Radio One's loss worsens, from 23 cents to 28 cents a share

Earnings of 11 cents a share expected in 2nd quarter

May 04, 2002|By Gus G. Sentementes | Gus G. Sentementes,SUN STAFF

Radio One Inc., the nation's largest radio broadcaster serving black listeners, reported yesterday record first-quarter revenue but a wider loss after writing down the value of Federal Communications Commission licenses at four stations in one of its markets.

The Lanham company said its net loss increased to $22 million, or 28 cents per share, from $15.1 million, or 23 cents per share, in last year's first quarter.

Radio One took a $23.2 million charge in the quarter under a new accounting rule that requires U.S. companies to take charges related to good will and intangible assets all at once, rather than in increments for up to 40 years. Excluding the charge, the company said, its profit was $1.3 million, or a penny a share.

Positive indicators

Two key indicators of a company's performance in the radio industry were positive for the broadcaster in the quarter, which ended March 31. Its net broadcast revenue was $58.3 million, up 21 percent from $48 million for the corresponding year-earlier period. And broadcast cash flow climbed 17 percent to $25.8 million.

Though radio broadcasters were hurt by businesses that trimmed their advertising spending during the recession, Radio One said January was the first positive month for the industry in more than a year.

The radio industry has gone through a "pretty remarkable turnaround over the past several months," Scott R. Royster, Radio One's executive vice president and chief financial officer, said during a conference call with analysts yesterday. "The fundamentals of the radio industry appear to be strong and improving."

The company also released guidance yesterday for the second quarter, saying it expects to report net revenue of approximately $79.5 million, broadcast cash flow of $41 million and earnings per share of 11 cents.

Radio One is the nation's seventh-largest radio broadcaster, owning or operating 65 stations in 22 of the largest markets in the country. The company also programs five channels on the XM Satellite Radio Inc. system.


James B. Boyle, a media analyst with Wachovia Securities, said Radio One has been at the top of the radio sector for the past few years. "They are well-positioned because typically in a recession the large markets lead the recovery," he said. Boyle has a "strong buy" on Radio One's stock, which rose $1.24 yesterday to close at $24.12.

The company announced yesterday the completion of its $55 million acquisition of an Atlanta radio station, giving it four stations in that market, one of the nation's largest and fastest-growing.

Jason Helfstein, an analyst covering the broadcast sector for CIBC World Markets in New York, said Radio One has benefited from growth in some of its underdeveloped properties and solid ratings increases.

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