Radio One's Losses Grow, Stock Declines

By Anita Huslin
Washington Post Staff Writer
Friday, February 22, 2008

Radio One, the Lanham-based urban broadcaster, said yesterday that its losses grew sharply in the last three months of 2007 during an industrywide slump, and it recorded a $404 million write-down in the value of some of its radio station licenses.

The company said its net loss for the quarter totaled $386.4 million ($3.91 a share), a big jump from the $25.5 million loss (26 cents) it had in the comparable period a year earlier. For all of 2007, the company's losses totaled $387.1 million ($3.92 a share), up from the $6.73 million (7 cents) loss recorded for all of 2006.

Radio One attributed the losses chiefly to a drop in national advertising that coincided with its effort to ramp up spending on new Internet and multimedia initiatives, which the company regards as important sources of future growth.

Chief executive Alfred C. Liggins III said he was optimistic that advertising would pick up based on early signs of single-digit revenue growth this year.

"Although 2008 looks to be a challenging year given the economy, I believe our radio business has bottomed out, and we are poised to outperform the industry in 2008," Liggins said in a conference call with industry analysts.

Radio One's new chief financial officer, Peter D. Thompson, joined the conference call yesterday. Liggins hired Thompson last year as executive vice president of business development to focus on the company's strategy to diversify into other media, such as the Internet. Thompson had been chief financial officer for Universal Music in London, where he handled efforts to control expenses and increase earnings.

Liggins said he has a vision of a Univision-like conglomeration of media enterprises that cross-market and share content and resources. Analysts suggested that Liggins's challenge will be making Radio One's various holdings -- 54 radio stations, Magazine One (formerly Giant Magazine), an interest in TV One and -- a cohesive media company whose brand is bigger than the parts.

Analysts expressed concerns about the company's cash flow and its ability to repay the debt it accumulated from the days when it assembled its nationwide network. The company's stock price has fallen about 80 percent for the year. Yesterday, it closed at $1.39 a share, down 16.3 percent.

"Even if the top line is flat, their expense growth is significantly higher than their peers," said Wachovia analyst Marci Ryvicker. "What are they willing to do to get this company back on track?"

The company attributed the $404 million write-down primarily to the falling values of its struggling stations in Los Angeles and Houston, and to a lesser extent outlets in the Cincinnati; Cleveland; Columbus, Ohio; Dallas and Philadelphia markets. In the past year and a half, Radio One sold nearly $150 million in assets -- mainly underperforming radio stations. The credit crunch has made it harder to find buyers for other properties, however.

"Right now our plans are to grow our cash flow, and if we come to a decision or realization that's not possible, we're always thinking about how we prudently manage our balance sheet," Liggins said.

The company recently reorganized its Los Angeles station, bringing in new management and launching a marketing campaign to try to boost its presence in the large and highly competitive market.

At one time, "L.A. was a big [revenue] driver" for the company, Liggins said.

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