Radio One plans sale of 10 million shares

Lower debt, capital for growth sought

March 26, 2002|By Andrea K. Walker | Andrea K. Walker,SUN STAFF

Radio One Inc. said yesterday that it would sell 10 million shares, as the nation's largest radio company targeting black listeners tries to pay down debt and raise capital for growth opportunities.

The Lanham-based company said it will offer 8.7 million shares, and shareholders will sell the remaining 1.3 million shares. The securities firms handling the sale - Banc of America Securities LLC and Credit Suisse First Boston - will have the option of offering an additional 1.18 million shares.

"We're looking at some potential growth opportunities over the next 10 to 15 months," said Scott Royster, Radio One chief financial officer.

"We're going to pay down some debt to raise money for future acquisitions and potential strategic investments."

Royster said there are no specific deals the company is working on.

Analysts and industry experts said Radio One, the nation's seventh-largest broadcasting company, with 65 stations in 22 markets, is priming itself for when the econo- my improves. The entire media industry has faced a decline in advertising since the nation has been in a recession.

"This is the time for Radio One to do this," said Tom Taylor, editor of the New Hampshire-based radio trade publication M Street Daily.

"Stock prices are strong. And beyond that there is a sense that advertising is starting to rebound. Radio tends to lead other media out of a recession," Taylor said.

January was the first month that the advertising industry showed a year-over-year improvement in 15 months, said David Seyler, managing editor of the Alexandria-based trade magazine Radio Business Report.

It is expected to show a decline again in February, for which results haven't been released yet, because of post-Olympics effects, but should pick up again in March, Seyler said.

Radio One carved a niche for itself by targeting African-American clientele, and is today one of the best-performing radio companies, analysts have said.

Like the rest of the industry, Radio One has faced losses because of the weak advertising environment. For instance, the company incurred a $15.4 million fourth-quarter loss. But its broadcast revenue, a key indicator of success in the industry, was $67.4 million, up 16 percent from the fourth quarter last year.

Radio One accumulated much of its debt in a major expansion it launched in 2000, when it bought or agreed to buy 43 stations. Royster said the company has a 33 percent debt-to-equity ratio.

The company has said it wants to acquire more stations. Radio One hasn't expanded into areas such as San Francisco and New York, two popular markets.

"They can get bigger," said Taylor. "There are significant holes where they'd like to build up their cluster."

Radio One shares yesterday lost 8 cents, closing at $22.04.

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.