Parent
have the right to consent, in their sole discretion, to certain transactions involving LBI Media Holdings, subsidiaries of LBI Media Holdings, and the Parent, including, among other things, certain acquisitions or dispositions of assets by LBI Media
Holdings, subsidiaries of LBI Media Holdings, and the Parent. The investor rights agreement also contains customary representations and affirmative and negative covenants.



|10. | Income Taxes
|--- | ------------

The provision for income taxes for
the three months ended March 31, 2008 was $2.5 million as compared to $46.9 million for the three months ended March 31, 2007. The deferred provision for income taxes for the three months ended March 31, 2008 was $2.4 million as
compared to $46.8 million for the three months ended March 31, 2007, which was the period in which the Company became a C Corporation. As a result of the loss of S Corporation status, the Company recorded a one-time non-cash charge of
$46.8 million to adjust its deferred tax accounts at March 30, 2007. This charge is included in the provision for income taxes for the three months ended March 31, 2007 in the accompanying consolidated statements of operations. The
increase in the deferred tax liability during the three months ended March 31, 2008 results from the amortization of the Companys indefinite-lived intangible assets that, for tax purposes, are amortized over fifteen years.

The Companys deferred tax liabilities as of March 31, 2008 and December 31, 2007 were approximately $51.9 million and
$49.5 million, respectively, and result primarily from book and tax basis differences of the Companys indefinite-lived intangible assets. In addition to the deferred tax liability for its indefinite-lived intangible assets, the Company
has net deferred tax assets for which it has provided a full valuation allowance. The valuation allowance on deferred taxes relates to future deductible temporary differences and net operating losses for which the Company has concluded it is more
likely than not that these items will not be realized in the ordinary course of operations. As of March 31, 2008 and December 31, 2007, the net deferred tax asset and the related valuation allowance were approximately $14.5 million and
$10.1 million, respectively.



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LBI MEDIA HOLDINGS, INC.

NOTES TO INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



|11. | LBI Media Holdings, Inc. (Parent Company Only)
|--- | ----------------------------------------------

The
terms of LBI Medias 2006 Senior Credit Facilities and the indenture governing LBI Medias 2007 Senior Subordinated Notes (and previously, LBI Medias 2002 Senior Subordinated Notes) restrict LBI Medias ability to transfer net
assets to LBI Media Holdings in the form of loans, advances, or cash dividends. The following parent-only unaudited condensed financial information presents balance sheets and related statements of operations and cash flows of LBI Media Holdings by
accounting for the investments in the owned subsidiaries on the equity method of accounting. The accompanying unaudited condensed financial information should be read in conjunction with the consolidated financial statements and notes thereto.

Condensed Balance Sheet Information:

(in
thousands)



|                                           |  |               |         |   |                  |   |         |  
|------------------------------------------ |  | ------------- | ------- | - | ---------------- | - | ------- | -
|                                           |  | As of         |        
|                                           |  | March 31,2008 |         |   | December 31,2007 |  
|                                           |  | (Unaudited)   |         |   | (Note 1)         |  
|Assets                                     |  |               |         |   |                  |   |         |  
|Deferred financing costs                   |  | $             | 1,093   |   |                  | $ | 1,142   |  
|Investment in subsidiaries                 |  |               | 78,228  |   |                  |   | 84,141  |  
|Other assets                               |  |               | 2       |   |                  |   | 3       |  
|                                           |  |               |         |   |                  |   |         |  
|Total assets                               |  | $             | 79,323  |   |                  | $ | 85,286  |  
|                                           |  |               |         |   |                  |   |         |  
|Liabilities and stockholders equity       |  |               |         |   |                  |   |         |  
|Long term debt                             |  | $             | 64,576  |   |                  | $ | 62,885  |  
|Stockholders equity:                      |  |               |         |   |                  |   |         |  
|Common stock                               |  |               |        |   |                  |   |        |  
|Additional paid-in capital                 |  |               | 63,296  |   |                  |   | 63,298  |  
|Accumulated deficit                        |  |               | (48,549 | ) |                  |   | (40,897 | )
|                                           |  |               |         |   |                  |   |         |  
|Total stockholders equity                 |  |               | 14,747  |   |                  |   | 22,401  |  
|                                           |  |               |         |   |                  |   |         |  
|Total liabilities and stockholders equity |  | $             | 79,323  |   |                  | $ | 85,286  |  
|                                           |  |               |         |   |                  |   |         |  

Condensed Statement of Operations Information:

(In thousands)



|                              |  |                             |        |   |      |   |         |  
|----------------------------- |  | --------------------------- | ------ | - | ---- | - | ------- | -
|                              |  | Three Months EndedMarch 31, |       
|                              |  | 2008                        |        |   | 2007 |  
|Loss:                         |  |                             |        |   |      |   |         |  
|Equity losses of subsidiaries |  | $                           | (5,911 | ) |      | $ | (46,458 | )
|Expenses:                     |  |                             |        |   |      |   |         |  
|Interest expense              |  |                             | (1,741 | ) |      |   | (1,569  | )
|                              |  |                             |        |   |      |   |         |  
|Loss before taxes             |  |                             | (7,652 | ) |      |   | (48,027 | )
|Income tax benefit            |  |                             |       |   |      |   | 1       |  
|                              |  |                             |        |   |      |   |         |  
|Net loss                      |  | $                           | (7,652 | ) |      | $ | (48,026 | )
|                              |  |                             |        |   |      |   |         |  



13



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##### Table of Contents

LBI MEDIA HOLDINGS, INC.

NOTES TO INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



Condensed Statement of Flows Information:

(In thousands)



|                                                                                |  |                             |        |   |      |   |         |  
|------------------------------------------------------------------------------- |  | --------------------------- | ------ | - | ---- | - | ------- | -
|                                                                                |  | Three Months EndedMarch 31, |       
|                                                                                |  | 2008                        |        |   | 2007 |  
|Cash flows provided by operating activities:                                    |  |                             |        |   |      |   |         |  
|Net loss                                                                        |  | $                           | (7,652 | ) |      | $ | (48,026 | )
|Adjustments to reconcile net loss to net cash provided by operating activities: |  |                             |        |   |      |   |         |  
|Equity in losses of subsidiaries                                                |  |                             | 5,911  |   |      |   | 46,458  |  
|Benefit from income taxes                                                       |  |                             |       |   |      |   | (1      | )
|Amortization of deferred financing costs                                        |  |                             | 49     |   |      |   | 50      |  
|Accretion on senior discount notes                                              |  |                             | 1,691  |   |      |   | 1,519   |  
|Change in other assets                                                          |  |                             | 1      |   |      |   |        |  
|Distributions from subsidiaries                                                 |  |                             | 2      |   |      |   | 981     |  
|                                                                                |  |                             |        |   |      |   |         |  
|Net cash provided by operating activities                                       |  |                             | 2      |   |      |   | 981     |  
|Cash flows used in financing activities:                                        |  |                             |        |   |      |   |         |  
|Contribution to subsidiaries                                                    |  |                             |       |   |      |   | (47,900 | )
|Contribution from Parent                                                        |  |                             |       |   |      |   | 47,946  |  
|Distributions to Parent                                                         |  |                             | (2     | ) |      |   | (1,023  | )
|                                                                                |  |                             |        |   |      |   |         |  
|Net cash used in financing activities                                           |  |                             | (2     | ) |      |   | (977    | )
|Net change in cash and cash equivalents                                         |  |                             |       |   |      |   | 4       |  
|Cash and cash equivalents at beginning of period                                |  |                             |       |   |      |   |        |  
|                                                                                |  |                             |        |   |      |   |         |  
|Cash and cash equivalents at end of period                                      |  | $                           |       |   |      | $ | 4       |  
|                                                                                |  |                             |        |   |      |   |         |  



|12. | Subsequent Events
|--- | -----------------

On April 11, 2008, Liberman
Broadcasting of California LLC, an indirect wholly owned subsidiary of LBI Media Holdings, Inc. entered into a Purchase Agreement and an Investors Rights Agreement with PortalUno, Inc. and Reivax Technology, Inc. Under these agreements,
Liberman Broadcasting of California LLC purchased a number of shares of the Series A Preferred Stock of PortalUno, Inc. representing 30% of the fully diluted capital stock of PortalUno, Inc. Liberman Broadcasting of California LLC purchased the
shares for $450,000; $425,000 was paid in cash and $25,000 of consideration was paid in lieu of cash which represented the cancellation of a $25,000 note in favor of Liberman Broadcasting of California LLC.



14



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##### Table of Contents

|Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations
|------- | -------------------------------------------------------------------------------------

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the financial statements
included elsewhere in this Quarterly Report on Form 10-Q and the audited financial statements for the year ended December 31, 2007, included in our Annual Report on Form 10-K (File No. 333-110122). This Quarterly Report contains, in
addition to historical information, forward-looking statements, which involve risk and uncertainties. The words believe, expect, estimate, may, will, could, plan, or
continue, and similar expressions are intended to identify forward-looking statements. Our actual results could differ significantly from the results discussed in such forward-looking statements.

Overview

We own and operate radio and television
stations in Los Angeles (including Riverside and San Bernardino Counties), California, Houston, Texas and Dallas, Texas and television stations in San Diego, California and Salt Lake City, Utah. Our radio stations consist of five FM and two AM
stations serving Los Angeles, California and its surrounding areas, five FM and four AM stations serving Houston, Texas and its surrounding areas, and five FM stations and one AM station serving Dallas-Fort Worth, Texas and its surrounding areas.
Our five television stations consist of four full-power stations serving Los Angeles, California, Houston, Texas, Dallas-Fort Worth, Texas and Salt Lake City, Utah. We also have a low-power television station serving San Diego, California. In
October 2007, wildfires affected parts of Southern California and burned down that stations broadcasting facility, temporarily suspending service to the San Diego market until we rebuilt the broadcast facility and resumed service in January
2008.

In addition, we operate a television production facility, Empire Burbank Studios, in Burbank, California that we use to produce our
core programming for all of our television stations, and we have television production facilities in Houston and Dallas-Fort Worth that allow us to produce programming in those markets as well.

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

Our primary expenses are employee compensation, including commissions paid to our
local and national sales staffs, promotion, selling, programming and engineering expenses, general and administrative expenses and interest expense. Our programming expenses for television consist of costs related to the production of original
programming content, production of local newscasts and, to a lesser extent, the acquisition of programming content from other sources. Because we are highly leveraged, we will need to dedicate a substantial portion of our cash flow from operations
to pay interest on our debt. We may need to pursue one or more alternative strategies in the future to meet our debt obligations, such as refinancing or restructuring our indebtedness, selling equity securities or selling assets.

We are organized as a Delaware corporation. Prior to March 30, 2007, we were a qualified subchapter S subsidiary as we were deemed for tax purposes
to be part of our parent, an S corporation under federal and state tax laws. Accordingly, our taxable income was reported by the stockholders of our parent on their respective federal and state income tax returns. As a result of the sale of
Class A common stock of our parent (as described below under Sale and Issuance of Liberman Broadcastings Class A Common Stock), Liberman Broadcasting, Inc., a Delaware corporation and successor in interest to LBI
Holdings I, Inc., no longer qualified as an S Corporation, and none of its subsidiaries, including us, are able to qualify as qualified subchapter S subsidiaries. Thus, we have been taxed at regular corporate rates since March 30, 2007.



15



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##### Table of Contents

Sale and Issuance of Liberman Broadcastings Class A Common Stock

On March 30, 2007, our parent, Liberman Broadcasting, sold shares of its Class A common stock to affiliates of Oaktree Capital Management LLC
and Tinicum Capital Partners II, L.P. The sale resulted in net proceeds to Liberman Broadcasting at closing of approximately $117.3 million, after deducting approximately $7.7 million in closing and transaction costs. A portion of these net proceeds
were used to repay Liberman Broadcastings 9% subordinated notes due 2014 and to redeem related warrants to purchase shares of common stock of the predecessor of Liberman Broadcasting. Liberman Broadcasting contributed approximately $47.9
million of the net proceeds to us, and we, in turn, contributed $47.9 million to LBI Media. LBI Media used the proceeds contributed to it to repay outstanding amounts borrowed under LBI Medias senior revolving credit facility.

In connection with the sale of Liberman Broadcastings Class A common stock, Liberman Broadcasting and its stockholders entered into an
investor rights agreement that defines certain rights and obligations of Liberman Broadcasting and the stockholders of Liberman Broadcasting. Pursuant to this investor rights agreement, the investors have the right to consent to certain transactions
involving us, Liberman Broadcasting, and our subsidiaries, including:



| |  |  | certain acquisitions or dispositions of assets by us, Liberman Broadcasting and our subsidiaries that are consummated on or after September 30, 2009;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | certain transactions between us, Liberman Broadcasting and our subsidiaries, on the one hand, and Jose Liberman, our chairman and president and LBI Medias
chairman and president, Lenard Liberman, our executive vice president and secretary and LBI Medias executive vice president and secretary, or certain of their respective family members, on the other hand;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | certain issuances of equity securities to employees or consultants of ours, Liberman Broadcasting, and our subsidiaries;
| | - |  | ------------------------------------------------------------------------------------------------------------------------



| |  |  | certain changes in the compensation arrangements with Jose Liberman, Lenard Liberman or certain of their respective family members;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------



| |  |  | material modifications in our business strategy and the business strategy of Liberman Broadcasting and our subsidiaries;
| | - |  | ------------------------------------------------------------------------------------------------------------------------



| |  |  | commencement of a bankruptcy proceeding related to us, Liberman Broadcasting, and our subsidiaries;
| | - |  | ---------------------------------------------------------------------------------------------------



| |  |  | certain issuances of new equity securities to the public prior to March 30, 2010;
| | - |  | ---------------------------------------------------------------------------------



| |  |  | certain changes in Liberman Broadcastings corporate form to an entity other than a Delaware corporation;
| | - |  | ---------------------------------------------------------------------------------------------------------



| |  |  | any change in Liberman Broadcastings auditors to a firm that is not a big four accounting firm; and
| | - |  | ----------------------------------------------------------------------------------------------------



| |  |  | certain change of control transactions.
| | - |  | ---------------------------------------

Refinancing of LBI Media Senior Subordinated Notes

On July 23,
2007, LBI Media issued approximately $228.8 million aggregate principal amount of 81/2% Senior Subordinated Notes that mature in
2017, resulting in gross proceeds of approximately $225.0 million and net proceeds of approximately $221.6 million after certain transaction costs. The net proceeds of the 81/2% senior subordinated notes were used to redeem LBI Medias 101/8%
senior subordinated notes due 2012, to repay a portion of the borrowings under LBI Medias senior revolving credit facility and for general corporate purposes. The 101/8% senior subordinated notes were redeemed in full on August 22, 2007. See Liquidity and Capital Resources for more information on the 81/2% senior subordinated notes.

Acquisitions

On November 30, 2007, two of our indirect, wholly owned subsidiaries, KRCA Television LLC and KRCA
License LLC, consummated the acquisition of selected assets of television station KPNZ-TV, Ogden, Utah, that was owned and operated by Utah Communications, LLC pursuant to that certain asset purchase agreement, entered into by the parties on
May 15, 2007. The selected assets include, among other things, (i) licenses and permits authorized by the FCC for or in connection with the operation of the television station and (ii) broadcast and other television studio equipment
used to operate the television station. The purchase of these assets marks our first entry into this market. The total purchase price of approximately $10.0 million was paid in cash through borrowings under LBI Medias senior credit facilities.



16



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##### Table of Contents

On November 9, 2007, two of our indirect, wholly owned subsidiaries, Liberman Broadcasting of
California LLC and LBI Radio License LLC, entered into an asset purchase agreement with R&R Radio Corporation, as the seller, pursuant to which we have agreed to acquire selected assets of radio station KDES-FM, located in Palm Springs,
California, from the seller. The selected assets include, among other things, (i) licenses and permits authorized by the FCC for or in connection with the operation of the station, (ii) transmitter and other broadcast equipment used to
operate the station, and (iii) other related assets. We intend to change the programming format and the location of KDES-FM from Palm Springs, California to Redlands, California.

The aggregate purchase price will be approximately $17.5 million in cash, subject to certain adjustments, of which $0.5 million has been deposited in
escrow. We will pay $10.5 million of the aggregate purchase price to the seller and $7.0 million to Spectrum Scan-Idyllwild, LLC, or Spectrum Scan. As a condition to our purchase of the assets from the seller, Liberman Broadcasting of California LLC
has entered into an agreement with Spectrum Scan whereby it will pay $7.0 million to Spectrum Scan in exchange for Spectrum Scans agreement to terminate its option to purchase KWXY-FM, located in Cathedral City, California, and Spectrum
Scans assistance in the relocation of KDES-FM from Palm Springs, California to Redlands, California. Payment to Spectrum Scan is conditioned on the completion of the purchase of the assets from the seller. If the purchase of KDES-FM is not
completed, we must pay a $500,000 fee to Spectrum Scan.

Consummation of the acquisition is subject to regulatory approval from the FCC,
including consent to the relocation of KDES-FM from Palm Springs, California to Redlands, California, and to other customary closing conditions.

On September 21, 2007, two of our indirect, wholly owned subsidiaries, Liberman Broadcasting of California LLC and LBI Radio License LLC, consummated the acquisition of selected assets of radio station KWIE-FM (currently known as
KRQB-FM), 96.1 FM, licensed to San Jacinto, California, from KWIE, LLC, KWIE Licensing LLC and Magic Broadcasting, Inc. pursuant to an asset purchase agreement dated as of July 16, 2007. The total purchase price of approximately $25.0 million
was paid for in cash primarily through borrowings under LBI Medias senior secured revolving credit facility. The assets that were acquired include, among other things, (i) licenses and permits authorized by the FCC for or in connection
with the operation of the radio station and (ii) broadcast and other studio equipment used to operate the radio station.

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

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



17



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##### Table of Contents

Results of Operations

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



|                                                                                                 |  |                             |        |      |   |        |  
|------------------------------------------------------------------------------------------------ |  | --------------------------- | ------ | ---- | - | ------ | -
|                                                                                                 |  | Three Months EndedMarch 31, |       
|                                                                                                 |  | 2008                        |        | 2007 |  
|                                                                                                 |  | (in thousands)              |       
|Net revenues:                                                                                    |  |                             |        |      |   |        |  
|Radio                                                                                            |  | $                           | 13,695 |      | $ | 12,061 |  
|Television                                                                                       |  |                             | 12,712 |      |   | 13,084 |  
|                                                                                                 |  |                             |        |      |   |        |  
|Total                                                                                            |  | $                           | 26,407 |      | $ | 25,145 |  
|                                                                                                 |  |                             |        |      |   |        |  
|Total operating expenses before deferred compensation benefit and depreciation and amortization: |  |                             |        |      |   |        |  
|Radio                                                                                            |  | $                           | 7,713  |      | $ | 6,552  |  
|Television                                                                                       |  |                             | 9,535  |      |   | 9,113  |  
|                                                                                                 |  |                             |        |      |   |        |  
|Total                                                                                            |  | $                           | 17,248 |      | $ | 15,665 |  
|                                                                                                 |  |                             |        |      |   |        |  
|Deferred compensation benefit:                                                                   |  |                             |        |      |   |        |  
|Radio                                                                                            |  | $                           |       |      | $ | (1,132 | )
|Television                                                                                       |  |                             |       |      |   |       |  
|                                                                                                 |  |                             |        |      |   |        |  
|Total                                                                                            |  | $                           |       |      | $ | (1,132 | )
|                                                                                                 |  |                             |        |      |   |        |  
|Depreciation and amortization:                                                                   |  |                             |        |      |   |        |  
|Radio                                                                                            |  | $                           | 1,251  |      | $ | 1,152  |  
|Television                                                                                       |  |                             | 1,232  |      |   | 1,148  |  
|                                                                                                 |  |                             |        |      |   |        |  
|Total                                                                                            |  | $                           | 2,483  |      | $ | 2,300  |  
|                                                                                                 |  |                             |        |      |   |        |  
|Total operating expenses:                                                                        |  |                             |        |      |   |        |  
|Radio                                                                                            |  | $                           | 8,964  |      | $ | 6,571  |  
|Television                                                                                       |  |                             | 10,767 |      |   | 10,261 |  
|                                                                                                 |  |                             |        |      |   |        |  
|Total                                                                                            |  | $                           | 19,731 |      | $ | 16,832 |  
|                                                                                                 |  |                             |        |      |   |        |  
|Operating income:                                                                                |  |                             |        |      |   |        |  
|Radio                                                                                            |  | $                           | 4,731  |      | $ | 5,489  |  
|Television                                                                                       |  |                             | 1,945  |      |   | 2,823  |  
|                                                                                                 |  |                             |        |      |   |        |  
|Total                                                                                            |  | $                           | 6,676  |      | $ | 8,312  |  
|                                                                                                 |  |                             |        |      |   |        |  
|Adjusted EBITDA (1):                                                                             |  |                             |        |      |   |        |  
|Radio                                                                                            |  | $                           | 5,982  |      | $ | 6,641  |  
|Television                                                                                       |  |                             | 3,177  |      |   | 3,971  |  
|                                                                                                 |  |                             |        |      |   |        |  
|Total                                                                                            |  | $                           | 9,159  |      | $ | 10,612 |  
|                                                                                                 |  |                             |        |      |   |        |  



|(1) | We define Adjusted EBITDA as net loss plus income tax expense, net interest expense, interest rate swap expense, impairment of broadcast licenses, and depreciation and amortization.
Management considers this measure an important indicator of our liquidity relating to our operations because it eliminates the effects of certain non-cash items and our capital structure. This measure should be considered in addition to, but not as
a substitute for or superior to, other measures of liquidity and financial performance prepared in accordance with U.S. generally accepted accounting principles, such as cash flows from operating activities, operating income and net income. In
addition, our definition of Adjusted EBITDA may differ from those of many companies reporting similarly named measures.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

We discuss Adjusted EBITDA and the limitations of this financial measure in more detail under Non-GAAP Financial Measures.



18



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##### Table of Contents

The table set forth below reconciles net cash used in operating activities, calculated
and presented in accordance with U.S. generally accepted accounting principles, to Adjusted EBITDA:



|                                               |  |                             |        |   |      |   |         |  
|---------------------------------------------- |  | --------------------------- | ------ | - | ---- | - | ------- | -
|                                               |  | Three Months EndedMarch 31, |       
|                                               |  | 2008                        |        |   | 2007 |  
|                                               |  | (In thousands)              |       
|Net cash used in operating activities          |  | $                           | (4,041 | ) |      | $ | (615    | )
|Add:                                           |  |                             |        |   |      |   |         |  
|Income tax expense                             |  |                             | 2,543  |   |      |   | 46,941  |  
|Interest expense, net                          |  |                             | 9,117  |   |      |   | 9,117   |  
|Less:                                          |  |                             |        |   |      |   |         |  
|Amortization of deferred financing costs       |  |                             | (362   | ) |      |   | (300    | )
|Amortization of discount on subordinated notes |  |                             | (62    | ) |      |   |        |  
|Amortization of program rights                 |  |                             | (136   | ) |      |   |        |  
|Accretion on senior discount notes             |  |                             | (1,691 | ) |      |   | (1,519  | )
|Provision for doubtful accounts                |  |                             | (245   | ) |      |   | (221    | )
|Deferred compensation benefit                  |  |                             |       |   |      |   | 1,132   |  
|Changes in operating assets and liabilities:   |  |                             |        |   |      |   |         |  
|Cash overdraft                                 |  |                             | (773   | ) |      |   |        |  
|Accounts receivable                            |  |                             | (5     | ) |      |   | (2,454  | )
|Deferred compensation payment                  |  |                             |       |   |      |   | 1,374   |  
|Program rights                                 |  |                             | 1,160  |   |      |   | (178    | )
|Amounts due from related parties               |  |                             | 19     |   |      |   | (9      | )
|Prepaid expenses and other current assets      |  |                             | (20    | ) |      |   | (38     | )
|Employee advances                              |  |                             | 130    |   |      |   | 5       |  
|Accounts payable and accrued expenses          |  |                             | 1,427  |   |      |   | 756     |  
|Accrued interest                               |  |                             | 5,285  |   |      |   | 3,471   |  
|Deferred taxes payable                         |  |                             | (2,381 | ) |      |   | (46,058 | )
|Other assets and liabilities                   |  |                             | (806   | ) |      |   | (792    | )
|                                               |  |                             |        |   |      |   |         |  
|Adjusted EBITDA                                |  | $                           | 9,159  |   |      | $ | 10,612  |  
|                                               |  |                             |        |   |      |   |         |  

Three Months Ended March 31, 2008 Compared to the Three Months Ended March 31, 2007

Net Revenues. Net revenues increased by $1.3 million, or 5.0%, to $26.4 million for the three months ended March 31, 2008, from
$25.1 million for the same period in 2007. The increase was primarily attributable to increased advertising revenue in all of our radio markets, partially offset by declines in our California television markets.

Net revenues for our radio segment increased by $1.7 million, or 13.5%, to $13.7 million for the three months ended March 31, 2008, from $12.0
million for the same period in 2007. This growth was attributable to an increase in revenue across all of our radio markets  Los Angeles, Dallas and Houston  reflecting improved station ratings and increased advertiser acceptance of our
station formats.

Net revenues for our television segment decreased by $0.4 million, or 2.8%, to $12.7 million for the three months ended
March 31, 2008, from $13.1 million for the same period in 2007. This decrease was primarily attributable to decreased advertising revenue in our California markets, partially offset by increased advertising revenue in our Texas and Utah
markets.

We currently anticipate net revenue growth for the remainder of 2008 from both our radio and television segments due to increased
advertising time sold and increased advertising rates. Our internally produced programming, focused sales strategy and improved ratings performance should continue to increase our advertising time sold and advertising rates in 2008 for both
segments.

Total operating expenses. Total operating expenses increased by $2.9 million, or 17.2%, to $19.7 million for the three
months ended March 31, 2008 from $16.8 million for the same period in 2007. This increase was primarily attributable to:



| | (1) | a $1.1 million increase in deferred compensation, reflecting the impact of a $1.1 million accrual reduction that we recorded in the first quarter of 2007;
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------



19



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##### Table of Contents

| | (2) | a $1.1 million increase in selling, general and administrative expenses primarily attributable to (a) start-up costs and additional expenses related to our newly acquired radio
station in the Riverside and San Bernardino region of our Los Angeles market and our new television station in Salt Lake City, and (b) higher professional fees associated with the implementation of new procedures and internal controls testing
as required by the Sarbanes-Oxley Act of 2002;
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (3) | a $0.5 million increase in programming and technical expenses primarily related to additional expenses for our new Riverside-San Bernardino radio station that we acquired in October
2007 and our Salt Lake City television station that we acquired in December 2007; and
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (4) | a $0.2 million increase in depreciation and amortization.
| | --- | ---------------------------------------------------------

As noted above, deferred compensation expense increased from a $1.1 million benefit in the first quarter of 2007 to an expense of $0 million for the same period in 2008. The $1.1 million benefit recorded during the first three months of
2007 resulted from a reduction in the deferred compensation accrual because the amounts that were ultimately paid to employees in the first quarter of 2007 were less than the amounts that had been accrued at December 31, 2006. Our deferred
compensation liability can increase in future periods based on changes in an employees vesting percentage, which is based on time and performance measures, and can increase or decrease in future periods based on changes in the net value of our
parent, Liberman Broadcasting, Inc. See Critical Accounting PoliciesDeferred Compensation.

We believe that our
total operating expenses, before consideration of any impairment charges and adjustments to deferred compensation expense or benefit, will increase in the remainder of 2008 due to increased programming costs for our television segment and increased
sales commissions and administrative expenses associated with our anticipated net revenue growth. Continued growth in expenses may also occur as a result of future acquisitions of radio and television assets. We anticipate that the growth rate of
our 2008 total operating expenses, excluding any impairment charges and deferred compensation, will be lower than the growth rate of our 2008 net revenue. This expectation could be negatively impacted by the number and size of additional radio and
television assets that we acquire, if any.

Total operating expenses for our radio segment increased by $2.4 million, or 36.4%, to $9.0
million for the three months ended March 31, 2008, from $6.6 million in the three months ended March 31, 2007. This increase was primarily attributable to:



| | (1) | a $1.1 million increase in deferred compensation, reflecting the impact of the $1.1 million accrual reduction we recorded in the first quarter of 2007;
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | a $0.8 million increase in selling, general and administrative expenses, primarily due to (a) increased salaries, including new personnel and start-up costs in connection with
our newly acquired radio station in the Riverside and San Bernardino region of our Los Angeles market, (b) additional expenses incurred for our Dallas radio stations, reflecting the overall growth in net revenue, and (c) higher
professional expenses associated with the implementation of new procedures and internal controls testing as required by the Sarbanes-Oxley Act of 2002;
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (3) | a $0.4 million increase in programming and technical expenses primarily associated with our new radio station in the Riverside and San Bernardino region of our Los Angeles market;
and
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (4) | a $0.1 million increase in depreciation and amortization.
| | --- | ---------------------------------------------------------

Total operating expenses for our television segment increased by $0.5 million, or 4.9%, to $10.7 million for the three months ended March 31, 2008, from $10.2 million for the same period in 2007. This increase was primarily due to:



| | (1) | a $0.3 million increase in selling, general and administrative expenses primarily attributable to start up costs and other expenses incurred for our new television station in Salt
Lake City; and
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| | (2) | a $0.1 million increase in depreciation and amortization.
| | --- | ---------------------------------------------------------

Interest expense, net. Interest expense, net, was $9.1 million for the three months ended March 31, 2008 and 2007, respectively. As a result of our 2007 acquisitions, our average debt balance increased in the first quarter of
2008, as compared to the same period in 2007. However, interest expense remained flat at $9.1 million due to lower average interest rates during the three months ended March 31, 2008 as compared to the first quarter of 2007.

Our interest expense may increase in the remainder of 2008 if we borrow additional amounts under LBI Medias senior revolving credit facility to
acquire additional radio or television station assets, including the acquisition of the selected assets of radio station KDES-FM from R&R Radio Corporation. See Acquisitions.

Interest rate swap expense. Interest rate swap expense increased by $2.4 million to $2.7 million for the three months ended March 31, 2008,
from $0.3 million for the same period of 2007. This increase reflects the change in the fair market value of our interest rate swap during the quarter.

Provision for income taxes.Our provision for income taxes decreased by $44.4 million, to $2.5 million for the three months ended March 31, 2008, from $46.9 million for the corresponding period in 2007. As
described above under Sale and Issuance of Liberman Broadcastings Class A Common Stock, certain investors purchased shares of our parents Class A common stock in March 2007. As a result, our parent no longer
qualified as an S corporation and we and our subsidiaries no longer qualified as qualified subchapter S corporations. Accordingly, we recorded a one-time non-cash charge of $46.8 million to adjust our deferred tax accounts in the first quarter of
2007.

Net loss. We recognized a net loss of $7.7 million for the three months ended March 31, 2008, as compared to a net loss
of $48.0 for the same period of 2007, a decrease of $40.3 million. This change was primarily attributable to the one-time non-cash charge of $46.8 million to our deferred tax accounts for the three months ended March 31, 2007, partially offset
by higher operating and interest rate swap expenses, as described above.

Adjusted EBITDA. Adjusted EBITDA decreased by $1.4
million, or 13.7%, to $9.2 million for the three months ended March 31, 2008 as compared to $10.6 million for the same period in 2007 primarily as a result of the $1.1 million increase in deferred compensation reflecting the impact of the
accrual reduction we recorded in the first quarter of 2007, as described earlier.

Adjusted EBITDA for our radio segment decreased by $0.6
million, or 9.9%, to $6.0 million for the three months ended March 31, 2008, as compared to $6.6 million for the same period in 2007. The decrease was primarily the result of the $1.1 million increase in deferred compensation, partially offset
by increased operating leverage across the segment.

Adjusted EBITDA for our television segment decreased by $0.8 million, or 20.0%, to
$3.2 million for the three months ended March 31, 2008, from $4.0 million for the same period in 2007. This decrease was primarily the result of lower advertising revenue and increased operating expenses related to our newly acquired Utah
television station as discussed above.

Liquidity and Capital Resources

LBI Medias Senior Credit Facilities.Our primary sources of liquidity are cash provided by operations and available borrowings under LBI
Medias $150.0 million senior revolving credit facility. On May 8, 2006, LBI Media refinanced its prior $220.0 million senior revolving credit facility with a $150.0 million senior revolving credit facility and a $110.0 million senior
term loan facility. On January 23, 2008, LBI Media entered into a commitment increase agreement pursuant to which its senior term loan facility increased by $10.0 million. LBI Media borrowed the full amount of the increase in the commitment.

LBI Media has the option to request its existing or new lenders under its senior secured term loan facility and under its $150.0 million
senior secured revolving credit facility to increase the aggregate amount of its senior credit facilities by an additional $40.0 million; however, its existing and new lenders are not obligated to do so. The increases under the senior secured
revolving credit facility and the senior secured term loan credit facility, taken together, cannot exceed $50.0 million in the aggregate (including the $10.0 million increase on January 23, 2008).



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Under the senior revolving credit facility, LBI Media has a swing line sub-facility equal to an amount of
not more than $5.0 million. Letters of credit are also available to LBI Media under the senior revolving credit facility and may not exceed the lesser of $5.0 million or the available revolving commitment amount. There are no scheduled
reductions of commitments under the senior revolving credit facility. Under the senior term loan facility, each quarter, LBI Media must pay 0.25% of the original principal amount of the term loans, plus 0.25% of the additional amount borrowed in
January 2008 and 0.25% of any additional principal amount incurred in the future under the senior term loan facility. The senior credit facilities mature on March 31, 2012.

As of March 31, 2008, LBI Media had $20.4 million aggregate principal amount outstanding under the senior revolving credit facility and $117.8
million aggregate principal amount of outstanding senior term loans.

Borrowings under the senior credit facilities bear interest based on
either, at LBI Medias option, the base rate for base rate loans or the LIBOR rate for LIBOR loans, in each case plus the applicable margin stipulated in the senior credit agreements. The base rate is the higher of (i) Credit Suisses
prime rate and (ii) the Federal Funds Effective Rate (as published by the Federal Reserve Bank of New York) plus 0.50%. The applicable margin for revolving loans, which is based on LBI Medias total leverage ratio, will range from 0% to
1.00% per annum for base rate loans and from 1.00% to 2.00% per annum for LIBOR loans. Including the $10.0 million increase to LBI Medias senior secured term loan facility in January 2008, the applicable margin for term loans ranges
from 0.50% to 0.75% for base rate loans and from 1.50% to 1.75% for LIBOR loans. The applicable margin for any future term loans will be agreed upon at the time those loans are incurred. Interest on base rate loans is payable quarterly in arrears,
and interest on LIBOR loans is payable either monthly, bimonthly or quarterly depending on the interest period elected by LBI Media. All amounts that are not paid when due under either the senior revolving credit facility or the senior term loan
facility will accrue interest at the rate otherwise applicable plus 2.00% until such amounts are paid in full. In addition, LBI Media pays a quarterly unused commitment fee ranging from 0.25% to 0.50% depending on the level of facility usage. At
March 31, 2008, borrowings under LBI Medias senior credit facilities bore interest at rates between 4.20% and 4.87%, including the applicable margin.

Under the indentures governing LBI Medias 81/2% senior subordinated notes and our senior discount notes (described below), LBI Media is limited in its ability to borrow under the senior revolving credit facility and
to borrow additional amounts under the senior term loan facility. LBI Media may borrow up to an aggregate of $260.0 million under the senior credit facilities (subject to certain reductions under certain circumstances) without having to comply with
specified leverage ratios under the indentures governing its 81/2% senior subordinated notes and our senior discount notes, but
any amount over such $260.0 million that LBI Media may borrow under the senior credit facilities (subject to certain reductions under certain circumstances) will be subject to LBI Medias and our compliance with specified leverage ratios (as
defined in the indentures governing LBI Medias 81/2% senior subordinated notes and our senior discount notes). Also, the
indenture governing LBI Medias 81/2% senior subordinated notes prohibits borrowings under LBI Medias senior credit
facilities, the proceeds of which would be used to repay, redeem, repurchase or refinance any of our senior discount notes earlier than one year prior to their stated maturity.

LBI Medias senior credit facilities contain customary restrictive covenants that, among other things, limit its ability to incur additional
indebtedness and liens in connection therewith and pay dividends. Under the senior revolving credit facility, LBI Media must also maintain a maximum senior secured leverage ratio (as defined in the senior credit agreement) on and after the fiscal
quarter ended June 30, 2009.

LBI Medias 81/2% Senior Subordinated Notes. On July 23, 2007, LBI Media issued approximately
$228.8 million aggregate principal amount of 81/2% Senior Subordinated Notes that mature in 2017, resulting in gross proceeds of
approximately $225.0 million and net proceeds of approximately $221.6 million after deducting certain transaction costs. Under the terms of LBI Medias 81/2% senior subordinated notes, it must pay semi-annual interest payments of approximately $9.7 million each February 1 and August 1, commencing February 1, 2008. LBI Media may redeem the 81/2% senior subordinated notes at any time on or after August 1, 2012 at redemption prices specified in the indenture governing
its 81/2% senior subordinated notes, plus accrued and unpaid interest. At any time prior to August 1, 2012, LBI Media may
redeem some or all of its 81/2% senior subordinated notes at a redemption price equal to a make whole amount as set
forth in the indenture governing such senior subordinated notes. Also, LBI Media may redeem up to 35% of the aggregate principal amount of the notes with the net proceeds of certain equity offerings completed on or prior to August 1, 2010 at a
redemption price of 108.5% of the principal amount of the notes, plus accrued and unpaid interest, if any, thereon to the applicable redemption date.



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The indenture governing these notes contains
restrictive covenants that limit, among other things, LBI Medias and its subsidiaries ability to incur additional indebtedness, issue certain kinds of equity, and make particular kinds of investments. The indenture governing LBI
Medias 81/2% senior subordinated notes also prohibits the incurrence of indebtedness, the proceeds of which would be used
to repay, redeem, repurchase or refinance any of our senior discount notes earlier than one year prior to the stated maturity of the senior discount notes unless such indebtedness is (i) unsecured, (ii) pari passu or junior in right of
payment to the 81/2% senior subordinated notes of LBI Media, and (iii) otherwise permitted to be incurred under the
indenture governing LBI Medias 81/2% senior subordinated notes.

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

Senior Discount Notes. In October 2003, we issued $68.4 million aggregate principal amount at maturity of senior discount notes that mature in
2013. Under the terms of the senior discount notes, cash interest will not accrue or be payable on the senior discount notes prior to October 15, 2008, and instead the accreted value of the senior discount notes will increase until such date.
Thereafter, cash interest on the senior discount notes will accrue at a rate of 11% per year payable semi-annually on each April 15 and October 15, with the first payment due on April 15, 2009; provided, however, that we may make
a cash interest election on any interest payment date prior to October 15, 2008. If we make a cash interest election, the principal amount of the senior discount notes at maturity will be reduced to the accreted value of the senior discount
notes as of the date of the cash interest election, and cash interest will begin to accrue at a rate of 11% per year from the date such election is made. We may redeem the senior discount notes at any time on or after October 15, 2008 at
redemption prices specified in the indenture governing our senior discount notes, plus accrued and unpaid interest.

The indenture governing the senior discount notes contains certain restrictive covenants that, among other things, limit our ability to incur additional indebtedness and pay dividends to Liberman Broadcasting. Our
senior discount notes are structurally subordinated to LBI Medias senior credit facilities and LBI Medias 81/2%
senior subordinated notes.

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



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The following table summarizes our various levels of indebtedness at March 31, 2008.



|                           |  |                                                         |  |                                                       |  |                         |  |                                                                                      
|-------------------------- |  | ------------------------------------------------------- |  | ----------------------------------------------------- |  | ----------------------- |  | -------------------------------------------------------------------------------------
|Issuer                     |  | Form of Debt                                            |  | Principal AmountOutstanding                           |  | Scheduled Maturity Date |  | Interest rate                                                                        
|LBI Media, Inc.            |  | $150.0 million senior secured revolving credit facility |  | $20.4 million                                         |  | March 31, 2012          |  | LIBOR or base rate, plus an applicable margin dependent on LBI Medias leverage ratio
|LBI Media, Inc.            |  | Senior secured term loan credit facility                |  | $117.8 million                                        |  | March 31, 2012          |  | LIBOR plus 1.50% per annum, or base rate plus 0.50% per annum                        
|LBI Media, Inc.            |  | Senior subordinated notes                               |  | $228.8 million aggregate principal amount at maturity |  | August 1, 2017          |  | 8.5%                                                                                 
|LBI Media Holdings Inc.    |  | Senior discount notes                                   |  | $68.4 million aggregate principal amount at maturity  |  | October 15, 2013        |  | 11%                                                                                  
|Empire Burbank Studios LLC |  | Mortgage note                                           |  | $2.2 million                                          |  | July 1, 2019            |  | 5.52%                                                                                

Cash Flows. Cash and cash equivalents were $0.5 million and $1.7 million at March 31,
2008 and December 31, 2007, respectively.

Net cash flow used in operating activities was $4.0 million and $0.6 million for the three
months ended March 31, 2008 and 2007, respectively. The increase in our net cash flow used in operating activities during the three months ended March 31, 2008 as compared to 2007 was primarily the result of increases in television program
purchases and interest payments.

Net cash flow used in investing activities was $2.3 million and $5.7 million for the three months ended
March 31, 2008 and 2007, respectively. The decrease was primarily attributable to lower capital expenditures during the three months ended March 31, 2008, as compared to the same period in 2007.

Net cash flow provided by financing activities was $5.1 million and $52.1 million for the three months ended March 31, 2008 and 2007. The decrease
primarily reflects a $47.9 million capital contribution from our parent in the first quarter of 2007, resulting from the issuance of its Class A common stock during the period.

Contractual Obligations. Other than the additional $10.0 million borrowing under our senior term loan facility described above, we had no material
changes in commitments for long-term debt obligations or operating lease obligations as of March 31, 2008 as compared to those disclosed in our table of contractual obligations included in our Annual Report on Form 10-K for the year ended
December 31, 2007. We anticipate that funds generated from operations and funds available under LBI Medias senior revolving credit facility will be sufficient to meet our working capital and capital expenditure needs in the foreseeable
future.

Expected Use of Cash Flows. We believe that our cash on hand, cash provided by operating activities and borrowings under
LBI Medias senior revolving credit facility will be sufficient to permit us to fund our contractual obligations and operations for at least the next twelve months. For both our radio and television segments, we have historically funded, and
will continue to fund, expenditures for operations, administrative expenses, capital expenditures and debt service from our operating cash flow and borrowings under LBI Medias senior revolving credit facility. For our television segment, our
planned uses of liquidity during the next twelve months will include the addition of production equipment primarily for our Houston, Dallas, Salt Lake City and Los



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Angeles television stations at an estimated cost of $3.0 million. In connection with the purchase of the selected assets of five radio stations from
Entravision Communications Corporation, one of our indirect, wholly owned subsidiaries, Liberman Broadcasting of Dallas, Inc. (predecessor in interest to Liberman Broadcasting of Dallas LLC), also purchased a building in Dallas, Texas to accommodate
our growth in stations owned and operated in the Dallas-Fort Worth market. We estimate we will spend approximately $10.0 million on improvements and equipment for our new Dallas building. In addition, our senior discount notes will begin
accruing cash interest at a rate of 11% per year on October 15, 2008, with the first payment due on April 15, 2009. Prior to October 15, 2008, our senior discount notes have not been accruing cash interest and instead the
accreted value of the notes has been increasing. The interest payments will be payable on April 15 and October 15 of each year until the notes mature on October 15, 2013.

We have used, and expect to continue to use, a significant portion of our capital resources to fund acquisitions. Future acquisitions will be funded from
amounts available under LBI Medias senior revolving credit facility, the proceeds of future equity or debt offerings and our internally generated cash flows. However, our ability to pursue future acquisitions may be impaired if we or our
parent are unable to obtain funding from other capital sources. As a result, we may not be able to increase our revenues at the same rate as we have in recent years.

Seasonality

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

Non-GAAP Financial Measures

We use the term
Adjusted EBITDA throughout this report. Adjusted EBITDA consists of net (loss) income plus income tax expense, net interest expense, interest rate swap expense, impairment of broadcast licenses and depreciation and amortization.

This term, as we define it, may not be comparable to a similarly titled measure employed by other companies and is not a measure of
performance calculated in accordance with U.S. generally accepted accounting principles, or GAAP.

Management considers this measure an
important indicator of our liquidity relating to our operations, as it eliminates the effects of certain non-cash items and our capital structure. Management believes liquidity is an important measure for our company because it reflects our ability
to meet our interest payments under our substantial indebtedness and is a measure of the amount of cash available to grow our company through our acquisition strategy. This measure should be considered in addition to, but not as a substitute for or
superior to, other measures of liquidity and financial performance prepared in accordance with GAAP, such as cash flows from operating activities, operating income and net income.



| |  |  | We believe Adjusted EBITDA is useful to an investor in evaluating our liquidity and cash flow because:
| | - |  | ------------------------------------------------------------------------------------------------------



| |  |  | it is widely used in the broadcasting industry to measure a companys liquidity and cash flow without regard to items such as depreciation and amortization and
impairment of broadcast licenses. The broadcast industry uses liquidity to determine whether a company will be able to cover its capital expenditures and whether a company will be able to acquire additional assets and broadcast licenses if the
company has an acquisition strategy. We believe that by eliminating the effect of certain non-cash items, Adjusted EBITDA provides a meaningful measure of liquidity;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | it gives investors another measure to evaluate and compare the results of our operations from period to period by removing the impact of non-cash expense items,
such as impairment of broadcast licenses. By removing the non-cash items, it allows our investors to better determine whether we will be able to meet our debt obligations as they become due; and
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | it provides a liquidity measure before the impact of a companys capital structure by removing net interest expense items and interest rate swap expenses.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------



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Our management uses Adjusted EBITDA:



| |  |  | as a measure to assist us in planning our acquisition strategy;
| | - |  | ---------------------------------------------------------------



| |  |  | in presentations to our board of directors to enable them to have the same consistent measurement basis of liquidity and cash flow used by management;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | as a measure for determining our operating budget and our ability to fund working capital; and
| | - |  | ----------------------------------------------------------------------------------------------



| |  |  | as a measure for planning and forecasting capital expenditures.
| | - |  | ---------------------------------------------------------------

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

Critical Accounting Policies

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

We believe the following accounting policies and the related judgments and estimates affect the preparation of our consolidated financial statements.

Acquisitions of radio and television station assets

Our radio and television station acquisitions have consisted primarily of FCC licenses to broadcast in a particular market (broadcast licenses). We generally acquire the existing format and change it upon acquisition.
As a result, a substantial portion of the purchase price for the assets of a radio or television station is allocated to its broadcast license. The allocations assigned to acquired broadcast licenses and other assets are subjective by their nature
and require our careful consideration and judgment. We believe the allocations represent appropriate estimates of the fair value of the assets acquired.

Allowance for doubtful accounts

We maintain allowances for doubtful accounts for estimated losses resulting from the
inability of our customers to make required payments. A considerable amount of judgment is required in assessing the likelihood of ultimate realization of these receivables including our history of write-offs, relationships with our customers and
the current creditworthiness of each advertiser. Our historical estimates have been a reliable method to estimate future allowances, with historical reserves averaging approximately 9.0% of our outstanding receivables. If the financial condition of
our advertisers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required. The effect of an increase in our allowance of 3.0% of our outstanding receivables as of March 31, 2008,
from 11.1% to 14.1% or $2.2 million to $2.8 million, would result in a decrease in pre-tax income of $0.6 million for the three months ended March 31, 2008.

Intangible assets

We account for our broadcast licenses in accordance with Statement of Financial Accounting
Standards No. 142, Goodwill and Other Intangible Assets (SFAS 142). We believe our broadcast licenses have indefinite useful lives given they are expected to indefinitely contribute to our future cash flows and that they may be
continually renewed without substantial cost to us. As such, in accordance with SFAS 142, we review our broadcast licenses for impairment annually during the third quarter of each fiscal year, with additional evaluations performed if potential
impairment indicators are noted.



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We completed our annual impairment review of our broadcast licenses in the third quarter of 2007 and
conducted an additional review of the fair value of some of our broadcast licenses in the fourth quarter of 2007. For purposes of our impairment testing, the unit of accounting is each individual FCC license or, in situations where there are
multiple stations in a particular market that broadcast the same programming (that is, simulcast), it is the cluster of stations broadcasting the programming. We determined the fair value of each of our broadcast licenses by assuming that entry into
the particular market took place as of the valuation date and considered the signal coverage of the related station as well as the projected advertising revenues for the particular market(s) in which each station operates. We adjusted the projected
total advertising revenues to be generated in certain of these markets downward due to a general slowdown in broadcast revenues in those markets, which was partially explained by greater competition for revenues from non-traditional media. We
determined the fair value of each broadcast license primarily from projected total advertising revenues for a given market and did not take into consideration our format or management capabilities. As no impairment indicators were identified, we had
no impairment write-downs for the three months ended March 31, 2008 and 2007.

In assessing the recoverability of goodwill and
indefinite life intangible assets, we must make assumptions about the estimated future cash flows and other factors to determine the fair value of these assets. Assumptions about future revenue and cash flows require significant judgment because of
the current state of the economy and the fluctuation of actual revenue and the timing of expenses. We develop future revenue estimates based on projected ratings increases, planned timing of signal strength upgrades, planned timing of promotional
events, customer commitments and available advertising time. Estimates of future cash flows assume that expenses will grow at rates consistent with historical rates. Alternatively, some stations under evaluation have had limited relevant cash flow
history due to planned conversion of format or upgrade of station signal. The assumptions about cash flows after conversion reflect estimates of how these stations are expected to perform based on similar stations and markets and possible proceeds
from the sale of the assets. If the expected cash flows are not realized, impairment losses may be recorded in the future. If we experienced a 10% decrease in the fair value of each of our broadcast licenses from that determined during our last
annual impairment testing (including updated procedures through December 31, 2007), we would require an additional impairment write-down of approximately $8.3 million.

Deferred compensation

One of our indirect, wholly owned subsidiaries and our parent, Liberman
Broadcasting, have entered into employment agreements with certain employees. In addition to annual compensation and other benefits, these agreements provide the employees with the ability to participate in the increase of the net value
of Liberman Broadcasting over certain base amounts.

Our deferred compensation liability can increase based on changes in the applicable
employees vesting percentage and can increase or decrease based on changes in the net value of Liberman Broadcasting. We have two deferred compensation components that comprise the employees vesting percentage: (i) a
component that vests in varying amounts over time; and (ii) a component that vests upon the attainment of certain performance measures (each unique to the individual agreements). We account for the time vesting component over the vesting
periods specified in the employment agreements and account for the performance based component when we consider it probable that the performance measures will be attained.

As part of the calculation of the deferred compensation liability, we use the income and market valuation approaches to determine the net
value of Liberman Broadcasting. The income approach analyzes future cash flows and discounts them to arrive at a current estimated fair value. The market approach uses recent sales and offering prices of similar properties to determine
estimated fair value. Based on the net value of Liberman Broadcasting as determined in these analyses, and based on the percentage of incentive compensation that has vested (as specified in the employment agreements), we record deferred
compensation expense or benefit (and a corresponding credit or charge to deferred compensation liability). As such, estimation of the net value of Liberman Broadcasting requires considerable management judgment and the amounts recorded
as periodic deferred compensation expense or benefit are dependent on that judgment.



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At March 31, 2008, we estimated that no employees had vested in any unpaid deferred compensation. In the
first quarter of 2007, we satisfied our obligations under an employment agreement that had a December 31, 2006 net value determination date with an aggregate cash payment of approximately $1.4 million, which was approximately $1.1
million less than the amount accrued as of December 31, 2006. We also have an employment agreement with a net value determination date of December 31, 2009.

If we assumed no change in the net value of Liberman Broadcasting from that at March 31, 2008, we would not expect to record any deferred compensation expense during the remainder of 2008 relating
solely to the time vesting portion of the deferred compensation. The agreements require us to pay the deferred compensation amounts in cash until Liberman Broadcastings common stock becomes publicly traded, at which time we may pay these
amounts in cash or Liberman Broadcastings common stock, at our option.

Commitments and contingencies

We periodically record the estimated impacts of various conditions, situations or circumstances involving uncertain outcomes. These events are called
contingencies, and our accounting for these events is prescribed by SFAS No. 5, Accounting for Contingencies.

The accrual of a contingency involves considerable judgment on the part of our management. We use our internal expertise, and outside experts (such as lawyers), as necessary, to help estimate the probability that a loss has been incurred
and the amount (or range) of the loss. We currently do not have any material contingencies that we believe require loss accruals; however, we refer you to Note 6 of our condensed consolidated financial statements for discussion of other known
contingencies.

Recent Accounting Pronouncements

In September 2006, the FASB issued Statement of Financial Accounting Standards (Statement) No. 157, Fair Value Measurements (FAS 157). FAS 157 establishes a single authoritative definition
of fair value, sets out a framework for measuring fair value and expands on required disclosures about fair value measurement. We adopted on January 1, 2008, certain provisions of FAS 157 related to financial assets and liabilities as well as
other assets and liabilities carried at fair value on a recurring basis, and have determined that such adoption has no effect on our financial position, results of operations and cash flows. The provisions of FAS 157 related to other non-financial
assets and liabilities will be effective on January 1, 2009, and will be applied prospectively. We are currently evaluating the impact the provisions of FAS 157 will have on our financial position, results of operations and cash flows as it
relates to other non-financial assets and liabilities.

In addition, in February 2007, the FASB issued FAS No. 159, The Fair
Value Option for Financial Assets and Financial Liabilities-including an amendment of FASB Statement No. 115 (FAS 159). FAS 159 expands the use of fair value accounting but does not affect existing standards that require
assets or liabilities to be carried at fair value. Under FAS 159, a company may elect to use fair value to measure certain financial assets and liabilities and any changes in fair value are recognized in earnings. This statement was effective on
January 1, 2008. We did not elect the fair value option upon adoption of FAS 159.

In December 2007, the FASB issued SFAS
No. 141R, Business Combinations, which requires an acquirer to measure the identifiable assets acquired, the liabilities assumed and any noncontrolling interest in the acquiree at their fair values on the acquisition date, with
goodwill being the excess value over the net identifiable assets acquired. SFAS 141R is effective beginning January 1, 2009. We are currently evaluating what impact, if any, the adoption of SFAS 141R will have on our financial position, results
of operations and cash flows.

In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated
Financial Statements, which clarifies that a noncontrolling interest in a subsidiary should be reported as equity in the consolidated financial statements The calculation of earnings per share will continue to be based on income amounts
attributable to the Parent. SFAS 160 is effective beginning January 1, 2009. We are currently evaluating what impact, if any, the adoption of SFAS 160 will have on our financial position, results of operations and cash flows.



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Cautionary Statement Regarding Forward-Looking Statements

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



| |  |  | our dependence on advertising revenues;
| | - |  | ---------------------------------------



| |  |  | general economic conditions in the United States;
| | - |  | -------------------------------------------------



| |  |  | our ability to reduce costs without adversely impacting revenues;
| | - |  | -----------------------------------------------------------------



| |  |  | changes in the rules and regulations of the FCC;
| | - |  | ------------------------------------------------



| |  |  | our ability to attract, motivate and retain salespeople and other key personnel;
| | - |  | --------------------------------------------------------------------------------



| |  |  | our ability to successfully convert acquired radio and television stations to a Spanish-language format;
| | - |  | --------------------------------------------------------------------------------------------------------



| |  |  | our ability to maintain FCC licenses for our radio and television stations;
| | - |  | ---------------------------------------------------------------------------



| |  |  | successful integration of acquired radio and television stations;
| | - |  | -----------------------------------------------------------------



| |  |  | potential disruption from natural hazards;
| | - |  | ------------------------------------------



| |  |  | our ability to protect our intellectual property rights;
| | - |  | --------------------------------------------------------



| |  |  | strong competition in the radio and television broadcasting industries;
| | - |  | -----------------------------------------------------------------------



| |  |  | sufficient cash to meet our debt service obligations; and
| | - |  | ---------------------------------------------------------



| |  |  | our ability to obtain regulatory approval for future acquisitions.
| | - |  | ------------------------------------------------------------------

The foregoing factors are not exhaustive, and new factors may emerge or changes to the foregoing factors may occur that could impact our business. The forward-looking statements in this Quarterly Report, as well as
subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf, are hereby expressly qualified in their entirety by the cautionary statements in this Quarterly Report, the risk factors included in our
Annual Report on Form 10-K for the year ended December 31, 2007 and other documents that we file from time to time with the Securities and Exchange Commission, particularly any Current Reports on Form 8-K. We are not obligated to update or
revise any forward-looking statements, whether as a result of new information, future events or otherwise.



|Item 3. | Quantitative and Qualitative Disclosures About Market Risk
|------- | ----------------------------------------------------------

In the ordinary course of business, we are exposed to various market risk factors, including fluctuations in interest rates and changes in general economic conditions. Please see Item 7A. Quantitative and Qualitative Disclosures about
Market Risk, contained in our Annual Report on Form 10-K for the year ended December 31, 2007 for further discussion on quantitative and qualitative disclosures about market risk.



|Item 4T. | Controls and Procedures
|-------- | -----------------------

As required by SEC Rule
15d-15(b), we carried out an evaluation, under the supervision and with the participation of our management, including our President and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures as of March 31,
2008. Based on the foregoing, our President and Chief Financial Officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective at the reasonable assurance level.

As discussed in Part II, Item 9A(T). Controls and Procedures of our 2007 Form 10-K, management concluded that the implementation and
maintenance of logical security and access controls related to our critical information technology systems constituted a material weakness and that our internal control over financial reporting was therefore not effective as of December 31,
2007. As further discussed in our 2007 Form 10-K, Part II, Item 9A(T). Remediation Actions Undertaken by Management, we began remediating the deficiencies that gave rise to this material weakness. Since the above material weakness
was identified, we have (i) assigned individual user accounts and passwords and (ii) changed administrative access levels to users based on the requirements of their position. Other than these changes, there have been no significant
changes in our internal control over financial reporting, identified in connection with the evaluation of such internal control that occurred during our last fiscal quarter, which have materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting.



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PART II. OTHER INFORMATION



|Item 1. | Legal Proceedings
|------- | -----------------

In June 2005, eight former
employees of Liberman Broadcasting of California LLC, or LBI, one of our indirect wholly owned subsidiaries, filed suit in Los Angeles County Superior Court alleging claims on their own behalf and also on behalf of a purported class of former and
current employees of LBI. The complaint alleged, among other things, wage and hour violations relating to overtime pay, and wrongful termination and unfair competition under the California Business and Professions Code. Plaintiffs sought to recover,
among other relief, unspecified general, treble and punitive damages, as well as profit disgorgement, restitution and attorneys fees. In June 2007, two former employees of LBI filed another suit in Los Angeles County Superior Court, alleging
claims on their own behalf and also on behalf of a purported class of former and current employees of LBI. The complaint alleged, among other things, violations of California labor laws with respect to providing meal and rest breaks. Plaintiffs
sought, among other relief, unspecified liquidated and general damages, declaratory, equitable and injunctive relief, and attorneys fees.

On July 13, 2007, LBI entered into a settlement agreement with class action representatives to settle, subject to court approval, these lawsuits. While LBI denied the allegations in both lawsuits, it agreed to the final settlement of
both actions that was approved by the court in January 2008 to avoid significant legal fees, other expenses and management time that would have to be devoted to the two litigation matters. The final settlement provided for a settlement payment of
$469,000 (including attorneys fees and costs and administrative fees). Selling, general and administrative expenses for the three months ended March 31, 2007 include a litigation accrual of approximately $350,000 related to this matter.
We recorded an additional accrual of $475,000 in the second quarter of 2007 and reduced the total litigation accrual by $356,000 in the fourth quarter of 2007, reflecting our settlement in January 2008.

In consideration of the settlement payment, the plaintiffs in both cases agreed to dismiss the two class actions with prejudice and to release all known
and unknown claims arising out of or relating to such claims. Because the settlement has received court approval, the settlement has become effective and binding on the parties.

We are a party to an ongoing dispute with Broadcast Music, Inc. (BMI) and the American Society of Composers, Authors and Publishers
(ASCAP) related to royalties due to BMI and ASCAP in the amount of approximately $1.3 million. As of March 31, 2008, we have reserved approximately $0.5 million related to this dispute. On March 24, 2008, we submitted a formal
offer to settle all amounts due related to all disputed matters with BMI and ASCAP totaling approximately $0.3 million. It is our position that the remaining portion of the total disputed amounts is attributable primarily to billings related to our
time-brokered and simulcast stations, as well as other differences, for which we were improperly billed. BMI and ASCAP have communicated that they did not believe our proposal was acceptable. The parties are continuing their discussions.

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



|Item 1A. | Risk Factors
|-------- | ------------

There have been no material changes
in our risk factors from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2007.



|Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds
|------- | -----------------------------------------------------------

None.



|Item 3. | Defaults upon Senior Securities
|------- | -------------------------------

None.



|Item 4. | Submission of Matters to a Vote of Security Holders
|------- | ---------------------------------------------------

None.



|Item 5. | Other Information
|------- | -----------------

None.



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|Item 6. | Exhibits
|------- | --------



| | (a) | Exhibits
| | --- | --------



|              |  |                                                                                                                                                                                                    
|------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Exhibit Description                                                                                                                                                                                
|3.1           |  | Restated Certificate of Incorporation of LBI Media Holdings, Inc.(1)                                                                                                                               
|              | 
|3.2           |  | Amended and Restated Bylaws of LBI Media Holdings, Inc. (1)                                                                                                                                        
|              | 
|4.1           |  | Indenture governing LBI Media Holdings, Inc.s 11% Senior Discount Notes due 2013, dated October 10, 2003, by and among LBI Media Holdings, Inc. and U.S. Bank National Association, as
Trustee (2)
|              | 
|4.2           |  | Form of Exchange Note (included as Exhibit A-1 to Exhibit 4.1)                                                                                                                                     
|              | 
|10.1          |  | Employment Agreement, dated February 27, 2008, by and between Liberman Broadcasting, Inc. and Wisdom Lu (3)                                                                                        
|              | 
|31.1          |  | Certification of President pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934*                                                                                      
|              | 
|31.2          |  | Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934*                                                                        



|* | Filed herewith.
|- | ---------------

|(1) | Incorporated by reference to LBI Media Holdings, Inc.s Quarterly Report on Form 10-Q filed on May 17, 2007.
|--- | ------------------------------------------------------------------------------------------------------------

|(2) | Incorporated by reference to LBI Media Holdings, Inc.s Registration Statement on Form S-4 (Registration No. 333-110122), filed with the Securities and Exchange Commission
on October 30, 2003, as amended.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Incorporated by reference to LBI Media Holdings, Inc.s Annual Report on Form 10-K filed on March 31, 2008.
|--- | -----------------------------------------------------------------------------------------------------------



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SIGNATURE

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



LBI MEDIA HOLDINGS, INC.By:

/s/ Wisdom LuWisdom LuChief Financial Officer


Date: May 15, 2008



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