COCONUT GROVE, Fla., March 23 /PRNewswire-FirstCall/ -- Spanish Broadcasting System, Inc. (the 'Company' or 'SBS') (Nasdaq: SBSA) today reported financial results for the fourth quarter and fiscal year ended December 31, 2008.
Discussion and Results
Raul Alarcon, Jr., Chairman and CEO, commented, 'Our fourth quarter financial results were impacted by the national recession and industry-wide advertising slowdown, offset in part by the robust growth at MegaTV. Our TV operations exceeded our expectations during the quarter with 95% revenue growth over the prior year. We are continuing to build on MegaTV's expanded distribution and ratings traction and we are successfully monetizing our growing audience shares. Our radio stations faced a very difficult operating environment during the quarter as advertisers decreased their budgets in the nation's top markets. However, we continued to generate industry-leading audience shares across our portfolio. We also continued to seek avenues to reduce our operating expenses, while maintaining prudent levels of investment in our station brands, content and sales personnel. Looking ahead, the advertising market remains weak and visibility is limited, but we believe we are taking the right steps to position the company for growth over the long-term.'
Quarter Results
For the quarter ended December 31, 2008, consolidated net revenue totaled $40.9 million compared to $46.2 million for the same prior year period, resulting in a decrease of $5.3 million or 12%. This consolidated decrease was attributable to our radio segment which had a net revenue decrease of $8.2 million or 19%, offset by an increase in our television segment net revenue of $2.9 million or 95%. Our radio segment had a decrease in net revenue primarily due to lower local and national sales caused mainly by the decline in economic conditions. The decrease in local sales occurred in all of our markets, excluding an increase in our Puerto Rico market. The decrease in national sales occurred in all of our markets. Our television segment continues to increase its advertising and content demand as our MegaTV content continues to increase its viewership. Our television segment net revenue growth was primarily due to the increases in local spot sales, subscriber revenue related to the DirecTV affiliation agreements, national sales, barter sales, and sponsorship sales.
Operating (loss) income totaled $(20.1) million compared to $5.8 million for the same prior year period. The decrease in operating (loss) income was mainly due to the decrease in consolidated net revenue and the impairment of FCC broadcasting licenses and restructuring costs of $22.7 million, offset by a decrease in corporate expenses. Please refer to the Impairment of FCC Broadcasting Licenses and Restructuring Costs section for a detailed discussion.
Operating income before depreciation and amortization, gain on the disposal of assets, net, and impairment of FCC broadcasting licenses and restructuring costs, a non-GAAP measure, totaled $4.2 million compared to $7.1 million for the same prior year period, representing a decrease of $2.9 million or 41%. This decrease was primarily attributed to the decrease of $2.5 million in our radio segment and an increased loss of $1.9 million in our television segment, offset by a decrease of $1.5 million in corporate expenses. Please refer to the Segment Data and Non-GAAP Financial Measures section for definitions and a reconciliation of GAAP to non-GAAP financial measures.
(Loss) income before income taxes totaled $(31.6) million compared to $0.9 million for the same prior year period.
Fiscal Year Results
For the fiscal year ended December 31, 2008, consolidated net revenue totaled $163.7 million compared to $179.7 million for the same prior year period, resulting in a decrease of $16.0 million or 9%. This consolidated decrease was attributable to our radio segment which had a net revenue decrease of $24.1 million or 14%, offset by an increase in our television segment net revenue of $8.1 million or 80%. Our radio segment had a decrease in net revenue primarily due to lower local and national sales caused mainly by the decline in economic conditions. The decrease in local sales occurred in all of our markets, excluding an increase in our Puerto Rico market. The decrease in national sales occurred in all of our markets. Our television segment continues to increase its advertising and content demand as our MegaTV content continues to increase its viewership. Our television segment net revenue growth was primarily due to the increases in local spot sales, subscriber revenue related to the DirecTV affiliation agreements, national sales, barter sales, and sponsorship sales.
Operating (loss) income totaled $(408.2) million compared to $34.7 million for the same prior year period. The decrease in operating (loss) income was mainly due to the decrease in consolidated net revenue and the impairment of FCC broadcasting licenses and restructuring costs of $421.1 million, offset by a decrease in corporate expenses. Please refer to the Impairment of FCC Broadcasting Licenses and Restructuring Costs section for a detailed discussion.
Operating income before depreciation and amortization, gain on the disposal of assets, net, and impairment of FCC broadcasting licenses and restructuring costs, a non-GAAP measure, totaled $19.2 million compared to $39.5 million for the same prior year period, representing a decrease of $20.3 million. This decrease was primarily attributed to the decrease of $18.6 million in our radio segment and an increased loss of $3.9 million in our television segment, offset by a decrease of $2.2 million in corporate expenses. Please refer to the Segment Data and Non-GAAP Financial Measures section for definitions and a reconciliation of GAAP to non-GAAP financial measures.
(Loss) income before income taxes totaled $(430.2) million compared to $17.6 million for the same prior year period.
Impairment of FCC Broadcasting Licenses
We generally perform our annual impairment test of our indefinite-lived intangibles during the fourth quarter of the fiscal year but, given the deteriorating economic conditions throughout the year and continued revenue declines in the broadcasting industry, we also performed an interim impairment test as of June 30, 2008 in connection with the close of our quarter-ended June 30, 2008.
As a result of the interim impairment test, we determined that there was an impairment of our FCC broadcasting licenses. We recorded a non-cash impairment loss of approximately $396.3 million that reduced the carrying values of our FCC broadcasting licenses for certain individual stations in our Los Angeles, San Francisco, Puerto Rico, Miami and New York markets. The tax impact of the impairment loss was an approximate $108.9 million tax benefit, which was related to the reduction of the book/tax basis differences on our FCC broadcasting licenses.
During the annual impairment test, we determined that there was an additional impairment of our FCC broadcasting licenses due to the decrease in the demand for advertising and the continued deterioration of the economy. We recorded a non-cash impairment loss of approximately $22.4 million that reduced the carrying values of our FCC broadcasting licenses for certain individual stations in all of our markets.
