Radio network operating income turned negative in Q1 for Citadel Broadcasting and the radio station business suffered as well. Net revenues for the entire company fell 22.8% in the quarter to $158.9 million as Citadel posted a net loss of $5.3 million, or two cents per share – actually improved from a loss of $8.3 million, or three cents per share, a year earlier.
For the former ABC Radio Networks, recently renamed Citadel Media, Q1 revenues decreased 37.5% to $29 million. The network business posted negative station operating income (SOI) of $4.3 million, swinging from positive SOI of $6.8 million a year earlier.
“The revenue decrease is primarily attributable to an industry wide decline in radio advertising as well as the loss of the Sean Hannity syndicated program. As a result of the current economic environment, the Company expects that net revenue will continue to decline in the remaining quarters of 2009 compared to the same quarters in the prior year,” the company said in an SEC filing Friday evening. Citadel did not issue a quarterly earnings release or hold a conference call with analysts and investors.
For the radio station business, Q1 revenues fell 18.8% to $130.9 million. Citadel reported that local was down 20.7% and national 10%. SOI dropped 35.4% to $35.7 million.
“As a result of the current economic environment, the Company expects that net revenue will continue to decline in the remaining quarters of 2009 compared to the same quarters in the prior year,” the company said.
Citadel amended the terms of its senior loan agreements on March 26th to enable the company to stay in covenant compliance through 2009. However, one of the requirements of the amended senior credit facility is that Citadel have at least $150 million of available cash on January 15, 2010. The latest filing repeated a warning that Citadel included in its annual 10-K filing.
“Based on the current economic and capital markets and the continuing decline in radio revenues, the Company anticipates that it will be difficult for the Company to meet these requirements in 2010, especially those commencing on January 15, 2010. If we fail to do so, we will be in default under our Senior Credit and Term Facility and would also be in default under the terms of our convertible subordinated notes. Should we default, our indebtedness may be accelerated, we will likely not be able to satisfy these obligations, and we may need to either obtain an additional amendment or waiver from lenders or reorganize our capital structure and debt,” the company said. So that’s what long-suffering shareholders have to look forward to next year.
RBR/TVBR observation: Shareholders should have received their proxy ballots for the May 20th annual meeting. With Citadel saying it is likely to have to seek a financial restructuring next year, wiping out or diluting current shareholders, this is the last chance for the owners of the company to vote “withhold” for Farid Suleman’s re-election to the board of directors – signaling to the board that you want Suleman to be tossed out and a new CEO brought in to rescue the company from disaster.
