Radio stock rebound evaluated


The RBR Radio Index has recently been hitting all-time highs. The long-standing record that was broken April 12th – and several times since then – had stood since December 29, 2003. So let’s look at the underlying stocks, then and now.

Arbitron hasn’t changed a whole lot, compared to some of the component stocks in our index. Back at that previous peak it was at $41.85, but lately has been about 10 bucks lower.

Beasley Broadcast Group is currently about a third of what it was worth back then — $16.40.

What was then Clear Channel Communications was a hefty $46.86. The successor company, which you would own if you kept the stock instead of taking the cash buyout, is CC Media Holdings, lately trading between six and seven bucks.

Cumulus Media was then $22.07, but about a quarter of that lately. Emmis Communications is about 10% of the 2003 level of $27.60, with a going private buyout looming. Entercom dropped from $52.90 to around $15.
Radio One has lately been a little better than a quarter of the $19.50 it commanded back then. Salem dropped from $27.18 to lately a bit over five bucks.

The last two stocks in our index have had reverse stock splits in the intervening years. Adjusted for its 1-for-4 reverse split, Saga Communications was at $77 back in 2003 and lately in the mid 20s. For Westwood One, the crushing 1-for-200 reverse split made the comparable price for its stock $6,838 back in 2003, versus a dozen bucks now.

Since that 2003 peak we also lost some stocks from the index. Cox Radio, then $25.36, went private. Citadel Broadcasting Corp., which then traded at $22.74, is in Chapter 11 bankruptcy reorganization. Regent was then at $6.52 and shareholders are now being cashed out for 13 cents as the company recently emerged from Chapter 11 as a private company owned by its former debt holders.

There were also changes along the way. Westwood One was dropped for a while when its stock price dropped below our minimum limit – and then was restored after its financial reorganization and reverse stock split. CC Media did not immediately replace Clear Channel, since we waited to see if trading volume on the greatly reduced float would be sufficient for daily pricing. Entravision, with its nearly equal radio and television revenues, was a component of the RBR Radio Index back in 2003, but moved to the TVBR Television Index when it launched on the first day of 2008.

What is apparent is that an index follows trends, but does not precisely track real world dollars. To exactly mirror the RBR Radio Index you would have had to do some things which are impossible, such as rebalancing your portfolio daily at the exact closing price for every component stock – and without any transaction charges.

How does our index work? It is an unweighted index, like the Dow Jones Industrial Average. We made the decision to go that route back in 1995 because, at that time, a weighted index would have been nothing more than a duplication of the Clear Channel trading chart. The percentage changes for all component stocks are calculated daily, then averaged to find the percentage change applied to the index. From a base of 100 on December 31, 1995, the index rose to a high of 289.720 on December 29, 2003, then fell to an all-time low of 19.076 on November 21, 2008. From there it began a slow recovery until an acceleration in 2009 that has continued to produce new highs in recent days.