Westwood One Slumps

Profit drops and the company sets plans to modify its CBS deal.
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Westwood One

(WON)

, a provider of content for radio and television programs, said its third-quarter earnings fell 47.8% from the year-ago period, hurt by adverse market conditions and a lower demand for the company's products and services.

The New York City-based company earned $10.5 million, or 12 cents a share, in the quarter, compared with $20.1 million, or 22 cents a share, a year ago. Analysts polled by Thomson First Call were expecting earnings of 11 cents a share in the most recent quarter.

Third-quarter revenue fell 15.3% from a year ago to $114.3 million as against analysts' expectation of $120.7 million.

Looking ahead, the company sees double digit declines in revenues in fourth quarter and low single digit increases in operating expenses, which will lead to double digit declines in operating income before depreciation and amortization. Analysts project fourth-quarter earnings of 18 cents a share on sales of $140.2 million.

Third-quarter operating income fell 36.7% from a year ago to $23.8 million and operating margin declined 700 basis points to 20.9%.

Capital expenditures for the third quarter was about $2.6 million, compared with about $1.2 million a year ago. The increase in capital expenditures is primarily due to initiatives to enhance its digital products and data, the company said.

In a seperate release, the company said that its board established a strategic review committee comprised of independent directors to evaluate means by which Westwood may be able to enhance shareholder value.

The committee will focus on modifying and extending the company's various agreements with

CBS Radio

and its affiliates, including the company's management agreement and programming and distribution arrangements with CBS Radio. Westwood's principal agreements with CBS Radio currently expire on March 31, 2009.

Shares fell 54 cents to $7.86.

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