Digital revenues are soaring. Cable TV advertising revenues were up substantially, too. Oh, and radio advertising — ex-political and digital — was up 17.4%.
That’s the first quarter fiscal health synopsis for the largest media and entertainment company in the U.S. superserving African-American consumers.
Digital revenues were up 49.5%, Cable TV advertising revenues were up 46.9%.
That growth enabled Urban One to increase its Adjusted EBITDA by 38.9% year-over-year, to $42 million from $30.2 million, and from $27.7 million in the first quarter of 2019.
For the three months ending March 31, 2022, Urban One’s net revenue rose to $112.35 million, from $91.44 million as net income attributable to common shareholders came in at $16.37 million ($0.30 per diluted share), compared to just $7,000 ($0.00) in Q1 2021 as the company slowly recovered from the worst of the COVID-19 pandemic.
Investors appeared to be pleased with the results, as Urban One’s common stock, UONE, rose by 5.3% within the first 30 minutes of Thursday’s trading session, to $8.89.
“Looking back at pre-pandemic revenues, when we aggregate our radio broadcasting, syndication, events and digital operations, net revenues were up 11.5% compared to Q1 2019,” CEO Alfred Liggins III said ahead of Urban One’s quarterly earnings call on Thursday morning.
He added that second quarter core radio advertising is pacing up mid-single digits, as Urban One starts “to lap the tougher comps from 2021.” Furthermore, Liggins says Urban One’s balance sheet continues to strengthen, with $166.4 million of cash and net leverage down to 4.07x.
CFO Peter D. Thompson again provided a clean and easy-to-read balance sheet, and noted that Broadcast and Digital Operating Income increased to $48.4 million from $36.4 million. It now represents 43.1% of total net revenue.
While cable and digital dollars are growing, the bulk of Urban One’s revenue is still tied to broadcast radio stations.
On the conference call, Thompson shared ad category health for Urban One. Automotive is still a challenge, down 14.3% year-over-year. Food and Beverage was also down, by roughly 9.4%. In contrast, Services was the biggest ad category, driven by law firms and an increase in spending from taxation prep services. Healthcare and travel were up by double-digits; telecom was flat.
Revenue at Reach Media, the national radio arm, increased to $10 million from $7.8 million year-over-year in Q1 as net income increased to $2.86 million from $1.95 million. Thompson cited “strong demand” to reach the African-American market, with programs hosted by Rickey Smiley and D.L. Hughley seeing the biggest gains.
Cable Television net revenue grew to $56.43 million, from $46.24 million as net income increased to $20.68 million from $16.48 million.
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On the call, Liggins addressed the failed November 2021 voter referendum on a major casino resort facility Urban One hoped to launch in Richmond, Va. What’s next? “We believe we have an extraordinarily strong legal argument and that the General Assembly cannot undo a court order,” he said, noting that a second referendum is an effort that is ongoing. Yet, there’s an effort to hold the matter off the ballot in the City of Richmond until November 2023. As such, the tug of war will continue as Urban One works with the governor’s office in Virginia to help the referendum move forward. “We keep making progress,” he said, noting that Urban One is in a better position than where it was in December 2021.
What’s the Q2 forecast from Urban One? Second quarter core radio advertising is pacing up mid-single digits. With pacings moderating, is it because they are getting tougher or because they are softening? Aaron Watts at Deutsche Bank asked that, and CEO Alfred Liggins III said Radio is moderating due to economic slowdowns. “I don’t know how strong political is going to be,” he added, knowing that it will be up but can’t say growth will be “gangbusters.” Liggins said, “There is absolutely a slowdown in economic activity, but that doesn’t mean there is going to be a recession.”
