Compared to its peers, that really wasn’t such a bad showing for Citadel Broadcasting. Both the radio group and Citadel Media Networks, the former ABC Radio Networks, posted revenue declines for the quarter.
Q2 net revenues were down 17.9% to $188.1 million. Citadel noted an industry-wide decline in advertising. Also, for the radio network business, it did not have the Paul Harvey and Sean Hannity programs in Q2 of 2009.
For its radio markets, net revenues fell 15.6% to $156.2 million and station operating income (SOI) fell 22.8% to $61.5 million. Radio network revenues fell 28.5% to $33 million and SOI plunged 68.3% to $2.4 million. (The sum does not equal the company total for net revenues, due to $1.1 million in intersegment revenues.)
“As a result of the current economic environment, the Company believes net revenues will continue to decline in the remaining quarters of 2009 as compared to the same quarters in the prior year,” Citadel said in an SEC filing.
The company repeated a warning that it will be difficult for Citadel to meet the covenant requirements under its senior credit and term facility in 2010, especially some tough requirements that kick in on January 15, 2010. The company said it may need to seek a further amendment to its loan agreements or a waiver from its creditors, or it would need to reorganize its capital structure and debt. The later could potentially mean a Chapter 11 filing. Citadel recently hired Lazard Freres & Co. to advise it on financial options.
As has been the case for many broadcasters, Citadel’s re-evaluation of the value of its FCC licenses and goodwill in the current depressed marketplace led to an impairment charge in Q2 – and what a whopper it was. Citadel wrote down the value of its FCC licenses and goodwill by a total of $933.1 million in the quarter. That resulted in a net loss for the quarter of $758.7 million, or $2.88 per share. That compared to a net loss of $251.6 million, or 96 cents per share a year earlier.