Westwood shareholder vote: what to expect on the ad side


Westwood One has its next shareholder vote next week. We’ve been hearing some detail on some of their numbers on the sports side that could be a bit of a sticking point at the meeting. First of all, WW1 just ended their deal with The Content Factory for Tony Bruno, a deal that was less than a year old. Then, Compass Media just did a deal for exclusive rights for some of Learfield basketball and football games. Learfield traditionally has farmed out some of those rights to WW1.

This is all happening on the heels of them trying to pitch to shareholders a reverse stock split. That may be a sticky wicket, considering how the business is pacing. Will the shareholders go for it? We’ll see. Westwood One spokesperson Christine Miller tells us they are confident this will be successful and it will not affect dilution.

In order for them to try and corner the national football marketplace, they’ve created a situation where they’ve inundated the marketplace with games and inventory that may have become an oversaturation. This doesn’t include the pending deal with Sports USA, which could add even more games to the situation–if they want to. We estimate they could have approximately 200 games for the 2009-2010 season, which includes college and NFL. That’s a lot of inventory to sell. However, Miller tells RBR/TVBR that they are quite happy with the sports inventory they have this year.

While we have heard WW1 currently has a $33 million dollar net guarantee for two years to NFL for Sunday, Monday Night and Playoffs, plus several millions more with 23 individual teams, Westwood One says those numbers and the characterization of that contract is inaccurate. Obviously, they could not supply the actual numbers, which are confidential.

We believe that this year alone they need to net $16 million, plus $4-$5 million in expenses. Not only are they nowhere near those guarantees from what we hear, but they are pacing significantly behind last year’s NFL numbers. We hear that they have only $8 million on the books for NFL Football so far. This deal was made in Q1, before the TV upfront and after the net radio upfront ended. So those radio dollars have been held up with the delayed and sluggish TV upfront—which obviously include NFL sponsorship deals. Miller tells us they are quite aggressively selling these games and the response in the marketplace is extremely positive.

Gary Schonfeld, President of Network Radio, WW1, said: “Our NFL sales have been tracking extremely well. We have the exact same schedule of NFL games this year as we did last year. We have the prime time schedule and the same Sunday doubleheaders that we’ve had for the last 15+ years. We fully expect that we will meet our projections. Westwood One continues to dominate sports on the radio…and nobody else comes close.”

RBR/TVBR observation: So the marketplace is telling us two different stories about the sales pacing for NFL games. Whatever the reality is, they will be presented next week at the meeting. If indeed they are pacing behind, they’ve got little time to get those dollars on the books—it will be a challenge. WW1 CEO Rod Sherwood is personally getting involved in the sales as well—not a bad idea, as he has been pretty good for the company so far. They got pushed back on the last vote, so we’ll see what happens this time. It should be interesting. Gores may be forced to make a decision to continue self fund WW1 or not. This meeting may be crucial to the future of the company.