Urban One Inc (UONE) 2011 Q1 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to the Radio One's first quarter 2011 earnings conference call. At this time, all participants have been placed in a listen-only mode. Following the formal remarks, we will open the call for questions and answers.

I have been asked to begin this call with the following Safe Harbor statement. During this conference call, Radio One will be sharing with you certain projections or other forward-looking statements regarding future events or its future performance. Radio 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. This call will present information as of May 12, 2011. Please note that the Radio One disclaims any duty to update any forward-looking statements made in the presentation. In this call Radio One, may also discuss 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.radioone.com.

Ladies and gentlemen, a replay of this conference call will be available from 12.30 PM Eastern time, May 12, 2011, until midnight, May 14, 2011. Callers may access the replay by dialing 1-800-475-6701. International callers may dial direct 1-320-365-3844. The replay access code is 201802. Access to live audio and a replay of the conference call will also be available on Radio One's corporate website at www.radioone.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 will now turn the call over to Alfred C. Liggins, Chief Executive Officer of Radio One, who is joined by Peter Thompson, Chief Financial Officer. Mr. Liggins, please go ahead.

Thank you very much, operator.

Thank you, everyone, for joining our first quarter results call. There has been a lot of information put out on the Street about our Q1 numbers, a lot of pre-announcements, so I don't think there are many surprises with the Q1 results. Peter Thompson is going to go into the details of those results a little bit later on the conference call. I would like to talk about some of the very important things that we did achieve in Q1, first and foremost we were able to refinance our senior credit facility at favorable terms and extend out our maturities, which I know was a big overhang for the Company and we're very pleased to get that done.

We also completed the buyout of our partners in TV One, other than Comcast, and we've increased our ownership, finally, interest in TV One to 50.9% which will allow consolidation of that entity into Radio One. Also, during the first quarter we had announced that our second quarter revenue was pacing in the mid- to high single digits at one point in time. Those pacings have since flattened out due to the unforeseen business and advertising disruption resulting from the disaster in Japan. We now expect to be relatively flat in revenue year over year similar to what other radio companies in the sector are all now reporting. However, Q2 will be the first quarter of consolidation of TV One and we expect this to positively impact our revenue and EBITDA in the quarter, mitigating the current stagnation in Q2 radio pacings. We also expect the Q2 -- the radio pacing in the radio business to become more normalized as we cycle through all of the issues resulting from the Japan disaster and the year moves onward.

I will now turn it over to Peter Thompson for more detail on the numbers and then Barry Mayo will go into depth on our Q1 performance at our core radio business.

Thank you, Alfred.

Net revenue increased to approximately $65 million the quarter ended March 31, 2011, from approximately $59 million from the same period in 2010, an increase of 10.2%. The increase was driven by Reach Media and was positively impacted by Reach Media assuming operational and financial control and responsibility for the Tom Joyner Fantastic Voyage event. Our Core Radio division, excluding Reach Media, produced net revenues of $48.3 million, down 1.8% from the same period last year. Reach Media had net revenues of $14.7 million in the quarter, which was up 84% year to year. The Tom Joyner Fantastic Voyage generated approximately $6.6 million of revenue for Reach Media. Excluding the Fantastic Voyage, Reach Media revenue was up 1.3% year to year. The Interactive division had net revenues of $3.5 million which was up 1% year to year.

Our four largest markets performed as follows, Houston was up 1.7%; Atlanta was up 15.3%; Washington was up 1.2%; and, Baltimore was down 6.9%. While half of our radio clusters posted growth in Q1, the other half had year-to-year declines, most notably in Dallas which was minus 20.3%. Our Ohio clusters were down 9.7%, Indianapolis was down 8.9%, and Philadelphia was down 8.8%. Barry will provide a little color around those numbers later. Our average unit rate was up by 5%. However, the number of spots that we sold in the first quarter was down by 8% compared to prior year, and sellout was 2.7 points below Q1 2010. By advertising category, entertainment was the highest revenue category, but was down 11% year to year. Telecom was the second highest and was plus 2% year to year; retail was minus 11%; auto was up 51%; food and beverage was flat; financial was down 5%; and, government/public was down 19%. That was predominantly due to Census we may have received in 2010, but would not recur.

Operating expenses, excluding depreciation, amortization, and stock-based compensation, increased to approximately $54.5 million in Q1, which was up 12.4% from approximately $48.5 million incurred in Q1 2010. The increased expenses, primarily due to expenses associated with Reach Media, assuming operational and financial control and responsibility for the Tom Joyner Fantastic Voyage in the amount of $5.6 million. Excluding the Fantastic Voyage expenses, operating expenses were up 0.9% on a consolidated basis. Our Radio operating expenses, including corporate expenses, increased by 1.1%. There were favorable variances from sales commissions, legal fees, external marketing, bad debt expense, and from a noncash charge in 2010 relating to the CEO's future TV One Award. However, the expense growth was driven by increased compensation costs due to the reversal of salary cuts in Q1, 2010, staff merit increases, bonuses, as well as an increased contractual Arbitron PPM leave.

For the first quarter, consolidated station operating income was approximately $17.8 million and was flat, compared to the same period in 2010. Adjusted consolidated EBITDA was $10.6 million, which is an increase of 0.1% versus 2010. Interest expense increased to approximately $19.3 million for the first quarter from approximately $9.2 million for the same period in 2010, which is an increase of 109.8%. The increase in interest expense was due to our entry into the amended and restated credit agreement and the amended exchange offer on November 24, 2010. Higher interest rates associated with the amendments were in effect for the 3 months ended March 31, 2011, compared to the same period 2010. Cash interest for the quarter was approximately $17.3 million. We booked a net loss on retirement of debt of $7.7 million, which reflects a one-time noncash write off of approximately $6.5 million of capitalized debt financing costs associated with the amended and restated credit facility and a one-time write off of approximately $1.2 million associated with the termination of the Company's interest rate swap agreement.

Equity and income of Affiliated Company increased to approximately $3.1 million for the first quarter compared to approximately $909,000 for the same period in 2010, an increase of 238.7%. The amounts are attributable, primarily to our share in the net income generated by TV One. The provision for income taxes for the first quarter was $45.6 million compared to a benefit of approximately $309,000 in the comparable period of 2010. Approximately $45.3 million of the amount reflects the increase in deferred tax liabilities associated with the amortization of certain of the Company's radio broadcast licenses for tax purposes, and $310,000 of the increase relates to Radio One's state income taxes based on gross receipts. Approximately $275,000 of the tax increase relates to Reach Media, which had a pre-tax loss in the first quarter of 2010 and had pre-tax income in the first quarter of 2011. The Company continues to hold net operating losses of approximately $548 million. As a result of our noncash provision for income taxes, net loss was approximately $64.2 million or a loss of $1.23 per share, a decrease on the reported net loss of approximately $4.6 million or $0.09 a share for the same period in 2010. Cash taxes for the quarter was actually a refund of $6,000.

For the first quarter capital expenditures were approximately $1.7 million compared to $1.2 million in the first quarter of 2010. The increase was due to an upgrade of the Company's aging vehicle fleet. As of March 31, 2011, we had debt net of cash balances of approximately $638.8 million. Our cash and liquidity position has been improved by the refinancing of our bank debt and we ended the first quarter with approximately $31.8 million of unrestricted cash. On April 19, we made the final capital call of $13.7 million into TV One prior to the redemption of the DirecTV units. Effective April 25, our ownership interest in TV One was increased from 44.6% to 50.9% as a result of the redemption of units held by DirecTV. Further, Radio One will account for TV One on a consolidated basis as of April 14, 2011. This is a result of an amendment to the TV One operating agreement concerning certain governance issues separate and apart from the redemption transaction increase in Radio One's interest in TV One. We recently announced that had our Board has approved a stock repurchase program for stock worth up to $15 million over the next 2 years, and so far the Company has repurchased approximately 1.95 million shares at a cost of approximately $5.4 million.

I hope this is helpful in providing some additional detail on the numbers contained in the press release, and I will now hand over to Barry Mayo, who will provide some additional color on our Radio division performance.

This is the operator. Mr. Mayo has disconnected. He is calling back in. One moment, please. And, Mr. Mayo has re-connected.

Thank you, Peter. Thank you, operator.

Over all, our markets were generally healthy, being up 4.5% in Q1; unfortunately, though, we as a group under performed our markets. We were down by 0.5%, and it was a mixed bag, though, with Atlanta, Charlotte, Detroit, Richmond, and St. Louis all either holding share or gaining share. Now, there were four principle reasons for our Q1 under performance, first, management changes and the timing of them; second, ratings; we have got four markets in the last tranche of markets to go currency in PPM; and, then pricing. Frankly, we were too aggressive in pricing our inventory in a few markets and we lost share to competitors who, just frankly, under priced us. Now, Peter mentioned the fact that we sold about 8% less spots in Q1 than last year, but our average unit rates were up 5%. Additionally, last year Radio One received over $1 million from the US Census, specifically targeting African-Americans; obviously, our competitors didn't play in that revenue. Now, the largest amount of that figure fell in the month of April, that was $504,000 and obviously is nonrecurring.

So, let me do this. Let me take you through the markets that bear explanation for under performance in Q1. Let me start off with our Houston cluster. Houston experienced a rare under performance to their market in Q1. I think this may be the first time since I have been here in the Company, and this was due, frankly, to what I just mentioned, to inventory pricing issues in both the national and the local arenas. We were, frankly, too aggressive in pricing, particularly in January, and lost market share to our principle competitor as they just under cut us.

Columbus was one of the markets that got hit hard by PPM. Additionally, I made a change at the market level -- the market manager level, I should say, early in the quarter. Now, while I have hired an and announced his replacement, he will not start until June 1, so Columbus for all of Q1 and for a good part of Q2 will not have a market manager and that has impacted the marketplace. Cleveland, continuing in the Midwest, also took a ratings hit, although not to the extent that Columbus did, but I am pleased to say that Cleveland has already made a recent rating recovery with both of their FM's being in the top three in the respective demos. Early in this quarter I promoted Jeffrey Wilson, a Radio One veteran, to the position of Regional Vice President for the entire Midwest region, and that position has been vacant since May of 2010. The April Miller Kaplan shows Cleveland cutting its Q1 under performance in half, so they're definitely headed in the right direction.

Last but not least, in Jeff's three markets, Cincinnati has also been without a market manager since May of last year. During this quarter, I announced the hiring of a new manager last month, Frank Lee, and that alone, with some sales restructuring, has Cincinnati already turning around. Now, while our Cincy cluster did under perform the market in Q1, they out performed the market by over 11 points in total revenue in the April Miller Kaplan, so Cincy has a nice head of steam and a good head start on the second quarter.

Now, our Indianapolis cluster suffered a 50% average quarter on our ratings on loss on two of the three FM's when PPM went currency in that market and they struggled in Q1. However, they out performed the market in local revenue by over 6 points in the April Miller Kaplan, way outselling their ratings share, so the value of a great sales management team and a great sales staff is showing up there as they try to fight their way past PPM ratings problems.

Now, Dallas, Peter made reference to, we candidly last year made some strategic programming errors to our adult urban station there, and it's put it at a marked disadvantage to our competitor. We do feel, though, that we have a handle on the issues, and we're looking for a ratings turn around by Q3 of this year.

Now, we experienced one of our rare losses of the key sales manager at Radio One in Q1 in our Baltimore market, which contributed to our under performance. We have identified her replacement and he started 2 weeks ago.

More change. In Philadelphia our Philadelphia cluster under performed in Q1 by a considerable margin. During the last week of December, I made a market manager change there, and we started off the new year with one of my five Regional Vice Presidents, Bruce Demps, as the new Philly market manager. Bruce, by the way, is the RVP who oversaw the turn around of Atlanta, which currently is our best performing market at Radio One, and he will continue to oversee Atlanta and Baltimore.

Finally, for those of you concerned about Q2, our Q2 pacings are being led by very strong performance by Atlanta, Charlotte, Cincinnati, Detroit, St. Louis, and Washington, DC, which is both going positive and is outpacing the market. I highlight that because you will remember that we made a large turnover in the upper management last year in the DC market.

That's it for me and I look forward to any questions you might have.

Operator, if we could open the lineup for Q&A, please.

Certainly. (Operator Instructions)

First, go to the line of Bishop Cheen with Wells Fargo.

Hi, Alfred, Peter, and Barry. Thanks for the detailed update.

Let me focus two things quickly on the balance sheet. One, as we look today, in May, the cash, the $33 million in cash you had, you spent some on the capital call and on some other things. Where is your cash level now?

Unrestricted cash is approximately $10 million.

Okay.

And Reach has got somewhere between $2 million, $2.5 million.

So, it is kind of back to normal, where it usually is?

Yes, and we over financed the term loan with an eye on the capital call that we needed to make into TV One, and that money going out which has allowed TV One to complete the buy out of DTV and be left with a pretty healthy cash balance.

Okay.

Could you tell me again what was that capital call on April 19?

It is $13.7 million.

Thank you. Okay.

And then last question, more philosophic. Certainly, Alfred, you have leaped lots of hurdles in the past 12 months, so one that comes to mind ahead of you, it would seem to me is the Reach put, and that's a January 2012 event. Can you give us any color on degree of difficulty around that?

One, we have the ability to satisfy it in stock, so at the end of the day, we could have a 0 degree of difficulty if we wanted to deal with it in that manner. However, we have had a number of discussions with David Canner, who is the CEO at Reach, about how we will work together and how that business might be organized if we were to own more of it, and one of the things leading that conversation is the fact that Reach is actually a federal taxpayer.

They spend $4 million or $5 million a year in taxes, and if we were to own 80% of it instead of 53.5% of it, they would not be a taxpayer. So, with that said, I think there is ultimately a very favorable way to resolve the Reach put without it being any severe economic burden on Radio One. David and Tom Joyner, who are partners there, seem to be favorably disposed of creating a win-win, so I would not look at that as any sort of over hang, if you will.

Okay, and that is great color. Look, I will pass it along and may circle back. Thank you.

The next question is from Jim Boyle with Gilford Securities. Please go ahead.

Good morning.

First, Barry, in the past when an ad category had a major disruption that was seen as nonrecurrent, has it been your experience that maybe half or more of that unspent dollar surfaced later or was it almost close to 100% surfacing later?

Which nonrecurring revenue are you talking about?

The Japanese auto disruption.

That's very difficult to answer. I think that the overall, prior to the tsunami, auto advertising was coming back very strong. As Peter noted in Q1, it was up 51%. I would think that given the nature of our niche that we should recover most of that, but for how long, who can say, given the fact that these factories are -- have slowed up. I guess in the long-term I would say that we should recover -- I can see no fundamental in reason why we would only recover half of that revenue. I think it will just be connected to how the supply goes.

Okay. Alfred, besides the radio station pacings in Q2, what are the other segments TV One, Reach Media, and Internet seeing so far, in Q2?

The internet segment is undergoing a sales transition. We had the head of digital sales actually out of there, probably about I would say close to three weeks ago, and we are in the process of forming a search to replace her. However, I would classify as kind of treading water at this point in time; it's probably going to be down in Q2 about 10%. However, I am not concerned about it because it is really a sales effort play from our standpoint.

We have not been able to get the exact right sales force and sales leadership in place at I-One yet. I am comfortable with the amount of traffic that we have, and I just got to get the right team in place in order for us to effectively monetize that. So, the outlook for I-One this year is we're probably not going to get it to break even, not probably. We won't get it to break even, but we will substantially cut last year's loss probably by at least half and get it down to, call it a couple $1 million.

TV One continues to perform very strongly, and we're going into the up front. The cable scatter market looks to be strong, very, very happy with TV One's pacing, and do you have an idea what Reach is doing in Q2?

I do. It is up very slightly.

So, Reach is up very slightly, call it low single digits, 1%, 2%.

Yes.

Okay.

And actually, Peter, just a housekeeping, on the Q2 of last year. You had how much in the radio station segment for the cruise? Was that $6 million?

No.

Which cruise?

We had two cruises.

Two cruises?

Yes.

Are you talking about the Reach Media -- I referenced earlier the Tom Joyner Fantastic Voyage, so that's the Reach cruise.

Yes.

That was the $6 million number, 6.6% of rev --

Correct.

-- which was not in anywhere last year. It was not booked as part of Reach or Radio One.

Oh, okay, but there was a cruise last year in Q2 for the stations, was there not?

That's the One Love Cruise, that's our cruise that's in every year. So, we have One --

There is no timing difference on that one?

There was a timing difference. Was there a timing difference on the One Love Cruise?

No. I think it was comparable this year to last year; it was the year before where it went out of phase.

Okay.

Okay.

Then finally, Peter, on the interest expense, is Q1 essentially the run rate for the rest of 2011?

Yes. The only difference is a modest increase under the new facility, so that's a pretty decent run rate.

Okay. Thank you.

Our next question is from Michael Kass with Blue Mountain Capital.

Thanks for taking the question.

Just trying to discern on the Radio results, on the top line, what you guys think -- heard both that this was -- that the decline was in line with comps at the beginning of the call and then seemed to be there were misses in select markets. Overall, would you say that you under performed peers or came in line with peers?

For our radio business for Q1, we definitely under performed our peers. We said that our markets were healthy, call it up 4.5%, and we were basically flat or down 0.5% and we identified -- the reason Barry went through the list of markets and the issues. We've identified what our core issues were in the markets where we under performed and are focused on basically fixing those and getting the ship righted again, but definitely Q1 was definitely an under performance for us from a radio standpoint.

It looks like you were down about 2%.

1.8% to be exact.

Down 1.8%, okay. If I went through the market by market that you provided, and thanks for that, it seems like there is a lot of management issues. Should we expect comp and OpEx in the radio segment to go up versus what it was last year, going forward or is it going to be relatively neutral?

Well, people's compensation is tied to hitting their numbers. So, the answer in the market, I wouldn't know -- I don't think that there are any of major salary adjustments. So, the bonus lines that are tied to achieving their market share goal will be significantly reduced based on not achieving those goals.

I guess the only difference is in a couple of markets like Cincinnati --

Yes.

-- which for 3 months I personally ran, and we went without a General Manager. So, you will see the expense in those markets where there was no general management; we put one in, but the rate or the amounts of the salaries and bonuses will be comparable or lower than they had been in the past.

What percentage of -- or how many of your markets currently don't have a General Manager?

Columbus, again, has a manager that starts on June 1. We just had two managers that started in the last month, one in Dallas, and one in Cincinnati. So, in terms of not having a manager at all, it is just really Columbus.

Only Columbus.

And just with regards to you mentioned that in several markets you're getting hit on the ratings' impact of PPM. Can you just expand on that a little bit? When will that roll through and --

Sure, sure. Generally, we found that the first thing that happens in urban stations is that, you take a hit in both rank and share and then average quarter hour ratings. Which as you know ,is the number that we use to come up with rates, and, that's standard in the industry. There is usually about a year, sometimes a little more, sometimes a little less, there is usually about a year for that to cycle through for things to normalize. And as I mentioned, we have four markets that are the only four markets that have not gone through that whole year cycle, and again, those markets are Indianapolis, and the three Midwest markets, Cleveland, Columbus, and Cincinnati.

And when will those cycle through?

I think it was September of last year. Let me look that up for you, right quick. I believe it was September.

Okay.

What was the overall hit that you took on average quarter early ratings or will take --?

It is situational. The markets that were hit the hardest were the markets that had the lowest percentage of African-American listening, and those two markets were Cinci and Columbus.

Okay.

Just magnitude wise, is this -- ?

Well, in terms of average quarter hour ratings, between 45% and 50%. Now, we make up for that -- they also take a rank hit, but like in Cleveland, while our average quarter hour rating is still down. We have gotten the station back to number one or number two, it's in the [34 and 25/54] and again that process, which we've pretty much perfected now, since we have gone through over 3 years of this, takes about 1 year.

So, at the end of the day the revenue hit that you see in those markets is, what?

No where near what the ratings hit is.

Okay.

No where near.

By the way, PPM on average has shown the average radio station, average quarter hour rating down as well. So, the market's average quarter hour rating is dropping because it shows what we call compression, just people listening to more radio stations than had previously thought. So, if the average station is down, call it 20% or 25%, then the urban and the Hispanic stations are down, call it 40%, 45%, so -- it's not linear that the average quarter hour is going to be down 45% and our revenue is going to follow. The revenue drop is significantly less.

And the other side of that is that, as Alfred alluded to, it shows -- PPM shows that all radio stations that listeners, are listening to more stations than they had previously thought under the diary method. So, the [cumes] have gone up.

So, it calls for a different approach in selling. Now the advantage that urban stations and Latino stations, have over their general market competitors, is that our listeners tend to be more engaged than our general market competitors with longer and larger what they call AWTE, which is the new name for time spent listening. So, it is something that in the sales process that we highlight. So, that is the flip side of the average quarter hour ratings, a loss.

And you should also know that we've actually cycled through PPM in most of our largest markets, so Washington, Houston, and Baltimore is the tail end of that as well, Atlanta. So, we're now going through the last of the three remaining markets, and they're not insignificant markets for us, but they're not the big four. In fact, I would say Columbus -- what is it Barry, Columbus, Cincinnati, and what's the other one?

Cleveland. And Indy.

And Indy, so there is -- those markets are at the bottom part of the mid-section of our market lineup. So, while they impacted our performance in Q1, they're not such big revenue cash flow contributors that you should be worried about some overall systemic substantial risk to the Company's revenue and cash flow base.

In other words, we have taken the biggest hit to PPM to this Company a year or so ago.

Thank you very much.

Our next question is from Marci Ryvicker with Wells Fargo. Please go ahead.

Thanks. Good morning.

Alfred, I think you said the Q2 at some point was pacing up mid-single digits. When did the pacing start to fall off?

Yes, I think I looked at it -- we made that announcement on March 18. I went and looked back at the timeline, I think the earthquake happened March 13 or March 11, and that's what our business was doing. When we sent that out, we were getting -- we put a lot of information out on the street because we were in the middle of doing a term loan. So, we pre-announced a whole bunch of stuff, and the pacing started to increase, substantially, over a 3-week period, and we put -- that was realtime information -- and then, I have to go back and look.

It was about six weeks ago, Marci.

Yes, yes, when they started to drop, but clearly the event started to cycle through and affect the advertising market and they just went, literally, from mid- to high- single digits to flat to slightly down. We're still forecasting to be up at this point, but we're pacing flat. It was disappointing because you really thought you were onto something good in terms of momentum and then that happened.

Marci, I would say ditto to the comments our friend David Field made; because I think he saw a similar trajectory in his paces in Q2, as we did.

He did? Do you have any visibility into Q3?

We've got it, but no -- (laughter).

And, just one last question, can you just tell us how local versus national did? I don't know if you said it in your prepared comments for Q1.

I could ask another question. How is auto pacing right now?

It is okay. Hang on a second.

National was down 5, local was down 0.5 a point.

Are you seeing the same kind of performance in the second quarter with local out performing national?

At the moment we -- yes, national is slightly less than local.

Thank you.

Our next question is from Mark Kaufman with Rafferty Capital Markets. Please go ahead.

Good morning. Thanks for letting me ask a question.

About TV One, now that you have the majority ownership in it, do you see the opportunities potentially expanding its reach going forward, Cablevision here in the New York area as a possibility? And also, what type of cross-selling opportunities might there be for advertising across the three platforms now, radio, cable television and internet and if you have been thinking about that?

Was the first question about Cablevision?

Well, Cablevision or other, if you know potential areas that you're not in yet.

Yes, look, the two big operators that we don't have are Cablevision and DISH, and we're consistently working to try to win carriage agreements there. I ultimately think something happens -- where we pick up that carriage. You just can't handicap when that will be.

Gerry Laybourne started this network called Oxygen and it was independent for a while. It is now owned by NBC Universal, but they weren't on DISH and the way that they got on DISH, is DISH Network got into a fight with Lifetime and re-tiered the Lifetime Movie Network and put Oxygen in. And it was because some big brouhaha happened between them and Lifetime, and so it can be events like that. It can be us getting a hit show, that drives demand. It could be just rising consumer demand for the Network at these particular operators.

TV One's a pretty requested network among African-Americans. We know that much, so I am optimistic that we have carriage upside with potentially getting those two operators. Also, I believe that we have carriage upside at Comcast. We only have 13 million out of the 20-plus million subs, so -- when we do our TV One numbers, budgets, forecasts, et cetera, we don't assume that we get DISH or Cablevision. So, when we talk about the business, we talk about it assuming those things don't happen. And that we just get some normalized growth out of our existing contracts with the cable and satellite operators.

We do have a cross platform effort. It is called One Solution. It is headed by Keith Bowen, who is the chief revenue officer at TV One and Interactive One, and we did about $6 million last year of cross platform revenue. We continue to push that initiative and it is great because when we combine all of our assets and we reach about 82% of Black America between TV, radio, syndicated radio, and online. That conversation, that ability gets us in the door with many major advertisers and allows us to have a very high level conversation. So, I think that you will see that becoming a growing part of our business.

Thank you.

We have a question from Jerry Gold with Marblegate. Please go ahead.

Thanks.

Two quick questions. I guess the first is, you had a bunch of transactions in the first quarter. Is there anything in the EBITDA number that you would consider more one-time transactional costs, lawyer's fees, placement fees, valuation fees?

No. Most of that, in fact, all of it pretty much was capitalized. So, aside from what we wrote off on the previous deal I called out, that $7-odd million, no.

Okay.

Second question, Alfred, I think you referenced it a little bit just before on the TV One piece. Can you remind us a little bit about the structure of subscriber fees there? I think you have talked in the past about how increases were largely back-ended given the newness of the network a couple years ago? When can we expect to see some of the pickup in subscriber fees?

They're not back ended now. Everybody is paying, and our fees go up basically $0.01 a year.

Okay.

We started out -- you cycle through the free period. Our rates started out at, call it $0.10 or $0.11. Now, people who give you more subs, get volume discounts, but let's say the average rate ends up being $0.13 or so. $0.13 or $0.14, and that goes up $0.01 every year, starting now.

We're in the normalized piece at this point?

Yes. When we bought in TV One and we valued it, people looked at -- oh wow, it's going to have $20 million EBITDA and you're valuing this thing at $500 million. Largely the reason it is valued at that rate and that kind of multiple, is because of the contractual subscriber fee agreements that you have in place for the next 4 to 5 years that increase annually.

Okay. Thank you very much.

Next go to Charis Homestead with UBS. Please go ahead.

Any thoughts on the ability to go all cash pay on your bonds before the mandatory cash pay?

(Laughter) Yes, we thought a lot about it, and I think that the answer is that is we would not -- we just [consolidated] TV One. The radio business got choppy on us in Q2. We probably won't be really looking at that hard until the end of the year. After we know what the rest of the year is going to look like.

Given what happened with Japan and the impact on the business, what are your thoughts? I know you put out a forecast at the end of 2010 for 2011 of $98 million of EBITDA.

Yes.

What sort of view do you have on that?

We thought about that. We're sticking it out at this point in time because there is a number of ways to get there. We still have too many ways that we could actually get there to change that guidance, that forecast today. Now, you know, if Q3 -- if things don't normalize again, you know, and the rest of the year is flat in radio, we may have to rethink that. Right now, our view is that this is a short-term disruption. We're going to get some growth again, and we're not backing off of that number at this point in time.

Okay. Thanks.

We do have a follow-up from Bishop Cheen. Please go ahead.

Alfred, it wouldn't be a fun call without me asking you about the web. So, Interactive One, thoughts about how that is developing and we'll bench into your forecast? Is it about where you thought it would be, showing hopeful signs, running behind? Tell us what you can.

I mentioned it earlier. It is running behind where I thought it would be today. Primarily because we're still trying to get the sales effort to the optimum level, optimum number of people, the right people, the exact right leadership that comes under the chief revenue officer. There is a head of digital there. We have a search going right now for a replacement candidate for the head of digital.

I am happy with traffic, where it is. Case in point, Univision has just about 4 million users, comScore users, and they're probably doing $50 million to $60 million of digital revenue, and we have got about 3.6 to 4 million users and all in, our digital business including the radio website is, call it a $20 million business. So, I think that we have -- we've got a monetization issue right now that we're very focused on, in terms of reviewing structure, number of people, talent level of those people, leadership, and I feel like we're going to get home.

The online market, the display ad market, continues to grow torridly. We're in significant conversations now about potential other partners coming in and aligning with us at I-One. I feel like even not hitting our revenue target for this year at I-One, we're going to cut last year's $4 million cash loss in half.

But, you're not ready to throw in the towel yet and say you're not going to hit your revenue forecast for this year, or are you?

No. Actually, we're thinking more about our EBITDA forecast, to be honest with you. I haven't given significant thought about the revenue forecast. We have given a lot of thought about our EBITDA forecast; that's what we're most focused on. And today, not knowing exactly where the radio business is going to end up, not knowing exactly what 100% of our dividends are going to look like at TV One. Because we don't know how much cash we'll ultimately take out of there, and not having made -- we haven't made any draconian decisions so far this year, on our cost base yet.

So, if we get to the point where we want to do some significant things on our cost base, those are all factors that ultimately will determine whether or not we hit our EBITDA number and there is still too much -- too many levers that we could pull for us to say that we would have to come off of that number. I don't want to opine on the revenue number, because I haven't really thought about it.

Fair enough. I will leave it at that. Thank you.

Last question, please.

That will be from Jim Boyle. Please go ahead.

Thank you, again.

Barry, or Alfred, you mentioned, obviously, one of the pluses of PPM is much higher cume for radio, and some markets apparently have seen it higher than the TV stations and newspaper cume. But, radio has also been sold on a frequency average quarterly hour basis. How long would it take you to retrain the ad community to buy cume or [Reach]?

And, second, Barry, you've mentioned all of these new managers and program changers and so forth at a variety of your markets. With when does this finally have some traction for you? Is it Q3 or Q4 timing?

Repeat that last part again.

When will all the new managers and your programming changes finally see fruition?

Well, the first part, Arbitron is currently having meetings with their council to discuss coming up with a new metric, that isn't currently being used right now, just to measure engagement. They have people in committees that are actually discussing that right now, so that's how important that is. Obviously, when the Arbitron and the industry get to an agreement on how to measure that engagement, that will obviously be an instant and immediate plus for us, and Hispanic radio. So, that's in the works. Obviously, I don't work there, so I couldn't give you a timeline, but I wanted you to know the significance of the point that I was making.

The management changes and I said timing wise, I don't look at them -- they're situational. If I go through the markets, and I will do that for you right now, to give you sense of it. Two of them, I mentioned that my Regional Vice President Bruce Demps, who hired a key player a couple years ago -- Atlanta was a market that pretty consistently, the first couple years I was here, under performed. He hired a key player who helped turn around the Atlanta market, and as I mentioned, is already our best performing market right now in the Company. He is personally overseeing Atlanta -- excuse me, Philadelphia.

Philadelphia has gone positive already. He restructured the sales and the marketing effort, and in Q2 they're already pacing positive, which they had not been, any of last year. So, this is not a Q3 or Q4 play. It is already happening. Cincinnati, which I was very involved in -- very involved in, I mean, living in three different cities at one time last year for 3 months, has between digital and the hiring of an LSM -- and we still have this same general sales manager -- has turned. Again in the first month of Q2, the April Miller Kaplan, which was just released 48 hours ago, they out performed the market by 11 points. So, again, not a long-term play. The Cincinnati turn is happening.

Columbus, I think, will probably be the longest one and the heaviest lift. The Columbus market is the market that has the lowest percentage of African-Americans in our Company and that was a double whammy. Frankly, I made a management mistake last year in hiring Jeff Wolfson's replacement. Columbus has historically -- when I got here, Columbus was one of the top three performing markets, and I fixed that error in Q1. That gentlemen doesn't start until June 1. I would suspect that probably is a Q3 or Q4 turn around. Okay?

Okay.

Thank you, operator.

As usual, Peter and I and Barry are available now to chat off line if anybody has any follow-up questions. We appreciate you guys tuning in.

Thank you, much.

Ladies and gentlemen that does conclude your conference for today. Thank you for your participation.