MediaCo Holding Inc. — Q3 2023 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2023. Unaudited results; dollar amounts below are in millions unless stated otherwise. MediaCo operates two New York City radio stations and earns revenue mainly from advertising, events, syndication and digital services. The Fairway outdoor advertising business was sold in December 2022 and is reported as discontinued operations.
Financial performance and liquidity
| Metric | Q3 2023 | Q3 2022 | Nine months 2023 | Nine months 2022 |
|---|---|---|---|---|
| Net revenue | $6.447 | $8.270 | $25.862 | $28.914 |
| Operating loss | $(1.964) | $(0.272) | $(3.986) | $(1.616) |
| Net loss from continuing operations | $(2.153) | $(2.016) | $(4.538) | $(7.515) |
| Consolidated net loss | $(2.316) | $(2.651) | $(4.844) | $(9.847) |
| Net loss attributable to common shareholders | $(2.918) | $(3.489) | $(6.632) | $(12.303) |
- Revenue declined 22.0% in Q3 and 10.6% year to date. Operating margin was approximately (30.5)% in Q3 and (15.4)% year to date.
- Q3 revenue mix: spot radio advertising $4.328 million; digital $0.608 million; syndication $0.602 million; events and sponsorships $0.293 million; other $0.616 million.
- For the first nine months, continuing operating cash flow was $(3.662) million, versus $3.377 million provided in 2022. Total operating cash flow, including discontinued operations, was $(3.403) million. Investing cash outflow was $1.081 million and financing cash outflow was $1.177 million.
- Cash, cash equivalents and restricted cash totaled $9.640 million at quarter-end, down from $15.301 million at year-end 2022; this included $6.413 million of unrestricted cash and $3.227 million of restricted cash. Net working capital was $10.3 million.
- Long-term debt was $5.950 million, due in 2024, with no debt-service requirements over the next 12 months as described by management. Operating lease liabilities totaled $15.482 million, including current and noncurrent portions.
- Preferred stock dividends were $0.602 million in Q3 and $1.788 million year to date. Series A preferred stock carrying value was $28.127 million; it accrues cumulative dividends and is redeemable at the holder’s option beginning June 2025.
Changes, outlook and notable matters
- Management attributed lower revenue to reduced healthcare advertising, including slower COVID-19 vaccination awareness campaigns, and lower online gambling, automotive and wireless spending. New York market gross radio revenue fell 4.6% for the nine months, while MediaCo’s reported gross revenue fell 15.3%.
- Year-to-date events and sponsorship revenue increased to $4.921 million from $3.185 million, partly reflecting stronger Summer Jam ticket sales and sponsorships. Spot radio advertising fell to $14.009 million from $19.025 million.
- Operating expenses excluding depreciation and amortization rose 2.1% year to date, while corporate expenses fell 24.7%, principally due to lower stock-based compensation. Interest expense declined sharply after repayment of the senior credit facility and conversion of SG Broadcasting debt in 2022.
- Cash use reflected income-tax payments related to the Fairway sale, lower receivable collections, share repurchases and investment in a digital platform and new office space. No formal financial guidance is provided in the filing.
- MediaCo received a Nasdaq minimum-bid-price deficiency notice on September 15, 2023. It had until March 13, 2024 to regain compliance; management said it might consider a reverse stock split, but gave no assurance of compliance.
- After quarter-end, CEO Rahsan-Rahsan Lindsay resigned effective October 11, 2023, and COO Kudjo Sogadzi was appointed interim President. Management cited no pending legal proceedings believed likely to have a material adverse effect.
- Other disclosed risks include reliance on the New York radio market, competition from digital and streaming media, advertising-market conditions, FCC licensing and regulation, financing availability, and possible impairment of FCC licenses. The filing reported no indicators requiring an interim impairment test as of September 30, 2023.
Key facts for investors to verify
- Whether advertising revenue and station performance recover relative to the New York market, particularly after the reported healthcare-spending decline.
- Unrestricted cash, operating cash burn, and the company’s ability to meet the $5.950 million Emmis note maturity in 2024.
- Progress toward Nasdaq’s minimum-bid-price requirement and any action taken to maintain listing.
- The terms, cumulative dividends and potential dilution or redemption implications of Series A preferred stock.
- Implications of the CEO departure and interim leadership arrangement for operations and strategy.