SwingTrade Member Forum

[MikeDDKing]

A big reason for selling ROIAK is the text below from the last 10-Q regarding their relationship with Citadel. Citadel filed bankruptcy on December 20, 2009. Citadel has historically represented roughly 10% of ROIAK's revenue. Also, it appears that ROIAK took a $2M revenue and earnings hit in Q4'09 related to Citadel in exchange for advance payment because of the impending Citadel bankruptcy. It isn't clear to me what impact the Citadel bankruptcy and contract experation will have on ROIAK going forward. IMO it could be a small hit or a big hit.

Citadel Bankruptcy filing news:
http://memphis.bizjournals.com/memphis/stories/2009/12/21/daily2.html?ana=yfcpc

From the ROIAK Q3'09 10-Q: "We derive a significant portion of our net revenue from a single customer, Radio Networks, a media representation firm which is owned by Citadel. Reach Media, a subsidiary of which the Company owns 51%, derives a substantial majority of its net revenue from a sales representation agreement (the “Sales Representation Agreement”) with Radio Networks. The Sales Representation Agreement, calls for Radio Networks to act as Reach Media’s sales representative primarily for advertising airing on 108 affiliate radio stations broadcasting the Tom Joyner Morning Show, and to also serve as its sales representative for internet and events sales. The Sales Representation Agreement provides for Radio Networks to retain a portion of Reach Media’s advertising revenues only after satisfying certain revenue guarantee obligations to Reach Media. Further, but to a lesser extent, in accordance with ASC 605, “Revenue Recognition,” revenue for Company owned radio stations is also generated from Radio Networks for barter agreements whereby the Company provides advertising time in exchange for programming content (the “RN Barter Revenue”). As a result of our 51% ownership of Reach Media, we consolidate net revenue derived by Reach Media from the Sales Representation Agreement into our financial statements. Net revenue attributable to the Sales Representation Agreement and the RN Barter Revenue accounted for more than 10% of our total consolidated net revenues for the three and nine month periods ended September 30, 2009 and 2008, respectively. During the three and nine month periods ended September 30, 2009 and 2008 net revenue attributable to the Sales Representation Agreement and the RN Barter Revenue accounted for 11.5% and 9.8%, respectively, and 12.6% and 10.5%, respectively, of our total consolidated net revenues.

The Sales Representation Agreement commenced January 2003 and in connection with the Sales Representation Agreement Radio Networks obtained an ownership interest in Reach Media. In June 2007, Radio Networks assumed the Sales Representation Agreement as a result of Citadel’s purchase of ABC Radio Networks from The Walt Disney Company. The Sales Representation Agreement expires on December 31, 2009; however, during the quarter ended September 30, 2009, Reach Media and Citadel reached an agreement whereby the revenue guarantee obligation to Reach Media for each of the months of November and December 2009 was reduced by $1.0 million in exchange for prepayment of the reduced revenue guarantee obligation for those months. Payment of the reduced revenue guarantee obligation was received by Reach Media. "