Beasley Broadcast Group has announced operating results for the three-and twelve-month periods ended December 31, 2019. The results presented herein reflect actual results including the operations of WXTU-FM in Philadelphia since its acquisition in September 2018 and WDMK-FM in Detroit since its acquisition in August 2019.
The $3.5 million, or 4.6%, year-over-year decrease in net revenue during the three months ended December 31, 2019 reflects the cyclical impact of strong political adverting revenue recorded in the prior year period, partially offset by fourth quarter 2019 revenue increases in six of the Company’s market clusters.
Beasley reported operating income of $11.2 million in the fourth quarter of 2019 compared to operating income of $13.9 million in the fourth quarter of 2018, largely reflecting the year-over-year decrease in SOI, in addition to higher corporate expenses related to digital growth investments and a $12.4 million non-cash impairment charge related to Beasley’s AM stations in Boca Raton and Atlanta and a $1.3 million impairment loss on an investment, partially offset by a $17.1 million gain from land and tower sales during the period.
Fourth quarter 2019 interest expense was flat year-over-year at approximately $4.5 million. Beasley reported net income of $4.8 million, or $0.17 per diluted share, in the three months ended December 31, 2019, compared to net income of $2.1 million, or $0.08 per diluted share in the three months ended December 31, 2018. The increase was primarily due to the aforementioned gain from land and tower sales, and lower income tax expense compared to the prior year period.
Caroline Beasley
Commenting on the financial results, Caroline Beasley, Chief Executive Officer, said, “Fiscal year 2019 was an active and productive period for Beasley as we continued to make significant progress rolling out our digital expansion and transformation initiatives across the Company, while advancing our revenue diversification strategies and actively managing our local radio platform to drive long-term SOI growth and margin expansion. Beasley’s fourth quarter net revenue decline of $3.5 million primarily reflects a $2.8 million reduction in political advertising revenue compared to the prior year period. While we were not able to fully offset the cyclical impact of political revenue, the fourth quarter radio advertising environment remained healthy with six of our markets generating year-over-year revenue increases.
“By opportunistically divesting several non-core land and tower assets in 2019, Beasley generated a 31% increase in full year free cash flow over the prior year period, which enabled us to complete several strategic growth and diversification investments in our broadcast, digital, technology and esports platforms throughout the year. Our fourth quarter results highlight the value we have begun extracting from our digital transformation strategy investments. In the fourth quarter, Beasley generated digital revenue growth of approximately 44% on a year-over-year basis, with digital now accounting for 9.2% of total revenue, compared to 6.1% of total revenue in the prior year period. With our focus on quality content production and consumer engagement, we are growing audience share across our digital platforms while delivering multi-platform turnkey marketing solutions to advertisers and brands. Overall, we are pleased with the momentum and trajectory of our digital initiatives and look forward to this growth trend continuing in 2020.
“In 2019, we also continued our disciplined approach to growing our platform, content portfolio and distribution by identifying and completing transactions where we can drive revenue and cost synergies, and further strengthen SOI margins, with a limited impact on our leverage as we applied capital from the sale of non-core assets and cash from operations to make these investments. In August, we completed the accretive and deleveraging acquisition of WDMK-FM, which is complementary to our three existing radio stations and digital operations in Detroit and moves us closer to our goal of achieving 30% revenue share in the market. The integration of WDMK-FM is proceeding according to plan, and we expect to realize the full financial and strategic benefits of this transaction in 2020.
“During the fourth quarter we further expanded Beasley’s role in the fast-growing esports vertical by acquiring a majority interest in the Houston Outlaws, one of only 20 Overwatch League teams in the world. The transaction partners Beasley with Blizzard Entertainment and its parent company Activision Blizzard, a leading global developer and publisher of interactive entertainment content and services. Our growing esports infrastructure and management combined with our success in hosting and promoting large events and our national esports content hub—BeasleyXP—are key factors in our expectations for long-term returns from this investment.
“In addition to our growth and diversification initiatives, we remain committed to enhancing shareholder value through capital returns and leverage reduction. In the fourth quarter, we used net cash provided by operating activities to pay our twenty-fifth consecutive quarterly cash dividend and made voluntary debt repayments of $7.0 million, with total outstanding long-term debt of $263.5 million as of December 31, 2019.
“In 2020, Beasley intends to continue to actively manage our business to best position the Company for the future with the goal of delivering exceptional content and services to our listeners, advertisers, online users and esports fans, while creating new value for our shareholders. We remain focused on 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. We believe our radio platform and competitive positions in our markets are as strong as ever and remain confident that our revenue diversification initiatives, including our digital media initiatives, are creating new opportunities for further growth and enhanced shareholder returns.”
