As the economy improves, so do profits for Naples-based radio operator Beasley Broadcast Group.
The company's revenue and profit rose in the first quarter, primarily reflecting a better performance at its stations in the Fayetteville, N.C. market.
Revenues grew 1.1 percent to $23.3 million, while profits rose more than 55 percent to $2.4 million – up from $1.5 million a year ago.
"Overall, we achieved revenue increases in six of our 11 market clusters, as we saw improved local and digital advertising, which offset the impact of a mid-single-digit decline in national (advertising)," said Caroline Beasley, the company's chief financial officer, during a conference call on Friday.
The profit growth is a reflection of higher operating income and a $1 million year-over-year reduction in interest expense, related to lower outstanding credit balances and the expiration of swap agreements.
In swap agreements, a company agrees to pay the bank a fixed interest rate on what would otherwise be a variable rate loan. The bank agrees to pay back interest to the company based on a floating rate. As interest rates fall, a company pays more.
Beasley Broadcast earned 11 cents a share in the quarter, up from 7 cents a year ago.
"First quarter revenue growth reflects improved economic conditions in some of our markets, most notably Fayetteville where our market cluster revenue rose 8.3 percent," said George G. Beasley, the company's chairman and CEO, in a statement. "In markets measured by Miller Kaplan, Beasley Broadcast Group clusters generated a slight revenue gain while these markets recorded a slight decline in revenue."
Overall, the company saw a 7 percent decline in national spot advertising revenue at its stations in the six markets that are tracked by Miller Kaplan. That matched up with the overall industry trend in those same markets.
The Philadelphia market was a key driver in the national drop in revenue, Caroline Beasley said.
Comcast, Chrysler and USAA are a few of the companies that pulled back on their national advertising in the first quarter, she said.
Local advertising makes up 65 to 70 percent of the revenue generated by Beasley Broadcast's stations.
January and February were good months for the company, but March "got weaker as the impact of higher gas prices and the uncertainty over the election began to weigh on consumers and advertisers," Caroline Beasley said.
In the quarter, the company saw revenues decline at its stations in the Fort Myers market, primarily because of a change in format at 96.1 K-Rock (WRXK), which has changed from classic rock to talk. Beasley said she expects the decline in the local market to reverse itself over the next quarter or two.
Looking forward, George Beasley said the company remains focused on meeting or exceeding the overall revenue performance in its markets and strengthening its balance sheet.
While April was weaker than March for the company, May and June are "pacing better," with gas prices starting to ease up, Caroline Beasley said.
The company expects to benefit from more political advertising later this year as the presidential election approaches.
Caroline Beasley said the radio industry is "doing the right things to ensure its bright future." That means keeping itself relevant and taking advantage of new technology in a digital world, including new possibilities created by FM-enabled mobile devices.
"Some smart phones already have the FM chip, but they are not enabled," Caroline Beasley said in an interview after the conference call. "Some phones are enabled, but people aren't aware of it. They don't know it's a feature."
She said an HD chip in place of the FM chip in mobile devices offers the opportunity for a more interactive experience with listeners, including the ability for them to receive coupons from radio advertisers.
"HD radio brings pictures to your radio," Beasley said. "I don't know if many people know that."Connect with Laura Layden at www.naplesnews.com/staff/laura_layden