Urban One Is Ready For More Multi-Market Swaps – Or Something Bigger

 

Story by Inside Radio

Last year’s multi-market swap between Entercom (now Audacy) and Urban One allowed both companies to get stronger in one market in exchange for exiting another where they didn’t have much of a fighting chance. Urban One now has a seven-station cluster in Charlotte and Audacy has eight in St. Louis.

“It's been great. The business is just a lot more stable when you've got larger shares and you're in multiple formats,” said Urban One CEO Alfred Liggins.

Liggins has long said further consolidation in the industry is inevitable – and necessary for its financial health. Now he’s thinking Urban One would be better off if it merged with another group. “I think our assets should ultimately be combined with a larger radio platform to get more scale, particularly in the markets that we already operate in,” he said in response to an analyst question during the company’s quarterly earnings call last week.

Competing with large, scale-driven companies like iHeartMedia, Audacy and Cumulus Media, Liggins says Urban One would do better on a larger stage. “I think that now that there is not radio dereg on the horizon that our company probably is the best well positioned to be one of the central platforms in the consolidation. And that's absolutely what I think should happen in radio. I've said it before.”

The problem is that no one wants to sell in today’s environment. Coming off the COVID-powered ad downturn, “nobody has any idea what their real EBITDA is,” Liggins noted, making it next to impossible to determine a station’s current value. “Nobody wants to buy, nobody wants to sell right now because you just don't know what assets are worth. But as soon as we get through that, I think we should be focused on doing something.”

Buyer Or Seller?

All of which begs the question: Is Urban One a buyer or a seller? Is it ready to cash out of radio and invest more in the casino business?

“I have always said that we are willing… to be on either side of a transaction that created value and made sense,” Liggins said. “I like the radio business.”

But while he’s fond of the industry that he and his mother, Radio One founder Cathy Hughes, have played a pivotal role in for the past 36 years, he’s also a pragmatist. Before the swap with Entercom, Urban One owned just three FMs in Charlotte, all focused on the 23% of the market that is African American “The Entercom deal was interesting because I was like, we either need to leave Charlotte or you need to leave Charlotte,” Liggins explained. “And I said I'll do either.”

While he says he’s willing to be on either side of the deal table, he doesn’t sound like a chief executive ready or willing to exit the business anytime soon. “If I had to handicap it, there are not a lot of radio operators left who know the business, know how to run radio stations, like running radio stations [and] don't mind the business. So I would have to say that given the current landscape we would probably be the surviving entity,” Liggins said. “I'm happy to be the management solution for that because we like the business. We know the business. The radio business has actually helped us get into these other businesses.” In addition to radio, Urban One owns TV and digital assets, has a 7% stake in one casino and is one of two finalists bidding for the rights to build a second one.

So does that make Urban One more like a willing swap partner? “We would be a seller or a swapper of assets in order to create value of which we can then use to delever or deploy into other areas that we can grow faster,” he said.

Getting a bit more specific, Liggins said he’s looking for synergies in markets where Urban One doesn’t have a full boat of stations and where it could achieve significant cost savings, including Indianapolis, Dallas, Cincinnati and Washington DC. And he has his eye on a potential dance partner. “A company like a Cumulus, between corporate and the seven markets that we overlap in [including Atlanta, Cincinnati, Dallas, Houston, Indianapolis, Washington,] I think there's a lot of cost and revenue synergies there,” he continued. “I think that somebody needs to take advantage of that.”