SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

~~Form 10-Q~~

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September~~June 30, ~~2020~~2021

Commission File No. 0-25969

URBAN ONE, INC.

(Exact name of registrant as specified in its charter)

Delaware	52-1166660
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

1010 Wayne Avenue,

14th Floor

Silver Spring, Maryland20910

(Address of principal executive offices)

(301) 429-3200

~~(301) 429-3200~~

Registrant’s telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act:


Title of each class:	Trading Symbol(s)	Name of each exchange on which registered:
Class A Common Stock	UONE	NASDAQ Stock Market
Class D Common Stock	UONEK	NASDAQ Stock Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x☒ No ¨☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x☒ No ¨

☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨☐	Accelerated filer ¨☐
Non-accelerated filer x☒	Smaller reporting company x☒
	Emerging growth company ¨☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨☐

Indicate by check mark whether the registrant is a shell company as defined in Rule 12b-2 of the Exchange Act. Yes ¨☐ No x

☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class

~~Class~~	Outstanding at ~~November 6, 2020~~July 30, 2021
Class A Common Stock, $.001 Par Value		~~4,441,635~~	8,221,026
Class B Common Stock, $.001 Par Value	2,861,843	~~2,861,843~~
Class C Common Stock, $.001 Par Value	2,928,906	~~2,928,906~~
Class D Common Stock, $.001 Par Value		~~37,515,801~~	37,301,482

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TABLE OF CONTENTS

		~~Page~~
		Page
	PART I. FINANCIAL INFORMATION

Item 1.	Consolidated Statements of Operations for the Three and ~~Nine~~Six Months Ended ~~September~~June 30, 2021 and 2020 ~~and 2019~~ (Unaudited)	5
	Consolidated Statements of Comprehensive ~~Loss~~Income (Loss) for the Three and ~~Nine~~Six Months Ended ~~September~~June 30, 2021 and 2020 ~~and 2019~~ (Unaudited)	6
	Consolidated Balance Sheets as of ~~September~~June 30, ~~2020~~2021 (Unaudited) and December 31, ~~2019~~2020	7
	Consolidated Statement of Changes in Stockholders’ Equity for the ~~Nine~~Three and Six Months Ended ~~September~~June 30, ~~2020~~2021 (Unaudited)	8
	Consolidated Statement of Changes in Stockholders’ Equity for the ~~Nine~~Three and Six Months Ended ~~September~~June 30, ~~2019~~2020 (Unaudited)	9
	Consolidated Statements of Cash Flows for the ~~Nine~~Six Months Ended ~~September~~June 30, 2021 and 2020 ~~and 2019~~ (Unaudited)	10
	Notes to Consolidated Financial Statements (Unaudited)	11
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	40
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	61
Item 4.	Controls and Procedures	61 62

	PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	63
Item 1A.	Risk Factors	63
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	64
Item 3.	Defaults Upon Senior Securities	64
Item 4.	Mine Safety Disclosures	64
Item 5.	Other Information	64
Item 6.	Exhibits	64 65
	SIGNATURES	65 66

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CERTAIN DEFINITIONS

Unless otherwise noted, throughout this report, the terms “Urban One,” the “Company,” “we,” “our” and “us” refer to Urban One, Inc. together with its subsidiaries.

Cautionary Note Regarding Forward-Looking Statements

This document contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements do not relay historical facts, but rather reflect our current expectations concerning future operations, results and events. All statements other than statements of historical fact are “forward-looking statements” including any projections of earnings, revenues or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements concerning proposed new services or developments; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing. You can identify some of these forward-looking statements by our use of words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “likely,” “may,” “estimates” and similar expressions. You can also identify a forward-looking statement in that such statements discuss matters in a way that anticipates operations, results or events that have not already occurred but rather will or may occur in future periods. We cannot guarantee that we will achieve any forward-looking plans, intentions, results, operations or expectations. Because these statements apply to future events, they are subject to risks and uncertainties, some of which are beyond our control that could cause actual results to differ materially from those forecasted or anticipated in the forward-looking statements. These risks, uncertainties and factors include (in no particular order), but are not limited to:

·●

economic volatility, financial market unpredictability and fluctuations in the United States and other world economies that may affect our business and financial condition, and the business and financial conditions of our ~~advertisers;~~advertisers, including as a result of the ongoing COVID-19 pandemic;

·●

our high degree of leverage, certain cash commitments related thereto and potential inability to finance strategic transactions given fluctuations in market conditions;

·●

fluctuations in the local economies of the markets in which we operate (particularly our largest markets, Atlanta; Baltimore; Houston; and Washington, DC) could negatively impact our ability to meet our cash needs and our ability to maintain compliance with our debt covenants;

·●

~~fluctuations~~the extent of the impact of the COVID-19 pandemic (particularly in our largest markets, Atlanta; Baltimore; Houston; and Washington, DC), including the duration, spread of variants, severity, and any recurrence of the COVID-19 pandemic, the duration and scope of any renewed government orders and restrictions, the impact on our employees, and the extent of the impact of the COVID-19 pandemic on overall demand for advertising across our various media;

·●

local, regional, national, and international economic conditions that have been impacted as a result of the COVID-19 pandemic, including the risks of a global recession or a recession in one or more of our key markets, the impact that these economic conditions may have on us and our customers, and our assessment of that impact;

●

risks associated with the implementation and execution of our business diversification strategy;

·●

regulation by the Federal Communications Commission (“FCC”) relative to maintaining our broadcasting licenses, enacting media ownership rules and enforcing of indecency rules;

·●

regulation by certain gaming commissions relative to maintaining our interests, or our creditors ability to foreclose on collateral that includes our interests in, in any gaming licenses, joint ventures or other gaming and casino investments;

●

risks associated with our investment in gaming businesses that are managed or operated by persons not affiliated with us and over which we have little or no control;

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●

changes in our key personnel and on-air talent;

·●

increases in competition for and in the costs of our programming and content, including on-air talent and content production or acquisitions costs;

·●

financial losses that may be incurred due to impairment charges against our broadcasting licenses, goodwill, and other intangible assets;

3●

increased competition for advertising revenues with other radio stations, broadcast and cable television, newspapers and magazines, outdoor advertising, direct mail, internet radio, satellite radio, smart phones, tablets, and other wireless media, the internet, social media, and other forms of advertising;

·●

the impact of our acquisitions, dispositions and similar transactions, as well as consolidation in industries in which we and our advertisers operate;

	●
	·	developments and/or changes in laws and regulations, such as the California Consumer Privacy Act or other similar federal or state regulation through legislative action and revised rules and standards;

·●

disruptions to our technology network including computer systems and software, whether by man-made or other disruptions of our operating systems, structures or equipment as well as natural events such as pandemic, severe weather, fires, floods and earthquakes;

·●

disruptions to our business operations, investments and our sales resulting from quarantines of employees, customers and suppliers in areas affected by the Coronavirus/COVID-19 outbreak and reduced consumer spending given uncertainty around the duration of the virus’ impact; and

other factors mentioned in our filings with the Securities and Exchange Commission (“SEC”) including the factors discussed in detail in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K, for the year ended December 31, 2019 as well as the factors discussed in Part II, “Item 1A. Risk Factors” in each of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 and our Quarterly Report on Form 10- Q for the quarter ended June 30, 2020.

You should not place undue reliance on these forward-looking statements, which reflect our views as of the date of this report. We undertake no obligation to publicly update or revise any forward-looking statements because of new information, future events or otherwise.

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URBAN ONE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020

	(Unaudited)
	(In thousands, except share data)

NET REVENUE	$	107,593	$	76,008	$	199,033	$	170,883
OPERATING EXPENSES:
Programming and technical including stock-based compensation of $4 and $4, and $10 and $12, respectively		26,517		23,624		51,613		51,494
Selling, general and administrative, including stock-based compensation of $0 and $78, and $31 and $164, respectively		31,510		22,294		61,497		51,757
Corporate selling, general and administrative, including stock-based compensation of $168 and $186, and $384 and $485, respectively		9,321		7,326		19,657		15,957
Depreciation and amortization		2,325		2,382		4,589		4,930
Impairment of long-lived assets		0		0		0		53,650
Total operating expenses		69,673		55,626		137,356		177,788
Operating income (loss)		37,920		20,382		61,677		(6,905)
INTEREST INCOME		168		26		172		34
INTEREST EXPENSE		15,853		18,395		33,898		37,533
LOSS ON RETIREMENT OF DEBT		0		0		6,949		0
OTHER INCOME, net		(2,362)		(94)		(4,046)		(1,598)
Income (loss) before provision for (benefit from) income taxes and noncontrolling interests in income of subsidiaries		24,597		2,107		25,048		(42,806)
PROVISION FOR (BENEFIT FROM) INCOME TAXES		6,119		465		6,109		(21,390)
CONSOLIDATED NET INCOME (LOSS)		18,478		1,642		18,939		(21,416)
NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS		612		222		1,066		351
CONSOLIDATED NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	17,866	$	1,420	$	17,873	$	(21,767)

BASIC NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS
Net income (loss) attributable to common stockholders	$	0.36	$	0.03	$	0.36	$	(0.48)

DILUTED NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS
Net income (loss) attributable to common stockholders	$	0.33	$	0.03	$	0.34	$	(0.48)

WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic		49,789,892		44,806,219		49,124,056		45,025,471
Diluted		53,780,918		48,154,262		53,186,619		45,025,471

Three Months Ended
September 30, Nine Months Ended
September 30,
2020 2019 2020 2019
(Unaudited)
(In thousands, except share data)
NET REVENUE $ 91,912 $ 111,055 $ 262,795 $ 331,075
OPERATING EXPENSES:
Programming and technical including stock-based compensation of $4 and $23, and $16 and $70, respectively 24,206 31,060 75,700 93,849
Selling, general and administrative, including stock-based compensation of $99 and $263, and $263 and $460, respectively 23,615 36,637 75,372 115,634
Corporate selling, general and administrative, including stock-based compensation of $691 and $1,595, and $1,176 and $2,062, respectively 8,584 9,648 24,541 28,307
Depreciation and amortization 2,489 2,593 7,419 14,451
Impairment of long-lived assets 29,050 — 82,700 3,800
Total operating expenses 87,944 79,938 265,732 256,041
Operating income (loss) 3,968 31,117 (2,937 ) 75,034
INTEREST INCOME 178 45 212 131
INTEREST EXPENSE 18,243 20,239 55,776 61,647
OTHER INCOME, net (1,684 ) (1,299 ) (3,282 ) (4,669 )
(Loss) income before (benefit from) provision for income taxes and noncontrolling interests in income of subsidiaries (12,413 ) 12,222 (55,219 ) 18,187
(BENEFIT FROM) PROVISION FOR INCOME TAXES (136 ) 6,535 (21,526 ) 8,342
CONSOLIDATED NET (LOSS) INCOME (12,277 ) 5,687 (33,693 ) 9,845
NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS 495 328 846 999
CONSOLIDATED NET (LOSS) INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS $ (12,772 ) $ 5,359 $ (34,539 ) $ 8,846

BASIC NET (LOSS) INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS
Net (loss) income attributable to common stockholders $ (0.29 ) $ 0.12 $ (0.77 ) $ 0.20

DILUTED NET (LOSS) INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS
Net (loss) income attributable to common stockholders $ (0.29 ) $ 0.12 $ (0.77 ) $ 0.19

WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic 44,175,385 44,315,077 44,738,635 44,912,673
Diluted 44,175,385 46,118,702 44,738,635 46,965,245

The accompanying notes are an integral part of these consolidated financial statements.

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URBAN ONE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE ~~LOSS~~INCOME (LOSS)

Three Months Ended
September 30, Nine Months Ended
September 30,
2020 2019 2020 2019
(Unaudited)
(In thousands)
COMPREHENSIVE (LOSS) INCOME $ (12,277 ) $ 5,687 $ (33,693 ) $ 9,845
LESS: COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS 495 328 846 999
COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS $ (12,772 ) $ 5,359 $ (34,539 ) $ 8,846


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020

	(Unaudited)
	(In thousands)

COMPREHENSIVE INCOME (LOSS)	$	18,478	$	1,642	$	18,939	$	(21,416)
LESS: COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS		612		222		1,066		351
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	17,866	$	1,420	$	17,873	$	(21,767)

The accompanying notes are an integral part of these consolidated financial statements.

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URBAN ONE, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

As of
September 30,
2020 December 31,
2019
(Unaudited)
(In thousands, except share data)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 102,223 $ 33,073
Restricted cash 473 473
Trade accounts receivable, net of allowance for doubtful accounts of $8,276 and $7,416, respectively 92,357 106,148
Prepaid expenses 3,936 11,261
Current portion of content assets 30,314 30,642
Other current assets 4,240 4,442
Total current assets 233,543 186,039
CONTENT ASSETS, net 66,917 70,121
PROPERTY AND EQUIPMENT, net 23,306 24,393
GOODWILL 223,872 239,772
RIGHT OF USE ASSETS 43,389 44,922
RADIO BROADCASTING LICENSES 516,372 582,697
OTHER INTANGIBLE ASSETS, net 54,585 58,212
OTHER ASSETS 48,553 43,763
Total assets $ 1,210,537 $ 1,249,919
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable $ 6,399 $ 5,919
Accrued interest 14,465 9,094
Accrued compensation and related benefits 5,487 10,903
Current portion of content payables 17,338 14,804
Current portion of lease liabilities 9,158 8,980
Other current liabilities 19,899 25,393
Current portion of long-term debt 49,997 25,945
Total current liabilities 122,743 101,038
LONG-TERM DEBT, net of current portion, original issue discount and issuance costs 827,128 850,308
CONTENT PAYABLES, net of current portion 11,616 14,826
LONG-TERM LEASE LIABILITIES 38,868 40,494
OTHER LONG-TERM LIABILITIES 33,929 25,054
DEFERRED TAX LIABILITIES, net 2,711 24,560
Total liabilities 1,036,995 1,056,280

REDEEMABLE NONCONTROLLING INTERESTS 11,117 10,564

STOCKHOLDERS’ EQUITY:
Convertible preferred stock, $.001 par value, 1,000,000 shares authorized; no shares outstanding at September 30, 2020 and December 31, 2019 — —
Common stock — Class A, $.001 par value, 30,000,000 shares authorized; 4,441,635 and 1,582,375 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively 4 2
Common stock — Class B, $.001 par value, 150,000,000 shares authorized; 2,861,843 shares issued and outstanding as of June September 30, 2020 and December 31, 2019 3 3
Common stock — Class C, $.001 par value, 150,000,000 shares authorized; 2,928,906 shares issued and outstanding as of September 30, 2020 and December 31, 2019 3 3
Common stock — Class D, $.001 par value, 150,000,000 shares authorized; 37,520,026 and 38,752,749 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively 38 39
Additional paid-in capital 993,722 979,834
Accumulated deficit (831,345 ) (796,806 )
Total stockholders’ equity 162,425 183,075
Total liabilities, redeemable noncontrolling interests and stockholders’ equity $ 1,210,537 $ 1,249,919


	As of
	June 30, 2021		December 31, 2020
	(Unaudited)
	(In thousands, except share data)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	129,307	$	73,385
Restricted cash		473		473
Trade accounts receivable, net of allowance for doubtful accounts of $7,307 and $7,956, respectively		103,902		106,296
Prepaid expenses		10,613		10,154
Current portion of content assets		31,180		28,434
Other current assets		4,260		4,224
Total current assets		279,735		222,966
CONTENT ASSETS, net		63,594		63,175
PROPERTY AND EQUIPMENT, net		25,258		19,192
GOODWILL		223,402		223,402
RIGHT OF USE ASSETS		42,202		40,918
RADIO BROADCASTING LICENSES		505,148		484,066
OTHER INTANGIBLE ASSETS, net		53,059		56,053
DEFERRED TAX ASSETS, net		3,933		10,041
ASSETS HELD FOR SALE		0		32,661
OTHER ASSETS		43,211		43,013
Total assets	$	1,239,542	$	1,195,487
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	12,523	$	11,135
Accrued interest		26,414		8,017
Accrued compensation and related benefits		6,705		12,302
Current portion of content payables		19,403		16,248
Current portion of lease liabilities		9,975		8,928
Other current liabilities		24,137		26,917
Current portion of long-term debt		0		23,362
Total current liabilities		99,157		106,909
LONG-TERM DEBT, net of current portion, original issue discount and issuance costs		817,774		818,924
CONTENT PAYABLES, net of current portion		7,000		9,479
LONG-TERM LEASE LIABILITIES		35,950		36,577
OTHER LONG-TERM LIABILITIES		28,006		23,999
Total liabilities		987,887		995,888

REDEEMABLE NONCONTROLLING INTERESTS		15,192		12,701

STOCKHOLDERS’ EQUITY:
Convertible preferred stock, $.001 par value, 1,000,000 shares authorized; 0 shares outstanding at June 30, 2021 and December 31, 2020		0		—
Common stock — Class A, $.001 par value, 30,000,000 shares authorized; 8,221,026 and 4,441,635 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively		8		4
Common stock — Class B, $.001 par value, 150,000,000 shares authorized; 2,861,843 shares issued and outstanding as of June 30, 2021 and December 31, 2020		3		3
Common stock — Class C, $.001 par value, 150,000,000 shares authorized; 2,928,906 shares issued and outstanding as of June 30, 2021 and December 31, 2020		3		3
Common stock — Class D, $.001 par value, 150,000,000 shares authorized; 37,266,083 and 37,515,801 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively		37		38
Additional paid-in capital		1,023,458		991,769
Accumulated deficit		(787,046)		(804,919)
Total stockholders’ equity		236,463		186,898
Total liabilities, redeemable noncontrolling interests and stockholders’ equity	$	1,239,542	$	1,195,487

The accompanying notes are an integral part of these consolidated financial statements.

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URBAN ONE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE ~~NINE~~SIX MONTHS ENDED ~~SEPTEMBER~~JUNE 30, ~~2020~~2021 (UNAUDITED)


	Convertible		Common		Common		Common		Common		Additional				Total
	Preferred		Stock		Stock		Stock		Stock		Paid-In		Accumulated		Stockholders’
	Stock		Class A		Class B		Class C		Class D		Capital		Deficit		Equity

	(In thousands, except share data)
BALANCE, as of December 31, 2020	$	0	$	4	$	3	$	3	$	38	$	991,769	$	(804,919)	$	186,898
Consolidated net income		0		0		0		0		0		0		17,873		17,873
Repurchase of 509,347 shares of Class D common stock		0		0		0		0		(1)		(904)		0		(905)
Issuance of 3,779,391 shares of Class A common stock		0		4		0		0		0		33,278		0		33,282
Exercise of options for 197,256 shares of common stock		0		0		0		0		0		315		0		315
Adjustment of redeemable noncontrolling interests to estimated redemption value		0		0		0		0		0		(1,425)		0		(1,425)
Stock-based compensation expense		0		0		0		0		0		425		0		425
BALANCE, as of June 30, 2021	$	0	$	8	$	3	$	3	$	37	$	1,023,458	$	(787,046)	$	236,463

Convertible
Preferred
Stock Common
Stock
Class A Common
Stock
Class B Common
Stock
Class C Common
Stock
Class D Additional
Paid-In
Capital Accumulated
Deficit Total
Stockholders’
Equity
(In thousands, except share data)
BALANCE, as of December 31, 2019 $ — $ 2 $ 3 $ 3 $ 39 $ 979,834 $ (796,806 ) $ 183,075
Consolidated net loss — — — — — — (34,539 ) (34,539 )
Repurchase of 3,915,055 shares of Class D common stock — — — — (3 ) (3,604 ) — (3,607 )
Issuance of 2,859,276 shares of Class A common stock — 2 — — — 14,770 — 14,772
Exercise of options for 1,032,922 shares of Class D common stock — — — — 2 1,974 — 1,976
Adjustment of redeemable noncontrolling interests to estimated redemption value — — — — — (707 ) — (707 )
Stock-based compensation expense — — — — — 1,455 — 1,455
BALANCE, as of September 30, 2020 $ — $ 4 $ 3 $ 3 $ 38 $ 993,722 $ (831,345 ) $ 162,425

The accompanying notes are an integral part of these consolidated financial statements.

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URBAN ONE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE ~~NINE~~SIX MONTHS ENDED ~~SEPTEMBER~~JUNE 30, ~~2019~~2020 (UNAUDITED)

Convertible
Preferred
Stock Common
Stock
Class A Common
Stock
Class B Common
Stock
Class C Common
Stock
Class D Additional
Paid-In
Capital Accumulated
Deficit Total
Stockholders’
Equity
(In thousands, except share data)
BALANCE, as of December 31, 2018 $ — $ 2 $ 3 $ 3 $ 39 $ 978,628 $ (803,534 ) $ 175,141
Consolidated net income — — — — — — 8,846 8,846
Repurchase of 54,896 shares of Class A common stock and 2,588,796 shares of Class D common stock — — — — (2 ) (5,321 ) — (5,323 )
Adoption of ASC 842 — — — — — — 5,803 5,803
Exercise of options for 15,000 shares of common stock — — — — — 29 — 29
Adjustment of redeemable noncontrolling interests to estimated redemption value — — — — — 984 — 984
Issuance of 755,239 shares of Class D common stock — — — — — 1,609 — 1,609
Stock-based compensation expense — — — — 2 2,590 — 2,592
BALANCE, as of September 30, 2019 $ — $ 2 $ 3 $ 3 $ 39 $ 978,519 $ (788,885 ) $ 189,681

~~The accompanying notes are an integral part of these consolidated financial statements.~~

~~URBAN ONE, INC. AND SUBSIDIARIES~~


	Convertible		Common		Common		Common		Common		Additional				Total
	Preferred		Stock		Stock		Stock		Stock		Paid-In		Accumulated		Stockholders’
	Stock		Class A		Class B		Class C		Class D		Capital		Deficit		Equity

	(In thousands, except share data)
BALANCE, as of December 31, 2019	$	0	$	2	$	3	$	3	$	39	$	979,834	$	(796,806)	$	183,075
Consolidated net loss		0		0		0		0		0		0		(21,767)		(21,767)
Repurchase of 3,911,860 shares of Class D common stock		0		0		0		0		(3)		(3,598)		0		(3,601)
Exercise of options for 1,032,922 shares of common stock		0		0		0		0		2		1,974		0		1,976
Adjustment of redeemable noncontrolling interests to estimated redemption value		0		0		0		0		0		(884)		0		(884)
Stock-based compensation expense		0		0		0		0		0		661		0		661
BALANCE, as of June 30, 2020	$	0	$	2	$	3	$	3	$	38	$	977,987	$	(818,573)	$	159,460

~~CONSOLIDATED STATEMENTS OF CASH FLOWS~~

Nine Months Ended September 30,
2020 2019
(Unaudited)
(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Consolidated net (loss) income $ (33,693 ) $ 9,845
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization 7,419 14,451
Amortization of debt financing costs 3,248 2,893
Amortization of content assets 27,607 34,167
Amortization of launch assets 770 772
Deferred income taxes (21,849 ) 8,874
Amortization of right of use assets 5,974 5,184
Non-cash lease liability expense 3,692 4,095
Non-cash interest expense 1,614 1,513
Impairment of long-lived assets 82,700 3,800
Stock-based compensation 1,455 2,592
Effect of change in operating assets and liabilities, net of assets acquired:
Trade accounts receivable 13,791 7,258
Prepaid expenses and other current assets 6,342 (2,567 )
Other assets (10,764) (4,270 )
Accounts payable 480 (2,072 )
Accrued interest 5,371 7,729
Accrued compensation and related benefits (5,416) (6,538 )
Other liabilities 452 (38 )
Payments for content assets (24,750) (36,640 )
Net cash flows provided by operating activities 64,443 51,048
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (3,176 ) (3,947 )
Proceeds from sale of radio station — 13,500
Acquisition of broadcasting assets (475 ) —
Net cash flows (used in) provided by investing activities (3,651 ) 9,553
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of 2017 credit facility (2,473 ) (2,473 )
Distribution of contingent consideration — (658 )
Repayment of Comcast Note — (11,872 )
Proceeds of Asset-backed credit facility, net 27,500 —
Proceeds from issuance of Class A common stock, net of fees 14,772 —
Proceeds of MGM National Harbor Loan 3,600 —
Repayment of 2018 credit facility (32,410 ) (21,254 )
Proceeds from exercise of stock options 1,976 29
Repayment of 2020 Notes — (2,037 )
Payment of dividends to noncontrolling interest members of Reach Media (1,000 ) (1,000 )
Repurchase of common stock (3,607 ) (5,323 )
Net cash flows provided by (used in) financing activities 8,358 (44,588 )
INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH 69,150 16,013
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period 33,546 15,890
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period $ 102,696 $ 31,903

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for:
Interest $ 45,542 $ 49,512
Income taxes, net of refunds $ 509 $ 458

NON-CASH OPERATING, FINANCING AND INVESTING ACTIVITIES:
Issuance of common stock $ — $ 1,609
Right of use asset additions upon adoption of ASC 842 $ — $ 49,803
Lease liability additions upon adoption of ASC 842 $ — $ 54,113
Right of use asset and lease liability additions $ 5,483 $ 1,341

The accompanying notes are an integral part of these consolidated financial statements.

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URBAN ONE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended

June 30,


2021

2020

(Unaudited)

(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:




Consolidated net income (loss)

$
18,939

$
(21,416)
Adjustments to reconcile net income (loss) to net cash from operating activities:

Depreciation and amortization

4,589

4,930
Amortization of debt financing costs

1,296

2,128
Amortization of content assets

18,575

16,639
Amortization of launch assets

668

514
Bad debt expense

134

894
Deferred income taxes

6,108

(21,391)
Amortization of right of use assets

3,851

4,042
Non-cash lease liability expense

2,066

2,436
Non-cash interest expense

158

1,044
Impairment of long-lived assets

0

53,650
Stock-based compensation

425

661
Non-cash fair value adjustment of Employment Agreement Award

1,508

1,311
Loss on retirement of debt

6,949

0
Gain on asset exchange agreement

404

0

Effect of change in operating assets and liabilities, net of assets acquired:

Trade accounts receivable

2,260

18,124
Prepaid expenses and other current assets

(1,285)

(137)
Other assets

(8,512)

(8,160)
Accounts payable

1,388

(805)
Accrued interest

18,397

(1,930)
Accrued compensation and related benefits

(5,597)

(6,065)
Other liabilities

235

2,394
Payments for content assets

(21,064)

(15,592)
Net cash flows provided by operating activities

51,492

33,271
CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of property and equipment

(2,454)

(2,650)
Proceeds from sale of broadcasting assets

8,000

0
Acquisition of broadcasting assets

0

(475)
Net cash flows provided by (used in) investing activities

5,546

(3,125)
CASH FLOWS FROM FINANCING ACTIVITIES:

Repayment of 2017 credit facility

(317,332)

(1,648)
Proceeds of asset-backed credit facility

0

27,500
Proceeds of MGM National Harbor Loan

0

3,600
Proceeds from 2028 Notes

825,000

0
Proceeds from PPP Loan

7,505

0
Debt refinancing costs

(11,157)

0
Repayment of MGM National Harbor Loan

(57,889)

0
Repayment of 7.375% Notes

(2,984)

—
Repayment of 8.75% Notes

(347,016)

—
Repayment of 2018 credit facility

(129,935)

(20,348)
Proceeds from exercise of stock options

315

1,976
Proceeds from issuance of Class A common stock, net of fees

33,282

0
Payment of dividends to noncontrolling interest members of Reach Media

0

(1,000)
Repurchase of common stock

(905)

(3,601)
Net cash flows (used in) provided by financing activities

(1,116)

6,479
INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH

55,922

36,625
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period

73,858

33,546
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period

$
129,780

$
70,171

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid for:

Interest

$
14,048

$
36,291
Income taxes, net of refunds

$
782

$
0

NON-CASH OPERATING, FINANCING AND INVESTING ACTIVITIES:

Assets acquired under Entercom asset exchange

$
28,193

$
0
Liabilities recognized under Entercom asset exchange

$
2,669

$
0
Right of use asset and lease liability additions

$
4,935

$
3,187
Adjustment of redeemable noncontrolling interests to estimated redemption value

$
1,425

$
884

The accompanying notes are an integral part of these consolidated financial statements.

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URBAN ONE, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

~~ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:~~

(a)

Organization

~~(a)~~

~~Organization~~

Urban One, Inc. (a Delaware corporation referred to as “Urban One”) and its subsidiaries (collectively, the “Company”) is an urban-oriented, multi-media company that primarily targets African-American and urban consumers. Our core business is our radio broadcasting franchise which is the largest radio broadcasting operation that primarily targets African-American and urban listeners. As of ~~September~~June 30, ~~2020,~~2021, we owned and/or operated 6163 independently formatted, revenue producing broadcast stations (including ~~all~~54 FM or AM stations, 7 HD stations, ~~translator stations~~ and the 2 low power television stations we operate) located in 1413 of the most populous African-American markets in the United States. While a core source of our revenue has historically been and remains the sale of local and national advertising for broadcast on our radio stations, our strategy is to operate as the premier multi-media entertainment and information content provider targeting African-American and urban consumers. Thus, we have diversified our revenue streams by making acquisitions and investments in other complementary media properties. Our diverse media and entertainment interests include TV One, LLC (“TV One”), an African-American targeted cable television network; our 80.0% ownership interest in Reach Media, Inc. (“Reach Media”) which operates the Rickey Smiley Morning Show and our other syndicated programming assets, including the Get Up! Mornings with Erica Campbell Show, Russ Parr Morning Show and the DL Hughley Show; and Interactive One, LLC (“Interactive One”), our wholly owned digital platform serving the African-American community through social content, news, information, and entertainment websites, including its Cassius and Bossip, HipHopWired and MadameNoire digital platforms and brands. We also hold a minority ownership interest in MGM National Harbor, a gaming resort located in Prince George’s County, Maryland. Through our national multi-media operations, we provide advertisers with a unique and powerful delivery mechanism to the African-American and urban audiences.

On January 19, 2019, the Company launched CLEO TV, a lifestyle and entertainment network targeting Millennial and Gen X women of color. CLEO TV offers quality content that defies negative and cultural stereotypes of today’s modern women. The results of CLEO TV’s operations will be reflected in the Company’s cable television segment.

On May 20, 2021, the City of Richmond, Virginia (the “City”) announced that it has selected the Company’s wholly-owned unrestricted subsidiary RVA Entertainment Holdings, LLC (“RVAEH”), as the City’s preferred casino gaming operator to develop and operate a casino resort in Richmond. Pursuant to the Virginia Casino Act, the City is one of five cities within the Commonwealth of Virginia eligible to host a casino gaming establishment, subject to the citizens of the City approving a referendum, which is anticipated to be held in November 2021. Prior to requesting a Virginia court to order the referendum, the City is required to (i) select the City’s preferred location for the Casino Resort, which must be listed on the referendum, (ii) select a preferred casino gaming operator to develop and operate the Casino Resort (the “Preferred Casino Operator”), and (iii) submit the Preferred Casino Operator to the Commonwealth for pre-certification. RVAEH was approved in the pre-certification process on July 20, 2021.

If the voters approve the referendum, then the Commonwealth may issue one license permitting operation of a casino in Richmond. Upon passage and certification of the referendum, RVAEH, along with its management and development team, including Peninsula Pacific Entertainment would commence development and construction of the casino resort to be named ONE Casino + Resort.

Our core radio broadcasting franchise operates under the brand “Radio One.” We also operate our other brands, such as TV One, CLEO TV, Reach Media and Interactive One, while developing additional branding reflective of our diverse media operations and targeting our African-American and urban audiences.

As part of our consolidated financial statements, consistent with our financial reporting structure and how the Company currently manages its businesses, we have provided selected financial information on the Company’s ~~four~~4 reportable segments: (i) radio broadcasting; (ii) Reach Media; (iii) digital; and (iv) cable television. (See Note 7 – Segment Information.)

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(b)

Interim Financial Statements

The interim consolidated financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). In management’s opinion, the interim financial data presented herein include all adjustments (which include only normal recurring adjustments) necessary for a fair presentation. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) have been condensed or omitted pursuant to such rules and regulations.

During the fourth quarter of 2019, the Company revised the interest expense component of operating leases accounted for under ASC 842 from interest expense into operating expenses. Operating income for the quarters ended March 31, 2019, June 30, 2019 and September 30, 2019 have been reclassified in the amounts of approximately $1.3 million, $1.4 million and $1.4 million, respectively, to reflect the interest expense component of operating leases from interest expense into operating expenses. The financial statements for the quarterly periods ended March 31, June 30 and September 30, 2019 were not restated as management determined that the impact of this error is immaterial to the interim consolidated financial statements filed for each quarterly period in 2019. These revisions had no effect on any other previously reported or consolidated net income or loss or any other statement of operations, balance sheet or cash flow amounts.

Results for interim periods are not necessarily indicative of results to be expected for the full year. This Form 10-Q should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s ~~2019~~2020 Annual Report on Form 10-K.

(c)

Financial Instruments

Financial instruments as of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, consisted of cash and cash equivalents, restricted cash, trade accounts receivable, asset-backed credit facility, long-term debt and redeemable noncontrolling interests. The carrying amounts approximated fair value for each of these financial instruments as of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, except for the Company’s long-term debt. On June 1, 2021, the Company borrowed approximately $7.5 million on a new PPP loan (as defined in Note 4 – Long-Term Debt). The ~~7.375% Senior Secured Notes due in April 2022 (the “2022 Notes”)~~PPP Loan had a carrying value of approximately ~~$350.0~~$7.5 million and fair value of approximately ~~$316.8~~$7.5 million as of ~~September~~June 30, ~~2020.~~2021. The ~~2022~~fair value of the PPP Loan, classified as a Level 3 instrument, was determined based on the fair value of a similar instrument as of the reporting date using updated interest rate information derived from changes in interest rates since inception to the reporting date. On January 24, 2021, the Company borrowed $825 million in aggregate principal amount of senior secured notes due February 2028 (the “2028 Notes”). The 7.375% 2028 Notes had a carrying value of approximately ~~$350.0~~$825.0 million and fair value of approximately ~~$344.8~~$888.9 million as of ~~December 31, 2019.~~June 30, 2021. The fair values of the ~~2022~~2028 Notes, classified as Level 2 instruments, were determined based on the trading values of these instruments in an inactive market as of the reporting date. ~~See Note 9~~ ~~– Subsequent Events~~The Company used the net proceeds from the 2028 Notes, together with cash on hand, to repay or redeem (1) the 2017 Credit Facility, (2) the 2018 Credit Facility, (3) the MGM National Harbor Loan; (4) the remaining amounts of our 7.375% Notes, and (5) our 8.75% Notes that were issued in the November 2020 Exchange Offer (all as defined below). Upon settlement of the 2028 Notes Offering, the 2017 Credit Facility, the 2018 Credit Facility and the MGM National Harbor Loan were terminated and the indentures governing the 7.375% Notes and the 8.75% Notes were satisfied and discharged. The 7.375% Senior Secured Notes that were due in April 2022 (the “7.375% Notes”) had a carrying value of approximately $3.0 million and fair value of approximately $2.8 million as of December 31, 2020. The fair values of the 7.375% Notes, classified as Level 2 instruments, were determined based on the trading values of these instruments in an inactive market as of the reporting date. On April 18, 2017, the Company closed on a $350.0 million senior secured credit facility (the “2017 Credit Facility”) which had a carrying value of approximately ~~$318.2~~$317.3 million and fair value of approximately ~~$266.0 million as of September 30, 2020, and had a carrying value of approximately $320.6 million and fair value of approximately $309.1~~$293.5 million as of December 31, ~~2019.~~2020. The fair value of the 2017 Credit Facility, classified as a Level 2 instrument, was determined based on the trading values of this instrument in an inactive market as of the reporting date. On December 20, 2018, the Company closed on a $192.0 million unsecured credit facility (the “2018 Credit Facility”) which had a carrying value of approximately ~~$134.7~~$129.9 million and fair value of approximately ~~$137.4 million as of September 30, 2020, and had a carrying value of approximately $167.1 million and fair value of approximately $170.5~~$132.5 million as of December 31, ~~2019.~~2020. The fair value of the 2018 Credit Facility, classified as a Level 2 instrument, was determined based on the trading values of this instrument in an inactive market as of the reporting date. On December 20, 2018, the Company also closed on a $50.0 million secured credit loan (the “MGM National Harbor Loan”) which had a carrying value of approximately ~~$57.3~~$57.9 million and fair value of approximately ~~$64.2 million as of September 30, 2020, and had a carrying value of approximately $52.1 million and fair value of approximately $58.4~~$64.8 million as of December 31, ~~2019.~~2020. The fair value of the 2018 MGM National Harbor Loan, classified as a Level 2 instrument, was determined based on the trading values of this instrument in an inactive market as of the reporting date. ~~The Company’s asset-backed credit facility~~On November 9, 2020, we completed an exchange of 99.15% of our outstanding 7.375% Notes for $347.0 million aggregate principal amount of newly issued 8.75% Senior Secured Notes due December 2022 (the ~~“ABL Facility”~~“8.75% Notes”). As of December 31, 2020, the 8.75% Notes had a carrying value of approximately ~~$27.5~~$347.0 million and fair value of approximately ~~$27.5 million as of September 30, 2020.~~$338.0 million. There was no0 balance outstanding on the ~~ABL Facility~~Company’s asset-backed credit facility as of June 30, 2021 and December 31, ~~2019.~~ 2020.

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(d)

Revenue Recognition

In accordance with Accounting Standards Codification (“ASC”) 606, “Revenue from Contracts with Customers,” the Company recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which it expects to be entitled in exchange for those goods or services. The Company elected to use the modified retrospective method, but the adoption of the standard did not have a material impact to our financial statements. In general, our spot advertising (both radio and cable television) as well as our digital advertising continues to be recognized when aired and delivered. For our cable television affiliate revenue, the Company grants a license to the affiliate to access its television programming content through the license period, and the Company earns a usage based royalty when the usage occurs, consistent with our previous revenue recognition policy. Finally, for event advertising, the performance obligation is satisfied at a point in time when the activity associated with the event is completed.

Within our radio broadcasting and Reach Media segments, the Company recognizes revenue for broadcast advertising at a point in time when a commercial spot runs. The revenue is reported net of agency and outside sales representative commissions. Agency and outside sales representative commissions are calculated based on a stated percentage applied to gross billing. Generally, clients remit the gross billing amount to the agency or outside sales representative, and the agency or outside sales representative remits the gross billing, less their commission, to the Company. For our radio broadcasting and Reach Media segments, agency and outside sales representative commissions were approximately ~~$4.2~~$4.1 million and ~~$6.2~~$2.5 million for the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively. Agency and outside sales representative commissions were approximately ~~$11.4~~$7.6 million and ~~$17.2~~$7.2 million for the ~~nine~~six months ended ~~September~~June 30, 2021 and 2020, ~~and 2019.~~

respectively.

Within our digital segment, including Interactive One, which generates the majority of the Company’s digital revenue, 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. Advertising revenue is recognized at a point in time either as impressions (the number of times advertisements appear in viewed pages) are delivered, when “click through” purchases are made, or ratably over the contract period, where applicable. In addition, Interactive One derives revenue from its studio operations, in which it provides third-party clients with publishing services including digital platforms and related expertise. In the case of the studio operations, revenue is recognized primarily through fixed contractual monthly fees and/or as a share of the third party’s reported revenue.

Our cable television segment derives advertising revenue from the sale of television air time to advertisers and recognizes revenue when the advertisements are run. Advertising revenue is recognized at a point in time when the individual spots run. To the extent there is a shortfall in contracts where the ratings were guaranteed, a portion of the revenue is deferred until the shortfall is settled, typically by providing additional advertising units generally within one year of the original airing. Our cable television segment also derives revenue from affiliate fees under the terms of various multi-year affiliation agreements based on a per subscriber fee multiplied by the most recent subscriber counts reported by the applicable affiliate. The Company recognizes the affiliate fee revenue at a point in time as its performance obligation to provide the programming is met. The Company has a right of payment each month as the programming services and related obligations have been satisfied. For our cable television segment, agency and outside sales representative commissions were approximately ~~$3.7~~$4.4 million and ~~$3.4~~$3.2 million for the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively. Agency and outside sales representative commissions were approximately ~~$10.5~~$8.2 million and ~~$10.9~~$6.9 million for the ~~nine~~six months ended ~~September~~June 30, 2021 and 2020, ~~and 2019,~~ respectively.

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Revenue by Contract Type

The following chart shows our net revenue (and sources) for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019:~~ 2020:


									Three Months Ended June 30,				Six Months Ended June 30,
									2021		2020		2021		2020
	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(In thousands, unaudited)
									(In thousands, unaudited)
Net Revenue:
Radio Advertising	$	34,919	$	50,813	$	98,695	$	144,958	$	42,605	$	25,358	$	75,944	$	63,776
Political Advertising		4,324		300		7,089		741		500		361		1,280		2,764
Digital Advertising		8,121		8,171		20,514		23,270		15,016		6,104		25,369		12,393
Cable Television Advertising		19,603		20,649		59,576		60,658		22,968		18,941		43,670		39,973
Cable Television Affiliate Fees		24,421		25,330		75,247		79,404		25,396		24,619		50,883		50,826
Event Revenues & Other		524		5,792		1,674		22,044		1,108		625		1,887		1,151
Net Revenue (as reported)	$	91,912	$	111,055	$	262,795	$	331,075	$	107,593	$	76,008	$	199,033	$	170,883

Contract assets and liabilities

Contract assets (unbilled receivables) and contract liabilities (customer advances and unearned income and unearned event income) that are not separately stated in our consolidated balance sheets at ~~September~~June 30, 2021, December 31, 2020 and June 30, 2020 ~~December 31, 2019 and September 30, 2019~~ were as follows:

	September 30, 2020		December 31, 2019		September 30, 2019
	(Unaudited)				(Unaudited)
	(In thousands)

							June 30, 2021		December 31, 2020		June 30, 2020
							(Unaudited)				(Unaudited)
							(In thousands)
Contract assets:
Unbilled receivables	$	7,085	$	3,763	$	5,968	$	8,540	$	5,798	$	3,892


Contract liabilities:
Customer advances and unearned income	$	4,587	$	3,048	$	3,403	$	5,252	$	4,955	$	2,918
Unearned event income		6,809		6,645		3,831		6,118		5,921		10,352

Unbilled receivables consists of earned revenue on behalf of customers that have not yet been billed. Customer advances and unearned income represents advance payments by customers for future services under contract that are generally incurred in the near term. Unearned event income represents payments by customers for upcoming events.

For customer advances and unearned income as of January 1, 2021, approximately $545,000 and approximately $2.6 million was recognized as revenue during the three and six months ended June 30, 2021. For unearned event income, 0 revenue was recognized during the three or six months ended June 30, 2021. For customer advances and unearned income as of January 1, 2020, approximately ~~$103,000~~$448,000 and approximately ~~$2.2~~$2.1 million was recognized as revenue during the three and ~~nine~~six months ended ~~September~~June 30, 2020. For unearned event income, there was no0 revenue was recognized during the three months or ~~nine~~six months ended ~~September~~June 30, 2020. For customer advances and unearned income as of January 1, 2019, $250,000 and approximately $2.3 million, respectively, was recognized as revenue during the three and nine months ended September 30, 2019. For unearned event income as of January 1, 2019, approximately $3.9 million was recognized during the three and nine months ended September 30, 2019, as the event took place during the second quarter of 2019.

Practical expedients and exemptions

We generally expense sales commissions when incurred because the amortization period would have been one year or less. These costs are recorded within selling, general and administrative expenses.

We do not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less or (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed.

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(e)

Launch Support

The cable television segment has entered into certain affiliate agreements requiring various payments for launch support. Launch support assets are used to initiate carriage under affiliation agreements and are amortized over the term of the respective contracts. The Company did not pay any launch support for carriage initiation during the three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019.~~2020. The weighted-average amortization period for launch support is approximately ~~7.8~~7.4 years as of ~~September~~June 30, ~~2020,~~2021, and approximately ~~7.8~~7.4 years as of December 31, ~~2019.~~2020. The remaining weighted-average amortization period for launch support is ~~4.3~~4.0 years and ~~5.1~~4.5 years as of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively. Amortization is recorded as a reduction to revenue to the extent that revenue is recognized from the vendor, and any excess amortization is recorded as launch support amortization expense. For the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, launch support asset amortization of ~~$106,000~~$105,000 and ~~$106,000,~~$105,000, respectively, was recorded as a reduction of revenue, and ~~$151,000~~$229,000 and $151,000, respectively, was recorded as an operating expense in selling, general and administrative expenses. For the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, launch support asset amortization of ~~$317,000~~$211,000 and ~~$317,000,~~$211,000, respectively, was recorded as a reduction of revenue, and ~~$454,000~~$457,000 and ~~$455,000,~~$302,000, respectively, was recorded as an operating expense in selling, general and administrative expenses. Launch assets are included in other intangible assets on the consolidated balance sheets, except for the portion of the unamortized balance that is expected to be amortized within one year which is included in other current assets.

(f)

Barter Transactions

For barter transactions, the Company provides broadcast advertising time in exchange for programming content and certain services. The Company includes the value of such exchanges in both broadcasting net revenue and operating expenses. The valuation of barter time is based upon the fair value of the network advertising time provided for the programming content and services received. For the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, barter transaction revenues were ~~$523,000~~$440,000 and ~~$574,000,~~$527,000, respectively. Additionally, for the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, barter transaction costs were reflected in programming and technical expenses of ~~$380,000~~$302,000 and ~~$424,000,~~$384,000, respectively, and selling, general and administrative expenses of ~~$143,000~~$138,000 and ~~$150,000,~~$143,000, respectively. For the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, barter transaction revenues were $889,000 and approximately ~~$1.6 million and $1.7~~$1.0 million, respectively. Additionally, for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, barter transaction costs were reflected in programming and technical expenses of ~~approximately $1.1 million~~$614,000 and ~~1.3 million,~~$755,000, respectively, and selling, general and administrative expenses of ~~$429,000~~$275,000 and ~~$451,000,~~$286,000, respectively. The Company reached an agreement with a cable television provider related to an adjustment of previously estimated affiliate fees in the amount of approximately $2.0 million for the year ended December 31, 2018, as final reporting became available. Upon settlement of this agreement, the Company will receive approximately $2.0 million in marketing services that will be utilized in future periods.

(g)

Earnings Per Share

Basic earnings per share is computed on the basis of the weighted average number of shares of common stock (Classes A, B, C and D) outstanding during the period. Diluted earnings per share is computed on the basis of the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method. The Company’s potentially dilutive securities include stock options and unvested restricted stock. Diluted earnings per share considers the impact of potentially dilutive securities except in periods in which there is a net loss, as the inclusion of the potentially dilutive common shares would have an anti-dilutive effect.

Table of Contents

The following table sets forth the calculation of basic and diluted earnings per share from continuing operations (in thousands, except share and per share data):

Three Months Ended
September 30, Nine Months Ended
September 30,
2020 2019 2020 2019
(Unaudited)
(In thousands, except share data)
Numerator:
Net (loss) income attributable to common stockholders $ (12,772) $ 5,359 $ (34,539) $ 8,846
Denominator:
Denominator for basic net (loss) income per share - weighted average outstanding shares 44,175,385 44,315,077 44,738,635 44,912,673
Effect of dilutive securities:
Stock options and restricted stock — 1,803,625 — 2,052,572
Denominator for diluted net (loss) income per share - weighted-average outstanding shares 44,175,385 46,118,702 44,738,635 46,965,245

Net (loss) income attributable to common stockholders per share – basic $ (0.29 ) $ 0.12 $ (0.77 ) $ 0.20
Net (loss) income attributable to common stockholders per share –diluted $ (0.29 ) $ 0.12 $ (0.77 ) $ 0.19


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020

	(Unaudited)
	(In Thousands)
Numerator:
Net income (loss) attributable to common stockholders	$	17,866	$	1,420	$	17,873	$	(21,767)
Denominator:
Denominator for basic net income (loss) per share - weighted average outstanding shares		49,789,892		44,806,219		49,124,056		45,025,471
Effect of dilutive securities:
Stock options and restricted stock		3,991,026		3,348,043		4,062,563		0
Denominator for diluted net income (loss) per share - weighted-average outstanding shares		53,780,918		48,154,262		53,186,619		45,025,471

Net income (loss) attributable to common stockholders per share – basic	$	0.36	$	0.03	$	0.36	$	(0.48)
Net income (loss) attributable to common stockholders per share –diluted	$	0.33	$	0.03	$	0.34	$	(0.48)

All stock options and restricted stock awards were excluded from the diluted calculation for the ~~three and nine~~six months ended ~~September~~June 30, 2020, as their inclusion would have been anti-dilutive. The following table summarizes the potential common shares excluded from the diluted calculation.

Three Months Ended Nine Months Ended
September 30, September 30,
2020 2020
(Unaudited)
(In thousands)
Stock options 3,849 3,849
Restricted stock awards 1,818 1,886

	*~~(h)~~*
		*Six Months Ended June 30,*
		2020
		(Unaudited)
		(In thousands)
Stock options		3,849
Restricted stock awards		1,929

(h)

Fair Value Measurements

We report our financial and non-financial assets and liabilities measured at fair value on a recurring and non-recurring basis under the provisions of ASC 820, “Fair Value Measurements and Disclosures.” ASC 820 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements.

The fair value framework requires the categorization of assets and liabilities into three levels based upon the assumptions (inputs) used to price the assets or liabilities. Level 1 provides the most reliable measure of fair value, whereas Level 3 generally requires significant management judgment. The three levels are defined as follows:

Level 1: Inputs are unadjusted quoted prices in active markets for identical assets and liabilities that can be accessed at the measurement date.

Level 2: Observable inputs other than those included in Level 1 (i.e., quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets).

Level 3: Unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the asset or liability.

A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value instrument.

Table of Contents

As of ~~September~~June 30, ~~2020,~~2021, and December 31, ~~2019,~~2020, respectively, the fair values of our financial assets and liabilities measured at fair value on a recurring basis are categorized as follows:

Total Level 1 Level 2 Level 3
(Unaudited)
(In thousands)
As of September 30, 2020
Liabilities subject to fair value measurement:
Contingent consideration (a) $ 1,154 — — $ 1,154
Employment agreement award (b) 27,710 — — 27,710
Total $ 28,864 $ — $ — $ 28,864

Mezzanine equity subject to fair value measurement:
Redeemable noncontrolling interests (c) $ 11,117 $ — $ — $ 11,117

As of December 31, 2019
Liabilities subject to fair value measurement:
Contingent consideration (a) $ 1,921 — — $ 1,921
Employment agreement award (b) 27,017 — — 27,017
Total $ 28,938 $ — $ — $ 28,938

Mezzanine equity subject to fair value measurement:
Redeemable noncontrolling interests (c) $ 10,564 $ — $ — $ 10,564


	Total		Level 1		Level 2		Level 3

	(Unaudited)
	(In thousands)
As of June 30, 2021
Liabilities subject to fair value measurement:
Contingent consideration (a)	$	—		—		—	$	—
Employment agreement award (b)		27,111		—		—		27,111
Total	$	27,111	$	—	$	—	$	27,111

Mezzanine equity subject to fair value measurement:
Redeemable noncontrolling interests (c)	$	15,192	$	—	$	—	$	15,192

As of December 31, 2020
Liabilities subject to fair value measurement:
Contingent consideration (a)	$	780		—		—	$	780
Employment agreement award (b)		25,603		—		—		25,603
Total	$	26,383	$	—	$	—	$	26,383

Mezzanine equity subject to fair value measurement:
Redeemable noncontrolling interests (c)	$	12,701	$	—	$	—	$	12,701

(a)

This balance is measured based on the income approach to valuation in the form of a Monte Carlo simulation. The Monte Carlo simulation method is suited to instances such as this where there is non-diversifiable risk. It is also well-suited to multi-year, path dependent scenarios. Significant inputs to the Monte Carlo method include forecasted net revenues, discount rate and expected volatility. A third-party valuation firm assisted the Company in estimating the contingent consideration.

(b)

Each quarter, pursuant to an employment agreement (the “Employment Agreement”) executed in April 2008, the Chief Executive Officer (“CEO”) is eligible to receive an award (the “Employment Agreement Award”) amount equal to approximately 4% of any proceeds from distributions or other liquidity events in excess of the return of the Company’s aggregate investment in TV One. The Company reviews the factors underlying this award at the end of each quarter including the valuation of TV One (based on the estimated enterprise fair value of TV One as determined by a discounted cash flow analysis).The Company’s obligation to pay the award was triggered after the Company recovered the aggregate amount of capital contributions in TV One, and payment is required only upon actual receipt of distributions of cash or marketable securities or proceeds from a liquidity event with respect to such invested amount. The long-term portion of the award is recorded in other long-term liabilities and the current portion is recorded in other current liabilities in the consolidated balance sheets. The CEO was fully vested in the award upon execution of the Employment Agreement, and the award lapses if the CEO voluntarily leaves the Company or is terminated for cause. A third-party valuation firm assisted the Company in estimating TV One’s fair value using a discounted cash flow analysis. Significant inputs to the discounted cash flow analysis include forecasted operating results, discount rate and a terminal value. In September 2014, the Compensation Committee of the Board of Directors of the Company approved terms for a new employment agreement with the CEO, including a renewal of the Employment Agreement Award upon similar terms as in the prior Employment Agreement.

(c)

The redeemable noncontrolling interest in Reach Media is measured at fair value using a discounted cash flow methodology. A third-party valuation firm assisted the Company in estimating the fair value. Significant inputs to the discounted cash flow analysis include forecasted operating results, discount rate and a terminal value.

~~(a) This balance is measured based on the income approach to valuation in the form~~Table of a Monte Carlo simulation. The Monte Carlo simulation method is suited to instances such as this where there is non-diversifiable risk. It is also well-suited to multi-year, path dependent scenarios. Significant inputs to the Monte Carlo method include forecasted net revenues, discount rate and expected volatility. A third-party valuation firm assisted the Company in estimating the contingent consideration. The long-term portion of the contingent consideration is recorded in other long-term liabilities and the current portion is recorded in other current liabilities in the consolidated balance sheets.Contents

(b) Each quarter, pursuant to an employment agreement (the “Employment Agreement”) executed in April 2008, the Chief Executive Officer (“CEO”) is eligible to receive an award (the “Employment Agreement Award”) amount equal to approximately 4% of any proceeds from distributions or other liquidity events in excess of the return of the Company’s aggregate investment in TV One. The Company reviews the factors underlying this award at the end of each quarter including the valuation of TV One (based on the estimated enterprise fair value of TV One as determined by a discounted cash flow analysis), and an assessment of the probability that the Employment Agreement will be renewed and contain this provision. The Company’s obligation to pay the award was triggered after the Company recovered the aggregate amount of certain pre-April 2015 capital contributions in TV One, and payment is required only upon actual receipt of distributions of cash or marketable securities or proceeds from a liquidity event with respect to such invested amount. The long-term portion of the award is recorded in other long-term liabilities and the current portion is recorded in other current liabilities in the consolidated balance sheets. The CEO was fully vested in the award upon execution of the Employment Agreement, and the award lapses if the CEO voluntarily leaves the Company or is terminated for cause. A third-party valuation firm assisted the Company in estimating TV One’s fair value using a discounted cash flow analysis. Significant inputs to the discounted cash flow analysis include forecasted operating results, discount rate and a terminal value. In September 2014, the Compensation Committee of the Board of Directors of the Company approved terms for a new employment agreement with the CEO, including a renewal of the Employment Agreement Award upon similar terms as in the prior Employment Agreement. Prior to the quarter ended September 30, 2018, there were probability factors included in the calculation of the award related to the likelihood that the award will be realized. During the quarter ended September 30, 2018, management changed the methodology used in calculating the fair value of the Company's Employment Agreement Award liability to simplify the calculation. As part of the simplified calculation, the Company eliminated certain adjustments made to its aggregate investment in TV One, including the treatment of historical dividends paid and potential distribution of assets upon liquidation. The Compensation Committee of the Board of Directors approved the simplified method which eliminates certain assumptions that were historically used in the determination of the fair value of this liability.

(c) The redeemable noncontrolling interest in Reach Media is measured at fair value using a discounted cash flow methodology. A third-party valuation firm assisted the Company in estimating the fair value. Significant inputs to the discounted cash flow analysis include forecasted operating results, discount rate and a terminal value.

There were no transfers in or out of Level 1, 2, or 3 during the ~~nine~~six months ended ~~September~~June 30, ~~2020.~~2021. The following table presents the changes in Level 3 liabilities measured at fair value on a recurring basis for the ~~nine~~six months ended ~~September~~June 30, ~~2020:~~2021:


												Employment		Redeemable
										Contingent		Agreement		Noncontrolling
										Consideration		Award		Interests
	Contingent Consideration			Employment Agreement Award			Redeemable Noncontrolling Interests
	(In thousands)
Balance at December 31, 2019	$	1,921		$	27,017		$	10,564
										(In thousands)

Balance at December 31, 2020										$	780	$	25,603	$	12,701
Net income attributable to noncontrolling interests		—			—			846			—		—		1,066
Distribution		(766	)		(1,625	)		—			(1,060)		—		—
Dividends paid to noncontrolling interests		—			—			(1,000	)
Change in fair value		(1	)		2,318			707			280		1,508		1,425
Balance at September 30, 2020	$	1,154		$	27,710		$	11,117

Balance at June 30, 2021										$	—	$	27,111	$	15,192

The amount of total (losses)/income for the period included in earnings attributable to the change in unrealized losses/income relating to assets and liabilities still held at the reporting date	$	1		$	(2,318	)	$	—		$	(280)	$	(1,508)	$	—

Losses and income included in earnings were recorded in the consolidated statements of operations as corporate selling, general and administrative expenses for the employment agreement award for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019.~~2020. Losses included in earnings were recorded in the consolidated statements of operations as selling, general and administrative expenses for contingent consideration for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019.~~ 2020.

Significant As of
September 30,
2020 As of
December 31,
2019
Level 3 liabilities Valuation Technique Unobservable Inputs Significant Unobservable Input Value
Contingent consideration Monte Carlo Simulation Expected volatility 39.1 % 20.8 %
Contingent consideration Monte Carlo Simulation Discount Rate 16.5 % 14.5 %
Employment agreement award Discounted Cash Flow Discount Rate 10.0 % 10.0 %
Employment agreement award Discounted Cash Flow Long-term Growth Rate 2.0 % 2.0 %
Redeemable noncontrolling interest Discounted Cash Flow Discount Rate 11.0 % 11.0 %
Redeemable noncontrolling interest Discounted Cash Flow Long-term Growth Rate 1.0 % 1.0 %


			As of		As of
			June 30,		December 31,
		Significant	2021		2020

		Unobservable	Significant Unobservable
Level 3 liabilities	Valuation Technique	Inputs	Input Value
Contingent consideration	Monte Carlo Simulation	Expected volatility	*		29.5	%
Contingent consideration	Monte Carlo Simulation	Discount Rate	*		16.5	%
Employment agreement award	Discounted Cash Flow	Discount Rate	10.5	%	10.5	%
Employment agreement award	Discounted Cash Flow	Long-term Growth Rate	1.0	%	1.0	%
Redeemable noncontrolling interest	Discounted Cash Flow	Discount Rate	11.5	%	11.0	%
Redeemable noncontrolling interest	Discounted Cash Flow	Long-term Growth Rate	1.0	%	1.0	%

*Contingent consideration liability is fully settled as of June 30, 2021.

Any significant increases or decreases in discount rate or long-term growth rate inputs could result in significantly higher or lower fair value measurements.

Certain assets and liabilities are measured at fair value on a non-recurring basis using Level 3 inputs as defined in ASC 820. These assets are not measured at fair value on an ongoing basis but are subject to fair value adjustments only in certain circumstances. Included in this category are goodwill, radio broadcasting licenses and other intangible assets, net, that are written down to fair value when they are determined to be impaired, as well as content assets that are periodically written down to net realizable value. The Company concluded these assets were not impaired during the six months ended June 30, 2021. For the ~~three~~six months ended ~~September~~June 30, 2020, the Company recorded an impairment charge of approximately ~~$10.0~~$5.9 million related to its Atlanta market and Indianapolis goodwill balances and also an impairment charge of approximately $19.1 million associated with our Atlanta, Cincinnati, Dallas, Houston, Indianapolis, Philadelphia and Raleigh market radio broadcasting licenses. For the nine months ended September 30, 2020, the Company recorded an impairment charge of approximately $15.9 million related to its Atlanta market and Indianapolis goodwill balances and also an impairment charge of approximately $66.8$47.7 million associated with our Atlanta, Cincinnati, Dallas, Houston, Indianapolis, Philadelphia, Raleigh, Richmond and St. Louis market radio broadcasting licenses. ~~For the nine months ended September 30, 2019, the Company recorded an impairment charge~~

Table of ~~approximately $3.8 million related to its Detroit market radio broadcasting licenses. The Company concluded these assets were not impaired during the three months ended September 30, 2019.~~ Contents

(i)

Leases

As of January 1, 2019, the Company adopted Accounting Standards Codification (“ASC”) Topic 842, Leases (“ASC 842”), using the modification retrospective transition method. Prior comparative periods will be not be restated under this new standard and therefore those amounts are not presented below. The Company adopted a package of practical expedients as allowed by the transition guidance which permits the Company to carry forward the historical assessment of whether contracts contain or are leases, classification of leases and the remaining lease terms. The Company has also made an accounting policy election to exclude leases with an initial term of twelve months or less from recognition on the consolidated balance sheet. Short-term leases will be expensed over the lease term. The Company also elected to separate the consideration in the lease contracts between the lease and non-lease components. All variable non-lease components are expensed as incurred.

ASC 842 results in significant changes to the balance sheets of lessees, most significantly by requiring the recognition of right of use (“ROU”) assets and lease liabilities by lessees for those leases classified as operating leases. Upon adoption of ASC 842, deferred rent balances, which were historically presented separately, were combined and presented net within the ROU asset. The adoption of this standard resulted in the Company recording an increase in ROU assets of approximately $49.8 million and an increase in lease liabilities of approximately $54.1 million. Approximately $4.3 million in deferred rent was also reclassified from liabilities to offset the applicable ROU asset. The tax impact of ASC 842, which primarily consisted of deferred gains related to previous transactions that were historically accounted for as sale and operating leasebacks in accordance with prior guidance ASC Topic 840 was recognized as part of the cumulative-effect adjustment to retained earnings, resulting in an increase to retained earnings, net of tax, of approximately $5.8 million.

Many of the Company's leases provide for renewal terms and escalation clauses, which are factored into calculating the lease liabilities when appropriate. The implicit rate within the Company's lease agreements is generally not determinable and as such the Company’s collateralized borrowing rate is used.

The following table sets forth the components of lease expense and the weighted average remaining lease term and the weighted average discount rate for the Company’s leases:


													Three Months Ended June 30,						Six Months Ended June 30,
													2021			2020			2021			2020
	Three Months Ended September 30,						Nine Months Ended September 30,
	2020			2019			2020			2019
	(Unaudited)						(Unaudited)
	(Dollars In thousands)						(Dollars In thousands)
													(Unaudited)						(Unaudited)
													(Dollars In thousands)						(Dollars In thousands)
Operating Lease Cost (Cost resulting from lease payments)	$	3,166		$	3,200		$	9,477		$	9,642		$	3,335		$	3,153		$	6,549		$	6,305
Variable Lease Cost (Cost excluded from lease payments)		34			40			109			116			10			34			20			74
Total Lease Cost	$	3,200		$	3,240		$	9,586		$	9,758		$	3,345		$	3,187		$	6,569		$	6,379


Operating Lease - Operating Cash Flows (Fixed Payments)	$	3,241		$	3,212		$	9,897		$	10,010		$	3,419		$	3,243		$	6,750		$	6,650
Operating Lease - Operating Cash Flows (Liability Reduction)	$	2,080		$	1,888		$	6,258		$	6,653		$	2,248		$	2,045		$	4,422		$	4,182


Weighted Average Lease Term - Operating Leases		5.42 years			5.91 years			5.42 years			5.91 years			5.24	years		5.38	years		5.24	years		5.38	years
Weighted Average Discount Rate - Operating Leases		11.00	%		11.00	%		11.00	%		11.00	%		11.00	%		11.00	%		11.00	%		11.00	%

As of ~~September~~June 30, ~~2020,~~2021, maturities of lease liabilities were as follows:


For the Year Ended December 31,	(Dollars in thousands)			(Dollars in thousands)
For the remaining three months ending December 31, 2020	$	3,394
2021		13,304
For the remaining six months ending December 31, 2021				$	6,951
2022		12,664			13,606
2023		10,916			11,734
2024		9,795			10,619
2025					5,872
Thereafter		13,904			12,054
Total future lease payments		63,977			60,836
Imputed interest		(15,951	)		14,911
Total	$	48,026		$	45,925

Table of Contents

(j)

~~(j)~~

Impact of Recently Issued Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). ASU 2016-13 is intended to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. In November 2019, the FASB issued ASU 2019-10, “Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates.” ASU 2019-10 defers the effective date of credit loss standard ASU 2016-13 by two years for smaller reporting companies and permits early adoption. ASU 2016-13 is effective for the Company beginning January 1, 2023. The Company is evaluating the impact of the adoption of ASU 2016-13 on its financial statements.

In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes”, which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. ASU 2019-12 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption is permitted. The Company adopted ASU 2019-12 on January 1, 2020, and adoption did not have a material impact on our consolidated financial statements and related disclosures.

(k)

Redeemable noncontrolling interest

Redeemable noncontrolling interests are interests in subsidiaries that are redeemable outside of the Company’s control either for cash or other assets. These interests are classified as mezzanine equity and measured at the greater of estimated redemption value at the end of each reporting period or the historical cost basis of the noncontrolling interests adjusted for cumulative earnings allocations. The resulting increases or decreases in the estimated redemption amount are affected by corresponding charges against retained earnings, or in the absence of retained earnings, additional paid-in-capital.

(l)

Investments – Cost Method

On April 10, 2015, the Company made a $5 million investment in MGM’s world-class casino property, MGM National Harbor, located in Prince George’s County, Maryland, which has a predominately African-American demographic profile. On November 30, 2016, the Company contributed an additional $35 million to complete its investment. This investment further diversified our platform in the entertainment industry while still focusing on our core demographic. We account for this investment on a cost basis. Our MGM National Harbor investment entitles us to an annual cash distribution based on net gaming revenue. ~~Our~~The value of our MGM investment is included in other assets on the consolidated balance sheets and its distribution income in the amount of approximately ~~$1.7~~$1.9 million and ~~$1.8 million,~~$80,000, for the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively, and approximately ~~$3.3~~$3.6 million and ~~$5.2~~$1.6 million, for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively is recorded in other income on the consolidated statements of operations. The cost method investment is subject to a periodic impairment review in the normal course. ~~In connection with its impairment analysis for the nine months ended September 30, 2020, the~~The Company reviewed the investment and concluded that no impairment to the carrying value was required. As of December ~~4, 2018,~~31, 2020, the Company’s interest in the MGM National Harbor Casino ~~secures~~secured the MGM National Harbor Loan (as defined in Note 4 – Long-Term ~~Debt)~~Debt.).

Upon settlement of the 2028 Notes, the Company’s subsidiaries of Radio One Entertainment Holdings, LLC and Urban One Entertainment SPV, LLC became guarantors under the 2028 Notes along with the Company’s other subsidiaries.

(m)

Content Assets

Our cable television segment has entered into contracts to acquire entertainment programming rights and programs from distributors and producers. The license periods granted in these contracts generally run from one year to ten years. Contract payments are made in installments over terms that are generally shorter than the contract period. Each contract is recorded as an asset and a liability at an amount equal to its gross contractual commitment when the license period begins, and the program is available for its first airing. Acquired content is generally amortized on a straight-line basis over the term of the license which reflects the estimated usage. For certain content for which the pattern of usage is accelerated, amortization is based upon the actual usage. Amortization of content assets is recorded in the consolidated statement of operations as programming and technical expenses.

Table of Contents

The Company also has programming for which the Company has engaged third parties to develop and produce, and it owns most or all rights (commissioned programming). In accordance with ASC 926, content amortization expense for each period is recognized based on the revenue forecast model, which approximates the proportion that estimated advertising and affiliate revenues for the current period represent in relation to the estimated remaining total lifetime revenues as of the beginning of the current period. Management regularly reviews, and revises when necessary, its total revenue estimates, which may result in a change in the rate of amortization and/or a write-down of the asset to fair value.

~~Acquired program rights are~~Commissioned programming is recorded at the lower of unamortized cost or estimated net realizable value. Estimated net realizable values are based on the estimated revenues associated with the program materials and related expenses. The Company did not record any additional amortization expense as a result of evaluating its contracts for recoverability for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019.~~2020. All produced and licensed content is classified as a long-term asset, except for the portion of the unamortized content balance that is expected to be amortized within one year which is classified as a current asset.

Tax incentives that state and local governments offer that are directly measured based on production activities are recorded as reductions in production costs.

(n)

Derivatives

The Company recognizes all derivatives at fair value on the consolidated balance sheets as either an asset or liability. The accounting for changes in the fair value of a derivative, including certain derivative instruments embedded in other contracts, depends on the intended use of the derivative and the resulting designation.

The Company accounts for the Employment Agreement Award as a derivative instrument in accordance with ASC 815, “Derivatives and Hedging.”The Company estimated the fair value of the award at ~~September~~June 30, ~~2020,~~2021, and December 31, ~~2019,~~2020, to be approximately ~~$27.7~~$27.1 million and ~~$27.0~~$25.6 million, respectively, and accordingly adjusted its liability to this amount. The long-term portion is recorded in other long-term liabilities and the current portion is recorded in other current liabilities in the consolidated balance sheets. The expense associated with the Employment Agreement Award was recorded in the consolidated statements of operations as corporate selling, general and administrative expenses and was ~~approximately $1.0 million~~$911,000 and ~~$860,000~~$98,000 for the three months ended ~~September~~June 30, ~~2020,~~2021, and ~~2019,~~2020, respectively, and was approximately ~~$2.3~~$1.5 million and ~~$3.6~~$1.3 million for the ~~nine~~six months ended ~~September~~June 30, 2021 and 2020, ~~and 2019,~~ respectively.

The Company’s obligation to pay the Employment Agreement Award was triggered after the Company recovered the aggregate amount of its capital contribution in TV One and ~~recurs~~ only upon actual receipt of distributions of cash or marketable securities or proceeds from a liquidity event with respect to the Company’s aggregate investment in TV One. The CEO was fully vested in the award upon execution of the employment agreement, and the award lapses if the CEO voluntarily leaves the Company, or is terminated for cause. In September 2014, the Compensation Committee of the Board of Directors of the Company approved terms for a new employment agreement with the CEO, including a renewal of the Employment Agreement Award upon similar terms as in the prior employment agreement. Prior to the quarter ended September 30, 2018, there were probability factors included in the calculation of the award related to the likelihood that the award will be realized. ~~During the quarter ended September 30, 2018, management changed the methodology used in calculating the fair value~~

Table of the Company's Employment Agreement Award liability to simplify the calculation. As part of the simplified calculation, the Company eliminated certain adjustments made to its aggregate investment in TV One, including the treatment of historical dividends paid and potential distribution of assets upon liquidation. The Compensation Committee of the Board of Directors approved the simplified method which eliminates certain assumptions that were historically used in the determination of the fair value of this liability.Contents

(o)

Related Party Transactions

Reach Media operates the Tom Joyner Foundation’s Fantastic Voyage^® (the “Fantastic Voyage^®”), a fund-raising event, on behalf of the Tom Joyner Foundation, Inc. (the “Foundation”), a 501(c)(3) entity. The agreement under which the Fantastic Voyage^® operates provides that Reach Media provide all necessary operations of the cruise and that Reach Media will be reimbursed its expenditures and receive a fee plus a performance bonus. Distributions from operating revenues are in the following order until the funds are depleted: up to $250,000 to the Foundation, reimbursement of Reach’s expenditures, up to a $1.0 million fee to Reach, a performance bonus of up to 50% of remaining operating revenues to Reach Media, with the balance remaining to the Foundation. For 2021 and 2022, $250,000 to the Foundation is guaranteed. Reach Media’s earnings for the Fantastic Voyage^® in any given year may not exceed $1.75 million. The Foundation’s remittances to Reach Media under the agreements are limited to its Fantastic Voyage^®related cash collections. Reach Media bears the risk should the Fantastic Voyage^® sustain a loss and bears all credit risk associated with the related passenger cruise package sales. The agreement between Reach and the Foundation automatically renews annually unless termination is mutually agreed or unless a party’s financial requirements are not met, in which case the party not in breach of their obligations has the right, but not the obligation, to terminate unilaterally. Due to the pandemic, the 2020 cruise has been rescheduled to November 2021 and passengers have been given the option to have the majority of their payments refunded. As of ~~September~~June 30, ~~2020, due to such refunds, Reach Media has an estimated net liability to the Foundation of approximately $2.7 million. As of December 31, 2019,~~2021, the Foundation owed Reach Media ~~$24,000~~$460,000 under the agreements for the operation of the ~~cruises.~~

cruises and as of December 31, 2020, Reach Media owed the Foundation $244,000 due to passengers’ refunds pending.

Reach Media provides office facilities (including office space, telecommunications facilities, and office equipment) to the Foundation. Such services are provided to the Foundation on a pass-through basis at cost. Additionally, from time to time, the Foundation reimburses Reach Media for expenditures paid on its behalf at Reach Media-related events. Under these arrangements, as of ~~September~~June 30, ~~2020,~~2021 and December 31, ~~2019,~~2020, the Foundation owed ~~$21,000~~$4,000 and ~~$32,000,~~$6,000, respectively, to Reach Media.

For the nine months ended September 30, 2019, Reach Media’s revenues, expenses, and operating income for the Fantastic Voyage were approximately $10.2 million, $8.5 million, and $1.7 million, respectively. The Fantastic Voyage took place during the second quarter of 2019. Due to the aforementioned ~~reschedule~~rescheduling of the Fantastic Voyage resulting from impacts of the COVID pandemic, no cruise ~~will be~~was operated in 2020.

(p)

Going Concern Assessment

As part of its internal control framework, the Company routinely performs a going concern assessment. ~~The~~We have concluded that the Company has ~~concluded that it has~~ sufficient ~~resources~~capacity to meet its ~~financial~~financing obligations, ~~has additional capacity to access ABL Facility funds to finance working capital needs should the need arise, and~~ that cash flows from operations are sufficient to meet the liquidity ~~needs. As a result,~~needs and/or has sufficient capacity to access asset-backed facility funds to finance working capital needs should the ~~Company is projecting compliance with all debt covenants through the one year period following the financial statement issuance date.~~need arise.

Beginning in March 2020, the Company noted that the COVID-19 pandemic and the resulting government stay at home orders across the markets in which we operate were dramatically impacting certain of the Company's revenues. Most notably, a number of advertisers across significant advertising categories have reduced or ceased advertising spend due to the outbreak and stay at home orders which effectively shut many businesses down. This has been particularly true within our radio segment which derives substantial revenue from local advertisers who have been particularly hard hit due to social distancing and government interventions. Further, the COVID-19 outbreak has caused the postponement of our 2020 Tom Joyner Foundation Fantastic Voyage cruise and impaired ticket sales of other tent pole special events, some of which we had to cancel. We do not carry business interruption insurance to compensate us for losses that may occur as a result of any of these interruptions and continued impacts from the COVID-19 outbreak. Continued or future outbreaks and/or the speed at which businesses reopen (or reclose) in the markets in which we operate could have material impacts on our liquidity and/or operations including causing potential impairment of assets and of our financial results.

Given the expected continued decreases in revenues caused by the COVID-19 pandemic, we assessed our operations considering a variety of factors, including but not limited to, media industry financial reforecasts for 2020, expected operating results, estimated net cash flows from operations, future obligations and liquidity, capital expenditure commitments and projected debt covenant compliance. If the Company were unable to meet its financial covenants, an event of default would occur and the Company’s debt would have to be classified as current, which the Company would be unable to repay if lenders were to call the debt. We concluded that the potential that the Company could incur considerable decreases in operating profits and the resulting impact on the Company’s ability to meet its debt service obligations and debt covenants were probable conditions giving rise to assess whether substantial doubt existed over the Company’s ability to continue as a going concern.

As a result, during the third quarter of 2020, the Company performed a complete reforecast of its 2020 anticipated results extending through one year from the date of issuance of the consolidated financial statements. In reforecasting its results, the Company considered the offsetting impact of certain of cost-cutting measures including furloughs, layoffs, salary reductions, other expense reduction (including eliminating travel and entertainment expenses), eliminating discretionary bonuses and merit raises, decreasing or deferring marketing spend, deferring programming/production costs, reducing special events costs, and implementing a hiring freeze on open positions.

Out of an abundance of caution and to provide for further liquidity given the uncertainty around the pandemic, the Company drew approximately $27.5 million on its ABL Facility on March 19, 2020. As of September 30, 2020, that amount remained on the Company’s balance sheet and together with other cash on hand improved our cash balance to approximately $102.2 million. As of November 9, 2020 our cash on hand balance is approximately $94.6 million. Based on the Company’s forecast operational activity, its ability to manage and delay any capitalized expenditures and additional variable cost-cutting measures, the Company has adequate cash reserves and sufficient liquidity into the foreseeable future or for the next 12 months. As a result of the cost reduction measures that the Company took in in response to the onset of the COVID-19 pandemic, the Company’s current cash balance and further, considering certain remaining countermeasures the Company can implement in the event of further or continued downturn, the Company anticipates meeting its debt service requirements and is projecting compliance with all debt covenants through one year from the date of issuance of the consolidated financial statements. This estimate is, however, subject to substantial uncertainty, in particular due to the unpredictable extent and duration of the impact of COVID-19 on our business, and the concentration of certain of our revenues in areas that could be deemed “hotspots” for the pandemic, and other factors described in Part II, “Item 1A. Risk Factors” herein and Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019 as well as the factors discussed in Part II, “Item 1A. Risk Factors” in each of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 and our Quarterly Report on Form 10- Q for the quarter ended June 30, 2020.

2.	2. ACQUISITIONS AND DISPOSITIONS:

On October 20, 2011, we entered into a time brokerage agreement (“TBA”) with WGPR, Inc. (“WGPR”). Pursuant to the TBA, on October 24, 2011, we began to broadcast programs produced, owned or acquired by the Company on WGPR’s Detroit radio station, WGPR-FM. We paid a monthly fee as well as certain operating costs of WGPR-FM, and in exchange we retained all revenues from the sale of the advertising within the programming we provided. The original term of the TBA was through December 31, 2014; however, in September 2014, we entered into an amendment to the TBA to extend the term of the TBA through December 31, 2019 on which date we ceased operation of the station on our behalf. While we ceased operations of the station on December 31, 2019, the Company continues to provide certain limited management services to the current owner and operator of WGPR.

On August 31, 2019, the Company closed on its previously announced sale of assets of its Detroit, Michigan radio station, WDMK-FM and three translators W228CJ, W252BX, and W260CB for approximately $13.5 million to Beasley Broadcast Group, Inc. The Company recognized an immaterial loss on the sale of the station during the year ended December 31, 2019.

On January 30, 2017, the Company entered into an asset purchase agreement to sell certain land, towers and equipment to a third party for $25 million. On May 2, 2017, the Company closed on its previously announced sale, and is leasing certain of the assets back from the buyer as a part of its normal operations. The Company received proceeds of approximately $25.0 million, resulting in an overall net gain on sale of approximately $22.5 million, of which approximately $14.4 million was recognized immediately during the second quarter of 2017, and approximately $8.1 million which was deferred and was recognized into income ratably over the lease term of ten years. Upon adoption of ASC 842 on January 1, 2019, the unamortized portion of this deferred gain, net of tax, was recognized as a cumulative adjustment to equity.

On December 19, 2019, we entered into both an asset purchase agreement (“APA”) and a TBA with Guardian Enterprise Group, Inc. and certain of its affiliates (collectively, “GEG”) with respect to the acquisition and interim operation of low power television station WQMC-LD in Columbus, Ohio. Pursuant to the TBA, in January 2020, we began to operate WQMC-LD until such time as the purchase transaction can close under the APA. Under the terms of the TBA, we pay a monthly fee as well as certain operating costs of WQMC-LD, and, in exchange, we will retain all revenues from the sale of the advertising within the programming. After receipt of FCC approval, we closed the transactions under the APA and took ownership of WQMC-LD on February 24, 2020 for total consideration of $475,000.

On October 30, 2020, we entered into a local marketing agreement (“LMA”) with Southeastern Ohio Broadcasting System for the operation of station WWCD-FM in Columbus, Ohio beginning November 2020. Under the terms of the LMA, we will pay a monthly fee as well as certain operating costs, and, in exchange, we will retain all revenues from the sale of the advertising within the programming.

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3.	~~GOODWILL AND RADIO BROADCASTING LICENSES:~~

On November 6, 2020, the Company entered into a definitive asset exchange agreement with Entercom Communications Corp. whereby the Company would receive Charlotte stations: WLNK-FM (Adult Contemporary); WBT-AM & FM (News Talk Radio); and WFNZ-AM & 102.5 FM Translator (Sports Radio). In exchange, Urban One would transfer three radio stations to Entercom: St. Louis, WHHL-FM (Urban Contemporary); Philadelphia, WPHI-FM (Urban Contemporary); and Washington, DC, WTEM-AM (Sports); as well as the intellectual property to its St. Louis radio station, WFUN-FM (Adult Urban Contemporary). The Company and Entercom began operation of the exchanged stations on or about November 23, 2020 under LMAs until FCC approval was obtained. The deal was subject to FCC approval and other customary closing conditions and, after obtaining the approvals, closed on April 20, 2021. In addition, the Company entered into an asset purchase agreement with Gateway Creative Broadcasting, Inc. (“Gateway”) for the remaining assets of our WFUN station in a separate transaction which also closed on April 20, 2021. The Company received approximately $8.0 million and exchanged approximately $8.0 million in tangible and intangible assets as part of the transaction with Gateway. The identified assets with a combined carrying value of approximately $32.7 million were classified as held for sale in the consolidated balance sheet at December 31, 2020. The major categories of the assets held for sale include the following:

As of December 31,

2020

(In thousands)
Property and equipment, net

$
2,144
Goodwill

470
Radio broadcasting licenses

30,606
Right of use assets

1,071
Lease liabilities

(1,630)
Assets held for sale, net

$
32,661

The Company’s purchase accounting to reflect the fair value of assets acquired and liabilities assumed consisted of approximately $21.1 million to radio broadcasting licenses, approximately $1.8 million to land and land improvements, approximately $2.0 million to towers and antennas, $517,000 to buildings, approximately $1.0 million to transmitters, $712,000 to studios, $53,000 to vehicles, $200,000 to furniture and fixtures, $67,000 to computer equipment, $19,000 to other equipment, approximately $1.7 million to right of use assets, $1.9 million advertising credit liability, $921,000 to operating lease liabilities, and $812,000 unfavorable lease liability. The fair value of the assets exchanged with Entercom approximate the carrying value of the assets held for sale as of December 31, 2020. The Company recognized a net gain of $404,000 related to the Entercom and Gateway transactions during the three months ended June 30, 2021.

3. GOODWILL AND RADIO BROADCASTING LICENSES:

Impairment Testing

In accordance with ASC 350, “Intangibles - Goodwill and Other,” we do not amortize our indefinite-lived radio broadcasting licenses and goodwill. Instead, we perform a test for impairment annually across all reporting units, or on an interim basis when events or changes in circumstances or other conditions suggest impairment may have occurred in any given reporting unit. Other intangible assets continue to be amortized on a straight-line basis over their useful lives. We perform our annual impairment test as of October 1 of each year. We evaluate all events and circumstances on an interim basis to determine if an interim indicator is present.

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Valuation of Broadcasting Licenses

Beginning in March 2020, the Company ~~noted~~observed that the COVID-19 pandemic and the resulting government stay at home orders were dramatically impacting certain of the ~~Company's~~Company’s revenues. Most notably, a number of advertisers across significant advertising categories ~~have~~had reduced or ceased advertising spend due to the outbreak and stay at home orders which effectively shut many businesses down in the markets in which we operate. This was particularly true within our radio segment which derives substantial revenue from local advertisers who ~~have~~had been particularly hard hit due to social distancing and government interventions. As a result of COVID-19, the total market revenue growth for certain markets in which we operate was below that assumed in our annual impairment testing. ~~During~~As a result, during the ~~first quarter of~~six months ended June 30, 2020, the Company recorded a non-cash impairment charge of approximately $47.7 million associated with our Atlanta, Cincinnati, Dallas, Houston, Indianapolis, Philadelphia, Raleigh, Richmond and St. Louis radio market broadcasting licenses. We did not identify any impairment indicators at any of our reportable segments for the ~~three~~six months ended June 30, 2020. Based on the latest market data obtained by the Company in the third quarter of 2020, the total anticipated market revenue growth for certain markets in which we operate continues to be below that assumed in our first quarter impairment testing. We deemed that to be an impairment indicator that warranted2021 and, therefore, no interim impairment testing ~~of certain markets’ radio broadcasting licenses, which we~~was performed as of ~~September~~June 30, ~~2020.~~ 2021.

Valuation of Goodwill

As ~~a result of that testing, the Company recorded a non-cash impairment charge of~~ ~~approximately $19.1 million associated with our Atlanta, Cincinnati, Dallas, Houston, Indianapolis, Philadelphia and Raleigh market radio broadcasting licenses.~~ Wenoted above, we did not identify any impairment indicators at any of our reportable segments for the ~~three~~six months ended ~~September~~June 30, 2019. During the nine months ended September 30, 2019, the Company recorded a non-cash impairment charge of approximately $3.8 million associated with our Detroit market radio broadcasting licenses. Below are some of the key assumptions used in the income approach model for estimating broadcasting licenses fair values for the interim impairment assessments where impairment was recorded for 2020.

~~(a)~~

~~Reflects changes only to the key assumptions used in the interim testing for certain units of accounting.~~

~~Valuation of Goodwill~~

As2021. Also as noted above, during the first ~~and third quarters~~quarter of 2020 due to the COVID-19 pandemic, we identified impairment indicators at certain of our radio markets, and, as such, we performed an interim analysis for certain radio market goodwill. During the ~~three~~six months ended ~~March 31,~~June 30, 2020, the Company recorded a non-cash impairment charge of approximately ~~$6.0~~$5.9 million to reduce the carrying value of our Atlanta and Indianapolis market goodwill balances. We did not identify any impairment indicators at any of our other reportable segments for the three months ended June 30, 2020. During the three months ended September 30, 2020, the Company recorded a non-cash impairment charge of approximately ~~$10.0 million related to its Atlanta market and Indianapolis market goodwill balances~~. We did not identify any impairment indicators at any of our reportable segments for the three months ended September 30, 2019. Below are some of the key assumptions used in the income approach model for estimating reporting unit fair values for the ~~interim impairment assessments~~ ~~where impairment was recorded for 2020~~.

Goodwill (Radio Market September 30, March 31,
Reporting Units) 2020 (a) 2020 (a)
Impairment charge (in millions) $ 10.0 $ 6.0

Discount Rate 9.0 % 9.5 %
Year 1 Market Revenue Growth Rate Range (26.6)% – 34.7 % (14.5)% – (12.9) %
Long-term Market Revenue Growth Rate Range (Years 6 – 10) 0.9% – 1.1 % 0.9% – 1.1 %
Mature Market Share Range 8.4% – 12.7 % 11.1% – 13.0 %
Mature Operating Profit Margin Range 27.7% – 48.1 % 29.4% – 39.0 %

~~(a)~~

~~Reflects the key assumptions for testing only those radio markets with remaining goodwill.~~

Goodwill Valuation Results

The table below presents the changes in the Company’s goodwill carrying values for its ~~four~~4 reportable segments.


															Radio		Reach				Cable
															Broadcasting		Media		Digital		Television
															Segment		Segment		Segment		Segment		Total
	Radio Broadcasting Segment			Reach Media Segment			Digital Segment			Cable Television Segment		Total
	(In thousands)
															(In thousands)
Gross goodwill	$	155,000		$	30,468		$	27,567		$	165,044	$	378,079		$	155,000	$	30,468	$	27,567	$	165,044	$	378,079
Additions		—			—			—			—		—			0		0		0		0		0
Impairments		(15,900	)		—			—			—		(15,900	)		0		0		0		0		0
Accumulated impairment losses		(101,848	)		(16,114	)		(20,345	)		—		(138,307	)		(117,748)		(16,114)		(20,345)		0		(154,207)
Net goodwill at September 30, 2020	$	37,252		$	14,354		$	7,222		$	165,044	$	223,872
Entercom asset exchange																(470)		—		—		—		(470)
Net goodwill at June 30, 2021															$	36,782	$	14,354	$	7,222	$	165,044	$	223,402

4.	4. LONG-TERM DEBT:

Long-term debt consists of the following:

	September 30, 2020		December 31, 2019
	(Unaudited)
	(In thousands)

					June 30, 2021		December 31, 2020
					(Unaudited)
					(In thousands)
7.375% Senior Secured Notes due February 2028					$	825,000	$	0
PPP Loan						7,505		0
2018 Credit Facility	$	134,736	$	167,145		0		129,935
MGM National Harbor Loan		57,312		52,099		0		57,889
2017 Credit Facility		318,156		320,629		0		317,332
7.375% Senior Secured Notes		350,000		350,000
Asset-backed credit facility		27,500		—
8.75% Senior Secured Notes due December 2022						0		347,016
7.375% Senior Secured Notes due April 2022						0		2,984
Total debt		887,704		889,873		832,505		855,156
Less: current portion of long-term debt		49,997		25,945		0		23,362
Less: original issue discount and issuance costs		10,579		13,620		14,731		12,870
Long-term debt, net	$	827,128	$	850,308	$	817,774	$	818,924

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2028 Notes

On January 7, 2021, the Company launched an offering (the “2028 Notes Offering”) of $825 million in aggregate principal amount of 7.375% 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. On January 8, 2021, the Company entered into a purchase agreement with respect to the 2028 Notes at an issue price of 100% and the 2028 Notes Offering closed on January 25, 2021.

The Company used the net proceeds from the 2028 Notes Offering, together with cash on hand, to repay or redeem (1) the 2017 Credit Facility, (2) the 2018 Credit Facility, (3) the MGM National Harbor Loan; (4) the remaining amounts of our 7.375% Notes, and (5) our 8.75% Notes that were issued in the November 2020 Exchange Offer (all as defined below). Upon settlement of the 2028 Notes Offering, the 2017 Credit Facility, the 2018 Credit Facility and the MGM National Harbor Loan were terminated and the indentures governing the 7.375% Notes and the 8.75% Notes were satisfied and discharged. There was a net loss on retirement of debt of approximately $6.9 million for the six months ended June 30, 2021 associated with the settlement of the 2028 Notes.

The 2028 Notes are the Company’s general senior obligations and are guaranteed by each of the Company’s restricted subsidiaries (other than excluded subsidiaries). 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.

The associated debt issuance costs in the amount of $15.4 million is being reflected as an adjustment to the carrying amount of the debt obligations and amortized to interest expense over the term of the credit facility using the effective interest rate method. The amortization of deferred financing costs was charged to interest expense for all periods presented.

The amount of deferred financing costs included in interest expense for all instruments, for the three months ended June 30, 2021 and 2020, was $471,000 and approximately $1.1 million, respectively. The amount of deferred financing costs included in interest expense for all instruments, for the six months ended June 30, 2021 and 2020, was approximately $1.3 million and $2.1 million, respectively.

PPP Loan

On January 29, 2021, the Company submitted an application for participation in the second round of the Paycheck Protection Program loan program (“PPP”).On June 1, 2021, the Company received proceeds of approximately $7.5 million. The loan bears interest at a fixed rate of 1% per year and will not be changed during the life of the loan. The loan matures June 1, 2026. The Company is in the process of applying for loan forgiveness. While certain of the PPP loans may be forgivable, until they are repaid or forgiven, the loans the amount may constitute debt under the 2028 Notes and increase the Company’s leverage.

8.75% Notes

In October 2020, the Company announced an offer to eligible holders of its 7.375% Senior Secured Notes due 2022 (the “7.375 Notes”) to exchange any and all of their 7.375 Notes for newly issued 8.75% Senior Secured Notes due 2022 (the “8.75 Notes”). The exchange offer closed on November 9, 2020 and, therefore, is referred to as the “November 2020 Exchange Offer”. Until their satisfaction and discharge on settlement of the 2028 Notes, the 8.75% Notes were governed by an indenture, dated November 9, 2020 (the “8.75% Notes Indenture”), by and between the Company, the guarantors therein (the “Guarantors”) and Wilmington Trust, National Association, as trustee (in such capacity, the “8.75% Notes Trustee”) and as notes collateral agent (in such capacity, “the 8.75% Notes Collateral Agent”). Interest on the 8.75% Notes accrued at the rate per annum equal to 8.75% and was payable, in cash, quarterly on January 15, April 15, July 15 and October 15 of each year, commencing on January 15, 2021, to holders of record on the immediately preceding January 1, April 1, July 1 and October 1, respectively.

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The 8.75% Notes were general senior obligations and were guaranteed (the “Guarantees”) by the Guarantors. The 8.75% Notes and the Guarantees: (i) ranked equal in right of payment to all of the Company’s and the Guarantor’s existing and future senior indebtedness, (ii) were secured on a first-priority basis by the Notes Priority Collateral (as defined below) and on a second-priority basis by the ABL Priority Collateral (defined below) owned by the Company and the applicable Guarantor, in each case subject to certain liens permitted under the 8.75% Notes Indenture, (iii) were equal in priority to the collateral owned by the Company and the Guarantor with respect to obligations under the credit agreement, dated as of April 18, 2017, by and among the Company, various lenders therein and Guggenheim Securities Credit Partners, LLC, as administrative agent and any other Parity Lien Debt (as described in the 8.75% Notes Indenture), if an, incurred after the date the 8.75% Notes were issued, (iv) ranked senior in right of payment to any existing or future subordinated indebtedness of the Company or Guarantors, (v) were initially guaranteed on a senior basis by each of the Company’s wholly-owned domestic subsidiaries (other than certain immaterial subsidiaries, unrestricted subsidiaries, and other certain exceptions), (vi) were effectively senior to all of the Company’s and the Guarantor’s existing and future unsecured indebtedness to the extent of the value of the collateral owned by the Company or applicable Guarantors and effectively senior to all existing and future ABL Debt Obligations (as defined in the 8.75% Notes Indenture) to the extent of the value of the Notes Priority Collateral (as defined below) owned by the Company or applicable Guarantor, (vii) were effectively subordinated to all of the Company’s and the Guarantor’s existing and future indebtedness that was secured by liens on assets that do not secure the Notes or the Guarantee to the extent of the value of such assets, (viii) were structurally subordinated to all of the Company’s and the Guarantor’s existing and future indebtedness and other claims and liabilities, including preferred stock, of subsidiaries of the Company that are not guarantors, and (ix) were effectively senior to any 7.375% Notes that remain outstanding after the November 2020 Exchange Offer with respect to any collateral proceeds.

The 8.75% Notes and the guarantees were 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 (which, in the case of foreign subsidiaries, is limited to 65% of the voting stock and 100% of the non-voting stock of each first-tier foreign subsidiary) (collectively, the “Notes Priority Collateral”) and (ii) on a second priority basis by the ABL Priority Collateral.

In connection with the November 2020 Exchange Offer, the 8.75% Notes were subject to a new intercreditor agreement, pursuant to which proceeds received by the 7.375% Notes Trustee with respect to collateral proceeds received by the 7.375% Notes Trustee for the 7.375% Notes under an existing parity lien intercreditor agreement were to be paid over to the 8.75% Notes Trustee for the 8.75% Notes to the extent of the amounts owed to the holders of the 8.75% Notes then outstanding.

The Company could redeem the 8.75% Notes in whole or in part, at its option, upon not less than 30 nor more than 60 days’ prior notice at a redemption price equal to 100% of the principal amount of such 8.75% Notes plus accrued and unpaid interest, if any, to the redemption date.

Within 90 days following the completion of the November 2020 Exchange Offer, the Company was required to repurchase, repay or redeem $15 million aggregate principal amount of the 8.75% Notes. Separately, within five business days after each Excess Cash Flow Calculation Date (as defined in the 8.75% Notes Indenture), the Company was to redeem an aggregate principal amount of 8.75% Notes equal to 50% of the Excess Cash Flow (as defined in the 8.75% Notes Indenture), provided that repurchases, repayments or redemption of 8.75% Notes with internally generated funds during the applicable calculation period would reduce on a dollar-for-dollar basis the amount of such redemption otherwise required on the applicable calculation date. Any such mandatory redemptions were to be at par (plus accrued and unpaid interest).

During the year ended December 31, 2020, the Company recorded a loss on retirement of debt of approximately $2.9 million associated with the November 2020 Exchange Offer. The premium paid to the bondholders in the amount of approximately $3.5 million is being reflected as an adjustment to the carrying amount of the debt obligation and amortized to interest expense over the term of the obligation using the effective interest rate method. The amortization of deferred financing costs was charged to interest expense for all periods presented.

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2018 Credit Facility

On December 4, 2018, the Company and certain of its subsidiaries entered into a credit agreement (“2018 Credit Facility”), among the Company, the lenders party thereto from time to time, Wilmington Trust, National Association, as administrative agent, and TCG Senior Funding L.L.C, as sole lead arranger and sole bookrunner. The 2018 Credit Facility provided $192.0 million in term loan borrowings, which was funded on December 20, 2018. The net proceeds of term loan borrowings under the 2018 Credit Facility were used to refinance, repurchase, redeem or otherwise repay the Company's then outstanding 9.25% ~~senior subordinated notes~~Senior Subordinated Notes due 2020.

~~Borrowings~~Until its termination on settlement of the 2028 Notes, borrowings under the 2018 Credit Facility ~~are~~were subject to customary conditions precedent, as well as a requirement under the 2018 Credit Facility that (i) the Company's total gross leverage ratio on a pro forma basis be not greater than 8:00 to 1:00 (this total gross leverage ratio test steps down as described below), (ii) neither of the administrative agents under the Company's existing credit facilities nor the trustee under the Company's existing senior secured notes due 2022 have objected to the terms of the new credit documents and (iii) certification by the Company that the terms and conditions of the 2018 Credit Facility ~~satisfy~~satisfied the requirements of the definition of “Permitted Refinancing” (as defined in the agreements governing the Company's existing credit facilities) and neither of the administrative agents under the Company's existing credit facilities ~~notifies~~notified the Company within five (5) business days prior to funding the borrowings under the 2018 Credit Facility that it ~~disagrees~~disagreed with such determination (including a reasonable description of the basis upon which it disagrees).

The 2018 Credit Facility ~~matures~~was scheduled to mature on December 31, 2022 (the “Maturity Date”). In connection with the November 2020 Exchange Offer, we also entered into an amendment to certain terms of our 2018 Credit Facility including the extension of the maturity date to March 31, 2023. Interest rates on borrowings under the 2018 Credit Facility ~~will be~~were either (i) from the Funding Date to the Maturity Date, 12.875% per annum, (ii) 11.875% per annum, once 50% of the term loan borrowings ~~have~~had been repaid or (iii) 10.875% per annum, once 75% of the term loan borrowings ~~have~~had been repaid. Interest payments ~~begin~~began on the last day of the 3-month period commencing on the Funding Date.

Within 90 days following the completion of the November 2020 Exchange Offer, the Company was required to repay $10 million of the 2018 Credit Facility. The amendment was accounted for as a modification in accordance with the provisions of ASC 470, “Debt”.

The Company's obligations under the 2018 Credit Facility ~~are~~were not secured. The 2018 Credit Facility iswas guaranteed on an unsecured basis by each entity that guarantees the Company's outstanding $350.0 million 2017 Credit Facility (as defined below).

The term loans could ~~have been~~be voluntarily prepaid prior to February 15, 2020 subject to payment of a prepayment premium. The Company iswas required to repay principal to the extent then outstanding on each quarterly interest payment date, commencing on the last business day in March 2019, equal to one quarter of 7.5% of the aggregate initial principal amount of all term loans incurred on the Funding Date to December 2019, commencing on the last business day in March 2020, one quarter of 10.0% of the aggregate initial principal amount of all term loans incurred on the Funding Date to December 2021, and, commencing on the last business day in March 2021, one quarter of 12.5% of the aggregate initial principal amount of all term loans incurred on the Funding Date to December 2022. The Company iswas also required to use 75% of excess cash flow (“ECF payment”) as defined in the 2018 Credit Facility, which ~~exclude~~excluded any distributions to the Company or its restricted subsidiaries in respect of its interests in the MGM National Harbor, to repay outstanding term loans at par, paid semiannually and to use 100% of all distributions to the Company or its restricted subsidiaries received in respect of its interest in the MGM National Harbor to repay outstanding terms loans at par. During the three and ~~nine~~six months ended ~~September~~June 30, 2020, the Company repaid approximately ~~$12.1~~$8.4 million and ~~$32.4~~$20.3 million, respectively under the 2018 Credit Facility. Included in the repayments made during the ~~nine~~six months ended ~~September~~June 30, 2020 was approximately $11.1 million in ECF payments in accordance with the agreement. During the three and nine months September 30, 2019, the Company repaid approximately $7.1 million and $21.3 million, respectively, under the 2018 Credit Facility. Included in the repayments made during the quarter ended September 30, 2019 was approximately $3.5$3.8 million in ECF payments in accordance with the agreement.

The 2018 Credit Facility ~~contains~~contained customary representations and warranties and events of default, affirmative and negative covenants (in each case, subject to materiality exceptions and qualifications). The 2018 Credit Facility, as amended, also ~~contains~~contained certain financial covenants, including a maintenance covenant requiring the Company's total gross leverage ratio to be not greater than 8.0 to 1.00 in 2019, 7.5 to 1.00 in 2020, 7.25 to 1.00 in 2021, ~~and~~ 6.75 to 1.00 in ~~2022. As of September 30, 2020, the Company was~~2022 and 6.25 to 1.00 in ~~compliance with all of its financial covenants under the 2018 Credit Facility.~~2023.

~~As of September 30, 2020, the Company had outstanding approximately $134.7 million on its 2018 Credit Facility.~~ The original issue discount in the amount of approximately $3.8 million and associated debt issuance costs in the amount of $875,000 ~~is being~~were reflected as an adjustment to the carrying amount of the debt obligation and amortized to interest expense over the term of the credit facility using the effective interest rate method. The amortization of deferred financing costs was charged to interest expense for all periods presented. ~~The amount~~

Table of deferred financing costs included in interest expense for all instruments, for the three months ended September 30, 2020 and 2019, was approximately $1.1 million and $986,000, respectively. The amount of deferred financing costs included in interest expense for all instruments, for the nine months ended September 30, 2020 and 2019, was approximately $3.2 million and $2.9 million, respectively.Contents

MGM National Harbor Loan

Concurrently, on December 4, 2018, Urban One Entertainment SPV, LLC (“UONESPV”) and its immediate parent, Radio One Entertainment Holdings, LLC (“ROEH”), each of which is a wholly owned subsidiary of the Company, entered into a credit agreement, providing $50.0 million in term loan borrowings (the “MGM National Harbor Loan”) which was funded on December 20, 2018. On June 25, 2020, the Company borrowed an incremental $3.6 million on the MGM National Harbor Loan and used the proceeds to pay down the higher coupon 2018 Credit Facility by the same amount.

~~The~~Until its termination on settlement of the 2028 Notes, the MGM National Harbor Loan ~~matures~~was scheduled to mature on December 31, 2022 and ~~bears~~bore interest at 7.0% per annum in cash plus 4.0% per annum paid-in kind. The loan ~~has~~had limited ability to be prepaid in the first two years. The loan iswas secured on a first priority basis by the assets of UONESPV and ROEH, including all of UONESPV's shares held by ROEH, all of UONESPV's interests in MGM National Harbor, its rights under the joint venture operating agreement governing the MGM National Harbor and UONESPV's obligation to exercise its put right under the joint venture operating agreement in the event of a UONESPV payment default or bankruptcy event, in each case, subject to applicable Maryland gaming laws and approvals. Exercise by UONESPV of its put right under the joint venture operating agreement iswas subject to required lender consent unless the proceeds are used to retire the MGM National Harbor Loan and any remaining excess is used to repay borrowings, if any, under the 2018 Credit Facility. The MGM National Harbor Loan also ~~contains~~contained customary representations and warranties and events of default, affirmative and negative covenants (in each case, subject to materiality exceptions and qualifications).

~~As of September 30, 2020, the Company had outstanding approximately $57.3 million on its MGM National Harbor Loan.~~ The original issue discount in the amount of approximately $1.0 million and associated debt issuance costs in the amount of approximately $1.7 million iswas being reflected as an adjustment to the carrying amount of the debt obligation and amortized to interest expense over the term of the obligation using the effective interest rate method. The amortization of deferred financing costs was charged to interest expense for all periods presented.

2017 Credit Facilities

On April 18, 2017, the Company closed on a senior secured credit facility (the “2017 Credit Facility”). The 2017 Credit Facility iswas governed by a credit agreement by and among the Company, the lenders party thereto from time to time and Guggenheim Securities Credit Partners, LLC, as administrative agent, The Bank of New York Mellon, as collateral agent, and Guggenheim Securities, LLC as sole lead arranger and sole book running manager. The 2017 Credit Facility ~~provides~~provided for $350 million in term loan borrowings, all of which was advanced and outstanding on the date of the closing of the transaction.

~~The~~Until its termination on settlement of the 2028 Notes, the 2017 Credit Facility ~~matures~~matured on the earlier of (i) April 18, 2023, or (ii) in the event such debt is not repaid or refinanced, 91 days prior to the maturity of the Company’s ~~2022~~7.375% Notes (as defined below). At the Company’s election, the interest rate on borrowings under the 2017 Credit Facility are based on either (i) the then applicable base rate (as defined in the 2017 Credit Facility) as, for any day, a rate per annum (rounded upward, if necessary, to the next 1/100th of 1%) equal to the greater of (a) the prime rate published in the Wall Street Journal, (b) 1/2 of 1% in excess rate of the overnight Federal Funds Rate at any given time, (c) the one-month LIBOR rate commencing on such day plus 1.00%) and (d) 2%, or (ii) the then applicable LIBOR rate (as defined in the 2017 Credit Facility). The average interest rate was approximately ~~5.23%~~5.0% for ~~2020~~2021 and ~~was 6.41%~~5.62% for ~~2019.~~

2020.

The 2017 Credit Facility iswas (i) guaranteed by each entity that guarantees the Company’s ~~2022~~7.375% Notes on a pari passu basis with the guarantees of the ~~2022~~7.375% Notes and (ii) secured on a pari passu basis with the Company’s ~~2022~~7.375% Notes. The Company’s obligations under the 2017 Credit Facility ~~are~~were secured, subject to permitted liens and except for certain excluded assets (i) on a first priority basis by certain notes priority collateral, and (ii) on a second priority basis by collateral for the Company’s asset-backed line of credit.

In addition to any mandatory or optional prepayments, the Company iswas required to pay interest on the term loans (i) quarterly in arrears for the base rate loans, and (ii) on the last day of each interest period for LIBOR loans. Certain voluntary prepayments of the term loans during the first six months ~~will require~~required an additional prepayment premium. Beginning with the interest payment date occurring in June 2017 and ending in March 2023, the Company ~~will be~~was required to repay principal, to the extent then outstanding, equal to 1∕4 of 1% of the aggregate initial principal amount of all term loans incurred on the effective date of the 2017 Credit Facility. On December 19, 2018, upon drawing under the 2018 Credit Facility and MGM National Harbor Loan, the Company voluntarily prepaid approximately $20.0 million in principal on the 2017 Credit Facility. During ~~each of~~ the three ~~month periods in September~~months ended June 30, 2020, ~~and 2019,~~ the Company repaid $824,000 under the 2017 Credit ~~Facility. During each of~~Facility and during the ~~nine month periods in September~~six months ended June 30, 2020, ~~and 2019,~~ the Company repaid approximately ~~$2.5~~$1.6 million under the 2017 Credit Facility.

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The 2017 Credit Facility ~~contains~~contained customary representations and warranties and events of default, affirmative and negative covenants (in each case, subject to materiality exceptions and qualifications) which may be more restrictive than those governing the ~~2022~~7.375% Notes. The 2017 Credit Facility also ~~contains~~contained certain financial covenants, including a maintenance covenant requiring the Company’s interest expense coverage ratio (defined as the ratio of consolidated EBITDA to consolidated interest expense) to be greater than or equal to 1.25 to 1.00 and its total senior secured leverage ratio (defined as the ratio of consolidated net senior secured indebtedness to consolidated EBITDA) to be less than or equal to 5.85 to 1.00.

The net proceeds from the 2017 Credit Facility were used to prepay in full the Company’s previous senior secured credit facility and the agreement governing such credit facility.

The 2017 Credit Facility ~~contains~~contained affirmative and negative covenants that the Company iswas required to comply with, including:

(a)

maintaining an interest coverage ratio of no less than:

§◾

1.25 to 1.00 on June 30, 2017 and the last day of each fiscal quarter thereafter.

(b)

maintaining a senior leverage ratio of no greater than:

§◾

5.85 to 1.00 on June 30, 2017 and the last day of each fiscal quarter thereafter.

(c)

limitations on:

§◾

liens;

§◾

sale of assets;

	§◾	payment of dividends; and
	§	~~mergers.~~

◾

mergers.

~~As of September 30, 2020, the Company was in compliance with all of its financial covenants under the 2017 Credit Facility.~~

~~As of September 30, 2020, the Company had outstanding approximately $318.2 million on its 2017 Credit Facility.~~ The original issue discount is being reflected as an adjustment to the carrying amount of the debt obligations and amortized to interest expense over the term of the credit facility using the effective interest rate method. The amortization of deferred financing costs was charged to interest expense for all periods presented.

~~2022~~7.375% Notes

On April 17, 2015, the Company closed a private offering of $350.0 million aggregate principal amount of 7.375% senior secured notes due 2022 (the ~~“2022~~“7.375% Notes”). The ~~2022~~7.375% Notes were offered at an original issue price of 100.0% plus accrued interest from April 17, 2015 and ~~will mature~~matured on April 15, 2022. Interest on the ~~2022~~7.375% Notes ~~accrues~~accrued at the rate of 7.375% per annum and iswas payable semiannually in arrears on April 15 and October 15, which commenced on October 15, 2015. The ~~2022~~7.375% Notes ~~are~~were guaranteed, jointly and severally, on a senior secured basis by the Company’s existing and future domestic subsidiaries, including TV One.

In connection with the closing of the 2022 Notes, the Company and the guarantor parties thereto entered into a Fourth Supplemental Indenture to the indenture governing the 2020 Notes (as defined below). Pursuant to this Fourth Supplemental Indenture, TV One, which previously did not guarantee the 2020 Notes, became a guarantor under the 2020 Notes indentures. In addition, the transactions caused a “Triggering Event” (as defined in the 2020 Notes Indenture) and, as a result, the 2020 Notes became an unsecured obligation of the Company and the subsidiary guarantors and rank equal in right of payment with the Company’s other senior indebtedness.

The Company used the net proceeds from the ~~2022~~7.375% Notes, to refinance a previous credit agreement, refinance certain TV One indebtedness, and finance the buyout of membership interests of Comcast in TV One and pay the related accrued interest, premiums, fees and expenses associated therewith.

~~The 2022~~Until their satisfaction and discharge on settlement of the 2028 Notes, ~~are~~the 7.375% Notes were the Company’s senior secured obligations and ~~rank~~ranked equal in right of payment with all of the Company’s and the guarantors’ existing and future senior indebtedness, including obligations under the 2017 Credit Facility and the Company’s ~~2020 Notes (defined below).~~previously existing senior subordinated notes. The ~~2022~~7.375% Notes and related guarantees ~~are~~were equally and ratably secured by the same collateral securing the 2017 Credit Facility and any other parity lien debt issued after the issue date of the ~~2022~~7.375% Notes, including any additional notes issued under the Indenture, but ~~are~~were effectively subordinated to the Company’s and the guarantors’ secured indebtedness to the extent of the value of the collateral securing such indebtedness that does not also secure the ~~2022~~7.375% Notes. Collateral ~~includes~~included substantially all of the Company’s and the guarantors’ current and future property and assets for accounts receivable, cash, deposit accounts, other bank accounts, securities accounts, inventory and related assets including the capital stock of each subsidiary guarantor. As

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On November 9, 2020, we completed the ~~Company had~~November 2020 Exchange Offer of 99.15% of our outstanding ~~approximately $350.0 million of the 2022 Notes. See Note 9~~ ~~– Subsequent Events~~.

~~Senior Subordinated~~7.375% Notes

~~On February 10, 2014, the Company closed a private placement offering of $335.0~~ for $347 million aggregate principal amount of 9.25% senior subordinated notes due 2020 (the “2020 Notes”). The 2020 Notes were offered at an original issue price of 100.0% plus accrued interest from February 10, 2014. The 2020 Notes were scheduled to mature on February 15, 2020. Interest accrued at the rate of 9.25% per annum and was payable semiannually in arrears on February 15 and August 15 in the initial amount of approximately $15.5 million, which commenced on August 15, 2014. The 2020 Notes were guaranteed by certain of the Company’s existing and future domestic subsidiaries and any other subsidiaries that guarantee the existing senior credit facility or any of the Company’s other syndicated bank indebtedness or capital markets securities. The Company used the net proceeds from the offering to repurchase or otherwise redeem all of the amounts then outstanding under its previous notes and to pay the related accrued interest, premiums, fees and expenses associated therewith. During the quarter ended December 31, 2018, in conjunction with entering into the 2018 Credit Facility and MGM National Harbor Loan, the Company repurchased approximately $243.0 million of its 2020 Notes at an average price of approximately 100.88% of par.8.75% Notes.

On January 17, 2019, the Company announced that it had given the required notice under the indenture governing its 2020 Notes to redeem for cash all outstanding aggregate principal amount of its Notes to the extent outstanding on February 15, 2019 (the "Redemption Date"). The redemption price for the Notes was 100.0% of the principal amount of the Notes, plus accrued and unpaid interest to the Redemption Date. On February 15, 2019, the remaining 2020 Notes were redeemed in full.

~~Comcast Note~~

Until February 2019, the Company also had outstanding a senior unsecured promissory note in the aggregate principal amount of approximately $11.9 million due to Comcast (“Comcast Note”). The Comcast Note bore interest at 10.47%, was payable quarterly in arrears, and the entire principal amount was due on April 17, 2019. However, the Company was contractually required to retire the Comcast Note in February 2019 upon redemption of the remaining 2020 Notes. On February 15, 2019, upon redemption of the remaining 2020 Notes, the Comcast Note was paid in full and retired.

Asset-Backed Credit ~~Facility~~

Facilities

On April 21, 2016, the Company entered into a senior credit agreement governing an asset-backed credit facility (the ~~“ABL~~“2016 ABL Facility”) among the Company, the lenders party thereto from time to time and Wells Fargo Bank National Association, as administrative agent (the “Administrative Agent”). The 2016 ABL Facility originally provided for $25 million in revolving loan borrowings in order to provide for the working capital needs and general corporate requirements of the Company. On November 13, 2019, the Company entered into an amendment to the 2016 ABL Facility, (the ~~“ABL~~“2016 ABL Amendment”), which increased the borrowing capacity from $25 million in revolving loan borrowings to $37.5 million in order to provide for the working capital needs and general corporate requirements of the Company and provides for a letter of credit facility up to $7.5 million as a part of the overall $37.5 million in capacity. The 2016 ABL Amendment also ~~redefines~~redefined the “Maturity Date” to ~~read as follows: “Maturity Date" shall mean the~~be “the earlier to occur of (a) April 21, 2021 and (b) the date that is thirty (30) days prior to the earlier to occur of (i) the Term Loan Maturity Date (as defined in the Term Loan Credit Agreement as in effect on the Effective Date or as the same may be extended in accordance with the terms of the Term Loan Credit Agreement), and (ii) the Stated Maturity (as defined in the Senior Secured Notes Indenture (as defined in the Term Loan Credit Agreement)) of the Notes (as defined in the Senior Secured Notes Indenture as in effect on the Effective Date or as the same may be extended in accordance with the terms of the Senior Secured Notes Indenture).”

At the Company’s election, the interest rate on borrowings under the 2016 ABL Facility ~~are~~were based on either (i) the then applicable margin relative to Base Rate Loans (as defined in the 2016 ABL Facility) or (ii) the then applicable margin relative to LIBOR Loans (as defined in the 2016 ABL Facility) corresponding to the average availability of the Company for the most recently completed fiscal quarter.

Advances under the 2016 ABL Facility ~~are~~were limited to (a) eighty-five percent (85%) of the amount of Eligible Accounts (as defined in the 2016 ABL Facility), less the amount, if any, of the Dilution Reserve (as defined in the 2016 ABL Facility), minus (b) the sum of (i) the Bank Product Reserve (as defined in the 2016 ABL Facility), plus (ii) the aggregate amount of all other reserves, if any, established by Administrative Agent.

All obligations under the 2016 ABL Facility ~~are~~were secured by first priority lien on all (i) deposit accounts (related to accounts receivable), (ii) accounts receivable, (iii) all other property which constitutes ABL Priority Collateral (as defined in the 2016 ABL Facility). The obligations ~~are~~were also secured by all material subsidiaries of the Company.

~~Finally, the~~The 2016 ABL Facility iswas subject to the terms of the Intercreditor Agreement (as defined in the 2016 ABL Facility) by and among the Administrative Agent, the administrative agent for the secured parties under the Company’s term loan and the trustee and collateral trustee under the senior secured notes indenture.

In connection with the offering of the 2028 Notes, the Company entered into an amendment of its 2016 ABL Facility to facilitate the issuance of the 2028 Notes. The amendments to the 2016 ABL Facility, include, among other things, a consent to the issuance of the 2028 Notes, revisions to terms and exclusions of collateral and addition of certain subsidiaries as guarantors.

On February 19, 2021, the Company closed on a new asset backed credit facility (the “Current 2021 ABL Facility”). The Current 2021 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 2021 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 2021 ABL Facility also provides for a letter of credit facility up to $5 million as a part of the overall $50 million in capacity. On closing of the Current 2021 ABL Facility, the 2016 ABL Facility was terminated on February 19, 2021. As of ~~December 31, 2019, the Company did not have any borrowings~~June 30, 2021, there is no balance outstanding on ~~its ABL Facility. As of September 30, 2020,~~ the ~~Company had approximately $27.5 million in borrowings outstanding on its~~Current 2021 ABL Facility.

At the Company’s election, the interest rate on borrowings under the Current 2021 ABL Facility are based on either (i) the then applicable margin relative to Base Rate Loans (as defined in the Current 2021 ABL Facility) or (ii) the then applicable margin relative to LIBOR Loans (as defined in the Current 2021 ABL Facility) corresponding to the average availability of the Company for the most recently completed fiscal quarter.

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Advances under the Current 2021 ABL Facility are limited to (a) eighty-five percent (85%) of the amount of Eligible Accounts (as defined in the Current 2021 ABL Facility), less the amount, if any, of the Dilution Reserve (as defined in the Current 2021 ABL Facility), minus (b) the sum of (i) the Bank Product Reserve (as defined in the Current 2021 ABL Facility), plus (ii) the AP and Deferred Revenue Reserve (as defined in the Current 2021 ABL Facility), plus (iii) without duplication, the aggregate amount of all other reserves, if any, established by Administrative Agent.

All obligations under the Current 2021 ABL Facility are secured by 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 2021 ABL Facility). The obligations are also guaranteed by all material restricted subsidiaries of the Company.

The Current 2021 ABL Facility matures on the earliest of: the earlier to occur of (a) the date that is five (5) years from the effective date of the Current 2021 ABL Facility and (b) 91 days prior to the maturity of the Company’s 2028 Notes.

Finally, the Current 2021 ABL Facility is subject to the terms of the Revolver Intercreditor Agreement (as defined in the Current 2021 ABL Facility) by and among the Administrative Agent and Wilmington Trust, National Association.

Letter of Credit Facility

On February 24, 2015, the Company entered into a letter of credit reimbursement and security agreement. On October 8, 2019, the Company entered into an amendment to its letter of credit reimbursement and security agreement and extended the term to October 8, 2024. As of ~~September~~June 30, ~~2020,~~2021, the Company had letters of credit totaling $871,000 under the agreement. Letters of credit are issued under the ~~agreement~~Current 2021 ABL Facility and are required to be collateralized with cash.

The Company conducts a portion of its business through its subsidiaries. Certain of the Company’s subsidiaries have fully and unconditionally guaranteed the Company’s 2022 Notes, the Company’s obligations under the 2017 Credit Facility, and the obligations under the 2018 Credit Facility. The Company’s interest in the MGM National Harbor Casino fully guarantees the MGM National Harbor Loan. 2028 Notes.

Future Minimum Principal Payments

Future scheduled minimum principal payments of debt as of ~~September~~June 30, ~~2020,~~2021, are as follows:


													7.375% Senior
													Secured Notes due
													February 2028		PPP Loan		Total
	2018 Credit Facility		MGM National Harbor Loan		Asset-backed Credit Facility		2017 Credit Facility		7.38% Senior Secured Notes due April 2022		Total
	(In thousands)
October - December 2020	$	4,800	$	—	$	—	$	824	$	—	$	5,624
2021		19,200		—		27,500		3,297		—		49,997
													(In thousands)
July - December 2021													$	0	$	0	$	0
2022		110,736		57,312		—		3,297		350,000		521,345		0		0		0
2023		—		—		—		310,738		—		310,738		0		0		0
2024		—		—		—		—		—		—		0		0		0
2025 and thereafter		—		—		—		—		—		—
2025														0		0		0
2026 and thereafter														825,000		7,505		832,505
Total Debt	$	134,736	$	57,312	$	27,500	$	318,156	$	350,000	$	887,704	$	825,000	$	7,505	$	832,505

5.	~~INCOME TAXES:~~

5. INCOME TAXES:

The Company ~~generally utilizes~~uses the estimated annual effective tax rate method ~~(“Estimated AETR Method”) prescribed~~ under ASC 740-270, “Interim Reporting” to calculate the provision for income taxes. ~~For the nine months ended September 30, 2020, the~~The Company recorded a ~~benefit from~~provision for income taxes of approximately ~~$21.5~~$6.1 million on pre-tax ~~loss~~income from continuing operations of ~~approximately $55.2~~$25.0 million ~~utilizing~~for the ~~actual effective~~six months ended June 30, 2021, which results in a tax rate ~~(“Discrete Method”) for the period.~~ Economic disruptions caused by COVID-19 have impacted the Company’s ability to accurately forecast earnings in certain segments, therefore the Company continues to utilize the Discrete Method to calculate the interimof approximately 24.4%. This tax ~~provision for the quarter ended September 30, 2020.~~

~~During the three months ended March 31, 2020, the Internal Revenue Service (“IRS”) accepted the Company’s petition to extend the time to file certain procedural elections~~rate is based on an estimated annual effective rate of ~~a subsidiary corporation.~~25.0%. The IRS acceptance resulted in a reduction of the valuation allowance against certain deferred tax assets (“DTAs”) for our net operating losses. As a result of the reduction of the valuation allowance, the Company recorded adiscrete tax benefit of ~~approximately $12.5 million that is included in the $21.5 million benefit from income taxes recorded~~$143,000 primarily for ~~the nine months ended September 30, 2020.~~

excess tax benefits related to restricted stock units.

In accordance with ASC 740, “Accounting for Income Taxes”, the Company continues to evaluate the realizability of its net DTAs by assessing the future tax consequences of events that have been recognized in the Company’s financial statements or tax returns, tax planning strategies, and future profitability. As of ~~September~~June 30, ~~2020,~~2021, the Company believes it is more likely than not that these DTAs will be realized.

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The Company is subject to the continuous examination of our income tax returns by the IRS and other domestic tax authorities. We believe that an adequate provision has been made for any adjustments that may result from tax examinations. The Company ~~does not currently anticipate~~believes that ~~the total amounts~~it is reasonably possible that a decrease of up to approximately $1.0 million of unrecognized tax benefits ~~will significantly change~~related to state tax exposures may be necessary within the next twelve months.

6. STOCKHOLDERS’ EQUITY:

On June 16, 2020, the Company’s Board of Directors authorized an amendment (the “Potential Amendment”) of Urban One's certificate of incorporation to effect a reverse stock split across all classes of common stock by a ratio of not less than one-for-two and not more than one-for-fifty at any time prior to December 31, 2021, with the exact ratio to be set at a whole number within this range as determined by our board of directors in its discretion. The Company’s shareholders approved the Potential Amendment at the annual meeting of the shareholders June 16, 2020. The Company has not acted on the Potential Amendment but may do so as determined by our board of directors in its discretion.

On June 23, 2021, the Company’s Board of Directors authorized an amendment of the Urban One 2019 Equity and Performance Incentive Plan to increase the number of shares available for grant and to provide the grant of Class A as well as Class D shares.

On August 18, 2020, the Company entered into an Open Market Sales Agreement with Jefferies LLC (“Jefferies”) under which the Company ~~may offer and sell, from time to time at its sole discretion, (the “Current ATM Program”)~~sold shares of its Class A common stock, par value $0.001 per share (the “Class A Shares”) up to an aggregate offering price of $25 ~~million.~~million (the “2020 ATM Program”). Jefferies ~~is acting~~acted as sales agent for the ~~Current~~2020 ATM Program. ~~In August~~During the year ended December 31, 2020, the Company issued 2,859,276 shares of its Class A Shares at a weighted average price of $5.39 for approximately ~~$14.8~~$14.7 million of net proceeds after associated fees and expenses. ~~While~~

On January 19, 2021, the Company ~~still has~~completed its 2020 ATM Program, sold an additional 1,465,825 shares for an aggregate of 4,325,102 Class A shares sold through the 2020 ATM Program, receiving gross proceeds of approximately $25.0 million and net proceeds of approximately $24.0 million for the program (inclusive of the $14.7 million sold during the year ended December 31, 2020). On January 27, 2021, the Company entered into a new 2021 Open Market Sale Agreement (the “2021 Sale Agreement”) with Jefferies under which the Company could sell up to an additional $25.0 million of Class A Shares, ~~available for issuance under~~through Jefferies as its sales agent. During the ~~Current ATM Program,~~three months ended March 31, 2021, the Company issued and sold an aggregate of 420,439 Class A Shares pursuant to the 2021 Sale Agreement and received gross proceeds of approximately $3.0 million and net proceeds of approximately $2.8 million, after deducting commissions to Jefferies and other offering expenses. During the three months ended June 30, 2021, the Company issued and sold an aggregate of 1,893,126 Class A Shares pursuant to the 2021 Sale Agreement and received gross proceeds of approximately $22.0 million and net proceeds of approximately $21.2 million, after deducting commissions to Jefferies and other offering expenses. 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.

Stock Repurchase Program

From time to time, the Company’s Board of Directors has authorized repurchases of shares of the Company’s Class A and Class D common stock. As of March 13, 2020, the Company’s Board authorized a new repurchase plan of up to $2.6 million of the Company’s Class A and Class D shares through December 31, 2020. In addition, on June 11, 2020, the Company’s Board authorized a repurchase of $2.4 million of the Company’s Class D shares. As of ~~September 30,~~December 31, 2020, the Company had ~~$2.6 million~~no capacity remaining under the authorizations as the capacity under the June authorization was used and the March authorization lapsed by its ~~open authorization with respect to its Class A and Class D common stock.~~terms on December 31, 2020. Under open authorizations, repurchases may be made from time to time in the open market or in privately negotiated transactions in accordance with applicable laws and regulations. Shares are retired when repurchased. The timing and extent of any repurchases will depend upon prevailing market conditions, the trading price of the Company’s Class A and/or Class D common stock and other factors, and subject to restrictions under applicable law. When in effect, the Company executes upon stock repurchase programs in a manner consistent with market conditions and the interests of the stockholders, including maximizing stockholder value. During the three and six months ended ~~September~~June 30, ~~2020,~~2021, the Company did not repurchase any shares of Class A ~~and/~~common stock or Class D common stock. During the three months ended September 30, 2019, the Company repurchased 6,345 shares of Class A common stock in the amount of $14,000 at an average price of $2.20 per share and repurchased 448,742 shares of Class D common stock in the amount of $975,000 at an average price of $2.17 per share. During the nine months ended SeptemberJune 30, 2020, the Company did not repurchase any shares of Class A common stock and repurchased 3,208,288 shares of Class D common stock in the amount of approximately $2.4 million at an average price of $0.76 per share. During the ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, the Company ~~repurchased 54,896~~did not repurchase any shares of Class A common stock ~~in the amount of $120,000 at an average price of $2.19 per share~~ and repurchased ~~1,709,315~~3,208,288 shares of Class D common stock in the amount of approximately ~~$3.5~~$2.4 million at an average price of ~~$2.06~~$0.76 per share.

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In addition, the Company has limited but ongoing authority to purchase shares of Class D common stock (in one or more transactions at any time there remain outstanding grants) under the Company’s 2009 Stock Plan and 2019 Equity and Performance Incentive Plan (both as defined below). As of May 21, 2019, the authority under the 2019 Equity and Performance Incentive Plan will be used to satisfy any employee or other recipient tax obligations in connection with the exercise of an option or a share grant under the 2009 Stock Plan and the 2019 Equity and Performance Incentive Plan, to the extent that the Company has capacity under its financing agreements (i.e., its current credit facilities and indentures) (each a “Stock Vest Tax Repurchase”). During the three months ended ~~September~~June 30, 2021, the Company executed a Stock Vest Tax Repurchase of 14,051 shares of Class D Common Stock in the amount of $33,000 at an average price of $2.36 per share. During the three months ended June 30, 2020, the Company executed a Stock Vest Tax Repurchase of ~~3,195~~155,771 shares of Class D Common Stock in the amount of ~~$6,000~~$140,000 at an average price of ~~$1.74~~$0.90 per share. During the ~~three~~six months ended ~~September~~June 30, ~~2019,~~2021, the Company executed a Stock Vest Tax Repurchase of ~~13,264~~509,347 shares of Class D Common Stock in the amount of ~~$25,000~~$904,000 at an average price of ~~$1.87~~$1.78 per share. During the ~~nine~~six months ended ~~September~~June 30, 2020, the Company executed a Stock Vest Tax Repurchase of ~~706,767~~703,572 shares of Class D Common Stock in the amount of approximately $1.2 million at an average price of $1.64 per share. During the nine months ended September 30, 2019, the Company executed a Stock Vest Tax Repurchase of 871,383 shares of Class D Common Stock in the amount of approximately $1.7 million at an average price of $1.94 per share.

Stock Option and Restricted Stock Grant Plan

Our 2009 stock option and restricted stock plan (the “2009 Stock Plan”) was originally approved by the stockholders at the Company’s annual meeting on December 16, 2009. The Company had the authority to issue up to 8,250,000 shares of Class D Common Stock under the 2009 Stock Plan. Since its original approval, from time to time, the Board of Directors adopted and, as required, our stockholders approved certain amendments to and restatement of the 2009 Stock Plan (the “Amended and Restated 2009 Stock Plan”). The amendments under the Amended and Restated 2009 Stock Plan primarily affected (i) the number of shares with respect to which options and restricted stock grants may be granted under the 2009 Stock Plan and (ii) the maximum number of shares that can be awarded to any individual in any one calendar year. On April 13, 2015, the Board of Directors adopted, and our stockholders approved on June 2, 2015, an amendment that replenished the authorized plan shares, increasing the number of shares of Class D common stock available for grant back up to 8,250,000 shares. Our new stock option and restricted stock plan (“2019 Equity and Performance Incentive Plan”), currently in effect was approved by the stockholders at the Company’s annual meeting on May 21, 2019. The Board of Directors adopted, and on May 21, 2019, our stockholders approved, the 2019 Equity and Performance Incentive Plan which is funded with 5,500,000 shares of Class D Common Stock. The Company uses an average life for all option awards. The Company settles stock options upon exercise by issuing stock. As of ~~September~~June 30, ~~2020, 690,336~~2021, 438,052 shares of Class D common stock were available for grant under the 2019 Equity and Performance Incentive Plan.

On ~~August 7, 2017,~~June 12, 2019, the Compensation Committee (“Compensation Committee”) of the Board of Directors of the Company awarded Catherine Hughes, Chairperson, 474,609 restricted shares of the Company’s Class D common stock, and stock options to purchase 210,937 shares of the Company’s Class D common stock. The grants were effective January 5, 2018, and vested on January 5, 2019.

~~On June 12, 2019, the Compensation Committee~~ awarded Catherine Hughes, Chairperson, 393,685 restricted shares of the Company’s Class D common stock, and stock options to purchase 174,971 shares of the Company’s Class D common stock. The grants were effective July 5, 2019 and vested on January 6, 2020.

On June 12, 2019, the Compensation Committee awarded Catherine Hughes, Chairperson, 427,148 restricted shares of the Company’s Class D common stock, and stock options to purchase 189,843 shares of the Company’s Class D common stock. The grants were effective June 5, 2020 and ~~will vest~~vested on January 6, 2021.

On August 7, 2017, the Compensation Committee awarded Alfred Liggins, Chief Executive Officer and President, 791,015 restricted shares of the Company’s Class D common stock, and stock options to purchase 351,562 shares of the Company’s Class D common stock. The grants were effective January 5, 2018, and vested on January 5, 2019.

On June 12, 2019, the Compensation Committee awarded Alfred Liggins, Chief Executive Officer and President, 656,142 restricted shares of the Company’s Class D common stock, and stock options to purchase 291,619 shares of the Company’s Class D common stock. The grants were effective July 5, 2019 and vested on January 6, 2020.

On June 12, 2019, the Compensation Committee awarded Alfred Liggins, Chief Executive Officer and President, 711,914 restricted shares of the Company’s Class D common stock, and stock options to purchase 316,406 shares of the Company’s Class D common stock. The grants were effective June 5, 2020 and ~~will vest~~vested on January 6, 2021.

On August 7, 2017, the Compensation Committee awarded Peter Thompson, Chief Financial Officer, 270,833 restricted shares of the Company’s Class D common stock, and stock options to purchase 120,370 shares of the Company’s Class D common stock. The grants were effective January 5, 2018, and vested on January 5, 2019.

On June 12, 2019, the Compensation Committee awarded Peter Thompson, Chief Financial Officer, 224,654 restricted shares of the Company’s Class D common stock, and stock options to purchase 99,846 shares of the Company’s Class D common stock. The grants were effective July 5, 2019 and vested on January 6, 2020.

On June 12, 2019, the Compensation Committee awarded Peter Thompson, Chief Financial Officer, 243,750 restricted shares of the Company’s Class D common stock, and stock options to purchase 108,333 shares of the Company’s Class D common stock. The grants were effective June 5, 2020 and ~~will vest~~vested on January 6, 2021.

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On August 7, 2017, the Compensation Committee awarded 575,262 shares of restricted stock and 470,000 stock options to certain employees pursuant to the Company’s long-term incentive plan. The grants were effective August 7, 2017. 470,000 shares of restricted stock and 470,000 stock options have vested or will vest in three installments, with the first installment of 33% having vested on January 5, 2018, and the second installment having vested on January 5, 2019, and the ~~remaining~~final installment ~~vesting~~vested on January 5, 2020.

On October 2, 2017, Karen Wishart, our current Chief Administrative Officer, as part of her employment agreement, received an equity grant of 37,500 shares of the Company's Class D common stock as well as a grant of options to purchase 37,500 shares of the Company's Class D common stock. The grants have vested ~~or vest~~ in equal increments on each of October 2, 2018, October 2, 2019 and October 2, 2020.

On June 12, 2019, the Compensation Committee awarded David Kantor, Chief Executive Officer – Radio Division, 195,242 restricted shares of the Company’s Class D common stock, and stock options to purchase 86,774 shares of the Company’s Class D common stock. The grants were effective July 5, 2019 and vested on January 6, 2020.

On June 12, 2019, the Compensation Committee awarded David Kantor, Chief Executive Officer – Radio Division, 211,838 restricted shares of the Company’s Class D common stock, and stock options to purchase 94,150 shares of the Company’s Class D common stock. The grants were effective June 5, 2020 and ~~will vest~~vested on January 6, 2021.

Pursuant to the terms of each of our stock plans and subject to the Company’s insider trading policy, a portion of each recipient’s vested shares may be sold in the open market for tax purposes on or about the vesting dates.

Stock-based compensation expense for the three months ended ~~September~~June 30, 2021 and 2020, was $172,000and ~~2019, was $794,000 and approximately $1.9 million,~~$268,000, respectively, and for the ~~nine~~six months ended ~~September~~June 30, 2021 and 2020, was $425,000and ~~2019, was approximately $1.5 million and $2.6 million,~~$661,000, respectively.

~~There were no~~The Company did not grant any stock options ~~granted~~ during the three months ended ~~September~~June 30, ~~2020~~2021 and ~~there were 708,732~~granted 20,000 stock options ~~granted~~ during the ~~nine~~six months ended ~~September~~June 30, ~~2020.~~2021. The Company granted ~~653,210~~708,732 stock options during the three and ~~nine~~six months ended ~~September~~June 30, ~~2019.~~

2020.

Transactions and other information relating to stock options for the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, are summarized below:

Number of
Options Weighted-Average
Exercise Price Weighted-Average
Remaining
Contractual Term (In
Years) Aggregate
Intrinsic
Value
Outstanding at December 31, 2019 4,197,000 $ 2.13 6.70 $ 255,000
Grants 709,000 $ 2.00
Exercised 1,033,000 $ 1.91
Forfeited/cancelled/expired/settled 24,000 $ 3.17
Balance as of September 30, 2020 3,849,000 $ 2.16 6.59 $ 34,000
Vested and expected to vest at September 30, 2020 3,815,000 $ 2.12 6.56 $ 34,000
Unvested at September 30, 2020 726,000 $ 2.00 9.61 $ —
Exercisable at September 30, 2020 3,123,000 $ 2.19 5.89 $ 34,000


				Weighted-Average
				Remaining	Aggregate
	Number of	Weighted-Average		Contractual Term	Intrinsic
	Options	Exercise Price		(In Years)	Value
Outstanding at December 31, 2020	4,019,000	$	2.11	6.48	$	41,000
Grants	20,000	$	1.25	—		0
Exercised	197,000	$	1.60	—		0
Forfeited/cancelled/expired/settled	59,000	$	1.27	—		0
Balance as of June 30, 2021	3,783,000	$	2.15	6.15	$	10,860,000
Vested and expected to vest at June 30, 2021	3,779,000	$	2.15	6.15	$	10,846,000
Unvested at June 30, 2021	71,000	$	1.13	9.26	$	275,000
Exercisable at June 30, 2021	3,712,000	$	2.17	6.09	$	10,585,000

The aggregate intrinsic value in the table above represents the difference between the Company’s stock closing price on the last day of trading during the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, and the exercise price, multiplied by the number of shares that would have been received by the holders of in-the-money options had all the option holders exercised their options on ~~September~~June 30, ~~2020.~~2021. This amount changes based on the fair market value of the Company’s stock.

There were no197,256 options exercised during the three and six months ended ~~September~~June 30, ~~2020 and there~~2021. There were 1,032,922 options exercised during the ~~nine~~three and six months ended ~~September~~June 30, 2020. ~~There were no options exercised during the three months ended September 30, 2019 and there were 15,000 options exercised during the nine months ended September 30, 2019. No~~NaN options vested during the three months ended ~~September~~June 30, 2021 and 832,847 options vested during the six months ended June 30, 2021. NaN options vested during the three months ended June 30, 2020 and 624,770 options vested during the ~~nine~~six months ended ~~September~~June 30, 2020. ~~No options vested during the three months ended September 30, 2019 and 834,530 options vested during the nine months ended September 30, 2019.~~

As of ~~September~~June 30, ~~2020, $135,000~~2021, $3,000 of total unrecognized compensation cost related to stock options is expected to be recognized over a weighted-average period of ~~three months.~~less than one month. The weighted-average fair value per share of shares underlying stock options was ~~$1.39~~$1.43 at ~~September~~June 30, ~~2020.~~2021.

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The Company ~~did not grant~~granted 62,373 shares of restricted stock during the three and six months ended ~~September~~June 30, ~~2020 and~~2021. The Company granted 1,649,394 shares of restricted stock during the ~~nine~~three and six months ended ~~September~~June 30, 2020. Each of the three non-executive directors received 18,248 shares of restricted stock or $50,000 worth of restricted stock based upon the closing price of the Company’s Class D common stock on June 16, 2020. The Company granted 1,499,723 shares of restricted stock during the three months ended September 30, 2019 and granted 2,379,962 shares of restricted stock during the nine months ended September 30, 2019. Each of the four non-executive directors received 25,000 shares of restricted stock or $50,000 worth of restricted stock based upon the closing price of the Company’s Class D common stock on June 17, 2019.

Transactions and other information relating to restricted stock grants for the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, are summarized below:

	Shares			Average Fair Value at Grant Date
Unvested at December 31, 2019		1,814,000		$	2.14

							Average
							Fair Value
							at Grant
						Shares	Date
Unvested at December 31, 2020						1,724,000	$	0.83
Grants		1,649,000		$	1.02	62,000	$	2.00
Vested		(1,727,000	)	$	2.14	(1,730,000)	$	0.82
Forfeited/cancelled/expired		—		$	—	0	$	0
Unvested at September 30, 2020		1,736,000		$	1.07
Unvested at June 30, 2021						56,000	$	2.45

Restricted stock grants were and are included in the Company’s outstanding share numbers on the effective date of grant. As of ~~September~~June 30, ~~2020, approximately $1.0 million~~2021, $308,000 of total unrecognized compensation cost related to restricted stock grants is expected to be recognized over the weighted-average period of ~~four~~nine months.

7. SEGMENT INFORMATION:

The Company has ~~four~~4 reportable segments: (i) radio broadcasting; (ii) Reach Media; (iii) digital; and (iv) cable television. These segments operate in the United States and are consistently aligned with the Company’s management of its businesses and its financial reporting structure.

The radio broadcasting segment consists of all broadcast results of operations. The Reach Media segment consists of the results of operations for the related activities and operations of our syndicated shows. The digital segment includes the results of our online business, including the operations of Interactive One, as well as the digital components of our other reportable segments. The cable television segment consists of the Company’s cable TV operation, including TV One’s and CLEO TV’s results of operations. Corporate/Eliminations represents financial activity associated with our corporate staff and offices and intercompany activity among the four segments.

Operating loss or income represents total revenues less operating expenses, depreciation and amortization, and impairment of long-lived assets. Intercompany revenue earned and expenses charged between segments are recorded at estimated fair value and eliminated in consolidation.

The accounting policies described in the summary of significant accounting policies in Note 1 – Organization and Summary of Significant Accounting Policies are applied consistently across the segments.

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Detailed segment data for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, is presented in the following tables:

Three Months Ended
September 30,
2020 2019
(Unaudited)
(In thousands)
Net Revenue:
Radio Broadcasting $ 31,645 $ 46,467
Reach Media 7,751 10,917
Digital 8,451 8,170
Cable Television 44,746 45,981
Corporate/Eliminations* (681 ) (480 )
Consolidated $ 91,912 $ 111,055

Operating Expenses (including stock-based compensation and excluding depreciation and amortization and impairment of long-lived assets):
Radio Broadcasting $ 20,368 $ 29,776
Reach Media 4,632 9,011
Digital 6,860 7,530
Cable Television 18,420 23,921
Corporate/Eliminations 6,125 7,107
Consolidated $ 56,405 $ 77,345

Depreciation and Amortization:
Radio Broadcasting $ 759 $ 791
Reach Media 59 60
Digital 483 474
Cable Television 934 953
Corporate/Eliminations 254 315
Consolidated $ 2,489 $ 2,593

Impairment of Long-Lived Assets:
Radio Broadcasting $ 29,050 $ —
Reach Media — —
Digital — —
Cable Television — —
Corporate/Eliminations — —
Consolidated $ 29,050 $ —

Operating income:
Radio Broadcasting $ (18,532 ) $ 15,900
Reach Media 3,060 1,846
Digital 1,108 166
Cable Television 25,392 21,107
Corporate/Eliminations (7,060 ) (7,902 )
Consolidated $ 3,968 $ 31,117


	Three Months Ended
	June 30,
	2021		2020

	(Unaudited)
	(In thousands)
Net Revenue:
Radio Broadcasting	$	35,465	$	20,505
Reach Media		9,414		6,268
Digital		15,129		6,104
Cable Television		48,461		43,761
Corporate/Eliminations*		(876)		(630)
Consolidated	$	107,593	$	76,008

Operating Expenses (including stock-based compensation and excluding depreciation and amortization and impairment of long-lived assets):
Radio Broadcasting	$	22,369	$	20,614
Reach Media		6,002		4,941
Digital		8,800		5,723
Cable Television		23,550		16,953
Corporate/Eliminations		6,627		5,013
Consolidated	$	67,348	$	53,244

Depreciation and Amortization:
Radio Broadcasting	$	792	$	766
Reach Media		53		60
Digital		315		277
Cable Television		937		940
Corporate/Eliminations		228		339
Consolidated	$	2,325	$	2,382

Operating income (loss):
Radio Broadcasting	$	12,304	$	(875)
Reach Media		3,359		1,267
Digital		6,014		104
Cable Television		23,974		25,868
Corporate/Eliminations		(7,731)		(5,982)
Consolidated	$	37,920	$	20,382

* Intercompany revenue included in net revenue above is as follows:

~~Radio Broadcasting~~

~~(681~~

)

~~(480~~

)


Radio Broadcasting		$	(876)		$	(630)

Capital expenditures by segment are as follows:


Radio Broadcasting	$	306	$	1,406	$	966	$	557
Reach Media		9		31		31		9
Digital		180		348		246		239
Cable Television		8		15		144		23
Corporate/Eliminations		23		37		263		392
Consolidated	$	526	$	1,837	$	1,650	$	1,220

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Nine Months Ended
September 30,
2020 2019
(Unaudited)
(In thousands)
Net Revenue:
Radio Broadcasting $ 87,066 $ 132,528
Reach Media 20,709 36,660
Digital 20,844 23,280
Cable Television 136,003 140,234
Corporate/Eliminations* (1,827 ) (1,627 )
Consolidated $ 262,795 $ 331,075

Operating Expenses (including stock-based compensation and excluding depreciation and amortization and impairment of long-lived assets):
Radio Broadcasting $ 67,373 $ 89,142
Reach Media 15,468 30,955
Digital 19,778 22,310
Cable Television 55,772 75,284
Corporate/Eliminations 17,222 20,099
Consolidated $ 175,613 $ 237,790

Depreciation and Amortization:
Radio Broadcasting $ 2,266 $ 2,510
Reach Media 178 178
Digital 1,248 1,395
Cable Television 2,817 9,430
Corporate/Eliminations 910 938
Consolidated $ 7,419 $ 14,451

Impairment of Long-Lived Assets:
Radio Broadcasting $ 82,700 $ 3,800
Reach Media — —
Digital — —
Cable Television — —
Corporate/Eliminations — —
Consolidated $ 82,700 $ 3,800

Operating (loss) income:
Radio Broadcasting $ (65,273 ) $ 37,076
Reach Media 5,063 5,527
Digital (182 ) (425 )
Cable Television 77,414 55,520
Corporate/Eliminations (19,959 ) (22,664 )
Consolidated $ (2,937 ) $ 75,034


	Six Months Ended
	June 30,
	2021		2020

	(Unaudited)
	(In thousands)
Net Revenue:
Radio Broadcasting	$	63,253	$	55,421
Reach Media		17,230		12,958
Digital		25,484		12,393
Cable Television		94,703		91,257
Corporate/Eliminations*		(1,637)		(1,146)
Consolidated	$	199,033	$	170,883

Operating Expenses (including stock-based compensation and excluding depreciation and amortization and impairment of long-lived assets):
Radio Broadcasting	$	45,698	$	47,006
Reach Media		11,176		10,836
Digital		16,853		12,918
Cable Television		45,071		37,352
Corporate/Eliminations		13,969		11,096
Consolidated	$	132,767	$	119,208

Depreciation and Amortization:
Radio Broadcasting	$	1,522	$	1,506
Reach Media		111		119
Digital		638		765
Cable Television		1,866		1,883
Corporate/Eliminations		452		657
Consolidated	$	4,589	$	4,930

Impairment of Long-Lived Assets:
Radio Broadcasting	$	—	$	53,650
Reach Media		—		—
Digital		—		—
Cable Television		—		—
Corporate/Eliminations		—		—
Consolidated	$	—	$	53,650

Operating income (loss):
Radio Broadcasting	$	16,033	$	(46,741)
Reach Media		5,943		2,003
Digital		7,993		(1,290)
Cable Television		47,766		52,022
Corporate/Eliminations		(16,058)		(12,899)
Consolidated	$	61,677	$	(6,905)

* Intercompany revenue included in net revenue above is as follows:

~~Radio Broadcasting~~

~~(1,827~~

)

~~(1,627~~

)


Radio Broadcasting		$	(1,637)		$	(1,146)

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Capital expenditures by segment are as follows:


Radio Broadcasting	$	1,826	$	2,269	$	1,227	$	1,520
Reach Media		75		97		32		66
Digital		616		1,066		572		436
Cable Television		72		173		182		64
Corporate/Eliminations		587		342		441		564
Consolidated	$	3,176	$	3,947	$	2,454	$	2,650


	June 30, 2021		December 31, 2020
	(Unaudited)
	(In thousands)
Total Assets:
Radio Broadcasting	$	625,205	$	630,174
Reach Media		43,532		38,235
Digital		24,491		23,168
Cable Television		383,036		374,046
Corporate/Eliminations		163,278		129,864
Consolidated	$	1,239,542	$	1,195,487

September 30, 2020 December 31, 2019
(Unaudited)
(In thousands)
Total Assets:
Radio Broadcasting $ 628,195 $ 721,295
Reach Media 44,829 41,892
Digital 19,553 22,223
Cable Television 383,782 388,465
Corporate/Eliminations 134,178 76,044
Consolidated $ 1,210,537 $ 1,249,919

~~COMMITMENTS AND CONTINGENCIES:~~

8. COMMITMENTS AND CONTINGENCIES:

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 April 22, 2020, the Radio Music License Committee (“RMLC”), an industry group which the Company is a part of, and BMI have reached agreement on the terms of a new license agreement that covers the period January 1, 2017, through December 31, 2021. Upon approval of the court of the BMI/RMLC agreement, the Company automatically became a party to the agreement and a license through December 31, 2021.

Other Contingencies

The Company has been named as a defendant in several legal actions arising in the ordinary course of business. It is management’s opinion, after consultation with its legal counsel, that the outcome of these claims will not have a material adverse effect on the Company’s financial position or results of operations.

Off-Balance Sheet Arrangements

~~On February 24, 2015, the Company entered into a~~The Current 2021 ABL Facility provides for letter of credit ~~reimbursement and security agreement. On October 8, 2019, the Company entered into an amendment~~capacity of up to ~~its letter of credit reimbursement and security agreement and extended the term~~$5 million subject to ~~October 8, 2024.~~certain limitations on availability. As of ~~September~~June 30, ~~2020,~~2021, the Company had letters of credit totaling $871,000 under the ~~agreement~~Current 2021 ABL Facility for certain operating leases and certain insurance policies. Letters of credit are issued under the ~~agreement~~Current 2021 ABL Facility and are required to be collateralized with cash.

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Noncontrolling Interest Shareholders’ Put Rights

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 ~~30, 2020.~~31, 2021. Management, at this time, cannot reasonably determine the period when and if the put right will be exercised by the noncontrolling interest shareholders.

~~SUBSEQUENT EVENTS~~

9. SUBSEQUENT EVENTS:

On ~~October 2, 2020,~~July 6, 2021, each of the 4 non-executive directors received 9,671 shares of restricted stock or $50,000 worth of restricted stock based upon the closing price of the Company's Class D common stock on July 6, 2021. The shares vest in equal over two years.

On July 29, 2021, RVA Entertainment Holdings, LLC (“RVAEH”), a wholly owned unrestricted subsidiary of the Company, ~~announced~~entered into a Host Community Agreement (the “HCA”) with the ~~launch~~City of ~~an offer to eligible holders~~Richmond for the development of ~~its 7.375% Senior Secured Notes due 2022~~the ONE Casino + Resort (the ~~“Existing Notes”) to exchange (the “Exchange Offer”) any and all of their Existing Notes for newly issued 8.75% Senior Secured Notes due 2022 (the “New Notes”~~“Project”). The ~~New Notes are secured (i)~~HCA imposes certain obligations on ~~a first priority basis by substantially all~~RVAEH in connection with the development of the ~~Company’s~~Project. These commitments include but are not limited to: (i) a $26 million upfront payment (the “Upfront Payment”) due upon successful passage of a citywide referendum permitting development of the Project (the “Referendum”); (ii) annual financial commitments upon opening of the Project; (iii) commitments with respect to the design, standards and “look and feel” of the Project; (iv) commitments with respect to programming and operation of the Project; (v) commitments with respect to wages and benefits and hiring and contracting goals; (vi) commitments with respect to the construction and funding of needed public and private infrastructure; (vii) area beautification commitments; (viii) timing obligations; (ix) commitments with respect to insurance and indemnification of the City and (x) restrictions on certain ~~subsidiary guarantors’ current and future property and assets other than certain property and assets securing~~transfers of the ~~Company’s asset-backed revolving credit facility (such property and assets, “ABL Priority Collateral”) and (ii) on a second priority basis by~~Project or management of the ABL Priority Collateral. Eligible holders who validly tendered and did not validly withdraw their Existing Notes in the Exchange Offer prior to 5:00 p.m., New York City time, on October 16, 2020, were eligible to receive $1,000 in principal amount of New Notes plus $10.00 in cash per $1,000 principal amount of Existing Notes. For any Existing Notes validly tendered after the Early Tender Date but before 11:59 p.m., New York City time, on October 30, 2020, were eligible to receive $1,000 in principal amount of New Notes plus $5.00 in cash per $1,000 principal amount of Existing Notes. The New Notes were offered to provide the Company with additional financial flexibility as the New Notes mature eight months after the Existing Notes are scheduled to mature. The New Notes will mature on December 15, 2022.

Project. In connection with the ~~Exchange Offer,~~HCA, RVAEH and its development partner Pacific Peninsula Entertainment funded the ~~Company also entered~~Upfront Payment into ~~an amendment~~escrow to ~~certain terms of its Unsecured Term Loan, dated December 4, 2018, by and among~~be released to the ~~Company, the Lenders party thereto from time to time and Wilmington Trust, National Association, as Administrative Agent (the “2018 Credit Facility”), including the extension~~City upon successful passage of the ~~maturity date by 90 days which maturity is more than 90 days after~~Referendum or back to RVAEH in the ~~maturity date~~event the Referendum fails. On July 29, 2021, the City of ~~the New Notes.~~

~~In conjunction with the Exchange Offer, the Company also solicited consents (the “Consent Solicitation”) from holders of the Existing Notes (the “Consents”) to certain proposed amendments~~Richmond formally filed a petition to the indenture governing the Existing Notes (the “Existing Notes Indenture”), by and among the Company, the guarantors party thereto, Wilmington Trust National Association, as trustee and as collateral agent, to eliminate substantially all of the restrictive covenants and certain of the default provisions contained in the Existing Notes Indenture and to enter into a new intercreditor agreement among the Company, the trusteeCircuit Court for the ~~New Notes, the trustee~~City of Richmond calling for the ~~Existing Notes,~~Referendum to be added to the ~~collateral agent~~ballot for ~~the New Notes and the collateral agent for the Existing Notes (collectively, the “Proposed Amendments”).~~November 2, 2021 citywide elections.

The consummation of the Exchange Offer and Consent Solicitation was subject to customary conditions, including the receipt of Consents from at least 90% of the eligible holders and the satisfaction or waiver of other conditions set forth in the offering memorandum and consent solicitation statement prepared by the Company in connection with the Exchange Offer and Consent Solicitation.

On October 19, 2020, the Company announced the early tender results of the Exchange Offer. Based on the early tenders as of 5:00 p.m. on the Early Tender Date, eligible holders had validly tendered and not validly withdrawn $347.0 million aggregate principal amount, representing 99.15% of the outstanding principal amount, of the Existing Notes in the Exchange Offer and Consent Solicitation.

As of the expiration date, October 30, 2020, an aggregate of $347.0 million principal amount of Existing Notes were validly tendered and not validly withdrawn. Eligible holders who validly tendered and did not validly withdraw their Existing Notes received the early participation payments and accrued and unpaid interest in cash on their Existing Notes accepted for exchange to, but not including, the Settlement Date for the Exchange Offer. In connection with the settlement of the Exchange Offer and Consent Solicitation, on November 9, 2020, the Company issued $347,016,000 aggregate principal amount of the New Notes.

Further information concerning the Exchange Offer and the results can be found in the Current Reports on Form 8-K dated October 2, 2020, October 19, 2020, and November 9, 2020, as on file with the SEC.

On November 6, 2020, the Company announced it had signed a definitive asset exchange agreement with Entercom Communications Corp. where the Company will receive Charlotte stations: WLNK-FM (Adult Contemporary); WBT-AM & FM (News Talk Radio); and WFNZ-AM & 102.5 FM Translator (Sports Radio). As part of the transaction, Urban One will transfer three radio stations to Entercom: St. Louis, WHHL-FM (Urban Contemporary); Philadelphia, WPHI-FM (Urban Contemporary); and Washington, DC, WTEM-AM (flagship station of the Washington Football Team); as well as the intellectual property its St. Louis radio station, WFUN-FM (Adult Urban Contemporary). ~~The Company and Entercom will begin operation of the exchanged stations on or about November 23, 2020 under LMAs until FCC approval is obtained.~~ The deal is subject to FCC approval and other customary closing conditions and is expected to close in the first quarter of 2021. In addition, we have entered into an asset purchase agreement with Gateway Creative Broadcasting, Inc. for the remaining assets of our WFUN station.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following information should be read in conjunction with “Selected Financial Data” and the Consolidated Financial Statements and Notes thereto included elsewhere in this report and the audited financial statements and Management’s Discussion and Analysis contained in our Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020.

Introduction

~~Revenue~~

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 September 30,						For The Nine Months Ended September 30,
	2020			2019			2020			2019

													For The Three Months Ended				For The Six Months Ended
													June 30,				June 30,
													2021		2020		2021		2020
Radio broadcasting segment		34.4	%		41.8	%		33.1	%		40.0	%	33.0	%	27.0	%	31.8	%	32.4	%


Reach Media segment		8.4	%		9.8	%		7.9	%		11.1	%	8.7	%	8.2	%	8.7	%	7.6	%


Digital segment		9.2	%		7.4	%		7.9	%		7.0	%	14.1	%	8.0	%	12.8	%	7.3	%


Cable television segment		48.7	%		41.4	%		51.8	%		42.4	%	45.0	%	57.6	%	47.5	%	53.4	%


Corporate/eliminations		(0.7	)%		(0.4	)%		(0.7	)%		(0.5	)%	(0.8)	%	(0.8)	%	(0.8)	%	(0.7)	%

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 September 30,						For The Nine Months Ended September 30,
	2020			2019			2020			2019

													For The Three Months Ended				For The Six Months Ended
													June 30,				June 30,
													2021		2020		2021		2020
Percentage of core radio business generated from local advertising		53.1	%		57.1	%		55.6	%		58.1	%	61.5	%	50.7	%	61.0	%	57.0	%


Percentage of core radio business generated from national advertising, including network advertising		45.7	%		37.8	%		43.1	%		36.4	%	36.9	%	47.5	%	37.2	%	41.6	%

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.

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The following ~~charts~~chart show our net revenue (and sources) for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019:~~2020:


											Three Months
											Ended June 30,
											2021		2020		$Change		% Change
	Three Months Ended September 30,
	2020		2019		$ Change			% Change
	(Unaudited) (In thousands)
											(Unaudited)
											(In thousands)
Net Revenue:
Radio Advertising	$	34,919	$	50,813	$	(15,894	)		(31.3	)%	$	42,605	$	25,358	$	17,247	68.0	%
Political Advertising		4,324		300		4,024			1,341.3			500		361		139	38.5
Digital Advertising		8,121		8,171		(50	)		(0.6	)		15,016		6,104		8,912	146.0
Cable Television Advertising		19,603		20,649		(1,046	)		(5.1	)		22,968		18,941		4,027	21.3
Cable Television Affiliate Fees		24,421		25,330		(909	)		(3.6	)		25,396		24,619		777	3.2
Event Revenues & Other		524		5,792		(5,268	)		(91.0	)		1,108		625		483	77.3
Net Revenue (as reported)	$	91,912	$	111,055	$	(19,143	)		(17.2	)%	$	107,593	$	76,008	$	31,585	41.6	%

Six Months

Ended June 30,


2021

2020

$Change

% Change

(Unaudited)

(In thousands)

Net Revenue:









Radio Advertising

$
75,944

$
63,776

$
12,168

19.1
%
Political Advertising

1,280

2,764

(1,484)

(53.7)

Digital Advertising

25,369

12,393

12,976

104.7

Cable Television Advertising

43,670

39,973

3,697

9.2

Cable Television Affiliate Fees

50,883

50,826

57

0.1

Event Revenues & Other

1,887

1,151

736

63.9

Net Revenue (as reported)

$
199,033

$
170,833

$
28,150

16.5
%
41

Nine Months Ended
September 30,

2020 2019 $ Change % Change

(Unaudited)
(In thousands)

Net Revenue:
Radio Advertising $ 98,695 $ 144,958 $ (46,263 ) (31.9 )%
Political Advertising 7,089 741 6,348 856.7
Digital Advertising 20,514 23,270 (2,756 ) (11.8 )
Cable Television Advertising 59,576 60,658 (1,082 ) (1.8 )
Cable Television Affiliate Fees 75,247 79,404 (4,157 ) (5.2 )
Event Revenues & Other 1,674 22,044 (20,370 ) (92.4 )
Net Revenue (as reported) $ 262,795 $ 331,075 $ (68,280 ) (20.6 )%

In the broadcasting industry, radio stations and television stations often 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, including Interactive One which generates the majority of the Company’s digital revenue, 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. Advertising revenue is recognized either as impressions (the number of times advertisements appear in viewed pages) are delivered, when “click through” purchases are made, or ratably over the contract period, where applicable. In addition, Interactive One derives revenue from its studio operations, in which it provides third-party clients with publishing services including digital platforms and related expertise. In the case of the studio operations, revenue is recognized primarily through fixed contractual monthly fees and/or as a share of the third party’s reported revenue.
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 air time 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 affiliation agreements based upon a per subscriber fee multiplied by most recent subscriber counts reported by the applicable affiliate.
Reach Media primarily derives its revenue from the sale of advertising in connection with its syndicated radio shows, including the ~~Tom Joyner Morning Show and our other syndicated programming assets, including the~~ Rickey Smiley Morning Show, the Russ Parr Morning Show and the DL Hughley Show. Mr. Joyner was a leading nationally syndicated radio personality. Mr. Joyner announced his then forthcoming retirement in 2018 and, in December 2019, the Tom Joyner Morning Show ceased being broadcast upon Mr. Joyner’s retirement. Up until his retirement in December 2019, the Tom Joyner Morning Show was broadcast on 71 affiliate stations across the United States. Reach Media also operates www.BlackAmericaWeb.com, an African-American targeted news and entertainment website. Additionally, Reach Media operates various other event-related activities.

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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.

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, as “click throughs” are made or ratably over contract periods, where applicable. 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: Net income (loss) before depreciation and amortization, income taxes, interest expense, interest income, noncontrolling interests in income of subsidiaries, other (income) expense, corporate selling, general and administrative expenses, stock-based compensation, impairment of long-lived assets, (gain) loss on retirement of debt and gain on sale-leaseback, is commonly referred to in the radio broadcasting industry as “station operating income.” However, given the diverse nature of our business, station operating income is not truly reflective of our multi-media operation and, therefore, we now use the term broadcast and digital operating income. Broadcast and digital operating income is not a measure of financial performance under accounting principles generally accepted in the United States of America (“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 and long-lived intangible 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~~“station operating income” or other similarly titled measures as used by other companies. Broadcast and digital operating income does not represent operating 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.

(c) Broadcast and digital operating income margin: Broadcast and digital operating income margin represents broadcast and digital operating income as a percentage of net revenue. Broadcast and digital operating income margin is not a measure of financial performance under GAAP. Nevertheless, we believe that broadcast and digital operating income margin is a useful measure of our performance because it provides helpful information about our profitability as a percentage of our net revenue. Broadcast and digital operating margin includes results from all four segments (radio broadcasting, Reach Media, digital and cable television).

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(d) Adjusted EBITDA: Adjusted EBITDA consists of net (loss) income plus (1) depreciation and amortization, income taxes, interest expense, noncontrolling interests in income of subsidiaries, impairment of long-lived assets, stock-based compensation, (gain) loss on retirement of debt, gain on sale-leaseback, employment agreement, incentive plan award expenses and other compensation, contingent consideration from acquisition, casino chase costs, severance-related costs, cost method 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 because Adjusted EBITDA excludes charges for depreciation, amortization and interest expense that have resulted from our acquisitions and debt financing, our taxes, impairment charges, and gain on retirements of debt. Accordingly, we believe that Adjusted EBITDA provides useful information about the operating performance of our business, apart from the expenses associated with our fixed assets and long-lived intangible assets, capital structure or the results of our affiliated company. 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). 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:


													Three Months Ended June 30,						Six Months Ended June 30,
													2021			2020			2021			2020
	Three Months Ended September 30,						Nine Months Ended September 30,
	2020			2019			2020			2019
	(In thousands, except margin data)
	(Unaudited)
													(In thousands, except margin data)
													(Unaudited)
Net revenue	$	91,912		$	111,055		$	262,795		$	331,075		$	107,593		$	76,008		$	199,033		$	170,883
Broadcast and digital operating income		44,194			43,644			112,002			122,122			49,570			30,172			85,964			67,808
Broadcast and digital operating income margin		48.1	%		39.3	%		42.6	%		36.9	%		46.1	%		39.7	%		43.2	%		39.7	%
Consolidated net (loss) income attributable to common stockholders	$	(12,772	)	$	5,359		$	(34,539	)	$	8,846
Consolidated net income (loss) attributable to common stockholders													$	17,866		$	1,420		$	17,873		$	(21,767)

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


													Three Months Ended June 30,					Six Months Ended June 30,
													2021		2020		2021		2020
	Three Months Ended September 30,						Nine Months Ended September 30,
	2020			2019			2020			2019
	(In thousands, unaudited)
Consolidated net (loss) income attributable to common stockholders	$	(12,772	)	$	5,359		$	(34,539	)	$	8,846
Add back non-broadcast and digital operating income items included in consolidated net (loss) income:
													(In thousands, unaudited)
Consolidated net income (loss) attributable to common stockholders													$	17,866	$	1,420	$	17,873	$	(21,767)
Add back non-broadcast and digital operating income items included in consolidated net income (loss):
Interest income		(178	)		(45	)		(212	)		(131	)		(168)		(26)		(172)		(34)
Interest expense		18,243			20,239			55,776			61,647			15,853		18,395		33,898		37,533
(Benefit from) provision for income taxes		(136	)		6,535			(21,526	)		8,342
Provision for (benefit from) income taxes														6,119		465		6,109		(21,390)
Corporate selling, general and administrative, excluding stock-based compensation		7,893			8,053			23,365			26,245			9,153		7,140		19,273		15,472
Stock-based compensation		794			1,881			1,455			2,592			172		268		425		661
Loss on retirement of debt														—		—		6,949		—
Other income, net		(1,684	)		(1,299	)		(3,282	)		(4,669	)		(2,362)		(94)		(4,046)		(1,598)
Depreciation and amortization		2,489			2,593			7,419			14,451			2,325		2,382		4,589		4,930
Impairment of long-lived assets		29,050			—			82,700			3,800			—		—		—		53,650
Noncontrolling interests in income of subsidiaries		495			328			846			999			612		222		1,066		351
Broadcast and digital operating income	$	44,194		$	43,644		$	112,002		$	122,122		$	49,570	$	30,172	$	85,964	$	67,808

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


													Three Months Ended June 30,					Six Months Ended June 30,
													2021		2020		2021		2020
	Three Months Ended September 30,						Nine Months Ended September 30,
	2020			2019			2020			2019
	(In thousands, unaudited)
													(In thousands, unaudited)
Adjusted EBITDA reconciliation:
Consolidated net (loss) income attributable to common stockholders, as reported	$	(12,772	)	$	5,359		$	(34,539	)	$	8,846
Add back non-broadcast and digital operating income items included in consolidated net (loss) income:
Consolidated net income (loss) attributable to common stockholders, as reported													$	17,866	$	1,420	$	17,873	$	(21,767)
Add back non-broadcast and digital operating income items included in consolidated net income (loss):
Interest income		(178	)		(45	)		(212	)		(131	)		(168)		(26)		(172)		(34)
Interest expense		18,243			20,239			55,776			61,647			15,853		18,395		33,898		37,533
(Benefit from) provision for income taxes		(136	)		6,535			(21,526	)		8,342
Provision for (benefit from) income taxes														6,119		465		6,109		(21,390)
Depreciation and amortization		2,489			2,593			7,419			14,451			2,325		2,382		4,589		4,930
EBITDA	$	7,646		$	34,681		$	6,918		$	93,155		$	41,995	$	22,636	$	62,297	$	(728)
Stock-based compensation		794			1,881			1,455			2,592			172		268		425		661
Loss on retirement of debt														—		—		6,949		—
Other income, net		(1,684	)		(1,299	)		(3,282	)		(4,669	)		(2,362)		(94)		(4,046)		(1,598)
Noncontrolling interests in income of subsidiaries		495			328			846			999			612		222		1,066		351
Casino chase costs														941		—		2,334		—
Employment Agreement Award, incentive plan award expenses and other compensation		1,008			860			2,318			3,576			911		98		1,509		1,311
Contingent consideration from acquisition		5			53			(1	)		219			240		66		280		(7)
Severance-related costs		559			358			2,145			1,178			312		1,261		573		1,587
Impairment of long-lived assets		29,050			—			82,700			3,800			—		—		—		53,650
Cost method investment income		1,695			1,809			3,266			5,167			1,944		80		3,615		1,570
Adjusted EBITDA	$	39,568		$	38,671		$	96,365		$	106,017		$	44,765	$	24,537	$	75,002	$	56,797

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URBAN ONE, INC. AND SUBSIDIARIES

RESULTS OF OPERATIONS

The following table summarizes our historical consolidated results of operations:

Three Months Ended ~~September~~June 30, ~~2020~~2021 Compared to Three Months Ended ~~September~~June 30, ~~2019~~ 2020(In thousands)


												Three Months Ended June 30,
												2021		2020		Increase/(Decrease)
	Three Months Ended September 30,
	2020			2019			Increase/(Decrease)
	(Unaudited)
												(Unaudited)
Statements of Operations:
Net revenue	$	91,912		$	111,055		$	(19,143	)	(17.2	)%	$	107,593	$	76,008	$	31,585	41.6	%
Operating expenses:
Programming and technical, excluding stock-based compensation		24,202			31,037			(6,835	)	(22.0	)		26,513		23,620		2,893	12.2
Selling, general and administrative, excluding stock-based compensation		23,516			36,374			(12,858	)	(35.3	)		31,510		22,216		9,294	41.8
Corporate selling, general and administrative, excluding stock-based compensation		7,893			8,053			(160	)	(2.0	)		9,153		7,140		2,013	28.2
Stock-based compensation		794			1,881			(1,087	)	(57.8	)		172		268		(96)	(35.8)
Depreciation and amortization		2,489			2,593			(104	)	(4.0	)		2,325		2,382		(57)	(2.4)
Impairment of long-lived assets		29,050			—			29,050		100.0
Total operating expenses		87,944			79,938			8,006		10.0			69,673		55,626		14,047	25.3
Operating income		3,968			31,117			(27,149	)	(87.2	)		37,920		20,382		17,538	86.0
Interest income		178			45			133		295.6			168		26		142	546.2
Interest expense		18,243			20,239			(1,996	)	(9.9	)		15,853		18,395		(2,542)	(13.8)
Other income, net		(1,684	)		(1,299	)		385		29.6			(2,362)		(94)		2,268	2,412.8
(Loss) income before (benefit from) provision for income taxes and noncontrolling interests in income of subsidiaries		(12,413	)		12,222			(24,635	)	(201.6	)
(Benefit from) provision for income taxes		(136	)		6,535			(6,671	)	(102.1	)
Consolidated net (loss) income		(12,277	)		5,687			(17,964	)	(315.9	)
Income before provision for income taxes and noncontrolling interests in income of subsidiaries													24,597		2,107		22,490	1,067.4
Provision for income taxes													6,119		465		5,654	1,215.9
Consolidated net income													18,478		1,642		16,836	1,025.3
Net income attributable to noncontrolling interests		495			328			167		50.9			612		222		390	175.7
Net (loss) income attributable to common stockholders	$	(12,772	)	$	5,359		$	(18,131	)	(338.3	)%
Net income attributable to common stockholders												$	17,866	$	1,420	$	16,446	1,158.2	%

Table of Contents

Net revenue

Three Months Ended September 30, Increase/(Decrease)
2020 2019
$ 91,912 $ 111,055 $ (19,143) (17.2 )%

Three Months Ended June 30,

Increase/(Decrease)

2021

2020


$
107,593

$
76,008

$
31,585

41.6
%

During the three months ended ~~September~~June 30, ~~2020,~~2021, we recognized approximately ~~$91.9~~$107.6 million in net revenue compared to approximately ~~$111.1~~$76.0 million during the same period in ~~2019.~~2020. These amounts are net of agency and outside sales representative commissions. The decrease in net revenue was due primarily to the COVID-19 pandemic which continued to weaken demand for advertising in general, impaired ticket sales and caused the postponement or cancellation of major tent pole special events. Net revenues from our radio broadcasting segment ~~decreased 31.9%~~increased 73.0% compared to the same period in ~~2019.~~2020. The increase in net revenue in our radio broadcasting segment was due primarily to mitigation of the economic impacts of the COVID-19 pandemic which began in March 2020. 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 no longer participate in Miller Kaplan) ~~decreased 30.0%~~increased 84.8% in total revenues. ~~With the exception of our Philadelphia market, we~~We experienced net revenue ~~declines~~improvements in all of our existing radio ~~markets for~~markets. Net revenue excluding political, from our radio broadcasting segment increased 74.1% compared to the ~~quarter, primarily due to lower advertising sales.~~same period in 2020. We recognized approximately ~~$44.7~~$48.5 million of revenue from our cable television segment during the three months ended ~~September~~June 30, ~~2020,~~2021, compared to approximately ~~$46.0~~$43.8 million for the same period in ~~2019~~2020 with the ~~decrease~~increase primarily in advertising ~~sales and affiliate fees. Net~~sales. We recognized approximately $9.4 million of revenue from our Reach Media segment ~~decreased approximately $3.2 million for~~during the three months ended ~~September~~June 30, ~~2020,~~2021, compared to approximately $6.3 million for the same period in ~~2019 due primarily to the cancellation of special events.~~2020. Finally, net revenues for our digital segment increased approximately ~~$281,000~~$9.0 million for the three months ended ~~September~~June 30, ~~2020,~~2021, compared to the same period in ~~2019.~~2020, primarily due to an increase in direct revenues.
Operating Expenses
Programming and technical, excluding stock-based compensation

Three Months Ended September 30, Increase/(Decrease)
2020 2019
$ 24,202 $ 31,037 $ (6,835 ) (22.0 )%

Three Months Ended June 30,

Increase/(Decrease)

2021

2020


$
26,513

$
23,620

$
2,893

12.2
%

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. The ~~decrease~~increase in programming and technical expenses for the three months ended ~~September~~June 30, 2021, compared to the same period in 2020 was due primarily to higher expenses in our radio broadcasting, Reach Media and cable television segments. Expenses in our radio broadcasting segment increased approximately $1.0 million for the three months ended June 30, 2021, compared to the same period in 2020 due primarily to higher music royalties and research expenses. Expenses in our cable television segment increased approximately $1.5 million for the three months ended June 30, 2020 compared to the same period in 2019 is primarily due to several cost-cutting initiatives, specifically compensation savings from employee layoffs, furloughs and salary reductions and on-air talent reductions. Our radio broadcasting segment generated a decrease of approximately $2.1 million for the three months ended September 30, 2020 ~~compared to the same period in 2019~~ due primarily to lower compensation costs, contract labor costs and music licensing fees. Our Reach Media segment generated a decrease of approximately $1.3 million for the three months ended September 30, 2020, compared to the same period in 2019 due primarily to lower contract labor and talent costs. Our cable television segment generated a decrease of approximately $2.9 million for the three months ended September 30, 2020, compared to the same period in 2019 due primarily to lower compensation costs and lowerhigher content amortization expense. ~~Our digital segment generated a decrease of $559,000 for the three months ended September 30, 2020, compared to the same period in 2019.~~
47
Selling, general and administrative, excluding stock-based compensation

Three Months Ended September 30, Increase/(Decrease)
2020 2019
$ 23,516 $ 36,374 $ ( 12,858) (35.3 )%

Three Months Ended June 30,

Increase/(Decrease)

2021

2020


$
31,510

$
22,216

$
9,294

41.8
%

Table of Contents

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. The ~~decrease~~increase in expenses for the three months ended ~~September~~June 30, ~~2020,~~2021, compared to the same period in ~~2019 is~~2020 was primarily due to ~~special events costs that were eliminated, lower commissions and national representative fees due to declining revenue, lower compensation~~higher expenses resulting from employee layoffs, furloughs and salary cuts. Other savings include lower promotional expenses and reduced travel and entertainment spending due to pandemic related restrictions and safety measures. Ourat all of our segments. Expenses in our radio broadcasting segment ~~generated a decrease of approximately $7.1 million~~increased for the three months ended ~~September~~June 30, ~~2020,~~2021, compared to the same period in ~~2019~~2020 due primarily ~~due~~ to ~~lower~~higher compensation ~~costs, national rep fees, lower professional fees, special event costs and promotional spending. Our Reach Media~~costs. Expenses in our digital segment ~~generated a decrease of~~increased approximately $3.1 million for the three months ended ~~September~~June 30, ~~2020,~~2021, compared to the same period in ~~2019,~~2020 due primarily ~~due~~ to ~~the cancellation of special events. Our~~higher compensation costs, higher traffic acquisition costs and web services fees. Finally, expenses in our cable television segment ~~generated a decrease of~~increased approximately ~~$2.3~~$5.0 million for the three months ended ~~September~~June 30, ~~2020,~~2021, compared to the same period in ~~2019~~2020 due primarily ~~due~~ to ~~lower~~higher research expenses and higher promotional and advertising ~~expenses and lower compensation costs. Our digital segment generated a decrease of approximately $105,000 for the three months ended September 30, 2020, compared to the same period in 2019.~~

expenses.

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

Three Months Ended September 30, Increase/(Decrease)
2020 2019
$ 7,893 $ 8,053 $ (160 ) (2.0 )%

Three Months Ended June 30,

Increase/(Decrease)

2021

2020


$
9,153

$
7,140

$
2,013

28.2
%

Corporate expenses consist of expenses associated with our corporate headquarters and facilities, including personnel as well as other corporate overhead functions. The ~~decrease~~increase in expense for the three months ended ~~September~~June 30, ~~2020,~~2021, compared to the same period in ~~2019 is~~2020 was primarily due to ~~lower expenses at our cable television segment.~~
an increase in professional fees related to corporate development activities in connection with potential gaming and other similar business activities as well as an increase in compensation expense for the Chief Executive Officer in connection with the valuation of the Employment Agreement Award element.
Stock-based compensation

Three Months Ended September 30, Increase/(Decrease)
2020 2019
$ 794 $ 1,881 $ (1,087 ) (57.8 )%

Three Months Ended June 30,

Increase/(Decrease)

2021

2020


$
172

$
268

$
(96)

(35.8)
%

The decrease in stock-based compensation for the three months ended ~~September~~June 30, ~~2020,~~2021, compared to the same period in ~~2019, is~~2020, was primarily due to timing of grants and vesting of stock awards for certain executive officers and other management personnel.
Depreciation and amortization

Three Months Ended September 30, Increase/(Decrease)
2020 2019
$ 2,489 $ 2,593 $ (104 ) (4.0 )%

Three Months Ended June 30,
Increase/(Decrease)

2021

2020

$
2,325

$
2,382

$
(57)

(2.4)
%

The decrease in depreciation and amortization expense for the three months ended ~~September~~June 30, ~~2020,~~2021, was due to the mix of assets approaching or near the end of their useful lives.
48
~~Impairment of long-lived assets~~
Three Months Ended September 30, Increase/(Decrease)
2020 2019
$ 29,050 $ — $ 29,050 100.0 %
The impairment of long-lived assets for the three months ended September 30, 2020, was related to a non-cash impairment charge of approximately $10.0 million recorded to reduce the carrying value of our Atlanta and Indianapolis market goodwill balances and a charge of approximately ~~$19.1 million associated with our Atlanta, Cincinnati, Dallas, Houston, Indianapolis, Philadelphia and Raleigh market radio broadcasting licenses.~~
Interest expense

Three Months Ended September 30, Increase/(Decrease)
2020 2019
$ 18,243 $ 20,239 $ (1,996 ) (9.9 )%

Three Months Ended June 30,

Increase/(Decrease)

2021

2020


$
15,853

$
18,395

$
(2,542)

(13.8)
%

Interest expense decreased to approximately ~~$18.2~~$15.9 million for the three months ended ~~September~~June 30, ~~2020,~~2021, compared to approximately ~~$20.2~~$18.4 million for the same period in ~~2019,~~2020, due to lower overall debt balances outstanding and lower average interest ~~rates~~rates. As discussed above, on ~~its~~January 25, 2021, the Company closed on a new financing in the form of the 2028 Notes. The proceeds from the 2028 Notes were used to repay in full each of: (1) the 2017 Credit ~~Facility.~~Facility, (2) the 2018 Credit Facility, (3) the MGM National Harbor Loan; (4) the remaining amounts of our 7.375% Notes, and (5) our 8.75% Notes that were issued in the November 2020 Exchange Offer.

Table of Contents

Other income, net

Three Months Ended September 30, Increase/(Decrease)
2020 2019
$ (1,684 ) $ (1,299) $ 385 29.6 %

Three Months Ended June 30,

Increase/(Decrease)

2021

2020


$
(2,362)

$
(94)

$
2,268

2,412.8
%

Other income, net, was approximately ~~$1.7~~$2.4 million and ~~$1.3 million~~$94,000 for the three months ended ~~September~~June 30, 2021 and 2020, ~~and 2019, respectively~~. respectively. We recognized other income in the amount of approximately ~~$1.7~~$1.9 million and ~~approximately $1.8 million,~~$80,000 for the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively, related to our MGM investment. ~~In addition, we recognized a loss of $509,000~~
Provision for ~~the three months ended September 30, 2019 related to the sale of its remaining Detroit station and translators.~~
~~(Benefit~~(benefit from) ~~provision for~~ income taxes

Three Months Ended June 30,

Increase/(Decrease)

2021

2020


$
6,119

$
465

$
5,654

1,215.9
%

Three Months Ended September 30, Increase/(Decrease)
2020 2019
$ (136 ) $ (6,535) $ (6,671 ) (102.1 )%
For the three months ended ~~September~~June 30, 2021, we recorded a provision for income taxes of approximately $6.1 million on pre-tax income from continuing operations of approximately $24.6 million which results in an effective tax rate of 24.9%. This rate includes $22,000 of tax benefit related to excess tax benefits from restricted stock units. For the three months ended June 30, 2020, we recorded a ~~benefit from~~provision for income taxes of ~~$136,000~~$465,000 on a pre-tax ~~loss~~income from continuing operations of approximately ~~$12.4~~$2.1 million based on the actual effective tax rate for the year to date, which results in an effective tax rate of ~~1.1%~~22.1%. This rate includes ~~$176,000~~$312,000 of tax benefit related to ~~provision to return adjustments and $114,000 of tax expense related to non-deductible officers’~~stock-based compensation.For the three months ended September 30, 2019, we recorded a provision for income taxes of approximately $6.5 million on pre-tax income from continuing operations of approximately $12.2 million, which results in a tax rate of 53.5%. This tax rate is based on an estimated annual effective tax rate of 35.5%, and discrete tax provision adjustments of approximately $1.9 million primarily due to provision to return adjustments related to state apportionment.
Noncontrolling interests in (loss) income of subsidiaries

Three Months Ended June 30,

Increase/(Decrease)

2021

2020

$
612

$
222

$
390

175.7
%

Three Months Ended September 30, Increase/(Decrease)
2020 2019
$ 495 $ 328 $ 167 50.9 %
The increase in noncontrolling interests in income of subsidiaries was due primarily to higher net income recognized by Reach Media during the three months ended ~~September~~June 30, ~~2020~~ 2021 compared to the three months ended ~~September~~ June 30, ~~2019.~~2020.
49
Other Data
Broadcast and digital operating income
Broadcast and digital operating income increased to approximately ~~$44.2~~$49.6 million for the three months ended ~~September~~ June 30, ~~2020~~,2021, compared to approximately ~~$43.6~~$30.2 million for the comparable period in ~~2019,~~2020, an increase of ~~$550,000~~approximately $19.4 million or ~~1.3%~~64.3%. The increase was primarily due to higher broadcast and digital operating income at our radio broadcasting, Reach Media ~~digital~~ and ~~cable television~~digital segments which was partially offset by lower broadcast and digital operating income at our ~~radio broadcasting~~cable television segment. Our radio broadcasting segment generated ~~$11.4~~approximately $13.1 million of broadcast and digital operating income during the three months ended ~~September~~ June 30, ~~2020~~,2021, compared to ~~approximately $17.0 million~~a broadcast and digital operating ~~income~~loss of $77,000 during the three months ended ~~September~~ June 30, ~~2019, a decrease of $5.6 million,~~2020, with the increase primarily due to ~~lower~~higher net revenues. Reach Media generated approximately ~~$3.7~~$4.0 million of broadcast and digital operating income during the three months ended ~~September~~ June 30, ~~2020~~,2021, compared to approximately ~~$2.4~~$2.0 million during the three months ended ~~September~~ June 30, ~~2019,~~ 2020, with the increase primarily due to ~~overall lower expenses.~~higher net revenues. Our digital segment generated ~~$1.6~~approximately $6.3 million of broadcast and digital operating income during the three months ended ~~September~~ June 30, ~~2020~~,2021, compared to ~~$652,000 of broadcast and digital operating income~~$400,000 during the three months ended ~~September~~ June 30, ~~2019~~.2020. The increase in the digital segment’s broadcast and digital operating income is primarily from higher ~~net revenue and lower expenses.~~ revenues. Finally, TV One generated approximately ~~$27.5~~$26.1 million of broadcast and digital operating income during the three months ended ~~September~~ June 30, ~~2020~~,2021, compared to approximately ~~$23.5~~$27.9 million during the three months ended ~~September~~ June 30, ~~2019~~,2020, with the ~~increase~~decrease primarily due to ~~overall lower~~higher programming and technical expenses as well as higher selling, general and administrative expenses.

Table of Contents

Broadcast and digital operating income margin

Broadcast and digital operating income margin increased to ~~48.1%~~46.1% for the three months ended ~~September~~ June 30, ~~2020~~,2021, from ~~39.3%~~39.7% for the comparable period in ~~2019.~~2020. The margin increase was primarily attributable to higher broadcast and digital operating income ~~at our Reach Media, cable television and digital segment, partially offset by a decrease at~~across our radio broadcasting, ~~segment as noted above.~~Reach Media and digital segments.

Table of Contents

URBAN ONE, INC. AND SUBSIDIARIES

RESULTS OF OPERATIONS

The following table summarizes our historical consolidated results of operations:

~~Nine~~Six Months Ended ~~September~~June 30, ~~2020~~2021 Compared to ~~Nine~~Six Months Ended ~~September~~June 30, ~~2019~~2020 (In thousands)


												Six Months Ended June 30,
												2021		2020		Increase/(Decrease)
	Nine Months Ended September 30,
	2020			2019			Increase/(Decrease)
	(Unaudited)
												(Unaudited)
Statements of Operations:
Net revenue	$	262,795		$	331,075		$	(68,280	)	(20.6	)%	$	199,033	$	170,883	$	28,150	16.5	%
Operating expenses:
Programming and technical, excluding stock-based compensation		75,684			93,779			(18,095	)	(19.3	)		51,603		51,482		121	0.2
Selling, general and administrative, excluding stock-based compensation		75,109			115,174			(40,065	)	(34.8	)		61,466		51,593		9,873	19.1
Corporate selling, general and administrative, excluding stock-based compensation		23,365			26,245			(2,880	)	(11.0	)		19,273		15,472		3,801	24.6
Stock-based compensation		1,455			2,592			(1,137	)	(43.9	)		425		661		(236)	(35.7)
Depreciation and amortization		7,419			14,451			(7,032	)	(48.7	)		4,589		4,930		(341)	(6.9)
Impairment of long-lived assets		82,700			3,800			78,900		2,076.3			—		53,650		53,650	100.0
Total operating expenses		265,732			256,041			9,691		3.8			137,356		177,788		(40,432)	(22.7)
Operating (loss) income		(2,937	)		75,034			(77,971	)	(103.9	)
Operating income (loss)													61,677		(6,905)		68,582	993.2
Interest income		212			131			81		61.8			172		34		138	405.9
Interest expense		55,776			61,647			(5,871	)	(9.5	)		33,898		37,533		(3,635)	(9.7)
Loss on retirement of debt													6,949		—		6,949	100.0
Other income, net		(3,282	)		(4,669	)		(1,387	)	(29.7	)		(4,046)		(1,598)		2,448	153.2
(Loss) income before (benefit from) provision for income taxes and noncontrolling interests in income of subsidiaries		(55,219	)		18,187			(73,406	)	(403.6	)
(Benefit from) provision for income taxes		(21,526	)		8,342			(29,868	)	(358.0	)
Consolidated net (loss) income		(33,693	)		9,845			(43,538	)	(442.2	)
Income (loss) before provision for (benefit from) income taxes and noncontrolling interests in income of subsidiaries													25,048		(42,806)		67,854	158.5
Provision for (benefit from) income taxes													6,109		(21,390)		(27,499)	(128.6)
Consolidated net income (loss)													18,939		(21,416)		40,355	188.4
Net income attributable to noncontrolling interests		846			999			(153	)	(15.3	)		1,066		351		715	203.7
Net (loss) income attributable to common stockholders	$	(34,539	)	$	8,846		$	(43,385	)	(490.4	)%
Net income (loss) attributable to common stockholders												$	17,873	$	(21,767)	$	39,640	182.1	%

Table of Contents

Net revenue

Nine Months Ended September 30, Increase/(Decrease)
2020 2019
$ 262,795 $ 331,075 $ (68,280 ) (20.6 )%

Six Months Ended June 30,

Increase/(Decrease)

2021

2020


$
199,033

$
170,883

$
28,150

16.5
%

During the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, we recognized approximately ~~$262.8~~$199.0 million in net revenue compared to approximately ~~$331.1~~$170.9 million during the same period in ~~2019.~~2020. These amounts are net of agency and outside sales representative commissions. The ~~decrease~~increase in net revenue was due primarily to mitigation of the economic impacts of the COVID-19 pandemic which ~~continued to weaken demand for advertising~~began in ~~general, impaired ticket sales and caused the postponement or cancellation of major tent pole special events.~~March 2020. Net revenues from our radio broadcasting segment for the ~~nine~~six months ended ~~September~~June 30, ~~2020, decreased 34.3%~~2021, increased 14.1% from the same period in ~~2019.~~2020. Based on reports prepared by Miller Kaplan, the markets we operate in ~~decreased 31.5%~~increased 22.8% in total revenues. We experienced net revenue ~~declines~~improvements in all of our existing radio ~~markets primarily due to lower advertising sales. Reach Media’s net revenues decreased 43.5% for the nine months ended September 30, 2020,~~markets. Net revenue excluding political, from our radio broadcasting segment increased 17.1% compared to the same period in ~~2019,~~2020. Reach Media’s net revenues increased 33.0% for the six months ended June 30, 2021, compared to the same period in 2020, due primarily to ~~the postponement of our annual cruise and cancellation of other special events.~~increased demand. We recognized approximately ~~$136.0~~$94.7 million and ~~$140.2~~$91.3 million of revenue from our cable television segment during the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, and ~~2019,~~2020, respectively, due primarily to ~~lower affiliate~~increased advertising sales. Net revenue for our digital segment ~~decreased~~increased approximately ~~$2.4~~$13.1 million for the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, compared to the same period in ~~2019~~2020 primarily from ~~lower~~higher direct revenues.
Operating Expenses
Programming and technical, excluding stock-based compensation

Nine Months Ended September 30, Increase/(Decrease)
2020 2019
$ 75,684 $ 93,779 $ (18,095 ) (19.3 )%

Six Months Ended June 30,

Increase/(Decrease)

2021

2020


$
51,603

$
51,482

$
121

0.2
%

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 internet 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. The ~~decrease~~increase in programming and technical expenses for the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, compared to the same period in ~~2019~~2020 is primarily ~~due~~ to ~~several cost-cutting initiatives, specifically compensation savings from employee layoffs, furloughs~~higher expenses in our Reach Media and ~~salary reductions and on-air talent reductions at all~~cable television segments which was partially offset by a decrease in our ~~segments. Our~~ radio broadcasting segment generated a decrease of approximately $5.5 million for the nine months ended September 30, 2020, compared to the same period in 2019 due primarily to lower compensation costs, contract labor costs and music licensing fees. Our Reach Media segment generated a decrease of approximately $3.0 million for the nine months ended September 30, 2020, compared to the same period in 2019 due primarily to contract labor and talent cost reductions. Our cable television segment generated a decrease of approximately $9.3 million for the nine months ended September 30, 2020, compared to the same period in 2019 due primarily to lower content amortization expense, contract labor and lower compensation costs.
digital segments.
Selling, general and administrative, excluding stock-based compensation

Nine Months Ended September 30, Increase/(Decrease)
2020 2019
$ 75,109 $ 115,174 $ (40,065 ) (34.8 )%

Six Months Ended June 30,

Increase/(Decrease)

2021

2020


$
61,466

$
51,593

$
9,873

19.1
%

52
51

Table of Contents

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~~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 internet 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. ~~The decrease in expenses~~Our cable television segment generated an increase of approximately $6.9 million for the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, compared to the same period in ~~2019 is~~2020 primarily due to special events costs that were eliminated, lower commissions and national representative fees due to declining revenue, lower compensation expenses resulting from employee layoffs, furloughs and salary cuts. Other savings include lower promotionalhigher research expenses and ~~reduced travel~~higher promotional and ~~entertainment spending.~~advertising expenses. Our ~~radio broadcasting~~digital segment generated ~~a decrease~~an increase of approximately ~~$16.0~~$4.3 million for the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, compared to the same period in ~~2019~~2020, primarily due to lower compensation ~~costs, national rep fees, special event costs~~ and ~~promotional spending. Our Reach Media segment generated~~traffic acquisition costs. These increases were partially offset by a decrease ~~of approximately $12.4 million for the nine months ended September 30, 2020, compared to the same period~~ in 2019, primarily due to the cancellation of special events. Our cable television segment generated a decrease of approximately $9.2 million for the nine months ended September 30, 2020, compared to the same periodexpenses in 2019 primarily due to lower promotional and advertising expenses, compensation costs and travel and entertainment spending. Our digital segment generated a decrease of approximately $2.0 million for the nine months ended September 30, 2020, compared to the same period in 2019, primarily due to lower compensation costs.

our radio broadcasting segment.

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

Nine Months Ended September 30, Increase/(Decrease)
2020 2019
$ 23,365 $ 26,245 $ (2,880 ) (11.0 )%

Six Months Ended June 30,

Increase/(Decrease)

2021

2020


$
19,273

$
15,472

$
3,801

24.6
%

Corporate expenses consist of expenses associated with our corporate headquarters and facilities, including personnel as well as other corporate overhead functions. The ~~decrease~~increase in ~~corporate selling, general and administrative expenses~~expense was primarily due to ~~a decrease~~an increase in professional fees related to corporate development activities in connection with potential gaming and other similar business activities as well as an increase in compensation ~~costs.~~
expense for the Chief Executive Officer in connection with the valuation of the Employment Agreement Award element.
Stock-based compensation

Nine Months Ended September 30, Increase/(Decrease)
2020 2019
$ 1,455 $ 2,592 $ (1,137 ) (43.9 )%

Six Months Ended June 30,

Increase/(Decrease)

2021

2020


$
425

$
661

$
(236)

(35.7)
%

The decrease in stock-based compensation for the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, compared to the same period in ~~2019,~~2020, is primarily due to ~~a decrease in~~ grants and vesting of stock awards for certain executive officers and other management personnel.
Depreciation and amortization

Nine Months Ended September 30, Increase/(Decrease)
2020 2019
$ 7,419 $ 14,451 $ (7,032 ) (48.7 )%

Six Months Ended June 30,
Increase/(Decrease)

2021

2020

$
4,589

$
4,930

$
(341)

(6.9)
%
The decrease in depreciation and amortization expense for the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, was due to the mix of assets approaching or near the end of their useful lives, most notably the Company’s affiliate agreements.
Impairment of long-lived assets

Six Months Ended June 30,

Increase/(Decrease)

2021

2020


$
—

$
53,650

$
53,650

100.0
%
Nine Months Ended September 30, Increase/(Decrease)
2020 2019
$ 82,700 $ 3,800 $ 78,900 2,076.3 %
53

The impairment of long-lived assets for the ~~nine~~six months ended ~~September~~June 30, 2020, was related to a non-cash impairment charge of approximately ~~$15.9~~$5.9 million recorded to reduce the carrying value of our Atlanta and Indianapolis market goodwill balances and a charge of approximately ~~$66.8~~$47.7 million associated with our Atlanta, Cincinnati, Dallas, Houston, Indianapolis, Philadelphia, Raleigh, Richmond and St. Louis radio market broadcasting licenses. ~~The impairment~~

Table of long-lived assets for the nine months ended September 30, 2019, was related to a non-cash impairment charge of approximately $3.8 million associated with our Detroit market radio broadcasting licenses.Contents

Interest expense

Nine Months Ended September 30, Increase/(Decrease)
2020 2019
$ 55,776 $ 61,647 $ (5,871 ) (9.5 )%

Six Months Ended June 30,

Increase/(Decrease)

2021

2020


$
33,898

$
37,533

$
(3,635)

(9.7)
%

Interest expense decreased to approximately ~~$55.8~~$33.9 million for the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, compared to approximately ~~$61.6~~$37.5 million for the same period in ~~2019,~~2020, due to lower overall debt balances outstanding and lower average interest ~~rates~~rates. As discussed above, on ~~its~~January 25, 2021, the Company closed on a new financing in the form of the 2028 Notes. The proceeds from the 2028 Notes were used to repay in full each of: (1) the 2017 Credit ~~Facility.~~Facility, (2) the 2018 Credit Facility, (3) the MGM National Harbor Loan; (4) the remaining amounts of our 7.375% Notes, and (5) our 8.75% Notes that were issued in the November 2020 Exchange Offer.
Loss on retirement of debt

Six Months Ended June 30,

Increase/(Decrease)

2021

2020


$
6,949

$
—

$
6,949

100.0
%

As discussed above, upon settlement of the 2028 Notes Offering, the 2017 Credit Facility, the 2018 Credit Facility and the MGM National Harbor Loan were terminated and the indentures governing the 7.375% Notes and the 8.75% Notes were satisfied and discharged. There was a net loss on retirement of debt of approximately $6.9 million for the six months ended June 30, 2021 associated with the settlement of the 2028 Notes.
Other income, net

Nine Months Ended September 30, Increase/(Decrease)
2020 2019
$ (3,282 ) $ (4,669 ) $ (1,387 ) (29.7 )%

Six Months Ended June 30,

Increase/(Decrease)

2021

2020


$
(4,046)

$
(1,598)

$
(2,448)

(153.2)
%

Other income, net ~~decreased~~increased to approximately ~~$3.3~~$4.0 million for the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, compared to approximately ~~$4.7~~$1.6 million for the same period in ~~2019.~~2020. We recognized other income in the amount of approximately ~~$3.3~~$3.6 million and ~~$5.2~~$1.6 million, for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively, related to our MGM investment. ~~The decrease is due to~~
Provision for (benefit from) income taxes

Six Months Ended June 30,

Increase/(Decrease)

2021

2020


$
6,109

$
(21,390)

$
(27,499)

(128.6)
%

For the ~~closure of the MGM casino as~~six months ended June 30, 2021, we recorded a ~~result of the COVID-19 pandemic.~~
~~(Benefit from)~~ provision for income taxes
Nine Months Ended September 30, Increase/(Decrease)
2020 2019
$ (21,526 ) $ 8,342 $ (29,868 ) (358.0 )%
~~For the nine months ended September 30, 2020, we recorded a~~ ~~benefit from income taxes~~ of approximately ~~$21.5~~$6.1 million. This amount is based on the actual effective tax rate of ~~39.0%~~24.4%, which includes ~~-6.0%~~0.8% related to non-deductible ~~impairments~~officer’s compensation, and 0.3% other permanently non-deductible expenses. For the six months ended June 30, 2020, we recorded a benefit from income taxes of approximately $21.4 million. This amount is based on the actual effective tax rate of 50.0%, which includes -2.9% related to ~~goodwill,~~non-deductible officer’s compensation, and ~~22.7%~~29.3% related to the release of valuation allowance for certain of our net operating losses. For the nine months ended September 30, 2019, we recorded a provision for income taxes of approximately $8.3 million on a pre-tax income from continuing operations of approximately $18.2 million, which results in a tax rate of 45.9%. This tax rate was based on an estimated annual effective rate of 35.5% and a discrete tax provision adjustment of approximately $1.9 million primarily due to provision to return adjustments related to state apportionment.
Noncontrolling interests in income of subsidiaries

Nine Months Ended September 30, Increase/(Decrease)
2020 2019
$ 846 $ 999 $ (153 ) (15.3 )%

Six Months Ended June 30,

Increase/(Decrease)

2021

2020

$
1,066

$
351

$
715

203.7
%

The ~~decrease~~increase in noncontrolling interests in income of subsidiaries was due to ~~lower~~higher net income recognized by Reach Media during ~~nine~~the six months ended ~~September~~June 30, ~~2020,~~2021, versus the same period in ~~2019.~~2020.
54
53

Table of Contents

Other Data

Broadcast and digital operating income

Broadcast and digital operating income ~~decreased~~increased to approximately ~~$112.0~~$86.0 million for the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, compared to approximately ~~$122.1~~$67.8 million for the comparable period in ~~2019, a decrease~~2020, an increase of approximately ~~$10.1~~$18.2 million or ~~8.3%~~3.5%. This ~~decrease~~increase was primarily due to ~~declines in net revenue as a result of weakened advertising demand given the COVID-19 pandemic in our radio broadcasting and Reach Media segments, which was partially offset by~~ higher broadcast and digital operating income at ~~our~~radio broadcasting, Reach Media and digital ~~and~~segments, which was partially offset by a decrease at our cable television ~~segments.~~segment. Our radio broadcasting segment generated approximately ~~$19.9~~$17.6 million of broadcast and digital operating income during the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, compared to approximately ~~$43.8~~$8.5 million during the ~~nine~~six months ended ~~September~~June 30, ~~2019, a decrease~~2020, an increase of approximately ~~$23.9~~$9.1 million, primarily from ~~lower~~higher net ~~revenues, partially offset by lower expenses.~~revenue. Reach Media generated approximately ~~$7.2~~$7.3 million of broadcast and digital operating income during the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, compared to approximately ~~$7.8~~$3.5 million during the ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, with the ~~decrease~~increase primarily due to ~~lower~~higher net ~~revenues, partially offset by lower expenses.~~revenues. Our digital segment generated ~~$1.1~~approximately $8.6 million of broadcast and digital operating income during the ~~nine~~six months ended ~~September~~June 30, 2021, compared to $500,000 of broadcast and digital operating loss during the six months ended June 30, 2020, ~~compared~~with the increase primarily due to higher net revenues. Finally, TV One generated approximately ~~$1.0~~$52.5 million of broadcast and digital operating income during the ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2021, compared to approximately $56.3 million during the six months ended June 30, 2020, with the ~~increase~~decrease primarily due to ~~overall lower~~increased expenses. Finally, TV One generated approximately $83.8 million of broadcast and digital operating income during the nine months ended September 30, 2020, compared to approximately $69.6 million during the nine months ended September 30, 2019, with the increase primarily due to overall lower expenses.

Broadcast and digital operating income margin

Broadcast and digital operating income margin increased to ~~42.6%~~43.2% for the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, compared to ~~36.9%~~39.7% for the comparable period in ~~2019.~~2020. The margin increase was primarily attributable to higher broadcast and digital operating income ~~at our digital and cable television segments~~ as noted above.

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 (the “ABL Facility”).~~ facility.

~~Beginning in March 2020, the Company noted that the~~The COVID-19 pandemic ~~and the resulting government stay at home orders across the markets in which we operate were dramatically impacting~~could have an impact on certain of our revenue and alternative revenue sources on a going forward basis. While parts of the ~~Company's revenues. Most notably,~~country are recovering, other parts are seeing a resurgence of the pandemic and this could impact our results of operations, particularly in our larger markets such as Dallas, Houston and Atlanta. During the early portion of the pandemic, a number of advertisers across significant advertising categories ~~have~~ reduced ~~or ceased~~ advertising spend due to the ~~outbreak and stay at home orders which effectively shut many businesses down.~~outbreak. This ~~has been~~was particularly true within our radio segment which derives substantial revenue from local advertisers, ~~who have been~~including in areas such as Texas, Ohio and Georgia. The economies in these areas were hit particularly hard ~~hit~~ due to social distancing and other government interventions. Further, the COVID-19 outbreak ~~has~~ caused the postponement of our 2020 Tom Joyner Foundation Fantastic Voyage cruise and impaired ticket sales of other tent pole special events, some of which we had to cancel. A resurgence could have a similar future impact. We do not carry business interruption insurance to compensate us for losses ~~that~~and such losses may continue to occur as a result of ~~any~~the ongoing nature of ~~these interruptions and continued impacts from~~ the COVID-19 ~~outbreak. Continued~~pandemic. New outbreaks or ~~future outbreaks and/or the speed at which businesses reopen (or reclose)~~surges in new cases due to variants in the markets in which we operate could have material impacts on our liquidity, ~~and/or~~ operations including ~~causing~~ potential impairment of assets, and of our financial results. Likewise, our income from our investment in MGM National Harbor Casino could be negatively impacted by closures and limitations on occupancy imposed by state and local governmental authorities.

~~Given~~Table of Contents

During the ~~expected continued decreases in revenues caused by~~height of the COVID-19 pandemic in 2020, we assessed our operations considering a variety of factors, including but not limited to, media industry financial reforecasts for 2020, expected operating results, estimated net cash flows from operations, future obligations and liquidity, capital expenditure commitments and projected debt covenant compliance. If the Company were unable to meet its financial covenants, an event of default would occur and the Company’s debt would have to be classified as current, which the Company would be unable to repay if lenders were to call the debt. We concluded that the potential that the Company could incur considerable decreases in operating profits and the resulting impact on the Company’s ability to meet its debt service obligations and debt covenants were probable conditions giving rise to assess whether substantial doubt existed over the Company’s ability to continue as a going concern.

As a result, during the third quarter of 2020, the Company performed a complete reforecast of its 2020 anticipated results extending through one year from the date of issuance of the consolidated financial statements. In reforecasting its results, the Company considered the offsetting impact ofproactively implemented certain of cost-cutting measures including furloughs, layoffs, salary reductions, other expense reduction (including eliminating travel and entertainment expenses), eliminating ~~discretionary bonuses and~~ merit raises, decreasing or deferring marketing spend, deferring programming/production costs, reducing special events costs, and implementing a hiring freeze on open positions.

~~Out~~ The Company performed a complete reforecast of its anticipated results extending through one year from the date of issuance of the consolidated financial statements. Further, out of an abundance of caution and to provide for further liquidity given the uncertainty around the pandemic, ~~the Company~~we drew approximately $27.5 million on ~~its ABL Facility~~our asset-backed credit facility on March 19, 2020. As ~~of September 30, 2020, that amount remained~~operating conditions improved throughout the year, we were able to accumulate cash and all amounts outstanding under our asset-backed credit facility were repaid on ~~the Company’s balance sheet and together with other cash on hand improved our cash balance to approximately $102.2 million.~~December 22, 2020. As of ~~November 9, 2020~~June 30, 2021, no amounts were outstanding. Further, as we refinanced our cash on hand balance is approximately $94.6 million. Based on the Company’s forecast operational activity, its ability to manage and delay any capitalized expenditures and additional variable cost-cutting measures, the Company has adequate cash reserves and sufficient liquidity into the foreseeable future or for the next 12 months. As a result of the cost reduction measures that the Company tookdebt structure in response to the onset of the COVID-19 pandemic, the Company’s current cash balance and further, considering certain remaining countermeasures the Company can implement in the event of further or continued downturn, the Company anticipatesJanuary 2021, we anticipate meeting ~~its~~our debt service requirements and ~~is projecting compliance with all debt covenants~~obligations for the foreseeable future, including through one year from the date of issuance of ~~the~~our most recent consolidated financial statements. ~~This estimate is,~~Our estimates however, remain subject to substantial uncertainty, in particular due to the unpredictable extent and duration of the impact of COVID-19 on our business and the economy generally, the possibility of new variants of the coronavirus and the concentration of certain of our revenues in areas that could be deemed “hotspots” for the pandemic, and other factors described in Part II, “Item 1A. Risk Factors” herein and Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019 as well as the factors discussed in Part II, “Item 1A. Risk Factors” in each of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 and our Quarterly Report on Form 10- Q for the quarter ended June 30, 2020.pandemic.

On August 18, 2020, the Company entered into an Open Market ~~Sale~~Sales Agreement^SM ~~(the “ATM Sale Agreement”)~~ with Jefferies LLC (“Jefferies”) under which the Company ~~may offer and sell, from time to time at its sole discretion,~~sold shares of its Class A common stock, par value $0.001 per share (the “Class A Shares”), up to an aggregate offering price of $25 million (the “2020 ATM Program”). Jefferies acted as sales agent for the 2020 ATM Program. During the year ended December 31, 2020, the Company issued 2,859,276 shares of its Class A Shares at a weighted average price of $5.39 for approximately $14.7 million of net proceeds after associated fees and expenses.

On January 19, 2021, the Company completed its 2020 ATM Program, sold an additional 1,465,825 shares for an aggregate of 4,325,102 Class A shares sold through the 2020 ATM Program, receiving gross proceeds of approximately $25.0 million and net proceeds of approximately $24.0 million for the program (inclusive of the $14.7 million sold during the year ended December 31, 2020). On January 27, 2021, the Company entered into a new 2021 Open Market Sale Agreement (the “2021 Sale Agreement”) with Jefferies under which the Company could sell up to an additional $25.0 million of Class A Shares, through Jefferies as its sales agent. ~~The Company also filed a prospectus supplement pursuant to~~During the ~~Sale Agreement for the offer and sale of its Class A Shares having an aggregate offering price of up to $25 million.~~

Pursuant to the ATM Sale Agreement, sales of the Class A Shares, if any, will be made under the Company’s previously filed and effective Registration Statement on Form S-3 (File No. 333-241635) and an applicable prospectus supplement, by any method that is deemed to be an “at the market offering” as defined in Rule 415(a)(4) under the Securities Act of 1933, as amended. Subject to the terms and conditions of the ATM Sale Agreement, Jefferies may sell the Class A Shares by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415(a)(4) of the Securities Act of 1933, as amended. Jefferies will use commercially reasonable efforts to sell the Class A Shares from time to time, based upon instructions fromthree months ended March 31, 2021, the Company (including any price, time or size limits or other customary parameters or conditions the Company may impose). The Company will pay Jefferies a commission equal to three percent (3.0%) of the gross sales proceeds of any Class A Shares sold through Jefferies under the ATM Sale Agreement. In addition, the Company has agreed to reimburse certain legal expenses and fees by Jefferies in connection with the offering, in addition to certain ongoing disbursements of Jefferies’ counsel.

~~As of September 30, 2020, the Company has~~ issued and sold an aggregate of ~~2,859,276~~420,439 Class A Shares pursuant to the ~~ATM~~2021 Sale Agreement and received gross proceeds of approximately ~~$15.4~~$3.0 million and net proceeds of approximately ~~$14.8~~$2.8 million, after deducting commissions to Jefferies and other offering expenses.

During the three months ended June 30, 2021, the Company issued and sold an aggregate of 1,893,126 Class A Shares pursuant to the 2021 Sale Agreement and received gross proceeds of approximately $22.0 million and net proceeds of approximately $21.2 million, after deducting commissions to Jefferies and other offering expenses. 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.

On ~~October 2, 2020, a private offer to certain eligible noteholders to exchange~~January 25, 2021, the Company closed on an offering (the ~~“Exchange Offer”~~“2028 Notes Offering”) ~~any and all~~ of ~~its outstanding $350.0~~$825 million in aggregate principal amount of ~~7.375% Senior Secured Notes~~senior secured notes due ~~2022~~2028 (the ~~“Existing~~“2028 Notes”) ~~for newly issued 8.75% Senior Secured Notes due 2022 (the “New Notes”) commenced. As~~in a private offering exempt from the registration requirements of the ~~expiration date, October 30, 2020, an aggregate~~Securities Act of ~~$347.0 million principal amount~~1933, as amended (the “Securities Act”). The 2028 Notes are general senior secured obligations of ~~Existing~~the Company and are guaranteed on a senior secured basis by certain of the Company’s direct and indirect restricted subsidiaries. The 2028 Notes ~~were validly tendered~~mature on February 1, 2028 and ~~not validly withdrawn. Eligible holders who validly tendered~~interest on the Notes accrues and ~~did not validly withdraw their Existing~~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 Company used the net proceeds from the 2028 Notes, ~~received the early participation payments and accrued and unpaid interest in~~together with cash on ~~their Existing~~hand, to repay or redeem (1) the 2017 Credit Facility, (2) the 2018 Credit Facility, (3) the MGM National Harbor Loan; (4) the remaining amounts of our 7.375% Notes, ~~accepted for exchange to, but not including,~~and (5) our 8.75% Notes that were issued in the ~~Settlement Date for the~~November 2020 Exchange Offer. ~~In connection with the~~Upon settlement of the ~~Exchange Offer~~2028 Notes Offering, the 2017 Credit Facility, the 2018 Credit Facility and ~~Consent Solicitation,~~the MGM National Harbor Loan were terminated and the indentures governing the 7.375% Notes and the 8.75% Notes were satisfied and discharged.

The 2028 Notes are the Company’s general senior obligations and are guaranteed by each of the Company’s restricted subsidiaries (other than excluded subsidiaries). The 2028 Notes and the guarantees are secured, subject to permitted liens and except for certain excluded assets (i) on ~~November 9, 2020,~~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.

Table of Contents

On February 19, 2021, the Company ~~issued $347,016,000 aggregate principal~~closed on a new asset backed credit facility (the “Current 2021 ABL Facility”). The Current 2021 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 2021 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 New ABL 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, was terminated on February 19, 2021.

Advances under the Current 2021 ABL Facility are limited to (a) eighty-five percent (85%) of the amount of Eligible Accounts (as defined in the ~~New~~Current 2021 ABL Facility), less the amount, if any, of the Dilution Reserve (as defined in the Current 2021 ABL Facility), minus (b) the sum of (i) the Bank Product Reserve (as defined in the Current 2021 ABL Facility), plus (ii) the AP and Deferred Revenue Reserve (as defined in the Current 2021 ABL Facility), plus (iii) without duplication, the aggregate amount of all other reserves, if any, established by Administrative Agent.

On January 29, 2021, the Company submitted an application for participation in the second round of the Paycheck Protection Program loan program (“PPP”). On June 1, 2021, the Company received proceeds of approximately $7.5 million. The loan bears interest at a fixed rate of 1% per year and will not be changed during the life of the loan. The loan matures June 1, 2026. The Company is in the process of applying for loan forgiveness. While certain of the PPP loans may be forgivable, until they are repaid or forgiven, the loans the amount may constitute debt under the 2028 Notes and increase the Company’s leverage.

See Note 4 to our consolidated financial statements – Long-Term Debt for further information on liquidity and capital resources ~~and see Note 9 –~~ ~~Subsequent Events~~in the footnotes to the consolidated financial statements.

~~As of September 30, 2020, ratios calculated in accordance with the 2017 Credit Facility were as follows:~~

As of
September 30, 2020 Covenant
Limit Excess
Coverage
Interest Coverage
Covenant EBITDA / Interest Expense 2.02 x 1.25 x 0.77 x

Senior Secured Leverage
Senior Secured Debt / Covenant EBITDA 4.55 x 5.85 x 1.30 x
~~Covenant EBITDA – Earnings before interest, taxes, depreciation and amortization (“EBITDA”) adjusted for certain other adjustments, as defined in the 2017 Credit Facility~~
~~As of September 30, 2020, ratios calculated in accordance with the 2018 Credit Facility were as follows:~~
As of
September 30, 2020 Covenant
Limit Excess
Coverage
Total Gross Leverage
Consolidated Indebtedness / Covenant EBITDA 6.36 x 7.50 x 1.14 x
~~Covenant EBITDA – Earnings before interest, taxes, depreciation and amortization (“EBITDA”) adjusted for certain other adjustments, as defined in the 2018 Credit Facility~~
The following table summarizes the interest rates in effect with respect to our debt as of ~~September~~June 30, ~~2020:~~2021:

Type of Debt Amount Outstanding Applicable
Interest
Rate
(In millions)
2017 Credit Facility, net of original issue discount and issuance costs (at variable rates)(1) $ 313.9 5.0 %
7.375% Senior Secured Notes, net of original issue discount and issuance costs (fixed rate) 348.3 7.375 %
2018 Credit Facility, net of original issue discount and issuance costs (fixed rate) 131.8 12.875 %
MGM National Harbor Loan, net of original issue discount and issuance costs (fixed rate, including PIK) 55.6 11.0 %
Asset-backed credit facility (variable rate)(1) 27.5 2.40 %

Applicable

Amount

Interest

Type of Debt

Outstanding

Rate

(In millions)

7.375% Senior Secured Notes, net of issuance costs (fixed rate)

$
810.3

7.375
%
PPP Loan

7.5

1.0
%
Asset-backed credit facility (variable rate)(1)

—

—
%
(1) Subject to variable LIBOR or ~~Prime~~base rate plus a spread ~~that is incorporated into~~as defined in the ~~applicable interest rate set forth above.~~agreement.

Table of Contents

The following table provides a comparison of our statements of cash flows for the ~~nine~~three months ended ~~September~~June 30, 2021 and 2020, ~~and 2019,~~ respectively:

2020 2019
(In thousands)
Net cash flows provided by operating activities $   64,443 $ 51,048
Net cash flows (used in) provided by investing activities $       (3,651 ) $ 9,553
Net cash flows provided by (used in) financing activities $ 8,358 $ (44,588 )


2021

2020

(In thousands)
Net cash flows provided by operating activities

$
51,492

$
33,271
Net cash flows provided by (used in) investing activities

$
5,546

$
(3,125)
Net cash flows (used in) provided by financing activities

$
(1,116)

$
6,479

Net cash flows provided by operating activities were approximately ~~$64.4~~$51.5 million and ~~$51.0~~$33.3 million for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively. Net cash flow from operating activities for the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, increased from the prior year primarily due to timing of ~~collections~~payments of accrued interest, accounts receivable and ~~lower payments for~~ content 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.
57
Net ~~cash flows used in investing activities were approximately $3.7 million for the~~ ~~nine months ended September 30, 2020~~ ~~and net~~ cash flows provided by investing activities were ~~$9.6~~approximately $5.5 million compared to net cash flows used in investing activities of approximately $3.1 million for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~ 2021 and ~~2019,~~2020, respectively. Capital expenditures, including digital tower and transmitter upgrades, and deposits for station equipment and purchases were approximately ~~$3.2~~$2.5 million and ~~$3.9~~$2.7 million for the ~~nine~~six months ended ~~September~~June 30, 2021 and 2020, ~~and 2019,~~ respectively. ~~During the nine months ended September 30, 2019, the Company received proceeds of approximately $13.5 million for the sale of the remaining Detroit station and translators.~~ We took ownership of WQMC-LD on February 24, 2020 for total consideration of $475,000 for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~.
2020. The Company received approximately $8.0 million as part of the transaction with Gateway.
Net cash flows used in financing activities were approximately $1.1 million compared to net cash flows provided by financing activities ~~were approximately $8.4 million compared to net cash flows used in financing activities~~ of approximately ~~$44.6~~$6.5 million for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~ 2021 and ~~2019,~~2020, respectively. During the ~~nine~~six months ended ~~September~~June 30, ~~2020~~ 2021 and ~~2019,~~2020, we repaid approximately ~~$34.9~~$855.2 million and ~~$37.6~~$22.0 million in outstanding debt, respectively. During the ~~nine~~six months ended ~~September~~June 30, 2021, we borrowed approximately $825.0 million on our 2028 Notes. During the six months ended June 30, 2021, we paid approximately $11.2 million in debt refinancing costs. During the six months ended June 30, 2020, w~~e received net proceeds of~~we borrowed approximately $27.5 million on our ~~ABL Facility. During the~~ ~~nine months ended September 30, 2020, we borrowed~~asset-backed credit facility and approximately $3.6 million on the MGM National Harbor Loan. We repurchased $905,000 and approximately $3.6 million ~~and $5.3 million~~ of our ~~Class A and~~ Class D Common Stock during the ~~nine~~six months ended ~~September~~June 30, 2021 and 2020, ~~and 2019,~~ respectively. During the ~~nine~~six months ended ~~September~~June 30, 2021 and 2020, werespectively, we received proceeds of $315,000 and approximately $2.0 million from the exercise of stock options. ~~During the nine months ended~~ ~~September~~ 30, 2019, the Company distributed $658,000 of contingent consideration related to the Moguldom acquisition. Reach Media paid approximately $1.0 million in dividends to noncontrolling interest shareholders during each of the ~~nine months ended September 30, 2020~~ ~~and 2019. Finally, the~~The Company received proceeds of approximately ~~$14.8~~$33.3 million from the issuance of Class A Common Stock, net of fees paid during the ~~nine~~six months ended ~~September~~June 30, 2021. The Company also received proceeds of approximately $7.5 million on its PPP Loan. Finally, Reach Media paid approximately $1.0 million in dividends to noncontrolling interest shareholders during the six months ended June 30, 2020.
Credit Rating Agencies
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 POLICIES AND ESTIMATES
Our significant accounting policies are described in Note 1 - Organization and Summary of Significant Accounting Policies of the consolidated financial statements in our Annual Report on Form 10-K. We prepare our consolidated financial statements in conformity with accounting principles generally accepted in the United States, 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 consolidated 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 Annual Report on Form 10-K for the year ended December 31, ~~2019,~~2020, we summarized the policies and estimates that we believe 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 Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020.

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Goodwill and Radio Broadcasting Licenses

Impairment Testing

We have made several acquisitions in the past for which a significant portion of the purchase price was allocated to radio broadcasting licenses and goodwill. Goodwill exists whenever the purchase price exceeds the fair value of tangible and identifiable intangible net assets acquired in business combinations. As of ~~September~~June 30, ~~2020,~~2021, we had approximately ~~$516.4~~$505.2 million in broadcast licenses and ~~$223.8~~$223.4 million in goodwill, which totaled ~~$740.2~~$728.6 million, and represented approximately ~~61.2%~~58.8% of our total assets. Therefore, we believe estimating the fair value of goodwill and radio broadcasting licenses is a critical accounting estimate because of the significance of their carrying values in relation to our total assets.

There was no impairment recorded during the six months ended June 30, 2021. For the ~~nine~~six months ended ~~September~~June 30, 2020, the Company recorded an impairment charge of approximately ~~$15.9~~$5.9 million related to its Atlanta market and Indianapolis goodwill balances and also a charge of approximately ~~$66.8~~$47.7 million associated with our Atlanta, Cincinnati, Dallas, Houston, Indianapolis, Philadelphia, Raleigh, Richmond and St. Louis market radio broadcasting licenses. ~~For the nine months ended September 30, 2019, the Company recorded an impairment charge of approximately $3.8 million related to its Detroit market radio broadcasting licenses.~~

We test for impairment annually across all reporting units, or when events or changes in circumstances or other conditions suggest impairment may have occurred in any given reporting unit. Our annual impairment testing is performed as of October 1 of each year. Impairment exists when the carrying value of these assets exceeds its respective fair value. When the carrying value exceeds fair value, an impairment amount is charged to operations for the excess.

Valuation of Broadcasting Licenses

Valuation of Goodwill

As a result of that testing, the Company recorded a non-cash impairment charge of approximately $19.1 million associated with our Atlanta, Cincinnati, Dallas, Houston, Indianapolis, Philadelphia and Raleigh market radio broadcasting licenses. Wenoted above, we did not identify any impairment indicators at any of our reportable segments for the ~~three~~six months ended ~~September~~June 30, 2019. During the nine months ended September 30, 2019, the Company recorded a non-cash impairment charge of approximately $3.8 million associated with our Detroit market radio broadcasting licenses. Below are some of the key assumptions used in the income approach model for estimating broadcasting licenses fair values for the interim impairment assessments where impairment was recorded for 2020.

Radio Broadcasting September 30, March 31,
Licenses 2020 (a) 2020 (a)
Impairment charge (in millions) $ 19.1 $ 47.7
Discount Rate 9.0 % 9.5 %
Year 1 Market Revenue Growth Rate Range (10.7)% – (16.8) % (13.3) %
Long-term Market Revenue Growth Rate Range (Years 6 – 10) 0.7% – 1.1 % 0.7% – 1.1 %
Mature Market Share Range 6.7% – 23.9 % 6.9% – 25.0 %
Mature Operating Profit Margin Range 27.7% –37.1 % 27.6% –39.7 %
~~(a)~~ ~~Reflects changes only to the key assumptions used in the interim testing for certain units of accounting.~~
~~Valuation of Goodwill~~
As2021. Also as noted above, during the first ~~and third quarters~~quarter of 2020 due to the COVID-19 pandemic, we identified impairment indicators at certain of our radio markets, and, as such, we performed an interim analysis for certain radio market goodwill. During the ~~three~~six months ended ~~March 31,~~June 30, 2020, the Company recorded a non-cash impairment charge of approximately ~~$6.0~~$5.9 million to reduce the carrying value of our Atlanta and Indianapolis market goodwill balances. We did not identify any impairment indicators at any of our other reportable segments for the three months ended June 30, 2020. During the three months ended September 30, 2020, the Company recorded a non-cash impairment charge of approximately $10.0 million to reduce the carrying value of our Atlanta and Indianapolis market goodwill balances. We did not identify any impairment indicators at any of our reportable segments for the three months ended September 30, 2019. Below are some of the key assumptions used in the income approach model for estimating reporting unit fair values for the ~~interim impairment assessments~~ ~~where impairment was recorded for 2020~~.
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Goodwill (Radio Market September 30, March 31,
Reporting Units) 2020 (a) 2020 (a)
Impairment charge (in millions) $ 10.0 $ 6.0
Discount Rate 9.0 % 9.5 %
Year 1 Market Revenue Growth Rate Range (26.6)% – 34.7 % (14.5)% – (12.9) %
Long-term Market Revenue Growth Rate Range (Years 6 – 10) 0.9% – 1.1 % 0.9% – 1.1 %
Mature Market Share Range 8.4% – 12.7 % 11.1% – 13.0 %
Mature Operating Profit Margin Range 27.7% – 48.1 % 29.4% – 39.0 %
~~(a)~~ ~~Reflects the key assumptions for testing only those radio markets with remaining goodwill.~~
As part of our annual testing, when arriving at the estimated fair values for radio broadcasting licenses and goodwill, we also performed an analysis by comparing our overall average implied multiple based on our cash flow projections and fair values to recently completed sales transactions, and by comparing our fair value estimates to the market capitalization of the Company. The results of these comparisons confirmed that the fair value estimates resulting from our annual assessment for ~~2019~~2020 were reasonable.
Several of the licenses in our units of accounting have limited or no excess of fair values over their respective carrying values. Should our estimates, assumptions, or events or circumstances for any upcoming valuations worsen in the units with no or limited fair value cushion, additional license impairments may be needed in the future.

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Realizability of Deferred Tax Assets

As of each reporting date, management considers new evidence, both positive and negative, that could affect its conclusions regarding the future realization of the Company’s deferred tax assets (“DTAs”). During the ~~nine months~~quarter ended ~~September~~June 30, ~~2020,~~2021, management continues to believe that there is sufficient positive evidence to conclude that it is more likely than not the DTAs are realizable. The assessment to determine the value of the DTAs to be realized under ASC 740 is highly judgmental and requires the consideration of all available positive and negative evidence in evaluating the likelihood of realizing the tax benefit of the DTAs in a future period. Circumstances may change over time such that previous negative evidence no longer exists, and new conditions should be evaluated as positive or negative evidence that could affect the realization of the DTAs. Since the evaluation requires consideration of events that may occur some years into the future, significant judgment is required, and our conclusion could be materially different if certain expectations do not materialize.

In the assessment of all available evidence, an important piece of objectively verifiable evidence is evaluating a cumulative income or loss position over the most recent three-year period. Historically, the Company maintained a full valuation against the net DTAs, principally due to overwhelming objectively verifiable negative evidence in the form of a cumulative loss over the most recent three-year period. However, during the quarter ended December 31, 2018, the Company achieved three years of cumulative income, which removed the most heavily weighted piece of objectively verifiable negative evidence from our evaluation of the realizability of DTAs. Moreover, in combination with the three years of cumulative income and other objectively verifiable positive evidence that existed as of the quarter ended December 31, 2018, management believed that there was sufficient positive evidence to conclude that it was more likely than not that a material portion of its net DTAs were realizable. Consequently, the Company reduced its valuation allowance during the quarter ended December 31, ~~2018, in addition to the reduction of the valuation allowance during the quarter ended December 31, 2017.~~

2018.

As of the quarter ended ~~September~~June 30, ~~2020,~~2021, management continues to weigh the objectively verifiable evidence associated with its cumulative income or loss position over the most recent three-year period. ~~Further, as of the quarter ended September 30, 2020, the~~The Company continues to have three years of rolling cumulative income. Management also considered the cumulative income includes non-deductible pre-tax expenditures that, while included in pre-tax earnings, are not a component of taxable income and therefore are not expected to negatively impact the Company's ability to realize the tax benefit of the DTAs in current or future years.

As part of the 2017 Tax Act, IRC Section 163(j) limits the timing of the tax deduction for interest expense. In conjunction with evaluating and weighing the aforementioned negative and positive evidence from the Company’s historical cumulative income or loss position, management also evaluated the impact that interest expense has had on our cumulative income or loss position over the most recent three-year period. A material component of the Company’s expenses is interest and has been the primary driver of historical pre-tax losses. As part of our evaluation of positive evidence, management is adjusting for the IRC Section 163(j) interest expense limitation on projected taxable income as part of developing forecasts of taxable income sufficient to utilize the Company’s federal and state net operating losses that are not subject to annual limitation resulting from the 2009 ownership shift as defined under IRC Section 382.

Realization of the Company’s DTAs is dependent on generating sufficient taxable income in future periods, and although management believes it is more likely than not future taxable income will be sufficient to realize the DTAs, realization is not assured and future events may cause a change to the judgment of the realizability of the DTAs. If a future event causes management to re-evaluate and conclude that it is not more likely than not, that all or a portion of the DTAs are realizable, the Company would be required to establish a valuation allowance against the assets at that time, which would result in a charge to income tax expense and a decrease to net income in the period which the change of judgment is concluded.

The Company continues to assess potential tax strategies, which if successful, may reduce the impact of the annual limitations and potentially recover NOLs that otherwise would expire before being applied to reduce future income tax liabilities. If successful, the Company may be able to recover additional federal and state NOLs in future periods, which could be material. If we conclude that it is more likely than not that we will be able to realize additional federal and state NOLs, the tax benefit could materially impact future quarterly and annual periods. The federal and state NOLs expire in various years from 2021 to 2039.

RECENT ACCOUNTING PRONOUNCEMENTS

See Note 1 of our consolidated financial statements – Organization and Summary of Significant Accounting Policies for a summary of recent accounting pronouncements.

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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 ~~December 2020~~August 2021 through ~~October 2028.~~February 1, 2029. 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.

Indebtedness

~~Indebtedness~~

~~We have several debt instruments~~As of June 30, 2021, we had approximately $825.0 million of our 2028 Notes outstanding and approximately $7.5 million outstanding on our PPP Loan within our corporate structure. ~~We incurred senior bank debt as part of our~~The Company used the net proceeds from the 2028 Notes, together with cash on hand, to repay or redeem (1) the 2017 Credit Facility, in(2) the amount of $350.0 million that matures on the earlier of (i) April 18, 2023, or (ii) in the event such debt is not repaid or refinanced, 91 days prior to the maturity of the Company’s 2022 Notes. We also have approximately $350.0 million outstanding in our 2022 Notes. Finally, on December 20, 2018 ~~the Company closed on a $192.0 million unsecured credit facility (the “2018~~ Credit ~~Facility”) and the Company also closed on a $50.0 million loan secured by our interest in~~Facility, (3) the MGM National Harbor ~~Casino (the “MGM~~Loan; (4) the remaining amounts of our 7.375% Notes, and (5) our 8.75% Notes that were issued in the November 2020 Exchange Offer. Upon settlement of the 2028 Notes, the 2017 Credit Facility, the 2018 Credit Facility and the MGM National Harbor ~~Loan”).~~Loan were terminated and the indentures governing the 7.375% Notes and the 8.75% Notes were satisfied and discharged. See “Liquidity and Capital Resources.” ~~See the current balances outstanding in the “Type of Debt” section as part of the “~~~~Liquidity and Capital Resources~~~~” section above. See Note 9~~ ~~– Subsequent Events~~ ~~in the footnotes to the consolidated financial statements.~~

Royalty Agreements

Lease obligations

We have non-cancelable operating leases for office space, studio space, broadcast towers and transmitter facilities that expire over the next 1110 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 five years.

Reach Media Noncontrolling Interest Shareholders’ Put Rights

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Contractual Obligations Schedule

The following table represents our scheduled contractual obligations as of ~~September~~June 30, ~~2020:~~2021:

Payments Due by Period
Contractual Obligations Remainder
of 2020 2021 2022 2023 2024 2025 and
Beyond Total
(In thousands)
7.375% Senior Subordinated Notes(1) $ 6,453 $ 25,813 $ 357,529 $ — $ — $ — $ 389,795
2017 Credit facility(2) 5,598 24,907 24,633 316,363 — — 371,501
2018 Credit facility(2) 9,233 35,216 124,009 — — — 168,458
Other operating contracts/agreements(3)

27,181
67,454 20,939 12,325 10,834 35,395 174,128
Operating lease obligations

3,352
12,547 11,499 9,618 8,812 11,660 57,488
MGM National Harbor Loan

1,598
6,518 69,433 — — — 77,549
Total $ 53,415 $ 172,455 $ 608,042 $ 338,306 $ 19,646 $ 47,055 $ 1,238,919

Payments Due by Period

Remainder

2026 and

Contractual Obligations

of 2021

2022

2023

2024

2025

Beyond

Total

(In thousands)
7.375% Senior Subordinated Notes (1)

$
30,422

$
60,844

$
60,844

$
60,844

$
60,844

$
951,758

$
1,225,556
PPP Loan (2)

38

75

75

75

75

7,542

7,880
Other operating contracts/agreements (3)

40,020

29,128

16,464

13,320

13,146

9,675

121,753
Operating lease obligations

6,527

12,503

10,803

9,651

5,160

8,214

52,858
Total

$
77,007

$
102,550

$
88,186

$
83,890

$
79,225

$
977,189

$
1,408,047
(1) Includes interest obligations based on ~~effective~~ interest rates on senior secured notes outstanding as of ~~September~~June 30, ~~2020.~~2021.
(2) Includes interest obligations ~~based~~ on ~~effective interest rate, and projected interest expense on credit facilities~~PPP Loan outstanding as of ~~September~~June 30, ~~2020.~~2021.
(3) Includes employment contracts (including the Employment Agreement Award), severance obligations, on-air talent contracts, consulting agreements, equipment rental agreements, programming related agreements, asset-backed credit facility 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.
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Of the total amount of other operating contracts and agreements included in the table above, approximately ~~$87.7~~$68.1 million has not been recorded on the balance sheet as of ~~September~~June 30, ~~2020,~~2021, as it does not meet recognition criteria. Approximately ~~$8.6~~$2.4 million relates to certain commitments for content agreements for our cable television segment, approximately ~~$13.6~~$12.6 million relates to employment agreements, and the remainder relates to other agreements.
Other Contingencies
The Company has been named as a defendant in several legal actions arising in the ordinary course of business. It is management’s opinion, after consultation with its legal counsel, that the outcome of these claims will not have a material adverse effect on the Company’s financial position or results of operations.
Off-Balance Sheet Arrangements
~~On February 24, 2015, the Company entered into a~~The Current 2021 ABL Facility provides for letter of credit ~~reimbursement and security agreement. On October 8, 2019, the Company entered into an amendment~~capacity of up to ~~its letter of credit reimbursement and security agreement and extended the term~~$5 million subject to ~~October 8, 2024.~~certain limitations on availability. As of ~~September~~June 30, ~~2020,~~2021, the Company had letters of credit totaling $871,000 under the ~~agreement.~~Current 2021 ABL Facility for certain operating leases and certain insurance policies. Letters of credit issued under the ~~agreement~~Current 2021 ABL Facility are required to be collateralized with cash.

Item 3: Quantitative and Qualitative Disclosures About Market Risk

For quantitative and qualitative disclosures about market risk affecting Urban One, see Item 7A: “Quantitative and Qualitative Disclosures about Market Risk” in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2019.~~2020. Our exposure related to market risk has not changed materially since December 31, ~~2019.~~2020.

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Item 4. Controls and Procedures

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. Based on this evaluation, our CEO and CFO concluded that, as of such date, our disclosure controls and procedures are ~~not~~ effective in timely alerting them to material information required to be included in our periodic SEC ~~reports due to the material weaknesses discussed below.~~reports. 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. Our management, including our CEO and CFO, has concluded that our disclosure controls and procedures are ~~not~~ effective in reaching that level of reasonable assurance.

Changes in internal control over financial reporting

During the three months ended ~~September~~June 30, ~~2020,~~2021, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

As part of the Urban One Form 10-K filing for the year ended December 31, 2019, the Company identified three material weaknesses that required remediation. The Company began addressing these areas during the first quarter of 2020. We have substantially completed the remediation activities and believe that we have strengthened our controls to address the identified material weaknesses. However, control weaknesses are not considered remediated until new internal controls have been operational for a period of time, are tested, and management concludes that these controls are operating effectively. We expect to complete the remediation process in 2020. Other than the remediation actions disclosed in Item 9A. of the 2019 Form 10-K, there were no changes in our internal controls over financial reporting that occurred during the quarter ended September 30, 2020 that materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting. As discussed in Item 9A. of our 2019 Form 10-K, we have initiated several remedial procedures to address the material weaknesses in our internal control over financial reporting. These remedial procedures will continue through fiscal year 2020, with the goal to fully remediate all remaining material weaknesses by fiscal year end.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Legal Proceedings

Urban One is involved from time to time in various routine legal and administrative proceedings and threatened legal and administrative proceedings incidental to the ordinary course of our business. Urban One believes the resolution of such matters will not have a material adverse effect on its business, financial condition or results of operations.

Item 1A. Risk Factors

~~Impact of Public Health Crisis~~

An epidemic or pandemic disease outbreak, such as the current COVID-19 outbreak, could cause, is currently causing and could continue to cause, significant disruption to our business operations. Measures taken by governmental authorities and private actors to limit the spread of this virus are interfering with the ability of the Company’s employees, suppliers, and customers to conduct their functions and business in a normal manner. Further, the demand for advertising across our various segments/platforms is linked to the level of economic activity and employment in the United States. Specifically, our business is heavily dependent on the demand for advertising from consumer-focused companies. The recent and significant dislocation of consumer demand due to social distancing and government interventions (such as lockdowns or shelter in place policies) has caused, and could further cause, advertisers to reduce, postpone or eliminate their marketing spending generally, and on our platforms in particular. Continued or future social distancing, government interventions and/or recessions could have a material adverse effect on our business and financial condition. Moreover, continued or future declines or disruptions due to the COVID-19 outbreak, could adversely affect our business and financial performance. The COVID-19 outbreak has had an impact on certain of the Company’s revenue and alternative revenue sources. Most notably, a number of advertisers across significant advertising categories have reduced advertising spend due to the outbreak, particularly within our radio segment which derives substantial revenue from local advertisers, including in areas currently considered “hotspots” such as Texas, Ohio and Georgia, who have been particularly hard hit due to social distancing and government interventions. Further, the COVID-19 outbreak has caused the postponement of our 2020 Tom Joyner Foundation Fantastic Voyage cruise and impaired ticket sales of other tent pole special events, some of which we had to cancel. We do not carry business interruption insurance to compensate us for losses that may occur as a result of any of these interruptions and continued impacts from the COVID-19 outbreak. Outbreaks in the markets in which we operate could have material impacts on our liquidity, operations including potential impairment of assets, and our financial results.

We anticipate continued decreases in revenues due to the COVID-19 pandemic. As such we assessed our operations considering a variety of factors, including but not limited to, media industry financial reforecasts for 2020, expected operating results, estimated net cash flows from operations, future obligations and liquidity, capital expenditure commitments and projected debt covenant compliance. If the Company were unable to meet financial covenant under certain of our outstanding debt covenants, an event of default would occur and the Company’s debt would have to be classified as current, which the Company would be unable to repay if lenders were to call the debt.

To address the matter, the Company proactively implemented certain cost-cutting measures including furloughs, layoffs, salary reductions, other expense reduction (including eliminating travel and entertainment expenses), eliminating discretionary bonuses and merit raises, decreasing or deferring marketing spend, deferring programming/production costs, reducing special events costs, and implementing a hiring freeze on open positions. Further, out of an abundance of caution and to provide for further liquidity given the uncertainty around the pandemic, the Company drew approximately $27.5 million on its ABL Facility on March 19, 2020. While management estimates that these expense reduction measures, as well as other certain other remedial actions that remain available in the event of sustained or further revenue decline, will be sufficient to provide the Company with adequate liquidity and capacity to maintain covenant compliance, given the unprecedented nature of the pandemic (including the breadth and duration of its economic impact on both business and consumer spending), the extent to which the pandemic impacts our results will depend on future developments, which are highly uncertain and cannot be predicted with complete accuracy.

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 Annual Report on Form 10-K for the year ended December 31, ~~2019~~2020 (the ~~“2019~~“2020 Annual Report”), which could materially affect our business, financial condition or future results. The risks described in our ~~2019~~2020 Annual Report, 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.

Unique Risks Related to Our Development of ONE Casino + Resort

The market for a casino in Richmond is yet to develop and unproven.

On May 20, 2021, the City of Richmond, Virginia (the “City”) announced that it has selected the Company’s wholly-owned unrestricted subsidiary RVA Entertainment Holdings, LLC (“RVAEH”), as the City’s preferred casino gaming operator to develop and operate a Casino Resort in Richmond. Pursuant to the Virginia Casino Act, the City is one of five cities within the Commonwealth of Virginia eligible to host a casino gaming establishment, subject to the citizens of the City approving a referendum, which is anticipated to be held in November 2021. Prior to requesting a Virginia court to order the referendum, the City is required to (i) select the City’s preferred location for the Casino, which must be listed on the referendum, (ii) select a preferred casino gaming operator to develop and operate the Casino Resort (the “Preferred Casino Operator”), and (iii) submit the Preferred Casino Operator to the Commonwealth for pre-certification. If the voters approve the referendum, then the Commonwealth may issue one license permitting operation of a casino in Richmond.

Upon passage and certification of the referendum, RVAEH, along with its management and development team, including Peninsula Pacific Entertainment would commence development and construction of the casino resort to be named ONE Casino + Resort (the “Casino Resort”). The market for a casino in Richmond, Virginia is unproven and projected revenues and customer growth may never materialize or may materialize in a manner much less than projected. There is inherent uncertainty in entering into new markets. The residents of the Richmond must pass the referendum in order for us to proceed with the development of the Casino Resort. If the referendum is not successful, the Casino Resort would not be permitted by law and RVAEH may not move forward with development of the Casino Resort. Further, the market for a casino in Richmond, Virginia may be impacted by the development of other casinos or other gaming operations in other parts of the Commonwealth of Virginia or in other states.

Competitors could challenge the Referendum and/or sue to challenge the City’s selection process.

Numerous applicants responded to the City’s request for proposal for a resort casino development, resulting in a competitive process. These respondents included: Bally’s Corporation, The Cordish Companies, Golden Nugget Hotels & Casinos, the Pamunkey Indian Tribe, and Wind Creek Hospitality. Any of these competitors could make efforts to oppose the successful passage of the Referendum and/or otherwise sue to challenge the City’s RFP process and/or the selection of RVAEH as the City’s preferred casino operator. Such actions could delay the development of the Casino Resort and/or impact the financial projections and/or results of operations of the Casino Resort.

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The gaming industry in which the Company intends to compete is subject to intense competition.

There is intense competition in the Virginia market in which the Company intends to operate and in surrounding markets. The Casino Resort will compete directly with other existing gaming facilities located in Richmond, Virginia and in bordering states, including Maryland and North Carolina. Furthermore, it is likely that other competitors will emerge in the future. The Casino Resort will also be competing, directly and indirectly, with gaming facilities throughout the United States and throughout the world as well as with internet gaming operators and Native American gaming operations which enjoy certain tax advantages. Many companies with which the Casino Resort will compete are substantially larger and have significantly greater resources than the Casino Resort. The Company expects this competition to increase as new gaming operators enter these markets, existing competitors expand their operations, gaming activities expand in existing jurisdictions, gaming is legalized in new jurisdictions, and internet gaming is legalized in new jurisdictions. Assuming it is successful in developing a destination casino resort, the Casino Resort will also be competing with other forms of gaming and entertainment, including but not limited to, bingo, online computer gambling, pull tab games, card parlors, sports-book operations, pari-mutuel betting, dog racing, horse racing, lotteries, jai-alai, video lottery terminals, and video poker terminals.

The Casino Resort will be subject to significant development and operational risks.

The Casino Resort will be subject to development and operational risks, including but not limited to those relating to developing a new business and establishing and maintaining operations in general, insurance coverage problems unique to the area in which the Casino Resort will be located, weather-related problems, including hurricanes and floods, and labor-related problems unique to the area and other general and unforeseeable risks such as the COVID-19 pandemic. The operation will also be subject to development and ongoing operational risks relating to security, licensing, and suitability findings unique to the gaming industry. The Casino Resort’s proposed operations are also subject to all of the risks inherent in the establishment of a new business enterprise, including the absence of an operating history.

We are dependent upon our operating partners to provide the services necessary to develop and operate the Casino Resort.

We are dependent upon our operating partners to provide the services necessary to develop and operate the Casino Resort. We do not have a history of developing or operating casinos. Therefore, the project is dependent on the services provided by our partners and their subsidiaries, and we cannot operate the Casino Resort without these services. If the quality of the services provided by our partners and its subsidiaries deteriorates, or the terms under which our partners provide services change in a manner that is adverse to us, it could have a material adverse effect on our business, financial condition, and operating results.

In addition, if any of the Casino Resort development and/or management agreements were to be terminated, or if our partner’s or their subsidiaries were to suffer significant liquidity or operational difficulties, becoming incapable of providing development or management services (or unable to provide such services at the agreed upon level) to us or cease operations altogether, we may be unable to continue to develop and operate the Casino Resort, which would have a material adverse effect on our business, financial condition and operating results. Finally, subsidiaries of our partners operate other gaming facilities in the Commonwealth of Virginia and at times their interests may differ and not align with the interests of the Casino Resort.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

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Item 6. Exhibits

Exhibit Number		Description

31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101		Financial information from the Quarterly Report on Form 10-Q for the quarter ended ~~September~~June 30, ~~2020,~~2021, formatted in XBRL.
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	URBAN ONE, INC.

	/s/ PETER D. THOMPSON
	Peter D. Thompson
	Executive Vice President and
	Chief Financial Officer
	(Principal Accounting Officer)

~~November 12, 2020~~August 13, 2021