Q3 2023 Urban One Inc Earnings Call
Yes.
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 10Ks, 10Qs, and other reports 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.
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.
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 January 11th 'twenty 'twenty. Four. Please note that urban one disclaims any duty to update any forward looking statements made in the press.
This call will present information as of January 11th, 2024. Please note that Urban One disclaims any duty to update any forward-looking statements made in the presentation.
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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.
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 dot urban one dot com.
A replay of this conference call will be available from 1 p.m. Eastern Time January 11th, 2024 until 11.59 p.m. January 18th, 2024. Colors may access the replay by calling 866-207-1041 or International Colors may dial direct 402-970-0847. The replay access code is 231-8685.
A replay of this conference call will be available from one P. M. Eastern time January 11th 2024 until 11 59 P. M January 18th 2020 for callers may access the replay by calling 8662071041 or international callers may dial dirt.
Correct four zero to 9700847, the replay access code is 2318685 access to live audio and a replay of the conference call will also be available on urban one's corporate website at www Dot urban one dot com the replay will made.
Access to live audio and a replay of the conference call will also be available on Urban1's corporate website at www.urban1.com. The replay will be made available on the website for seven days after the call. No other recordings or copies of this call are authorized or may be relayed upon.
Made available on the website for seven days after the call no other recordings or copies of this call or outright or may be relied upon.
I'll now turn the call over to Alfred C. Liggins, chief executive officer of Urban1 who is joined by Peter D. Thompson, chief financial officer. Please go ahead.
Now I'll turn the call over to Alfred C. Liggins, Chief Executive Officer of urban one who is joined by Peter D. Thompson Chief Financial Officer. Please go ahead.
Thank you, operator, also joining Peter and I are
Thank you operator also joining Peter and I are.
Chief Administrative Officer Karen Wishart, General Counsel Chris Simpson, and the Chief Financial Officer for TV1 Judge juror. We have
Speaker Change: Chief administrative officer, Karen Wishart, our general Counsel, Kris Simpson and the Chief Financial Officer.
Speaker Change: Do you want the Cherokee Dror.
Speaker Change: We have released.
released our third quarter results did so before the end of the year. So that's been out there and obviously doing the conference call now. A little bit of news that's already out there, I think we kind of guided as to where we were going to be for the year end, third quarter for us.
We released our third quarter results did so before the end of the year. So that's been out there and we're.
Speaker Change: Obviously, if you on the conference call now.
Speaker Change: Yeah, a little bit.
Speaker Change: Of news that's already out there I think we've kind of guided.
As to where we were going to be for the year and third quarter for <unk>.
Yes. It is.
as well as the rest of the radio sector, you know, an awful quarter, ours wasn't any different.
Speaker Change: As well as the rest of the radio sector.
Speaker Change: God awful quarter.
Speaker Change: Yeah ours ours wasn't any different.
We have a huge political, you know, that's kind of, you know, same station, you know, ex-political, kind of in line with third quarter, you know, as well. But, you know, net net, we still, you know, are affirming our year in guidance.
Speaker Change: The fourth quarter.
Speaker Change: Huge political now that's kind of same station ex political and kind of in line with with third quarter as well, but yes net net we still you know are affirming our year end guidance.
We're still on top of that comfortable with that as we finish time out the year end result.
Speaker Change: 125 to almost 128.
Speaker Change: Yeah, we're still on top of that we're comfortable with that as we finish time out.
Speaker Change: The year end results are good news going into 'twenty.
Good news going into 24 in the radio sector Q1.
Speaker Change: 24.
And the radio sector Q1.
radio basings are substantially better bolstered, a lot by improving local currently for us. We're facing low single digits today. It bounces around, but today it's minus one for Q1. We'll see how that looks and holds, but we're optimistic as we go into 24 for more.
Speaker Change: Our pacings are are substantially better bolstered.
Speaker Change: A lot by improving local economy for us where.
Yes.
Speaker Change: Low single digits today, it's bounces around but today, it's minus one for Q1.
See how that looks and holds but we're optimistic as we go into 'twenty.
Speaker Change: <unk> 24 for a bottoming, if you will and and.
Speaker Change: a bottoming, you know, if you will in radio advertising performance and then an upswing due to political. So with that, I'm going to turn it over to Peter about him getting into the detail of the numbers and then we'll come back for Q&A. Thank you, Alfred. Net revenue is down by 2.8% year over year, quarter end of September 30th, 2023, at approximately 100%.
Speaker Change: And radio advertising performance and then.
And im swing due to political so with that I'm going to turn it over to Peter and let him get into the detail of the numbers and then we'll come back for Q&A.
Peter: Thank you Alfred net revenue was down by two 8% year over year for the quarter ended September 32023, and approximately $100.
Peter: net revenue for the radio statement was $40.2 million a decrease of 0.6% year-over-year. And we were down by 14.4% same-station, minus 12% same-station ex-political, which is out of its fad is broadly in line with what we discussed on our last update.
Speaker Change: Got it.
Revenue for the radio segment was $42 million, a decrease of <unk>, 6% year over year.
And moving down by 14, 4%.
Speaker Change: Same station.
Speaker Change: Minus 12% same station ex political which as Alan said is broadly in line with what we discussed on our last earnings call.
Peter: According to Miller Kaplan, local outfells were down 8.4% against the market. It was down 5.7% for the quarter, and our national outfells were down 7% against the market. It was down 10 and a half.
Speaker Change: According to Miller Kaplan.
Speaker Change: Local AD sales were down eight 4% against the market that was down five 7% for the quarter and a national AD sales were down 7% against the market that was down 10%.
Peter: Q4-23 radio segment is expected to be down approximately 14% all in. On the same station basis, Q4 is expected to be down approximately 23% and then ex-political down about 13%, so broadly kind of in line with Q3 same station.
Speaker Change: Q4, 23 radio segment is expected to be down approximately 14% all in.
Speaker Change: On a same station basis Q4 is expected to be down approximately 23%.
Speaker Change: And then ex political down about 13%, so so broadly kind of in line.
Speaker Change: Q3 same station.
Peter: And Q1 pays in the same station basis, currently down, very low single digits. Local is pays in plus 4%, nationals down about 20%.
Speaker Change: And Q1 pacings on a same station basis currently down very low single digits local is pacing plus 4% national was down about 20%.
Peter: Revenue for reach media was 11.2 million dollars in the third quarter up 10.8% over a prior year and it just leave it dark was 3.4 million dollars down 6.7% for the quarter.
Speaker Change: Net revenue for reach media was $11 $2 million in the third quarter up 10, 8% over prior year and adjusted EBITDA was $3 4 million down six 7% for the quarter net.
Peter: Net revenues for our digital segment decrease by 3% in Q3 to $20.4 million.
Speaker Change: Net revenues for our digital segment decreased by 3% in Q3 to $24 million.
Peter: direct sales down while local radio, streaming and podcast revenues are all up there.
Speaker Change: <unk> sales are down while local radio streaming podcast revenues.
Peter: just to give you now a $7.4 million down, $7.4 million down, $2.9% here.
Speaker Change: Adjusted EBITDA was $7 4 million down $7 $4 million down two 9% year over year.
Peter: We recognize approximately 46.8 million dollars of revenue to our level television segment during the quarter decreased to 7.6.
Speaker Change: We recognized approximately $46 $8 million of revenue from our cable television segment during the quarter decreased to seven 6%.
Peter: table TV, advertising revenue was down 5.9%, where we had a favorable rate impact of $1.1 million, unfavorable volume impact of $1.2 million, half a million unfavorable audience efficiency units, and an $850,000 reclass of VOD revenue to our digital segment.
Speaker Change: Cable TV advertising revenue was down five 9%.
Speaker Change: While we had a favorable rate impact of $1 $1 million.
Unfavorable volume impact of $1 $2 million half a million unfavorable audience deficiency units and then $850000 re class of Vod revenue to digital segment.
Speaker Change: Related to CTV.
Peter: Cable TV affiliate revenue was down by 9.3%, with favorable rate increases of a million to be an offset by $3.4 million of net churn.
Cable TV affiliate revenue was down by nine 3% with favorable rate increases of $1, two being offset by $3 4 million of net churn.
Peter: Cable subscribers for TV1 as measured by Nielsen finished Q3 2020 through a 44 million compared to 45.1 million at the end of Q2 and Clio TV had 41.4 million Nielsen.
Speaker Change: Cable subscribers with TV, one as measured by Nielsen finished Q3, 2023 of $44 million compared to $45 1 million at the end of Q2.
Speaker Change: <unk> TV had 41 4 million Nielsen subs.
Peter: Operating expenses, excluding depreciation and amortization, stop those compensation and impairments of long-life assets.
Speaker Change: Operating expenses, excluding depreciation and amortization stock based compensation and impairments of long lived assets.
Peter: increased to approximately $84.5 million for the quarter of 5.3% from the approximately $80.2 million incurred for the comparable period in 2022.
Speaker Change: Increased to approximately $84 $5 million for the quarter up five 3% from approximately $8 $2 million incurred for the comparable period in 2022.
Peter: If radio operating expenses were up 14.1% or $3.9 million, the Houston radio acquisition, which was expected August 1, 2023, donated approximately $2.2 million to the expense, and also the Indianapolis radio acquisition, which we did back in September of 2022, added approximately $2 million to $1.1 million to expense.
Speaker Change: Radio operating expenses were up 14, 1% or $3 $9 million.
Speaker Change: The Houston Radio acquisition, which was effective August one 2023 that added approximately $2 $2 million to expense and also the Indianapolis acquisition, which we did back in September of 2022 added approximately $2 million.
Speaker Change: <unk> expense.
Speaker Change: On a same station basis.
Peter: Sales commission expenses were down, an event expenses were down from last year to the quarter due to the time and the difference between the two of the largest radio events for the company.
Speaker Change: Sales Commission expenses were down on event expenses were down from last year for the quarter due to the timing difference between.
Two of the largest radio events for the company.
Peter: reach operating expenses are up by 21.4%. That was driven by increased reach net station compensation expense given the addition of foreign new networks as well as event expenses and talent compensation.
Speaker Change: Reach operating expenses were up by 21, 4% that was driven by increased reach that station compensation expense.
Given the addition of four new networks as well as eventful expenses on pilot compensation.
Peter: Operating expenses in the digital statement were down 3%, given predominantly by variable sales expenses tied to lower direct advertising revenue.
Operating expenses in the digital segment were down 3% driven predominantly by variable sales expenses tied to lower direct advertising revenues.
Peter: cable TV expenses were down 4.4% year earlier, content amortization expense was up by $1.7
Speaker Change: Cable TV expenses were down four 4% year over year.
Content amortization expense was up by $1 $7 million.
Peter: driven by an increase of $2.2 million or original program, and that increases offset slightly by reduction in promotional media spend, actually $3.1 million, considering that we had a greater number of premier hours that we promoted in prior year. Operating expenses in the corporate sector.
Speaker Change: Driven by our increased $2 $2 million or original programming that.
Speaker Change: That increase was offset slightly by a reduction in promotional media spend.
Actually between $1 million.
Speaker Change: Considering that we had a greater number of premiere hours that we promoted in prior year.
Speaker Change: Operating expenses in the cohort.
Speaker Change: The <unk> segment.
Peter: We are quite approximately $520,000, primarily as a result of higher third-party consulting and audit expense.
Speaker Change: By approximately $520000, primarily as a result of higher third party consulting and audit expenses.
Peter: Consolidated in just a wee bit down, it was $34.1 million for the quarter, down 23%.
Speaker Change: Consolidated adjusted EBITDA.
It was $34 1 million for the quarter down 23%.
Peter: for the third quarter, consolidated broadcast and digital operating income was approximately $43.8 million, a decrease of 13.9 million.
Speaker Change: For the third quarter consolidated broadcast and digital operating income was approximately $43 8 million a decrease of 13, 9%.
Peter: interest expense decreased to approximately $14 million for Q3 down and $15.3 million last year due to lower overall debt balances.
Interest expense decreased to approximately $14 million for Q3 down $15 3 million last year due to lower overall debt balances.
Peter: Company made cash interest payments of approximately 26.9 million dollars in the quarter, and the next semi-annual debt service payment is due in Q1.
Speaker Change: Company made cash interest payments of approximately $26 $9 million in the quarter.
Speaker Change: The next semiannual debt service payment is due in Q1.
[laughter].
Peter: an 85.4 million dollar impairment of goodwill in terms of long live assets was recorded across 10 about 13 radio miles.
Speaker Change: $5 4 million impairment of goodwill and long lived assets was recorded across 10 about 13 radio markets.
Peter: The benefit from income taxes was approximately $16.8 million for the quarter and the company paid cash income taxes in the amount of approximately $1.6 million.
Speaker Change: The benefit from income taxes was approximately $16 $8 million for the quarter. The company paid cash income taxes in the amount of approximately $1 6 million.
Peter: net loss was approximately $54.4 million or $1.14 per share compared to net income of $3.5 million or $0.7 per share for the third quarter of 2020.
Speaker Change: Net loss was approximately $54 4 million or $1 14 per share compared to net income of $3 5 million or <unk> <unk> per share for the third quarter of 2022 capital expenditures were approximately $2 million for the quarter.
Peter: capital expenditures were approximately 1.5 million for the quarter.
Peter: And as of September 30, 2023, total gross debt was $725 million, ending unrestricts of cash was $195.7 million, resulting in net debt of approximately $529.3 million.
Speaker Change: And as of September 32023, total gross debt was $725 million.
Speaker Change: Ending unrestricted cash was $195 $7 million, resulting in net debt of approximately $529 $3 million, which compared to $133 $3 million of LTM reported adjusted EBITDA for a total net leverage ratio of 397 times.
Peter: compared to $133.3 million of LPM reported adjusted EBITDA for a total net leverage ratio of 3.97 times.
Peter: The pro forma for the Indianapolis and Houston radio acquisitions total net leverage was 3.9 through time.
Speaker Change: Pro forma for the Indiana, Indianapolis and Houston Radio acquisitions total net leverage was three nine times.
Speaker Change: And with that, I'll come back to you. Thank you, Peter. Operator, could you open it up to the callers for June?
Speaker Change: With that I'll hand back.
Thank you Peter operator could you open it up to the callers for Q&A.
Speaker Change: Okay, ladies and gentlemen, if you'd like to ask a question, please press 1-0 on your telephone keypad. You may withdraw your question at any time by repeating the 1-0 command. If you're using a speakerphone, please pick up the handset before pressing the numbers. Once again, if you have a question, please press 1-0 at this time. Then one moment please for your first question.
Speaker Change: Okay, ladies and gentlemen, if you'd like to ask a question. Please press. One then zero on your telephone keypad you may withdraw your question at any time by repeating the one zero command if youre using a speakerphone. Please pick up the handset before pressing the numbers. Once again, if you have a question. Please press one then zero at this time and one moment. Please for your first question.
Speaker Change: Okay.
Speaker Change: Your first question comes from the line of Hal Steiner from BNP Paribah. Please go ahead.
Your first question comes from the line of Health Stiner from BNP Paribas. Please go ahead.
Hal Steiner: Hey guys, congratulations on the quarter and coming in line with expectations. Great to see the, you know, affirmation of the guide for the year.
Heath Stiner: Hey, guys congratulations on the quarter and come in in line with expectations, great to see the affirmation of the guide for the year.
Hal Steiner: I guess, you know, one thing that really stuck out to me was I thought the Q1 pacing for radio for much stronger than I would have expected, you speak to local being stronger, which is fantastic. Is that really just a reflection of the economy improving and people are stepping back in and being willing to advertise again? And I guess my little two-parter on that is just sort of, you know, for the year with sort of that pacing, do you think, should we be thinking that overall radio revenue should be up year over year with political?
Speaker Change: You know one thing that really stuck out to me was I thought the Q1 pacings for where radio for much stronger than I would've expected.
Speaker Change: The local being stronger which is fantastic is that really just a reflection of the economy, improving and people are stepping back in and being willing to advertise again and I guess my little to partner on that is just sort of.
Speaker Change: For the year with sort of that pacing do you think should we be thinking that overall radio revenue should be up year over year with political.
Hal Steiner: the answer to that is yes, and
Speaker Change: Yes, the answer to that is yes.
And.
Speaker Change: And look I would.
Speaker Change: Yeah.
Hal Steiner: I definitely feel like we've gone through an ad recession, 23. I mean, we felt it, we felt it. I mean, you could really see it in national, right? You know, advertisers pulling that, we saw it across.
Speaker Change: I definitely feel like we've gone through and add recession in 'twenty three I mean, we felt that we felt bad I mean, you can really see it national right now advertisers pulling pulling that we saw it across all of our businesses. So not one of them was not affected from TV.
Hal Steiner: all of our businesses, so not one of them was not affected from television to radio to digital. So just because there's an ad recession doesn't necessarily mean there is, you know, indeed a macroeconomic recession. So the recession that
Speaker Change: The radio.
Speaker Change: Digital so just because there's an AD recession doesn't necessarily mean there it is.
Speaker Change: Indeed, a macro economic recession.
Speaker Change: So the recession that.
Hal Steiner: that never materializes or soft landing or whatever you want to call it. So I'm not good at sort of...
Speaker Change: That never materialize is or a soft landing or <unk> or whatever you use.
Want to call it.
So I'm not I'm not good at sort of print.
Hal Steiner: you know, predicting, you know, why, you know, economic advertising trends, moving one direction, you know, or another, but it, you know, definitely does feel like, you know, you kind of bottom out in the third and fourth quarter. I'm hearing it from other operators that,
Speaker Change: Depicting why economic advertising trends move in one direction.
Speaker Change: Or another but it definitely does feel like you've kind of bottomed out in the third and fourth quarter I'm hearing that from other operators that.
Hal Steiner: That business in Q1 looks better and I think the tenor around the country seems much more optimistic in terms of whether or not we're going to have a soft landing.
Speaker Change: That business in in Q1.
Speaker Change: It looks better and you know I think the tenor.
Speaker Change: Around the country seems much more optimistic in terms of whether or not we're going to have a soft landing now so.
Hal Steiner: My guess is, yeah, things are bottom out and are improving and that's indicative of what's happening with our radio patients right now. Again, that's my opinion, but that's what it feels like. I try, I had a conversation with one of our
Speaker Change: My guess is yeah, yeah things are.
Bottomed out and are improving and.
And that's indicative of what's happening with our radio pacings right now again Thats My opinion you know.
Speaker Change: But that's what it feels like.
Speaker Change: I had a conversation with one of our.
Speaker Change: Our sales managers, you know, handles the
Speaker Change: R.
Our sales managers handles.
Speaker Change: and national political, you know, stuff for us, we're starting to see more political evils, you know, coming in, those should also, if there's not a ton of political money in that Q1 number right now, you know, you may have thought it was maybe 150 grand or something like that, you know, but we're starting to see it, you know, see it heat up so, you know, hopefully, again, that's a good sign for things to come for the year.
National political.
Speaker Change: Stop for US, we're starting to see more political avails, yeah, coming and those should also yes, there's not a ton of political money in that Q1 number right now yeah.
Speaker Change: You may have thought is maybe 150 grand or something like that.
Speaker Change: <unk>.
Speaker Change: But we're starting to see it youll see it heat up so hopefully.
Speaker Change: Again, that's a good sign for things to come for the year.
Speaker Change: Yeah, great no that absolutely.
Speaker Change: I mean, that is fantastic, I mean, that the data itself is certainly refutable. So anyway, I guess moving on to my next question is, I mean, with all of that, I guess I would think then that
Speaker Change: That is fantastic.
Unnamed Host: Ladies and gentlemen, 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 January 11th, 2024. Please note that Urban One disclaims any duty to update any forward-looking statements made in this presentation.
Speaker Change: Data itself is certainly irrefutable.
Speaker Change: So anyway, I guess moving onto my next question is I mean with all of that I guess I would think than that.
Speaker Change: I know you're not putting out any guidance yet for 2024, but sort of with that backdrop. I mean, certainly there will probably be some subpressure on TV, but overall, I mean, wouldn't you guys sort of maybe be disappointed at this point?
Speaker Change:
Speaker Change: It would it be right to it and I know, you're not putting out any guidance yet for 2024, but sort of with that backdrop. I mean, certainly there probably will still be some sub pressure on T V. But overall I mean, when you guys sort of maybe be disappointed at this point if EBITDA was flat for the year and 'twenty four I would think that there would probably be some room for a little bit of improvement year over year.
Speaker Change: Ibadah was flat for the year in 24, I would think that there would probably be some room for a little bit of improvement year over year.
Speaker Change: We're not there yet, but you said you called out the single biggest headwind, and that's the pay TV for system and turn in double digits, you know, seven to five, you know, those are difficult to deal with, you know, and so we're not prepared to give a 24, you know, number yet, we're still working through budgets.
Speaker Change: We're not there yet but use that you like you said.
Speaker Change: You called out the single biggest headwind.
Speaker Change: And experts.
Unnamed Host: 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 1 p.m. Eastern time, January 11, 2024, until 11:59 p.m., January 18, 2024. Callers may access the replay by calling 866-207-1041, or international callers may dial directly 402-970-0847. The replay access code is 231-8685. 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 seven days after the call.
Speaker Change: Pay TV ecosystem.
Speaker Change: Double digit decline.
Speaker Change: Yes.
Speaker Change: Those are difficult to deal with.
Speaker Change: No.
Speaker Change: We're not prepared to give a 24 number yet we're still working through budgets.
Speaker Change: Yeah, honestly, you see in this momentum in the radio business, it's helpful to our mindset, but we're not ready to plant a stake in the ground as to where we're going to find ourselves.
Speaker Change: Yes.
Speaker Change: Yes honestly.
Speaker Change: Seeing this momentum in the radio business.
Speaker Change: As it was.
Speaker Change: So our mindset, but we're not ready to plant.
Speaker Change: Our stake in the ground.
Speaker Change: So to work ourselves.
Speaker Change: Sure.
Speaker Change: That makes sense out, but that's definitely a.
Speaker Change: And I appreciate the conservatism, you know, but respect the strong performance. And I'll just say one last question, and I guess I'll go back into the queue, and thank you guys of course for the time. But I guess I just wanted to say...
Speaker Change: Prudent and I appreciate the conservatism.
But we respect the strong performance and then I'll just say one last question and then I guess I'll go back into the queue.
Speaker Change: Thank you guys of course, but the time, but I guess I just wanted to say.
Speaker Change: So for the debt pay down, we have been talking about that before. I think on the last call you had said, you're pretty much restricted from doing anything until the last 10Q was posted. I mean, so now that that's done, have you started to buy back any of the bonds yet in the open market in 4Q and or 1Q?
Speaker Change: So for the debt pay down we have been talking about that.
Speaker Change: Before and I think on the last call you had said youre pretty much restricted from doing anything until the last 10-Q was posted.
Unnamed Host: 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. Please go ahead.
Speaker Change: So now that that's done.
Speaker Change: Have you started to buy back any of the bonds yet in the open market in <unk> and <unk>.
Speaker Change: Just asking that and then if there's any update on the size of the buyback or what you think, you'll talk about it. The answer is yes, we are active in the market now.
Speaker Change: Just asking that and then just any and then if there's any update on the size of the buyback or what you think youll towards.
Thank you, operator. Also joining Peter and me are our Chief Administrative Officer, Karen Wischart, our General Counsel, Chris Simpson, and the Chief Financial Officer for TV One, Jody Drewer. We have released our third quarter results, did so before the end of the year, so that's been out there, and we're obviously doing the conference call now. A little bit of news that's already out there. I think we kind of guided as to where we were going to be for the year-end, third quarter. Us, y'all, as well as the rest of the radio sector, you know, an awful quarter. Ours wasn't any different, fourth quarter, you know, we had huge political, you know, that's kind of, you know, same station, you know, ex-political, kind of in line with, with third quarter, you know, as well.
Speaker Change: The answer is yes, we are active in the market now.
Speaker Change: That's great.
Speaker Change: Yeah. Great. Any update on the overall sizing of what you think?
Speaker Change: Great and any update on the overall sizing of what you think.
Speaker Change: I think I've said on the call before that, you know, I think we talked about it, right? I kind of trying to look at our bomb buybacks in kind of $25 million tranches. I think we got an authorization from our board for $75 million just because
Speaker Change: I think I've said I think I've said on the call before that you know.
Speaker Change: And I think I think we talked about it right I kind of triangulate it.
Speaker Change: Yeah, we tend we tend to look at like our bond buybacks and kind of $25 million tranches. We yeah. I think we got an authorization from our board for $75 million, just because we kind of like the round number of 650 in terms of face amount of.
Speaker Change: We kind of liked the round number of 650 in terms of face amount of debt to go down to.
Speaker Change: Of that to go down too.
Speaker Change: And so, you know, that's what we did. We got that authorization. We kind of, you know, look at, you know, $25 million tranches and then kind of pause and see where we're at. And, you know, that's kind of been our game plan, you know, and that's what we're doing. So. Great. Thank you guys so much for the.
Speaker Change: To next and so that's what we did we got that authorization, we kind of look at.
Speaker Change: $25 million tranche is and then kind of pause and see where we're at and yeah.
Speaker Change: That's been our that's kind of been our game plan, Yeah, and that's what we're done so.
But, yeah, net-net, we still, you know, are affirming our year-end guidance of 125 to almost, you know, 128, yeah, we're still on top of that, comfortable with that as we, you know, finish tying out the year-end results. Good news going into 24. In the radio sector, Q1 radio casings are substantially better, bolstered a lot by improving local.
Great. Thank you guys so much for the questions and congratulations again.
Speaker Change: Youre welcome.
Speaker Change: If there are any additional questions, please press 1 and 0.
Speaker Change: If there are any additional questions. Please press one zero.
Speaker Change: And you have a question from the line of Brad Kern, a private investor. Please go ahead.
Speaker Change: And you have a question from the line of Brad Kern, a private investor. Please go ahead.
Brad Kern: I think she's picking my call. First of all, I want to say.
Hi, Thanks for taking my call.
Brad Kern: First of all wanted to it.
Speaker Change: I wanted to see if there was any update on the way you're thinking about capital deployment in terms of strategic investments, and I don't know if you can maybe share what you're seeing out there in terms of opportunities that you're vetting for other use of the cash on balance sheets and that's a good one.
Brad Kern: Yes.
Brad Kern: There was any update on the way you're thinking about capital deployment in terms of strategic investments and I don't know if you can maybe share what you're seeing out there in terms of opportunities that you are betting.
Currently, for us, we're casing low single digits. Today, it bounces around, but today it's minus one for Q1. We'll see how that looks and holds, but we're optimistic as we go into 24 for a bottoming, if you will, in radio advertising performance and an upswing due to politics. With that, I'm going to turn it over to Peter, let him get into the detail of the numbers, and then we'll come back for Q&A. Thank you, Alfred.
Brad Kern: For other uses of the cash on balance sheet in the second of all it was.
Brad Kern: I'll start with that.
Speaker Change: Yeah, there is no strategic investment decisions.
Brad Kern: Yeah, there is no strategic investment.
Brad Kern: <unk> decisions.
Speaker Change: currently being vetted at the company right now we've got you know we've got nothing on the table you know we you know we're not exploring we're not working on an acquisition now we
Brad Kern: Currently being embedded at the company right now we've got you know we've got nothing on the table.
Brad Kern: We know we're not exploring we're not working on an acquisition.
Net revenue was down by 2.8% year-over-year for the quarter ended September 3rd, 2023, at approximately $100,000. Net revenue for the radio segment was $40.2 million, a decrease of 0.6% year-over-year. And we were down by 14.4% same station, minus 12% same station ex-political, which, as Alfred said, is broadly in line with what we discussed on our last earnings call. According to Miller Kaplan, our local ad sales were down 8.4% against the market. It was down 5.7% for the quarter, and our national ad sales were down 7% against the market. Overall, it was down 10.5%.
Brad Kern: Now we.
Speaker Change: I know we still are active in trying to figure out future gaming opportunities, but there is nothing actionable today. And so the number one use of capital right now is what I just described to the last caller's question.
Brad Kern: We still are active in trying to figure out.
Future gaming opportunities, but there is nothing actionable today.
Brad Kern: And Ah and so the number one use of capital right now is what I just described to the last caller's.
Brad Kern: <unk> and <unk>.
Speaker Change: and net it, you know, you know, really boring, you know, delivering and operating and strategically trying to figure out what to, you know, do with these businesses, you know, where do we take our cable television business, you know, what are our next distribution opportunities. That stuff's changed and so fast.
Speaker Change: That's it yeah.
Speaker Change: Really boring.
Speaker Change: Delevering and operating and strategically trying to figure out what to do.
Speaker Change: Ill do with with these businesses.
Or do we take our cable TV business and you know what our next.
Speaker Change: Next distribution opportunities that stuff's changing so fast.
Q4-23, the radio segment is expected to be down approximately 14% all-in. On a same-station basis, Q4 is expected to be down approximately 23%, and then ex-political down about 13%, so broadly kind of in line with Q3 same-station. And Q1 pacing is on the same station basis, currently down very low single digits, local is pacing plus 4%, and national is down about 20%. Net revenue for Reach Media was $11.2 million in the third quarter, up 10.8% over the prior year. And then just leave it there: $3.4 million, down 6.7% for the quarter. Net revenues for our digital segment decreased by 3% in Q3 to $20.4 million.
Speaker Change: Yeah, like I feel good that we're sitting back and we have, you know, we have breathing room, you know, to, to,
Speaker Change: Yeah like I feel good that we're sitting back and we and we have you know we.
We are breathing room to two.
Speaker Change: you have to figure out where the pucks go in and try to skate there and continue to work on delivering at the same time.
Speaker Change: You have to figure out where the puck is going in and tried to escape there and continue to work on Delevering at the same time so.
Okay.
Speaker Change: Okay, that's helpful, and then there was some news in December about around
Speaker Change: Okay. That's helpful. And then there was some news in December about round, Paramount potentially selling and talks with L. D. G to a management led buyout team and you had said on a previous call that you were you were around kind of the who there.
Speaker Change: paramount, potentially selling in talks as well, DET, to think their own management led by a team and you had said on a previous call that you were around. Yeah. Kind of the hoop.
Speaker Change: I mean, I saw that news report. I don't know how real it is. I think a number of people reached out when they saw that news report and said, hey, we're still interested.
I don't.
I I mean, I saw I thought I saw that news report I don't you know I don't know how real. It is you know I think you know a number of people kind of reached out when they saw that news report and said Hey, we're still interested and you know.
Direct sales were down while local radio, streaming, and podcast revenues were all up, adjusted even now with $7.4 million, down 2.9% year-over-year. We recognized approximately $46.8 million of revenue from our cable television segment during the quarter, a decrease of $7.6 million. Cable TV advertising revenue was down 5.9%, where we had a favorable rate impact of $1.1 million, an unfavorable volume impact of $1.2 million, half a million unfavorable audience deficiency units, and an $850,000 reclass of VOD revenue to our digital revenue related to CT. Cable TV affiliate revenue was down by 9.3%, with favorable rate increases of $1.2 million being offset by $3.4 million of net churn
Speaker Change: And it looks like Paramount didn't really respond to that. They seem like they're working on some sort of larger solution.
Speaker Change: And it looks like you know Paramount didn't really respond.
Speaker Change: To that they seem like they're working on some sort of larger.
Speaker Change: Solution.
Speaker Change: So I don't know anymore. I mean, you know, we were, you know, we were, we were there with
Speaker Change: So I don't know anymore. I mean, we were yeah. We were we were there with a b.
Speaker Change: A bed that was, you know,
Speaker Change: Bad that was.
Speaker Change: well lower than the $3 billion that they had, you know, kind of
While lower than the $3 billion at bad Yeah kind of.
Speaker Change: said that they were looking for, we had a great private equity partner lined up and
Speaker Change: Said that they were looking for are we we had to.
Speaker Change: Great private equity partner lined up and ready.
Speaker Change: I'm ready to go and we had a couple of banks lined up and ready to underwrite it so our bid was real. So I'm saying all that, they know that we were there and we were credible and we could be actionable.
Speaker Change: Ready to go and we had a couple of banks lined up and ready to go to <unk>.
Alright, it so our bid was real.
Speaker Change: Saying all of that.
They know that we where they are and we were credible and we could we could be actionable.
Cable subscribers for TV One, as measured by Nielsen, finished Q3 2023 at 44 million, compared to 45.1 million at the end of Q2, and Clio TV had 41.4 million. Nielsen, operating expenses excluding depreciation and amortization, stock-based compensation, and impairments of long life increased to approximately $84.5 million for the quarter, up 5.3% from the approximately $80.2 million incurred for the comparable period in 2022. Radio operating expenses were up 14.1% or $3.9 million, and the Houston radio acquisition, which was effective August 1st, 2023, that added approximately $2.2 million to expenses. And also, the Indianapolis radio acquisition, which we did back in September of 2022, added approximately $2 million of incremental expense on the same station base. Sales Commission expenses were down, and event expenses were down from last year for the quarter due to the time and difference between the two of the largest radio events for the company. Reach operating expenses were up by 21.4%. That was driven by increased reach net station compensation expenses given the addition of four new networks as well as event expenses and talent compensation. Operating expenses in the digital segment were down 3%, due predominantly to variable sales expenses tied to lower direct advertising revenue. Cable TV expenses were down 4.4% year-over-year.
Speaker Change: So it would be surprising to me if they, and again, this is just my opinion, go out and do kind of like a one-off deal.
Speaker Change: So it would be surprising to me.
Speaker Change: Now if they and again this is just my opinion.
Go out and do kind of like a one off deal without at least calling people that base that we're credible there to create some tension if they if they were they're going to decide to sell for a lower number than than three and come down to kind of where everybody was that.
Speaker Change: at least calling people that were credible there to create some tension if they were going to decide to sell for a lower number than three and come down to kind of where everybody was at, you know, it would be surprising if we didn't get a call to re-engage, you know, and we haven't, you know, and so I don't know what's going on there, you know.
Speaker Change: It would be surprising if we didn't get a call to reengage.
And we have it now and so I don't know what's going on there.
Speaker Change: But it feels like they got bigger fish to fry, right? I think I just saw something either yesterday or the day before about Skydance and Redbird trying to, you know, take out national amusement, you know, seems like.
Speaker Change: But it feels like they got bigger fish to Fry right I think I just saw something is either yesterday or the day before about the sky dance in Redbird trying to take out national Amusements, Yeah. It seems like.
Speaker Change: a larger discussion than whether or not you're going to spin out BET.
Speaker Change: A larger discussion and whether or not you're going to spin out the T.
Speaker Change: Yeah, absolutely alright, thanks for the time.
Speaker Change: Sure.
Speaker Change: If there are any additional questions, please press 1, then 0.
Speaker Change: If there are any additional questions. Please press one than zero.
Speaker Change: And at this time, there are no further questions. Right. But thank you, everybody. We look forward to speaking with you again on our year-end conference call.
Speaker Change: And at this time there are no further questions all right well. Thank you everybody and we look forward to.
Speaking with you again on our year end conference call.
Speaker Change: Ladies and gentlemen, that does conclude your conference for today. Thank you for your participation and for using AT&T teleconference. You may now disconnect.
Speaker Change: Ladies and.
Speaker Change: That does conclude your conference for today. Thank you for your participation and for using AT&T teleconference. You may now disconnect.
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Content amortization expense was up by $1.7 million. Thank you very much. Operating expenses in the corporate and renovation segment were up by approximately $520,000 primarily as a result of higher third-party consulting and audit expenses. Consolidated, at just a wee bit down, was $34.1 million for the quarter, down 23%. For the third quarter, consolidated broadcast and digital operating income was approximately $43.8 million, a decrease of $13.9 million. Interest expense decreased to approximately $14 million for Q3, down from $15.3 million last year due to lower overall debt balances.
The company made cash interest payments of approximately $26.9 million in the quarter, and the next semi-annual debt service payment is due in Q1. An $85.4 million impairment of goodwill in terms of assets from long-lived assets was recorded across 10 of our 13 radio markets. The benefit from income taxes was approximately $16.8 million for the quarter.
The company paid cash income taxes in the amount of approximately $1.6 million. The net loss was approximately $54.4 million or $1.14 per share compared to net income of $3.5 million or $0.07 per share for the third quarter of 2021. Capital expenditures were approximately two and a half million for the quarter.
And as of September 30th, 2023, total gross debt was $725 million, ending unrestricted cash was $195.7 million, resulting in net debt of approximately $529.3 million, which we compare to $133.3 million of LTM reported adjusted EBITDA for a total net leverage ratio of 3.97 times. And with that, I'll hand it back to you, Alan. Thank you, Peter. Operator, could you open it up to the callers for Q&A? Okay, ladies and gentlemen, if you'd like to ask a question, please press 1 and 0 on your telephone keypad. You may withdraw your question at any time by repeating the 1-0 command. If you're using a speakerphone, please pick up the handset before pressing the numbers.
Unnamed Host: Once again, if you have a question, please press 1 and 0 at this time. And one moment, please, for your first question. Your first question comes from the line of Hal Steiner from BNP Paribas. Please go ahead.
Hal Steiner: Hey guys, congratulations on the quarter, coming in line with expectations, great to see the confirmation of the guy for the year. I guess, you know, one thing that really stuck out to me was I thought the Q1 pacings for radio were much stronger than I would have expected. You speak of local being stronger, which is fantastic.
Is that really just a reflection of the economy improving and people are stepping back in and being willing to advertise again? And I guess my little two-parter on that is just sort of, you know, for the year, with sort of that pacing, should we be thinking that overall radio revenue should be up year over year with politics? The answer to that is yes, and Luke Eyewitness, y'all.
I definitely feel like we've gone through an ad recession, 23, I mean, we felt it, we felt it, I mean, you could really see it national, right? You know, advertisers pulling back, we saw it across all of our businesses, so, you know, not one of them was not affected from television to radio to digital, so just because there's an ad recession doesn't necessarily mean there is, you know, indeed a macroeconomic recession, so the recession that never materializes or a soft landing or whatever, you know, you want to call it, you know, so, like, I'm not, you know, I'm not good at sort of, you know, why, you know, economic advertising trends move in one direction, you know, or another, but it definitely does feel like, you know, you kind of bottomed out in the third and fourth quarter, I'm hearing it from other operators that business in Q1 looks better, and, you know, I think the tenor, you know, around, you know, the country, you know, seems much more, you know, optimistic in terms of whether or not, you know, we're going to have a soft landing, you know, so, you know, my guess is, yeah, yeah, things are, you know, bottomed out and are improving, and that's indicative of, you know, what's happening with our radio patients right now. Again, that's my opinion, you know, but that's what it feels like.
I actually had a conversation with one of our... our sales managers handle national political stuff for us. We're starting to see more political avails coming in. Those should also, there's not a ton of political money in that Q1 number right now. I thought it was maybe 150 grand or something like that, but we're starting to see it heat up, so hopefully, again, that's a good sign for things to come for the year Yeah, great. No. I mean, that is fantastic. I mean, the data itself is certainly irrefutable.
Um, so anyway, I guess moving on to my next question is, I mean, with all of that, I guess I would think then that it would be right to be, and I know you're not putting out any guidance yet for 2024, but, sort of, with that backdrop, I mean, certainly there probably will still be some sub-pressure on TV, but overall, wouldn't you guys sort of maybe be disappointed at this point if EBITDA I would think that there would probably be some room for a little bit of improvement year over year. We're not there yet, but you said you called out the single biggest headwind, and that's the pay TV ecosystem, churn, and double-digit sub-decline. Those are difficult to deal with, and so we're not prepared to give a 24 number yet.
We're still working through budgets. Honestly, seeing this momentum in the radio business is helpful to our mindset, but we're not ready to plant a stake in the ground as to where we're going to land. That makes sense, Alfred, that's definitely a...
Prudent, and I appreciate the conservatism, you know, but respect the strong performance. And I'll just say one last question, and I guess I'll go back into the queue, and thank you guys, of course, for the time, but I guess I just wanted to say... So, for the debt paydown, we have been talking about that before, and I think on the last call you had said you were pretty much restricted from doing anything until the last 10Q was posted. I mean, now that that's done, have you started to buy back any of the bonds yet in the open market in 4Q or 1Q? Just asking that and if there's any update on the sizing of the buyback or what you think you'll target. The answer is yes, we are active in the market. That's great. Any update on the overall sizing of what you think?
I think I said on the call before that, you know, I think we talked about it, right? I kind of tried. We did. We tend to look at, like, you know, our bond buybacks and kind of $25 million tranches. You know, I think we got an authorization from our board for $75 million just because we kind of liked the round number of 650 in terms of the face amount of debt to go down to, you know, to next. And so, you know, that's what we did. We got that authorization.
Hal Steiner: We kind of, you know, looked at, you know, $25 million tranches and then kind of paused to see where we were at. And, you know, that's been our game plan, you know, and that's what we're doing. Great. Thank you guys so much for the questions and congratulations again. You're up.
Brad Kern: If there are any additional questions, please press 1 and 0. And I have a question from the line of Brad Kern, a private investor. Please go ahead.
Brad Kern: I think she's taking my call. First of all, I wanted to... wanted to see if there was any update on the way you're thinking about capital deployment in terms of strategic investments. And I don't know if you can maybe share what you're seeing out there in terms of opportunities that you're vetting for other uses of the cash on the balance sheet. Yeah, I'll start with that. Yeah, there are no strategic investment decisions currently being vetted at the company right now. We've got, you know, we've got nothing on the table.
You know, we, you know, we're not exploring, we're not working on an acquisition. I know we still are active in trying to figure out future gaming opportunities, but there's nothing actionable today, and so the number one use of capital right now is what I just described to the last caller's question, and that's it. It's really boring, de-levering, and operating and strategically trying to figure out what to do with these businesses.
Where do we take our cable television business? What are our next distribution opportunities? That stuff's changing so fast that we're sitting back, and we have breathing room, you know, to figure out where the puck's going and try to skate there and continue to, you know, work on de-levering at the same time.
Okay, that's helpful. And then there was some news in December about Paramount potentially selling Intoxys L-P-E-T to a management-led buyout team. And you had said on a previous call that you were around, kind of the hoop. I saw that news report. I don't know how real it is.
I think a number of people kind of reached out when they saw that news report and said, hey, we're still interested. But it looks like Paramount didn't really respond to that. They seem like they're working on some sort of larger solution, so I don't know anymore. I mean, we were there with a bid that was, Well, lower than the $3 billion that they had, you know, kind of said that they were looking for. But we had a great private equity partner lined up and ready to go, and we had a couple banks lined up and ready to underwrite it, so our bid was real.
So I say in all that that they know that we were there and we were credible, and we could be actionable. So it would be surprising to me if they, and again this is just my opinion, go out and do a one-off deal without at least calling people that were credible there to create some tension. If they were going to decide to sell for a lower number than three and come down to kind of where everybody was at, it would have been surprising if we didn't get a call to reengage, and we haven't. So I don't know what's going on there, but it feels like they have bigger fish to fry. I think I just saw something either yesterday or the day before about Skydance and Redbird trying to take out national amusements.
Seems like a larger discussion than whether or not you're going to spin out BET. Yeah, absolutely. All right, thanks for the time. Sure. If there are any additional questions, please press 1 and 0. And at this time, there are no further questions. Great. Well, thank you, everybody.
Unnamed Host: We look forward to speaking with you again on our year-end conference call. Ladies and gentlemen, that does conclude your conference for today. Thank you for your participation and for using AT&T Teleconference. You may now disconnect.