Radio One Q2 2025 Earnings Call Transcript

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Provided by Quartr
August 13, 2025

Key Takeaways

  • Negative Sentiment: Company revised full-year adjusted EBITDA guidance downward from $75 million to $60 million, reflecting ongoing headwinds.
  • Negative Sentiment: Consolidated net revenue fell 22.2% year-over-year to $91.6 million, driven by declines in the radio, digital, and Reach Media segments.
  • Negative Sentiment: Consolidated adjusted EBITDA dropped 51.7% to $14 million and the company reported a Q2 net loss of $77.9 million ($1.74 per share).
  • Positive Sentiment: Urban One repurchased $64 million of 2028 notes at an average price of 51.8% of par, lowering interest expense and achieving a net leverage ratio of 5.14×.
  • Positive Sentiment: Cable Television segment held margins flat despite a 7.5% revenue decline, benefiting from programming cost savings and growth in CTV and third-party platform revenue.
AI Generated. May Contain Errors.
Earnings Conference Call
Radio One Q2 2025
00:00 / 00:00

There are 6 speakers on the call.

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Urban One twenty twenty five Second Quarter Earnings Call. As a reminder, this conference is being recorded. We will begin this call with the following safe harbor statement. 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.

Operator

This call will present information as of 08/13/2025. 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 the conference call will be available from 2PM Eastern Time, 08/13/2025 until 11:59PM Eastern Time, 08/20/2025.

Operator

Callers may access the replay by calling 30. International callers may dial direct 0909. The replay access code is 300000660280 Access to live audio and a replay of the conference will also be available on UrbanOne'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.

Operator

I will now turn the call over to Alfred C. Liggins, Chief Executive Officer of Urban One, who is joined by Peter Thompson, Chief Financial Officer. Mr. Liggins, please go ahead.

Speaker 1

Thank you, operator. Also joining us is our General Counsel, Chris Simpson our Chief Administrative Officer, Karen Wishart and our TV One CFO, Jody Dror. The earnings release, press release is out consistent with what's going on in the industry. It was a tough quarter. Albeit when Peter gets into the numbers, there are some adjustments that need to be taken into account that don't make the picture as dire.

Speaker 1

One of those is a difference in the timing of our Tom Joyner cruise, which was in Q2 last year, but has been moved to Q4, and that's a big revenue number. And also there's a noncash adjustment to the TV One award, which has a significant impact on the downdraft on the EBITDA line as well. I think the big news is that we have revised our guidance for the year, given the headwinds that we're experiencing down from the original $75,000,000 which we had at the beginning of the year to a $60,000,000 full year number. We have not instituted a second round of cost cuts and rightsizing as of yet. That's something that we'll be focused on over the next thirty days and look to institute by the end of Q3.

Speaker 1

So it takes a step back in Q4. We have seen a bit of a moderation, as I think we said last quarter, in our TV business. Actually, that's a business that is doing better than we originally have budgeted. But the radio and the digital business and reach media, in particular, undergoing are significant headwinds. So with that, I'm going to let Peter take you through the details and then we'll open it up for Q and A and talk about the business in more detail.

Speaker 2

Thanks, Alfred. I'll just quickly run us through the numbers. So consolidated net revenue is approximately $91,600,000 down 22.2% year over year for the three months ended 06/30/2025. Net revenue for the Radio Broadcast segment was $36,700,000 a decrease of 12.6% year on year. Excluding political, net revenue was down 10.3% year on year.

Speaker 2

According to Miller Kaplan, our local advertising sales were down 5.6% against the market that was down 11%. Our national ad sales were down 23.6% against the market that was down 13.1%. Largest ad category was services, which was up 23.4%. That was driven by legal firms and legal services. Financial was also up 11.3.

Speaker 2

All of the other major categories were down. Net revenue for Reach Media segment was $5,300,000 in the second quarter, down 71.9% from the prior year. And adjusted EBITDA for Reach was a loss of $1,700,000 for the quarter. Tom joined a cruise event, as Alphys said, was in the 2024 and generated $9,600,000 in revenue in Q2 last year. This year is going to be held in Q4.

Speaker 2

So you have a revenue and a profit timing difference there for the quarter. Aside from the absence of the cruise revenue, client attrition, lower average unit rates drove the network advertising revenue decline. Now revenues for the digital segment were down 27.1% in Q2 at $10,300,000 The decline was driven by the loss of an exclusive third party audio streaming deal. So that impacted us by $1,600,000 of revenue. Direct and indirect digital sales were down by $1,200,000 Adjusted EBITDA was a loss of $100,000 compared to a profit of $2,700,000 last year.

Speaker 2

We recognized approximately $40,100,000 of revenue from our Cable Television segment during the quarter, a decrease of 7.5%. Cable TV advertising revenue was down 4.2%. Total day delivery declined 12.5% for persons twenty fivefifty four, and that was offset by an increase in CTV and third party platform revenue share. Cable TV affiliate revenue was down 11.7%, driven by subscriber churn, which was partially offset by an increase in subscriber rate and the launch of NOW TV. Cable subscribers for TV One, as measured by Nielsen, finished second quarter at 34,300,000 compared to 35,600,000 at the end of Q1.

Speaker 2

Clio TV had 33,700,000 Nielsen subscribers. Operating expenses, excluding depreciation and amortization, stock based compensation and impairments of goodwill and intangible assets decreased to approximately $78,100,000 for the quarter, a decrease of 16.3% from the prior year. The overall decrease in operating expenses was primarily due to the absence of the REACH cruise event, which had $8,400,000 of expenses in the second quarter of last year. Other notable expense decreases include corporate professional fees, overall payroll expenses and cable TV advertising expense. A noncash credit of $6,200,000 was included in the prior year expenses for the reduction in the value of the CEO's TV-one award.

Speaker 2

And that compares to a charge of $700,000 which was included in this year's second quarter total. That caused an unfavorable variance of $6,900,000 year over year, which was non cash. Normalizing for this, adjusted EBITDA was down $8,000,000 year over year and further adjusting for the timing of the Tom Joyner Fantastic Voyage, EBITDA was down approximately $7,000,000 year over year. Radio operating expenses were down 7.8% or $2,500,000 driven by lower employee compensation and fewer station event expenses. Reach operating expenses were down by 55% due to the absence of the cruise event.

Speaker 2

Operating expenses in the digital segment were down 8.4%, driven by lower employee compensation. Operating expenses in the cable TV segment were down 19.6% year over year, driven by lower programming content amortization, lower marketing campaign expenses and lower employee compensation expense. Operating expenses in corporate were up by approximately $2,100,000 Third party professional fees were significantly down from last year. However, the noncash compensation relates to the TB1 award that I just mentioned increased by $6,900,000 Hence, the overall corporate expense was up. Consolidated adjusted EBITDA was $14,000,000 for the second quarter, down 51.7%.

Speaker 2

Consolidated Broadcast and Digital operating income was approximately $25,700,000 a decrease of 25% year over year. Interest and investment income was approximately $600,000 in the second quarter compared to $1,800,000 last year. Decrease was due to lower cash balances and interest bearing investment accounts. Interest expense decreased to approximately $9,700,000 in Q2, down from $12,400,000 last year due to lower overall debt balances as a result of the company's debt reduction efforts. Company made cash interest payments of approximately $800,000 in the quarter.

Speaker 2

And during the quarter, company repurchased $64,000,000 of its 2028 notes at an average price of 51.8% at par, bringing the balance to $492,300,000 as of 06/30/2025. We recorded $130,100,000 in noncash impairments in Q2 against the carrying value of the FCC licenses in all of our markets with the exception of Baltimore and goodwill impairment for certain important units in the radio broadcasting segment and the digital segment. Due to the decline in the forecast cash flows in Q2 and continued decline in the radio industry generally, the company prospectively changed the useful life of the FCC licenses from indefinite lives to finite lives intangible assets, effective 06/01/2025. We recorded amortization expense of approximately $1,300,000 for the three months ended 06/30/2025. Benefit from income taxes was approximately $21,400,000 and the company paid cash income taxes net of refunds in the amount of $200,000 Capital expenditures were approximately 1,200,000 for the quarter.

Speaker 2

Net loss was approximately $77,900,000 or $1.74 per share compared to a net loss of $45,400,000 or $0.94 per share for the 2024. During the three months ended 06/30/2025, the company repurchased 226,041 shares of Class A common stock in the amount of approximately $369,000 average price of $1.63 per share. And we purchased 200,549 shares of Class D common stock in the amount of approximately $117,000 and at an average price of $0.59 per share. As of 06/30/2025, total gross debt was approximately $492,300,000 Our ending unrestricted cash was $85,700,000 resulting in net debt of approximately $406,600,000 which compares to $79,100,000 of LTM reported adjusted EBITDA for a total net leverage ratio of 5.14x. And with that, I'll hand it back to Alfred.

Speaker 1

Thank you, Peter. Operator, could you open it up for Q and A, please?

Operator

We will now begin the question and answer Our first question will come from the line of Ben Briggs with Stonix Financial Inc. Please go ahead.

Speaker 3

Good morning, guys. Thank you for holding the call and for taking the questions. Sure. Yes. So a couple of quick ones from me here.

Speaker 3

First of all, I'm looking at the margins here in your cable TV segment. And I'm noticing that the EBITDA margins have grown a bit. Am I right to infer that those are from this first round of cost cutting initiatives that you guys did?

Speaker 2

No. I think the Yes. Do to you speak to it, Jody? It's a timing issue. We did get some savings on programming that will be real for the year.

Speaker 3

But just

Speaker 2

timing of our marketing campaign this

Speaker 3

year versus last year good what's giving you the positive flip. Got you. Understood. Understood. And after the second round of cost cuts, I know you mentioned that they're going to happen kind of by the end of the third quarter, so expect to see them flow through results in the fourth quarter.

Speaker 3

Can you give any granularity on what we should expect to see and how we should expect to see those cost cuts flow Not through the

Speaker 1

yet. We haven't tapped yet. We've started the process and but, you we're not we're not finished, you know, so that's the reason they haven't taken effect. I I I don't I don't suspect it's going to dramatically change, the current guide. And I think you'll see the majority of the impact come through for 2026.

Speaker 1

But I don't have that answer for you just yet. But since we've talked about it on the call last quarter, I wanted to point out that we haven't gotten there yet. But we wanted to go ahead and get the guide out there sort of irrespective of what that cost cut was going to bring. I could it bring $1,000,000 or $2,000,000 in the quarter? Maybe we'll find out.

Speaker 1

We just haven't we haven't tabulated yet. But it's not going to take it to 70. Right. Okay. Got it.

Speaker 1

Got it. All right. Go ahead.

Speaker 2

And Ben, just circling back on the TV One margins. I'm looking at the full year projections, and the margins are, yes, flat essentially. So we're holding margins pretty well off of, obviously, a diminished revenue base, but the margins are not margins are flat, but it's a good effort.

Speaker 3

Okay. I appreciate that. Thank you. And then next thing and maybe the last thing from me is obviously, there was $64,000,000 of debt buybacks during the second quarter. How are you guys thinking about debt buybacks?

Speaker 3

Obviously, bonds are trading a little up. They're closer to 60 now than I think they were when you were buying them. Are you guys planning on continuing those debt buybacks or maybe a pause now that debt is rallied?

Speaker 1

Yes. Look, I think that

Speaker 3

our

Speaker 1

focus continues to be debt reduction and expense management. So whether or not we're going to be back opportunistically buying debt at this level remains to be seen. Meaning that yes, look, one of the reasons why we wanted to get our numbers out there so the market can have a realistic view of what where we're going to be this year. So we'll still see how it all plays out. The vast, vast, vast, vast majority of our cash is continued to be focused on our delevering.

Speaker 1

So don't have an answer of what we're going to do this afternoon or tomorrow in terms of debt buybacks, but our priority has not changed.

Speaker 3

Understood. I appreciate that. That will be all from me. I'll hand it over to others. Thank you again for the call.

Speaker 3

Thank you.

Operator

And our next question will come from the line of Ken Silver with Stifel. Please go ahead.

Speaker 4

Hey, guys. Thank you for the time. Can

Speaker 1

we can.

Speaker 3

Okay. Sorry about that.

Speaker 4

There's an echo on my end. Just a few questions. And you sort of just addressed this with the last caller, but your sales and marketing expenses on a consolidated basis were down a lot year over year in the second quarter. Is that like the new normal? Or are they going to like I think you kind of are they going to reverse a lot in the second half of the year?

Speaker 2

Well, there's a timing difference that Jody just mentioned for TV One. So that there's some element of reversal there. But I mean, we're just obviously tightening our belts across everything we can. So I don't think there's going to be a major rebound on those.

Speaker 4

Okay. And then I guess, I mean, if you're tightening sales and marketing a fair amount, like I mean, is it are you seeing any sort of unintended consequences negatively from like top line? Or you feel like that hasn't affected you?

Speaker 1

I mean that

Speaker 2

It's almost the other way around. It's like the sales commissions because Yes, exactly.

Speaker 1

It's variable, right? Yes. We have not gone in and taken out sales people in our cost efforts. That's not and in fact, if anything, in markets like Washington, D. C, we're looking to beef up, right?

Speaker 1

We're so we're not sales is not an area, where we're looking to take out a bunch of costs, right? Right now, it's really kind of we actually need to be re reorienting our efforts in the radio business to actually increase our digital, our local digital revenue generation. So I think cost reduction in that area has got to be largely related to just the revenue being down, right?

Speaker 4

Okay. You.

Speaker 1

Yes.

Speaker 4

Okay. Understand. I thought it was something marketing expenditure, too. Got it. No, I understand.

Speaker 4

Okay. And then Peter, I think I heard you say that on National Radio, yours was down 22% in the quarter versus like a market down 11%. Is that right? And if that's right, what can you maybe just talk about that a little more?

Speaker 2

Yes. So national, we were down 23.6% against the market that was down 31%. So we've been struggling nationally with big clients and big agencies. There's some Yes.

Speaker 1

So look, so we got a couple of things happen. One, you got the national the natural pressure on secular pressure on our businesses, cable television, broadcast radio and national radio. Then you also have the pullback in DEI dollars, which have absolutely hurt our performance. And so it's a combination of those things.

Speaker 2

And then we're also hearing about AI, you know, AI related Yeah. Excluding radio altogether. So Yeah.

Speaker 1

So so these, you know, these large language models that people are now using do marketing campaigns are not they're omitting broadcast radio as part of it. We've to figure out what the solution is for that. But again, that's more of the digital transformation that puts pressure on us.

Speaker 4

Got it. Okay. And then just lastly, on your ABL, I think it was undrawn, but is it fully available? Are there covenants? Can you just remind us?

Speaker 2

Yes. No, it's fully available to be drawn. There's a maintenance covenant, fixed charge ratio covenant, which we are in compliance with. So if we needed to draw on it, could.

Speaker 4

What is the covenant?

Speaker 2

I think it's 1.1 ratio and we're at 1.7 off the top of my head. So we've got significant headroom on that. And it's just fixed Okay,

Speaker 1

great.

Speaker 4

Thanks a lot. I appreciate it.

Operator

And our next question comes from the line of Marlene Perrero with Bank of America. Please go ahead.

Speaker 5

Good morning, everyone and thanks for taking the question. I was wondering if at a very high level you can just let us know how you're thinking about free cash flow for the remainder of the year and for the full year. One, obviously, the reduction in the EBITDA, obviously, there should be some cost saving elements in the second half of the year, although I know that's still to be determined. Also, has there been any tax benefits? Sorry if I had missed that.

Speaker 5

But just if you can provide some context, that would be great.

Speaker 2

Sorry, what was the last bit? Tax benefit.

Speaker 5

From the new legislation.

Speaker 1

What new legislation?

Speaker 5

I was wondering if there's any interest benefit from the big beautiful bill.

Speaker 2

Nothing that's impacted. No. So look, we're projecting at the moment, if we don't do any more debt buybacks, we're projecting about a $95,000,000 cash balance at year end.

Speaker 1

$95,000,000

Speaker 2

$95,000,000 Yes. So obviously, even with the lower EBITDA, we think we're going to generate some additional cash in the back half of the year. Was there a third part of the question? Answered two.

Speaker 5

That was it. Just any context on the moving parts, but that's helpful. So thank you.

Operator

That will conclude our question and answer session. I'll hand the call back over to Alfred Liggins for any closing comments.

Speaker 1

Great. Thank you, operator. Thank you, everybody, for joining the call. As usual, we're available offline for any additional questions that you may not have a chance to ask. Thank you.

Speaker 1

Thank you, operator.

Operator

Thank you. And this will conclude today's call. You may now disconnect.

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