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Radio One, Inc. Reports First Quarter Results

WASHINGTON, May 12, 2011 /PRNewswire via COMTEX/ --

Radio One, Inc. (NASDAQ: ROIAK and ROIA) today reported its results for the quarter ended March 31, 2011. Net revenue was approximately $65.0 million, an increase of 10.2% from the same period in 2010. Station operating income(1) remained flat at approximately $17.8 million, for both periods ended March 31, 2011 and 2010. The Company reported operating income of approximately $5.5 million compared to operating income of $3.8 million for the same period in 2010. Net loss was approximately $64.2 million or $1.23 per share, an increase in the amount of the net loss of $4.6 million or $0.09 per share, for the same period in 2010. Approximately $0.88 per share of the net loss is the result of a non-cash charge related to its provision for income taxes. The amount reflects the increase in deferred tax liabilities associated with the amortization of certain of the Company's radio broadcast licenses for tax purposes.

(Logo: http://photos.prnewswire.com/prnh/20090806/PH57529LOGO )

Alfred C. Liggins, III, Radio One's CEO and President stated, "Q1 2011 was challenging with our overall radio net revenues down 1.5% in the first quarter compared to last year. Reach Media net revenues increased 83.8% and were impacted by Reach Media assuming operational and financial control and responsibility for the ongoing cruise event, the "Tom Joyner Fantastic Voyage." The "Tom Joyner Fantastic Voyage" took place in March 2011 and generated approximately $6.6 million of revenue for Reach Media. Our internet business revenues increased 1.0% this quarter compared to the first quarter of 2010; we continue to believe that our on-line platform will be a major source of revenue and EBITDA growth for the future.

During the first quarter 2011, the Company closed upon a new senior secured credit facility comprised of a $25.0 million "super-priority" revolving credit facility and a $386.0 million term loan (the "New Senior Credit Facility"). The revolving portion of the credit facility is available for general corporate purposes while the proceeds of the term portion of the New Senior Credit Facility were used to refinance all of the Company's outstanding indebtedness under its prior senior credit facility.

TV One continues to perform strongly. TV One had Q1 net revenues of $30.8 million (+19.7% vs. Q1 2010) and EBITDA of $7.6 million (+83.7% vs. Q1 2010). On April 25, 2011, TV One closed on the redemption of a 12.4% ownership interest held by DIRECTV using funds from the private debt offering of $119 million managed by Canyon Capital Advisors LLC and the capital commitment funding completed on April 19, 2011 with the remaining members of TV One. This redemption was in addition to the redemption of 15.4% of its outstanding membership interests from certain financial investors and 2.0% of its outstanding membership interests held by TV One management (representing approximately 50% of interests held by management) completed on February 25, 2011. Radio One's ownership interest in TV One is now approximately 50.9%, giving Radio One a majority interest in TV One. Additionally, Radio One expects to account for TV One on a consolidated basis beginning in the second quarter of 2011 after an amendment to the TV One operating agreement was executed with the remaining members of TV One concerning certain governance issues separate and apart from the redemption transaction increasing Radio One's interest in TV One.

Second quarter 2011 radio pacings have deteriorated over the past several weeks, and we now expect Q2 2011 radio revenues to be relatively flat compared to prior year, although this will be mitigated by the strong growth in TV One revenues, which will be consolidated for the first time in Q2 2011."

RESULTS OF OPERATIONS











Three Months Ended March 31,



2011


2010

STATEMENT OF OPERATIONS

(unaudited)



(in thousands, except share data)







NET REVENUE

$ 65,045


$ 59,018


OPERATING EXPENSES





Programming and technical

18,883


18,585


Selling, general and administrative, excluding stock-based compensation

28,356


22,605


Corporate selling, general and administrative, excluding stock-based compensation

7,249


7,285


Stock-based compensation

937


2,013


Depreciation and amortization

4,099


4,721


Total operating expenses

59,524


55,209


Operating Income

5,521


3,809


INTEREST INCOME

8


25


INTEREST EXPENSE

19,333


9,235


LOSS ON RETIREMENT OF DEBT

7,743


-


EQUITY IN INCOME OF AFFILIATED COMPANY

3,079


909


OTHER (INCOME) EXPENSE, net

(25)


477


Loss before provision for (benefit from) income taxes, noncontrolling interest in

income (loss) of subsidiaries and gain from discontinued operations

(18,443)


(4,969)


PROVISION FOR (BENEFIT FROM) INCOME TAXES

45,619


(309)


Net loss from continuing operations

(64,062)


(4,660)


GAIN FROM DISCONTINUED OPERATIONS, net of tax

20


63


NET LOSS

(64,042)


(4,597)


NET INCOME (LOSS) ATTRIBUTABLE TO NONCONTROLLING INTERESTS

203


(29)


NET LOSS ATTRIBUTABLE TO RADIO ONE, INC.

$ (64,245)


$ (4,568)







AMOUNTS ATTRIBUTABLE TO RADIO ONE, INC.:





NET LOSS FROM CONTINUING OPERATIONS

$ (64,265)


$ (4,631)


GAIN FROM DISCONTINUED OPERATIONS, net of tax

20


63


NET LOSS ATTRIBUTABLE TO RADIO ONE, INC.

$ (64,245)


$ (4,568)







Weighted average shares outstanding - basic(2)

52,117,552


50,844,148


Weighted average shares outstanding - diluted(2)

52,117,552


50,844,148


Three Months Ended March 31,


2011


2010


(unaudited)


(in thousands, except per share data)

PER SHARE DATA - basic and diluted:








Net loss from continuing operations (basic)

$ (1.23)


$ (0.09)

Income (loss) from discontinued operations, net of tax (basic)

0.00


0.00

Net loss attributable to Radio One, Inc. (basic)

$ (1.23)


$ (0.09)





Net loss from continuing operations (diluted)

$ (1.23)


$ (0.09)

Income (loss) from discontinued operations, net of tax (diluted)

0.00


0.00

Net loss attributable to Radio One, Inc. (diluted)

$ (1.23)


$ (0.09)





SELECTED OTHER DATA




Station operating income (1)

$ 17,806


$ 17,828

Station operating income margin (% of net revenue)

27.4%


30.2%





Station operating income reconciliation:








Net loss attributable to Radio One, Inc.

$ (64,245)


$ (4,568)

Add back non-station operating income items included in net loss:




Interest income

(8)


(25)

Interest expense

19,333


9,235

Provision for (benefit from) income taxes

45,619


(309)

Corporate selling, general and administrative expenses

7,249


7,285

Stock-based compensation

937


2,013

Loss on retirement of debt

7,743


-

Equity in income of affiliated company

(3,079)


(909)

Other (income) expense, net

(25)


477

Depreciation and amortization

4,099


4,721

Noncontrolling interest in income (loss) of subsidiaries

203


(29)

Gain from discontinued operations, net of tax

(20)


(63)

Station operating income

$ 17,806


$ 17,828





Adjusted EBITDA(3)

$ 10,557


$ 10,543





Adjusted EBITDA reconciliation:








Net loss attributable to Radio One, Inc.

$ (64,245)


$ (4,568)

Interest income

(8)


(25)

Interest expense

19,333


9,235

Provision for (benefit from) income taxes

45,619


(309)

Depreciation and amortization

4,099


4,721

EBITDA

$ 4,798


$ 9,054

Stock-based compensation

937


2,013

Loss on retirement of debt

7,743


-

Equity in income of affiliated company

(3,079)


(909)

Other (income) expense, net

(25)


477

Noncontrolling interest in income (loss) of subsidiaries

203


(29)

Gain from discontinued operations, net of tax

(20)


(63)

Adjusted EBITDA

$ 10,557


$ 10,543



March 31, 2011


December 31, 2010



(unaudited)





(in thousands)

SELECTED BALANCE SHEET DATA:



Cash and cash equivalents

$ 33,817


$ 9,192


Intangible assets, net

835,285


840,147


Total assets

1,007,427


999,212


Total debt (including current portion)

672,629


642,222


Total liabilities

844,138


774,242


Total stockholders' equity

132,020


194,335


Redeemable noncontrolling interests

31,269


30,635








Current Amount Outstanding


Applicable Interest Rate


(in thousands)



SELECTED LEVERAGE DATA:



Senior bank term debt, net of original issue discount of approximately $7.7
million (subject to variable rates) (a)

$ 378,280


7.50%


12 1/2%/15% senior subordinated notes (fixed rate)

292,602


15.00%


6 3/8% senior subordinated notes (fixed rate)

747


6.38%


Note payable (fixed rate)

1,000


7.00%






(a)Subject to variable Libor Rate plus a spread currently at 6.50% and incorporated into the applicable interest rate set forth above.

Cautionary Note Regarding Forward-Looking Statements

This press release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements represent management's current expectations and are based upon information available to Radio One at the time of this release. These forward-looking statements involve known and unknown risks, uncertainties and other factors, some of which are beyond Radio One's control, that may cause the actual results to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. Important factors that could cause actual results to differ materially are described in Radio One's reports on Form 10-K and other filings with the Securities and Exchange Commission. Radio One does not undertake any duty to update any forward-looking statements.

Net revenue increased to approximately $65.0 million for the quarter ended March 31, 2011, from approximately $59.0 million for the same period in 2010, an increase of 10.2%. The increase was driven by Reach Media and was positively impacted by Reach Media assuming operational and financial control and responsibility for the ongoing cruise event, the "Tom Joyner Fantastic Voyage." The "Tom Joyner Fantastic Voyage" took place in March 2011 and generated approximately $6.6 million of revenue for Reach Media. Excluding Reach Media, net revenues from our radio division decreased 1.8% and net revenue for our internet business increased 1.0% for the three months ended March 31, 2011 compared to the same period in 2010. The markets in which we operate in grew 4.5% for the quarter ended March 31, 2011, led primarily by growth in local revenue. Our radio clusters underperformed their marketplaces this quarter, with a slight decline in local revenue and underperformance in national revenue as well. While three of our four largest markets posted growth during the quarter, with Atlanta up 15.3%, Houston up 1.7% and Washington, DC up 1.2%, our Baltimore market was down 6.9%. Further, while our Richmond market experienced revenue growth of 6.6% for the quarter and Raleigh grew 3.1%, our Columbus and Dallas markets were down 15.3% and 20.3%, respectively.

Operating expenses, excluding depreciation and amortization and stock-based compensation increased to approximately $54.5 million for the quarter ended March 31, 2011, up 12.4% from the approximately $48.5 million incurred for the comparable quarter in 2010. The increased expense is primarily due to events spending associated with Reach Media assuming operational and financial control and responsibility for the "Tom Joyner Fantastic Voyage," held in March 2011. Reach Media incurred approximately $5.6 million of operating expenses associated with the "Tom Joyner Fantastic Voyage." The increase is also payroll related due to annual salary increases and additional research spending with Arbitron Inc. The increased expenses were partially offset by reduced bad debt expense and less promotional spending.

Stock-based compensation decreased to $937,000 for the quarter ended March 31, 2011, compared to approximately $2.0 million for the same period in 2010. Decreased stock-based compensation expense is due to accelerated vesting that occurred in the first quarter of 2010 associated with the long-term incentive plan whereby officers and certain key employees were granted a total of 3,250,000 shares of restricted stock in January of 2010. Stock-based compensation requires measurement of compensation costs for all stock-based awards at fair value on date of grant and recognition of compensation over the service period for awards expected to vest.

Depreciation and amortization expense decreased to approximately $4.1 million compared to approximately $4.7 million for the quarters ended March 31, 2011 and 2010, respectively, a decrease of 12.8%. The decrease is attributable to the completion of amortization for certain intangible assets and the completion of useful lives for certain assets.

Interest expense increased to approximately $19.3 million for the quarter ended March 31, 2011, from approximately $9.2 million for the same period in 2010, an increase of 109.8%. The increase in interest expense was due to our entry into the Amended and Restated Credit Agreement and Amended Exchange Offer on November 24, 2010. Higher interest rates associated with the amendments were in effect for the three months ended March 31, 2011 compared to the same period in 2010. The increase in the overall effective cost of borrowing for the three months ended March 31, 2011 was approximately 6.0% compared to the three months ended March 31, 2010.

The loss on retirement of debt of approximately $7.7 million for the three months ended March 31, 2011 was due to the retirement of the Amended and Restated Credit Facility on March 31, 2011. This amount includes a write-off of approximately $6.5 million of capitalized debt financing costs associated with the Amended and Restated Credit Facility and a one-time write-off of approximately $1.2 million associated with the termination of the Company's interest rate swap agreement.

Other income of $25,000 for the quarter ended March 31, 2011 compared to other expense of $477,000 for the comparable quarter in 2010. The other expense for the three months ended March 31, 2010 was principally due to the write-off a pro-rata portion of debt financing and modification costs in connection with the lowering of the revolver commitment under the Company's bank facilities from $500.0 million to $400 million. The $100.0 million reduction to the revolver commitment resulted from entering into a third amendment to our Credit Agreement. The third amendment also waived a non-monetary technical default to the Credit Agreement associated with not designating certain subsidiaries as guarantors under our indentures governing our senior subordinated notes. The write-off of the debt financing and modification costs were partially offset by the recording of the value of translator equipment awarded to the Company as a result of a legal settlement.

Equity in income of affiliated company increased to approximately $3.1 million for the quarter ended March 31, 2011, compared to $909,000 for the same period in 2010, an increase of 241.0%. The amounts are attributable primarily to our share of the net income generated by TV One, LLC ("TV One") for the quarters ended March 31, 2011 and 2010, respectively. The Company's share of the net income is driven by TV One's current capital structure and the Company's ownership levels in the equity securities of TV One.

The provision for income taxes for the quarter ended March 31, 2011 was approximately $45.6 million compared to a benefit of $309,000 for the comparable period in 2010. Approximately $45.3 million of the increase is attributable to the increase in the DTL for indefinite-lived intangibles as certain of these assets are deductible for tax purposes but not for book purposes and $310,000 of the increase relates to Radio One state income taxes based on gross receipts. No tax expense related to the DTL change or state income taxes was recorded for Radio One in the period ended March 31, 2010. Approximately $275,000 of the tax increase relates to Reach Media, which had a pre-tax loss in the period ended March 31, 2010 and had pre-tax income in the period ended March 31, 2011. The consolidated effective tax rate for the three months ended March 31, 2011 and 2010 was (247.4)% and 6.2%, respectively.

Gain or loss from discontinued operations, net of tax, includes the results of operations for our sold radio stations and Giant Magazine, which ceased publication in December 2009. The gain from discontinued operations, net of tax, for the three months ended March 31, 2011 resulted from the disposition of an asset. The gain from discontinued operations, net of tax, for the three months ended March 31, 2010 resulted from the assumption of Giant Magazine's subscriber liability by another publisher, which was partially offset by legal and litigation expenses incurred as a result of certain previous station sales. The gain from discontinued operations, net of tax, includes no tax provision for the three months ended March 31, 2011 and 2010.

Other pertinent financial information includes capital expenditures of approximately $1.8 million and $1.2 million for the quarters ended March 31, 2011 and 2010, respectively. In addition, as of March 31, 2011, Radio One had total debt (net of cash balances) of approximately $638.8 million.

Supplemental Financial Information:

For comparative purposes, the following more detailed, unaudited statements of operations for the three months ended March 31, 2011 and 2010 are included.





Three Months Ended March 31, 2011





(in thousands, unaudited)


























Corporate/

Eliminations/

Other









Reach

Media








Consolidated


Radio One



Internet







STATEMENT OF OPERATIONS:

























NET REVENUE

$

65,045

$

48,294

$

14,725

$

3,515

$

(1,489)


OPERATING EXPENSES:












Programming and technical


18,883


12,864


5,303


2,410


(1,694)


Selling, general and administrative


28,356


19,009


6,957


2,638


(248)


Corporate selling, general and administrative


7,249


-


1,677


-


5,572


Stock-based compensation


937


140


-


24


773


Depreciation and amortization


4,099


1,767


984


1,118


230


Total operating expenses


59,524


33,780


14,921


6,190


4,633


Operating income (loss)


5,521


14,514


(196)


(2,675)


(6,122)


INTEREST INCOME


8


-


5


-


3


INTEREST EXPENSE


19,333


-


11


-


19,322


LOSS ON RETIREMENT OF DEBT


7,743


-


-


-


7,743


EQUITY IN INCOME OF AFFILIATED COMPANY


3,079


-


-


-


3,079


OTHER (INCOME) EXPENSE, net


(25)


(34)


-


-


9


(Loss) income before provision for income taxes, noncontrolling
interest in income of subsidiaries and income from discontinued operations


(18,443)


14,548


(202)


(2,675)


(30,114)


PROVISION FOR (BENEFIT FROM) INCOME TAXES


45,619


45,691


(72)


-


-


Net loss from continuing operations


(64,062)


(31,143)


(130)


(2,675)


(30,114)


INCOME FROM DISCONTINUED OPERATIONS, net of tax


20


20


-


-


-


NET LOSS


(64,042)


(31,123)


(130)


(2,675)


(30,114)


NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS


203


-


-


-


203


NET LOSS ATTRIBUTABLE TO RADIO ONE, INC.

$

(64,245)

$

(31,123)

$

(130)

$

(2,675)

$

(30,317)





Three Months Ended March 31, 2010





(in thousands, unaudited)


























Corporate/

Eliminations/

Other









Reach

Media








Consolidated


Radio One



Internet







STATEMENT OF OPERATIONS:

























NET REVENUE

$

59,018

$

49,219

$

8,013

$

3,479

$

(1,693)


OPERATING EXPENSES:












Programming and technical


18,585


12,695


4,992


2,365


(1,467)


Selling, general and administrative


22,605


18,817


1,260


3,203


(675)


Corporate selling, general and administrative


7,285


-


1,753


-


5,532


Stock-based compensation


2,013


349


-


54


1,610


Depreciation and amortization


4,721


2,172


979


1,271


299


Total operating expenses


55,209


34,033


8,984


6,893


5,299


Operating income (loss)


3,809


15,186


(971)


(3,414)


(6,992)


INTEREST INCOME


25


-


23


-


2


INTEREST EXPENSE


9,235


-


20


-


9,215


EQUITY IN INCOME OF AFFILIATED COMPANY


909


-


-


-


909


OTHER EXPENSE (INCOME), net


477


(230)


-


114


593


(Loss) income before (benefit from) provision for income taxes,
noncontrolling interest in loss of subsidiaries and income (loss)
from discontinued operations


(4,969)


15,416


(968)


(3,528)


(15,889)


(BENEFIT FROM) PROVISION FOR INCOME TAXES


(309)


33


(342)


-


-


Net (loss) income from continuing operations


(4,660)


15,383


(626)


(3,528)


(15,889)


INCOME (LOSS) FROM DISCONTINUED OPERATIONS, net of tax


63


(181)


-


244


-


NET (LOSS) INCOME


(4,597)


15,202


(626)


(3,284)


(15,889)


NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS


(29)


-


-


-


(29)


NET LOSS (INCOME) ATTRIBUTABLE TO RADIO ONE, INC.

$

(4,568)

$

15,202

$

(626)

$

(3,284)

$

(15,860)

Radio One, Inc. (Nasdaq: ROIAK; ROIA) will be holding a conference call for investors, analysts and other interested parties to discuss its results for first fiscal quarter of 2011. The conference call is scheduled for Thursday, May 12, 2011 at 10:00 a.m. EDT. To participate on this call, U.S. callers may dial toll-free 1-800-230-1074; international callers may dial direct (+1) 612-332-0107.

A replay of the conference call will be available from 12:30 p.m. EDTMay 12, 2011 until 11:59 p.m.May 15, 2011. Callers may access the replay by calling 1-800-475-6701; international callers may dial direct (+1) 320-365-3844. The replay Access Code is 201802. Access to live audio and a replay of the conference call will also be available on Radio One's corporate website at http://www.radio-one.com. The replay will be made available on the website for seven days after the call.

Radio One, Inc. (www.radio-one.com) is a diversified media company that primarily targets African-American and urban consumers. The Company is one of the nation's largest radio broadcasting companies, currently owning 53 broadcast stations located in 16 urban markets in the United States. As a part of its core broadcasting business, Radio One operates syndicated programming including the Russ Parr Morning Show, the Yolanda Adams Morning Show, the Rickey Smiley Morning Show, CoCo Brother Live, CoCo Brother's "Spirit" program, Bishop T.D. Jakes' "Empowering Moments", the Reverend Al Sharpton Show, and the Warren Ballentine Show. The Company also owns a controlling interest in Reach Media, Inc. (www.blackamericaweb.com), owner of the Tom Joyner Morning Show and other businesses associated with Tom Joyner. Beyond its core radio broadcasting business, Radio One owns Interactive One (www.interactiveone.com), an online platform serving the African-American community through social content, news, information, and entertainment, which operates a number of branded sites, including News One, UrbanDaily, HelloBeautiful, Community Connect Inc. (www.communityconnect.com), an online social networking company, which operates a number of branded websites, including BlackPlanet, MiGente, and Asian Avenue and an interest in TV One, LLC (www.tvoneonline.com), a cable/satellite network programming primarily to African-Americans.

Notes:

1 "Station operating income" consists of net loss before depreciation and amortization, corporate expenses, stock-based compensation, equity in income of affiliated company, income taxes, noncontrolling interest in income (loss) of subsidiaries, interest expense, impairment of long-lived assets, other (income) expense, loss (gain) on retirement of debt, (income) loss from discontinued operations, net of tax, and interest income. Station operating income is not a measure of financial performance under generally accepted accounting principles. Nevertheless we believe station operating income is often a useful measure of a broadcasting company's operating performance and is a significant basis used by our management to measure the operating performance of our stations within the various markets because station operating income provides helpful information about our results of operations apart from expenses associated with our fixed assets and long-lived intangible assets, income taxes, investments, debt financings and retirements, overhead, stock-based compensation, impairment charges, and asset sales. Station operating income is frequently used as one of the bases for comparing businesses in our industry, although our measure of station operating income may not be comparable to similarly titled measures of other companies. Station operating income does not purport to represent operating income or cash flow from operating activities, as those terms are defined under generally accepted accounting principles, and should not be considered as an alternative to those measurements as an indicator of our performance. A reconciliation of net loss to station operating income has been provided in this release.

2 For the quarters ended March 31, 2011 and 2010, Radio One had 52,117,552 and 50,844,148 shares of common stock outstanding on a weighted average basis, both basic and fully diluted for outstanding stock options, respectively.

3 "Adjusted EBITDA" consists of net loss plus (1) depreciation, amortization, income taxes, interest expense, noncontrolling interest in income of subsidiaries, impairment of long-lived assets, stock-based compensation, loss on retirement of debt, less (2) equity in income of affiliated company, other income, interest income and income from discontinued operations, net of tax,. Net income before interest income, interest expense, income taxes, depreciation and amortization is commonly referred to in our business as "EBITDA." Adjusted EBITDA and EBITDA are not measures of financial performance under generally accepted accounting principles. We believe Adjusted EBITDA is often a useful measure of a company's operating performance and is a significant basis used by our management to measure the operating performance of our business because Adjusted EBITDA excludes charges for depreciation, amortization and interest expense that have resulted from our acquisitions and debt financing, our taxes, impairment charges, as well as our equity in (income) loss of our affiliated company, gain on retirements of debt, and any discontinued operations. Accordingly, we believe that Adjusted EBITDA provides useful information about the operating performance of our business, apart from the expenses associated with our fixed assets and long-lived intangible assets, capital structure or the results of our affiliated company. Adjusted EBITDA is frequently used as one of the bases for comparing businesses in our industry, although our measure of Adjusted EBITDA may not be comparable to similarly titled measures of other companies. Adjusted EBITDA and EBITDA do not purport to represent operating income or cash flow from operating activities, as those terms are defined under generally accepted accounting principles, and should not be considered as alternatives to those measurements as an indicator of our performance. A reconciliation of net loss to EBITDA and Adjusted EBITDA has been provided in this release.

SOURCE Radio One, Inc.