Radio One Shares At New Lows

By Anita Huslin

Urban media company Radio One was warned that it was failing to meet Nasdaq listing requirements after its stock plummeted to all-time lows this week.

Fund managers dropped shares of the Lanham company on Tuesday in response to its removal from the SmallCap 600 index by Standard & Poor's because the value of outstanding shares had fallen well below the $250 million minimum. Chief executive Alfred C. Liggins said fund managers sold about 6 million shares in response, and shares closed at 9 cents Tuesday.

Typically, when a company's stock falls below $1 for 30 days or more it is placed on a watch list of companies that are at risk of being delisted from the Nasdaq. Given the global market upheaval, the exchange last week suspended that rule until next year.

Liggins yesterday issued assurances that the company is not going under and attributed the stock decline to an industry-wide malaise related to competition from subscription radio and the Internet.

"There's no doubt our stock and stock in other companies like ours continue to be under pressure, but it's got nothing to do with any specific events at the company," Liggins said yesterday. "We obviously are in a recession. Purchases will slow down, and advertising is about purchases. But we are well-diversified to weather this storm."

Analysts have suggested that the company sell its share in TVOne, which Liggins says he expects to become profitable next year, and significantly reduce its debt. Liggins so far has not wanted to entertain that idea.

Despite analysts' concerns about Radio One's debt levels, which are higher than industry averages, Liggins sought to allay fears that the company was facing problems beyond those that prompted it to sell off a dozen under-performing stations and renegotiate terms with one of its lenders last year.

The company is not at risk of violating the terms of any of its covenants with lenders, he said, and is proceeding with a stock buyback program designed to bolster the shares' price. Nevertheless, Radio One's shares have continued to slide to an all-time low, losing 97 percent of their value over the past year. Yesterday, the stock closed at 13 cents.

By Terri Rupar  |  October 22, 2008; 6:16 PM ET  | Category:  Economy Watch , Media
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