Radio One Q2 Results: Online Success Despite Radio Advertising Challenges

Yesterday’s second quarter results for Radio One, Inc. (NASDAQ: ROIAK) offered interesting insights into the state of the company that owns several radio and online properties that cater to the needs of African Americans.

Overall Revenue Growth

Net revenue was $75.2 million which represented a 7.6% increase from the $69.9 million reported for the same period last year.  Radio One, Inc., CEO and president, Alfred C. Liggins, partly attributed the overall positive revenue growth of the company to “the recovery in radio revenues”.  He also cited strong results from an internal sales team which was put into place during the first quarter of this year and switched from a guaranteed revenue arrangement to one that was commission based.

Radio Advertising Weakness

While the overall performance of the company was positive, an informative line item in the report was station operating income.  While station operating income is not a measure of financial performance under GAAP (Generally Accepted Accounting Principles), it is a useful number for judging the operating performance of a broadcast company like Radio One, Inc.  Station operating income measures the performance of the 53 broadcast stations controlled by the company including shows such as the Russ Parr Morning Show, the Reverand Al Sharpton Show, and the Yolanda Adams Morning Show.

Station operating income for the quarter was $28.3 million which represented a 5% decrease from the $29.9 million reported last year.  Liggins attributed part of the drop in station operating income to costs such as PPM (pay per month) fees which suggests weakness in the company’s radio advertising business.

Online Strength

A bright spot in the in the report was the success of the company’s online business.  Operating under a division of Radio One, Inc. called Interactive One, the company’s online portfolio includes properties such as  BlackPlanet.com, NewsOne.com, TheUrbanDaily.com, GiantMag.com, and HelloBeautiful.com.

Net revenue for online operations increased to $4.49 million which demonstrated a 48.7%  jump from last year’s number of $3.02 million. Liggins stated that, “Our internet business is growing strongly…and we continue to believe that our on-line platform will be a major source of revenue and EBITDA growth for the future.”

In summary, the second quarter report suggests that Radio One, Inc. will continue to make investments in the health of its online properties while trying to stabilize the advertising business of the radio side of the company.

About the Author
Anjuan Simmons is an emerging technology consultant and freelance technology consultant currently working as a Director at Adverlyze, an online marketing strategy company. Anjuan has previously worked for Accenture and Deloitte. He has an undergraduate degree in electrical engineering from the University of Texas at Austin and an MBA from Texas A&M University. He can be found on Facebook at http://www.facebook.com/anjuan and on Twitter at http://www.twitter.com/anjuan.
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