Radio One Takes a Long View

Analysts generally applaud efforts to find new ways to reach Radio One's audience. "Radio One is proactively capitalizing on this trend with its focus on becoming a multimedia powerhouse for the African American demographic," analysts at Wachovia Capital Markets LLC noted approvingly in a recent research report.

Nonetheless, Wachovia cut the stock's rating from "outperform" to "market perform, " the equivalent of a "hold" rating.

From talking to analysts and reading their research, it becomes clear that most agree on the prognosis for Radio One: It could be a good investment down the road, but the future is not now.

FBR's McKenzie, who has the equivalent of a "hold" rating on the stock, said: "Long-term, these diversifications could prove successful. But in the near term, we expect resource allocation to have a negative impact on the company's margins." In other words, it's going to cost money to get those new ventures off the ground, and in the meantime, profit will suffer.

Analysts at Stifel, Nicolaus & Co. say investors would get a quicker payoff if Radio One were sold. They express regret that Radio One's "management isn't overly concerned with short-term stock price."

Liggins dealt with that complaint during his February conference call. "We are more concerned about actually creating value than what the Street is going to think. They think three- to six-month return. I'm more concerned about how much more cash flow we're going to have in five years."

That's an attitude that ought to appeal to long-term investors -- if there are any left.

Jerry Knight's e-mail address isknightj@washpost.com