Ladies and gentlemen, thank you for standing by. 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 May 5, 2022. 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 the company's press release, which can be found on its website at www.urbanone.com. A replay of this conference call will be available from 12:00 p.m. Eastern Time, May 5, 2022, until 11:59 p.m., May 9, 2022. Callers may access the replay by calling (866) 207-1041 in the U.S., International callers may dial direct, area code (402) 970-0847. The replay access code is 744529. Access to live audio and a replay of the conference call will also be available on Urban One's corporate website at www.urbanone.com. The replay will be made available on the website for 7 days after the call. No other recordings or copies of this call are authorized or may be relied upon. I'll now turn the call over to Alfred C. Liggins, Chief Executive Officer of Urban One, who is joined by Peter D. Thompson, Chief Financial Officer.

Thank you, operator, and welcome to our first quarter results conference call. Joining Peter and me are Kristopher Simpson, our General Counsel; Karen Wishart, our Chief Administrative Officer; and Jody Drewer, the CFO of TV One. We are excited about the extraordinarily strong quarter we experienced across all business units, with performance exceeding the expectations of most analysts. We had anticipated mid-teens revenue growth in the radio business, but digital and TV One performed very well too. Overall, our team across all divisions delivered excellent results, and I am very proud of them. I want to address two key areas: our guidance for the year and an update on Richmond. Given the strength in Q1, we believe we will exceed the upper end of our EBITDA guidance for the year, which is between $145 million and $150 million. While we are not certain where we will land, we are confident it will be above that range. However, it is important to note that we are experiencing a slowdown in pacing moving forward, as detailed in our press release. Radio is pacing in the mid-single digits, and we will start facing tougher comparisons from last year. Despite this, we still expect to exceed our guidance. It is crucial to recognize that there are more challenging comparisons ahead, and we are seeing a moderation in growth, particularly within radio. Additionally, we are uncertain about the macroeconomic factors that may impact us, but we expect to be in a solid position by the end of the year. However, please do not simply project Q1’s performance into the next three quarters. Regarding Richmond, we frequently receive inquiries about our progress. To clarify, we have been working to schedule a second referendum. The Richmond City Council voted to petition the court for this back in January. We sought precertification from the Virginia Lottery, which we received in early April. Following this, we petitioned the Circuit Court of Richmond for the referendum to be scheduled, and it has been granted for November. The court order became final and unappealable on April 18th, meaning the referendum is set. That said, there are still challenges. There is an effort within the General Assembly to include language in their budget that could block the second referendum, preventing us from proceeding until November 2023. We are lobbying to have this language removed, though we cannot guarantee success. The governor also has the authority to veto or amend legislation, including budget bills. We believe we have a strong legal argument that the final court order stands, and the General Assembly cannot retroactively alter it. We have engaged extensively with legal experts on this issue. Discussions at the legislative level are becoming more focused as they continue to work on the budget. There is a likelihood that this blocking language will be included, and if we cannot get it vetoed or removed legislatively, we may have to engage in some form of judicial process. We are uncertain how that would unfold, but we believe we have a strong position if it comes to that. We remain optimistic about conducting a second referendum, but I want to caution everyone that it is not guaranteed. This situation is quite unprecedented; it is unusual for budget language to be used to undermine a final court order. Ultimately, a judge may need to make a decision regarding this matter, but I cannot predict the timing. In the meantime, we are working diligently to convince legislators to support our position. We also aim to persuade the Governor's Office that this is a legal right that should not be denied to the citizens of Richmond. The city feels compelled to move forward with this referendum based on the court order in place. I believe we are in a better position than we were last December, and we continue to make progress. It’s important to remember that the previous referendum was very close, with a result of 50.85% to 49.15%. Our focus is on determining what we can do differently to secure a victory if we have the chance to run it again. I want to emphasize that while this situation is not dead, it is certainly uncertain. I can't provide a timeline for when we will have definitive clarity on whether the referendum will proceed, as this is an ongoing process involving engagement with the legislature, the Governor's Office, and potentially judicial proceedings. With that, I will hand it over to Peter for the specifics on the quarter, after which we will return for Q&A.

Thank you, Alfred. So as Alfred said, the first quarter of '22 finished very strongly, with net revenue and adjusted EBITDA across the board over the prior year. Consolidated adjusted EBITDA was $42 million for the quarter, up from $30.2 million in 2021, up from $27.7 million in prepandemic 2019. The revenue was up by 22.9% year-over-year for the quarter at approximately $112.3 million. Net revenue for the radio segment increased 13.3% year-over-year in the first quarter. Local ad sales, excluding political, were up 14.8%, and national ad sales were up 6.9% excluding political. Most of the major advertising categories were up from last year with the exception of government and public, which was down 13.7%; and automotive, which was down 14.3%; food and beverage down 5.9%. We saw a decrease in government-funded pandemic outreach, and political spending was down given the Georgia runoff election that occurred in Q1 of last year. Services were our biggest ad category, driven by a return of spending by law firms and an increase in spending from tax services, that was up 23.3%. The entertainment category was up 116%. Health care, retail, financial, travel and transportation all saw double-digit increases compared to last year. Telecoms was flat. And as Alfred mentioned, the second quarter '22 is currently pacing up in the mid-single-digit percentage range. Net revenue for Reach Media was $10 million in the first quarter compared to $7.8 million in the prior year. The revenue increase was due to strong demand to reach the African-American audience, which drove improved pricing. The biggest revenue increases were on the Rickey Smiley Morning Show and the DL Hughley Show. Adjusted EBITDA in our Reach segment was up by 43% for the quarter. Net revenues for our digital segment increased by 49.6% in the first quarter to $15.5 million. Sponsored and branded content were the primary direct sales drivers in Q1 as traditional budgets continue to shift to digital and video. Adjusted EBITDA increased for the quarter by 94%. We recognized approximately $56.4 million of revenue for our cable television segment during the quarter, an increase of 22%. Cable TV advertising revenue was up 46.9%, excluding political, with a favorable rate volume impact of $5 million, $700,000 of free video-on-demand revenue, $1.5 million increase for CLEO TV advertising and $1.6 million of favorable advertising burn-off and increased advertising related to Urban One owners. Cable TV affiliate revenue was up by 1.9% for the quarter, driven by rate increases and converting some free subscribers to paying subscribers, which was partially offset by churn. Cable subscribers for TV One, as measured by Nielsen, finished Q1 at 46.8 million compared to 49.3 million at the end of Q4. And CLEO had 41.8 million Nielsen subscribers. We recorded approximately $2 million of income from our investment in the MGM National Harbor property for the quarter, compared to $1.7 million last year and $1.7 million in 2019. Operating expenses, excluding depreciation, amortization, impairments, and stock-based compensation increased to approximately $73.3 million in Q1 compared to $65.2 million in Q1 of 2021. As a result of the continuing reopening of the economy and increase in revenue, the following operating expenses increased from prior year. Programming content and amortization at our cable television segment increased by $2.2 million. Outside services, including contract, talent and consultancy fees increased by $2.1 million. Marketing and promotional spending increased by $2 million. Revenue variable expenses increased by $1.9 million and employee compensation increased by approximately $933,000. Casino chase costs were down by $1.1 million, but are added back to adjusted EBITDA. Radio operating expenses were up 1.3%, with 90% of the revenue increases falling to adjusted EBITDA. Expenses relating to the revenue increase, such as music licensing fees, sales commissions and bonuses were up. Successful collection efforts drove a favorable bad debt allowance adjustment. Reach Media operating expenses were up by $1 million against a revenue increase of $2.2 million. Affiliate fees and commissions drove most of the increase. Operating expenses in the digital segment were up by $2.8 million, driven predominantly by variable expenses related to traffic acquisition and sales and also increased video production costs. Cable TV expenses were up $4.6 million year-over-year. Product and content expenses increased by approximately $2.2 million. Sales and marketing spend at TV One was up by $1.9 million. Operating expenses in the corporate and eliminations segment were down, including a favorable year-over-year variance for the Richmond Casino chase costs of $1.1 million. For the first quarter, consolidated broadcast and digital operating income was approximately $48.4 million, an increase of 33%. Interest expense was approximately $15.9 million for the first quarter compared to approximately $18 million for the same period in 2021. The company made cash interest payments of approximately $30.6 million in the quarter, since semiannual debt service payments are due in Q1 and Q3 of each year. Provision for income taxes was approximately $5.6 million for the quarter. The company paid cash taxes net of refunds in the amount of $2,000. Net income was approximately $16.4 million or $0.32 per share compared to $7,000 or $0.00 per share for the first quarter of 2021. Capital expenditures were approximately $1.6 million. The company executed a stock repurchase of 2,649 shares of Class D common stock in the amount of $10,000. As of March 31, 2022, total gross debt was $825 million. Our ending cash balance was $166.4 million, resulting in a net debt of approximately $659.1 million compared to $162 million of LTM reported adjusted EBITDA for a total net leverage ratio of 4.07x. And with that, I'll hand back to Alfred.

Thank you, Peter. Again, I want to reiterate that we will exceed the high end of our $145 million to $150 million of EBITDA guidance for 2022. We feel comfortable about that number even if there is a continued economic slowdown. And again, the Richmond update is a work in progress, further along than we have been since December, but not all the way there yet, but optimistic. Operator, I'd like to open it up for questions.

Our first question will come from the line of Aaron Watts with Deutsche Bank.

Alfred, appreciate the color that you gave around the ad environment on the radio side. I just wanted to clarify something. So I know you said that the pacings are moderating. And I was curious if they're moderating because the comps are tougher as you move forward through the year or if there's actual softening coming through concerns.

Yes, that's a good question. It varies by segment. Digital is moderating mainly because the performance was very strong in the second, third, and fourth quarters of last year. Radio is also moderating, I believe, due to the economic slowdown. There’s a noticeable difference between mid-teens performance and mid-single performance. I'm uncertain about how robust political advertising will be. It could be very strong. We expect it to exceed last year’s numbers, but it heavily relies on the dynamics of the races, whether they are competitive or not. So, that remains to be seen. There is potential for growth, but there’s definitely a slowdown in economic activity, especially in the national radio sector. You can see this trend reflected on CNBC. However, that doesn't necessarily indicate an impending recession. David Rubenstein mentioned on CNBC that while we may face increased wage and input pressures, he believes growth will slow without falling into recession territory. If interest rates rise and wage and input costs increase, earnings will likely decline. This appears to be evident in the market, where valuations are compressing across sectors due to these factors. That said, there may still be some standout performances, and we hope to be among them, but that's the current situation.

Okay. That's helpful context. And one other question I just wanted to ask you was around share within the local marketplace. Do you feel that radio in your stations are maintaining their share? Maybe you're taking some share versus other local media? Curious, the dynamics you're seeing right now there maybe versus outdoor digital?

Yes. I don't have specific information on radio's share compared to other mediums in local markets since we don't receive details on the distribution of the local advertising revenue among outdoor, radio, and digital. We can assess our own performance relative to other radio competitors, but we currently lack that information. We're open to discussing it further offline. Overall, our national platforms, including digital and national radio—whether through our syndication or regular national business, along with our radio station digital efforts—are performing better than traditional terrestrial radio spots. Combining those sectors, we are doing well. While local performance may be slightly behind, I would need to analyze that market by market and would be glad to do so offline, but it will require some research.

We'll go next to the line of Sundar Varadarajan with Lord, Abbett & Co.

I have a couple of questions. First, I'd like to revisit your outlook. You've slightly raised your guidance by indicating that you'll be exceeding the high end of your previous forecast. Given that in Q1 you're currently pacing at about a $160 million annual run rate, which is usually considered the weakest quarter, is there anything in the second half that prevents you from being more optimistic with your guidance? Secondly, regarding the casino, as you prepare for the second referendum, do you anticipate any increase in expenses? If so, can you provide any details on that?

Yes, we chose not to provide a new guidance number because I'm unsure about the potential impact of the economy. I just mentioned that we expect to exceed our previous guidance, and you'll need to estimate how much that might be. We prefer not to present a specific number since it could lead to disappointment if we don't meet it. Our message is that we're confident we'll perform better than we indicated previously. I hope there's no significant economic slowdown, but it seems like one is underway. Regarding the casino, you should expect an increase in expenses. If we secure the second referendum, we spent around $4 million last year on it, and I don't anticipate us spending less this time. Since we lost last time, we might need to allocate more resources to cover areas we overlooked before, and we haven't set a budget for the second referendum yet. Currently, our budget reflects the same amount we had last year. But Peter, do we have any guidance regarding the referendum?

We have made adjustments, so we provide adjusted EBITDA which does not include those numbers. I have figures included in my forecast, but they won't be reflected in the adjusted EBITDA. However, they are accounted for in the expense lines of the press release, but they do not impact the adjusted EBITDA.

So when we're giving you our adjusted EBITDA guidance, that's not taking into account the referendum expenses for the second go around.

Got it. And then I just had one more follow-up since there is some concern about a slowdown as we get to the end of the year and into next. Could you revisit for us your leverage targets assuming that the political year would be behind? If '23 is going to be a slowing down year, could you talk about where you should be net of the casino?

Net of the casino, you want to...

Assuming the $100 million is spent on the casino as well. So $100 million is earmarked for the casino in that.

Yes. So assuming that the casino project happens and we spend, call it, $10 million of cash this year on the things we would need to do, including not just referendum but including all the other things we would need to do, I still have us below 4x at the end of this year. So high-ish 3s.

And that assumes the $100 million goes away for the casino?

The remainder will be included in our Q3 projections for next year. We anticipate most of it will be recognized in Q3, where I project our figures to be just above 4, but not significantly so. That’s the expected impact. Initially, we will be below 4, but if we proceed with the $100 million expenditures, it will bring us back above 4. I foresee us maintaining around the 4 mark in my projections until the end of next year, after which we expect to drop below 4 again in 2024, dipping into the mid-3s and then low 3s thereafter. These are just projections, of course; the future is uncertain. But that’s our thought process, including for the Richmond project.

We'll go next to the line of Patrick Wang with Voya Investment.

Could you talk about TV One because that's over half of your revenue and EBITDA? And so what's the dynamics there for 2022 since you're doing very well?

TV One is performing very well, expected to exceed $100 million in EBITDA. Last year, we achieved $95 million, and we're projecting even better this year. Out of approximately $150 million, TV One is anticipated to contribute around $107 million to $108 million. Ratings are stable and in good shape. I foresee TV One maintaining at least $100 million in EBITDA over the next four years, even with the challenges in the Pay TV ecosystem, such as losses from churn and streaming. Like other cable TV programmers, we must determine our position in this evolving landscape that involves linear cable, streaming, digital video, and FAST channels. This has been complex; for instance, back in 2019, investors favored radio over cable television. However, the pandemic changed that as cable did well with people staying at home and watching more TV, benefiting from two revenue streams. Radio offers more control since you own your distribution, while cable relies on third parties. Both sectors face digital disruption, which is why I value our diversification. I believe radio still has significant longevity as an advertising medium. Nonetheless, advertisers are eager to secure TV impressions. Historically, as broadcast networks saw their audiences shrink with the rise of cable, advertisers allocated higher budgets to maintain reach. Thus, having interests in both radio and television is crucial. The streaming sector also faces challenges, with firms like Netflix losing subscribers. Ultimately, we will see a mix of these distribution systems emerge as the new norm.

And just...

What's the current sub count for TV One right now?

Yes. You gave it for TV One and CLEO, didn't we?

Yes. I just gave you that. So I'll just go back in my notes. All right. So 46.8 million for TV One and 41.8 million Nielsen subs for CLEO.

It's fantastic that we launched CLEO about two and a half years ago, and it's now nearly matching the subscription count of TV One. CLEO operates as a free network, while TV One generates revenue through license fees. Our strategy with CLEO being free was to quickly increase its distribution and monetize it. I'm confident that it will maintain revenue above $100 million for the next four years because we've successfully developed another network at scale, which enables meaningful monetization. This success is driving higher ad revenue and helping us sustain EBITDA, even as Pay TV subscriptions decline.

Let me just follow up with a bit of color on the numbers. So Alfred said earlier, you can't extrapolate Q1 through the year. So you can't take the 45% ad revenue growth at TV One and just extrapolate that. But what we're seeing and what we're projecting, obviously, we're commanding higher rates, demand is strong. So we are seeing and projecting double-digit ad revenue increases for the rest of the year and indeed for the whole year. And then on the affiliate side, we were up marginally 1.9% in Q1. We're modeling moderate declines for the rest of the year. So you could think about the affiliate revenue as being maybe down low single digits. And so when you combine those, I think you're still going to hopefully see double-digit growth on the top line for TV One this year when you combine those lines.

All right, all right. Great. Another question that's regarding the MGM harbor stake. Where does that show up on the income statement because I don't see equity investment? That's not consolidated, I assume that EBITDA, whatever that may be, $15 million, is not in the consolidated EBITDA number.

Yes, it is. And it comes through as other income in the corporate line. You'll see that in the press release. You see it at the bottom of Page 3 as a reconciling item, but then you'll also see it in the corporate elimination segment under other income net, which is $1.9 million.

Right. So the current arrangement with MGM is still puttable. So what's your current thinking on that stake? Or you're happy with the status quo?

It's a good question. We believe that stake is currently valued at its full multiple of 7x, making it worth over $100 million. However, we generate only about $8 million in income from it annually. This means that we are only realizing value based on our trading multiple for that $8 million. We estimate that stake is worth twice what we currently value it at. For the time being, we plan to hold onto it this year, especially since we expect its EBITDA to grow, particularly with the introduction of sports betting in Maryland and the opening of their sportsbook. It’s important to note that there is additional value, over $50 million, that isn't currently reflected. The only way to truly secure value is to either monetize it to pay down debt or invest in cash flow with the residual value. As it stands, we have no immediate plans to act on it today, and the opportunity to put it has passed for this year, so we won't be able to do anything until the first quarter of next year.

Yes. Okay. Now that the leverage is down to 4x, your equity is just another couple of turns of leverage. What's your thinking on the cash generating from a business is looking pretty strong, probably in excess of $80 million going forward on free cash flow. What's your plan on that free cash? How do you want to expand it beyond the Casino chase?

Yes, I think I mentioned in the last conference call that we want to monitor developments with Richmond. We are exploring strategic M&A opportunities in the Radio sector, especially in markets where we are already present. We are exercising caution and being prudent. I'm pleased with our current leverage, but I would like to reduce it. Our goal is to position the company so we can continue creating value while also returning capital to shareholders. However, that requires careful balancing. If we win the casino, it would certainly be worth investing $100 million into that opportunity, which would generate significantly more value. We view M&A opportunities in a similar light. As the largest shareholder, I want to ensure the company’s leverage is low enough to facilitate returning capital. We announced a share buyback last quarter, but we haven't acted on it yet. The share price has moved independently, and we avoided buying when it was in the high $3s or $4 range, as it seemed undervalued then. Conversely, valuations are now compressing, making it uncertain how the market will ultimately value media cash flow, since we are involved in radio, cable, and digital. I aim to return capital to shareholders, whether through a combination of buybacks and dividends or one of those options alone. However, if we have to allocate $100 million, it will negatively impact our leverage profile. It would take us a year to reduce our leverage below 4 if we invest that amount into the Richmond Casino project.

Just a quick follow-up on that Richmond project. Your partner, P2E, just underwent a buyout with a new owner. Has anything changed with the new ownership?

Yes. Well, look, I'm glad you mentioned because I hadn't mentioned it. Yes, P2E got bought by Churchill Downs. I've spent a lot of time with the Churchill Downs CEO and his team. And while P2E was a great partner with us, they wanted to do this deal with us, and we were successful in winning the RFP. Churchill is just as excited, if not more excited, about partnering with us because I think that they would like to see the Class 3 happen in Richmond because that would be gravy for them, right? Because they agreed to buy it after we lost the referendum, right? And so we didn't get the referendum back on through the courts and stuff until after they had made the announcement. So that would be all gravy and upside. But they're a much bigger company with a much bigger balance sheet and a much bigger brand in the gaming and leisure space. And I think that will be helpful in a second referendum run in Richmond because it's a different partner, which I think has got more cache. I hope that matters. And the other thing is that they certainly have more economic resources. So should we need more capital for the Richmond project, they have indicated that they want to participate at a higher level. So that's all good. There's nothing bad about Churchill taking over to P2E. And no, the terms of the deal have not changed. But just like everything else, the cost of that build-out, I know for sure, has probably increased by 10% since we modeled it out last year. And it will be good to have a capital partner at the table that can help take up some of that.

Speakers, we currently have no one else in the queue.

Thank you very much, everybody. As always, we're available offline for additional questions, and we'll see you next quarter.

Ladies and gentlemen, that will conclude your conference call for today. Thank you for your participation and for using AT&T event teleconferencing. You may now disconnect.