Westwood One’s Q1 decreased $1.9 million, or 2.1%, to $90.9 million from $92.8 million in 2010. The decrease occurred in network radio, and is primarily due to the absence in 2011 of the Winter Olympics (which contributed significantly to Q1 2010 network radio revenue), a decline in RADAR and news revenue, and the compressed selling period for the NCAA Men’s Basketball Championship after the contract was re-upped in January (selling usually starts in October or November of the year before).
The decreases were partially offset by revenue increases in network music and entertainment, and certain news and talk programs including The Osgood File with Charles Osgood, the longest running news/talk feature on radio. The revenue decrease was also partially offset by increased Metro Traffic revenue.
As of the end of the quarter, earnings included the results of the Metro Traffic business, which Westwood sold on 4/29/11. The sale of the Metro Traffic reduced the company’s outstanding senior debt by some $104 million.
“This transaction increases our flexibility,” said Westwood One President Rod Sherwood on the call. “…and positions the company for future growth. Going forward Westwood One is focused strategically on expanding the company’s leadership position as the premium content provider of news, sports, information, talk, music and entertainment programming in network radio. This is our heritage and will drive our future.”
He added, “Our plans are well underway to drive growth in the network business. In the first four months of 2011, we have already launched five new programs. Our new talk programs, the Robert Wuhl Show and Urbanski are generating increasing revenue and gaining distribution. In April, we launched The Daily Wrap, in partnership with The Wall Street Journal. This new program adds a fresh, timely component to our business news programming and it has been very well-received in the advertising marketplace. We also launched Rocsi on the Radio, with Rocsi Diaz, (the popular co-host of BET’s hit television show, 106 & Park), and a suite of Rick Dees programming that airs hit music every week.”
He also mentioned a strong focus on expansion on digital for most of their properties, including audio and video content. “Loveline,” for example is launching a new daily viral video package. Facebook fans, Twitter followers and newsletter subscribers are growing rapidly. The Loveline iPhone app now has over 90,000 downloads. The Robert Wuhl show is now in the Top 10 for social media followers amond talk show hosts.
For the quarter, Network Radio revenue was $51.7 million, a decrease of $3.8 million, or 6.9%, compared to $55.6 million in Q1 2010. Overall, Metro Traffic revenue for the first quarter was $39.2 million, an increase of $1.9 million, or 5.0%, from $37.3 million in 2010.
Revenue for Metro Traffic Radio was $31.2 million, an increase of $3.5 million or 12.5%, compared to $27.7 million in 2010. This increase was based largely on increased ad revenue in the key categories of financial services, travel and entertainment. Revenue for Metro Television was $8.0 million, a decrease of $1.6 million, or 16.6%, from $9.6 million in 2010, primarily due to lower ratings and audience levels.
Operating loss in Q1 increased by $6.5 million to $13.1 million from $6.6 million in 2010. This increased loss was largely due to increased station compensation to support increased distribution, and to higher programming and operating costs associated with new agreements. This included higher non-cash broadcast rights expense of $3.0 million. The increased loss was partially offset by lower corporate expenses, and lower restructuring and special charges.
Adjusted EBITDA in Q1 was a loss of $5.2 million, which includes incremental broadcast rights expense of $3.7 million related to a new sports content agreement, compared to the Q1 of last year. Of the $3.7 million of incremental broadcast rights expense, $0.7 was paid in the period and $3.0 million was non-cash. Excluding the incremental non-cash broadcast rights expense, Adjusted EBITDA would have been a loss of $2.2 million in 2011 compared to Adjusted EBITDA income of $2.1 million in the first quarter of 2010. The incremental non-cash expense related to the new broadcast rights agreement is expected to be $2.4 million for the 12 months ended December 31, 2011, which will be paid in future years.
Net loss for the Q1 was $9.8 million, or $0.45 per diluted share, compared with a net loss of $6.7 million, or $0.33 per diluted share, in 2010. The YOY change in net loss reflects the higher operating losses of $6.5 million, partially offset by a higher tax benefit of $2.2 million and other income of $1.1 million related to the fair market value adjustment from the $10.0 million of common stock purchased by Gores Group this past February.
Q1 2010 average share amounts were lower than average share amounts in the Q1 of 2011 as a result of the $15.0 million of common stock that was issued to Gores Group in September 2010 and February 2011.
Said Sherwood on the outlook going forward for the company: “Westwood One built its brand as a network radio company and we have a solid base going forward for 2011 and beyond. We believe our growth will come from finding, creating and syndicating the best network radio content for our affiliates, listeners and advertisers. We will continue to invest in new programming, as well as expand our digital business this year to satisfy our customers’ needs in the marketplace. Assuming that economic conditions remain relatively stable, we believe our investments will provide a foundation for revenue growth over time.”