UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended March 31, 2008

OR

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

For the transition period from                      to                     

Commission file number 333-110122

LBI MEDIA HOLDINGS, INC.

(Exact Name of Registrant as Specified in Its Charter)

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

1845 West Empire Avenue

Burbank, California 91504

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

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

Not Applicable

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

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  x    No  ¨

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

Large accelerated filer  ¨	Accelerated filer  ¨
Non-accelerated filer  x	Smaller reporting company  ¨
(Do not check if a smaller reporting company)

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

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

LBI MEDIA HOLDINGS, INC.

FORM 10-Q QUARTERLY REPORT

TABLE OF CONTENTS

			Page
PART I. FINANCIAL INFORMATION			1
	Item 1.	Financial Statements	1
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29
	Item 4T.	Controls and Procedures	29
PART II. OTHER INFORMATION			30
	Item 1.	Legal Proceedings	30
	Item 1A.	Risk Factors	30
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30
	Item 3.	Defaults upon Senior Securities	30
	Item 4.	Submission of Matters to a Vote of Security Holders	30
	Item 5.	Other Information	30
	Item 6.	Exhibits	31

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

LBI MEDIA HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

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

See accompanying notes.

1

LBI MEDIA HOLDINGS, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands)

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

See accompanying notes.

2

LBI MEDIA HOLDINGS, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

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

See accompanying notes.

3

LBI MEDIA HOLDINGS, INC.

NOTES TO INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Description of Business and Basis of Presentation

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

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

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

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

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

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

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

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

4

LBI MEDIA HOLDINGS, INC.

NOTES TO INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

2. Recent Accounting Pronouncements

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

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

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

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

3. Broadcast Licenses

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

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

5

LBI MEDIA HOLDINGS, INC.

NOTES TO INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

4. Long-Term Debt

Long-term debt consists of the following:

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

LBI Media’s 2006 Revolver and 2006 Term Loan

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

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

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

6

LBI MEDIA HOLDINGS, INC.

NOTES TO INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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

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

LBI Media’s 2002 Senior Subordinated Notes

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

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

LBI Media’s 2007 Senior Subordinated Notes

On July 23, 2007, LBI Media issued approximately $228.8 million aggregate principal amount of 8 ¹/2% Senior Subordinated Notes due 2017 (the “2007 Senior Subordinated Notes”). The 2007 Senior Subordinated Notes were sold at 98.350% of the principal amount, resulting in gross proceeds of approximately $225.0 million. All of LBI Media’s subsidiaries are wholly owned and provide full and unconditional joint and several guarantees of the 2007 Senior Subordinated Notes.

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

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

7

LBI MEDIA HOLDINGS, INC.

NOTES TO INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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

Senior Discount Notes

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

LBI Media’s 2004 Empire Note

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

8

LBI MEDIA HOLDINGS, INC.

NOTES TO INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Scheduled Debt Repayments

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

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

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

Interest Paid and Capitalized

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

5. Acquisitions

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

6. Commitments and Contingencies

Deferred Compensation

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

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

9

LBI MEDIA HOLDINGS, INC.

NOTES TO INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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

Litigation

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

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

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

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

10

LBI MEDIA HOLDINGS, INC.

NOTES TO INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

7. Related Party Transactions

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

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

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

8. Segment Data

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

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

11

LBI MEDIA HOLDINGS, INC.

NOTES TO INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

9. Parent Issuance of Class A Common Stock

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

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

10. Income Taxes

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

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

12

LBI MEDIA HOLDINGS, INC.

NOTES TO INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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

Condensed Balance Sheet Information:

(in thousands)

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

Condensed Statement of Operations Information:

(In thousands)

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

13

LBI MEDIA HOLDINGS, INC.

NOTES TO INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Condensed Statement of Flows Information:

(In thousands)

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

12. Subsequent Events

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

14

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

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

Overview

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

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

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

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

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

15

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

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

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

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

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

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

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

• material modifications in our business strategy and the business strategy of Liberman Broadcasting and our subsidiaries;

• commencement of a bankruptcy proceeding related to us, Liberman Broadcasting, and our subsidiaries;

• certain issuances of new equity securities to the public prior to March 30, 2010;

• certain changes in Liberman Broadcasting’s corporate form to an entity other than a Delaware corporation;

• any change in Liberman Broadcasting’s auditors to a firm that is not a big four accounting firm; and

• certain change of control transactions.

Refinancing of LBI Media Senior Subordinated Notes

On July 23, 2007, LBI Media issued approximately $228.8 million aggregate principal amount of 8 ¹/2% Senior Subordinated Notes that mature in 2017, resulting in gross proceeds of approximately $225.0 million and net proceeds of approximately $221.6 million after certain transaction costs. The net proceeds of the 8 ¹/2% senior subordinated notes were used to redeem LBI Media’s 10 ¹/8% senior subordinated notes due 2012, to repay a portion of the borrowings under LBI Media’s senior revolving credit facility and for general corporate purposes. The 10 ¹/8% senior subordinated notes were redeemed in full on August 22, 2007. See “—Liquidity and Capital Resources” for more information on the 8 ¹ /2% senior subordinated notes.

Acquisitions

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

16

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

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

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

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

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

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

17

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

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

We discuss Adjusted EBITDA and the limitations of this financial measure in more detail under “—Non-GAAP Financial Measures.”

18

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Liquidity and Capital Resources

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

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

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

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

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

Under the indentures governing LBI Media’s 8 ¹/2% 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 8 ¹/2% senior subordinated notes and our senior discount notes, but any amount over such $260.0 million that LBI Media may borrow under the senior credit facilities (subject to certain reductions under certain circumstances) will be subject to LBI Media’s and our compliance with specified leverage ratios (as defined in the indentures governing LBI Media’s 8 ¹/2% senior subordinated notes and our senior discount notes). Also, the indenture governing LBI Media’s 8 ¹/2% senior subordinated notes prohibits borrowings under LBI Media’s senior credit facilities, the proceeds of which would be used to repay, redeem, repurchase or refinance any of our senior discount notes earlier than one year prior to their stated maturity.

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

LBI Media’s 8 ¹/2% Senior Subordinated Notes. On July 23, 2007, LBI Media issued approximately $228.8 million aggregate principal amount of 8 ¹/2% 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 8 ¹/2% senior subordinated notes, it must pay semi-annual interest payments of approximately $9.7 million each February 1 and August 1, commencing February 1, 2008. LBI Media may redeem the 8 ¹/2% senior subordinated notes at any time on or after August 1, 2012 at redemption prices specified in the indenture governing its 8 ¹/2% 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 8 ¹/2% senior subordinated notes at a redemption price equal to a “make whole” amount as set forth in the indenture governing such senior subordinated notes. Also, LBI Media may redeem up to 35% of the aggregate principal amount of the notes with the net proceeds of certain equity offerings completed on or prior to August 1, 2010 at a redemption price of 108.5% of the principal amount of the notes, plus accrued and unpaid interest, if any, thereon to the applicable redemption date.

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The indenture governing these notes contains restrictive covenants that limit, among other things, LBI Media’s and its subsidiaries’ ability to incur additional indebtedness, issue certain kinds of equity, and make particular kinds of investments. The indenture governing LBI Media’s 8 ¹/2% 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 8 ¹/2% senior subordinated notes of LBI Media, and (iii) otherwise permitted to be incurred under the indenture governing LBI Media’s 8 ¹/2% senior subordinated notes.

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

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

The indenture governing the senior discount notes contains certain restrictive covenants that, among other things, limit our ability to incur additional indebtedness and pay dividends to Liberman Broadcasting. Our senior discount notes are structurally subordinated to LBI Media’s senior credit facilities and LBI Media’s 8 ¹/2% senior subordinated notes.

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

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

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

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

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

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

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

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

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

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

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

Seasonality

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

Non-GAAP Financial Measures

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

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

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

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

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

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

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

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Our management uses Adjusted EBITDA:

• as a measure to assist us in planning our acquisition strategy;

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

• as a measure for determining our operating budget and our ability to fund working capital; and

• as a measure for planning and forecasting capital expenditures.

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

Critical Accounting Policies

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

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

Acquisitions of radio and television station assets

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

Allowance for doubtful accounts

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

Intangible assets

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

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

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

Deferred compensation

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

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

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

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

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

Commitments and contingencies

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

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

Recent Accounting Pronouncements

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

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

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

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

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Cautionary Statement Regarding Forward-Looking Statements

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

• our dependence on advertising revenues;

• general economic conditions in the United States;

• our ability to reduce costs without adversely impacting revenues;

• changes in the rules and regulations of the FCC;

• our ability to attract, motivate and retain salespeople and other key personnel;

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

• our ability to maintain FCC licenses for our radio and television stations;

• successful integration of acquired radio and television stations;

• potential disruption from natural hazards;

• our ability to protect our intellectual property rights;

• strong competition in the radio and television broadcasting industries;

• sufficient cash to meet our debt service obligations; and

• our ability to obtain regulatory approval for future acquisitions.

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

Item 3. Quantitative and Qualitative Disclosures About Market Risk

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

Item 4T. Controls and Procedures

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

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

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

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

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

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

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

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

Item 1A. Risk Factors

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

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

None.

Item 3. Defaults upon Senior Securities

None.

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

None.

Item 5. Other Information

None.

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Item 6. Exhibits

(a) Exhibits

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

* Filed herewith.

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

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

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

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SIGNATURE

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

LBI MEDIA HOLDINGS, INC.
By:	/s/ Wisdom Lu
	Wisdom Lu
	Chief Financial Officer

Date: May 15, 2008

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