Westwood One Expects Record $24-Million Loss for Fiscal Year

Westwood One Inc., the fast growing but beleaguered broadcasting concern that in five short years as a public company has become the nation’s second-largest radio network owner behind ABC, said Friday that it expects to report a record loss of about $24 million for the latest fiscal year.

The forecast came just three days after the Culver City-based radio network operator celebrated reaching an agreement on a new radio venture that may enable the company to reach a vast new audience through a ground-breaking rock music program to be broadcast over the Soviet Union’s state network.

Although Westwood One Chairman Norman J. Pattiz said radio advertising revenues at his network climbed 12% last year, earnings suffered from additional borrowing and other costs to acquire radio stations in New York and Los Angeles. Another $6.1 million of the loss for the fiscal year ended Nov. 30 stemmed from the company’s settlement of a shareholder class-action lawsuit in August.

The company also faces an ongoing Federal Elections Commission inquiry into a complaint that Pattiz allegedly made an improper $13,000 contribution to the presidential campaign of Sen. Joseph Biden (D-Del.). The company declined comment, citing a confidentiality rule imposed by the commission.

The shareholder suit alleged that Westwood One, which owns radio stations and produces and distributes radio programs, provided “inaccurate financial information” to shareholders who bought its stock between Jan. 12 and May 31, 1988. In settlement, the company agreed to pay shareholders $2.5 million in cash and 3 million warrants to purchase common stock at $17.25 a share.

With the class-action lawsuit behind him, Pattiz said he is now optimistic about Westwood One’s outlook.

“The actions we have taken to build and redirect the company are beginning to show results,” he said. Pattiz added that his company has been able to cut significantly the estimated $20 million in annual losses registered by the two radio networks and six radio stations acquired by his company in the past four years, including KQLZ-FM in Los Angeles.

“Some, like Mutual Broadcasting System and WYNY-FM, were turned around quickly,” Pattiz said. “Others, like the NBC Radio Network, have taken longer to show results.”

Yet while Pattiz is optimistic, Wall Street has not looked kindly on Westwood One’s stock, which in 1987 traded as high as $32. In over-the-counter trading Friday, before Westwood One made its earnings forecast, the stock closed at $7.625 a share, up 12.5 cents.