From its Reach Media national radio arm to its cable television networks TV One and Cleo, revenue improvements were seen for Urban One, the African American-focused multimedia company that owns the MGM National Harbor hotel and casino in suburban Washington, D.C.
But, did Urban One see a net income gain? No. Here’s why.
In a word, the answer is expenses.
Total operating expenses soared for Urban One in the third quarter of 2022, moving to $102.43 million from $76.99 million.
There are two reasons for this. First, “Selling, general and administrative” expenses rose to $41.07 million from $33.1 million. Second, Urban One opted to take an impairment charge of its “long-lived assets.” While this does not reflect the company’s income in any way, it nevertheless puts a $14.45 million dent in the income statement.
That $14.45 impairment charge is reflective of radio properties Urban One owns.
Because of the impairment charge and wider expenses, Urban One’s net income dipped to $4.21 million ($0.08 per diluted share) from $13.88 million ($0.25). No financial analysts polled by Yahoo! Finance track Urban One. As such, there is no consensus estimates for the company’s performance.
Perhaps a look at Urban One’s adjusted EBITDA paints a clearer picture for how the company performed in Q3: It moved ahead to $44.34 million from $42.73 million.
Overall net revenue jumped by 8.9%, to $121.4 million from $111.46 million. Political advertising comprised $2,766,000 of the total, while Radio Advertising managed a 4.6% year-over-year improvement to $45.08 million from $43.09 million.
Meanwhile, cable television advertising rose 16.7% to $26.8 million from $22.97 million as digital advertising continued its strong growth, climbing by 33.9% to $20.06 million from $14.98 million.
Reach Media’s net revenues increased 1.3% in Q3, to $10.07 million from $9.94 million in the same period in 2021.
Speaking on the company’s Q3 earnings call for investors on Thursday morning, Urban One President/CEO Alfred Liggins III said, “I’m very happy with the quarter, with almost 9% net revenue growth,” he said. “With increasing headwinds, we thought this was a very solid performance, and more importantly our Q4 pacings continue to be strong, relative to some other folks who have reported in our radio business.”
He adds that double-digital radio growth in the radio segment, with “very, very robust growth” for the digital segment continuing into Q4. With that, full-year guidance will be adjusted upward, with 2022 EBITDA “better than $150 million” expected to grow into the mid-$160 million range. Excellent political dollars and a “robust” upfront for both TVOne and Cleo were cited as other positives by Liggins. More diversity and inclusion in the advertising sector is also “proving to be very fruitful” during this time period.
Meanwhile, the Richmond casino “battle” in the upcoming Virginia General Assembly session is being teed up for 2023. Will the casino site move to Petersburg, Va., and to a runner-up bidder in the process that had Urban One poised to construct a facility within the City of Richmond but was thwarted in a city election? There’s no clear visibility from Liggins. “We continue to fight the good fight,” he said.
Otherwise, Urban One continues to de-lever, buying back its 7.375% bonds in the open market, he shared.
Local ad sales were down 1.7% against a market that was down 2.1%, Urban One CFO Peter D. Thompson shared, citing Miller Kaplan data. Events in Atlanta and Raleigh, however, proved disappointing, impacting overall revenue for the Radio division.
How did Urban One’s radio stations perform with respect to key ad categories? Automotive was up 57.3%, a sign that the category’s supply chain issues are finally getting resolved. Telecom was up 14.5% in Q3 2022, compared to one year ago. Down in Q3 ’22: Services, Entertainment, Retail, Food, and Travel/Transportation.
Looking ahead, Q4 ad revenue pacings for the Radio One arm look sharp, and are up 26.5% including political, or 10.9% including political, Thompson said on the earnings call.
