Recalling that when Cathy Hughes launched Radio One in another recession she put herself on the air because she couldn’t afford a morning host, current CEO Alfred Liggins says, “In Armageddon, I’ll be on the air.” He remains confident that Radio One is better positioned than its peers, but Q1 radio ad sales are pacing down 31% and Q2 over 50%. For 2009, job one at Radio One is maintaining compliance with its loan covenants.
The company released its quarterly results the previous evening, but more detail was provided in the conference call with analyst and investors. Help from political kept the Q4 revenue decline to 7.1%, but the election is past history. For Q1 thus far, local revenues are down 30% and national 37% for a combined 31% decline.
Liggins noted that Interactive One and TV One are ahead of budget thus far in 2009, while radio is behind. And while the company has been cutting costs, it is preparing to hire a VP of Interactive for Radio to help build that business even more.
Despite the decline, Radio Division President Barry Mayo said Radio One’s station group outperformed its markets. The biggest contributors to that were Atlanta, Baltimore, Houston, Indianapolis and Philadelphia. Auto advertising has been soft for Radio One as for most other groups. In fact, Mayo said Auto was no longer a top five category in Q4. The list was Retail, Entertainment, Telecommunications, Government/Political and Food & Beverage. How the mighty have fallen.
You may have heard that some radio companies have been cutting sales commissions. Well, Radio One has increased commissions for new business. Mayo said the company also had success in Q4 with a program aimed at getting existing advertisers to increase their ad spending on Radio One stations.
In the course of 2008 Radio One bought back $196 million face value of its public bonds at an average discount of 38.4%. Liggins would love to buy back lots more, but he noted that the company currently has only $40 million of capacity left for such purchases. He lamented that the current state of the US banking industry prevents Radio One from being able to rework its balance sheet and take out more of that debt at discounted prices.“All banks across America seem unwilling – unless you want a mortgage now, thanks to the federal government – unwilling to negotiate terms that are not necessarily draconian to borrow,” he complained.
RBR/TVBR observation: The CEO didn’t recount another story that his mother tells – how she made him clean the WOL-AM DC studios because she also couldn’t afford to hire anyone else to do it. So, he may have been just a kid, but he’s seen what it takes to get through tough times.
