Revenue for the Q3 was $78.5 million, a decrease of $17.8 million, or 18.5%, compared to revenue of $96.3 million in Q3 2008. The decrease is (of course) attributable to declines in ad revenue, but was in line with industry trends of 19% declines in the radio biz.
Network radio revenue was $40.4 million, a decrease of $7.7 million or 16%, compared to revenue of $48.1 million in the comparable quarter in 2008. The decrease was principally due to a decline in ad spend which affected network revenue from news and talk programs and sport events, cancellation of certain programs, and lower revenues from our RADAR network inventory.
Revenue for Metro Traffic was $38.0 million, a decrease of $10.2 million or 21%, compared to $48.2 million in the third quarter of 2008. The decline was principally due to a weak local advertising marketplace spanning various categories, including retail and telecommunications.
Operating expenses for the quarter decreased $11.2 million, or 13.0%, to $74.9 million as compared to operating expenses of $86.1 million in the comparable period of 2008. WW1 recognized $42.0 million of savings from both the Metro Traffic re-engineering and additional cost reduction initiatives undertaken through the end of the third quarter of 2009, of which $5.5 million was recognized during 2008.
WW1 says it continues to be on track to achieve its previously announced goal of annual operating savings of $53.0 to $61.0 million in 2009. These savings will be offset somewhat by specific strategic investment areas, including: strengthening the Company’s sales force in both the Network and Metro Traffic businesses, investments in new programming, investments in the digital area, improvements in systems infrastructure, TV inventory outlays, incremental costs related to the TrafficLand license agreement, and increased expenses under the company’s distribution arrangement with CBS Radio, which has resulted partly from increased clearance levels by CBS Radio.
Operating loss in the third quarter of 2009 was $60.1 million, compared with operating loss of $7.6 million for Q3 2008. The increased operating loss is primarily due to a non-cash goodwill impairment charge of $50.4 million.
Said Rod Sherwood, President and CFO of Westwood One: “In addition to general economic conditions, one other significant event impacted radio revenues in the 3rd quarter. In previous years, the TV upfront concluded in Q2. This year, upfront ad sales were not completed until August. During this period, advertisers were also slow to commit to buying commercial airtime for the 3rd quarter of 2009, which kept additional downward pressure on radio revenues.”
He added, “Our strategic focus has been on realigning our capital structure, reducing operating expenses, and completing our operational turnaround, along with implementing revenue initiatives. We have invested in the strategic revenue drivers of the business by developing new programming, increasing our sales force and expanding our distribution channels. We are single-mindedly focused on our core mission of meeting our affiliates’ and advertising customers’ needs with quality programming and services that will help build their businesses.”
In September, Westwood One announced it will be the exclusive affiliate and ad sales rep for The Weather Channel Radio Network, which serves nearly 700 radio stations in the U.S. and is in 42 of the top 50 markets. “Westwood One is bringing the best known brand of weather information to our affiliate and advertising partners to help them build their audiences with listeners who seek “must-have” weather information,” said Sherwood.
Also in September, Westwood announced the expansion of The Billy Bush Show to CHR audiences nationwide. In addition, WW1 signed Dennis Miller to a new multi-year agreement to continue hosting The Dennis Miller Show, including those in 22 of the top 25 markets.
New network digital products included three mobile iPhone applications for The Dennis Miller Show, The Fred Thompson Show, and Loveline. WW1 also produced the first ever radio remote for 15 top market stations at the MTV VMA Awards from New York City which was sponsored on the Westwood One network.
In the Metro Traffic business, WW1 launched a new mobile product, Traffic on the Go, for iPhones, Blackberrys and other mobile devices, at the NAB Radio Show. Traffic on the Go delivers instant, live camera images of traffic conditions to smartphones and other mobile devices.
The company also increased the inventory of 15 second sponsorships by 10% through September, by converting stations from 10 second to 15 second sponsorships.
In television, Metro Traffic introduced market-leading technology products to its affiliates including the new TrafficLand broadcaster tool, TrafficLand’s video distribution system and “Traffic on the Go.” As part of the Company’s multi-platform strategy, Metro Traffic’s digital advertising network increased from 445 to 526 radio, TV and newspaper affiliates.
