Wednesday, July 30, 2008

Cox Radio Death Spiral

Cox Radio (CXR) announced a drop in revenues of approximately 8%. Profitability disappeared and red ink flowed down the corporate hallways and through investor’s pocket books. They did take the opportunity to realize an impairment of $147 million of their intangible costs. While it was a non cash cost, it does represent 14% of shareholder equity. I guess we should be thankful that the smoke and mirrors quotient has been reduced.

The press release essentially did not deal with any of the dynamics of the advertising and/or radio market. Management essentially said they are executing on their strategy, enhancing content and whipping the sales force in a poor ad market. They also indicated that they are making significant progress on their digital media presence. Just what does that mean?

While it is intuitively obvious that media and advertising driven businesses are having a hard time in the downturn, it is not too much to ask the captains on the bridge to start commenting in some detail about the future and how they plan to steer the ship.