Radio One Is Poised For a Comeback

Dec.26.06 | About: Radio One, (ROIA)

Investor Trip submits For a stock that's been beaten down since its IPO, Radio One (NASDAQ:ROIA) showed signs of life this quarter when the company announced market leading 3rd quarter subscriber growth for their co-owned TV One network.

It's the one bright signal coming from Radio One, after experiencing a very tough year in broadcast radio. If TV One CEO Jonathan Rodgers has plans for TV One, I hope they involve 100% ownership. TV One is a joint venture with Comcast Corp (NASDAQ:CMCSA) and DIRECTV (DTV), who all own 1/3 of the TV's network share.

The face of network advertising is changing. Firms target more buyers via internet and television than through the radio waves; Advertising growth via local radio stations declines every year. As Satellite radio becomes more prevalent in cars, homes, and offices, Radio One must adapt to the ever-changing media market by upgrading and synchronizing all their media assets to the future of digital media.

TV One is well positioned because of its targeted broadcasts towards African American families. The high subscriber growth this quarter validates the ongoing migration from traditionally black networks like Black Entertainment Television (BET) to more conservative, family guided television networks. After Bob Johnson sold BET to Viacom (NYSE:VIA) for $3 billion, the once pillar station of the black community lost its rich content base and national appeal.

TV One can be different from BET. It has the opportunity to morph into the premier black family network. Of course, profitability will not happen overnight, but TV One is a prime advertising platform. Although Radio One's balance sheet cannot fund a buyout at the moment, it will be interesting to witness how management takes stride towards 100% ownership.

Double digit subscriber growth should carry on through the holiday season as expected. As along as media growth remains stable, expect Radio One shares to continue their upward movement. The company just experienced its worst fiscal year in its 26-year history. Radio One is poised for a comeback, which is why I'm long on ROIA stock.

ROIA 1-yr chart

Disclosure: Author is long ROIA.