Tuesday, August 08, 2006

What's Up with Talk Radio Stocks?

The Wall Street Journal has an article today on Westwood One, one of my favorite radio broadcasting companies. I recognize Westwood One because I love sports on the radio and they broadcast many college and NFL football games.

(T)he New York company, which is 18%-owned by CBS Corp., is struggling amid a general slowdown in radio advertising and competition from new players that sell programming at reduced rates. At the same time, costs for radio talent are rising as satellite-radio operators are paying top dollar for big names.

Westwood One's 2 year stock chart.

Here are some of the others.

Clear Channel

Salem Communications, home of Hugh Hewitt, Michael Medved and Dennis Prager.

Just to give you a frame of reference, here's Salem vs. the S&P 500 over the same time frame.

Sirius Satellite is having problems, too.

What gives? I went and did a cursory scan of Salem Communications and they seem like a healthy, growing company. In the two years covered in that chart they have had real growth.

Gross income up from $178M to $212M.
Profit up from a loss of $677K to a profit of $12.6M.

Their long term debt has gone down and their shareholders' equity has gone up. The only thing I can think of is either they were overvalued two years ago or they project badly into the future. Are people predicting that podcasts downloaded off the Internet will replace listening to the radio?

The Feline Theocracy's Patriarch of the Airwaves, Hugh Hewitt, is now podcasting, but given the choice, I prefer to listen to him live. The podcast merely fills in for the times when it's really interesting and I can't turn on the radio. As for sports, how can podcasts replace that?

Westwood One is embracing the digital age with some clever ideas marrying their old business with new ones.

Pushing to reach new listeners through wireless-linked personal data assistants, mobile phones, and in-car navigation devices, the company has cut deals to get its real-time traffic information onto Yahoo Maps and the in-car navigation screens made by companies like Navteq Corp. Mr. Kosann sees room for more growth, boosting the percentage of sales represented by those outlets into the double digits from 8%.
Hmm. This requires some more thought.

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