ROIA

Radio One, Inc. (ROIA)

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Exchange: NASDAQ
Industry: Consumer Services
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Radio One, Inc. (ROIA)

Q1 2008 Earnings Call

May 8, 2008 10:00 am ET

Executives

Alfred Liggins - Chief Executive Officer

Peter Thompson - Chief Financial Officer

Linda Vilardo - Chief Administrative Officer

Barry Mayo - President of Radio

Analysts

Victor Miller - Bear Stearns

Bishop Cheen - Wachovia

Marci Ryvicker - Wachovia Securities

Shelley Bergman - Morgan Stanley

Fred Moran - Stanford Group

Presentation

Operator

Welcome to Radio One’s First Quarter 2008 Earnings Conference Call. I have been asked to begin this call with the following Safe Harbor statement. During this conference call the Company will be sharing with you certain projections or forward-looking statements regarding future events or its future performance. Radio One cautions you that certain factors, including risks and uncertainties referred to in the 10-Ks, 10-Qs and other reports periodically filed with the Securities and Exchange Commission could cause the Company’s actual results to differ materially from those indicated by its projections or forward-looking statements. This call will present information as of May 8, 2008.

Please note that Radio One disclaims any duty to update any forward-looking statements made in the presentation. In this call, Radio One may discuss some non-GAAP financial measures in talking about its performance. These measures will be reconciled to GAAP either during the course of this call or in the Company’s press release, which can be found at its website at www.radio-one.com.

The conference call will be recorded and made available for replay from 1:30 pm today until 11:59 pm Eastern time tomorrow. You may listen to the replay by calling 320-365-3844 and entering the access code of 917-331. Access to live audio and replay of the conference call will also be available on Radio One’s corporate website, again, at www.radio-one.com. The replay will be made available on the website for seven calendar days following the call. No other recordings or copies of this call are authorized or may be relied upon.

I will now turn the call over to Alfred Liggins, Chief Executive Officer of Radio One, who is joined by Peter Thompson, the Company’s Chief Financial Officer.

Alfred Liggins - Chief Executive Officer

Thank you very much, operator, and welcome, everyone, to our first quarter results conference call. Also joining Peter and I are Linda Vilardo, our Chief Administrative Officer and Barry Mayo, who is our President of Radio. I am going to let Peter take over and talk to you about the numbers and then we are going to talk about operations and some further issues.

Peter Thompson - Chief Financial Officer

Okay, great. For the first quarter, the radio markets in which we operate were down 5% year-to-year. On a same station basis, our Radio division, excluding Reach Media, was down 2.3%. However, we had a major NTR event in the quarter, our Gospel Cruise, which, when added, pushed net revenue into positive growth territory with a 0.9% increase year-to-year for the Radio division.

On a consolidated basis, net revenue was $72.5 million, down 2.1% on a same station basis from the first quarter of 2007. Of this decline, 100 basis points was attributable to Reach Media where the comps included TV syndication and Sky Show revenues, which were discontinued in 2008. GIANT magazine was responsible for 70 basis points of the decline as they had a $600,000 one time sponsorship deal in the 2007 comps.

Looking at our spot radio business, our local advertising revenue was up by 0.3% against a decline of 5.3% in our markets. National advertising was down 11.4% year-to-year versus a decline of 8.2% in our markets. So, in terms of the business that we control directly, we substantially outperformed the market and we continue to work closely with our national rep firm to ensure that we maximize our share of national revenues.

Looking by market, we had year-over-year growth in Washington, Philadelphia, Raleigh, Indianapolis and Columbus, whilst we declined in Atlanta, Dallas, Detroit, Charlotte and Houston.

Turning to pricing, the Q1 average unit rates fell by 6% year-to-year, reflecting continued pricing softness. Our total number of spots sold increased by 6%. Looking by advertising category as expected political performed well as did financial and nonprofit. However, of the major categories automotive retail, telecommunications and entertainment were all weaker year-to-year. For the first quarter consolidated station operating income was $28.9 million, a decrease of 15.1% on a same station basis from 2007, which includes our spending on Interactive One.

Adjusted consolidated EBITDA was $22.2 million, a decrease of 13.6% on a same station basis from 2007. Operating expenses for the quarter were up 3.7% year-to-year on a same station basis normalizing against quarter one 2007 for the One Love Gospel Cruise at $1.9 million extra expense, Interactive One, which had an incremental $1.2 million of expense and the WPRS Washington station acquisition, which had an incremental expense of $0.3 million and also adjusting for stock option investigation costs of $1 million, which happened in Q1 2007 reduces that increase substantially and I will tell you what the normalized percentage is a little later on.

Aside from the cruise and our Internet activities, the only significant area of increased expenditure in Q1 was programming costs, which increased by $1 million. This principally related to new on-air talent deals, (inaudible) believe investment in talent forms part of an ongoing initiative, which will build revenue generating syndicated programs for the future.

Elsewhere, we were able to deliver cuts in travel and entertainment, marketing and promotion and 401K expenses. Normalizing for these three items that I mentioned earlier namely, the cruise, Interactive One and stock option investigations, our core expenses actually reduced by 0.6 of a percent for the quarter. This is a reflection of our focus on cost control. Much of the low hanging fruit has now been taken and we need to reengineer business processes and make consolidations across the group to increase profitability.

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