Urban One, Inc. Class A Common Stock 2026 Q2 Earnings Call

Also joining us as usual is Jodi Drew, our Chief Financial Officer at TV One, Chris Simpson, our General Counsel, and Karen Wishart, our Chief Administrative Officer. As you've seen in the press release and the results that have come out, we have seen sequential improvements over Q1, but still, we are in a rate of decline, less decline than Q1, however, still a tough first half of the year. We are expecting things to pick up as we move into Q3, as political starts to become more and more of a factor in our numbers. Even though it's an unknown, we're hopeful because of competitive races in Ohio, Texas, Georgia, North Carolina, and Indiana. During the quarter, we have continued to reduce our leverage with market repurchases of our debt.

We spent about $23.5 million purchasing our 2031 Second Lien Notes at an average price of approximately $0.42 on the dollar. That's about a $60.2 million long-term debt reduction and an annual interest savings of $4.6 million. Because of the weak first half of the year, we have decided to adjust our guidance, down from 60 to the mid-50s, even though we still don't know exactly where political's going to come out. Also, we closed on our Dallas acquisition. I believe that was it August 17th?

Yeah. That's off to a good start, and that's going to contribute significantly to the last five and a half months.

There's potential upside there, still, out of an abundance of caution and trying to be more accurately elected to bring the guide down. That could change, but at this point in time, we're saying mid-50s. I'm going to turn it over to Peter to go into the details of the numbers, then we can open it up for Q&A.

Peter? Thanks, Alfred. Consolidated net revenues for the three months ended June 30th, 2026 was approximately $85.8 million, which was 6.4% decrease year-over-year.

Net revenue for the radio broadcasting segment was $35.3 million, a decrease of 3.9% year-over-year. Excluding political, net revenue for radio was down 6.6% year-over-year. According to Miller Kaplan, our local ad sales were down 10.1% against a market that was down 7.8%. Our national advertising sales were down 1.5% against a market that was down 4.6%. We outperformed on national and underperformed a little on local. Our largest ad category was services, which was down approximately 0.7%, primarily due to legal services. Government public category was up 14.5% as a result of political spending. The telecommunications category was up 16.9%. All the other major categories were down in the quarter.

Net revenue for Reach Media was $4.8 million in the same quarter, decline of 10.6% from the prior year. Adjusted EBITDA on Reach was a loss of $1 million. We just continue to see declines in net revenue available for us to participate in. Net revenue for digital segments down 8.4% at $9.4 million. Decrease was driven by the decrease in national direct revenue streams as a result of reductions in DEI-focused spending, a lot of client spending in general due to macroeconomic concerns. We recognized approximately $37.1 million of revenue from our Cable Television segment during the quarter, decrease of 7.4%. Cable television advertising sales were down 9.6%, with strong competition from the NBA playoffs, that contributed to prime delivery declines of 21% year-over-year for persons 25-54.

This, along with a continued weak scatter market, led to more commercial units continuing to be allocated to direct response at lower average unit rates. Cable television affiliate revenue was down by 4.5%, driven by subscriber churn as linear cable continues to decline, and that was partially offset by an increase in subscriber rates. Traditional linear cable TV subscribers at TV One, as measured by Nielsen, finished Q2 at 27.3 million, compared to 34.3 million at the end of Q2 2025. Inclusive of virtual subscribers, TV One finished with 30.5 million Nielsen subscribers, compared to 35.4 million in the second quarter of 2025. Decline obviously being driven by linear churn. CLEO TV had 27.2 million traditional linear Nielsen subs and 31.1 million inclusive of virtual subscribers.

Through the first four weeks of Q3 2026, TV One is up by 4% in prime persons 25 to 54 delivery compared to Q2 2026, and only down 3% compared to Q3 2025. Operating expenses, excluding depreciation, amortization, stock-based compensation, and impairment charges, were approximately $75 million for the three months, compared to approximately $78.1 million for the comparable period in 2025. This decrease was mainly driven by sales and marketing expense decreases in the operating segments. Radio expenses were down by 1.6%, or half a million dollars, driven primarily by lower revenue and lower bad debt reserves, lower expenses connected to revenue, sales commission, et cetera. Reach operating expenses were down 17%, or $1.2 million, primarily due to lower bad debt reserves. Operating expenses in the digital segment were down 8.7%, driven by a decrease in traffic acquisition costs, commissions, head count savings, and bad debt reserves.

Operating expenses in the cable television segment were up 4.1%, driven by a combination of programming expenses and accounted for new executive agreements at TV One. Operating expenses in corporate, down by approximately 16.7%, driven by lower professional service fees and other compensation-related costs. Consolidated adjusted EBITDA was $11.7 million, down 16%. Consolidated broadcast and digital operating income was approximately $22.2 million, a decrease of 13.7% year-over-year. Interest expense in the P&L was down to approximately $2.1 million, down from $9.7 million last year. It's reflecting the debt repurchase accounting and lower effective interest rates under the troubled debt restructuring rules. We made cash interest payments of approximately $5 million during the quarter.

The semiannual cash interest payment for the 2030 and 2031 notes was made on April 1st, the next payment is due on October the 1st for the full 180 days of accrued interest, which is approximately $12.1 million. During the three months ended June 30th, we repurchased approximately $23.5 million of our 2031 second lien notes at a weighted average price of 42% of par. Debt repurchase of the 2031 second lien notes in the second quarter reduced the outstanding long-term debt balance to $303.2 million. Year to date, that's a total reduction in long-term debt of $60.2 million, an annualized interest saving of $4.6 million. Under the troubled debt restructure account, the long-term debt on the balance sheet includes a premium which amortizes over the remaining term, we've separated that out in the press release you can see what that is.