We have been in the radio business since 1986, building, operating and developing stations throughout Canada.
Over the last twenty-four years, we have grown from one AM station to a portfolio of 81 licences in eight provinces. Radiois our business, and we are the largest pure-play radio company in Canada. In over two decades, 2010 has been our mostsuccessful year. From the studio to the balance sheet, this was a year where the Company performed exceptionally well both on-the-air and off-the-air.
In 2010, we continued to see year-overyear growth, growing at a rate of 12%, our highest growth rate in the last three years. Our growth rate outpaced the industry growth rate of 6%. Our revenues were $117 million, compared to last year’s total of $105 million. Our EBITDA rose to $25.6 million from $21.1 million in 2009. Our growth came from doing what we do best—maximizing the return from our existing operations through enhanced programming and increased advertising revenue. During 2010, in virtually every market we operate, we saw ratings gains, expanded our market share, and were the number #1 or #2 station in the majority of our rated markets.
Executing on our Strategy, Reaching more Listeners
In 2010, we stayed on track with a disciplined and proven strategy: growing organically by maximizing returns on our assets by improving our content, lowering our costs, widening our reach, and reducing our debt-load. This strategy has proven successful for the Company. It has allowed us to navigate the past financial crisis, and emerge a stronger Company that has flourished in the subsequent years. We executed again on this strategy in 2010 and we continued to boost our ratings through compelling programming,ranking #1 in our targeted demographic in nine of our thirteen surveyed markets. Our talented research, programming and promotional teams work extremely hard to keep our product fresh and our audiences engaged. During 2010, we re-launched and re-branded two stations: Sudbury, Ontario’s CHNO-FM was re-launched as Rewind 103.9 and plays Sudbury’s Greatest Hits, and the format of CHNK-FM in Winnipeg, Manitoba was re-branded as K-Rock 100.7, which replaces a country format with world class rock as well as blues and roots music. Both launches were extremely successful, especially in Sudbury, where Rewind debuted at #1 in the market with a 19.5 market share.
A key part of our strategy is to increase the number of listeners and communities we reach by adding repeater signals, and converting existing AM licences to FM. This adds significant incremental gains in listenership with only moderate additional costs. We launched four repeater signals in Prince Edward Island which allows us to broadcast two great FM stations from Charlottetown to new communities throughout the province. We also received CRTC approval for repeaters in Springdale and North West River, Newfoundland and Labrador.
Converting AM stations to FM is a very important value-generating facet of our strategy, which the Company pursues wherever possible. In 2010, we launched three newly-converted AM to FM stations in Wabush and Goose Bay, Newfoundland and Labrador, and in High Prairie, Alberta. We also received CRTC approval to convert two AM stations in Brooks and Westlock, Alberta to FM.
In 2010 we used free cash flow to repurchase $9.2 million of capital stock and we reduced our long-term debt by almost $4 million.
Looking Ahead to 2011 2010 was a record year in many respects for the Company. We outpaced the radio industry revenue growth rate and are very proud of this achievement. However, there
is much more room to grow, and we are a Company whose talented employees are always performing at their peak, looking for ways to improve and bring in more listeners and revenue
Looking ahead, we will continue to explore and evaluate acquisition and expansion opportunities that fit our disciplined criteria of being cash accretive in markets where there is room to grow, and benefit from synergies which allow us to leverage multiple stations onto our operating platform. We will continue to aggressively apply to the CRTC for new licences and create long-term value forour shareholders by pursuing, wherever possible, CRTC approval to convert our AM stations to FM. We will also look to reduce our debt-load to strengthen our balance sheet for future acquisition opportunities.
In the coming year we will continue to implement our growth strategy and maintain a clear focus on our strong operational foundation—commitment to our communities, our listeners, our customers, and our talented radio professionals. This commitment is critical to our success in the past, present, and future. We will also continue to improve our content and build our presence in our largest markets—Ottawa, Calgary and Edmonton, markets which bear the greatest potential for upside in EBITDA and revenue growth.
The Board of Directors declared dividends of $0.06 per share in August 2010 and $0.06 per share in December 2010. This represents a 20% increase over the previous year’s total of $0.10 per share.
We would like to extend our gratitude to all of our employees, whose ingenuity and talent propelled our Company and our product to a higher level. We commend them on the excellent work they’ve done to help our stations understand exactly what people in our communities want to hear; and delivering on those needs with content that is innovative and constantly-evolving.
We also thank our long-term shareholders for their interest in the Company, and our Board of Directors for their continued leadership and support.
Sincerely,
Rob Steele
President and Chief Executive Officer
Harry Steele
Chairman