Revenue for the Q1 decreased $20.7 million or 19.4%, to $85.9 million compared with $106.6 million in 2008. The decrease in revenue is primarily attributable to the current economic downturn and the general decline in advertising spending, which started to contract mid-year 2008. The decline accelerated during the Q4 2008 and has continued in 2009, said the company.
Revenue for Westwood One’s Metro Traffic decreased 26.9%, which was principally due to the weak local advertising marketplace spanning various categories including automotive, retail and telecommunications.
Network Radio revenue declined 13.5%, which was principally due to the general decline in advertising spending which affected Network revenue from sports and news events, particularly in automotive advertising, as well as the cancellation of certain unprofitable programs.
Said Rod Sherwood, Westwood One CEO: “In terms of business environment, now that it is Spring, the economic reports are making reference to “green shoots,” reflecting the optimistic hope that the economy is showing small but encouraging signs of improvement. While we welcome that optimism, we remain conscious about the pace of recovery in the advertising market. According to various industry estimates, revenue for radio industry participants was generally down between 20 and 29% in Q1.”
“Since we could not change the course of the economic downturn in Q1 2009, we focused on the things we could change in order to prepare Westwood One to emerge as a stronger company when the economy improves. Despite this difficult economic environment, Westwood One made real progress in several key strategic areas of its turnaround plan.”
1. Solidified the financial structure (refinancing debt and recapitalizing equity with the Gores Group now owning 75% of its equity)
2. Moved aggressively to reduce operating costs
3. Continued to pursue revenue initiatives in growing content and distribution assets.
In Network Radio, the company signed a deal in April to continue as the exclusive network radio partner of the NFL. The NFL programming, adds to deals with the Masters Tournament and the NCAA Final Four. In Metro Traffic, Westwood is continuing to differentiate its Traffic product with cutting edge technology. Metro Traffic and its technology partner, TrafficLand, rolled out a national traffic video network that lets the company’s traffic reporters follow local traffic on many routes simultaneously in their respective markets.
Looking forward, Sherwood said he expects operating expenses in Q2 to decline, as compared to Q1, as a result of the seasonality in broadcast rights fees as well as the new cost reduction program launched in Q1, and the ongoing reductions from the Metro Traffic re-engineering program. The Company expects operating expenses to be down by approximately $13.0 to $15.0 million in the Q2 versus Q1.