Edgar Filing: GRUPO RADIO CENTRO SAB DE CV

As filed with the Securities and Exchange Commission on June 30, 2010

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 20-F

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

for the fiscal year ended December 31, 2009

Commission File Number: 1-12090

Grupo Radio Centro, S.A.B. de C.V.

(Exact name of Registrant as specified in its charter)

Radio Center Group

(Translation of Registrant’s name into English)

United Mexican States

(Jurisdiction of incorporation or organization)

Constituyentes 1154 (7° Piso)

Col. Lomas Altas

C.P. 11950, México, D.F., México

(Address of principal executive offices)

Alfredo Azpeitia Mera

Constituyentes 1154 (7° Piso)

Col. Lomas Altas

C.P. 11950, México, D.F., México

aazpeitia@grc.com.mx

(5255) 5728 48 00

(Name, telephone, e-mail and/or facsimile number and address of company contact person)

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

Title of each class:		Name of each exchange on which registered

Series A Shares, without par value (“Series A Shares”)		New York Stock Exchange*
Ordinary Participation Certificates (“CPOs”), each CPO representing one Series A Share		New York Stock Exchange*
American Depositary Shares (“ADSs”), each representing nine CPOs		New York Stock Exchange

*Not for trading, but only in connection with the registration of American Depositary Shares, pursuant to the requirements of the Securities and Exchange Commission.

Securities registered or to be registered pursuant to Section 12(g) of the Act: None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report: 162,724,561 Series A Shares

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ¨ Yes x No

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. ¨ Yes x No

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). N/A

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

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP ¨ International Financial Reporting Standards ¨ Other x

Indicate by check mark which financial statement item the registrant has elected to follow: ¨ Item 17 x Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ¨ Yes x No

TABLE OF CONTENTS

		Page

PART I		2
Item 1.	Identity of Directors, Senior Management and Advisers	2
Item 2.	Offer Statistics and Expected Timetable	2
Item 3.	Key Information	2
Item 4.	Information on the Company	1
Item 4A.	Unresolved Staff Comments	28
Item 5.	Operating and Financial Review and Prospects	28
Item 6.	Directors, Senior Management and Employees	37
Item 7.	Major Shareholders and Related Party Transactions	42
Item 8.	Financial Information	45
Item 9.	The Offer and Listing	48
Item 10.	Additional Information	50
Item 11.	Quantitative and Qualitative Disclosures About Market Risk	64
Item 12.	Description of Securities Other than Equity Securities	64
Item 12A.	Debt Securities	64
Item 12B.	Warrants and Rights	64
Item 12C.	Other Securities	65
Item 12D.	American Depositary Shares	65
PART II		66
Item 13.	Defaults, Dividend Arrearages and Delinquencies	66
Item 14.	Material Modifications to the Rights of Security Holders and Use of Proceeds	66
Item 15.	Controls and Procedures	66
Item 16A.	Audit Committee Financial Expert	67
Item 16B.	Code of Ethics	67
Item 16C.	Principal Accountant Fees and Services	68
Item 16D.	Exemptions from the Listing Standards for Audit Committees	68
Item 16E.	Purchases of Equity Securities by the Issuer and Affiliated Purchasers	68
Item 16F.	Change in Registrant’s Certifying Accountant.	68
Item 16G.	Corporate Governance	68
PART III		72
Item 17.	Financial Statements	72
Item 18.	Financial Statements	72
Item 19.	Exhibits	72

INTRODUCTION

Grupo Radio Centro, S.A.B. de C.V. is a corporation organized under the laws of the United Mexican States. As used in this Annual Report and except as the context otherwise requires, the terms “Grupo Radio Centro” and the “Company” refer to Grupo Radio Centro, S.A.B. de C.V. and its consolidated subsidiaries.

PRESENTATION OF FINANCIAL INFORMATION

The Company publishes its financial statements in Mexican pesos. Our financial statements have been prepared in accordance with the Mexican Financial Reporting Standards, or MFRS, issued by the Consejo Mexicano para la Investigación y Desarrollo de Normas de Información Financiera (Mexican Board for Research and Development of Financial Information Standards).

Through the end of 2007, MFRS required us to recognize certain effects of inflation in our financial statements by restating financial statements from prior periods in constant pesos as of the end of the most recent period presented. Due to a change in MFRS effective January 1, 2008, we are no longer required to recognize the effects of inflation in our financial statements, unless the economic environment in which we operate qualifies as “inflationary.” Because of the relatively low level of inflation in recent years, the Mexican economy did not qualify as inflationary in 2008 or 2009. As a result, we are presenting our 2008 and 2009 financial statements without inflation accounting. We have not restated financial statements for prior periods; therefore, financial information for dates and periods prior to 2008 continue to be expressed in constant pesos as of December 31, 2007.

This Annual Report contains translations of certain peso amounts into U.S. dollars at specified rates solely for the convenience of the reader. These translations should not be construed as representations that the peso amounts actually represent such U.S. dollar amounts or could be converted into U.S. dollars at the rate indicated. Unless otherwise indicated, such U.S. dollar amounts have been translated from pesos at an exchange rate of Ps. 13.0576 to U.S.$ 1.00, the exchange rate for pesos on December 31, 2009, as published by the U.S. Federal Reserve Board. On June 18, 2010, the exchange rate for pesos was Ps. 12.5430 to U.S.$ 1.00. See Item 3, “Key Information—Exchange Rate Information,” for information regarding exchange rates since January 1, 2005.

In this Annual Report, references to “pesos” or “Ps.” are to the lawful currency of Mexico. References herein to “U.S. dollars” or “U.S.$” are to United States dollars.

FORWARD-LOOKING STATEMENTS

This Annual Report contains words such as “believe,” “expect,” “anticipate” and similar expressions that identify forward-looking statements that reflect the Company’s views about future events and financial performance. Actual results could differ materially from those projected in such forward-looking statements as a result of various factors that may be beyond the Company’s control. These factors, some of which are discussed in Item 3, “Key Information—Risk Factors,” include projections of operating revenues, net income, net income per share, capital expenditures, indebtedness levels, dividends, capital structure or other financial items or ratios; statements about our future financial performance or the economic performance of Mexico or other countries; effects on the Company from competition with its broadcasting operations; material changes in the performance or popularity of key radio stations or broadcast programs; the loss of one or more key customers or a reduction in the advertising expenditures of key customers; a change in the seasonality of the Company’s business; the ability of the Company to make additional investments in radio operations or renew its broadcasting licenses; significant developments in the Mexican economic or political situation; changes in the Company’s regulatory environment or fluctuations in inflation rates or exchange rates. Accordingly, readers are cautioned not to place undue reliance on these forward-looking statements. In any event, these statements speak only as of their dates, and the Company undertakes no obligation to update or revise any of them, whether as a result of new information, future events or otherwise.

PART I

Item 1. Identity of Directors, Senior Management and Advisers

Not applicable.

Item 2. Offer Statistics and Expected Timetable

Not applicable.

Item 3. Key Information

SELECTED FINANCIAL DATA

The following table presents selected consolidated financial information of the Company and its subsidiaries for each of the periods indicated. This information, to the extent applicable, should be read in conjunction with, and is qualified in its entirety by reference to, our audited consolidated financial statements as of December 31, 2009 and 2008 and for the years ended December 31, 2009, 2008 and 2007 (the “Consolidated Financial Statements”), including the notes thereto, included elsewhere in this Annual Report. Grupo Radio Centro’s financial statements are prepared in accordance with MFRS, which differ in certain respects from generally accepted accounting principles in the United States, or U.S. GAAP. Note 23 to the Consolidated Financial Statements provides a description of the principal differences between MFRS and U.S. GAAP as they relate to Grupo Radio Centro, including differences related to certain cash flow information and a reconciliation to U.S. GAAP of operating income, net income and shareholders’ equity.

For dates and periods prior to 2008, Grupo Radio Centro’s financial statements were prepared giving effect to Bulletin B-10, Recognition of the Effects of Inflation, and Bulletin B-12, Statements of Changes in Financial Position, under MFRS. Beginning on January 1, 2008, in accordance with the adoption of MFRS B-10, we ceased to recognize the effects of inflation on our financial information. As a result, we have not applied the effects of inflation accounting to our financial information in 2008 and 2009. In our financial information for 2008 and 2009, inflation adjustments for prior periods have not been removed from shareholders’ equity and the re-expressed amounts for non-monetary assets and liabilities at December 31, 2007 became the accounting basis for those assets and liabilities beginning on January 1, 2008 and for subsequent periods, as required by MFRS. For dates and periods prior to 2008, the selected consolidated financial information set forth below, and data in the related Consolidated Financial Statements, have been restated in constant pesos as of December 31, 2007. See Item 5, “Operating and Financial Review and Prospects—Changes in Inflation Accounting.”

Due to the adoption of MFRS B-10, effective January 1, 2008, inflation accounting methods do not apply unless the economic environment in which the Company operates is “inflationary” for purposes of MFRS. An environment is considered inflationary if the cumulative inflation rate equals or exceeds an aggregate of 26% over the three preceding years. Because of the relatively low level of Mexican inflation in recent years, the cumulative inflation rate in Mexico over the three-year period preceding December 31, 2008 does not qualify the Mexican economic environment as inflationary. As a result, we have not applied the effects of inflation accounting to our financial information in 2008 and 2009. In our financial information for 2008 and 2009, inflation adjustments for prior periods have not been removed from shareholders’ equity and the re-expressed amounts for non-monetary assets and liabilities at December 31, 2007 became the accounting basis for those assets and liabilities beginning on January 1, 2008 and for subsequent periods, as required by MFRS. See Item 5, “Operating and Financial Review and Prospects—Changes in Inflation Accounting.”

	Year Ended December 31,
	2009 (1)			2009			2008		2007		2006		2005
	(in thousands, except per ADS data)
Operating Data:
MFRS:
Broadcasting revenue	U.S.$	60,185		Ps.	785,869		Ps.	735,105	Ps.	654,760	Ps.	825,590	Ps.	638,204
Broadcasting expenses(2)(3)		45,568			595,011			452,350		421,970		460,072		423,857
Broadcasting income		14,617			190,858			282,755		232,790		365,518		214,347
Depreciation and amortization		1,993			26,024			31,720		33,687		37,183		39,957
Corporate, general and administrative expenses(3)		1,144			14,939			14,461		14,774		14,813		14,575
Operating income		11,480			149,895			236,574		184,329		313,522		159,816
Comprehensive cost of financing		3,112			40,615			7,678		5,850		39,842		13,779
Other expenses, net		5,092			66,495			56,880		45,806		59,511		52,490
Extraordinary item(4)		-			-			-		-		263,523		-
Net income (loss)(5)		340			4,443			126,765		91,119		434,748		70,099
Minority interest		(4,131	)		(53,943	)		45		21		63		16
Net income (loss) per ADS(5) (6)		0.02			0.25			7.01		5.04		24.08		3.88
Common shares outstanding(6)		162,725			162,725			162,725		162,725		162,500		162,657
U.S. GAAP:
Broadcasting revenue	U.S.$	60,185		Ps.	785,869		Ps.	735,105	Ps.	654,760	Ps.	825,590	Ps.	638,204
Operating (loss) income (4)		6,388			83,400			179,694		138,523		517,534		107,326
Net income (loss)(5)		340			4,443			126,720		91,098		434,685		70,083
Net income (loss) per ADS(5) (6)		0.25			3.23			7.01		5.04		24.08		3.88
Dividends per ADS(6) (7)		0.42			5.53			5.53		5.53		4.01		-

Balance Sheet Data:
MFRS:
Working capital	U.S.$	18,913		Ps.	246,967		Ps.	212,776	Ps.	170,056	Ps.	133,545	Ps.	(123,008	)
Property and equipment, net		35,224			459,941			465,034		461,555		481,220		513,259
Excess cost over fair value of assets of subsidiaries		63,478			828,863			828,863		828,863		828,734		828,734
Total assets		147,575			1,926,955			1,743,638		1,700,445		1,722,173		1,709,011
Long-term debt excluding current portion		9,956			130,000			-		-		-		61,128
Total debt(8)		13,019			170,000			-		-		-		122,255
Shareholders’ equity(9)		103,884			1,356,479			1,432,790		1,406,025		1,387,446		1,081,619
U.S. GAAP:
Total assets	U.S.$	146,795		Ps.	1,916,790			1,801,377		1,779,008		1,763,734		1,750,572
Shareholders’ equity (9)		103,106			1,346,314			1,422,404		1,396,585		1,378,019		1,072,255

(1)	Peso amounts have been translated into U.S. dollars solely for the convenience of the reader at the rate of Ps. 13.0576 per U.S. dollar, the exchange rate for pesos on December 31, 2009, as published by the U.S. Federal Reserve Board. See “—Exchange Rate Information.”

(2)	Excludes depreciation, amortization and corporate, general and administrative expenses.

(3)	Certain amounts in the 2005 financial statements, as originally issued, have been reclassified for uniformity of presentation with the 2009, 2008, 2007 and 2006 financial statements.

(4)

The extraordinary item recorded in 2006 reflects the reversal in June 2006 of a provision for the contingent liability related to an arbitration proceeding. See Item 5, “Operating and Financial Review and Prospects—Loss Contingency” and Item 8, “Financial Information—Other Financial Information—Legal and Arbitration Proceedings.”

(5)

In accordance with then-applicable MFRS, net income for dates and periods prior to 2008 does not give effect to minority interest. Net income under U.S. GAAP and, for dates and periods beginning in 2008 under MFRS, does give effect to minority interest. See Note 23 to the Consolidated Financial Statements.

(6)	Amounts shown are the weighted average number of Series A Shares outstanding, which was used for purposes of computing net income per ADS under both MFRS and U.S. GAAP and dividends per ADS under U.S. GAAP.

(7)

The Company declares dividends in any given year for the immediately preceding fiscal year. On March 24, 2010, the Company paid dividends in the aggregate amount of Ps. 100.0 million with respect to 2009. In 2009, the Company paid dividends in the aggregate amount of Ps. 100.0 million with respect to 2008. In 2008, the Company paid dividends in the aggregate amount of Ps. 100.0 million with respect to 2007. In 2007, the Company paid dividends in the aggregate amount of Ps. 71.9 million with respect to 2006. The Company did not pay any dividends in 2006 with respect to 2005.

(8)	Total debt consists of bank debt. See Item 5, “Operating and Financial Review and Prospects—Liquidity and Capital Resources—Indebtedness.”

(9)	In 2006, the Company reduced its capital by Ps. 128.5 million (Ps. 120.0 million nominal amount) through cash payments to its shareholders equal to that amount.

EXCHANGE RATE INFORMATION

Mexico has a free market for foreign exchange, and the Mexican government allows the peso to float freely against the U.S. dollar. There can be no assurance that the government will maintain its current policies with regard to the peso or that the peso will not appreciate or depreciate significantly in the future.

The following table sets forth, for the periods indicated, the high, low, average and period-end exchange rate for the purchase of U.S. dollars, expressed in pesos per U.S. dollar.

Period	Exchange Rate(1)
Year Ended December 31,	High		Low		Average(2)		Period End
2005		11.41		10.41		10.87		10.63
2006		11.46		10.43		10.90		10.80
2007		11.27		10.67		10.93		10.92
2008		13.94		9.92		11.21		13.83
2009		15.41		12.63		13.58		13.06

Month Ended 2009:
December 31		13.07		12.63				13.06

Month Ended 2010:
January 31		13.03		12.65
February 28		13.19		12.76
March 31		12.74		12.30
April 30		12.41		12.16
May 31		13.14		12.27

(1)	Sources: Federal Reserve Bank of New York and the U.S. Federal Reserve Board.

(2)	Average of month-end rates.

On June 18, 2010, the exchange rate was Ps. 12.5430 to U.S.$ 1.00.

Fluctuations in the exchange rate between the peso and the U.S. dollar will affect the U.S. dollar equivalent of the peso price of Series A Shares on the Bolsa Mexicana de Valores, S.A. de C.V. (the Mexican Stock Exchange) and the price of American Depositary Shares, or “ADSs”, on the New York Stock Exchange (“NYSE”). The Company pays cash dividends in pesos, and exchange rate fluctuations will affect the U.S. dollar amounts received by holders of ADSs upon conversion by Citibank N.A., as depositary for the ADSs (the “Depositary”), of cash dividends on the Series A Shares underlying the certificados de participación ordinaria (ordinary participation certificates, or “CPOs”) represented by the ADSs.

RISK FACTORS

Risks Relating to Our Operations

We have not complied with a financial covenant in our credit facility, and although we have obtained a waiver, the lender may not provide future waivers and could accelerate the maturity of the loan and proceed against our collateral

We have entered into a credit facility for a secured peso-denominated loan having an outstanding aggregate principal amount of Ps. 180 million as of the date hereof. This amount is guaranteed by several of our subsidiaries and secured by a first priority lien on substantially all of our property, including our corporate headquarters but excluding any equipment used for broadcasting.

The credit facility contains covenants requiring us to maintain certain financial ratios and comply with other financial conditions that, among other things, limit our ability to incur additional indebtedness, pay dividends, pledge assets and enter into transactions with affiliates. We were not in compliance with the fixed charges coverage ratio, as defined in the credit facility, as of March 31, 2010. We obtained a waiver from the lender of this non-compliance for the first quarter of 2010 as well as the second quarter ending June 30, 2010. There is significant uncertainty as to whether we will be able to comply with the fixed charges coverage ratio for the third quarter of 2010. If we fail to comply with this covenant or any other covenant under the credit facility, there can be no assurance that we will be able to obtain waivers of such failures or that the lender will not accelerate amounts due under the credit facility. If we are unable to repay amounts due under the credit facility, the lender could proceed against the collateral securing our indebtedness. Such events would have a material adverse effect on our business, financial condition and results of operations.

We may be unsuccessful in addressing the challenges and risks presented by our new investment in the United States

In April 2009, we began to provide programming to, and sell advertising time on, KXOS-FM (formerly, KMVN-FM), a radio station broadcasting in Los Angeles, California that is owned by Emmis Communications Corporation. Our investment in the United States involves risks to which we have not previously been exposed and presents different or greater risks, including from competition and regulation, than those present in Mexico. Our potential for success must be considered in light of the expenses, complications and delays frequently encountered in connection with a new business. Moreover, the start-up costs and the losses we have incurred in connection with the radio station in Los Angeles have placed demands upon our liquidity and cash flow. In 2009, our U.S. operations generated an operating loss of Ps. 107.3 million. We cannot predict whether or when our operations in the United States will become profitable.

In light of operating losses in our start-up operations in the United States, we may not have sufficient sources of cash to meet our working capital needs

Although cash flow from operations historically has been sufficient to cover our working capital needs, our investment in April 2009 in a Los Angeles radio station has resulted in increased working capital requirements. On June 1, 2010, we borrowed Ps. 30 million under the revolving tranche of our credit facility to meet working capital needs and we may need to do so again in the future. We have remaining borrowing capacity of Ps. 30 million under our credit facility, but our ability to borrow under that facility is subject to compliance with covenants or our ability to obtain a waiver of non-compliance with those covenants. There can be no assurances that we will be able to meet our working capital needs, or, if we are in non-compliance with our debt covenants, that we will be able to borrow further amounts under the credit facility. Such events would have a material adverse effect on our financial condition and results of operations.

Increased competition or a decline in popularity of any of our radio formats could reduce our audience share and result in a loss of revenue

Radio broadcasting is highly competitive, and programming popularity, an important factor in advertising sales, is readily susceptible to change. There can be no assurance that increased competition within, or a decline in the popularity of, a given format will not decrease our aggregate audience share in the future. In addition, we face strong competition for advertising revenues from both television and various print media. If we are unable to respond to an increase in competition or a decline in the popularity of any of our radio formats, our revenue and profitability could suffer material adverse consequences.

If we lose one or more of our key customers in Mexico, we could lose a significant amount of our revenue

Our two largest individual customers in 2007, 2008 and 2009 were Nueva Wal Mart de México, S.A.B. de C.V. (“Nueva Wal Mart”) and Tiendas Comercial Mexicana, S.A.B. de C.V. (“Comercial Mexicana”). In 2009, Nueva Wal Mart represented 7.0% and Comercial Mexicana represented 4.0% of our total broadcasting revenue, (excluding revenue from our operations in the United States). In 2008, Nueva Wal Mart represented 6.6% and Comercial Mexicana represented 3.7% of our total broadcasting revenue. In 2007, Nueva Wal Mart represented 5.6% and Comercial Mexicana represented 4.2% of our total broadcasting revenue. The companies comprising Grupo Cifra and Grupo Carso are also key customers, representing 11.3% and 6.4%, respectively, of our total broadcasting revenue in 2009 (excluding revenue from our operations in the United States).

In October 2008, Comercial Mexicana’s parent company, Controladora Comercial Mexicana, S.A.B. de C.V. (“CCM”), defaulted on certain of its debt and filed for bankruptcy protection in the Mexican courts. Since then, Comercial Mexicana has purchased less advertising from us and we cannot predict how the restructuring of CCM will affect Comercial Mexicana or its continued relationship with us. We also cannot assure you that Nueva Wal Mart, Comercial Mexicana or the companies comprising Grupo Carso and Grupo Cifra will continue to purchase advertising from us at current levels or at all. The loss of our relationship with any one of our principal customers could have a material adverse effect on our results of operations.

The seasonal nature of our business affects our revenue

Our business is seasonal. Our revenue from advertising sales, which we recognize when the advertising is aired, is generally highest in the fourth quarter because of the high level of advertising during the holiday season. Accordingly, our results of operations depend disproportionately on revenue recognized in the fourth quarter, and a low level of fourth quarter advertising revenue could have a material adverse effect on our results of operations for the year.

The Mexican Federal Competition Commission may prohibit us from making additional investments in radio operations in Mexico

We, like all Mexican radio licensees, are subject to regulation by several Mexican governmental agencies. As a result of such regulation, radio licenses are subject to review and possible revocation, and licensees are prohibited from transferring or assigning their radio broadcasting licenses without prior governmental approval of both the transfer and its terms. As a result of the increase in our share of the Mexico City radio market following the acquisition of Radiodifusión RED, S.A. in 1996, we are required by the Mexican Comisión Federal de Competencia (Federal Competition Commission) to seek its prior approval in connection with any future investments in radio operations in Mexico, including, without limitation, purchases and leases of radio stations, interests in other radio concerns or transmission sites, irrespective of the size of such investments or their related audience share. To the best of our knowledge, other Mexican radio broadcasting companies are not generally subject to this requirement. No assurance can be given that we will be permitted by the Federal Competition Commission to make any particular investment should we desire to do so.

If the Mexican government does not renew our broadcasting licenses, our business could be harmed

To broadcast commercial radio in Mexico, a broadcaster must have a license from the Secretaría de Comunicaciones y Transportes (Secretary of Communication and Transportation, or “SCT”). Because the SCT generally grants renewals to licensees that have substantially complied with applicable law, we expect that our future renewal applications will be granted. However, if we were unable to renew these licenses in the future, our business could be significantly harmed.

Adverse global economic conditions and, in particular, the slowdown of the U.S. and Mexican economies, could have a negative impact on our liquidity, business, and results of operations, and may affect a portion of our client base

Our business is influenced by general economic conditions worldwide and in Mexico. The risks associated with our business become more acute in periods of a slowing economy or recession, which may be accompanied by a decrease in advertising. A decline in the level of business activity of our advertisers could have an adverse effect on our revenue and profit margins. In response to current market conditions, customers may choose to make fewer expenditures, to slow their spending on or cancel our services or to seek contract terms more favorable to them. Adverse economic conditions may also lead to an increase in the number of our customers that are unable to pay for services. If these events were to occur, it could have a material adverse effect on our business and results of operations.

Many lenders and institutional investors have reduced and, in some cases, ceased to provide funding to borrowers. Continued disruption of the credit markets could adversely affect our borrowing capacity. Our ability to expand our business may be limited if, in the future, we were unable to access or increase our existing credit facilities on favorable terms or at all. These disruptions could negatively affect our liquidity, business and results of operations.

If we are required by the Mexican courts to pay a pending arbitration award, it may have a material adverse effect on our financial condition

We are party to legal proceedings in Mexico relating to an arbitration award granted in 2004 against us in favor of Infored, S.A. de C.V. and Mr. José Gutiérrez Vivó. If we are ultimately unsuccessful in challenging the enforcement of the arbitration award, we will be required to finance all or part of the amount due. Our ability to obtain financing is subject to various factors, including general market conditions, our financial condition and results of operations and the fact that we have pledged substantially all of our assets under outstanding indebtedness. Accordingly, we may not be able to obtain financing in a timely manner, or on acceptable terms, or at all. If we incur additional indebtedness or we are unable to obtain financing when needed, our financial condition may be materially and adversely affected.

Risks Relating to Our Principal Shareholders and Capital Structure

Holders of ADSs are not entitled to attend shareholders meetings and have no voting rights

Holders of the CPOs, and therefore holders of the ADSs, have no voting rights with respect to the underlying Series A Shares. Pursuant to the trust agreement under which the CPOs are issued, the trustee for the CPOs will vote the Series A Shares held in the trust in the same manner as the majority of the Series A Shares that are not held in the trust and that are voted at the relevant shareholders meeting. Holders of the CPOs are not entitled to attend or to address our shareholders meetings.

Certain members of the Aguirre family effectively control our management and the decisions of the shareholders, and their interests may differ from those of other shareholders

Certain members of the Aguirre family have the power to elect a majority of our directors and control our management because they own a substantial majority of the outstanding Series A Shares not held in the form of CPOs. These Aguirre family members have established a Mexican trust, which they control, that holds 51.6%, of the outstanding Series A Shares as of March 16, 2010.

Our bylaws include provisions that could delay or prevent a takeover and, thus, deprive you of a premium over the market price of the ADSs or otherwise adversely affect the market price of the ADSs

Our bylaws include certain provisions that could delay, defer or prevent a third party from acquiring us, despite the possible benefit to our shareholders. These provisions include restrictions on the acquisition, without the approval of the board of directors, of our shares or other securities representing 30% or more of our capital stock and restrictions on agreements and other arrangements, without the approval of the board of directors, for the exercise of voting rights in respect of shares representing 30% or more of our capital stock. These provisions may deprive you of a premium over the market price of the ADSs or otherwise adversely affect the market price of the ADSs.

Future sales of Series A Shares by the controlling shareholders may affect future market prices of the Series A Shares, CPOs and ADSs

Actions by members of the Aguirre family, directly or through the Mexican trust through which they hold most of their Series A Shares, with respect to the disposition of their Series A Shares, may adversely affect the trading price of the Series A Shares or the CPOs on the Mexican Stock Exchange and the price of the ADSs on the NYSE. There are no contractual restrictions on the rights of members of the Aguirre family to sell ADSs, CPOs or Series A Shares, other than those contained in our U.S.$ 21 million credit facility, which requires the Aguirre family to maintain 51% of our capital stock.

You may not be able to participate in any future preemptive rights offering and, as a result, your equity interest in the Company may be diluted

Under current Mexican law, if we issue new shares for cash as a part of a capital increase, we generally must grant our shareholders the right to purchase a sufficient number of shares to maintain their existing ownership percentage. Rights to purchase shares in these circumstances are known as preemptive rights. We may not be legally permitted to allow holders of ADSs in the United States to exercise any preemptive rights in any future capital increases unless (i) we file a registration statement with the U.S. Securities and Exchange Commission (“SEC”) with respect to that future issuance of shares or (ii) the offering qualifies for an exemption from the registration requirements of the U.S. Securities Act of 1933. At the time of any future capital increase, we will evaluate the costs and potential liabilities associated with filing a registration statement with the SEC, the benefits of preemptive rights to holders of ADSs in the United States and any other factors that we consider important in determining whether to file a registration statement.

We cannot assure you that we will file a registration statement with the SEC to allow holders of ADSs in the United States to participate in a preemptive rights offering. Furthermore, under current Mexican law, sales by the Depositary of preemptive rights and distribution of the proceeds from such sales to ADS holders are not possible. As a result, the equity interest of ADS holders would be diluted proportionately. In addition, preemptive rights will not arise under current Mexican law upon the sale of newly issued shares in a public offering or the resale of shares of capital stock previously repurchased by us.

Risks Relating to Mexico

Economic developments in Mexico may adversely affect our business

Our financial condition and results of operations are generally affected by the strength of the Mexican economy, as the demand for advertising, from which we derive revenue constituting the principal source of our earnings, generally declines during periods of economic difficulty.

In 2009, Mexico’s gross domestic product, or GDP, fell by 6.5% and inflation was 3.6%. In 2008, Mexico’s GDP grew by 1.3% and inflation was 6.5%. The Mexican economy is experiencing a downturn. In 2010, according to preliminary estimates of the Mexican government, GDP is expected to increase by 3.9% and inflation is expected to be 5.2%. If the Mexican economy contracts or if inflation and interest rates increase significantly, our business, financial condition and results of operations could suffer material adverse consequences.

Economic conditions in Mexico are heavily influenced by the condition of the U.S. economy due to various factors, including commercial trade with the U.S., U.S. investment in Mexico and emigration from Mexico to the United States. Events and conditions affecting the U.S. economy may adversely affect our business, results of operations, prospects and financial condition. In addition, in the past, economic crises in Asia, Russia, Brazil and other emerging markets have adversely affected the Mexican economy and could do so again.

High levels of inflation and high interest rates in Mexico could adversely affect our financial condition and results of operations

Mexico has experienced high levels of inflation and high domestic interest rates in the past. The annual rate of inflation, as measured by changes in the INPC, was 3.6% for 2009. Inflation for the first quarter of 2010 was 2.4%. If inflation in Mexico does not remain within the government’s projections, we may not be able to raise our broadcast advertising rates to keep pace with inflation. More generally, the adverse effects of high inflation on the Mexican economy may result in lower demand for broadcast advertising.

Interest rates on 28-day Mexican treasury bills, or Cetes, averaged 5.4% during 2009. During the first quarter of 2010, the average 28-day Cetes rate was 4.5%. High interest rates in Mexico could adversely affect our financing costs, and to the extent that we incur peso-denominated debt in the future, it could be at high interest rates.

Political events in Mexico could affect Mexican economic policy and our operations

Mexican political events may significantly affect our operations and the performance of Mexican securities, including our securities. We cannot assure you that the current political situation or any future political developments will not have a broad adverse effect on growth trends in the Mexican broadcasting industry or in the economy generally, or directly and adversely affect us.

Depreciation of the peso relative to the U.S. dollar could adversely affect our financial condition and results of operations

The value of the peso has been subject to significant fluctuations with respect to the U.S. dollar in the past and may be subject to significant fluctuations in the future. In 2009, the peso appreciated against the U.S. dollar at year-end by 5.6%, while the average value of the peso against the U.S. dollar during 2009 was 16.5% lower than in 2008. In 2008, the peso depreciated against the U.S. dollar at year-end by 26.6%, and the average value of the peso against the U.S. dollar during 2008 was 2.7% lower than in 2007. In 2007, the peso depreciated against the U.S. dollar at year-end by 1.1%, and average value of the peso against the U.S. dollar during 2007 was 0.3% lower than in 2006. No assurance can be given that the peso will not depreciate in value relative to the U.S. dollar in the future.

Fluctuations in the exchange rate between the peso and the U.S. dollar will affect the U.S. dollar value of an investment in our equity securities and of dividend and other distribution payments on those securities.

In 2009, our operating costs payable in U.S. dollars increased due to our investment in a radio station in Los Angeles, California. These expenses represented 22% of our consolidated broadcasting expenses in 2009. We prepaid the first two years of fees (U.S.$ 14 million) under the related local marketing agreement and, beginning in April 2011, we will begin making monthly fee payments of U.S.$583,000. Although at December 31, 2009, we had no U.S. dollar-denominated indebtedness, we may incur U.S. dollar-denominated indebtedness in the future. Declines in the value of the peso relative to the U.S. dollar increase our operating costs, increase our interest costs in pesos relative to any U.S. dollar-denominated indebtedness, increase our obligations payable in U.S. dollars, result in foreign exchange losses and could adversely affect our ability to meet our U.S. dollar-denominated obligations. Additionally, since substantially all our revenue is denominated in pesos, increased costs resulting from a decline in the value of the peso relative to the U.S. dollar will not be offset by any exchange-related increase in revenue. Since we fund our operations in the United States with peso-denominated revenue earned in Mexico, the decline of the peso relative to the decline in the U.S. dollar could increase our operating costs.

Severe devaluation or depreciation of the peso may also result in disruption of the international foreign exchange markets and may limit our ability to transfer, or to convert pesos into, U.S. dollars and other currencies for the purpose of making timely payments of our operating costs or obligations payable in U.S. dollars.

Developments in other countries may affect the price of the ADSs

As is the case with respect to securities of issuers from other emerging markets, the market value of securities of Mexican companies is, to varying degrees, affected by economic and market conditions in other countries. Although economic conditions in other countries may differ significantly from economic conditions in Mexico, investors’ reactions to developments in other countries may have an adverse effect on the market value of securities of Mexican issuers. In recent years, for example, economic conditions in Mexico have become increasingly correlated to economic conditions in the United States as a result of NAFTA and increased economic activity between the two countries. Adverse economic conditions in the United States and other related events could have a material adverse effect on the Mexican economy. Prices of Mexican securities also dropped substantially as a result of developments in Russia, Asia, Brazil and Argentina in the late 1990s. The Mexican securities markets also have been adversely affected by ongoing developments in the global credit markets. We cannot assure you that events in other emerging market countries, in the United States or elsewhere, will not have a material adverse effect on our business, financial condition or results of operations.

Item 4. Information on the Company

THE COMPANY

Organization

Grupo Radio Centro is a corporation (sociedad anónima bursátil de capital variable) organized under the laws of Mexico. Grupo Radio Centro is a holding company that operates through its subsidiaries.

Grupo Radio Centro’s principal executive offices are located at Constituyentes 1154 (7° Piso), Col. Lomas Altas, C.P. 11950, México, D.F., México. The telephone number of Grupo Radio Centro is (525) 55-728-4800.

History

Grupo Radio Centro is a family-controlled radio broadcasting company with roots in Mexican radio broadcasting dating back approximately 60 years. Francisco Aguirre J., the founder of Grupo Radio Centro, initiated his radio broadcasting activities in 1946. In 1952, he founded Organización Radio Centro (“ORC”), the sole owner and operator of two radio stations, Radio Centro and Radio Exitos. In 1965, the Company formed Organización Impulsora de Radio (“OIR”), to provide national sales representation to affiliated radio stations outside Mexico City. The Company was incorporated as Técnica de Desarrollo Publicitario, S.A. de C.V. on June 8, 1971, renamed Grupo Radio Centro, S.A. de C.V. on July 14, 1992 and renamed Grupo Radio Centro, S.A.B. de C.V. on July 31, 2006. The bylaws of the Company provide for its indefinite existence.

In 1973, Grupo Radio Centro expanded its broadcasting activities by establishing three new FM radio stations, thus consolidating its position as the market leader in Mexico City radio broadcasting. In 1989, the Aguirre family began a comprehensive process of corporate reorganization designed to consolidate Grupo Radio Centro’s radio operations under the common ownership of the Company and the family’s non-radio-related operations under the common ownership of another company controlled by the Aguirre family outside Grupo Radio Centro. The purpose of the reorganization was to permit Grupo Radio Centro to focus on radio-related operations and to acquire the balance of shares of its radio broadcasting subsidiaries that were owned directly or indirectly by members of the Aguirre family outside Grupo Radio Centro. As a result of the reorganization, the Company acquired substantially all of the shares of its radio broadcasting subsidiaries, with the last transfer of shares occurring in March 1993. In the third quarter of 1993, the Company completed an initial public offering of its ADSs and CPOs, listing these securities on the NYSE and the Mexican Stock Exchange. The Company completed a subsequent public offering of ADSs and CPOs during the third quarter of 1996. On June 30, 2003, all CPOs held by holders that qualified as Mexican investors, pursuant to the Company’s bylaws (see Item 10, “Additional Information—Bylaws and Mexican Law—Limitations Affecting Non-Mexican Holders—Share Ownership”), were exchanged for Series A Shares held in the CPO Trust (see Item 9, “The Offer and Listing”). In connection with the amended CPO trust arrangement, the Series A Shares commenced trading on the Mexican Stock Exchange under the symbol “RCENTRO.A” on June 30, 2003. The Series A Share listing is deemed to include the CPOs, so the Series A Share trading line reflects trading of both Series A Shares and CPOs.

Capital Expenditures and Divestitures

Capital Expenditures

Capital expenditures were Ps. 27.7 million in 2009, Ps. 36.4 million in 2008 and Ps. 14.3 million in 2007. In 2009, 2008 and 2007, capital expenditures were financed from working capital. In 2009, the Company’s principal capital expenditures were for transportation equipment, leasehold improvements and broadcasting equipment. In 2008 and 2007, the Company’s principal capital expenditures were for transportation equipment, which consists primarily of promotional trucks and vans. The increase in 2009 compared to 2008 was primarily due to increased expenditures related to leasehold improvements.

Capital Divestitures

During 2009, the Company had capital divestitures in the amount of Ps. 6.6 million, principally related to transportation equipment. During 2008, the Company had capital divestitures in the amount of Ps. 1.2 million, principally related to the sale of transportation equipment. In 2007, the Company had capital divestitures in the amount of Ps. 0.79 million, principally related to the sale of transportation equipment. See Notes 1 and 12 to the Consolidated Financial Statements.

BUSINESS OVERVIEW

Grupo Radio Centro is a leading radio broadcasting company in Mexico. For more than 30 years, the Company has been the leading radio broadcaster in terms of audience share in Mexico City, the most populous city in North America. Grupo Radio Centro’s principal activities are the production and broadcasting of music, entertainment, news and special event programs. The Company’s revenue is derived primarily from the sale of commercial airtime to advertising agencies and businesses. According to IBOPE AGB México (“IBOPE”), the Company’s Mexico City average audience share for the year ended December 31, 2009 was 43.4%, more than twice that of the next most popular radio broadcasting company in Mexico City for the same period. See “—Broadcasting Operations” and “—Competition.”

In Mexico, Grupo Radio Centro currently owns eight AM and five FM radio stations. The Company manages and operates an additional FM station. Of these 14 radio stations, Grupo Radio Centro operates five AM and six FM stations in Mexico City and one AM station in both Guadalajara and Monterrey. The remaining AM radio station in Mexico City is managed and operated by a third party pursuant to an operating agreement.

The Company manages the 11 radio stations it operates in Mexico City as a portfolio, combining in-depth market research and programming innovation with continuous investment in state-of-the-art technology and human resources to produce high-quality, popular programs that target substantially all of the demographic segments of the Mexico City radio audience sought by advertisers. According to IBOPE, for the year ended December 31, 2009, Grupo Radio Centro’s radio stations ranked as five of the top 10 FM radio stations (out of a total of 31 FM stations) and three of the top 10 AM stations (out of a total of 35 AM stations). See “—Business Strategy.”

In the United States, we entered into an agreement on April 3, 2009 with Emmis Communications Corporation (“Emmis”), a U.S. radio broadcasting company. We agreed to provide programming to, and sell advertising time on, KXOS-FM for up to seven years. KXOS-FM is an Emmis-owned radio station broadcasting in Los Angeles, California, on the 93.9 FM frequency. We began operating the station in the contemporary Spanish-language hits format on April 15, 2009. We operate KXOS-FM through our subsidiary, Grupo Radio Centro LA, LLC (“GRC-LA”), which was incorporated on March 13, 2009 as a Delaware limited liability company. According to Arbitron Inc., a media and marketing research firm, as of December 31, 2009, KXOS-FM had an audience share of 1.6% and was ranked 25th out of a total of 62 stations in the Los Angeles metropolitan area and an audience share of 3.3% and was ranked 11th in terms of the Hispanic population.

In addition to its radio broadcasting activities, the Company, under the trade name Organización Impulsora de Radio, acts as the national sales representative for, and provides programming to, a network of affiliates in Mexico. At December 31, 2009, the Company had 107 affiliates in 75 cities throughout Mexico.

Business Strategy

The Company’s strategy is to optimize cash flow from operations by maintaining its leading market position.

Maintenance of Leading Market Position

The Company is focused on maintaining its current position as the leading radio broadcaster in Mexico City, offering advertisers top-ranked stations in almost all major station formats, including the following:

Grupera—Diverse Musical Genres,

Juvenil—Youth Oriented,

Spanish Language—Contemporary Music,

English Language—Classic Rock,

English Language—Contemporary Music,

Spanish Language—Classics, News/Talk Show, and

English Language—Music/News.

By maintaining a strong presence in the major station formats, management believes that the Company will maximize its share of total radio advertising expenditures. Management bases such belief on the following rationales: (i) a broadcaster’s revenue is correlated with its ability to maximize the number of listeners within an advertiser’s given demographic parameters, and (ii) the Company’s stations currently cover almost all of the demographic segments of the radio audience sought by advertisers. In addition, by managing its stations as a portfolio and offering a broad range of advertising packages, the Company believes that it distinguishes itself from its smaller competitors, who cannot offer as comprehensive coverage of the Mexican radio audience. The Company offers advertisers exposure to listening audiences targeted to correspond with the demographic profiles advertisers seek and provides advertisers with their choice of either focused or broad audience exposure across a comprehensive range of income classes and age groups.

In order to maximize the audience share of its portfolio of stations, the Company recognizes the need to be responsive to the requirements of its listeners and advertisers, tailoring its stations to the changing circumstances of the market. The Company seeks to manage its station portfolio by balancing the mix of its station formats to correspond to the needs of the overall market and being proactive in the management of each individual station format and adjusting to the evolution of its particular market segment.

OIR Network Strategy

As a complement to its radio-broadcasting activities, Grupo Radio Centro operates and continues its efforts to expand its OIR radio network. The Company simultaneously transmits its news program “La Red de Radio Red” from 5:45 a.m. to 10:00 a.m. to the 26 largest commercial markets in Mexico outside the Mexico City metropolitan area. While increasing programming and service revenue, the operation of OIR also facilitates the Company’s overall marketing efforts, offering advertisers access to radio stations on a nationwide basis. See “—OIR Network.”

Broadcasting Operations

Radio Stations

Except as noted, the following table sets forth certain information about the radio stations Grupo Radio Centro operates in Mexico City as of December 31, 2009:

Station	Frequency	Power (Watts)		Station Format	Total Market Rank(1)(2)		Total Audience Share(1)(3)			Band Rank(1)(4)		Target Demographic Segments
XEQR-FM	107.3 mhz		100,000	Grupera—Diverse Musical Genres		1		14.9	%		1	13-44 years

XERC-FM	97.7 mhz		100,000	Juvenil—Youth Oriented		8		3.2	%		7	8-34 years

XEJP-FM	93.7 mhz		100,000	Spanish Language—Contemporary Music		4		6.9	%		4	18-44 years

XHFO-FM(5)	92.1 mhz		150,000	English Language—Classic Rock		5		5.7	%		5	18-44 years

XHFAJ-FM	91.3 mhz		100,000	English Language—Contemporary Music		13		2.6	%		11	13-24 years

XEQR-AM	1030 khz		50,000	Spanish Language—Talk Show		6		4.3	%		1	25+ years

XEJP-AM	1150 khz		50,000	Spanish Language Classics		11		2.7	%		2	35+ years

XERED-AM	1110 khz		100,000	News / Talk Show		24		1.0	%		6	25+ years

XHRED-FM	88.1 mhz		100,000	News / English Language—Music		21		1.1	%		16	25+ years

XERC-AM	790 khz		50,000	News		39		0.4	%		14	25+ years

XEN-AM	690 khz		100,000	News / Talk Show		37		0.5	%		13	25+ years

(1)

Source: IBOPE AGB México.

(2)

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

(3)

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

(4)

Band rank is determined based on each station’s annual average share of the radio audience within its broadcasting frequency band (i.e., either AM or FM).

(5)

XHFO-FM is operated by Grupo Radio Centro pursuant to an operating agreement that was renewed on October 16, 2008 for five years ending on January 2, 2014. For the year ended December 31, 2009, XHFO-FM accounted for approximately 14.6% of Grupo Radio Centro’s broadcasting revenue.

Programming

The Company currently produces all of the programming for the stations it owns or operates. The Company also provides programming to its network of affiliates.

The programming the Company produces includes playing recorded music, covering live music events (such as concerts), and airing special musical programs and news and talk show programs. Through its Noticentro news division, the Company produces daily news programs consisting of three-minute updates and 10-minute summaries of local, national and international news that are broadcast through Formato 21, the Company’s 24-hour all-news station, and the majority of its other stations in Mexico City.

The Company’s programming strategy is to tailor the format of each of its stations to attract targeted demographic segments of the radio audience sought by advertisers. To ensure that its programming remains responsive to shifting demographic trends and audience tastes, Grupo Radio Centro uses its internal research division (which regularly conducts door-to-door interviews throughout Mexico City), as well as commercially available data, to assess the listening habits and tastes of the Mexico City population. Grupo Radio Centro conducted approximately 250,000 in 2009 and 247,000 interviews in 2008. The Company believes that no competitor has developed an internal research capability as extensive as its own.

Production and Transmission of Programming

Audio Engineering. Grupo Radio Centro has 18 production studios in which musical material, advertisements, informational messages, news and promotional spots are recorded on hard drive, compact disk, and DVD-audio through the Maestro Automation System. This system permits the direct transmission of audio recordings to the Company’s 35 workstations, where they are processed and sent to broadcast sites.

Grupo Radio Centro also maintains 13 on-air studios, each of which is linked to Grupo Radio Centro’s automated programming computer network via fiber optics. Grupo Radio Centro’s primary studio operations are substantially fully digital and utilize state-of-the-art computer networks to record, schedule and play all news, music, promotional and advertising material. Currently, the Company has a single high-speed computer network installed both in on-air studios and in production studios.

Grupo Radio Centro’s news division uses the News Room system, which enables news writers to provide radio announcers with information directly through scrolling text that runs across a flat-panel screen while the announcers are on air. The system is used primarily in the Formato 21 radio station, but it also provides information to news centers in other radio stations. The News Room system, which receives news reports from the Associated Press (AP), Agence France-Presse (AFP), Notimex F and Reuters, has reduced considerably the amount of paper used during news programs.

In 2008, the Company installed two digital mixer consoles used by OIR.

Transmission. Each of the Company’s radio stations has a main transmitter and two back-up transmitters. All AM transmitters incorporate solid-state design. Each transmitter site has a diesel generator with automatic transfer that allows rapid switch to back-up power in case of a power outage. In addition, the main FM transmitter facility is equipped with an uninterruptible power supply to prevent the loss of airtime during the transfer to back-up power.

Grupo Radio Centro uses multiplexed networks for transmission, which allows five of its AM stations to operate at three sites, each using one antenna. Similarly, five FM stations are multiplexed in a common panel master antenna on the Cerro del Chiquihuite, which Grupo Radio Centro believes is ideally located at 540 meters above the average terrain level in Mexico City. One FM radio station operated by the Company transmits from the World Trade Center building in Mexico City.

In 2007, the Company renovated a location to serve as an alternate transmission site as a back-up studio and production space. This facility is equipped with two small production studios, six transmission booths for talk show or news programs, and five workstations for music programs. The facility also has a sophisticated multiplexing network for up to five stereo channels for the FM stations and six digital encoders/decoders to connect to the transmitting plants. If there is an emergency, the alternate site can be controlled remotely from the XERC-FM, XEJP-FM and XEQR-FM radio stations in Mexico City.

In 2008, the Company began renovating an additional alternate transmission site for the studios of 11 of the Company’s Mexico City radio stations. The alternate site, which was completed in 2009, is equipped with two small production studios, six transmitter booths for talk show and news programs, and five workstations for music programs.

In December 2008, the Company obtained authorization from the SCT to increase the power at two stations: XEDKR-AM (in Jalisco) was increased from one to 10 kilowatts, and XESTN-AM (in Monterrey) was increased from one to five kilowatts. In June 2009, the Company completed a new transmission site and the new building from which XEDKR-AM currently operates. In September 2009, the Company completed upgrades to its XESTN-AM transmission site. Both stations now operate with increased power.

Investment in Technology

Grupo Radio Centro consistently invests in state-of-the-art equipment, the development and deployment of new operating systems and the training of its engineering and operating personnel. The Company believes these investments enable it to produce high-quality programming with few on-air errors and to broadcast a superior signal to listeners’ radios. In addition, Grupo Radio Centro’s computer system allows it to maintain a certifiable log of advertising and to generate real-time affidavits certifying that advertisements have been aired when and as requested, which reduces customers’ monitoring costs and enhances customers’ goodwill. The Company believes that its equipment and engineering staff give it a competitive edge in Mexico City radio broadcasting.

Currently, all AM and FM radio broadcast signals in Mexico are analog. However, there are various efforts underway to develop, test and implement radio digital audio broadcasting (DAB), using either the “in-band-on-channel” U.S. broadcasting model or the “out-of-band” European broadcasting model. If implemented, DAB would largely eliminate fading, static and other interference that adversely affects the listening experience.

The Cámara Nacional de la Industria de Radio y Televisión (National Chamber of the Radio and Television Industries, or “CIRT”) is in the process of analyzing DAB proposals and has created a task force with the Comisión Federal de Telecomunicaciones (Mexican Federal Telecommunications Commission or “Cofetel”) in order to introduce DAB in Mexico in the future. CIRT and Cofetel have announced plans to issue digital radio standards in 2009. However, there can be no assurance as to whether or when DAB will be introduced.

The Company actively participates in the analysis of the adoption of DAB in Mexico through its representation in CIRT and by supporting Cofetel’s Comité Mixto de Tecnologías Digitales (Mixed Committee on Digital Technology).

The Company has also supported the adoption of DAB in Mexico by installing and operating advanced digital radio transmission systems on an experimental basis. In 2005, the Company temporarily installed a powerful digital transmission system called the Eureka 147 Digital Audio Broadcasting (DAB) at its Cerro del Chiquihuite plant. The Eureka 147 DAB system is equipped to transmit simultaneously up to five different radio programs. In 2005 and 2006, the Company performed tests of the new system, for representatives of the SCT and CIRT’s Comité de Nuevas Tecnologías (Committee on New Technology), to demonstrate the application and capabilities of Digital Multimedia Broadcasting (DMB) technology, which enables a single broadcasting station to transmit video and audio and data for multiple applications.

In 2007, the Company tested an upgraded Eureka 147 DAB system in its broadcasting facilities at the Constituyentes building. The Company operated the upgraded system, which offered additional channels greater capabilities, until March 2008.

From October to December 2008, the Company tested a Digital Broadcasting System from its Constituyentes building. The system’s capabilities included the transmission on one digital radio channel of two video programs, eight audio CD quality programs, data, and a webcam signal. The Company demonstrated the system with a reduced power transmitter during “CIRT Radio Week” in October 2008. The demonstration included more than 20 different types of DAB receivers.

Sale of Airtime and Marketing

Commercial airtime for Grupo Radio Centro’s radio stations is sold both to advertising agencies and directly to businesses. The Company’s top 10 customers accounted for approximately 30.2% of total broadcasting revenue (excluding revenue from our operations in the United States) in 2009, 2008 and 2007. Our two largest individual customers in 2009, 2008 and 2007 were Nueva Wal Mart and Comercial Mexicana. In 2009, Nueva Wal Mart represented approximately 7.0% and Comercial Mexicana represented approximately 4.0% of our total broadcasting revenue (excluding revenue from our operations in the United States). In 2008, Nueva Wal Mart represented approximately 6.5% and Comercial Mexicana represented approximately 3.7% of our total broadcasting revenue. In 2007, Nueva Wal Mart represented approximately 5.6% and Comercial Mexicana represented approximately 4.2% of our total broadcasting revenue.

The companies comprising Grupo Cifra and Grupo Carso also are key customers. In 2009, the companies comprising Grupo Cifra accounted for 11.3% of our total broadcasting revenue (excluding revenue from our operations in the United States), and the companies comprising Grupo Carso accounted for 6.4% of our total broadcasting revenue (excluding revenue from our operations in the United States). In 2008, the companies comprising Grupo Cifra accounted for 7.7% of our total broadcasting revenue, and the companies comprising Grupo Carso accounted for 7.3% of our total broadcasting revenue. In 2007, the companies comprising Grupo Cifra accounted for 7.1% of our total broadcasting revenue, and the companies comprising Grupo Carso accounted for 8.4% of our total broadcasting revenue.

Sales of commercial airtime vary throughout the year and are generally highest in the fourth quarter of the year and lowest in the first quarter of the year. See Item 5, “Operating and Financial Review and Prospects—Seasonality of Sales.”

At December 31, 2009, the Company had a sales force of 29 individuals, of which 15 marketed primarily to advertising agencies and major customer accounts, and 14 marketed to small and mid-sized customer accounts.

Grupo Radio Centro establishes its advertising rates by considering the cost per thousand listeners as a reference to ensure that its rates are competitive. The Company offers package discounts to customers who purchase airtime on multiple stations; the largest discounts are offered to customers who purchase airtime on all of its stations. The Company charges higher rates to customers who purchase airtime during “special events,” such as live concerts and special news features.

The Company sells some commercial airtime in advance. The advance-sales arrangements guarantee the rate in effect at the time of purchase to advertisers who deposit cash with Grupo Radio Centro in an amount equal to their advertising commitment for an agreed period. These advertisers are also granted bonus advertising time in addition to the time purchased. The Company invests cash deposited pursuant to advance sales and includes interest generated on such investments in broadcasting revenue. In 2009, revenue recognized under advance-sale arrangements, including related interest income, accounted for approximately 24.9% of total broadcasting revenue (excluding revenue from our operations in the United States), compared to 33.7% for 2008 and 32.5% for 2007.

The effect of such advance sales is to substitute the increased interest income earned on the advance sale payments for a portion of the operating income foregone because of the reduced effective rate on the advertising time sold subject to the advance-sale arrangements. The Company believes that such advance sales are advantageous to Grupo Radio Centro because the interest income generated by the proceeds of such advance sales offsets, in part, the effective reduction in advertising rates associated with such sales and because the bonus advertising time granted to purchasers is “dead time” (i.e., time that would not otherwise be sold). The Company also believes that the benefits of guaranteed rates and bonus airtime under its advance-sales plans attract advertisers who would not otherwise purchase advertising time. However, any decrease in future inflation rates may reduce the attractiveness of these plans for such advertisers.

OIR Network

Grupo Radio Centro, under the trade name OIR, provides national sales representation, programming and broadcast-related services to a network of affiliates. At December 31, 2009, Grupo Radio Centro had 107 affiliates located in 75 cities throughout Mexico. During the last three years, broadcasting revenue from OIR-related activities ranged from 3.0% to 3.2% of total broadcasting revenue (excluding revenue from our operations in the United States). In 2009, approximately 3.0% of the Company’s revenue (excluding revenue from our operations in the United States) was attributable to its work through OIR, and no single affiliate represented more than 7.1% of total OIR-related revenue.

At December 31, 2009, 13 of the Company’s OIR-related affiliates were owned or controlled by shareholders of the Company. Except as disclosed elsewhere (see Item 7, “Major Shareholders and Related Party Transactions—Related Party Transactions” and Note 6 to the Consolidated Financial Statements), all commercial relations between such shareholder-owned or shareholder-controlled stations and Grupo Radio Centro are on an arm’s-length basis.

Outside Mexico City, virtually all advertising aimed at a national audience is sold through networks of affiliated radio stations. Pursuant to its standard affiliate agreement, which is terminable at will by either party on 60 days’ notice, OIR agrees to purchase commercial airtime from affiliated stations, compensating such stations for their airtime with a percentage of the revenue obtained on the resale of commercial airtime to national advertisers. The affiliates agree to broadcast certain programs at specified times with advertising spots of specified duration. Compensation paid to each affiliate varies depending on the size of each affiliate’s market.

OIR transmits special event programs, including national advertising, directly to certain affiliates via satellite. In December 2005, the Company installed a new satellite up-link system with state-of-the-art technologies, including Digital Video Broadcasting (DVB) transmission, with 10 digital stereo channels. All of our affiliates are able to receive OIR special event programs via satellite from Mexico City. Between January and March 2006, we replaced the receivers of our affiliates that obtain OIR programs via satellite with more cost-effective units.

Competition

Radio broadcasting in Mexico is highly competitive, and programming popularity, an important factor in advertising sales, is readily susceptible to change. As of December 31, 2009, there were 59 commercial radio stations in Mexico City (34 AM and 25 FM stations) and eight not-for-profit, public-service stations (two AM and six FM). These stations constitute all of the currently available radio broadcast channels within Mexico City’s AM and FM frequency spectrum.

Set out below is a table showing the number of stations in Mexico City operated by Grupo Radio Centro and each of its six main competitors at December 31, 2009, and a chart depicting the audience share of each.

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

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

(1) Source: Grupo Radio Centro.

Mexico City Radio Audience Share (1970-2009)(1)

(1)	Sources: INRA, Arbitron, Inc. and IBOPE.

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

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

(4)	As of 1994, Núcleo Radio Mil (NRM) no longer owns XECO-AM and XEUR-AM. In 1995, NRM purchased XHMM-FM.

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

According to IBOPE, the Company’s Mexico City audience share increased to 43.4% in 2009. According to IBOPE, the Company’s average Mexico City audience share decreased slightly from 43.6% in 2007 to 42.9% in 2008. The Company has experienced gradual declines in previous years, which were mainly attributable to increased competition from other radio stations that adopted formats similar to the Company’s most successful formats, including Juvenil—Youth Oriented, Grupera—Diverse Musical Genres and News/Talk Show.

The Company believes that its balanced portfolio of station formats reduces the impact of a decline in audience share of any one format segment or station. For example, the Company’s most popular station, XEQR-FM, which was the top-ranked station in Mexico City for the year ended December 31, 2009, represented only 14.6% of the Company’s total radio audience. However, there can be no assurance that competition within, or a decline in the popularity of, a given format will not decrease the Company’s aggregate audience share in the future.

In addition, the Company faces strong competition for advertising revenue from both television and various print media.

OIR Network Competition

The Mexican radio-network market is highly competitive. As of December 31, 2009, there were 27 radio networks serving 742 AM radio stations and 478 FM radio stations outside Mexico City. The Company believes that the popularity of its programming, its long-standing experience in the Mexican radio broadcasting market and the quality of its broadcast-related services enable the Company’s affiliates that are served by OIR to compete effectively.

Significant Subsidiaries

The following table sets forth the Company’s significant subsidiaries at December 31, 2009:

Name of the Company	Jurisdiction of Establishment	Percentage of Ownership and Voting Interest			Description

XEQR, S.A. de C.V.	Mexico		99.9	%	Radio station

XERC, S.A. de C.V.	Mexico		99.9	%	Radio station

XEEST, S.A. de C.V.	Mexico		99.9	%	Radio station

XEQR-FM, S.A. de C.V.	Mexico		99.9	%	Radio station

XERC-FM, S.A. de C.V.	Mexico		99.9	%	Radio station

XEJP-FM, S.A. de C.V.	Mexico		99.9	%	Radio station

XEDKR-AM, S.A. de C.V.	Mexico		99.2	%	Radio station

Radio Red, S.A. de C.V.	Mexico		99.9	%	Radio station

Radio Red-FM, S.A. de C.V.	Mexico		99.9	%	Radio station

Radio Sistema Mexicano, S.A.	Mexico		99.9	%	Radio station

Estación Alfa, S.A. de C.V.	Mexico		99.9	%	Radio station

Emisora 1150, S.A. de C.V.	Mexico		99.9	%	Radio station

Grupo Radio Centro LA, LLC	United States of America		51.0	%1	Radio station

Radio Centro Publicidad, S.A. de C.V.	Mexico		99.9	%	Marketing company

1 As the result of a capital reduction in February 2010, the Company now owns 100% of Grupo Radio Centro LA, LLC. See Item 7, “Major Shareholders and Related Party Transactions—Related Party Transactions—Investment in GRC-LA.”

Name of the Company	Jurisdiction of Establishment	Percentage of Ownership and Voting Interest			Description

GRC Publicidad, S.A. de C.V.	Mexico		99.9	%	Marketing company

GRC Medios, S.A. de C.V.	Mexico		99.9	%	Marketing company

GRC Comunicaciones, S.A. de C.V.	Mexico		100	%	Marketing company

GRC Radiodifusión, S.A. (formerly Aerocer, S.A.)	Mexico		99.9	%	Marketing company

Promotora Técnica de Servicios Profesionales, S.A. de C.V.	Mexico		99.9	%	Service company

Publicidad y Promociones Internacionales, S.A. de C.V.	Mexico		99.9	%	Service company

To2 México, S.A. de C.V.	Mexico		100	%	Service company

Promo Red, S.A. de C.V.	Mexico		99.9	%	Service company

Universal de Muebles e Inmuebles, S.A. de C.V.	Mexico		99.8	%	Real estate company

Inmobiliaria Radio Centro, S.A. de C.V.	Mexico		99.9	%	Real estate company

Desarrollos Empresariales, S.A. de C.V.	Mexico		99.9	%	Sub-holding company

Radiodifusión Red, S.A. de C.V.	Mexico		99.9	%	Sub-holding company

Enlaces Troncales, S.A. de C.V.	Mexico		99.9	%	Sub-holding company

Música, Música, Música, S.A. de C.V.	Mexico		90.9	%	Non-operating company

Promotora de Éxitos, S.A. de C.V.	Mexico		90.9	%	Non-operating company

Producciones Artísticas Internacionales, S.A. de C.V.	Mexico		99.9	%	Non-operating company

On March 31, 2009, the Company merged three of its marketing subsidiaries, Radio Centro Publicidad, S.A. de C.V., GRC Publicidad, S.A. de C.V., and GRC Medios, S.A. de C.V., into GRC Comunicaciones, S.A. de C.V.

Property and Equipment

All of Grupo Radio Centro’s tangible assets are located in Mexico. At December 31, 2009, the net book value of all property and equipment was approximately Ps. 459.9 million (U.S.$ 35.2 million).

Grupo Radio Centro’s principal executive offices and studios are located in Mexico City and are owned by the Company. In 1992 Grupo Radio Centro purchased the Constituyentes building, a 102,000 square foot building of which, at December 31, 2009, the Company occupied approximately 81,000 square feet. The remainder is available for leasing to third parties. In March 1994, Grupo Radio Centro moved its principal offices and broadcasting operations (excluding transmitter antennae and related equipment) into the Constituyentes building. Grupo Radio Centro also owns the transmitter sites and antenna sites used by most of its Mexico City radio stations, including related back-up facilities. In addition, Grupo Radio Centro currently leases satellite-transmission facilities in Mexico City from the Mexican government. As a result of a 1993 change in Mexican law, Grupo Radio Centro purchased and received authorization from Telecomunicaciones de México, a state-owned entity, to operate its own up-link equipment. This up-link equipment has been operational since the end of 1994 and was upgraded in December 2005 and the first quarter of 2006 (see “—Business Strategy—Production and Transmission of Programming”).

Grupo Radio Centro continues to own the building in which its administrative offices and studios were located immediately before its move into the Constituyentes building. Grupo Radio Centro also owns the land in Mexico City on which the transmission facilities of XERED-AM are located. Grupo Radio Centro believes that its facilities are adequate for its present needs and are suitable for their intended purpose.

Substantially all of the Company’s property, excluding its broadcasting equipment, is subject to a first priority lien under our credit facility. See Item 5, “Operating and Financial Review and Prospects—Liquidity and Capital Resources—Indebtedness.”

REGULATORY FRAMEWORK

The business of Grupo Radio Centro is subject to regulation and oversight by the SCT and Cofetel. The SCT is part of the executive branch of the Mexican federal government and Cofetel is a separate administrative agency independent of the SCT. Regulation and oversight are governed by the Ley Federal de Radio y Televisión (Federal Radio and Television Law), the Ley Federal de Telecomunicaciones (Federal Telecommunications Law), the regulations issued pursuant to these laws and the licenses granted by the SCT. We are also subject to oversight by the Procuraduría Federal del Consumidor (Federal Agency for Consumer Protection) and the Comisión Federal de Competencia Económica (Federal Competition Commission).

Regulation of Radio Broadcasting by Mexico

Licenses. Under the Federal Radio and Television Law, amended by the Mexican Congress in April 2006, owners and operators of radio stations in Mexico must obtain a license from the Mexican government through the SCT to broadcast over a specified channel. After a call for bids and a public bidding process, a 20-year license is granted to the winning applicant upon payment of a fee. The SCT through Cofetel, may terminate or revoke the license at any time upon the occurrence of, among others, the following events: failure to construct broadcasting facilities within a specific period; changes in the location of the broadcasting facilities or changes in the frequency assigned without prior governmental authorization; failure to broadcast for more than 60 days without reasonable justification; and any violation of any of the other terms of the license. Under Mexican law, if the Company’s license were revoked for certain specified reasons, Grupo Radio Centro would forfeit to the Mexican government its transmission and antenna facilities with respect to the license. If the license were terminated early for other causes, the Mexican government would have a right of first refusal to purchase all these assets at a price fixed by an independent appraiser. In addition, if the SCT, through Cofetel, terminates or revokes a license, the licensee may not obtain a new license for one to five years and, in some cases, may be forbidden from obtaining a new license at all. Under current regulations, we believe that it is unlikely that additional licenses will be granted in the Mexico City market.

The licensee has a preferential right to renew the license for periods of up to 20 years (with most terms for renewal currently being granted for up to 12 years) under a non-competitive renewal process. Renewals are generally granted to licensees that have substantially complied with the applicable law and the terms of their licenses. The licenses for nine of Grupo Radio Centro’s radio stations (XEQR-AM, XERC-AM, XEEST-AM, XEJP-AM, XERED-AM, XEN-AM, XEQR-FM, XERC-FM AND XHFAJ-FM) were renewed and are now set to expire in 2016. The license for XHRED-FM was renewed and is now set to expire in 2019. The license for XEJP-FM is set to expire in 2012. The license for XEDKR-AM (in Guadalajara) will expire in October 2015, and the license for XESTN-AM (in Monterrey) will expire in November 2015.

The licenses contain restrictions on the transfer of shares of the licensee, including the following: the transfer must be to a qualifying Mexican person; the transfer cannot result in a concentration of radio broadcasting holdings that may be contrary to the public interest; and the transfer cannot result in a gain to the seller. All such transfers are subject to prior notice to the SCT. In addition, any transfer of the license is subject to the prior approval of the SCT. A license may only be assigned if the license has been in effect for more than three years, the licensee has complied with all of its obligations under the license and has obtained a favorable opinion of the Federal Competition Commission.

Supervision of Operations. Cofetel conducts regular inspections of the operations of the radio stations, and the companies or persons to whom licenses have been granted must file annual technical, statistical, financial and legal reports with Cofetel.

Under Mexican law, radio programming is not subject to judicial or administrative censorship, except that programming is subject to various regulations, including prohibitions on explicit language and programming that is contrary to the general principles of right conduct, national security or public order.

Radio programming is required to promote Mexico’s cultural, social and ideological identity, and each licensee is required to make available each day up to 30 minutes of cultural or educational programming, or programming regarding family counseling or other social matters. The programming to be used to fulfill this requirement is provided to the broadcaster by the Mexican government.

Each licensee is required to provide a limited amount of broadcasting time free of charge to all registered political parties and the Instituto Federal Electoral (Federal Electoral Institute or “IFE”). See “— Political Advertising.”

Networks. There are no Mexican regulations governing the ownership and operation of a radio broadcasting network, such as OIR’s network, separate from the regulations applicable to operating a radio station.

Restrictions on Advertising. Mexican law regulates the type and contents of advertising that may be broadcast on radio. Licensees are also prohibited from broadcasting advertisements that are misleading. Advertisements for certain products and services are subject to restrictions or require government approval before their broadcast. Moreover, the Mexican government must approve any advertisement of lotteries or raffles, or any advertisement that promotes bonuses to consumers for purchasing products or services.

Mexican law also regulates the amount of advertising that may be broadcast in any day. Under Mexican regulations, no more than 40% of total broadcast time may be used for advertisements. That time must be divided proportionately among broadcasting hours.

The Company sets its minimum advertising rates and registers such rates through Cofetel. Commercial airtime may not be sold at lower rates than those registered with the SCT. There are no restrictions on maximum rates that may be charged.

Broadcast Tax. All radio stations in Mexico are subject to a tax payable by granting the Mexican government the right to use a portion of broadcast time. Radio stations must satisfy this tax by providing the Mexican government with several advertising spots lasting between 20 to 30 seconds each. The amount of broadcasting time allotted to the government is currently fixed at 35 minutes each day between 6:00 a.m. and midnight. The use of this time is not cumulative, and the Mexican government forfeits any time it does not use in any day. The Mexican government’s spots must be distributed on a proportional and equitable basis throughout the relevant programming period.

Public service announcements provided by the Mexican government are prohibited from competing with the licensee’s programming, and Mexican government programming that promotes the consumption of products or services must be limited to the general promotion of Mexico’s goods and services.

Political Advertising. Several articles of the Mexican constitution relating to political parties and elections were amended in November 2007. A new electoral code implementing the amendments became effective on January 15, 2008. The constitutional amendments and the electoral code prohibit political parties from directly or indirectly purchasing broadcast time on any radio or television station. In addition, private individuals and entities are prohibited from purchasing advertising on radio or television aimed at influencing voter preferences.

The Mexican government is allotted a certain amount of time under concession agreements with broadcasters and, in turn, gives a portion of that time to the IFE to distribute among the political parties (during election years) and for the use of the IFE. The broadcast time that political parties receive through the IFE is free of charge and airs during primetime hours. During campaign season, the IFE is granted 48 minutes of the 65 minutes the Mexican government receives daily as a broadcast tax. In other periods, the IFE receives eight minutes. The time allocated by IFE to political parties is the only broadcast time at their disposal as, under the electoral code, political parties are prohibited from purchasing broadcast time. IFE has supervisory powers and is able to administer sanctions for violations of the provisions of the electoral code.

Other. Mexican companies are subject to the Ley Federal de Competencia Económica (Federal Economic Competition Law), which promotes fair competition and prevents monopolistic practices.

As a result of the increase in Grupo Radio Centro’s share of the Mexico City radio market following its acquisition of Radiodifusión RED, S.A. in 1996, the Company is required by the Federal Competition Commission to seek its prior approval in connection with any future acquisitions of radio stations in Mexico, including, without limitation, purchases or leases of radio stations, interests in other radio concerns or transmission sites, irrespective of the size of such investments or their related audience share, a requirement to which, to the best knowledge of the Company, other Mexican broadcasting companies generally are not subject. The Company received Federal Competition Commission approval of its acquisition of XEN-AM in July 2001 because the Company sold two of its AM stations in 2000. No assurance can be given that the Federal Competition Commission will permit the Company to make any additional investments should it desire to do so.

The Federal Economic Competition Law was amended in 2006. These amendments strengthened the authority of the Federal Competition Commission, expanded the definition of monopolistic practices, provided a more rigorous approval process for business combinations and established more stringent penalties, including substantially higher fines and the divestiture of assets. As a result, it is possible that the Federal Competition Commission will more strictly enforce the Federal Economic Competition Law, which could restrict our operations.

The Federal Telecommunications Law was also amended in 2006, and interpretive regulations were issued in October 2007. The amendments to the Federal Telecommunications Law subject radio and television broadcasting companies such as Grupo Radio Centro to the oversight of Cofetel. The Federal Telecommunications Law also covers the transmission of restricted radio signals and other telecommunications services at certain frequencies.

The Federal Telecommunications Law expanded Cofetel’s authority to conduct public auctions of available radio and television frequencies. Under this law, while the SCT retains the ultimate authority to issue licenses, Cofetel is permitted to engage in granting, prorogation, and completion of concessions, permissions and allocations to use and operate frequency bands attributed to the broadcasting service, acting as a branch of the SCT.

Mexican law prohibits ownership of radio broadcasting companies by non-Mexicans and Mexican corporations that allow foreign ownership of their voting securities. The adoption of the North American Free Trade Agreement did not change these Mexican regulations.

Intellectual Property

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

·	“Radio Red”	·	“Stereo 97.7”
·	“Joya”	·	“Alegría”
·	“El Fonógrafo del Recuerdo”	·	“Centro”
·	“Variedades”	·	“Formato 21”
·	“Stereo Joya”	·	“Hoy”
·	“NotiCentro” (and design)	·	“OIR”
·	“Sensación” (and design)	·	“Palco Deportivo”
·	“Universal” (and design)	·	“To2”
·	“Radio Programas de México”	·	“UNIRED”
·	“RPM”	·	“SERVIRED”
·	“ALFA 91.3”	·	“AUTORED”
·	“BANG”

In addition, Grupo Radio Centro (directly or through its subsidiaries) has registered or filed for registration the following commercial slogans:

“CRC Radiodifusión Internacional”

“Grupo Radio Centro Radiodifusión de México al Mundo”

“ORC Radiodifusión Valle de México”

“OIR Radiodifusión Nacional”

“Radio Centro, la Estación de la Gran Familia Mexicana”

“SER, Servicios Especializados de Radiodifusión”

United States. Grupo Radio Centro has filed for registration with the United States Patent and Trademark Office for the following service mark:

“Radio Éxitos”

Item 4A. Unresolved Staff Comments

Not applicable.

Item 5. Operating and Financial Review and Prospects

The following discussion should be read in conjunction with the Consolidated Financial Statements and the notes thereto included elsewhere in this Annual Report. Grupo Radio Centro’s Consolidated Financial Statements have been prepared in accordance with MFRS, which differ in certain respects from U.S. GAAP. Note 23 to the Consolidated Financial Statements provides a description of the principal differences between MFRS and U.S. GAAP, as they relate to Grupo Radio Centro, including differences related to certain cash flow information and a reconciliation to U.S. GAAP of operating income, net income and shareholders’ equity.

Beginning in 2008, the inflation accounting methods previously required by MFRS no longer apply, except if the economic environment in which we operate qualifies as inflationary. See “—Changes in Inflation Accounting.” As a result, the financial information in the Consolidated Financial Statements and throughout this Annual Report, for dates and periods after January 1, 2008 has been presented without inflation accounting. The financial information for dates and periods prior to January 1, 2008 has been expressed in constant pesos as of December 31, 2007.

General

Grupo Radio Centro’s operating performance is dependent on a number of factors, including its ability to produce popular radio programs that attract the demographic segments of the radio audience sought by advertisers, its share of the total radio audience, the relative advertising cost efficiency of radio compared to other media, its competition, the strength of its radio signals and the quality of its sound, the rate of growth of the local and national economies and government regulation and policies. Grupo Radio Centro’s revenue is generated mainly from the sale of commercial airtime. The primary operating expenses involved in owning and operating radio stations are employee salaries, programming expenses, promotion and advertising expenses and depreciation and amortization.

Seasonality of Sales

Grupo Radio Centro’s revenue varies throughout the year. Sales of commercial airtime, Grupo Radio Centro’s primary source of revenue, are generally highest in the fourth quarter of the year and lowest in the first quarter of the year. Grupo Radio Centro historically has had sufficient cash flow from operations to meet its operating needs in all four calendar quarters.

The following table sets forth the Company’s broadcasting revenue and broadcasting income (excluding depreciation, amortization and corporate, general and administrative expenses) on a quarterly basis, in each case as a percentage of its respective total, for 2009, 2008 and 2007.

	Broadcasting Revenue									Broadcasting Income
	2009			2008			2007			2009			2008			2007
First quarter		19.8	%		17.4	%		19.1	%		22.8	%		8.5	%		7.7	%
Second quarter		22.6			23.6			22.2			24.3			22.9			19.2
Third quarter		24.3			27.5			27.1			6.8			30.8			31.4
Fourth quarter		33.3			31.5			31.6			46.1			37.8			41.7
Total		100	%		100	%		100	%		100	%		100	%		100	%

Historically, advertising expenditures by political campaigns represented an important part of the Company’s total broadcasting revenue during the congressional elections that occur every three years, including 2006, and during presidential elections that occur every six years (coinciding with congressional elections), including 2006. Since January 2008, Mexican law has prohibited political parties and private individuals from purchasing broadcast time for political advertising on any radio or television station. As a result, we no longer receive revenues from advertising by political campaigns. See Item 4, “Information on the Company—Business Overview—Broadcasting Operations—Sale of Airtime and Marketing.”

Economic Conditions in Mexico

Grupo Radio Centro’s financial condition and results of operations are generally affected by the strength of the Mexican economy, as demand for advertising, revenue from which is the principal source of the Company’s earnings, generally declines during periods of economic difficulty.

Mexico began to enter a recession in the fourth quarter of 2008 during which GDP fell by approximately 1.6%. GDP fell by 6.5% in 2009 and grew by 4.3% in the first quarter of 2010. If the Mexican economy continues to experience a recession or the existing recession becomes more severe, if inflation or interest rates increase significantly or if the Mexican economy is otherwise adversely impacted, our business, financial condition or results of operations could be materially and adversely affected.

The annual rate of inflation in Mexico, as measured by changes in the INPC, was 3.6% for 2009. Inflation for the first quarter of 2010 was 2.4%. The adverse effects of high inflation on the Mexican economy might result in lower demand for broadcast advertising.

Loss Contingency

In 2002, Infored, S.A. de C.V. (“Infored”) and José Gutiérrez Vivó initiated an arbitration proceeding against us, seeking the rescission of a production contract and damages. In March 2004, an arbitration panel of the International Chamber of Commerce notified us of its decision to rescind the contract and award Infored and Mr. Gutiérrez Vivó, collectively, U.S.$ 21.1 million. As a result of the damages award, we recorded a provision for this contingent liability in the amount of U.S.$ 21.1 million as of December 31, 2003. For the year ended December 31, 2005, we recorded Ps. 14.3 million and, for the year ended December 31, 2004, we recorded Ps. 7.0 million in interest relating to this provision. As of March 31, 2006, the provision amounted to Ps. 253.6 million (nominal amount). We challenged the validity of the arbitration award, and on June 16, 2006, a Mexican court set aside and refused to enforce the arbitration award in Mexico. As a result, we reversed the provision and recorded it as an extraordinary income item in June 2006.

Since the June 2006 decision, legal proceedings have continued, and in June 2008, the June 2006 decision was reversed. We currently do not consider it necessary to record a provision for this matter because the June 2008 decision does not impose an obligation to pay the arbitration award and we have continued to challenge the award’s validity in the Mexican courts. See Item 8, “Financial Information¾Other Financial Information¾Legal and Arbitration Proceedings.”

Changes in Inflation Accounting

Through the end of 2007, MFRS required us to recognize certain effects of inflation in our financial statements. It also required us to restate financial statements from prior periods in constant pesos as of the end of the most recent period presented. As discussed below, due to the current level of inflation in Mexico, we have not applied the effects of inflation to our financial information in 2008 and 2009.

Due to the adoption of MFRS B-10, effective January 1, 2008, inflation accounting methods no longer apply unless the economic environment qualifies as “inflationary” for purposes of MFRS. An environment is considered inflationary if the cumulative inflation rate equals or exceeds 26% over the three preceding years (equivalent to an average of 8% in each year). Because of the relatively low level of Mexican inflation in recent years (3.6% in 2009, 6.5% in 2008 and 3.8% in 2007), the cumulative inflation rate in Mexico over the three-year period preceding December 31, 2009 does not qualify the Mexican economic environment as inflationary.

As a result, we have not applied the effects of inflation to our financial information in 2009 and 2008. In our financial information for 2009 and 2008, inflation adjustments for prior periods have not been removed from shareholders’ equity and the re-expressed amounts for non-monetary assets and liabilities at December 31, 2007 became the accounting basis for those assets and liabilities beginning on January 1, 2008 and for subsequent periods, as required by MFRS. In this respect, our financial statements for 2009 and 2008 are not comparable to those for prior periods.

In comparing our results for 2009, 2008 and any future periods without inflation accounting to results for prior periods that used inflation accounting, we consider that the most important effects of the cessation of inflation accounting, and of related changes in other accounting standards, to be as follows:

We no longer recognize monetary gains and losses attributable to the effects of inflation on our monetary assets and liabilities.

We have ceased to adjust the carrying values of non-monetary assets for inflation.

We no longer restate results of prior periods. Financial information for dates and periods prior to 2008 will continue to be expressed in constant pesos as of December 31, 2007.

We have ceased to use inflation-adjusted assumptions in determining our employee benefit obligations and instead use nominal discount rates and other assumptions.

Changes in MFRS

Note 3 to our Consolidated Financial Statements discusses new accounting pronouncements under MFRS that came into force in 2008 and 2009. The 2008 and 2009 pronouncements have already been fully implemented in the financial statements included in this Annual Report. Certain pronouncements have required us to change our financial presentation in 2009 in ways that have not had a material effect on our results of operations and our balance sheet.

Critical Accounting Policies

Impairment Testing

The Company is required to test for impairment of its long-lived assets in use, including goodwill and other intangible assets, at least on an annual basis. To calculate impairment loss of long-lived assets in use, it is necessary to determine the asset’s recovery value. Recovery value is defined as the greater of the net sales price of a cash-generating unit of the asset and the asset’s use value, which is the present value of estimated future cash flows. The determination of the underlying assumptions related to the recoverability of long-lived assets, including goodwill and other intangible assets, is subjective and requires the exercise of considerable judgment. Any changes in key assumptions about the Company’s business and prospects, or changes in market conditions, could result in an impairment charge.

Employee Benefits

The Company records a reserve for the estimated accrued seniority premiums, severance payments under certain circumstances and pension benefits, the amount of which is determined through actuarial estimates.

2009 vs. 2008 Results of Operations

For the year ended December 31, 2009, broadcasting revenue was Ps. 785.9 million, representing a 6.9% increase compared to the Ps. 735.1 million reported in 2008. The increase in broadcasting revenue was mainly attributable to a Ps. 27.2 million increase in advertising expenditures by the Company’s Mexican customers, who purchased more airtime in 2009 than in 2008 and to Ps. 23.6 million in revenues from the radio station we operate in Los Angeles.

The Company’s broadcasting expenses (excluding depreciation, amortization and corporate, general and administrative expenses) for the year ended December 31, 2009 were Ps. 595.0 million, an increase of 31.5% compared to the Ps. 452.4 million reported in 2008. This increase was primarily due to (i) broadcasting expenses of Ps. 130.9 million incurred in connection with the radio station we operate in Los Angeles, which the Company began operating in April 2009, and (ii) higher sales commissions to the Company’s sales force, as a result of the increase in broadcasting revenue during 2009.

Broadcasting income (i.e., broadcasting revenue minus broadcasting expenses, excluding depreciation, amortization and corporate, general and administrative expenses) for the year ended December 31, 2009 was Ps. 190.9 million, a decrease of 32.5% compared to the Ps. 282.8 million reported in 2008. This decrease was mainly attributable to the increase in broadcasting expenses, as described above.

Depreciation and amortization expenses for the year ended December 31, 2009 were Ps. 26.0 million, a decrease of 18.0% compared to the Ps. 31.7 million reported in 2008. This decrease was due to a reduction in the Company’s depreciable asset base.

The Company’s corporate, general and administrative expenses for the year ended December 31, 2009 were Ps. 14.9 million, slightly higher than the Ps. 14.5 million reported in 2008.

As a result of the foregoing, the Company reported operating income of Ps. 149.9 million for the year ended December 31, 2009, a 36.6% decrease compared to the Ps. 236.6 million reported in 2008.

Other expenses, net, for the year ended December 31, 2009 were Ps. 66.5 million, a 16.9% increase compared to the Ps. 56.9 million reported in 2008. This increase was mainly attributable to legal expenses incurred in connection with the transactions related to the radio station we operate in Los Angeles that the Company entered into with Emmis in April 2009.

The Company’s comprehensive financing cost for 2009 was Ps. 40.6 million, compared to the Ps. 7.7 million reported in 2008. This increase was mainly due to interest expense related to the Company’s Ps. 200.0 million loan obtained from Banco Inbursa, S.A. in March 2009 and net foreign exchange loss attributable to an appreciation of the peso against the U.S. dollar, which resulted in a decline in the peso value of the Company’s U.S. dollar-denominated loan to GRC-LA.

For the year ended December 31, 2009, the Company reported income before taxes of Ps. 42.8 million, compared to Ps. 172.0 million reported in 2008, mainly due to an increase in broadcasting expenses and comprehensive financing cost, as described above.

The Company recorded income taxes of Ps. 38.3 million for the year ended December 31, 2009, compared to Ps. 45.3 million recorded in 2008, primarily due to lower taxable income. The Company’s effective tax rate increased to 89.6% in 2009 from 26.3% in 2008. Although after 2007 we no longer recognize the effects of inflation in our financial statements, we do continue to recognize the impact of inflation for tax purposes. This causes our pretax income to be affected by taxable monetary gain or loss on our net monetary liabilities and by higher depreciation due to the application of inflation indexation on our assets. Additionally, our effective tax rate was higher in 2009 than in 2008 because of the Company’s assessment that the tax losses resulting from the operating losses from the Company’s Los Angeles radio station will not be utilized to offset future taxable income in 2010. Accordingly, the Company recorded a reserve against the total deferred tax benefits that would be derived from such tax losses.

As a result of the foregoing, the Company recorded net income of Ps. 4.4 million for the year ended December 31, 2009, compared to net income of Ps. 126.8 million reported in 2008. The Company’s lower net income in 2009 reflected, in large part, operating losses generated by the radio station we operate in Los Angeles. In 2009, the Aguirre family owned 49% of the investment in this station. However, following a capital reduction of GRC-LA in February 2010, described under Item 7, “Major Shareholders and Related Party Transactions— Related Party Transactions –Investment in GRC-LA,” the Company owns 100% of this investment. As a result, future losses or income generated by GRC-LA will not be offset by the family’s minority interest and will be borne fully by the Company.

2008 vs. 2007 Results of Operations

For the year ended December 31, 2008, broadcasting revenue was Ps. 735.1 million, representing a 12.3% increase compared to the Ps. 654.8 million reported in 2007. The increase in broadcasting revenue was mainly attributable to an increase in advertising expenditures by the Company’s customers, who purchased more airtime in 2008 than in 2007. This increase in advertising was the result of a highly competitive environment, in which the Company sought to gain market share by offering attractive sales packages, as well as increasing the size of its sales force.

The Company’s broadcasting expenses (excluding depreciation, amortization and corporate, general and administrative expenses) for the year ended December 31, 2008 were Ps. 452.4 million, an increase of 7.2% compared to the Ps. 422.0 million reported in 2007. This increase was primarily due to (i) expenses related to extensive advertising campaigns undertaken by the Company; (ii) higher sales commissions to the Company’s sales force, as a result of the increase in broadcasting revenues; and (iii) higher expenses related to the Company’s market research in 2008 than in 2007.

Broadcasting income (i.e., broadcasting revenue minus broadcasting expenses, excluding depreciation, amortization and corporate, general and administrative expenses) for the year ended December 31, 2008 was Ps. 282.8 million, an increase of 21.5% compared to the Ps. 232.8 million reported in 2007. This increase was mainly attributable to the increase in broadcasting revenue described above.

Depreciation and amortization expenses for the year ended December 31, 2008 were Ps. 31.7 million, a decrease of 5.8% compared to the Ps. 33.7 million reported in 2007. This decrease was due to the Company no longer recording depreciation on certain Company assets whose useful lives have ended.

The Company’s corporate, general and administrative expenses for the year ended December 31, 2008 were Ps. 14.5 million, a slight decrease compared to the Ps. 14.8 million reported in 2007.

As a result of the foregoing, the Company reported operating income of Ps. 236.6 million for the year ended December 31, 2008, a 28.3% increase compared to the Ps. 184.3 million reported in 2007.

Other expenses, net, for the year ended December 31, 2008 were Ps. 56.9 million, a 24.2% increase compared to the Ps. 45.8 million reported in 2007. This increase was mainly attributable to higher legal expenses for litigation relating to a pending arbitration award in 2008 than in 2007.

The Company’s comprehensive financing cost for 2008 was Ps. 7.7 million, a 30.5% increase compared to the Ps. 5.9 million reported in 2007. This increase was mainly due to fees paid in connection with the amendment of the Company’s credit facility in 2008. The increase in comprehensive financing cost was partially offset by the fact that the Company did not record a loss on its net monetary position in 2008, due to a change in MFRS regarding inflation accounting, compared to a loss on net monetary position of Ps. 3.5 million recorded in 2007.

For the year ended December 31, 2008, the Company reported income before taxes of Ps. 172.0 million, a 29.6% increase compared to the Ps. 132.7 million reported in 2007, mainly due to the increase in broadcasting revenue, described above.

The Company recorded income taxes of Ps. 45.3 million for the year ended December 31, 2008, compared to Ps. 41.6 million recorded in 2007, primarily due to higher taxable income due to an 12.3% increase of income, which was only partially offset by a 7.2% increase in broadcast expenses.

As a result of the foregoing, the Company reported net income of Ps. 126.8 million for the year ended December 31, 2008, an increase of 39.2% compared to net income of Ps. 91.1 million reported in 2007.

Liquidity and Capital Resources

The Company’s primary source of liquidity is cash flow from operations. The Company’s operating activities provided Ps. 55.4 million in 2009, Ps. 69.3 million in 2008 and Ps. 153.5 million in 2007. Working capital at December 31, 2009 was Ps. 247.0 million and at December 31, 2008 was Ps. 212.8 million.

Although cash flow from operations historically has been sufficient to cover the Company’s working capital needs, the Company’s investment in April 2009 in a Los Angeles radio station has resulted in increased working capital needs. On June 1, 2010, the Company borrowed Ps. 30 million under the revolving tranche of its credit facility to meet its working capital needs and it may need to do so again in the future. The Company currently expects to be able to meet its working capital needs in 2010 with cash flow from operations. The Company has remaining borrowing capacity of Ps. 30 million under its credit facility but its ability to borrow under that facility is subject to compliance with covenants or its ability to obtain a waiver of non-compliance with those covenants. There can be no assurances that the Company will be able to meet its working capital needs, or, if it is in non-compliance with its debt covenants, that it will be able to borrow further amounts under the credit facility. Such events would have a material adverse effect on the Company’s financial condition and results of operations.

During 2009, the Company’s principal use of funds, other than for operating purposes and capital expenditures was the payment of dividends in the amount of Ps. 100.0 million and the repayment of indebtedness in the principal amount of Ps. 30.0 million. In 2008, the Company’s principal use of funds, other than for operating purposes and capital expenditures was the payment of dividends in the amount of Ps. 100.0 million. In 2007, the Company’s principal use of funds, other than for operating purposes and capital expenditures was the payment of dividends in the amount of Ps. 71.9 million. Grupo Radio Centro may from time to time repurchase its outstanding equity securities if market conditions and other relevant considerations make such repurchases appropriate.

Grupo Radio Centro invests its cash balances, generally, in short-term peso instruments, including overnight and time deposits, repurchase agreements, certificates of deposit and commercial paper of certain Mexican issuers. The Company has not entered into any arrangements for the purpose of hedging interest rate or currency risk.

Indebtedness

We have entered into a credit facility with Banco Inbursa S.A., Institución de Banca Múltiple, Grupo Financiero Inbursa for a secured peso-denominated loan in two tranches in an aggregate principal amount equivalent to up to U.S. $21.0 million. As of the date hereof, Ps. 180 million is outstanding under this credit facility. The first, non-revolving tranche is for a peso-denominated amount equivalent to up to U.S. $14 million to be used for capital expenditures and other corporate purposes. The second, revolving tranche is for a peso-denominated amount equivalent to up to U.S. $7 million to be used for working capital purposes.

On March 26, 2009, we drew down on the first tranche, in the amount of Ps. 200 million, to finance the prepayment of the first two years of fees under the local marketing agreement we entered into with Emmis. We are required to repay the principal amount over five years in 20 quarterly installments beginning June 1, 2009 and make quarterly interest payments at an annual rate of 13% through March 18, 2010 and at 9.5% thereafter. On June 1, 2010, we borrowed Ps. 30 million under the second tranche for working capital purposes. We are required to repay this amount on December 1, 2010 and make monthly interest payments at a variable interest rate of the Mexican Interbank Equilibrium Interest Rate (“Tasa de Interes Interbancaria de Equilibrio” or “TIIE”) plus 3%.

Amounts borrowed under the credit facility are guaranteed by several of our subsidiaries and secured by a first priority lien on substantially all of our property, including our corporate headquarters but excluding any equipment used for broadcasting.

As of the date hereof, our remaining borrowing capacity under the credit facility is Ps. 30 million. The credit facility will expire on June 16, 2015. The principal conditions to drawing down include that we are in compliance with our obligations under the credit facility; there be no material adverse change resulting in a loss or liability to us equivalent to 5% or more of our total assets (as such condition is more fully defined in the credit facility) and no material adverse change in the banking environment or international capital markets; borrowed amounts be secured by a first priority lien on substantially all of our property; and there be no event of default under the credit facility has occurred. If any of the conditions to draw down is not met or waived, we will be unable to obtain funds under the credit facility.

We were not in compliance with the fixed charges coverage ratio as of March 31, 2010. We obtained a waiver from the lender of this non-compliance for the first quarter of 2010 as well as the second quarter ending June 30, 2010. There is significant uncertainty as to whether we will be able to comply with the fixed charges coverage ratio for the third quarter of 2010. If we fail to comply with this covenant or any other covenant under the credit facility, there can be no assurance that we will be able to obtain waivers of such failures or that the lender will not accelerate amounts due under the credit facility. If we are unable to repay amounts due under the credit facility, the lender could proceed against the collateral securing our indebtedness. Such events would have a material adverse effect on our business, financial condition and results of operations.

Off-Balance Sheet Arrangements

In 2009, the Company had no off-balance sheet arrangements that have or, in the opinion of the Company, are reasonably likely to have a current or future effect on the Company’s financial condition.

Contractual Obligations

In the table below we set forth contractual obligations consisting of long-term debt as of December 31, 2009 and the period in which the contractual obligations come due. The amount of our long-term debt reported in the table excludes interest and fee payments, which are primarily variable amounts. The table below does not include pension liabilities, tax liabilities or accounts payable.

	Payments Due by Period (as of December 31, 2009)
	Total		2010		2011-2012		2013-2014		2015 and beyond
	(in millions of Mexican pesos)
Contractual obligations:
Total debt(1)	Ps.	170.0	Ps.	40.0	Ps.	80.0	Ps.	50.0	Ps.	0

(1)	Excludes interest payments, fees and the effect of derivative financial instruments.

U.S. GAAP Reconciliation

Net income under U.S. GAAP was Ps. 4.4 million for 2009, Ps. 126.7 million for 2008 and Ps. 91.1 million for 2007. For the year ended December 31, 2009, no U.S. GAAP adjustment to net income was required because, as of January 1, 2009, a minority interest in subsidiaries is treated as a part of shareholders’ equity under both U.S. GAAP and MFRS. The slight difference between net income under MFRS and U.S. GAAP for the years ended December 31, 2008 and 2007 was due to the treatment under U.S. GAAP of a minority interest in subsidiaries of the Company as a liability.

Operating income under U.S. GAAP was Ps. 83.4 million for the year ended December 31, 2009, Ps. 179.7 million for 2008 and Ps. 138.5 million for 2007. For the years ended December 31, 2009, 2008 and 2007, certain other expenses, net of the Company that are classified as non-operating charges under MFRS are charged against operating income under U.S. GAAP.

Shareholders’ equity under U.S. GAAP was Ps. 1,346.3 million at December 31, 2009, Ps.1,422.4 million at December 31, 2008 and Ps. 1,396.6 million at December 31, 2007. In all years, the difference between shareholders’ equity under MFRS and U.S. GAAP was mainly due to the U.S. GAAP limitation, which unlike MFRS, does not allow the Company to record an increase in value of previously impaired buildings held for sale.

Pursuant to MFRS, for dates and periods prior to 2008, Grupo Radio Centro’s financial statements recognize certain effects of inflation in accordance with Bulletin B-10 and Bulletin B-12; these effects have not been reversed in the reconciliation to U.S. GAAP. Due to the Company’s adoption of Bulletin D-4, the Company’s financial statements for 2009, 2008 and 2007 include an expanded recognition of deferred taxes under MFRS that more closely parallels U.S. GAAP. Accordingly, there were no differences related to deferred taxes that had to be reconciled between Mexican and U.S. GAAP for purposes of the Consolidated Financial Statements.

For a further discussion of the differences between MFRS and U.S. GAAP as they relate to Grupo Radio Centro, see Note 23 to the Consolidated Financial Statements.

Item 6. Directors, Senior Management and Employees

Directors

Management of the business of the Company is vested in the board of directors and the chief executive officer. Our bylaws provide that the board of directors consist of a minimum of seven and a maximum of 21 directors and an equal number of alternate directors. The Company’s shareholders elect each director and alternate director by simple majority vote at the annual ordinary general meeting. Alternate directors are authorized to serve on the board of directors in place of directors who are unable to attend meetings or otherwise participate in the activities of the board of directors. Directors and alternate directors may be Mexican or foreign, but both the majority of directors and the majority of alternate directors must be Mexican. A person who has acted as an external auditor of the Company or of companies that form a part of the Company’s corporate group or consortium during the year prior to appointment may not be a director.

Of the total number of directors, and their respective alternate directors, at least 25% must be independent directors. Independent directors may not be individuals related to the Company, such as, among others, employees or officers of the Company, controlling shareholders, important customers, suppliers, debtors or creditors of the Company, or their respective shareholders, directors or employees. Alternate directors only serve in place of their respective regular directors and, alternates of independent directors, must also meet the requirements for independent directors.

The board of directors currently consists of 12 members. Alejandro Sepulveda de la Fuente is the secretary to the board of directors. The current members of the board of directors were reelected at the annual shareholders meeting on March 16, 2010 for a one-year term. Their names, positions, ages and information on their principal business activities outside Grupo Radio Centro are listed below. In addition to the “other directorships” listed below, two Aguirre members of the board of directors, Francisco Aguirre and María Adriana Aguirre, sit on the boards of directors of various radio stations in Mexico.

Name	Position	Age	Years as director	Principal occupation	Other directorships
Francisco Aguirre G.	Chairman	68	10	Private investor	Chairman of the board of Grupo Radio México, S.A. de C.V.
María Esther Aguirre G.	First Vice Chairperson	70	10	Private investor	–
María Adriana Aguirre G.	Second Vice Chairperson	63	10	Private investor	–
Ana María Aguirre G.	Director	65	39	Private investor	–
Carlos Aguirre G.	Director	55	10	Chief Executive Officer of Grupo Radio Centro	–

Name	Position	Age	Years as director	Principal occupation	Other directorships
Rafael Aguirre G.	Director	52	17	Private investor	Director of the Quintana Roo branch of HSBC México, S.A. (formerly Banco Internacional, S.A.); Director of the Yucatan Peninsula branch of Banco Nacional de México, S.A.
José Manuel Aguirre G.	Director	47	10	Real estate investor	–
Pedro Beltrán N.	Director	66	8	Finance & Administrative Director and Chief Financial Officer of Grupo Radio Centro	–
Luis Alfonso Cervantes Muñiz	Director	54	5	Attorney	–
Gustavo Gabriel Llamas Monjardín	Director	47	5	Public accountant	–
Thomas Harold Raymond Moffet	Director	68	10	President of Amsterdam Pacific Capital, LLC (a financial advisory firm)	–
Luis Manuel de la Fuente Baca	Director	64	10	Financial advisor	–

Francisco Aguirre G., María Adriana Aguirre G., María Esther Aguirre G., Ana María Aguirre G., Carlos Aguirre G., Rafael Aguirre G. and José Manuel Aguirre G. are siblings. Until she passed away on June 23, 2008, their mother María Esther G. de Aguirre was the honorary chairperson of the board of directors of the Company.

Francisco Aguirre G., María Esther Aguirre G., María Adriana Aguirre G., Ana María Aguirre G., Carlos Aguirre G., Rafael Aguirre G. and José Manuel Aguirre G. are shareholders of the Company. Pedro Beltrán N. is an employee of the Company and Luis Alfonso Cervantes Muñiz is an advisor to affiliates of the Company. Thomas Harold Raymond Moffet, Gustavo Gabriel Llamas Monjardín and Luis de la Fuente Baca are independent directors, as defined under the Mexican Securities Market Law.

The Company’s bylaws provide that the board of directors shall meet at least four times during each fiscal year. Each of the chairman of the board of directors, the chairman of the Audit Committee, the chairman of the Corporate Practices Committee or at least 25% of the members of the board of directors is entitled to call a meeting of the Board and to include items in the agenda for each meeting.

The bylaws provide that holders of Series A Shares representing 10% of the capital stock of the Company shall be entitled to appoint one regular member of the board of directors and such member’s alternate.

The bylaws also provide that the board of directors shall present to the shareholders at the annual shareholders meeting (i) the report on the transactions and activities in which it has been involved in accordance with the Mexican Securities Market Law, (ii) the report on the main accounting and information policies and criteria employed in the preparation of financial information, (iii) the reports prepared by the chairpersons of the Audit Committee and the Corporate Practices Committee and (iv) the report prepared by the chief executive officer together with the external auditors’ report. The board of directors shall also present its opinion on the content of the report prepared by the chief executive officer.

The bylaws of the Company were amended on April 22, 2005 to provide that, independently and without prejudice to the exercise of the powers granted to the board of directors pursuant to Mexican law, the board of directors is entitled to grant or delegate in favor of the Audit Committee those powers that it deems necessary or convenient to comply with the legal and regulatory provisions applicable to the Company, as well as to determine the rules pursuant to which the Audit Committee shall exercise such powers, including the right to revoke or modify them.

The bylaws of the Company were further amended on July 31, 2006 to meet the requirements of the Mexican Securities Market Law. The amendments granted the board of directors and the Audit Committee greater authority and provided for the creation of the Corporate Practices Committee. The amendments to the bylaws also increased the authority that the board of directors may exert over the Company’s accounting, auditing and internal control. With prior favorable opinion from the Audit Committee, the board of directors may approve the Company’s financial statements, internal control and audit guidelines and accounting policies.

Executive Committee

The Company’s bylaws provide that at an ordinary general meeting, the shareholders may elect, by simple majority vote, an Executive Committee of five to seven members from among the Company’s directors or alternate directors elected or designated at such shareholders meeting. The bylaws of the Company provide that the Executive Committee’s operations are subject to the same rules applicable to the operation of the board of directors. Alternate Executive Committee members are authorized to serve on the Executive Committee in place of members who are unable to attend meetings or otherwise participate in the activities of the Executive Committee.

The current members of the Executive Committee are José Manuel Aguirre G. (chairman), Carlos Aguirre G. (vice-chairman), Ana María Aguirre G., María Esther Aguirre G., María Adriana Aguirre G., Rafael Aguirre G. and Francisco Aguirre G.

Audit Committee

The Audit Committee consists of Thomas Harold Raymond Moffet, Gustavo Gabriel Llamas Monjardín and Luis Manuel de la Fuente Baca (chairman). All three members of the Audit Committee also serve on the Company’s board of directors. The shareholders ratified the appointment of these members to the Audit Committee and Mr. de la Fuente Baca’s appointment as committee chairman at the annual shareholders’ meeting held on March 16, 2010. As required by our bylaws and applicable law, all members of the Audit Committee are independent, as defined under Mexican Securities Market Law and Rule 10A-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). See Item 16A, “Audit Committee Financial Expert.” In order for a meeting of the Audit Committee to be valid, the majority of its members must be present, and the Audit Committee must adopt resolutions by majority vote.

The chairman of the Audit Committee may not also be the chair of the board of directors and is appointed and removed exclusively through a majority vote of the shareholders. The shareholders base their decision on the experience, ability and professional prestige of the appointee. The chairman of the Committee must submit an annual report on the activities of the Audit Committee to the board of directors.

The Audit Committee is responsible for assisting the Board in overseeing the activities of the Company. The members evaluate the performance, opinions and reports of the external auditor. In addition, the Audit Committee is responsible for regulation within the Company. The Audit Committee investigates possible violations of internal guidelines and also verifies the establishment of internal controls and the filing of related information. Additionally, the Audit Committee renders an opinion on the report regarding the financial information and results of operations of the Company, which is filed by the chief executive officer, and provides further information concerning that report to the board of directors.

The Audit Committee further assists the board of directors in oversight activities by requesting periodic meetings with executive officers. The Audit Committee also monitors the filing of information related to the internal control systems and internal audits of the Company and is responsible for preparing an opinion on the report filed by the chief executive officer. Additionally, the Audit Committee is responsible for verifying that the chief executive officer abides by the resolutions adopted in shareholder meetings and by the board of directors.

Corporate Practices Committee

The Corporate Practices Committee consists of Thomas Harold Raymond Moffet, Gustavo Gabriel Llamas Monjardín and Luis Manuel de la Fuente Baca, with Mr. de la Fuente Baca (chairman). All three members of the Corporate Practices Committee also serve on the Company’s board of directors. The shareholders ratified the appointment of these members to the Corporate Practices Committee and Mr. de la Fuente Baca’s appointment as committee chairman at the annual shareholders’ meeting held on March 16, 2010. As required by our bylaws and applicable law, all members are independent, as defined by the Mexican Securities Market Law and Rule 10A-3 of the Exchange Act. In order for a meeting of the Corporate Practices Committee to be valid, the majority of its members must be present, and the Corporate Practices Committee must adopt resolutions by majority vote.

In accordance with the Securities Market Law, the Corporate Practices Committee is responsible for rendering opinions to the board of directors and requesting the opinions of independent experts if the Corporate Practices Committee considers it necessary. The Corporate Practices Committee assists the board of directors in generating reports on the main accounting policies and the criteria used to prepare the financial statements of the Company. The Corporate Practices Committee also reports on the transactions and activities of the Company in which the board of directors intervened. The Corporate Practices Committee may call shareholders’ meetings and contribute items to the agenda when needed.

The chairman of the Corporate Practices Committee must submit an annual report on the activities of the Corporate Practices Committee to the board of directors. This report includes information regarding related party transactions, waivers granted and the performance and compensation of the Company’s executive officers.

Executive Officers

The executive officers of Grupo Radio Centro are as follows:

Name	Position	Years as officer	Years of service

Carlos Aguirre G.	Chief Executive Officer	31	36

Pedro Beltrán N.	Finance & Administrative Director and Chief Financial Officer	24	24

Arturo Yáñez F.	Auditing Director	26	26

Sergio González L.	Operations Director	26	26

Luis Cepero A.	Audio Engineering Director	27	49

Eduardo Stevens A.	Transmission Engineering Director	20	30

Gonzalo Yáñez V.	Marketing Director	10	13

Rodolfo Nava C.	Treasurer and Financial Information Manager	10	24

Alvaro Fajardo de la Mora	General Counsel	25	25

Luis Miguel Carrasco N.	Commercial Director	12	17

Alfredo Azpeitia Mera	Investor Relations Manager	21	17

Compensation

For the year ended December 31, 2009, the aggregate compensation for the executive officers of the Company paid or accrued in that year for services in all capacities was Ps. 24.3 million, of which approximately Ps. 6.5 million was paid in the form of bonus compensation. The bonus compensation amounts were determined based on various factors, including quarterly financial results and station ratings and rankings.

The total of payments to Executive Committee members for attendance at Executive Committee meetings during 2009 was Ps. 22.2 million. The total of payments to directors for attendance at Board of Director meetings during 2009 was Ps. 174,240. The total payments to Audit Committee members for attendance at Audit Committee meetings during 2009 was Ps. 550,000.

Board Practices

None of the directors have entered into a service contract with the Company that provides for benefits upon termination of employment.

Employees

At December 31, 2009, Grupo Radio Centro employed a total of 481 full-time employees, fewer than half of whom are members of the Sindicato de Trabajadores de la Industria de Radio y Televisión, Similares y Conexos de la República Mexicana (Radio and Telecommunications Workers Union, or the “Union”). The Company employed a total of 484 full-time employees at December 31, 2008 and a total of 458 full-time employees at December 31, 2007. Grupo Radio Centro also employs a varying number of temporary employees. During 2009, the Company employed an average of 81 temporary employees. All employees of Grupo Radio Centro work in Mexico City.

Negotiations with Union employees are conducted at the industry level pursuant to a national contract (the “Contrato Ley”) that is administered by the Union and that provides for general employment terms applicable to all Union employees, although particular enterprises within the radio broadcasting industry may negotiate separate contractual arrangements with the Union if exceptions from the Contrato Ley are desired. All of Grupo Radio Centro’s current contractual relations with Union employees are pursuant to the stated terms of the Contrato Ley. The current Contrato Ley was renewed on February 1, 2010; however, salary increases are implemented annually. On February 1, 2010, the Company and the Union agreed to a 5.0% increase in salaries. Relations between Grupo Radio Centro, its workers and the Union have historically been good; there have been no material disputes between any of the radio broadcasting subsidiaries of Grupo Radio Centro and any of their employees since the founding of Grupo Radio Centro.

Share Ownership

As of December 31, 2009, the Aguirre members of the board of directors had beneficial ownership, through a Mexican trust through which they hold Series A Shares, of 84,020,646 Series A Shares of the Company, representing 51.6% of the outstanding Series A Shares. See Item 7, “Major Shareholders and Related Party Transactions—Major Shareholders.”

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

Item 7. Major Shareholders and Related Party Transactions

Major Shareholders

The Company was incorporated as Técnica de Desarrollo Publicitario, S.A. de C.V. on June 8, 1971, with its principal shareholders being members of the Aguirre family. The Company has undergone several changes in nominal ownership, but ultimate control has always resided with the Aguirre family.

On June 3, 1998, all of the Series A Shares and CPOs owned by the Aguirre family, which had been held in a trust established by the Aguirre family in 1992 (the “Old Controlling Trust”), were divided into two trusts (the Old Controlling Trust and the “New Controlling Trust” and, together, the “Controlling Trusts”). Before the division, 50% of the Series A Shares and CPOs of the Company held by the Old Controlling Trust was held for the benefit of María Esther G. de Aguirre, with the remainder divided equally among her children. Simultaneously with the division, María Esther G. de Aguirre acquired a 50% interest in each of the Controlling Trusts and transferred those interests to her children in equal parts, but reserved her rights to vote and receive dividends in respect of the Series A Shares and CPOs previously held for her benefit (the “reserved rights”).

On May 25, 1999, four members of the Aguirre family made a gift of their interests in the Company’s Series A Shares and CPOs held by the Controlling Trusts to María Esther G. de Aguirre. On the same date, the Aguirre family amended the terms of the Controlling Trusts to transfer, on such date, the reserved rights held by María Esther G. de Aguirre to her children in equal parts and to transfer, upon the occurrence of certain events, the trust interests gifted to her by her four children to her seven other children—María Esther Aguirre G., Francisco Aguirre G., María Adriana Aguirre G., Ana María Aguirre G., Carlos Aguirre G., Rafael Aguirre G. and José Manuel Aguirre G.

On April 5, 2000, María Esther G. de Aguirre made a gift of her approximate 36% interest in the Controlling Trusts to her seven children holding interests in such trusts. Following this gift and an amendment of the terms of the Controlling Trusts to remove María Esther G. de Aguirre as grantor and beneficiary, those seven children owned, in equal parts, 100% of the interests in the Controlling Trusts. In 2003, all CPOs held by the Controlling Trusts were converted to Series A Shares.

In 2007, the Controlling Trusts were amended to change the trustee and consolidate the Controlling Trusts. Pursuant to agreements dated June 15, 2007, Bancomer, S.A. was replaced with Banco IXE S.A. as trustee of each Controlling Trust. Pursuant to an agreement dated June 18, 2007, the New Controlling Trust was dissolved and all of its assets were transferred to the Old Controlling Trust (now referred to simply as the “Trust”). The same seven members of the Aguirre family continue to own, in equal parts, 100% of the interests in the Trust. Under the terms of the Trust, the Series A Shares held by the Trust are ordinarily voted as directed by a majority of the beneficiaries of the Trust.

The following table sets forth certain information regarding the beneficial ownership of Series A Shares by beneficial holders of more than 5% of the outstanding Series A Shares as of December 31, 2010.

Name of Person or Group	Series A Shares Beneficially Owned			Percentage of Series A Shares(1)
The Trust		84,020,646			51.6	%
María Esther Aguirre G.		84,020,646	(2)		51.6	%
Francisco Aguirre G.		84,020,646	(2)		51.6	%
María Adriana Aguirre G.		84,020,646	(2)		51.6	%
Ana María Aguirre G.		84,053,946	(2)(3)		51.7	%
Carlos Aguirre G.		84,044,046	(2) (4)		51.6	%
Rafael Aguirre G		84,020,646	(2)		51.6	%
José Manuel Aguirre G.		84,020,646	(2)		51.6	%

(1)

Percentages are based on 162,724,561 Series A Shares issued and outstanding as of December 31, 2009.

(2)

All Series A Shares beneficially owned by the Trust (the “Family Shares”) are held for the benefit of the Aguirre Family and are deemed to be beneficially owned by each member of the Aguirre Family, each of whom is deemed to share power to vote or dispose, or direct the vote or disposition of, the Family Shares as a member of the Technical Committee of the Trust.

(3)

Includes 33,300 Series A Shares beneficially owned by Ana María Aguirre G. in addition to Family Shares.

(4)

Includes 2,600 ADSs beneficially owned by Carlos G. Aguirre in addition to Family Shares.

The voting rights of the holders of Series A Shares not held in the form of CPOs or ADSs are identical.

The bylaws of the Company prohibit the ownership of Series A Shares by persons who do not qualify as Mexican investors. See Item 10, “Additional Information—Bylaws and Mexican Law—Limitations Affecting Non-Mexican Holders—Share Ownership.” At April 30, 2010, to the best knowledge of the Company, approximately 3.3% of the outstanding Series A Shares was represented by ADSs. It is not practical for the Company to determine the number of U.S. holders of CPOs or ADSs, the portion of each class of securities held in Mexico or the number of record holders in Mexico.

Related Party Transactions

The Company engages in a variety of transactions with affiliates. Pursuant to the Company’s bylaws, the operating rules of the board of directors and Mexican law, the Corporate Practices Committee of Company’s board of directors must express an opinion on, and the Company’s board of directors has exclusive power to approve, any transaction with a related party unless the transaction (i) is considered to be not material based on the value of the transaction; (ii) is entered into with a controlled entity, provided that such a transaction is either in the ordinary course of the Company’s business and carried out at market price or supported in valuations prepared by external experts; or (iii) is entered into with employees, provided that the transaction is conducted under the same conditions as it would be for a client or as a result of general labor benefits.

Investment in GRC-LA

On May 13, 2009, certain members of the Aguirre family acquired a 49% equity stake in Grupo Radio Centro LA, LLC, a wholly-owned subsidiary of the Company formed to provide programming to KXOS-FM pursuant to the local marketing agreement with Emmis Communications Corporation. In exchange for their 49% equity stake, the Aguirre family members agreed to be responsible for 49% of the cost of the Company’s investment. On February 26, 2010, the Company undertook a capital reduction of Grupo Radio Centro LA, LLC by returning U.S.$ 1.47 million in capital contributions to certain members of the Aguirre family, which was the same amount initially invested by them. As a result of the capital reduction, the Company is the sole shareholder of Grupo Radio Centro LA, LLC.

Family Control of OIR Network Affiliates

In addition to their ownership interest in the Company, members of the Aguirre family owned or controlled 13 of the 107 affiliates in the network serviced by OIR at December 31, 2009. Affiliated stations owned or controlled by members of the Aguirre family accounted for approximately 10.3% of OIR revenue (or 0.3% of the Company’s total broadcasting revenue) for 2009 (excluding revenue from our operations in the United States), 9.6% of OIR revenue (or 0.3% the Company’s total broadcasting revenue) for 2008, and 11.7% of OIR revenue (or 0.4% of the Company’s total broadcasting revenue) for 2007. The Company has provided administrative and other services to such family-owned stations in the OIR network and under certain circumstances has provided commercial airtime to related parties, on terms that are more favorable than those provided to unrelated parties. The Company does not believe that such transactions have been material.

Service Contract

On January 5, 2000, Grupo Radio Centro entered into a contract with an entity owned by Francisco Aguirre G., chairman of the board of directors of the Company, for an indefinite term pursuant to which this entity is compensated for consulting services and the sale of airtime provided to the Company by Mr. Aguirre. The Company incurred expenses under this contract totaling Ps. 4.0 million in 2009, Ps. 3.3 million in 2008 and Ps. 3.6 million in 2007. See Note 6 to the Consolidated Financial Statements.

Sale of Doubtful Accounts Receivable

In December 2006, the Company sold to an entity owned by Francisco Aguirre G. accounts receivable representing Ps. 40.3 million owed to it mainly by political parties in connection with purchases of airtime from 2003 to 2005 for a cash purchase price of Ps. 12.2 million. The Company had been unsuccessful in its attempts to collect the accounts receivable and, accordingly, increased its allowance for doubtful accounts beginning in 2005. The Company sold the accounts receivable because

it believed, based on its past efforts, that the accounts receivable were not recoverable, and

the sale enabled the Company to take a tax deduction in connection with the unrecoverable accounts receivable, which deduction otherwise would not have been available without bringing legal proceedings against the customers. The Audit Committee ratified this transaction on February 19, 2007.

Sale of Goods and Services

The Company makes available to employees, including key management personnel, and directors and directors’ family members goods and services obtained by the Company in barter transactions. These goods and services are offered to executive officers and directors at discounts that are comparable to the discounts offered to the Company’s employees. The Company received a total of Ps. 3.3 million in 2009, Ps. 3.0 million in 2008 and Ps. 1.6 million in 2007 from executive officers and directors and their families in connection with these transactions. See Note 6 to the Consolidated Financial Statements.

Attention to Aguirre Family Matters

Carlos Aguirre G., the Chief Executive Officer, Pedro Beltrán, the Chief Financial Officer, and Alvaro Fajardo, the General Counsel, have spent a portion of their time on Aguirre family matters for which the Company has not been separately compensated.

Loans to Executive Officers and Directors

In October 2006, the Company extended a loan in the amount of Ps. 3.2 million (nominal amount) to a company controlled by Ana María Aguirre G., a member of the board of directors. The loan bore interest at an annual rate of 10.5% and was repaid in full in May 2007. The proceeds of the loan were used for purposes unrelated to the business of the Company. Neither the Audit Committee nor the Corporate Practices Committee was asked to consider this transaction.

For further information regarding transactions between Grupo Radio Centro and related parties, see Note 6 to the Consolidated Financial Statements.

Item 8. Financial Information

Consolidated Financial Statements

See Item 18, “Financial Statements” and pages F-1 through F-41.

Other Financial Information

Legal and Arbitration Proceedings

Through a series of transactions effected in 1995 and 1996, the Company acquired five radio stations owned by Radiodifusión RED, S.A., as well as the exclusive radio broadcasting rights to Monitor, a news and talk radio program. On December 23, 1998, the Company entered into an agreement with Infored and Mr. Gutiérrez Vivó, the principal anchor of Monitor, pursuant to which they would provide the Company with original news programs and special-event productions until 2015 (the “Infored Agreement”). The Infored Agreement provided that Mr. Gutiérrez Vivó would continue as Monitor’s host until at least the end of 2003.

In May 2002, Mr. Gutiérrez Vivó and Infored initiated an arbitration proceeding pursuant to which they sought rescission of the Infored Agreement and damages. On March 1, 2004, the International Chamber of Commerce, or the ICC, notified the Company that, by majority vote of two of the three arbitrators, the ICC panel held that the Company was in breach of its contract with Infored and Mr. Gutiérrez Vivó. As a result, the contract was rescinded and Infored and Mr. Gutiérrez Vivó together were awarded a total of U.S.$ 21.1 million in damages, which represents the amount the Company would be required to pay under the contract after taking into account prepayments made by the Company. The Company challenged the validity of this decision in the Mexican courts and, on November 11, 2004, Civil Judge 63 of the Federal District Superior Tribunal of Justice, set aside the arbitration award. Infored and Mr. Gutiérrez Vivó initiated an amparo, which is a type of proceeding used to challenge the legality of a decision under Mexican law, in November 2004. On August 11, 2005, District Judge 6 of Civil Matters granted Infored and Mr. Gutiérrez Vivó an amparo, in effect overturning the November 2004 decision. On August 25, 2005, the Company challenged District Judge 6’s ruling in a proceeding before the Federal District’s Thirteenth Circuit Court of Civil Matters. On June 16, 2006, the Federal District’s Thirteenth Circuit Court of Civil Matters ratified the decision of the Civil Judge 63 of the Federal District Superior Tribunal of Justice to set aside the arbitration award and refused to enforce the arbitration award in Mexico.

Following an appeal by Infored and Mr. Gutiérrez Vivó, on January 30, 2007, the Mexican Supreme Court (Suprema Corte de Justicia de la Nación), in a 5 to 4 decision based on procedural grounds, reversed the Federal District’s Thirteenth Circuit Court of Civil Matters’ decision that had ratified a lower court’s decision to set aside the arbitration award. The Supreme Court remanded the case to the Thirteenth Circuit Court, instructing the court to reexamine the matter under different procedural rules, which required the court to review the merits of the case. On June 12, 2008, the Thirteenth Circuit Court reversed its prior decision, granted the amparo of Infored and Mr. Gutiérrez Vivó, denied the amparo of the Company, and remanded the case to Civil Judge 63 of the Federal District Superior Tribunal of Justice. On July 11, 2008, Civil Judge 63 of the Federal District Superior Tribunal of Justice ruled that the decision that set aside the arbitration award was invalid. The July 2008 decision of Civil Judge 63 of the Federal District Superior Tribunal of Justice did not constitute an order to pay the arbitration award, the enforcement of which remains subject to lower court review.

In August 2008, the Company challenged the arbitration award as unconstitutional in an amparo filed with District Judge 6 of Civil Matters. District Judge 6 dismissed the amparo based on procedural grounds. The Company challenged this action before the Thirteenth Circuit Court, and in February 2009, that court ruled the Company’s amparo was admissible and remanded it to District Judge 6 of Civil Matters. In April 2009, District Judge 6 of Civil Matters granted the Company’s amparo, in part, but dismissed the amparo with respect to the Company’s challenge of the constitutionality of certain provisions of the Mexican commercial code. The Company then appealed this dismissal to the Thirteenth Circuit Court in July 2009, which in turn referred the constitutional question to the Mexican Supreme Court. The Mexican Supreme Court accepted the constitutional matter for review in October 2009, and its decision is pending.

The Company plans to continue to challenge the validity of the arbitration award in the Mexican courts. If the Company is ultimately unsuccessful in challenging the enforcement of the arbitration award in Mexico, it will be required to finance any amounts due. See Item 5, “Operating and Financial Review and Prospects—Liquidity and Capital Resources.” The Company’s ability to obtain financing is subject to various factors, including general market conditions, the Company’s financial condition and results of operations and the fact that the Company has pledged substantially all of its assets under its outstanding indebtedness. Accordingly, the Company may not be able to obtain financing in a timely manner, or on acceptable terms, or at all. If the Company incurs additional indebtedness or it is unable to obtain financing when needed, the Company’s financial condition and results of operations may be materially and adversely affected.

The Company is involved in various other legal proceedings related to the Infored and Gutiérrez Vivó transaction. In 2004, the Company and a subsidiary, along with four minority shareholders, initiated two lawsuits against Mr. Gutiérrez Vivó and Ms. María Ivonne Gutiérrez Vivó to seek rescission of the stock purchase agreement entered into as an “accessory contract” to the Infored Agreement. One case pertains to the shares of the licensee of the radio station formerly known as XEJP-AM (now XENET-AM), and the other case pertains to the shares of the licensee of the radio station formerly known as XEFAJ-AM (now XEINFO-AM). These proceedings have been suspended pending a final determination in the arbitration.

In addition, in 2008, Mr. Gutiérrez Vivó and Infored initiated additional claims against the Company for alleged violations of labor law in connection with the Infored Agreement. In 2009, Mr. Gutiérrez Vivó and Infored initiated a civil law suit against the Company and individual members of the Aguirre family, seeking consequential damages in an amount of approximately Ps. 9.46 billion arising out of the Company’s alleged wrongful failure to pay the arbitration award. The Company’s management believes that these cases will be resolved in favor of the Company.

The Company is also involved in a variety of labor claims initiated by former employees between 2000 and 2004 seeking an aggregate amount of approximately Ps. 49.6 million. The Company has not recorded a provision for these claims, as the Company’s management believes that the cases will be resolved in favor of the Company.

Other than proceedings related to labor claims and proceedings related to the arbitration with Infored described above, neither the Company nor any of its subsidiaries is currently engaged in any material litigation or arbitration, and no material litigation or claim is known to the Company to be pending or threatened against the Company or any of its subsidiaries.

Dividend Policy

The table below sets forth each of the dividends paid by the Company during the period from 2006 to 2009, together with per-Series A Share (in nominal pesos and U.S. dollars) and per-ADS amounts translated into U.S. dollars at the exchange rate in effect on each of the respective payment dates.

Date Dividend Paid	Fiscal Year with Respect to which Dividend Paid	Aggregate Amount of Dividend Paid (Nominal Pesos)		Dividend Per Series A Share (Nominal Pesos)(1)		Dividend Per Series A Share (U.S. dollars)(1)		Dividend Per ADS (U.S. dollars)(1)(2)

May 7, 2007	2006	Ps.	70,000,000		0.43		0.04		0.36
March 14, 2008	2007	Ps.	100,000,000		0.61		0.06		0.51
April 13, 2009	2008	Ps.	100,000,000		0.61		0.05		0.42
March 24, 2010	2009	Ps.	100,000,000		0.61		0.05		0.44

(1)	Per Series A Share and ADS amounts are calculated based on number of shares outstanding on the date of payment of the dividend.

(2)	Nominal peso amounts have been translated to U.S. dollar amounts at the exchange rate for pesos on the date of payment of the dividend, as published by the Federal Reserve Bank of New York and the U.S. Federal Reserve Board.

The amount of future dividends will depend upon Grupo Radio Centro’s operating results, financial condition and capital requirements and upon general business conditions. The declaration, amount and payment of dividends are determined by a majority vote of the holders of the Series A Shares, generally upon the recommendation of the Company’s board of directors. Depending on the Company's financial position and compliance with the covenants in its credit facility, the Company may declare dividends in the future. See Item 10, “Additional Information—Bylaws and Mexican Law—Dividends.”

On August 1, 2006, the Company reduced its fixed capital stock by a total of Ps. 128.5 million (Ps. 120.0 million nominal amount) through the payment of cash to its shareholders on August 7 and October 2, 2006. The payment was made with cash flow from operations. See Item 5, “Operating and Financial Review and Prospects—Capital Reduction.”

Item 9. The Offer and Listing

Since July 1, 1993, the CPOs have been listed on the Mexican Stock Exchange and the ADSs have been listed on the NYSE. The ADSs have been issued by the Depositary. Each ADS represents nine CPOs. Each CPO represents a financial interest in one Series A Share.

The CPOs were originally issued by Nacional Financiera, S.N.C., Institución de Banca de Desarrollo, Dirección Fiduciaria (“Nafin”) as trustee for the trust (the “CPO Trust”) created by the trust agreement, dated May 24, 1993, as amended, among the Old Controlling Trust and the Company, as grantors, and Nafin, as CPO trustee. At a general meeting of the Company’s shareholders on April 25, 2003 and a general meeting of the CPO holders on May 19, 2003, the shareholders and CPO holders approved several amendments to the CPO Trust. On June 27, 2003, the parties to the CPO Trust agreement entered into an amended and restated CPO Trust agreement (the “Amended CPO Trust Agreement”), reflecting those amendments, including the following:

Nafin was replaced as the CPO trustee by GE Capital Bank, S.A., Institución de Banca Múltiple, GE Capital Grupo Financiero, División Fiduciaria, as successor trustee for the CPO Trust (the “CPO Trustee”).

The term of the CPO Trust was extended 20 years until June 29, 2023 (which term may be further extended).

On June 30, 2003, all CPOs held by holders that qualified as Mexican investors, as defined in the Company’s bylaws (see Item 10, “Additional Information—Bylaws and Mexican Law––Limitations Affecting Non-Mexican Holders”), were exchanged for Series A Shares held in the CPO Trust. As of June 30, 2003, qualifying Mexican investors held Series A Shares and no longer held CPOs. Non-Mexican holders of CPOs as of June 30, 2003 continued to hold CPOs and, as holders of CPOs, are not entitled to withdraw the Series A Shares held in the CPO Trust.

In connection with the Amended CPO Trust, the Series A Shares commenced trading on the Mexican Stock Exchange under the symbol “RCENTRO.A” on June 30, 2003. The Series A Share listing is deemed to include the CPOs, such that the Series A Share trading line will reflect trading of both Series A Shares and CPOs.

Holders of CPOs are able to sell their CPOs (i) to a non-Mexican investor, in which event the non-Mexican investor would receive such CPOs, or (ii) to a Mexican investor, in which event the Mexican investor would receive the Series A Shares underlying such CPOs, directly or by keeping them deposited at an account at Indeval, maintained by such investor or by an authorized institution. Indeval, or S.D. Indeval, S.A. de C.V., Institución para el Depósito de Valores, is a privately owned securities depositary that acts as a clearinghouse for Mexican Stock Exchange transactions.

The 2003 amendments to the CPO Trust did not affect the rights or interests of holders of ADSs.

On April 6, 2010 GE Money Bank, S.A., Institución de Banca Múltiple, GE Capital Grupo Financiero (formerly GE Capital Bank, S.A.) was replaced as CPO Trustee of the CPO Trust, by Banco Multiva, S.A., Institución de Banca Múltiple, Grupo Financiero Multiva, División Fiduciaria (“Multiva”), as a result of the divesture by GE Money of its managing trust portfolio, which included the Trust. Multiva assumed the position of CPO Trustee under the Trust.

Price History

The following table sets forth, for the periods indicated, the reported high and low sale prices for the Series A Shares and the CPOs on the Mexican Stock Exchange (on a nominal basis) and the reported high and low sale prices for the ADSs on the NYSE.

	Mexican Stock Exchange				New York Stock Exchange
	Amounts per Series A Share and per CPO (in nominal pesos)				Amounts per ADS (in U.S. dollars)
	High		Low		High		Low

2005		9.92		8.08		7.75		6.45
2006		13.10		7.15		10.75		5.50
2007		18.95		12.30		15.65