It was a mixed Q2 for Urban One, with net revenue down and net income rising.
The biggest announcement for the media company super-serving Black consumers, however, had little to do with financials and a lot more to do with what’s in store come 2019.
A new cable TV channel is in store for viewers, and two unnamed MVPDs are already on board to carry the channel.
In comments made during his company’s Q2 conference call for Wall Street investment analysts, Urban One President/CEO Alfred C. Liggins III announced that Urban One will be launching a lifestyle network for the Black and Afro-Latino woman named Cleo.
Liggins pitched the coming network as “advertiser friendly” and “lower cost to produce,” as well as being a complementary network to TV One, its general interest channel focused on second-run scripted programming of key interest to African American viewers.
Urban One expects to launch Cleo in January 2019 with “two major MVPD partners,” and as a “license-fee free network.” It will not have an affiliate revenue model — a.k.a. there will be no retrans fee battles as Urban One will solely focus on advertising revenue for Cleo’s growth.
“The addition of a second network will help us to continue to grow our TV business in the longer term, and has great potential synergy with our existing platform,” Liggins says.
Cleo was naturally a focus of several analysts participating in the conference call, with queries on how it will impact Urban One’s 2020 refinancing efforts.
News of Cleo’s launch overshadowed news that Urban One’s Q3 pacing is flat and that April “was a very tough month, but it got better along the way,” Liggins notes.
Additionally, the company shared that markets including Cleveland, Cincinnati, Dallas and Washington, D.C., outperformed the total market for Urban One. Net revenue declines impacted Urban One’s Atlanta, Philadelphia, Raleigh, and St. Louis markets.
And, Liggins is expecting a big Q4 for political dollars.
In Q2, net revenue slipped 2.1% to $115.2 million from $117.6 million.
At the same time, net income soared to $23.6 million (49 cents per diluted share) from $802,000 (2 cents).
Adjusted EBITDA was approximately $39.0 million for the three months ended June 30, compared to $36.7 million for the same period in 2017, an increase of 6.4%.
“The decline in our TV advertising revenues improved sequentially over first quarter, and our affiliate revenues benefitted from a one-time adjustment to an agreement with a major MVPD,” Liggins adds. “Our digital segment came in below expectation for Q2, but has had a very strong start to third quarter and we remain optimistic for the back half of the year.”
Diversified holdings including newly acquired WTEM-AM 980 in Washington and the MGM National Harbor casino resort to the south of downtown Washington are positives, and double-digit growth in gaming revenue was seen in Q2.
Meanwhile, national radio arm Reach Media held its 19th “successful” Tom Joyner Foundation Fantastic Voyage cruise event, and this delivered a 14.7% increase in Adjusted EBITDA for the quarter, Liggins said.
POLITICAL SAVES THE DAY
Much of what Urban One and Liggins had to say appears in its Q2 financial sheet.
Political accounted for $1.18 million in revenue during the quarter, and this helped to offset some not-so-attractive performances across each of Urban One’s segments.
- Radio advertising fell 6%, to $48.9 million
- Digital advertising was off 2.7%, to $6.56 million
- Cable TV advertising declined 4.6%, to $18.12 million
Cable TV affiliate fees offset the ad revenue decline, thanks to a 7.2% rise to $28 million.
Meanwhile, “pricing pressure” is the reason Reach Media’s net revenue decreased by about $1.1 million in Q2 but did not specify what it fell to, as Reach Media’s totals are included with its AM and FM radio station revenue performance.