Urban One Inc (UONEK) 2011 Q2 法說會逐字稿

Ladies and gentlemen, thank you for standing by and welcome to Radio One's 2011 second quarter earnings 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-K,s 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 June 30th, 2011.

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 non-GAAP financial measures in talking about its performance. If measures will be reconciled to GAAP either during the course of this call or the company's press release which can be found in its website at www. Radio One .com. A replay of the conference call will be available from 12.30 PM Eastern Time August 4th 2011 until 11.59 PM August 5th, 2011. Callers may access the replay by calling 800-475-6701.

International callers may dial direct, 320-365-3844. The replay access code is 210252. Access to live audio and the 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. With that being said I will turn the call over to Alfred C. Liggins Chief Executive Officer of Radio One, who is joined by Peter D. Thompson, Chief Financial Officer. Mr. Liggins.

Thank you, operator and welcome to our Q2 results conference call. Also joining Peter and I is Barry Mayo who is President of our Radio division. You have seen our results that were recently released, and Q2 was a challenging quarter for our core radio business as the economy stalled against the Japanese crisis and larger macroeconomic forces.

We continue to see strong performance from our cable tv network segment which is consolidated for the first time in our earnings. And even in an ever challenging quarter it lead to our attributable EBITDA being up 6.4%. Our losses at Interactive One continue to dramatically narrow and we are excited about robust forward pacing on our revenue line. I One is on target for a break-even second half and for positive cash flow in 2012. I will now let our CFO, Peter Thompson, dive more deeply into the numbers.

Thank you, Alfred. Net revenue was approximately $97.1 million for the quarter ending June 30th, 2011, an increase of 29.3% from approximately $75.1 million in the same period in 2010. We began to consolidate results of TV One as of April 14 and recognize approximately $25.2 million of net revenue from the cable television segment.

The radio division excluding Reach Media had net revenues of $62.2 million, down 3.5% from the same period last year. The markets in which we operate grew 1.5% in the quarter. Reach Media had net revenues of $9.8 million in the quarter which was down 6.2% year-to-year. The decrease was primarily due to the non-recurring 2010 Census tour event, and the change in date for the on-going cruise event, the Tom Joyner Fantastic Voyage and the event was held in March 2011 versus May 2010. That was a tiny difference.

Interactive division had net revenues of $4.3 million down 3.6% year-to-year. Our four largest clusters performed as follows; Atlanta was up 8.5%, Baltimore down 11.9%, Houston was down 9.9%, Washington, D.C. was down 3.1%. Along with Atlanta, four of our other radio clusters posted growth in Q2. St. Louis up 29.4%, Cincinnati up 8.7%, Detroit +1.8% and Charlotte up 5.4%. Along with Houston, Baltimore and DC the clusters with the most notable year-to-year declines were Dallas at -21% and Columbus at -14.9%. and Barry Mayo will provide some more color on our performance in these markets shortly.

Our average unit rate was down 4% while the number of spots in Q2 was flat compared to prior year. Sellout was 50 basis points above Q2 2010. Advertising category retail, and food and beverage were our two largest categories and both were down 1% year-to-year. Followed by entertainment which was up 34% year-to-year. Telecom was next which was down 5% year-to-year. Auto remained in the top five categories, but was down 6% in the second quarter. Operating expenses excluding depreciation, amortization and stock-based compensation increased to approximately $69.8 million in Q2 of which $17.5 million related to the new and consolidated cable television segment.

Excluding the cable television expenses, operating expenses were down 4%. Radio division operating expenses including corporate expenses increased by 0.5% driven primarily by increased event process associated with the ongoing One Love Gospel Cruise and the new Springfest event. These increases were offset by reduced market and promotion spending, non-recurring severance expenses and lower legal fees. Reach's operating expense decreased by 5.4% primarily due to the non-recurring 2010 Census Tour event. The internet segment's operating expenses decreased by 25.8% driven primarily by reductions in sales, marketing and G&A spending. On a cash basis, internet losses for the quarter were $259,000 compared to $1.1 million for the same period of 2010.

For the second quarter consolidated station operating income was approximately $34.8 million, up 22.5% compared to the same period in 2010. Adjusted consolidated EBITDA was $27.2 million an increase of 32% including TV One. Excluding TV One, station operating income was down 4.3% and adjusted EBITDA was down 5.2%. Interest expense increased to approximately $22.9 million for the second quarter from approximately $9.7 million in the same period of 2010, an increase of 136%. The increase in interest expense was due to our entry into the 2011 credit agreement on March 31st, 2011. An amended exchange offer on November 24th, 2010 as well as a consolidation of TV One. Higher interest rates associated with the 2011 credit agreement and amended exchange offer were left back to three months ended June 30th, 2011 compared to the same period of 2010.

The increase in overall effective rate for (inaudible) the quarter was approximately 5.6%. Approximately $3.1 million of the increased interest expense relates to the debt recorded as part of the consolidation of TV One. We booked a non-cash pre-tax gain on investment in affiliated company of $146.9 million which related to acquiring the controlling interest in TV One and consolidating their results at as of April 14, 2011. The recording of the assets of TV One of fair market value resulted in an amortization charge in the quarter of approximately $6.1 million. Equity in income of affiliated company decreased approximately $208,000 for the second quarter compared to approximately $1.1 million for the same period 2010.

and that decrease is due to the consolidation of TV One during the period. The provision for income taxes for the quarter ended June 30th, 2011 was approximately $38.6 million compared to $233,000 for the quarter ended June 30, 2010. Substantially all the increase in the tax provision relates to the recognition of the deferred tax liability in connection with the consolidation of TV One. The consolidation of effective tax rate for the three months ended June 30th, 2011 and 2010 was 27.6% and 8% respectively. As a result of our non-cash gain on the investment in TV One, net income was approximately $98.6 million or $1.94 per share, an increase from the reported net income of approximately $2 million or $.04 cents per share in the same period of 2010.

For the second quarter, capital expenditures were approximately $1.9 compared to $1 million in the second quarter 2010. Approximately $200,000 of this was from the newly consolidated cable television segment. The remaining increase is related to infrastructure upgrades and continued investment in the interactive business. As of June 30th, 2011, Radio One had total consolidated debt net of cash balances of approximately $767.7 million.

The unrestricted cash balance as of June 30th was $9.3 million. Consolidated cash interest paid for the quarter was $14.5 million. Cash taxes paid were approximately $863,000. During the quarter the company repurchased approximately 2.8 million shares of (inaudible) stock at a cost of approximately $7.5 million. Currently our third quarter radio station revenues facing flat up low single digits on a combined basis. (Inaudible) additional detail on the numbers and I will now hand it over to Barry Mayo.

Thank you. Peter mentioned our radio division has soft Q2 under-performing our markets by 500 basis points. Our exceptional over-performance in Atlanta, Charlotte, St. Louis and a new turn around from Q1 in Cincinnati were outweighed by the under-performance in those markets that Peter mentioned. I will take you through each of those markets that had the biggest impact on our gross Q2 performance. Our largest challenge in Q2 continues to be in Houston.

Frankly we continue to be challenged by a competitor with greater supply who has discounted their rates so significantly it lowered cost the Houston market's [AWRs] and the cost per points. This has impacted our position as a market rate and share leader which we have been for the last two years. It has also disproportionately impacted our performance in transactional business and the national arena where our under-performance is significantly higher than in the local space.

We have made certain adjustments that show us narrowing that GAAP though. We have experienced a similar dynamic in Baltimore where we are a market ratings leader, but have been competitively challenged by severe rate under cutting. Fortunately the adjustments we have made combined with more favorable comps in the local space for the back half of the year should have us closing the under-performance gap.

As I mentioned in the Q1 earnings call Columbus was one of the four markets of the last group to convert to PPM. While our radio groups total average quarter hour ratings have decreased by 33% under PPM, we have found that in Radio One markets where the black population is 15% or less our average quarter ratings have been hit even harder.

Columbus' average quarter hour ratings are currently down 44% from the last diary period. We had a similar situation in Cincinnati where our average quarter suffered a 48% drop. In that particular market though we changed the format of our adult urban station to one that relied on more general market listening, and that station not only regained its top 10 2554 rank, but the net effect of that format switch on our mainstream adult urban station in Cincy has been to elevate it to number 1 18-34, number 2 18-49, and number 5 25-54.

So we are in the process of evaluating our options in Columbus. Dallas was the final market that contributed to our group's under performance in the second quarter. We spoke about this in the Q1 call when one of you asked me when I thought we could have positive results in Dallas, and I told you back then that should happen in Q4. We have completed the research that was in the field at that time, and last Friday at 4PM we changed our adult urban station's format for oldies. We are now calling it Old School 94.5 and the initial buzz in the market has been extremely favorable, and we are on track to see those positive results in Q4 as I mentioned in the Q1 call.

I guess I should also tell you our Radio division had an exceptionally strong Q2 in the digital space with the exception of only three markets, Atlanta, Philly and Dallas. All of our clusters out-performed in the digital arena. Our markets combined were up 25.4% and our stations were up 43.9%. That's it. Look forward to answering any questions you may have.

Operator let's turn it over to questions.

Thank you. (Operator Instructions) First the line of Bishop Cheen with Wells Fargo. Please go ahead.

Hi, everyone. Thank you for taking the question. Alfred, great summary. Let me ask you about Q1 2012. I think you have a call event with Reach. Could you remind us again what your thinking is about how you might resolve that?

We have been working with Reach recently over the last couple months to figure out a resolution with that. It is a collaborative resolution that we are working on. We more than likely highly unlikely that we will take 100% of Reach. Probably more like going up to 80% which will allow us to shelter their taxes because they have been a Federal taxpayer and obviously we have $500 million of NOL. So there is a tax solution there if we are to increase our ownership. So we are working through it. We are working with the CEO there, David Cantor.

It is not resolved yet because there are a lot of other things that are to be considered like the potential of combining the syndicated shows that we own separately at Radio One with Reach and how do we put sales efforts together and things like that. But the thing that the markets should know is that it is not going to be -- it shouldn't -- they shouldn't view it as some economic overhang that is a negative for the company because there won't be a full scale put of the other 40-something percent of Reach to the company.

Actually it is not even to the company. It is to Reach. And actually I don't think that the market understands that. Quite frankly for a long time I hadn't really understood it. The put is to Reach Media and not to Radio One, that's correct, right Peter? So the worst that could happen is that put throws Reach into play which is not I think what anybody wants to -- either side us or Tom Joyner and David Cantor want to see happen. But it's not an overhang on Radio One.

When you say not an economic overhang that also implies there would not be a significant cash component to whatever the solution is?

Well it depends on what you call significant. (Laughter) Look, at one time we were carrying Reach on our books at $100 million plus. So one could infer from that that the other half is going to cost us $50 million, and when we're out in the market doing our deal, our refi, we sort of thought about it in those terms even though we didn't think that was likely. What happened since then is we have written down that asset significantly, taking the charge for it because it is worth a lot less than we paid for it.

And so I am not saying that there won't be a cash solution to Reach, but it won't be anywhere near the magnitude of what people had thought that it might be in the past. And we may have led some people to believe that it could be that much. We were so far out from beginning to discuss a resolution that we kind of erred on the side of conservancy and told people assume it will be $50 million. And we made our plans around that. Although we knew that it was highly unlikely that it was ever going to be something of that magnitude.

Got it. And one last question on that. In the queue, if you have a file, do you state the book value of Reach in there?

Where are we carrying it now?

Where are you carrying it?

Approximate-- Within a couple million dollars. It is approximately $65 million.

Yes, within a couple million dollars. It is approximately $65 million.

Thank you very much.

Our next question is from Jim Boyle with Guilford. Please go ahead.

Good morning. Barry, the radio stations as you noted have lagged in markets in Q2 by 500 bits. Very similar to Q1's under-performance given the recent PPM launches in some markets among other things. Can that gap be largely narrowed in Q3, Q4, or is this starting to look like a 2012 timing?

No it's absolutely not looking -- I have zero expectations that gap will look anything like that in 2012. Let's review. Dallas had a big part of that under-performance. I mean, Dallas alone in Q2 under-performed in the market by 23%, 23.1%. I knew that by the time we got the research and frankly we helped mess that station up in Dallas, and we are going to fix it. I suspect by the end of the year that gap is going to be largely closed. While there was a 500 basis point delta in under-performance in Q1, that included a significant under-performance by Cincinnati. They under-performed in the market in Q1 by 540 basis points.

In Q2 they out-performed the market by 800 basis points. That just shows you how quickly, when we make the right adjustments, that can turn around, Jim. The other thing is that we have our total management team in place in DC. You will remember that last year we changed the entire management and programming team in Washington, and that gap has been now largely and we are at a place of just having to step up on the sale side. But the management team is in place there, so I think you will continue to see growth again this year in the DC turn around. So forget January 2012. I think you are going to see a significant performance improvement this year.

Barry you mentioned at least two markets where a competitor has severely dropped rates. Is that the same competitor in both of those two markets, or is it coming from two different directions this undisciplined rate card integrity?

Yes.

Same person?

Yes. In the second market in Baltimore, it's actually two competitors. The fundamental answer to your question about the same competitor exists in both markets, yes.

Alfred, let me shift over to Radio One now generates 62% of revenue from the legacy radio segment. When can you change the company's name and can you see that 62% radio share drop into below 50% in three to five years?

The change in the company's name is about the 85th priority I have right at this second, (Laughter) and it is not going to grow my EBITDA if I change the name. I hear where you are coming from. We have thought about it. We have held some domain names for different iterations of new title for the company. It is just low on the priority list. We will get around to it. Quite frankly the name we would love to have, Media1, is tied up in the old cable company and we can't figure out how to unwind it. So we just haven't focused on it. We are more focused, however, because it is a very top priority of reducing our reliance on core radio.

And the answer is, I think it is silly to put a timetable -- to put a target and a timetable on how fast you are going to get down to a certain percentage. Because we can't really control it, right? And stuff happens all the time that pops up and presents an opportunity. It is absolutely our goal to do that. The traditional media business is as challenged as everybody knows. We are lucky we did diversify when we did. And we will continue to do that. I don't know what percent we will -- I would like to get down to 50% in the next few years. That would be a great target. I just can't guarantee that can happen. I need interactive growth. TV One to continue to grow fast, but offsetting that we have some plans in house to make the radio division to grow too. So as we are growing the non-core radio assets, we are also trying to figure out a way to get our radio EBITDA up. So that will mitigate some of the percentage decrease in radio if we are successful there. And I'm okay with that.

You definitely don't want to be counting our radio division out.

Alfred, two questions on the internet division. It nicely cut back on its losses in Q2. What is your expectation on losses in the second half of the year and second-fold on the Q2 revenue down tick for the internet division, when the internet industry ad revenues accelerate and then surging, why was that?

A couple things. One, we have a plan that is in place, put together by the management team there. Tom Newman and Keith Bowen,Tom Newman is the President and Keith Bowen is the Chief Revenue Officer, that I feel really comfortable with in terms of expense cuts and we originally had a moderate revenue projection because we are in transition from one digital sales manager to a search for a new one that reports to Keith Bowen the Chief Revenue Officer. The expense cuts are in place as you can see from Q2. We have a break even game plan that I am very comfortable with for the second half. Funny thing happened on our way to putting the expense plan in place and moving past the old digital sales manager is that there has been a reinvigoration of our sales effort there, and we actually are doing better without the digital sales manager.

We made some changes. A couple of new sellers, some other folks have gone away, but they are really on a good track revenue wise right now for Q3 and Q4. I am feeling real good about I1. Last year the reason Q2 was down is because last year in Q1 and Q2, I1 killed it. We were up 40% in Q1 and 25% in Q2, and then we just died the back half of the year, and that's why you see the down tick. I am feeling pretty good about where those guys are sitting. You are right. The interactive advertising is growing by leaps and bounds. We are number one in our space, on sites that we own and operate. About 3.4 million comps for users on a monthly basis which is about the size of Univision that makes us number one in the space by ourselves. We just did an alliance which consists of a sales agreement, a marketing and editorial alliance with NBC news that owns a site called theGrio which has another 1.2 million users.

So between the two of us we have 5.5 million monthly comp score users which is 25% of all African-Americans on-line which is a very big number. Our goal is to get to 10 million which is a 50 share. But it is a hell of an advertising story, and we are getting the right people out there telling it, and it is starting to payoff. And we are just really in the first inning of what I1 can be. My goal at I1, as I told the management team there, look let's cut the losses. Let's get rid of the red ink, get our periscope above water, and then we can see where we need to sail to for the most bountiful treasures of the island in the internet sea. Rule number one, let's just get the red ink out of the way because it is a hindrance and we are tired of talking about it, and they are doing it, and it is great.

Final quickie for Peter. Peter, what Q3 to date share buy backs have you done and what is left on the authorization?

We've done none in Q3 so far, so there are approximately $7.5 million left on the authorization.

How much left?

$7.5 million.

Thank you.

Our next question is from Jared Golub with Marblegate. Please go ahead.

Thanks for taking the question. Just on TV One, can you help bridge us to what the full quarter results would have been had you consolidated it starting April 1st?

So the revenue would have been approximately $29.6 million as opposed to the $25.1 that we consolidated. EBITDA would have been approximately $9 million as opposed to $7.6 we consolidated. So Jared, the pro rata was 84.8% approximately.

In the release there was a reference that the programming expense is largely non-cash. Obviously the way accounting works for content, does the cash programming expenses generally track the non-cash amortization or can you help us think about what cash flow is for that business versus EBITDA?

That's tricky because the amortization has everything to do with when we run the programming. And scheduling is all over the place.

I think what we could do going forward --

give a cash number.

Is put a cash number up in the press release so you can track. It up and down quarter by quarter.

It is up and down quarter by quarter, but it is roughly -- put it this way. It is not like the business is making $10 million of cash. The business is making double digits in cash just like the EBITDA is. It doesn't disconnect that point-- I mean that dramatically, but it is up and down depending on how many shows we make, how we run them, what it is useful life of the show is. Going forward it is a good idea to give you two numbers, what the EBITDA is which takes into account programming and amortization and actually what the cash flow is.

I think that would be helpful.

Just FYI though, the cash flow, Peter correct me if I am wrong, but the cash flow is going to be stronger this year than usual because we had a transition in CEO, the founding CEO, Johnathan Rogers, retired last Friday. The new CEO, Wonya Lucas, starts on Monday. So we haven't been making as much new programming. There has been sort of like a hold on the programming strategy to give the new CEO time to come in and set the table the way she sees fit. So we haven't been spending as much cash as we probably normally would have. We are actually going to show a better cash result this year than normal.

And last question, and That's a good transition. Obviously the debt facility has specified restrictions on dividends to the equity holders to you in Comcast. Is there a dividend policy or something you can share with the investor community so we understand how you can take cash out of the business?

The covenant-- we are about to file the document, right?

Yes.

We will file the TV One indenture so you will see the TV One

Sorry two things. Yes that does have a restriction on dividends which we would pass that threshold. You will see that. The dividend policy was set between ourselves and Comcast, and it essentially gives Comcast some protection that we have the minimum amount of cash in the business and our leverage is not above a certain ratio. I thought we put that in the public domain. I will check that. We haven't? Okay.

So you will see the canyon documents for the debt facility, but as long as we have $25 million of trailing EBITDA and $5 million of cash we have unlimited ability to dividend out to Comcast and Radio One. So that's the attractiveness of that credit facility which is why we paid at the time what looks like a premium on the rate of 10%, but we needed that flexibility. And the dividend policy that we have in place with Comcast is loose enough, flexible enough so that it allows us to take those dividends and flow them up. It gives them some protection that we don't take all of the cash out of TV One, and that by the time that the facility starts to actually mature, we got a path for refinancing. We are not de-levering it at all. We were very careful to structure both dividend policies such that we could -- they could be useful to Radio One.

And your opening comment where you said you anticipate free cash flow positive in 2012, I assume that that means --

you mean for interactive -- I said that was for interactive One.

Sorry that wasn't Company One. Okay. Thank you for taking the questions.

And next to Jeremy Lucas with Scotia Capital. Please go ahead.

Good morning. Just wondering if you can quantify compliance LTM EBITDA under the facility.

Yes, sure. Give me one second. There is approximate bank EBITDA for the end of the second quarter on the bank rate it is approximately $82 million.

Okay. And where does that put you in terms of the covenants on the facility?

It puts us in compliance of approximately net debt, total leverage, net debt compliance at about 8.25% versus 9.25%. Senior is about 4.6% versus 5.25%.

Great. And finally does Reach Media just so I understand the process any better, does Reach Media make any kind of dividend payment that is included in the credit facility EBITDA?

It does.

How much is that?

It is around -- for the full year it is forecasted at about $2.2 million and on an LTM basis, it is $3.9 million. So of that $82 million, on an LTM basis reached dividends received at $3.9 million.

Great. Thanks very much.

Our next question is from Michael Kass with BlueMountain Capital. Please go ahead.

Hi. Just wonder figure you can provide revenue and EBITDA for TV One year-over-year?

Sure. So for the three months ended June 30th, 2010, revenues were approximately $26.6 million and EBITDA was approximately $5.8 million.

Was that year over--

In terms of growth? That is 11.3% on the top line and about 55% on the EBITDA line.

And That's for the full quarter?

Yes. Sorry, To be clear, that's for the fourth quarter and needs to be compared to the numbers Jared asked for which is $29.6 million on the (inaudible)

And just wondering if you can speak more qualitatively to how the business is going with trends you are seeing, the switch and see and all of that.

It is going great. The new CEO doesn't start until Monday, but during -- we agreed on her coming to take the position a few months ago, maybe about three months ago and she -- although on vacation out of the country for about three weeks of that period she has been actively involved in decision making, direction, et cetera. She really jumped right in so that we didn't have much of a malaise if you will, in between-- in transition. That business is doing great. We're focused on now improving the amount of our original programming and improving our ratings, upping our marketing efforts and there is a couple big distributors we have yet to get that we are focused on getting and we feel confident we will make some progress there.

Is there any visibility in getting enhanced carriage on Comcast?

(Laughter) Funny you should mention that. No visibility at this time, but we are very focused on trying to get enhanced carriage amongst all distributors, but yes we are focused on what can happen at Comcast as well.

Thanks.

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

Just a question about radio advertising in the auto manufacturers. Understand that the Japanese are going to start to roll out some advertising in response to their rolling out cars again and if you have been seeing any of that?

We have seen positive and negative. We have had a few cancellations from business that had been booked because of a lack of supply. I think Peter mentioned that in Q2 auto for all markets was down 6%. We are hopeful. We know at some point there are signs. I heard some of our pees talk about it. There are signs that automotive is coming back. I'm feeling pretty sanguine about it. We are in that period right now where supply is an issue.

Supply of advertising or supply of cars?

Cars, sorry. (Laughter)

We got plenty of inventory.

No, supply of cars.

Thank you.

(Operator Instructions) And we will go to Richard Lee, Post Advisory. Please go ahead.

Thanks for taking the call. Most of my questions have been answered, but the TV One, 11%, 12%, any chance you can break out between subscriber fees and advertising, how those are trending?

We will give it to you off line. Shoot Peter an e-mail and he'll shoot it to you.

Okay and then can you just remind me --

But roughly so you know our revenue is about 50% license fees and 50% advertising.

Okay, great. And can you remind us how many subscribers are you actually getting paid for?

Mid-40s.

Mid-40s, great. Thank you.

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

Thank you. Alfred, just your thoughts on the start-up broadcast network, Bounce. As I understand it is strictly broadcast and not cable, but I may have that wrong.

You know what, look, it is more competition. It is a very tough business, the television business, to be in without getting license fees. Even the broadcast networks are out getting reverse comp, retransmission fees. It costs a lot of money to make quality content. If you don't make quality content you won't get ratings. However, if you have distribution and you have something on the air, and even if the ratings aren't great, you may take some advertising dollars, right? So even if these networks take a few million dollars, That's a few million dollars that can be split up between the incumbent players, us and BET.

So I don't think these networks have a successful business model based on what I just said, the lack of license fees and how much it costs to make content, but I don't want to discount them because it is just more -- it is just more blood in the water for the sharks, right?

Yes. This is the way I think about it. But also there are other things like strategic partners, parentage. You have Comcast from the get go. So you are six years into that. To my knowledge, Bounce does not have a strategic partner, or do I have that wrong as well?

I don't think -- well, look, they made deals with the big broadcast tv operators. They made a deal with Raycom, I understand. I think they just made one with Gannett which got them on in Atlanta.

They do. Those are carriage deals. I was thinking more of an equity piece. (Multiple speakers)

It doesn't matter -- look, you can have a strategic partner all you want. But if your business plan is flawed given the competitive environment, it doesn't matter. Motorola -- was it Motorola that put iridium in the air and lost $6 billion, they were about as strategic as you could get. Bad idea. Being a broadcast network on a digital side channel on these broadcast tv stations, targeting African-Americans is just a bad idea from an economic standpoint. You just can't make it work.

So we'll have to --

I have to tell you. The most strategic advantage -- Comcast was a good, strategic advantage to begin with. It got us in the game, but they are not our largest distributor. Direct TV is our largest distributor today, and we still have distribution upside for TV One that we pursue. We need to pursue. Our largest strategic advantage I think is the fact that Radio One has 20 million listeners over our mostly African-American over our 53 radio stations and our nine syndicated shows. So if there is something on TV One worth watching, the black community is going to know it. We have been telling them for seven years. That's a strategic advantage that none of these guys coming to the table are going to have. It is certainly going to cost money to market those channels. If you are on channel 228 and nobody knows it, you can't make any money.

Good point.

Put it this way, I learned that point when we tried to actually launch a Spanish Radio station in Houston against Univision and I forgot that not only do they have five FM radio stations in the market, but they owned basically all of the tv stations within the audience.

Alfred, I am not going to even ask what you were thinking.

You know what, it was a longtime ago.

All right, thank you, Alfred.

To the presenters, no further questions in queue.

Great, thank you, everybody. As usual, we are available for follow-up questions:

Thank you. And ladies and gentlemen, that does conclude your conference for today. Thank you for your participation. You may now disconnect.