Beasley Broadcast Group has announced operating results for the three month and twelve month periods ended December 31, 2017.
The $4.8 million, or 9.0% increase in net revenue to $58.5 Million, reflects the inclusion of stations acquired from Greater Media in Boston, Philadelphia, Detroit and New Jersey, partially offset by the disposition of the Charlotte and Greenville-New Bern-Jacksonville stations and strong non-recurring political advertising revenue recorded in the year ago fourth quarter.
Station Operating Income (SOI) declined 7.3% year-over-year in the fourth quarter of 2017. The decrease reflects higher expenses related to the operations of the acquired Greater Media stations as well as lower comparable quarterly net revenues at Beasley’s existing stations versus the 2016 period due in part to non-recurring political ad spending.
Commenting on the financial results, Caroline Beasley, Chief Executive Officer, said, “Throughout 2017, we continued to actively manage our station portfolio to extract operating and financial synergies from the acquired Greater Media stations, while implementing our proven strategies across our platform, which are focused on delivering strong local programming, diversifying our operations, managing risk and improving financial results.
“On a GAAP basis, fourth quarter net revenue rose 9.0% compared to the prior year, primarily reflecting the acquisitions and divestitures to our platform on a year-over-year basis. Pro forma net revenues for the three months ended December 31, 2017 declined 6.9% compared to the prior year period, reflecting $3.9 million in non-recurring political advertising revenue and softer national advertising revenue. The year-over-year decline was partially offset by a 6.5%, or $3.5 million, reduction in pro forma station operating expenses. As a result, Beasley’s fourth quarter pro forma SOI declined 7.8% year over year while SOI margins were relatively flat compared to the prior year period.
“In the fourth quarter, we completed the accretive asset exchange transaction of WMJX-FM for WBZ-FM, with approximately $6.0 million of the $12.0 million cash consideration funded by additional borrowings. WBZ-FM is highly complementary to our five other radio stations and digital operations in the Boston market and its addition to our portfolio further diversifies our content offerings with marquee sports programming and live game broadcasts of several of the most prominent and competitive professional sports teams in the country. Importantly, we expect the asset exchange to be accretive to the Company’s financial results and believe it represents another unique and innovative means for Beasley Broadcast Group to enhance shareholder value.
“In addition to the station swap in November, we successfully refinanced our credit facility, increasing the principal amount to $225 million and reducing our interest rate by 200 basis points. Over the past two years, we have continued our disciplined approach to growing our platform by executing accretive transactions that deliver valuable synergies and the potential for SOI margin improvement, all with a limited impact to our leverage.
“With our strong operating cash flows and commitment to return capital to shareholders, we declared our eighteenth consecutive quarterly cash dividend during the fourth quarter.
“Focusing on strong core programming and targeted original local content across all distribution platforms is the foundation of our operating strategy and has proven vital to the Company’s long-term ratings strength and success. In this regard, during the fourth quarter we made progress on phase 2 of our mobile technology update and expect to roll out our new mobile applications by mid-year 2018. In addition, the Amazon Alexa platform now features live streams and podcasts from 65 of our brands and we are encouraged by the preliminary data we have received on this initiative.
“Looking ahead to 2018, we intend to continue our strategic priorities of realizing synergy targets, reducing debt and leverage, taking advantage of political revenue opportunities, improving top and bottom-line performance and returning capital to shareholders through our quarterly cash dividend. With enhanced opportunities to monetize our strong core programming and local brands, we remain confident in the radio industry and in Beasley’s growing broadcast and digital platform. We look forward to realizing the strategic benefits of the WBZ transaction in 2018 and remain confident that our ongoing initiatives to drive sales, productivity and efficiency across our platform, combined with prudent management of our capital structure, is a proven formula for sustained long term financial growth and the creation of shareholder value.”