Westwood One finally rebounding


Westwood One CEO Peter Kosann declared the cost cutting over and said the company is again focused on investing in growth. WW1 reported that Q3 revenues were down 8.8% to 108.1 million, but that was ahead of Street expectations and expenses were down sharply. Q4 guidance is also better than analysts had been expecting.

"We’re done cutting costs, streamlining costs, and we’re in a mode now of selective investment," Kosann told analysts. He said advertisers’ upfront budgets appear to be fairly healthy and, from a business point of view, Westwood is now playing more offense than defense.

CFO Gary Yusko also reassured analysts about previous worries that WW1 was in danger of violating a loan covenant with its lenders. But with the financial picture improving, that leverage trigger is not expected to be reached. WW1 does, however, still have to renegotiate its loan terms so that ending its agreement to be managed by CBS Radio is not a covenant violation. That’s not seen as an obstacle, but the lenders still have to sign off on the change.
As for the reworked relationship with CBS (10/3/07 RBR #193), which ends the management agreement, but keeps CBS O&O radio stations clearing WW1 inventory through March 2017, WW1 says the proxy will be going out this quarter, with a shareholder vote in Q1 2008. There was no update on the search for a CEO successor to Kosann, a CBS employee who will exit when the management agreement ends.

RBR/TVBR observation: There were sighs of relief all around last month when the long-awaited deal reworking the relationship with CBS was completed. Shareholder approval seems to be a foregone conclusion. Why would anyone vote against it? While many investors are hoping that the next move will be cashing out, with private equity or a larger media company buying Westwood One, that is not guaranteed. But a standalone WW1 still looks to be a viable company – and one that is finally ready to grow a bit after a long period of trying to halt a downward slide. Key, of course, is recruiting the right CEO to take the helm in 2008. We are all waiting for that name to be announced.