A ransomware attack, along with added expenses tied to a late-night TVOne talk program hosted by D.L. Hughley, were black marks on an otherwise positive Q1 earnings report delivered early Thursday by Urban One.
Yet, while Reach Media and TVOne saw gains, radio revenue was off, leading to a slip in overall net revenue for the company led by CEO Alfred Liggins III.
Liggins opened Urban One’s first-quarter earnings call by noting he was “actually pretty pleased with the first-quarter results, although radio division finished a little softer than expected.”
Overall net revenue declined by 1.2%, to $98.45 million from $99.62 million, as Urban One’s net loss lowered to $6.7 million (-15 cents per share), from $22.6 million (-48 cents). Adjusted EBITDA was statistically flat, moving to $29 million from $28.5 million.
Net revenues from Urban One’s radio broadcasting segment, using the company’s original name of Radio One, decreased by 7% in Q1. Liggins remarked that the forecast for the division was a mid-single-digit decline. Radio One’s Adjusted EBITDA fell to $10.1 million, from $12.6 million.
This is what likely triggered a stock slide of 9.9% as the Opening Bell rang on Wall Street, moving UONE to $1.91. However, trading volume was very small at just 244 shares.
Urban One’s radio clusters in eight of its markets suffered revenue declines: Baltimore, Charlotte, Cincinnati, Detroit, Houston, Indianapolis, Philadelphia and Richmond.
Just two markets saw net revenue growth in Q1: Atlanta and Washington, D.C.
While some would be glum, “the good news,” Liggins said, is that he continues to be happy with how the radio industry has held up.
He’s also giddy about Urban One’s Q2 forecast, as April is up in the high-teens and Q2 is pacing ahead by high-single-digits.
REACH REBOUND, TV RATINGS FIRM
The national radio division of Urban One, Reach Media, had a nice beat in expense division due to new digital strategy, Liggins said.
Net revenue for Reach Media grew to $6.97 million from $6.52 million.
Better inventory utilization is to thank for this improvement.
Meanwhile, Urban One’s MVPD-distributed TVOne has been helped by ratings stabilization, Liggins said.
Some $47.8 million in revenue was seen for TVOne, up from $46.2 million for the same period in 2018, with an increase primarily thanks to advertising sales.
That said, growth initiatives will lead to more expenses. Liggins expects the company to spend more on TV programming and marketing, thanks to the late-night talk show starring former BET and NBC star D.L. Hughley. “We’re making modest programming investments to improve ratings and revenue delivery,” he said.
RANSONWARE ATTACK HITS REVENUE
Urban One CFO Peter Thompson revealed that national radio spots and some Radio One audio streams were impacted by a cyberattack that occurred in late February. This crippled the company’s internal computing systems at various clusters, forcing staff to rebuild file systems over several weeks.
Thompson says some $5,000 to $6,000 was spend on recovery efforts, but that the attack put a $1 million impact on Q1, which will be mitigated in insurance claims presently in process.
AD CATEGORY TRENDS, FURTHER DEBT TRIM
With broadcast and digital operating income up to $34.49 million from $32.5 million, Liggins noted that this was largely thanks to cable TV advertising improvements.
Radio ad sales were off 4.9%, to $42.44 million, as cable TV advertising gained 6.6%, to $20.19 million.
Negatively impacting Urban One in Q1 was a 20% drop in Telecom revenue, due to a single non-recurring ad campaign for T-Mobile. Retail was off 8%, and this was attributed to a campaign from Walmart.
With nearly $200 million in EBITDA in 2018 seen from Urban One’s investment in the MGM National Harbor Resort and Casino, to the east of Alexandria, Va., along the Potomac River, and encouraging signs for its radio stations, the “highest priority” for Urban One is to tackle its indebtedness.
“We continue our march to deleverage and pay down debt,” Liggins says. “Our new credit facility is designed to do that.”