That’s how CEO Tom Beusse refers to changes coming in Q3 to streamline the company and deal with the soft business environment. The re-engineering will focus on three areas: reworking the local traffic operations to “leverage leading edge technology and right-size the business”; “top-grade” the sales organization to be more effective and cross-sell products; and “introduce significant organizational and operational discipline” to streamline the company’s cost structure.
That comes as Beusse described recent revenue trends as softer than expected. He noted that the positive trend for network radio has now reversed. For Q2, WW1 revenues declined 9.6% to $100.4 million, with a slight decline in national revenues offset by a 16.8% drop in local/regional business. That was blamed primarily on softness in advertising in the automotive, banking and real estate categories.
Not only is WW1 not providing any guidance for Q3, the company has withdrawn its previous guidance for full year 2008. Beusse said he expects trends to remain soft through the end of the year, but he had already called this a transitional year and plans to have WW1 ready for growth in 2009.
After seven months on the job, here’s what he had to say about where the company is heading: “We are making significant progress on our strategy to become a leading integrated, cross- platform media company delivering superior content and services. Of note, the recently announced partnership with AirSage, which significantly elevates our traffic offering, and ongoing investments in the business highlight the significant progress we are making in more effectively positioning the Company for the long-term. Moreover, the latest recruits to the management team have a wealth of experience across broad media, radio and digital platforms and we are all aligned on the vision for the business. I am excited about the team we have in place and the addition of The Gores Group, LLC as value-added investors and members of the board.”
Although Westwood One does not have any FCC broadcast licenses, it too took a non-cash write-down in Q2 for impairment of goodwill value. That charge of $206.1 million resulted in a net loss for the quarter of $199.7 million, or $1.98 per share. Adjusted EBITDA for the quarter was $14.1 million, down from $26.6 million a year ago.
Now that WW1 is operating apart from CBS Radio, the impact of the new distribution agreement with CBS Radio has been a positive for the company. WW1 reported that national inventory clearances on CBS stations have increased to over 93% from a previous level in the mid-80s.