# Urban One, Inc.: Form 10-Q for the period ended Mar 31, 2023

- Company: [Urban One, Inc.](/companies/uone.md) (CIK 1041657)
- Form: 10-Q
- Filed: 2023-11-20
- Accepted by EDGAR: Nov 20, 2023, 12:56 ET
- Period: 2023-03-31
- Accession: 0001558370-23-019225
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1041657/000155837023019225/uone-20230331x10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1041657/000155837023019225/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2023-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2023-01-01 to 2023-03-31 | $109.9m | us-gaap:RevenueFromContractWithCustomerIncludingAssessedTax |
| Selling, general and administrative | 3 months, 2023-01-01 to 2023-03-31 | $36.9m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2023-01-01 to 2023-03-31 | $8.1m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2023-01-01 to 2023-03-31 | $14.1m | us-gaap:InterestExpense |
| Income tax | 3 months, 2023-01-01 to 2023-03-31 | −$1.2m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2023-01-01 to 2023-03-31 | −$2.9m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2023-01-01 to 2023-03-31 | −$0.06 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2023-01-01 to 2023-03-31 | −$0.06 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2023-01-01 to 2023-03-31 | 47,420,832 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2023-01-01 to 2023-03-31 | $17.1m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2023-01-01 to 2023-03-31 | $2.0m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Share repurchases | 3 months, 2023-01-01 to 2023-03-31 | $1.3m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2023-03-31 | $71.5m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2023-03-31 | $258.7m | us-gaap:AssetsCurrent |
| Total assets | at 2023-03-31 | $1.28bn | us-gaap:Assets |
| Current liabilities | at 2023-03-31 | $112.6m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2023-03-31 | $927.8m | us-gaap:Liabilities |
| Long-term debt | at 2023-03-31 | $714.8m | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | at 2023-03-31 | $0 | us-gaap:LongTermDebtCurrent |
| Shareholders' equity | at 2023-03-31 | $331.6m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 51,300 characters.

### Introduction

### Revenue

Within our core radio business, we primarily derive revenue from the sale of advertising time and program sponsorships to local and national advertisers on our radio stations. Advertising revenue is affected primarily by the advertising rates our radio stations are able to charge, as well as the overall demand for radio advertising time in a market. These rates are largely based upon a radio station’s audience share in the demographic groups targeted by advertisers, the number of radio stations in the related market, and the supply of, and demand for, radio advertising time. Advertising rates are generally highest during morning and afternoon commuting hours.

Net revenue consists of gross revenue, net of local and national agency and outside sales representative commissions. Agency and outside sales representative commissions are calculated based on a stated percentage applied to gross billing.

The following chart shows the percentage of consolidated net revenue generated by each reporting segment.

| ​ ​ ​ ​ | ​ ​ ​ ​ | ​ ​ For The Three Months Ended March 31, 2023 ​ | ​ ​ 2022 ​ | ​ ​ ​ |
| --- | --- | ---: | ---: | --- |
| Radio broadcasting segment | ​ | 32.1% | 28.1% | ​ |
| Reach Media segment | ​ | 9.9% | 8.9% | ​ |
| Digital segment | ​ | 13.7% | 13.8% | ​ |
| Cable television segment | ​ | 45.2% | 50.1% | ​ |
| All other - corporate/eliminations | ​ | (0.9)% | (0.9)% | ​ |

The following chart shows the percentages generated from local and national advertising as a subset of net revenue from our core radio business.

| ​ ​ ​ ​ | ​ ​ ​ ​ | ​ ​ For The Three Months Ended March 31, 2023 | ​ ​ 2022 | ​ ​ ​ |
| --- | --- | ---: | ---: | --- |
| Percentage of core radio business generated from local advertising | ​ | 60.6% | 62.3% | ​ |
| ​ | ​ | ​ ​ | ​ ​ | ​ |
| Percentage of core radio business generated from national advertising, including network advertising | ​ | 36.5% | 35.8% | ​ |

National and local advertising also includes advertising revenue generated from our digital segment. The balance of net revenue from our radio segment was generated from tower rental income, ticket sales and revenue related to our sponsored events, management fees and other revenue.

The following chart shows the sources of our net revenue for the three months ended March 31, 2023 and 2022:

*(In thousands)*

*(In thousands)*

| ​ ​ ​ ​ ​ Net Revenue: | ​ ​ ​ | ​ ​ Three Months Ended March 31, 2023 ​ | ​ | ​ ​ 2022 ​ | ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ $ Change ​ | ​ ​ ​ ​ ​ ​ ​ % Change ​ ​ ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | ---: |
| Radio advertising | ​ | $43,108 | ​ | $39,127 | ​ | $3,981 | 10.2% |
| Political advertising | ​ | 296 | ​ | 532 | ​ | (236) | (44.4) ​ |
| Digital advertising | ​ | 15,024 | ​ | 15,482 | ​ | (458) | (3.0) ​ |
| Cable television advertising | ​ | 25,822 | ​ | 30,414 | ​ | (4,592) | (15.1) ​ |
| Cable television affiliate fees | ​ | 23,837 | ​ | 25,752 | ​ | (1,915) | (7.4) ​ |
| Event revenues & other | ​ | 1,782 | ​ | 824 | ​ | 958 | 116.3 ​ |
| Net revenue | ​ | $109,869 | ​ | $112,131 | ​ | $(2,262) | (2.0)% |

In the broadcasting industry, radio stations and television stations may utilize trade or barter agreements to reduce cash expenses by exchanging advertising time for goods or services. In order to maximize cash revenue for our spot inventory, we closely manage the use of trade and barter agreements.

Within our digital segment, Interactive One generates the majority of the Company’s digital revenue. Our digital revenue is principally derived from advertising services on non-radio station branded, but Company-owned websites. Advertising services include the sale of banner and sponsorship advertisements. As the Company runs its advertising campaigns, the customer simultaneously receives benefits as impressions are delivered, and revenue is recognized over time. The amount of revenue recognized each month is based on the number of impressions delivered multiplied by the effective per impression unit price, and is equal to the net amount receivable from the customer.

Our cable television segment generates the Company’s cable television revenue, and derives its revenue principally from advertising and affiliate revenue. Advertising revenue is derived from the sale of television airtime to advertisers and is recognized when the advertisements are run. Our cable television segment also derives revenue from affiliate fees under the terms of various multi-year affiliation agreements generally based on a per subscriber royalty for the right to distribute the Company’s programming under the terms of the distribution contracts.

Reach Media primarily derives its revenue from the sale of advertising in connection with its syndicated radio shows, including the Rickey Smiley Morning Show, the Russ Parr Morning Show and the DL Hughley Show. Reach Media also operates www.BlackAmericaWeb.com, an African-American targeted news and entertainment website, in addition to various other event-related activities.

### Expenses

Our significant expenses are: (i) employee salaries and commissions; (ii) programming expenses; (iii) marketing and promotional expenses; (iv) rental of premises for office facilities and studios; (v) rental of transmission tower space; (vi) music license royalty fees; and (vii) content amortization. We strive to control these expenses by centralizing certain functions such as finance, accounting, legal, human resources and management information systems and, in certain markets, the programming management function. We also use our multiple stations, market presence and purchasing power to negotiate favorable rates with certain vendors and national representative selling agencies. In addition to salaries and commissions, major expenses for our internet business include membership traffic acquisition costs, software product design, post-application software development and maintenance, database and server support costs, the help desk function, data center expenses connected with internet service provider (“ISP”) hosting services and other internet content delivery expenses. Major expenses for our cable television business include content acquisition and amortization, sales and marketing.

We generally incur marketing and promotional expenses to increase and maintain our audiences. However, because Nielsen reports ratings either monthly or quarterly, depending on the particular market, any changed ratings and the effect on advertising revenue tends to lag behind both the reporting of the ratings and the incurrence of advertising and promotional expenditures.

### RESULTS OF OPERATIONS

The following table summarizes our historical consolidated results of operations:

### Three Months Ended March 31, 2023 Compared to Three Months Ended March 31, 2022

*(In thousands)*

*(In thousands)*

| ​ ​ ​ ​ Statements of Operations: | ​ ​ ​ | ​ ​ Three Months Ended March 31, 2023 ​ | ​ | ​ ​ 2022 ​ | ​ ​ ​ | ​ ​ ​ ​ Change ​ | ​ ​ ​ | ​ ​ ​ ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Net revenue | ​ | $109,869 | ​ | $112,131 | ​ | $(2,262) |  | (2.0)% |
| Operating expenses: | ​ | ​ | ​ | ​ | ​ | ​ |  | ​ ​ |
| Programming and technical, excluding stock-based compensation | ​ | 33,854 | ​ | 28,518 | ​ | 5,336 |  | 18.7 ​ |
| Selling, general and administrative, excluding stock-based compensation | ​ | 36,715 | ​ | 35,210 | ​ | 1,505 |  | 4.3 ​ |
| Corporate selling, general and administrative, excluding stock-based compensation | ​ | 8,530 | ​ | 9,413 | ​ | (883) |  | (9.4) ​ |
| Stock-based compensation | ​ | 3,278 | ​ | 124 | ​ | 3,154 |  | \*NM ​ |
| Depreciation and amortization | ​ | 2,597 | ​ | 2,405 | ​ | 192 |  | 8.0 ​ |
| Impairment of goodwill, intangible assets, and long-lived assets | ​ | ​ 16,775 | ​ | ​ — | ​ | ​ 16,775 | ​ | 100.0 ​ |
| Total operating expenses | ​ | 101,749 | ​ | 75,670 | ​ | 26,079 |  | 34.5 ​ |
| Operating income | ​ | 8,120 | ​ | 36,461 | ​ | (28,341) |  | (77.7) ​ |
| Interest income | ​ | 333 | ​ | ​ 59 | ​ | 274 |  | 464.4 ​ |
| Interest expense | ​ | 14,068 | ​ | ​ 15,927 | ​ | (1,859) |  | (11.7) ​ |
| Gain on retirement of debt | ​ | 2,356 | ​ | ​ — | ​ | ​ 2,356 |  | 100.0 ​ |
| Other (expense) income, net | ​ | (312) | ​ | ​ 1,986 | ​ | (2,298) |  | 115.7 ​ |
| (Loss) income before provision for income taxes and noncontrolling interests in income of subsidiaries | ​ | (3,571) | ​ | 22,579 | ​ | (26,150) |  | (115.8) ​ |
| (Benefit from) provision for income taxes | ​ | (1,160) | ​ | ​ 5,465 | ​ | (6,625) |  | (121.2) ​ |
| Net (loss) income | ​ | (2,411) | ​ | 17,114 | ​ | (19,525) |  | (114.1) ​ |
| Net income attributable to noncontrolling interests | ​ | 511 | ​ | ​ 626 | ​ | (115) |  | (18.4) ​ |
| Net (loss) income attributable to common stockholders | ​ | $(2,922) | ​ | $16,488 | ​ | $(19,410) |  | (117.7)% |

\*NM - Not meaningful

### Net revenue

| ​ ​ Three Months Ended March 31, 2023 | ​ | ​ ​ 2022 | ​ ​ | ​ ​ Change ​ ​ | ​ ​ ​ ​ ​ ​ |
| ---: | --- | ---: | --- | ---: | ---: |
| $109,869 | ​ | $112,131 | ​ | $(2,262) | (2.0)% |

During the three months ended March 31, 2023, we recognized approximately $109.9 million in net revenue compared to approximately $112.1 million during the three months ended March 31, 2022. These amounts are net of agency and outside sales representative commissions. We recognized approximately $35.2 million of revenue from our radio broadcasting segment during the three months ended March 31, 2023, compared to approximately $31.5 million for the three months ended March 31, 2022, an increase of approximately $3.7 million primarily due to the acquisition of three stations in the second half of 2022 in the Indianapolis market and revenue growth in the Atlanta market. Based on reports prepared by the independent accounting firm Miller, Kaplan, Arase & Co., LLP (“Miller Kaplan”), the markets we operate in (excluding Richmond and Raleigh, both of which do not participate in Miller Kaplan) decreased 0.6% in total revenues. Same station net revenue from our radio broadcasting segment, excluding political advertising, during the three months ended March 31, 2023 increased 3.6% compared to the three months ended March 31, 2022, primarily in our Atlanta market.

We recognized approximately $10.9 million of revenue from our Reach Media segment during the three months ended March 31, 2023, compared to approximately $10.0 million for the three months ended March 31, 2022, an increase of approximately $0.9 million. The increase was primarily driven by four new reach networks and four new programming platforms.

We recognized approximately $49.7 million of revenue from our cable television segment during the three months ended March 31, 2023, compared to approximately $56.2 million for the three months ended March 31, 2022, a decrease of approximately $6.5 million. The decrease was primarily driven by lower ratings for the three months ended March 31, 2023 and a decrease in advertising sales and affiliate fees.

We recognized approximately $15.1 million of revenue from our digital segment during the three months ended March 31, 2023 compared to $15.5 million for the three months ended March 31, 2022, a slight decrease of approximately $0.4 million.

### Operating Expenses

#### Programming and technical, excluding stock-based compensation

| ​ ​ Three Months Ended March 31, 2023 | ​ | ​ ​ 2022 | ​ ​ | ​ ​ Change ​ ​ | ​ ​ ​ ​ ​ |
| ---: | --- | ---: | --- | ---: | ---: |
| $33,854 | ​ | $28,518 | ​ | $5,336 | 18.7% |

Programming and technical expenses include expenses associated with on-air talent and the management and maintenance of the systems, tower facilities, and studios used in the creation, distribution and broadcast of programming content on our radio stations. Programming and technical expenses for the radio segment also include expenses associated with our programming research activities and music royalties. For our digital segment, programming and technical expenses include software product design, post-application software development and maintenance, database and server support costs, the help desk function, data center expenses connected with ISP hosting services and other internet content delivery expenses. For our cable television segment, programming and technical expenses include expenses associated with technical, programming, production, and content management. Programming and technical expenses were $33.9 million for the three months ended March 31, 2023 compared to $28.5 million for the three months ended March 31, 2022, an increase of approximately $5.3 million. The increase was due to higher expenses across all segments. Expenses in our cable television segment for the three months ended March 31, 2023 increased approximately $3.1 million compared to the three months ended March 31, 2022. This increase was primarily driven by higher content amortization expense which increased approximately $2.9 million for the three months ended March 31, 2023 compared to the three months ended March 31, 2022.

Expenses in our radio broadcasting segment for the three months ended March 31, 2023 increased approximately $1.5 million compared to the three months ended March 31, 2022. This increase was primarily driven by an increase in payroll, contract labor and rent expense.

### Selling, general and administrative, excluding stock-based compensation

| ​ ​ Three Months Ended March 31, 2023 | ​ ​ ​ 2022 | ​ ​ ​ ​ Change ​ ​ | ​ ​ ​ ​ ​ |
| ---: | ---: | ---: | ---: |
| $36,715 | $35,210 | $1,505 | 4.3% |

Selling, general and administrative expenses include expenses associated with our sales departments, offices and facilities and personnel (outside of our corporate headquarters), marketing and promotional expenses, special events and sponsorships and back office expenses. Expenses to secure ratings data for our radio stations and visitors’ data for our websites are also included in selling, general and administrative expenses. In addition, selling, general and administrative expenses for the radio broadcasting segment and digital segment include expenses related to the advertising traffic (scheduling and insertion) functions. Selling, general and administrative expenses also include membership traffic acquisition costs for our online business. Selling, general and administrative expenses were approximately $36.7 million for the three months ended March 31, 2023 compared to $35.2 million for the three months ended March 31, 2022, an increase of approximately $1.5 million. Expenses in our radio broadcasting segment increased approximately $1.2 million for the three months ended March 31, 2023, compared to the three months ended March 31, 2022 due primarily to payroll costs.

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

| ​ ​ Three Months Ended March 31, 2023 | ​ ​ ​ 2022 | ​ ​ ​ ​ Change ​ ​ | ​ ​ ​ ​ ​ |
| ---: | ---: | ---: | ---: |
| $8,530 | $9,413 | $(883) | (9.4)% |

Corporate expenses consist of expenses for associated with our corporate headquarters and facilities, including personnel as well as other corporate overhead functions. Corporate selling, general and administrative expenses were approximately $8.5 million for the three months ended March 31, 2023 compared to $9.4 million for the three months ended March 31, 2022, a decrease of approximately $0.9 million. The decrease is primarily due to lower expenses associated with salaries and related compensations costs.

### Stock-based compensation

| ​ ​ Three Months Ended March 31, 2023 | ​ ​ ​ 2022 | ​ ​ ​ ​ Change ​ ​ | ​ ​ ​ ​ ​ |
| ---: | ---: | ---: | --- |
| $3,278 | $124 | $3,154 | \*NM% |

Stock-based compensation expense was approximately $3.3 million for the three months ended March 31, 2023 compared to $0.1 million for the three months ended March 31, 2022, an increase of approximately $3.2 million. The increase in stock-based compensation, was primarily due to new grants during the three months ended March 31, 2023 and the timing of vesting of stock awards for executive officers and other management personnel.

\*NM – Not meaningful

### Depreciation and amortization

| ​ ​ Three Months Ended March 31, 2023 | ​ ​ ​ 2022 | ​ ​ ​ ​ Change ​ ​ ​ | ​ ​ ​ ​ ​ |
| ---: | ---: | ---: | ---: |
| $2,597 | $2,405 | $192 | 8.0% |

Depreciation and amortization expense was approximately $2.6 million for the three months ended March 31, 2023, compared to approximately $2.4 million for the three months ended March 31, 2022, an increase of approximately $0.2 million. The increase is due to increased depreciation of capital expenditures.

### Impairment of goodwill, intangible assets, and long-lived assets

| ​ ​ Three Months Ended March 31, 2023 | ​ | ​ ​ 2022 | ​ | ​ ​ Change ​ ​ | ​ ​ ​ ​ ​ |
| ---: | --- | ---: | --- | ---: | ---: |
| $16,775 | ​ | $— | ​ | $16,775 | 100.0% |

Impairment of goodwill, intangible assets and long-lived assets was approximately $16.8 million for the three months ended March 31, 2023 with no impairment for the three months ended March 31, 2022. The expense for the three months ended March 31, 2023 was driven by the Company recording an impairment loss associated with the sale of the KROI-FM radio broadcasting license as discussed in Note 5 – *Radio Broadcasting Licenses* of our consolidated financial statements.

### Interest expense

| ​ ​ Three Months Ended March 31, 2023 | ​ | ​ ​ 2022 | ​ | ​ ​ Change ​ ​ | ​ ​ ​ ​ ​ ​ |
| ---: | --- | ---: | --- | ---: | ---: |
| $14,068 | ​ | $15,927 | ​ | $(1,859) | (11.7)% |

Interest expense was approximately $14.1 million for the three months ended March 31, 2023 compared to approximately $15.9 million for the three months ended March 31, 2022, a decrease of approximately $1.9 million. Beginning in the second quarter of 2022 and continuing through the fourth quarter of 2022, the Company repurchased $75.0 million of its 2028 Notes at an average price of approximately 89.5% of par. During the three months ended March 31, 2023, the Company repurchased $25.0 million of its 2028 Notes at an average price of approximately 89.1% of par. This reduction in the outstanding debt balances led to a reduction in interest expense.

### Gain on retirement of debt

| ​ ​ Three Months Ended March 31, 2023 | ​ | ​ ​ 2022 | ​ | ​ ​ Change ​ ​ | ​ ​ ​ ​ ​ |
| ---: | --- | ---: | --- | ---: | ---: |
| $2,356 | ​ | $— | ​ | $2,356 | 100.0% |

Gain on retirement of debt was approximately $2.4 million for the three months ended March 31, 2023 compared to $0.0 million for the three months ended March 31, 2022. As discussed above, the Company repurchased $25.0 million of its 2028 Notes at an average price of approximately 89.1% of par, resulting in a net gain on retirement of debt.

### Other (expense) income, net

| ​ ​ Three Months Ended March 31, 2023 | ​ ​ ​ 2022 | ​ ​ ​ Change ​ ​ | ​ ​ ​ ​ ​ ​ |
| ---: | ---: | ---: | ---: |
| $(312) | $1,986 | $(2,298) | 115.7% |

Other expense was approximately $0.3 million for the three months ended March 31, 2023, compared to other income of approximately $2.0 million for the three months ended March 31, 2022, respectively. As the Company exercised its put interest in March 2023, the Company was no longer entitled to any dividend in 2023. We recognized other income in the amount of approximately $2.0 million for the three months ended March 31, 2022, related to our MGM investment.

### (Benefit from) provision for income taxes

| ​ ​ Three Months Ended March 31, 2023 | ​ | ​ ​ 2022 | ​ | ​ ​ Change ​ ​ | ​ ​ ​ ​ ​ |
| ---: | --- | ---: | --- | ---: | ---: |
| $(1,160) | ​ | $5,465 | ​ | $(6,625) | (121.2)% |

For the three months ended March 31, 2023, we recorded a benefit from income taxes of approximately $1.2 million on pre-tax loss from continuing operations of approximately $3.6 million which results in an effective tax rate of 32.5%. This rate includes $0.1 million of discrete tax benefits primarily related to statutory state tax rate and apportionment changes. For the three months ended March 31, 2022, we recorded a provision for income taxes of approximately $5.5 million on pre-tax income from continuing operations of approximately $22.6 million which results in an effective tax rate of 24.2%.

### Net income attributable to noncontrolling interests

| ​ ​ Three Months Ended March 31, 2023 | ​ ​ ​ 2022 | ​ ​ ​ ​ Change ​ ​ ​ | ​ ​ ​ ​ ​ |
| ---: | ---: | ---: | ---: |
| $511 | $626 | $(115) | (18.4)% |

Net income attributable to noncontrolling interests was approximately $0.5 million for the three months ended March 31, 2023 compared to approximately $0.6 million for the three months ended March 31, 2022. The decrease was due primarily to lower net income recognized by Reach Media during the three months ended March 31, 2023 compared to the three months ended March 31, 2022

### Non-GAAP Financial Measures

The presentation of non-GAAP financial measures is not intended to be considered in isolation from, as a substitute for, or superior to the financial information prepared and presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”). We use non-GAAP financial measures including broadcast and digital operating income and Adjusted EBITDA as additional means to evaluate our business and operating results through period-to-period comparisons. Reconciliations of our non-GAAP financial measures to the most directly comparable GAAP financial measures are included below for review. Reliance should not be placed on any single financial measure to evaluate our business.

### Measurement of Performance

We monitor and evaluate the growth and operational performance of our business using net income and the following key metrics:

(a) *Net revenue:* The performance of an individual radio station or group of radio stations in a particular market is customarily measured by its ability to generate net revenue. Net revenue consists of gross revenue, net of local and national agency and outside sales representative commissions consistent with industry practice. Net revenue is recognized in the period in which advertisements are broadcast. Net revenue also includes advertising aired in exchange for goods and services, which is recorded at fair value, revenue from sponsored events and other revenue. Net revenue is recognized for our online business as impressions are delivered. Net revenue is recognized for our cable television business as advertisements are run, and during the term of the affiliation agreements at levels appropriate for the most recent subscriber counts reported by the affiliate, net of launch support.

(b) *Broadcast and digital operating income:* The radio broadcasting industry commonly refers to “station operating income” which consists of net income (loss) before depreciation and amortization, income taxes, interest expense, interest income, net income attributable to noncontrolling interests, other (expense) income, corporate selling, general and administrative expenses, stock-based compensation, impairment of goodwill, intangible assets, and long-lived assets and gain on retirement of debt. However, given the diverse nature of our business, station operating income is not truly reflective of our multi-media operation and, therefore, we use the term “broadcast and digital operating income.” Broadcast and digital operating income is not a measure of financial performance under GAAP. Nevertheless, broadcast and digital operating income is a significant measure used by our management to evaluate the operating performance of our core operating segments. Broadcast and digital operating income provides helpful information about our results of operations, apart from expenses associated with our fixed assets and, goodwill, intangible assets, and long-lived assets, income taxes, investments, impairment charges, debt financings and retirements, corporate overhead and stock-based compensation. Our measure of broadcast and digital operating income is similar to industry use of station operating income; however, it reflects our more diverse business and therefore is not completely analogous to “station operating income” or other similarly titled measures as used by other companies. Broadcast and digital operating income does not represent operating income or loss, or cash flow from operating activities, as those terms are defined under GAAP, and should not be considered as an alternative to those measurements as an indicator of our performance.

Broadcast and digital operating income decreased to approximately $39.3 million for the three months ended March 31, 2023, compared to approximately $48.4 million for the three months ended March 31, 2022, a decrease of approximately $9.1 million or 18.8%. The decrease was primarily due to lower broadcast and digital operating income at our digital, Reach Media and cable television segments, which was partially offset by higher broadcast and digital operating income at our radio broadcasting segment. Our digital segment generated approximately $3.8 million of broadcast and digital operating income during the three months ended March 31, 2023, compared to approximately $4.6 million during the three months ended March 31, 2022. The decrease in the digital segment’s broadcast and digital operating income is primarily from higher selling, general and administrative expenses. Reach Media generated approximately $4.2 million of broadcast and digital operating income during the three months ended March 31, 2023, compared to approximately $4.5 million during the three months ended March 31, 2022. TV One generated approximately $22.4 million of broadcast and digital operating income during the three months ended March 31, 2023, compared to approximately $31.4 million during the three months ended March 31, 2022. The decrease in the cable television segment’s broadcast and digital operating income is primarily from lower net revenues coupled with higher programming and technical expenses. Finally, our radio broadcasting segment generated approximately $8.9 million of broadcast and digital operating income during the three months ended March 31, 2023, compared to approximately $7.9 million during the three months ended March 31, 2022.

(c) *Adjusted EBITDA*: Adjusted EBITDA consists of net (loss) income plus (1) depreciation and amortization, income taxes, interest expense, net income attributable to noncontrolling interests, impairment of goodwill, intangible assets, and long-lived assets, stock-based compensation, gain on retirement of debt, employment agreement award and other compensation, corporate development costs, severance-related costs, investment income, less (2) other income and interest income. 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 GAAP. We believe Adjusted EBITDA is often a useful measure of a company’s operating performance and is a significant measure used by our management to evaluate the operating performance of our business. Accordingly, based on the previous description of Adjusted EBITDA, we believe that it provides useful information about the operating performance of our business, apart from the expenses associated with our fixed assets and goodwill, intangible assets, and long-lived assets or capital structure. Adjusted EBITDA is frequently used as one of the measures for comparing businesses in the broadcasting industry, although our measure of Adjusted EBITDA may not be comparable to similarly titled measures of other companies, including, but not limited to the fact that our definition includes the results of all four of our operating segments (radio broadcasting, Reach Media, digital and cable television). Business activities unrelated to these four segments are included in an “all other” category which the Company refers to as “All other - corporate/eliminations.” Adjusted EBITDA and EBITDA do not purport to represent operating income or cash flow from operating activities, as those terms are defined under GAAP, and should not be considered as alternatives to those measurements as an indicator of our performance.

### Summary of Performance

The tables below provide a summary of our performance based on the metrics described above:

*(In thousands)*

| ​ ​ ​ ​ ​ | ​ ​ Three Months Ended March 31, 2023 ​ ​ | ​ ​ | ​ ​ 2022 ​ ​ | ​ ​ ​ | ​ ​ ​ ​ |
| --- | --- | --- | --- | --- | --- |
| Net revenue | $109,869 | ​ | $112,131 | ​ | ​ |
| Net (loss) income attributable to common stockholders | ​ (2,922) | ​ | ​ 16,488 | ​ | ​ |
| Broadcast and digital operating income | ​ 39,300 | ​ | ​ 48,403 | ​ | ​ |
| Adjusted EBITDA | ​ 30,285 | ​ | ​ 42,004 | ​ | ​ |

The reconciliation of net (loss) income to broadcast and digital operating income is as follows:

*(In thousands)*

| ​ ​ ​ ​ ​ | ​ ​ ​ | ​ ​ Three Months Ended March 31, 2023 ​ ​ | ​ ​ | ​ ​ 2022 ​ ​ | ​ ​ ​ |
| --- | --- | ---: | --- | ---: | --- |
| Net (loss) income attributable to common stockholders | ​ | $(2,922) | ​ | $16,488 | ​ |
| Add back/(deduct) non-broadcast and digital operating income items included in net (loss) income: | ​ | ​ | ​ | ​ | ​ |
| Interest income | ​ | (333) | ​ | (59) | ​ |
| Interest expense | ​ | 14,068 | ​ | 15,927 | ​ |
| (Benefit from) provision for income taxes | ​ | (1,160) | ​ | 5,465 | ​ |
| Corporate selling, general and administrative, excluding stock-based compensation | ​ | 8,530 | ​ | 9,413 | ​ |
| Stock-based compensation | ​ | 3,278 | ​ | 124 | ​ |
| Gain on retirement of debt | ​ | (2,356) | ​ | — | ​ |
| Other expense (income), net | ​ | 312 | ​ | (1,986) | ​ |
| Depreciation and amortization | ​ | 2,597 | ​ | 2,405 | ​ |
| Net income attributable to noncontrolling interests | ​ | ​ 511 | ​ | ​ 626 | ​ |
| Impairment of goodwill, intangible assets, and long-lived assets | ​ | ​ 16,775 | ​ | ​ — | ​ |
| Broadcast and digital operating income | ​ | $39,300 | ​ | $48,403 | ​ |

The reconciliation of net (loss) income to adjusted EBITDA is as follows:

*(In thousands)*

| ​ ​ ​ ​ ​ | ​ ​ ​ | ​ ​ ​ Three Months Ended March 31, 2023 ​ ​ | ​ ​ | ​ ​ 2022 ​ ​ | ​ ​ ​ |
| --- | --- | --- | --- | --- | --- |
| Net (loss) income attributable to common stockholders | ​ | $(2,922) | ​ | $16,488 | ​ |
| Add back/(deduct) non-broadcast and digital operating income items included in net (loss) income: | ​ | ​ ​ | ​ | ​ ​ | ​ |
| Interest income | ​ | ​ (333) | ​ | ​ (59) | ​ |
| Interest expense | ​ | ​ 14,068 | ​ | ​ 15,927 | ​ |
| (Benefit from) provision for income taxes | ​ | ​ (1,160) | ​ | ​ 5,465 | ​ |
| Depreciation and amortization | ​ | ​ 2,597 | ​ | ​ 2,405 | ​ |
| EBITDA | ​ | $12,250 | ​ | $40,226 | ​ |
| Stock-based compensation | ​ | ​ 3,278 | ​ | ​ 124 | ​ |
| Gain on retirement of debt | ​ | ​ (2,356) | ​ | ​ — | ​ |
| Other expense (income), net | ​ | ​ 312 | ​ | ​ (1,986) | ​ |
| Net income attributable to noncontrolling interests | ​ | ​ 511 | ​ | ​ 626 | ​ |
| Corporate development costs | ​ | ​ (376) | ​ | ​ 334 | ​ |
| Employment Agreement Award and other compensation | ​ | ​ (144) | ​ | ​ 580 | ​ |
| Severance-related costs | ​ | ​ 150 | ​ | ​ 133 | ​ |
| Impairment of goodwill, intangible assets, and long-lived assets | ​ | ​ 16,775 | ​ | ​ — | ​ |
| Investment (expense) income from MGM National Harbor1 | ​ | ​ (115) | ​ | ​ 1,967 | ​ |
| Adjusted EBITDA | ​ | $30,285 | ​ | $42,004 | ​ |

1Investment expense (income) from MGM National Harbor is included in the Other (expense) income, net

### LIQUIDITY AND CAPITAL RESOURCES

Our primary source of liquidity is cash provided by operations and, to the extent necessary, borrowings available under our asset-backed credit facility. Our cash, cash equivalents and restricted cash balance is approximately $71.9 million as of March 31, 2023. As of March 31, 2023, there were no borrowings outstanding on the Current ABL Facility (as defined below) which has $50.0 million in overall capacity.

The Company regularly considers the impact of macroeconomic conditions on our business. Uncertainty in the macroeconomic environment with continued increases in inflation and interest rates, along with banking volatility, may have an adverse effect on our revenues.

On May 17, 2021, the Company entered into an Open Market Sale Agreement (the “Class D Sale Agreement”) under which the Company may offer and sell, from time to time at its sole discretion, shares of its Class D common stock, par value $0.001 per share (the “Class D Shares”). On May 17, 2021, the Company filed a prospectus supplement pursuant to the Class D Sale Agreement for the offer and sale of its Class D Shares having an aggregate offering price of up to $25.0 million. As of March 31, 2023, the Company has not sold any Class D Shares under the Class D Sale Agreement. The Company may from time to time also enter into new additional ATM programs and issue additional common stock from time to time under those programs.

During the three months ended March 31, 2023, the Company repurchased 824 shares of Class D common stock in the amount of $3,000 at an average price of $3.99 per share and during the three months ended March 31, 2023, the Company executed Stock Vest Tax Repurchases of 255,618 shares of Class D Common Stock in the amount of approximately $1.3 million at an average price of $5.17 per share.

On March 8, 2023, ROEH issued a Put Notice with respect to its Put Interest in MGMNH. Upon issuance of the Put Notice, no later than thirty (30) days following receipt, MGMNH was required to repurchase the Put Interest for cash. On April 21 2023, ROEH closed on the sale of the Put Interest and received approximately $136.8 million at the time of settlement of the Put Interest, representing the put price. During the quarter ended March 31, 2023, the Company received $8.8 million representing the Company’s annual distribution from MGMNH with respect to fiscal year 2022.

On January 25, 2021, the Company closed on an offering (the “2028 Notes Offering”) of $825.0 million in aggregate principal amount of senior secured notes due 2028 (the “2028 Notes”) in a private offering exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”). The 2028 Notes are general senior secured obligations of the Company and are guaranteed on a senior secured basis by certain of the Company’s direct and indirect restricted subsidiaries. The 2028 Notes mature on February 1, 2028 and interest on the Notes accrues and is payable semi-annually in arrears on February 1 and August 1 of each year, commencing on August 1, 2021 at the rate of 7.375% per annum.

The 2028 Notes and the guarantees are secured, subject to permitted liens and except for certain excluded assets (i) on a first priority basis by substantially all of the Company’s and the Guarantors’ current and future property and assets (other than accounts receivable, cash, deposit accounts, other bank accounts, securities accounts, inventory and related assets that secure our asset-backed revolving credit facility on a first priority basis (the “ABL Priority Collateral”)), including the capital stock of each guarantor (collectively, the “Notes Priority Collateral”) and (ii) on a second priority basis by the ABL Priority Collateral.

During the three months ended March 31, 2023, the Company repurchased $25.0 million of its 2028 Notes at an average price of approximately 89.1% of par, resulting in a net gain on retirement of debt of approximately $2.4 million. During the year ended December 31, 2022, the Company repurchased $75.0 million of its 2028 Notes at an average price of approximately 89.5% of par. The Company recorded a net gain on retirement of debt of $6.7 million for the year ended December 31, 2022. As of March 31, 2023, the Company had approximately $725.0 million of our 2028 Notes outstanding. See Note 6 – *Long-Term Debt* of our consolidated financial statements for further information on liquidity and capital resources in the footnotes to the consolidated financial statements.

On February 19, 2021, the Company closed on a new asset backed credit facility (the “Current ABL Facility”). The Current ABL Facility is governed by a credit agreement by and among the Company, the other borrowers party thereto, the lenders party thereto from time to time and Bank of America, N.A., as administrative agent. The Current ABL Facility provides for up to $50 million revolving loan borrowings in order to provide for the working capital needs and general corporate requirements of the Company. The Current ABL Facility also provides for a letter of credit facility up to $5 million as a part of the overall $50 million in capacity. The Asset Backed Senior Credit Facility entered into on April 21, 2016 among the Company, the lenders party thereto from time to time and Wells Fargo

Bank National Association, as administrative agent (the “2016 ABL Facility”), was terminated on February 19, 2021. As of March 31, 2023, there were no borrowings outstanding on the Current ABL Facility. See Note 12 – *Subsequent Events* of our consolidated financial statements for descriptions of amendments to the Current ABL Facility subsequent to March 31, 2023.

At the Company’s election, the interest rate on borrowings under the Current ABL Facility are based on either (i) the then applicable margin relative to Base Rate Loans (as defined in the Current ABL Facility) or (ii) the then applicable margin relative to LIBOR Loans (as defined in the Current ABL Facility) corresponding to the average availability of the Company for the most recently completed fiscal quarter.

Advances under the Current ABL Facility are limited to (a) eighty-five percent (85%) of the amount of Eligible Accounts (as defined in the Current ABL Facility), less the amount, if any, of the Dilution Reserve (as defined in the Current ABL Facility), minus (b) the sum of (i) the Bank Product Reserve (as defined in the Current ABL Facility), plus (ii) the AP and Deferred Revenue Reserve (as defined in the Current ABL Facility), plus (iii) without duplication, the aggregate amount of all other reserves, if any, established by Administrative Agent.

All obligations under the Current ABL Facility are secured by a first priority lien on all (i) deposit accounts (related to accounts receivable), (ii) accounts receivable, and (iii) all other property which constitutes ABL Priority Collateral (as defined in the Current ABL Facility). The obligations are also guaranteed by all material restricted subsidiaries of the Company.

The Current ABL Facility matures on the earlier to occur of: (a) the date that is five (5) years from the effective date of the Current ABL Facility, and (b) 91 days prior to the maturity of the Company’s 2028 Notes. The Current ABL Facility is subject to the terms of the Revolver Intercreditor Agreement (as defined in the Current ABL Facility) by and among the Administrative Agent and Wilmington Trust, National Association.

The following table summarizes the interest rates in effect with respect to our debt as of March 31, 2023:

*(In millions)*

| ​ ​ ​ Type of Debt ​ | ​ ​ ​ ​ | ​ ​ ​ ​ Amount Outstanding | ​ ​ ​ ​ Applicable ​ Interest Rate ​ ​ |
| --- | --- | ---: | ---: |
| 2028 Notes, net of issuance costs (fixed rate) | ​ | $714.8 | 7.375% |
| Asset-backed credit facility (variable rate) (1) | ​ | ​ — | — ​ |

(1) Subject to variable LIBOR or base rate plus a spread as defined in the agreement. See Note 12 – *Subsequent Events* of our consolidated financial statements for further discussion.

The following table provides a summary of our statements of cash flows for the three months ended March 31, 2023 and 2022, respectively:

*(In thousands)*

| ​ ​ ​ ​ | ​ ​ ​ | ​ ​ Three Months Ended March 31, 2023 | ​ | ​ ​ 2022 |
| --- | --- | --- | --- | --- |
| Net cash flows provided by operating activities | ​ | $17,104 | ​ | $15,456 |
| Net cash flows used in investing activities | ​ | ​ (21,446) | ​ | ​ (1,576) |
| Net cash flows (used in) provided by financing activities | ​ | ​ (25,606) | ​ | ​ 268 |

Net cash flows provided by operating activities were approximately $17.1 million and $15.5 million for the three months ended March 31, 2023 and 2022, respectively. Net cash flow from operating activities for the three months ended March 31, 2023 increased from the prior year primarily due to timing of collections of accounts receivable and payments for other assets. Cash flows from operations, cash and cash equivalents, and other sources of liquidity are expected to be available and sufficient to meet foreseeable cash requirements.

Net cash flows used in investing activities were approximately $21.5 million and $1.6 million for the three months ended March 31, 2023 and 2022, respectively. During the three months ended March 31, 2023, we derecognized $26.0 million of restricted cash related to the deconsolidation of RVAEH. Additionally, we sold a partial interest in RVAEH for $6.6 million. Capital expenditures, including digital tower and transmitter upgrades and deposits for station equipment and purchases were approximately $2.0 million and $1.6 million for the three months ended March 31, 2023 and 2022, respectively.

Net cash flows (used in) provided by financing activities were approximately ($25.6) million and $0.3 million for the three months ended March 31, 2023 and 2022, respectively. We repurchased approximately $1.3 million and $10,000 of our Class D Common Stock during the three months ended March 31, 2023 and 2022, respectively. During the three months ended March 31, 2023, the Company repurchased approximately $25.0 million of our 2028 Notes. Finally, Reach Media paid approximately $2.0 million in dividends to noncontrolling interest shareholders during the three months ended March 31, 2023.

### Credit Rating Agencies

On a continuing basis, Standard and Poor’s, Moody’s Investor Services and other rating agencies may evaluate our indebtedness in order to assign a credit rating. Our corporate credit ratings by Standard & Poor's Rating Services and Moody's Investors Service are speculative-grade and have been downgraded and upgraded at various times during the last several years. Any reductions in our credit ratings could increase our borrowing costs, reduce the availability of financing to us or increase our cost of doing business or otherwise negatively impact our business operations.

### CRITICAL ACCOUNTING ESTIMATES

Our significant accounting policies are described in Note 3 – *Summary of Significant Accounting Policies* of the consolidated financial statements in our Form 10-K. We prepare our consolidated financial statements in conformity with GAAP, which require us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the year. Actual results could differ from those estimates. In Management’s Discussion and Analysis contained in our Form 10-K for the year ended December 31, 2022, we summarized the policies and estimates to be most critical in understanding the judgments involved in preparing our consolidated financial statements and the uncertainties that could affect our results of operations, financial condition and cash flows. There have been no material changes to our existing accounting policies or estimates since we filed our Form 10-K for the year ended December 31, 2022.

### Radio Broadcasting Licenses

Based on our 2022 annual quantitative impairment test, the fair value of four markets, with radio broadcasting licenses of approximately $163.4 million as of March 31, 2023, exceeded their carrying value by less than 10%. The radio broadcasting licenses in all four markets are considered at risk of failing step one of the impairment test in future quarters if financial performance continues to decrease.

Refer to our Form 10-K for additional information regarding the method and key assumptions, and any uncertainty associated with the key assumptions.

### Goodwill

Based on our 2022 annual quantitative impairment test, there was no radio market reporting unit at risk of failing step one of the impairment test. Based on our year end 2022 qualitative impairment test, it was more likely than not that the fair value of all other reporting units exceeded its carrying amounts.

### Intangible Assets Excluding Goodwill and Radio Broadcasting Licenses

Based on our 2022 annual qualitative impairment test, it was more likely than not that the fair value of intangible assets exceeded their respective carrying amounts.

### RECENT ACCOUNTING PRONOUNCEMENTS

See Note 3 - *Summary of Significant Accounting Policies* of our consolidated financial statements for a summary of recent accounting pronouncements.

### CAPITAL AND COMMERCIAL COMMITMENTS

### Radio Broadcasting Licenses

Each of the Company’s radio stations operates pursuant to one or more licenses issued by the Federal Communications Commission that have a maximum term of eight years prior to renewal. The Company’s radio broadcasting licenses expire at various times beginning in October 2027 through August 1, 2030. Although the Company may apply to renew its radio broadcasting licenses, third parties may challenge the Company’s renewal applications. The Company is not aware of any facts or circumstances that would prevent the Company from having its current licenses renewed. A station may continue to operate beyond the expiration date of its license if a timely filed license renewal application was filed and is pending.

### Indebtedness

As of March 31, 2023, we had approximately $725.0 million of our 2028 Notes outstanding within our corporate structure. See “*Liquidity and Capital Resources.”* The Company had no other indebtedness.

### Royalty Agreements

Musical works rights holders, generally songwriters and music publishers, have been traditionally represented by performing rights organizations, such as the American Society of Composers, Authors and Publishers (“ASCAP”), Broadcast Music, Inc. (“BMI”) and SESAC, Inc. (“SESAC”). The market for rights relating to musical works is changing rapidly. Songwriters and music publishers have withdrawn from the traditional performing rights organizations, particularly ASCAP and BMI, and new entities, such as Global Music Rights, Inc. (“GMR”), have been formed to represent rights holders. These organizations negotiate fees with copyright users, collect royalties, and distribute them to the rights holders. We currently have arrangements with ASCAP, SESAC and GMR. On February 7, 2022, the RMLC and GMR reached a settlement and achieved certain conditions which effectuate a four-year license for the period April 1, 2022 to March 31, 2026. The license includes an optional three-year extended term that the Company may effectuate prior to the end of the initial term.

### Lease Obligations

We have non-cancelable operating leases for office space, studio space, broadcast towers and transmitter facilities that expire over the next fifty years.

### Operating Contracts and Agreements

We have other operating contracts and agreements including employment contracts, on-air talent contracts, severance obligations, retention bonuses, consulting agreements, equipment rental agreements, programming related agreements, and other general operating agreements that expire over the next six years.

### Reach Media Noncontrolling Interest

Beginning on January 1, 2018, the noncontrolling interest shareholders of Reach Media have had an annual right to require Reach Media to purchase all or a portion of their shares at the then current fair market value for such shares (the “Put Right”). This annual right is exercisable for a 30-day period beginning January 1 of each year. The purchase price for such shares may be paid in cash and/or registered Class D common stock of Urban One, at the discretion of Urban One. The noncontrolling interest shareholders of Reach Media did not exercise their Put Right for the 30-day period ending January 31, 2023. Management, at this time, cannot reasonably determine the period when and if the put right will be exercised by the noncontrolling interest shareholders.

### Contractual Obligations Schedule

The following table represents our scheduled contractual obligations as of March 31, 2023:

*(In thousands)*

| ​ ​ ​ ​ Contractual Obligations ​ | ​ ​ ​ ​ | ​ ​ Payments Due by Period ​ ​ Remainder of 2023 | ​ ​ ​ | ​ ​ ​ ​ ​ ​ 2024 | ​ ​ ​ | ​ ​ ​ ​ ​ ​ 2025 | ​ ​ ​ | ​ ​ ​ ​ ​ ​ 2026 | ​ ​ ​ | ​ ​ ​ ​ ​ ​ 2027 | ​ ​ ​ | ​ ​ ​ ​ 2028 and Beyond | ​ ​ ​ | ​ ​ ​ ​ ​ ​ Total |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| 7.375% Subordinated Notes (1) | ​ | $40,102 | ​ | $53,469 | ​ | $53,469 | ​ | $53,469 | ​ | $53,469 | ​ | $729,456 | ​ | $983,434 |
| Other operating contracts/agreements (2) | ​ | 80,393 | ​ | ​ 43,624 | ​ | ​ 27,828 | ​ | ​ 13,816 | ​ | ​ 4,551 | ​ | ​ 8,297 | ​ | 178,509 |
| Operating lease obligations | ​ | 8,745 | ​ | ​ 10,822 | ​ | ​ 6,891 | ​ | ​ 5,121 | ​ | ​ 3,550 | ​ | ​ 8,486 | ​ | 43,615 |
| Total | ​ | $129,240 | ​ | $107,915 | ​ | $88,188 | ​ | $72,406 | ​ | $61,570 | ​ | $746,239 | ​ | $1,205,558 |

(1) Includes interest obligations based on interest rates on senior secured notes outstanding as of March 31, 2023.

(2) Includes employment contracts (including the Employment Agreement Award), severance obligations, on-air talent contracts, consulting agreements, equipment rental agreements, programming related agreements, launch liability payments, asset-backed credit facility (if applicable) and other general operating agreements. Also includes contracts that our cable television segment has entered into to acquire entertainment programming rights and programs from distributors and producers. These contracts relate to their content assets as well as prepaid programming related agreements.

Of the total amount of other operating contracts and agreements included in the table above, approximately $110.0 million has not been recorded on the balance sheet as of March 31, 2023, as it does not meet recognition criteria. Approximately $26.1 million relates to certain commitments for content agreements for our cable television segment, approximately $36.1 million relates to employment agreements, and the remainder relates to other agreements.

### Off-Balance Sheet Arrangements

The Company currently is under a letter of credit reimbursement and security agreement with capacity of up to $1.2 million which expires on October 8, 2024. As of March 31, 2023, the Company had letters of credit totaling $0.8 million under the agreement for certain operating leases and certain insurance policies. Letters of credit issued under the agreement are required to be collateralized with cash. In addition, the Current ABL Facility provides for letter of credit capacity of up to $5 million subject to certain limitations on availability.

## Controls and procedures

As filed, 9,879 characters.

### (a) Evaluation of disclosure controls and procedures

We have carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer (“CEO”) and the Chief Financial Officer (“CFO”), of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, are controls and procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms.

In designing and evaluating the disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can only provide reasonable assurance of achieving the desired control objectives and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our disclosure controls and procedures are designed to provide a reasonable level of assurance of reaching our desired disclosure controls objectives. Based on this evaluation, our CEO and CFO concluded that as of March 31, 2023, our disclosure controls and procedures were not effective in timely alerting them to material information required to be included in our periodic SEC reports as a result of material weaknesses that existed in our internal control over financial reporting as described below.

Previously Reported Material Weakness in Internal Control Over Financial Reporting

As previously described in the 2022 Form 10-K, in connection with the audits of our consolidated financial statements in certain prior years, we and our independent registered public accounting firm identified certain control deficiencies in the design and implementation of our internal control over financial reporting that, in the aggregate, constituted a material weakness. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our consolidated annual or interim financial statements will not be prevented or detected on a timely basis. Specifically, we did not design and or implement an effective control environment or control activities as further detailed below:

- Control Environment, Risk Assessment, and Monitoring – We did not have appropriately designed entity-level controls impacting the (1) control environment, (2) risk assessment procedures, and (3) monitoring activities to prevent or detect material misstatements to the financial statements and assess whether the components of internal control were present and functioning. These deficiencies were attributed to an insufficient number of qualified resources to effectively operate and oversee internal controls over financial reporting.
- Control Activities – Management has determined that the Company did not have an adequate selection and development of effective control activities resulting in the following material weaknesses:
- Management did not design and maintain effective information technology general controls in the areas of user access and program change management for certain information technology systems that support the Company’s financial reporting and other processes. This material weakness also resulted in segregation of duties conflicts for certain user roles.
- Management did not design and maintain effective controls to support proper segregation of duties relating to the review of manual journal entries.
- Management did not design and maintain effective review controls over revenue, income taxes, content assets, launch assets, the preparation of the statements of cash flows, and certain financial statement disclosures with an appropriate level of precision to detect a material misstatement.
- Management did not design and maintain effective review controls over the accounting and disclosures related to non-routine transactions, including the investment in MGM National Harbor, certain stock-based compensation, and the Joint Venture RVA Entertainment Holdings.
- Management did not design and maintain effective controls over the completeness and accuracy of the balances of its radio broadcasting licenses, goodwill and related accounts. Specifically, the Company’s monitoring and control activities related to review of key third-party reports and assumptions used in the valuation of its radio broadcasting licenses, goodwill and related accounts were not operating effectively.

Material Weakness in Internal Control Over Financial Reporting

In connection with the preparation of our consolidated financial statements for the three months ended March 31, 2023, we and our independent registered public accounting firm identified certain control deficiencies in the design and implementation of our internal control over financial reporting that, in the aggregate, constituted a material weakness. Specifically, we did not design and or implement an effective control environment or control activities over the financial statement close process including an inadequate evaluation of the accounting for significant and non-recurring transactions and an inadequate review as part of the Company’s reporting and disclosures with an appropriate level of precision to detect a material misstatement.

Based on additional procedures and post-closing review, management concluded that the consolidated financial statements included in this Quarterly Report on Form 10-Q present fairly, in all material respects, our financial position, results of operations, and cash flows for the periods presented, in conformity with accounting principles generally accepted in the United States.

Remediation of the Material Weaknesses in Internal Control over Financial Reporting

In response to the material weaknesses identified, management designed a remediation plan which was approved by the Audit Committee and board of directors. As of November 20, 2023, Management has made progress to remediate the control deficiencies contributing to the material weaknesses, as described below:

- We provided training to new and existing personnel on proper execution of designed control procedures;
- As part of our ongoing effort to expand our accounting department, we hired a Corporate Controller and a Senior VP-Finance/Chief Accounting Officer and engaged external resources to augment our accounting team. We developed a preliminary hiring plan which has been approved by the Audit Committee and continue to assess our personnel needs, expertise and requirements and will hire personnel as needed.
- We engaged external resources with the appropriate depth of expertise to establish a robust financial controls governance structure, conduct a financial risk assessment, establish internal materiality thresholds, and identify key business processes.
- We are in the process of conducting process and control walkthroughs of all key processes to identify risk points and corresponding controls.
- We have initiated the process to document, implement and redesign controls, policies, and procedures with an appropriate level of precision to detect a material misstatement, and to retain sufficient documentation to support the operating effectiveness of the controls. The control enhancement procedures are focused on:
- Increasing the precision and specificity of our control activities, addressing completeness and accuracy of the information used in performing management review controls, as well as documenting sufficient evidence of management’s review supporting its conclusions; and
- Modifying our journal entry operating procedures to establish a formal hierarchy of review of journal entries to enforce proper segregation of duties in advance of implementing a new general ledger system.
- Assessing roles and permissions across relevant financial systems and restricting access based on job responsibilities.
- Redesigning information technology general controls across relevant systems related to user access and change management.
- We will also seek to improve the process of assessing the effectiveness of the control environment by:
- Implementing a Governance Risk and Compliance (“GRC”) tool to manage the control assessment annually; and
- Designing and implementing an ongoing controls evaluation strategy to be executed by an independent party

Management is committed to the remediation of the material weaknesses described above, as well as the continued improvement of the Company’s internal control over financial reporting. The actions that we are taking are subject to ongoing senior management review, as well as oversight of the audit committee of our board of directors. We may also conclude that additional measures may be required to remediate the material weaknesses. We will not be able to conclude that we have remediated a material weakness until the applicable controls operate for a sufficient period of time and management has concluded, through formal testing, that these controls are operating effectively. We will continue to monitor the design and effectiveness of these and other processes, procedures and controls and make any further changes management deems appropriate.

### (b) Changes in internal control over financial reporting

Except for the material weakness and the material weakness remediation efforts described above, there were no changes in our internal control over financial reporting during the three months ended March 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 5,634 characters.

In addition to the other information set forth in this report, you should carefully consider the risk factors discussed in Part I, “Item 1A. Risk Factors” in our Form 10-K for the year ended December 31, 2022, which could materially affect our business, financial condition or future results. The risks described in our 2022 Form 10-K, as updated by our quarterly reports on Form 10-Q, are not the only risks facing our Company. Additional risks and uncertainties not currently known to us, or that we currently deem to be immaterial, may also materially adversely affect our business, financial condition and/or operating results.

***Continued delays in the filing of our periodic reports with the Securities and Exchange Commission could impact our listing on the Nasdaq stock market, which could materially and adversely affect our stock price and impact our operations.***

As previously disclosed, in connection with the preparation of the consolidated financial statements for the period ended December 31, 2022, the Company re-evaluated its accounting for the valuation of its investment interest in MGM National Harbor (the “MGM Investment”) and determined that adjustments were required to previously issued financial statements for certain periods due to understatements in the value of the MGM Investment and related tax effects. As a result, the Company was unable to file its Annual Report on Form 10-K for the period ended December 31, 2022 (the “2022 Form 10-K”) on a timely basis with the United States Securities and Exchange Commission (the “SEC”). While we filed our 2022 Form 10-K on June 30, 2023, the delay in filing the 2022 Form 10-K caused follow on delays in the filing of our Quarterly Reports on Forms 10-Q for the three months ended March 31, 2023 and June 30, 2023, which were due in May 2023 and August 2023, respectively. While we subsequently filed the Quarterly Reports on Forms 10-Q for the three months ended March 31, 2023 and June 30, 2023 on November 20, 2023, we are now delayed in the filing of our Quarterly Report on Form 10-Q for the three months ended September 30, 2023 (the “Q3 2023 10-Q”). We anticipate filing the Q3 2023 10-Q prior to December 31, 2023.

Nasdaq Listing Rule 5250(c) (1) (the “Listing Rule”) requires Nasdaq listed companies to timely file all required periodic financial reports with the SEC. On September 28, 2023, the Company received a Staff Delisting Determination (the “Staff Determination”) from the Nasdaq Listing Qualifications Department (the “Listing Department”) notifying the Company that Nasdaq has initiated a process that could result in the delisting of the Company’s securities from Nasdaq as a result of the Company not being in compliance with the Listing Rule. The Staff Determination had no immediate effect and did not immediately result in the suspension of trading or delisting of the Company’s shares of common stock. After receipt of the Staff Determination, the Company timely requested a hearing before a Nasdaq Hearings Panel (the “Hearings Panel”). The hearing request automatically stayed any suspension or delisting action at least through October 20, 2023. On October 17, 2023, the Hearings Panel granted the Company’s request that the stay be extended through the hearing, scheduled for November 30, 2023 (the “Hearing”), and the expiration of any additional extension period granted by the Hearings Panel following the Hearing. We cannot assure you that we will be successful in keeping the Company’s stock listed after the Hearing or any extension granted at the Hearing. However, in the interim, during the period of any stay or extension, the Company’s common stock will continue to trade on the Nasdaq.

If our common stock were to be delisted, the liquidity of our common stock would be adversely affected and the market price of our common stock could decrease. While our common stock could move to the over-the-counter markets (“OTC”), OTC markets are significantly more limited than the Nasdaq, and quotation on the OTC markets may result in a less liquid market available for existing and potential security holders to trade in our common stock and could further depress the trading price of our common stock. The suspension and delisting of our common stock from the Nasdaq could also result in other adverse consequences, including lower demand for our common stock, increased volatility in the price of our common stock, adverse publicity, reputational harm and a reduced interest in our Company from investors, analysts and other market participants. In addition, the suspension and delisting could impair our ability to raise additional capital through equity or debt financing and our ability to attract and retain employees by means of equity compensation. There can be no assurance that our common stock would continue to trade on the OTC markets or that any public market for our common stock would exist in the future, whether broker-dealers will continue to provide public quotes of our common stock on this market, whether the trading volume of our common stock will be sufficient to provide for an efficient trading market, whether quotes for our common stock may be blocked by in the future, or that we would seek to, or be able to, relist our common stock on a national securities exchange.

In addition, the delay in our 2022 and 2023 filings could expose the Company to risk of litigation concerning any impact upon the Company’s price of the Company’s common stock. Any such litigation could distract management from day-to-day operations and further adversely affect the market price of our common stock

Filed Nov 20, 2023.
Source: SEC EDGAR, the filing index for accession 0001558370-23-019225. Last ingested by Listed: Nov 3, 2026, 23:15 ET. No prices; not investment advice.