Urban One Inc (UONEK) 2005 Q1 法說會逐字稿

Ladies and gentlemen, thank you for standing by and welcome to Radio One's 2005 first quarter results conference call. At this time all participants are in a listen-only mode. Later we will conduct a question and answer session, instructions will be given at that time. [OPERATOR INSTRUCTIONS] As a reminder, today's conference is being recorded.

I would now like to turn our conference over to our host, CEO and President, Mr. Alfred Liggins. Please, go ahead, sir.

Thank you very much. Joining me today is our Chief Operating Officer, Mary Catherine Sneed, our EVP and Chief Financial Officer, Scott Royster. As you know, we released earnings and net broadcast revenue was up 11%. Station operating income 13%. Pretty satisfied with the quarter. I am going to turn it over to Scott. He's going to read something to you and then go into the numbers and then we'll answer questions.

Thanks. Good morning, everybody. This conference call includes forward-looking statements within the meaning of section 27-A of the Securities Act of 1933, and section 21E of the Securities and Exchange Act of 1934. Because these statements apply to future events, they are subject to risks and uncertainties that could cause actual results to differ materially, including the absence of a combined history with an acquired company or radio station and the potential inability to integrate acquired business, seasonal nature of the business, granting of rights to acquire certain portions of the acquired companies or radio stations operations, market ratings, variable economic conditions in consumer tastes, as well as restrictions imposed by existing debt and future payment obligations and agreed upon conditions to closing. Important factors that can cause actual results to differ materially are described in Radio One's reports on forms 10-K and 10-Q and other filings with the Securities and Exchange Commission.

Radio One has started off the year on a good note. While it took us a minute to find our footing, our business began to ramp up in mid February, and March for us was one of the strongest months we have seen in a long, long time. It's been a while since we raised guidance twice in one quarter and then ended up even beating that optimistic out look. For the quarter, we outgrew our markets by 500 basis points, saw a tremendous positive reversal in what was a soft national market for us, starting late February. We improved our core radio margins, even with three new stick stations coming on line late last year, and consummated the acquisition of Reach Media at the beginning of March.

On our last earnings call, we also discussed our successful high yield transaction and mentioned that we would be buying back all of our preferred stock, a process which we completed in late February. A couple of weeks ago we launched another process. This time to put in place a new bank credit facility, and that is going along very well and we expect to have that new facility in place within the next several weeks.

As for our results, this quarter includes Reach Media's results for the month of March only. I will talk about Reach and its bigger picture effecting our financials going forward a bit later. Independent of Reach, Radio One's new revenue grew approximately 7% and approximately 6% on a same station basis. On a consolidated basis, new revenue for the quarter was 77 million of approximately 11% from last year's first quarter.

Strong markets for us included Charlotte, Cleveland, Dallas, Huston, Columbus, Raleigh, Minneapolis and Washington D.C. We were soft in Los Angeles, Baltimore, Boston and St. Louis. National was flat while local was up double digits. Although in March, both local and national were up double digits. Strong sectors included retail, telecom, food and beverage, and the financials. Operating expenses, excluding depreciation, amortization, and non-cash compensation increased 14% due primarily to Reach and corporate expense growth. At the station level, expenses grew in the mid single digits. Core corporate expense growth was due to a variety of factors. Some one time, some not. but, prior to factoring in Reach, corporate expenses should decline modestly in Q2 from Q1.

Report station operating income was up approximately 10% to $37.5 million and adjusted EBITDA was up approximately 7%, $32.2 million. Net income per share applicable to common share holders was $0.07 versus $0.04 in last years first quarter and free cash flow was $15.1 million for the quarter. Net debt was approximately $923 million and debt to EBITDA was approximately 5.6 times. CapEx was approximately $3 million for the quarter.

Looking forward, business continues to be strong for us. April ended up in the high single digits with national out pacing local. We expect core radio to grow in the mid single digits for the quarter, again, driven by strength in both national and local, and we expect station operating income to also be up in the mid single digits. Inclusive of Reach, net revenues should be up north of 15% and station operating income up in the double-digit range for the second quarter.

Now, let's talk about Reach. Obviously, we are excited to own 51% of this very powerful content machine. We have previously provided guidance for Reach for all 2005 of net revenue of approximately $50 million and EBITDA of approximately $12.5 million. This guidance stands.

Please note however, that Reach has significantly lower EBITDA margins than does Radio One. What that means is that, for this year at least, our consolidated revenue growth will undoubtedly be faster than our EBITDA growth. And our station operating income and EBITDA margins should decline modestly. We continue to believe that there is good operational leverage in core radio. But combining these two business will change, to some extent, at least the optics of our financial presentation. And will modestly effect certain of our metrics.

Additionally, Reach's corporate expenses are a percentage of their revenue, are significantly higher than Radio One's. Thus our reported corporate expenses will be significantly higher in 2005 than in 2004. This is basically just due to the nature of their business and is obviously built into the guidance we provided. Some of it is structural and some of it is just mapping and subjective allocation related. These noticeable differences will be smoothed out in 2006 when there is a more of an apples to apples comparison. We will provide you with further detail of the impact of Reach on our reported financials, when we report second quarter numbers in a few months.

So, in conclusion, we feel pretty good about the radio environment right now. Things are felling relatively healthy. Inventories are tight and demand appears to be strong. There are obviously many different perspectives on radio floating around, and there appear to be mixed messages being articulated by different management teams. Our message is generally one of decent, consistent growth, backup up by an optimistic outlook based on our position in our markets, our ownership of a very important and proprietary content vehicle, and our investment in TV One which continues to perform very well.

With that, I'd like to turn it back over to Alfred, and I guess we'll go straight into questions. So, we'll go to q&a, operator, please.

[OPERATOR INSTRUCTIONS] I would like to go to the line of Jason Helfstein from CIBC World Markets, please go ahead.

Thanks. Three questions. The first, Scott, if you could give us a little more color on the corporate, I mean, that is a big number for the first quarter, it's even above the fourth quarter, which included a lot of Sarbanes type things. So, if you can give us some more color on that and just what you think is the right run rate? Because otherwise we could be looking at something like 20 million of corporate a year, which probably sounds too high.

Secondly, if you guys could disclose, what did your rep business, you national rep business grow in the quarter? It seems like we are hearing that Interep is having some issues, particularly in the smaller markets. I don't know if it's hitting bigger markets, but it seems like the industry needs to do something, permanently, with respect to how Interep functions, and, I don't know, maybe the consortium idea finally makes sense.

Lastly, Alfred. It looks like TV One is really going better than expected, at least from a profitability standpoint. Is there any update you want to give us, as far as like the full year outlook or give just us an update on TV One. Thanks.

Yes, Jason, with regard to corporate, I think the right number on stand alone independent of Reach quarterly basis is in the low 4's. So, annualized is more like 16 to 17 million a year, as opposed to not headed towards 20. And of course, Reach, we are still working on mapping their specific corporate expenses relative to other departments, other functional departments, but Reach will be a significant addition to that. But again, a lot of this is just where the numbers fall. I don't know if it necessarily is all that relevant to the ultimate reported financial results of the enterprise. It, certainly, EBITDA is after all that. So, there were probably a couple hundred thousand dollars of one time or special corporate expenses in the first quarter that shouldn't have a negative impact on us in the second quarter. So, I would say in the low $4 million range a quarter is a decent run rate.

With regard to Rep funds, I'm not sure we have all that much, I mean, we continue to have our portfolio split between the two firms.

I mean, we didn't really call it out in the last conference call but, the Katz radio group has been performing well, and Interep has been weaker. I think, and certainly (indiscernible) brought that to light. I think they continue to be weak. Although M.C., we've seen, I am not saying it's out, it's nowhere near out of the woods, we're still weak but it seems like performance has been improving from where it was, at least last quarters. Would you agree with that?

For both?

For inner -- Katz continues to be strong, Interep continues to be weak, but from a weak standpoint has it been improving over the quarter would you say?

I would say Katz is definitely out performing Interep.

No. No. Katz is out performing Interep for sure, by a big margin. But the question is, is Interep improving off of its lull from last quarter.

A little bit, yes.

Okay. And I don't know what is going to happen at Interep, I do know that I am sure, that you know, the client groups need to talk about what they are going to do. And, I think it is to everybody's advantage to have Interep be healthy and to survive. It's a significant part of our business relies on them. But, if Interep had been performing as well as Katz, we would have done even better this quarter. It's an issue that, that everybody is focused.

I guess, specifically, do you think it makes sense for the industry or those who use Interep actually to buyout the firm? All in the same direction?

The big problem with that is that Interep has $100 million worth of debt, and Infinity is such a huge piece of their business, that unless Infinity is involved in some way, whoever buys out Interep or takes on the -- did I tell you the equity is worth nothing when you take on $100 million of debt. You're at significant risk to, whatever, Infinity decides to do. So, I don't see that happening. But, I could be wrong. But if Infinity decides to participate in that, then it's a different story.

And, then, on TV One?

Doing significantly better than we thought it was. Probably, we are really -- getting really close to getting our Time Warner deal done. Advertising's still strong, and we are not going to give any sort of update on performance, specific performance right now. But, suffice it to say that we are really, really, really pleased with it.

Jason, let me clarify corporate expense analysis that I gave you. It wasn't much of an analysis in the answer. Of the -- almost $5 million of reported corporate for the quarter. But half a million of that was Reach. And then I mentioned that there was a couple hundred thousand dollars of effectively one time nonrecurring items in the quarter. That's how I get down to a low $4 million number. Four for Radio One corporate on a quarterly basis.

Okay. Thank you.

Thank you.

Our next question comes from the line of Victor Miller from Bear Stearns. Please, go ahead.

Good morning. Thanks for taking the question. Mary Catherine, the first question I have for you is, what changed in mid February to escalate you from being, kind of, in line with the industry to dramatically out performing it? Does it have anything to do with (inaudible) or the demos or some changes in individual markets? And secondly, Alfred and Scott and Mary Catherine, if you could talk about the progress in Huston, Philadelphia, and Atlanta, some of the stick developments that you are doing in those markets?

February was very strange because it was like the flood gates opened and you could feel that it was starting to happen, but, the last two years, we have been a little gun shy to get excited. But, even from a local standpoint, and all of a sudden, early in the year we were really watching and focusing on inventory, and the markets were really smart and they raised rates, and it ended up being a great month. So it was just a combination of those things that we used to see five years ago. Felt really good. Hopefully it'll continue.

Progress, Huston, for us with our Hispanic station is actually is really slow. We got about a one share, we are focused on it.

We have a signal improvement coming there though.

And Atlanta, the stick we bought there, WAMJ, it's doing about the same as it was. We found that in combination with our gospel station, WPZE, because the battle is so intense there between Infinity and Cox. Cox sells their two urban stations in combo, we sell our two urban stations in combo. So, WMAJ is really kind of a flanker to one of the Cox stations. But, overall, our Atlanta business is doing good between the jazz station, the gospel and the urban oldies combo, and the hip-hop station.

Philadelphia, if you look at the revenue for us in Philadelphia, this quarter, it's horrible because we reformatted the whole market. Switched a bunch of stuff around. But, we're really optimistic because we got our first rating book back for WR&B, which is one of the newest Philadelphia sticks that we bought, (indiscernible) and we were 4th, 25.54(ph) in the market. That's a pretty impressive debut. And, we should be able to really make a lot of hay with that kind of number. And we're aggressively marketing the hip-hop station, which moved to a bigger signal, when we killed the modern rock format, back in February, and we also launched the new gospel, which we haven't gotten a number back on yet. So we feel pretty good about our Philadelphia progress.

Thank you very much.

Thank you. Our next question come from the line of Jim Boyle from Wachovia, please go ahead.

Good morning. Mary Catherine, could you quantify your sellout rate as you entered March, as you entered April, and as you hit May? And, also, what type of ad rates, increases did you typically get in Q1, and so far in Q2? And I have a follow up for Alfred?

There were some markets that actually, a couple, I think one actually went into March soldout, and it was a very big market. Couple of others are fast approaching sellouts. They went into March. We actually have a couple of markets that have already made May. One is a significant market. We did start to refocus efforts on inventory management, which is something that, in the last year, unfortunately, we talk about it a lot, but there wasn't a lot of need for it, because everybody had inventory. But we are totally focused on that right now.

And, a couple of the bigger markets are getting significant rate increases. Huston is just through the roof, I mean, Huston is already soldout, for this month and they have inventory left, so getting on that station you are going to really have to pay up to get on there. And a couple of the other markets are also sold out for May as well.

M.C., this is Scott, let me build on this a little bit. Jim, at the beginning of April, end of March, we went into April at about 80%. At the end of April, we went into May at about 83%. So we feel very good with those ratios. With regard to pricing overall for the quarter. Q1, AUR was flat, but up in March 6%. So I think, when you sort of look at, when did the business turn, there is a fairly consistent story here, that the month of March really was the first month where we started to see some real traction, both from a pricing perspective as well as capacity utilization perspective.

Okay. I will let someone ask the Clear Channel versus non-Clear Channel. Alfred, the early start on TV One and on Reach Media, very good, very encouraging, what's the next new direction to leverage Radio One's content and expertise or do you go back in an old direction?

We try to be really careful not to spread ourselves too thin. So everything that we do, we want to work together. We are still focused on building a web initiative. We got our websites for the radio station. M.C., how many websites do we have up now?

We've got almost all of them up, I think we are lacking like 10.

So we have 60 websites?

Yes.

And, we have not yet settled on the portal strategy. One strategy is to use Reach Media's Black America web, another strategy is to create something new. So, collectively, the brain trust of Radio One and TV One and Reach Media are trying to figure out what the best approach is to leverage all of the assets. Because, what we believe is that what will work is sending all the traffic from each of these different platforms to one website. So we are focused on that.

We're still looking for tuck in acquisitions in markets that we operate in. We have no interest in the Susquehanna assets, and TV One is growing at such a fast clip, we're now looking to figure out how to develop more proprietary content with TV One because we are probably going to go get rated soon. Probably in the fourth quarter we'll start to get rated. So, we're looking at how we start to build content assets, that ultimately, we can run across our platforms, whether it is radio, the net or the cable network. And something that can ultimately generate some licensing revenue down the line. But that's a lot to do.

It all works together, we're not, we're not where we want to be with any of it and so I think we are going to focus on those -- and key to that is content. Owning Tom Joyner is important to this company. Scott and I were kicking it around earlier. Their business is growing at a pretty, at a great clip and they're in the radio business, we're in the radio business. Now it's part of our company. That enhances Radio One's growth profile. So we are looking for other content assets that will allow us to do that.

You sound like something that (Red Stone)ph, content is king?

I mean, I wouldn't mind owning Comcast, for turning revenues. [Laughter] It just so happens we started out in the one revenue business -- the one revenue stream business and so, we are not going to make a value judgement as to which is better because certainly I love the Comcast business. I mean, but, if you can't have the Comcast platform, I think that the direction that we need to move in, is content. Because that will allow us to get potentially another revenue stream that's not 100% ad dependent.

Thank you.

We will now go to the line of Shawn Feely from CSFB, please go ahead.

Good morning. Scott, quick question, you said that April was kind of a finished double-digits.

No, I didn't. I didn't. I said it was up high singles.

High singles. Okay. I am sorry. Sellout was pretty high going into May. Kind of wondering if the mid single digit guidance looks a little conservative or if something is going out in June that if the business is slowing down a little bit? And then, secondarily, maybe just talk a little about LA. It looks like you had a little bit of a sequential decline in ratings, and just wondering what you guys are doing out there? Thanks.

LA, ratings are down there. We are doing some things that we got a new program director out there. So, we're analyzing the situation and we are focused on it and that's all we are going to say about LA right now. We will acknowledge the ratings are down. We are managing our expenses there. But LA has been a drag for you us -- for a for us for a little bit here and we're still able to out perform, even with that drag gone, right and essentially it was LA and Philadelphia that have been dragging on us. And Philadelphia, given the performance of WR&B 4th 25 to 54, is about to come out of that muck, and I think that some of the things that we're looking out in L.A. will help stabilize that as well.

So, with regard to revenue guidance for Q2, is mid single digit guidance conservative, given our performance in April, and the strength going into May. I don't know, Shawn, tell me what the radio industry is going to do for the next two months, then I'll tell you if it's conservative. Fundamentally our issue is trying to get arms around the health of the radio industry. One of the things we have been hearing is that there are a lot of stations that are soldout in May. Which, on its face, might appear as a positive thing but to be sold out at the beginning of May means you didn't practice very good inventory management. It also means that advertisers coming to market, may in fact, pass and move their moneys to June or even into the third quarter because they can't find enough ratings points to buy.

If that is, in fact, a dynamic that is effecting the business, or will effect the business over the course of the next four to eight weeks, then the potential growth from now through the end of the quarter might be some what limited, which is why we have continued to pound the table with regard to how inventory is priced in this industry, and the fact of the matter is that we need to be much more vigilant about that, particularly in a stronger economy where demand seems to be pretty decent. At the end of the day, if you're not increasing the number of spots, which you shouldn't, then you need to be highly, highly vigilant with regard to how you price your inventory from the first spot you sell to the last spot you sell, for any particular day part or any given day of a month.

So, if we have one concern with regard to the next eight weeks, it is that issue. We think we've done a great job managing our inventory. We've got lot to capacity -- we've got a decent amount of capacity given the state of the business, but we're somewhat concerned that there maybe other companies out there that don't have enough capacity to make it worth advertiser's while to come to market, particularly, for the month of May, and maybe even for June. M.C., do you agree with that?

Well, I think the bigger issue is that national for June has really slowed down, and that happened to be just the last two weeks. That could be part of what you are looking at it, too, Scott.

National is still for us is looking pretty solid for June, but again, it does tend to be highly variable. But certainly, I think, a number of folks have said that June, right now, is looking a little soft. The good thing is, it's early May and we've got some time to see if that will build back up.

All right. Thanks.

Thanks, Shawn.

Thank you, our next question comes from the line of Jonathan Jacoby from Banc of America Securities, please go ahead.

Good morning. Interesting, how the national just has slowed down for June. If you give us a little color, perhaps as to why? Then, are you selling any 30 seconds spots with demand you are seeing for that product? Lastly, I believe earlier this year, you said you expected the new stations to reach break even by the second have of 2005, is that still the plan?

Well, just in the last 10 days, our national sales managers have (inaudible) a lot for June. And this is sort of the pattern that we saw last year, where things would look decent and all of a sudden they would just stop, so, hopefully, that's not going to be the case, it has slowed down significantly for us and in many of our markets, big and small. What's the other question, was what?

30 seconds, you guys?

Oh, yes. But we've always sold 30 second spots, and it's scattered, we just haven't seep an incredible amount of demand for 30. Maybe here and there. But it has not been, it hasn't been intense, so, that, I don't think that is something that has really shaken out yet. Maybe as the year goes on, and Clear Channel sticks to their guns we might see more demand for that. But right now it is not significant.

Your pricing 30s at the same as 60 currently?

Yes, unit to unit.

With regard to the fixation, yes, what we have generally said, Jonathan, is that we expect six stations to basically have a run rate to break even by the end of the first year of their operation?

Thank you so much.

Thank you, we will now go to the line of Bishop Cheen from Wachovia, please, go ahead.

Good morning, Alfred, Scott, Catherine. Two questions. Let me go to the balance sheets. Scott, on that table that you always prepare that is so helpful, walking through your balance sheet, isn't there a revolver piece that isn't included in this table?

I don't know which table you're referring to. Are you talking about the applicable interest rate?

Yes, on the current amount outstanding, and you walk through the bank right down to the 6 3/8.

No. All the senior debt is a combination of revolver and term. It does say term debt but it's basically all the senior bank debt, it's a combination of revolver and term, those three lines.

Well that table adds up to 8.20 and the balance sheet says 9, what ever it is 9.37 total 9.20. So I was wondering where the missing piece was.

All of the debt that is not swapped would be variable rate.

That's it. Okay. And roughly do you know how much that debt is? The amount?

That is at variable rates?

Yes. That is not swapped. You have 50 swap.

No, it's 150 swapped.

Right.

Probably, roughly, another 140 variable rates.

Okay. That's helpful and what's your current availability. Maybe it is a moot question because you're --

The availability under the revolver is 40 million, but, it is a moot question because the new facility will have much more significant capacity.

Okay.

But I can't talk any more specifically about it at this time.

Understood. And, Alfred, just going back to TV One, can you just give us a snapshot of some sub penetration or any key metrics that you used to describe TV One when you're marketing.

We are at about 21 million subs right now, and that's without a Time Warner deal. And we don't have an Echo Star deal. We do have a DIRECTV deal, as you guys know, and my understanding is they just really announced a big increase in subs in their most recent quarter.

It was through the roof.

I think they're running at what, 14 million subs or something like that?

Yes, I mean, their big thing is they're leasing boxes. Little bit change in the model.

So we expect to actually, beat our revenue budget for advertising this year. And there are some things going around. Interest are some things going around. There's some things happening. We're going to need a Time Warner deal done. We're looking to improve our relationship with Comcast. It's a great relationship but they've got a lot more subs under their management than we currently have, so we are looking to figure out ways to increase that.

If you get your Time Warner deal done, would you theoretically have the availability across their platform?

In the market that matter, yes.

How many subs are we talking about?

I am not going to get into it.

Okay.

But we think that we are going to be, call it mid 20 million subs by the end of the year, just total.

Okay.

But,. Well, it is doing very, very, very well. It is doing better than where we thought it was going to do when we met with all the analysts however many month as ago that was.

Thank you.

How how come you are the only one that cares?

Old thinking, roots, I guess. [Laughter]

Thanks, Bishop.

We will now go to the line of Spencer Wang from J.P. Morgan, please, go ahead.

This is John Blackledge for Spencer Wang. Just a couple question. I don't know if you said this already, Scott, but national and local pacings in the second quarter? And then, on your internet initiative, what percent of the cost growth was it in the first quarter? That's, that's it.

Well, I don't get pacing numbers for the industry. So, I have no idea. I mean, we're looking at pretty solid mid to high single digit growth for national. We have no idea what the industry is doing.

And local? And local pacing, for you guys, for you guys?

Similar. The good things is that they're roughly in line with each other. And with regard to internet, what we have said historically is that, we think that, given the initiative that we have underway now, we'll spend north of $1 million, but probably not a lot north of $1 million in just core expenses, and it is possible that we could break even on that. We shall see. We are not breaking even yet, but it is possible.

Okay. Can I ask one follow up? In the first quarter, did you guys increase the amount of 60 second ads that you sold, specifically in the markets where you cross over with Clear Channel.

No, we didn't. We didn't increase that load at all.

Thank you.

Thank you. Our next question comes from Laraine Mancini from Merrill Lynch. Please, go ahead.

Thanks, two questions. Quick follow up to your L.A., I know you didn't want to discuss the situation very much, but just, do you have timing in your mind on when this market might turn around? Is that a 2005 or a 2006 event? Also, in terms of bartered? How much of your business is done on a barter basis, or your revenue, that is?

I was going to say, do you want to set a date for the turn around in L.A. like June? [Laughter]

June 5th at 6:00 p.m.

I don't know. It's art, not science. Put it this way, we're focused on it. We are not standing still, we are doing things. Whether those things work, it's going to take time to see, but the fact of the matter is we own a portfolio of assets, and L.A. is one of them. It's a significant piece of our revenue and cash flow, but we keep buying stuff and reformatting stuff such that we're hopefully divers -- continuing to diversify on our reliance on certain markets down, and it didn't hurt us this quarter and it's been [expletive] all quarter. So, my sense is, is that right now the guidance we're giving is to perform in line with what we have done. Basically in line with what we have done in Q1. So, that's a long winded way of saying, no, I don't want to discuss it further and I can't give a date.

Laraine, with regard to trade. Couple of items, first of all, overall trade for us is about 1% of revenue. So, it's actually, if you look at just core Radio One, independent of an issue I'm about to discuss, it's under 1%. The TV One relationship, it's such that Radio One received equity in exchange for running ads for TV One in our radio station. That is something that we've talked about on numerous occasions. Obviously, that's not a cash transaction, so that is booked as trade or barter, so, when we run a TV One spot, effectively, what we're doing is we're generating trade or barter revenue in exchange for equity in TV One.

So you're barter, you're less than 1% includes any barter agreements for content as well?

It differs quarter to quarter but in general, yes. It could, what will vary, the core business that we do, independent of Tv One, it's fairly consistent. We've certainly looked to minimize it over the years. What will vary is the TV One activity. Because, that's not necessarily our unilateral decision with regard to how much, how many ads they run. They may have a specific need to run more or fewer ads in a given quarter, and, so that will cause -- potentially cause trade and bater to vary on a quarter by quarter basis.

How about any traffic type content, or anything like that, is that included in it?

To whatever extent, there are trade deals that relate to traffic, yes.

Okay.

Thank you, our next question comes from the line of James Dix from Deutsche Bank, please, go ahead.

Good morning, everyone. Couple questions. Just following up on Laraine's question. So, Scott, the TV One barter is not included on that 1% of revenue? If you could just put a dimension on where that is or where it could be.

It's a total commitment was $11 million over five years.

Okay.

But again, it's not up to us as to exactly how much runs and when.

Okay. Secondly, just to break out the growth in the markets where you overlap with Clear Channel, versus don't overlap with Clear Channel, that's just two things first. What was the difference in the growth of those markets? And then what was the difference in your share gain?

James, I'm not sure that there's any market where we don't overlap with Clear Channel. So, I know that other companies have the ability to analyze their business in Clear Channel market than non Clear Channel markets. I can't think of a market we operate in where Clear Channel doesn't have a strong presence.

Did you see any differential response by Clear Channel, or activity, we heard something about large versus small markets, some operators have said that the Clear Channel appeared to have phased it in a little bit more aggressively in some markets, maybe larger markets first. Have you seen anything like that?

It's really hard to say, maybe M.C. can speak to that, but in terms of just looking at the Miller Kaplan reports for first quarter, one of the good things is that the range of performance in the markets was fairly narrow. You had most of the markets were positive in the low to mid singles. There were a handful of markets that were negative in the low to mid singles, so, overall, the markets were up, under 1% in Q1. But then when you sort of drill down and look at it with regard to geography or market size, there is, I can't see any rhyme or reason. Cleveland up -- Cleveland down 2, Columbus up 3, Atlanta up 1, Washing down 3, Raleigh up 6, L.A. up 4. So, it's -- it really is a fairly narrow band, but it really is all over the place.

My last question is just for Alfred. I guess longer term with more of a focus on -- potentially on content. Is that going to change your focus on distribution strategy at all? Like, maybe you'd be more interested in A.M. stations down the road if you have maybe more talk or nonmusic programming?

No.

Would that dovetail at all into you're -- what you think you're going to do with your H.D. signals.

We don't know what we are going to do with our H.D. signals, yet. I don't think anybody in the industry does. We haven't an interest in A.M.s in a very long time, so, and we're not going to start to develop one.

We'll go to the line of Bill Meyers from Lehman Brothers, please, go ahead.

Thanks. A few questions. I guess, first, in terms of Steve Harvey. I believe he recently signed off in Dallas and the contract is up in L.A. by year-end. Just, given his desire to continue, what would your plans be for L.A., I guess, starting next year? And then, just the second question, in March, you've given us a growth by about 10 percentage points after posting growth in line with initiative of both January and February, if you could just walk us through what happened in March? Then I think we can extrapolate going forward or was it just unique to that specific market? Thank you.

We are not going to tell you what our plans in L.A. are, so our competitors can start to prepare for them. That is just probably not smart. And I don't know what the situation is going to be with Harvey. He does have a contract through the end of the year, and we're looking at talking to him, looking at our options. You want to?

Well, M.C., I think we've addressed sort of the March issue. Pricing was stronger, demand was firmer. Capacity utilization increased. M.C., you want to speak to why?

Well, I actually surveyed all of our general managers and said, do you think this has anything to do with less is more or are we just doing a good job? Of course, everybody said, we're doing a good job, but they also said it is partially because of less is more. So it's sort of half and half. At least that is what's coming out of Radio One.

And then, just back on Steve Harvey, he's no longer in Dallas, correct?

That is correct.

What have you done in Dallas to replace him?

We put together a new morning show that consists of one of the guys that was on at night. A woman who is doing middays for us in Huston, and a comedian, pretty well known comedian throughout the south, and actually throughout the country, not as big as Steve. But his name is Rickey Smiley, and we put that show together and we think it sounds pretty good. So, we're moving forward with it.

He's very big in that part of the country.

Even in terms of next year, the absence of Steve Harvey could actually boost the L.A. markets?

I am sorry.

I was just going to say, that the absence of Steve Harvey next year could help your market in L.A. given his contract?

You are a 1000% correct. The reason we're not freaking out about L.A. is that, and we don't know whether Steve's coming or going or what the story is. Right now Steve has a contract through the end of the year. The down side, if he goes, is that he still does pretty well in that market. The bright side is, if he goes, that we'll probably replace the show with something that costs a lot less. So, again, we're being fluid in our thinking as to how we push our options.

Thanks, Bill.

Thank you.

Thank you. We'll now go to the line of David Banks from RBC Capital. Please, go ahead.

Thanks. Good morning. Alfred, a couple of months ago in connection with a presentation on TV One, you talked about how TV One was giving you a little bit of an entree into some of the larger national advertisers that had been more difficult for you to get through to. I think you gave the example of things like beverages, as a radio company, you are sometimes more limited to regional distributorship versus walking into a place like Anheuser-Busch, that you could do with TV One, have you seen during that time any of those sort of those bigger deals materialize, particularly, cross platform, for both platforms? Would be my first question. And just a quick second one, I think it's probably more for Mary Catherine. Mary Catherine, do you think advertisers are behaving right now as if they have a pretty optimistic view on the economy going out or sort of a neutral view or negative view?

I think that they have an optimistic view right now. The calls I've been on have all been very positive without people talking about cutting budgets or pulling back. I really haven't heard that. Well, actually in several months. So, they seem to be very positive. Local and national.

Great.

The TV One. TV One question about cross platforms, I don't remember seeing anything about Anheuser-Busch.

I'm sorry, I was using that as a generic example.

Yes. Because, A, B, we do lots of business with actually -- we used to do lots of business before -- and we still do a good amount of business before they changed their demo strategy. They don't advertise on radio stations that draw significant amount of teens.

Let me clarify that, Alfred did not say anything about Anheuser-Busch. We are starting our.

We are just actually starting our first cross platform program that we're going out to pitch. Targeted toward the pharmaceutical companies, and it's as pitch that includes all of our platforms, Radio One, Reach Media, the net and TV One. So we will see how that goes.

So, it hasn't become a big part of our business, but we're focused on, and yes, it does open doors, we just had a meeting with one of the largest advertisers in the country. That, because of all of our different platforms that said, we now want to figure out a way to be a strategic partner with you, as opposed to -- and these people have not been significant radio advertisers in the past. So, we've got to figure out how we can increase our radio shares there as well. But, people acknowledge that this is the way to reach African-Americans in the U.S. and that's what we want.

Thanks.

Thank you, we will go to the line of Mark Winkas(ph) of Goldman Sachs. Please, go ahead.

Good morning. Just two follow ups. First, will reaching mid 20 million subs at TV One take that business close to cash or break even?

I'm sorry, what --

Repeat that question, Mark.

Will reaching like mid 20 million subs you just said on the call, you're going to reach mid 20s at TV One, will that take the business in cash flow break even or somewhat close?

We told people that we thought that TV One is going to break even in '07 sometime. And could we break even earlier? Yes, we could. It also depends, if we get rated in the fourth quarter like we plan to, don't know if we're definitely going to do it, but we're thinking about it. And, people like our programming as much as we think that they do, and instead of getting .2, we get a .3 or .4. If got a .4 we could break even next year. But, it's doing well. It's doing much better. I don't understand why we get no credit for it in our stock, given that it's a significantly valuable asset that's going to continue to grow at an extraordinary pace. But, it is doing great.

Okay. And then, just real quick, you said you don't have any interest on Susquehanna, but on the last call you said there's maybe a handful of Infinity stations that might interest you. Has this view point changed at all, or has there been any activity there?

No, I think, Infinity has shut down, until they figure out what their split up of the company is going to be or not be. And so, but our view hasn't changed. There is a handful of Infinity stations that would be interested if and when they decide to do something.

Great. Okay. Thank you.

This is the line of Kit Spring from Stifel. Please, go ahead.

Hi. Most of my questions have been answered, but can you give us a hint to, as to what the revenue guidance would be if you excluded the sticks? Would that bring it down to low singles instead of mid or ---

No, no, no. If the sticks contribute 100 to 150 basis points of growth, I would be surprised.

Great. Thanks.

Thanks.

Thank you. Once again, if there are any questions please press star 1. We will go to the line of Stuart Kagel from Sun Trust Robinson Humphrey. Please, go ahead.

Hi, guys. One of the areas, I think, where you can make marked improvement would be on the power issues at some of your black gospel stations. Just wanted to know how the progress is going on that front?

M.C.?

I think that's a work in progress. I started doing urban radio, I don't know, 20 years ago, and the power ratios were awful, and I don't think people ever thought they were going to get better and of course, they did. And I think we're in the same place with the gospel stations, but I think the growth mode will be much faster and they are improving. So, that's all we can ask for.

Thank you very much.

Thanks.

Thank you and we do have a follow up from Bishop Cheen from Wachovia. Please, go ahead.

Scotty, Alfred, Mary Catherine. You ought to keep talking, S&P just upgraded your credit rating.

You stole my thunder, I was going to say that. But, that's fine. Thank you, Bishop. We did just get news that S&P upgraded us, so we're very happy. We sat with them earlier this year and they put us on positive credit watch and then we had another conversation in conjunction with our new bank credit facility that we're working on and they have decided to upgrade us. So we're very pleased with that.

They must be listening.

Thank you, Bishop. Operator, I think we'll take one more question, if there is one, and we'll be done for now.

Actually, we have no further questions in queue.

Great. We appreciate everybody dialing in, and, as always, we're available for any off line questions.

Thanks, very much.

Thank you.