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Radio One, Inc. Reports Operating Results (10-Q/A)

September 11, 2012 | About:
10qk

10qk

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Radio One, Inc. (ROIA) filed Amended Quarterly Report for the period ended 2012-03-31.

Radio One, Inc. has a market cap of $43.4 million; its shares were traded at around $0.83 with and P/S ratio of 0.1.

Highlight of Business Operations:

During the three months ended March 31, 2012, approximately 51.9% of our net revenue was generated from the sale of advertising in our core radio business, excluding Reach Media. Of our total net revenue, approximately 38.4% of our net revenue was generated from local advertising and approximately 31.5% was generated from national advertising, including network advertising. In comparison, during the three months ended March 31, 2011, approximately 56.1% of our net revenue was generated from local advertising and approximately 29.1%, was generated from national advertising, including network advertising. National advertising also includes advertising revenue generated from our Internet segment. The balance of net revenue from our radio franchise was generated from tower rental income, ticket sales and revenue related to our sponsored events, management fees and other revenue. The change in revenue mix is due to the consolidation of TV One.

We generally incur marketing and promotional expenses to increase our radio and cable television audiences. However, because Arbitron reports ratings either monthly or quarterly, depending on the particular market, any changed ratings and the effect on advertising revenue tends to lag behind both the reporting of the ratings and the incurrence of advertising and promotional expenditures.

During the three months ended March 31, 2012, we recognized approximately $103.0 million in net revenue compared to approximately $65.0 million during the same period in 2011. These amounts are net of agency and outside sales representative commissions, which were approximately $7.2 million during the three months ended March 31, 2012, compared to approximately $6.8 million during the same period in 2011. We began to consolidate the results of TV One during the second quarter of 2011 and recognized approximately $32.2 million of incremental revenue from our cable television segment during the three months ended March 31, 2012. Net revenue for our radio broadcasting segment increased 9.3% and excluding the timing difference for the Company’s annual Gospel Cruise held in March 2012 versus April 2011, our core radio revenue, including syndicated programming, increased 6.4% for the quarter ended March 31, 2012 compared to the same period in 2011. Based on reports prepared by the independent accounting firm Miller, Kaplan, Arase & Co., LLP, the markets we operate in decreased 1.1% in total revenues. We experienced net revenue growth most significantly in our Atlanta, Cincinnati, Cleveland, Detroit and Raleigh markets, with our Dallas and Houston markets experiencing declines. In addition, the radio segment revenue increased due to the timing of the Company’s annual Gospel Cruise held in March 2012 versus April 2011. Reach Media’s net revenues decreased 8.0% in the first quarter of 2012 compared to the same period in 2011 primarily due to changes to certain of Reach Media’s affiliate agreements that became effective January 1, 2012. The “Tom Joyner Fantastic Voyage” took place during March 2012 and March 2011 and generated revenue of approximately $5.9 million and $6.6 million, respectively, for Reach Media. Net revenues for our internet business increased 64.6% for the three months ended March 31, 2012 compared to the same period in 2011. Our internet business recognized strong revenue growth due to an improved sales effort and strong traffic growth, as well as successful Black History Month campaigns.

Selling, general and administrative expenses include expenses associated with our sales departments, offices and facilities and personnel (outside of our corporate headquarters), marketing and promotional expenses, special events and sponsorships and back office expenses. Expenses to secure ratings data for our radio stations and visitors’ data for our websites are also included in selling, general and administrative expenses. In addition, selling, general and administrative expenses for the Radio segment and Internet segment include expenses related to the advertising traffic (scheduling and insertion) functions. Selling, general and administrative expenses also include membership traffic acquisition costs for our online business. Our cable television segment accounted for approximately $7.0 million of the increase due to the impact of consolidating the results of TV One. Excluding the impact of consolidating the results of TV One, our selling, general and administrative expenses increased by 12.6%. The increased expense for the three months ended March 31, 2012 compared to the same period in 2011 is primarily due to timing of the Company’s annual Gospel Cruise held in March 2012 versus April 2011 as well as increased payroll costs. In addition, Reach Media incurred approximately $4.9 million and $5.0 million of selling, general and administrative expenses associated with the “Tom Joyner Fantastic Voyage,” held during March 2012 and March 2011, respectively.

Net cash flows provided by investing activities for the three months ended March 31, 2012 were $551,000 compared to net cash flows used in investing activities of approximately $1.8 million for the three months ended March 31, 2011. Capital expenditures, including digital tower and transmitter upgrades, deposits for station equipment and purchases were approximately $3.0 million and $1.8 million for the three months ended March 31, 2012 and 2011, respectively. Proceeds from sales of investment securities were approximately $3.9 million for the three months ended March 31, 2012.

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