URBAN ONE, INC. Q3 FY2022 earnings call

Management Statement and Operational Highlights

• Urban One had almost 9% net revenue growth in Q3 and updated full-year guidance to mid-160s EBITDA, up from the original $145M to $150M range.
• Q4 pacings are strong, particularly radio with political contributing to growth. Digital segment continues to see robust growth.
• Richmond Casino faces a battle in the upcoming general assembly session regarding its location.
• The company is deleveraging by buying back bonds in the open market.
• TV One and CLEO TV had a robust upfront, and the radio business benefits from demand for diverse and inclusive advertising.

Segment Performance

• Radio segment: Third quarter net revenue increased by 4.8% year-over-year. Fourth quarter radio division is pacing up approximately 26.5% including political and about 10.9% excluding political. Fourth quarter radio has $5.6 million of net political ad revenue, with annual total political ad revenue at ~$9.5 million.
• Digital segment: Net revenues increased by 40.1% to $21 million in Q3. Adjusted EBITDA increased by $2.2 million, up 40.7%. Fourth quarter digital revenue expected to exceed Q3 number.
• Cable television segment: Recognized approximately $50.8 million of revenue, an increase of 4%. Cable TV advertising revenue was up 16.7%, while affiliate revenue was down 7.6%.

Guidance

• Originally projected full-year EBITDA between $145 million and $150 million, now expects mid-160s EBITDA.
• Q4 radio division pacing up ~26.5% including political and ~10.9% excluding political. Digital revenue expected to exceed Q3 number.
• Political ad revenue will decrease significantly next year, but offset by other segments like Indianapolis acquisition and digital growth.

Risks

• Richmond Casino: Battle in the legislature regarding casino location is highly political and speculative.
• Macro headwinds: Affecting TV advertising with softening ad demand. Political ad revenue will decline next year, and a looming recession poses challenges.
• Subscriptions: Uncertainty in the trajectory of the Pay TV ecosystem impacting TV One subscriptions.

Question and Answer

Q: Ben Briggs asked about debt buybacks, authorization, and MGM National Harbor investment.

A: Alfred Liggins said there's ~$7 million left on the $25 million debt buyback authorization and it's quick to get Board approval. The MGM investment is based on 7x their EBITDAR, worth over $100 million with MGM's gaming revenue growing.

Q: Aaron Watts asked about radio advertiser reactions to macro headwinds.

A: Alfred Liggins said radio is seeing some slowdown in national, but the corporate sales team is offsetting it, and they're outperforming competitors. TV side is affected by macro headwinds but target demo and diversity inclusion may help.

Q: Bradd Kern asked about sustainability of guidance and political impact.

A: Alfred Liggins said political ad revenue will decrease next year, but digital growth and Indianapolis acquisition offset some headwinds. Digital has robust growth projections despite recession concerns.

Q: George Michaels asked about equity buybacks.

A: Alfred Liggins said they've been discussing equity buybacks but focus has been on bonds, and they'll do it opportunistically when the time is right.