Radio One Q3 net revenue down 2%


Radio One’s Q3 net revenue was $86.2 million, a decrease of 2% from the same period in 2007. The core radio division, excluding Reach Media, produced net revenues of $66.7 million, down 7.2% from Q3 ’07. Reach Media has net revenues of $14.9 million, down 6.4% YTY as a result of discontinued TV revenues.

Station operating income was $34.7 million, a decrease of 17% from the same period in 2007. The company recorded a non-cash impairment charge against its FCC licenses of $337.9 million which lead to a net operating loss of approximately $315.6 million. Net loss was approximately $266.1 million or a loss of $2.81 per basic share, a decrease from the reported net income of approximately $4.7 million or $.05 per basic share for the same period in 2007.

Radio One stations continue to outperform their markets, which were down 8.4%. Local revenues only declined 5.6%, against an 8.7% decline for their markets.

However, national revenues continue to be a drag, being down 17.4% YTY, mitigated somewhat by increased political revenues (up 319% YTY). Radio One markets, for national, were down 12.5%. Much of the reason given by Radio Division President Barry Mayo was that The Obama Campaign spent much more on general market than multicultural—that factor will intensify in Q4 results. The automotive category continues to show sharp declines, down 37% YTY, which accounts for over 10% of its business.

Broken down by market, Houston was down 1.2%; DC was down 7.7%; Atlanta was down 21% and Baltimore down 4.2%. Philly was up 15%; Indianapolis was up 7.4% and St. Louis was up 12.6%.

Radio One reduced operating expenses by 3% for the quarter compared to previous Q3.

Their Q4 revenue estimate is pacing down 11% in local; 3% in national and 9% combined. The number of spots ran are down 6% in the quarter and the average unit price fell by 5%.

Their Interactive One division lost $3.1 million on revenues of $5.6 million—in line with their expectations, according to CFO Peter Thompson.

Said CEO Alfred Liggins in his Q3 call: "We are obviously in a very challenging advertising and economic environment and radio in and of itself has struggled with flat revenue growth up until this decline. Now, obviously, we’re seeing a decline like most other mediums. Our focus continues to be grabbing market share, improving or cost containment and efficiencies…and diversifying the company’s revenue streams more into online and into television. We’re excited about the fact that TV one is now starting to make money. We’re going to see benefits from that in 2009.”

Liggins also mentioned plans to selectively buy back bonds, given the low stock price and valuations these days for radio groups.

He estimated the Interactive One division is expected to be up YOY 5%, even though they only bought Community Connect in April. The integration of Community Connect has been achieved as planned, and Radio One now has in excess of eight million monthly unique visitors to its online properties, viewing over 500 million pages each month. “Our ability to provide advertising clients with access to 82% of all African Americans across a platform of radio, TV, online and print gives us a unique niche in the market, and puts us in a strong position for the long term," Liggins added.