Urban One Inc (UONE) 2010 Q4 法說會逐字稿

Welcome to Radio One's 2010 fourth quarter and year-end results conference call. I have been asked to begin the call with the following Safe Harbor statement. During this call, Radio One may share with you certain projections or forward-looking statements regarding future events, or future performance. The Company cautions you that certain factors including risks and uncertainties may be referred to in that 10-K and 10-Qs and other reports periodically filed at the Securities and Exchange Commission could cause the Company's actual results to differ materially from those indicated by the projections or forward-looking statements.

This call will present information as of December 31, 2010. Please note that Radio One disclaims any duty to update any forward-looking statements made in the presentation.

In this call, Radio One may also discuss some non-GAAP financial measures in talking about its performance. Its measures will be reconciled through GAAP either during the course of this call or in the Company's press release which can be found on its website at www.radio-one.com.

A replay of the conference call will be available from 12.30 p.m. Eastern time March 3, 2010, until 11.59 p.m. March 5, 2011. Callers may access the replay by calling 1-800-475-6701. International callers may dial direct 1-320-365-3844. The replay access code is 193396. Access to the live audio and a replay of the conference call will also be available on Radio One's corporate website at www.radio-one.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 would now like to turn the conference over to Alfred C. Liggins, Chief Executive Officer of Radio One, who is joined by Peter D. Thompson, Chief Financial Officer.

Thank you very much, operator, and welcome, everyone, to our Q4 2010 earnings release conference call. Also on the call with us is Barry Mayo, who is the President of our Radio Division.

Let me say just a few things. You have all seen the press release. Our Q4 was a solid quarter for us and it was the best of 2010. We are seeing that the radio industry will continue to improve in 2011 as the broader economy improves, albeit we are starting out a little slow but we are still very optimistic about the year based on trends that we are seeing.

Strategically, we are continuing our quest to increase our ownership in TV One. This time through a financing at the TV One level that has lifted our ownership stake from approximately 37% to approximately 45%.

Lastly in 2011, we see our Internet division will continue to narrow its losses and move towards breakeven and be poised for significant revenue growth in the future.

With that, I'm going to turn it over to Peter who will go into the numbers.

Thank you, Alfred. Net revenue increased to approximately $71.2 million for the quarter ended December 31, 2010 from approximately $67.3 million for the same period in 2009, an increase of 5.8%. Our Radio Division excluding Reach Media produced net revenues of $59.9 million, up 8.1% from the same period last year. Reach Media had net revenues of $9.3 million in the quarter which was down 5.3% year-to-year.

The Interactive Division had net revenues of $3.7 million, down 8% year-to-year. On a cash basis, the radio stations showed the highest sequential growth of Q4 for all of 2010 and that was plus 11%. That is excluding trade and intercompany revenue. This growth was led by national business which was up 17.7% against a market which was up 12.7% according to Miller, Kaplan. And radio segment Internet revenue which was up 179%.

Political added $1.5 million of revenue compared to the same period last year. Our four largest markets performed as follows. Houston was up 11.6%; Washington was up 6.7%; Atlanta was up 22.1%; and Baltimore was up 0.5%. We had some comparably strong performances in other markets notably Raleigh, which was up 19.3%, and St. Louis, which was up 20.1%. For the full year, our Radio segment net revenues were up by 5.2%.

The number of spots in Q4 was down by 4% compared to prior year. However, the average unit price rose by 10%. Sellout was 1.2 points below Q4 2009. By advertising category, retail was up 23% year-to-year; government and public was up 37%; auto was up 10%; food and beverage plus 6%; financial plus 12%; telecom plus 1%; and entertainment was flat.

Turning to expenditures, our radio operating expenses including corporate expenses increased by 7.3%. There were some favorable variances from recording two quarters of employee bonuses in the fourth quarter of 2010 compared to recording four quarters in 2009 from the reversal of accrued vacation and from a temporary decrease in the music [role].

However, the expense growth was driven by increased variable expenses on the higher revenue, increased compensation costs due to the reversal of salary cuts previously enforced, and additional investments in sales and digital personnel. Also increased contractual Arbitron PPM fees and a non-cash charge relating to the CEO's future TV One award.

For the fourth quarter, consolidated station operating income was approximately $28 million, an increase of 6.5% from the same period in 2009. Adjusted consolidated EBITDA was $20.4 million, an increase of 14.4% versus 2009.

Our Q4 interest expense of $15.8 million, was $6.4 million more than in Q4 last year. The increase in interest expense was due primarily to higher interest rates to [perfect] as the result of both entering into the third amendment to our credit agreement in March of 2010 as well as defaults under our credit agreement that occurred as of June 30, 2010, July 1, 2010, and September 30, 2010.

And in addition, as a result of our entry in amended and restated credit agreement on November 24, 2010, and issue of our exchange notes, higher interest rates were in effect for the last month of the year.

We booked a net gain on retirement of debt of $6.6 million which reflects the $9.9 million discount on the 2013 notes, offset by a write-off of $3.3 million of previously capitalized debt financing costs. The remaining $4.5 million of 2011 notes were redeemed at par on December 2010.

The Company elected to PIK part of the interest due on the new exchange notes and as a consequence, is currently paying 6% cash interest and 9% PIK. The PIK election will continue through May 12, 2012 unless we change the election to cash pay.

Moving down the P&L, as part of our quarterly impairment review, we recorded impairment charges to our long-lived assets of $36.1 million. Impairment charges are a result of our annual year-end impairment testing and reflect a non-cash charge recorded for the impairment of radio broadcasting licenses in Philadelphia and goodwill associated with Reach Media.

As a result of the non-cash impairment charge, net loss was approximately $27.2 million or a loss of $0.52 per share. An increase from the reported net loss of approximately $14.9 million or $0.28 per share from the same period in 2009.

For the fourth quarter, CapEx was approximately $900,000. Cash paid for taxes was approximately $1.4 million, all of which was paid by Reach Media. As of December 31, 2010, we had debt net of cash balances of approximately $633 million. Our Federal NOL balances at the year-end have increased to approximately $526 million, primarily driven by $106 million of tax amortization from our FCC licenses.

At December 31, 2010, our ratio of senior debt to EBITDA was approximately 4.48 times compared to a minimum covenant of five times. Our ratio of total debt to EBITDA was approximately 8.12 times compared to a maximum covenant of 9 times and our ratio of EBITDA to fixed charges was approximately 1.22 times compared to minimum covenant of 1.07 times.

Effective February 28, our ownership interest in TV One was increased from 36.8% to 44.6% as a result of the redemption of units held by financial investors and management. The valuation used for this transaction was $500 million on an enterprise basis and an equity value of $534 million. As a result of the increase in valuation of TV One, the Company booked a non-cash charge of approximately $1.1 million in respect of the CEO's future TV One award.

As for Q1, currently our first quarter radio station revenue is pacing flat to up low single digits on a combined basis. Normalizing for time and differences for Reach Media [Cruise], which will happen in Q1 this year versus Q2 last year, consolidated net revenue in EBITDA are expected to be approximately flat year-over-year.

And now I will hand back to Alfred.

Operator, let's open the forum up for Q&A, please.

(Operator Instructions) Bishop Cheen, Wells Fargo.

Hi. Alfred, Peter, and Barry. Once a year, gee whiz, we are going through withdrawal here. Okay, so you answered the PIK question, you intend to keep it that way through May of next year I think is what you said. Tell us again if I have this right. Is the TV One transaction is work in progress, so the carve out, if it is -- when it is consolidated on Radio One's balance sheet, you don't have to -- if you have $119 million in debt, that debt will not be consolidated to Radio One's balance sheet, if I understand this correctly?

Yes, we have a carve out for that in our current agreement.

Okay, and anything above $120 million then would just be the incremental above $120 million --?

Actually, that is not quite how it works. That was designed to be a limit on it. If we go above that, then the whole thing would have to be consolidated. So there is a definite penalty and the intent was that we would not go above $120 million.

And your intention is to move forward with the goal of to have a above 50%, so you can't consolidate TV One into Radio One?

That's correct. There are some issues in terms of governance to work out with Comcast that still are in progress that will determine if and when that happen. But that has always been the goal. That continues to be the goal. We have increased our interest up to about 45% now. We have raised the financing at TV One to be able to take out the 12-ish% that DirecTV owns, and we are working through our issues with Comcast and it is our hope to consolidate the entity in the future.

Last question and I will pass it on. You say with conviction that the Internet or Interactive One is working toward breakeven. It looks to be still around $5.5 million down on cash flow. Is that breakeven like the back half of the year? Do you think we are going to see significant improvements in Q2? Can you give us some --?

Yes, know, we -- somebody -- I don't know if was you or Jim Boyle asked the question of what happened in Internet in Q4. We made some significant sales changes about this time last year, and we killed it in Q2 and Q3 at IOne, like up 40% in Q2, up 24% in Q3. And we hit a brick wall in Q4. There is a bunch of reasons that it happened from our standpoint that were probably -- not probably -- were execution oriented, which we got on top of, are focused on and actually our Q1 at IOne is doing significantly better and we feel like we know what our issues are and we are working on them.

And so that leads me to say with conviction that we have a budget that essentially is designed to get us to breakeven for 2011 and I am hopeful that we will hit that budget. But in any event if we don't hit that budget we will substantially cut that loss, that $5.5 million loss, and every dollar we cut that loss is a pickup in EBITDA and a delevering event.

So I feel good about that. One of the things about our bank amendment was that we got rid of our Internet carve out -- Internet loss carve out so one of the reasons our leverage looks as high as it does is because we have got these IOne losses.

I mean, the reality is if we were to shut down IOne tomorrow, we'd pick up a lot of EBITDA in this Company. However, you can't be a media company and not have an online strategy and we think that we have the right strategy and we are committed to it. And I think that the team there is poised to continue to make progress.

Now, by the way, each and every year that IOne has existed, it was budgeted to lose money and we essentially have continued to narrow those losses each and every year and this is the year that we feel we are going to get close to breakeven and then start making money the following year.

So at the very least we are going to whittle down that loss substantially and it is our hope to get to breakeven.

Okay. Thank you all.

Hang on.

Just a couple of points, Bishop, on your earlier things, we will be doing quarterly calls this year, just to let you know.

And secondly, just to clarify on that PIK election, that is the way it works legally so having elected to PIK, it will just stay that way through May 12 unless we elect to change. But we can elect every quarter to change. So the next time is mid-May and we will review it every quarter and we will make a decision every quarter as to which way we think is appropriate to go. I didn't want to let you think we are locked into that.

Let me ask (multiple speakers) reminder. It is a quarterly election, not a half-year election?

Yes.

All right. Thank you.

Jim Boyle, Gilford.

Good morning, gentlemen. Peter, could you provide perhaps some color or precision on one, the TV One $2 million valuation expense that resulted in $5.9 million EBITDA. Is that -- if it wasn't there it would have been $7.9 million, or $3.9 million? What was that valuation expense in actuality?

It would've been a higher number. We had -- we charged the P&L with $2 million and that $2 million as you probably know there is a valuation process, the financial investors hired Allen & Co. We hired Rothchild. They both did a big bunch of work and that was the final cost which was split pretty evenly.

Okay. And the Reach Media cruise time and which is Q1 this year versus A2 of last year, could you give us a feel for roughly how much revenue EBITDA that is kind of being normalized out of Q1 consolidated revenue EBITDA flat guidance?

Yes, if you don't normalize for it, your revenue is going to be up about 11% on a consolidated basis. And EBITDA wise, it is going to produce around about $900,000.

$900,000 EBITDA?

Yes.

Okay. I guess I will back into that.

So $6.5 million around $900,000 of the EBITDA (multiple speakers)

Okay. That always makes life simpler. Barry, how did your core radio clusters do versus their markets in Q4 in total revenue and versus the markets in total revenue for the full year?

In Q4, Jim, we underperformed -- our clusters underperformed our markets by about 50 basis points. Our markets were up 9.2% and we were up 8.7%. That doesn't tell the whole story because it was --

Well, the industry was up 7% so obviously your markets were hotter than the industry and so were you.

Correct, correct.

How about full year?

Full year, our markets were up 7.2% and we were up 5.4%. And I need to give you some color on that. Washington DC, as you know is one of the four markets that represent a little over 50% of our total revenue. And earlier in the year around April, we made a total management change there. Our DOS resigned to go into business for himself. We changed general managers, hired our very strong regional vice president. We actually had him come from Dallas, St. Louis area to DC, Chris Wegmann. And we changed program directors.

So from what you are seeing throughout the course of the year is a big change to Washington DC. For full year, Washington DC underperformed the market by 12 points but by the fourth quarter, we had narrowed that to about 1.5 points and currently they are pacing up double-digits for February. So that turnaround is in the process of happening. So when you look at the full year what is currently happening is a lot different than what happened full year.

So full year for all your markets, you underperformed by about 180 bps even though your markets were better than the industry?

Yes.

And then Q4 you had narrowed that underperformance gap to 50 bps. So in Q1, you think you're probably going to be about equal or slightly ahead of market?

It's hard to say that right now because I have got, frankly, some issues -- it will be close, I think. But I've got some issues in the Midwest. There were a lot of moving parts throughout the course of the year. And if you would like to -- for me to get into it in more detail with you off-line, I would be happy to do it.

Okay, thank you. Alfred, the TV One repurchase of 17.4% from the financial investors and management for $82.4 million was at roughly what run rate or forward EBITDA multiple?

Actually, isn't there a forward EBITDA of multiple? With the EBITDA number that is on the street for 2011 for TV One is what?

32 each, so from memory, it is about 17 times this year, give or take.

So look, it is optically a big multiple on forward and trailing but if you know anything about these businesses, the cable network business which is -- which are incredible businesses, half of our revenue is in license fees that come from the largest TV distributors, Time Warner, Comcast, DirecTV, Charter, AT&T, Verizon, and they are locked in for the next five years. And they increase every year at a decent rate.

So it is a very predictable business and those cash flows will continue to grow. And by the way, we have valued this entity every year since its existence and over the last year, we have had dueling valuations and dueling negotiations with some very sophisticated investors, Highbridge on one side, Comcast on the other, us, and the networks were $500 million, based on its future earning potential and the contracts that it has under -- in existence today.

And so today's multiple is irrelevant, because it is going to produce a significant amount of cash flow in the future period, end of story.

Yes, I worked in cable for 12 years. I am aware how attractive cable network EBITDA growth is in their business model, so thanks.

Yes, I wanted to be clear with that, because people who aren't aware of it, I have gotten -- the last time we were going to do this inside Radio One, I had some equity investors -- oh, look at the multiple you are paying. And we never really -- because we were in the middle of doing a deal, it wasn't like I could explain a lot of stuff to people. And when we did the bondholder restructure, we ended up putting numbers out on the street. So I thought that would be helpful.

But we haven't put 2012 numbers out. We haven't put 2013 numbers out. But the fact of the matter is if you understand this business, as you do, you can kind of back in to why this thing is worth $500 million today and is a great asset for us to own and consolidate.

How many households is TV One in now?

50 million, Nielsen, or just north of 50 million.

And that is full-time equivalent?

Full-time equivalent? I don't understand --

Households?

That is the Nielsen universe which we are measured by. We're probably in the low 40s in terms of what we get paid on. But Nielsen grosses up the number of households that are actually seeing you. The number of households that are actually seeing you are different and usually larger than the number of households that you are getting paid for.

Understood. Peter, it seems that 2010 might be your trough year as it regards to EBITDA margins. How much better might your 2011 margins be if the economy cooperates?

Well, there are a couple of things. Firstly, you have got to separate out by segment, obviously. I think in the numbers we put out to the street we are showing cash flow growth in core radio for 2011. As Alfred said, it's been a slow start to the year, but we are still pretty confident about that growth.

But the exciting news outside of that core growth I think is that Reach is going to deliver higher cash flow, Internet is going to lose less and TV One is going to continue to grow into cash flow strongly. So when you aggregates all of that lot, I think it is a good picture for 2011 in terms of cash flow and margin.

Substantially or just a modest improvement if all those parts work half as well as you hope?

Say that again. Sorry.

Would you say that your margin improvement in 2011, given all those parts might work in the direction you think they might work? Is that a modest margin improvement or a substantial margin improvement?

I think in radio we are saying modest, but in the other units, substantial.

And final question for you, Peter, on your balance sheet. What are your expectations on your credit facility in 2011?

Well, obviously, it expires in the middle of 2012, and a year prior to that we would have to have some conversations with the auditors if we haven't taken it out. So the middle of this year is the latest we would want to leave it in place, frankly. So somewhere between now and then I think we will be looking at putting a new facility in place and sooner rather than later, to the blunt about it.

Okay. Thank you.

Bob Kricheff, Credit Suisse.

Hi, guys. A couple of quick questions. I guess first of all on the corporate expense line, the $7.8 million you said about $1.1 million of that was kind of the non-cash related to the write-up of TV One if I understood that right. Is that kind of adjusted 6.7-ish roughly a reasonable quarterly run rate for you guys going forward or is there anything else that we should factor in there?

Yes, that is reasonable as a run rate.

Okay. Then two other things on the TV One situation. You noted in the -- and if you said this at the very beginning I apologize because I got cut off a little bit. I am sure it wasn't personal.

Yes it was. I'm glad you noticed it.

On the TV One you said that the agreement with Canyon doesn't prevent any distributions. Is there any plans at this point for distributions or do you have an expectation of when distributions would be coming out of TV One?

Look, we took our time to find the right capital provider, structure the right security such that we would have the flexibility -- obviously subject to some baseline level of EBITDA, TV One and cash left in the business -- have the ability to upstream dividends to Comcast. To date, we don't have a plan as to exactly when those dividends will hit. But I think we proved last year that it is high on our priority list and I forgot how much in dividends we took in.

But TV One's cash flow is growing. We have debt service, but it is our plan to continue to field a dividend stream from there and the amount of that is going to be subject to their performance and also final negotiation with our partner, Comcast.

Just a couple of things on that. Just to clarify, we took $7.8 million of dividends in 2010 and I think how we're thinking about it in a very short term, the next goal is to deal with the DTV [Portland] call (inaudible). And so I don't think you will see us taking dividends out before that is dealt with just to be blunt.

Okay, fair enough. And I guess on that point, which is kind of my last question is, obviously you spent $82.4 million for a 15.4 stake. You have $37 million roughly left in this note, proceeds from this note. Unless DTV is going to reprice everything, it -- obviously you are going to need to raise more money to buy that stake in. Any discussion on sort of where that would come or am I missing something in my math or something?

The network is sitting on a substantial amount of cash and there is still a capital call that is left to go into the network from Radio One and Comcast which is about another $16 million, which we actually have a sub facility in our existing bank agreement to pay.

That is your portion, Alfred, the --?

Our portion is --

13.7.

Right, okay.

Yes, so if you take into account the network's cash, the capital call that has got to go in, the remainder on the Canyon facility, and the general ballpark of what we think the valuation is going to be, we are fine. We have structured it such that we were able to take out the DTV stake given all of those buckets of resources I just outlined to you.

Okay, great. Thanks, guys.

Lance Vitanza, CRT Capital Group.

Hi, guys. Just to sort of follow up on the TV One valuation question. If I take the $82.4 million and I put that over -- not only the 15.4, but also the 2% that you bought from management if I am thinking about this correctly, you really bought 17.4% of the Company for $82.4 million. But that only implies about a $475 million equity valuation. Am I doing something wrong there because I thought you had mentioned on the call that the equity value was higher than that.

Lance, that is exactly why I did it because you can't back into the number from what you see and there are two reasons for that. On management, they had a hurdle, so it reflected the capital that was contributed initially. So you can't back into it from the management because of that floor.

And on the financial investors, we made an adjustment for the fact that they were due to put their share of the capital call in, which is roughly $7 million.

Okay.

So the capital call was adjusted for that and again, that would lead you to undervalue it if you just did the math.

Understood. Okay. And then I heard commentary about the pace of the increase in the carriage revenue there. Could you be -- I think you said that it was going to increase over the tenor of those contracts at a decent rate. How should I think about that? Is that to mid single digits? Is that high single digits?

Yes, we are not going to say that. But you can pick up [cagan]. There are lots of resources out there that can give you the general idea of how cable carriage agreements work.

And yours is in line?

And ours is in line.

Okay, great. And then you mentioned that there is -- Bob had asked about the $1.8 million non-cash charge in the corporate overhead line. And I am sorry I missed it. Could you just reiterate, what is that noncash charge related to?

That was 1.1 that I think Bob was relating to. And that was -- there is a future TV One award that is due to Alfred which is being negotiated as part of his last contract and essentially we have to keep an accrual of what we think the likely value of that will be. And we got that charge because the valuation that we previously had was 450 and we had to write up the value to what the negotiated price was. So that is why we got a bump in that charge in the fourth quarter. But again, noncash and it's based on a expectation of sort of payout in -- at some future point.

But ultimately the payout will be in cash.

Ultimately yes, it will be -- once Radio One has got back every dollar it has invested, then it will be 8% of the net dollar thereafter.

I see. Okay. And then the $2 million valuation expense that I heard about in the Q&A, that was just the portion that was charged to TV One. Was there any of that valuation expense that might have been charged at Radio One that we should be aware of as well?

There is no double counting, so effectively Radio One has already paid some of that. But we will just be getting it back from the network, so there is no -- there will be no double count.

Okay. Lastly, I guess the Q1 radio pacings appear to be a bit lower than what some other terrestrial radio players have reported. Is this related to your markets or demographic or are your stations underperforming? What is going on there?

It is primarily related to a few markets that we have got issues in, most notably Dallas. One, I think the pacings for Q1 are probably for folks -- from what I understand talking to people, are kind of like low single digits and so us flat to single digits, which is underperforming the low single digits, is primarily related to an issue that we have in Dallas, which is about 40% of our problem.

So I do think that the first quarter has started out more sluggish than folks had hoped. I think that you are seeing -- you're going to see second quarter be stronger than Q1 and we have got a specifically issue primarily related to probably approximately three markets with one of those markets being Dallas about 40% of our total problem.

And I apologize if I missed this, but are you still standing by the 2011 guidance that you put out in November?

Yes.

Thank you.

Nick Phillips, Holden Asset Management.

Actually my questions have been answered. Thanks.

Mark Kaufman, Rafferty Capital Markets.

Good morning. I was wondering if you could tell me what the Company's share of TV One will be after the acquisition of DirecTV?

Close -- I think 50.8%.

50.5, I think.

50.5%, just over 50%.

Okay. Any more granularity on the timing that would actually show up in the income statement?

You know what? I would say somewhere between now and the end of second quarter.

Okay. That's fair enough.

That's because there is a process that goes on and with the financial investors, we started a process but we ended up negotiating a deal and I just don't know what the process is going to end up looking like with DTV just yet.

So by the third, you are anticipating or hopefully by the third quarter it would be fully reflected?

That is my anticipation.

Thank you.

Carras Holmstead, UBS.

Wondering if you could talk about potentially for adding new carriage providers either in EchoStar or Cablevision? I know those names have been mentioned in the past. Are you still negotiating with those companies for TV One?

We are always in constant talks with them, some more robust than others. I would say that -- I don't like to actually give real flavor to carriage talks because cable operators are very different animals to handicap in terms of when and if you are going to get a carriage deal done. You have seen these retran [spikes] and Scripps versus Cablevision.

But let's just say that the network's brand continues to build, it continues to have consumer demand. I will tell you that the NBC Universal Comcast merger is only going to be a plus for TV One because now we are in a much larger programming group with much, much more access to programming resources, and I think operators generally like what TV One has done. The ratings are pretty good. They are not stellar but they are pretty good. They are well ahead of most networks its size in terms of distribution.

And I think that the remaining operators that we don't have, most notably Cablevision and DISH know that about this network, and I suspect that over time we will get one if not both of them. But let me be clear, if we get neither one of them this is a fabulous business. We target African-Americans, we target 13% of the US population, and we are carried currently in the places that we need to be carried to have a very meaningful and viable business, whether we get Cablevision or DISH ever.

Just on that point, seeing that you will own a majority of the equity and you will consolidate it, would there be thoughts about spinning it off because clearly the value of this asset you would value higher than a pure radio asset and allow sort of the equity to benefit from a proper valuation?

You mean after I just spent 18 months trying to consolidate it and turn around -- spin it off?

Well, yeah -- you still --

I'd probably rather shoot myself in the head and then fall off the side of our office building and land in the parking lot. No, the reason we consolidated it and went after it is because we look at ourselves as creating an African-American targeted multimedia company similar to the strategy that Univision has adopted. We think that the assets work well together and complement each other and we think that that consolidated multimedia platform is the future of our Company. So spinning it off is not something that makes any sense to me whatsoever.

I have a sales background in terms of professionally and I am still out working with a lot of advertisers even today and more and more advertisers are talking about a consolidated cross-platform experience, more and more. Because they know that there is content, they have no idea where it's going to be distributed and they want to reach the consumer and that is what we are creating here at Radio One.

Yes, I was thinking more sort of a spinoff where you allocate the shares to the equity, but it would stay obviously under the Radio One umbrella but it is what it is.

In terms of Reach Media, it still seems like that asset is struggling since the Chapter 11 filing of Citadel and implementing your own salesforce. Is there any sort of views on that going forward and when you think you will gain sales traction?

Yes. We are getting sales traction. 2010 was a transition year because we did come off a $30 million Citadel guarantee. I mean that is a lot of revenue that all of a sudden goes away from a guarantee standpoint. The CEO of Reach, David Kantor, built his own sales force. He is probably the preeminent executive in the network business, and we had a tough year, but he made it. He turned the corner. EBITDA went down but it didn't disappear and now we think 2010 was the floor on Reach. They're actually having a pretty decent Q1.

In fact, he is probably going to raise his forecast up for the second time this quarter and we think that is -- 2010 was a low watermark and we will see how much higher it goes from here but we feel comfortable with it.

Just last question, when you mentioned some softness in Q1, are there specific categories that are generally softer than they had been?

No, you know, our issues aren't category oriented, they are generally relating -- ratings/sales management related.

Okay, thank you.

[Tom Koch], [Aegis Security].

Yes, good morning. I'm just looking back on a document back from when you did the refinancing of the debt and there were some projections as of June 7, 2010 in here. It looks like for the whole year the projection was adjusted EBITDA, if this is similar to the way you reported them today I'm not sure, but it is a $95.5 million. It includes $23 million from TV One. So I guess that would get us to like a $72 million net to number and you guys reported $74 million. Is that an apples-to-apples comparison?

No, it's not. It's complicated. It is not a million miles out, but it is not quite apples to apples. It would be better if we probably took it off-line because there is a lot of moving parts between what you just said and where it ended up.

Okay, well, then perhaps can you just talk kind of qualitatively then -- what has changed since these numbers were put together? Were there any major areas where there were hits or misses? And I am just trying to get a feel as to how you performed relative to these expectations?

In revenue terms, I think we were pretty -- we were close on everything apart from the Internet Division which as Alfred mentioned, hit a wall in Q4. Having said that, they still made the EBITDA number. In fact, slightly better I think than the number we had on the street at that point.

There were some mostly non-cash hits to the P&L in Radio that would explain the delta. So topline was fine, bottom line we got the $1.1 million hit that we talked about earlier on the TV One award. We also booked two quarters of bonuses as opposed to -- in the numbers that were on the street we had one quarter.

So apart from that, they were the main variances, so we didn't get too many surprises other than the stuff we already talked about.

Got it. Okay, great. I just have two others. One other is a year ago when you guys held this call, you also talked about on the Interactive or the Internet side reducing the burn which I can't remember what it was at the time, maybe $5 million. That didn't happen and it maybe even went the other way. You're talking about it again this year. Can you give us some more specifics on how is it going to improve? And why did it not improve last year and why is that going to happen this year?

It improved.

Yes, it did improve. I don't know what you are talking --

Okay.

It went from 9 and change to 6 on an EBITDA basis. But on a cash basis it went from about 6 and change to 4 on a cash basis.

Okay. I apologize.

Cash burn is about for and as Alfred said earlier, the projected -- what we try to get to is a zero cash burn this year.

Okay, great. And then just one other thing, regarding this DTV purchase, how does that change the operating relationship with them and does it have any effect on -- I think there was a question earlier about EchoStar -- how do you see this purchase of their equity impacting the business going forward?

Look, it doesn't. They are a shareholder distribution partner. They don't -- they sit on the Board, they don't have any operating relationship with the network. Quite frankly, the equity investment that they have was really part of the original distribution deal that we have. It is a small investment for them, and the fact of the matter is that the gentleman that sits on the Board of TV One from DTV is a pretty senior executive there.

And so they love the network. We have a great relationship. It is a bit of a time burn for not a lot of money. I mean -- and so at the end of the day, it has got nothing to do with how they feel about the network. It is just the puts and the calls are here. When they start thinking about how they allocate their time and they only own 10% of the network, I guess they own 12% now, it is just more prudent for them to exit the investment.

Okay, great. And then I'm sorry, I just have one more, which is do you guys publicly disclose assuming -- not pro forming in the purchase of their 12% so assuming they are a 12% holder, the makeup of the other holders. I know what yours is. I know what theirs is. Can you tell us who the other holders are?

I'm sorry --

It is management elect with just over 2% and then Comcast has the balance.

So management, Comcast, you all and DTV, those are the only holders?

Yes.

Okay. Thank you very much.

One last question, operator?

Michael Schwartz, Normandy Hill Capital.

My question has actually been answered. I appreciate it.

Thank you very much. As Peter said, we will be doing quarterly conference calls from here on out. It is something that we agreed to with our bondholders on our restructure and so we'll look forward to you talking to you next quarter and thank you for your support.

Ladies and gentlemen, that does conclude your conference for today. Thank you for your participation and using AT&T Executive Teleconference. You may now disconnect.