Radio One Loses Millions in Write-downs - Black Enterprise
Black Enterprise Magazine September/October 2018 Issue

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After the NASDAQ warned Radio One last month that they were in jeopardy of being delisted when their stock prices dropped below $1, the company’s third quarter earnings report provided further evidence that the media company is suffering tremendously from the nation’s current economic turmoil.

Radio One posted $266.1 million in losses for the third quarter ending Sept. 30. This report included a write-down of assets worth $337.9 million, a loss attributed to a decline in radio ad revenue. “Those losses aren’t real losses,” says Alfred Liggins, president and CEO at Radio One. “They are just write-downs of value on our assets.”

The company’s consolidated net revenues were down by 2% to $86 million despite the benefit of increased political advertising by $600,000 from the presidential election. Barry Mayo, president of the radio division at Radio One, mentioned in the third quarter earnings conference call last Thursday that they did not receive as much assistance from President-Elect Barack Obama as they had anticipated and that in that area they did not perform as well as general market stations.

The new CFO, Peter D. Thompson, said that the auto, retail, healthcare, and telecom advertising categories declined year-to-year by 37%, 24%, 16%, and 17% respectively.

“Local radio is especially impacted with the current economy because auto and retail are radio’s two biggest ad categories and they are the two categories most affected by the recession,” says Andrew Hampp, Ad Age’s cable, TV, out of home (taxis and billboards) and radio reporter.

“In the middle of the greatest economic downturn since the great depression [increasing ad revenue] is a very difficult prospect,” Liggins says. “New ad mediums like online and cable network business are actually growing. While old-line, mainstream categories like newspaper, magazines, broadcast TV, and radio are not growing.”

Nevertheless, the Lanham, Maryland-based radio broadcasting company operates 53 radio stations in 16 markets, and is loaded down with some $765 million of debt. Stanford Institutional Research predicts Radio One could violate its bank agreements if their debt load increases. Additionally, another research provider, Market Grader, scored Radio One’s stock as particularly risky with a troubled and uncertain business model.

Liggins says that the company’s debt is under control. “We have been reducing our debt all year long, and we will continue to reduce our debt each and every quarter,” he says. “We make over $100 million per year. Our interest costs are substantially lower than that and we use our free cash flow to pay off our debt.”

There was some good news. Markets that experienced year-to-year growth included Indianapolis (7%), Philadelphia (15%) and St. Louis (13%). In addition, financial and tourism advertising was up by 3% and 47%, respectively.

Hampp says to increase investor confidence, management needs to create more efficiencies on an operational level, which could mean slashing market spending, lay-offs, or repositioning key assets. The company has already begun to reduce its operating income, which has decreased by 17% to $34.7 million since 2007 on a same station basis, and they sold

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Marcia Wade Talbert

Marcia is a multimedia content producer focusing on technology at Black Enterprise Magazine. In this capacity she writes and assigns stories to educate readers about social media; digital integration; gadgets, apps, and software for business and professional development; minority tech startups; and careers in STEM (Science, Technology, Engineering, and Mathematics). In 2012, she received two Salute to Excellence Awards from the National Association of Black Journalists and was recognized by Blacks in Technology (BiT) as one of the Top 10 Black achievers in the tech arena for 2011 at SXSW in Austin, Texas. She has spoken about technology on panels for New York Social Media Week, at The 2012 Rainbow/PUSH Wall Street Summit, as well as at Black Enterprise’s Entrepreneurs Conference and Women of Power Summit. In 2011, chose her as one of 28 People of Color Impacting the Social Web, and through crowdsourcing she was listed as one of BlackWeb2.0's/HP's 50 Most Notable African American Tastemakers in Social Media and Technology for 2010. Since taking on the role of Tech editor in September 2010, she has conceived and produced five cover stories on Technology and/or STEM and countless articles, videos, and slideshows online. Before joining as an interactive general assignment reporter in 2008, she freelanced with Black Enterprise beginning in 2003 while working as the technical editor at Prepared Foods magazine. There she further honed her writing skills and became an authority on food ingredients, including ingredients used in food fortification and enrichment. Meanwhile, her freelancing with Black Enterprise and helped her stay current on issues pertaining to the financial and business welfare of African Americans. As a general reporter for Black Enterprise she attended and reported on the Democratic and Republican National Conventions, where she interviewed Valerie Jarrett, senior advisor and assistant to President Barack Obama and U.S. Attorney General Eric Holder. Marcia has a Bachelor of Science degree in Agriculture with an emphasis in food science from the University of Minnesota, and a Master of Science degree in journalism from Roosevelt University in Chicago. En route to her secondary degree, she served as the editor-in-chief of the Roosevelt University Torch, a weekly, student-run newspaper. An avid photographer and videographer, Marcia is one of several employees at BLACK ENTERPRISE who interned for the publishing company as a college student. She lives in New Jersey with her husband, a food scientist; her seventeen-month-old daughter; and “The Cat”, but still considers Chicago home.