Beasley Media Reports Net Revenue Was Flat During 1Q

Beasley Broadcast Group, Inc. has announced operating results for the three-month period ended March 31, 2020.

The results presented reflect actual results including the operations of WDMK-FM in Detroit since its acquisition in August 2019.

Operating income (loss), net income (loss) and net income (loss) per diluted share reflect $6.8 million of non-cash impairment losses in the three months ended March 31, 2020 and a $3.5 million gain on dispositions in the three months ended March 31, 2019.

Net revenue during the three months ended March 31, 2020 reflects strong political advertising revenue, an increase in digital advertising and esports revenue and contributions from the August 2019 acquisition of WDMK-FM, partially offset by a year-over-year decrease in commercial advertising revenue and other revenue related to the impact of the COVID-19 pandemic.

Beasley reported an operating loss of $7.1 million in the first quarter of 2020 compared to operating income of $6.8 million in the first quarter of 2019, largely reflecting the year-over-year decrease in Station Operating Income (SOI, a non-GAAP financial measure), in addition to higher operating expenses related to the acquisition of WDMK-FM and esports investments, higher depreciation and amortization expense, and a $6.8 million non-cash impairment charge resulting from the impact of the COVID-19 pandemic on advertising revenue, partially offset by lower corporate expense. The comparable 2019 period benefitted from a $3.5 million gain on asset dispositions.

First quarter 2020 interest expense decreased 8.8% to $4.2 million compared to interest expense of $4.6 million in the prior year period, due to lower interest rates, partially offset by an increase in long-term debt outstanding.

Beasley reported a net loss of $8.8 million, or $0.32 per diluted share, in the three months ended March 31, 2020 compared to net income of $1.4 million, or $0.05 per diluted share, in the three months ended March 31, 2019. The year-over-year decrease was primarily due to the aforementioned non-cash impairment charge recorded in the first quarter of 2020 and the gain on asset dispositions in the prior year period.

Caroline Beasley

Commenting on the financial results, Caroline Beasley, Chief Executive Officer, said, “During the first quarter, the broadcast industry experienced a rapid deterioration in market conditions brought on by the onset of the COVID-19 pandemic, which resulted in a significant decline in commercial advertising revenue in March. Despite these challenges, first quarter net revenue was $57.7 million, primarily reflecting strong performance across our station clusters in seven markets during the months of January and February driven by robust political ad spending and contributions from WDMK-FM, as well as significant growth in digital and esports revenue. However, our top-line growth was not able to fully offset the acute challenges brought on by the COVID-19 pandemic during the three-month period, resulting in a year-over-year decline in first quarter SOI and Free Cash Flow.

“During the first quarter, we continued to advance our digital transformation and revenue diversification initiatives across the Company. In this regard, Beasley generated digital revenue growth of approximately 49% on a year-over-year basis, with digital accounting for approximately 9% of total first quarter revenue, compared to 6% of total revenue in the prior year period. In addition, Beasley launched the first major esports event featuring the Houston Outlaws, which the Company acquired in November 2019, securing several new sponsorships as the team began competing in Blizzard Entertainment’s Overwatch League matches in February. With our focus on quality content production and consumer engagement, we are growing audience share across our digital and esports platforms while delivering multi-platform turnkey marketing solutions to advertisers and brands. Overall, we are pleased with the momentum and trajectory of these digital and esports initiatives, which have been less impacted by COVID-19, and look forward to this growth trend continuing throughout the remainder of the year and beyond.

“Since the nationwide COVID-19 outbreak, we implemented immediate actions to adapt our business to protect our employees and preserve liquidity in order to best position the Company, our stations, our digital operations, and our esports interests for renewed long-term success. In this regard, we have quickly implemented several changes across the Company including reducing operating expenses and corporate overhead, decreasing selling, general and administrative costs and realigning our company-wide cost structure to preserve cash."