Strong Q4 and year for Westwood One


Having been delayed by pressing financial business before completing its Q4 and full year 2010 reports, the numbers that Westwood One delivered on Wednesday (4/13) were pretty impressive. President Rod Sherwood (pictured) is also upbeat about 2011, although he’s not issuing any specific targets.

Q4 revenue was up 6.5% to $98.3 million, with the Network Radio division up 9.8% to $57.2 million and Metro Traffic revenues up 2.2% to $41.2 million. Within Metro, radio was up 14.3% to $35.1 million, while TV was down 36.8% to $6 million. Sherwood said the company is focusing on adding more TV stations carrying its traffic reports so it won’t have to buy inventory to meet the ratings and audience levels in advertiser contracts.

Adjusted EBITDA for Q4 was off significantly to $900K from $6.1 million in Q4 of 2009. That was blamed on higher expenses for sports programming, guaranteed program commissions and other increased costs. The company noted that it has not renewed or is restructuring some of its Network Radio contracts to improve profit margins.

Full year revenue was up 6.5% to $362.5 million, with Network Radio up 7.1% to $197 million and Metro Traffic up 5.8% to $165.5 million.

“Westwood One’s revenue increases for both Network Radio and Metro Traffic Radio outpaced growth in the radio marketplace,” Sherwood happily reported in his conference call with Wall Street analysts. “Specifically, Network Radio revenue grew by 9.8%for the fourth quarter and 7.1% for the full year 2010, compared to the same periods in 2009, outpacing overall the overall network radio market growth of 5.4% for the fourth quarter and 2.5% for the total year, according to industry sources.”

Sherwood spelled out what was behind the improvement: “To drive Network Radio growth we implemented the following initiatives. We renewed a multi-year partnership with the NFL to continue as its network radio primetime partner, including the NFL playoffs and Super Bowl. We renewed a long-term partnership with the NCAA to be the exclusive network radio provider for the NCAA Men’s Basketball Championship and other NCAA tournaments. We signed two new talk radio programs that launched in January 2011. First, the Robert Wuhl Show, which is sports/talk programming, and second, Urbanski, which is a conservative talk show hosted by Douglas Urbanski. [We] expanded distribution of our popular Dennis Miller Show to over 280 stations, launched digital extensions of our new talk programming, in addition to digital distribution of the Dennis Miller Show and Loveline with Dr. Drew Pinsky and Mike Catherwood. We launched a new sports prep service, which is rapidly gaining affiliates. We renewed partnerships with the Grammys and the Academy of Country Music for the ACM Awards, and we launched VH1 Classic Rock Nights with our partners at MTV. These initiatives reflect our core network radio strategies of syndicating a wide range of high quality programming, delivering targeted audiences for our advertisers and providing services to our affiliates and advertising customers.”

Westwood One also has a better balance sheet this year. It recently completed a new deal with its lenders that gives the company greater financial flexibility. And a few weeks earlier The Gores Group had invested an additional $10 million in Westwood One, increasing its equity stake to 76.5%.

Looking ahead, Sherwood noted that 2011 radio revenue growth forecasts range from 1.3% by Magna to 3.7% by BIA/Kelsey or 4% by Jim Boyle at Gilford Securities. “We believe that the strategic initiatives begun in 2010 and continuing in 2011, together with the cost reduction and margin improvement actions implemented in the first quarter of 2011 will lead to revenue and EBITDA growth for the full year 2011,” he said, without providing any numbers.
RBR-TVBR observation: We found it interesting that none of the analysts or investors even had a single question to ask about the financial impact of the current NFL lockout. Our guess is that no one really believes the owners and players will remain at loggerheads to the point where games are canceled this fall and they all lose money as a result.