While other broadcasters have been reporting revenue gains for Q3, the news from Radio One was a slight decline in revenues. Meanwhile, the Urban radio specialist is still negotiating with its creditors over new terms for its loans and bonds, which are in technical default.
“While overall core radio revenues were virtually flat in the third quarter compared to last year, we did see areas of improvement such as national business, which was up 3.1%, and radio segment internet revenue, which was up 133%. As I noted in the second quarter we continue to have upward pressure on the cost base, driven by a combination of contractual increases, commission expenses and the restoration of salary expenses. Reach Media continues to recover from its lack of guaranteed revenues during the third quarter with its strong in-house sales effort. Our internet business continues to grow, with revenues up 24% this quarter compared to the third quarter of 2009, and we continue to believe that our on-line platform will be a major source of revenue and EBITDA growth for the future,” said CEO Alfred Liggins in the company’s quarterly earnings release. Radio One no longer conducts a quarterly conference call with analysts.
As for the refinancing talks, Liggins had this to say: “The multiple defaults that were triggered in each of the second and third quarters under the terms of our credit facility are still in effect; however, our business remains viable and we continue to work towards a resolution with our lenders and bondholders. I anticipate a solution to these issues will be forthcoming in the near term.”
For Q3 Radio One saw net revenues decline 0.2% to $74.5 million. Station operating income decreased 13.4% to $28.3 million.
“We continue to see improvements in the radio industry compared to last year, with the markets that we operate in growing 6.2% for the quarter, and 6.6% year to date. Similar to last quarter, national revenue continued to lead the recovery in our radio marketplaces for the quarter, with growth of 9.7%, while local revenue grew 4.0%,” the company said. But while the radio business is improving, Radio One is not keeping pace. “Overall, our radio clusters underperformed their marketplaces this quarter, with growth of 3.1% in national revenue and a decline of 1.3% in local revenue. More specifically, our Charlotte, Columbus, Dallas, Detroit, Houston and St. Louis markets posted strong double-digit quarterly growth, while our Cleveland, Washington, DC and Baltimore markets declined for the quarter. Total core radio revenue (radio stations and syndicated programs excluding Reach Media) held constant for the quarter over the same period in 2009.”
The Reach Media business is still a drag on the company’s performance. “While Reach Media’s revenue declined 3.2% in the quarter, this decline was an improvement from those experienced during the first and second quarters of 2010. Reach Media revenues declined following the December 31, 2009 expiration of a sales representation agreement with Citadel Broadcasting Corporation whereby a minimum level of revenue was guaranteed over the term of the agreement. Effective January 1, 2010, Reach Media’s newly established sales organization began selling its inventory on the Tom Joyner Morning Show and under a new commission-based sales representation agreement with Citadel, which sells certain inventory owned by Reach Media in connection with its 105 radio station affiliate agreements,” Radio One told Wall Street.
There was some good news to report: “We continue to deliver very strong growth from our internet business, including Community Connect LLC, which posted 23.5% growth for the quarter,” the release noted.
Also, TV One continues to grow. Radio One’s equity in income from its stake in the cable TV channel increased 28.6% in Q3 to $1.8 million.