Radio One Profit Falls Nearly 50%

Lanham-Based Company Branches Out Into Other Media

Radio One Inc. said yesterday that its fourth-quarter profit fell nearly 50 percent because of a national slowdown in the radio industry, which faces increased competition from satellite radio, Internet music services and MP3 players.

To diversify the Lanham company beyond its sluggish core business, chief executive Alfred C. Liggins III told analysts on the company's quarterly conference call that he has been investing in cable television, film and Internet businesses targeted at the African American audiences served by his radio stations.

"In order to move the stock we have got to figure out a way to monetize our biggest asset, which is our 14 million listeners in our audience," he said.

In the fourth quarter, the company earned $9.5 million (10 cents a share), down from $18.6 million (18 cents before preferred dividends, 13 cents after) a year earlier. Broadcast revenue rose by almost 15 percent to $91.2 million.

Radio One, which had outperformed the industry since going public in 1999, did little better than average last year. Its 2005 profit fell 18 percent to $50.5 million (46 cents) on revenue of $371.1 million.

Shares in the company closed yesterday at $9.09, down $1.05.

In the past three years, Liggins's plans for diversifying his company have included backing TV One, a cable television network. Radio One also bought radio personality Tom Joyner's syndication company and started a talk radio network that it has sold to 14 stations.

This year, Liggins said, he will launch an Internet portal targeting blacks. Radio One also is part of an investment group bidding for the Washington Nationals baseball team.

Liggins said Radio One has licensed an African American targeted movie called "Preaching to the Choir," and in April the company's radio stations will promote it as it goes to theaters, then take a cut of DVD sales and air it on TV One.

Some analysts said yesterday that income growth for Radio One's new initiatives could be a long time coming. "Management may indeed be successful in its ventures long term," wrote analyst Kit Spring of Stifel, Nicolaus & Co. in a research report. "However, we doubt the Street will give [the company] significant credit until such strategies are closer to bearing fruit."