Competition, Lower Ratings Hurt Radio One Profit By Frank Ahrens Washington Post Staff Writer
Tuesday, August 8, 2006; D04 http://www.washingtonpost.com/wp-dyn/content/article/2006/08/07/AR2006080701274_pf.html Second-quarter profit at Radio One Inc. was down 59 percent, the Lanham-based media company reported yesterday. Radio One -- which celebrates its 25th anniversary this year and owns 71 radio stations, a channel on XM Satellite Radio and the TV One cable channel -- reported $8.1 million in profit on $97.8 million in revenue (8 cents a share), compared with $19.8 million in net income on $102 million in revenue (19 cents) in the corresponding period of 2005. The company's woes mirror those of the radio industry, as listeners and advertisers move to other media, such as satellite radio, iPods and the Internet. Radio One caters almost exclusively to black radio, television and film audiences. "Last quarter, we said that the second quarter could be the bottom for the radio industry and for Radio One, and, on its face, this quarter was pretty disappointing," chief executive Alfred C. Liggins III said in a statement. Liggins assumed the role of interim chief operating officer after Mary Catherine Sneed left the job last month. "We are clearly facing some challenges in certain markets, over and above the ongoing softness in the radio industry, and are taking active steps to address those challenges." Liggins said that ratings were down for the company's stations in Los Angeles; Dallas; Cleveland; Cincinnati; and Washington, where Radio One owns WKYS (93.9 FM), WMMJ (102.3 FM), WOL (1450 AM) and WYCB (1340 AM). Those declines more than offset ratings increases in other Radio One cities, such as Philadelphia, Liggins said. In Los Angeles, Radio One's KKBT replaced deejay Steve Harvey with former NBA player John Salley and lost about half of the station's ratings, Liggins said in a conference call. KKBT also is getting stiff competition from Spanish-speaking stations. Liggins alluded to freezing wages and hiring as part of possible cost controls. The company, which Liggins took over from his mother, founder Catherine L. Hughes, boomed during the '90s, riding the popularity of hip-hop music, acquiring stations and watching ratings soar. But the increased competition, and the large capital costs of expansion into television and film, have dimmed prospects. The stock price has declined from a high of more than $30 per share in early 2000, closing down nearly 13 percent yesterday at $6.09 per share. Yesterday's results missed analysts' expectations by 4 cents per share. "While we are normally not the kind of management team that looks for excuses to explain our performance, we do feel that there was a powerful continuance of events in this quarter that makes things look worse than they really are," Chief Financial Officer Scott R. Royster said. He said the quarter looked especially bad compared with last year, when the company outperformed the industry. The company has had some operational missteps. It paid $73 million for a Houston station in 2004, flipped the format to Hispanic and "did a really bad job of executing the format," Liggins said. He recounted what he called a "funny story": A program director changed the station from one type of Spanish-speaking format to another, "and we didn't know it because we didn't speak the language," Liggins said. ================================ George Antunes, Political Science Dept University of Houston; Houston, TX 77204 Voice: 713-743-3923 Fax: 713-743-3927 antunes at uh dot edu Reply with a "Thank you" if you liked this post. _____________________________ MEDIANEWS mailing list [email protected] To unsubscribe send an email to: [EMAIL PROTECTED]
