Beasley Broadcast Group Inc.

The stable outlook reflects our expectation that leverage will decrease to the mid-4x area over the next year due to a combination of EBITDA growth from acquisitions and debt repayment. We could lower the rating if Beasley pursues additional debt-financed acquisitions that keep leverage elevated in the high-4x area. We could also lower the rating if deteriorated operating performance related to lower audience ratings or an unexpected acceleration in the decline of broadcast radio advertising revenue limits the company's ability to reduce leverage back to the mid-4x area and maintain at least a 15% margin of EBITDA compliance with its net leverage covenant. Although unlikely, we could raise the rating if the company reduces leverage below 4x and commits to

...Terrestrial radio broadcasters are faced with structural pressures from digital disruption, resulting in lower advertising rates. Digital advertising is taking away money from traditional forms of advertising, including radio, newspaper, and television. We expect this trend will continue, making it difficult for Beasley and other radio broadcasters to increase advertising rates, resulting in low-single-digit annual percentage declines in radio industry advertising revenues. Beasley's small size and geographic concentration could result in volatile revenue. Beasley Broadcast Group Inc.'s size prevents it from achieving significant operating leverage compared to its larger radio broadcast peers. Further, its stations are geographically concentrated on the U.S. East Coast, with the Boston and Philadelphia markets accounting for roughly 45% of its revenues, which magnifies the risk of those markets underperforming. Approximately 90% of Beasley's revenue is generated from local and national...

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