- The Washington Times - Monday, December 1, 2003

Washington radio broadcasting company Radio One Inc. yesterday announced plans to purchase WSNJ-FM in Philadelphia.

The move was praised by several analysts and helped send the company’s shares higher, closing yesterday on the Nasdaq at $17.91, up 80 cents from $17.11 a week earlier.

The company, which primarily targets black and urban listeners, agreed to buy the station from New Jersey Radio Partners LLC for $35 million. The transaction is expected to close during the first quarter of 2004.

Radio One owns 66 radio stations in 22 markets nationwide, two of which are in the Philadelphia area.

Most of the company’s growth will be through “fill-in acquisitions” like the Philadelphia station, in which Radio One buys startup and smaller stations in key cities to dominate the urban audience, said James Marsh Jr., a broadcasting and publishing analyst with SG Cowen Securities Corp., a New York investment banking firm.

“More extensive growth will be from strategic buys in untapped cities” like New York, Mr. Marsh said. A Radio One spokesman was not available to comment.

Mr. Marsh, who rated the company a “strong buy,” credited the black audience, increasing 75 percent faster than other radio audiences, for Radio One’s station growth. Mr. Marsh does not own Radio One stock.

“The company’s urban radio formats have become more mainstream in the past decade,” which helped Radio One outpace the industry as a whole for the past five years, Mr. Marsh said.

While ad revenues are recovering slowly after plummeting during the Iraq invasion in March, Lanny Baker, an analyst with Citigroup subsidiary Smith Barney, said Radio One’s sluggish third-quarter revenues suggest smaller profits for 2004.

Broadcast revenue for the third quarter ended Sept. 30 edged up 2 percent to $92.6 million from $91.2 million a year earlier. Profits jumped 30 percent to $16.7 million (16 cents per share) from $12.8 million (12 cents) a year earlier.

“We believe that looking ahead the company’s revenue and profit growth may be more modest and closer to the radio industry averages than it has been in the past five years,” Mr. Baker said in his most recent report, advising investors to hold their Radio One shares.

Mr. Baker does not own any of the company stock.

The purchase comes as Radio One plans to roll out a network cable TV channel, TV One LLC, for black audiences next month as a joint venture with Philadelphia cable company Comcast Corp.

Kit Spring, vice president for equity research at the St. Louis brokerage firm Stifel, Nicolaus & Co. Inc., called the network “a no-brainer” because of demand for a rival channel to Black Entertainment Television Inc., a Washington cable channel for black audiences and a Viacom Inc. subsidiary.

“Cable companies want another network that caters to the urban market to break the virtual monopoly of BET,” he said, rating Radio One as a “buy.” Mr. Spring, who does not own any Radio One shares, said he expected the new cable network, which is costing $130 million to start, will break even in the next few years.


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