Rough Start For Radio as Q1 Earnings Roll In

The lack of political spending pinches revenue at some, merger costs affect others. iHeart actually warns that of “substantial doubt as to our ability to continue as a going concern”…

Iheart logoBy Paul Marszalek

It’s not exactly a case of the good, the bad, and the ugly, but one would have hoped for a better report overall. I’ve been coached more than once: you can’t have a good year without a good first quarter. And for too many, Q1 was subpar.

The faucet has now been turned off in terms of political spending, and that’s leaving companies flat or outright down when compared to last year. As costs rise, however, flat is not a good thing.

A snapshot:

iHeart Media – It’s Complicated

Consolidated earnings are off 2.4% – but there are things like the sale of assets, foreign exchange fluctuations and other factors that make an assessment difficult for anyone without an MBA or accounting background.

But if you need to distill it, it comes down to iHeart Media being a pretty great company that happens to be saddled with an impossible amount of debt. And that’s almost the whole story, because if iHeart cannot continue to get relief and restructure that debt, in their own words, it’s over. From their release:

“Management has determined that there is substantial doubt as to our ability to continue as a going concern for a period of 12 months following MAY 4th, 2017 as a result of uncertainty around our ability to refinance or extend the maturity of our receivables based credit facility, to achieve our forecasted results and to achieve sufficient cash interest savings from the pending notes exchange offers and term loan offers.”

When iHeart released earnings last Thursday, the stock dove about 7% to $1.95. Today it’s back up to $2.20, suggesting that they’ll have at least some success fighting the good fight and find ways to restructure.

Radio One – Results So Good We Changed Our Name

Net revenues down 7.1%; broadcast and digital operating income down 11.9%. Those are big numbers that probably go beyond the loss of political dollars. Today, Radio One changed their name to Urban One. We like the move.

Entercom – Revs Up, Income Down

Revenue was up 1.4%, but income was down due to charges related to turning in the license of KDND/Sacramento (a $13.5 million write down), and another $10 million in expenses related to the merger with CBS. Solid.

CBS Corporation – It’s Complicated, But in a Good Way

Q1 revenue at the media behemoth dropped by $61 million year-over-year, and the company reported a $252 million loss for the quarter — much of it due to the radio merger with Entercom. Overall, earnings per share (EPS) was up 9%. CBS is about as good as it gets in the media world these days. But they’re out of radio from here on.

Saga – Little Engine that Could

Unfortunately, Saga is down 4.1% – but  when you take out political spending, they’re almost exactly flat. But operating expenses were up 1.5% — so as we’ve said repeatedly, flat is not flat, flat is down. But, at least Saga has free cash flow and actually paid a dividend of 30 cents a share. Nice!

Filed Under: Actual NewsFeaturedNewsRadio and Records


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