On May 23, with time ticking for the company founded as Radio One under Cathy Hughes, Urban One received a second letter from the Listing Qualifications Department of Nasdaq notifying the company that it was further non-compliant with a listing rule. It had nothing to do with failure to meet its $1 per share minimum trading requirement, but instead on its overdue 10-K and 10-Q SEC filings tied to its firing of independent outside account BDO in 2023.
Urban One said it would make the filings in a timely manner to avoid any Nasdaq issues. And, late Friday, that’s exactly what transpired for the owner of two cable TV networks, local radio stations and a national radio arm known as Reach Media.
Why was there a months-long delay in the submission to the Securities and Exchange Commission of Urban One’s FY2023 results, as well as its Q1 2024 results? The July 2023 decision to dismiss BDO as its independent registered accounting firm and immediately replace it with EY is the culprit, and with the change this required a wholesale reevaluation of all of the financial data. BDO’s exit was triggered after a re-evaluation by Urban One of its accounting for the valuation of its now-concluded MGM National Harbor investment.
This put EY in overdrive; it had until June 7 to meet the Nasdaq deadline. The filing came just in the nick of time, with notification of the SEC filings coming after the Closing Bell on Wall Street. News of the filing triggered strong after-hours trading for UONE, which was up by nearly 10% to $2.33 as of Sunday morning (6/9).
So, how did Urban One do across 2023? Net revenue slipped by 1.4%, but was up by 2.9% in its core Radio division. It is also important to note that political advertising dollars are the key factor for the overall decline. Ex-political, Urban One was up.
The cable television segment was down by 4% in its advertising and some 9.5% in its affiliate fees in 2023, compared to 2022. Urban One owns the TV One and Cleo MVPD-distributed networks.
Nevertheless, political dollars are a significant contributor to the bottom line, and in 2023 Urban One’s net income attributable to common stockholders came in at $2.05 million — a 94% drop from $34.34 million in 2022.
Additionally, operating expenses were up by 11.6%, to $136.88 million.
And, the all-important adjusted EBITDA was $128.38 million, shifting from $165.18 million.
A SOFT START TO 2024
Concurrent to the delayed 10-K filing for 2023 was the tardy submission to the SEC of Urban One’s 10-Q detailing its first quarter 2024 performance.
Like its peers in the radio industry, challenges were seen with respect to revenue and profit gains.
For the three-month period ending March 31, Urban One’s net revenue dipped to $104.41 million from $109.87 million. But, the company benefited from income tax provisions and its joint venture agreement to swing to net income of $7.49 million ($0.15 per share) from a net loss of $2.92 million (-$0.06).
By category, Radio advertising was statistically flat, moving to $33.75 million from $33.84 million. However, Q1 saw political advertising of $1.17 million, against $249,000 a year ago, giving the division a bump as event revenue increased to $1.43 million from $1.09 million.
In a sign that national advertising remains soft for Audio, Reach Media in Q1 2024 saw its revenue dip to $8.38 million from $10.29 million.
Meanwhile, the cable TV ad revenue was statistically flat too, shifting to $25.37 million from $25.82 million as affiliate fees dipped to $20.79 million from $23.84 million.
A conference call to discuss the reports with analysts, debtholders and shareholders hosted by CEO Alfred Liggins III is scheduled for today (6/10) at 4:30pm Eastern.
