James Taylor famously reported that he was going to Carolina in his mind – and while he’s there, if he can, it would be helpful to Beasley Broadcasting if he could inject some cash into one of the group’s operations.
According to the group, reverses inGreenville-New Bern-Jacksonville in North Carolina, along with a station in Wilmingon DE, were largely responsible for a $700K, 5% decrease in net revenue for its continuing operations (which do not factor in stations being swapped to CBS.
Beasley said losses in those two markets overwhelmed gains in Las Vegas and Fort Myers-Naples.
The revenue loss, coupled with a small gain in operating expense, led to an $800K 18.9% decline in operating income.
The stations on their way to CBS – located in Philadelphia and Miami — also saw net revenue and operating income decrease, from $12.2M to $11.5M and $5M to $4.2M respectively.
The group expects to report benefits from the CBS deal within a year and a half, and said it was happy to do the deal with no need to tap into the financial markets. It says its leverage is as low as it has been in ten years.
Beasley commented, “We are very excited by the potential presented by the CBS transaction as we will exchange five stations in Philadelphia and Miami for fourteen stations in Tampa-St. Petersburg, Charlotte and Philadelphia. Throughout Beasley Broadcast Group’s 53-year history, we have actively managed our station portfolio with the goal of serving the local communities where we operate, diversifying our operations, managing risk and improving financial results. The planned asset exchange with CBS Radio addresses these strategic objectives and upon completion, we will expand our owned and operated station base by nine stations increasing Beasley’s portfolio to 53, including 33 FM and 20 AM stations, in twelve markets with approximately 7.7 million weekly listeners. Importantly, we will add completed clusters in the Tampa and Charlotte markets which complement our already strong mid- Atlantic presence.
“In addition to our initiatives during the quarter to expand and diversify our station and digital media operations, we continue to focus on debt reduction and returning capital to shareholders. During the third quarter we made credit facility repayments totaling $3.3 million, reducing borrowings to $99.0 million at September 30, 2014 and declared our fourth consecutive quarterly cash dividend. Notably, the asset exchange agreement with CBS Radio has been structured to allow us to meaningfully expand our operating and revenue base without incurring additional borrowings or using cash from operations. Based on our expectation that the transaction will lead to station operating income accretion in the first eighteen months after closing, we expect to further reduce the Company’s leverage ratio which is presently near its lowest level in ten years.
“Looking forward, we are focused on ensuring that our continuing operations station clusters, our stand-alone station in Wilmington, and soon to be acquired clusters in Tampa and Charlotte, match or exceed their market’s revenue performance while further strengthening our balance sheet. We are actively developing post-closing integration, cost efficiency and operating plans and look forward to welcoming the new stations to Beasley Broadcast Group. Our operating initiatives post-closing will focus on targeted localism and delivering quality programming, effective online marketing solutions and dedicated service to the listeners and advertisers in these markets. These strategies have created long-term value for Beasley Broadcast Group and we are confident that the application of our operating and programming disciplines combined with our commitment to build strong community involvement in our markets will support our goals for growth and the enhancement of shareholder value.”