Radio One, Inc. Reports Third Quarter Results

by Mr. Kev - Posted Thursday, November 1st, 2012. Category: URBAN

 width=Radio One, Inc. today reported its results for the quarter ended September 30, 2012. Giving effect to the consolidation of TV One, net revenue was approximately $110.0 million, an increase of 5.4% from the same period in 2011. Also giving effect to the consolidation of TV One, station operating income1 was approximately $40.9 million, an increase of 14.2% from the same period in 2011. The Company reported operating income of approximately $21.5 million compared to operating income of approximately $13.1 million for the same period in 2011. Net loss was approximately $13.1 million or $0.26 per share compared to net loss of $9.9 million or$0.20 per share, for the same period in 2011.

Alfred C. Liggins, III, Radio One’s CEO and President stated, “Our core radio revenues continue to outperform the markets in which we operate, in Q3 by 500Bps. Political revenue was just over $2 million in the quarter, the highest level in Q3 in company history, and ramped-up strongly in October, helping to push our fourth quarter radio pacings to approximately +13%. TV One revenues grew by 12.5% and EBITDA by 32.1%. A solid upfront cycle saw both volume and CPM’s grow by mid-single digits. During the third quarter we successfully launched two strong new TV series: R&B Divas and the Rickey Smiley Show; cross promotion across the radio and digital platform helped both shows perform strongly, debuting with household ratings of 1.09HH and 1.29HH, respectively. I believe we can build on that success to grow our cash flows in Q4 and 2013.”

Net revenue increased to approximately $110.0 million for the quarter ended September 30, 2012, from approximately $104.4 million for the same period in 2011, an increase of 5.4%. We recognized approximately $33.2 million of revenue from our new cable television segment during the three months ended September 30, 2012 compared to approximately $29.5 million for the same period in 2011. Net revenues from our radio segment, including syndicated programming, increased 5.3% for the quarter ended September 30, 2012 compared to the same period in 2011. Our Baltimore, Cleveland, Columbus, Detroit,Indianapolis, Raleigh and Washington D.C. clusters posted the most significant quarterly growth, while our Houston,Philadelphia and St. Louis markets posted the most significant declines. Reach Media’s net revenues decreased 11.3% in the third quarter 2012 compared to the same period in 2011 primarily due to fewer sponsors of certain events. Net revenues for our internet business decreased 8.9% for the three months ended September 30, 2012 compared to the same period in 2011.

Operating expenses, excluding depreciation and amortization, stock-based compensation and impairment of long-lived assets, decreased to approximately $78.7 million for the quarter ended September 30, 2012, down 0.5% from the approximately $79.1 million incurred for the comparable quarter in 2011.

Stock-based compensation decreased to $37,000 for the quarter ended September 30, 2012, compared to $759,000 for the same period in 2011. Vesting associated with the Company’s long-term incentive plan whereby officers and certain key employees were granted a total of 3,250,000 shares of restricted stock in January of 2010 was fully completed as ofDecember 31, 2011. Stock-based compensation requires measurement of compensation costs for all stock-based awards at fair value on date of grant and recognition of compensation over the service period for awards expected to vest.

Depreciation and amortization expense decreased to approximately $9.7 million compared to approximately $11.5 million for the quarters ended September 30, 2012 and 2011, respectively, a decrease of 15.7%. The decrease was due to the completion of amortization for certain intangible assets and the completion of useful lives for certain assets.

Interest expense decreased to approximately $22.2 million for the quarter ended September 30, 2012 compared to approximately $23.0 million for the same period in 2011. The Company made cash interest payments of approximately $21.0 million for the quarter ended September 30, 2012. Through May 15, 2012, interest on the Company’s 12 ½%/15% Senior Subordinated Notes (“Senior Subordinated Notes”) was payable at our election partially in cash and partially through the issuance of additional Senior Subordinated Notes (a “PIK Election”) on a quarterly basis. The PIK Election expired on May 15, 2012 and interest accruing on the Senior Subordinated Notes from and after May 15, 2012 accrues at a rate of 12 ½% and is payable in cash.

The provision for income taxes for the quarter ended September 30, 2012 was approximately $9.1 million compared to a benefit from income taxes of approximately $2.3 million for the comparable period in 2011. The increase is primarily attributable to the increase in the deferred tax liability related to the indefinite-lived intangible assets as of September 30, 2012. The benefit for income taxes of approximately $2.3 million for the same period in 2011 was attributable to changes in the estimated annual effective rate based on the increase in the deferred tax liability for indefinite-lived intangibles and expected pre-tax income of the Company due to the impact of the consolidation of TV One. The Company paid $271,000 in taxes for the quarter ended September 30, 2012.

Income from discontinued operations, net of tax, for the quarter ended September 30, 2012 includes the results of operations for our sold radio stations (or stations made the subject of a local marketing agreement). Income from discontinued operations, net of tax, was $15,000 for the quarter ended September 30, 2012, compared to income from discontinued operations, net of tax, of $11,000 for the same period in 2011. The activity for the three months ended September 30, 2012and 2011 resulted primarily from our remaining station in our Boston market entering into an LMA. The income (loss) from discontinued operations, net of tax, includes no tax provision for either of the three month periods ended September 30, 2012or 2011.

The increase in noncontrolling interests in income of subsidiaries was due primarily to greater net income generated by TV One during the three months ended September 30, 2012 compared to the same period in 2011.

Other pertinent financial information includes capital expenditures of approximately $2.8 million and $1.8 million for the quarters ended September 30, 2012 and 2011, respectively. $677,000 of capital expenditures for the quarter ended September 30, 2012 relates to the Company’s corporate office move to Silver Spring, Maryland and $305,000 relates to the Company’s Philadelphia market office move. The Company received dividends from TV One in the amount of approximately$2.0 million for the quarter ended September 30, 2012. As of September 30, 2012, the Company had total debt (net of cash balances) of approximately $770.7 million. The Company’s cash and cash equivalents by segment are as follows: Radio and Internet approximately $24.6 million, Reach Media approximately $1.9 million and Cable Television approximately $22.2 million. In addition to cash and cash equivalents, the cable television segment also has short-term investments of $165,000and long-term investments of approximately $2.4 million.

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