• Get involved.
    We want your input!
    Apply for Membership and join the conversations about everything related to broadcasting.

    After we receive your registration, a moderator will review it. After your registration is approved, you will be permitted to post.
    If you use a disposable or false email address, your registration will be rejected.

    After your membership is approved, please take a minute to tell us a little bit about yourself.
    https://www.radiodiscussions.com/forums/introduce-yourself.1088/

    Thanks in advance and have fun!
    RadioDiscussions Administrators

Beasley To Lay Off 7% Of Staff

DToTheJ said:
God, please let one of them be Roxanne Wilder...
radioinsight.com

Names From The Beasley Cuts Continue To Come Forward

The list of those affected by last week's Beasley Media layoffs continues to grow with cuts made at the company's
radioinsight.com radioinsight.com
Click to expand...
not cool :mad:

think about how hard it is to even have a job nowadays, how hard it is to even live in the modern economy, and you just wanted someone to get fired because they were "annoying" or "not your kind of host"
 
Caroline Beasley's earnings announcement remarks can be described as hyperbole at best:

bbgi.com

BEASLEY BROADCAST GROUP REPORTS FIRST QUARTER REVENUE OF $54.4 MILLION - Beasley Media Group, LLC

14.8% Digital Revenue Growth and Expense Management Lead to a $4.1 Million Reduction in Net Loss and a 16.8% Increase in Adjusted EBITDA NAPLES, Florida, August 3, 2023 – Beasley Broadcast Group, Inc. (Nasdaq: BBGI) (“Beasley” or the “Company”), a multi-platform media...
bbgi.com bbgi.com

Linear revenue was weak, Adjusted EBITDA for the quarter was barely above zero, the stock is about to be delisted, the 10-Q (likely to be posted within the next several days) will probably contain a "substantial doubt" disclaimer regarding going concern viability, and yet she has the nerve to call the company's fundamentals "strong" ???

It will be interesting to see what liquidity looks like once March 31's full financial statements are available.
 
Last edited:
The 10Q was posted this afternoon and is now available for public viewing.

Cash improved from $26.7 million at 12-31-23 to $27.8 million at 3-31-24, but this was mainly due to $6.0 million received from Beasley's sale of its investment in BMI.

Capex spend was below $1 million on the quarter, around $948,000.

Excluding the one-time BMI proceeds, net cash burn on a levered basis was about $4.9 million on the quarter. Excluding beneficial net working capital changes, that number worsens to $5.4 million.

No loan / bond principal was repaid in Q1. No new borrowings occurred. $11.5 million in semi-annual interest expense was paid on the company's $267 million in senior secured notes. There will be no such interest expense due next quarter, so Q2 might be cash flow positive excluding non-recurring items. The next interest payment is due in August.

On a forward 12-month basis, BBGI's levered recurring cash flow should be modestly positive. Still, at the end of the day, that leaves Beasley with little if any free cash flow to apply toward principal repayment. Their senior secured notes mature February 1, 2026. With outrageously high cash flow leverage, the lenders will want equity control.

Even if 2H 2024 sees a nice influx of revenue from political ads, I bet net senior secured leverage will be north of 25x.

They're going to need to find a way to wipe out 80 percent or more of their debt via steeply discounted buybacks, debt exchanges (where holders of current debt trade agree to accept new debt to retire existing debt at a fraction of par value) or Chapter 11 reorganization.

Beasley's EBITDA is so poor - and the company is small enough - that a sale of most / all of its assets as a means of settling with senior secured debt holders may be a viable option. I think a business valuation would likely come in no greater than $75 million using a discounted cash flow methodology. Asset liquidation value would compare favorably to that number all day long.

I think the cost cuts announced days ago are just the tip of the iceberg, especially if Caroline wants to preserve a chance of keeping her job long term.
 
Last edited:
MarkW said:
They're going to need to find a way to wipe out 80 percent or more of their debt via steeply discounted buybacks, debt exchanges (where holders of current debt trade agree to accept new debt to retire existing debt at a fraction of par value) or Chapter 11.
Click to expand...

If Beasley's layoffs follow those at every other company, none of the savings will be applied to the debt. All of it will be used to cover inflation and the huge increase in insurance (both property and medical). They're paddling as hard as they can to stay above water.
 
I agree, BigA. The only way it potentially goes toward debt is if they can buy it back for pennies on the dollar (illustrative example: $5 million is spent to cancel $25 million in debt - and even THAT price might be too rich).

They definitely will not be making any voluntary prepayments at full face value.
 
BigA is probably right. This is a preemptive move because ad revenue for many forms of media has been down long enough that it's likely it won't recover anytime soon. Think of it as Beasley making sure they're wearing a cup should an inadvertent ground ball bounce up and catch them in the nuts.
 
PTBoardOp93 said:
So you're saying that's a "good case", not "worst case"? :oops:
Click to expand...
The company generated about $20 million of Adjusted EBITDA in 2023 and about $25 million in 2022.

They'll be lucky to get to $10 million this year. If they do get to $10 million, net senior secured leverage will be near 25x, assuming they don't wipe out a good chunk of debt via a steeply discounted buyback.

I do think each of the next three fiscal quarters will be better than the horrendous $0.7 million result reported in Q1. Still, $10 million in full year EBITDA would represent a horrible result for a company that carries $267 million in debt in a declining industry. Cash flow leverage for a radio broadcaster should be 4x or less.

My outlook for the industry is consistent with Kelly's remarks. I am very bearish on linear media (digital is challenged as well).
 
MarkW said:
The company generated about $20 million of Adjusted EBITDA in 2023 and about $25 million in 2022.

They'll be lucky to get to $10 million this year. If they do get to $10 million, net senior secured leverage will be near 25x, assuming they don't wipe out a good chunk of debt via a steeply discounted buyback.

I do think each of the next three fiscal quarters will be better than the horrendous $0.7 million result reported in Q1. Still, $10 million in full year EBITDA would represent a horrible result for a company that carries $267 million in debt in a declining industry. Cash flow leverage for a radio broadcaster should be 4x or less.

My outlook for the industry is consistent with Kelly's remarks. I am very bearish on linear media (digital is challenged as well).
Click to expand...
Beasley will probably do $10m in EBITDA in Q4 alone.
Q1 is always light. Q2 they said was pacing down low single digits, but that’s off $63.5m in revenue in Q2 last year. So down 3% would still put it north of $60m. Sequentially that will be at least a $7m improvement over Q1. Most of the costs are fixed, so incremental revenue above a certain level has very high margins. Combine that with the cost cutting and I would estimate Q2 adj Ebita north of $5m. Q3 probably in the $6-7m range. And then Q4 in the $10-12m range.
They bought back $20m in bonds in Q4, so that alone will save them $2m in interest compared to 2023.
I’d anticipate further bond repurchases this year.
Obviously the elephant in the room is the 2026 bond payment. Cumulus just renegotiated their bonds at 8% with a 92% of par redemption. I’d expect Beasley to go for something similar, although maybe less on the redemption value.
 
Last edited:
Adjusted EBITDA was off $1.9 million in Q1 year over year. If the regression in what is generally the lightest cash flowing quarter of the year is that sharp, my view is the next three quarters could each see even wider monetary variance.

Low single digits negative revenue variance in Q2 versus a year ago, assuming mostly fixed expense, would likely mean $2 million to $3 million of negative EBITDA variance comparatively before giving any attribution to pro forma expense savings add backs.

I simply cannot see them doing anywhere near $22 million to $25 million in full year Adjusted EBITDA this year unless political ad buys blow the doors off.

I should've researched their expense cut guidance more closely before making my prior post. Caroline is promising $6.8 million of run rate cost savings actions this year. $3.8 million were implemented via the headcount cuts announced days ago + other measures. Another wave of planned cuts later this year will produce $3.0 million in run rate savings. I presume the unrealized portion of all $6.8 million of planned per annum run rate expense reductions will show up as an EBITDA addback when FYE reporting is issued. Severance costs will also show as an addback.

My view is these cuts are unlikely to be revenue neutral over the long term, even though the company will likely give the impression they are revenue neutral. So, yeah, upon further reflection, the company might report what is effectively pro forma Adjusted EBITDA closer to $20 million than to $10 million. (A number close to $20 million is still poor for a company carrying a debt load as large as theirs.)

My prediction is the pro forma full year Adjusted EBITDA number will be in the mid to maybe upper teens, say $14 million to $18 million.

I never have accepted the premise that you can slash programming expense and market research expense and not incur any revenue blowback eventually. Listeners eventually notice diminished programming quality, gradually become less engaged, and choose to spend more time with other audio or entertainment mediums. That eventually translates to diminished advertiser interest, a lagging consequence. Then, the cycle starts all over again. It's a vicious cycle.

Even with the knowledge of the planned expense cuts, I still believe my $75 million DCF valuation is not too far off the mark. I certainly wouldn't place that figure above $100 million.
 
Last edited:
MarkW said:
I never have accepted the premise that you can slash programming expense and not incur any revenue blowback eventually.
Click to expand...

The problem is that they've had a revenue loss with no change to programming. So the two seem unrelated. Most analysts don't see improvement coming in the advertising outlook for the rest of the year. And as we've seen, this problem isn't unique to Beasley.
 
Cutting expenses is better than not cutting expenses in many cases. What I'm challenging is the notion that there won't be some degree of punitive revenue impact at some point due to expense cuts in functionally important areas. In other words, there is some degree of future risk. Admittedly, such risk is difficult to quantify monetarily and might not truly rear its head until a couple years (or more) down the road.

That's why I generally view addbacks associated with "unrealized pro forma cost savings" or similar descriptions with a degree of skepticism.
 
Last edited:
MarkW said:
That's why I generally view addbacks associated with "unrealized pro forma cost savings" or similar descriptions with a degree of skepticism.
Click to expand...

I agree with your skepticism, but I base my view on ten years or so of layoffs that iHeart that never addressed the debt problem, ultimately leading to bankruptcy. You think of all the cost savings and asset sales that have been done at radio companies over the last ten years, and how many have solved their debt crisis?
 
You hit the nail on the head. My guess is Cumulus bondholders who just exchanged their old bonds for later dated bonds will incur future losses on principal. We all know Audacy's prepetition debt holders will take a massive hit; the opening value of the stock they will be receiving covers only a fraction of their principal loss. I think Beasley's debt holders will suffer large losses, as I pontificated earlier in this thread.

"Resets" transacted via chapter 11 or via consensual debt exchanges may suffice to kick the proverbial can down the road for 3, 4 or 5 years. But as the perpetual decline of radio industry cash flow continues, there will need to be further rounds of reckoning.
 
Last edited:
Status
This thread has been closed due to inactivity. You can create a new thread to discuss this topic.


Back
Top Bottom