For the first half of the year ended 6/30/12, Dial Global’s revenue was up $81,572,000 to $122,940,000 compared with $41,368,000 for the six months ended 6/30/11. The increase is primarily due to upped ad revenue from the merger with Westwood One.
Also for the first half of the year, cost of revenue increased $64,292,000 to $83,185,000 compared with $18,893,000 for the six months ended 6/30/11. The increase in cost of revenue was due to increases in expenses for station compensation of $20,015,000, broadcast rights of $15,071,000, revenue sharing of $10,671,000, news content of $9,175,000, employee compensation of $5,811,000, and costs associated with talent, contractors and production of $2,959,000. These increases are also a result of the Westwood merger and were partially offset by cost reductions as a result of the 2011 and 2012 programs to reduce workforce expense.
For the six months ended 6/30/12, gross profit increased $17,280,000, or 76.9%, to $39,755,000 compared with $22,475,000 for the six months ended 6/30/11. The increase is also due to the merger with Westwood, which increased DG’s revenue and cost of revenue.
DG notes—in not so many words—the impact of Rush Limbaugh’s fiasco with Sandra Fluke:
“The nature of the news/talk format in network radio programming means our advertisers’ commercials may air in or adjacent to programming that is not owned or represented by us, and, as demonstrated by recent events, may be sufficiently controversial that advertisers do not want to be associated with it or with news/talk programming at all, which could ultimately have a material impact on our advertising revenue. In March 2012, events surrounding a nationally syndicated talk personality employed by another company created issues in news/talk formats (like those provided by us) as certain advertisements by advertisers, not included in controversial programming, became associated with such controversial talk programming as a result of their proximity to the broadcast. In the second quarter of 2012, our financial results were significantly impacted thereby. While we have made meaningful changes to our internal systems and procedures to allow us to better separate our advertisers’ ads from certain controversial programming, such process has consumed time and resources, and notwithstanding our efforts, certain advertisers have exited news talk programming and may not ultimately resume advertising in this area of programming at previous levels, or at all. If we are unable to bring back advertisers into our news/talk radio programming, this would have an adverse effect on our revenue, which would have an adverse effect on our results of operations.”
RBR-TVBR observation: Indeed, as we reported, the fallout from Rush’s commentary about Georgetown student Sandra Fluke had an impact on radio and the advertisers that use it. As you read, DG had to make some changes in placement and context of its ads and ad networks to minimize the impact. Goes to show you the power of just a few words—and the power of Talk radio!