COCONUT GROVE, Fla., May 15 /PRNewswire-FirstCall/ -- Spanish Broadcasting System, Inc. (the 'Company' or 'SBS') (Nasdaq: SBSA) today reported financial results for the first quarter ended March 31, 2009.
Discussion and Results
Raul Alarcon, Jr., Chairman and CEO, commented, 'We made considerable progress in reducing our costs during the quarter, significantly offsetting the impact of the global economic recession and bleak U.S. advertising market. MegaTV generated another healthy revenue increase, as we continued to expand and monetize our growing TV audience. Our radio operations reported reduced revenues, despite continued strong audience shares, reflecting the ongoing industry-wide advertising downturn. Looking ahead, our ability to deliver Hispanic audiences to national and local advertisers in the nation's top markets has never been stronger. We will continue to support our station brands, while aggressively controlling our costs, with the goal of positioning our assets for growth over the long-term.'
Quarter Results
For the quarter ended March 31, 2009, consolidated net revenue totaled $27.8 million compared to $36.4 million for the same prior year period, resulting in a decrease of $8.6 million or 24%. This consolidated decrease was attributable to our radio segment which had a net revenue decrease of $8.8 million or 27%, offset by an increase in our television segment net revenue of $0.2 million or 6%. 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, with the exception of our Chicago market. The decrease in national sales occurred in all of our markets. Our television segment continues to increase its advertising and content demand as MegaTV continues to increase its viewership.
Operating income (loss) 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 $2.6 million compared to $(1.4) million for the same prior year period, representing an increase of $4.0 million. This increase was primarily attributed to the decreases in station operating expenses of $11.9 million and corporate expenses of $0.7 million, offset by a decrease in net revenue of $8.6 million. Please refer to the Segment Data and Non-GAAP Financial Measures section for definitions and a reconciliation of GAAP to non-GAAP financial measures.
Operating loss totaled $(9.7) million compared to $(2.8) million for the same prior year period. The increase in operating loss was mainly due to the impairment of FCC broadcasting licenses and restructuring costs of $10.6 million. Also contributing to the increase in operating loss was a decrease in our net revenue, offset by decreases in our station operating expenses and corporate expenses. Please refer to the Impairment of FCC Broadcasting Licenses and Restructuring Costs section for a detailed discussion.
Loss before income taxes totaled $(13.2) million compared to $(5.9) million for the same prior year period.
Impairment of FCC Broadcasting Licenses
As a result of the SFAS No. 142 impairment testing of our indefinite-lived intangible assets and goodwill, we recorded a non-cash impairment loss of approximately $10.1 million that reduced the carrying values of our FCC broadcasting licenses in our Chicago and San Francisco markets. The impairment loss was due to changes in estimates and assumptions which were primarily: (a) lower industry advertising revenue growth projections in our respective markets, and (b) lower industry profit margins.
Restructuring Costs
As a result of the decrease in the demand for advertising and the continued deterioration of the economy, we began to implement a restructuring plan in the third quarter of fiscal year 2008 to reduce expenses throughout the Company and have incurred costs totaling $3.0 million to date, which includes $0.5 million for the three-months ended March 31, 2009, related to the termination of various programming contracts and personnel.
