Nothing is this document should be construed as investment advice. It is presented to give visitors to the web site an idea of who owns America’s radio stations, and how they may be affected by the global economic problems of 2008/9.
Beasley Broadcast Group (Website) is a publicly traded (Nasdaq: BBGI) radio station owner that operates about 44 radio stations (17 AM/27 FM) in the United States. Beasley’s stations are located mostly in North Carolina, Georgia, and South Florida and the Philadelphia area. Beasley is headquartered in Naples Florida, and employs about 850 people.
History
George G. Beasley (now age 74) started in the radio business when he started WPYB-AM in Benson, NC in 1961 – a 500 watt daytime only station that he and his relatives built by hand, and operated from a mobile home that was bartered in exchange for free advertising for the mobile home dealer. In 1966, he sold the station for $125,000 and bought a more powerful station in Goldsboro, NC (WFMC-AM). In 1969, he left his job as a School Principal to go into radio full time. In 1976, he acquired a station in Cleveland, Ohio improved the antenna and resold it at a profit, then bought an AM & FM station in Las Vegas in 1988. During the 80s and 90s, the company acquired, improved and resold a number of stations – one FM station in Los Angeles was sold for $115 million. In 1996, the FCC relaxed the FCC license ownership limits and
[Begin standard boilerplate here]
The company launched its IPO in [2000], with two classes of stock, Class A which is publicly traded on NASDAQ, and Class B which is held by the founder’s family and gets 10 votes/share resulting in control of [81.9%] of the company’s votes. The company used the IPO and borrowed money to buy a number of radio stations. The Clinton era stock bubble burst in late 2000, the value of station licenses deteriorated in the mid 2000s, advertising revenue has fallen as younger people are not listening to radio, the company’s debt service costs and buyback of Class A stock began to consume much of the company’s free cash flow and culminated in a large impairment charge – writing down the value of its intangible FCC licenses and goodwill, the main asset held by the company. In 2009, the company sought to renegotiate the term of its LIBOR based credit facility. The company has interest rate swaps in place to limit the risk of an increase in LIBOR based interest rates on its credit facility.
[End boilerplate text]
Specifically, the company raised $97 million from its IPO and acquired Centennial Broadcasting for $113 million. Centennial owned stations in Las Vegas and New Orleans.
May 29, 2009 the company announced it was selling 2 stations in Las Vegas for about $12.5 million in cash.
For the first quarter of 2009, the company had a net profit of $7,944.00 (after paying $2 million in interest).
Stations Owned
+-------------+------------------+--------+ | Station | City | State | +-------------+------------------+--------+ | WTMR AM | CAMDEN | NJ | | WWDB AM/HD | PHILADELPHIA | PA | | WXTU FM/HD1 | PHILADELPHIA | PA | | WRDW FM/HD1 | PHILADELPHIA | PA |
| WJBR FM/HD1 | WILMINGTON | DE | (paid $42.2 million in 2007)
| WAEC AM/HD | ATLANTA | GA |
| WRCA AM | WATERTOWN | MA | (Boston)
| WQAM AM/HD | MIAMI | FL | | WHSR AM/HD | POMPANO BEACH | FL | | WSBR AM/HD | BOCA RATON | FL | | WWNN AM/HD | POMPANO BEACH | FL | | WKIS FM/HD1 | BOCA RATON | FL | | WPOW FM/HD1 | MIAMI | FL |
| KDWN AM/HD | LAS VEGAS | NV | | KKLZ FM | LAS VEGAS | NV | | KBET AM | WINCHESTER | NV | (Paid $2.7 million in 2007) | KFRH FM/HD1 | BOULDER CITY | NV | | KCYE FM | NORTH LAS VEGAS | NV | (KCYE's programming will move to KFRH?)
| WWCN AM/HD | NORTH FORT MYERS | FL | | WJBX FM/HD1 | FORT MYERS BEACH | FL | | WJPT FM/HD1 | FORT MYERS | FL | | WRXK FM/HD1 | BONITA SPRINGS | FL | | WXKB FM/HD1 | CAPE CORAL | FL |
| WNCT AM/HD | GREENVILLE | NC | | WIKS FM/HD1 | NEW BERN | NC | | WMGV FM/HD1 | NEWPORT | NC | | WNCT FM/HD1 | GREENVILLE | NC | | WSFL FM/HD1 | NEW BERN | NC | | WXNR FM/HD1 | GRIFTON | NC |
| WRDW AM/HD | AUGUSTA | GA | | WCHZ FM | HARLEM | GA | | WKXC FM | AIKEN | SC | | WGUS FM | NEW ELLENTON | SC | | WGUS AM | AUGUSTA | GA | | WDRR FM | MARTINEZ | GA | | WGAC AM/HD | AUGUSTA | GA | | WWWE AM/HD | HAPEVILLE | GA | | WGAC FM | WARRENTON | GA | | WHHD FM/HD1 | CLEARWATER | SC |
} WAZZ AM | FAYETTEVILLE | NC | | WFLB FM | LAURINBURG | NC | | WKML FM | LUMBERTON | NC | | WUKS FM | ST PAULS | NC | | WZFX FM/HD1 | WHITEVILLE | NC | | WTEL AM | RED SPRINGS | NC | +-------------+------------------+--------+
Sale of station pending
Ownership
There are two classes of stock:
Class A – 8.5 million shares, 1 vote/share – traded on NASDAQ as BBGI. Company has been aggressively using borrowed money to buy up the Class A shares (increasing the % of ownership of the Class B shares). Class A stockholders have the right to choose 2 members of the Board of Directors.
Class B – 16.6 million shares, each with 10 votes/share. Note that even with the 10:1 non-proportional voting rights, the Class B stock outweighs the Class A ownership.
Management
George Beasley is the Chairmand and CEO and has been since the company’s founding in 1962
Bruce Beasley (George’s Son) is President and COO, a position he has held since 1997. He began working for the company in 1975 (which would have made him 15 years old).
Beasley’s other children Caroline and Brian serve on the board of directors.
Institutional Owners:
| Class A Owner | Location | Approx # Shares |
|---|---|---|
| Gamco Investors(Possibly a holding in a closed end mutual fund that isn’t allowed to sell) |
Rye, NY | 1.3 Million |
| King Luther Capital | Ft Worth, TX | 951,000 |
| Dimensional Fund Advisors | Austin, TX | 412,000 |
| Vanguard | Valley Forge, PA | 194,000 |
| California Public Employee Retirement | Sacramento, CA | 92,000 |
Financial Condition
(2008 10-K) (2009 1st qtr 10-Q)
Key Balance Sheet Items: (2008)
Total Assets: $264 Million
- Value of Radio Station licenses: $191 million
- Goodwill and other intangible Assets: $13 Million
- Cash: $3 Million
- Accounts Receivable: $20 Million (60 days of revenue)
- Land, Buildings, Equipment (net) $26 Million
Debt:
- Current Liabilities: $13 million
- Long Term Debt: $174 Million
Stockholder Equity: $47 Million
Credit Facility
The company had $221 Million available in its credit facility at the end of 2008, and by March 31st has an $174M credit facility, $119 million in term loans, and $55 million in revolving credit. $167 million is currently borrowed against the facility. In March 2009, the terms of the facility were modified to prohibit the company from using funds to repurchase company stock.
Swap transactions
The company has in place Interest Rate swaps to cover the risk of an increase in LIBOR for about $110 Million of their credit facility.
10-k Notes
Beasley could be adversely affected by hurricanes. Its headquarters and 11 of its stations are located in Florida (along with many stations in Coastal North Carolina).
Much of the office space and radio towers used by Beasley Broadcasting are leased from independent companies owned by George Beasley for a total of about $500k a year. The company funded the sale/leaseback purchase of the towers by extended an unsecured 6% loan to Mr. Beasley, on which $3.7 million is still owed.
Profitability
| All numbers in $million | 2008 | 2007 | 2006 | 2005 | 2004 |
| Radio Revenue | 121 | 133 | 125 | 124 | 122 |
| License Impairment | 62 | 2 | 2 | ||
| Operating Income (Without Impairment) |
24 | 12 | 10 | 10 | 4 |
| Long Term Debt Balance | 170 | 191 | 154 | 144 | 158 |
| Debt Service Cost | 9 | 14 | 9 | 7 | 12 |
Stock Performance
In December 2008, the stock fell below $1/share, which requires most institutional investors to sell their holdings. Since that time, there is virtually no trading in this stock. The company did pay a small cash dividend up until 3rd quarter of 2008.
The stock ended its first day of trading at 14 1/8 ($14.125). It reached $15.81 before the stock market collapse in the fall of 2000. The stock finished 2000 at $8.31. In February 2004, the stock hit its peak of $19.09 a share. The stock stayed around $15 share through 2006 when it broke down through the $10 mark. In March 2008, it went below $5 (a key price at which some institutional investors cannot buy and other trading restrictions kick in). On December 2nd, the stock hit $.76, when 2.2 million shares were sold in one day… (that was the company buying back 1 million of its own shares) . The stock closed on May 29th 2009 (see related news story) at $2.60 a share.
If you bought the stock at the IPO, you have lost 81% of your investment (not including cash dividends). If you bought at the peak of $19.09, you have lost 86% of your investment. If you bought some of that 2 million shares in December, you have a theoretical gain of 242%, but that’s theoretical because it was the company doing the buying.