Urban One, Inc.

Ladies and gentlemen, thank you for standing by. During this conference call, Urban One will be sharing with you certain projections or other forward-looking statements regarding future events or its future performance. Urban One cautions you that certain factors, including risks and uncertainties, referred to in the 10-Ks, 10-Qs, and other reports it periodically files with the Securities and Exchange Commission could cause the company's actual results to differ materially from those indicated by its projections or forward-looking statements. This call will present information as of January 11, 2024. Please note that Urban One disclaims any duty to update any forward-looking statements made in the presentation. In this call, Urban One may also discuss some non-GAAP financial measures in talking about its performance. These measures will be reconciled to GAAP either during the course of this call or in the company's press release, which can be found on its website at www.urbanone.com. A replay of this conference call will be available from 1 p.m. Eastern Time, January 11, 2024, until 1159 p.m., January 18, 2024. Callers may access the replay by calling 866-207-1041, or international callers may dial direct 402-970-0847. The replay access code is 231-8685. Access to live audio and a replay of the conference call will also be available on Urban One's corporate website at www.urbanone.com. The replay will be made available on the website for seven days after the call. No other recordings or copies of this call are authorized or may be relied upon. I'll now turn the call over to Alfred C. Liggins, Chief Executive Officer of Urban One, who is joined by Peter D. Thompson, Chief Financial Officer. Please go ahead.

Thank you, Operator. Also joining Peter and I are our Chief Administrative Officer, Karen Wishart, our General Counsel, Chris Simpson, and the Chief Financial Officer for TV1, Jody Dror. We have released our third quarter results, did so before the end of the year, so that's been out there, and we're obviously doing the conference call now. A little bit of news that's already out there. I think we kind of guided as to where we were going to be for the year end. Third quarter for us, as well as the rest of the radio sector, an awful quarter. Ours wasn't any different. Fourth quarter, We have huge political, you know, that's kind of, you know, same station, you know, ex-political kind of in line with third quarter, you know, as well. But, yeah, net-net, we still, you know, are affirming our year-end guidance of 125 to almost, you know, 128. You know, we're still on top of that, comfortable, you know, with that as we, you know, finish tying out the the year-end results. Good news going into 24 in the radio sector, Q1 radio pacings are substantially better, bolstered a lot by improving local. Currently for us, we're pacing low single digits. Today it bounces around, but today it's minus one for Q1. We'll see how that looks and holds, but we're optimistic as we go into 24 for a bottoming, if you will, in radio advertising performance and an upswing due to political. So with that, I'm going to turn it over to Peter, let him get into the detail of the numbers, and then we'll come back for Q&A.

Thank you, Alfred. Net revenue was down by 2.8% year-over-year for the quarter end of September 30th, 2023, at approximately $117.8 million. Net revenue for the radio segment was $40.2 million, a decrease of 0.6% year-over-year. And we were down by 14.4% same-station, minus 12% same-station ex-political, which, as Alfred said, is broadly in line with what we discussed on our last earnings call. According to Miller Kaplan, our local ad sales were down 8.4% against the market that was down 5.7% for the quarter, and our national ad sales were down 7% against the market that was down 10.5%. Q4 23 radio segment is expected to be down approximately 14% all in. On the same station basis, Q4 is expected to be down approximately 23%, and then ex-political down about 13%, so broadly kind of in line with Q3 same-station. And Q1 pacing on a same-station basis, currently down very low single digits. Local is pacing plus 4%. National is down about 20%. Net revenue for reach media. was $11.2 million in the third quarter, up 10.8% over prior year, and adjusted EBITDA was $3.4 million, down 6.7% for the quarter. Net revenues for our digital segment decreased by 3% in Q3, to $20.4 million. Direct sales were down while local radio, streaming, and podcast revenues were all up. Adjusted EBITDA was $7.4 million, down 2.9% year over year. We recognized approximately $46.8 million of revenue from our cable television segment during the quarter, decreased 7.6%. Cable TV advertising revenue was down 5.9%, where we had a favorable rate impact of $1.1 million, unfavorable volume impact of $1.2 million, half a million unfavorable audience deficiency units, and an $850,000 reclass of VOD revenue to our digital segment related to CTV. Cable TV affiliate revenue was down by 9.3%, with favorable rate increases of $1.2 million being offset by $3.4 million of net churn. Cable subscribers for TV1, as measured by Nielsen, finished Q3 2023 at $44 million, compared to 45.1 million at the end of Q2. And Clio TV had 41.4 million meals and subs. Operating expenses, excluding depreciation and amortization, stock-based compensation and impairments of long-lived assets, increased to approximately $84.5 million for the quarter, up 5.3%. approximately $80.2 million incurred for the comparable period in 2022. Radio operating expenses were up 14.1%, or $3.9 million, and the Houston radio acquisition, which was effective August 1st, 2023, that added approximately $2.2 million to expense, and also the Indianapolis radio acquisition, which we did back in September of 2022, added approximately $2 million of incremental expense. On the same station basis, sales commission expenses were down and event expenses were down from last year for the quarter due to the time and difference between the two of the largest radio events for the company. REACH operating expenses were up by 21.4%. That was driven by increased REACH net station compensation expense given the addition of four new networks as well as event expenses and talent compensation. Operating expenses in the digital segment were down 3%, driven predominantly by variable sales expenses tied to lower direct advertising revenues. Cable TV expenses were down 4.4% year-over-year. Content amortization expenses up by $1.7 million, driven by an increase of $2.2 million for original programming. And that increases offset slightly by a reduction in promotional media spend, actually $3.1 million, considering that we had a greater number of premier hours that we promoted in prior year. Operating expenses in the corporate elimination segment were up by approximately $520,000, primarily as a result of higher third-party consulting and audit expenses. Consolidated adjusted EBITDA. was $34.1 million for the quarter, down 23%. For the third quarter, consolidated broadcast and digital operating income was approximately $43.8 million, a decrease of 13.9%. Interest expense decreased to approximately $14 million for Q3, down $15.3 million last year due to lower overall debt balances. The company made cash interest payments of approximately $26.9 million in the quarter, and the next semiannual debt service payment is due in Q1. An $85.4 million impairment of goodwill in long live assets was recorded across 10 of our 13 radio markets. The benefit from income taxes was approximately $16.8 million for the quarter. The company paid cash income taxes in the amount of approximately $1.6 million. Net loss was approximately $54.4 million, or $1.14 per share, compared to net income of $3.5 million, or $0.07 per share, for the third quarter of 2022. Capital expenditures were approximately $2.5 million for the quarter. And as of September 30, 2023, total gross debt was $725 million, ending unrestricted cash was $195.7 million, resulting in net debt of approximately $529.3 million, which we compare to $133.3 million of LTM reported adjusted EBITDA for a total net leverage ratio of 3.97 times. Pro forma for the Indianapolis and Houston radio acquisitions, total net leverage was 3.93 times. And with that, I'll come back to you.