2010 starting off well for Radio One


Radio One’s once-per-year Wall Street conference call was full of optimism. While Q4 2009 revenues were down 8.9%, CEO Alfred Liggins said Q1 is pacing up in the mid-single digits and Q2 is looking even better.

CFO Peter Thompson told analysts that while Q4 revenues were down 8.9% to $67.3 million, the core radio division, excluding Reach Media, was down 7.9% to $55.4 million. Reach Media had net revenues of $9.8 million, down 3.9%. Interactive division revenues were $4 million, down 4.5%. Q4 was the best quarter of 2009 and, excluding political, radio revenues were down only 4.2%.

Local was down 7.3% in Q4 for Radio One’s stations, against a 12% decline reported for its markets. National was down 8.4% – the same as the decline for its markets.

Station operating income was down 16.2% (same station) in Q4 to $26.3 million.

Radio division President Barry Mayo said the outperformance in Q4 was driven by three of the company’s big markets: Dallas, Detroit and Houston. “This has come largely as a result of an operational realignment last year that we made at the regional vice president level. That’s actually started to pay off nicely,” he said.

Mayo said strong national performance is driving growth in Q1. “National’s pretty much on fire right now,” he said. Five of Radio One’s clusters are outperforming their markets in Q1: Charlotte, Columbus, Dallas, Indianapolis and St. Louis.

While the company reported to Wall Street that Q1 is currently pacing up 7%, Radio One executives also cautioned that a major revenue event, the company’s annual gospel cruise, will be in Q2 this year rather than Q1.

“Q2 is going to be better than Q1,” Liggins declared. He noted that it is hard to project precisely because business had been placed so late the past couple of years, while advertisers are now returning to more normal practices. Asked about whether any rate discipline is finally being seen, Mayo responded that it is definitely happening now in larger markets, where inventory is tightening, but not yet in the company’s 25+ ranked markets.

Reach Media, the syndication arm of Radio One, recently reworked its agreement with Citadel Media, the former ABC Radio Networks. As part of the revision, Reach Media accepted $2 million less in guaranteed payments from Citadel in Q4. Under the new agreement there are no more guarantees and the two companies split ad sale responsibilities, with Reach Media handling all ad sales for “The Tom Joyner Morning Show.”

RBR-TVBR observation: Things are changing so fast – and fortunately for the better – that Liggins noted a wide disparity of 2010 growth projections by his fellow CEOs and Wall Street analysts. He referenced the RBR-TVBR article just days ago on how some forecasts are trailing pacing numbers. As the year goes on, he expects the low forecasts to move up as pacing gains moderate (against stronger late 2009 months) to meet somewhere in the middle.