Urban One, Inc. Q2 FY2026 earnings call

• Overall Financial Performance

  • Sequential improvement from Q1 2026, but the first half of 2026 still saw year-over-year revenue declines, albeit at a slower pace than Q1
  • Consolidated adjusted EBITDA was $11.7 million, down 16% year-over-year; net loss was $7 million ($1.58 per share), compared to a $77.9 million loss ($17.41 per share) in Q2 2025
  • Corporate operating expenses decreased 16.7% year-over-year driven by lower professional service fees and compensation-related costs

• Balance Sheet and Capital Activity

  • Reduced long-term debt by $60.2 million in the first half of 2026 via debt repurchases at an average price of ~42 cents on the dollar, generating annual interest savings of $4.6 million
  • In Q2 2026, repurchased $23.5 million of 2031 second lien notes at a weighted average price of $42; drew an additional $10 million under the asset-backed facility, leaving a $22 million outstanding draw as of Q3 2026, with $24.1 million in remaining borrowing capacity
  • As of June 30 2026, total outstanding debt was $323.2 million, with $15.4 million in unrestricted cash and a net leverage ratio of 6.66x
  • Recognized a $13.9 million goodwill impairment charge and $300,000 long-lived asset impairment charge related to Reach Media; no additional major impairments are expected going forward after recent accounting adjustments
  • Completed previously announced sales of two Charlotte radio licenses in June 2026 for a total gain of $4.7 million; completed sale of KZMJ (Dallas) in July 2026 for a $3.2 million gain, recognized in Q3 2026

• M&A Activity

  • Completed the acquisition of Service Broadcasting Group (including Dallas radio stations KKDA and KRNB) on July 17 2026; management expects the acquisition to contribute meaningfully to results over the remaining five and a half months of 2026

• Early Q3 2026 Trends

  • TV One prime delivery for 25-54 viewers is up 4% sequentially from Q2 2026, and only down 3% year-over-year
  • Radio markets including Washington D.C., Atlanta, and Houston show improving performance compared to Q2 2026

Consolidated net revenue for Q2 2026 was $85.8 million, a 6.4% year-over-year decrease. Segment performance:

• Radio Broadcasting: Net revenue of $35.3 million, a 3.9% year-over-year decrease, contributing 41.1% of total consolidated net revenue. Excluding political spending, revenue was down 6.6% year-over-year; local ad sales declined 10.1% (underperforming the market decline of 7.8%), while national ad sales declined 1.5% (outperforming the market decline of 4.6%). Operating expenses were down 1.6% ($0.5 million) driven by lower revenue-related costs and bad debt reserves.
• Reach Media: Net revenue of $4.8 million, a 10.6% year-over-year decrease, contributing 5.6% of total consolidated net revenue. The segment reported a net loss of $1 million, with ongoing declines in available network revenue. Operating expenses were down 17% ($1.2 million) primarily from lower bad debt reserves.
• Digital: Net revenue of $9.4 million, an 8.4% year-over-year decrease, contributing 11% of total consolidated net revenue. The decline was driven by reduced DEI-focused client spending and general cutbacks amid macroeconomic concerns. Operating expenses were down 8.7% from lower traffic acquisition costs, commissions, headcount savings, and bad debt reserves.
• Cable Television: Net revenue of $37.1 million, a 7.4% year-over-year decrease, contributing 43.2% of total consolidated net revenue. Advertising sales declined 9.6% due to 21% lower prime delivery for 25-54 viewers (driven by NBA playoff competition) and a weak scatter market, pushing more inventory to lower-rate direct response. Affiliate revenue declined 4.5% due to ongoing linear subscriber churn, partially offset by higher subscriber rates. Operating expenses increased 4.1% due to higher programming costs and new executive agreement accounting.

Management lowered full-year 2026 adjusted EBITDA guidance from the prior $60 million range to a mid-$50 million range, citing uncertainty around final political ad spending and maintaining a cautious outlook. While the Dallas acquisition has potential upside to full-year results, management adjusted guidance down to reflect current uncertainty. Free cash flow expectations for 2026 are now lower than the prior $40 million estimate, due to shifts in the composition of revenue and EBITDA. For 2027, no formal guidance was provided, but management noted expectations for continued industry consolidation and planned deliberate, value-accretive expansion focused on core market scale.

• Ongoing macroeconomic uncertainty has driven general client advertising spending cuts across all segments, negatively impacting top-line results
  • Local radio ad sales continue to underperform broader market declines, putting pressure on radio segment revenue
  • Linear cable television faces sustained subscriber churn, growing competition from CTV providers (including Netflix and Amazon), and a weak scatter ad market, creating ongoing pricing pressure for ad inventory
  • Political ad revenue, a key expected 2026 tailwind, has high uncertainty: final spending levels depend on race competitiveness, candidate fundraising, and allocation of ad budgets between radio, digital, TV, and digital platforms, so final results may differ from current budgets
  • The radio broadcasting industry faces structural top-line pressure from broader shifts in media consumption and advertising allocation, requiring disciplined acquisitions to avoid overleveraging

Q: Analyst Ben Briggs asked to quantify 2026 political ad spending guidance, its distribution across segments, and asked for an update on the proposed AM tower sale, and confirmed whether a $35 million free cash flow expectation was accurate after the guidance revision.

A: Management budgeted $11.1 million for political ad spending in radio, which is expected to be lower than the 2022 cycle which included an extra Georgia runoff that added incremental spending. TV One is not expected to see meaningful political spending outside of presidential election years, while digital is expected to receive roughly $1 million in political ad spend. The AM tower sale process is ongoing and management expects a positive outcome by the end of 2026. Free cash flow is now expected to be lower than $35 million due to shifts in revenue and EBITDA composition.

Q: Analyst Aaron Watts asked what factors caused Q2 2026 radio results to come in softer than prior guidance, why national radio performance is stronger than local, whether the Q3 2026 radio forecast implies core market improvement or just a political lift, and what factors are weighing on TV advertising.

A: Q2 2026 radio revenue missed guidance almost entirely due to lighter-than-expected local ad spending across categories, where the company underperformed the broader market. National radio performance improved after a period of underperformance, bringing results in line with market trends. The Q3 2026 softer revenue decline reflects both early political ad spending and underlying improvements in key markets including Washington D.C., Atlanta, and Houston, which recovered from Q2 weakness tied to the World Cup. TV advertising weakness stems from linear structural trends: growing CTV impression supply, a weak scatter market, and fewer upfront advertisers, which pushes more unsold inventory to lower-rate direct response.

Q: Analyst Adam Jacobson asked about Urban One's strategic direction for 2027 and beyond the 2026 political cycle, specifically whether the company will double down on its core multicultural focus or evaluate non-core assets for sale.

A: Management confirmed the company will continue focusing on its core African American targeted demographic, particularly for television, where no expansion outside the core footprint is planned. For radio, the company will continue deliberate, value-accretive expansion to build scale in existing markets, including both multicultural and non-multicultural assets, to improve local ad solution offerings. Management expects further industry consolidation, but will avoid acquisitions for the sake of growth, only pursuing deals that are de-levering and purchased at attractive valuations that account for ongoing structural pressure on traditional radio ad revenue.