Radio One lowers its estimate for 4th quarter after record 3rd

Broadcaster announces partnership with ABC

November 07, 2001|By Andrea K. Walker | Andrea K. Walker,SUN STAFF

Radio One Inc. reported record third-quarter results yesterday, but the nation's largest radio broadcaster targeting black listeners lowered future revenue expectations because of a softening economy and a weak advertising market.

The Lanham company also said it has entered into a partnership with ABC Radio Networks that it hopes will further solidify its dominance in the African-American market. ABC Radio, which is owned by Walt Disney Co., has more than 4,600 affiliates, including 163 urban stations.

In the three months that ended Sept. 30, Radio One reported broadcast cash flow - a key measure of performance - of $34.4 million, a 54 percent increase from this time last year.

But in a sign that an industry-wide decline in advertising sales is affecting the company's earnings, the company said it had a third-quarter net loss of $10 million, or 11 cents a share, compared with a loss of $4 million, or 5 cents a share, in the third quarter last year.

"This is a very tough environment," Alfred C. Liggins III, Radio One's president and chief executive officer, said in a conference call. " ... It is now apparent that a rebound isn't going to happen. Given the environment, we are proud of our management to continue to grow our core business."

Radio One officials, saying they don't expect the economic climate to improve this year, also lowered their fourth-quarter net revenue estimate to $62 million, down from a previous estimate of $66 million to $68 million.

"The reason we're guiding the way we're guiding is because the market is tenuous and pretty tough and choppy right now," Scott R. Royster, Radio One's chief financial officer, said yesterday. "It certainly is not looking good and we don't know when it will get better."

Radio One lost $2 million because of ad cancellations after the Sept. 11 terrorist attacks.

Despite the tough times, Radio One continues to strike new deals. The company's agreement with ABC allows the company to widen its market at little upfront cost, Phillips and other analysts said. Radio One now operates 65 stations in 22 markets aimed at African-Americans.

In the partnership, Radio One allocates a portion of its commercial time to ABC in return for 75 percent of the profits from the advertising. Combined, the two companies will reach 93 percent of the African-American market.

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