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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 September 30, 2009

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   ̈    No   ̈ (Note: As a voluntary filer, the registrant has filed all reports under Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months, but the registrant is not subject
to such filing requirements.)

Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was
required to submit and post such files).    Yes   ̈    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 November 13, 2009, 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 |  | 22  
|                              |  |          | 
|                              |  | Item 3.  |  | Quantitative and Qualitative Disclosures About Market Risk                            |  | 39  
|                              |  |          | 
|                              |  | Item 4T. |  | Controls and Procedures                                                               |  | 40  
|                              | 
|PART II. OTHER INFORMATION    |  | 41      
|                              |  |          | 
|                              |  | Item 1.  |  | Legal Proceedings                                                                     |  | 41  
|                              |  |          | 
|                              |  | Item 1A. |  | Risk Factors                                                                          |  | 41  
|                              |  |          | 
|                              |  | Item 2.  |  | Unregistered Sales of Equity Securities and Use of Proceeds                           |  | 41  
|                              |  |          | 
|                              |  | Item 3.  |  | Defaults upon Senior Securities                                                       |  | 41  
|                              |  |          | 
|                              |  | Item 4.  |  | Submission of Matters to a Vote of Security Holders                                   |  | 41  
|                              |  |          | 
|                              |  | Item 5.  |  | Other Information                                                                     |  | 41  
|                              |  |          | 
|                              |  | Item 6.  |  | Exhibits                                                                              |  | 43  



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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)



|                                                                                                                                  |  |                   |          |   |                  |   |          |  
|--------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | -------- | - | ---------------- | - | -------- | -
|                                                                                                                                  |  | September 30,2009 |          |   | December 31,2008 |  
|                                                                                                                                  |  | (Unaudited)       |          |   | (Note 1)         |  
|Assets                                                                                                                            |  |                   |          |   |                  |   |          |  
|Current assets:                                                                                                                   |  |                   |          |   |                  |   |          |  
|Cash and cash equivalents                                                                                                         |  | $                 | 1,109    |   |                  | $ | 450      |  
|Accounts receivable (less allowances for doubtful accounts of $3,810 as of September 30, 2009 and $3,072 as of
December 31, 2008) |  |                   | 20,488   |   |                  |   | 18,244   |  
|Current portion of program rights, net                                                                                            |  |                   | 288      |   |                  |   | 457      |  
|Amounts due from related parties                                                                                                  |  |                   | 213      |   |                  |   | 175      |  
|Current portion of notes receivable from related parties                                                                          |  |                   | 465      |   |                  |   | 457      |  
|Current portion of employee advances                                                                                              |  |                   | 735      |   |                  |   | 744      |  
|Prepaid expenses and other current assets                                                                                         |  |                   | 1,627    |   |                  |   | 1,862    |  
|Assets held for sale                                                                                                              |  |                   | 5,197    |   |                  |   |         |  
|                                                                                                                                  |  |                   |          |   |                  |   |          |  
|Total current assets                                                                                                              |  |                   | 30,122   |   |                  |   | 22,389   |  
|Property and equipment, net                                                                                                       |  |                   | 93,574   |   |                  |   | 95,745   |  
|Broadcast licenses, net                                                                                                           |  |                   | 161,659  |   |                  |   | 292,343  |  
|Deferred financing costs, net                                                                                                     |  |                   | 7,033    |   |                  |   | 8,131    |  
|Notes receivable from related parties, excluding current portion                                                                  |  |                   | 2,542    |   |                  |   | 2,399    |  
|Employee advances, excluding current portion                                                                                      |  |                   | 911      |   |                  |   | 888      |  
|Program rights, excluding current portion                                                                                         |  |                   | 5,038    |   |                  |   | 738      |  
|Other assets                                                                                                                      |  |                   | 5,576    |   |                  |   | 5,420    |  
|                                                                                                                                  |  |                   |          |   |                  |   |          |  
|Total assets                                                                                                                      |  | $                 | 306,455  |   |                  | $ | 428,053  |  
|                                                                                                                                  |  |                   |          |   |                  |   |          |  
|Liabilities and stockholders deficiency                                                                                          |  |                   |          |   |                  |   |          |  
|Current liabilities:                                                                                                              |  |                   |          |   |                  |   |          |  
|Cash overdraft                                                                                                                    |  | $                 |         |   |                  | $ | 395      |  
|Accounts payable                                                                                                                  |  |                   | 2,270    |   |                  |   | 4,414    |  
|Accrued liabilities                                                                                                               |  |                   | 6,707    |   |                  |   | 4,071    |  
|Accrued interest                                                                                                                  |  |                   | 6,196    |   |                  |   | 9,633    |  
|Current portion of long-term debt                                                                                                 |  |                   | 1,353    |   |                  |   | 1,347    |  
|                                                                                                                                  |  |                   |          |   |                  |   |          |  
|Total current liabilities                                                                                                         |  |                   | 16,526   |   |                  |   | 19,860   |  
|Long-term debt, excluding current portion                                                                                         |  |                   | 428,037  |   |                  |   | 415,998  |  
|Fair value of interest rate swap                                                                                                  |  |                   | 6,036    |   |                  |   | 7,627    |  
|Deferred income taxes                                                                                                             |  |                   | 11,956   |   |                  |   | 23,691   |  
|Other liabilities                                                                                                                 |  |                   | 1,604    |   |                  |   | 1,683    |  
|                                                                                                                                  |  |                   |          |   |                  |   |          |  
|Total liabilities                                                                                                                 |  |                   | 464,159  |   |                  |   | 468,859  |  
|                                                                                                                                  |  |                  
|Commitments and contingencies                                                                                                     |  |                   |          |   |                  |   |          |  
|                                                                                                                                  |  |                  
|Stockholders deficiency:                                                                                                         |  |                   |          |   |                  |   |          |  
|Common stock, $0.01 par value:                                                                                                    |  |                   |          |   |                  |   |          |  
|Authorized shares  1,000                                                                                                         |  |                   |          |   |                  |   |          |  
|Issued and outstanding shares  100                                                                                               |  |                   |         |   |                  |   |         |  
|Additional paid-in capital                                                                                                        |  |                   | 62,970   |   |                  |   | 63,056   |  
|Accumulated deficit                                                                                                               |  |                   | (220,674 | ) |                  |   | (103,862 | )
|                                                                                                                                  |  |                   |          |   |                  |   |          |  
|Total stockholders deficiency                                                                                                    |  |                   | (157,704 | ) |                  |   | (40,806  | )
|                                                                                                                                  |  |                   |          |   |                  |   |          |  
|Total liabilities and stockholders deficiency                                                                                    |  | $                 | 306,455  |   |                  | $ | 428,053  |  
|                                                                                                                                  |  |                   |          |   |                  |   |          |  

See accompanying notes.



1



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LBI MEDIA HOLDINGS, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands)



|                                                                                         |  |                                 |         |   |                                |   |         |      |  |   |          |   |  |   |         |  
|---------------------------------------------------------------------------------------- |  | ------------------------------- | ------- | - | ------------------------------ | - | ------- | ---- |  | - | -------- | - |  | - | ------- | -
|                                                                                         |  | Three Months EndedSeptember 30, |         |   | Nine Months EndedSeptember 30, |  
|                                                                                         |  | 2009                            |         |   | 2008                           |   |         | 2009 |  |   | 2008     |  
|Net revenues                                                                             |  | $                               | 27,520  |   |                                | $ | 30,493  |      |  | $ | 77,062   |   |  | $ | 90,203  |  
|Operating expenses:                                                                      |  |                                 |         |   |                                |   |         |      |  |   |          |   |  |   |         |  
|Program and technical, exclusive of depreciation shown below                             |  |                                 | 5,914   |   |                                |   | 6,889   |      |  |   | 16,130   |   |  |   | 19,407  |  
|Promotional, exclusive of depreciation shown below                                       |  |                                 | 878     |   |                                |   | 1,026   |      |  |   | 2,139    |   |  |   | 2,339   |  
|Selling, general and administrative, exclusive of depreciation shown below               |  |                                 | 10,084  |   |                                |   | 9,906   |      |  |   | 30,522   |   |  |   | 31,253  |  
|Depreciation                                                                             |  |                                 | 2,441   |   |                                |   | 2,579   |      |  |   | 7,259    |   |  |   | 7,407   |  
|Loss on disposal of property and equipment                                               |  |                                 |        |   |                                |   | 824     |      |  |   | 941      |   |  |   | 824     |  
|Impairment of broadcast licenses                                                         |  |                                 | 75,077  |   |                                |   | 46,666  |      |  |   | 126,543  |   |  |   | 46,666  |  
|                                                                                         |  |                                 |         |   |                                |   |         |      |  |   |          |   |  |   |         |  
|Total operating expenses                                                                 |  |                                 | 94,394  |   |                                |   | 67,890  |      |  |   | 183,534  |   |  |   | 107,896 |  
|                                                                                         |  |                                 |         |   |                                |   |         |      |  |   |          |   |  |   |         |  
|Operating loss                                                                           |  |                                 | (66,874 | ) |                                |   | (37,397 | )    |  |   | (106,472 | ) |  |   | (17,693 | )
|Interest expense, net of amounts capitalized                                             |  |                                 | (8,457  | ) |                                |   | (9,213  | )    |  |   | (25,159  | ) |  |   | (27,822 | )
|Interest rate swap income (expense)                                                      |  |                                 | 234     |   |                                |   | (88     | )    |  |   | 1,591    |   |  |   | (14     | )
|Gain on note purchase                                                                    |  |                                 |        |   |                                |   |        |      |  |   | 520      |   |  |   |        |  
|Equity in losses of equity method investment                                             |  |                                 | (40     | ) |                                |   | (213    | )    |  |   | (103     | ) |  |   | (213    | )
|Impairment of equity method investment                                                   |  |                                 |        |   |                                |   | (161    | )    |  |   |         |   |  |   | (161    | )
|Interest and other income (expense)                                                      |  |                                 | 44      |   |                                |   | (38     | )    |  |   | 89       |   |  |   | 18      |  
|                                                                                         |  |                                 |         |   |                                |   |         |      |  |   |          |   |  |   |         |  
|Loss before (provision for) benefit from income taxes and discontinued operations        |  |                                 | (75,093 | ) |                                |   | (47,110 | )    |  |   | (129,534 | ) |  |   | (45,885 | )
|(Provision for) benefit from income taxes                                                |  |                                 | (3,310  | ) |                                |   | 15,575  |      |  |   | 12,034   |   |  |   | 10,666  |  
|                                                                                         |  |                                 |         |   |                                |   |         |      |  |   |          |   |  |   |         |  
|Loss from continuing operations                                                          |  |                                 | (75,403 | ) |                                |   | (31,535 | )    |  |   | (117,500 | ) |  |   | (35,219 | )
|Income from discontinued operations, net of tax (provision) benefit of $0, $0, $0 and $0 |  |                                 | 55      |   |                                |   | 318     |      |  |   | 688      |   |  |   | 962     |  
|                                                                                         |  |                                 |         |   |                                |   |         |      |  |   |          |   |  |   |         |  
|Net loss                                                                                 |  | $                               | (78,348 | ) |                                | $ | (31,217 | )    |  | $ | (116,812 | ) |  | $ | (34,257 | )
|                                                                                         |  |                                 |         |   |                                |   |         |      |  |   |          |   |  |   |         |  

See accompanying notes.



2



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LBI MEDIA HOLDINGS, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)



|                                                                                                                 |  |                                |          |   |      |   |         |  
|---------------------------------------------------------------------------------------------------------------- |  | ------------------------------ | -------- | - | ---- | - | ------- | -
|                                                                                                                 |  | Nine Months EndedSeptember 30, |         
|                                                                                                                 |  | 2009                           |          |   | 2008 |  
|Operating activities                                                                                             |  |                                |          |   |      |   |         |  
|Net loss                                                                                                         |  | $                              | (116,812 | ) |      | $ | (34,257 | )
|Adjustments to reconcile net loss to net cash (used in) provided by operating activities:                        |  |                                |          |   |      |   |         |  
|Depreciation                                                                                                     |  |                                | 7,312    |   |      |   | 7,460   |  
|Loss on sale and disposal of property and equipment                                                              |  |                                | 941      |   |      |   | 891     |  
|Impairment of broadcast licenses                                                                                 |  |                                | 126,817  |   |      |   | 46,666  |  
|Impairment of equity method investment                                                                           |  |                                |         |   |      |   | 161     |  
|Equity in losses of equity method investment                                                                     |  |                                | 103      |   |      |   | 213     |  
|Stock-based compensation                                                                                         |  |                                | 21       |   |      |   |        |  
|Amortization of deferred financing costs                                                                         |  |                                | 1,098    |   |      |   | 1,062   |  
|Amortization of discount on subordinated notes                                                                   |  |                                | 204      |   |      |   | 189     |  
|Amortization of program rights                                                                                   |  |                                | 2,107    |   |      |   | 413     |  
|Accretion on senior discount notes                                                                               |  |                                |         |   |      |   | 5,243   |  
|Gain on note purchase                                                                                            |  |                                | (520     | ) |      |   |        |  
|Interest rate swap (income) expense                                                                              |  |                                | (1,591   | ) |      |   | 14      |  
|Provision for doubtful accounts                                                                                  |  |                                | 1,660    |   |      |   | 929     |  
|Changes in operating assets and liabilities:                                                                     |  |                                |          |   |      |   |         |  
|Cash overdraft                                                                                                   |  |                                | (395     | ) |      |   |        |  
|Accounts receivable                                                                                              |  |                                | (3,904   | ) |      |   | (5,493  | )
|Program rights                                                                                                   |  |                                | (6,238   | ) |      |   | (1,159  | )
|Amounts due from related parties                                                                                 |  |                                | (20      | ) |      |   | (39     | )
|Prepaid expenses and other current assets                                                                        |  |                                | 235      |   |      |   | (33     | )
|Employee advances                                                                                                |  |                                | (14      | ) |      |   | (418    | )
|Accounts payable                                                                                                 |  |                                | (1,271   | ) |      |   | (43     | )
|Accrued liabilities                                                                                              |  |                                | 2,676    |   |      |   | (454    | )
|Accrued interest                                                                                                 |  |                                | (3,437   | ) |      |   | (5,054  | )
|Deferred income taxes                                                                                            |  |                                | (11,735  | ) |      |   | (10,813 | )
|Other assets and liabilities                                                                                     |  |                                | (159     | ) |      |   | (68     | )
|                                                                                                                 |  |                                |          |   |      |   |         |  
|Net cash (used in) provided by operating activities                                                              |  |                                | (2,922   | ) |      |   | 5,410   |  
|                                                                                                                 |  |                                |          |   |      |   |         |  
|Investing activities                                                                                             |  |                                |          |   |      |   |         |  
|Purchases of property and equipment                                                                              |  |                                | (8,322   | ) |      |   | (7,524  | )
|Deposits on purchases of property and equipment                                                                  |  |                                | (229     | ) |      |   |        |  
|Acquisition of broadcast licenses                                                                                |  |                                | (3       | ) |      |   | (139    | )
|Notes receivable issued to related parties                                                                       |  |                                | (125     | ) |      |   |        |  
|Repayment of notes receivable from related parties                                                               |  |                                | 6        |   |      |   |        |  
|Investment in PortalUno, Inc. (including acquisition costs)                                                      |  |                                |         |   |      |   | (488    | )
|Acquisition costs (including amounts deposited into escrow for the acquisition of selected radio station assets) |  |                                |         |   |      |   | (999    | )
|Net proceeds from the sale of property and equipment                                                             |  |                                |         |   |      |   | 670     |  
|                                                                                                                 |  |                                |          |   |      |   |         |  
|Net cash used in investing activities                                                                            |  |                                | (8,673   | ) |      |   | (8,480  | )
|                                                                                                                 |  |                                |          |   |      |   |         |  
|Financing activities                                                                                             |  |                                |          |   |      |   |         |  
|Proceeds from bank borrowings                                                                                    |  |                                | 43,700   |   |      |   | 38,700  |  
|Payments on bank borrowings                                                                                      |  |                                | (30,859  | ) |      |   | (36,229 | )
|Purchase of senior discount notes                                                                                |  |                                | (480     | ) |      |   |        |  
|Payments of deferred financing costs                                                                             |  |                                |         |   |      |   | (499    | )
|Distributions to Parent                                                                                          |  |                                | (107     | ) |      |   | (242    | )
|                                                                                                                 |  |                                |          |   |      |   |         |  
|Net cash provided by financing activities                                                                        |  |                                | 12,254   |   |      |   | 1,730   |  
|                                                                                                                 |  |                                |          |   |      |   |         |  
|Net increase (decrease) in cash and cash equivalents                                                             |  |                                | 659      |   |      |   | (1,340  | )
|Cash and cash equivalents at beginning of period                                                                 |  |                                | 450      |   |      |   | 1,697   |  
|                                                                                                                 |  |                                |          |   |      |   |         |  
|Cash and cash equivalents at end of period                                                                       |  | $                              | 1,109    |   |      | $ | 357     |  
|                                                                                                                 |  |                                |          |   |      |   |         |  
|Supplemental disclosure of cash flow information:                                                                |  |                                |          |   |      |   |         |  
|Non-cash amounts included in accounts payable:                                                                   |  |                                |          |   |      |   |         |  
|Purchases of property and equipment                                                                              |  | $                              | 458      |   |      | $ | 1,351   |  
|                                                                                                                 |  |                                |          |   |      |   |         |  
|Acquisition costs                                                                                                |  | $                              |         |   |      | $ | 564     |  
|                                                                                                                 |  |                                |          |   |      |   |         |  
|Cash paid during the period for:                                                                                 |  |                                |          |   |      |   |         |  
|Interest                                                                                                         |  | $                              | 27,334   |   |      | $ | 26,329  |  
|                                                                                                                 |  |                                |          |   |      |   |         |  
|Income taxes                                                                                                     |  | $                              | 266      |   |      | $ | 214     |  
|                                                                                                                 |  |                                |          |   |      |   |         |  

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 and purchase of a portion of its senior discount notes (see Note 7) and the operations of its subsidiaries. Accordingly, its only material source of cash is dividends,
distributions and/or loans from its subsidiaries, which are subject to restrictions by LBI Medias senior credit facilities and the indenture governing the senior subordinated notes issued by LBI Media (see Note 7). Parent-only condensed
financial information of LBI Media Holdings on a stand-alone basis has been presented in Note 14.

LBI Media Holdings and its
wholly owned subsidiaries (collectively referred to as the Company) own and operate radio and television stations located in California, Arizona, Texas and Utah. In addition, the Company owns television production facilities that are
used to produce programming for its owned and affiliated television stations. 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 four of its radio stations.

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

As more fully described in Note 4, in October 2009, the Company entered into an asset purchase agreement to sell radio station KSEV-AM (in the Houston, Texas market) for $6.5 million in cash. Consummation
of the disposition is subject to regulatory approval from the FCC and to other customary closing conditions. In accordance with Statement of Financial Accounting Standards (SFAS) No. 144 Accounting for the Impairment or
Disposal of Long-Lived Assets (FAS 144) issued by the Financial Accounting Standards Board (FASB), the Company has reported the operating results of KSEV-AM for all periods presented in discontinued operations within
the accompanying condensed consolidated statements of operations. FAS 144 was incorporated into FASB Accounting Standards Codification (ASC) 360 Impairment or Disposal of Long-Lived Assets under the new FASB codification (see
Note 2).

The Companys television stations, KRCA, KSDX, KVPA, KZJL, KMPX and KPNZ serve the Los Angeles, California, San
Diego, California, Phoenix, Arizona, Houston, Texas, Dallas-Fort Worth, Texas, and Salt Lake City, Utah markets, respectively.

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

In the third quarter of 2009, the Company
began providing its original programming through its EstrellaTV network to its affiliated stations. Currently, this affiliate network consists of seventeen television stations in various states serving specific market areas, including
six in Texas, four in Florida, two in California and one each in Arizona, Nevada, New Mexico, New York and Oregon.

The
accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and with the instructions for Rule 10-01 of
Regulation S-X promulgated by the Securities and Exchange Commission (SEC). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. The results of operations for interim periods are not necessarily indicative of the results that may be expected for the fiscal
year. The condensed consolidated



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LBI MEDIA HOLDINGS, INC.

NOTES TO INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



financial statements should be read in conjunction with the Companys December 31, 2008 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, 2008 has been derived from the audited financial statements at that date but does not include all the information and footnotes required by
GAAP 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.

2. Recent Accounting Pronouncements

In June 2009, the FASB issued SFAS No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles, (FAS 168)
a replacement of FASB Statement No. 162.FAS 168 is the new source of authoritative GAAP recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the SEC under authority of
federal securities laws are also sources of authoritative GAAP for SEC registrants. This statement was incorporated into ASC 105 Generally Accepted Accounting Principles under the new FASB codification which became effective on
July 1, 2009. The new codification supersedes all then-existing non-SEC accounting and reporting standards. All other non-grandfathered non-SEC accounting literature not included in the codification will become non-authoritative. The Company
adopted this statement on July 1, 2009. The Company has included the references to the codification, as appropriate, in these consolidated financial statements. Adoption of this statement did not have an impact on the Companys
consolidated results of operations, cash flows or financial condition.

In September 2006, the FASB issued SFAS
No. 157, Fair Value Measurements (FAS 157). FAS 157 provides a single definition of fair value, together with a framework for measuring it, and requires additional disclosure about the use of fair value to measure
assets and liabilities. Under the new codification, FAS 157 was incorporated into ASC 820 Fair Value Measurements and Disclosures (ASC 820).

In February 2007, the FASB issued SFAS 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. FAS 159 was incorporated into ASC 825 The Fair Value Option for Financial
Assets and Liabilities (ASC 825), under the new FASB codification. Under ASC 825, 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 ASC 825.

In December 2007, the FASB issued SFAS No. 141R, Business Combinations (FAS 141R), 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. FAS 141R also changed the accounting for the treatment of acquisition related transaction costs. FAS 141R
was incorporated into ASC 805 Business Combinations (ASC 805), under the new FASB codification. This ASC 805 update became effective and the Company adopted the provisions of this ASC 805 update on January 1, 2009. As
such, the accompanying condensed consolidated statements of operations for the nine months ended September 30, 2009 include a charge of approximately $0.4 million, which relates to the write-off of pre-acquisition costs for certain asset
purchases that did not close prior to December 31, 2008 (see Note 8).

In December 2007, the FASB issued SFAS
No. 160, Noncontrolling Interests in Consolidated Financial Statements (FAS 160), which clarifies that a noncontrolling interest in a subsidiary should be reported as equity in the consolidated financial statements. FAS
160 was incorporated into ASC 810 Consolidation (ASC 810). ASC 810 became effective on January 1, 2009. The adoption of ASC 810 did not have a material effect on the Companys consolidated results of operations,
cash flows or financial condition.

In February 2008, the FASB issued FASB Staff Position (FSP) FAS 157-2,
Effective Date of FASB Statement No. 157(FSP 157-2), which delayed the effective date of FAS 157 for nonfinancial assets and liabilities, except for items that are recognized or disclosed at fair value in the
financial statements on a recurring basis (at least annually), to fiscal years beginning after November 15, 2008. Under the new codification, FSP 157-2 was incorporated into ASC 820. The Company adopted this ASC update on January 1, 2009
and it did not have a material impact on the Companys consolidated results of operations, cash flows or financial condition, and did not require additional disclosures.



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LBI MEDIA HOLDINGS, INC.

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In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative
Instruments and Hedging Activities, an amendment of FASB Statement No. 133 (FAS 161), which requires enhanced disclosures for derivative and hedging activities. FAS 161 was incorporated into ASC 815 Derivatives and
Hedging (ASC 815). The objective of the guidance is to provide users of financial statements with an enhanced understanding of how and why an entity uses derivative instruments, how derivative instruments and related hedged items
are accounted for, and how derivative instruments and related hedged items effect and entitys financial position, financial performance and cash flows. ASC 815 was adopted on January 1, 2009. The adoption of this ASC update did not have a
material impact on the disclosures required in the Companys consolidated financial statements.

In April 2008, the
FASB issued FSP FAS 142-3, Determination of the Useful Lives of Intangible Assets,which amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of an
intangible asset. Under the new codification this FSP was incorporated into two different ASCs, ASC 275 Risks and Uncertainties (ASC 275) and ASC 350 IntangiblesGoodwill and Other (ASC
350). This interpretation was effective for financial statements issued for fiscal years beginning after December 15, 2008 and interim periods within those years. The Company adopted these ASCs on January 1, 2009, and they did
not have a material impact on the Companys consolidated results of operations, cash flows or financial condition, and did not require additional disclosures related to existing intangible assets.

In October 2008, the FASB issued FSP FAS 157-3, Determining the Fair Value of a Financial Asset When the Market for That Asset Is
Not Active (FSP 157-3) which clarifies the application of FAS 157 in a market that is not active. FSP 157-3 was incorporated unto ASC 820. This ASC update became effective upon issuance, including prior periods for which financial
statements have not been issued. The adoption of this ASC update did not have a material impact on the Companys consolidated results of operations, cash flows or financial condition.

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



Level 1:

Inputs are unadjusted quoted prices in active markets for identical assets and liabilities that can be assessed at a measurement date.Level 2:

Observable inputs other than those included in Level 1. For example, quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets
or liabilities in inactive markets.Level 3:

Unobservable inputs reflecting managements own assumptions about the inputs used in pricing the asset or liability.


As of September 30, 2009 and December 31, 2008, respectively, the
fair values of the Companys financial liabilities are categorized as follows:



|                                               |  |       |       |                |   |         |  |         |       |  |   |  
|---------------------------------------------- |  | ----- | ----- | -------------- | - | ------- |  | ------- | ----- |  | - | -
|                                               |  | Total |       | Level 1        |   | Level 2 |  | Level 3
|                                               |  |       |       | (In thousands) |   |        
|As of September 30, 2009                       |  |       |       |                |   |         |  |         |       |  |   |  
|Liabilities subject to fair value measurement: |  |       |       |                |   |         |  |         |       |  |   |  
|Interest rate swap (a)                         |  | $     | 6,036 |                | $ |        |  | $       | 6,036 |  | $ | 
|                                               |  |       |       |                |   |         |  |         |       |  |   |  
|Total                                          |  | $     | 6,036 |                | $ |        |  | $       | 6,036 |  | $ | 
|                                               |  |       |       |                |   |         |  |         |       |  |   |  
|As of December 31, 2008                        |  |       |       |                |   |         |  |         |       |  |   |  
|Liabilities subject to fair value measurement: |  |       |       |                |   |         |  |         |       |  |   |  
|Interest rate swap (a)                         |  | $     | 7,627 |                | $ |        |  | $       | 7,627 |  | $ | 
|                                               |  |       |       |                |   |         |  |         |       |  |   |  
|Total                                          |  | $     | 7,627 |                | $ |        |  | $       | 7,627 |  | $ | 
|                                               |  |       |       |                |   |         |  |         |       |  |   |  



|(a) | Based on London Interbank Offered Rate (LIBOR). See Interest Rate Swap in Note 7.
|--- | -------------------------------------------------------------------------------------

Certain assets and liabilities are measured at fair value on a non-recurring basis. This means that certain assets are not measured at fair
value on an ongoing basis but are subject to fair value adjustments only in certain circumstances. Included in this category are



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LBI MEDIA HOLDINGS, INC.

NOTES TO INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



the Companys radio and television Federal Communications Commission (FCC) broadcast licenses that are written down to fair value when they are determined to be impaired.

As of September 30, 2009, each major category of assets and liabilities measured at fair value on a non-recurring basis
during the period is categorized as follows:



|                                                         |  |       |         |                |   |         |  |         |   |                    |   |         |  |   |          |  
|-------------------------------------------------------- |  | ----- | ------- | -------------- | - | ------- |  | ------- | - | ------------------ | - | ------- |  | - | -------- | -
|                                                         |  | Total |         | Level 1        |   | Level 2 |  | Level 3 |   | TotalGains(Losses) |  
|                                                         |  |       |         | (In thousands) |   |         |  |         |  
|As of September 30, 2009                                 |  |       |         |                |   |         |  |         |   |                    |   |         |  |   |          |  
|Non-recurring assets subject to fair market measurement: |  |       |         |                |   |         |  |         |   |                    |   |         |  |   |          |  
|Broadcast licenses                                       |  | $     | 161,659 |                | $ |        |  | $       |  |                    | $ | 161,659 |  | $ | (126,543 | )
|Broadcast licenses held for sale                         |  |       | 3,870   |                |   |        |  |         |  |                    |   | 3,870   |  |   | (274     | )
|                                                         |  |       |         |                |   |         |  |         |   |                    |   |         |  |   |          |  
|Total                                                    |  | $     | 165,529 |                | $ |        |  | $       |  |                    | $ | 165,529 |  | $ | (126,817 | )
|                                                         |  |       |         |                |   |         |  |         |   |                    |   |         |  |   |          |  

As of December 31, 2008, the total recorded carrying value of the Companys
broadcasting licenses was approximately $292.3 million. Pursuant to SFAS No. 142 Goodwill and Other Intangible Assets (FAS 142), (which was incorporated into ASC 350 Goodwill and Other Intangible Assets under
the FASB codification), and in connection with an interim impairment test performed for asset values as of March 31, 2009 and its annual impairment test performed as of September 30, 2009, the carrying values for several of the
Companys radio and television broadcasting licenses were written down to their estimated fair values, resulting in a total broadcast license carrying value of approximately $240.9 million as of March 31, 2009 and $161.7 million as of
September 30, 2009 (excluding the broadcast license of radio station KSEV-AM which is classified as held for sale as of September 30, 2009). The broadcast license write-downs resulted in impairment charges of approximately $75.1 million
and $126.5 million for the three and nine months ended September 30, 2009, respectively (excluding $0.3 million in impairment charges relating to radio station KSEV-AM for the three and nine months ended September 30, 2009, which is
included in discontinued operations in the accompanying condensed consolidated statements of operations). The Companys 2008 annual impairment test resulted in total broadcast license write downs of approximately $46.7 million for the three and
nine months ended September 30, 2008. Such charges are recorded as impairment of broadcast licenses in the accompanying condensed consolidated statements of operations. A description of the Level 3 inputs and the information used to develop the
inputs is discussed in Note 3 Broadcast Licenses.

In April 2009, the FASB issued FASB Staff Position
(FSP) No. 115-2 and No. 124-2, Recognition and Presentation of Other-Than-Temporary Impairments (FSP 115-2 and FSP 124-2), which changes the method for determining whether an other-than-temporary
impairment exists for debt securities and the amount of an impairment charge to be recorded in earnings. FSP 115-2 and FSP 124-2 were incorporated into ASC 320 InvestmentsDebt and Equity Securities under the new FASB codification.
This ASC update became effective for interim periods ending after June 15, 2009. The Company adopted this update during the second quarter of 2009 and it did not have a material impact on the Companys consolidated results of operations,
cash flows or financial condition, and did not require additional disclosures.

In April 2009, the FASB issued FSP FAS 157-4,
Determining Whether a Market is Not Active and a Transaction is Not Distressed, (FSP 157-4). FSP 157-4 provides additional guidance to highlight and expand on the factors that should be considered in estimating fair value
when there has been a significant decrease in market activity for a financial asset. Under the new codification, FSP 157-4 was incorporated into ASC 820. This update became effective for the Companys financial statements as of June 30,
2009 and it did not have a material impact on the Companys consolidated results of operations, cash flows or financial condition and did not require additional disclosures.

In April 2009, the FASB issued FSP FAS 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial Instruments
(FSP FAS 107-1 and APB 28-1), which increases the frequency of fair value disclosures from annual only to quarterly. Under the new codification, FSP 107-1 and APB 28-1 were incorporated into ASC 825. This ASC update became effective for
the Companys financial statements as of June 30, 2009.

The carrying value of the Companys financial
instruments included in current assets and current liabilities (such as cash and equivalents, accounts receivable, accounts payable and accrued liabilities, and other similar items) approximate fair value due to the short-term nature of such
instruments. The estimated fair value of LBI Medias 2007 Senior Subordinated Notes (see Note 7), based on quoted bid prices, was approximately $141.8 million and $80.1 million at September 30, 2009 and December 31, 2008,



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NOTES TO INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



respectively, (carrying value of $225.6 million and $225.4 million as of September 30, 2009 and December 31, 2008, respectively). The estimated fair value of LBI Media Holdings
Senior Discount Notes (see Note 7), based on quoted bid prices, was approximately $26.3 million and $18.6 million at September 30, 2009 and December 31, 2008, respectively (carrying values of $45.4 million and $46.4 million as of
September 30, 2009 and December 31, 2008, respectively). The Companys other long-term debt has variable interest rates or rates that the Company believes approximate current market rates and, accordingly, the carrying value is a
reasonable estimate of its fair value.

In May 2009, the FASB issued SFAS No. 165, Subsequent Events
(FAS 165), which requires disclosure of the date through which a company evaluated the need to disclose events that occurred subsequent to the balance sheet date and whether that date represents the date the financial statements were
issued or were available to be issued. This statement was incorporated into ASC 855 Subsequent Events (ASC 855). The Company adopted ASC 855 for the period ended June 30, 2009. The adoption of ASC 855 did not have a
material effect on the disclosures required in the Companys consolidated financial statements. The Company considered subsequent events through November 13, 2009 for disclosure in this Quarterly Report on Form 10-Q, which is the date the
financial statements were available to be issued.

In June 2009, the FASB issued SFAS No. 167, Amendments to
FASB Interpretation No. 46 (R) (FAS 167), which amended the consolidation guidance for variable-interest entities. The amendments include: (1) the elimination of the exemption for qualifying special purpose entities,
(2) a new approach for determining who should consolidate a variable-interest entity, and (3) changes to when it is necessary to reassess who should consolidate a variable-interest entity. FAS 167 was incorporated into ASC 810
Consolidation. ASC 810 is effective for financial statements issued for fiscal years periods beginning after November 15, 2009, for interim periods within that first annual reporting period and for interim and annual reporting
periods thereafter. Earlier application is prohibited. The Company will adopt ASC 810 on January 1, 2010 and is still assessing the impact the pronouncement will have on the Companys consolidated results of operations, cash flows and
financial condition.

3. Broadcast Licenses

The Companys indefinite-lived assets consist of its FCC broadcast licenses. The Company believes its broadcast licenses have indefinite useful lives given that they are expected to indefinitely
contribute to the future cash flows of the Company and that they may be continually renewed without substantial cost to the Company. In certain prior years, the licenses were considered to have finite lives and were subject to amortization.
Accumulated amortization of broadcast licenses totaled approximately $17.7 million at September 30, 2009 and December 31, 2008.

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

The Company generally tests its broadcast licenses for impairment at the individual license level. However, the Company has applied the
guidance of Emerging Issues Task Force Issue No. 02-07, Unit of Accounting for Testing Impairment of Indefinite-Lived Intangible Assets (EITF 02-07), to certain of its broadcast licenses. EITF 02-07 was incorporated into
ASC 350-30 under the FASB codification. ASC 350-30 states that separately recorded indefinite-lived intangible assets should be combined into a single unit of accounting for purposes of testing impairment if they are operated as a single asset and,
as such, are essentially inseparable from one another. Accordingly, the Company aggregates broadcast licenses for impairment testing if their signals are simulcast and are operating as one revenue-producing asset.

In the first quarter of 2009, the Company conducted an interim review of the fair value of some of its broadcast licenses. This review
primarily resulted from the continued slowdown in the U.S. advertising industry, which reduced advertising revenue projections for the markets in which the Company operates beyond levels assumed in its 2008 annual and year end impairment testing.
Based on its evaluation, the Company determined that several of its radio and television broadcast licenses were impaired and



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recorded an impairment charge of approximately $51.5 million to reduce the net book value of these broadcast licenses to their estimated fair market values.

During the three months ended September 30, 2009, the Company completed its annual impairment review and concluded that several of its
broadcast licenses were impaired. As such, the Company recorded a non-cash impairment loss of approximately $75.1 million to reduce the net book value of these broadcast licenses to their estimated fair market values. The Company also recorded a
$0.3 million impairment charge during the three months ended September 30, 2009 relating to radio station KSEV-AM, which is included in discontinued operations in the accompanying condensed consolidated statements of operations (see Note 4).
During the three months ended September 30, 2008, the Company recorded a non-cash impairment loss of $46.7 million resulting from its 2008 annual impairment review. The impairment charges resulted from market changes in estimates and
assumptions that were attributable to lower advertising revenue growth projections for the broadcasting industry, increased discount rates and a decline in cash flow multiples for recent station sales.

Below are key assumptions used in the income approach model for estimating asset fair values for the impairment testing performed as of
September 30, 2009 and December 31, 2008. Ranges are included because the Company evaluates each station on an individual basis (or cluster basis for simulcast stations) for impairment and the ranges reflect the range of assumptions for
the stations included in the categories below.



|                                  |  |                    |  |                  
|--------------------------------- |  | ------------------ |  | -----------------
|Radio Broadcasting Licenses       |  | September 30, 2009 |  | December 31, 2008
|Discount Rate                     |  | 12.7%              |  | 10.8%            
|2009 Market Growth Rate Range     |  | (17.6)% - (24.0)%  |  | (6.6)% - (10.3)% 
|Out-year Market Growth Rate Range |  | 0.8% - 2.0%        |  | 2.6% - 3.2%      
|Market Share Range (1)            |  | 0.2% - 11.8%       |  | 0.1% - 11.4%     
|Operating Profit Margin Range (1) |  | (4.3)% - 32.9%     |  | (5.1)% - 37.8%   
|                                  |  |                   
|Television Broadcasting Licenses  |  | September 30, 2009 |  | December 31, 2008
|Discount Rate                     |  | 12.6%              |  | 11.2%            
|2009 Market Growth Rate Range     |  | (17.0)% - (22.0)%  |  | (6.5)% - (7.5)%  
|Out-year Market Growth Rate Range |  | 1.4% - 2.4%        |  | 2.0% - 3.7%      
|Market Share Range (1)            |  | 0.2% - 2.5%        |  | 1.0% - 2.6%      
|Operating Profit Margin Range (1) |  | 9.8% - 31.3%       |  | 10.3% - 32.2%    



|(1) | Excludes first year of operations.
|--- | ----------------------------------

4.
Assets Held for Sale and Discontinued Operations

In October 2009, two of LBI Media Holdings indirect, wholly owned
subsidiaries entered into an asset purchase agreement to sell certain assets of radio station KSEV-AM, in the Houston, Texas market, to Patrick Broadcasting, LP, for approximately $6.5 million in cash, subject to certain adjustments. Those assets
will include, among other things, (i) licenses and permits authorized by the FCC for or in connection with the operation of the station, (ii) the transmission facility, (iii) and broadcast and other studio equipment used to operate
the station. Consummation of the disposition is subject to regulatory approval from the FCC and to other customary closing conditions. The sale is expected to close in the first half of 2010.

Upon the consummation of the disposition, the Company will no longer own or operate the station, and therefore, the stations
operations and cash flows will be eliminated from the Companys ongoing operations. Accordingly, the accompanying condensed consolidated financial statements reflect the operating results of radio station KSEV-AM as discontinued operations. The
Company has presented the related net assets as assets held for sale and reclassified the related revenue and expenses as discontinued operations.

Assets classified as assets held for sale are measured at the lower of their carrying amount or fair value less cost to sell and are not depreciated and amortized while classified as held for sale. The
fair value of assets held for sale is based on estimates of future cash flows, which may include expected proceeds to be received or the present value of estimated future cash flows. Costs to sell are the direct incremental costs estimated to
transact a sale. A loss is recognized for any initial or subsequent write-down to fair value less costs to sell. A gain is recognized for any subsequent increase in fair value less cost to sell, but not in excess of the cumulative loss previously
recognized.



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LBI MEDIA HOLDINGS, INC.

NOTES TO INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



Summarized financial information of the major classes of assets held for sale in the
accompanying condensed consolidated balance sheets for the discontinued KSEV-AM radio operations as of September 30, 2009 is as follows (unaudited, in thousands):



|                                           |  |                   |      
|------------------------------------------ |  | ----------------- | -----
|                                           |  | September 30,2009
|Property and equipment, net                |  | $                 | 1,327
|Broadcast licenses                         |  |                   | 3,870
|                                           |  |                   |      
|Total assets held for sale                 |  | $                 | 5,197
|                                           |  |                   |      
|Carrying value of net assets held for sale |  | $                 | 5,197
|                                           |  |                   |      

Summarized financial information in the accompanying condensed consolidated
statements of operations for the discontinued KSEV-AM radio operations is as follows (unaudited, in thousands):



|                                                  |  |                                       |     |                                      |   |      |  |      |       |  |   |      
|------------------------------------------------- |  | ------------------------------------- | --- | ------------------------------------ | - | ---- |  | ---- | ----- |  | - | -----
|                                                  |  | Three-Month PeriodEnded September 30, |     | Nine-Month PeriodEnded September 30,
|                                                  |  | 2009                                  |     | 2008                                 |   | 2009 |  | 2008
|Net revenue                                       |  | $                                     | 359 |                                      | $ | 350  |  | $    | 1,045 |  | $ | 1,055
|                                                  |  |                                       |     |                                     
|Income before income taxes                        |  |                                       | 55  |                                      |   | 318  |  |      | 688   |  |   | 962  
|Income tax (expense) benefit                      |  |                                       |    |                                      |   |     |  |      |      |  |   |     
|                                                  |  |                                       |     |                                      |   |      |  |      |       |  |   |      
|Income from discontinued operations, net of taxes |  | $                                     | 55  |                                      | $ | 318  |  | $    | 688   |  | $ | 962  
|                                                  |  |                                       |     |                                      |   |      |  |      |       |  |   |      

5. Loss on Disposal of Property and Equipment

During the nine months ended September 30, 2009, the Company disposed of certain analog television equipment that the Company deemed
would no longer be of use. As a result, the Company recorded a $0.9 million loss to write-off the net book value of such equipment. This charge is included in loss on disposal of property in the accompanying condensed consolidated statements of
operations.

In September 2008, Hurricane Ike caused substantial damage across the state of Texas. As a result of this
hurricane, the Company sustained damage to its corporate office and broadcast facility in Houston and several of its tower and transmitter sites and recorded a charge of approximately $585,000 to write off the carrying value of all assets damaged by
the hurricane. As such, the write-off of these assets is included in loss on sale and disposal of property and equipment in the accompanying condensed consolidated statements of operations.

During the three and nine months ended September 30, 2008, the Company also disposed of $0.2 million in other property and equipment
which was removed from operations.

6. Program Rights

Costs incurred for the production of the Companys original television programs are expensed based on the ratio of the current periods gross revenues to estimated remaining total gross revenues
from all sources (Ultimate Revenues) on an individual program basis. Costs of television productions are subject to regular recovery assessments which compare the estimated fair values with the unamortized costs. The amount by which the
unamortized costs of television productions exceed their estimated fair values is written off. Prior to January 1, 2009, television production costs for all programs were charged to operating expense as incurred because the Company had
estimated that the useful lives of these programs did not exceed one year. Beginning January 1, 2009, the Company determined, based on an evaluation of historical programming data, that certain of its television programs have demonstrated the
ability to generate gross revenues beyond the current fiscal year, and therefore, television production costs for these programs are charged to operating expense based on the ratio of the current periods gross revenues to Ultimate Revenues as
described above. Costs related to the production of all other television programs for which the Company does not believe have a useful life beyond the current fiscal year are expensed as incurred. For episodic television series, costs are expensed
for each episode as it recognizes the related revenue for the episode. The adoption impact of the change in estimate of the useful life for certain television programs was a reduction in program and technical expenses of approximately $1.3 million
and $4.5 million during the three and nine months ended September 30, 2009, respectively.

Television program rights
acquired by the Company from third-party vendors are stated at the lower of unamortized cost or estimated net realizable value. These program rights, together with the related liabilities, are recorded when the license period begins



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and the program becomes available for broadcast. Program rights are amortized using the straight-line
method over the license term. Program rights expected to be amortized in the succeeding year and program rights payable due within one year are classified as current assets and current liabilities, respectively.

7. Long-Term Debt

Long-term debt consists
of the following:



|                                        |  |                   |         |   |                  |   |         |  
|--------------------------------------- |  | ----------------- | ------- | - | ---------------- | - | ------- | -
|                                        |  | September 30,2009 |         |   | December 31,2008 |  
|                                        |  | (In thousands)    |        
|2006 Revolver due 2012                  |  | $                 | 40,500  |   |                  | $ | 26,650  |  
|2006 Term Loan due 2012                 |  |                   | 116,000 |   |                  |   | 116,900 |  
|2007 Senior Subordinated Notes due 2017 |  |                   | 225,561 |   |                  |   | 225,356 |  
|Senior Discount Notes due 2013          |  |                   | 45,383  |   |                  |   | 46,383  |  
|2004 Empire Note due 2019               |  |                   | 1,946   |   |                  |   | 2,056   |  
|                                        |  |                   |         |   |                  |   |         |  
|                                        |  |                   | 429,390 |   |                  |   | 417,345 |  
|Less current portion                    |  |                   | (1,353  | ) |                  |   | (1,347  | )
|                                        |  |                   |         |   |                  |   |         |  
|                                        |  | $                 | 428,037 |   |                  | $ | 415,998 |  
|                                        |  |                   |         |   |                  |   |         |  

LBI Medias 2006 Revolver and 2006 Term Loan

In May 2006, LBI Media refinanced its then existing senior secured 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 sub-facility and allows for letters of credit up to the lesser of $5.0 million and the available remaining revolving commitment amount. In January 2008,
LBI Media increased its senior term loan credit facility by $10.0 million. LBI Media has the option to request its existing or new lenders under the 2006 Term Loan and 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 in January 2008).

LBI Media must pay 0.25% of the original principal amount of the 2006 Term Loan each
quarter (or $275,000 per quarter) plus 0.25% of amounts borrowed in connection with the term loan increase (or $25,000 per quarter), 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, ranges
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 principal amount of the 2006 Term Loan 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 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 1.75% and 4.25%, including the applicable margin, at September 30, 2009.

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. Under the 2006 Revolver, LBI
Media must also maintain a maximum senior secured leverage ratio (as defined in the senior credit agreement). As of September 30, 2009, LBI Media was in compliance with all such covenants.



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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.

LBI Medias Senior Subordinated Notes due 2017

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

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

LBI Media may redeem the 2007 Senior Subordinated Notes at any time on or after August 1, 2012 at redemption prices specified in the indenture governing its 2007 Senior Subordinated Notes, plus
accrued and unpaid interest. At any time prior to August 1, 2012, LBI Media may redeem some or all of its 2007 Senior Subordinated Notes at a redemption price equal to a make whole amount as set forth in the indenture governing the
2007 Senior Subordinated Notes. Also, LBI Media may redeem up to 35% of the aggregate principal amount of the 2007 Senior Subordinated 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.

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).

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,
(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 September 30, 2009, 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 due 2013

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 Senior Discount Notes were sold at 58.456% of principal amount at maturity, resulting in gross proceeds of
approximately $40.0 million and net proceeds of approximately $38.8 million after certain transaction costs. Under the terms of the Senior Discount Notes, cash interest did not accrue and was not payable on the notes prior to October 15, 2008
and instead the value of the notes increased each period until it equaled $68.4 million on October 15, 2008; such accretion (approximately $1.8 million and $5.4 million for the three and nine months ended September 30, 2008, respectively)
was recorded as additional interest expense by LBI Media Holdings. On October 15, 2008, cash interest began to accrue at a rate of 11% per year payable semi-annually on each April 15 and October 15.

In the fourth quarter of 2008, LBI Media Holdings purchased approximately $22.0 million aggregate principal amount of its Senior Discount
Notes in various open market transactions at a weighted average purchase price of 43.321% of the principal amount.



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In the second quarter of 2009, LBI Media Holdings purchased an additional $1.0 million aggregate principal amount of its Senior Discount Notes in an open market transaction at a purchase price of
48.0% of the principal amount.

The indenture governing the Senior Discount Notes contains certain restrictive covenants that,
among other things, limit LBI Media Holdings ability to incur additional indebtedness and pay dividends. As of September 30, 2009, 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) and
used the proceeds to repay its former mortgage note. The 2004 Empire Note bears interest at the rate of 5.52% per annum and is payable in monthly principal and interest payments of approximately $21,000 through maturity in July 2019. The
borrowings under the 2004 Empire Note are secured primarily by all of Empires real property.

Scheduled Debt Repayments

As of September 30, 2009, the Companys long-term debt had scheduled repayments as follows:



|                  |  |                |        
|----------------- |  | -------------- | -------
|                  |  | (in thousands)
|Remainder of 2009 |  | $              | 337    
|2010              |  |                | 1,356  
|2011              |  |                | 1,364  
|2012              |  |                | 153,974
|2013              |  |                | 45,566 
|Thereafter        |  |                | 226,793
|                  |  |                |        
|                  |  | $              | 429,390
|                  |  |                |        

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

Interest Rate Swap

The Company uses an interest rate swap to manage interest rate risk associated with its variable rate borrowings. In connection with the issuance of the 2006 Senior Credit Facilities, in July 2006, the
Company entered into a fixed-for-floating interest rate swap to hedge the underlying interest rate risk on the expected outstanding balance of the 2006 Term Loan over time. Pursuant to the terms of this interest rate swap, the Company pays a fixed
rate of 5.56% on the $80.0 million notional amount and receives payments based on LIBOR. This swap fixes the interest rate at 7.56% on the Companys variable rate borrowings (including the applicable margin) and terminates in November 2011.

The Company accounts for its interest rate swap in accordance with ASC 815, Derivatives and Hedging (ASC
815). As noted above, the effect of the interest rate swap is to fix the interest rate at 7.56% on the Companys variable rate borrowings (including the applicable margin). However, changes in the fair value of the interest rate swap for
each reporting period have been recorded in interest rate swap income in the accompanying condensed consolidated statements of operations because the interest rate swap does not qualify for hedge accounting.

The fair value of the interest rate swap agreement at each balance sheet date was as follows (unaudited, in millions):



|                                                  |  |                             |  |                   |     |                  |   |    
|------------------------------------------------- |  | --------------------------- |  | ----------------- | --- | ---------------- | - | ---
|Derivatives Not Designated As Hedging Instruments |  | Balance Sheet Location      |  | September 30,2009 |     | December 31,2008
|Interest rate swap agreement                      |  | Other long-term liabilities |  | $                 | 6.0 |                  | $ | 7.6

The following table presents the effect of the interest rate swap agreement on the
Companys condensed consolidated statements of operations for the three and nine months ended September 30, 2009 and 2008 (unaudited, in millions):



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|                                                 |  |                                    |  |                                     |     |                                     |   |      |                                    |  |                                    |     |  |   |      |  
|------------------------------------------------ |  | ---------------------------------- |  | ----------------------------------- | --- | ----------------------------------- | - | ---- | ---------------------------------- |  | ---------------------------------- | --- |  | - | ---- | -
|Derivatives Not Designated As HedgingInstruments |  | Location ofGain (Loss)             |  | Three MonthsEnded September 30,2009 |     | Three MonthsEnded September 30,2008 |   |      | Nine MonthsEnded September 30,2009 |  | Nine MonthsEnded September 30,2008 |    
|Interest rate swap agreement                     |  | Interest rate swapincome (expense) |  | $                                   | 0.2 |                                     | $ | (0.1 | )                                  |  | $                                  | 1.6 |  | $ | (0.0 | )

The Company measures the fair value of its interest rate swap on a recurring basis
pursuant to ASC 820. As described in Note 2, ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The three tiers are: Level 1, defined as inputs such as quoted prices in active markets;
Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop
its own assumptions. The Company categorizes this swap contract as Level 2.

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

The fair value of the Companys interest rate swap was a liability of $6.0 million and $7.6 million at September 30, 2009 and December 31, 2008, respectively. The fair value of the interest
rate swap represents the present value of the expected future cash flows that are estimated to be received from or paid to a marketplace participant of the instrument. It is valued using inputs such as broker dealer quotes and adjusted for
non-performance risk, which are based on valuation models that incorporate observable market information and are classified within Level 2 of the fair value hierarchy.

Interest Paid and Capitalized

The total amount of interest paid (net of
amounts capitalized) was approximately $11.6 million and $11.9 million for the three months ended September 30, 2009 and 2008, respectively, and approximately $27.3 million and $26.3 million for the nine months ended September 30, 2009 and
2008, respectively. Interest is capitalized on individually significant construction projects during the construction period. Capitalized interest was approximately $43,000 and $6,000, for the three months ended September 30, 2009 and 2008,
respectively, and approximately $103,000 and $7,000 for the nine months ended September 30, 2009 and 2008, respectively. Capitalized interest in both 2009 and 2008 relates to the construction of a new corporate office building and broadcast
studio facility in Dallas, Texas.

8. Acquisitions

In December 2008, two of LBI Media Holdings indirect, wholly owned subsidiaries, KRCA Television LLC (KRCA TV) and KRCA License LLC (KRCA License), as buyers, consummated the
acquisition of selected assets of television station KVPA-LP, licensed to Phoenix, Arizona, from Latin America Broadcasting of Arizona, Inc., as seller, pursuant to an asset purchase agreement entered into in August 2008. The aggregate purchase
price was approximately $1.4 million, including acquisition costs of approximately $0.1 million, and was paid in cash. The assets acquired included, among other things, (i) licenses and permits authorized by the FCC for or in connection with
the operation of the television station and (ii) transmission and other broadcast equipment used to operate the television station. The Company allocated the purchase price as follows:



|                       |  |                |      
|---------------------- |  | -------------- | -----
|                       |  | (in thousands)
|Broadcast licenses     |  | $              | 1,329
|Property and equipment |  |                | 65   
|                       |  |                |      
|                       |  | $              | 1,394
|                       |  |                |      

In November 2008, KRCA TV and KRCA License, as buyers, entered into an asset
purchase agreement with Venture Technologies Group, LLC, as seller, pursuant to which the buyers have agreed to acquire selected assets of low-power television station WASA-LP, licensed to Port Jervis, New York, from the seller. The selected assets
include, among other things, licenses and



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permits authorized by the FCC for or in connection with the operation of the station. The total purchase
price will be $6.0 million in cash, subject to certain adjustments, of which $0.6 million has been deposited into escrow. In accordance with certain provisions of ASC 805, which became effective on January 1, 2009, the Company wrote-off
approximately $0.2 million in pre-acquisition costs related to this proposed acquisition. Such amount is included in selling, general and administrative expenses in the accompanying condensed consolidated statement of operations for the nine months
ended September 30, 2009. Consummation of the acquisition is currently subject to customary closing conditions, as the transaction has been granted regulatory approval from the FCC. The Company expects to close this acquisition in the first
half of 2010.

In September 2008, two of LBI Media Holdings indirect, wholly owned subsidiaries, Liberman Broadcasting
of California LLC (LBI California) and LBI Radio License LLC (LBI Radio), as buyers, entered into an asset purchase agreement with Sun City Communications, LLC and Sun City Licenses, LLC, as sellers (collectively, Sun
City), pursuant to which the buyers had agreed to acquire certain assets of radio station KVIB-FM, 95.1 FM, licensed to Phoenix, Arizona, from the sellers. Those assets were to include, among other things, (i) licenses and permits
authorized by the FCC for or in connection with the operation of the station, (ii) antenna and transmitter facilities, (iii) broadcast and other studio equipment used to operate the station, and (iv) contract rights and other
intangible assets. The total purchase price was to be approximately $15.0 million in cash, subject to certain adjustments, of which $0.8 million had been deposited into escrow as of September 30, 2009 and December 31, 2008. Such amount is
included in other assets in the accompanying condensed consolidated balance sheets. In December 2008, the Company submitted a formal notice to Sun City to terminate the asset purchase agreement as a result of a material adverse event that the
Company believes has occurred since entering into the asset purchase agreement. Although the Company has received an objection from Sun City, it believes the $0.8 million escrow deposit is fully collectible as of September 30, 2009, and expects
to recoup the deposit once the agreement has been formally terminated.

In November 2007, LBI California and LBI Radio,
as buyers, entered into an asset purchase agreement with R&R Radio Corporation (R&R Radio), as seller, pursuant to which the buyers had agreed to acquire selected assets of radio station KDES-FM, located in Palm Springs,
California, from the seller. In accordance with certain provisions of ASC 805, which became effective on January 1, 2009, the Company wrote-off approximately $0.2 million in pre-acquisition costs related to this proposed acquisition. Such
amount is included in selling, general and administrative expenses in the accompanying condensed consolidated statements of operations for the nine months ended September 30, 2009. The selected assets were to 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 intended to change the location of KDES-FM
from Palm Springs, California to Redlands, California.

The aggregate purchase price was to be approximately $17.5 million in
cash, subject to certain adjustments, of which $0.5 million had been deposited in escrow. Such escrow amount is included in other assets in the accompanying condensed consolidated balance sheets as of September 30, 2009 and December 31,
2008. The Company would have paid $10.5 million of the aggregate purchase price to the seller and $7.0 million to Spectrum Scan-Idyllwild, LLC (Spectrum Scan). As a condition to the Companys then pending purchase of the assets from
the seller, LBI California had entered into an agreement relating to the relocation and purchase of KDES-FM with Spectrum Scan whereby it would have paid $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 was conditioned on the completion of
the purchase of the assets from the seller. However, if the Company had received final FCC approval and the purchase of KDES-FM was not completed, the Company would have been required to pay a $0.5 million fee to Spectrum Scan.

In July 2009, LBI California and LBI Radio entered into an assignment and assumption agreement with LC Media LP (LC Media) and
R&R Radio, pursuant to which LBI California and LBI Radio assigned all of their rights, benefits, obligations and duties in and to a certain asset purchase agreement to purchase the selected assets of radio station KDES-FM to LC Media and LC
Media assumed all of the rights, benefits, obligations and duties under such asset purchase agreement, including payment of the purchase price to R&R Radio and the entry into a substitute escrow agreement with R&R Radio. As a result, the
$0.5 million escrow deposit that had been previously paid by the Companys indirect, wholly-owned subsidiaries was returned to the Company in August 2009.

In connection with the assignment and assumption agreement, LBI California and Spectrum Scan entered into an amendment to the agreement relating to the relocation and purchase of KDES-FM, pursuant to
which LBI California will pay, subject to certain exceptions, approximately $4.2 million to Spectrum Scan (instead of the $7.0 million previously agreed upon) 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 when LC Media and R&R



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Radio consummate the acquisition of the selected assets. Consummation of such transaction is subject to
customary closing conditions.

As consideration for the assignment and assumption agreement and the amendment to the agreement
with Spectrum Scan, LC Media will pay, subject to and upon consummation of the purchase of KDES-FM from R&R Radio by LC Media, $5.9 million to the Company. Upon receipt of this payment, the Company will then pay $4.2 million to Spectrum Scan
pursuant to the amendment to the agreement relating to the relocation and purchase of KDES-FM, as described above.

9. Commitments and
Contingencies

Deferred Compensation

The Parent has 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, one agreement (the Deferred Compensation Agreement) provides the employee with the ability to participate in the increase
of the net value (as defined in the Deferred Compensation Agreement) of the Parent over a certain base amount (Incentive Compensation) that was negotiated at the time the Deferred Compensation Agreement was entered into.
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 period specified in the Deferred Compensation Agreement. 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 Deferred
Compensation Agreement contains provisions, however, that allow for limited accelerated vesting in the event of a change in control of the Parent (as defined in the Deferred Compensation Agreement). Unless there is a change in control of the Parent
(as defined in the Deferred Compensation Agreement), the net value of the Parent will be determined as of December 31, 2009.

Until the net value of the Parent has been determined by appraisal as of such valuation date, the Company evaluates and estimates the deferred compensation liability under the Deferred
Compensation Agreement. 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.

As of September 30, 2009, the Company estimated that no Incentive Compensation had been earned under the Deferred Compensation
Agreement.

Litigation

In 2008, the Company began negotiations with Broadcast Music, Inc. (BMI) related to disputes over royalties owed to BMI. In October 2009, the Company settled all royalty disputes relating to
its television stations as well as royalties owed for the period ending December 31, 2006 for the Companys radio stations. The remaining outstanding dispute relates to the Companys radio stations for
the period commencing January 1, 2007, for which the Company has filed an application for a reasonable license under BMIs antitrust consent decree (the post-court period). As of September 30, 2009, the Company
had reserved a total of approximately $1.4 million relating to the BMI dispute, of which $0.8 million related to the remaining dispute over the post-court period. The Company believes that the reserve related to the post-court period is
adequate as of September 30, 2009.

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.

10. Related Party Transactions

The Company had approximately $3.2 million and $3.0 million due from stockholders of the Parent and from affiliated companies at September 30, 2009 and December 31, 2008, respectively. These
amounts include a $1.9 million loan the Company made to one of the stockholders of the Parent in July 2002. The loans due from the stockholders of the Parent bear interest at the applicable federal rate and currently mature through December 2009.
Although no specific determination has been made, the Company plans to extend certain of these loans to such stockholders beyond their current December 2009 maturity date; therefore,



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such loans have been classified in notes receivable from related parties, net of current, in the
accompanying condensed consolidated balance sheets.

The Company also had approximately $690,000 due from one if its executive
officers and directors at September 30, 2009 and December 31, 2008, which is included in employee advances in the accompanying condensed consolidated balance sheets. The Company made these loans in various transactions in 1998, 2002 and
2006. Except for $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.

In April 2008, LBI California entered into a Purchase Agreement and an Investors Rights Agreement with PortalUno, Inc. (PortalUno) and Reivax Technology, Inc. (Reivax). Under
these agreements, LBI California purchased shares of the Series A Preferred Stock of PortalUno representing 30% of the fully diluted capital stock of PortalUno. The shares were purchased for $450,000, of which $425,000 was paid in cash and the
remaining $25,000 of consideration was the cancellation of a $25,000 note in favor of LBI California. An employee of one of LBI Media Holdings indirect, wholly owned subsidiaries is an owner of Reivax, which holds the remaining ownership
interest in PortalUno.

The Company accounts for its investment in PortalUno using the equity method under Accounting
Principles Board Opinion No. 18, The Equity Method of Accounting for Investments in Common Stock (APB 18). APB was incorporated into ASC 323 under the FASB codification. As such, the Companys share of
PortalUnos net loss is included in equity in losses of equity method investment in the accompanying condensed consolidated statements of operations.

Condensed financial information has not been provided because the operations are not considered to be significant.

In December 2008, stockholders of the Parent and one of the Companys executive officers purchased approximately $1.2 million aggregate principal amount of the Senior Discount Notes in various open
market transactions. The weighted average price of the notes purchased was 41.250% of principal.

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.

11. Equity Incentive Plan

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

As of September 30, 2009, the only option grant under the Plan has been to one of the
Companys executive officers, which was made in December 2008, pursuant to such employees employment agreement. The options have a contractual term of ten years from the date of the grant and vest over 5 years. No new options were granted
during the three or nine months ended September 30, 2009.

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

The Company calculated the fair value of each option award on the date of grant using the Black-Scholes option pricing
model. The weighted average grant date fair value using the Black-Scholes option pricing model was approximately $90,000 per share. Unamortized compensation as of September 30, 2009 was approximately $175,000 and is being amortized over the
expected term of 7.5 years.

Stock-based compensation expense was approximately $6,000 and $0 for the three months ended
September 30, 2009 and 2008, respectively, and approximately $21,000 and $0 for the nine months ended September 30, 2009 and 2008, respectively.



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LBI MEDIA HOLDINGS, INC.

NOTES TO INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



The following is a summary of the Companys stock options as of September 30,
2009:



|                                       |  |        |  |                                       |           |                         |   |                                                 |  |     
|-------------------------------------- |  | ------ |  | ------------------------------------- | --------- | ----------------------- | - | ----------------------------------------------- |  | ----
|                                       |  | Shares |  | WeightedAverageExercisePrice PerShare |           | AggregateIntrinsicValue |   | WeightedAverageRemainingContractualLife (Years)
|Outstanding at September 30, 2009      |  | 2.19   |  | $                                     | 1,368,083 |                         | $ |                                                |  | 9.25
|Exercisable at September 30, 2009      |  | 0.44   |  | $                                     | 1,368,083 |                         | $ |                                                |  | 9.25
|Expected to vest at September 30, 2009 |  | 1.75   |  | $                                     | 1,368,083 |                         | $ |                                                |  | 9.25

During the nine months ended September 30, 2009, options to purchase 0.437054
shares of the Parents Class A common stock had vested. However, none of these stock options had been exercised and no stock options expired during the nine months ended September 30, 2009. Additionally, there was no intrinsic value
for the stock options exercisable at September 30, 2009.

12. Segment Data

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



|                                                                                                                                                                            |  |                                 |        |                                |   |        |  |      |         |  |   |       
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------- | ------ | ------------------------------ | - | ------ |  | ---- | ------- |  | - | ------
|                                                                                                                                                                            |  | Three Months EndedSeptember 30, |        | Nine Months EndedSeptember 30,
|                                                                                                                                                                            |  | 2009                            |        | 2008                           |   | 2009   |  | 2008
|                                                                                                                                                                            |  | (in thousands)                 
|Net revenues:                                                                                                                                                               |  |                                 |        |                                |   |        |  |      |         |  |   |       
|Radio operations                                                                                                                                                            |  | $                               | 16,465 |                                | $ | 17,136 |  | $    | 44,982  |  | $ | 49,891
|Television operations                                                                                                                                                       |  |                                 | 11,055 |                                |   | 13,357 |  |      | 32,080  |  |   | 40,312
|                                                                                                                                                                            |  |                                 |        |                                |   |        |  |      |         |  |   |       
|Consolidated net revenues                                                                                                                                                   |  |                                 | 27,520 |                                |   | 30,493 |  |      | 77,062  |  |   | 90,203
|                                                                                                                                                                            |  |                                 |        |                                |   |        |  |      |         |  |   |       
|Operating expenses, excluding stock-based compensation expense, depreciation, loss on disposal of property and equipment and
impairment of broadcast licenses:              |  |                                 |        |                                |   |        |  |      |         |  |   |       
|Radio operations                                                                                                                                                            |  |                                 | 8,758  |                                |   | 8,652  |  |      | 25,411  |  |   | 24,700
|Television operations                                                                                                                                                       |  |                                 | 8,112  |                                |   | 9,169  |  |      | 23,359  |  |   | 28,299
|                                                                                                                                                                            |  |                                 |        |                                |   |        |  |      |         |  |   |       
|Consolidated operating expenses, excluding stock-based compensation expense, depreciation, loss on disposal of property and
equipment and impairment of broadcast licenses: |  |                                 | 16,870 |                                |   | 17,821 |  |      | 48,770  |  |   | 52,999
|                                                                                                                                                                            |  |                                 |        |                                |   |        |  |      |         |  |   |       
|Operating income before stock-based compensation expense, depreciation, loss on disposal of property and equipment and impairment
of broadcast licenses:                    |  |                                 |        |                                |   |        |  |      |         |  |   |       
|Radio operations                                                                                                                                                            |  |                                 | 7,704  |                                |   | 8,484  |  |      | 19,561  |  |   | 25,191
|Television operations                                                                                                                                                       |  |                                 | 2,946  |                                |   | 4,188  |  |      | 8,731   |  |   | 12,013
|                                                                                                                                                                            |  |                                 |        |                                |   |        |  |      |         |  |   |       
|Consolidated operating income before stock-based compensation expense, depreciation, loss on disposal of property and equipment
and impairment of broadcast licenses        |  |                                 | 10,650 |                                |   | 12,672 |  |      | 28,292  |  |   | 37,204
|                                                                                                                                                                            |  |                                 |        |                                |   |        |  |      |         |  |   |       
|Stock-based compensation expense:                                                                                                                                           |  |                                 |        |                                |   |        |  |      |         |  |   |       
|Corporate                                                                                                                                                                   |  |                                 | 6      |                                |   |       |  |      | 21      |  |   |      
|                                                                                                                                                                            |  |                                 |        |                                |   |        |  |      |         |  |   |       
|Consolidated stock-based compensation expense                                                                                                                               |  |                                 | 6      |                                |   |       |  |      | 21      |  |   |      
|                                                                                                                                                                            |  |                                 |        |                                |   |        |  |      |         |  |   |       
|Depreciation expense:                                                                                                                                                       |  |                                 |        |                                |   |        |  |      |         |  |   |       
|Radio operations                                                                                                                                                            |  |                                 | 1,203  |                                |   | 1,282  |  |      | 3,600   |  |   | 3,768 
|Television operations                                                                                                                                                       |  |                                 | 1,238  |                                |   | 1,297  |  |      | 3,659   |  |   | 3,639 
|                                                                                                                                                                            |  |                                 |        |                                |   |        |  |      |         |  |   |       
|Consolidated depreciation expense                                                                                                                                           |  |                                 | 2,441  |                                |   | 2,579  |  |      | 7,259   |  |   | 7,407 
|                                                                                                                                                                            |  |                                 |        |                                |   |        |  |      |         |  |   |       
|Loss on disposal of property and equipment:                                                                                                                                 |  |                                 |        |                                |   |        |  |      |         |  |   |       
|Radio operations                                                                                                                                                            |  |                                 |       |                                |   | 425    |  |      | 32      |  |   | 425   
|Television operations                                                                                                                                                       |  |                                 |       |                                |   | 399    |  |      | 909     |  |   | 399   
|                                                                                                                                                                            |  |                                 |        |                                |   |        |  |      |         |  |   |       
|Consolidated loss on disposal of property and equipment                                                                                                                     |  |                                 |       |                                |   | 824    |  |      | 941     |  |   | 824   
|                                                                                                                                                                            |  |                                 |        |                                |   |        |  |      |         |  |   |       
|Impairment of broadcast licenses:                                                                                                                                           |  |                                 |        |                                |   |        |  |      |         |  |   |       
|Radio operations                                                                                                                                                            |  |                                 | 47,154 |                                |   | 33,989 |  |      | 79,040  |  |   | 33,989
|Television operations                                                                                                                                                       |  |                                 | 27,923 |                                |   | 12,677 |  |      | 47,503  |  |   | 12,677
|                                                                                                                                                                            |  |                                 |        |                                |   |        |  |      |         |  |   |       
|Consolidated impairment of broadcast licenses                                                                                                                               |  |                                 | 75,077 |                                |   | 46,666 |  |      | 126,543 |  |   | 46,666
|                                                                                                                                                                            |  |                                 |        |                                |   |        |  |      |         |  |   |       



18



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LBI MEDIA HOLDINGS, INC.

NOTES TO INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



|                                                                                                                                                                                                                                                                |  |                                 |         |   |                                |   |         |      |  |   |          |   |  |   |         |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------- | ------- | - | ------------------------------ | - | ------- | ---- |  | - | -------- | - |  | - | ------- | -
|                                                                                                                                                                                                                                                                |  | Three Months EndedSeptember 30, |         |   | Nine Months EndedSeptember 30, |  
|                                                                                                                                                                                                                                                                |  | 2009                            |         |   | 2008                           |   |         | 2009 |  |   | 2008     |  
|                                                                                                                                                                                                                                                                |  | (in thousands)                  |        
|Operating loss:                                                                                                                                                                                                                                                 |  |                                 |         |   |                                |   |         |      |  |   |          |   |  |   |         |  
|Radio operations                                                                                                                                                                                                                                                |  |                                 | (40,653 | ) |                                |   | (27,212 | )    |  |   | (63,111  | ) |  |   | (12,991 | )
|Television operations                                                                                                                                                                                                                                           |  |                                 | (26,215 | ) |                                |   | (10,185 | )    |  |   | (43,340  | ) |  |   | (4,702  | )
|Corporate                                                                                                                                                                                                                                                       |  |                                 | (6      | ) |                                |   |        |      |  |   | (21      | ) |  |   |        |  
|                                                                                                                                                                                                                                                                |  |                                 |         |   |                                |   |         |      |  |   |          |   |  |   |         |  
|Consolidated operating loss                                                                                                                                                                                                                                     |  | $                               | (66,874 | ) |                                | $ | (37,397 | )    |  | $ | (106,472 | ) |  | $ | (17,693 | )
|                                                                                                                                                                                                                                                                |  |                                 |         |   |                                |   |         |      |  |   |          |   |  |   |         |  
|Reconciliation of operating income before stock-based compensation expense, depreciation, loss on disposal of property and
equipment and impairment of broadcast licenses to loss before (provision for) benefit from income taxes and discontinued operations: |  |                                 |         |   |                                |   |         |      |  |   |          |   |  |   |         |  
|Operating income before stock-based compensation expense, depreciation, loss on disposal of property and equipment and impairment
of broadcast licenses                                                                                                         |  | $                               | 10,650  |   |                                | $ | 12,672  |      |  | $ | 28,292   |   |  | $ | 37,204  |  
|Stock-based compensation expense                                                                                                                                                                                                                                |  |                                 | (6      | ) |                                |   |        |      |  |   | (21      | ) |  |   |        |  
|Depreciation                                                                                                                                                                                                                                                    |  |                                 | (2,441  | ) |                                |   | (2,579  | )    |  |   | (7,259   | ) |  |   | (7,407  | )
|Loss on disposal of property and equipment                                                                                                                                                                                                                      |  |                                 |        |   |                                |   | (824    | )    |  |   | (941     | ) |  |   | (824    | )
|Impairment of broadcast licenses                                                                                                                                                                                                                                |  |                                 | (75,077 | ) |                                |   | (46,666 | )    |  |   | (126,543 | ) |  |   | (46,666 | )
|Gain on note purchase                                                                                                                                                                                                                                           |  |                                 |        |   |                                |   |        |      |  |   | 520      |   |  |   |        |  
|Equity in losses of equity method investment                                                                                                                                                                                                                    |  |                                 | (40     | ) |                                |   | (213    | )    |  |   | (103     | ) |  |   | (213    | )
|Impairment of equity method investment                                                                                                                                                                                                                          |  |                                 |        |   |                                |   | (161    | )    |  |   |         |   |  |   | (161    | )
|Interest expense, net of amounts capitalized                                                                                                                                                                                                                    |  |                                 | (8,457  | ) |                                |   | (9,213  | )    |  |   | (25,159  | ) |  |   | (27,822 | )
|Interest rate swap income (expense)                                                                                                                                                                                                                             |  |                                 | 234     |   |                                |   | (88     | )    |  |   | 1,591    |   |  |   | (14     | )
|Interest and other income (expense)                                                                                                                                                                                                                             |  |                                 | 44      |   |                                |   | (38     | )    |  |   | 89       |   |  |   | 18      |  
|                                                                                                                                                                                                                                                                |  |                                 |         |   |                                |   |         |      |  |   |          |   |  |   |         |  
|Loss before (provision for) benefit from income taxes and discontinued operations                                                                                                                                                                               |  | $                               | (75,093 | ) |                                | $ | (47,110 | )    |  | $ | (129,534 | ) |  | $ | (45,885 | )
|                                                                                                                                                                                                                                                                |  |                                 |         |   |                                |   |         |      |  |   |          |   |  |   |         |  

13. Income Taxes

During the nine months ended September 30, 2009 and 2008, respectively, the Company recorded approximately $126.8 million and $46.7 million in non-cash impairment charges to reduce the value of
certain broadcast licenses. The impairment charge recorded in 2009 includes a $0.3 million write down in book value of the broadcast license for KSEV-AM, which is included in discontinued operations in the accompanying condensed consolidated
statements of operations. These impairment charges substantially reduced the Companys deferred tax liability because the difference between the carrying value of the broadcast licenses for income tax purposes and the value for financial
reporting purposes was substantially reduced. Accordingly, the Company recorded a benefit from income taxes for the nine months ended September 30, 2009 and 2008, respectively of $12.0 million and $10.7 million. The deferred benefit from income
taxes was $11.7 million and $10.8 million for the nine months ended September 30, 2009 and 2008, respectively.

The
Company recorded a provision for income taxes of $3.3 million for the three months ended September 30, 2009, as compared to a benefit from income taxes of $15.6 million for the three months ended September 30, 2008. Although the Company
recorded impairment charges in both the 2009 and 2008 periods, the charges recorded in 2009 caused the gross deferred tax balances to switch from liabilities to assets during the third quarter of 2009. The Company concluded that these items will not
be realized in the ordinary course of operations, and therefore has provided a full valuation allowance on deferred tax assets relating to these indefinite lived intangibles. The result of the movement in the deferred tax balances relating to these
intangible assets was a $3.3 million provision for income taxes in the third quarter of 2009.

The Companys net deferred
tax liabilities as of September 30, 2009 and December 31, 2008 were approximately $12.0 million and $23.7 million, respectively, and result primarily from book and tax basis differences of certain indefinite-lived intangible assets.
In addition to the deferred tax liability for these 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 September 30, 2009 and December 31,
2008, the net deferred tax asset and the related valuation allowance were approximately $57.6 million and $19.9 million, respectively.

The Company adopted the provisions of Financial Interpretation No. 48, Accounting for Uncertainty in Income Taxes (FIN 48) on January 1, 2007. FIN 48 was incorporated into ASC 740-10 Income
Taxes under the FASB codification. The Companys policy is to recognize interest related to unrecognized tax benefits (UTB) and penalties as additional income tax expense.



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LBI MEDIA HOLDINGS, INC.

NOTES TO INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



A reconciliation of the beginning and ending amount of UTB for the nine months ended
September 30, 2009 is as follows:



|                                                             |  |   |          |  
|------------------------------------------------------------ |  | - | -------- | -
|Balance at January 1, 2009                                   |  | $ | 342,000  |  
|Additions based on tax positions related to the current year |  |   |         |  
|Additions for tax positions of prior years                   |  |   |         |  
|Reductions for tax positions of prior years                  |  |   |         |  
|Lapse of statute of limitations                              |  |   | (342,000 | )
|Settlements                                                  |  |   |         |  
|                                                             |  |   |          |  
|Balance at September 30, 2009                                |  | $ |         |  
|                                                             |  |   |          |  

During the nine months ended September 30, 2009, the Company recognized
approximately $342,000 of these UTB due to the expiration of the respective statute of limitations and, accordingly, the effective tax rate was reduced. The Company is no longer subject to federal or state income tax examinations for years prior to
2005 and 2004, respectively. As a result of the expiration of the statute of limitations in certain jurisdictions, the accrual for UTB for tax positions taken in previously filed tax returns decreased by approximately $342,000 during the second
quarter of 2009. Notwithstanding the adjustments discussed above, the Company believes that it has appropriate support for the income tax positions taken and presently expected to be taken on its tax returns. Additionally, the Company believes that
its accruals for tax liabilities are adequate for all years open to income tax examinations based on an assessment of many factors including past experience, past examinations by taxing authorities and interpretations of tax law applied to the facts
of each matter.

14. 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
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
condensed consolidated financial statements and notes thereto.

Condensed Balance Sheet Information:

(in thousands)



|                                             |  |                   |         |                  |   |       
|-------------------------------------------- |  | ----------------- | ------- | ---------------- | - | ------
|                                             |  | As of            
|                                             |  | September 30,2009 |         | December 31,2008
|                                             |  | (Unaudited)       |         | (Note 1)        
|Assets                                       |  |                   |         |                  |   |       
|Deferred financing costs                     |  | $                 | 799     |                  | $ | 947   
|Investment in subsidiary                     |  |                   |        |                  |   | 15,645
|Amounts due from subsidiary                  |  |                   | 689     |                  |   |      
|Other assets                                 |  |                   | 26      |                  |   | 3     
|                                             |  |                   |         |                  |   |       
|Total assets                                 |  | $                 | 1,514   |                  | $ | 16,595
|                                             |  |                   |         |                  |   |       
|Liabilities and stockholders deficiency     |  |                   |         |                  |   |       
|Accrued interest                             |  | $                 | 2,316   |                  | $ | 1,093 
|Interest due to subsidiary                   |  |                   | 302     |                  |   | 26    
|Long term debt                               |  |                   | 45,383  |                  |   | 46,383
|Notes payable to subsidiary                  |  |                   | 13,663  |                  |   | 9,899 
|Losses in excess of investment in subsidiary |  |                   | 97,554  |                  |   |      
|                                             |  |                   |         |                  |   |       
|Total liabilities                            |  |                   | 159,218 |                  |   | 57,401
|                                             |  |                  
|Stockholders deficiency:                    |  |                   |         |                  |   |       
|Common stock                                 |  |                   |        |                  |   |      
|Additional paid-in capital                   |  |                   | 62,970  |                  |   | 63,056



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LBI MEDIA HOLDINGS, INC.

NOTES TO INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



|                                               |  |                   |          |   |                  |   |          |  
|---------------------------------------------- |  | ----------------- | -------- | - | ---------------- | - | -------- | -
|                                               |  | As of             |         
|                                               |  | September 30,2009 |          |   | December 31,2008 |  
|                                               |  | (Unaudited)       |          |   | (Note 1)         |  
|Accumulated deficit                            |  |                   | (220,674 | ) |                  |   | (103,862 | )
|                                               |  |                   |          |   |                  |   |          |  
|Total stockholders deficiency                 |  |                   | (157,704 | ) |                  |   | (40,806  | )
|                                               |  |                   |          |   |                  |   |          |  
|Total liabilities and stockholders deficiency |  | $                 | 1,514    |   |                  | $ | 16,595   |  
|                                               |  |                   |          |   |                  |   |          |  

Condensed Statement of Operations Information:

(Unaudited, in thousands)



|                               |  |                                 |         |   |                                |   |         |      |  |   |          |   |  |   |         |  
|------------------------------ |  | ------------------------------- | ------- | - | ------------------------------ | - | ------- | ---- |  | - | -------- | - |  | - | ------- | -
|                               |  | Three Months EndedSeptember 30, |         |   | Nine Months EndedSeptember 30, |  
|                               |  | 2009                            |         |   | 2008                           |   |         | 2009 |  |   | 2008     |  
|Income:                        |  |                                 |         |   |                                |   |         |      |  |   |          |   |  |   |         |  
|Equity in losses of subsidiary |  | $                               | (76,948 | ) |                                | $ | (29,384 | )    |  | $ | (113,110 | ) |  | $ | (28,865 | )
|Gain on note purchase          |  |                                 |        |   |                                |   |        |      |  |   | 520      |   |  |   |        |  
|Expenses:                      |  |                                 |         |   |                                |   |         |      |  |   |          |   |  |   |         |  
|Interest expense               |  |                                 | (1,400  | ) |                                |   | (1,833  | )    |  |   | (4,222   | ) |  |   | (5,392  | )
|                               |  |                                 |         |   |                                |   |         |      |  |   |          |   |  |   |         |  
|Net income (loss)              |  | $                               | (78,348 | ) |                                | $ | (31,217 | )    |  | $ | (116,812 | ) |  | $ | (34,257 | )
|                               |  |                                 |         |   |                                |   |         |      |  |   |          |   |  |   |         |  

Condensed Statement of Cash Flows Information:

(Unaudited, in thousands)



|                                                                                          |  |                                |          |   |      |   |         |  
|----------------------------------------------------------------------------------------- |  | ------------------------------ | -------- | - | ---- | - | ------- | -
|                                                                                          |  | Nine Months EndedSeptember 30, |         
|                                                                                          |  | 2009                           |          |   | 2008 |  
|Cash flows (used in) provided by operating activities:                                    |  |                                |          |   |      |   |         |  
|Net loss                                                                                  |  | $                              | (116,812 | ) |      | $ | (34,257 | )
|Adjustments to reconcile net loss to net cash (used in) provided by operating activities: |  |                                |          |   |      |   |         |  
|Equity in losses of subsidiary                                                            |  |                                | 113,110  |   |      |   | 28,865  |  
|Gain on note purchase                                                                     |  |                                | (520     | ) |      |   |        |  
|Amortization of deferred financing costs                                                  |  |                                | 148      |   |      |   | 146     |  
|Accretion on senior discount notes                                                        |  |                                |         |   |      |   | 5,243   |  
|Other assets and liabilities, net                                                         |  |                                | 790      |   |      |   | 3       |  
|Distributions from subsidiary                                                             |  |                                | 107      |   |      |   | 242     |  
|                                                                                          |  |                                |          |   |      |   |         |  
|Net cash (used in) provided by operating activities                                       |  |                                | (3,177   | ) |      |   | 242     |  
|Cash flows provided by (used in) financing activities:                                    |  |                                |          |   |      |   |         |  
|Loan from subsidiary                                                                      |  |                                | 3,764    |   |      |   |        |  
|Purchase of senior discount notes                                                         |  |                                | (480     | ) |      |   |        |  
|Distributions to Parent                                                                   |  |                                | (107     | ) |      |   | (242    | )
|                                                                                          |  |                                |          |   |      |   |         |  
|Net cash provided by (used in) financing activities                                       |  |                                | 3,177    |   |      |   | (242    | )
|Net change in cash and cash equivalents                                                   |  |                                |         |   |      |   |        |  
|Cash and cash equivalents at beginning of period                                          |  |                                |         |   |      |   |        |  
|                                                                                          |  |                                |          |   |      |   |         |  
|Cash and cash equivalents at end of period                                                |  | $                              |         |   |      | $ |        |  
|                                                                                          |  |                                |          |   |      |   |         |  



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|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, 2008, 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. The forward-looking
statements in this Quarterly Report on Form 10-Q, 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 on Form 10-Q, the risk factors included in our Annual Report on Form 10-K for the year ended December 31, 2008 and other documents that we file from time to time with the Securities and Exchange Commission, particularly
any Current Reports on Form 8-K.

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, Salt Lake City, Utah and Phoenix, Arizona. 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 six 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 two low-power television stations serving the San Diego, California and Phoenix, Arizona markets.

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, Texas, that allow us to produce programming in those markets as well. We have entered into time brokerage agreements with third parties for four of our radio stations as well.

We operate in two reportable segments, radio and television. Additionally, as of September 30, 2009, the assets of one of our radio
stations serving the Houston, Texas market, is classified as held for sale.

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. Beginning in the third quarter of 2009, we also began generating advertising sales on
our affiliated stations that broadcast our EstrellaTV network programming. In addition to our six owned and operated stations, we also broadcast our EstrellaTV network programming through a network of seventeen affiliate television
stations in various states serving specific market areas including six in Texas, four in Florida, two in California and one each in Arizona, Nevada, New Mexico, New York and Oregon. Our EstrellaTV network is currently in 19 of the top 25 Hispanic
designated markets and a reach of approximately 67% of the U.S. Hispanic population.

Advertising rates are, in large part,
based on each stations ability to attract audiences in demographic groups targeted by advertisers. Our stations compete for audiences and advertising revenue directly with other Spanish-language radio and television stations, and we generally
do not obtain long-term commitments from our advertisers. As a result, our management team focuses on creating a diverse advertiser base, providing cost-effective advertising solutions for clients, executing targeted marketing campaigns to develop a
local audience and implementing strict cost controls. We recognize revenues when the commercials are broadcast or the brokered time is made available to the customer. We incur commissions from agencies on local, regional and national 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 amortization of capitalized costs related to the production of original programming content, production of local newscasts and, to a lesser extent, the amortization of programming content acquired from other sources. Because we are highly
leveraged, we will need to dedicate a substantial portion of our cash flow from operations to pay interest on our debt. 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



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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.

Dispositions

In October 2009, two of LBI Media Holdings indirect, wholly owned subsidiaries, Liberman Broadcasting of Houston LLC and Liberman
Broadcasting of Houston License LLC, as sellers, entered into an asset purchase agreement with Patrick Broadcasting, LP, as buyer, pursuant to which the buyer has agreed to acquire certain assets of radio station KSEV-AM, 700AM, licensed to Tomball,
Texas, from the sellers. Those assets will include, among other things, (i) licenses and permits authorized by the FCC for or in connection with the operation of the station, (ii) the transmission facility, (iii) and broadcast and
other studio equipment used to operate the station. The total sale price is to be approximately $6.5 million in cash, subject to certain adjustments. Consummation of the disposition is subject to regulatory approval from the FCC and to other
customary closing conditions. The sale is expected to close in the first half of 2010.

Upon the consummation of the
disposition, we will no longer own or operate the station and therefore, the stations operations and cash flows will be eliminated from our ongoing operations. Accordingly, our financial statements reflect radio station KSEV-AM as discontinued
operations. We have presented the related net assets as assets held for sale and reclassified the related revenue and expenses as discontinued operations.

Acquisitions

In December 2008, two of our indirect, wholly owned
subsidiaries, KRCA Television LLC and KRCA License LLC, consummated the acquisition of selected assets of low-power television station KVPA-LP, Channel 42, licensed to Phoenix, Arizona, from Latin America Broadcasting of Arizona, Inc., pursuant to
an asset purchase agreement entered into by the parties in August 2008. The total purchase price of approximately $1.4 million (including acquisition costs of approximately $0.1 million) and was primarily paid for in cash. The assets acquired
included, among other things, (i) licenses and permits authorized by the Federal and Communications Commission, or FCC, for or in connection with the operation of the station and (ii) transmission and other broadcast equipment used to
operate the station. The purchase of these assets marked our first entry into the Phoenix market.

In November 2008, KRCA
Television LLC and KRCA License LLC entered into an asset purchase agreement with Venture Technologies Group, LLC, as seller, pursuant to which we have agreed to acquire selected assets of low-power television station WASA-LP, licensed to Port
Jervis, New York, from the seller. The selected assets include, among other things, licenses and permits authorized by the FCC for or in connection with the operation of the station. The total purchase price will be $6.0 million in cash, subject to
certain adjustments, of which $0.6 million has been deposited into escrow. Consummation of the acquisition is currently subject to customary closing conditions, as the transaction has been granted regulatory approval from the FCC. We expect to close
this acquisition in the first half of 2010.

In September 2008, two of our indirect, wholly owned subsidiaries, Liberman
Broadcasting of California LLC and LBI Radio License LLC, as buyers, entered into an asset purchase agreement with Sun City Communications, LLC and Sun City Licenses, LLC, as sellers, or together, Sun City, pursuant to which we agreed to acquire
certain assets of radio station KVIB-FM, 95.1 FM, licensed to Phoenix, Arizona, from Sun City. Those assets were to include, among other things, (i) licenses and permits authorized by the FCC for or in connection with the operation of the
station, (ii) antenna and transmitter facilities, (iii) broadcast and other studio equipment used to operate the station, and (iv) contract rights and other intangible assets. The total purchase price was to be approximately $15.0
million in cash, subject to certain adjustments, of which $0.8 million has been deposited into escrow. In December 2008, we submitted a formal notice to Sun City to terminate the asset purchase agreement as a result of a material adverse event that
we believe occurred since entering into the agreement. Although we have received an objection from Sun City, management believes the $0.8 million escrow deposit is fully collectible as of September 30, 2009, and expects to recoup the deposit
once the agreement has been formally terminated.

In November 2007, 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 had agreed to acquire selected assets of radio station KDES-FM, located in Palm Springs, California, from the seller. The
selected assets were to 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 intended to change the programming format and the location of KDES-FM from Palm Springs, California to Redlands, California. The aggregate purchase price was to be approximately $17.5 million in cash, subject to
certain adjustments, of which $0.5 million had been deposited in escrow. We would have paid $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 then
pending purchase of the assets from the seller, Liberman Broadcasting of California had entered into an agreement relating to



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the relocation and purchase of KDES-FM with Spectrum Scan whereby it would have paid $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 was conditioned on the completion of the
purchase of the assets from the seller. However, if we had received final FCC approval and the purchase of KDES-FM was not completed, we would have been required to pay a $500,000 fee to Spectrum Scan.

In July 2009, Liberman Broadcasting of California LLC and LBI Radio License LLC entered into an assignment and assumption agreement with LC
Media LP and R&R Radio Corporation, pursuant to which Liberman Broadcasting of California LLC and LBI Radio License LLC assigned all of their rights, benefits, obligations and duties in and to such asset purchase agreement to purchase the
selected assets of radio station KDES-FM to LC Media and LC Media assumed all of the rights, benefits, obligations and duties under such asset purchase agreement, including payment of the purchase price to R&R Radio Corporation and the entry
into a substitute escrow agreement with R&R Radio Corporation. As a result, the $0.5 million escrow deposit that had been previously paid by our subsidiaries was returned to us in August 2009. Such escrow deposit is included in other assets as
of December 31, 2008 in our condensed consolidated balance sheets.

In connection with the assignment and assumption
agreement, Liberman Broadcasting of California LLC and Spectrum Scan entered into an amendment to the agreement relating to the relocation and purchase of KDES-FM, pursuant to which Liberman Broadcasting of California will pay, subject to certain
exceptions, approximately $4.2 million to Spectrum Scan (instead of the $7.0 million that had been previously agreed upon) 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 when LC Media and R&R Radio Corporation consummate the acquisition of the selected assets. Consummation of such
transaction is subject to customary closing conditions.

As consideration for the assignment and assumption agreement and the
amendment to the agreement with Spectrum Scan, LC Media will pay, subject to and upon consummation of the purchase of KDES-FM from R&R Radio by LC Media, $5.9 million to us. Upon receipt of this payment, we will then pay $4.2 million to Spectrum
Scan pursuant to the amendment to the agreement relating to the relocation and purchase of KDES-FM, as described above.

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

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

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.

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;
| | - |  | ---------------------------------------------------------------------------------------------------



24



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| |  |  | 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.
| | - |  | ---------------------------------------

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 EndedSeptember 30, |         |   | Nine Months EndedSeptember 30, |  
|                                                                                                                                                                 |  | 2009                            |         |   | 2008                           |   |         | 2009 |  |   | 2008     |  
|Net revenues:                                                                                                                                                    |  |                                 |         |   |                                |   |         |      |  |   |          |   |  |   |         |  
|Radio                                                                                                                                                            |  | $                               | 16,465  |   |                                | $ | 17,136  |      |  | $ | 44,982   |   |  | $ | 49,891  |  
|Television                                                                                                                                                       |  |                                 | 11,055  |   |                                |   | 13,357  |      |  |   | 32,080   |   |  |   | 40,312  |  
|                                                                                                                                                                 |  |                                 |         |   |                                |   |         |      |  |   |          |   |  |   |         |  
|Total                                                                                                                                                            |  | $                               | 27,520  |   |                                | $ | 30,493  |      |  | $ | 77,062   |   |  | $ | 90,203  |  
|                                                                                                                                                                 |  |                                 |         |   |                                |   |         |      |  |   |          |   |  |   |         |  
|Total operating expenses before stock-based compensation expense, impairment of broadcast licenses, loss on disposal of property
and equipment and depreciation: |  |                                 |         |   |                                |   |         |      |  |   |          |   |  |   |         |  
|Radio                                                                                                                                                            |  | $                               | 8,761   |   |                                | $ | 8,652   |      |  | $ | 25,421   |   |  | $ | 24,700  |  
|Television                                                                                                                                                       |  |                                 | 8,109   |   |                                |   | 9,169   |      |  |   | 23,349   |   |  |   | 28,299  |  
|                                                                                                                                                                 |  |                                 |         |   |                                |   |         |      |  |   |          |   |  |   |         |  
|Total                                                                                                                                                            |  | $                               | 16,870  |   |                                | $ | 17,821  |      |  | $ | 48,770   |   |  | $ | 52,999  |  
|                                                                                                                                                                 |  |                                 |         |   |                                |   |         |      |  |   |          |   |  |   |         |  
|Stock-based compensation expense:                                                                                                                                |  |                                 |         |   |                                |   |         |      |  |   |          |   |  |   |         |  
|Corporate                                                                                                                                                        |  | $                               | 6       |   |                                | $ |        |      |  | $ | 21       |   |  | $ |        |  
|                                                                                                                                                                 |  |                                 |         |   |                                |   |         |      |  |   |          |   |  |   |         |  
|Total                                                                                                                                                            |  | $                               | 6       |   |                                | $ |        |      |  | $ | 21       |   |  | $ |        |  
|                                                                                                                                                                 |  |                                 |         |   |                                |   |         |      |  |   |          |   |  |   |         |  
|Impairment of broadcast licenses:                                                                                                                                |  |                                 |         |   |                                |   |         |      |  |   |          |   |  |   |         |  
|Radio                                                                                                                                                            |  | $                               | 47,154  |   |                                | $ | 33,989  |      |  | $ | 79,040   |   |  | $ | 33,989  |  
|Television                                                                                                                                                       |  |                                 | 27,923  |   |                                |   | 12,677  |      |  |   | 47,503   |   |  |   | 12,677  |  
|                                                                                                                                                                 |  |                                 |         |   |                                |   |         |      |  |   |          |   |  |   |         |  
|Total                                                                                                                                                            |  | $                               | 75,077  |   |                                | $ | 46,666  |      |  | $ | 126,543  |   |  | $ | 46,666  |  
|                                                                                                                                                                 |  |                                 |         |   |                                |   |         |      |  |   |          |   |  |   |         |  
|Loss on disposal of property and equipment:                                                                                                                      |  |                                 |         |   |                                |   |         |      |  |   |          |   |  |   |         |  
|Radio                                                                                                                                                            |  | $                               |        |   |                                | $ | 425     |      |  | $ | 32       |   |  | $ | 425     |  
|Television                                                                                                                                                       |  |                                 |        |   |                                |   | 399     |      |  |   | 909      |   |  |   | 399     |  
|                                                                                                                                                                 |  |                                 |         |   |                                |   |         |      |  |   |          |   |  |   |         |  
|Total                                                                                                                                                            |  | $                               |        |   |                                | $ | 824     |      |  | $ | 941      |   |  | $ | 824     |  
|                                                                                                                                                                 |  |                                 |         |   |                                |   |         |      |  |   |          |   |  |   |         |  
|Depreciation:                                                                                                                                                    |  |                                 |         |   |                                |   |         |      |  |   |          |   |  |   |         |  
|Radio                                                                                                                                                            |  | $                               | 1,203   |   |                                | $ | 1,282   |      |  | $ | 3,600    |   |  | $ | 3,768   |  
|Television                                                                                                                                                       |  |                                 | 1,238   |   |                                |   | 1,297   |      |  |   | 3,659    |   |  |   | 3,639   |  
|                                                                                                                                                                 |  |                                 |         |   |                                |   |         |      |  |   |          |   |  |   |         |  
|Total                                                                                                                                                            |  | $                               | 2,441   |   |                                | $ | 2,579   |      |  | $ | 7,259    |   |  | $ | 7,407   |  
|                                                                                                                                                                 |  |                                 |         |   |                                |   |         |      |  |   |          |   |  |   |         |  
|Total operating expenses:                                                                                                                                        |  |                                 |         |   |                                |   |         |      |  |   |          |   |  |   |         |  
|Radio                                                                                                                                                            |  | $                               | 57,118  |   |                                | $ | 44,348  |      |  | $ | 108,093  |   |  | $ | 62,882  |  
|Television                                                                                                                                                       |  |                                 | 37,270  |   |                                |   | 23,542  |      |  |   | 75,420   |   |  |   | 45,014  |  
|Corporate                                                                                                                                                        |  |                                 | 6       |   |                                |   |        |      |  |   | 21       |   |  |   |        |  
|                                                                                                                                                                 |  |                                 |         |   |                                |   |         |      |  |   |          |   |  |   |         |  
|Total                                                                                                                                                            |  | $                               | 94,394  |   |                                | $ | 67,890  |      |  | $ | 183,534  |   |  | $ | 107,896 |  
|Operating loss:                                                                                                                                                  |  |                                 |         |   |                                |   |         |      |  |   |          |   |  |   |         |  
|Radio                                                                                                                                                            |  | $                               | (40,653 | ) |                                | $ | (27,212 | )    |  | $ | (63,111  | ) |  | $ | (12,991 | )
|Television                                                                                                                                                       |  |                                 | (26,215 | ) |                                |   | (10,185 | )    |  |   | (43,340  | ) |  |   | (4,702  | )
|Corporate                                                                                                                                                        |  |                                 | (6      | ) |                                |   |        |      |  |   | (21      | ) |  |   |        |  
|                                                                                                                                                                 |  |                                 |         |   |                                |   |         |      |  |   |          |   |  |   |         |  
|Total                                                                                                                                                            |  | $                               | (66,874 | ) |                                | $ | (37,397 | )    |  | $ | (106,472 | ) |  | $ | (17,693 | )
|                                                                                                                                                                 |  |                                 |         |   |                                |   |         |      |  |   |          |   |  |   |         |  
|Adjusted EBITDA (1):                                                                                                                                             |  |                                 |         |   |                                |   |         |      |  |   |          |   |  |   |         |  
|Radio                                                                                                                                                            |  | $                               | 7,704   |   |                                | $ | 8,484   |      |  | $ | 19,561   |   |  | $ | 25,191  |  
|Television                                                                                                                                                       |  |                                 | 2,946   |   |                                |   | 4,188   |      |  |   | 8,731    |   |  |   | 12,013  |  
|                                                                                                                                                                 |  |                                 |         |   |                                |   |         |      |  |   |          |   |  |   |         |  
|Total                                                                                                                                                            |  | $                               | 10,650  |   |                                | $ | 12,672  |      |  | $ | 28,292   |   |  | $ | 37,204  |  
|                                                                                                                                                                 |  |                                 |         |   |                                |   |         |      |  |   |          |   |  |   |         |  



|(1) | We define Adjusted EBITDA as net income or loss less income from discontinued operations, net of taxes, plus income tax benefit or expense, net interest expense,
interest rate swap income or expense, impairment of broadcast licenses, depreciation, loss on disposal of property and equipment, stock-based compensation expense, and other non-cash gains or losses. Management considers this measure an important
indicator of our liquidity relating to our operations because it eliminates the effects of certain non-cash items, our discontinued operations 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, or GAAP, such as cash flows from operating activities, operating income or loss and net income or loss.
In addition, our definition of Adjusted EBITDA may differ from those of many companies reporting similarly named measures.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

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

The table set forth below reconciles net cash (used in) provided by
operating activities, calculated and presented in accordance with GAAP, to Adjusted EBITDA:



|                                                    |  |                                 |        |   |                                |   |         |      |  |   |         |   |  |   |         |  
|--------------------------------------------------- |  | ------------------------------- | ------ | - | ------------------------------ | - | ------- | ---- |  | - | ------- | - |  | - | ------- | -
|                                                    |  | Three Months EndedSeptember 30, |        |   | Nine Months EndedSeptember 30, |  
|                                                    |  | 2009                            |        |   | 2008                           |   |         | 2009 |  |   | 2008    |  
|                                                    |  | (In thousands)                  |       
|Net cash (used in) provided by operating activities |  | $                               | (1,925 | ) |                                | $ | 1,345   |      |  | $ | (2,922  | ) |  | $ | 5,410   |  
|Add:                                                |  |                                 |        |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Income tax expense (benefit)                        |  |                                 | 3,310  |   |                                |   | (15,575 | )    |  |   | (12,034 | ) |  |   | (10,666 | )
|Interest expense and other income, net              |  |                                 | 8,413  |   |                                |   | 9,251   |      |  |   | 25,070  |   |  |   | 27,804  |  
|Less:                                               |  |                                 |        |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Effect of discontinued operations                   |  |                                 | (347   | ) |                                |   | (340    | )    |  |   | (1,015  | ) |  |   | (1,020  | )
|Amortization of deferred financing costs            |  |                                 | (368   | ) |                                |   | (333    | )    |  |   | (1,098  | ) |  |   | (1,062  | )
|Amortization of discount on subordinated notes      |  |                                 | (69    | ) |                                |   | (64     | )    |  |   | (204    | ) |  |   | (189    | )
|Amortization of program rights                      |  |                                 | (1,093 | ) |                                |   | (133    | )    |  |   | (2,107  | ) |  |   | (413    | )
|Accretion on senior discount notes                  |  |                                 |       |   |                                |   | (1,784  | )    |  |   |        |   |  |   | (5,243  | )
|Provision for doubtful accounts                     |  |                                 | (969   | ) |                                |   | (292    | )    |  |   | (1,660  | ) |  |   | (929    | )
|Loss on sale of property and equipment              |  |                                 |       |   |                                |   | (62     | )    |  |   |        |   |  |   | (62     | )
|Changes in operating assets and liabilities:        |  |                                 |        |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Accounts receivable                                 |  |                                 | 1,460  |   |                                |   | (100    | )    |  |   | 3,904   |   |  |   | 5,493   |  
|Cash overdraft                                      |  |                                 |       |   |                                |   |        |      |  |   | 395     |   |  |   |        |  
|Program rights                                      |  |                                 | 2,284  |   |                                |   |        |      |  |   | 6,238   |   |  |   | 1,159   |  
|Amounts due from related parties                    |  |                                 |       |   |                                |   | 4       |      |  |   | 20      |   |  |   | 39      |  
|Prepaid expenses and other current assets           |  |                                 | (18    | ) |                                |   | 154     |      |  |   | (235    | ) |  |   | 33      |  
|Employee advances                                   |  |                                 | 7      |   |                                |   | 14      |      |  |   | 14      |   |  |   | 418     |  
|Accounts payable                                    |  |                                 | 237    |   |                                |   | (996    | )    |  |   | 1,271   |   |  |   | 43      |  
|Accrued liabilities                                 |  |                                 | (661   | ) |                                |   | 323     |      |  |   | (2,676  | ) |  |   | 454     |  
|Accrued interest                                    |  |                                 | 3,584  |   |                                |   | 4,850   |      |  |   | 3,437   |   |  |   | 5,054   |  
|Deferred income taxes                               |  |                                 | (3,309 | ) |                                |   | 15,585  |      |  |   | 11,735  |   |  |   | 10,813  |  
|Other assets and liabilities                        |  |                                 | 114    |   |                                |   | 825     |      |  |   | 159     |   |  |   | 68      |  
|                                                    |  |                                 |        |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Adjusted EBITDA                                     |  | $                               | 10,650 |   |                                | $ | 12,672  |      |  | $ | 28,292  |   |  | $ | 37,204  |  
|                                                    |  |                                 |        |   |                                |   |         |      |  |   |         |   |  |   |         |  

Three Months Ended September 30, 2009 Compared to the Three Months Ended September 30,
2008

Net Revenues. Net revenues decreased by $3.0 million, or 9.7%, to $27.5 million for the three months ended
September 30, 2009, from $30.5 million for the same period in 2008. The change was primarily attributable to decreased advertising revenue in both our radio and television segments, reflecting the general decline in the advertising
industry consistent with the continued downturn in the local and U.S. economies.

Net revenues for our radio segment decreased
by $0.7 million, or 3.9%, to $16.5 million for the three months ended September 30, 2009, from $17.2 million for the same period in 2008. This change was primarily attributable to a decline in advertising revenue in our Southern California
market.

Net revenues for our television segment decreased by $2.3 million, or 17.2%, to $11.0 million for the three months
ended September 30, 2009, from $13.3 million for the same period in 2008. This decrease was primarily attributable to lower advertising revenue in our California and Texas markets, reflecting the continued downturn in the local and U.S.
economies.

We currently anticipate full year net revenue to decline in 2009, as compared to 2008, in both our radio and
television segments as a result of the U.S. economic recession, which has negatively impacted both the national and local advertising markets.



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Total operating expenses. Total operating expenses increased by $26.5 million, or
39.0%, to $94.4 million for the three months ended September 30, 2009, as compared to $67.9 million for the same period in 2008. The increase was primarily attributable to a $28.4 million increase in broadcast license impairment charges,
primarily due to higher impairment charges in our California radio and television markets. The write-downs in 2009 were primarily the result of (a) a decrease in advertising revenue growth projections for the markets in which we operate,
(b) an increase in discount rates and (c) a decline in cash flow multiples for recent station sales. We also experienced a modest $0.2 million increase selling, general and administrative expenses, which was primarily due to higher bad
debt reserves. These increases were partially offset by:



| | (1) | a $1.0 million decline in program and technical expenses, primarily resulting from an increase in managements estimate of the period over which certain of our
internally produced programs contribute to our revenues. Prior to January 1, 2009, television production costs for all programs were charged to operating expense as incurred, because we had estimated that the useful lives of these programs did
not exceed one year. Beginning January 1, 2009, we determined, based on an evaluation of our historical programming data, that certain of our television programs have demonstrated the ability to generate gross revenues beyond one year, and
therefore, television production costs for these programs are charged to operating expense based on the ratio of the current periods gross revenues to estimated remaining total gross revenues from all sources on an individual program basis. If
we had not made this change and continued to expense television production costs for these programs as incurred as we had in the prior fiscal year, our program and technical expenses would have been approximately $1.3 million higher for the three
months ended September 30, 2009. The decline in program and technical expenses was also due to lower payroll expenses resulting from staff reductions. However, the overall decrease in program and technical expenses was partially offset by
higher ratings service costs and music license fees;
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | a $0.8 million decline in loss on disposal of property and equipment, reflecting the absence of asset disposals in the third quarter of 2009. The loss recorded in 2008
primarily related to the damage caused by Hurricane Ike in September 2008; and
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (3) | a $0.3 million decline in promotional expenses and depreciation.
| | --- | ----------------------------------------------------------------

Total operating expenses for our radio segment increased by $12.8 million, or 28.8%, to $57.1 million for the three months ended September 30, 2009, from $44.3 million for the three months ended
September 30, 2008. This change was primarily attributable to a $13.2 million increase in broadcast license impairment charges and a $0.3 million increase in selling, general and administrative expenses. These increases were partially offset
by:



| | (1) | a $0.4 million decline in loss on disposal of property and equipment, reflecting the absence of asset disposals in the third quarter of 2009. The loss recorded in 2008
primarily related to the damage caused by Hurricane Ike in September 2008; and
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | a $0.2 million decrease in program and technical, promotional and depreciation expenses.
| | --- | ----------------------------------------------------------------------------------------

Total operating expenses for our television segment increased by $13.7 million, or 58.3%, to $37.3 million for the three months ended
September 30, 2009, from $23.6 million for the same period in 2008. This change was primarily attributable to a $15.2 million increase in broadcast license impairment charges. This increase was partially offset by:



| | (1) | a $0.9 million decrease in programming and technical expenses, reflecting the increase in the period over which certain in-house television productions costs are
amortized, as discussed above, and lower payroll expenses resulting from staff reductions. However, the overall decrease was partially offset by higher ratings service costs and music license fees;
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | a $0.4 million decline in loss on disposal of property and equipment, reflecting the absence of asset disposals in the third quarter of 2009. The loss recorded in 2008
primarily related to the damage caused by Hurricane Ike in September 2008; and
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (3) | a $0.2 million decrease in selling, general and administrative expenses and depreciation expense.
| | --- | -------------------------------------------------------------------------------------------------

We believe that our total operating expenses, before consideration of any impairment charges, will decrease in the remainder of 2009 as
compared to 2008, due to the extension of the period over which certain in-house television production costs are amortized, as described above, and a decrease in sales commissions and administrative expenses resulting from lower advertising revenues
and operating cost reductions. However, this expectation could be negatively impacted by the consummation of the acquisition of WASA-LP and the number and size of additional radio and television assets that we acquire, if any.

Interest expense and interest and other income. Interest expense and interest and other income decreased by $0.8 million, or 9.1%, to
$8.5 million for the three months ended September 30, 2009, as compared to $9.3 million for the same period in 2008. Although the average debt balance under LBI Medias senior secured credit facilities was higher in the third quarter of
2009, as compared to the same period in 2008, the average interest rates were lower during the current year period, which more than offset the higher debt balances. In addition, our senior discount notes began accruing cash interest at 11% in
October 2008, which was lower



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than the effective yield at which the notes had been previously accreting. As a result, interest expense related to our senior discount notes decreased by $0.5 million during the three months
ended September 30, 2009, as compared to the same period in 2008.

Our interest expense may increase in 2009 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 television station WASA-LP from Venture Technologies Group, LLC.
See Acquisitions.

Interest rate swap income (expense). We recorded interest rate swap income of $0.2
million for the three months ended September 30, 2009, as compared to interest rate swap expense of $0.1 million for the three months ended September 30, 2008, a change of $0.3 million. Interest rate swap income (or expense) reflects
changes in the estimated fair market value of our interest rate swap during the respective period.

Equity in losses of
equity method investment. In April 2008, one of our indirect, wholly owned subsidiaries purchased a 30% interest in PortalUno, Inc., or PortalUno, a development stage, online search engine for the Hispanic community. Equity in losses of equity
method investment was $40,000 for the three months ended September 30, 2009, as compared to $213,000 for the same period in 2008, and represents our share of PortalUnos net loss during the respective periods.

Impairment of equity method investment. In the third quarter of 2008, we tested our equity investment in PortalUno for impairment.
Based on this analysis, including a review of the factors which contributed to the impairment charge we recorded during the third quarter relating to our broadcast licenses, we determined that an other-than-temporary decline in the estimated fair
value of the investment had occurred. As such, during the three months ended September 30, 2008, we recorded a $0.2 million impairment charge to reduce the carrying value of the investment to its estimated fair value. No such impairment was
recorded in the third quarter of 2009.

(Provision for) benefit from income taxes.During the three months ended
September 30, 2009, we recorded a provision for income taxes of $3.3 million as compared to a benefit from income taxes of $15.6 million for the same period in 2008, a change of $18.9 million. Although we recorded broadcast license impairment
charges in both the 2009 and 2008 periods (which generally produces a tax benefit because of the reduction in the difference between the carrying value of the broadcast licenses for income tax and financial reporting purposes), the charges recorded
in 2009 caused the gross deferred tax balances to switch from liabilities to assets. Due to our conclusion that these items (along with all other deferred tax assets) will not be realized in the ordinary course of operations, we provided full
valuation allowance on deferred tax assets relating to these indefinite lived assets. The result of the change in the deferred tax balances relating to these intangible assets was a $3.3 million provision for income taxes in the third quarter of
2009.

Income from discontinued operations. In October 2009, we entered into a definitive agreement to sell radio
station KSEV-AM in our Texas market, which we currently expect to be completed during the first half of 2010. Upon the closing of the disposition, we will no longer own or operate this station. In accordance with Accounting Standards Codification
(ASC) 360-10-45, Impairment or Disposal of Long-Lived Assets (ASC 360-10-45), we reported the operating results of KSEV-AM in discontinued operations within the accompanying condensed consolidated statements of
operations. Income from discontinued operations, net of taxes, decreased to $0.1 million for the three months ended September 30, 2009, as compared to $0.3 million for the same period in 2008, a change of $0.2 million. The decrease was
primarily attributable to a $0.3 million broadcast license impairment charge recognized during the third quarter of 2009, as compared to no charge recorded during the corresponding period in 2008.

Net loss. We recognized a net loss of $78.3 million for the three months ended September 30, 2009, as compared to $31.2 million
for the same period of 2008, a decrease of $47.1 million. This change was primarily attributable to the $29.5 million increase in operating loss due to changes in revenues and expenses discussed above, and the $18.9 million change in the income tax
provision.

Adjusted EBITDA. Adjusted EBITDA decreased by $2.0 million, or 16.0%, to $10.7 million for the three months
ended September 30, 2009, as compared to $12.7 million for the same period in 2008. This change was primarily the result of the overall decline in radio and television advertising revenues, partially offset by the decrease in program and
technical expenses.

Adjusted EBITDA for our radio segment decreased by $0.8 million, or 9.2%, to $7.7 million for the three
months ended September 30, 2009, as compared to $8.5 million for the same period in 2008. The decrease was primarily the result of the decline in advertising revenues and the increase in selling, general and administrative expenses. However,
these changes were partially offset by the decline in promotional expenses, as discussed above.

Adjusted EBITDA for our
television segment decreased by $1.2 million, or 29.6%, to $2.9 million for the three months ended September 30, 2009, from $4.1 million for the same period in 2008. This decrease was primarily the result of lower advertising revenue, partially
offset by declines in program and technical and selling, general and administrative expenses, as discussed above.



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Nine Months Ended September 30, 2009 Compared to the Nine Months Ended September 30, 2008

Net Revenues. Net revenues decreased by $13.1 million, or 14.6%, to $77.1 million for the nine months ended
September 30, 2009, from $90.2 million for the same period in 2008. The change was primarily attributable to decreased advertising revenue in both our radio and television segments, reflecting the general decline in the advertising
industry consistent with the continued downturn in the local and U.S. economies.

Net revenues for our radio segment decreased
by $4.9 million, or 9.8%, to $45.0 million for the nine months ended September 30, 2009, from $49.9 million for the same period in 2008. This change was primarily attributable to a decline in advertising revenue in our California and Texas
markets.

Net revenues for our television segment decreased by $8.2 million, or 20.4%, to $32.1 million for the nine months
ended September 30, 2009, from $40.3 million for the same period in 2008. This decrease was primarily attributable to lower advertising revenue in all of our markets, reflecting the continued downturn in the local and U.S. economies.

Total operating expenses. Total operating expenses increased by $75.6 million, or 70.1%, to $183.5 million for the
nine months ended September 30, 2009, as compared to $107.9 million for the same period in 2008. The increase was primarily attributable to a $79.9 million increase in broadcast license impairment charges, primarily resulting from higher
impairment charges in our California market. The write-downs in 2009 were primarily attributable to (a) a decrease in advertising revenue growth projections for the markets in which we operate, (b) an increase in discount rates and
(c) a decline in cash flow multiples for recent station sales. These increases were partially offset by:



| | (1) | a $3.3 million decline in program and technical expenses, primarily resulting from an increase in managements estimate of the period over which certain of our
internally produced programs contribute to our revenues. Prior to January 1, 2009, television production costs for all programs were charged to operating expense as incurred, because we had estimated that the useful lives of these programs did
not exceed one year. Beginning January 1, 2009, we determined, based on an evaluation of our historical programming data, that certain of our television programs have demonstrated the ability to generate gross revenues beyond one year, and
therefore, television production costs for these programs are charged to operating expense based on the ratio of the current periods gross revenues to estimated remaining total gross revenues from all sources on an individual program basis. If
we had not made this change and continued to expense television production costs for these programs as incurred as we had in the prior fiscal year, our program and technical expenses would have been approximately $4.5 million higher for the nine
months ended September 30, 2009. The decline in program and technical expenses was also due to lower payroll expenses resulting from staff reductions. However, the overall decrease in program and technical expenses was partially offset by
higher ratings service costs and music license fees;
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | a $0.7 million decline in selling, general and administrative expenses, primarily due to lower sales commissions expenses, reflecting lower net revenues and commission
payout rates; and
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (3) | a $0.3 million decline in promotional expenses and depreciation expense.
| | --- | ------------------------------------------------------------------------

Total operating expenses for our radio segment increased by $45.2 million, or 71.9%, to $108.1 million for the nine months ended September 30, 2009, from $62.9 million in the nine months ended
September 30, 2008. This increase was primarily attributable to:



| | (1) | a $45.0 million increase in broadcast license impairment charges; and
| | --- | ---------------------------------------------------------------------



| | (2) | a $0.9 million increase in selling, general and administrative expenses, primarily resulting from (a) higher trade expenses and (b) higher legal expenses and
pre-acquisition costs (the adoption of an update to ASC 805, which became effective on January 1, 2009, resulted in the write-off of $0.2 million in previously capitalized pre-acquisition expenses. See Recent Accounting
Pronouncements). These increases were partially offset by lower sales commission expenses, reflecting lower sales and commission payout rates.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

These increases were partially offset by a $0.4 million decline in loss on disposal of property and equipment (reflecting the absence of the 2008 Hurricane Ike disaster loss in 2009), a $0.3 million
decline in promotional expenses and lower depreciation expense.



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Total operating expenses for our television segment increased by $30.3 million, or 67.6%, to
$75.4 million for the nine months ended September 30, 2009, from $45.1 million for the same period in 2008. This change was primarily the result of a $34.8 million increase in impairment charges, primarily attributable to increased write-downs
in our California market, and a $0.5 million increase in loss on disposal of property and equipment. These increases were partially offset by:



| | (1) | a $3.4 million decrease in programming and technical expenses, reflecting the increase in the period over which certain in-house television productions costs are
amortized, as discussed above, and lower payroll expenses resulting from staff reductions. However, the overall decrease was partially offset by higher ratings service costs and music license fees; and
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | a $1.6 million decrease in selling, general and administrative expenses, primarily resulting from lower sales commission expenses, reflecting lower sales and commission
payout rates. These declines were partially offset by (a) higher trade expenses and (b) higher legal expenses and pre-acquisition costs (the adoption of an update to ASC 805, which became effective on January 1, 2009, resulted in the
write-off of $0.2 million in previously capitalized pre-acquisition expenses. See Recent Accounting Pronouncements).
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Interest expense and interest and other income. Interest expense and interest and other income decreased by $2.7 million, or 10.9%, to $25.1 million for the nine months ended September 30,
2009, as compared to $27.8 million for the same period in 2008. Although the average debt balance under LBI Medias senior secured credit facilities was higher in the first nine months of 2009, as compared to the same period in 2008, the
average interest rates were lower during the current period, which more than offset the higher debt balances. In addition, our senior discount notes began accruing cash interest at 11% in October 2008, which was lower than the effective yield at
which the notes had been previously accreting. As a result, interest expense related to our senior discount notes decreased by $1.5 million during the nine months ended September 30, 2009, as compared to the same period in 2008.

Interest rate swap income (expense). Interest rate swap income was $1.6 million for the nine months ended September 30, 2009, as
compared to interest rate swap expense of $14,000 for the same period of 2008, a change of $1.6 million. Interest rate swap income (or expense) reflects changes in the estimated fair market value of our interest rate swap during the respective
period.

Gain on note purchase.During the nine months ended September 30, 2009, we purchased $1.0 million
aggregate principal amount of our outstanding 11% senior discount notes at a purchase price of 48.0% of face value in an open market transaction. The purchase resulted in a pre-tax gain of approximately $0.5 million (see Liquidity and Capital
ResourcesSenior Discount Notes). No such purchase occurred during the nine months ended September 30, 2008.

Equity in losses of equity method investment. As described above, one of our indirect, wholly owned subsidiaries purchased a 30% interest in PortalUno in April 2008. Equity in losses of equity method investment was $103,000 for the
nine months ended September 30, 2009, as compared to $213,000 for the same period in 2008, and represents our share of PortalUnos net loss during the period.

Impairment of equity method investment. In the third quarter of 2008, we tested our equity investment in PortalUno for impairment. Based on this analysis, including a review of the factors which
contributed to the impairment charge we recorded during the third quarter relating to our broadcast licenses, we determined that an other-than-temporary decline in the estimated fair value of the investment had occurred. As such, during the nine
months ended September 30, 2008, we recorded a $0.2 million impairment charge to reduce the carrying value of the investment to its estimated fair value. No such impairment was recorded in 2009.

(Provision for) benefit from income taxes.During the nine months ended September 30, 2009, we recognized an income tax benefit
of $12.0 million, as compared to a tax benefit of $10.6 million for the same period in 2008. The $1.4 million increase in our income tax benefit primarily resulted from the higher impairment charges recorded in 2009, partially offset by changes in
our deferred tax account (and related valuation allowance) balances associated with our indefinite-lived intangible assets.

Income from discontinued operations. In October 2009, we entered into a definitive agreement to sell radio station KSEV-AM in our Texas market, which we currently expect to be completed during the first half of 2010. Upon the closing
of the disposition, we will no longer own or operate this station. In accordance with ASC 360-10-45, we reported the operating results KSEV-AM in discontinued operations within the accompanying condensed consolidated statements of operations. Income
from discontinued operations, net of taxes, decreased to $0.7 million for the nine months ended September 30, 2009, as compared to $1.0 million for the same period in 2008, a change of $0.3 million. The decrease was primarily attributable to a
$0.3 million broadcast license impairment charge recognized during the nine months ended September 30, 2009, as compared to no charge recorded during the corresponding period in 2008, and a decrease in the benefit from income taxes.

Net loss. We recognized net losses of $116.8 million and $34.3 million for the nine months ended September 30, 2009 and 2008,
respectively. This change was primarily attributable to the $79.9 million increase in broadcast license impairment charges, and the other changes noted above.



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Adjusted EBITDA. Adjusted EBITDA decreased by $8.9 million, or 24.0%, to $28.3
million for the nine months ended September 30, 2009, as compared to $37.2 million for the same period in 2008. This change was primarily the result of the overall decline in radio and television advertising revenues, partially offset by the
decrease in program and technical expenses and selling, general and administrative expenses, as discussed above.

Adjusted
EBITDA for our radio segment decreased by $5.6 million, or 22.3%, to $19.6 million for the nine months ended September 30, 2009, as compared to $25.2 million for the same period in 2008. The decrease was primarily the result of the decline in
advertising revenues in our Los Angeles market and an increase in program and technical expenses and selling, general and administrative expenses, as discussed above.

Adjusted EBITDA for our television segment decreased by $3.3 million, or 27.3%, to $8.7 million for the nine months ended September 30, 2009, from $12.0 million for the same period in 2008. This
decrease was primarily the result of lower advertising revenue, partially offset by declines in program and technical expenses and selling, general and administrative expenses, 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. In May 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. In January 2008, LBI Media entered into a commitment increase agreement
pursuant to which its senior term loan facility increased by $10.0 million, from $108.4 million (net of principal repayments from May 2006 through January 2008) to $118.4 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 in January 2008).

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 (repayment of $275,000 per quarter as of September 30, 2009), plus 0.25% of the
additional amount borrowed in January 2008 (repayment of $25,000 per quarter as of September 30, 2009) 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 September 30, 2009, LBI Media had $40.5 million aggregate principal amount outstanding
under the senior revolving credit facility and $116.0 million aggregate principal amount of outstanding senior term loans. Since September 30, 2009, LBI Media has borrowed, net of repayments, an additional $1.2 million under its senior secured
revolving credit facility.

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, ranges 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 September 30, 2009,
borrowings under LBI Medias senior credit facilities bore interest at rates between 1.75% and 4.25%, 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



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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). As of September 30, 2009, LBI Media was in compliance with all such covenants.

LBI Medias 81/2% Senior Subordinated Notes. In July 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 pays semi-annual interest payments
of approximately $9.7 million each February 1 and August 1, which commenced on 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.

The indenture
governing these notes contains restrictive covenants that limit, among other things, LBI Medias and its subsidiaries abilities 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. As of September 30, 2009, LBI
Media was in compliance with all such covenants.

The indenture governing these notes
also provides for customary events of default, which include (subject in certain instances to cure periods and dollar thresholds): nonpayment of principal, interest and premium, if any, on the notes, breach of covenants specified in the indenture,
payment defaults or acceleration of other indebtedness, a failure to pay certain judgments and certain events of bankruptcy, insolvency and reorganization. The 81/2% 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 us and certain of our 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 did not accrue and was
not payable on the senior discount notes prior to October 15, 2008 and, instead, the accreted value of the senior discount notes had been increased each period until the value equaled $68.4 million on October 15, 2008. We recorded such
accretion as additional interest expense. After October 15, 2008, cash interest began to accrue at a rate of 11% per year payable semi-annually on each April 15 and October 15.

In the fourth quarter of 2008, we purchased approximately $22.0 million aggregate principal amount of our senior discount notes in various
open market transactions at a weighted average purchase price of 43.321% of the principal amount. In the second quarter of 2009, we purchased an additional $1.0 million aggregate principal amount of our senior discount notes on the open market at a
purchase price of 48.0% of the principal amount.

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. As of September 30, 2009, we were in compliance with all such covenants.

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



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The following table summarizes our various levels of indebtedness at September 30,
2009.



|                           |  |                                                         |  |                                                       |  |                         |  |                                                                                                                                         
|-------------------------- |  | ------------------------------------------------------- |  | ----------------------------------------------------- |  | ----------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------
|Issuer                     |  | Form of Debt                                            |  | Principal AmountOutstanding                           |  | Scheduled Maturity Date |  | Interest rate                                                                                                                           
|LBI Media, Inc.            |  | $150.0 million senior secured revolving credit facility |  | $40.5 million (1)                                     |  | March 31, 2012          |  | LIBOR or base rate, plus an applicable margin dependent on LBI Medias leverage ratio (2.3% weighted average rate at September 30, 2009)
|                           |  |                                                         |  |                                                      
|LBI Media, Inc.            |  | Senior secured term loan credit facility                |  | $116.0 million                                        |  | March 31, 2012          |  | LIBOR or base rate, plus an applicable margin dependent on LBI Medias leverage ratio (1.8% weighted average rate at September 30, 2009)
|                           |  |                                                         |  |                                                      
|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 (2)                                     |  | October 15, 2013        |  | 11.0%                                                                                                                                   
|                           |  |                                                         |  |                                                      
|Empire Burbank Studios LLC |  | Mortgage note                                           |  | $1.9 million                                          |  | July 1, 2019            |  | 5.52%                                                                                                                                   



|(1) | Since September 30, 2009, LBI Media has borrowed, net of repayments, an additional $1.2 million under its senior secured revolving credit facility.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | In the fourth quarter of 2008 and the second quarter of 2009, we purchased approximately $22.0 million and $1.0 million, respectively, aggregate principal amount of our
senior discount notes in various open market transactions. As such, the total principal amount outstanding and due to third party noteholders was $45.4 million as of September 30, 2009.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Cash Flows. Cash and cash equivalents were $1.1 million and $0.5 million at September 30, 2009 and December 31, 2008,
respectively.

Net cash flow used in operating activities was $2.9 million for the nine months ended September 30, 2009,
as compared to cash provided by operations of $5.4 million for the nine months ended September 30, 2008. The change was primarily attributable to a decline in advertising revenues, partially offset by lower operating costs.

Net cash flow used in investing activities was $8.7 million and $8.5 million for the nine months ended September 30, 2009 and 2008,
respectively. The increase was primarily attributable to higher capital expenditures during the first nine months of 2009, as compared to 2008, primarily reflecting additional expenditures related to the construction of our new office building and
studio facility in Dallas, Texas.

Net cash flow provided by financing activities was $12.3 million and $1.7 million for the
nine months ended September 30, 2009 and 2008. The increase primarily reflects a $10.4 million increase in net borrowings under LBI Medias senior revolving credit facility.

Contractual Obligations. We had no material changes in commitments for long-term debt obligations or operating lease obligations as
of September 30, 2009, 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, 2008.

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



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Medias senior revolving credit facility. In addition, our senior discount notes began accruing cash interest at a rate of 11% per year on October 15, 2008, with the first payment
made on April 15, 2009. Prior to October 15, 2008, our senior discount notes had not been accruing cash interest and instead the accreted value of the notes had been increasing. The interest payments are payable on April 15 and
October 15 of each year until the notes mature on October 15, 2013. We also expect to use cash to fund the purchase price for the selected assets of television station WASA-LP within the next twelve months, primarily through borrowings
under LBI Medias senior revolving credit facility.

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 income or loss less income from
discontinued operations, net of taxes, plus income tax benefit or expense, net interest expense, interest rate swap income or expense, stock-based compensation expense, impairment of broadcast licenses, depreciation, loss on disposal of property and
equipment and other non-cash gains or losses.

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 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, our discontinued operations 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 stock-based
compensation expense, depreciation 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 depreciation and 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
income or expense.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------

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



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GAAP. We have included a presentation of net cash (used in) 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 GAAP. The preparation of
these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our
estimates, including those related to acquisitions of radio station and television station assets, allowance for doubtful accounts, program rights, 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 8.5% of our outstanding receivables. However, our allowances for doubtful accounts have increased over the past several
years from this historical average due to expansion in new markets and, most recently, the current downturn in the U.S. national and local economies. 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 September 30, 2009, from 15.7% to 18.7%, or $3.8 million to $4.5 million, would
result in a decrease in pre-tax income of $0.7 million for the nine months ended September 30, 2009.

Program Rights

Costs incurred in connection with the production of our internal television programs are expensed based on the ratio
of the current periods gross revenues to estimated remaining total gross revenues from all sources (Ultimate Revenues) on an individual program basis. Costs of television productions are subject to regular recovery assessments which compare
the estimated fair values with the unamortized costs. The amount by which the unamortized costs of television productions exceed their estimated fair values is written off. Prior to January 1, 2009, television production costs for all programs
were charged to operating expense as incurred because we estimated that the useful lives of these programs did not exceed one year. Beginning January 1, 2009, we determined, based on an evaluation of our historical programming data, that
certain of our television programs have demonstrated the ability to generate gross revenues beyond the current fiscal year, and therefore, television production costs for these programs are charged to operating expense based on the ratio of the
current periods gross revenues to Ultimate Revenues as described above. Costs related to the production of all other television programs for which we do not believe have a useful life beyond the current fiscal year are expensed as incurred.
For episodic television series, costs are expensed for each episode as it recognizes the related revenue for the episode. The adoption impact of the change in estimate of the useful life for certain television programs was a reduction in program and
technical expenses of approximately $1.3 million and $4.5 million during the three and nine months ended September 30, 2009, respectively.

With respect to television programs intended for broadcast, the most sensitive factors affecting estimates of Ultimate Revenues is the programs rating (which directly impacts the number of times the
show is expected to air) and the strength of the advertising market. Program ratings, which are an indication of market acceptance, directly affect our ability to generate advertising revenues during the airing of the program. Poor ratings may
result in the cancellation of a television program, which would require the



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immediate write-off of any unamortized production costs. A significant decline in the advertising market could also negatively impact our estimates.

Intangible assets

Our indefinite-lived assets consist of our FCC broadcast licenses. We believe that our broadcast licenses have indefinite useful lives given that they are expected to indefinitely contribute to our future cash flows and that they may be
continually renewed without substantial cost to us. In certain prior years, the licenses were considered to have finite lives and were subject to amortization.

In accordance Accounting Standards Codification (ASC) 350-30 General Intangibles Other Than Goodwill, we do not amortize our broadcast licenses. We test our broadcast licenses for
impairment at least annually or when indicators of impairment are identified. Our valuations principally use the discounted cash flow methodology, an income approach based on market revenue projections and not company-specific projections, which
assumes broadcast licenses are acquired and operated by a third party. This approach incorporates several variables including, but not limited to, types of signals, media competition, audience share, market advertising revenue projections,
anticipated operating margins, capital expenditures and discount rates that are based on the weighted average costs of capital for the broadcasting markets in which we operate, without taking into consideration the stations format or
management capabilities. This method calculates the estimated present value that would be paid by a prudent buyer for our FCC licenses as new radio or television stations as of the annual valuation date (September 30 of each year). If the discounted
cash flows estimated to be generated from these assets are less than the carrying value, an adjustment to reduce the carrying value to the fair market value of the assets is recorded.

We generally test our broadcast licenses for impairment at the individual license level. However, we aggregate broadcast licenses for
impairment testing if their signals are simulcast and are operating as one revenue-producing asset.

In the first quarter of
2009, we conducted an interim review of the fair value of some of our broadcast licenses. This review primarily resulted from the continued slowdown in the U.S. advertising industry, which reduced advertising revenue projections for the markets in
which we operate beyond levels assumed in our 2008 annual and year end impairment testing. Based on this evaluation, we determined that several of our radio and television broadcast licenses were impaired and recorded an impairment charge of
approximately $51.5 million to reduce the net book value of these broadcast licenses to their estimated fair market values.

During the three months ended September 30, 2009, we completed our annual impairment review and concluded that several of our broadcast licenses were impaired. As such, we recorded a non-cash impairment loss of approximately $75.1
million to reduce the book value of these broadcast licenses to their estimated fair values. We also recorded a $0.3 million impairment charge during the three months ended September 30, 2009 relating to radio station KSEV-AM, which is included
in discontinued operations in the accompanying condensed consolidated statements of operations (see Note 4 to our accompanying condensed consolidated financial statements). During the three months ended September 30, 2008, we recorded a
non-cash impairment loss of $46.7 million resulting from our 2008 annual impairment review. The impairment charges recorded in both 2009 and 2008 resulted from market changes in estimates and assumptions that were attributable to lower advertising
revenue growth projections for the broadcasting industry, increased discount rates and a decline in cash flow multiples for recent station sales. The increase in the impairment loss for the three months ended September 30, 2009, as compared to
the same period in 2008, was primarily due to increased write-downs relating to our California radio and television stations.

In assessing the recoverability of our indefinite-lived 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.

Deferred compensation

Our parent, Liberman Broadcasting, has
entered into employment agreements with certain employees. In addition to annual compensation and other benefits, one agreement provides an employee 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
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 such 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. We account for the time vesting component over the vesting period



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specified in the employment agreement 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 agreement), 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.

Such employment agreement has a
net value determination date of December 31, 2009, and as of September 30, 2009, we estimated that the employee had not earned any incentive compensation amounts.

If we assumed no change in the net value of Liberman Broadcasting from that at September 30, 2009, we would not expect to
record any deferred compensation expense during the remainder of 2009 relating solely to the time vesting portion of the deferred compensation. The employment agreement requires us to pay the deferred compensation amount in cash unless Liberman
Broadcastings common stock becomes publicly traded, at which time we may pay such amount 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 Statement of Financial Accounting Standards
(SFAS) No. 5, Accounting for Contingencies (FAS 5). FAS 5 was incorporated into ASC 450 Contingencies under the Financial Accounting Standards Board (FASB) codification.

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 9 of our accompanying condensed consolidated financial statements for a discussion of other known contingencies.

Recent
Accounting Pronouncements

In June 2009, the FASB issued SFAS No. 168, The FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting Principles, (FAS 168) a replacement of FASB Statement No. 162.FAS 168 is the new source of authoritative GAAP recognized by the FASB to
be applied by nongovernmental entities. Rules and interpretive releases of the SEC under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. This statement was incorporated into Accounting Standards
Codification (ASC) 105 Generally Accepted Accounting Principles under the new FASB codification which became effective on July 1, 2009. The new codification supersedes all then-existing non-SEC accounting and reporting
standards. All other non-grandfathered non-SEC accounting literature not included in the codification will become non-authoritative. We adopted this statement on July 1, 2009. We have included the references to the codification, as appropriate,
in the accompanying condensed consolidated financial statements. Adoption of this statement did not have an impact on our consolidated results of operations, cash flows or financial condition.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (FAS 157). FAS 157 provides
a single definition of fair value, together with a framework for measuring it, and requires additional disclosure about the use of fair value to measure assets and liabilities. Under the new codification, FAS 157 was incorporated into ASC 820
Fair Value Measurements and Disclosures (ASC 820).

In February 2007, the FASB issued SFAS
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. FAS 159 was incorporated into ASC 825 The Fair Value Option for Financial Assets and Liabilities (ASC 825) under the new FASB codification. Under ASC
825, 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 ASC 825.

In December 2007, the FASB issued SFAS No. 141R, Business Combinations (FAS
141R), 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



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the acquisition date, with goodwill being the excess value over the net identifiable assets acquired. FAS 141R also changed the accounting for the treatment of acquisition related transaction
costs. FAS 141R was incorporated into ASC 805 Business Combinations (ASC 805), under the new FASB codification. This ASC 805 update became effective and we adopted the provisions of this ASC 805 update on January 1,
2009. As such, the accompanying condensed consolidated statements of operations for the nine months ended September 30, 2009 include a charge of approximately $0.4 million, which relates to the write-off of pre-acquisition costs for certain
asset purchases that did not close prior to December 31, 2008 (see Note 8).

In December 2007, the FASB issued SFAS
No. 160, Noncontrolling Interests in Consolidated Financial Statements (FAS 160), which clarifies that a noncontrolling interest in a subsidiary should be reported as equity in the consolidated financial statements. FAS
160 was incorporated into ASC 810 Consolidation (ASC 810). ASC 810 became effective on January 1, 2009. The adoption of ASC 810 did not have a material effect on our consolidated results of operations, cash flows or
financial condition.

In February 2008, the FASB issued FASB Staff Position (FSP) FAS 157-2, Effective
Date of FASB Statement No. 157(FSP 157-2), which delayed the effective date of FAS 157 for nonfinancial assets and liabilities, except for items that are recognized or disclosed at fair value in the financial
statements on a recurring basis (at least annually), to fiscal years beginning after November 15, 2008. Under the new codification, FSP 157-2 was incorporated into ASC 820. We adopted this ASC update on January 1, 2009 and it did not have
a material impact on our consolidated results of operations, cash flows or financial condition, and did not require additional disclosures.

In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133 (FAS 161), which
requires enhanced disclosures for derivative and hedging activities. FAS 161 was incorporated into ASC 815 Derivatives and Hedging (ASC 815). The objective of the guidance is to provide users of financial statements with an
enhanced understanding of how and why an entity uses derivative instruments, how derivative instruments and related hedged items are accounted for, and how derivative instruments and related hedged items effect and entitys financial position,
financial performance and cash flows. ASC 815 was adopted on January 1, 2009. The adoption of this ASC update did not have a material impact on the disclosures required in our consolidated financial statements.

In April 2008, the FASB issued FSP FAS 142-3, Determination of the Useful Lives of Intangible Assets,which
amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of an intangible asset. Under the new codification this FSP was incorporated into two different ASCs, ASC 275
Risks and Uncertainties (ASC 275) and ASC 350 IntangiblesGoodwill and Other (ASC 350). This interpretation was effective for financial statements issued for fiscal years beginning after
December 15, 2008 and interim periods within those years. We adopted these ASCs on January 1, 2009, and they did not have a material impact on our consolidated results of operations, cash flows or financial condition, and did not
require additional disclosures related to existing intangible assets.

In October 2008, the FASB issued FSP FAS 157-3,
Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active (FSP 157-3) which clarifies the application of FAS 157 in a market that is not active. FSP 157-3 was incorporated unto ASC 820. This
ASC update became effective upon issuance, including prior periods for which financial statements have not been issued. The adoption of this ASC update did not have a material impact on our consolidated results of operations, cash flows or
financial condition.

In April 2009, the FASB issued FASB Staff Position (FSP) No. 115-2 and No. 124-2,
Recognition and Presentation of Other-Than-Temporary Impairments (FSP 115-2 and FSP 124-2), which changes the method for determining whether an other-than-temporary impairment exists for debt securities and the amount of an
impairment charge to be recorded in earnings. FSP 115-2 and FSP 124-2 were incorporated into ASC 320 InvestmentsDebt and Equity Securities under the new FASB codification. This ASC update became effective for interim periods ending
after June 15, 2009. We adopted this update during the second quarter of 2009 and it did not have a material impact on our consolidated results of operations, cash flows or financial condition, and did not require additional disclosures.

In April 2009, the FASB issued FSP FAS 157-4, Determining Whether a Market is Not Active and a Transaction is Not
Distressed, (FSP 157-4). FSP 157-4 provides additional guidance to highlight and expand on the factors that should be considered in estimating fair value when there has been a significant decrease in market activity for a financial
asset. Under the new codification, FSP 157-4 was incorporated into ASC 820. This update became effective for our financial statements as of June 30, 2009 and it did not have a material impact on our consolidated results of operations, cash
flows or financial condition and did not require additional disclosures.

In April 2009, the FASB issued FSP FAS 107-1 and APB
28-1, Interim Disclosures about Fair Value of Financial Instruments (FSP FAS 107-1 and APB 28-1), which increases the frequency of fair value disclosures from annual only to quarterly.



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Under the new codification, FSP 107-1 and APB 28-1 were incorporated into ASC 825. This ASC update became effective for our financial statements as of June 30, 2009.

In May 2009, the FASB issued SFAS No. 165, Subsequent Events (FAS 165), which requires disclosure of the
date through which a company evaluated the need to disclose events that occurred subsequent to the balance sheet date and whether that date represents the date the financial statements were issued or were available to be issued. This statement was
incorporated into ASC 855 Subsequent Events (ASC 855). We adopted ASC 855 for the period ended June 30, 2009. The adoption of ASC 855 did not have a material effect on the disclosures required in our consolidated
financial statements. We considered subsequent events through November 13, 2009 for disclosure in this Quarterly Report on Form 10-Q, which is the date the financial statements were available to be issued.

In June 2009, the FASB issued SFAS No. 167, Amendments to FASB Interpretation No. 46 (R) (FAS 167),
which amended the consolidation guidance for variable-interest entities. The amendments include: (1) the elimination of the exemption for qualifying special purpose entities, (2) a new approach for determining who should consolidate a
variable-interest entity, and (3) changes to when it is necessary to reassess who should consolidate a variable-interest entity. FAS 167 was incorporated into ASC 810 Consolidation. ASC 810 is effective for financial
statements issued for fiscal years periods beginning after November 15, 2009, for interim periods within that first annual reporting period and for interim and annual reporting periods thereafter. Earlier application is prohibited. We will
adopt ASC 810 on January 1, 2010 and are still assessing the impact the pronouncement will have on our consolidated results of operations, cash flows and financial condition.

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. 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 and in the regions in which we operate;
| | - |  | ----------------------------------------------------------------------------------------



| |  |  | 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;
| | - |  | --------------------------------------------------------



| |  |  | our ability to remediate or otherwise mitigate any material weakness in internal control over financial reporting or significant deficiencies that may
be identified in the future;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | 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, 2008 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, 2008 for further discussion on quantitative and qualitative disclosures about market risk.



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|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 Chief Executive Officer, President and Secretary and our Chief Financial Officer, of the
effectiveness of our disclosure controls and procedures as of September 30, 2009. Based on the foregoing, our Chief Executive Officer, President and Secretary and our Chief Financial Officer concluded that, as of the end of the period covered
by this report, our disclosure controls and procedures were effective at the reasonable assurance level.

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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##### Table of Contents

PART II. OTHER INFORMATION



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

Our
dispute with Broadcast Music, Inc. relating to royalties is ongoing. No material developments in this matter occurred during the three months ended September 30, 2009. For more information on these proceedings, see Item 1. Legal
Proceedings in our Annual Report on Form 10-K for the twelve month period ended December 31, 2008 and Note 9 to our condensed consolidated financial statements for the quarter ended June 30, 2009 in Part I. Item 1
Financial Information.

We are subject to pending litigation arising in the normal course of our business. While
it is not possible to predict the results of such litigation, management does not believe the ultimate outcome of these matters will have a 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, 2008.



|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
|------- | -----------------

On
October 30, 2009, Jose Liberman retired as President of Liberman Broadcasting, Inc. and each of its subsidiaries, including LBI Media Holdings, Inc. and LBI Media, Inc. Mr. Liberman will continue to serve as the Chairman of the boards of
directors of each of Liberman Broadcasting, LBI Media Holdings and LBI Media, Inc. and as a manager of the board of managers of each of LBI Medias subsidiaries.

On October 30, 2009, Lenard D. Liberman, was appointed Chief Executive Officer and President of Liberman Broadcasting and each of its subsidiaries, including LBI Media Holdings and LBI Media, until
such date when a successor is duly appointed and qualified. Mr. Liberman manages all day-to-day operations including acquisitions and financings. Since its formation in 1987, Mr. Liberman, age 47, has served and continues to serve as our
Secretary and member of the boards of directors of each of Liberman Broadcasting, LBI Media Holdings and LBI Media, Inc. and as a manager of the board of managers of each of LBI Medias subsidiaries. Mr. Liberman also previously served as
Liberman Broadcastings Executive Vice President from 1987 to October 2009 and as Chief Financial Officer from April 1999 to April 2000, April 2002 to April 2003 and April 2005 to May 2006. He received his juris doctorate degree and
masters of business administration degree from Stanford University in 1987. Mr. Liberman is a member of the California Bar.

Mr. Liberman and his father, Jose Liberman, Chairman of the board of Liberman Broadcasting and each of its subsidiaries, together, beneficially own 61% of Liberman Broadcastings economic interest.

We made personal loans to Lenard Liberman in the amount of $243,095, $32,000 and $1,916,563 on December 20,
2001, June 14, 2002 and July 9, 2002, respectively. Each of the loans bears interest at the alternative federal short-term rate published by the Internal Revenue Service for the month in which the advance was made, which rate was
2.48%, 2.91% and 2.84% for December 2001, June 2002 and July 2002, respectively. All three loans are scheduled to mature in December 2009. As of September 30, 2009, we had outstanding loans, including accrued interest of $448,025,
aggregating $2,639,683 to Mr. Liberman. During the year ended September 30, 2009, the largest aggregate amount of principal outstanding of these loans was $2,191,658. Lenard Liberman did not pay any principal or interest to us for the
nine months ended September 30, 2009.

Mr. Liberman is the sole shareholder of L.D.L. Enterprises, Inc., a mail
order business. From time to time, we allow L.D.L. Enterprises to use, free of charge, unsold advertising time on its television stations.

On October 30, 2009, Winter Horton was appointed Chief Operating Officer of Liberman Broadcasting and each of its subsidiaries, including LBI Media Holdings and LBI Media, until such date when a
successor is duly appointed and qualified.



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Mr. Horton, age 43, joined us in 1997 as Vice President of Programming for KRCA and has served as Liberman Broadcastings Corporate Vice President from 2001 to October 2009.
Mr. Horton is also a member of the boards of directors of each of Liberman Broadcasting, LBI Media Holdings and LBI Media.

As of September 30, 2009, we had outstanding loans aggregating $690,000 to Mr. Horton that were for personal use. Loans of $30,000, $36,000, $349,000 and $275,000 were made to Mr. Horton on November 20,
1998, November 22, 2002, November 29, 2002 and April 8, 2006, respectively. During the nine months ended September 30, 2009, the largest aggregate principal outstanding of these loans was $690,000. Mr. Horton did
not repay any principal or interest for the nine months ended September 30, 2009. The $30,000 loan does not bear interest and does not have a maturity date. Each of the other loans bears interest at 8.0% and the loans made on November 22,
2002, November 29, 2002 and April 8, 2006 mature on December 31, 2009, January 1, 2010 and December 31, 2010, respectively.



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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)                                                                                                                                     
|              | 
|31.1          |  | Certification of Chief Executive Officer, President and Secretary pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934*                                               
|              | 
|31.2          |  | Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934*                                                                        



|* | 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.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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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: November 13, 2009



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