Alfred Liggins - Chief Executive Officer Peter Thompson - Chief Financial Officer

Aaron Watts - Deutsche Bank Adam Jacobson - Radio & Television

Ladies and gentlemen, thank you for standing by. I have been asked to begin this call with a following Safe Harbor statement. During this conference call, Radio One will be sharing with you certain projections or other forward-looking statements regarding future events or its future performance. Radio 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 4, 2017. Please note that Radio One disclaims any duty to update any forward-looking statements made in the presentation. In this call, Radio 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.radio-one.com. A replay of the conference will be available from 12 p.m. Eastern Time May 4, 2017 until 11:59 p.m. May 6, 2017. Callers may access the replay by calling USA 1-800-475-6701. International callers may dial direct at 320-365-3844. The replay access code is 422406. Access to live audio and a replay of the conference call will also be available on Radio One’s corporate website at www.radio-one.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 maybe relied upon. I will now turn the conference over to Alfred C. Liggins, Chief Executive Officer of Radio One, who is joined by Peter D. Thompson, Chief Financial Officer. Mr. Liggins?

Thank you, operator and welcome to our Q1 conference call everyone. I am joined by Peter, our CFO as the operator also pointed out, but also we have on hand again Jody Drewer, he is the TV One CFO as we hit any more detailed questions during Q&A on TV One’s progress. As the press release stated and as we have guided before verbally and also at investor conference about the NAV. Q1 is a tough quarter to say the least mostly driven by Radio and Reach and tough political comps. We are still as a management team very committed to producing 2017 EBITDA growth. We are going to discuss kind of the roadmap of how we think we get there. I will go into that in more detail after Peter gives more details on the numbers. So, with that, Peter.

Thank you, Alfred. So, net revenue was down 7.1% for the quarter ended March 31, 2017 at approximately $101.3 million. Breakout revenue by source can be found on Page 5 of the press release and a breakout by segment can be found on Page 8. The radio station cost us the most significant declines, was Cincinnati, Cleveland, Dallas, Detroit, Houston and Philadelphia. Our Atlanta, Indianapolis, Richmond and St. Louis clusters showed positive revenue growth in Q1. The first quarter local revenue was down 5.9% and national revenue was down 8.7% for our radio stations. Political revenue was approximately $276,000 compared to approximately $1.7 million last year. For the radio stations, sales were down in all categories. In order of volume, telecommunications category was down 6.3%, retail was down 1.1%, services were down 2.1%, entertainment was down 3.2%, automotive category was down 13.4%, healthcare was down 9.3%, and government and public was down 24.6%. Financial was down 6.9%; food and beverage, down 1.4%; travel and transportation, down 1.9%. Declines really manifested themselves as a result of lower average unit rates which were down approximately 4.3% overall and the total spot markets in which we operate were down 3.3%. Radio ratings were relatively flat in the person’s 12 plus demo for the first quarter. Baltimore, Charlotte, Cincinnati, Columbus and Raleigh showed 12 plus ratings point growth in the quarter. For the Q2, our radio stations are currently pacing down at similar percentage amounts in Q1. For Reach Media, the Tom Joyner Fantastic Voyage cruise took place in April, performed well. So, for the same quarter that will offset the declines in spot advertising businesses each. Net revenue for Reach Media first quarter was down by 26.7% due to weaker demand and lower unit rates. Part of the decline relates to the timing of ad spends from two large clients, Wal-Mart and CarMax, both had significant campaigns in Q1 2016 did not recur in Q1 2017 although Walmart spend will normalize over the rest of 2017. Net revenues for our digital segment decreased 15% in Q1 due to lower direct and indirect sales of iONE as well as lower digital sales from our radio properties. We recognized approximately $48.6 million of revenue from our cable television segment during the quarter compared to approximately $49.5 million for the same period in 2016, a decrease of 1.9%. Cable TV advertising revenue was down 3.7% driven by a shortfall in delivery for the Image Awards and Game of Dating shows. Cable TV affiliate sales were down 0.3%. The affiliate rate increase was offset by an increase in volume discounts at consolidated MVPDs. Cable subscribers as measured by Nielsen finished Q1 at $59.3 million, down slightly from $59.5 million at the end of December. We approximately $1.5 million of cost method income for our investment in the MGM National Harbor Casino which is equal to 1% of the net gamming revenue reported to the State of Maryland. Operating expenses excluding depreciation, amortization and stock based compensation decreased by 5.5% to approximately $76.4 million in Q1. Radio expenses were down 4% due to lower music royalty expense and lower revenue variable costs. Reach expenses were down 6.2% due to the lower talent costs and lower bonus and commission expenses. Operating expenses in the digital segment were up 6.6% driven by investments in our digital sales and products. Cable TV expenses were down 5.5% year-over-year primarily due to the lower content amortization costs and has helped TV One grow adjusted EBITDA by 4.3% for the quarter. For the first quarter consolidated broadcast and internet operating income was approximately $34.9 million, down from $39.6 million in 2016. Consolidated adjusted EBITDA was $27.2 million decreased approximately 9.7% year-to-year. With Radio, Reach and digital EBITDA down, the cable TV and corporate adjusted EBITDA up year-over-year. Interest expense was approximately $20.3 million for the first quarter compared to approximately $20.6 million in the same period in 2016 and the company made cash interest payments of approximately $19.9 million in the quarter. Net loss was approximately $2.3 million or $0.05 per share compared to net loss of approximately $2.9 million or $0.08 per share for the first quarter of 2016. For the first quarter capital expenditures were approximately $1.5 million compared to $.1.2 million in the first quarter of 2016. The company paid cash taxes of approximately $167,000 in the quarter and the company repurchased 317,103 shares of Class D common stock to satisfy employee tax obligations in connection with the 2009 stock plan and the amount of $915,000. As of March 31, 2017, Radio One had total debt net of cash and restricted cash balances and original issue discount of approximately $965.8 million. For bank covenant purposes pro forma LTM bank EBITDA was approximately $129.5 million and net debt was approximately $981.7 million with total leverage ratio of 7.58x and the net senior leverage ratio of 5.06x. We entered into an agreement to purchase two stations from Red Zebra at a cost of $2 million; one FM in the Washington DC market and AM in the Richmond market which will strengthen each of those clusters. Pending closing, we began operating these stations under LMAs as of May 1. On April 18, the company completed a refinancing of its $350 million term loan. The new term loan has a 6-year term and is priced at L plus 400 with a 1% floor 99 OID. On April 28, the company acquired certain assets from Moguldom, namely the brands and online operations of Bossip, Madame Noire and Hip-Hop Wired for an initial consideration of $5 million. We put out $5 million in potential earn-out payments over the next 4 years depending on performance. This acquisition will strengthen our online business and will be immediately accretive and de-leveraging with approximately $3 million of trailing EBITDA. On May 3, the company completed the sale of 14 FM towers to American Tower Corporation. Gross proceeds of $25 million less transfer taxes and fees were received and yielded $24.5 million and the initial annualized EBITDA impact is approximately $1.75 million of leasing those towers back. And with that I will hand back to Alfred.

Thank you. So we expect a softer ad environment 2017 particularly in radio of non-political year seems like the economy is slowing down a bit. So we are focused on cost containment and also in revenue a prudent improvement at our under-developed assets in radio in Detroit, Philadelphia. Our acquisition in Washington is about simulcasting one of our largest radio stations to cover part of the market that we don’t have the signal coverage that we don’t have as good signal coverage and we think that, that’s going to help bolster our position there. Richmond, Virginia is the small sports AM tack on there, but that should yield positive accretive EBITDA off of that. So, little things on the margin that we can do in the radio division to actually improve underdeveloped assets, but mainly cost containment is the name of the game for Radio and Reach. Reach shouldn’t – it’s going to be down year-over-year, but it won’t be a disaster probably down a couple of million bucks from 9ish to 7ish in terms of EBITDA in 2017. 2017 for TV One as a guide last year we did about $76 million of EBITDA. We expect that to come in a range of $82 million to $84 million of EBITDA this year and GM is going to produce at least $6 million of additional EBITDA for us. So, those two growth engines hopefully will offset whatever is happening in Radio. iONE is historically about a breakeven proposition division for us. We are making additional video investments to try to grow that audience and grow the revenue with higher CPM digital video advertising, but this acquisition of the Bossip and Madame Noire brands. We think and we hope we believe is a game changer for us. It’s going to add about approximately $3 million of trailing EBITDA essentially were taken their revenue base from 2016 of about $8ish million of revenue and lumping it on to our platform there. And it’s going to produce approximately $3 million of trailing EBITDA. It also gives us more scale. They are a direct competitor. Madame Noire is the black women’s site. Bossip is essentially a black celebrity in the entertainment and gossip side. That’s the iONE scale. We are in the roughly $20 million comScore unique visitors. Bossip and Madame Noire add about $6 million of that $20 million. We think that this is an inflection point for that division that would put it solidly in the black. And so as we carefully follow the roadmap that I just laid out for you, the management team here is committed to producing EBITDA growth this year in the top here and that’s really what we are focused on blocking and tackling and in playing out that hand. So, you have got some new information. You got a TV One guide for this year kind of a plan for iONE. I think the tough news on radio is not anything that folks haven’t heard from us before. Managing that carefully will be the primary focus and moving towards again 2017 EBITDA growth. So with that operator, I would like to open it up for Q&A from the callers on the line.

[Operator Instructions] And our first question comes from the line of Aaron Watts of Deutsche Bank.

Hey, guys. Thanks for taking the question. Let me start with the ad environment that you are talking about, Alfred, any sense from your advertising clients on some of the drivers of the softness right now. Are they sitting on their hands keeping their money in their pocket or are those budgets being allocated to other medium besides radio?

That’s a good question. I don’t know the answer to that. I think that I would say about a year ago, there was a lot of chatter about video dollars moving out of cable TV and the digital video. And I think that the end analysis on that was that, that wasn’t happening at a drastic level. I mean, digital was largely about Facebook and Google, right. Digital publishers themselves are also having a tough time. I think the ad environment right now is about a softer economy. Our sales were down, big driver obviously for ad dollars. I am preparing for our earnings release reading the comments from other media companies and I think the theme is similar, whether it’s coming from outdoor or cable TV, certainly radio that you are seeing softer environment. I guess the GDP numbers for Q1 are becoming soft. We have been going at a steady cliff now for 8 years or so and maybe it’s time for a breather. So, yes, I haven’t spent enough time with advertisers to give you a really detailed assessment, if there is ad share shift, but I definitely feel that we have just got a softer economic backdrop right now.

Just a quick follow-on, the auto, I think you said down 13.5% in the quarter, how much of that was like was – maybe one big client or was that kind of across the board and kind of what percent of revenues is auto for you now in radio?

Yes. So, overall it’s about the Q1 was – the whole category for was $4.3 million. So it’s less than 10%. And then within that, obviously auto dealers is the biggest part of that, that’s about $3.7 million and that was down 13%. And I would say that, that’s probably across the board. I mean, it tends to be local dealerships more than one big client driving that. So that said, it’s not a huge category it’s not nearly as bigger category for us. It’s some others, but that’s the size of it for us.

Okay. And then within the markets, I think you mentioned that you had underperformed a little bit in terms of unit rate, but as you think about the competitive dynamics now, anything standout to you, any bad actor is pushing on pricing or otherwise and what do you think you need to do to get parity with at least market performance?

Look that’s bad actors, I mean the larger companies in the space, radio space definitely are pricing for share. So the bigger you are, the more inventory you have. The better you are able to do that and it hurts smaller players like us. I think the way that we are going to bring – get to parity with the market is probably more focused on improving our under-developed assets, because we are not all of a sudden going to become large and have some sort of pricing parity or scale parity with CBS, Entercom or iHeart or even Cumulus. So when you spend a lot of time focused on those assets where we think we can improve. We also need to look at whether even though its small potatoes, the Red Zebra deal, will be additive and accretive. I think where we can make deals like that that are low hanging fruits to improve our positions and make them accretive, we need to be focused on that. I said at the NAB that the industry probably needs another round of consolidation to try to stabilize pricing pressures. And I think the balance sheets of the overleveraged companies need to be fixed as you are not really kind of going to free fall frenzy for ad dollars. We are willing to participate in consolidation. Whether it’s a rationalization of market, be it divestiture or acquisition, it’s something that needs to happen. I think at this point in time it’s kind of like the airline industry, capacity needs to be shrunk, the actors need to be healthy. Right now we are moving in a healthy direction, but we are moving in that direction, the diversification. But that doesn’t fix the radio business. So we need to keep and open up our mind and be a participant in that some way. But in the meantime, it’s really going to be about improving underperforming assets, because I don’t see our pricing disadvantage, our scale disadvantage going away anytime soon.

Alright, that’s helpful color. If I could squeeze just one last one, I am shifting over to the TV side, you mentioned the fitness in the younger end demographic, any sense of what driver was of that, is that younger demographic leaving the platform or what else?

So, our big acquisition that was driving, you guys have heard this was Martin. And Martin is based – it’s a younger set time and had better 18 to 49 demographic make-ups, then the acquisitions that we replaced it with what’s your declines in Stanford and so on. We are teeing up another acquisition that was attractively priced that we think is going to help us. We can’t talk about it right this second, but that particular piece of content is – while it’s not what I would call contemporary, it’s certainly younger being Good Times and Stanford, which is not an easy hurdle to cross, right. But the fact of the matter is Good Times and Stanford they are doing good 25 to 54 numbers. It is not doing good 18 to 49 numbers. So, that’s what drove it, but it’s the difference in those two things and we have got something that we think will help us going to mitigate that.

Great. Thanks for the time.

Yes. Thank you.

And our next question comes from the line of Adam Jacobson of Radio & Television.

Hi there. It’s Adam Jacobson at the Radio & Television Business Report. I wanted to follow-up on the questions regarding television in particular we have heard a lot of stories about cord cutting in the total market. However, when we look at the multi-cultural marketplace, it’s a lot less of a factor. So, as we look into 2018 with the upfront season coming up, wondering what guidance you can give in terms of the overall growth and just the overall interest in a niche and definitely highly focused network in TV One for not only African-Americans, but for all consumers that like this particular type of programming.

Our position, cord cutting is definitely affecting the larger fully distributed networks that have been around a long time. ESPN is getting hit pretty hard. Also those networks happen to be the expense drivers on these bundles too. We have been a mid-pack network and have actually been gaining subs from our distributors. So we have been affected by churn, but we have been adding subs from these deals, so we haven’t really seen it that end of it impact our rating – excuse me, impact our subscribers at a significant level. I think with the additional subs what we got and committed to I think we are able to get to probably the mid-60s in terms of total subs. We don’t have dish, we been talking to and we continue to talk. If we are able to get dish, we could probably push close to 70. But then I think that’s kind of the top end for TV One. Now BET, when it got sold to Viacom for $3 billion had 60 million subscribers. So you can be as successful African-American network at the level that we are at now. They were the only game in town at that time. There is a lot more competition. Now, I think that other networks have discovered the ferocious viewing habits of African-Americans in the programming to them whether it’s a show here or there or a night here and there or multiple nights, Opus networks basically turned into an African-American focused network, up to 50% of that network is black. So, there is significant interest in more content. However, the fact of the matter is there is, call it, 40 million African-Americans in the U.S. This is not an ever-expanding pie. So at some point in time, you are going to hit saturation and then people will have to re-evaluate their strategies. And how much money and much programming real estate they want to put into chasing this demographic. We are going to continue our strategy. Our strategy isn’t changing. And so we will see how that ultimately plays out. As far as the landscape for kind of subscription services, OTT services for black folks going forward, there really isn’t anybody in the market in a big way doing this yet. As people are talking about it, Bob Johnson has got a movie channel. He has got very few subscribers, my understanding. Netflix actually does not really have a big African-American strategy. I hear that they are thinking about expanding more into this vertical. I don’t have a crystal ball to tell you what’s going to happen in 2018, 2019. But I do believe that this demographic is going to continue to become more and more important to advertisers. I think the love affair that people have with black television content currently is going to end up having a day of reckoning as more content hits and you hit a saturation point. And then people are going to end up having to rethink their strategies, because everybody can’t get the same view or black people can’t watch all television for the entire country. So and ultimately what that really says is there is going to be a shake out or there needs to be a shakeout in a number of channels that there are. I think there is too many channels period in the ecosystem. And I think that a lot of these channels that don’t really have a position or a reason for being ultimately end up going away over time. So for what it’s worth that’s my sort of limited view on the future. Round here, we are kind of folks, the future for us is 2017 and how we are going to get to the end and make good on the claims that we have stated already.

Okay, great. And I dialed in late on the call, so I am just wondering if you can just take in by yourselves, so I get everything correct?

I am sorry I didn’t what is my name, I am Alfred Liggins. I am the CEO.

I just want to make sure. Thank you, Mr. Liggins. Thank you.

No problem.

At this time there are no further questions. [Operator Instructions] And at this time Mr. Liggins there are no questions.

Thank you, operator. Thank you, everybody and we will talk to you next quarter.

Ladies and gentlemen, that does conclude your conference for today. Thank you for your participation and for using AT&T executive teleconference service. You may now disconnect.