Revenues fell 16.7% to $83.7 million for Westwood One in Q2 – a quarter which saw the company complete its financial restructuring. And while President and CEO Rod Sherwood sees some signs of improvement, he remains cautious.
“Westwood One’s turnaround continued to gain traction in the second quarter of 2009. Our adjusted EBITDA improved by approximately $16 million versus the first quarter of 2009, primarily due to our cost reduction initiatives. With the Company’s new capital structure in place as a result of our recent refinancing, and with our current cost reduction efforts largely implemented, our number one strategic initiative is to drive revenue across all businesses with branded content that continues to lead the industry in quality and excitement. Quality content, and supporting marketing programs, will attract the audiences our affiliate partners and advertising clients need to grow their businesses,” said Sherwood as he began his quarterly conference call with investors and analysts.
Network revenues fell 14.9% to $40.2 million. That was attributed primarily to a fall off in automotive advertising.
Metro Traffic saw revenues decline 18.3% to $43.5 million, with weakness in local advertising spread across many categories, including automotive, retail and telecommunications. The company’s TV business, which is much smaller than the radio component, was up 24% in the quarter.
Sherwood focused heavily on the company’s cost-reduction efforts in his conference call. WW1 had indicated that it expected to reduce expenses by $13-15 million in Q2, but the actual reduction was well ahead of that, at $18.2 million. The CEO reiterated guidance that the company will reduce costs by $53-61 million for all of 2009.
Adjusted EBITDA, while better than Q1, was still down from a year ago. It declined by $5 million to $9.1 million.
“Looking forward, Westwood One expects that the current significant downward pressures on advertising revenue in the radio industry will continue throughout 2009. We anticipate that we will achieve our previously announced goal of annual operating cost savings of $53.0 to $61.0 million in 2009. The Company expects operating expenses to be down by approximately $7.0 to $10.0 million in the second half of 2009 versus the first half of 2009,” WW1 said in its forward guidance to Wall Street.
With few analysts following what is now a penny stock, there were few questions in the Q&A session. One small investor said he appreciated the cost-reduction efforts, but wondered whether Sherwood was going to be able to build revenues in the future.
The CEO noted the results of other radio companies and said WW1 compared favorably to its peers in what is a down advertising market. “This is a tough ballgame that’s fought in the trenches and we need to make improvements every day. Gaining new customers and new revenue…” Sherwood was saying. “Are we gaining in that area?” the investor interrupted. The CEO insisted that WW1 has been acquiring new customers, but he also noted advertiser attrition – “so I think the net results speak for themselves.”