National led the way as revenues increased 7.6% to $75.2 million in Q2 for Radio One. That outpaced the 6.8% overall growth for the markets where the Urban specialist operates.
“The recovery in radio revenues continued in the second quarter, led by national business, which was up 17.5%. Our overall radio revenue growth of 8.4% was in line with expectations, however as I previously indicated we had upward pressure on the cost base, driven by a combination of contractual increases, such as in PPM fees, severance costs and non-cash compensation expenses. Reach Media made excellent progress with its in-house sales effort during the second quarter, although revenues and EBITDA were both adversely impacted by the lack of guaranteed revenues. Our internet business is growing strongly, with revenues up 48% from the second quarter of 2009, and we continue to believe that our on-line platform will be a major source of revenue and EBITDA growth for the future,” said CEO Alfred Liggins in an announcement. The company no longer conducts quarterly conference calls with Wall Street analysts.
Radio One had announced earlier this week that it was once again extending its bond exchange offer tender deadline as it continued to negotiate with a group of bondholders. The company has also filed with the SEC an amendment extending its forbearance agreement with Wells Fargo Bank as administrative agent for its bank group. Among other things, the revised agreement requires Radio One to hire a restructuring advisor by Wednesday (8/18).
Liggins commented on the difficulties encountered since announcing refinancing plans back in June.
“The volatility in the credit markets has made our refinancing much more complex than we could have anticipated when we started the process. While we have triggered certain defaults under the terms of our credit facility, our business remains viable and we are actively engaged in constructive dialogue with our lenders and bondholders. We are confident that we will be able to solve both for the defaults under the credit facility and for our upcoming debt maturities in a manner that permits the Company to maintain both strategic optionality and operational flexibility,” he said.
While Q2 revenues were up, the increased costs cited resulted in station operating income going down 5% to $28.4 million. On the bottom line, net income was $2 million, or four cents per share, down from $7.2 million, or 12 cents per share, a year earlier.
Core radio growth (excluding Reach Media) was 8.4%. The company said its Houston, Atlanta, Dallas, St. Louis and Detroit markets were up, with Cleveland, DC and Baltimore down. Reach Media revenues were down 5.4%, although that was an improvement from Q1 following the end of its rep agreement with Citadel Media as of the end of 2009.
The company provided little information about its partially owned TV One, except that its equity in income from the cable TV channel increased 52.5% for the quarter to $1.1 million.