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First Quarter Down for Radio One

“Soft” quarter leaves group owner looking for solutions

Radio One fell in line with most other major broadcast groups by pointing to a soft national advertising market as the reason for a disappointing opening quarter to 2017.

Across the board revenue at Radio One in Q1 stood at $101.3 million. That’s a drop of 7.1% from the same period a year ago, according to the company’s earnings data released this week. The company tried to keep operating expenses in line with a comparable 6% cut to a total of $84.8 million in the quarter compared to $90.1 million in Q1 2016.

The sluggish start to the year was most notable at Radio One clusters in Cincinnati, Cleveland, Dallas, Detroit, Houston and Philadelphia. Local advertising was down over 5% with national down nearly 9% on average across all markets. Radio One CFO Peter Thompson says the revenue pain was spread across multiple categories, including telecommunication (-6.3%), retail (-1.1%), services (-2.1%), entertainment (-3.2%), automotive (-13.4%) and health care (9.3%).

Thompson described Radio One’s ratings as “relatively flat” in the quarter with Q2 revenue pacing so far showing the same declines as the first quarter. Capital expenditures were $1.5 million compared to $1.2 million a year ago. The broadcaster’s current debt measures about $965.8 million.

The company did confirm on Thursday during its earnings call it completed a sale of 14 FM radio towers to American Tower Corp. for approximately $25 million.

Radio One CEO Alfred Liggins described it as a “tough first quarter” with a softer ad environment based on the economy.

“I have been reading the comments from other media companies and I think the theme is similar, whether it’s coming from outdoor, TV or radio, we are seeing a softer environment overall,” Liggins said. “The GDP in Q1 was soft. We have been growing at a steady clip now of about eight years or so and maybe it’s time for a breather.”

Liggins also touched on the topic of further radio industry consolidation when prompted by a question from analyst Aaron Watts of Deutsche Bank on the ad environment the competitive dynamics of radio.

“I said at NAB that the industry probably needs another round of consolidation to try and stabilize pricing pressures. The balance sheets of the overleveraged companies need to be fixed so you are not in a freefall frenzy for ad dollars. We are willing to participate in consolidation, whether through rationalization of markets, divestiture or acquisition,” Liggins said.

Radio One announced in April it had purchased two radio stations from Red Zebra, an FM station in Washington, and an AM in Richmond, Va.