Urban One - Earnings Call - Q3 2025

Executive Summary

• Net revenue declined 16.0% year-over-year to $92.7M; Adjusted EBITDA fell 44.1% to $14.2M, driven by weakness in national audio, Digital and Reach Media, and cable affiliate fee churn.
• Management cut FY 2025 Adjusted EBITDA guidance from $60.0M to $56.0–$58.0M, citing softer conditions; Q4 radio pacings are down 30.2% all-in and 6.4% ex-political, a key near-term headwind.
• Cable TV advertising fell 5.4% and affiliate fees declined 9.1% YoY; Digital revenue was down ~30% with audio streaming down $1.3M; Reach Media revenue fell 40% on weaker national renewals/DEI pullback.
• Balance sheet actions continue: $4.5M of 2028 notes repurchased at ~52% of par and announced exchange/tender offers (post-quarter) with a backstopped note subscription to extend maturities and optimize capital structure.

What Went Well and What Went Wrong

• What Went Well

  • Cost discipline: Q3 operating expenses (ex D&A, SBC, impairments) decreased to ~$83.7M (-4.2% YoY); corporate professional fees and payroll were down.
  • Local radio outperformance: Local ad sales down 6.5% vs market down 10.1%, partially offsetting national underperformance.
  • Debt management: Repurchased $4.5M of 2028 notes at ~52% of par, lowering interest expense YoY and recorded ~$2.1M gain on retirement of debt.

• What Went Wrong

  • Broad revenue softness: Net revenue down 16.0%; Digital (-26.8%), Reach (-40.0%), Radio (-15.3%), cable affiliate fees (-9.1%) all declined YoY.
  • Royalty catch-up expense: ~$3.1M retroactive music licensing royalties (RMLC settlement) raised radio programming/technical costs in Q3 (added back in Adjusted EBITDA).
  • Guidance cut and Q4 pacing: FY Adjusted EBITDA lowered to $56–$58M, with radio pacings down 30.2% all-in for Q4; national radio advertising demand remains weak.

Transcript

Operator (participant)

Ladies and gentlemen, thank you for standing by, and welcome to the Urban One 2025 third quarter earnings call. As a reminder, this conference is being recorded. We will begin this call with the following safe harbor statement. During this conference call, Urban One will be sharing with you certain projections or other forward-looking statements regarding future events or its future performance. Urban One cautions you that certain factors, including risks and uncertainties, referred to in the 10-Ks, 10-Qs, and other reports it periodically files with 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 November 4th, 2025. Please note that Urban One disclaims any duty to update any forward-looking statements made in the presentation.

In this call, Urban One may also discuss some non-GAAP financial measures in talking about its performance. These measures will be reconciled to GAAP either during the course of this call or in this company's press release, which can be found on its website at www.urbanone.com. A replay of the conference call will be available from 2:00 P.M. Eastern Standard Time, November 4th, 2025, until 11:59 P.M. Eastern Standard Time, November 14th, 2025. Callers may access the replay by calling 1-800-770-2030. International callers may dial direct, +1-609-800-9909. The replay access code is 78-22067. Access to live audio and a replay of the conference will also be available on Urban One's corporate website at www.urbanone.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.

I will now turn the call over to Alfred Liggins, Chief Executive Officer of Urban One, who is joined by Peter Thompson, Chief Financial Officer. Mr. Liggins, please go ahead.

Alfred Liggins (CEO)

Thank you very much, Operator, and welcome everybody. And as usual, we're joined by other team members here: Jody Drewer, our Chief Financial Officer for TV One and CLEO, in case we've got any questions on the cable business, Karen Wishart, our Chief Administrative Officer, Chris Simpson, our Chief Legal Officer, and also Veronica Tekes, who is our Chief Accounting Officer. And so thank you very much again for joining us this quarter. You've seen the press release. Hopefully, that we put out. Business came in a bit softer for the quarter than we had expected across the board. Our core radio pacings going forward are facing big political headwinds. So looking about -30% right now. However, ex-political, we're down to almost mid-single digits, about 6.4%, which is better. It's an improvement. But because the revenues have come in lighter with Q3, we are adjusting our guide for the year.

Last quarter, we guided to a $60 million EBITDA number. We generally usually give a range. We gave a hard number last quarter. We're adjusting that guide down to $56 million-$58 million EBITDA for the full year as we come to the close. Within our third quarter and last quarter, I said that we were going to look to do another round of cost saves, and we actually did that. In Q3, which resulted in about $3 million of annualized expense savings. This is in addition to the $5 million that we had done earlier in the year. Peter's going to talk about the impact on the numbers in Q3 of that in terms of severance. And so with that, I'm going to turn it over to Peter so he can go into the details of the numbers, and then we'll come back to Q&A.

Peter Thompson (CFO)

Thank you, Alfred. So consolidated net revenue is approximately $92.7 million, which is down 16% year-over-year. Revenue for the radio broadcasting segment was $34.7 million due to 12.6% year-over-year. Excluding political, net radio revenues were down 8.1% year-over-year, and according to Miller Kaplan, our local ad sales were down 6.5% against a market that was down 10.1%. So we outperformed on local, and on national ad sales, we were down 29.1% against a market that was down 21.5%. So we underperformed on national. Our largest ad category was services, which was up 22.9%, driven by legal services. Financial was up 17.9%. But all of the other major categories were down, including government, health, retail, entertainment, auto, telecoms, food, and beverage.

Net revenue for the REACH Media segment was $6.1 million in the third quarter, down 40% from the prior year, and Adjusted EBITDA REACH was a loss of approximately $200,000 for the quarter. And that was really a lower overall network audio market, lower national sales renewals, and probably a drying up of DEI that drove the decline at REACH. Net revenues for the digital segment were down 30.6% in Q3 at $12.7 million. Direct and indirect digital sales were down by approximately $4.4 million. That decline was the result of decreases in DEI money, back-to-school, political, and overall soft decline of demand. Audio streaming was down by $1.3 million year-over-year. Adjusted EBITDA was approximately $0.8 million compared to $5.3 million last year. We recognized approximately $39.8 million of revenue from our cable television segment during the quarter, a decrease of 7%.

Cable TV advertising revenue was down by 5.4%. Total daily delivery declined by 29.4% P2554, which was partially offset by an increase in CTV and third-party platform revenue share. Cable TV affiliate revenue was down by 9.1%, driven by subscriber churn. Cable subscribers to TV One as measured by Nielsen finished Q3 at 34.1 million compared to 34.3 million at the end of Q2. CLEO TV had 33.5 million Nielsen subs. Operating expenses, excluding depreciation and amortization, stock-based compensation and impairment of goodwill and intangible assets decreased to approximately $83.7 million for the quarter, a decrease of 4.2% from the prior year. There was some noise in the expenses. We had a notable expense decrease in corporate and professional fees and overall payroll expenses.

Also, cable television content amortization was down, but we had the August RMLC settlement with ASCAP and BMI, and that resulted in an average royalty rate increase of 20% retroactive to January of 2022. And so we recorded approximately $3.1 million of retroactive royalties in Q3. And you see that in the programming and technical expense in the radio segment. We did add that back to Adjusted EBITDA. The company, as Alfred said, completed a second reduction in force in October. It's part of the ongoing cost reduction efforts. As a result, we had $1.6 million of employee severance costs, which we recorded in third quarter, but we also added that back to the adjusted EBITDA for the quarter. Radio operating expenses were down 5%, or $1.7 million, driven by lower employee compensation, sales commissions, and a favorable change in the bad debt reserve compared to the prior year.

REACH operating expenses were up by 8%. And that was due to a favorable change in the bad debt reserve that we took in the prior year. Operating expenses in the digital segment were down 2.6%, and that was driven by lower employee compensation. Operating expenses in the cable TV segment were down 2.4% year-over-year, driven by lower programming content amortization due to fewer premier hours compared to last year. Operating expenses in corporate were down by approximately $1.5 million. The third-party finance and accounting professional fees were down significantly year-over-year. Consolidated adjusted EBITDA was $14.2 million for the third quarter, down 44.1%. And consolidated broadcast and digital operating income was approximately $20 million, a decrease of 43.6%. Interest and investment income was approximately $0.5 million in the third quarter compared to $1.1 million last year.

The decrease was due to lower cash balances, interest-bearing investment accounts. Interest expense decreased to approximately $9.4 million in Q3, down from $11.6 million last year due to lower overall debt balances as a result of the company's debt repurchase efforts. Company made cash interest payments of approximately $18.2 million in the quarter. And during the quarter, the company repurchased $4.5 million of its 2028 notes at an average price of 52%, bringing down the gross balance on the debt to $487.8 million as of September 30, 2025. Our depreciation and amortization expense increased $4.9 million as a result of the company's change to the useful life of TV One trade names and our FCC licenses, which we moved from indefinite life to finite life. Benefit from income taxes was approximately $1.1 million for the third quarter.

And the company paid cash income taxes, net of refunds, in the amount of $0.1 million. Capital expenditures were approximately $3.1 million. Our net loss was approximately $2.8 million, or 6 cents per share, compared to net loss of $31.8 million, or 68 cents per share for the third quarter of 2024. During the three months ended September 30, 2025, the company repurchased 176,591 shares of Class A common stock in the amount of approximately $0.3 million at an average price of $1.75 per share. And the company also repurchased 592,822 shares of Class D common stock in the amount of approximately $0.4 million at an average price of $0.73 a share. As of September 30, 2025, total gross debt was approximately $487.8 million.

Our ending unrestricted cash balance was $79.3 million, resulting in net debt of approximately $408.5 million, which we compared to $67.9 million of LTM reported adjusted EBITDA, giving a total net leverage ratio of 6.02 times. With that, I'll hand back to Alfred.

Alfred Liggins (CEO)

Thank you very much, Peter. Operator, can we go to the lines for questions, please?

Operator (participant)

Thank you. At this time, we would like to take as many questions as we have time for. If you'd like to ask a question, please press star followed by the number one on your telephone keypad. Once again, that is star followed by the number one on your telephone keypad to enter the question queue. We'll pause for a moment to compile the Q&A roster. Our first question comes from the line of Ben Briggs with StoneX Financial. Your line is open.

Ben Briggs (Director)

Good morning, guys. Thank you for doing the call. I have a couple of questions here. So first of all, and I know we're looking forward a little ways, and we're only part of the way through the fourth quarter. How are you guys thinking about 2026? And what demand looks like there and what listenership may be, kind of how the pieces of the puzzle are going to fit together then?

Alfred Liggins (CEO)

Yeah. We feel good about 2026 for a number of reasons. One, obviously, we're going into a political year. But, two, a number of the places that we've had challenges this year, we have changed our operating strategy to address that. I would say most notably where REACH Media has had a very tough year because we got caught flat-footed with a big, big decline in our largest advertiser in the company with unexpected cancellations. And these were cancellations across the board. When I say across the board, across the whole audio sector. And, quite frankly, we weren't able to replace those ad dollars once we had committed that inventory. So we're able to get ahead of that. We saw REACH Media and iOne had contributed probably, excuse me, had benefited the most from the rise in DEI advertising.

And we just got way too concentrated at REACH Media with two particular advertisers. One of those actually stood out more than the other. So we'll be more prepared for that going forward. This is also our first year navigating REACH without our former President of the audio division, David Cantor, who actually founded and created REACH. So trying to make that transition was also difficult, even though we knew it was coming and we prepared for it. And so I think we're better positioned there. Also, there have been a number of things that we're doing in our radio markets where we think that we will perform better. In particular, from our DC, we just rearranged some of our formats there. And we launched a new format targeting the Hispanic community, which has become a very, very large segment in the DC area.

It's almost close to 20% of the marketplace. I mean, it's like 18.5% of the marketplace. And we've positioned ourselves recently as a major player there, which is going to broaden our offering in the DC market, in addition to some changes that we've made in terms of management and beefing up our sales staff, etc. And so we've got a few other changes that we've made in some of the markets where we think it's going to improve performance in a meaningful way as well. And TV One's been holding in there this year. And so we think that given those things I just outlined, we're feeling good about a rebound in 2026.

Ben Briggs (Director)

Okay. Okay. That's good to hear. And that's great color. Thank you. Next thing for me, and I guess this is kind of focused on post-fourth quarter plans as well. But are you thinking of any kind of M&A activity or larger-than-usual kind of, I know you guys swap radio stations here and there on a pretty regular basis. But are you thinking about anything more transformative for the future? I know every now and then things get kicked around. I'm just curious. Is there anything else?

Alfred Liggins (CEO)

Yeah. I think everybody in the industry is focused on dereg and what's going to happen. You've seen a number of deals that have been filed already in the radio space looking for waivers to exceed the current ownership caps. The FCC has signaled that they think the ownership rules are antiquated, and people in TV and in radio have submitted deals to be approved for waivers. There is also a notice of proposed rulemaking out that I know that the industry is going to comment on if they haven't already about dereg. And I think everybody in the industry is going to be pro-dereg. And when I say everybody, I'm sure it's not necessarily going to be 100%. But that's going to create some opportunities for people to align assets in markets in a much more efficient manner. And yes, we're looking at that.

There's nothing that is large and transformative that we're working on now because this is all very new. But we tend to try to think ahead and be intellectually creative in what the next move is. And so all along, we've had conversations and thoughts with people about the art of the possible because historically, we haven't been up against the ownership cap. So we probably have had the ability to grow or do M&A that others haven't, even though in a dereg environment, that will be enhanced. But what is a governor is leverage, and is any transaction going to be delivering, right? And even when you look at these transactions, you got to think about it against a backdrop. Just because you have dereg doesn't solve necessarily your top-line secular trajectory, right? So you just got to be careful about how you underwrite and an M&A transaction.

But with that said, I do think it's going to create some significant opportunities to build stability in these businesses. At the end of the day, the radio business is largely a local business. So if you've got an opportunity to provide more different demographic targets to advertisers, local advertisers, I think that makes you a stronger player. We've seen that in our Indianapolis market, our Houston market, our Charlotte market, where we've spread out in different format demographics. And that's one of the things that we just did, like I articulated earlier, in DC, that I think is going to help significantly. So there's no M&A deal that we are currently working on that's transformative as we speak. But I'm sure that we will explore opportunities to be able to rearrange the demo shares in order to make us a stronger entity.

Ben Briggs (Director)

Okay. Okay. That's all very, very helpful. And then the next thing I want to ask about is, I think at the top of a lot of investors' minds, is your debt buyback activity. Obviously, you stated in the press release this morning that you did a little bit of buybacks in the third quarter. Are you expecting to continue to execute on those debt buybacks?

Alfred Liggins (CEO)

Yeah. Look, I figured we would get that question because of yeah, yeah, yeah, because we've been more acquisitive in the past. But because of this heat up in potential dereg and stuff moving around, we decided to sit pat and build a little liquidity as we get to the end of the year, see how that all shapes up, and figure out also how that is going to play out. We are always and have been focused on delivering and the best way to deliver. So one way to deliver is buyback debt at a discount. Another way to deliver, yeah, and we've done it a number of times, including in Houston, is through delivering M&A activity. So we've decided to keep our powder dry a little bit here to see what opportunities are going to present themselves in the near term.

Ben Briggs (Director)

Okay. All right. That's extraordinarily helpful. Thank you guys for taking the questions, and good luck on the fourth quarter and going forward.

Alfred Liggins (CEO)

Thank you. Appreciate it, Ben.

Operator (participant)

There are no further questions at this time. I'd like to hand the call back over to Alfred Liggins.

Alfred Liggins (CEO)

Thank you very much, Operator. And again, as always, Peter and I are available for calls afterwards. Emails or calls directed to us. Thank you for your support, and we'll talk to you next quarter.

Operator (participant)

This concludes today's call. You may now disconnect.