Radio One
Radio One INC.
This case involves an expansion of Radio One Inc. The company is evaluating several stations that are currently available due to a divesture that Clear Channel was required to complete. Radio One’s strategy is to be the number one urban- oriented music, entertainment, and information to African-American in as many major markets possible. With this opportunity Radio One can acquire an additional 12 stations in areas they have not been able to search before. The results of the expansion would bring greater advertising revenue and open avenues for the company to expanding to other forms of media such as cable, internet, and etc…. Liggins and Royster have purchased underperforming radio stations and gain a greater market in several …show more content…
Evaluating the company's Balance Sheets from previous years, Radio One was having issues with long-term debt. Their total debt ratio and the long term debt ratio were both over 95%. Before Radio One went public , their financial situation were not stable. If the economy were to suffer, Radio One would have not made it through. The IPO may have actually save the company from filing bankrupt. In 1999 Radio One received 4.46 million dollars the first year as a publicly traded company which increased the equity and the investments made back into the company. The long-term debt also decreased from the prior year (1998) but was still higher than the year before (1997). Analyzing the Income Statements from 1997-1999 shows that Radio One has not been generating any net income. The operating ratio averaged about 80%. This demonstrates that this organization has less ability to generate profit if revenues were to decrease. Management will need to focus on cutting cost in the selling, general and administrative expenses to improve the ability to generate profits.
In the radio industry there are tight regulations that one must follow in order to expand in particular markets. The Federal Communications Commission (FCC) regulates the number of broadcasting stations one company can own. October 1999, Clear Channel one of the largest radio stations announced their plans to merge with AMFM Inc. Due to the FCC regulations, Clear Channel was required to divest some its radio stations creating the opportunity for Radio One Inc. In addition to the divestiture announcement, Radio One's stock increased from the mid $40s to the high $90's per
This case involves an expansion of Radio One Inc. The company is evaluating several stations that are currently available due to a divesture that Clear Channel was required to complete. Radio One’s strategy is to be the number one urban- oriented music, entertainment, and information to African-American in as many major markets possible. With this opportunity Radio One can acquire an additional 12 stations in areas they have not been able to search before. The results of the expansion would bring greater advertising revenue and open avenues for the company to expanding to other forms of media such as cable, internet, and etc…. Liggins and Royster have purchased underperforming radio stations and gain a greater market in several …show more content…
Evaluating the company's Balance Sheets from previous years, Radio One was having issues with long-term debt. Their total debt ratio and the long term debt ratio were both over 95%. Before Radio One went public , their financial situation were not stable. If the economy were to suffer, Radio One would have not made it through. The IPO may have actually save the company from filing bankrupt. In 1999 Radio One received 4.46 million dollars the first year as a publicly traded company which increased the equity and the investments made back into the company. The long-term debt also decreased from the prior year (1998) but was still higher than the year before (1997). Analyzing the Income Statements from 1997-1999 shows that Radio One has not been generating any net income. The operating ratio averaged about 80%. This demonstrates that this organization has less ability to generate profit if revenues were to decrease. Management will need to focus on cutting cost in the selling, general and administrative expenses to improve the ability to generate profits.
In the radio industry there are tight regulations that one must follow in order to expand in particular markets. The Federal Communications Commission (FCC) regulates the number of broadcasting stations one company can own. October 1999, Clear Channel one of the largest radio stations announced their plans to merge with AMFM Inc. Due to the FCC regulations, Clear Channel was required to divest some its radio stations creating the opportunity for Radio One Inc. In addition to the divestiture announcement, Radio One's stock increased from the mid $40s to the high $90's per