After ‘Strong’ Q3, Alfred Liggins Expects Urban One’s Momentum To Continue Into 2023

 

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Story by Inside Radio

Photo of by Urban One

Urban One had what CEO Alfred Liggins (photo above)  called a “strong finish” to the second quarter as total revenue grew 10.4% to $118.8 million. Liggins chalked up the double-digit growth to “robust growth in digital and cable television advertising, both of which were up double digits.” Profits at the African American-owned and targeted media company grew 6.1% year over year to $47.5 million, from $44.8 million in 2021, and up from $39.6 million in pre-pandemic 2019.

Radio revenues increased 4.9% year-over-year with a large portion of the gain coming from political advertising. Excluding political, radio billings were up 1.3%.

Reach Media, the network behind D.L. Hughley, Rickey Smiley, “The Morning Hustle” and other syndicated personalities, saw its revenues shoot up 17.8% to $11.1 million during the quarter.

Radio advertising grew 4.5% to $44.5 million with local ad sales up 6.1% and national up 3.6%, bucking the trend of lower national sales seen at other radio companies. Healthcare, entertainment services and auto each posted double-digit increases, while telecommunications and financial had double-digit decreases, Chief Financial Officer Peter Thompson said during the company’s Tuesday evening earnings call.

Digital advertising jumped 19.1% to $187.9 million, cable television advertising rose 26.8% to $29.1 million and cable TV affiliate fees declined 4.2% to $24.3 million.

Third Quarter Slowdown

For third quarter, radio is pacing down 2.3% with July at -7%, August at -1% and September at +6%. “We are seeing a slowdown for some major retailers in third quarter, and also automakers as new car demand continues to exceed supply,” Thompson said. Radio is pacing down 4.4% in Q3 when political is factored out of the comparison.

“Even though we are seeing a slowdown in the radio business, our slowdown is not as significant as I've heard some of the other companies report,” Liggins told analysts, adding that Urban One’s mix of media assets – radio, TV and digital – will produce “positive revenue growth” for the company in third quarter, up by mid-to high-single digits.

Political has been tracking ahead of budget, Liggins said. And with numerous tight races in the 2022 midterm elections – especially in Ohio where Urban One has radio clusters in Cleveland, Columbus and Cincinnati – Liggins said, “Political is going to bode well for us.”

Sounding upbeat, Liggins said Urban One still expects to exceed the upper end of its full year guidance, which calls for earnings in the neighborhood of $145 million to $150 million. He expects the company’s momentum will continue through the rest of 2022 and into 2023. “Even with the looming slowdown, we got a lot of positive momentum across many of our different divisions,” Liggins said. He singled out “a great national effort” taking place at its radio division, “where we're taking advantage of the tailwind [of] the whole diversity and inclusion movement by advertisers.”

Operating expenses climbed 12.0% to $75.2 million in third quarter, due to higher programming and technical expenses, higher selling, general and administrative expenses, and higher corporate selling, general and administrative expenses.

Inflation Impact

With record-high inflation the biggest driver of the nation’s economic slowdown, Liggins said they’re feeling its impact when trying to fill job openings. “The number one way it's impacting us right now is it is becoming increasingly harder to fill positions,” he said. Posted positions that used to attract 15 resumes now only bring in a small handful. “The biggest impact is trying to get new people into our work environment. We're finding it is competitive,” he added.

As more advertisers look to invest in diverse content and diverse ownership, it is paying off for Urban One, which Liggins noted has had the same strategy since its inception in 1980. “We built a brand on serving the African-American community,” he explained. “So, with advertisers actually waking up and saying, ‘I want to put more money against this demo,’ I think we're benefiting from 42 years of brand building, of being committed to this space.”

Based on multiyear ad commitments from the likes of General Motors, McDonald’s, and Procter & Gamble, Liggins thinks the momentum will continue. “I’m not Nostradamus, and I can't predict the future. But I definitely see it continuing. For at least the next two or three years, just because of the commitments that a lot of these companies have verbally made, publicly made.”