Television is still a small part of Spanish Broadcasting System, but CEO Raúl Alarcón kicked off his quarterly conference call by focusing on the success of Mega TV, where revenues rose 99% from a year ago. The much larger radio group, meanwhile, saw revenues decline 18%, for a companywide revenue reduction of 12%.
In the midst of a broad advertising slowdown, Alarcón declared that “Mega TV is bucking the trend and growing robustly.” Q3 revenues rose 99% to $4.8 million and he reported that Q4 is pacing up 30% (breaking with the company’s refusal to offer forward guidance). But in Q&A, when a money manager asked if the CEO was still confident that Mega TV would reach break-even in Q4, Alarcón admitted, “No, I’m not as confident.” However, he insisted that the television start-up will stop losing money sometime in early 2009. He also disputed the investment manager’s contention that he should admit that getting into TV was a mistake. Alarcón insisted that SBS would be in a worse situation today if it had not diversified and he rejected the idea that stock price is the ultimate judge of success.
Radio revenues were down 18% to $36.5, with the company noting that both local and national sales were down. The local declines were in Miami, LA, New York and Chicago, offset by an increase in Puerto Rico. National was down for all markets. SBS did not provide any pacing information, but Alarcón noted that radio continues to face headwinds.
Total revenues were down 12% in Q3 to $41.3 million. Operating income declined to $4 million from $11.9 million a year earlier.
With SBS observing its 25th anniversary, Alarcón said the company has weathered past economic downturns. “This one will be no exception,” he said.