Digital growth was a third quarter 2019 highlight for Beasley Media Group, growing nearly 37% year-over-year and accounting for 7.4% of the company’s third quarter revenue, up from 5.4% in third quarter 2018.
“We are in the midst of aggressively rolling out a digital expansion and transformation across the company and during the third quarter we continued our investment in the development and diversification of our digital platform,” CEO Caroline Beasley told analysts on a call discussing the results. The company recently hired Todd Handy to the newly created position of Chief Digital Officer, while continuing to develop a digital support team. Digital revenue increased 22.5% on a year-to-date basis.
Without providing details, Beasley said the company is “in the process of rolling out our first series of BMG-produced syndicated music videos,” while continuing to work with on air talent to extend their brand to digital. “As a result, our digital expansion efforts are showing record growth including an increase in users year over year of 68% and page views are up 31%,” she said.
Beasley also pointed to the August closing of a $13.5 million acquisition of WDMK Detroit as a highlight from the quarter. “The acquisition of DMK is immediately accretive to the free cash flow and will contribute approximately $2.6 million in pro-forma station operating income and this includes synergies, while moving us closer to our goal of achieving 30% revenue share in the market,” Beasley said. “We look forward to realizing the financial and strategic benefits of this transaction in 2020.”
As earlier reported by Inside Radio, the company reported record third quarter revenue of $66.1 million, up $1 million year-over-year. The 1.5% increase reflects increased billings at the company’s Philadelphia, Detroit, Boston, Charlotte, Fayetteville and Wilmington market clusters, along with revenue contributions from recent station acquisitions.
Looking at year-over-year comparisons, the company in Q3 2018 had about $240,000 of non-recurring United States Traffic Network traffic revenue and $300,000 of non-recurring revenue related to a cancelled spectrum license. In addition, Q3 2019 levels were impacted by a $375,000 decline in political revenue from $700,000 in the 2018 mid-term election year. “As such, excluding the combined $915,000 of revenue related to these items, our Q3 2019 net revenue would have grown 2.9%,” Beasley said. On a same station basis, revenue for the quarter was essentially flat or minus $43,000. Same station spot advertising was flat, excluding political.
Looking past the revenue line, Beasley said the company’s “strategic accretive acquisitions, combined with our focus on margins and synergy, drove a 12.7% increase in reported third quarter station operating income to $16.7 million.”
Bringing Philadelphia’s WXTU back into the company fold is paying off as the station generated a 16% year-over-year revenue increase on a pro-forma basis. Beasley’s pro-forma revenue in Philly rose 5.4% and the cluster had a 28% revenue share in Q3.
Free cash flow was $4.6 million, down from $5.4 million, due to investments in digital platforms, buildout of the Philadelphia studios, increased borrowing costs and higher taxes.
Consumer services remained Beasley’s largest ad category, CFO Marie Tedesco said, representing around 26% of revenue and up 12% year-over-year during the quarter.
Retail was the second biggest category, with 16% of company revenue, up 1.5%. Entertainment was flat and Auto, the company’s fourth largest category, was down 5%, representing 13% of revenue.
“The top four categories accounted for approximately 69% of our total third quarter net revenue,” Tedesco said.
Operating income was approximately $9.4 million, compared to $9.3 million in Q3 2018, while net income increased 15.6%, or $410,000, to $3 million primarily as the result of higher station cash flow.
Beasley said she’s excited about the company’s expansion into Esports and the potential opportunities it brings. This includes investments in Checkpoint XP in 2018 and a syndication agreement with Sun Radio Group for Checkpoint XP Radio, now carried on 70 radio stations. The company’s Esports division also partnered with the University of Las Vegas for Checkpoint XP on Campus, “positioned as the voice of collegiate Esports produced for students by students with a show that airs weekly,” she continued.
Beasley said the company would continue to look at strategic investments in what is now its three “core buckets” – radio, digital and Esports. She said the company will “focus on investments that diversify the company on a long-term basis, particularly in digital and Esports.