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 very much, operator, and welcome to our first quarter results conference call. Also joining Peter and myself are Kristopher Simpson, who is our General Counsel; Karen Wishart, who is our Chief Administrative Officer; and Jody Drewer, who is the CFO of TV One. You saw the press release, really excited about the extraordinarily strong quarter that we had across all of our business units. Big performance well in excess of, I think, what most analysts had predicted. We had guided to mid-teens revenue growth in the radio business, but digital came in very strong and so did TV One. And so really strong performance from our team across all divisions, very proud of them. I'm going to hit what I think are kind of like the 2 highlight areas of conversation. First, here, our guidance for the year and also an update on Richmond. Given the strength in Q1, we do feel that we will exceed the top end of our $145 million to $150 million of EBITDA guidance for this year. Not sure exactly where it's going to land, but we'll beat that. However, it should be noted that we are seeing less robust pacing going forward, and we articulated that in the press release. Radio is pacing mid-single digits. We're also going to start to lap tougher comps from last year. So even with all of that, we still feel like we're going to exceed the top end of our guidance, but I just want to let people know that there are tougher comps coming and you are starting to see a moderation in the growth rate, in particular, in radio. And we don't know where the macroeconomic winds are going to blow, but we should be in good shape by the end of this year,…

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 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 was 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, 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 first quarter to $15.5 million. Sponsored…

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.

[Operator Instructions] 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, good question. It depends on the segment, right? Digital is moderating mostly because the pacings were so strong in Q2, 3 and 4 of last year. Radio is moderating, I think, just because of economic slowdown. And so I mean, look, there's a big difference between mid-teens pacings and mid-single pacings, right? I don't know how strong political is going to be. It could be gangbusters. Political, look, we know it's going to be an up number compared to last year, but political is highly dependent upon the nature of the races, close races, runaway races. So we -- that's yet to be seen. There could be upside there, but there is absolutely a slowdown of economic activity, particularly on the national level in the radio business. But look, you can turn on CNBC and see that, right? And it doesn't mean it's going to be a recession, right? You saw David Rubenstein today on CNBC and his prediction is, yes, you're going to have higher wage pressure, higher inputs pressure, but he thinks that growth slows, but doesn't push us into recession territory. If interest rates go up and wage and input costs go up, earnings are going to slow. And I think you're seeing that in the market where multiples are compressing just across all sectors because of those factors. And it doesn't mean there won't be some breakout performances. Hopefully, we can be one of those, but I think that's where we are. So...

Okay. That's helpful context. And one other question I just wanted to ask you was around share within the kind of 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. We -- look, I've got no color on radio's share versus other mediums in the local markets, right? Because we just don't get information on how much of the total local ad pie outdoor is taking versus radio versus digital. We can get our own performance and share against the other radio competitors. We just don't have that information right this second. We're happy to provide it off-line. Just at a high level, though, our national platforms: digital -- national radio, whether it's our syndication business or our national -- our regular national business plus our radio station digital business are outperforming just the traditional spots and dots on the terrestrial radio stations. So if we put those 2 together, we're doing just fine. There's -- local may be lagging a bit, but I'd have to go in and unpack that market-by-market, and happy to do that for you off-line. It'll take a little research.

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

A couple of questions. So first, I just want to go back to your outlook. You've kind of raised your guidance slightly by saying you're going to be exceeding the high end of your prior guidance. But just kind of given what you've done in Q1 around -- you're pacing at about $160 million run rate on an annualized basis, and typically, Q1, I think, is kind of the weakest quarter. Could you kind of -- is there anything you're expecting in the back half that, that precludes you from being more constructive from a guidance perspective? And then second on the casino. Could you -- as you kind of prep for the second referendum, do you expect to see any spike in expenses? And how much in -- and to what...

Yes, yes. So 2 good questions. We specifically chose not to give a new guidance number because I don't know what the economy -- what the effect of the economy is going to be. And so I just said we're going to exceed it. You're going to have to sort of make an estimation yourself on how much you think we're going to exceed it by. We don't want to throw a number out there. We throw a number out there and it doesn't happen, people would be disappointed. So I think all we're saying is we're going to beat what we told you last time. And that's kind of how we're thinking about it. I hope that there isn't any significant economic slowdown, but I do feel like that there is absolutely one occurring now. On the casino, you can absolutely expect expenses to go up. If we secure the second referendum, we probably spent about $4 million last year on that referendum. I don't see any reason why we would spend less than that. Given we lost last time, we might end up spending more this go around to try to cover off some constituencies that we didn't put a lot of resources towards last time, and so we haven't developed a budget for the second referendum yet. I think what we have in our budget right now is the same amount of money last year. But Peter, in our guidance, do we have -- have we -- do we have referendum...

We adjusted out, right? So we give adjusted EBITDA, and we don't include that. So I've got numbers buried in my forecast, but that's -- no one is going to see those in adjusted EBITDA. They do flow through the expense lines in the press release but they don't hit 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 will be -- 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?

Well, then the rest of that would go in Q3 of next year in our projections, right? So you've got the bulk of it being put in Q3 of next year, we think, at which point I have us just above 4, a little above 4, but not much. So that's the impact. So we get below 4 and then if we spend the $100 million, then that toggles us back above 4. And we stay around 4 in my projections through the end of next year, and then we drop below 4 again in '24, mid-3s and then low 3s thereafter. So that's kind of -- I mean, look, these are projections, right, who knows? But that's how we're thinking about it, including Richmond.

[Operator Instructions] 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 like you're doing very well?

Yes. TV One is doing very well to do over $100 million of EBITDA. What did we do last year? $95 million. We'll do over $100 million. Of that $155 million -- of that $150 million, TV One is going to be sort of $107 million, 108 million. Ratings are hanging in there, doing well, and it's in good shape. I mean I expect TV One to stay at $100 million of EBITDA or better for the next 4 years. I feel pretty comfortable about that, and that's including sort of the degradation of the Pay TV ecosystem. What I mean by that? Some losses due to churn and streaming and all that kind of stuff. We still have to figure out what are we -- I mean, like every other cable television programmer, you got to figure out how to stake out your position in this new world that will include linear cable and streaming and digital video and FAST channels. But -- and I struggle with it, right? There was a time, I would say, in 2019, where a lot of investors loved radio more than they loved cable television. And then the pandemic happened and radio got crushed and cable television did really well because people were inside, they're watching TV, and then you got 2 revenue streams. With radio, you've got more control of your destiny, you own your distribution. With cable television, you're relying on third parties for distribution. So again, I struggle with how I feel about these 2 businesses vis-a-vis one another. Both of them are challenged by digital disruption, which is why I'm happy that we're diversified now. I think radio has a long tail on it in terms of still being a useful and valuable ad medium over time to advertisers. But you can't deny the fact that advertisers do backflips to buy TV impressions. With the -- when they had broadcast television in the networks, as cable came into existence and started to grow, advertisers paid increasingly higher CPMs to reach smaller audiences at the broadcast networks because that's their preferred advertising medium. So having a stake in both areas is, I think, important. I don't believe that -- and now the streaming guys are having their challenges, right? Netflix is losing subs. And so there's going to be some melange of all of these different distribution systems that ultimately ends up being the status quo.

And just...

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

I'm sorry?

What's the subscriber count at quarter end for TV One?

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.

Which is great. We launched CLEO, what, 2.5 years ago, and now it's got almost as many subs as TV One. CLEO is a free network. TV One gets a license fee. Part of the reason we wanted CLEO to be free is so we could get the distribution up quickly and monetize that. So -- by the way, part of that -- me being comfortable that it's going to stay above 100% for the next 4 years is the fact that we've successfully created another network at scale. When I say at scale, at a scale large enough to monetize it on a real basis. And that's helping us drive more ad revenue and maintaining EBITDA even in the face of declining Pay TV subscribers.

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 I -- 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 think that, that stake, it's puttable now at its full multiple value of 7x. So that stake's worth over $100 million. We only take in about $8 million of income a year on it. So we're only getting whatever our trading multiple is on the $8 million. So we probably think that stake is worth twice what we get value for it. And so right now, we're going to hold on to it this year. We believe that its EBITDA will grow again this year, particularly because this is the first full year of sports betting in the state of Maryland and their sportsbook opened. But it's an option. I mean one way to think about us is there's another $50-plus million of value that isn't captured. Now I don't think anybody ever does that math. I mean some people do, right? But the fact of the matter is, the only way you really guarantee getting value for that is you monetize it and pay down debt or you monetize it and buy cash flow with the residual value or something. Yes, so we're not planning to do anything with it today. We certainly wouldn't put it -- the window to put it has passed for this year. So we couldn't put it until first quarter of next year anyway.

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 mean I think I've said on the last conference call, we want to wait and see what's going to happen with Richmond. We've -- we're looking at some strategic M&A opportunities in the Radio business, particularly in some markets that we already exist in. We're being careful and prudent. I like our leverage where it's at today, I'd like to get it lower. I think that we would like to ultimately get the company into a place where we can continue to create value, but we also get ourselves into a return of capital to shareholder position. But you got to balance those. I mean, if we win the casino, it's definitely worth putting $100 million into that opportunity and will create a lot more value. And we look at the same way for M&A opportunities. But ultimately, as the largest shareholder, you want to get the company to a position where you can have leverage low enough where you can return capital. We announced a share buyback last quarter. We haven't executed on it. The share price moved all on its own. We didn't buy anything because when it was high $3s or $4, we definitely felt it was undervalued. But by the same token, multiples are compressing. So I don't know what the market is ultimately going to value media cash flow at, right? Because we're a mix of radio and we are cable and we got digital, and so -- but I am interested in getting to a position of being able to return capital to shareholders, whether that's through a combination of buybacks and dividends or one or the other. But look, if we have to send $100 million out the door that's going to change -- that's going to stall our leverage profile at where it's at right now. We're not going to -- it's going to take us a year to get back down below $4 if we have to invest $100 million into the Richmond Casino project.

Just a quick follow-up on that Richmond project. At the -- 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, it 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.

[Operator Instructions] Speakers, we have no else in the queue at this time.

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.