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 3rd, 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.urban1.com. A replay of this conference call will be available from 12:00 p.m. Eastern time today until 11:59 p.m., November 6, 2022. Callers may access the replay by calling 866-207-1041, international callers may dial direct 402-970-0847. The replay access code is 1399699. Access to live audio and a replay of the conference will also be available on Urban One's corporate website at www.urban1.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 Liggins, Chief Executive Officer of Urban One, who is joined by Peter Thompson, Chief Financial Officer. Thank you.

Thank you very much, operator. Joining me are Jody Drewer, Chief Financial Officer for TV One; Christopher Simpson, General Counsel; and Karen Wishart, Chief Administrative Officer. Thank you for joining us. You have received our press release regarding our third quarter results. We are pleased with the quarter, achieving nearly 9% net revenue growth and an increase in adjusted EBITDA despite rising challenges. This is a solid performance. Moreover, our Q4 projections remain strong, especially compared to other reports from companies in our sector. Our radio business, particularly political advertising, is performing well heading into Q4. For political advertising in 2018, we anticipate double-digit revenue growth in the radio segment. Our digital segment continues to show very robust growth, carrying over from Q3 into Q4. Consequently, we will be updating our full-year guidance. Initially, we set our expectation at $145 million to $150 million, but we are likely to exceed the upper end of that range. With approximately two months remaining in the year, we feel confident that our full-year EBITDA will land in the mid-160s. Several factors will influence this in the fourth quarter, including bonus accruals, a true-up for TV One, and programming amortization. However, even accounting for these, we believe it is a safe estimate to be in the mid-160s. We had a strong upfront for TV One and CLEO, and our radio projections are outperforming many competitors. This success can be attributed to ongoing demand for our target audience and the shift towards greater diversity and inclusion in advertising. We have a long history of building a brand that serves the African-American community, and this brand recognition is proving beneficial during this period. Regarding the Richmond Casino, it has become a contentious issue. The upcoming general assembly session in January will determine if the casino opportunity remains in Richmond, where we are the selected developer, or moves to Petersburg, which is collaborating with the Cordish Companies, a runner-up in our process. The legislative landscape is complex, making it highly political. I do not have a clear answer about the outcome. My previous remarks on the casino opportunity have been cautious, and investors should view this as a potential positive, albeit speculative, since the decision hinges on politics rather than the optimal location for the casino resort. Nevertheless, we are committed to our business trajectory. We continue to reduce our debt and have been buying back bonds in the open market, which is advantageous for us. When we initiated this facility, we needed to pay 103 to redeem bonds before the first call date. Now, with most market bonds trading at a discount, this provides a great opportunity for us to deleverage since we have a substantial amount of cash available. Now, I will hand it over to Peter to discuss the numbers in more detail, after which we will return for Q&A.

Thank you, Alfred. So the third quarter was another strong quarter for us with both consolidated net revenue and adjusted EBITDA up year-over-year and also significantly above pre-pandemic levels. Consolidated adjusted EBITDA was $44.3 million for the quarter, up from $42.7 million in 2021 and up from $38.7 million in pre-pandemic 2019. Net revenue was up by 8.9% year-over-year for the quarter, approximately $121.4 million. Net revenue for the Radio segment increased by 4.8% year-over-year and on a same-station basis by 1.4%. According to Miller Kaplan, our local advertising sales were down 1.7% against a market that was down 2.1%. National ad sales were up 19.7% against the market that was up 0.8% and that was helped by our corporate sales effort and the continuing demand for our target audience. While we outperformed the spot markets, particularly in national sales, we like the market in the NTR category, as a result of disappointing performances on events in Atlanta and Raleigh and that also impacted margins overall of the Radio division. Midterm election spending started in Q3 in earnest, and we booked $2.7 million in net political ad revenue, of which $1.8 million was at radio compared to $711,000 last year. That meant that government and public was our biggest advertising category for the quarter, up 6.7%, and Healthcare was up 35.5%, Auto was up strongly 57.3% and telecommunications was up 14.5% year-over-year, while services, entertainment, retail, financial, food and beverage and travel and transportation were all down in the quarter. Fourth quarter revenue, radio division is currently pacing up approximately 26.5%, including political and about 10.9% excluding political. $5.6 million of net political ad revenue is on the books for the fourth quarter, bringing the annual total to approximately $9.5 million, which is above the $6.6 million net that we did in 2018. On a same station basis, fourth quarter is pacing up 0.1%, excluding political, with national pacing up 4.1% and local pacing down 2.8%. Net revenue for Reach Media was $10.1 million in the third quarter, up 1.3% over the prior year. Adjusted EBITDA was $3.7 million, up by 0.9% for the quarter. Fourth quarter ad sales are holding steady. However, we don't have a cruise event in the fourth quarter this year, and that event generated approximately $7 million in revenue and $400,000 in profit for the fourth quarter last year, which is not returning this year, but we will have a cruise in 2023. Net revenues for our Digital segment increased by 40.1% to $21 million. The direct sales team continued to build on the momentum that began in the first half of '22. The sharp revenue growth was really a result of the continued demand from advertisers to spend with black-owned and certified diversity publishers, also mid-term political revenue, as well as brands remaining committed to drive deeper engagement and reach with black audiences. Adjusted EBITDA increased for the quarter by $2.2 million, up 40.7%. Demand continues to be strong, and fourth quarter digital revenue is expected to exceed our Q3 number. We recognized approximately $50.8 million of revenue from our cable television segment during the quarter, an increase of 4%. Cable TV advertising revenue was up 16.7% with a favorable rate volume impact of $3.4 million, driven by higher average unit rates, $0.4 million of free video on demand, $1 million increase for CLEO TV, and then there was $1.3 million unfavorable or deficiency unit burn-off. Cable TV affiliate revenue was down by 7.6%, with favorable rate increases of $1.2 million, offset by $2.2 million of net churn and $1 million of increased loan support. Cable subscribers for TV One as measured by Nielsen finished the third quarter at $43.6 million compared to $45 million at the end of Q2 and CLEO TV at $41.3 million Nielsen subscribers. We recorded approximately $2.1 million of cost method income for our investment in the MGM National Harbor property for the quarter, the same as last year. Operating expenses excluding depreciation, amortization impairments and stock-based compensation increased to approximately $80.5 million in Q3 compared to $74.6 million in Q3 of 2021. Employee compensation increased by approximately $1.9 million. Revenue variable expenses increased by $2.4 million. Travel, entertainment and office expenses increased by $525,000 and outside services, including contract talent and consulting fees increased by $1.2 million. Marketing promotional and event spending increased by $3.3 million. However, our corporate development cost decreased by $2.1 million and Cable TV content amortization decreased by $1.1 million. About $1 million of increased expense for the Indianapolis Radio acquisition is included in these totals. Radio operating expenses were up 9%. The Indianapolis cluster added $1 million of that increase. Event expenses were up in Cleveland and Raleigh, expenses relating to the revenue increase such as sales, commissions and bonuses were up as well and there were some increases in outside services and employee compensation and benefits. Reach operating expenses were up by 2%, talent costs drove the increase, but expenses remained mostly flat otherwise at Reach. Operating expenses in the Digital segment were up 39.7%, driven predominantly by variable expenses related to traffic acquisition, sales and integrated marketing. Cable TV expenses were up 4.8% year-over-year, content amortization expense was down $1.1 million, while employee compensation benefits were up by $855,000. And sales and marketing spend was up by $1.4 million. Operating expenses in the Corporate/elimination segment were down by $1.5 million due to a $2.1 million decrease in corporate development costs relating to the Richmond Casino venture last year. Employee compensation and recruiting fees increased slightly. For the third quarter, consolidated broadcast and digital operating income was approximately $50.8 million, an increase of 3.5%. During the quarter, the company repurchased $25 million of its 2028 notes at an average price of approximately 91.1% par, resulting in a net gain on retirement of debt of approximately $1.8 million. An additional $18.271 million of the 28 notes were repurchased in the fourth quarter at an average price of approximately 85.75%, bringing total gross debt to a balance of $756.7 million, down from $825 million at the start of the year. Interest expense decreased to approximately $15.3 million for the third quarter. The company made cash interest payments of approximately $29.9 million in the quarter, including the accrued interest on the retired notes. Next, semiannual debt service payment is due in Q1 '23. A non-cash impairment charge of $14.5 million was recorded for our Atlanta, Charlotte, Dallas, Houston, Philadelphia, Raleigh, and Richmond radio market broadcasting licenses. And that was really triggered by the overall market performance in these markets rather than our specific Radio One performance. The provision for income taxes was approximately $3.4 million for the quarter and the company paid cash tax income taxes in the amount of $247,000. Net income was approximately $4.2 million or $0.09 per share compared to $13.9 million or $0.27 per share for the third quarter of 2021. Capital expenditures were approximately $1.4 million. The company repurchased shares of Class D common stock in the amount of $439,000 and executed a stock vest tax repurchase of 325,872 shares of Class D common stock in the amount of $1.4 million. As of September 30, 2022, total gross debt was $775 million. Our ending unrestricted cash balance was $105.1 million, resulting in net debt of approximately $669.9 million, which we compare to $166.3 million of LTM reported adjusted EBITDA for a total net leverage ratio of 4.03x and pro forma for the Indianapolis acquisition, total net leverage was 3.9x. And with that, I'll hand back to Alfred.

Thank you, Peter. Operator, could you open the lines up for questions?

Our first question comes from Ben Briggs with StoneX Financial Inc.

Yes. So congrats on the quarter, looks like a great quarter. Congrats on the buybacks. I just want to make sure I heard you guys right, you bought back another $19 million of debt in the fourth quarter so far, you said?

Yes, $18.7 million, call it, Ben.

Okay. Perfect. Thank you. Are there plans to continue this? Is there additional authorization that you need to do any more buybacks? How are you thinking about that going forward?

We actually have an $18.7 million amount, which is an unusual figure, and we also received an additional $25 million authorization. This leaves us with nearly a $7 million balance. We are looking to seize opportunities, and I believe that reducing debt is beneficial. Therefore, you will continue to see us take advantage of such opportunities. Are you there?

Yes, I'm sorry, I cut out for just a second, cut off for just a second. So I heard...

Go ahead. There's about $7 million remaining from the last $25 million authorization. We'll get through that, and then we'll evaluate where we stand. Clearly, we want to assess the economic situation, and paying down debt is beneficial, so we will continue to be cautious with our cash utilization.

Hey, Ben, sorry, I missed it. It was $18.7 million, so I'll say $7 million is close to the mark.

18.7, okay. So you've got about, call it $8 million of authorization left?

Yes.

What is the process of getting authorization to buy back more look like? Is it a quick enough process that allows you to be opportunistic if there's an aftermarket that makes sense?

It's super quick. We just do basically reach out and communicate with our Board, and they respond. Generally, getting the Board to approve paying down debt is not that difficult.

Right, right, right. It certainly seems that way from your history of buying back debt.

Yes.

Okay. Moving on from the debt for a second. So what is the current formula for putting back the MGM Grand National Harbor investment to MGM? What does that look like now and how much is it worth theoretically?

Yes, it's 7 times their EBITDAR. There’s a minor adjustment to their EBITDAR according to our definition, which amounts to several million dollars on the EBITDA figure, but it's not a major concern. However, it's important to note that it's valued at over $100 million. Last year, their EBITDAR was around $236 million. There is no threat concerning how they report their revenues, and they have been steadily gaining market share in Maryland this year, with projected gaming revenue exceeding $800 million. Therefore, I anticipate that their EBITDAR will increase from last year. We have a timeframe in the first quarter of each year to apply our interest at 7 times the previous year’s reported adjusted EBITDAR. We will evaluate the situation and make a decision, but it's valued at over $100 million.

Okay. Got it. Got it. So it's a window in the first quarter you're saying? It's not something you do nor at any time? Okay.

Yes, it's not anytime you want.

Okay, I understand. So in this first quarter, when you see their annual results, there will be internal discussions and that will be the time for your decision? Are you leaning one way?

We haven't thought about that. We're currently holding cash and our intention is to pay down debt using the cash on our balance sheet. The question is what to do with that cash if we don't use it to pay down more debt. Are we considering an investment instead? We haven't made a decision yet, but there's no urgent need to monetize it right now, especially since EBITDAR has been increasing.

Okay. Okay. That's helpful. And then kind of moving on, it was good to hear that the radio pacings seem like they're well up, I think you said in the fourth quarter, they're pacing up 26%, if you're inclusive of political. It sounds like you lost a few subs though at the TV One network, you're down to 33.6%, you said versus 45%. Do you have any clarity sort of mid fourth quarter right now where that sub number stands? And does it continue to bleed subs or has it stabilized?

Yes, I mean, look, I wouldn't want to give a mid-quarter estimate of what we think churn is going to be. I mean...

November Nielsen numbers came out and we actually gained over 200,000 subs.

Yes.

Oh, okay. Great.

The current discussion in the media revolves around the future of the Pay TV ecosystem. It's uncertain whether it is stabilizing or growing, but this is a significant topic. We are optimistic about our TV business due to the successful launch of our new service, CLEO TV, and the renewal of many affiliate agreements. Advertisers still show a strong interest in video programming and advertising, although we are noticing a decline in ad demand within our TV sector. Other companies, like Paramount and NBCU, have reported similar trends. However, we believe our focus on our target demographic and commitment to diversity will minimize our impact from these changes. It's important to acknowledge that we are facing a macroeconomic challenge affecting television advertising overall.

Operator, next question?

Our next question comes from Aaron Watts with Deutsche Bank.

Maybe a follow-up on that last answer. Just curious what you're hearing or seeing within the radio business in terms of any advertiser reactions or concerns related to the macro headwinds to close out this year, roll into '23. It sounds like you're feeling a little bit of it on the TV side, Alfred, maybe just a little more on the radio side, what you're seeing out there?

Yes, we are definitely noticing a slowdown in national radio. However, we are managing to offset that with our large and strong corporate sales team, which is actively addressing the ad demand in our industry. Therefore, we are performing significantly better on a national level compared to our competitors. So, what does this mean for next year? I've outlined what we expect in the fourth quarter, and I believe our performance in radio will be significantly better than others. As for next year, we are currently reviewing budgets, so I don't have a definitive answer yet. If I had to speculate, I think we have some solid plans that will continue to support us, such as our Indianapolis acquisition, which I believe will be beneficial for us in the radio sector. We are already identifying ways to control costs, including reducing our real estate footprint as some leases expire. We expect to have an excellent year, although I don't anticipate matching this year's performance next year. However, I was also surprised by how well we performed this year, so I can't accurately predict how a recession might affect us at this moment. That said, I believe our impact will be less severe than for others. Additionally, we didn't hold the Tom Joyner cruise this year, but it's set for next year and is already 80% sold out. We will soon announce our talent lineup, which is significant and should help us sell out the rest before the year ends. This is the first time I'm entering a recession without concern about its effects on our company, largely due to the stability of our leverage and our positive outlook.

Yes, I was going to say it must be nice sitting in that position. I know you've gone through the ups and downs a couple of times before and it seems like you are in a better position this time around for sure. Do you think, Alfred, that for maybe some of your peers that aren't as well positioned this time going in. There's some additional nervousness and stress on their part that there could be some opportunity for you with regards to maybe investments or M&A where you could take advantage of that to grow your platform further?

Yes, I believe that could happen. We have been very disciplined in our purchasing. Currently, the challenge is that while it might not be a problem for buyers, it's a good situation for sellers. Multiples have decreased significantly, especially in the media sector, where even large diversified media companies are seeing declines on a quarterly basis. Many radio assets were trading in the low fives to six times earnings. Therefore, it is essential to find a seller willing to negotiate reasonably in this current multiple valuation environment. Likewise, we need to justify any acquisition in terms of the prevailing multiples because that’s where we’re trading now. This creates a historical challenge in the bid-ask dynamics between buyers and sellers. Whether there can be a convergence of interests to facilitate a deal is uncertain, but we remain open to possibilities. If we cannot reach that point, we are content to focus on reducing debt and expanding our existing operations, although we will continue to explore potential opportunities in the market. That's our perspective.

And we do have a follow-up from Ben Briggs with StoneX Financial Inc.

I have a quick follow-up. I've noticed that the first three quarters of the year were very strong. Your guidance for 2022 is $145 million to $150 million. At the high end, $150 million would suggest only $16 million of EBITDA in the fourth quarter, which obviously seems incorrect.

You must have missed the first 5 minutes of the call. We updated guidance to mid-160s for this year.

Okay. I did miss the first 5 minutes of the call, so that's exactly what it is.

That was in the introduction that I gave. So sorry that I haven't read it, but...

And when you think about and you look at it and you're modeling it out, you should expect the fourth quarter to look quite like fourth quarter last year overall, right? So sequentially, it's going to be down on Q2 and Q3 for various good reasons, which hopefully kind of went into in the first 5 minutes, but yes, that would bring you out mid-160s.

And we figured that we needed to update guidance because somebody is going to do the math that you just did, what you guys talked about.

And we have a question from Bradd Kern with Atalaya.

What I wanted to ask is how sustainable you think the updated guidance is. How much of the uplift do you think is from political factors? Can we consider that as a sort of stable base, or how much regression do you expect in the following year?

Yes, the total political advertising across our platform is around $12 billion, with about $10 million of that from Radio. Next year, we can expect a substantial decline in that figure, though it won't disappear entirely. We also face the challenge of a potential recession, but our Indianapolis acquisition will help. The digital advertising category remains strong; in fact, I recently spoke with the Chief Investment Officer from one of the top three advertising holding companies, and they are still forecasting revenue growth for digital advertising next year, even as they project a decline for traditional advertising. Our digital platform is quite robust. Therefore, I wouldn't consider the mid-160s as a reliable baseline since removing political advertising and accounting for a recession would likely result in a downturn. However, the Indianapolis acquisition is expected to make a significant contribution to our EBITDA next year, likely adding an extra $4 million to $5 million. We also have other opportunities, like the Tom Joyner cruise, which could contribute nearly a couple million dollars to EBITDA. We're currently navigating through these factors. It's worth noting that TV companies typically experience fluctuations in revenue every other year based on political ad demand. Internally, we are beginning to view our business in a similar way, as it has now resulted in double-digit revenue changes for us.

That's real helpful.

In 2020, we do almost $20 million of political?

Yes, it was 18 unchanged.

Yes, it's a real number. We don't expect that next year, so don't be surprised if our EBITDA next year is lower than this year's. I'm not planning to budget for it to remain flat, but I have someone looking at me, questioning what I said.

Okay. So within Digital, let's focus on the growth potential. What kind of growth can we expect to be sustainable there? Is it related to website advertising or an app, and what does that entail?

We focus on our digital business, which is mainly display and increasingly video. I believe our revenue from digital video is currently around 25%. Audio streaming is another growing area within our digital segment. There has been a significant surge in demand for digital services. Back in 2019, this segment accounted for around low to mid-30s in revenue, but this year, we expect it to rise to nearly 80%.

Well, do you think you're gaining market share from more people listening, or are they transitioning from radio to platforms like Spotify and yours?

There is increased demand, and first, the amount of money we are generating is minimal compared to the entire digital revenue ecosystem, which includes major players like Meta, Google, and Spotify. There isn't a way to accurately measure our share in the digital space, and even if there were, it might not show significant results. However, I can share that national advertisers are investing more in digital and recognizing the value of targeted digital media and diverse-owned platforms. As their interest in diverse audiences has grown, we have been promoting our urban digital message since we started Interactive One in 2008. Brand building has benefited us, and we now have the largest urban or African-American targeted digital audience, according to Comscore, among all competitors.

That creates my next question, I'm sorry.

So that's what's happening.

Okay. That's a great lead into my next question about the diversity and inclusion initiatives. Can you explain what the commitments from advertisers entail? Are they set on a yearly basis? Have they allocated a specific dollar amount? How much insight do you have into these commitments? Additionally, can you clarify for the advertisers whether the economics are similar to a typical pop station or different? How are the advertisers approaching this? Is it essentially the same, better, or viewed as a marketing expense regarding the diversity and equity inclusion initiatives? Those are my two questions on that topic.

The conversation revolves around the commitments made by companies like Procter & Gamble, McDonald's, and General Motors to increase their spending with black-owned media from 2% to 4% over the next two years. While precise numbers aren't available, these companies have made multi-year spending commitments, although they haven’t finalized any contracts yet. There are discussions related to multi-year contracts currently underway. It’s evident that ad rates have increased due to rising demand. However, our rates remain low compared to what advertisers have historically paid for general market audiences. Therefore, companies are not paying excessively more to reach our specific audience at Urban One. Some diverse-owned platforms are now receiving funding, though they may not have substantial audiences, which might inflate their CPMs. In contrast, Urban One has always maintained a significant audience and even with a potential 40% rate increase, our costs will still be less than those of Warner Discovery networks.

And we have a question from George Michaels with Barclays.

First of all, I want to congratulate you guys on another great quarter. Just quickly, is there any thought to doing any additional equity buybacks? Or can you talk about that?

We've been discussing it and our focus has been on bonds. Internally, we haven't made a final decision yet. We used to have over 100 million shares outstanding, and now we have 48 million. We like to seize opportunities, and overall, we've been successful in doing so. Our last significant buyback was about a quarter ago when we repurchased approximately 4.5 million shares at an average price in the low 5s. However, the stock did decline shortly after that, which wasn’t ideal, but we feel positive about the company's direction. The option to buy back that many shares in a single transaction was a great opportunity. The stock doesn’t have high trading volume, so even when the price is low, there's a limit to how much we can purchase. We're currently evaluating our options and want to finalize our budgets before proceeding. If a chance to acquire a substantial block arises, we would consider it since such opportunities are rare. On another note, we’ve observed an upward trend in our EBITDA and a decrease in debt, yet the stock has remained stable. This is likely due to compression in multiples. Presently, with the stock trading at approximately low 5s, not factoring in MGM's value, I believe this should serve as a floor for our business. Comparing it to the lower end of the cable sector, such as AMC at around 5x, and given our superior position compared to newspapers and radio companies trading higher, our valuation at low 5x EBITDA seems like a sound entry point. Therefore, if you were to buy back stock while simultaneously paying down debt, it would likely be a favorable move. That said, as we are reviewing our budget for the upcoming year, I’m unsure of our exact position. We are long-term shareholders, with the family being the largest shareholder, and we typically prefer to increase our ownership over time. However, we want to approach this carefully. We’ve seen how investors can get caught up and buy at high prices only to face significant valuation corrections, leading to losses. We want to avoid that scenario. I don't perceive much risk at our current valuation level.

And there are no further questions.

Thank you, operator. Thank you, everyone. We'll talk to you offline if you have any additional questions and we'll see you next quarter.

Thank you. Ladies and gentlemen, that does conclude your conference for today. Thank you for your participation and for using AT&T Event Conferencing Service. You may now disconnect.