A Weak Start To 2017 For Newly Renamed Urban One


The nation’s premier broadcasting company serving African American consumers lowered its net loss in the first three months of 2017.

But, net revenue decreased 7.1% in Q1 for Radio One, to $101.3 million, as its consolidated net loss lowered to $2.3 million (5 cents per diluted share), from $3.9 million (8 cents). Consolidated operating income was down to $16.5 million, from $18.8 million, while Broadcast and Digital operating income fell to $34.9 million, from $39.6 million.

And, in its core radio division, net income slowed to $7.5 million, from $12.1 million in Q1 2016.

There are two big reasons why the company suffered to start the new year.

“A combination of tough political comps in radio, and non-recurring major client spending at Reach Media, made for a weak start to the year in radio advertising,” President/CEO Alfred Liggins III said in comments made prior to the company’s 10am Eastern conference call with financial analysts.

Additionally, Radio One’s digital cable network TV One saw diminished ratings with younger audiences, also presenting advertising challenges for Radio One.

“Despite this, we were able to post growth in adjusted EBITDA for the [cable TV] division,” Liggins said.

He also believes that newly acquired digital brands Bossip, a destination for “African-American and Black Celebrity Gossip, Entertainment News, and Black Hollywood Rumors,” and MadameNoire, a “black women’s lifestyle guide for the latest in black hair care, relationship advice, fashion trends, black entertainment news & parenting tips,” will be “immediately accretive.”

It’s one big reason why today is the final day for Radio One, as May 5 will see the company usher in a new era as Urban One.

The word accretive was a key focal point of Radio One’s Q1 conference call with analysts.

The lone participant with questions for company executives was Aaron Watts, Director of High-Yield Media, Entertainment, & Business Services at Deutsche Bank.

His queries focused on TV One, and why the network is not performing well among adults aged 18-49. Liggins explained that it has everything to do with Martin — the sitcom featuring comedian and actor Martin Lawrence. The show has concluded its run on TV One, and replacement shows Good Times and Sanford & Son aren’t drawing in younger viewers while still proving to be strong draws for audiences in the 25-54-year-old demographic.

“We’re teeing up another acquisition that was attractively priced that we think is going to help us,” Liggins said, without offering additional details.

Asked by RBR+TVBR if “cord-cutting” is having any impact on TV One, Liggins said no.

“Cord-cutting is definitely effecting the larger, wider-distributed networks pretty hard,” he said, referring to ESPN and its notable decline in total subscribers seen in the last six months. “We have been a mid-pack network and have actually been gaining subs from our distributors.”

That’s not to say TV One has not been effected by churn, Liggins warned.

Even so, with additional subscribers TV One will get to the mid-60 million range in terms of total subscribers. And, Liggins and his team continue to talk to DISH Network about a carriage deal. Such a deal could push TV one to close to 70 million subscribers.

That’s a big deal, considering that Black Entertainment Television (BET) boasted 60 million subscribers when it was sold to Viacom for a whopping $3 billion.

“There’s a lot more competition now,” Liggins said. “But marketers are learning about the voracious viewing of African Americans.” He noted that OWN—The Oprah Winfrey Network is now boasting a programming schedule that is more than 50% “black entertainment.”

Still, there is a matter of finite growth opportunities for both TV One and Radio One.

“The fact of the matter is there are 40 million African Americans,” Liggins said. “It’s not an ever-expanding pie, and at some point there will be saturation. We’re going to continue our strategy, and that’s not going to change.”

To that end, Liggins says that big OTT services such as Netflix do not have a big African American consumer strategy. That’s where TV One will continue to be a key draw for a demographic that continues to become more important to advertisers, he believes.

TV One is expected to grow its $76 million in FY2016 EBITDA to between $82 million and $84 million in EBTIDA in fiscal 2017, Liggins noted.


Despite the slow start to 2017 for the company set to be known as Urban One, Liggins and his team remain committed to growing its cash flow in 2017.

The opening of the Washington, D.C.-area MGM National Harbor resort and casino saw income of $1.5 million in Q1, and that will likely help the multimedia company as it begins to monetize new digital properties.

At the same time, ad challenges at its core AM and FM stations will likely result in some belt-tightening.

Liggins acknowledges that there’s a softer advertising environment for radio, given the lack of political dollars and “the economy slowing down a bit.”

Thus, the focus for Urban One’s radio stations will be on cost-containment and revenue improvement in its home market, where the addition of WWXT-FM 92.7 in Prince Frederick, Md., from Red Zebra Broadcasting “will help bolster the position” of WMMJ-FM “Majic 102.3.”

The company also sees positive accretive EBITDA from the purchase of Red Zebra’s ESPN Radio affiliate in Richmond, and seeks to improve its “underdeveloped assets” in Philadelphia, where it has three FM radio stations.

Meanwhile, Reach Media — the Radio One syndication arm that includes The Tom Joyner Morning Show — “won’t be a disaster,” Liggins said. However, EBITDA is expected to be down between $9 million and $7 million in fiscal 2017.

“The tough news on radio isn’t anything folks have heard from us before,” Liggins admitted. “Managing that carefully will be the primary focus, and we will also focus on moving again toward 2017 EBITDA growth.”

Overall, radio advertising in Q1 was down 8.7%, to $46.2 million. Cable TV advertising was off 3.7%, to $21.1 million; affiliate fees for TV One were statistically flat, at $27.3 million.


Asked by Deutsche Bank’s Watts about automotive category performance at Radio One, Liggins noted that automotive in Q1 comprised less than 10% of total ad revenue—some $4.3 million.

Category advertising attributed to auto dealers was $3.7 million—down 13% year-over-year.

Liggins said the auto category is not a big one for Radio One.

In midday trading, investors reacted negatively to soon-to-be-renamed Urban One’s Q1 results: At 12:20pm Eastern shares in “ROIAK” were off 10.5%, to $2.55.