If it weren’t for the 18 radio stations acquired by Beasley Media Group from the former Greater Media in November 2016, the last three months of 2017 wouldn’t have looked so hot.
With the inclusion of the stations, Beasley enjoyed a solid revenue gain and strong net income growth — despite a big dip in operating income.
For Q4 2017, Beasley’s net revenue increased by 9%, to $58.5 million from $53.7 million. Net income surged to $69.7 million ($2.50 per diluted share), from $41.5 million ($1.57).
While this appears to be rosy, Beasley appears to have hit some potholes as it plowed through the final quarter of 2017. How so? Greater Media’s additions appear to be driving the company’s growth, and not its heritage stations.
With stations in Boston, Philadelphia, Detroit and central New Jersey now in the Beasley stable, these properties continue to drive revenue for Beasley. On a non-GAAP basis, the all-important Station Operating Income (SOI) fell from $16.2 million to $15 million.
The 7.3% decline, Beasley explained, “reflects higher expenses related to the operations of the acquired Greater Media stations as well as lower comparable quarterly net revenues at Beasley’s existing stations versus the 2016 period due in part to non-recurring political ad spending.”
Translation: No Trump and down-ballot dollars dinged Beasley in markets such as Tampa, Las Vegas and Charlotte.
Meanwhile, operating income in Q4 decreased to $23.3 million, from $49.9 million. Why? Beasley explained that the dip is primarily attributable to the roughly $11.8 million gain on the asset exchange of WMJX-FM 106.7 in Boston for crosstown WBZ-FM 98.5, recorded in Q4, versus the approximate $44.3 million gain on the acquisition of the Greater Media stations recorded in Q4 2016.
The SOI decline was the other key factor.
In prepared comments ahead of a 10am Eastern conference call with Wall Street financial analysts, CEO Caroline Beasley said that, in addition to the WMJX swap for WBZ-FM, the company successfully refinanced its credit facility, increasing the principal amount to $225 million and reducing Beasley’s interest rate by 200 basis points. “Over the past two years, we have continued our disciplined approach to growing our platform by executing accretive transactions that deliver valuable synergies and the potential for SOI margin improvement, all with a limited impact to our leverage,” she said.
For the full-year 2017, net revenue improved to $232.2 million, from $136.7 million. Net income catapulted ahead to $87.1 million ($3.14 per diluted share), from $47.5 million ($1.98).
What does Caroline Beasley have to offer regarding 2018 visibility?
She said the company intends to continue its “strategic priorities of realizing synergy targets, reducing debt and leverage, taking advantage of political revenue opportunities, improving top and bottom-line performance and returning capital to shareholders through our quarterly cash dividend.”
She concluded with a rallying cry for Radio, and its continued value to shareholders, advertisers and consumers.
“With enhanced opportunities to monetize our strong core programming and local brands, we remain confident in the radio industry and in Beasley’s growing broadcast and digital platform,” Ms. Beasley said. “We look forward to realizing the strategic benefits of the WBZ transaction in 2018 and remain confident that our ongoing initiatives to drive sales, productivity and efficiency across our platform, combined with prudent management of our capital structure, is a proven formula for sustained long term financial growth and the creation of shareholder value.”
In related news, veteran WDHA-FM 105.5 in Dover, N.J., which serves the Morristown area of Northern New Jersey just west of the Hudson River and New York City, has signed PD/midday host Terrie Carr to a multi-year deal.