Following the latest cycle of quarterly reports, high-yield bond analysts Bishop Cheen and Davis Hebert have sent clients of Wells Fargo Securities a summary of who outperformed and who underperformed expectations in radio.
First off, industry giant CC Media Holdings, the parent company of Clear Channel Communications, was a winner with its Q1 financial results.
“CC Media Holdings reported earnings better than our expectations, with revenue of $1.32 billion, up 4.5% YoY, and EBITDA of $314.0 million, up 20% versus the prior year. We were looking for $1.31 billion in revenue and $281 million in EBITDA. Clear Channel’s radio business improved 2.8% on the top line (boosted by local and digital, which more than offset a slight decline in national), while radio EBITDA grew an impressive 15% YoY. Meanwhile, its outdoor business benefited from 7% revenue growth from both Americas and international, helped by strong digital billboard performance and growth in street furniture across the company’s international markets,” the analysts wrote.
Also outperforming was Salem Communications, which got the biggest bump from its non-broadcast revenue growth.
“Salem Communications Corporation reported Q1 total revenue of $51.8 million, up 7.2% YoY from $48.3 million, while adjusted EBITDA decreased 4.0% to $11.5 million from $12.0 million, a year earlier. The performance was slightly ahead of the company’s guidance and our expectation. For Q1, net broadcast revenue was $42.7 million (+3.2% YoY), station operating income was $14.9 million (-3.1%) and same-station net broadcast revenue was $41.8 million (+3.7%). As of March 31, 2011, the company’s bank leverage ratio was 5.55x versus a compliance covenant of 7.0x. For Q2 2011, Salem projects total revenue will increase 5%–7% over Q2 2010 total revenue of $53.1 million,” said Cheen and Hebert.
Both Citadel Broadcasting and Radio One had pre-announced Q1 results in general terms, so their actual announcements were in line with Wall Street expectations. Citadel reported a 3% revenue drop and Radio One reported a 10.2% rise, although only 1.8% for its radio stations. Citadel is, of course, being acquired by Cumulus Media, which was one of the late reporters for the quarter and not yet included in the Wells Fargo summary.
Entercom hit the analysts’ target for revenues with its Q1 numbers, but had higher expenses and came in below expectations for EBITDA.
“Entercom Communications Corp. reported Q1 net revenue of $82.5 million, up 2% YoY, while adjusted EBITDA declined 13% YoY to $15.1 million. We were looking for $82.5 million and $17.3 million in revenue and EBITDA, respectively. We estimate leverage remained unchanged sequentially at 5.6x, as the company offset the EBITDA decline with debt repayment. Station operating expense for FY 2011 is expected to be up in the mid-single-digit range, reflecting continued investment in emerging digital initiatives, the reformatting of several stations, a restoration of the employee 401(k) match, as well as certain contractual increases,” Cheen and Hebert told clients.
RBR-TVBR observation: Q1 was mostly positive, but as we all know by now Q2 is a bit rocky because of the Japanese auto supply chain disruption. As Lew Dickey noted in his Wall Street conference call, radio is being hit harder in Q2 than TV and outdoor because, “Radio is the easiest to cancel.”
Publisher Note: This is another prime example of why Radio and TV operators must build out their web / digital asset and learn from the ground up the ‘Vocabulary’ of today’s internet business model.
Once you have a working ‘Vocabulary’ then operators can build a second (2nd) stream of revenue.
What is stopping Radio and TV from moving forward – the lack of Knowledge and many cases the refusal to learn. We at RBR-TVBR, your day-to-day broadcaster, had to learn from the ground up to produce what you see today, not an ‘Old Media’ trade but a Digital Web based information media company,