Liggins says 4% Q2 decline was much ado about LA
Just back from visiting and meeting "every single Radio One employee," President/CEO Al Liggins and EVP/CFO Scott Royster told the story yesterday of why Q2's revenues were down 4% - twice the Thomson/First Call consensus of 2%. LA was blamed for "two-thirds to three quarters" of the shortfall - SBS's Latino 96.3 pulled many listeners from The Beat - about half. Pulling Steve Harvey from the morning drive there also wasn't a good move - at least in the short term.
No specific word on why former COO Mary Catherine Sneed parted ways a month ago after 11 years, but the move was given as the impetus for Liggins' cross-country tour of the stations.
The Q2 net broadcast revenue decrease of 4% to 97.8 million from 101.5 million in Q2 '05. Station operating income was also down by 15% to 46.9 million from the same period in '05. Operating income decreased as well by 24% to 34.9 million from the same period last year. Radio One's Q2 net income fell to 8.1 million, or 8 cents a share, down from 19.8 million, or 19 cents a share, during Q2 '05. The earnings per share of eight cents was four cents shy of expectations.
Along with mentioning the number of spots for the quarter was up 10% while pricing was down 16%, EVP/CFO Scott Royster blamed the Q2 losses on four things - 1. In last year's Q2, RO outperformed the radio industry by some 600 basis points - due to the early days of Less is More - and unsustainable today from comps. 2. LA suffered ongoing ratings declines at Urban KKBT-FM (blamed on SBS's Urban Latino entrant KXOL, which also hit Emmis' Power 106 there) and competitive pressures in DC due to the reverse impact from Less is More. KKBT has since been reformatted to Urban AC with Tom Joyner in the morning (he's also expanding the show two hours just for LA). [Incidentally, RO had 1.2 million in expenses in the quarter associated with Joyner's syndicated TV show that will not renew for the upcoming season. RO owns the bulk of Reach Media] 3. In Q2 2005, RO outperformed national by 1,000 basis points. This year was the opposite, again due to LIM comps. The switch to Katz as the rep firm for all RO stations has been a "challenging transition" in some markets. National was down double digits in Q2. 4. Costs were higher, such as setting up the company's new independent film distribution house "Distribution One" and launching its first film "Preaching to the Choir".
On the recent management realignments, Liggins mentioned his hiring of consultant Barry Mayo and that VP/Ops Zemira Jones will have increased responsibilities. Liggins is interim COO and President but will replace the role-not sure if that will be one or two folks. GM Doug Abernathy in Houston has been upped to regional GM. Liggins will hire a VP/Programming and add format specialists underneath.
On the television side, TV One has posted significant revenue and subscriber gains on a year-over-year basis.
