9.  INCOME TAXES:

 

      The estimated annual effective tax rate from continuing operations for the three month period ended March 31, 2009 was (21.9%), which includes an immaterial effect for discrete items.  This blended rate results from combining  an estimated annual effective tax rate of (11.8%) for Radio One, Inc., which has a full valuation allowance for most of its deferred tax assets (“DTAs”), separate and apart from an estimated annual effective rate of 35.2% for Reach Media, which does not have a valuation allowance.

 

      In 2007, the Company concluded it was more likely than not that the benefit from certain of its DTAs would not be realized. The Company considered its historically profitable jurisdictions, its sources of future taxable income and tax planning strategies in determining the amount of valuation allowance recorded. As part of that assessment, the Company also determined that it was not appropriate under generally accepted accounting principles to benefit its DTAs based on deferred tax liabilities (“DTLs”) related to indefinite-lived intangibles that cannot be scheduled to reverse in the same period. Because the DTL in this case would not reverse until some future indefinite period when the intangibles are either sold or impaired, any resulting temporary differences cannot be considered a source of future taxable income to suppo rt realization of the DTAs. As a result of this assessment, and given the then three year cumulative loss position, the uncertainty of future taxable income and the feasibility of tax planning strategies, the Company recorded a valuation allowance for certain of its DTAs in 2007. For the three month period ended March 31, 2009, an additional valuation allowance for the current year anticipated increase to DTA’s from the amortization of indefinite-lived intangibles was included in the annual effective tax rate calculation.

 

      On January 1, 2007, the Company adopted the provisions of FIN No. 48,“Accounting for Uncertainty in Income Taxes - Interpretation of SFAS No. 109,”   which recognizes the impact of a tax position in the financial statements if it is more likely than not that the position would be sustained on audit based on the technical merits of the position. The nature of the uncertainties pertaining to our income tax position is primarily due to various state tax positions. As of March 31, 2009, we had approximately $5.0 million in unrecognized tax benefits. Accrued interest and penalties related to unrecognized tax benefits is recognized as a component of tax expense. During the three months ended March 31, 2009, the Company recorded a benefit for interest and penalties of $2,000, due to a $6,000 release of interest from an expiring statute. As of March 31, 2009, the Company had a liability of $115,000 for unrecognized tax benefits for interest and penalties. The Company estimates the possible change in unrecognized tax benefits prior to March 31, 2010 would be anywhere from $0 to a reduction of $220,000, due to expiring statutes.

 

 

 

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10.  STOCKHOLDERS’ EQUITY:

 

      Common Stock

 

      Shareholders of Class A Common Stock are entitled to one vote per share. Shareholders of Class B Common Stock are entitled to ten votes per share. Shareholders of Class C and Class D Common Stock are not entitled to vote. 

  Stock Repurchase Program

 

      In March 2008, the Company’s board of directors authorized a repurchase of shares of the Company’s Class A and Class D common stock through December 31, 2009, in an amount of up to $150.0 million, the maximum amount allowable under the Credit Agreement.  The amount and timing of such repurchases will be based on pricing, general economic and market conditions, and the restrictions contained in the agreements governing the Company’s credit facilities and subordinated debt and certain other factors. While $150.0 million is the maximum amount allowable under the Credit Agreement, in 2005, under a prior board authorization, the Company utilized approximately $78.0 million to repurchase common stock leaving capacity of $72.0 million under the Credit Agreement. During the period ended March 31, 2009, the Company repurch ased 22,515 shares of Class A common stock at an average price of $0.57 and 14.4 million shares of Class D common stock at an average price of $0.47. There were no shares repurchased during the period ended March 31, 2008; however, for the year ended December 31, 2008 the Company repurchased 421,661 shares of Class A common stock at an average price of $1.32 and 20.0 million shares of Class D common stock at an average price of $0.58. As of March 31, 2009, the Company had approximately $53.1 million in capacity available under the 2008 stock repurchase program.

 

      The Company continues to have an open stock repurchase authorization with respect to its Class A and D stock and continued to make purchases subsequent to March 31, 2009. (See Note 15 – Subsequent Events.)

   Stock Option and Restricted Stock Grant Plan

On January 1, 2006, the Company adopted SFAS No. 123(R), “Share — Based Payment,” using the modified prospective method, which requires measurement of compensation cost for all stock-based awards at fair value on date of grant and recognition of compensation over the service period for awards expected to vest. The fair value of stock options is determined using the Black- Scholes (“BSM”) valuation model, which is consistent with our valuation methodologies previously used for options in footnote disclosures required under SFAS No. 123, “Accounting for Stock-based Compensation,” as amended by SFAS No. 148, “Accounting for Stock-Based Compensation-Transition and Disclosure.” Such fair value is recognized as an expense over the service period, net of estimated forfeitures, using the straight-line method under SFAS No. 123(R). Estimating the number of stock awards that will ultimately vest requires judgment, and to the extent actual forfeitures differ substantially from our current estimates, amounts will be recorded as a cumulative adjustment in the period the estimated number of stock awards are revised. We consider many factors when estimating expected forfeitures, including the types of awards, employee classification and historical experience. Actual forfeitures may differ substantially from our current estimate.

The Company also uses the BSM valuation model to calculate the fair value of stock-based awards. The BSM incorporates various assumptions including volatility, expected life, and interest rates. For options granted the Company uses the BSM option-pricing model and determines: (1) the term by using the simplified “plain-vanilla” method as allowed under SAB No. 110; (2) a historical volatility over a period commensurate with the expected term, with the observation of the volatility on a daily basis; and (3) a risk-free interest rate that was consistent with the expected term of the stock options and based on the U.S. Treasury yield curve in effect at the time of the grant.

 

      The Company did not grant stock options during the three months ended March 31, 2009 and March 31, 2008.

  Stock Option and Restricted Stock Grant Plan

 

      Radio One may issue up to 10,816,198 shares of Class D Common Stock under the Company’s Stock Option and Restricted Stock Grant Plan (“Plan”). At inception of the Plan, the Company’s board of directors authorized 1,408,099 shares of Class A common stock to be issuable under this plan. As of March 31, 2009, Class D shares were available for grant. The options are exercisable in installments determined by the compensation committee of the Company’s board of directors at the time of grant. The options expire as determined by the compensation committee, but no later than ten years from the date of the grant. The Company uses an average life for all option awards. The Company settles stock options upon exercise by issuing stock.

 

      Transactions and other information relating to stock options for the three months ended March 31, 2009 are summarized below:

		Number of Options				Weighted-Average Exercise Price				Weighted-Average Remaining Contractual Term			Aggregate Intrinsic Value
										(In years)
Balance as of December 31, 2008			5,547,000			$	9.64			—			—
Granted			—				—			—			—
Exercised			—				—			—			—
Forfeited, Cancelled			7,000			$	15.80			—			—
Balance as of March 31, 2009			5,540,000			$	9.37				6.47		—
Vested and expected to vest as of March 31, 2009			5,162,000			$	9.76				6.33		—
Unvested as of March 31, 2009			2,098,000			$	2.42				8.91		—
Exercisable as of March 31, 2009			3,442,000			$	14.25				4.76		—

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 three months ended March 31, 2009 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 March 31, 2009. This amount changes based on the fair market value of the Company’s stock. There were no options exercised during the three months ended March 31, 2009. The number of options that vested during the three months ended March 31, 2009 was 6,875.

As of March 31, 2009, approximately $1.6 million of total unrecognized compensation cost related to stock options is expected to be recognized over a weighted-average period of 9.4 months. The stock option weighted-average fair value per share was $4.78 at March 31, 2009.

Transactions and other information relating to restricted stock grants for the three months ended March 31, 2009 are summarized below:

 

		Number of Restricted Shares				Weighted-Average Fair Value at Grant Date
Unvested as of December 31, 2008			628,000			$	2.14
Granted			—			$	—
Vested			52,000			$	4.55
Forfeited, Cancelled, Expired			—			$	—
Unvested as of March 31, 2009			576,000			$	1.92

The restricted stock grants were included in the Company’s outstanding share numbers on the effective date of grant. As of March 31, 2009, $828,000 of total unrecognized compensation cost related to restricted stock grants is expected to be recognized over the next 1.2 years.

 

 

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 11.  SEGMENT INFORMATION:

Given its recent diversification strategy, the Company now has two reportable segments: (i) Radio Broadcasting and (ii) Internet/Publishing. These two 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 and Reach Media results of operations. The Internet/Publishing segment includes the results of our online business, including the operations of CCI since its date of acquisition, and Giant Magazine. Corporate/Eliminations/Other represents financial activity associated with our corporate staff and offices, inter-company activity between the two segments and activity associated with a small film venture.

Operating loss or income represents total revenues less operating expenses, depreciation and amortization, and impairment of long-lived assets. Inter-company revenue earned and expenses charged between segments are recorded at 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 two segments.

Detailed segment data for the three month periods ended March 31, 2009 and 2008 is presented in the following table:

		Three Months Ended March 31,
			2009					2008
			(Unaudited)
							(As Adjusted – See Note 1)
			(In thousands)
Net Revenue:
Radio Broadcasting		$	57,834			$		72,683
Internet/Publishing			3,824					850
Corporate/Eliminations/Other			(987	)				(1,035	)
Consolidated		$	60,671			$		72,498
Operating Expenses (excluding impairment charges and including stock-based compensation):
Radio Broadcasting		$	40,851			$		44,060
Internet/Publishing			6,737					3,280
Corporate/Eliminations/Other			2,188					2,905
Consolidated		$	49,776			$		50,245
Depreciation and Amortization:
Radio Broadcasting		$	3,370			$		3,232
Internet/Publishing			1,593					26
Corporate/Eliminations/Other			292					406
Consolidated		$	5,255			$		3,664
Impairment of Long-Lived Assets:
Radio Broadcasting		$	48,953			$		-
Internet/Publishing			-					-
Corporate/Eliminations/Other			-					-
Consolidated		$	48,953			$		-
Operating loss:
Radio Broadcasting		$	(35,340	)		$		25,392
Internet/Publishing			(4,506	)				(2,455	)
Corporate/Eliminations/Other			(3,467	)				(4,347	)
Consolidated		$	(43,313	)		$		18,590
			As of
			March 31, 2009					December 31, 2008
Total Assets:
Radio Broadcasting		$	1,107,252			$		1,169,925
Internet/Publishing			39,592					43,001
Corporate/Eliminations/Other			(87,280	)				(87,449	)
Consolidated		$	1,059,564			$		1,125,477

 

 12.  CONTRACT TERMINATION:

In connection with the September 2005 termination of the Company’s sales representation agreements with Interep National Radio Sales, Inc. (“Interep”), and its subsequent agreements with Katz Communications, Inc. (“Katz”) making Katz the Company’s sole national sales representative, Katz paid the Company $3.4 million as an inducement to enter into new agreements and paid Interep approximately $5.3 million to satisfy the Company’s termination obligations. The Company is amortizing both over the four-year life of the subsequent Katz agreements as a reduction to selling, general, and administrative expense. For each of the three month periods ended March 31, 2009 and 2008, selling, general, and administrative expense was reduced by $474,000. As of March 31, 2009 and December 31, 2008, an unamorti zed amount of $790,000 and approximately $1.3 million, respectively, is reflected in other current liabilities on the accompanying consolidated balance sheets.

 

13.  RELATED PARTY TRANSACTIONS:

The Company’s CEO and Chairperson own a music company called Music One, Inc. (“Music One”). The Company sometimes engages in promoting the recorded music product of Music One. Based on the cross-promotional value received by the Company, we believe that the provision of such promotion is fair. For the three months ended March 31, 2009 and 2008, Radio One paid $27,000 and $40,000, respectively, to or on behalf of Music One, primarily for market talent event appearances, travel reimbursement and sponsorships. For the three months ended March 31, 2009 and 2008, respectively, the Company provided $0 and $46,000 in advertising services to Music One. As of March 31, 2009, Music One owed Radio One $70,000 for office space and administrative services provided in 2008 and 2007.

 

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14.  CONDENSED CONSOLIDATING FINANCIAL STATEMENTS:

The Company conducts a portion of its business through its subsidiaries. All of the Company’s Subsidiary Guarantors have fully and unconditionally guaranteed the Company’s 87/8% Senior Subordinated Notes due July 2011, the 63/8% Senior Subordinated Notes due February 2013, and the Company’s obligations under the Credit Agreement.

Set forth below are consolidated balance sheets for the Company and the Subsidiary Guarantors as of March 31, 2009 and December 31, 2008, and related consolidated statements of operations and cash flow for each of the three month periods ended March 31, 2009 and 2008. The equity method of accounting has been used by the Company to report its investments in subsidiaries. Separate financial statements for the Subsidiary Guarantors are not presented based on management’s determination that they do not provide additional information that is material to investors.

 

RADIO ONE, INC. AND SUBSIDIARIES

CONSOLIDATING STATEMENT OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31, 2009

		Combined Guarantor Subsidiaries				Radio One, Inc.				Eliminations			Consolidated
		(Unaudited)				(Unaudited)				(Unaudited)			(Unaudited)
		(In thousands)
NET REVENUE		$	26,200			$	34,471			$	—		$	60,671
OPERATING EXPENSES:
Programming and technical			10,102				10,515				—			20,617
Selling, general and administrative			13,164				10,505				—			23,669
Corporate selling, general and administrative			—				5,490				—			5,490
Depreciation and amortization			3,006				2,249				—			5,255
Impairment of long-lived assets			37,424				11,529							48,953
Total operating expenses			63,696				40,288				—			103,984
Operating loss			(37,496	)			(5,817	)			—			(43,313)
INTEREST INCOME			—				18				—			18
INTEREST EXPENSE			2				10,777				—			10,779
GAIN ON RETIREMENT OF DEBT			—				1,221							1,221
EQUITY IN INCOME OF AFFILIATED COMPANY			—				1,150				—			1,150
OTHER INCOME (EXPENSE)			76				(26)				—			50
Loss before provision for income taxes, noncontrolling interests in income of subsidiaries and discontinued operations			(37,422	)			(14,231	)			—			(51,653	)
PROVISION FOR INCOME TAXES			175				6,896				—			7,071
Net loss before equity in income of subsidiaries and discontinued operations			(37,597	)			(21,127	)			—			(58,724	)
EQUITY IN LOSS OF SUBSIDIARIES			—				(37,664	)			37,664			—
Net loss from continuing operations			(37,597	)			(58,791	)			37,664			(58,724	)
(LOSS) INCOME FROM DISCONTINUED OPERATIONS, net of tax			(67	)			225				—			158
Consolidated net loss			(37,664	)			(58,566	)			37,664			(58,566	)
NONCONTROLLING INTERESTS IN INCOME OF SUBSIDIARIES			—				871				—			871
Net loss attributable to common stockholders		$	(37,664	)		$	(59,437	)		$	37,664		$	(59,437	)

 

The accompanying notes are an integral part of this consolidating financial statement.

 

 

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 RADIO ONE, INC. AND SUBSIDIARIES

 CONSOLIDATING STATEMENT OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31, 2008

		Combined Guarantor Subsidiaries				Radio One, Inc.			Eliminations			Consolidated
		(Unaudited)				(Unaudited)			(Unaudited)			(Unaudited)
		(In thousands)
NET REVENUE		$	31,966			$	40,532		$	—		$	72,498
OPERATING EXPENSES:
Programming and technical			8,349				10,716			—			19,065
Selling, general and administrative			13,224				11,425			—			24,649
Corporate selling, general and administrative			—				6,530			—			6,530
Depreciation and amortization			1,453				2,211			—			3,664
Total operating expenses			23,026				30,882			—			53,908
Operating income			8,940				9,650			—			18,590
INTEREST INCOME			—				201			—			201
INTEREST EXPENSE			—				17,259			—			17,259
EQUITY IN LOSS OF AFFILIATED COMPANY			—				2,829			—			2,829
OTHER EXPENSE, net			—				11			—			11
Income (Loss) before provision for income taxes, noncontrolling interests in income of subsidiaries and income (loss) from discontinued operations			8,940				(10,248	)		—			(1,308	)
PROVISION FOR INCOME TAXES			6,008				2,890			—			8,898
Net income (loss) before equity in income of subsidiaries and income (loss) from discontinued operations			2,932				(13,138	)		—			(10,206	)
EQUITY IN INCOME OF SUBSIDIARIES			—				3,075			(3,075	)		—
Net income (loss) from continuing operations			2,932				(10,063	)		(3,075	)		(10,206	)
INCOME (LOSS) FROM DISCONTINUED OPERATIONS, net of tax			143				(7,964	)		—			(7,821	)
Consolidated net income (loss)			3,075				(18,027	)		(3,075	)		(18,027	)
NONCONTROLLING INTERESTS IN INCOME OF SUBSIDIARIES			—				823			—			823
Net income (loss) attributable to common stockholders		$	3,075			$	(18,850	)	$	(3,075	)	$	(18,850	)

 

The accompanying notes are an integral part of this consolidating financial statement.

 

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RADIO ONE, INC. AND SUBSIDIARIES

CONSOLIDATING BALANCE SHEET

AS OF MARCH 31, 2009

		Combined Guarantor Subsidiaries				Radio One, Inc.				Eliminations				Consolidated
		(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)
		(As Restated - See Note 2)
		(In thousands)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	290			$	20,012			$	—			$	20,302
Trade accounts receivable, net of allowance for doubtful accounts			20,666				19,906				—				40,572
Prepaid expenses and other current assets			2,179				2,253				—				4,432
Deferred tax assets			—				108				—				108
Current assets from discontinued operations			187				140				—				327
Total current assets			23,322				42,419				—				65,741
PROPERTY AND EQUIPMENT, net			26,615				19,501				—				46,116
INTANGIBLE ASSETS, net			588,210				305,116				—				893,326
INVESTMENT IN SUBSIDIARIES			—				620,257				(620,257	)			—
INVESTMENT IN AFFILIATED COMPANY			—				49,420				—				49,420
OTHER ASSETS			326				4,635				—				4,961
Total assets		$	638,473			$	1,041,348			$	(620,257	)		$	1,059,564
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable		$	1,510			$	1,570			$	—			$	3,080
Accrued interest			—				4,241				—				4,241
Accrued compensation and related benefits			3,697				6,638				—				10,335
Income taxes payable			—				1,448								1,448
Other current liabilities			5,073				4,969				—				10,042
Current portion of long-term debt			57				26,461				—				26,518
Current liabilities from discontinued operations			30				147				—				177
Total current liabilities			10,367				45,474				—				55,841
LONG-TERM DEBT, net of current portion			—				650,680				—				650,680
OTHER LONG-TERM LIABILITIES			1,608				8,869				---				10,477
DEFERRED INCOME TAX LIABILITIES			6,241				85,721				—				91,962
Total liabilities			18,216				790,744				—				808,960
REDEEMABLE NONCONTROLLING INTERESTS			—				52,693				—				52,693
STOCKHOLDERS’ EQUITY:
Common stock			—				65				—				65
Accumulated other comprehensive loss			—				(2,926	)			—				(2,926	)
Additional paid-in capital			289,373				977,734				(289,373	)			977,734
Retained earnings (accumulated deficit)			330,884				(776,962	)			(330,884	)			(776,962	)
Total stockholders’ equity			620,257				197,911				(620,257	)			197,911
Total liabilities, redeemable noncontrolling interests and stockholders' equity		$	638,473			$	1,041,348			$	(620,257	)		$	1,059,564

 

The accompanying notes are an integral part of this consolidating financial statement.

 

 

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RADIO ONE, INC. AND SUBSIDIARIES
CONSOLIDATING BALANCE SHEETS
AS OF DECEMBER 31, 2008
		Combined
		Guarantor				Radio One,
		Subsidiaries				Inc.				Eliminations				Consolidated
		(As Restated - See Note 2)
		(In thousands)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	2,601			$	19,688			$	-			$	22,289
Trade accounts receivable, net of allowance for doubtful  accounts			25,930				24,007				-				49,937
Prepaid expenses and other current assets			1,941				3,619				-				5,560
Deferred tax assets			-				108				-				108
Current assets from discontinued operations			246				57				-				303
Total current assets			30,718				47,479				-				78,197
PROPERTY AND EQUIPMENT, net			28,161				20,441				-				48,602
INTANGIBLE ASSETS, net			626,725				318,244				-				944,969
INVESTMENT IN SUBSIDIARIES			-				669,308				(669,308	)			-
INVESTMENT IN AFFILIATED COMPANY			-				47,852				-				47,852
OTHER ASSETS			413				5,384				-				5,797
NON-CURRENT ASSESTS FROM DISCONTINUED OPERATIONS			60				-				-				60
Total assets		$	686,077			$	1,108,708			$	(669,308	)		$	1,125,477
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable		$	1,882			$	1,809			$	-			$	3,691
Accrued interest			-				10,082				-				10,082
Accrued compensation and related benefits			3,042				7,492				-				10,534
Income taxes payable			-				30				-				30
Other current liabilities			5,364				7,113				-				12,477
Current portion of long-term debt			210				43,597				-				43,807
Current liabilities from discontinued operations			30				552				-				582
Total current liabilities			10,528				70,675				-				81,203
LONG-TERM DEBT, net of current portion			-				631,555				-				631,555
OTHER LONG-TERM LIABILITIES			-				11,008				-				11,008
DEFERRED TAX LIABILITIES			6,241				79,995				-				86,236
Total liabilities			16,769				793,233				-				810,002
REDEEMABLE NONCONTROLLING INTERESTS			-				43,423				-				43,423
STOCKHOLDERS’ EQUITY:
Common stock			-				79				-				79
Accumulated other comprehensive loss			-				(2,981	)			-				(2,981	)
Additional paid-in capital			301,002				992,479				(301,002	)			992,479
Retained earnings (accumulated deficit)			368,306				(717,525	)			(368,306	)			(717,525	)
Total stockholders’ equity			669,308				272,052				(669,308	)			272,052
Total liabilities, redeemable noncontrolling interests and stockholders' equity		$	686,077			$	1,108,708			$	(669,308	)		$	1,125,477

  

The accompanying notes are an integral part of this consolidating financial statement.

 

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RADIO ONE, INC. AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2009
		Combined
		Guarantor
		Subsidiaries				Radio One, Inc.				Eliminations			Consolidated
		(Unaudited)				(Unaudited)				(Unaudited)			(Unaudited)
		(In thousands)
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES:
Net loss attributable to common stockholders		$	(37,664	)		$	(59,437	)		$	37,664		$	(59,437	)
Noncontrolling interests in income of subsidiaries			—				871				—			871
Consolidated net loss			(37,664	)			(58,566	)			37,664			(58,566	)
Adjustments to reconcile consolidated net loss to net cash from operating activities:
Depreciation and amortization			3,006				2,249				—			5,255
Amortization of debt financing costs			—				602				—			602
Deferred income taxes			—				5,726				—			5,726
Impairment of long-lived assets			37,424				11,529				—			48,953
Equity in income of affiliated company			—				(1,150	)			—			(1,150	)
Stock-based compensation and other non-cash compensation			—				483				—			483
Gain on retirement of debt			—				(1,221	)			—			(1,221	)
Amortization of contract inducement and termination fee			(240	)			(234	)			—			(474	)
Effect of change in operating assets and liabilities, net of assets acquired:
Trade accounts receivable, net			5,264				4,101				—			9,365
Prepaid expenses and other current assets			(238	)			1,366				—			1,128
Other assets			86				751				—			837
Due to corporate/from subsidiaries			(8,948	)			8,948				—			—
Accounts payable			(372	)			(239	)			—			(611	)
Accrued interest			—				(5,841	)			—			(5,841	)
Accrued compensation and related benefits			655				(854	)			—			(199	)
Income taxes payable			—				1,418				—			1,418
Other liabilities			1,317				(4,283	)			—			(2,966	)
Net cash flows provided from operating activities from discontinued operations			—				247				—			247
Net cash flows provided from (used in) operating activities			290				(34,968	)			37,664			2,986
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment			—				(1,148	)			—			(1,148	)
Investment in subsidiaries			—				37,664				(37,664	)		—
Purchase of other intangible assets			—				(39	)			—			(39	)
Net cash flows provided from investing activities			—				36,477				(37,664	)		(1,187	)
CASH FLOWS USED IN FINANCING ACTIVITIES:			—
Repayment of other debt			—				(153	)			—			(153	)
Repurchase of senior subordinated notes			—				(1,220	)			—			(1,220	)
Repayment of credit facility			—				(75,570	)			—			(75,570	)
Proceeds from credit facility			—				80,000				—			80,000
Repurchase of common stock			—				(6,843	)			—			(6,843	)
Net cash flows used in financing activities			—				(3,786	)			—			(3,786	)
INCREASE IN CASH AND CASH EQUIVALENTS			290				(2,277	)			—			(1,987	)
CASH AND CASH EQUIVALENTS, beginning of period			2,601				19,688				—			22,289
CASH AND CASH EQUIVALENTS, end of period		$	2,891			$	17,411			$	—		$	20,302
The accompanying notes are an integral part of these consolidated financial statements.

 

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RADIO ONE, INC. AND SUBSIDIARIES

 CONSOLIDATING STATEMENT OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2008

		Combined Guarantor Subsidiaries				Radio One, Inc.				Eliminations			Consolidated
		(Unaudited)				(Unaudited)				(Unaudited)			(Unaudited)
		(As Adjusted – See Note 1)
		(In thousands)
CASH FLOWS USED IN OPERATING ACTIVITIES:
Net income (loss) attributable to common stockholders		$	3,075			$	(18,850	)		$	(3,075	)	$	(18,850	)
Noncontrolling interests in income of subsidiaries			—				823				—			823
Consolidated net income (loss)			3,075				(18,027	)			(3,075	)		(18,027	)
Adjustments to reconcile net income (loss) to net cash from operating activities:
Depreciation and amortization			1,453				2,211				—			3,664
Amortization of debt financing costs			—				689				—			689
Deferred income taxes			—				8,997				—			8,997
Equity in net loss of affiliated company			—				2,829				—			2,829
Stock-based compensation and other compensation			148				220				—			368
Amortization of contract inducement and termination fee			(224	)			(291	)			—			(515	)
Change in interest due on stock subscriptions receivable			—				(5	)			—			(5	)
Effect of change in operating assets and liabilities, net of assets acquired:
Trade accounts receivable			533				2,870				—			3,403
Prepaid expenses and other current assets			431				703				—			1,134
Other assets			—				(976	)			—			(976	)
Due to corporate/from subsidiaries			(3,386	)			3,386				—			—
Accounts payable			(715	)			(913	)			—			(1,628	)
Accrued interest			—				(9,986	)			—			(9,986	)
Accrued compensation and related benefits			512				(1,745	)			—			(1,233	)
Income taxes payable			—				716				—			716
Other liabilities			2,139				(2,942	)			—			(803	)
Net cash from (used in) from operating activities of discontinued operations			(4,721	)			10,488				—			5,767
Net cash flows used in operating activities			(755	)			(1,776	)			(3,075	)		(5,606	)
CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES:
Purchase of property and equipment			—				(3,270	)			—			(3,270	)
Equity investments			—				(997	)			—			(997	)
Investment in subsidiaries			—				(3,075	)			3,075			—
Purchase of other intangible assets			—				(221	)			—			(221	)
Deposits for station equipment and purchases and other assets			—				(517	)			—			(517	)
Net cash from investing activities of discontinued operations			3				(3	)			—			—
Net cash flows from (used in) investing activities			3				(8,083	)			3,075			(5,005	)
CASH FLOWS USED IN FINANCING ACTIVITIES:
Repayment of other debt			—				(490	)			—			(490	)
Proceeds from credit facility			—				10,000				—			10,000
Repayment of credit facility			—				(11,500	)			—			(11,500	)
Payment of dividend to noncontrolling interest shareholders			—				(3,916	)			—			(3,916	)
Net cash flows used in financing activities			—				(5,906	)			—			(5,906	)
DECREASE IN CASH AND CASH EQUIVALENTS			(752	)			(15,765	)			—			(16,517	)
CASH AND CASH EQUIVALENTS, beginning of period			822				23,425				—			24,247
CASH AND CASH EQUIVALENTS, end of period		$	70			$	7,660			$	—		$	7,730

 

The accompanying notes are an integral part of this consolidating financial statement.

15.  SUBSEQUENT EVENTS:

 

      During April 2009, the Company repurchased 7,993 shares of Class A common stock in the amount of $6,844 at an average price of $0.86 per share and 3,852,470 shares of Class D common stock in the amount of approximately $1.9 million at an average price of $0.51 per share. As of April 30, 2009, the Company had approximately $51.2 million in capacity available under its share repurchase program.

 

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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/A for the year ended December 31, 2008.

Introduction

 

      Revenue

 

      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.

 

      During the three months ended March 31, 2009, approximately 38.3% of our net revenue was generated from local advertising and approximately 54.9% was generated from national advertising, including network advertising. In comparison, during the three months ended March 31, 2008, approximately 36.7% of our net revenue was generated from local advertising and approximately 58.9% was generated from national advertising, including network advertising. National advertising also includes advertising revenue generated from our internet and publishing segments. The balance of revenue was generated from tower rental income, ticket sales and revenue related to our sponsored events, management fees, magazine subscriptions, newsstand revenue and other revenue.

    

      In the broadcasting industry, radio 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 monitor the use of trade and barter agreements.

 

      CCI, which the Company acquired in April 2008, currently generates the majority of the Company’s internet revenue, and derives such revenue principally from advertising services, including diversity recruiting. 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 or leads are reported, or ratably over the contract period, where applicable. CCI has a diversity recruiting agreement with Monster, Inc. (“Monster”). Under the agreement, Monster posts job listings and advertising on CCI websites and CCI earns revenue for displaying the images on its websites. This a greement expires in December 2009.

 

      In December 2006, the Company acquired certain net assets (“Giant Magazine”) of Giant Magazine, LLC. Giant Magazine derives revenue from the sale of advertising, as well as newsstand and subscription revenue generated from sales of the magazine.

    

      In February 2005, we acquired 51% of the common stock of Reach Media, Inc. (“Reach Media”). A substantial portion of Reach Media’s revenue is generated from a sales representation agreement with a third party radio company. Pursuant to a multi-year agreement, revenue is received monthly in exchange for the sale of advertising time on the nationally syndicated Tom Joyner Morning Show, which is currently aired on 107 affiliated stations. The annual amount of revenue is based on a contractual amount determined based on number of affiliates, demographic audience and ratings.  The agreement provides for a potential to earn additional amounts if certain revenue goals are met. The agreement also provides for sales representation rights related to Reach Media’s ev ents. Additional revenue is generated by Reach Media from this and other customers through special events, sponsorships, its internet business and other related activities. The agreement expires December 31, 2009.

 

      Expenses

 

      Our significant broadcast 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 and (vi) music license royalty fees. We strive to control these expenses by centralizing certain functions such as finance, accounting, legal, human resources and management information systems and the overall 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.

 

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

 

      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 publishing business include salaries, commissions, and costs associated with printing, production and circulation of magazine issues.

 

      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 or, in the case of Giant Magazine, the month in which a particular issue is available for sale. 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 CCI as impressions are delivered, as “click throughs” are reported or ra tably over contract periods, where applicable.

 

      (b) Station operating income:  Net (loss) income before depreciation and amortization, income taxes, interest income, interest expense, equity in gain or loss of affiliated company, minority interests in income of subsidiaries, gain on retirement of debt, other expense, corporate expenses, stock-based compensation expenses, impairment of long-lived assets and gain or loss from discontinued operations, net of tax, is commonly referred to in our industry as station operating income. Station operating income is not a measure of financial performance under generally accepted accounting principles. Nevertheless, we believe station operating income is often a useful measure of a broadcasting company’s operating performance and is a significant basis used by our managemen t to measure the operating performance of our stations within the various markets. Station operating income provides helpful information about our results of operations, apart from expenses associated with our physical plant, income taxes, investments, impairment charges, debt financings and retirements, corporate overhead, stock-based compensation and discontinued operations. Station operating income is frequently used as a basis for comparing businesses in our industry, although our measure of station operating income may not be comparable to similarly titled measures of other companies. Station operating income does not represent operating income or loss or cash flows from operating activities, as those terms are defined under generally accepted accounting principles, and should not be considered as an alternative to those measurements as an indicator of our performance.

 

      (c) Station operating income margin:  Station operating income margin represents station operating income as a percentage of net revenue. Station operating income margin is not a measure of financial performance under generally accepted accounting principles. Nevertheless, we believe that station 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.

 

 

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     Summary of Performance

 

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

 

 

	Three Months Ended March 31,
	2009				2008
					(As Adjusted – See Note 1 of our Consolidated Financial Statements)
	(In thousands, except margin data)
Net revenue	$	60,671			$	72,498
Station operating income		16,511				28,989
Station operating income margin		27.2	%			40.0	%
Net loss attributable to common stockholders	$	(59,437	)		$	(18,850	)

 

     The reconciliation of net loss to station operating income is as follows:

		Three Months Ended March 31,
		2009				2008
					(As Adjusted – See Note 1 of our Consolidated Financial Statements)
		(In thousands)
Net loss attributable to common stockholders		$	(59,437	)		$	(18,850	)
Add back non-station operating income items included in net loss:
Interest income			(18	)			(201	)
Interest expense			10,779				17,259
Provision for income taxes			7,071				8,898
Corporate selling, general and administrative, excluding stock-based compensation			5,133				6,407
Stock-based compensation			483				328
Gain on retirement of debt			(1,221	)			—
Equity in (income) loss of affiliated company			(1,150	)			2,829
Other (income) expense, net			(50	)			11
Depreciation and amortization			5,255				3,664
Noncontrolling interests in income of subsidiaries			871				823
Impairment of long-lived assets			48,953				—
(Income) loss from discontinued operations, net of tax			(158	)			7,821
Station operating income		$	16,511			$	28,989

 

 

 

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RADIO ONE, INC. AND SUBSIDIARIES

RESULTS OF OPERATIONS

 

     The following table summarizes our historical consolidated results of operations:

Three Months Ended March 31, 2009 Compared to Three Months Ended March 31, 2008 (In thousands)

	Three Months Ended March 31,
	2009			2008 (1) (2)				Increase/(Decrease)
	(Unaudited)
Statements of Operations:
Net revenue	$	60,671		$	72,498			$	(11,827	)	(16.3	)%
Operating expenses:
Programming and technical, excluding stock-based compensation		20,586			19,032				1,554		8.2
Selling, general and administrative, excluding stock-based compensation		23,574			24,477				(903	)	(3.7	)
Corporate selling, general and administrative, excluding stock-based compensation		5,133			6,407				(1,274	)	(19.9	)
Stock-based compensation		483			328				155		47.3
Depreciation and amortization		5,255			3,664				1,591		43.4
Impairment of long-lived assets		48,953			—				48,953		—
Total operating expenses		103,984			53,908				50,076		92.9
Operating (loss) income		(43,313	)		18,590				(61,903	)	(333.0	)
Interest income		18			201				(183	)	(91.0	)
Interest expense		10,779			17,259				(6,480	)	(37.5	)
Gain on retirement of debt		1,221			—				1,221		—
Equity in income (loss) of affiliated company		1,150			(2,829	)			3,979		140.7
Other income (expense), net		50			(11	)			61		554.5
Loss before provision for income taxes, noncontrolling interests in income of subsidiaries and discontinued operations		(51,653	)		(1,308	)			(50,345	)	(3,849.0	)
Provision for income taxes		7,071			8,898				(1,827	)	(20.5	)
Net loss from continuing operations		(58,724	)		(10,206	)			(48,518	)	(475.4	)
Income (loss) from discontinued operations, net of tax		158			(7,821	)			(7,979	)	(102.0	)
Consolidated net loss		(58,566	)		(18,027	)			(40,539	)	(224.9	)
Noncontrolling interests in income of subsidiaries		871			823				48		5.8
Net loss attributable to common stock holders	$	(59,437	)	$	(18,850	)		$	(40,587	)	(215.3	)%

 

(1)	Certain reclassifications associated with accounting for discontinued operations have been made to the accompanying prior period financial statements to conform to the current period presentation.  These reclassifications had no effect on previously reported net income or loss, or any other previously reported statements of operations, balance sheet or cash flow amounts.
(2)	During the second quarter of 2008, Radio One was advised that prior period financial statements of TV One, LLC (“TV One”), an affiliate accounted for under the equity method, had been restated to correct certain errors that affected the reported amount of members’ equity and liabilities.  These restatement adjustments had a corresponding effect on the Company’s share of the earnings of TV One reported in prior periods.  We have adjusted certain previously reported amounts in the accompanying 2008 interim consolidated financial statements.

 

 Net revenue

Three Months Ended March 31,			Increase/(Decrease)
2009	2008
$60,671	$72,498		$(11,827)	(16.3)%

During the three months ended March 31, 2009, we recognized approximately $60.7 million in net revenue compared to approximately $72.5 million during the same period in 2008. These amounts are net of agency and outside sales representative commissions, which were approximately $5.5 million and $7.9 million during the three months ended March 31, 2009 and 2008, respectively. Our net revenue decline is primarily attributable to the prolonged economic downturn, which has weakened demand for advertising in general. Declines in net revenue in our radio business more than offset an increase in net revenue of approximately $3.3 million generated by CCI, an online social networking company, which we acquired in April 2008. For our radio business, based on reports prepared by the independent accounting firm Miller, Kaplan, Arase & Co., LLP , the markets in which we operate declined 24.2% in total revenues, 27.1% in national revenues and 25.7% in local revenues for the three months ended March 31, 2009. Except for Boston and St. Louis, we experienced net revenue declines in all our markets, most notably our largest markets, which include Atlanta, Baltimore, Houston and Washington, DC. While Reach Media’s net revenue remained flat for the quarter, we experienced a considerable growth in net revenue associated with our syndicated programs. Excluding the approximately $3.3 million generated by CCI, net revenue declined 20.8% for the three months ended March 31, 2009, compared to the same period in 2008.

 

 

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Operating expenses

Programming and technical, excluding stock-based compensation

Three Months Ended March 31,			Increase/(Decrease)
2009	2008
$20,586	$19,032		$1,554	8.2%

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 also include expenses associated with our programming research activities and music royalties. Expenses associated with the printing and publication of Giant Magazine issues are also included in programming and technical. For our internet business, 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. Increased programmi ng and technical expenses were primarily due to approximately $2.0 million in spending by CCI, which we acquired in April 2008, and $169,000 more spent for our broader internet initiative. Additional spending related to our radio business for on-air talent and music royalties were offset in part from salary expense and tower facilities savings, along with less printing and publication costs for Giant Magazine. Excluding the approximately $2.0 in spending for CCI, programming and technical expenses decreased 2.1% for the three months ended March 31, 2009, compared to the same period in 2008.

Selling, general and administrative, excluding stock-based compensation

Three Months Ended March 31,			Increase/(Decrease)
2009	2008
$23,574	$24,477		$(903)	(3.7)%

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 stations and visitors’ data for our websites are also included in selling, general and administrative expenses. Selling, general and administrative expenses also include membership traffic acquisition costs for our internet business. In addition, selling, general and administrative expenses also include expenses related to the advertising traffic (scheduling and insertion) functions. Our radio business drove approximately $2.8 million in reduced selling, general and administrative expenses, primarily in compensation, spec ifically salaries, commissions, national representative fees and talent fees. As a result of our expense reduction efforts, we also spent less in special events expenses, travel and entertainment and promotional activities. These savings were offset in part by spending of approximately $2.0 million for CCI, which we acquired in April 2008. Excluding the approximately $2.0 million spent by CCI, selling, general and administrative expenses decreased 11.9% for the three months ended March 31, 2009, compared to the same period in 2008.

 

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

Three Months Ended March 31,			Increase/(Decrease)
2009	2008
$5,133	$6,407		$(1,274)	(19.9)%

Corporate selling, general and administrative expenses consist of expenses associated with maintaining our corporate headquarters and facilities, including personnel. Decreased corporate selling, general and administrative expenses were primarily due to less compensation expense, mainly salaries, severance, bonuses and associated payroll taxes. In addition, our expense reduction efforts resulted in savings in research, legal and professional, contractors, consultants and travel and entertainment spending.

Stock-based compensation

Three Months Ended March 31,			Increase/(Decrease)
2009	2008
$483	$328		$155	47.3%

Stock-based compensation consists of expenses associated with our January 1, 2006 adoption of Statement of Financial Accounting Standards (“SFAS”) No. 123(R), “Share-Based Payment.”  SFAS No. 123(R) eliminated accounting for share-based payments based on Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees,” and requires measurement of compensation cost for all stock-based awards at fair value on date of grant and recognition of compensation over the service period for awards expected to vest. The increase in stock-based compensation was primarily due to additional stock options and restricted stock a wards associated with the March and April 2008 employment agreements for the Chief Executive Officer, the Founder and Chairperson and the Chief Financial Officer. The additional expense was offset in part due to the decline in the fair value of options and grants given the decline in the Company’s stock price, cancellations, forfeitures and the completion of the vesting period for certain stock option grants.

 

Depreciation and amortization

Three Months Ended March 31,			Increase/(Decrease)
2009	2008
$5,255	$3,664		$1,591	43.4%

The increase in depreciation and amortization expense was due primarily to the purchase price accounting for intangible assets acquired as part of the April 2008 purchase of CCI, which accounted for approximately $1.0 million of the increase. The intangible assets acquired include advertising agreements, brand names, non-compete agreements and a favorable office lease. An additional $610,000 of depreciation and amortization expense is attributable to the depreciation of technical assets for our other internet businesses.

Impairment of long-lived assets

Three Months Ended March 31,			Increase/(Decrease)
2009	2008
$48,953	$ -		$48,953	- %

The increase in the impairment of long-lived assets reflects a non-cash charge recorded for the impairment of radio broadcasting licenses in 11 of our 16 markets, namely, Charlotte, Cincinnati, Cleveland, Columbus, Dallas, Houston, Indianapolis, Philadelphia, Raleigh-Durham, Richmond and St. Louis. The impairment charges are driven by the prolonged economic downturn and further deterioration in the 2009 radio industry outlook, which adversely impacted revenue, profitability and terminal values. As a result, we lowered our financial projections since our 2008 annual and year end fair value assessments, thus causing this quarter’s impairment.

 

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Interest income

Three Months Ended March 31,			Increase/(Decrease)
2009	2008
$18	$201		$(183)	(91.0)%

The decrease in interest income was due primarily to lower cash balances, cash equivalents and a decline in interest rates.

 

Interest expense

Three Months Ended March 31,			Increase/(Decrease)
2009	2008
$10,779	$17,259		$(6,480)	(37.5)%

The decrease in interest expense was due primarily to interest savings from early redemptions of the Company’s 87/8% Senior Subordinated Notes due July 2011, and to a lesser extent, pay downs of outstanding debt on the Company’s credit facility. Interest savings were also due to the absence of fees associated with the operation of WPRS-FM pursuant to a local management agreement (“LMA”). LMA fees are classified as interest expense, and we purchased WPRS-FM in June 2008 for approximately $38.0 million in cash.

Gain on retirement of debt

Three Months Ended March 31,			Increase/(Decrease)
2009	2008
$1,221	$ -		$1,221	- %

The gain on retirement of debt for the three months ended March 31, 2009 was due to the early redemption of approximately $2.4 million of the Company’s previously outstanding 87/8% Senior Subordinated Notes due July 2011 at an average discount of 50.0%. An amount of approximately $101.5 million remained outstanding as of March 31, 2009.

Equity in gain (loss) of affiliated company

Three Months Ended March 31,			Increase/(Decrease)
2009	2008
$1,150	$(2,829)		$3,979	140.7%

 

Equity in gain or loss of affiliated company primarily reflects our estimated equity in the net income or loss of TV One. The gain or loss was due primarily to our share of TV One’s net income or loss relative to TV One’s current capital structure and the Company’s ownership levels in the equity securities of TV One that are currently absorbing its net income or losses. An adjustment was made to equity in loss of affiliated company for the three months ended March 31, 2008 to correct for a change in TV One’s capital structure. Pursuant to Staff Accounting Bulletin (“SAB”) 99, “Materiality” and SAB 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misst atements in Current Year Financial Statements,” we increased the previously reported equity in loss of affiliated company for the three months ended March 31, 2008 by $544,000.

Provision for income taxes

Three Months Ended March 31,			Increase/(Decrease)
2009	2008
$7,071	$8,898		$(1,827)	(20.5)%

For the three months ended March 31, 2009, the provision for income taxes decreased to approximately $7.1 million from approximately $8.9 million for the same period in 2008. The tax expense for the quarter ended March 31, 2009 was less than that for same period in 2008 due to a reduction in the tax expense related to indefinite-lived asset amortization and impairment charges for these assets.  The deferred tax assets (“DTAs”) and related valuation allowance were impacted by additional indefinite-lived assets amortization and impairment charges recorded in the quarter. Except for DTAs in our historically profitable filing jurisdictions, a full valuation allowance was recorded in both of the periods ended March 31, 2009 and 2008, as it was determined that more likely than not, the DTAs would not be realized. As su ch, what would have otherwise been a benefit for income taxes for the period ended March 31, 2009, was more than offset by the valuation allowance recorded. The income tax provision recorded, including the valuation allowance, resulted in a blended effective tax rate of (13.7%) for the three months ended March 31, 2009. This rate results from the combining of an effective quarterly tax rate for Radio One, Inc. of (12.0%), which has a full valuation allowance for most of its DTAs, separate and apart from an effective rate for Reach Media of 35.2%, which does not have a valuation allowance.

    Income (Loss) from discontinued operations, net of tax

Three Months Ended March 31,			Increase/(Decrease)
2009	2008
$158	$(7,821)		$(7,979)	(102.0)%

  

 The income from discontinued operations, net of tax, for the three months ended March 31, 2009 resulted primarily from activities associated with Los Angeles station KRBV-FM, which was sold in March 2008 for approximately $137.5 million. The loss from discontinued operations, net of tax for the three months ended March 31, 2008 was also attributable to the KRBV-FM sale, which included an approximate $5.1 million impairment charge, and approximately $1.8 million in other one-time sale related expenses. Discontinued operations, net of tax, also includes a tax provision in the amount of $89,000 and $830,000 for the three months ended March 31, 2009 and 2008, respectively.

 

 Noncontrolling interests in income of subsidiaries

Three Months Ended March 31,			Increase/(Decrease)
2009	2008
$871	$823		$48	5.8%

 The increase in noncontrolling interests in income of subsidiaries is due primarily to an increase in Reach Media’s net income for the three months ended March 31, 2009, compared to the same period in 2008.

 

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LIQUIDITY AND CAPITAL RESOURCES

 

      Our primary source of liquidity is cash provided by operations and, to the extent necessary, borrowings available under our credit facilities and other debt or equity financing.

 

      In June 2005, the Company entered into a credit agreement with a syndicate of banks (the “Credit Agreement”). Simultaneous with entering into the Credit Agreement, the Company borrowed $437.5 million to retire all outstanding obligations under its previous credit agreement. The Credit Agreement was amended in April 2006 and September 2007 to modify certain financial covenants and other provisions. The Credit Agreement expires the earlier of (a) six months prior to the scheduled maturity date of the 87/8% Senior Subordinated Notes due July 2011 (unless the 87/8% Senior Subordinated Notes have been repurchased or refinanced prior to such date) or (b) June 30, 2012. The total amount available under the Credit Agreement is $800.0 million, consisting of a $500.0 million revolving facility and a $300.0 million term loan facility. Borrowings under the credit facilities are subject to compliance with certain provisions including but not limited to financial covenants. The Company may use proceeds from the credit facilities for working capital, capital expenditures made in the ordinary course of business, its common stock repurchase program, permitted direct and indirect investments and other lawful corporate purposes. The Credit Agreement contains affirmative and negative covenants that the Company must comply with, including (a) maintaining an interest coverage ratio of no less than 1.90 to 1.00 from January 1, 2006 to September 13, 2007, and no less than 1.60 to 1.00 from September 14, 2007 to June 30, 2008, and no less than 1.75 to 1.00 from July 1, 2008 to December 31, 2009, and no less than 2.00 to 1.00 from January 1, 2010 to December 31, 2010, and no less than 2.25 to 1.00 from January 1, 2011 and thereafter, (b) maintaining a total leverage ratio of no greater than 7.00 to 1.00 beginning April 1, 2006 to September 13, 2007, and no greater than 7.75 to 1.00 beginning September 14, 2007 to March 31, 2008, and no greater than 7.50 to 1.00 beginning April 1, 2008 to September 30, 2008, and no greater than 7.25 to 1.00 beginning October 1, 2008 to June 30, 2010, and no greater than 6.50 to 1.00 beginning July 1, 2010 to September 30, 2011, and no greater than 6.00 to 1.00 beginning October 1, 2011 and thereafter, (c) maintaining a senior leverage ratio of no greater than 5.00 to 1.00 beginning June 13, 2005 to September 30, 2006, and no greater than 4.50 to 1.00 beginning October 1, 2006 to September 30, 2007, and no greater than 4.00 to 1.00 beginning October 1, 2007 and thereafter, (d) limitations on liens, (e) limitations on the sal e of assets, (f) limitations on the payment of dividends, and (g) limitations on mergers, as well as other customary covenants. The Company was in compliance with all debt covenants as of March 31, 2009. At the date of the filing of this Form 10-Q/A and based on its most recent projections, the Company's management believes it will be in compliance with all debt covenants through March 31, 2010. Based on its fiscal year end 2007 excess cash flow calculation, the Company made a debt principal prepayment of approximately $6.0 million in May 2008. For the year ended December 31, 2008 no excess cash calculation was required and therefore, no payment was required. In March 2009 the Company made a prepayment of $70.0 million on the term loan facility with $70.0 million in loan proceeds from the revolving facility.

 

      During the three months ended March 31, 2009, we borrowed $80.0 million from our credit facility to fund the $70.0 million prepayment of the term loan, the repurchase of 87/8% Senior Subordinated Notes due July 2011 and the repurchase of Company stock. During the three months ended March 31, 2008, we borrowed approximately $10.0 million from our credit facility and repaid approximately $11.5 million.

 

      As of March 31, 2009, we had approximately $213.5 million of borrowing capacity. Taking into consideration the financial covenants under the Credit Agreement, approximately $13.0 million of that amount is available for borrowing. The amount available for borrowing could increase to the extent the funds are used to repurchase the 87/8% Senior Subordinated Notes. Both the term loan and the revolving facilities bear interest, at our option, at a rate equal to either (i) the London Interbank Offered Rate (“LIBOR”) plus a spread that ranges from 0.63% to 2.25%, or (ii) the prime rate plus a spread of up to 1.25%. The amount of the spread varies depending on ou r leverage ratio. We also pay a commitment fee that varies depending on certain financial covenants and the amount of unused commitment, up to a maximum of 0.375% per annum on the unused commitment of the revolving facility.

 

      The Credit Agreement requires the Company from time to time to protect ourselves from interest rate fluctuations using interest rate hedge agreements. As a result, we have entered into various fixed rate swap agreements designed to mitigate our exposure to higher floating interest rates. These swap agreements require that we pay a fixed rate of interest on the notional amount to a bank and that the bank pays to us a variable rate equal to three-month LIBOR. As of March 31, 2009, we had two swap agreements in place for a total notional amount of $50.0 million, and the periods remaining on these two swap agreements range in duration from 14.5 to 38.5 months.

 

      Our credit exposure under the swap agreements is limited to the cost of replacing an agreement in the event of non-performance by our counter-party; however, we do not anticipate non-performance. All of the swap agreements are tied to the three-month LIBOR, which may fluctuate significantly on a daily basis. The valuation of each swap agreement is affected by the change in the three-month LIBOR and the remaining term of the agreement. Any increase in the three-month LIBOR results in a more favorable valuation, while a decrease results in a less favorable valuation.

 

      The following table summarizes the interest rates in effect with respect to our debt as of March 31, 2009:

Type of Debt		Amount Outstanding				Applicable Interest Rate
		(In millions)
Senior bank term debt (swap matures June 16, 2010)(1)		$	25.0				5.77	%
Senior bank term debt (swap matures June 16, 2012)(1)		$	25.0				5.97	%
Senior bank term debt (subject to variable interest rates)(2)		$	39.1				2.88	%
Senior bank revolving debt (subject to variable interest rates)(3)		$	286.5				2.06	%
87/8% Senior Subordinated Notes (fixed rate)		$	101.5				8.88	%
63/8% Senior Subordinated Notes (fixed rate)		$	200.0				6.38	%

 

(1)	A total of $50.0 million is subject to fixed rate swap agreements that became effective in June 2005. Under our fixed rate swap agreements, we pay a fixed rate plus a spread based on our leverage ratio, as defined in our Credit Agreement. That spread is currently set at 1.5% and is incorporated into the applicable interest rates set forth above.
(2)	Subject to rolling three month LIBOR plus a spread currently at 1.50%; incorporated into the applicable interest rate set forth above.
(3)	Subject to rolling three month and six month LIBOR plus a spread currently at 1.50%; incorporated into the applicable interest rate set forth above.

 

      The indentures governing our senior subordinated notes require that we comply with certain financial covenants limiting our ability to incur additional debt. Such terms also place restrictions on us with respect to the sale of assets, liens, investments, dividends, debt repayments, capital expenditures, transactions with affiliates, consolidation and mergers, and the issuance of equity interests, among other things. Our Credit Agreement also requires compliance with financial tests based on financial position and results of operations, including a leverage ratio, an interest coverage ratio and a fixed charge coverage ratio, all of which could effectively limit our ability to borrow under the Credit Agreement or to otherwise raise funds in the debt market.  The Company was in compliance with all covenants as of March 31, 2009, and as of the date of the filing of this Form 10-Q/A, and based on current projections, the Company believes it will be in compliance with all covenants through March 31, 2010.

 

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      The following table provides a comparison of our statements of cash flows for the three months ended March 31, 2009 and 2008:

		2008				2007
		(In thousands)
Net cash flows provided from (used in) from operating activities		$	2,986			$	(5,606	)
Net cash flows used in investing activities		$	(1,187	)		$	(5,005	)
Net cash flows used in financing activities		$	(3,786	)		$	(5,906	)

 

      Net cash flows provided from operating activities were approximately $3.0 million for the three months ended March 31, 2009 compared to net cash flows used in operating activities of approximately $5.6 million for the three months ended March 31, 2008. Excluding the non-cash impairment charge of approximately $49.0 million, cash flows from operating activities for the three months ended March 31, 2009 increased from the prior year due primarily to a decrease in the net loss for the period of approximately $8.5 million.

 

      Net cash flows used investing activities were approximately $1.2 million and $5.0 million for the three months ended March 31, 2009 and 2008, respectively. Capital expenditures, including digital tower and transmitter upgrades, and deposits for station equipment and purchases were approximately $1.1 million and $3.2 million for the three months ended March 31, 2009 and 2008, respectively.

 

      Net cash flows used in financing activities were approximately $3.8 million and $5.9 million for the three months ended March 31, 2009 and 2008, respectively. During the three months ended March 31, 2009 and 2008, respectively, we borrowed $80.0 million and approximately $10.0 million from our credit facility and repaid approximately $75.6 million and $11.5 million in outstanding debt.  During the three month ended March 31, 2009 we repurchased approximately $2.4 million of our 87/8% Senior Subordinated Notes due July 2011 and approximately $6.8 million of our Class A and Class D common stock. We paid approximately $3.9 million in dividends t o Reach Media’s noncontrolling interest shareholders for the three months ended March 31, 2008. 

 

      From time to time we consider opportunities to acquire additional radio stations, primarily in the top 50 African-American markets, and to make strategic acquisitions, investments and divestitures. In June 2008, the Company purchased the assets of WPRS-FM, a radio station located in the Washington, DC metropolitan area for approximately $38.0 million.  Since April 2007 and up until closing, the station had been operated under an LMA, and, hence, the results of its operations had been included in the Company’s consolidated financial statements.  The station was consolidated with the Company’s existing Washington, DC operations in April 2007.  This purchase was funded from borrowings under our credit facilities of $35.0 million. In April 2008, we acquired CCI, an online social netwo rking company, for $38.0 million in cash, and we borrowed $34.0 million from our credit facility to close this transaction. Other than our agreement with an affiliate of Comcast Corporation, DIRECTV and other investors to fund TV One (the balance of our commitment was approximately $13.7 million at March 31, 2009) we have no other definitive agreements to acquire radio stations or to make strategic investments. In October 2007, the Company had committed (subject to the completion and execution of requisite legal documentation) to invest in QCP Capital Partners, L.P. (“QCP”). At that time the Company also had agreed to provide an unsecured working capital line of credit to QCP Capital Partners, LLC, the management company for QCP, in the amount of $775,000. As of December 31, 2008, the Company had provided $457,000 under the line of credit. In December 2008, the Company made a determination that there was a substantial likelihood that QCP would not be able to proceed successful ly with its fundraising and, therefore, the Company was unlikely to recover any of the amounts provided to QCP Capital Partners, LLC pursuant to the October 2007 line of credit agreement. As a result, in December 2008, the Company wrote off the full amount outstanding under the line of credit agreement. No further investments in, or loans to, QCP are anticipated to be made in the foreseeable future.

 

      We anticipate that any future acquisitions or strategic investments will be financed through funds generated from operations, cash on hand, draws from our existing credit facilities, equity financings, permitted debt financings, debt financings through unrestricted subsidiaries or a combination of these sources. However, there can be no assurance that financing from any of these sources, if available, will be available on favorable terms.

 

      As of March 31, 2009, we had two standby letters of credit totaling $550,000 in connection with our annual insurance policy renewals. In addition, we had a letter of credit of $295,000 in connection with a contract that we inherited as part of the acquisition of CCI and a $200,000 letter of credit for a sponsored event. Other than a $40,000 reduction to the insurance letters of credit in April 2009, there has been no activity on these standby letters of credit.

 

      Our ability to meet our debt service obligations and reduce our total debt, our ability to refinance the 87/8% Senior Subordinated Notes at or prior to their scheduled maturity date in 2011, and our ability to refinance the 63/8% Senior Subordinated Notes at or prior to their scheduled maturity date in 2013 will depend upon our future performance which, in turn, will be subject to general economic conditions and to financial, business and other factors, including factors bey ond our control. In the next 12 months, our principal liquidity requirements will be for working capital, continued business development, strategic investment opportunities and for general corporate purposes, including capital expenditures.

 

      The Company continually projects its anticipated cash needs, which include its operating needs, capital requirements, the TV One funding commitment and principal and interest payments on its indebtedness. Management’s most recent operating income and cash flow projections considered the current economic crisis, which has reduced advertising demand in general, as well as the limited credit environment.  Management considered the risks that the current economic conditions may have on its liquidity projections, as well as the Company’s ability to meet its debt covenant requirements. If economic conditions deteriorate unexpectedly to an extent that we could not meet our liquidity needs or it appears that noncompliance with debt covenants is likely to result, the Company would implement several remedial measures, which could include further operating cost and capital expenditure reductions, and further de-leveraging actions, which may include repurchases of discounted senior subordinated notes and other debt repayments, subject to our available liquidity to make sure repurchases. If these measures are not successful in maintaining compliance with our debt covenants, the Company would attempt to negotiate for relief through an amendment with its lenders or waivers of covenant noncompliance, which could result in higher interest costs, additional fees and reduced borrowing limits. There is no assurance that the Company would be successful in obtaining relief from its debt covenant requirements in these circumstances. Failure to comply with our debt covenants and a corresponding failure to negotiate a favorable amendment or waivers with the Company’s lenders could result in the acceleration of the maturity of all the Company’s outstanding debt, which would have a material adverse effect on the Company’s business and financial position.

 

      Credit Rating Agencies

 

      On a continuing basis, credit rating agencies such as Moody’s Investor Services (“Moody’s”) and Standard & Poor’s (“S&P”) evaluate our debt.  On March 3, 2009, S&P lowered our corporate credit rating to B- from B and the issue-level rating on our $800.0 million secured credit facility to B- from BB-. While noting that our rating outlook was negative, the ratings downgrade reflects concern over the Company’s ability to maintain compliance with financial covenants due to weak radio advertising demand amid the deepening recession, which S&P expects to persist for all of 2009. On November 3, 2008, Moody’s placed on review the Company and its debt for a possible downgrade. The review was prompted by heightened concerns that the radio broadcast sector will li kely face significant revenue and cash flow deterioration due to the high probability of further deterioration in the U.S. economy and its impact on advertising revenue. On September 10, 2008, Moody’s downgraded our corporate family rating to B2 from B1 and our $800.0 million secured credit facility ($500.0 million revolver, $300.0 million term loan) to Ba3 from Ba2.  In addition, Moody’s downgraded our 87/8% Senior Subordinated Notes and 63/8% Senior Subordinated Notes to Caa1 from B3. While noting that our rating outlook was stable, the ratings downgrade reflected the Company’s operating performance, weaker than previously expected credit metrics and limited borrowing capacity u nder financial covenants.   On February 26, 2008, S&P placed its rating on the Company on credit watch with negative implications.  The credit watch was based on the Company’s narrow margin of covenant compliance as of December 31, 2007 and uncertainty surrounding compliance following impending step-downs in certain covenant ratios. 

 

      Although reductions in our bond ratings may not have an immediate impact on our cost of debt or liquidity, they may impact our future cost of debt and liquidity.  Increased debt levels and/or decreased earnings could result in further downgrades in our credit ratings, which, in turn, could impede our access to the debt markets and/or raise our long-term debt borrowing rates. Our ability to use debt to fund major new acquisitions or new business initiatives could also be limited.

 

 

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CRITICAL ACCOUNTING POLICIES AND ESTIMATES

 

      Our accounting policies are described in Note 1 of the consolidated financial statements in our Annual Report on Form 10-K/A - Organization and Summary of Significant Accounting Policies. 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 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/A for the year ended December 31, 2008, we summarized the policies and estimates that we believe to be most critical in understanding the judgments involved in preparing our financial statements and the uncertainties that could affect our results of operations, financial condition and cash flows. Other than the approximately $49.0 million recorded for impairment charges against radio broadcasting licenses during the three month period ended March 31, 2009, there have been no material changes to our accounting policies or estimates since we filed our Annual Report on Form 10-K/A for the year ended December 31, 2008.

Stock-Based Compensation

 

      The Company accounts for stock-based compensation in accordance with SFAS No. 123(R). Under the provisions of SFAS No. 123(R), stock-based compensation cost is estimated at the grant date based on the award’s fair value as calculated by the Black-Scholes (“BSM”) valuation option-pricing model and is recognized as expense ratably over the requisite service period.  The BSM incorporates various highly subjective assumptions including expected stock price volatility, for which historical data is heavily relied upon, expected life of options granted, forfeiture rates and interest rates. If any of the assumptions used in the BSM model change significantly, stock-based compensation expense may differ materially in the future from that previously recorded.

Goodwill and Radio Broadcasting Licenses

 

      We have made several radio station acquisitions in the past for which a significant portion of the purchase price was allocated to goodwill and radio broadcasting licenses. Goodwill exists whenever the purchase price exceeds the fair value of tangible and identifiable intangible net assets acquired in business combinations. As of March 31, 2009, we had approximately $851.8 million in goodwill and radio broadcasting licenses, which represents approximately 80.4% of our total assets. Therefore, we believe estimating the value of goodwill and radio broadcasting licenses is a critical accounting estimate because of this significance of their values in relation to total assets. In accordance with SFAS No. 142, “Goodwill and Other Intangible Assets,” for such assets owned as of October 1, we test annually for impairment during each fourth quarter or when events or circumstances suggest that impairment exists. Asset impairment exists when the carrying value of these assets exceeds their respective fair value. When the carrying value exceeds fair value, an impairment amount is charged to operations for the excess.

 

      Given the prolonged economic downturn and continual revenue and profitability declines in the radio broadcast industry, the Company performed an interim test for impairment as of February 28, 2009, and recorded impairment charges of approximately $49.0 million for radio broadcasting licenses for the three months ended March 31, 2009. There was no impairment charge recorded for the same period in 2008. The triggering circumstances for our interim impairment assessment were the continued deteriorating 2009 outlook for the radio industry and its adverse impact on profits and cash flows, resulting lower terminal values and our own lowered internal projections. Impairment charges continue to be a trend experienced by media companies in general, and are not unique to the Company.

 

      When estimating the fair values of radio broadcasting licenses and goodwill, we use the income approach method, which involves a 10-year discounted cash flow model that requires judgmental assumptions about projected revenue growth, future operating margins, discount rates and terminal values. There are inherent uncertainties related to these assumptions and our judgment in applying them to the impairment analysis. While we believe we have made reasonable estimates and assumptions to calculate the fair values, changes in certain events or circumstances (including events and circumstances resulting from a more prolonged or continued deterioration in the economy) could result in changes to our estimated fair values, and may result in additional write-downs to the carrying values of these assets in the future.

Impairment of Intangible Assets Excluding Goodwill and Radio Broadcasting Licenses

 

      Intangible assets, excluding goodwill and radio broadcasting licenses, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or group of assets may not be fully recoverable. These events or changes in circumstances may include a significant deterioration of operating results, changes in business plans, or changes in anticipated future cash flows. If an impairment indicator is present, we will evaluate recoverability by a comparison of the carrying amount of the assets to future undiscounted net cash flows expected to be generated by the assets. Assets are grouped at the lowest level for which there is identifiable cash flows that are largely independent of the cash flows generated by other asset groups. If the assets are impaired, the impairment is measured by the amount by which the carrying amount exceeds the fair value of the assets determined by estimates of discounted cash flows. The discount rate used in any estimate of discounted cash flows would be the rate required for a similar investment of like risk. We concluded no impairment indicators existed during the three months ended March 31, 2009 and accordingly, no impairment recoverability assessment was warranted. However, any changes in certain events or circumstances could result in changes to the estimated fair values of these intangible assets and may result in future write-downs to the carrying values.

 

      Allowance for Doubtful Accounts

 

      We must make estimates of the uncollectability of our accounts receivable. We specifically review historical write-off activity by market, large customer concentrations, customer credit worthiness and changes in our customer payment terms when evaluating the adequacy of the allowance for doubtful accounts. In the past four years, including the quarter ended March 31, 2009, our historical bad debt results have averaged approximately 5.1% of our outstanding trade receivables and have been a reliable method to estimate future allowances. If the financial condition of our customers or markets were to deteriorate, adversely affecting their ability to make payments, additional allowances could be required.

 

Revenue Recognition

 

      We recognize revenue for broadcast advertising when the commercial is broadcast and we report revenue net of agency and outside sales representative commissions in accordance with SAB No. 104, Topic 13, “Revenue Recognition, Revised and Updated.”   When applicable, agency and outside sales representative commissions are calculated based on a stated percentage applied to gross billing. Generally, advertisers 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 us. We recognize revenue for Giant Magazine, mainly advertising, subscriptions and newsstand sales in the month in which a particular issue is available for sale.

 

      CCI, the online social networking company acquired by the Company in April 2008, recognizes its advertising revenue as impressions (the number of times advertisements appear in viewed pages) are delivered, when “click through” purchases or leads are reported, or ratably over the contract period, where applicable.

Equity Accounting

 

      We account for our investment in TV One under the equity method of accounting in accordance with APB Opinion No. 18, “The Equity Method of Accounting for Investments in Common Stock,” and other related interpretations. We have recorded our investment at cost and have adjusted the carrying amount of the investment to recognize the change in Radio One’s claim on the net assets of TV One resulting from losses of TV One as well as other capital transactions of TV One using a hypothetical liquidation at book value approach. We will review the realizability of the investment if conditions are present or events occur to suggest that an impairment of the investment may exist. We have determined that although TV On e is a variable interest entity (as defined by FIN No. 46(R), “Consolidation of Variable Interest Entities”) the Company is not the primary beneficiary of TV One. (See Note 6 - Investment in Affiliated Company for further discussion.)

Contingencies and Litigation

 

      We regularly evaluate our exposure relating to any contingencies or litigation and record a liability when available information indicates that a liability is probable and estimable. We also disclose significant matters that are reasonably possible to result in a loss, or are probable but for which an estimate of the liability is not currently available. To the extent actual contingencies and litigation outcomes differ from amounts previously recorded, additional amounts may need to be reflected.

 

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Estimate of Effective Tax Rates

 

      We estimate the provision for income taxes, income tax liabilities, deferred tax assets and liabilities, and any valuation allowances in accordance with SFAS No. 109, “Accounting for Income Taxes” and FIN No. 18, “Accounting for Income Taxes in Interim Periods.” We estimate effective tax rates based on local tax laws and statutory rates, apportionment factors, taxable income for our filing jurisdictions and disallowable items, among other factors. Audits by the Internal Revenue Service or state and local tax authorities could yield different interpretations from our own, and differences between taxes recorded and taxes owed per our filed returns could cause us to record additional taxes.

 

      To address the exposures of unrecognized tax positions, in January 2007, we adopted FIN No. 48, “Accounting for Uncertainty in Income Taxes - Interpretation of SFAS No. 109,” which recognizes the impact of a tax position in the financial statements if it is more likely than not that the position would be sustained on audit based on the technical merits of the position. As of March 31, 2009, we had approximately $5.0 million in unrecognized tax benefits. Future outcomes of our tax positions may be more or less than the currently recorded liability, which could result in recording additional taxes, or reversing some portion of the liability, and recognizing a tax benefit once it is determined the liability is either inadequate or no longer necessary as potential issues g et resolved, or as statutes of limitations in various tax jurisdictions close.

 

      Realizability of Deferred Tax Balances

     

      In December 2007, except for DTAs in its historically profitable jurisdictions, and DTAs that may be benefited by future reversing deferred tax liabilities (“DTLs”), the Company recorded a full valuation allowance for all other DTAs, mainly NOLs, as it was determined that more likely than not, the DTAs would not be realized.  The Company reached this determination based on its then cumulative loss position and the uncertainty of future taxable income. Consistent with that prior realizability assessment, the Company has recorded a full valuation allowance for additional NOLs generated from the tax deductible amortization of indefinite-lived assets, as well as DTAs created by impairment charges. For remaining DTAs that were not fully reserved, we believe that these assets will be realized within the carryforward peri od; however, if we do not generate the projected levels of future taxable income in those specific jurisdictions, an additional valuation allowance may need to be recorded in the future.

 

      Fair Value Measurements

 

      Pursuant to SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” the Company has accounted for an award called for in the CEO’s employment agreement (the “Employment Agreement”) as a derivative instrument. According to the Employment Agreement, which was executed in April 2008, the CEO is eligible to receive an award amount equal to 8% 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’s obligation to pay the award will be triggered only after the Company’s recovery of the aggregate amount of its capital contribution in TV One and only upon actual receipt of distributions of cash or marketable securities or proceeds from a liquidity event with respect to the Company’s membership interest in TV One. The CEO was fully vested in the award upon execution of the agreement, and the award lapses upon expiration of the Employment Agreement in April 2011, or earlier, if the CEO voluntarily leaves the Company or is terminated for cause.

 

      With the assistance of a third party valuation firm, the Company reassessed the estimated fair value of the award as of March 31, 2009 at approximately $4.2 million, and accordingly, recorded compensation expense and a liability for that amount. The fair valuation incorporated a number of assumptions and estimates, including but not limited to TV One’s future financial projections, probability factors and the likelihood of various scenarios that would trigger payment of the award. As the Company will measure changes in the fair value of this award at each reporting period as warranted by certain circumstances, different estimates or assumptions may result in a change to the fair value of the award amount previously recorded.

With the assistance of a third-party valuation firm, the Company assesses the fair value of the redeemable noncontrolling interest in Reach Media as of the end of each reporting period.  The fair value of the redeemable noncontrolling interests as of March 31, 2009 was approximately $52.7 million.  The determination of fair value incorporated a number of assumptions and estimates including, but not limited to, forecasted operating results, discount rates and a terminal value.  Different estimates and assumptions may result in a change to the fair value of the redeemable noncontrolling interests amount previously recorded.

Redeemable noncontrolling interests

 

Noncontrolling interests in subsidiaries that are redeemable outside of the Company’s control for cash or other assets 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.

 
 

RECENT ACCOUNTING PRONOUNCEMENTS

 

      In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities – an amendment of FASB Statement No. 133.”   SFAS No. 161 requires disclosure of the fair value of derivative instruments and their gains and losses in a tabular format.  It also provides for more information about an entity’s liquidity by requiring disclosure of derivative features that are credit risk related.  Finally, it requires cross referencing within footnotes to enable financial statement users to locate important information about derivative instruments. Effective January 1, 2009, the Company adopted SFAS No. 161. The Company’s adoption of SFAS No. 161 had no impact on its financial condit ion or results of operations.  (See Note 7 – Derivative Instruments and Hedging Activities.)

 

      In December 2007, the FASB issued SFAS No. 141R, “Business Combinations.” SFAS No. 141R replaces SFAS No. 141, and requires the acquirer of a business to recognize and measure the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree at fair value.  SFAS No. 141R also requires transaction costs related to the business combination to be expensed as incurred.  SFAS No. 141R applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008.  Effective January 1, 2009, the Company adopted SFAS No. 141R.  There was no new business combination activity for the t hree month period ended March 31, 2009; therefore, no impact of  SFAS No. 141R related to future acquisitions, if any, is reflected in our consolidated financial statements.

 

      In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements - an amendment of ARB No. 51.”  This statement amends ARB No. 51 to establish accounting and reporting standards for the noncontrolling interests in a subsidiary and for the deconsolidation of a subsidiary.  It clarifies that a noncontrolling interests in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements.  This statement is effective for fiscal years beginning after December 15, 2008. Effective January 1, 2009, the Company adopted SFAS No. 160.  SFAS No. 160 changed the accounting and reporting for minority interests, whic h is now characterized as noncontrolling interests. SFAS No. 160 required retroactive adoption of the presentation and disclosure requirements for existing minority interests, with all other requirements applied prospectively. Reflected in the December 31, 2008 Form 10-K/A, minority interests on the consolidated balance sheet was approximately $2.0 million.  See Note 2 – Restatement of Consolidated Financial Statements, for a discussion of the Company’s accounting and reporting for its noncontrolling interests.

 

      In December 2007, the SEC issued SAB No. 110 that modified SAB No. 107 regarding the use of a “simplified” method in developing an estimate of expected term of “plain vanilla” share options in accordance with SFAS No. 123R, “Share-Based Payment.”   Under SAB No. 107, the use of the “simplified” method was not allowed beyond December 31, 2007. SAB No. 110 allows, however, the use of the “simplified” method beyond December 31, 2007 under certain circumstances. We currently use the “simplified” method under SAB No. 107, and we expect to continue to use the “simplified” method in future periods if the facts and circumstances permit.

 

      In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities,” which permits companies to choose to measure certain financial instruments and other items at fair value that are not currently required to be measured at fair value. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007.   Effective January 1, 2008, the Company adopted SFAS No. 159, which provides entities the option to measure many financial instruments and certain other items at fair value. Entities that choose the fair value option will recognize unrealized gains and losses on items for which the fair value option was elected in earnings at each subsequent reporting date. The Company h as currently chosen not to elect the fair value option for any items that are not already required to be measured at fair value in accordance with generally accepted accounting principles.

 

      In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements which provides guidance for using fair value to measure assets and liabilities. The standard also responds to investors’ requests for more information about: (1) the extent to which companies measure assets and liabilities at fair value; (2) the information used to measure fair value; and (3) the effect that fair value measurements have on earnings. SFAS No. 157 will apply whenever another standard requires (or permits) assets or liabilities to be measured at fair value. The standard does not expand the use of fair value to any new circumstances. The Company adopted SFAS No. 157 effective January 1, 2008. In February 2008, the FASB issued FASB Staff Position on State ment 157, "Effective Date of FASB Statement No. 157," ("FSP No. 157-2").  FSP No. 157-2 delayed the effective date of SFAS No. 157 for nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed on a recurring basis, to fiscal years beginning after November 15, 2008.  Effective January 1, 2009, the Company adopted FSP No. 157-2. The adoption of FSP No. 157-2 did not have a material impact on the Company’s financial statements.

 

 

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CAPITAL AND COMMERCIAL COMMITMENTS

TV One Cable Network

Pursuant to a limited liability company agreement dated July 18, 2003, the Company and certain other investors formed TV One for the purpose of developing and distributing a new television programming service. At that time, we committed to make a cumulative cash investment in TV One of $74.0 million, of which $60.3 million had been funded as of March 31, 2009. The initial commitment period for funding the capital was extended to July 1, 2009, due in part to TV One’s lower than anticipated capital needs during the initial commitment period.

Long-term debt

The total amount available under our existing Credit Agreement with a syndicate of banks is $800.0 million, consisting of a $500.0 million revolving facility and a $300.0 million term loan facility. As of March 31, 2009, we had approximately $375.6 million in debt outstanding under the Credit Agreement. We also have outstanding $200.0 million 63/8% Senior Subordinated Notes due 2013 and $101.5 million 87/8% Senior Subordinated Notes due 2011. See “Liquidity and Capital Resources.̶ 1;

Lease obligations

We have non-cancelable operating leases for office space, studio space, broadcast towers and transmitter facilities that expire over the next 21 years and a non-cancelable capital lease for equipment that expires in June 2009.

Operating Contracts and Agreements

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

Contractual Obligations Schedule

  The following table represents our contractual obligations as of March 31, 2009:

		Payments Due by Period
Contractual Obligations		2009				2010				2011				2012				2013				2015 and Beyond			Total
		(In thousands)
87/8% Senior Subordinated Notes(1)		$	4,505			$	9,009			$	110,519			$	—			$	—			$	—		$	124,033
63/8% Senior Subordinated Notes(1)			6,375				12,750				12,750				12,750				206,375				—			251,000
Credit facilities(2)			28,761				42,836				329,436				1,156				—				—			402,189
Capital lease obligation			58				—				—				—				—				—			58
Other operating contracts/agreements(3)			36,394				24,819				23,278				23,442				11,097				11,301			130,331
Operating lease obligations			6,416				7,189				5,949				4,355				3,661				10,140			37,710
Total		$	82,509			$	96,603			$	481,932			$	41,703			$	221,133			$	21,441		$	945,321

(1)	Includes interest obligations based on current effective interest rate on senior subordinated notes outstanding as of March 31, 2009.
(2)	Includes interest obligations based on current effective interest rate and projected interest expense on credit facilities outstanding as of March 31, 2009.
(3)	Includes employment contracts, severance obligations, on-air talent contracts, consulting agreements, equipment rental agreements, programming related agreements, and other general operating agreements.

Reflected in the obligations above, as of March 31, 2009, we had two swap agreements in place for a total notional amount of $50.0 million. The periods remaining on the swap agreements range in duration from 14.5 to 38.5 months. If we terminate our interest swap agreements before they expire, we will be required to pay early termination fees. Our credit exposure under these agreements is limited to the cost of replacing an agreement in the event of non-performance by our counter-party; however, we do not anticipate non-performance.

 

Off-Balance Sheet Arrangements

As of March 31, 2009, we had two standby letters of credit totaling $550,000 in connection with our annual insurance policy renewals. In addition, we had a letter of credit of $295,000 in connection with a contract we inherited as part of the acquisition of CCI and a letter of credit in the amount of $200,000 for a sponsorship event.  In April 2009, there was a $40,000 reduction in connection with the annual insurance policy renewals, and, there has been no other activity on any of these letters of credit.

 

 

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RELATED PARTY TRANSACTIONS

 

      The Company’s CEO and Chairperson own a music company called Music One, Inc. (“Music One”). The Company sometimes engages in promoting the recorded music product of Music One. Based on the cross-promotional value received by the Company, we believe that the provision of such promotion is fair. For the three months ended March 31, 2009 and 2008, Radio One paid $27,000 and $40,000, respectively, to or on behalf of Music One, primarily for market talent event appearances, travel reimbursement and sponsorships. For the three months ended March 31, 2009 and 2008, respectively, the Company provided $0 and $46,000 in advertising services to Music One. As of March 31, 2009, Music One owed Radio One $70,000 for office space and administrative services provided in 2008 and 2007.

Item 3:  Quantitative and Qualitative Disclosures About Market Risk

 

      For quantitative and qualitative disclosures about market risk affecting Radio One, see Item 7A: “Quantitative and Qualitative Disclosures about Market Risk” in our Annual Report on Form 10-K/A, for the fiscal year ended December 31, 2008.  Our exposure related to market risk has not changed materially since December 31, 2008.

 

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 effective in timely alerting them to material information required to be included in our periodic SEC 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, s ummarized 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 effective in reaching that level of reasonable assurance.

 

Changes in internal control over financial reporting

 

      During the three months ended March 31, 2009, 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.

 

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PART II. OTHER INFORMATION

  

Item 1.  Legal Proceedings

 

      There has been no material change to our legal proceedings as set forth in the most recently filed Form 10-K/A.

 

Item 1A.  Risk Factors

 

      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/A for the year ended December 31, 2008 (the "2008 Annual Report"), which could materially affect our business, financial condition or future results. The risks described in our 2008 Annual Report 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. There have been no material changes to our risk factors as set forth in our most recently filed form 10-K/A.

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

 

      During the three months ended March 31, 2009, we made repurchases of our Class A and Class D common stock pursuant to the $150.0 million stock repurchase program adopted by our board of directors on March 20, 2008.

 

      The following table provides information on our repurchases during the three months ended March 31, 2009:

	(a)			(b)				(c)				(d)
Period	Total Number of Shares Purchased (1)			Average Price Paid per Share				Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs				Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
January 1, 2009 — March 31, 2009	22,515	Class A		$	0.57				22,515			$	53,051,481
January 1, 2009 — March 31, 2009	14,407,165	Class D		$	0.47				14,407,165			$	53,051,481
Total	14,429,680								14,429,680			$	53,051,481

 

(1)

In March 2008, the Company’s board of directors authorized a repurchase of shares of the Company’s Class A and Class D common stock through December 31, 2009 of up to $150.0 million, the maximum amount allowable under the Credit Agreement. The amount and timing of such repurchases will be based on pricing, general economic and market conditions, and the restrictions contained in the agreements governing the Company’s credit facilities and subordinated debt and certain other factors. While $150.0 million is the maximum amount allowable under the Credit Agreement, in 2005 under a prior board authorization, the Company utilized approximately $78.0 million to repurchase common stock leaving capacity of $72.0 million under the Credit Agreement.  During the period ended March 31, 2009, the Company repurchased 22,515 sh ares of Class A common stock at an average price of $.57 and 14.4 million shares of Class D common stock at an average price of $0.47. There were no shares repurchased during the period ended March 31, 2008; however, for the year ended December 31, 2008 the Company repurchased 421,661 shares of Class A common stock at an average price of $1.32 and 20.0 million shares of Class D common stock at an average price of $0.58. As of March 31, 2009, the Company had approximately $53.1 million in capacity available under the 2008 share repurchase program.

 

Item 3.  Defaults Upon Senior Securities

None.

 

Item 4.  Submission of Matters to a Vote of Security Holders

None.

 

Item 5.  Other Information

None.

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.

 

 

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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.

 

RADIO ONE, INC.

 

/s/ PETER D. THOMPSON

 

Peter D. Thompson

Executive Vice President and Chief Financial Officer (Principal Accounting Officer)

 

 

  August 23, 2010

 

 

 

 

 

 

 

 

 

39

 

 

Exhibit 31.1

 

I, Alfred C. Liggins, III, Chief Executive Officer and President of Radio One, Inc., certify that:

	1.		I have reviewed this quarterly report on Form 10-Q/A of Radio One, Inc.;
	2.		Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
	3.		Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
	4.		The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:
			a)		designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
			b)		designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
			c)		evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
			d)		disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of this report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
	5.		The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
			a)		all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
			b)		any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
						By: /s/ Alfred C. Liggins, III
						Alfred C. Liggins, III
						President and Chief Executive Officer
					Date: August 23, 2010

 

Exhibit 31.2

 

I, Peter D. Thompson, Executive Vice President, Chief Financial Officer and Principal Accounting Officer of Radio One, Inc., certify that:

	1.		I have reviewed this quarterly report on Form 10-Q/A of Radio One, Inc.;
	2.		Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
	3.		Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
	4.		The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(i) for the registrant and have:

	a)		designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b)		designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c)		evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d)		disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of this report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.

The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

	a)		All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	b)		any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

				By: /s/ Peter D. Thompson
				Peter D. Thompson
				Executive Vice President,
				Chief Financial Officer and Principal Accounting Officer
			Date: August 23, 2010

 

Exhibit 32.1

 

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

 

      Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Radio One, Inc. (the “Company”) hereby certifies, to such officer’s knowledge, that:

	(i)		the accompanying Quarterly Report on Form 10-Q/A of the Company for the quarter ended March 31, 2009 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and
	(ii)		the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

				By: /s/ Alfred C. Liggins, III
				Name: Alfred C. Liggins, III
				Title: President and Chief Executive Officer
		Date: August 23, 2010

 

      A signed original of this written statement required by Section 906 has been provided to Radio One, Inc. and will be retained by Radio One, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

 

Exhibit 32.2

 

CERTIFICATION OF CHIEF FINANCIAL OFFICER

 

      Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Radio One, Inc. (the “Company”) hereby certifies, to such officer’s knowledge, that:

	(i)		The accompanying Quarterly Report on Form 10-Q/A of the Company for the quarter ended March 31, 2009 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and
	(ii)		the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

						By: /s/ Peter D. Thompson
						Name: Peter D. Thompson
						Title: Executive Vice President and Chief Financial Officer
		Date: August 23, 2010

 

      A signed original of this written statement required by Section 906 has been provided to Radio One, Inc. and will be retained by Radio One, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.