2011 has been a tough year for Citadel Broadcasting, other than being sold to Cumulus Media for nearly $2.5 billion in a deal likely to close next month. In what is likely to be his last quarterly conference call with Wall Street analysts as CEO of Citadel, Farid Suleman reported that, much like Q1 reported back in May, Q2 of 2011 saw revenue declines for both the radio station and network sides of Citadel.
Total revenues were down 4.8% to $185 million for Citadel Broadcasting. Consolidated segment operating income (SOI) fell 10% to $70 million. Free cash flow, however, grew 0.7% to $81 million.
Calling it “another tough quarter,” Suleman said three big markets – San Francisco, Atlanta and New York – were responsible for much of the shortfall.
Radio Markets revenue declined 4.1% to $157.7 million, while SOI was down 9.2% to $65.5 million.
Radio Network revenue was down 8.6% to $28.5 million and SOI dropped 20.8% to $4.5 million.
The CEO indicated that insurance and automotive were the strongest ad categories in Q2. In the Q&A session he said Citadel was not seeing auto cancelations.
Asked about the current quarter, Suleman said the network business (Citadel Media) is finally pacing up for the first time this year. He said pacing for the radio stations is comparable to Q2.
Citadel shareholders are due to vote September 15th on the cash/stock merger with Cumulus Media. In answer to an analyst’s question, Suleman said he did not see an impediment to the deal, but noted that it is still awaiting regulatory approval by the US Department of Justice Antitrust Division and by the FCC. So while Cumulus CEO Lew Dickey has indicated that the closing is likely to take place on September 15th just hours after the Citadel shareholders’ vote, Suleman is saying only that closing is expected yet this year.
RBR-TVBR observation: As Lew Dickey at Cumulus waits for the lights to go green for closing, the free cash flow (FCF) at Citadel is basically accumulating to the benefit of its new owner to be. Citadel used some of that FCF to pay down $50 million of debt in Q2, which reduces the amount of debt that Cumulus has to refinance when it takes over. Even after that debt pay-down, Citadel still had more than $100 million in cash at the end of Q2.