Westwood One operates two businesses, both terrestrial radio based. The traffic division provides customized news and traffic reports, and earns revenues on the short, announcer-read ad spots embedded during these reports. The network division provides longer events such as sports which are then sent to member stations around the country.
Revenues have been falling for the last 4 years, at nearly double digit rates. The ad businesses is brutally competitive, and Westwood faces stiff competition not only from other terrestrial radio operators like Clear Channel, but also from new media such as satellite radio and the internet. Terrestrial radio's decline as an entertainment medium has also sent ad prices falling.
They also have a huge debt load. At 330 million, this is almost 3 times the company's market cap! Coverage ratio is barely 3x earnings. There is very little wiggle room if revenues continue to decline, which is unfortunately the most likely scenario.