From the better late than never department: Urban One late Thursday reported its fourth quarter 2022 financial results. Net revenues increased 1.6% year-over-year to $132.6 million. Operating income fell 30% to $14.3 million from $20.3 million in the same period one year earlier. The African American media specialist reported net income of $856,000, or two cents per share, compared to $5.3 million, or ten cents per share, for the same period in 2021. Adjusted earnings were $31.7 million, down 2.5% from $32.5 million for the same period in 2021.
In a press release, CEO Alfred Liggins said he was pleased that the company’s adjusted earnings came in “right on top of our full year guidance at $165.6 million, a new highwater mark for Urban One.” Thanks to political advertising, Liggins said Urban One’s radio division grew revenues 14.1% year-over-year in the fourth quarter on a same station basis. Without political, radio was up 5.0%.
Reach Media’s Fantastic Voyage didn’t sail in 2022. The annual Tom Joyner-hosted cruise typically pulls in millions in revenue, so the syndication unit’s billings were down for the quarter. However, when normalizing for that event, Liggins said fourth quarter broadcast cash flow was down $317,000 year-over-year.
While Urban One’s digital segment grew revenue by 24%, higher traffic acquisition, ad production, and video content costs brought its profit margins down. Ad sales at its cable TV segment declined 8.4%, which Liggins attributed to “a combination of audience under-delivery against upfront commitments, timing of [free video on demand] payments in Q4 2021, and attrition in local direct response advertising.” Despite the softer fourth quarter, the cable TV segment reported adjusted earnings of $105.3 million, the highest in company history.
Offering a glimpse into its 2023 performance, Urban One said first quarter radio revenue was up 2.0% on a same station basis. “However we have seen a slowdown in Q2, which is currently pacing down -5.0% same station or -0.9% ex political,” Liggins said. Year to date through May 2023, the company’s radio division is down 2.9% on a same station basis.
Revenues at Reach Media were up 8.8% in first quarter 2023 and Liggins said they will be “further boosted” in Q2 by the 2023 Fantastic Voyage cruise in May. Digital segment revenues were down 2.7% in the first quarter, although they “bounced back up mid-single digits in Q2,” Liggins continued. However the audience under-delivery at TV One has continued into 2023, with advertising revenues down 15.9% for Q1 and down mid-to-high single digits for Q2, Liggins explained. TV affiliate revenues in 2023 are down approximately 7% year to date.
Liggins is expected to talk more about the full-year outlook for 2023 when Urban One holds its fourth quarter and full year 2022 results call today at 10am ET.
“Overall, I believe we will still compare favorably to pre-pandemic 2019 results, despite the off-cycle political revenues and general advertising market slow-down that the industry is experiencing,” Liggins said.
As it previously disclosed in a regulatory filing in April, while preparing its financial statements for full year 2022 Urban One says it re-evaluated its accounting for the valuation of its investment interest in MGM National, which it sold for $136.8 million on April 21. That’s when it determined that adjustments were needed for its financial statements starting with Jan. 1, 2021 and for each of the annual and interim periods ended Dec. 31, 2021 and Sept. 30, 2022 due to understatements in the value of the MGM investment and related tax effects. Urban One says it also had to make “corrections for misstatements” in financial results it issued earlier. The misstatements are related to “radio broadcasting license impairment, right of use assets, fair value of the Reach Media redeemable noncontrolling interest, amortization of certain launch assets, misclassifications of certain balance sheet items, and any related tax effects,” the company said.