Radio station owner and Overwatch League eSports team owner Beasley Media Group has become the first of the nation’s publicly traded radio and television broadcasting companies to release its fourth quarter and full-year 2022 results.
An 11am Eastern earnings call was held Thursday morning, with CEO Caroline Beasley and CFO Marie Tedesco discussing the results. Were the company’s results in line with estimates provided by the two Wall Street analysts tracking Beasley?
The answer is yes. And no.
Net revenue in Q4 climbed to $72 million from $70.7 million in the year-ago period, meeting the high revenue target and easily beating the low revenue target of $70.8 million from the two analysts polled by Yahoo! Finance.
But, what about Earnings Per Share?
Beasley swung to a net loss of $25.85 million (-$0.87 per share), from net income of $10.58 million ($0.36) in Q4 2021.
This is a big difference from the EPS estimates of $0.04, and $0.11, offered by the two analysts. What happened? Beasley’s operating loss, net loss and net loss per diluted share for the three months ended December 31, 2022 include $44.2 million of non-cash impairment losses related to FCC licenses, goodwill and franchise rights.
That’s why the non-GAAP measure of Station Operating Income has proven to be a key measure of where radio broadcasting companies that opt to take such non-cash charges are, with respect to profits and revenue. SOI in Q4 for Beasley was flat, at $13.9 million.
On a full-year basis, revenue climbed to $256.4 million from $241.4 million as a net loss widened to $43.4 million from $1.5 million. Station Operating Income was up to $43.1 million from $42 million.
The arrival of Beasley’s Q4 and full-year ’22 results come as the company’s lightly traded stock continues its Q1 2023 comeback from a dip to $0.91 seen just before the start of this year.
As of 11:20am Thursday, BBGI was trading at $1.19, down 6 cents.
It’s been a tough five years for long-term shareholders, as it was in June 2018 that BBGI started its tumble from low-$11 closing prices to $6.45 just one month later. Continued declines have been seen ever since, with a small 2021 rally fizzling.
Beasley’s 1-year target price is presently $2.25 per share.
Ahead of the 11am Eastern call, Caroline Beasley said the Q4 and the company’s full-year 2022 results “reflect the ongoing success of our digital transformation and revenue diversification strategies, which drove year-over-year increases in revenue and Station Operating Income (SOI) for both the three- and twelve-month periods.”
Caroline Beasley continued, “Throughout the year, Beasley largely offset ongoing challenges related to the economy and softness in the national spot market, as we generated healthy growth across all of our digital, local audio, political and other revenue sources, as reflected by the 6.2% increase in full year net revenue. This top-line growth was the primary factor contributing to a 2.8% year-over-year increase in full year SOI.”
DIGITAL PROWESS
While economic uncertainty remains, Beasley touted its digital strategy; Q4 digital revenue growth of 13.2% was seen year-over-year, and digital now represents nearly 17% of total fourth quarter revenue. In fact, Caroline Beasley said digital revenue “has consistently outpaced national spot advertising revenue over the past several quarters due to a combination of organic growth and contributions from the second quarter acquisition of our white label digital agency business, Guarantee Digital.”
With accelerating demand from consumers and advertisers for our local content and multi-platform marketing solutions, Beasley Media Group is “solidly on the path for this revenue source to reach 20% of total revenue,” Caroline Beasley said.
Beasley Media Group also remains focused on monetizing its premium audio and digital content through new local business development, revenue diversification and maximizing political revenue opportunities, she added. This helped Beasley in Q4 earn $5.1 million in net political revenue, with stronger than expected gains in Las Vegas, Philadelphia, and Detroit.
On the earnings call, Ms. Beasley noted that “headwinds” for national ad dollars remain strong, and on an ex-political basis dollars were down 25% in Q4. Higher local and digital revenue is helping to offset the national decline, which is expected to continue, she said.
On a positive note, the eSports business also saw year-over-year revenue increases, the company shared.
Also helping keep SOI flat in the quarter — a “cost reduction program” in the second half of 2022, with the majority of “cost cuts” occurring in October.
Speaking on the earnings call, Tedesco shared the trends for audio ad revenue in Q4. October was up 8%, while November and December were each down 2%, driven largely by double-digit dips in national and slightly lower local, in particular during December. Retail and Entertainment were down; they are the No. 2 and No. 3 categories for Beasley. No. 4 category Automotive dipped 3% ($190,000) in Q4, accounting for 8.8% of total revenue — despite big increases in spending in markets including Detroit.
Among the other financial details regarding Beasley: Total outstanding debt as of December 31, 2022 was $290 million, reflecting its bond repurchase activity throughout 2022. As such, fourth quarter interest expense declined to $6.6 million. Beasley had $39.5 million of cash and cash equivalents on hand at quarter’s end.
“We intend to keep our cash on the balance sheet in order to maintain our strong liquidity position, given the uncertain economic environment,” Caroline Beasley said.
Looking ahead to 2023, no specific guidance was offered by either Caroline Beasley or Marie Tedesco. But, Beasley shared that for Q1 2023, January was flat while February and March are trending up low-single-digits. Local is the driver, with national the struggle for the company.
Ms. Beasley commented, “Our strategic priorities remain focused on growing our overall audience and delivering exceptional content and services to our listeners, advertisers, online users and esports fans, while diversifying our revenue, growing our cash flow and maintaining a solid and flexible balance sheet with liquidity at current or higher levels, which we believe will best position Beasley for near- and long-term success and the enhancement of stockholder value.”
