MediaBay, which had a net loss of $4.8 million and a 5% decline in sales in 2001, expects to be profitable in 2002, company chairman Norton Herrick said, adding that revenue is also projected to grow this year. For the first quarter ended March 31, sales slipped to $9.5 million from $9.6 million, but the company reported an operating profit of $18,000, compared to an operating loss of $1.9 million in the first quarter of 2001. The company had a net loss of $525,000 in the quarter, compared to a net income of $10.6 million last year, a figure that included a tax benefit of $13 million.
The bottom line benefited from a $1-million reduction in advertising and promotion costs plus nearly $500,000 in lower general and administrative expenses. MediaBay expects to save $1 million in general and administrative costs for the full year, due mainly to the integration of its old-time radio Radio Spirits operations into its New Jersey headquarters. And despite lowering its advertising budget, the company added 78,000 new members to its Audio Book Club unit, a 65% improvement over last year's first quarter. Audio Book Club has had success with its first niche club, Audio Passages, a Christian club, and is testing a mystery continuity program that the company expects to roll out this fall. MediaBay will up its marketing budget by $2 million this year, with the goal of increasing membership in Audio Book Club by 30%. Sales in the division rose to $7.9 million from $7.8 million in last year's first period.
In its Radio Spirits division, which houses its classic radio shows, the company is testing an old-time radio continuity program and is working to add new wholesale accounts and channels. Sales fell to $1.5 million from $1.7 million. Despite the decline in sales in the first quarter, MediaBay expects sales to increase in the division and said that revenue from the old-time radio business could increase by 60% in 2003 over 2002.
With continuing improvements in both MediaBay's Audio Book Club and Radio Spirits divisions, Herrick predicted that MediaBay will report net income again in 2003 with accelerating growth.
