Analysts see Radio One station sale as positive for company's future

From Associated Press
(March 25, 2008) Radio One Inc.'s decision to sell its Los Angeles FM station lets the broadcaster divest itself of a money-losing asset and should remove fears the company may file for bankruptcy, analysts said Tuesday.

The Lanham, Md.-based operator of urban radio stations said Monday it is selling KRBV-FM for $137.5 million to Bonneville International. Radio One also said its board authorized the repurchase of up to $150 million in stock through the end of 2009.

Wachovia Capital Markets analyst Marci Ryvicker said in a client note the station sale and stock buyback plan should improve the company's financial strength as well as give its management "credibility."

In addition, "we believe that the fear of bankruptcy (which was more a perception than a reality, in our view) should be mitigated, which is particularly relevant in today's credit environment," Ryvicker wrote in a note.

The analyst maintained her "Market Perform" rating on the stock, citing the radio industry's lack of pricing power and weakening local ad environment.

David Bank of RBC Capital Markets noted that since the station hasn't earned a profit in nearly three years, the sale probably highlights that "money was left on the table over the past several years."

He rates the Radio One "Sector Perform" and raised his price target by $1 to $3.

Radio One owns and operates about 70 stations in 22 markets targeting African-American and urban listeners.

In afternoon trading, the company's shares slipped 5 cents, or 2.8 percent, to $1.71. The stock has traded in a 52-week range of 99 cents to $7.73.
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