Urban One Inc (UONE) 2013 Q1 法說會逐字稿

Welcome to Radio One's first quarter 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 its future performance.

The Company cautions you that certain factors, including risks and uncertainties referred to in the 10-Ks, 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 its projections or forward-looking statements.

This call will present information as of May 9, 2013. 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 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.radio-one.com.

A replay of the conference call will be available from 12.30 PM Eastern Time May 9, 2013, until May 12, 2013, at 11.59 PM. Callers may access the replay by calling 1-800-475-6701.

International callers may dial direct at 320-365-3844. And the replay access code is 292146. Access to 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 will now turn the call over to Alfred C. Liggins, Chief Executive Officer of Radio One, who is joined by Peter D. Thompson, the Company's Chief Financial Officer. Mr. Liggins?

Thank you very much, operator, and welcome everyone to our Q1 results conference call. As you saw in the press release, in the earnings release our Q1 results in radio did come in, in the mid-single digits on the revenue growth, as we had guided before. So we are very happy about that.

We had another strong quarter of growth for TV One, and we are seeing respectively optimistic radio pacings for Q2 in the low single digits. I'm going to turn it over to Peter Thompson, who will go into detail, as usual.

Thanks, Alfred. Overall I think the Company had a strong first quarter, particularly in the Radio and Television divisions. Net revenue was approximately $99.1 million, which was a decrease of 3.7%, but that decrease is primarily due to the timing difference of two of the Company's largest events -- the Tom Joyner Fantastic Voyage and the One Love Gospel Getaway, both taking place in the second quarter this year compared to the first quarter last year.

If you normalize for the event timing difference, consolidated net revenue was up approximately 4%.

The Radio division, excluding Reach Media, produced net revenues of $49.9 million which, excluding cabin sales from the 2012 One Love Gospel Cruise, was up 4.9% over last year. Reach Media had net revenues of $9.5 million in the quarter, which, excluding event revenue from the 2012 Tom Joyner Fantastic Voyage, was down 13.9% year to year. And that decline was primarily due to a decrease in advertising revenue on the Tom Joyner Morning Show.

We recognized approximately $36 million of net revenue from the Cable Television segment in the first quarter, which is an increase of 11.6% over Q1 2012. Affiliate revenue was on plan and was up 16% versus prior year and subscribers increased 1%.

Cable subscribers, as measured by Nielsen, finished the quarter at 57.4 million compared to 56.7 million at the end of March last year. TV One's advertising revenue was up 8% versus prior year.

The Internet division had net revenues of $5.1 million, which was down 12.7% year-to-year driven by a decrease in indirect revenues. Indirect alliance and affiliate revenue in the Internet division were all up year-over-year.

Our four largest radio clusters performed as follows. Houston net revenue was up 22.5%; Atlanta was up 7.2%; Washington, DC was up 2.3%; Baltimore was up 6.8% year-over-year. Philadelphia, Columbus, St. Louis and Charlotte clusters posted revenue growth year-over-year while our Detroit, Indianapolis, Cleveland, Dallas, Cincinnati, Richmond and Raleigh cluster posted net revenue declines over last year.

Local revenue was up 2.1% and national was plus 13.5%.

Our top five advertising categories were retail at 16% of the total, which was up 30% year-to-year; telecom at 14% of the total, up 22% year-to-year; entertainment at 12% of the total, down 5% year-to-year; food and beverage at 10% of the total, up 17% year-to-year; and financial at 10% of the total, up 7% year-to-year. Auto was our sixth-largest category and that was down 12% year-to-year.

Operating expenses excluding depreciation, amortization and stock-based compensation decreased to approximately $72.6 million in the first quarter. The decrease is primarily a result in timing difference in the One Love Gospel event and the Tom Joyner Fantastic Voyage. Excluding $2.1 million of expense from the 2012 One Love Gospel Cruise, Radio division expenses increased 1.8%.

Expenses at TV One increased 2.2% in the first quarter. And on a cash basis we spent $12.5 million on content assets during the quarter, of which $9 million was on original programming.

Excluding $4.9 million of expenses from the 2012 Tom Joyner Fantastic Voyage, Reach's operating expenses decreased by 13.3%, primarily as a result of discontinuing the management fee to Radio One. Excluding the management fee and related expenses, Reach's operating expenses were down 5.3%.

The Internet segment's operating expenses increased by 1.6%, driven mostly by bad debt expense as we booked a reserve of $175,000 against [an old] debt, which we expect to reverse upon collection in Q2.

For the first quarter, consolidated station operating income was approximately $35.9 million, up 8.6% from last year. Adjusted consolidated EBITDA was $26.5 million, an increase of approximately 12.5% year-over-year.

Interest expense decreased to approximately $22.2 million for the first quarter. The Company made cash interest payments of approximately $20.7 million in the quarter compared to approximately $15.5 million in the first quarter of 2012.

There was a non-cash impairment charge of $1.4 million to reduce the carrying value of the Cincinnati radio broadcast licenses.

Net loss was approximately $18.1 million or $0.36 per share compared to a net loss of approximately $79.2 million or $1.58 per share for the same period 2012.

For the first quarter, capital expenditures were approximately $2.2 million compared to $3 million in the first quarter of 2012. Higher expense in Q1 2012 was largely due to the corporate office buildout.

Cash taxes paid were approximately $8000. The Company received dividends from TV One in the amount of $8.2 million in the first quarter.

As of March 31, 2013, Radio One had total debt net of cash balances of approximately $771 million. [For then] covenant purposes, our total net debt was approximately $679.4 million and our [LTM bank] EBITDA was approximately $86.6 million, giving a total leverage ratio of approximately 7.84 times and a senior leverage ratio of approximately 4.07 times.

The Company's cash and cash equivalents by segment are as follows -- Radio and Internet approximately $23.8 million; Reach Media approximately $1.6 million; and Cable Television approximately $21 million. In addition to cash and cash equivalents, Cable Television segment also has short-term investments of approximately $3.2 million and long-term investments of approximately $68,000.

During the quarter and the Company repurchased 7150 shares of Class A common stock in the amount of $11,026 and 951,974 shares of Class B common stock in the amount of $1,514,903. With that, I will hand it back to Alfred.

Thank you very much, Peter. Operator, (inaudible) to open the lines up for questions please.

(Operator Instructions). Aaron Watts, Deutsche Bank.

Just maybe to start off, Alfred, can you maybe talk about why you are seeing the variance between local and national, and whether you think local can pick up here as we chug along this year?

You know, that is a good question. Usually you -- I would say for the last prior to this period of time coming into this year, we were seeing more local strength and national was weaker. And it is now reversed and looks like the larger markets are really performing well. And throughout this recession and this recovery, the large markets have actually been getting hit harder than the medium and smaller markets.

If you look at some of the bigger companies reporting, the Clear Channels, and even I saw when Cumulus reported I think they are seeing really strong, large market growth. And we are seeing it.

I wish I could tell you why that is. I have been in the business a long time. My sense is how companies and chief marketing officers decide to allocate their dollars between mediums -- local, national, et cetera -- is not something they like to share with the adversary.

And I call those of us who sell advertising the adversary because they like to keep their plans to themselves, so we can't come in and switch pitch them and deter them from moving forward with -- they want to accomplish is their own individual media plan.

However, what I have said from the very beginning, and I think you're hearing it from a lot of people and we continue to see it, is this is going to be a very slow, gradual recovery. And I continue to believe that the radio business is a flat to modestly up or modestly down business because of ad share shift.

And so, in order for companies like ours to advance the ball down the field, we have got to figure out ways to grow our market share in an otherwise static environment. And as an industry, we have got to figure out how to get into the pockets of weaker, if you will, traditional mediums like newspapers. And we can do that through our digital efforts.

But I wish I could really -- I can't explain why the divergence between local, national. But for us, I think, we are in a good spot, because although we are not in New York or Chicago or Los Angeles, we are in Houston, Dallas and Washington and Atlanta. And we have got exposure to the medium markets, but not really the smaller markets.

So last year when political was up, Ohio was killing it for us; loved it. This year the Midwest is weaker, but the big markets you are doing better. So I think we are uniquely and attractively diversified.

That is helpful context. And then maybe just shifting to the other side of the house, nice growth in the first quarter for the Cable TV business.

There is a lot of chatter in the media right now about the TV ad environment. Can you maybe just give us some thoughts on how you feel heading into this upfront season for your station and how the ad environment feels particularly for you?

We are feeling good about the upfront. It is not like we are -- TV One has yet to gain a significant ratings momentum. We are working on that now. We have got a lot of new stuff for 2014 that is on the horizon. We just premiered Season 2 of R&B Divas Atlanta and we're very happy with those results.

However, we have managed that business such from an ad inventory standpoint, ad pricing standpoint, that we think we will see substantial growth again throughout this year. And while the Cable Television industry has slowed from its historic growth rates, it is still continuing to draw share from the broadcast networks.

So I think we are going to be in a position to see up low to mid-single digit volume and CPM increases this year. So it is a very different business than the radio business is. And I'm glad we're in it.

Okay, and last one for me. Just on the TV business for you now, can you remind me where the split stands between your advertising revenue and your subscriber fees that are coming in?

It is about 50-50.

Okay, great. Thanks for taking the questions.

(Operator Instructions). On a few moments, I am showing no additional questions. Please continue.

Great, well, if there are no additional questions, appreciate everybody dialing in. As always, we are available off-line.

I know that people keep asking about our capital structure and when we would look to refinance, given how strong the capital markets are. Hopefully they continue to stay strong and we continue our growth momentum through the balance of this year. And if those things happen, I think that is when we start to actually visit that very real opportunity.

But we would like to get our leverage level into a much more attractive strike zone in order to actually execute a capital markets transaction. And we are focused on that. We believe that we have that opportunity and we can execute that. So that is pretty much our game plan for the rest of the year.

We thank you for your support and we look forward to talking to you on the next quarterly conference call. Thank you, operator.

Ladies and gentlemen, that does conclude your conference call for today. We do thank you for your participation and for using AT&T's Executive Teleconference. You may now disconnect.