Revenues down, but operating income up for Radio One


Radio One reported that Q1 revenues were down 2.1% to $59 million, but that was entirely due to changes at Reach Media, while revenues for the company’s radio stations increased in the quarter. Importantly, the company reported operating income of $3.8 million, flipping from a loss of $42.8 million a year earlier.

“The first quarter brought some much needed revenue growth to our core radio business, driven predominantly by national business, which was up 17.7% year-to-year and some uptick in local business, up 3.6%. Our core radio business also saw its second consecutive quarter with over $1.0 million in internet revenue, which had growth of 72.0% year-to-year. We continue to see healthy pacings in second quarter, with national pacing up 27.0% and local up 1.0%, although national has cooled somewhat over the past two to three weeks. I anticipate our second quarter core radio business finishing up with high single-digit growth,” said CEO Alfred Liggins.

“The sales transition at Reach Media, away from a guaranteed revenue to a commissioned based sales representation agreement with Citadel, has gone as well as could be expected. The new internal sales team has settled in, and we believe that the new structure, coupled with increased demand will allow us to strengthen rates over the long-term,” Liggins added.

Q2 revenues for Reach Media were $8 million, down from $10.5 million a year earlier under the old Citadel Media/ABC Radio Networks deal. But for the radio station group, revenues were $49.2 million, up 7.9% from $47.3 million. Radio One said national was up 17.7%, local 3.6% and Internet 72%.

Although Radio One now conducts only one Wall Street conference call per year, [LINK] it provided considerable detail in its Q2 press release.

“Three of our four largest markets posted growth during the quarter, with Atlanta up 16.0%, Houston up 11.4% and Baltimore up 1.7%. While sequentially better than the 13.1% decline experienced in the fourth quarter of 2009, our Washington, DC cluster was down 3.5% for the quarter. The DC cluster performance was driven by continuing ratings challenges on its adult station since the implementation of The Portable People Meter [PPM], and the impact that has had on pricing, especially local rates. Recent leadership and pending programming changes are expected to yield more positive results going forward for the DC cluster. Dallas, one of our mid-sized markets, posted an impressive 30.7% net revenue growth for the quarter. Our top four advertising categories for our core radio business generated 53.5% of the quarter’s business, with entertainment, retail, telecommunications and food & beverage comprising 15.5%, 14.7%, 12.9% and 10.4%, respectively, of radio’s total revenue. Growth performance during the quarter for the entertainment, retail, and telecommunications categories were 2.6%, 15.2% and 21.4%, respectively, while the food & beverage category declined 12.0% caused by less fast food and food product spending. Our automotive category, driven mostly by dealer activity, was 7.3% of total core radio revenue and grew 4.3% for the current quarter. Census, and political advertising helped our public category garner 9.3% of total core radio revenue, with a growth of 26.7% over last first quarter,” Radio One stated.

RBR-TVBR observation: As the nation’s largest radio company targeting the African-American audience, Radio One parted company with other Black broadcasters and worked to adapt to Arbitron’s PPM rather than denounce it. Radio One notes that its cluster in Dallas, one of the early PPM markets, posted a year-over-year revenue gain of more than 30% in Q1. But challenges from the more recent switch to PPM in Washington, DC are still holding down revenues in that market, where Radio One says changes it has made are expected to yield better results going forward.