Beasley Broadcast Group’s Q3 net revenue was $24.4 million, a $6.2 million, or 20.1% decline compared with Q3 2008. Most of the blame was attributed to the overall downturn in ad spending, but President/COO CEO Bruce Beasley handed a bit of blame to the company’s national rep Katz Media. Approximately 66% of the Q3 revenue decline was related to BBGI’s Miami-Fort Lauderdale, Philadelphia and Las Vegas market clusters.
In five of the 11 markets that report to Miller-Kaplan, the clusters slightly underperformed their markets on a combined basis—17% down overall general market M-K vs. 19% down for Beasley. Locally, they outperformed the markets; 17% vs. 19% down overall M-K.
Specifically, Philly was down 15%; Beasley’s cluster there was down 16%. Locally, Philly was down 13% vs. the market being down 19%. In Miami, general market revenue was down 14%; Beasley was down 23% (national was down 50% Beasley, vs. 13 down for the market.)
So national ad dollars were a real problem in the quarter. Beasley stations were down 36% compared to their markets being down 15%.
Said Beasley: “Q3 net sales reflected spending declines from retail, auto, restaurants and health care—our top 4 ad categories…however, based on what we are seeing at this time, we expect Q4 revenue comparisons to improve over Q3.”
On national and Katz, Beasley said: “We are intent on generating national revenue at our clusters that is at least in line with our markets. We’ve been addressing the national issue for several quarters following the switch to Katz as our rep firm in late ’08. And I attribute Beasley’s Q3 national sales underperformance to the transition. Because this transition took place in late ’08, we were not included in certain annual national ad buys. And in some of our markets, some of our national business that was being offered was at rates below what we were achieving from local business. In addition, we were not flexible enough with inventory in some markets to allow for some short-form buys. We have held extensive discussions with Katz personnel and senior management on selling BBGI to national advertisers and believe we will see improvements on this front beginning in the current quarter and throughout 2010.”
BBGI’s digital initiative increased 12% in revenue for the quarter.
Q3 operating income decreased $0.2 million, or 3.4%, compared to the year-ago period primarily reflecting the lower net revenue which more than offset company-wide cost containment measures which collectively resulted in a 24.3% reduction in total operating expenses including an 18.7% reduction in costs of services, an 18.3% reduction in selling, general and administrative (including stock-based compensation) expenses and a 16.2% reduction in corporate general and administrative (including stock-based compensation) expenses.
Q3 total operating expenses benefited from a $1.7 million gain on the sale of KBET-AM and certain assets used in the operation of KCYE-FM and KFRH-FM in Las Vegas. Excluding this benefit, Q3 total operating expenses declined 17.3% compared to the year-ago period.
There was some good news for comps as well. Beasley’s comps improved in the Q3 relative to the 2009 first and second quarters, partially reflecting progress in key markets such as Philadelphia and Fort Myers.
RBR-TVBR observation: After the closing of Interep Radio, for all reality purposes, today Katz is the only rep firm the radio medium has as it controls the majority of station inventory. Broadcasters have no place to complain as they put themselves into their current national dollar position. Groups were said to go for the quick money guarantee and never giving consideration what life would be like without competition on the street.
The groups that signed with Katz have to soul search and ask – Has Katz grown and increased business for the radio medium by controlling the majority of inventory? Has Katz put forth the necessary resources to help stations understand today’s ever changing business world for business to inch forward into the ‘new media’ business model? And in all areas of operations does Katz have an equal proportion of resources that are in proportion to the number of groups and stations they rep country-wide? If groups are not satisfied then there are a number of national smaller rep firms that may be able to service the needs in your market size.