SEC Filing | Urban One

View:

Download DOC

Download PDF

Download XLS

Download XBRL

Unassociated Document

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q/A

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2011

Commission File No. 0-25969

RADIO ONE, INC.

(Exact name of registrant as specified in its charter)

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

5900 Princess Garden Parkway,

7th Floor

Lanham, Maryland 20706

(Address of principal executive offices)

(301) 306-1111

Registrant’s telephone number, including area code

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o

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

Large accelerated filer o Accelerated filer o Non-accelerated filer þ

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

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

Class	Outstanding at August 9, 2011
Class A Common Stock, $.001 Par Value	2,787,426
Class B Common Stock, $.001 Par Value	2,861,843
Class C Common Stock, $.001 Par Value	3,121,048
Class D Common Stock, $.001 Par Value	42,830,226

TABLE OF CONTENTS

		Page

PART I. FINANCIAL INFORMATION

Item 1.	Consolidated Statements of Operations for the Three Months and Six Months Ended June 30, 2011 and 2010 (Unaudited)	5
	Consolidated Balance Sheets as of June 30, 2011 (Unaudited) and December 31, 2010	6
	Consolidated Statement of Changes in Equity for the Six Months Ended June 30, 2011 (Unaudited)	7
	Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2011 and 2010 (Unaudited)	8
	Notes to Consolidated Financial Statements (Unaudited)	9
	Consolidating Financial Statements	46
	Consolidating Statement of Operations for the Three Months Ended June 30, 2011 (Unaudited)	46
	Consolidating Statement of Operations for the Three Months Ended June 30, 2010 (Unaudited)	47
	Consolidating Statement of Operations for the Six Months Ended June 30, 2011 (Unaudited)	48
	Consolidating Statement of Operations for the Six Months Ended June 30, 2010 (Unaudited)	49
	Consolidating Balance Sheet as of June 30, 2011 (Unaudited)	50
	Consolidating Balance Sheet as of December 31, 2010	51
	Consolidating Statement of Cash Flows for the Six Months Ended June 30, 2011 (Unaudited)	52
	Consolidating Statement of Cash Flows for the Six Months Ended June 30, 2010 (Unaudited)	53
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	56
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	89
Item 4.	Controls and Procedures	89

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	90
Item 1A.	Risk Factors	91
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	91
Item 3.	Defaults Upon Senior Securities	91
Item 4.	Submission of Matters to a Vote of Security Holders	91
Item 5.	Other Information	91
Item 6.	Exhibits	91
	SIGNATURES	92

CERTAIN DEFINITIONS

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

Cautionary Note Regarding Forward-Looking Statements

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

•

the effects of global financial and economic conditions, credit and equity market volatility and continued fluctuations in the U.S. economy may continue to have on our business and financial condition and the business and financial condition of our advertisers;

•

continued fluctuations in the economy could negatively impact our ability to meet our cash needs and our ability to maintain compliance with our debt covenants;

•

fluctuations in the demand for advertising across our various media given the current economic environment;

•

our relationship with a significant customer has changed and we no longer have a guaranteed level of revenue from that customer;

•

risks associated with the implementation and execution of our business diversification strategy including our ownership of a significant interest in TV One, LLC;

•

increased competition in our markets and in the radio broadcasting and media industries;

•

changes in media audience ratings and measurement technologies and methodologies;

•

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

•

changes in our key personnel and on-air talent;

•

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

•

financial losses that may be incurred due to provisioning for income taxes and impairment charges against our broadcasting licenses, goodwill and other intangible assets, particularly in light of the current economic environment;

•

increased competition from new media and technologies;

•

the impact of our acquisitions, dispositions and similar transactions; and

•

other factors mentioned in our filings with the Securities and Exchange Commission (“SEC”) including the factors discussed in detail in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2010.

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

EXPLANATORY NOTE

Radio One, Inc. (“Radio One” or the “Company”) is filing this Amendment to its Quarterly Report on Form 10-Q for the period ended June 30, 2011, which was previously filed with the Securities and Exchange Commission on August 15, 2011 for the sole purpose to furnish Exhibit 101 to the Form 10-Q in accordance with Rule 405 of Regulation S-T. Exhibit 101 to this report provides the consolidated financial statements and related notes from the Form 10-Q formatted in XBRL (eXtensible Business Reporting Language).

No other changes have been made to the Form 10-Q. This Form 10-Q/A does not reflect events that may have occurred subsequent to the original filing date and does not modify or update in any way disclosures made in the Form 10-Q.

In accordance with Rule 406T of Regulation S-T, the interactive data files attached as Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

RADIO ONE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

	Three Months Ended June 30,						Six Months Ended June 30,
	2011			2010			2011			2010
	(Unaudited)
				(As Adjusted – See Note 1)						(As Adjusted – See Note 1)

	(In thousands, except share data)

NET REVENUE	$	97,062		$	75,146		$	162,070		$	134,126
OPERATING EXPENSES:
Programming and technical		30,718			19,294			49,549			37,829
Selling, general and administrative, including stock-based compensation of $212 and $279, and $376 and $682, respectively		31,806			27,743			60,301			50,729
Corporate selling, general and administrative, including stock-based compensation of $987 and $1,677, and $1,760 and $3,287, respectively		8,510			9,441			16,532			18,336
Depreciation and amortization		10,238			4,837			14,321			9,545
Total operating expenses		81,272			61,315			140,703			116,439
Operating income		15,790			13,831			21,367			17,687
INTEREST INCOME		9			43			17			67
INTEREST EXPENSE		22,916			9,703			42,249			18,938
LOSS ON RETIREMENT OF DEBT		—			—			7,743			—
GAIN ON INVESTMENT IN AFFILIATED COMPANY		146,879			—			146,879			—
EQUITY IN INCOME OF AFFILIATED COMPANY		208			1,139			3,287			2,048
OTHER EXPENSE, net		47			2,406			22			2,883
Income (loss) before provision for (benefit from) income taxes, noncontrolling interests in income of subsidiaries and loss from discontinued operations		139,923			2,904			121,536			(2,019	)
PROVISION FOR (BENEFIT FROM) INCOME TAXES		38,611			233			84,230			(75	)
Net income (loss) from continuing operations		101,312			2,671			37,306			(1,944	)
LOSS FROM DISCONTINUED OPERATIONS, net of tax		(45	)		(177	)		(81	)		(159	)
CONSOLIDATED NET INCOME (LOSS)		101,267			2,494			37,225			(2,103	)
NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS		2,717			446			2,920			417
CONSOLIDATED NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	98,550		$	2,048		$	34,305		$	(2,520	)

BASIC NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS
Continuing operations	$	1.94		$	0.04		$	0.67		$	(0.05	)
Discontinued operations, net of tax		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Net income (loss) attributable to common stockholders	$	1.94		$	0.04		$	0.67		$	(0.05	)

DILUTED NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS
Continuing operations	$	1.86		$	0.04		$	0.64		$	(0.05	)
Discontinued operations, net of tax		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Net income (loss) attributable to common stockholders	$	1.86		$	0.04		$	0.64		$	(0.05	)

WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic		50,831,560			51,054,572			51,474,556			50,942,693
Diluted		52,905,060			54,302,885			53,646,473			50,942,693

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

RADIO ONE, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	As of
	June 30, 2011			December 31, 2010
	(Unaudited)
				(As Adjusted – See Note 1)
	(In thousands, except share data)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	29,889		$	9,192
Short-term investments		584			—
Trade accounts receivable, net of allowance for doubtful accounts of $3,323 and $3,023, respectively		83,181			58,427
Prepaid expenses		4,185			6,809
Current portion of content assets		17,732			—
Other current assets		1,475			1,564
Current assets from discontinued operations		129			159
Total current assets		137,175			76,151
PREPAID PROGRAMMING AND DEPOSITS		5,064			—
CONTENT ASSETS, net		47,322			—
PROPERTY AND EQUIPMENT, net		33,629			33,041
GOODWILL		285,932			121,502
RADIO BROADCASTING LICENSES		677,407			677,407
LAUNCH ASSETS, net		36,941			—
OTHER INTANGIBLE ASSETS, net		289,258			40,036
LONG-TERM INVESTMENTS		6,136			—
INVESTMENT IN AFFILIATED COMPANY		—			47,470
OTHER ASSETS		3,479			1,981
NON-CURRENT ASSETS FROM DISCONTINUED OPERATIONS		1,513			1,624
Total assets	$	1,523,856		$	999,212

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
CURRENT LIABILITIES:
Accounts payable	$	4,648		$	3,009
Accrued interest		6,362			4,558
Accrued compensation and related benefits		10,593			10,721
Current portion of content payables		23,254			—
Income taxes payable		1,914			1,671
Other current liabilities		10,326			11,704
Current portion of long-term debt		4,860			18,402
Current liabilities from discontinued operations		80			34
Total current liabilities		62,037			50,099
LONG-TERM DEBT, net of current portion and original issue discount		792,773			623,820
CONTENT PAYABLES, net of current portion		18,214			—
OTHER LONG-TERM LIABILITIES		16,198			10,894
DEFERRED TAX LIABILITIES		172,536			89,392
NON-CURRENT LIABILITIES FROM DISCONTINUED OPERATIONS		33			37
Total liabilities		1,061,791			774,242

REDEEMABLE NONCONTROLLING INTERESTS		28,736			30,635

STOCKHOLDERS’ EQUITY:
Convertible preferred stock, $.001 par value, 1,000,000 shares authorized; no shares outstanding at June 30, 2011 and December 31, 2010		—			—
Common stock — Class A, $.001 par value, 30,000,000 shares authorized; 2,787,426 and 2,863,912 shares issued and outstanding as of June 30, 2011 and December 31, 2010, respectively		3			3
Common stock — Class B, $.001 par value, 150,000,000 shares authorized; 2,861,843 shares issued and outstanding as of June 30, 2011 and December 31, 2010, respectively		3			3
Common stock — Class C, $.001 par value, 150,000,000 shares authorized; 3,121,048 shares issued and outstanding as of June 30, 2011 and December 31, 2010, respectively		3			3
Common stock — Class D, $.001 par value, 150,000,000 shares authorized; 42,830,226 and 45,541,082 shares issued and outstanding as of June 30, 2011 and December 31, 2010, respectively		42			45
Accumulated other comprehensive income (loss)		56			(1,424	)
Additional paid-in capital		991,884			994,750
Accumulated deficit		(764,740	)		(799,045	)
Total stockholders’ equity		227,251			194,335
Noncontrolling interest		206,078			—
Total equity		433,329			194,335
Total liabilities, redeemable noncontrolling interests and equity	$	1,523,856		$	999,212

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

RADIO ONE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED JUNE 30, 2011 (UNAUDITED)

	Radio One, Inc. Stockholders
	Convertible Preferred Stock		Common Stock Class A		Common Stock Class B		Common Stock Class C		Common Stock Class D			Comprehensive Income		Accumulated Other Comprehensive (Loss) Income			Additional Paid-In Capital			Accumulated Deficit			Noncontrolling Interest		Total Equity
	(In thousands)
BALANCE, as of December 31, 2010	$	—	$	3	$	3	$	3	$	45				$	(1,424	)	$	994,750		$	(799,045	)	$	—	$	194,335
Comprehensive income:
Consolidated net income		—		—		—		—		—		$	37,225		—			—			34,305			2,313		36,618
Conversion of 76,486 shares of Class A common stock to Class D common stock		—		—		—		—		—			—		—			—			—			—		—
Repurchase of 2,787,342 shares of Class D common stock		—		—		—		—		(3	)				—			(7,507	)		—			—		(7,510	)
Recognition of noncontrolling interest in connection with consolidation of TV One		—		—		—		—		—					—			—			—			203,765		203,765
Net change in unrealized gain on investment activities		—		—		—		—		—			56		56			—			—			—		56
Change in unrealized loss on derivative and hedging activities, net of taxes		—		—		—		—		—			—		158			—			—			—		158
Termination of interest rate swap		—		—		—		—		—			—		1,266			—			—			—		1,266
Comprehensive income												$	37,281
Adjustment of redeemable noncontrolling interests to estimated redemption value		—		—		—		—		—					—			2,505			—			—		2,505
Stock-based compensation expense		—		—		—		—		—					—			2,136			—			—		2,136
BALANCE, as of June 30, 2011	$	—	$	3	$	3	$	3	$	42				$	56		$	991,884		$	(764,740	)	$	206,078	$	433,329

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

RADIO ONE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Six Months Ended June 30,
	2011			2010
				(As Adjusted – See Note 1)
	(Unaudited)
	(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Consolidated net income (loss)		37,225			(2,103	)
Adjustments to reconcile net income (loss) to net cash from operating activities:
Depreciation and amortization		14,321			9,545
Amortization of debt financing costs		2,339			1,168
Write off of debt financing costs		—			3,055
Amortization of content assets		9,406			—
Deferred income taxes		84,230			(818	)
Gain on investment in affiliated company		(146,879	)		—
Equity in income of affiliated company		(3,287	)		(2,048	)
Stock-based compensation		2,136			3,969
Non-cash interest		12,391			—
Loss on retirement of debt		7,743			—
Effect of change in operating assets and liabilities, net of assets acquired:
Trade accounts receivable		(24,754	)		(12,679	)
Prepaid expenses and other assets		2,713			(1,907	)
Other assets		1,925			2,600
Accounts payable		1,639			(1,617	)
Accrued interest		1,804			2,030
Accrued compensation and related benefits		(128	)		2,664
Income taxes payable		243			327
Other liabilities		(1,547	)		2,596
Net cash flows provided by operating activities of discontinued operations		616			104
Net cash flows provided by operating activities		2,136			6,886
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment		(3,610	)		(1,989	)
Net cash and investments acquired in connection with TV One consolidation		65,245			—
Purchase of content assets		(2,345	)		—
Purchase of other intangible assets		—			(268	)
Net cash flows provided by (used in) investing activities		59,290			(2,257	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from credit facility		378,280			12,000
Repayment of credit facility		(353,681	)		(8,449	)
Debt refinancing and modification costs		(5,999	)		(7,095	)
Repurchase of noncontrolling interests		(54,595	)		—
Proceeds from noncontrolling interest member		2,776			—
Repurchase of common stock		(7,510	)		—
Net cash flows used in financing activities		(40,729	)		(3,544	)
INCREASE IN CASH AND CASH EQUIVALENTS		20,697			1,085
CASH AND CASH EQUIVALENTS, beginning of period		9,192			19,963
CASH AND CASH EQUIVALENTS, end of period	$	29,889		$	21,048

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for:
Interest	$	14,533		$	15,739
Income taxes	$	863		$	413

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

RADIO ONE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

(a)

Organization

Radio One, Inc. (a Delaware corporation referred to as “Radio One”) and its subsidiaries (collectively, the “Company”) is an urban-oriented, multi-media company that primarily targets African-American consumers. Our core business is our radio broadcasting franchise that is the largest radio broadcasting operation that primarily targets African-American and urban listeners. We currently own and operate 52 broadcast stations located in 15 urban markets in the United States. While our primary source of revenue is the sale of local and national advertising for broadcast on our radio stations, our operating strategy is to operate the premier multi-media entertainment and information content provider targeting African-American consumers. Thus, we have diversified our revenue streams by making acquisitions and investments in other complementary media properties. Our other media interests include our approximately 50.9% (See Note 2 - Acquisitions) controlling ownership interest in TV One, LLC (“TV One”), an African-American targeted cable television network that we invested in with an affiliate of Comcast Corporation and other investors; our 53.5% ownership interest in Reach Media, Inc. (“Reach Media”), which operates the Tom Joyner Morning Show; our ownership of Interactive One, LLC (“Interactive One”), an online platform serving the African-American community through social content, news, information, and entertainment, which operates a number of branded sites, including News One, UrbanDaily and HelloBeautiful; and our ownership of Community Connect, LLC (formerly Community Connect Inc.) (“CCI”), an online social networking company, which operates a number of branded websites, including BlackPlanet, MiGente and Asian Avenue. CCI is included within the operations of Interactive One. Through our national multi-media presence, we provide advertisers with a unique and powerful delivery mechanism to the African-American and urban audience.

In December 2009, the Company ceased publication of our urban-themed lifestyle periodical Giant Magazine and as of June 2011, our remaining Boston radio station was made the subject of a local marketing agreement (“LMA”) whereby we have made available, for a fee, air time on this station to another party. The remaining assets and liabilities of Giant Magazine as well as stations sold or the subject of an LMA have been classified as discontinued operations as of June 30, 2011 and December 31, 2010, and Giant Magazine’s and the Boston station’s results from operations for the three months and six months ended June 30, 2011 and 2010, have been classified as discontinued operations in the accompanying consolidated financial statements.

As part of our consolidated financial statements, consistent with our financial reporting structure and how the Company currently manages its businesses, we have provided selected financial information on the Company’s three reportable segments: (i) Radio Broadcasting; (ii) Internet; and (iii) Cable Television (See Note 11 – Segment Information.)

(b) Interim Financial Statements

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

Results for interim periods are not necessarily indicative of results to be expected for the full year. This Form 10-Q/A should be read in conjunction with the financial statements and notes thereto included in the Company’s 2010 Annual Report on Form 10-K.

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 (See Note 3 — Discontinued Operations.)

Financial instruments as of June 30, 2011 and December 31, 2010 consisted of cash and cash equivalents, investments, trade accounts receivable, accounts payable, accrued expenses, note payable, long-term debt and redeemable noncontrolling interests. The carrying amounts approximated fair value for each of these financial instruments as of June 30, 2011 and December 31, 2010, except for the Company’s outstanding senior subordinated notes. The 6⅜% Senior Subordinated Notes due February 2013 had a carrying value of $747,000 and a fair value of approximately $710,000 as of June 30, 2011, and a carrying value of $747,000 and a fair value of approximately $672,000 as of December 31, 2010. The 12½%/15% Senior Subordinated Notes due May 2016 had a carrying value of $299.2 million and a fair value of approximately $303.7 million as of June 30, 2011, and a carrying value of $286.8 million and a fair value of approximately $278.2 million as of December 31, 2010. The fair values were determined based on the trading values of these instruments as of the reporting date.

(d) Revenue Recognition

Within our radio broadcasting segment, the Company recognizes revenue for broadcast advertising when a commercial is broadcast and is reported, net of agency and outside sales representative commissions, in accordance with Accounting Standards Codification (“ASC”) 605, “Revenue Recognition.” Agency and outside sales representative commissions are calculated based on a stated percentage applied to gross billing. Generally, clients remit the gross billing amount to the agency or outside sales representative, and the agency or outside sales representative remits the gross billing, less their commission, to the Company. Agency and outside sales representative commissions were approximately $8.6 million and $8.4 million for the three months ended June 30, 2011 and 2010, respectively. Agency and outside sales representative commissions were approximately $15.4 million and $15.1 million for the six months ended June 30, 2011 and 2010, respectively.

Interactive One, the primary driver of revenue in our Internet segment, generates the majority of the Company’s internet revenue, and derives such revenue principally from advertising services, including advertising aimed at 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. Interactive One has a diversity recruiting relationship with Monster, Inc. (“Monster”). Monster posts job listings and advertising on Interactive One’s websites and Interactive One earns revenue for displaying the images on its websites.

TV One, the primary driver of revenues in our Cable Television segment, derives advertising revenue from the sale of television air time to advertisers and recognizes revenue when the advertisements are run. TV One also receives affiliate fees and records revenue during the term of various affiliation agreements at levels appropriate for the most recent subscriber counts reported by the applicable affiliate.

(e) Barter Transactions

The Company provides advertising time in exchange for programming content and certain services and accounts for these exchanges in accordance with ASC 605, “Revenue Recognition.” The terms of these exchanges generally permit the Company to preempt such time in favor of advertisers who purchase time in exchange for cash. The Company includes the value of such exchanges in both net revenue and station operating expenses. The valuation of barter time is based upon the fair value of the network advertising time provided for the programming content and services received. For the three months ended June 30, 2011 and 2010, barter transaction revenues were $761,000 and $774,000, respectively. For each of the six months ended June 30, 2011 and 2010, barter transaction revenues were $1.6 million. Additionally, barter transaction costs were reflected in programming and technical expenses and selling, general and administrative expenses of $698,000 and $695,000 and $63,000 and $79,000, for the three months ended June 30, 2011 and 2010, respectively. For the six months ended June 30, 2011 and 2010, barter transaction costs were reflected in programming and technical expenses and selling, general and administrative expenses of $1.5 million and $1.5 million and $129,000 and $131,000, respectively.

(f) Comprehensive Income (Loss)

The Company’s comprehensive income (loss) consists of net income (loss) and other items recorded directly to the equity accounts. The objective is to report a measure of all changes in equity of an enterprise that result from transactions and other economic events during the period, other than transactions with owners. The Company’s other comprehensive income (loss) consists of income on derivative instruments that qualify for cash flow hedge treatment (See Note 7 - Derivative Instruments and Hedging Activities) and income on investment activities (See Note 6 – Investments).

The following table sets forth the components of comprehensive income (loss):

	Three Months Ended June 30,				Six Months Ended June 30,
	2011		2010		2011		2010
	(Unaudited)
	(In thousands)

Consolidated net income (loss)	$	101,267	$	2,494	$	37,225	$	(2,103	)
Other comprehensive income (net of tax benefit of $0 for all periods):
Investment activities		56		—		56		—
Derivative and hedging activities		—		262		—		396
Comprehensive income (loss)		101,323		2,756		37,281		(1,707	)
Comprehensive income attributable to the noncontrolling interests		2,717		446		2,920		417
Comprehensive income (loss) attributable to common stockholders	$	98,606	$	2,310	$	34,361	$	(2,124	)

(g) Earnings Per Share

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

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2011		2010		2011		2010
	(Unaudited)
Numerator:
Consolidated net income (loss) attributable to common stockholders	$	98,550	$	2,048	$	34,305	$	(2,520	)
Denominator:
Denominator for basic net income (loss) per share ¾ weighted average outstanding shares		50,831,560		51,054,572		51,474,556		50,942,693
Effect of dilutive securities:
Stock options and restricted stock		2,073,500		3,248,313		2,171,917		-
Denominator for diluted net income (loss) per share ¾ weighted-average outstanding shares		52,905,060		54,302,885		53,646,473		50,942,693

Net income (loss) attributable to common stockholders per share ¾ basic	$	1.94	$	0.04	$	0.67	$	(0.05	)
Net income (loss) attributable to common stockholders per share ¾ diluted	$	1.86	$	0.04	$	0.64	$	(0.05	)

All stock options and restricted stock were excluded from the diluted calculation for the six months ended June 30, 2010, as their inclusion would have been anti-dilutive. The following table summarizes the potential common shares excluded from the diluted calculation.

	Six Months Ended June 30, 2010

Stock options		5,247
Restricted stock		2,225

(h) Fair Value Measurements

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

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

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

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

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

As of June 30, 2011 and December 31, 2010, the fair values of our financial assets and liabilities are categorized as follows:

	Total		Level 1		Level 2		Level 3
	(Unaudited)
	(In thousands)
As of June 30, 2011
Assets subject to fair value measurement:
Fixed maturity securities – available for sale:
Corporate debt securities	$	5,804	$	5,804	$	—	$	—
Government sponsored enterprise mortgage-backed securities		916		—		916		—
Total fixed maturity securities (a)		6,720		5,804		916		—
Total	$	6,720	$	5,804	$	916	$	—

Liabilities subject to fair value measurement:
Incentive award plan (b)	$	6,428	$	—	$	—	$	6,428
Employment agreement award (c)		7,294		—		—		7,294
Total	$	13,722	$	—	$	—	$	13,722

Mezzanine equity subject to fair value measurement:
Redeemable noncontrolling interests (d)	$	28,736	$	—	$	—	$	28,736

As of December 31, 2010
Liabilities subject to fair value measurement:
Interest rate swaps (e)	$	1,426	$	—	$	1,426	$	—
Employment agreement award (b)		6,824		—		—		6,824
Total	$	8,250	$	—	$	1,426	$	6,824

Mezzanine equity subject to fair value measurement:
Redeemable noncontrolling interests (c)	$	30,635	$	—	$	—	$	30,635

(a) Where quoted market prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. If quoted market prices are not available, fair values are estimated using pricing models, quoted prices of securities with similar characteristics or discounted cash flows. In cases where Level 1 or Level 2 inputs are not available, securities are classified within Level 3 of the hierarchy.

(b) These balances are measured based on the estimated enterprise fair value of TV One. For the period ended June 30, 2011, the Company determined the enterprise fair value of TV One based on the price paid to repurchase interests from certain investors.

(c) Pursuant to an employment agreement (the “Employment Agreement”) executed in April 2008, the Chief Executive Officer (“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 reviews the factors underlying this award at the end of each quarter including the valuation of TV One and an assessment of the probability that the employment agreement will be renewed and contain this provision. The Company’s obligation to pay the award 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 Employment Agreement, and the award lapses upon expiration of the Employment Agreement, or earlier if the CEO voluntarily left the Company or was terminated for cause. In calculating the fair valuation of the award, the Company utilized the value assessed for TV One in connection with the buyout of financial investors. (See Note 7 – Derivative Instruments and Hedging Activities.) The Company is currently in negotiations with the Company’s CEO for a new employment agreement. Until such time as his new employment agreement is executed, the terms of his April 2008 employment agreement remain in effect including eligibility for the TV One award.

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

(e) Based on London Interbank Offered Rate (“LIBOR”).

The following table presents the changes in Level 3 liabilities measured at fair value on a recurring basis for the six months ended June 30, 2011.

	Incentive Award Plan		Employment Agreement Award			Redeemable Noncontrolling Interests

	(In thousands)		(In thousands)			(In thousands)

Balance at December 31, 2010	$	—	$	6,824		$	30,635
Losses (gains) included in earnings (unrealized)				470			—
Net income attributable to noncontrolling interests		—		—			606
Recognition of TV One management incentive award plan in connection with the consolidation of TV One		6,428		—			—
Change in fair value		—		—			(2,505	)
Balance at June 30, 2011	$	6,428	$	7,294		$	28,736

The amount of total losses for the period included in earnings attributable to the change in unrealized losses relating to assets and liabilities still held at the reporting date	$	—	$	(470	)	$	—

Gains (losses) included in earnings were recorded in the consolidated statement of operations as corporate selling, general and administrative expenses for the three and six months ended June 30, 2011.

Certain assets and liabilities are measured at fair value on a non-recurring basis using Level 3 inputs as defined in ASC 820. These assets are not measured at fair value on an ongoing basis but are subject to fair value adjustments only in certain circumstances. Included in this category are goodwill, radio broadcasting licenses and other intangible assets, net, that are written down to fair value when they are determined to be impaired, as well as content assets that are periodically written down to net realizable value. These assets were not impaired during the three and six months ended June 30, 2011, and therefore were not reported at fair value.

(i) Impact of Recently Issued Accounting Pronouncements

In June 2009, the FASB issued ASC 105, “Generally Accepted Accounting Principles,” which establishes the ASC as the source of authoritative non-SEC U.S. GAAP for non-governmental entities. ASC 105 is effective for financial statements issued for interim and annual periods ending after September 15, 2009. The adoption of ASC 105 did not have a material impact on the Company’s consolidated financial statements.

In May 2009, the FASB issued ASC 855, “Subsequent Events,” which addresses accounting and disclosure requirements related to subsequent events. It requires management to evaluate subsequent events through the date the financial statements are either issued or available to be issued. In February 2010, the FASB issued ASU 2010-09, which amends ASC 855 to remove all requirements for SEC filers to disclose the date through which subsequent events are considered. The amendment became effective upon issuance. The Company has provided the required disclosures regarding subsequent events in Note 15 – Subsequent Events.

The provisions under ASC 825, “Financial Instruments,” requiring disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies, as well as in annual financial statements became effective for the Company during the quarter ended June 30, 2009. The additional disclosures required under ASC 825 are included in Note 1 – Organization and Summary of Significant Accounting Policies.

Effective January 1, 2009, the provisions under ASC 350, “Intangibles - Goodwill and Other,” related to the determination of the useful life of intangible assets and requiring additional disclosures related to renewing or extending the terms of recognized intangible assets became effective for the Company. The adoption of these provisions did not have a material effect on the Company’s consolidated financial statements.

Effective January 1, 2009, the Company adopted an accounting standard update from the Emerging Issues Task Force consensus regarding the accounting for contingent consideration agreements of an equity method investment and the requirement for the investor to recognize its share of any impairment charges recorded by the investee. This update to ASC 323, “Investments – Equity Method and Joint Ventures,” requires the investor to record share issuances by the investee as if it has sold a portion of its investment with any resulting gain or loss being reflected in earnings. The adoption of this update did not have any impact on the Company’s consolidated financial statements.

In December 2010, the FASB issued ASU 2010-29, which specifies that if a public entity presents comparative financial statements, the entity should disclose revenue and earnings of the combined entity as though the business combination that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period. ASU 2010-29 is effective for business combinations occurring on or after the beginning of the first annual reporting period beginning on or after December 15, 2010.

(j) Liquidity and Uncertainties Related to Going Concern

On March 31, 2011, the Company entered into a new senior credit facility (the “2011 Credit Agreement”). Under the 2011 Credit Agreement, we must maintain compliance with certain financial covenants beginning June 30, 2011. Based on our current projections, we expect to be in compliance with these financial covenants over the next twelve months.

(k) Major Customer

Under agreements between the Company’s owned radio stations and Radio Networks, and in accordance with ASC 605, “Revenue Recognition,” the Company generated revenue through barter agreements whereby advertising time was exchanged for programming content.

In November 2009, Reach Media entered into a new sales representation agreement (the “New Sales Representation Agreement”) with Radio Networks whereby Radio Networks serves as the sales representative for the out of show portions of Reach Media’s advertising inventory for the period beginning January 1, 2010 through December 31, 2012. Under the New Sales Representation Agreement, which is now commissioned based, there are no minimum guarantees on revenue. Since January 1, 2010, total revenue generated from Radio Networks has not exceeded 10% of our total revenues and we believe it is unlikely to exceed 10% of our total revenues in future periods.

(l) 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.

(m) Investments

Investment Securities

Investments consist primarily of corporate fixed maturity securities and mortgage-backed securities.

Investments with original maturities in excess of three months and less than one year are classified as short-term investments. Long-term investments have original maturities in excess of one year.

Debt securities are classified as “available-for-sale” and reported at fair value. Investments in available-for-sale fixed maturity securities are classified as either current or noncurrent assets based on their contractual maturities. Fixed maturity securities are carried at estimated fair value based on quoted market prices for the same or similar instruments. Investment income is recognized when earned and reported net of investment expenses. Unrealized holding gains and losses are excluded from earnings and are reported as a separate component of accumulated other comprehensive income (loss) until realized, unless the losses are deemed to be other than temporary. Realized gains or losses, including any provision for other-than-temporary declines in value, are included in the statements of income. For purposes of computing realized gains and losses, the specific-identification method of determining cost was used.

Evaluating Investments for Other than Temporary Impairments

The Company periodically performs evaluations, on a lot-by-lot and security-by-security basis, of its investment holdings in accordance with its impairment policy to evaluate whether any declines in the fair value of investments are other than temporary. This evaluation consists of a review of several factors, including but not limited to: length of time and extent that a security has been in an unrealized loss position, the existence of an event that would impair the issuer’s future earnings potential, and the near-term prospects for recovery of the market value of a security. The FASB has issued guidance for recognition and presentation of other than temporary impairment (“OTTI”), or FASB OTTI guidance. Accordingly, any credit-related impairment of fixed maturity securities that the Company does not intend to sell, and is not likely to be required to sell, is recognized in the consolidated statements of income, with the noncredit-related impairment recognized in other comprehensive income.

For fixed maturity securities where fair value is less than amortized cost, and where the securities are not deemed to be credit-impaired, the Company has asserted that it has no intent to sell and that it believes it is more likely than not that it will not be required to sell the investment before recovery of its amortized cost basis. If such an assertion had not been made, the security’s decline in fair value would be deemed to be other than temporary and the entire difference between fair value and amortized cost would be recognized in the statements of income.

For fixed maturity securities, a critical component of the evaluation for OTTI is the identification of credit-impaired securities, where the Company does not expect to receive cash flows sufficient to recover the entire amortized cost basis of the security. The difference between the present value of projected future cash flows expected to be collected and the amortized cost basis is recognized as credit-related OTTI in the statements of income. If fair value is less than the present value of projected future cash flows expected to be collected, the portion of OTTI related to other than credit factors is reduced in accumulated other comprehensive income.

In order to determine the amount of credit loss for a fixed maturity security, the Company calculates the recovery value by performing a discounted cash flow analysis based on the present value of future cash flows expected to be received. The discount rate is generally the effective interest rate of the fixed maturity security prior to impairment.

When determining the collectability and the period over which the fixed maturity security is expected to recover, the Company considers the same factors utilized in its overall impairment evaluation process described above.

The Company believes that it has adequately reviewed its investment securities for OTTI and that its investment securities are carried at fair value. However, over time, the economic and market environment (including any ratings change for any such securities, including US treasuries and corporate bonds) may provide additional insight regarding the fair value of certain securities, which could change management’s judgment regarding OTTI. This could result in realized losses relating to other than temporary declines being charged against future income. Given the judgments involved, there is a continuing risk that further declines in fair value may occur and material OTTI may be recorded in future periods.

(n) Launch Support

TV One has entered into certain affiliate agreements requiring various payments for launch support. Launch assets are assets used to initiate carriage under new affiliation agreements and are amortized over the term of the respective contracts. Amortization is recorded as a reduction to revenue to the extent that revenue is recognized from the vendor, and any excess amortization is recorded as launch support amortization expense. The weighted-average amortization period for launch support is approximately 3.6 years. For the three months ended June 30, 2011, launch asset amortization of approximately $2.1 million was recorded as a reduction of revenue.

(o) Content Assets

In accordance with ASC 920, program rights are recorded at the lower of amortized cost or estimated net realizable value. Program rights are amortized based on the greater of the usage of the program or term of license. Estimated net realizable values are based on the estimated revenues directly associated with the program materials and related expenses. The Company recorded an additional $329,000 of amortization as a result of evaluating its contracts for recoverability at June 30, 2011. All produced and co-produced content is classified as a long-term asset. The portion of the unamortized licensed content balance that will be amortized within one year is classified as a current asset.

(p) Prepaid Programming and Deposits

Prepaid programming and deposits represent deposits made for the acquisition of TV One programming rights that have not been recorded as content assets because they do not meet the criteria as set forth by ASC 920.

2. ACQUISITIONS:

In February 2005, the Company acquired approximately 51% of the common stock of Reach Media for approximately $55.8 million in a combination of approximately $30.4 million of cash and 1,809,648 shares of the Company’s Class D common stock valued at approximately $25.4 million. A subsidiary of Citadel, Reach Media’s sales representative and an investor in the company, owned a noncontrolling interest in Reach Media. In November 2009, that subsidiary sold its ownership interest to Reach Media in exchange for a $1.0 million note due in December 2011 (See Note 8 – Long-Term Debt) as an inducement for Reach Media to execute a new sales representation agreement. This transaction increased Radio One’s common stock interest in Reach Media to 53.5%.

On February 25, 2011, TV One completed a privately placed debt offering of $119 million (the “Redemption Financing”). The Redemption Financing is structured as senior secured notes bearing a 10% coupon and is due in 2016. Subsequently, on February 28, 2011, TV One utilized $82.4 million of the Redemption Financing to repurchase 15.4% of its outstanding membership interests from certain financial investors and 2.0% of its outstanding membership interests held by TV One management (representing approximately 50% of interests held by management). Beginning on April 14, 2011, the Company began to account for TV One on a consolidated basis after having executed an amendment to the TV One operating agreement with the remaining members of TV One concerning certain governance issues. The Company’s preliminary purchase price allocation consisted of approximately $61.2 million to current assets, $39.0 million to launch assets, $2.4 million to fixed assets, $204.1 million to indefinite-lived intangibles (goodwill and TV One brand), $287.3 million to definite-lived intangibles (content assets, acquired advertising contracts, advertiser relationships, affiliation agreements, etc.), $225.7 million to liabilities (including the $119.0 million in debt discussed above) and $203.0 million in noncontrolling interests. Finally, on April 25, 2011, TV One utilized the balance of the Redemption Financing to repurchase 12.4% of its outstanding membership interests from DIRECTV. These redemptions by TV One increased Radio One’s ownership interest in TV One from 36.8% to approximately 50.9% as of April 25, 2011.

The following unaudited pro forma summary presents consolidated information of the Company as if the consolidation of TV One had occurred on January 1, 2010. The pro forma financial information gives effect to the Company’s consolidation of TV One by the application of the pro forma adjustments to the historical consolidated financial statements of the Company. Such unaudited pro forma financial information is based on the historical financial statements of the Company and TV One and certain adjustments, which the Company believes to be reasonable based on current available information, to give effect to these transactions. Pro forma adjustments were made from January 1, 2010 up to the date of the consolidation with the actual results reflected thereafter in the pro forma financial information.

The unaudited pro forma condensed consolidated financial data does not purport to represent what the Company’s results of operations actually would have been if the consolidation of TV One had occurred on January 1, 2010, or what such results will be for any future periods. The actual results in the periods following the consolidation date may differ significantly from that reflected in the unaudited pro forma condensed consolidated financial data for a number of reasons including, but not limited to, differences between the assumptions used to prepare the unaudited pro forma condensed consolidated financial data and the actual amounts.

The financial information of TV One has been extracted from the historical financial statements of TV One, which were prepared in accordance with US GAAP.

Unaudited adjustments have been made to adjust the results of TV One to reflect additional amortization expense that would have been incurred assuming the fair value adjustments to intangible assets as well as additional interest expense on the debt assumed had been applied from January 1, 2010, as well as additional pro forma adjustments, to give effect to these transactions occurring on January 1, 2010.

	Three Months Ended June 30,					Six Months Ended June 30,
	2011		2010			2011			2010
	(Unaudited)
	(In thousands)

Net revenue	$	101,515	$	101,677		$	197,355		$	186,409
Costs and expenses, net		92,929		108,008			256,167			99,775
Net income (loss)		8,586		(6,331	)		(58,812	)		86,634

3. DISCONTINUED OPERATIONS:

In December 2009, the Company ceased publication of Giant Magazine and as of June 2011, our remaining Boston radio station was made the subject of an LMA whereby we have made available, for a fee, air time on this station to another party. The remaining assets and liabilities of Giant Magazine as well as stations sold or made subject to an LMA have been classified as discontinued operations as of June 30, 2011 and December 31, 2010, and Giant Magazine and stations sold or made subject to an LMA results from operations for the three months and six months ended June 30, 2011 and 2010, have been classified as discontinued operations in the accompanying consolidated financial statements.

The following table summarizes the operating results for Giant Magazine and all of the stations sold or made subject to a LMA and classified as discontinued operations for all periods presented:

	Three Months Ended June 30,						Six Months Ended June 30,
	2011			2010			2011			2010
	(Unaudited)
	(In thousands)

Net revenue	$	22		$	48		$	59		$	83
Station operating expenses		48			212			125			213
Depreciation and amortization		19			13			35			27
Loss (gain) on sale of assets		—			—			(20	)		2
Loss before income taxes		(45	)		(177	)		(81	)		(159	)
Loss from discontinued operations, net of tax	$	(45	)	$	(177	)	$	(81	)	$	(159	)

The assets and liabilities of these stations classified as discontinued operations in the accompanying consolidated balance sheets consisted of the following:

	As of
	June 30,		December 31,
	2011		2010
	(Unaudited)		(As Adjusted – See Note 1)
	(In thousands)
Currents assets:
Accounts receivable, net of allowance for doubtful accounts	$	129	$	159
Total current assets		129		159
Intangible assets, net		1,202		1,202
Property and equipment, net		311		422
Total assets	$	1,642	$	1,783
Current liabilities:
Other current liabilities	$	80	$	34
Total current liabilities		80		34
Long-term liabilities		33		37
Total liabilities	$	113	$	71

4. GOODWILL, RADIO BROADCASTING LICENSES AND OTHER INTANGIBLE ASSETS

Impairment Testing

In the past, we have made acquisitions whereby a significant amount of the purchase price was allocated to radio broadcasting licenses, goodwill and other intangible assets. Effective January 1, 2002, in accordance with ASC 350, “Intangibles - Goodwill and Other,” we do not amortize our radio broadcasting licenses and goodwill. Instead, we perform a test for impairment annually or on an interim basis when events or changes in circumstances or other conditions suggest impairment may have occurred. Other intangible assets continue to be amortized on a straight-line basis over their useful lives. We perform our annual impairment test as of October 1 of each year.

Valuation of Broadcasting Licenses

We utilize the services of a third-party valuation firm to provide independent analysis when evaluating the fair value of our radio broadcasting licenses and reporting units, including goodwill. Fair value is estimated to be the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Effective January 1, 2002, we began using the income approach to test for impairment of radio broadcasting licenses. We believe this method of valuation to be consistent with ASC 805-20-S-99-3, “Use of the Residual Method to Value Acquired Assets Other Than Goodwill.” A projection period of 10 years is used, as that is the time horizon in which operators and investors generally expect to recover their investments. When evaluating our radio broadcasting licenses for impairment, the testing is done at the unit of accounting level as determined by ASC 350, “Intangibles - Goodwill and Other.” In our case, each unit of accounting is a clustering of radio stations into one of our 15 geographical radio markets. Broadcasting license fair values are based on the estimated after-tax discounted future cash flows of the applicable unit of accounting assuming an initial hypothetical start-up operation which possesses FCC licenses as the only asset. Over time, it is assumed the operation acquires other tangible assets such as advertising and programming contracts, employment agreements and going concern value, and matures into an average performing operation in a specific radio market. The income approach model incorporates several variables, including, but not limited to: (i) radio market revenue estimates and growth projections; (ii) estimated market share and revenue for the hypothetical participant; (iii) likely media competition within the market; (iv) estimated start-up costs and losses incurred in the early years; (v) estimated profit margins and cash flows based on market size and station type; (vi) anticipated capital expenditures; (vii) probable future terminal values; (viii) an effective tax rate assumption; and (ix) a discount rate based on the weighted-average cost of capital for the radio broadcast industry. In calculating the discount rate, we considered: (i) the cost of equity, which includes estimates of the risk-free return, the long-term market return, small stock risk premiums and industry beta; (ii) the cost of debt, which includes estimates for corporate borrowing rates and tax rates; and (iii) estimated average percentages of equity and debt in capital structures. Since our annual October 2010 assessment, we have not made any changes to the methodology for valuing broadcasting licenses.

During the second quarter of 2011, the total market revenue growth for specific markets was below that used in our 2010 annual impairment testing. We deemed that to be an impairment indicator that warranted interim impairment testing of certain of our radio broadcasting licenses, which we performed as of May 31, 2011. The Company concluded that our radio broadcasting licenses were not impaired during the second quarter of 2011.Below are some of the key assumptions used in the income approach model for estimating broadcasting licenses fair values for all annual and interim impairment assessments performed since January 2010.

Radio Broadcasting Licenses	October 1, 2010			May 31, 2011 (a)
	(In millions)			(In millions)

Pre-tax impairment charge	$	19.9		$	—

Discount Rate		10.0	%		10.0	%
Year 1 Market Revenue Growth or Decline Rate or Range		1.0% -3.0	%		1.3% -2.8	%
Long-term Market Revenue Growth Rate Range (Years 6 – 10)		1.0% - 2.5	%		1.5% - 2.0	%
Mature Market Share Range		0.8% - 28.3	%		9.0% - 22.5	%
Operating Profit Margin Range		19.0% - 47.3	%		32.7% - 40.8	%

(a)	Reflects changes only to the key assumptions used in the May 2011 interim testing for certain reporting units.

Valuation of Goodwill

The impairment testing of goodwill is performed at the reporting unit level. We had 19 reporting units as of our October 2010 annual impairment assessment. For the purpose of valuing goodwill, the 19 reporting units consisted of the 16 radio markets and three other business divisions. Due to the consolidation of TV One and with the transition of our Boston station into discontinued operations during the 3 months ended June 30, 2011, the Company now has 19 reporting units, consisting of the 15 radio markets and four business divisions. In testing for the impairment of goodwill, with the assistance of a third-party valuation firm, we primarily rely on the income approach. The approach involves a 10-year model with similar variables as described above for broadcasting licenses, except that the discounted cash flows are generally based on the Company’s estimated and projected market revenue, market share and operating performance for its reporting units, instead of those for a hypothetical participant. We follow a two-step process to evaluate if a potential impairment exists for goodwill. The first step of the process involves estimating the fair value of each reporting unit. If the reporting unit’s fair value is less than its carrying value, a second step is performed as per the guidance of ASC 805-10, “Business Combinations,” to allocate the fair value of the reporting unit to the individual assets and liabilities of the reporting unit in order to determine the implied fair value of the reporting unit’s goodwill as of the impairment assessment date. Any excess of the carrying value of the goodwill over the implied fair value of the goodwill is written off as a charge to operations. We have not made any changes to the methodology for determining the fair value of our reporting units.

In February, May and August of 2010, the Company performed interim impairment testing on the valuation of goodwill associated with Reach Media. Reach Media net revenues and cash flows declined for 2010 and full year internal projections were revised. The revenues declined following the December 31, 2009 expiration of a sales representation agreement with Citadel Broadcasting Corporation (“Citadel”) whereby a minimum level of revenue was guaranteed over the term of the agreement. Effective January 1, 2010, Reach Media’s newly established sales organization began selling its inventory on the Tom Joyner Morning Show and under a new commission-based sales representation agreement with Citadel, which sells certain inventory owned by Reach Media in connection with its 108 radio station affiliate agreements. Management revised its internal projections for Reach Media by lowering the Year 1 revenue growth rate to 2.5% in May and August 2010, versus 16.5% assumed in the previous annual assessment. Given the relative improvement in the credit markets since late 2009, the discount rate was lowered to 13.5% for both the February and May 2010 assessments and again lowered to 13.0% for the August 2010 assessment. As part of the year end impairment testing, the discount rate was increased to 13.5% and we reduced our operating cash flow projections and assumptions compared to the interim assessments based on declining revenue projections and actual results which did not meet budget. The Company recorded an impairment charge of $16.1 million for Reach Media for the quarter ended December 31, 2010.

Below are some of the key assumptions used in the income approach model for estimating the fair value for Reach Media for all interim, annual and year end assessments since January 2010. When compared to the discount rates used for assessing radio market reporting units, the higher discount rates used in these assessments reflect a premium for a riskier and broader media business, with a heavier concentration and significantly higher amount of programming content related intangible assets that are highly dependent on the on-air personality Tom Joyner. As a result of the February, May and August 2010 interim assessments, the Company concluded no impairment to the carrying value of Reach Media had occurred. During the fourth quarter of 2010, Reach Media’s operating performance continued to decline, but at a decreasing rate. We believe this represented an impairment indicator and as a result, we performed a year end impairment assessment at December 31, 2010. We performed interim impairment assessments at March 31, 2011 and June 30, 2011 as Reach Media did not meet its budgeted operating cash flow for the first and second quarters. However, upon review of the results of the March 2011 and June 2011 interim impairment tests, the Company concluded that the carrying value of goodwill attributable to Reach Media had not been impaired.

Reach Media Goodwill (Reporting Unit Within the Radio Broadcasting Segment)	February 28, 2010			May 31, 2010			August 31, 2010			December 31, 2010			March 31, 2011			June 30, 2011
	(In millions)
Pre-tax impairment charge	$	–		$	–		$	–		$	16.1		$	–		$	–

Discount Rate		13.5	%		13.5	%		13.0	%		13.5	%		13.5	%		13.0	%
Year 1 Revenue Growth Rate		8.5	%		2.5	%		2.5	%		2.5	%		2.5	%		2.5	%
Long-term Revenue Growth Rate Range		2.5% – 3.0	%		2.5% – 2.9	%		2.5% – 3.3	%		(2.6)% - 4.4	%		(1.3)% - 4.9	%		(0.2)% - 3.9	%

Operating Profit Margin Range		22.7% - 31.4	%		23.3% - 31.5	%		25.5% - 31.2	%		15.5% - 25.9	%		16.2% - 27.4	%		17.6% - 22.6	%

During the second quarter of 2011, the operating performance and current projections for the remainder of the year for specific radio markets were below that used in our 2010 annual impairment testing. We deemed that to be an impairment indicator that warranted interim impairment testing of goodwill associated with specific radio markets, which we performed as of May 31, 2011. The Company concluded that goodwill had not been impaired during the second quarter of 2011. Below are some of the key assumptions used in the income approach model for estimating goodwill fair values for the annual and interim impairments assessments performed since October 1, 2010.

Goodwill (Radio Market Reporting Units)	October 1, 2010			May 31, 2011 (a)
	(In millions)			(In millions)

Pre-tax impairment charge	$	—		$	—

Discount Rate		10.0	%		10.0	%
Year 1 Market Revenue Growth or Decline Rate or Range		1.5% -3.0	%		1.5% -3.0	%
Long-term Market Revenue Growth Rate Range (Years 6 – 10)		1.5% - 2.5	%		1.5% - 2.0	%
Mature Market Share Range		7.0% - 23.0	%		7.0% - 23.0	%
Operating Profit Margin Range		27.5% - 58.0	%		30.0% - 56.0	%

(a)	Reflects changes only to the key assumptions used in the May 2011 interim testing for certain reporting units.

Goodwill Valuation Results

The table below presents the changes in the carrying amount of goodwill by segment during the six month period ended June 30, 2011. The goodwill balances for each reporting unit are not disclosed so as to not make publicly available sensitive information that could potentially be competitively harmful to the Company.

	Goodwill Carrying Balances
	As of				As of
Segment	December 31, 2010		Change		June 30, 2011
			(In millions)

Radio Broadcasting Segment	$	99.7	$	—	$	99.7
Internet Segment		21.8		—		21.8
Cable Television Segment		—		164.4		164.4
Total	$	121.5	$	164.4	$	285.9

Intangible Assets Excluding Goodwill and Radio Broadcasting Licenses

Other intangible assets, excluding goodwill and radio broadcasting licenses, are amortized on a straight-line basis over various periods. Other intangible assets consist of the following:

	As of
	June 30, 2011			December 31, 2010			Period of Amortization
	(Unaudited)
	(In thousands)

Trade names	$	17,141		$	17,138		2-5 Years
Talent agreement		19,549			19,549		10 Years
Debt financing and modification costs		15,861			19,374		Term of debt
Intellectual property		14,151			14,151		4-10 Years
Affiliate agreements		186,755			7,769		1-10 Years
Acquired income leases		1,282			1,282		3-9 Years
Non-compete agreements		1,260			1,260		1-3 Years
Advertiser agreements		47,688			6,613		2-12 Years
Favorable office and transmitter leases		3,358			3,358		2-60 Years
Brand names		2,539			2,539		2.5 Years
Brand name - unamortized		39,688			—		Indefinite
Acquired advertising contracts		2,391			—		< 1Year
Other intangibles		1,270			1,258		1-5 Years
		352,933			94,291
Less: Accumulated amortization		(63,675	)		(54,255	)
Other intangible assets, net	$	289,258		$	40,036

Amortization expense of intangible assets for the three months ended June 30, 2011 and 2010 was approximately $7.5 million and $1.9 million, respectively, and for the six months ended June 30, 2011 and 2010 was approximately $8.9 million and $3.6 million, respectively. The amortization of deferred financing costs was charged to interest expense for all periods presented. The amount of deferred financing costs included in interest expense for the three months ended June 30, 2011 and 2010 was approximately $1.1 million and $556,000, respectively, and for the six month periods ended June 30, 2011 and 2010 was approximately $2.7 million and $1.6 million, respectively.

The following table presents the Company’s estimate of amortization expense for the remainder of 2011 and years 2012 through 2016 for intangible assets, excluding deferred financing costs:

	(In thousands)

2011 (July through December)	$	17,292
2012	$	31,072
2013	$	30,519
2014	$	29,922
2015	$	26,044
2016	$	25,885

Actual amortization expense may vary as a result of future acquisitions and dispositions.

The gross value and accumulated amortization of the launch assets is as follows:

	June 30, 2011			Weighted Average Period of Amortization
	(Unaudited)
	(In thousands)

Launch assets	$	39,013		3.6 Years
Less: Accumulated amortization		(2,072	)
Launch assets, net	$	36,941

Future estimated launch support amortization expense or revenue reduction related to launch assets for the remainder of 2011 and years 2012 through 2015 is as follows:

	(In thousands)

2011 (July through December)	$	4,915
2012	$	9,824
2013	$	9,824
2014	$	9,780
2015	$	2,598

The gross value and accumulated amortization of the content assets is as follows:

	June 30, 2011			Period of Amortization
	(Unaudited)
	(In thousands)

Content assets	$	74,460		1-8 Years
Less: Accumulated amortization		(9,406	)
Content assets, net	$	65,054

Future estimated content amortization expense related to agreements entered into as of June 30, 2011 for the remainder of 2011 and years 2012 through 2016 is as follows:

	(In thousands)

2011 (July through December)	$	17,732
2012	$	26,269
2013	$	14,655
2014	$	5,100
2015	$	817
2016	$	481

5. INVESTMENT IN AFFILIATED COMPANY:

In January 2004, the Company, together with an affiliate of Comcast Corporation and other investors, launched TV One, an entity formed to operate a cable television network featuring lifestyle, entertainment and news-related programming targeted primarily towards African-American viewers. At that time, we committed to make a cumulative cash investment of $74.0 million in TV One, of which $60.3 million had been funded as of April 30, 2007. Since December 31, 2006, the initial four year commitment period for funding the capital had been extended on a quarterly basis due in part to TV One’s lower than anticipated capital needs. In connection with the redemption financing (as defined below), together with the remaining portion of the members outstanding capital contribution, we funded our remaining capital commitment amount of approximately $13.7 million on April 19, 2011 and currently anticipate no further capital commitment. In December 2004, TV One entered into a distribution agreement with DIRECTV and certain affiliates of DIRECTV became investors in TV One.

Prior to April 14, 2011, when the Company began to account for TV One on a consolidated basis, the Company had recorded its investment at cost and had adjusted its carrying amount of the investment to recognize the change in the Company’s claim on the net assets of TV One resulting from operating income or losses of TV One as well as other capital transactions of TV One using a hypothetical liquidation at book value approach. At December 31, 2010, the carrying value of the Company’s investment in TV One was approximately $47.5 million and is presented on the consolidated balance sheet as investment in affiliated company. On April 14, 2011, the Company began to account for TV One on a consolidated basis and the basis of the assets and liabilities of TV One at that date were recorded at fair market value. For the three months ended June 30, 2011 and 2010, the Company’s allocable share of TV One’s operating income was $208,000 and approximately $1.1 million, respectively. For the six months ended June 30, 2011 and 2010, the Company’s allocable share of TV One’s operating income was approximately $3.3 million and $2.0 million, respectively.

We entered into separate network services and advertising services agreements with TV One in 2003. Under the network services agreement, we provided TV One with administrative and operational support services and access to Radio One personalities. In consideration of providing these services, we received equity in TV One, and received an annual cash fee of $500,000 for providing services under the network services agreement. The network services agreement, originally scheduled to expire in January 2009 was extended to January 2011, at which time it expired.

Under the advertising services agreement, we provided a specified amount of advertising to TV One. Prior to the consolidation date, the Company was accounting for the services provided to TV One under the advertising services agreement in accordance with ASC 505-50-30, “Equity.” As services were provided to TV One, the Company recorded revenue based on the fair value of the most reliable unit of measurement in these transactions. The most reliable unit of measurement had been determined to be the value of underlying advertising time that was provided to TV One. The Company recognized $501,000 and $540,000 in revenue relating to this agreement for the three months ended June 30, 2011 and 2010, respectively. The Company recognized $874,000 and $997,000 in revenue relating to this agreement for the six months ended June 30, 2011 and 2010, respectively. This agreement was also originally scheduled to expire in January 2009 and was extended to January 2011, at which time it expired. We recently entered into a new advertising services agreement with TV One, effective January 2011. Under the new advertising services agreement, we (i) provide advertising services to TV One on certain of our media properties and (ii) act as media placement agent for TV One in certain instances. In return for such services, TV One pays us for such advertising time and, where we act as media placement agent, pays us a media placement fee equal to the lesser of 15% of media placement costs or a market rate, in addition to reimbursing us (or paying in advance) for all actual costs associated with the media placement services.

6. INVESTMENTS

The Company’s investments (short-term and long-term) consist of the following:

	Amortized Cost Basis		Gross Unrealized Losses			Gross Unrealized Gains		Fair Value
June 30, 2011
Corporate debt securities	$	5,737	$	(52	)	$	119	$	5,804
Government sponsored enterprise mortgage-backed securities		927		(12	)		1		916
Total investments	$	6,664	$	(64	)	$	120	$	6,720

The following tables show the gross unrealized losses and fair value of the Company’s investments with unrealized losses that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position:

	Fair Value < 1 Year		Unrealized Losses < 1 Year			Fair Value > 1 Year		Unrealized Losses > 1 Year			Total Unrealized Losses
June 30, 2011
Corporate debt securities	$	2,224	$	(28	)	$	1,082	$	(24	)	$	(52	)
Government sponsored enterprise mortgage-backed securities		615		(11	)		99		(1	)		(12	)
Total investments	$	2,839	$	(39	)	$	1,181	$	(25	)	$	(64	)

The Company’s investments in debt securities are sensitive to interest rate fluctuations, which impact the fair value of individual securities. Unrealized losses on the Company’s investments in debt securities have occurred due to volatility and liquidity concerns within the capital markets during the quarter ended June 30, 2011.

The amortized cost and estimated fair value of debt securities at June 30, 2011, by contractual maturity, are shown below. Actual maturities may differ from contractual maturities of mortgage-backed securities because borrowers have the right to call or prepay obligations with or without call or prepayment penalties.

	Amortized Cost Basis		Fair Value

Within 1 year	$	596	$	584
After 1 year through 5 years		3,263		3,325
After 5 years through 10 years		1,403		1,422
After 10 years		475		473
Mortgage-backed securities		927		916
Total	$	6,664	$	6,720

A primary objective in the management of the fixed maturity portfolios is to maximize total return relative to underlying liabilities and respective liquidity needs. In achieving this goal, assets may be sold to take advantage of market conditions or other investment opportunities, as well as tax considerations. Sales will generally produce realized gains or losses. In the ordinary course of business, the Company may sell securities for a number of reasons, including, but not limited to: (i) changes to the investment environment; (ii) expectation that the fair value could deteriorate further; (iii) desire to reduce exposure to an issuer or an industry; (iv) changes in credit quality; and (v) changes in expected cash flow. Available-for-sale securities were sold as follows:

	Quarter Ended June 30, 2011

Proceeds from sales	$	2,530
Gross realized gains		6
Gross realized losses		(65	)

7. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

ASC 815, “Derivatives and Hedging,” establishes disclosure requirements related to derivative instruments and hedging activities with the intent to provide users of financial statements with an enhanced understanding of: (i) how and why an entity uses derivative instruments; (ii) how derivative instruments and related hedged items are accounted for and its related interpretations; and (iii) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. ASC 815 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about the fair value of gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative instruments.

The fair values and the presentation of the Company’s derivative instruments in the consolidated balance sheets are as follows:

	Liability Derivatives
	As of June 30, 2011			As of December 31, 2010
	(Unaudited)
	(In thousands)

	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Derivatives designated as hedging instruments:
Interest rate swaps	Other Long-Term Liabilities		—	Other Long-Term Liabilities		1,426

Derivatives not designated as hedging instruments:
Employment agreement award	Other Long-Term Liabilities		7,294	Other Long-Term Liabilities		6,824
Total derivatives		$	7,294		$	8,250

The effect and the presentation of the Company’s derivative instruments on the consolidated statements of operations are as follows:

Derivatives in Cash Flow Hedging Relationships	Amount of Gain in Other Comprehensive Loss on Derivative (Effective Portion)				Loss Reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion)						Gain (Loss) in Income (Ineffective Portion and Amount Excluded from Effectiveness Testing)
	Amount				Location	Amount					Location		Amount
	Three Months Ended June 30,
	(Unaudited)
	(In thousands)

	2011		2010			2011		2010					2011	2010
Interest rate swaps	$	—	$	262	Interest expense	$	—	$	(475	)	Interest expense	$	—	$	—

Derivatives in Cash Flow Hedging Relationships	Amount of Gain in Other Comprehensive Loss on Derivative (Effective Portion)				Loss Reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion)							Gain (Loss) in Income (Ineffective Portion and Amount Excluded from Effectiveness Testing)
	Amount				Location	Amount						Location	Amount
	Six Months Ended June 30,
	(Unaudited)
	(In thousands)

	2011		2010			2011			2010				2011		2010
Interest rate swaps	$	—	$	396	Interest expense	$	(258	)	$	(989	)	Interest expense	$	—	$	—

Derivatives Not Designated as Hedging Instruments	Location of Gain (Loss) in Income of Derivative	Amount of Gain (Loss) in Income of Derivative
		Three Months Ended June 30,
		2011			2010
		(Unaudited)
		(In thousands)

Employment agreement award	Corporate selling, general and administrative expense	$	(510	)	$	(484	)

Derivatives Not Designated as Hedging Instruments	Location of Gain (Loss) in Income on Derivative	Amount of Gain (Loss) in Income of Derivative
		Six Months Ended June 30,
		2011			2010
		(Unaudited)
		(In thousands)

Employment agreement award	Corporate selling, general and administrative expense	$	(470	)	$	(945	)

Hedging Activities

In June 2005, pursuant to our previous Credit Agreement (as defined in Note 8 — Long-Term Debt), the Company entered into four fixed rate swap agreements to reduce interest rate fluctuations on certain floating rate debt commitments. One of the four $25.0 million swap agreements expired in each of June 2007 and 2008, and 2010, respectively. The remaining $25.0 million swap agreement was terminated on March 31, 2011 in conjunction with the March 31, 2011 retirement of our previous Credit Agreement. We have no swap agreements in connection with our current credit facilities.

Each swap agreement had been accounted for as a qualifying cash flow hedge of the Company’s senior bank debt, in accordance with ASC 815, “Derivatives and Hedging,” whereby changes in the fair market value are reflected as adjustments to the fair value of the derivative instruments as reflected on the accompanying consolidated financial statements.

The Company’s objectives in using interest rate swaps were to manage interest rate risk associated with the Company’s floating rate debt commitments and to add stability to future cash flows. To accomplish this objective, the Company used interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.

The effective portion of changes in the fair value of derivatives designated and qualifying as cash flow hedges was recorded in Accumulated Other Comprehensive Loss and subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During the three months ended March 31, 2011, such derivatives were used to hedge the variable cash flows associated with existing floating rate debt commitments. The ineffective portion of the change in fair value of the derivatives, if any, was recognized directly in earnings.

Amounts reported in Accumulated Other Comprehensive Loss related to derivatives were reclassified to interest expense as interest payments were made on the Company’s floating rate debt.

Under the swap agreements, the Company paid a fixed rate. The counterparties to the agreements paid the Company a floating interest rate based on the three month LIBOR, for which measurement and settlement is performed quarterly. The counterparties to these agreements were international financial institutions.

Other Derivative Instruments

The Company recognizes all derivatives at fair value, whether designated in hedging relationships or not, on the balance sheet as either an asset or liability. The accounting for changes in the fair value of a derivative, including certain derivative instruments embedded in other contracts, depends on the intended use of the derivative and the resulting designation. If the derivative is designated as a fair value hedge, the changes in the fair value of the derivative and the hedged item are recognized in the statement of operations. If the derivative is designated as a cash flow hedge, changes in the fair value of the derivative are recorded in other comprehensive income and are recognized in the statement of operations when the hedged item affects net income. If a derivative does not qualify as a hedge, it is marked to fair value through the statement of operations. Any fees associated with these derivatives are amortized over their term.

As of June 30, 2011, the Company was party to an Employment Agreement executed in April 2008 with the CEO, which called for an award that has been accounted for as a derivative instrument without a hedging relationship in accordance with the guidance under ASC 815, “Derivatives and Hedging.” Pursuant to the Employment Agreement, 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 reassessed the estimated fair value of the award at June 30, 2011 to be approximately $7.3 million, and accordingly, adjusted its liability to this amount. 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 Employment Agreement, and the award lapses upon expiration of the Employment Agreement, or earlier if the CEO voluntarily left the Company, or was terminated for cause. The Company is currently in negotiations with the Company’s CEO for a new employment agreement. Until such time as his new employment agreement is executed, the terms of his April 2008 employment agreement remain in effect including eligibility for the TV One award.

8. LONG-TERM DEBT:

Long-term debt consists of the following:

	As of
	June 30, 2011		December 31, 2010
	(Unaudited)
	(In thousands)

Senior bank term debt	$	385,035	$	346,681
Senior bank revolving debt		—		7,000
6⅜% Senior Subordinated Notes due February 2013		747		747
12½%/15% Senior Subordinated Notes due May 2016		299,185		286,794
10% Senior Secured Notes due March 2016		119,000		—
Note payable		1,000		1,000
Total debt		804,967		642,222
Less: current portion		4,860		18,402
Less: original issue discount		7,334		—
Long-term debt, net	$	792,773	$	623,820

Credit Facilities

March 2011 Refinancing Transaction

On March 31, 2011, the Company entered into a new senior secured credit facility (the “2011 Credit Agreement”) with a syndicate of banks, and simultaneously borrowed $386.0 million to retire all outstanding obligations under the Company’s previous amended and restated credit agreement and to fund our obligation with respect to the TV One capital call. The total amount available under the 2011 Credit Agreement is $411.0 million, consisting of a $386.0 term loan facility that matures on March 31, 2016 and a $25.0 million revolving loan facility that matures on March 31, 2015. Borrowings under the credit facilities are subject to compliance with certain covenants including, but not limited to, certain financial covenants. Proceeds from the credit facilities can be used 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 2011 Credit Agreement contains affirmative and negative covenants that the Company is required to comply with, including:

(a) maintaining an interest coverage ratio of no less than:

1.25 to 1.00 on June 30, 2011 and the last day of each fiscal quarter through September 30, 2015; and

1.50 to 1.00 on December 31, 2015 and the last day of each fiscal quarter thereafter.

(b) maintaining a senior secured leverage ratio of no greater than:

5.25 to 1.00 on June 30, 2011; and

5.00 to 1.00 on September 30, 2011 and December 31, 2011; and

4.75 to 1.00 on March 31, 2012; and

4.50 to 1.00 on June 30, 2012, September 30, 2012 and December 31, 2012; and

4.00 to 1.00 on March 31, 2013 and the last day of each fiscal quarter through September 30, 2013; and

3.75 to 1.00 on December 31, 2013 and the last day of each fiscal quarter through September 30, 2014; and

3.25 to 1.00 on December 31, 2014 and the last day of each fiscal quarter through September 30, 2015; and

2.75 to 1.00 on December 31, 2015 and the last day of each fiscal quarter thereafter.

9.25 to 1.00 on June 30, 2011 and the last day of each fiscal quarter through December 31, 2011; and

9.00 to 1.00 on March 31, 2012; and

8.75 to 1.00 on June 30, 2012; and

8.50 to 1.00 on September 30, 2012 and December 31, 2012; and

8.00 to 1.00 on March 31, 2013 and the last day of each fiscal quarter through September 30, 2013; and

7.50 to 1.00 on December 31, 2013 and the last day of each fiscal quarter through September 30, 2014; and

6.50 to 1.00 on December 31, 2014 and the last day of each fiscal quarter through September 30, 2015; and

6.00 to 1.00 on December 31, 2015 and the last day of each fiscal quarter thereafter.

(d) limitations on:

liens;

sale of assets;

payment of dividends; and

mergers.

As of June 30, 2011, approximate ratios calculated in accordance with the 2011 Credit Agreement, are as follows:

	As of June 30, 2011			Covenant Limit			Excess Coverage

Pro Forma Last Twelve Months Covenant EBITDA (In millions)	$	82.0

Pro Forma Last Twelve Months Interest Expense (In millions)	$	47.4

Senior Debt (In millions)	$	376.8
Total Debt (In millions)	$	676.7

Senior Secured Leverage
Senior Secured Debt / Covenant EBITDA		4.60	x		5.25	x		0.65	x

Total Leverage
Total Debt / Covenant EBITDA		8.25	x		9.25	x		1.00	x

Interest Coverage
Covenant EBITDA / Interest Expense		1.73	x		1.25	x		0.48	x

EBITDA - Earnings before interest, taxes, depreciation and amortization

In accordance with the 2011 Credit Agreement, the calculations for the ratios above do not include the operating results and related debt of Reach and TV One.

As of June 30, 2011, the Company was in compliance with all of its financial covenants under the 2011 Credit Agreement. As noted in the previous table, measurement of interest coverage, senior secured leverage, and total leverage ratios began on June 30, 2011.

Under the terms of the 2011 Credit Agreement, interest on base rate loans is payable quarterly and interest on LIBOR loans is payable monthly or quarterly. The base rate is equal to the greater of the prime rate, the Federal Funds Effective Rate plus 0.50% and the LIBOR Rate for a one-month period plus 1.00%. The applicable margin on the 2011 Credit Agreement is between (i) 4.50% and 5.50% on the revolving portion of the facility and (ii) 5.00% (with a base rate floor of 2.5% per annum) and 6.00% (with a LIBOR floor of 1.5% per annum) on the term portion of the facility. Commencing on June 30, 2011, quarterly installments of 0.25%, or $965,000, of the principal balance on the $386.0 million term loan are payable on the last day of each March, June, September and December.

As of June 30, 2011, the Company had approximately $24.0 million of borrowing capacity under its revolving credit facility. Taking into consideration the financial covenants under the 2011 Credit Agreement, approximately $24.0 million of the revolving credit facility was available to be borrowed.

As of June 30, 2011, the Company had outstanding approximately $385.0 million on its term credit facility. During the quarter ended June 30, 2011, the Company repaid approximately $1.0 million under the 2011 Credit Agreement. Proceeds from the 2011 Credit Agreement of approximately $378.3 million, net of original issue discount, were used to repay the Amended and Restated Credit Agreement and pay other fees and expenses, with the balance of the proceeds to be used to fund the TV One capital call. The original issue discount is being reflected as an adjustment to the carrying amount of the debt obligation and amortized to interest expense over the term of the credit facility.

Period between and including the November 2010 Refinancing Transactions and entry into the 2011 Credit Agreement

On November 24, 2010, the Company entered into a Credit Agreement amendment with its prior syndicate of banks. The Credit Agreement amendment, which amended and restated our prior credit agreement (as so amended and restated, the “Amended and Restated Credit Agreement”), among other things, replaced the existing amount of outstanding revolving loans with a $323.0 million term loan and provided for three tranches of revolving loans, including a $20.0 million revolver to be used for working capital, capital expenditures, investments, and other lawful corporate purposes, a $5.1 million revolver to be used solely to redeem and retire the 2011 Notes, and a $13.7 million revolver to be used solely to fund a capital call with respect to TV One (the “November 2010 Refinancing Transaction”).

The Amended and Restated Credit Agreement provided for maintenance of the following maximum fixed charge coverage ratio as of the last day of each fiscal quarter:

Effective Period		Ratio
November 24, 2010 to December 30, 2010		1.05 to 1.00
December 31, 2010 to June 30, 2012		1.07 to 1.00

The Amended and Restated Credit Agreement also provided for maintenance of the following maximum total leverage ratios (subject to certain adjustments if subordinated debt is issued or any portion of the $13.7 million revolver was used to fund a TV One capital call):

Effective Period		Ratio
November 24, 2010 to December 30, 2010		9.35 to 1.00
December 31, 2010 to December 30, 2011		9.00 to 1.00
December 31, 2011 and thereafter		9.25 to 1.00

The Amended and Restated Credit Agreement also provided for maintenance of the following maximum senior leverage ratios (subject to certain adjustments if any portion of the $13.7 million revolver was used to fund a TV One capital call):

Beginning		No greater than
November 24, 2010 to December 30, 2010		5.25 to 1.00
December 31, 2010 to March 30, 2011		5.00 to 1.00
March 31, 2011 to September 29, 2011		4.75 to 1.00
September 30, 2011 to December 30, 2011		4.50 to 1.00
December 31, 2011 and thereafter		4.75 to 1.00

The Amended and Restated Credit Agreement provided for maintenance of average weekly availability at any time during any period set forth below:

Beginning		Average weekly availability no less than
November 24, 2010 through and including June 30, 2011		$10,000,000
July 1, 2011 and thereafter		$15,000,000

During the period between November 24, 2010, and as of March 31, 2011, the Company was in compliance with all of its financial covenants under the Amended and Restated Credit Agreement.

Under the terms of the Amended and Restated Credit Agreement, interest on both alternate base rate loans and LIBOR loans was payable monthly. The LIBOR interest rate floor was 1.00% and the alternate base rate was equal to the greater of the prime rate, the Federal Funds Effective Rate plus 0.50% and the LIBOR Rate for a one-month period plus 1.00%. Interest payable on (i) LIBOR loans were at LIBOR plus 6.25% and (ii) alternate base rate loans was at an alternate base rate plus 5.25% (and, in each case, could have been permanently increased if the Company exceeded certain senior leverage ratio levels, tested quarterly beginning June 30, 2011). The interest rate paid in excess of LIBOR could have been as high as 7.25% during the last quarter prior to maturity if the Company exceeded the senior leverage ratio levels on each test date. Commencing on September 30, 2011, quarterly installments of 0.25%, or $807,500, of the principal balance on the $323.0 million term loan were payable on the last day of each March, June, September and December.

Under the terms of the Amended and Restated Credit Agreement, quarterly installments of principal on the term loan facility were payable on the last day of each March, June, September and December commencing on September 30, 2007 in a percentage amount of the principal balance of the term loan facility outstanding on September 30, 2007, net of loan repayments, of 1.25% between September 30, 2007 and June 30, 2008, 5.0% between September 30, 2008 and June 30, 2009, and 6.25% between September 30, 2009 and June 30, 2012. Based on the (i) $174.4 million net principal balance of the term loan facility outstanding on September 30, 2008, (ii) a $70.0 million prepayment in March 2009, (iii) a $31.5 million prepayment in May 2009 and (iv) a $5.0 million prepayment in May 2010, quarterly payments of $4.0 million are payable between June 30, 2010 and June 30, 2012.

On December 24, 2010, all remaining outstanding 2011 Notes were repurchased pursuant to the indenture governing the 2011 Notes. We incurred approximately $4.5 million in borrowings under the Amended and Restated Credit Agreement in connection with such repurchase.

As a result of our repurchase and refinancing of the 2011 Notes, the expiration of the Amended and Restated Credit Agreement was June 30, 2012.

On March 31, 2011, the Company repaid all obligations under, and terminated, the Amended and Restated Credit Agreement. During the quarter ended March 31, 2011 the Company did not borrow from the Amended and Restated Credit Agreement and repaid approximately $353.7 million.

Pre November 2010 Refinancing Transactions

In June 2005, the Company entered into the Credit Agreement with a syndicate of banks (the “Pre-Refinancing Credit Agreement”), and simultaneously borrowed $437.5 million to retire all outstanding obligations under its previous credit agreement. The Pre-Refinancing Credit Agreement was amended in April 2006 and September 2007 to modify certain financial covenants and other provisions. Prior to the November 2010 Refinancing Transaction, the Pre-Refinancing Credit Agreement was to expire the earlier of (a) six months prior to the scheduled maturity date of the 8⅞% Senior Subordinated Notes due July 1, 2011 (January 1, 2011) (unless the 8⅞% 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 was $800.0 million, consisting of a $500.0 million revolving facility and a $300.0 million term loan facility. Borrowings under the credit facilities were subject to compliance with certain provisions including, but not limited, to financial covenants. The Company could 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.

During the quarter ended March 31, 2010, we noted that certain of our subsidiaries identified as guarantors in our financial statements did not have requisite guarantees filed with the trustee as required under the terms of the indentures governing the 6⅜% Senior Subordinated Notes due 2013 (the “2013 Notes”) and 2011 Notes (the “Non-Joinder of Certain Subsidiaries”). The Non-Joinder of Certain Subsidiaries caused a non-monetary, technical default under the terms of the relevant indentures at December 31, 2009, causing a non-monetary, technical cross-default at December 31, 2009 under the terms of our Pre-Refinancing Credit Agreement. On March 30, 2010, we joined the relevant subsidiaries as guarantors under the relevant indentures (the “Joinder”). Further, on March 30, 2010, we entered into a third amendment (the “Third Amendment”) to the Pre-Refinancing Credit Agreement. The Third Amendment provided for, among other things: (i) a $100.0 million revolver commitment reduction (from $500.0 million to $400.0 million) under the bank facilities; (ii) a 1.0% floor with respect to any loan bearing interest at a rate determined by reference to the adjusted LIBOR (iii) certain additional collateral requirements; (iv) certain limitations on the use of proceeds from the revolving loan commitments; (v) the addition of Interactive One, LLC as a guarantor of the loans under the Pre-Refinancing Credit Agreement and under the notes governed by the Company’s 2011 Notes and 2013 Notes; (vi) the waiver of the technical cross-defaults that existed as of December 31, 2009 and through the date of the amendment arising due to the Non-Joinder of Certain Subsidiaries; and (vii) the payment of certain fees and expenses of the lenders in connection with their diligence work on the amendment.

Under the terms of the Pre-Refinancing Credit Agreement, upon any breach or default under either the 8⅞% Senior Subordinated Notes due July 2011 or the 6⅜% Senior Subordinated Notes due February 2013, the lenders could among other actions immediately terminate the Pre-Refinancing Credit Agreement and declare the loans then outstanding under the Pre-Refinancing Credit Agreement to be due and payable in whole immediately. Similarly, under the 8⅞% Senior Subordinated Notes and the 6⅜% Senior Subordinated Notes, a default under the terms of the Pre-Refinancing Credit Agreement would constitute an event of default, and the trustees or the holders of at least 25% in principal amount of the then outstanding notes (under either class) may declare the principal of such class of note and interest to be due and payable immediately.

As of each of June 30, 2010, July 1, 2010 and September 30, 2010, we were not in compliance with the terms of the Pre-Refinancing Credit Agreement. More specifically, (i) as of June 30, 2010, we failed to maintain a total leverage ratio of 7.25 to 1.00 (ii) as of each of July 1, 2010 and September 30, 2010, as a result of a step down of the total leverage ratio from no greater than 7.25 to 1.00 to no greater than 6.50 to 1.00 effective for the period July 1, 2010 to September 30, 2011, we also failed to maintain the requisite total leverage ratio and (iii) as of September 30, 2010, we failed to maintain a senior leverage ratio of 4.00 to 1.00. On July 15, 2010, the Company and its subsidiaries entered into a forbearance agreement (the “Forbearance Agreement”) with Wells Fargo Bank, N.A. (successor by merger to Wachovia Bank, National Association), as administrative agent (the “Agent”), and financial institutions constituting the majority of outstanding loans and commitments (the “Required Lenders”) under the Pre-Refinancing Credit Agreement, relating to the defaults and events of default existing as of June 30, 2010 and July 1, 2010. On August 13, 2010, we entered into an amendment to the Forbearance Agreement (the “Forbearance Agreement Amendment”) that, among other things, extended the termination date of the Forbearance Agreement to September 10, 2010, unless terminated earlier by its terms, and provided additional forbearance related to the then anticipated default caused by an opinion of Ernst & Young LLP expressing substantial doubt about the Company’s ability to continue as a going concern as issued in connection with the restatement of our financial statements. Under the Forbearance Agreement and the Forbearance Agreement Amendment, the Agent and the Required Lenders maintained the right to deliver “payment blockage notices” to the trustees for the holders of the 2011 Notes and/or the 2013 Notes.

On August 5, 2010, the Agent delivered a payment blockage notice to the Trustee under the Indenture governing our 2013 Notes. As a result, neither we nor any of our guaranteeing subsidiaries could make any payment or distribution of any kind or character in respect of obligations under the 2013 Notes, including the interest payment that was scheduled to be made on August 16, 2010. The 30-day grace period for the nonpayment of interest before such nonpayment constituted an event of default under the 2013 Notes Indenture expired on September 15, 2010. While the trustee or holders of at least 25% in principal amount of the then outstanding 2013 Notes could have declared the principal amount, and accrued and unpaid interest, on all outstanding 2013 Notes to be due and payable immediately as a result of such event of default, no such remedies were exercised as we continued to negotiate the terms of the amended exchange offer and a new support agreement with the members of the ad hoc group of holders of our 2011 Notes and 2013 Notes. The event of default under the 2013 Notes Indenture also constituted an event of default under the Pre-Refinancing Credit Agreement. While the Forbearance Agreement Amendment expired by its terms on September 10, 2010, we and the Agent continued to negotiate the terms of a credit facility amendment and the Agent and the lenders did not exercise additional remedies under the Pre-Refinancing Credit Agreement. The Amended and Restated Credit Agreement cured all of these issues.

Senior Subordinated Notes

Period between and including the November 2010 Refinancing Transactions and March 2011 Refinancing Transaction

On November 24, 2010, we issued $286.8 million of our 12½%/15% Senior Subordinated Notes due May 2016 in a private placement and exchanged and then cancelled approximately $97.0 million of $101.5 million in aggregate principal amount outstanding of our 2011 Notes and approximately $199.3 million of $200.0 million in aggregate principal amount outstanding of our 2013 Notes (the 2013 Notes together with the 2011 Notes, the “Prior Notes”). We entered into supplemental indentures in respect of each of the Prior Notes which waived any and all existing defaults and events of default that had arisen or may have arisen that may be waived and eliminated substantially all of the covenants in each indenture governing the Prior Notes, other than the covenants to pay principal and interest on the Prior Notes when due, and eliminated or modified the related events of default. Subsequently, all remaining outstanding 2011 Notes were repurchased pursuant to the indenture governing the 2011 Notes, effective as of December 24, 2010.

As of June 30, 2011, the Company had outstanding $747,000 of its 6⅜% Senior Subordinated Notes due February 2013 and $299.2 million of our 12½%/15% Senior Subordinated Notes due May 2016. During the year ended December 31, 2010, pursuant to the debt exchange, the Company repurchased $101.5 million of the 8⅞% Senior Subordinated Notes at par and $199.3 million of the 6⅜% Senior Subordinated Notes at an average discount of 5.0%, and recorded a gain on the retirement of debt of approximately $6.6 million, net of the write-off of deferred financing costs of approximately $3.3 million. The 12½%/15% Senior Subordinated Notes due May 2016 had a carrying value of $299.2 million and a fair value of approximately $303.7 million as of June 30, 2011, and the 6⅜% Senior Subordinated Notes due February 2013 had a carrying value of $747,000 and a fair value of approximately $710,000 as of June 30, 2011. The fair values were determined based on the trading value of the instruments as of the reporting date.

Interest payments under the terms of the 6⅜% Senior Subordinated Notes are due in February and August. Based on the $747,000 principal balance of the 6⅜% Senior Subordinated Notes outstanding on June 30, 2011, interest payments of $24,000 are payable each February and August through February 2013.

Interest on the 12½%/15% Senior Subordinated Notes will be payable in cash, or at our election, partially in cash and partially through the issuance of additional 12½%/15% Senior Subordinated Notes (a “PIK Election”) on a quarterly basis in arrears on February 15, May 15, August 15 and November 15, commencing on February 15, 2011. We may make a PIK Election only with respect to interest accruing up to but not including May 15, 2012, and with respect to interest accruing from and after May 15, 2012 such interest shall accrue at a rate of 12.5% per annum and shall be payable in cash.

Interest on the Exchange Notes will accrue from the date of original issuance or, if interest has already been paid, from the date it was most recently paid. Interest will accrue for each quarterly period at a rate of 12.5% per annum if the interest for such quarterly period is paid fully in cash. In the event of a PIK Election, including the PIK Election currently in effect, the interest paid in cash and the interest paid-in-kind by issuance of additional Exchange Notes (“PIK Notes”) will accrue for such quarterly period at 6.0% per annum and 9.0% per annum, respectively.

In the absence of an election for any interest period, interest on the Exchange Notes shall be payable according to the election for the previous interest period, provided that interest accruing from and after May 15, 2012 shall accrue at a rate of 12.5% per annum and shall be payable in cash. A PIK Election is currently in effect.

During the quarter ended June 30, 2011, the Company paid cash interest in the amount of approximately $4.4 million and issued approximately $6.6 million of additional 12½%/15% Senior Subordinated Notes in accordance with the PIK Election that is currently in effect. During the six months ended June 30, 2011, the Company paid cash interest in the amount of approximately $8.3 million and issued approximately $12.4 million of additional 12½%/15% Senior Subordinated Notes in accordance with the PIK Election that is currently in effect.

The indentures governing the Company’s 12½%/15% Senior Subordinated Notes also contained covenants that restrict, among other things, the ability of the Company to incur additional debt, purchase common stock, make capital expenditures, make investments or other restricted payments, swap or sell assets, engage in transactions with related parties, secure non-senior debt with assets, or merge, consolidate or sell all or substantially all of its assets.

The Company conducts a portion of its business through its subsidiaries. Certain of the Company’s subsidiaries have fully and unconditionally guaranteed the Company’s 12½%/15% Senior Subordinated Notes, the 6⅜% Senior Subordinated Notes and the Company’s obligations under the 2011 Credit Agreement.

Period prior to November 2010 Refinancing Transactions

Subsequent to December 31, 2009, we noted that certain of our subsidiaries identified as guarantors in our financial statements did not have requisite guarantees filed with the trustee as required under the terms of the indentures (the “Non-Joinder of Certain Subsidiaries”). The Non-Joinder of Certain Subsidiaries caused a non-monetary, technical default under the terms of the relevant indentures at December 31, 2009, causing a non-monetary, technical cross-default at December 31, 2009 under the terms of our Credit Agreement dated as of June 13, 2005. We have since joined the relevant subsidiaries as guarantors under the relevant indentures (the “Joinder”). Further, on March 30, 2010, we entered into a third amendment (the “Third Amendment”) to the Credit Agreement. The Third Amendment provides for, among other things: (i) a $100.0 million revolver commitment reduction under the bank facilities; (ii) a 1.0% floor with respect to any loan bearing interest at a rate determined by reference to the adjusted LIBOR; (iii) certain additional collateral requirements; (iv) certain limitations on the use of proceeds from the revolving loan commitments; (v) the addition of Interactive One, LLC as a guarantor of the loans under the Credit Agreement and under the notes governed by the Company’s 2001 and 2005 senior subordinated debt documents; (vi) the waiver of the technical cross-defaults that existed as of December 31, 2009 and through the date of the amendment arising due to the Non-Joinder of Certain Subsidiaries; and (vii) the payment of certain fees and expenses of the lenders in connection with their diligence in connection with the amendment.

On August 5, 2010, the Agent under our Pre-Refinancing Credit Agreement delivered a payment blockage notice to the Trustee under the Indenture governing our 2013 Notes. As a result, neither we nor any of our guaranteeing subsidiaries may make any payment or distribution of any kind or character in respect of obligations under the 2013 Notes, including the interest payment that was scheduled to be made on August 16, 2010. The 30-day grace period for the nonpayment of interest before such nonpayment constituted an event of default under the 2013 Notes Indenture expired on September 15, 2010. While the trustee or holders of at least 25% in principal amount of the then outstanding 2013 Notes could have declared the principal amount, and accrued and unpaid interest, on all outstanding 2013 Notes to be due and payable immediately as a result of such event of default, no such remedies were exercised as we continued to negotiate the terms of the amended exchange offer and a new support agreement with the members of the ad hoc group of holders of our 2011 and 2013 Notes. The event of default under the 2013 Notes Indenture also constituted an event of default under the Pre-Refinancing Credit Agreement. As of November 24, 2010, any and all existing defaults and events of default that had arisen or may have arisen were cured.

As of each of June 30, 2010, July 1, 2010 and September 30, 2010, we were not in compliance with the terms of our Pre-Refinancing Credit Agreement. More specifically, (i) as of June 30, 2010, we failed to maintain a total leverage ratio of 7.25 to 1.00 (ii) as of each of July 1, 2010 and September 30, 2010, as a result of a step down of the total leverage ratio from no greater than 7.25 to 1.00 to no greater than 6.50 to 1.00 effective for the period July 1, 2010 to September 30, 2011, we also failed to maintain the requisite total leverage ratio and (iii) as of September 30, 2010, we failed to maintain a senior leverage ratio of 4.00 to 1.00. On July 15, 2010, the Company and its subsidiaries entered into the Forbearance Agreement with Wells Fargo Bank, N.A. (successor by merger to Wachovia Bank, National Association), as Agent, and the Required Lenders under our Pre-Refinancing Credit Agreement, relating to the defaults and events of default existing as of June 30, 2010 and July 1, 2010. On August 13, 2010, we entered into an amendment to the Forbearance Agreement Amendment that, among other things, extended the termination date of the Forbearance Agreement to September 10, 2010, unless terminated earlier by its terms, and provided additional forbearance related to the then anticipated default caused by an opinion of Ernst & Young LLP expressing substantial doubt about the Company’s ability to continue as a going concern as issued in connection with the restatement of our financial statements. Under the Forbearance Agreement and the Forbearance Agreement Amendment, the Agent and the Required Lenders maintained the right to deliver “payment blockage notices” to the trustees for the holders of the 2011 Notes and/or the 2013 Notes.

On August 5, 2010, the Agent under our Pre-Refinancing Credit Agreement delivered a payment blockage notice to the Trustee under the Indenture governing our 2013 Notes. As a result, neither we nor any of our guaranteeing subsidiaries could make any payment or distribution of any kind or character in respect of obligations under the 2013 Notes, including the interest payment that was scheduled to be made on August 16, 2010. The 30-day grace period for the nonpayment of interest before such nonpayment constituted an event of default under the 2013 Notes Indenture expired on September 15, 2010. While the trustee or holders of at least 25% in principal amount of the then outstanding 2013 Notes could declare the principal amount, and accrued and unpaid interest, on all outstanding 2013 Notes to be due and payable immediately as a result of such event of default, as of the date of this filing, no such remedies were exercised as we continued to negotiate the terms of the amended exchange offer and a new support agreement with the members of the ad hoc group of holders of our 2011 and 2013 Notes. The event of default under the 2013 Notes Indenture also constituted an event of default under the Pre-Refinancing Credit Agreement. As of November 24, 2010, as a result of the November 2010 Refinancing Transactions, any and all existing defaults and events of default that had arisen or may have arisen were cured.

Senior Secured Notes

TV One issued $119.0 million in senior secured notes on February 25, 2011. The notes were issued in connection with the repurchase of its equity interest from certain financial investors and TV One management. The notes bear interest at 10.0% per annum, which is payable monthly, and the entire principal amount is due on March 15, 2016.

Note Payable

Reach Media issued a $1.0 million promissory note payable in November 2009 to a subsidiary of Citadel. The note was issued in connection with Reach Media reacquiring Citadel’s noncontrolling stock ownership in Reach Media as well as entering into a new sales representation agreement with Radio Networks, a subsidiary of Citadel. The note bears interest at 7.0% per annum, which is payable quarterly, and the entire principal amount is due on December 31, 2011.

Future scheduled minimum principal payments of debt as of June 30, 2011 are as follows:

	Senior Subordinated Notes		Credit Facilities			Senior Secured Notes		Note Payable
	(Unaudited)
	(In thousands)

July – December 2011	$	—		$	1,930	$	—	$	1,000
2012		—			3,860		—		—
2013		747			3,860		—		—
2014		—			3,860		—		—
2015		—			3,860		—		—
2016 and thereafter		299,185			367,665		119,000		—
Total Debt	$	299,932		$	385,035	$	119,000	$	1,000

9. INCOME TAXES:

The effective tax rate from continuing operations for the six month period ended June 30, 2011 was 69.3%, when combined with the recognition of approximately $810,000 of tax expense for certain discrete items. This rate is principally due to an estimated annual effective tax rate of 68.7% for Radio One, which has a full valuation allowance for its deferred tax assets (“DTAs”). This rate is blended with an estimated annual effective tax rate of 34.9% for Reach Media, which does not have a valuation allowance.

For the six month period ended June 30, 2010, the effective tax rate for Radio One was zero percent and a provision of $66,000 related to discrete items was reported. A rate of zero percent was used for Radio One for the three and six month periods ended June 30, 2010 since the application of an effective tax rate to the pre-tax book loss would have resulted in the recording of a tax benefit. Management believed it was more likely than not that the benefit would not be realized by Radio One and accordingly reduced the estimated annual tax rate to zero percent. A tax benefit of approximately $141,000 was recognized for Reach Media, which resulted in a consolidated net tax benefit of $75,000 for the six month period ended June 30, 2010.

The Company maintains a full valuation allowance on its deferred tax assets, except as it relates to the deferred tax assets attributable to Reach Media. As part of its assessment of realizability, the Company also determined that it was not appropriate under generally accepted accounting principles to benefit its DTAs based on DTLs related to indefinite-lived intangibles, consisting principally of certain of the Company’s radio broadcasting licenses, which 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 support realization of the DTAs. For the six month period ended June 30, 2011, an additional valuation allowance for the current year anticipated increase to DTAs related to net operating loss carryforwards from the amortization of indefinite-lived intangibles was included in the annual effective tax rate calculation.

The Company recorded a non-cash pre-tax gain of approximately $146.9 million resulting from its increased ownership and controlling interest in TV One for the three months ended June 30, 2011. The consolidation of TV One included an adjustment to the DTL related to the partnership investment in TV One. The Company evaluated the DTL and determined that a portion will not reverse within the requisite period and cannot be offset against the DTAs. This item generated a tax expense of $44.5 million for the six month period ended June 30, 2011 and resulted in a 36.6% effective tax rate. The remaining portion of the tax expense of $1.2 million for the six months ended June 30, 2011 consisted principally of discrete items and certain state taxes for Radio One which are based on gross receipts.

On January 1, 2007, the Company adopted the provisions of ASC 740, “Income Taxes,” related to accounting for uncertainty in income taxes, 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 June 30, 2011, we had approximately $5.8 million in unrecognized tax benefits. Accrued interest and penalties related to unrecognized tax benefits is recognized as a component of tax expense. During the six months ended June 30, 2011, the Company recorded an expense for interest and penalties of $26,000. As of June 30, 2011, the Company had a liability of $291,000 for unrecognized tax benefits for interest and penalties. The Company estimates the possible change in unrecognized tax benefits prior to June 30, 2011 which could range from $0 to a reduction of $16,000, due to expiring statutes.

10. STOCKHOLDERS’ EQUITY:

Common Stock

The Company has four classes of common stock, Class A, Class B, Class C and Class D. Generally, the shares of each class are identical in all respects and entitle the holders thereof to the same rights and privileges. However, with respect to voting rights, each share of Class A common stock entitles its holder to one vote and each share of Class B common stock entitles its holder to ten votes. The holders of Class C and Class D common stock are not entitled to vote on any matters. The holders of Class A common stock can convert such shares into shares of Class C or Class D common stock. Subject to certain limitations, the holders of Class B common stock can convert such shares into shares of Class A common stock. The holders of Class C common stock can convert such shares into shares of Class A common stock. The holders of Class D common stock have no such conversion rights.

Stock Repurchase Program

In April 2011, the Company’s board of directors authorized a repurchase of shares of the Company’s Class A and Class D common stock (the “2011 Repurchase Authorization”). Under the 2011 Repurchase Authorization, the Company is authorized, but is not obligated, to repurchase up to $15 million worth of its Class A and/or Class D common stock prior to April 13, 2013. Repurchases will be made from time to time in the open market or in privately negotiated transactions in accordance with applicable laws and regulations. The timing and extent of any repurchases will depend upon prevailing market conditions, the trading price of the Company’s Class A and/or Class D common stock and other factors, and subject to restrictions under applicable law. The Company expects to implement this stock repurchase program in a manner consistent with market conditions and the interests of the stockholders, including maximizing stockholder value. For the three months ended June 30, 2011, the Company repurchased 2,787,342 shares of Class D common stock in the amount of approximately $7.5 million at an average price of $2.69 per share. 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 June 30, 2011 (See Note 15 – Subsequent Events).

Stock Option and Restricted Stock Grant Plan

Under the Company’s 1999 Stock Option and Restricted Stock Grant Plan (“Plan”), the Company had the authority to issue up to 10,816,198 shares of Class D common stock and 1,408,099 shares of Class A common stock. The Plan expired March 10, 2009. The options previously issued under this plan are exercisable in installments determined by the compensation committee of the Company’s board of directors at the time of grant. These 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.

A new stock option and restricted stock plan (the “2009 Stock Plan”) was approved by the stockholders at the Company’s annual meeting on December 16, 2009. The terms of the 2009 Stock Plan are substantially similar to the prior Plan. The Company has the authority to issue up to 8,250,000 shares of Class D common stock under the 2009 Stock Plan. As of June 30, 2011, 4,869,050 shares of Class D common stock were available for grant under the 2009 Stock Plan.

The compensation committee and the non-executive members of the Board of Directors have approved a long-term incentive plan (the “2009 LTIP”) for certain “key” employees of the Company. The purpose of the 2009 LTIP is to retain and incent these “key” employees in light of sacrifices they have made as a result of the cost savings initiatives in response to economic conditions. These sacrifices included not receiving performance-based bonuses in 2008 and salary reductions and shorter work weeks in 2009 in order to provide expense savings and financial flexibility to the Company. The 2009 LTIP is comprised of 3,250,000 shares (the “LTIP Shares”) of the 2009 Stock Plan’s 8,250,000 shares of Class D common stock. Awards of the LTIP Shares were granted in the form of restricted stock and allocated among 31 employees of the Company, including the named executive officers. The named executive officers were allocated LTIP Shares as follows: (i) Chief Executive Officer (“CEO”) (1.0 million shares); (ii) the Chairperson (300,000 shares); (iii) the Chief Financial Officer (“CFO”) (225,000 shares); (iv) the Chief Administrative Officer (“CAO”) (225,000 shares); and (v) the President of the Radio Division (“PRD”) (130,000 shares). The remaining 1,370,000 shares were allocated among 26 other “key” employees. All awards will vest in three installments. The awards were granted effective January 5, 2010, the first installment of 33% vested on June 5, 2010 and the second installment vested on June 5, 2011. The remaining installment will vest on June 5, 2012. Pursuant to the terms of the 2009 Stock Plan, subject to the Company’s insider trading policy, a portion of each recipient’s vested shares may be sold into the open market for tax purposes on or about the vesting dates.

The Company follows the provisions under ASC 718, “Compensation - Stock Compensation,” 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. These stock-based awards do not participate in dividends until fully vested. The fair value of stock options is determined using the Black-Scholes (“BSM”) valuation model. Such fair value is recognized as an expense over the service period, net of estimated forfeitures, using the straight-line method. 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: (i) the term by using the simplified “plain-vanilla” method as allowed under SAB No. 110; (ii) a historical volatility over a period commensurate with the expected term, with the observation of the volatility on a daily basis; and (iii) 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.

Stock-based compensation expense for the three months ended June 30, 2011 and 2010 was approximately $1.2 million and $1.9 million respectively and for the six months ended June 30, 2011 and 2010 was approximately $2.1 million and $3.9 million, respectively.

The Company granted 181,520 and 39,430 stock options during the six months ended June 30, 2011 and 2010, respectively and granted 66,845 stock options during the three months ended June 30, 2011. There were no stock options granted during the three months ended June 30, 2010.

	Three Months Ended June 30,					Six Months Ended June 30,
	2011			2010		2011			2010

Average risk-free interest rate		1.60	%		—		2.23	%		3.28	%
Expected dividend yield		0.00	%		—		0.00	%		0.00	%
Expected lives	5.75 Years				—	6.00 Years			6.25 Years
Expected volatility		124.3	%		—		120.7	%		111.3	%

Transactions and other information relating to stock options for the six months ended June 30, 2011 are summarized below:

	Number of Options			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (In Years)		Aggregate Intrinsic Value
Outstanding at December 31, 2010		4,999,000		$	9.40		—		—
Grants		182,000		$	1.38		—		—
Exercised		—			—		—		—
Forfeited/cancelled/expired		(32,000	)		15.41		—		—
Balance as of June 30, 2011		5,149,000		$	9.08		4.74		767,000
Vested and expected to vest at June 30, 2011		5,136,000		$	9.10		4.73		764,000
Unvested at June 30, 2011		128,000		$	1.75		9.61		31,000
Exercisable at June 30, 2011		5,021,000		$	9.26		4.62		736,000

The aggregate intrinsic value in the table above represents the difference between the Company’s stock closing price on the last day of trading during the six months ended June 30, 2011 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 June 30, 2011. This amount changes based on the fair market value of the Company’s stock. There were no options exercised during the three and six months ended June 30, 2011 and 2010. The number of options that vested during the three and six months ended June 30, 2011 and 2010 were 656,079 and 725,794 and 53,124 and 640,032 respectively.

As of June 30, 2011, approximately $170,000 of total unrecognized compensation cost related to stock options is expected to be recognized over a weighted-average period of 13.5 months. The stock option weighted-average fair value per share was $3.98 at June 30, 2011.

Transactions and other information relating to restricted stock grants for the six months ended June 30, 2011 are summarized below:

	Shares			Average Fair Value at Grant Date
Unvested at December 31, 2010		2,310,000		$	2.92
Grants		—		$	—
Vested		(1,205,000	)	$	2.87
Forfeited/cancelled/expired		—		$	—
Unvested at June 30, 2011		1,105,000		$	2.98

The restricted stock grants were included in the Company’s outstanding share numbers on the effective date of grant. As of June 30, 2011, approximately $3.1 million of total unrecognized compensation cost related to restricted stock grants is expected to be recognized over the next 11.5 months.

11. SEGMENT INFORMATION:

The Company has three reportable segments: (i) Radio Broadcasting; (ii) Internet; and (iii) Cable Television. These segments operate in the United States and are consistently aligned with the Company’s management of its businesses and its financial reporting structure.

The Radio Broadcasting segment consists of all broadcast and Reach Media results of operations. The Internet segment includes the results of our online business, including the operations of CCI. The Cable Television segment consists of TV One results of operations. Corporate/Eliminations/Other represents financial activity associated with our corporate staff and offices, intercompany activity between the three segments and activity associated with a small film venture.

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

Detailed segment data for the three and six month periods ended June 30, 2011 and 2010 is presented in the following tables:

	Three Months Ended June 30,
	2011			2010
		(Unaudited)
		(In thousands)
Net Revenue:
Radio Broadcasting	$	69,936		$	72,760
Internet		4,307			4,469
Cable Television		25,166			—
Corporate/Eliminations/Other		(2,347	)		(2,083	)
Consolidated	$	97,062		$	75,146

Operating Expenses (excluding depreciation, amortization and impairment charges and including stock-based compensation):
Radio Broadcasting	$	44,581		$	44,798
Internet		4,826			6,516
Cable Television		17,502			—
Corporate/Eliminations/Other		4,125			5,164
Consolidated	$	71,034		$	56,478

Depreciation and Amortization:
Radio Broadcasting	$	2,671		$	3,196
Internet		919			1,360
Cable Television		6,429			—
Corporate/Eliminations/Other		219			281
Consolidated	$	10,238		$	4,837

Operating income (loss):
Radio Broadcasting	$	22,684		$	24,766
Internet		(1,438	)		(3,407	)
Cable Television		1,235			—
Corporate/Eliminations/Other		(6,691	)		(7,528	)
Consolidated	$	15,790		$	13,831

	June 30, 2011			December 31, 2010
		(Unaudited)
		(In thousands)
Total Assets:
Radio Broadcasting	$	886,148		$	894,160
Internet		32,194			33,698
Cable Television		583,102			—
Corporate/Eliminations/Other		22,412			71,354
Consolidated	$	1,523,856		$	999,212

	Six Months Ended June 30,
	2011			2010
	(Unaudited)
	(In thousands)
Net Revenue:
Radio Broadcasting	$	132,919		$	129,955
Internet		7,821			7,948
Cable Television		25,166			—
Corporate/Eliminations/Other		(3,836	)		(3,777	)
Consolidated	$	162,070		$	134,126

Operating Expenses (excluding depreciation, amortization and impairment charges and including stock-based compensation):
Radio Broadcasting	$	90,455		$	84,591
Internet		9,897			12,138
Cable Television		17,502			—
Corporate/Eliminations/Other		8,528			10,165
Consolidated	$	126,382		$	106,894

Depreciation and Amortization:
Radio Broadcasting	$	5,407		$	6,334
Internet		2,037			2,631
Cable Television		6,429			—
Corporate/Eliminations/Other		448			580
Consolidated	$	14,321		$	9,545

Operating income (loss):
Radio Broadcasting	$	37,057		$	39,030
Internet		(4,113	)		(6,821	)
Cable Television		1,235			—
Corporate/Eliminations/Other		(12,812	)		(14,522	)
Consolidated	$	21,367		$	17,687

12. 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. During the three and six months ended June 30, 2011 and 2010, Radio One paid $1,000 and $5,000 and $0 and $6,000, respectively, to or on behalf of Music One, primarily for market talent event appearances, travel reimbursement and sponsorships. For the three and six months ended June 30, 2011 and 2010, the Company provided no advertising services to Music One. There were no cash, trade or no-charge orders placed by Music One for the three and six months ended June 30, 2011 and 2010.

The office space and administrative support transactions between Radio One and Music One are conducted at cost and all expenses associated with the transactions are passed through at actual costs. Costs associated with office space on behalf of Music One are calculated based on square footage used by Music One, multiplied by Radio One’s actual per square foot lease costs for the appropriate time period. Administrative services are calculated based on the approximate hours provided by each Radio One employee to Music One, multiplied by such employee’s applicable hourly rate and related benefits allocation. Advertising spots are priced at an average unit rate. Based on the cross-promotional nature of the activities provided by Music One and received by the Company, we believe that these methodologies of charging average unit rates or passing through the actual costs incurred are fair and reflect terms no more favorable than terms generally available to a third-party.

13. 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 6⅜% Senior Subordinated Notes due February 2013, the 12½%/15% Senior Subordinated Notes due May 2016, and the Company’s obligations under the 2011 Credit Agreement.

Set forth below are consolidated balance sheets for the Company and the Subsidiary Guarantors as of June 30, 2011 and December 31, 2010, and related consolidated statements of operations and cash flows for each of the three and six months ended June 31, 2011 and 2010. 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
Three Months Ended June 30, 2011

	Combined
	Guarantor			Radio
	Subsidiaries			One, Inc.		Eliminations			Consolidated
	(Unaudited)			(Unaudited)		(Unaudited)			(Unaudited)
	(In thousands)

NET REVENUE	$	33,743		$	63,319	$	—		$	97,062
OPERATING EXPENSES:
Programming and technical		7,677			23,041		—			30,718
Selling, general and administrative, including stock-based compensation		13,017			18,789		—			31,806
Corporate selling, general and administrative, including stock-based compensation		—			8,510		—			8,510
Depreciation and amortization		2,023			8,215		—			10,238
Total operating expenses		22,717			58,555		—			81,272
Operating income		11,026			4,764		—			15,790
INTEREST INCOME		—			9		—			9
INTEREST EXPENSE		—			22,916		—			22,916
GAIN ON INVESTMENT IN AFFILIATED COMPANY					146,879					146,879
EQUITY IN INCOME OF AFFILIATED COMPANY		—			208		—			208
OTHER EXPENSE, net					47		—			47
Income (loss) before provision for income taxes, noncontrolling interests in income of subsidiaries and discontinued operations		11,026			128,897		—			139,923
PROVISION FOR INCOME TAXES		—			38,611		—			38,611
Net income before equity in income of subsidiaries and discontinued operations		11,026			90,286		—			101,312
EQUITY IN INCOME OF SUBSIDIARIES		—			10,981		(10,981	)		—
Net income (loss) from continuing operations		11,026			101,267		(10,981	)		101,312
LOSS FROM DISCONTINUED OPERATIONS, net of tax		(45	)		—		—			(45	)
CONSOLIDATED NET INCOME (LOSS)		10,981			101,267		(10,981	)		101,267
NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS		—			2,717		—			2,717
CONSOLIDATED NET LOSS INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	10,981		$	98,550	$	(10,981	)	$	98,550

RADIO ONE, INC. AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF OPERATIONS
Three Months Ended June 30, 2010

	Combined
	Guarantor			Radio
	Subsidiaries			One, Inc.			Eliminations			Consolidated
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
	(As Adjusted - See Note 1)
	(In thousands)

NET REVENUE	$	35,567		$	39,579		$	—		$	75,146
OPERATING EXPENSES:
Programming and technical		8,781			10,513			—			19,294
Selling, general and administrative, including stock-based compensation		14,988			12,755			—			27,743
Corporate selling, general and administrative, including stock-based compensation		—			9,441			—			9,441
Depreciation and amortization		2,595			2,242			—			4,837
Total operating expenses		26,364			34,951			—			61,315
Operating income		9,203			4,628			—			13,831
INTEREST INCOME		—			43			—			43
INTEREST EXPENSE		—			9,703			—			9,703
EQUITY IN INCOME OF AFFILIATED COMPANY		—			1,139			—			1,139
OTHER (INCOME) EXPENSE, net		(3	)		2,409			—			2,406
Income (loss) before provision for income taxes, noncontrolling interests in income of subsidiaries and discontinued operations		9,206			(6,302	)		—			2,904
PROVISION FOR INCOME TAXES		—			233			—			233
Net income (loss) before equity in income of subsidiaries and discontinued operations		9,206			(6,535	)		—			2,671
EQUITY IN INCOME OF SUBSIDIARIES		—			9,110			(9,110	)		—
Net income (loss) from continuing operations		9,206			2,575			(9,110	)		2,671
LOSS FROM DISCONTINUED OPERATIONS, net of tax		(96)			(81	)		—			(177	)
CONSOLIDATED NET INCOME (LOSS)		9,110			2,494			(9,110	)		2,494
NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS		—			446			—			446
NET LOSS INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	9,110		$	2,048		$	(9,110	)	$	2,048

RADIO ONE, INC. AND SUBSIDIARIES

CONSOLIDATING STATEMENT OF OPERATIONS

Six Months Ended June 30, 2011

	Combined Guarantor Subsidiaries			Radio One, Inc.		Eliminations			Consolidated
	(Unaudited)			(Unaudited)		(Unaudited)			(Unaudited)
	(In thousands)

NET REVENUE	$	61,838		$	100,232	$	—		$	162,070
OPERATING EXPENSES:
Programming and technical		16,196			33,353		—			49,549
Selling, general and administrative, including stock-based compensation		25,888			34,413		—			60,301
Corporate selling, general and administrative, including stock-based compensation		—			16,532		—			16,532
Depreciation and amortization		4,210			10,111		—			14,321
Total operating expenses		46,294			94,409		—			140,703
Operating income		15,544			5,823		—			21,367
INTEREST INCOME		—			17		—			17
INTEREST EXPENSE		—			42,249		—			42,249
GAIN ON INVESTMENT IN AFFILIATED COMPANY		—			146,879		—			146,879
EQUITY IN INCOME OF AFFILIATED COMPANY		—			3,287		—			3,287
LOSS ON RETIREMENT OF DEBT		—			7,743		—			7,743
OTHER EXPENSE, NET		—			22		—			22
Income before provision for income taxes, noncontrolling interests in income of subsidiaries and discontinued operations		15,544			105,992		—			121,536
PROVISION FOR INCOME TAXES		—			84,230		—			84,230
Net income before equity in income of subsidiaries and discontinued operations		15,544			21,762		—			37,306
EQUITY IN INCOME OF SUBSIDIARIES		—			15,463		(15,463	)		—
Net income (loss) from continuing operations		15,544			37,225		(15,463	)		37,306
LOSS FROM DISCONTINUED OPERATIONS, net of tax		(81	)		—		—			(81	)
CONSOLIDATED NET INCOME (LOSS)		15,463			37,225		(15,463	)		37,225
NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS		—			2,920		—			2,920
NET LOSS INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	15,463		$	34,305	$	(15,463	)	$	34,305

RADIO ONE, INC. AND SUBSIDIARIES

CONSOLIDATING STATEMENT OF OPERATIONS

Six Months Ended June 30, 2010

	Combined Guarantor Subsidiaries			Radio One, Inc.			Eliminations			Consolidated
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
	(As Adjusted - See Note 1)
	(In thousands)

NET REVENUE	$	64,324		$	69,802		$	—		$	134,126
OPERATING EXPENSES:
Programming and technical		17,082			20,747			—			37,829
Selling, general and administrative, including stock-based compensation		28,862			21,867			—			50,729
Corporate selling, general and administrative, including stock-based compensation		—			18,336			—			18,336
Depreciation and amortization		5,138			4,407			—			9,545
Impairment of long-lived assets		—			—			—			—
Total operating expenses		51,082			65,357			—			116,439
Operating income		13,242			4,445			—			17,687
INTEREST INCOME		—			67			—			67
INTEREST EXPENSE		—			18,938			—			18,938
LOSS ON RETIREMENT OF DEBT		—			—			—			—
EQUITY IN INCOME OF AFFILIATED COMPANY		—			2,048			—			2,048
OTHER (INCOME) EXPENSE, NET		(114	)		2,997			—			2,883
Income (loss) before provision for income taxes, noncontrolling interests in income of subsidiaries and discontinued operations		13,356			(15,375	)		—			(2,019	)
BENEFIT FROM INCOME TAXES		—			(75	)		—			(75	)
Net income (loss) before equity in income of subsidiaries and discontinued operations		13,356			(15,300	)		—			(1,944	)
EQUITY IN INCOME OF SUBSIDIARIES		—			13,366			(13,366	)		—
Net income (loss) from continuing operations		13,356			(1,934	)		(13,366	)		(1,944	)
INCOME (LOSS) FROM DISCONTINUED OPERATIONS, net of tax		10			(169	)		—			(159	)
CONSOLIDATED NET INCOME (LOSS)		13,366			(2,103	)		(13,366	)		(2,103	)
NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS		—			417			—			417
NET LOSS INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	13,366		$	(2,520	)	$	(13,366	)	$	(2,520	)

RADIO ONE, INC. AND SUBSIDIARIES
CONSOLIDATING BALANCE SHEETS
As of June 30, 2011

	Combined
	Guarantor		Radio One,
	Subsidiaries		Inc.			Eliminations			Consolidated
	(Unaudited)		(Unaudited)			(Unaudited)			(Unaudited)
	(In thousands)

ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	52	$	29,837		$	—		$	29,889
Short-term investments		—		584			—			584
Trade accounts receivable, net of allowance for doubtful accounts		28,719		54,462			—			83,181
Prepaid expenses and other current assets		1,398		4,262			—			5,660
Current portion of content assets		—		17,732			—			17,732
Current assets from discontinued operations		—		129			—			129
Total current assets		30,169		107,006			—			137,175
PREPAID PROGRAMMING AND DEPOSITS		—		5,064			—			5,064
PROPERTY AND EQUIPMENT, net		17,946		15,683			—			33,629
INTANGIBLE ASSETS, net		566,667		722,871			—			1,289,538
CONTENT ASSETS, net		—		47,322			—			47,322
LONG-TERM INVESTMENTS		—		6,136			—			6,136
INVESTMENT IN SUBSIDIARIES		—		603,994			(603,994	)		—
OTHER ASSETS		350		3,129			—			3,479
NON-CURRENT ASSETS FROM DISCONTINUED OPERATIONS		1,513		—			—			1,513
Total assets	$	616,645	$	1,511,205		$	(603,994	)	$	1,523,856

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY

CURRENT LIABILITIES:
Accounts payable	$	927	$	3,721		$	—		$	4,648
Accrued interest		—		6,362			—			6,362
Accrued compensation and related benefits		1,985		8,608			—			10,593
Current portion of content payables				23,254			—			23,254
Income taxes payable		—		1,914			—			1,914
Other current liabilities		8,200		2,126			—			10,326
Current portion of long-term debt		—		4,860			—			4,860
Current liabilities from discontinued operations		49		31			—			80
Total current liabilities		11,161		50,876			—			62,037
LONG-TERM DEBT, net of current portion and original issue discount		—		792,773			—			792,773
CONTENT PAYABLES, net of current portion		—		18,214			—			18,214
OTHER LONG-TERM LIABILITIES		1,457		14,741			—			16,198
DEFERRED TAX LIABILITIES		—		172,536			—			172,536
NON-CURRENT LIABILITIES FROM DISCONTINUED OPERATIONS		33		—			—			33
Total liabilities		12,651		1,049,140			—			1,061,791

REDEEMABLE NONCONTROLLING INTERESTS		—		28,736			—			28,736

STOCKHOLDERS’ EQUITY:
Common stock		—		51			—			51
Accumulated other comprehensive income		—		56			—			56
Additional paid-in capital		216,847		991,884			(216,847	)		991,884
Retained earnings (accumulated deficit)		387,147		(764,740	)		(387,147	)		(764,740	)
Total stockholders’ equity		603,994		227,251			(603,994	)		227,251
Noncontrolling interest		—		206,078			—			206,078
Total Equity		603,994		433,329			(603,994	)		433,329
Total liabilities, redeemable noncontrolling interests and equity	$	616,645	$	1,511,205		$	(603,994	)	$	1,523,856

RADIO ONE, INC. AND SUBSIDIARIES
CONSOLIDATING BALANCE SHEETS
As of December 31, 2010

	Combined
	Guarantor		Radio One,
	Subsidiaries		Inc.			Eliminations			Consolidated
	(As Adjusted - See Note 1)
	(In thousands)

ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	1,043	$	8,149		$	—		$	9,192
Trade accounts receivable, net of allowance for doubtful accounts		30,427		28,000			—			58,427
Prepaid expenses and other current assets		1,323		7,050			—			8,373
Current assets from discontinued operations		31		128			—			159
Total current assets		32,824		43,327			—			76,151
PROPERTY AND EQUIPMENT, net		19,392		13,649			—			33,041
INTANGIBLE ASSETS, net		567,600		271,345			—			838,945
INVESTMENT IN SUBSIDIARIES		—		609,199			(609,199	)		—
INVESTMENT IN AFFILIATED COMPANY		—		47,470			—			47,470
OTHER ASSETS		497		1,484			—			1,981
NON-CURRENT ASSESTS FROM DISCONTINUED OPERATIONS		1,624		—			—			1,624
Total assets	$	621,937	$	986,474		$	(609,199	)	$	999,212

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Accounts payable	$	411	$	2,598		$	—		$	3,009
Accrued interest		—		4,558			—			4,558
Accrued compensation and related benefits		2,332		8,389			—			10,721
Income taxes payable		—		1,671			—			1,671
Other current liabilities		8,383		3,321			—			11,704
Current portion of long-term debt		—		18,402			—			18,402
Current liabilities from discontinued operations		44		(10	)		—			34
Total current liabilities		11,170		38,929			—			50,099
LONG-TERM DEBT, net of current portion		—		623,820			—			623,820
OTHER LONG-TERM LIABILITIES		1,531		9,363			—			10,894
DEFERRED TAX LIABILITIES		—		89,392			—			89,392
NON-CURRENT LIABILITIES FROM DISCONTINUED OPERATIONS		37		—			—			37
Total liabilities		12,738		761,504			—			774,242

REDEEMABLE NONCONTROLLING INTERESTS		—		30,635			—			30,635

STOCKHOLDERS’ EQUITY:
Common stock		—		54			—			54
Accumulated comprehensive income adjustments		—		(1,424	)		—			(1,424	)
Additional paid-in capital		237,515		994,750			(237,515	)		994,750
Retained earnings (accumulated deficit)		371,684		(799,045	)		(371,684	)		(799,045	)
Total stockholders’ equity		609,199		194,335			(609,199	)		194,335
Total liabilities, redeemable noncontrolling interests and stockholders' equity	$	621,937	$	986,474		$	(609,199	)	$	999,212

RADIO ONE, INC. AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF CASH FLOWS
Six Months Ended June 30, 2011

	Combined
	Guarantor			Radio
	Subsidiaries			One, Inc.			Eliminations			Consolidated
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
	(In thousands)

CASH FLOWS FROM OPERATING ACTIVITIES:
Consolidated net income (loss)	$	15,463			37,225			(15,463	)		37,225
Adjustments to reconcile net income (loss) to net cash from operating activities:
Depreciation and amortization		4,210			10,111			—			14,321
Amortization of debt financing costs		—			2,339			—			2,339
Amortization of content assets		—			9,406			—			9,406
Deferred income taxes		—			84,230			—			84,230
Gain on investment in affiliated company		—			(146,879	)		—			(146,879	)
Equity in income of affiliated company		—			(3,287	)		—			(3,287	)
Stock-based compensation and other non-cash compensation		—			2,136			—			2,136
Non-cash interest		—			12,391			—			12,391
Loss on retirement of debt		—			7,743			—			7,743
Effect of change in operating assets and liabilities, net of assets acquired:											—
Trade accounts receivable, net		1,708			(26,462	)		—			(24,754	)
Prepaid expenses and other current assets		(75	)		2,788			—			2,713
Other assets		147			1,778			—			1,925
Accounts payable		516			1,123			—			1,639
Due to corporate/from subsidiaries		(22,356	)		22,356			—			—
Accrued interest		—			1,804			—			1,804
Accrued compensation and related benefits		(347	)		219			—			(128	)
Income taxes payable		—			243			—			243
Other liabilities		(257	)		(1,290	)		—			(1,547	)
Net cash flows provided by operating activities from discontinued operations		—			616			—			616
Net cash flows provided by operating activities		(991	)		18,590			(15,463	)		2,136
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		—			(3,610	)		—			(3,610	)
Net cash and investments acquired in connection with TV One consolidation		—			65,245			—			65,245
Investment in subsidiaries		—			(15,463	)		15,463			—
Purchase of content assets		—			(2,345	)		—			(2,345	)
Net cash flows provided by investing activities		—			43,827			15,463			59,290
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from credit facility		—			378,280			—			378,280
Repayment of credit facility		—			(353,681	)		—			(353,681	)
Repurchase of common stock		—			(7,510	)		—			(7,510	)
Repurchase of noncontrolling interest		—			(54,595	)		—			(54,595	)
Proceeds from noncontrolling interest member		—			2,776			—			2,776
Debt refinancing and modification costs		—			(5,999	)		—			(5,999	)
Net cash flows used in financing activities		—			(40,729	)		—			(40,729	)
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		(991	)		21,688			—			20,697
CASH AND CASH EQUIVALENTS, beginning of period		1,043			8,149			—			9,192
CASH AND CASH EQUIVALENTS, end of period	$	52		$	29,837		$	—		$	29,889

RADIO ONE, INC. AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF CASH FLOWS
Six Months Ended June 30, 2010

	Combined
	Guarantor			Radio
	Subsidiaries			One, Inc.			Eliminations			Consolidated
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
	(As Adjusted - See Note 1)
	(In thousands)

CASH FLOWS FROM OPERATING ACTIVITIES:
Consolidated net income (loss)	$	13,366		$	(2,103	)	$	(13,366	)	$	(2,103	)
Adjustments to reconcile net income (loss) to net cash from operating activities:
Depreciation and amortization		5,138			4,407			—			9,545
Amortization of debt financing costs		—			1,168			—			1,168
Write off of debt financing costs		—			3,055			—			3,055
Deferred income taxes		—			(818	)		—			(818	)
Equity in income of affiliated company		—			(2,048	)		—			(2,048	)
Stock-based compensation and other non-cash compensation		—			3,969			—			3,969
Effect of change in operating assets and liabilities, net of assets acquired:											—
Trade accounts receivable, net		(3,161	)		(9,518	)		—			(12,679	)
Prepaid expenses and other current assets		(624	)		(1,283	)		—			(1,907	)
Other assets		187			2,413			—			2,600
Accounts payable		(325	)		(1,292	)		—			(1,617	)
Due to corporate/from subsidiaries		(22,564	)		22,564			—			—
Accrued interest		—			2,030			—			2,030
Accrued compensation and related benefits		373			2,291			—			2,664
Income taxes payable		—			327			—			327
Other liabilities		10,441			(7,845	)		—			2,596
Net cash flows provided by (used in) operating activities from discontinued operations		213			(109	)		—			104
Net cash flows provided by (used in) operating activities		3,044			17,208			(13,366	)		6,886
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(1,494	)		(495	)		—			(1,989	)
Investment in subsidiaries		—			(13,366	)		13,366			—
Purchase of other intangible assets		—			(268	)		—			(268	)
Net cash flows (used in) provided by investing activities		(1,494	)		(14,129	)		13,366			(2,257	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from credit facility		—			12,000			—			12,000
Repayment of credit facility		—			(8,449	)		—			(8,449	)
Debt refinancing and modification costs		—			(7,095	)		—			(7,095	)
Net cash flows used in financing activities		—			(3,544	)		—			(3,544	)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		1,550			(465	)		—			1,085
CASH AND CASH EQUIVALENTS, beginning of period		127			19,836			—			19,963
CASH AND CASH EQUIVALENTS, end of period	$	1,677		$	19,371		$	—		$	21,048

14. COMMITMENTS AND CONTINGENCIES:

Royalty Agreements

Effective December 31, 2009, our radio music license agreements with the two largest performance rights organizations, American Society of Composers, Authors and Publishers (“ASCAP”) and Broadcast Music, Inc. (“BMI”) expired. The Radio Music License Committee (“RMLC”), which negotiates music licensing fees for most of the radio industry with ASCAP and BMI, has reached an agreement with these organizations on a temporary fee schedule that reflects a provisional discount of 7.0% against 2009 fee levels. The temporary fee reductions became effective in January 2010. Absent an agreement on long-term fees between the RMLC and ASCAP and BMI, the U.S. District Court in New York has the authority to make an interim and permanent fee ruling for the new contract period. In May 2010 and June 2010, the U.S. District Court’s judge charged with determining the licenses fees ruled to further reduce interim fees paid to ASCAP and BMI, respectively, down approximately another 11.0% from the previous temporary fees negotiated with the RMLC.

The Company has entered into other fixed and variable fee music license agreements with other performance rights organizations, which expire as late as December 2015. In connection with these agreements, the Company incurred expenses of approximately $3.5 million and $6.3 million for the three and six month periods ended June 30, 2011, respectively, and approximately $3.0 million and $5.9 million, respectively, for the three and six month periods ended June 30, 2010.

Other Contingencies

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

Off-Balance Sheet Arrangements

As of June 30, 2011, we had four standby letters of credit totaling approximately $1.0 million in connection with our annual insurance policy renewals and real estate leases. In addition Reach Media had a letter of credit of $500,000.

Noncontrolling Interest Shareholders’ Put Rights

Beginning on February 28, 2012, the noncontrolling interest shareholders of Reach Media have an annual right to require Reach Media to purchase all or a portion of their shares at the then current fair market value for such shares. Beginning in 2012, this annual right can be exercised for a 30-day period beginning February 28 of each year. The purchase price for such shares may be paid in cash and/or registered Class D Common Stock of Radio One, at the discretion of Radio One. As a result, our ability to fund business operations, new acquisitions or new business initiatives could be limited.

15. SUBSEQUENT EVENTS:

On July 2011, we entered into a new advertising services agreement with TV One, effective January 2011. Under the new advertising services agreement, we (i) provide advertising services to TV One on certain of our media properties and (ii) act as media placement agent for TV One in certain instances. In return for such services, TV One pays us for such advertising time and, where we act as media placement agent, pays us a media placement fee equal to the lesser of 15% of media placement costs or a market rate, in addition to reimbursing us (or paying us in advance) for all actual costs associated with the media placement services. We are still negotiating a new network services agreement with TV One.

On November 24, 2010, in connection with the refinancing of prior outstanding bonds, we issued $286,794,302 of our 12½%/15% Senior Subordinated Notes due 2016 (the “Old 12½%/15% Senior Subordinated Notes”) in a private placement (the “Private Placement"). Simultaneously with the Private Placement, we entered into a registration rights agreement with the initial holders of the Old 12½%/15% Senior Subordinated Notes (the “Registration Rights Agreement”). Under the Registration Rights Agreement, we were required to use our reasonable best efforts to cause a registration statement for substantially identical notes, which will be issued in exchange for the Old 12½%/15% Senior Subordinated Notes, to be filed with the SEC within 90 days of the date of issuance of the Old Notes and to cause such registration statement to become effective within 120 days of the date of issuance of the Old Notes if the registration statement was not reviewed by the SEC or within 270 days of the date of issuance of the Old 12½%/15% Senior Subordinated Notes if the registration statement was reviewed by the SEC. We initially filed a registration statement on February 9, 2011 (the “Initial Registration Statement Filing”). The Initial Registration Statement Filing was reviewed by the SEC and we filed amendments to the Initial Registration Statement Filing on July 28, 2011 and August 4, 2011 (the Initial Registration Statement Filing, as amended by these amendments is referred to as the “Registration Statement”). The Registration Statement was declared effective by the SEC on August 8, 2011. The exchange offer contemplated by the Registration Statement expires at 5:00 p.m., New York City time, on September 8, 2011, unless extended by us.

Since July 1, 2011 and through August 15, 2011, the Company repurchased 37,082 shares of Class D common stock in the amount of $44,158 at an average price of $1.19 per share and 1,200 shares of Class A common stock in the amount of $1,514 at an average price of $1.26 per share. As of August 15, 2011, the Company had approximately $7.4 million in capacity available under its share repurchase program.

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

The following information should be read in conjunction with “Selected Financial Data” and the Consolidated Financial Statements and Notes thereto included elsewhere in this report and the audited financial statements and Management’s Discussion and Analysis contained in our Annual Report on Form 10-K for the year ended December 31, 2010.

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 June 30, 2011 and 2010, approximately 63.1% and 84.3%, respectively, of our net revenue was generated from the sale of advertising in our core radio business, excluding Reach Media. During the six months ended June 30, 2011 and 2010, approximately 68.2% and 84.7%, respectively, of our net revenue was generated from the sale of advertising in our core radio business, excluding Reach Media. During the three and six months ended June 30, 2011, approximately 41.3% and 45.9%, respectively, of our total net revenue was generated from local advertising and approximately 37.9% and 35.8%, respectively, was generated from national advertising, including network advertising. In comparison, during the three and six months ended June 30, 2010, approximately 56.1% and 57.6%, respectively, of our net revenue was generated from local advertising and approximately 36.1% and 36.4%, respectively, was generated from national advertising, including network advertising. National advertising also includes advertising revenue generated from our internet segments. The balance of revenue was generated from tower rental income, ticket sales and revenue related to our sponsored events, management fees and other revenue.

In the broadcasting industry, radio stations and television stations often utilize trade or barter agreements to reduce cash expenses by exchanging advertising time for goods or services. In order to maximize cash revenue for our spot inventory, we closely monitor the use of trade and barter agreements.

Community Connect, LLC (“CCI”), which is included within the operations of Interactive One, currently generates the majority of the Company’s internet revenue, and derives its revenue principally from advertising services, including diversity recruiting advertising. 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. Interactive One has a diversity recruiting relationship with Monster, Inc. (“Monster”). Monster posts job listings and advertising on Interactive One websites and Interactive One earns revenue for displaying the images on its websites.

TV One generates the Company’s cable television revenue, and derives its revenue principally from advertising and affiliate revenue. Advertising revenue is derived from the sale of television air time to advertisers and is recognized when the advertisements are run. TV One also receives affiliate fees and records revenue during the term of various affiliation agreements at levels appropriate for the most recent subscriber counts reported by the applicable affiliate.

Expenses

Our significant radio 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, in certain markets, the programming management function. We also use our multiple stations, market presence and purchasing power to negotiate favorable rates with certain vendors and national representative selling agencies.

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

In addition to salaries and commissions, major expenses for our internet business include membership traffic acquisition costs, software product design, post application software development and maintenance, database and server support costs, the help desk function, data center expenses connected with internet service provider (“ISP”) hosting services and other internet content delivery expenses.

Major expenses for our cable television business include content acquisition and amortization, sales and marketing.

Measurement of Performance

We monitor and evaluate the growth and operational performance of our business using net income and the following key metrics:

(a) Net revenue: The performance of an individual radio station or group of radio stations in a particular market is customarily measured by its ability to generate net revenue. Net revenue consists of gross revenue, net of local and national agency and outside sales representative commissions consistent with industry practice. Net revenue is recognized in the period in which advertisements are broadcast. Net revenue also includes advertising aired in exchange for goods and services, which is recorded at fair value, revenue from sponsored events and other revenue. Net revenue is recognized for our online business as impressions are delivered, as “click throughs” are reported or ratably over contract periods, where applicable. Net revenue is recognized for our cable television business as advertisements are run, and during the term of the affiliation agreements at levels appropriate for the most recent subscriber counts reported by the affiliate.

(b) Station operating income: Net income (loss) before depreciation and amortization, income taxes, interest income, interest expense, equity in income of affiliated company, noncontrolling interests in income (loss) of subsidiaries, gain/loss 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 in the United States (“GAAP”). 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 management 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 fixed and long-lived intangible assets, 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 loss or cash flow from operating activities, as those terms are defined under GAAP, and should not be considered as an alternative to those measurements as an indicator of our performance.

(c) 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 GAAP. 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.

Summary of Performance

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

	Three Months Ended June 30,						Six Months Ended June 30,
	2011			2010			2011			2010
					(As Adjusted – See Note 1 of our Consolidated Financial Statements)						(As Adjusted – See Note 1 of our Consolidated Financial Statements)
	(In thousands, except margin data)

Net revenue	$	97,062		$	75,146		$	162,070		$	134,126
Station operating income		34,750			28,388			52,596			46,250
Station operating income margin		35.8	%		37.8	%		32.5	%		34.5	%
Consolidated net income (loss) attributable to common stockholders	$	98,550		$	2,048		$	34,305		$	(2,520	)

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

	Three Months Ended						Six Months Ended
	June 30,
	2011			2010			2011			2010
				(As Adjusted – See Note 1 of our Consolidated Financial Statements)						(As Adjusted – See Note 1 of our Consolidated Financial Statements)
	(In thousands)
Consolidated net income (loss) attributable to common stockholders	$	98,550		$	2,048		$	34,305		$	(2,520	)
Add back non-station operating income items included in consolidated net income (loss):
Interest income		(9	)		(43	)		(17	)		(67	)
Interest expense		22,916			9,703			42,249			18,938
Provision for (benefit from) income taxes		38,611			233			84,230			(75	)
Corporate selling, general and administrative, excluding stock-based compensation		7,523			7,764			14,772			15,049
Stock-based compensation		1,199			1,956			2,136			3,969
Equity in income of affiliated company		(208	)		(1,139	)		(3,287	)		(2,048	)
Loss on retirement of debt		—			—			7,743			—
Gain on investment in affiliated company		(146,879	)		—			(146,879	)		—
Other expense, net		47			2,406			22			2,883
Depreciation and amortization		10,238			4,837			14,321			9,545
Noncontrolling interests in income of subsidiaries		2,717			446			2,920			417
Loss from discontinued operations, net of tax		45			177			81			159
Station operating income	$	34,750		$	28,388		$	52,596		$	46,250

RADIO ONE, INC. AND SUBSIDIARIES

RESULTS OF OPERATIONS

The following table summarizes our historical consolidated results of operations:

Three Months Ended June 30, 2011 Compared to Three Months Ended June 30, 2010 (In thousands)

	Three Months Ended June 30,
	2011			2010			Increase/(Decrease)
	(Unaudited)

Statements of Operations:
Net revenue	$	97,062		$	75,146		$	21,916		29.2	%
Operating expenses:
Programming and technical, excluding stock-based compensation		30,718			19,294			11,424		59.2
Selling, general and administrative, excluding stock-based compensation		31,594			27,464			4,130		15.0
Corporate selling, general and administrative, excluding stock-based compensation		7,523			7,764			(241	)	(3.1	)
Stock-based compensation		1,199			1,956			(757	)	(38.7	)
Depreciation and amortization		10,238			4,837			5,401		111.7
Total operating expenses		81,272			61,315			19,957		32.5
Operating income		15,790			13,831			1,959		14.2
Interest income		9			43			(34	)	(79.1	)
Interest expense		22,916			9,703			13,213		136.2
Gain on investment in affiliated company		146,879			—			146,879		100.0
Equity in income of affiliated company		208			1,139			(931	)	(81.7	)
Other expense, net		47			2,406			(2,359	)	(98.0	)
Income before provision for income taxes, noncontrolling interests in income of subsidiaries and discontinued operations		139,923			2,904			137,019		4,718.3
Provision for income taxes		38,611			233			38,378		16,471.2
Net income from continuing operations		101,312			2,671			98,641		3,693.0
Loss from discontinued operations, net of tax		(45	)		(177	)		(132	)	(74.6	)
Consolidated net income		101,267			2,494			98,773		3,960.4
Net income attributable to noncontrolling interests		2,717			446			2,271		509.2
Net income attributable to common stockholders	$	98,550		$	2,048		$	96,502		4,712.0	%

Net revenue

Three Months Ended June 30,				Increase/(Decrease)
2011		2010
$	97,062	$	75,146	$	21,916	29.2	%

During the three months ended June 30, 2011, we recognized approximately $97.1 million in net revenue compared to approximately $75.1 million during the same period in 2010. These amounts are net of agency and outside sales representative commissions, which were approximately $8.6 million during the three months ended June 30, 2011, compared to approximately $8.4 million for the comparable period in 2010. We began to consolidate the results of TV One during the three months ended June 30, 2011 and recognized approximately $25.2 million of revenue from our new cable television segment. Our radio stations’ net revenues decreased 4.3%, and based on reports prepared by the independent accounting firm Miller, Kaplan, Arase & Co., LLP (“Miller Kaplan”), the markets we operate in grew 1.5% in total revenues, led primarily by growth in local revenues of 1.4%, while national revenue in our radio marketplaces decreased 0.7% for the quarter. Net revenue growth for our radio stations was led by our Atlanta, Charlotte, Cincinnati, Detroit and St. Louis clusters, while our Baltimore, Columbus, Dallas and Houston markets experienced the most significant declines. Excluding Reach Media, net revenue for our radio division decreased 3.4%. Reach Media net revenue declined 6.2%, primarily due to the change in date for the ongoing cruise event, the “Tom Joyner Fantastic Voyage” (this event was held in March 2011 versus in May 2010). Reach Media recognized $363,000 of revenue related to the cruise event during the three months ended June 30, 2010. Net revenue for our internet business declined 3.6% for the three months ended June 30, 2011 compared to the same period in 2010.

Operating Expenses

Programming and technical, excluding stock-based compensation

Three Months Ended June 30,				Increase/(Decrease)
2011		2010
$	30,718	$	19,294	$	11,424	59.2	%

Programming and technical expenses include expenses associated with on-air talent and the management and maintenance of the systems, tower facilities, and studios used in the creation, distribution and broadcast of programming content on our radio stations. Programming and technical expenses for radio also include expenses associated with our programming research activities and music royalties. 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. For our cable television segment, programming and technical expenses include expenses associated with the technical, programming, production, and content management. The increase for the three months ended June 30, 2011 compared to the same period in 2010 is primarily related to the consolidation of TV One as approximately $11.8 million was recognized directly from TV One. Approximately $9.4 million of this amount relates to content amortization. Excluding the impact of consolidating TV One’s operating results, our programming and technical expenses declined by 1.8% for the quarter compared to the same period in 2010.

Selling, general and administrative, excluding stock-based compensation

Three Months Ended June 30,				Increase/(Decrease)
2011		2010
$	31,594	$	27,464	$	4,130	15.0	%

Selling, general and administrative expenses include expenses associated with our sales departments, offices and facilities and personnel (outside of our corporate headquarters), marketing and promotional expenses, special events and sponsorships and back office expenses. Expenses to secure ratings data for our radio stations and visitors’ data for our websites are also included in selling, general and administrative expenses. In addition, selling, general and administrative expenses for radio and internet include expenses related to the advertising traffic (scheduling and insertion) functions. Selling, general and administrative expenses also include membership traffic acquisition costs for our online business. Our cable television segment accounted for approximately $5.8 million of the increase due to the impact of consolidating TV One results. This increase was offset by savings of approximately $1.5 million generated in our internet division, primarily from decreases in payroll related expenses and marketing and promotional spending. Excluding the impact of consolidating TV One’s operating results, our selling, general and administrative expenses declined by 6.3% for the quarter compared to the same period in 2010.

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

Three Months Ended June 30,				Increase/(Decrease)
2011		2010
$	7,523	$	7,764	$	(241	)	(3.1	)%

Corporate expenses consist of expenses associated with our corporate headquarters and facilities, including personnel. The decrease in corporate expenses was due to lower professional fees, which were offset by payroll related increases due to annual salary adjustments and increased bonuses.

Stock-based compensation

Three Months Ended June 30,				Increase/(Decrease)
2011		2010
$	1,199	$	1,956	$	(757	)	(38.7	)%

Stock-based compensation expense is due to a long-term incentive plan whereby officers and certain key employees were granted a total of 3,250,000 shares of restricted stock in January of 2010. Stock-based compensation requires measurement of compensation costs 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 decrease in stock-based compensation expense was due to one-time accelerated vesting being recorded for the three months ended June 30, 2010 versus a more normalized vesting for the same period in 2011.

Depreciation and amortization

Three Months Ended June 30,				Increase/(Decrease)
2011		2010
$	10,238	$	4,837	$	5,401	111.7	%

The increase in depreciation and amortization expense for the three months ended June 30, 2011 was due primarily to additional depreciation and amortization expense of approximately $6.4 million resulting from fixed and intangible assets recorded as part of the consolidation of TV One. This increased expense was offset by the completion of amortization for certain CCI intangible assets and the completion of depreciation and amortization for certain assets.

Interest expense

Three Months Ended June 30,				Increase/(Decrease)
2011		2010
$	22,916	$	9,703	$	13,213	136.2	%

The increase in interest expense for the three months ended June 30, 2011 was due to our entry into the 2011 Credit Agreement on March 31, 2011 and Amended Exchange Offer on November 24, 2010, as well as the consolidation of TV One, including its $119.0 million senior secured notes due in 2016 (the “TV One Notes”). Higher interest rates associated with the 2011 Credit Agreement and Amended Exchange Offer were in effect for the three months ended June 30, 2011 compared to the same period in 2010. The increase in the overall effective rate of borrowing for the three months ended June 30, 2011 was approximately 5.6% compared to the three months ended June 30, 2010. Approximately $3.1 million of the increased interest expense relates to the TV One Notes.

Other expense, net

Three Months Ended June 30,				Increase/(Decrease)
2011		2010
$	47	$	2,406	$	(2,359	)	(98.0	)%

The other expense for the three months ended June 30, 2010 was principally due to a write off of a pro-rata portion of debt financing and modification costs in connection with the Company’s offering of Second-Priority Senior Secured Grid Notes upon which the Company did not close (the “Abandoned Second Lien Notes”).

Gain on investment in affiliated company

Three Months Ended June 30,				Increase/(Decrease)
2011		2010
$	146,879	$	—	$	146,879	100.0	%

The gain on investment in affiliated company of approximately $146.9 million for the three months ended June 30, 2011 was due to acquiring the controlling interest in and the accounting impact of consolidating TV One’s operating results as of April 14, 2011.

Equity in income of affiliated company

Three Months Ended June 30,				Increase/(Decrease)
2011		2010
$	208	$	1,139	$	(931	)	(81.7	)%

Equity in income of affiliated company primarily reflects our estimated equity in the net income of TV One. The decrease to equity in income of affiliated company for the three months ended June 30, 2011 was due to the consolidation of TV One during this period. Previously, the Company’s share of the net income was driven by TV One’s current capital structure and the Company’s percentage ownership of the equity securities of TV One. Beginning on April 14, 2011, the Company began to account for TV One on a consolidated basis.

Provision for income taxes

Three Months Ended June 30,				Increase/(Decrease)
2011		2010
$	38,611	$	233	$	38,378	16,471.2	%

For the three months ended June 30, 2011 and 2010, a tax expense of approximately $44.5 million was recognized for the partnership interest in TV One. A tax benefit of approximately $6.7 million was recognized for the change in the DTL related to indefinite lived intangibles and a state tax benefit of $59,000. The remaining tax consists of discrete items of $810,000, and the tax expense for Reach Media of $151,000.

The Company is estimating an annual effective tax rate of approximately 69% for 2011. The Company continues to maintain a full valuation allowance for entities other than Reach Media for its deferred tax assets (“DTAs”), including the DTA associated with its net operating loss carryforward. As a result, pre-tax book income for the entities other than Reach Media does not generate any tax expense. Instead, the tax expense for these entities is based on the change in the DTL associated with certain indefinite-lived intangibles, which increases as tax amortization on these intangibles is recognized and decreases as impairments for book purposes are recorded on these assets. In addition to the DTL on these intangibles, a portion of the DTL for the partnership interest in TV One cannot be offset by the DTAs from the net operating loss carryforward and therefore results in a current period expense.

The consolidated effective tax rate for the three months ended June 30, 2011 and 2010 was 27.6% and 8.1%, respectively.

Loss from discontinued operations, net of tax

Three Months Ended June 30,						Increase/(Decrease)
2011			2010
$	(45	)	$	(177	)	$	(132	)	(74.6	)%

Included in the loss from discontinued operations, net of tax, are the results from operations for radio station clusters sold or made the subject of an LMA in Los Angeles, Miami, Augusta, Louisville, Dayton, Minneapolis and Boston markets. Discontinued operations also include the results from operations for Giant Magazine, which ceased publication in December 2009. The loss from discontinued operations, net of tax, for the three months ended June 30, 2010 resulted from legal and litigation expenses incurred as a result of ongoing legal activity for certain station sales. The loss from discontinued operations, net of tax, for the three months ended June 30, 2011 resulted primarily from the remaining Boston radio station entering into an LMA in June 2011. The loss from discontinued operations, net of tax, also includes a tax provision of zero for the three months ended June 30, 2011 and 2010.

Noncontrolling interests in income of subsidiaries

Three Months Ended June 30,				Increase/(Decrease)
2011		2010
$	2,717	$	446	$	2,271	509.2	%

The increase in noncontrolling interests in income of subsidiaries is due primarily to the impact of consolidating TV One’s operating results during the three months ended June 30, 2011. This amount is partially offset by lower net income generated by Reach Media for the three months ended June 30, 2011 compared to the same period in 2010.

Other Data

Station operating income

Station operating income increased to approximately $34.8 million for the three months ended June 30, 2011 compared to approximately $28.4 million for the comparable period in 2010, an increase of $6.4 million or 22.5%. This increase was primarily due to the impact of consolidating TV One results, as TV One generated approximately $7.6 million of station operating income during the quarter ended June 30, 2011.

Station operating income margin

Station operating income margin decreased to 35.8% for the three months ended June 30, 2011 from 37.8% for the comparable period in 2010. The margin decrease was primarily attributable to the impact of consolidating TV One results as described above.

RADIO ONE, INC. AND SUBSIDIARIES

RESULTS OF OPERATIONS

The following table summarizes our historical consolidated results of operations:

Six Months Ended June 30, 2011, Compared to Six Months Ended June 30, 2010 (In thousands)

	Six Months Ended June 30,
	2011			2010			Increase/(Decrease)
	(Unaudited)

Statements of Operations:
Net revenue	$	162,070		$	134,126		$	27,944		20.8	%
Operating expenses:
Programming and technical, excluding stock-based compensation		49,549			37,829			11,720		31.0
Selling, general and administrative, excluding stock-based compensation		59,925			50,047			9,878		19.7
Corporate selling, general and administrative, excluding stock-based compensation		14,772			15,049			(277	)	(1.8	)
Stock-based compensation		2,136			3,969			(1,833	)	(46.2	)
Depreciation and amortization		14,321			9,545			4,776		50.0
Total operating expenses		140,703			116,439			24,264		20.8
Operating income		21,367			17,687			3,680		20.8
Interest income		17			67			(50	)	(74.6	)
Interest expense		42,249			18,938			23,311		123.1
Loss on retirement of debt		7,743			—			7,743		100.0
Gain on investment in affiliated company		146,879			—			146,879		100.0
Equity in income of affiliated company		3,287			2,048			1,239		60.5
Other expense, net		22			2,883			(2,861	)	(99.2	)
Income (loss) before provision for (benefit from) income taxes, noncontrolling interests in income of subsidiaries and discontinued operations		121,536			(2,019	)		123,555		6,119.6
Provision for (benefit from) income taxes		84,230			(75	)		84,305		112,406.7
Net income (loss) from continuing operations		37,306			(1,944	)		39,250		2,019.0
Loss from discontinued operations, net of tax		(81	)		(159	)		(78	)	(49.1	)
Consolidated net income (loss)		37,225			(2,103	)		39,328		1,870.1
Net income attributable to noncontrolling interests		2,920			417			2,503		600.2
Net income (loss) attributable to common stockholders	$	34,305		$	(2,520	)	$	36,825		1,461.3	%

Net revenue

Six Months Ended June 30,				Increase/(Decrease)
2011		2010
$	162,070	$	134,126	$	27,944	20.8	%

During the six months ended June 30, 2011, we recognized approximately $162.1 million in net revenue compared to approximately $134.1 million during the same period in 2010. These amounts are net of agency and outside sales representative commissions, which were approximately $15.4 million during the six months ended 2011, compared to approximately $15.1 million during the same period in 2010. We began to consolidate the results of TV One during the three months ended June 30, 2011 and recognized approximately $25.2 million of revenue from our cable television segment. Our radio stations’ net revenue declined 3.1% for the six months ended June 30, 2011, and based on reports prepared by Miller Kaplan, the markets we operate in increased 2.9% in total revenues, led primarily by growth in local revenues of 2.9%. Our Atlanta, Charlotte, Cincinnati, Detroit and St. Louis markets experienced net revenue growth, while our Baltimore, Columbus and Dallas markets experienced the most significant declines. For our radio stations, overall national sales were down 4.3% and local sales were down 2.3%. Reach Media net revenue increased 32.9% for the six months ended June 30, 2011 compared to the same period in 2010 due primarily from assuming operational and financial control and responsibility for the ongoing cruise event, the “Tom Joyner Fantastic Voyage.” The “Tom Joyner Fantastic Voyage” took place in March 2011 and generated approximately $6.6 million of revenue for Reach Media. Net revenue for our internet business declined 1.6% for the six months ended June 30, 2011 compared to the same period in 2010.

Operating Expenses

Programming and technical, excluding stock-based compensation

Six Months Ended June 30,				Increase/(Decrease)
2011		2010
$	49,549	$	37,829	$	11,720	31.0	%

Programming and technical expenses include expenses associated with on-air talent and the management and maintenance of the systems, tower facilities, and studios used in the creation, distribution and broadcast of programming content on our radio stations. Programming and technical expenses for radio also include expenses associated with our programming research activities and music royalties. 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. For our cable television segment, programming and technical expenses include expenses associated with the technical, programming, production, and content management. The increase for the six months ended June 30, 2011 compared to the same period in 2010 is primarily related to consolidating the results of TV One, as approximately $11.8 million of our consolidated programming and technical operating expenses were recognized directly from TV One. Approximately $9.4 million of this amount relates to content amortization. Excluding the impact of consolidating TV One’s operating results, our programming and technical expenses declined by 0.1% for the six months ended June 30, 2011 compared to the same period in 2010.

Selling, general and administrative, excluding stock-based compensation

Six Months Ended June 30,				Increase/(Decrease)
2011		2010
$	59,925	$	50,047	$	9,878	19.7	%

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 radio stations and visitors’ data for our websites are also included in selling, general and administrative expenses. In addition, selling, general and administrative expenses for radio and internet include expenses related to the advertising traffic (scheduling and insertion) functions. Selling, general and administrative expenses also include membership traffic acquisition costs for our online business. Our cable television segment accounted for approximately $5.8 million of the increase due to the impact of consolidating the results of TV One. Excluding the impact of consolidating the results of TV One, our selling, general and administrative expenses increased by 7.4%. The increased expense for the six months ended June 30, 2011 compared to the same period in 2010 is primarily due to Reach Media events spending associated with Reach assuming operational and financial control and responsibility for the “Tom Joyner Fantastic Voyage,” held in March 2011. Reach Media incurred over $5.0 million of selling, general and administrative expenses associated with the “Tom Joyner Fantastic Voyage,” held in March 2011. This increase was offset by savings of approximately $2.2 million generated in our internet division, primarily from decreases in payroll related expenses and marketing and promotional spending.

Stock-based compensation

Six Months Ended June 30,				Increase/(Decrease)
2011		2010
$	2,136	$	3,969	$	(1,833	)	(46.2	)%

Stock-based compensation expense is due to a long-term incentive plan whereby officers and certain key employees were granted a total of 3,250,000 shares of restricted stock in January of 2010. Stock-based compensation requires measurement of compensation costs 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 decrease in stock-based compensation expense was due to accelerated vesting being recorded for the six months ended June 30, 2010 versus a more normalized vesting for the same period in 2011.

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

Six Months Ended June 30,				Increase/(Decrease)
2011		2010
$	14,772	$	15,049	$	(277	)	(1.8	)%

Corporate expenses consist of expenses associated with our corporate headquarters and facilities, including personnel. The decrease in corporate expenses was primarily related to a decrease in compensation expense for the Chief Executive Officer in connection with the potential payment for the TV One award element in his employment Agreement as well as decreased professional fees. The decreases were offset by payroll related increases due to annual salary adjustments and increased bonuses.

Depreciation and amortization

Six Months Ended June 30,				Increase/(Decrease)
2011		2010
$	14,321	$	9,545	$	4,776	50.0	%

The increase in depreciation and amortization expense for the six months ended June 30, 2011 was due primarily to additional depreciation and amortization expense of approximately $6.4 million resulting from fixed and intangible assets recorded as part of the consolidation of TV One. This increased expense was offset by the completion of amortization for certain CCI intangible assets and the completion of depreciation and amortization for certain assets.

Interest expense

Six Months Ended June 30,				Increase/(Decrease)
2011		2010
$	42,249	$	18,938	$	23,311	123.1	%

The increase in interest expense for the six months ended June 30, 2011 was due to our entry into the 2011 Credit Agreement on March 31, 2011 and Amended Exchange Offer on November 24, 2010, as well as the consolidation of TV One, including the TV One Notes. Higher interest rates associated with the 2011 Credit Agreement and Amended Exchange Offer were in effect for the six months ended June 30, 2011 compared to the same period in 2010. The increase in the overall effective rate of borrowing for the six months ended June 30, 2011 was approximately 4.8% compared to the six months ended June 30, 2010. Approximately $3.1 million of the increased interest expense relates to the TV One Notes.

Loss on retirement of debt

Six Months Ended June 30,				Increase/(Decrease)
2011		2010
$	7,743	$	—	$	7,743	100.0	%

The loss on retirement of debt for the six months ended June 30, 2011 was due to a charge related to the retirement of the 2011 Credit Facility on March 31, 2011. This amount includes a write-off of approximately $6.5 million of capitalized debt financing costs associated with the Amended and Restated Credit Facility and a write-off of approximately $1.2 million associated with the termination of the Company’s interest rate swap agreement.

Gain on investment in affiliated company

Six Months Ended June 30,				Increase/(Decrease)
2011		2010
$	146,879	$	—	$	146,879	100.0	%

The gain on investment in affiliated company of approximately $146.9 million for the six months ended June 30, 2011 was due to acquiring the controlling interest in and the accounting impact of consolidating TV One’s operating results as of April 14, 2011.

Equity in income of affiliated company

Six Months Ended June 30,				Increase/(Decrease)
2011		2010
$	3,287	$	2,048	$	1,239	60.5	%

Equity in income of affiliated company primarily reflects our estimated equity in the net income of TV One. The increase to equity in income of affiliated company for the six months ended June 30, 2011 was due primarily to additional net income generated by TV One for the six months ended June 30, 2011 versus the same period in 2010. The Company’s share of the net income is driven by TV One’s current capital structure and the Company’s percentage ownership of the equity securities of TV One. Beginning on April 14, 2011, the Company began to account for TV One on a consolidated basis.

Other expense, net

Six Months Ended June 30,				Increase/(Decrease)
2011		2010
$	22	$	2,883	$	(2,861	)	(99.2	)%

The other expense for the six months ended June 30, 2010 was principally due to the write off of a portion of deferred financing costs due to a reduction in the revolver commitment and the write off of certain deferred financing costs related to the Abandoned Second Lien Notes. There were costs associated with lowering the revolver commitment under the Company’s bank facilities from $500.0 million to $400.0 million, resulting from entering into a third amendment to our Credit Agreement in March 2010. In addition, there were costs written off in connection with the Company’s offering of the Abandoned Second Lien Notes.

Provision for (benefit from) income taxes

Six Months Ended June 30,					Increase/(Decrease)
2011		2010
$	84,230	$	(75	)	$	84,305	112,406.7	%

For the six months ended June 30, 2011, the provision for income taxes was $84.2 million compared to a benefit from income taxes of $75,000 for the same period in 2010. Approximately $44.5 million of the increase is due to the deferred tax liability for the partnership interest in TV One and $38.5 million of the increase is due to the increase in the deferred tax liability for indefinite-lived intangibles related to radio broadcasting.

For the six months ended June 30, 2011 a tax expense of approximately $44.5 million was recognized for the partnership interest in TV One and $38.5 million was recognized for the change in the DTL on indefinite-lived intangibles. State taxes on Radio One were $326,000 and discrete items were $810,000. The tax expense for Reach Media was $78,000.

The Company continues to maintain a full valuation allowance for entities other than Reach Media for its deferred tax assets (“DTAs”), including the DTA associated with its net operating loss carryforward. As a result, pre-tax book income for the entities other than Reach Media does not generate any tax expense. Instead, the tax expense for these entities is based on the change in the DTL associated with certain indefinite-lived intangibles, which increases as tax amortization on these intangibles is recognized and decreases as impairments for book purposes are recorded on these assets. In addition to the DTL on these intangibles, a portion of the DTL for the partnership interest in TV One cannot be offset by the DTAs from the net operating loss carryforward and therefore results in a current period expense.

For 2010, no tax expense was recognized for the partnership interest in TV One as there was no significant change in the basis difference during that period. The zero tax expense for 2010 for indefinite-lived intangibles and state taxes was based on the reduction of the 2010 effective tax rate to zero percent to prevent the recognition of a tax benefit for which management believed it was more likely than not that the benefit would not be realized. The tax benefit for 2010 for Reach Media was $141,000, which was offset by discrete items of $66,000 for a net benefit of $75,000.

The consolidated effective tax rate for the six months ended June 30, 2011 and 2010 was 69.3% and 3.6%, respectively.

Loss from discontinued operations, net of tax

Six Months Ended June 30,						Increase/(Decrease)
2011			2010
$	(81	)	$	(159	)	$	(78	)	(49.1	)%

Included in the loss from discontinued operations, net of tax, are the results from operations for radio station clusters sold or made the subject of an LMA in the Los Angeles, Miami, Augusta, Louisville, Dayton, Minneapolis and Boston markets. Discontinued operations also include the results from operations for Giant Magazine, which ceased publication in December 2009. The loss incurred for the six months ended June 30, 2010 was due to legal and litigation spending from ongoing litigation for certain previous station sales. This spending was partially offset by the assumption of Giant Magazines subscriber liability by another publisher. The loss from discontinued operations, net of tax, for the six months ended June 30, 2011 resulted primarily from our remaining station in our Boston market entering into an LMA. The loss from discontinued operations, net of tax, also includes a provision for zero for the six months ended June 30, 2011 and 2010.

Noncontrolling interests in income of subsidiaries

Six Months Ended June 30,				Increase/(Decrease)
2011		2010
$	2,920	$	417	$	2,503	600.2	%

The increase in noncontrolling interests in income of subsidiaries is due to the generation of net income by Reach Media during the six months ended June 30, 2011 compared to the same period in 2010 as well as the impact of consolidating TV One’s operating results for the three months ended June 30, 2011.

Other Data

Station operating income

Station operating income increased to approximately $52.6 million for the six months ended June 30, 2011 compared to approximately $46.3 million for the comparable period in 2010, an increase of $6.3 million or 13.6%. This increase was primarily due to consolidating TV One results, as TV One generated approximately $7.6 million of station operating income during the six months ended June 30, 2011.

Station operating income margin

Station operating income margin decreased to 32.5% for the six months ended June 30, 2011 from 34.5% for the comparable period in 2010. The margin decrease was primarily attributable to the impact of consolidating TV One results as described above.

LIQUIDITY AND CAPITAL RESOURCES

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

For the purposes of the below discussion, the term “November 2010 Refinancing Transactions” refers to (i) our November 24, 2010, exchange and cancellation of approximately $97.0 million of our 8⅞% senior subordinated notes due 2011 (the “2011 Notes”) and approximately $199.3 million of our 6⅜% senior subordinated notes due 2013 (the “2013 Notes” and together with the 2011 Notes, the “Prior Notes”) for approximately $287.0 million of our 2016 Notes; (ii) our entrance into supplemental indentures in respect of each of the Prior Notes which waived any and all existing defaults and events of default that had arisen or may have arisen that may be waived and eliminated substantially all of the covenants in each indenture governing the Prior Notes, other than the covenants to pay principal of and interest on the Prior Notes when due, and eliminated or modified the related events of default; and (iii) our entrance into an amendment to our senior credit facility as described below.

Credit Facilities

March 2011 Refinancing Transaction

The 2011 Credit Agreement contains affirmative and negative covenants that the Company is required to comply with, including:

(a) maintaining an interest coverage ratio of no less than:

1.25 to 1.00 on June 30, 2011 and the last day of each fiscal quarter through September 30, 2015; and

1.50 to 1.00 on December 31, 2015 and the last day of each fiscal quarter thereafter.

(b) maintaining a senior secured leverage ratio of no greater than:

5.25 to 1.00 on June 30, 2011; and

5.00 to 1.00 on September 30, 2011 and December 31, 2011; and

4.75 to 1.00 on March 31, 2012; and

4.50 to 1.00 on June 30, 2012, September 30, 2012 and December 31, 2012; and

4.00 to 1.00 on March 31, 2013 and the last day of each fiscal Quarter through September 30, 2013; and

3.75 to 1.00 on December 31, 2013 and the last day of each fiscal quarter through September 30, 2014; and

3.25 to 1.00 on December 31, 2014 and the last day of each fiscal quarter through September 30, 2015; and

2.75 to 1.00 on December 31, 2015 and the last day of each fiscal quarter thereafter.

9.25 to 1.00 on June 30, 2011 and the last day of each fiscal quarter through December 31, 2011; and

9.00 to 1.00 on March 31, 2012; and

8.75 to 1.00 on June 30, 2012; and

8.50 to 1.00 on September 30, 2012 and December 31, 2012; and

8.00 to 1.00 on March 31, 2013 and the last day of each fiscal quarter through September 30, 2013; and

7.50 to 1.00 on December 31, 2013 and the last day of each fiscal quarter through September 30, 2014; and

6.50 to 1.00 on December 31, 2014 and the last day of each fiscal quarter through September 30, 2015; and

6.00 to 1.00 on December 31, 2015 and the last day of each fiscal quarter thereafter.

(d) limitations on:

liens;

sale of assets;

payment of dividends; and

mergers.

As of June 30, 2011, approximate ratios calculated in accordance with the 2011 Credit Agreement, are as follows:

	As of June 30, 2011			Covenant Limit			Excess Coverage

Pro Forma Last Twelve Months Covenant EBITDA (In millions)	$	82.0

Pro Forma Last Twelve Months Interest Expense (In millions)	$	47.4

Senior Debt (In millions)	$	376.8
Total Debt (In millions)	$	676.7

Senior Secured Leverage
Senior Secured Debt / Covenant EBITDA		4.60	x	5.25		x	0.65		x

Total Leverage
Total Debt / Covenant EBITDA		8.25	x		9.25	x		1.00	x

Interest Coverage
Covenant EBITDA / Interest Expense		1.73	x		1.25	x		0.48	x

EBITDA - Earnings before interest, taxes, depreciation and amortization

In accordance with the 2011 Credit Agreement, the calculations for the ratios above do not include the operating results and related debt of Reach and TV One.

As of June 30, 2011, the Company had outstanding approximately $385.0 million on its term credit facility. During the quarter ended June 30, 2011, the Company repaid approximately $1.0 million under the 2011 Credit Agreement. Proceeds from the 2011 Credit Agreement of approximately $378.3 million, net of original issue discount, were used to repay the Amended and Restated Credit Agreement and pay other fees and expenses, with the balance of the proceeds used to fund the TV One capital call. The original issue discount is being reflected as an adjustment to the carrying amount of the debt obligation and amortized to interest expense over the term of the credit facility.

Period between and including the November 2010 Refinancing Transactions and entering into the 2011 Credit Agreement

On November 24, 2010, the Company entered into a Credit Agreement amendment with its prior syndicate of banks. The Credit Agreement amendment, which amended and restated the Credit agreement (as so amended and restated, the “Amended and Restated Credit Agreement”), among other things, replaced the existing amount of outstanding revolving loans with a $323.0 million term loan and provided for three tranches of revolving loans, including a $20.0 million revolver to be used for working capital, capital expenditures, investments, and other lawful corporate purposes, a $5.1 million revolver to be used solely to redeem and retire the 2011 Notes, and a $13.7 million revolver to be used solely to fund a capital call with respect to TV One (the “November 2010 Refinancing Transaction”).

The Amended and Restated Credit Agreement provided for maintenance of the following maximum fixed charge coverage ratio as of the last day of each fiscal quarter:

Effective Period		Ratio
November 24, 2010 to December 30, 2010		1.05 to 1.00
December 31, 2010 to June 30, 2012		1.07 to 1.00

Effective Period		Ratio
November 24, 2010 to December 30, 2010		9.35 to 1.00
December 31, 2010 to December 30, 2011		9.00 to 1.00
December 31, 2011 and thereafter		9.25 to 1.00

Beginning		No greater than
November 24, 2010 to December 30, 2010		5.25 to 1.00
December 31, 2010 to March 30, 2011		5.00 to 1.00
March 31, 2011 to September 29, 2011		4.75 to 1.00
September 30, 2011 to December 30, 2011		4.50 to 1.00
December 31, 2011 and thereafter		4.75 to 1.00

The Amended and Restated Credit Agreement provided for maintenance of average weekly availability at any time during any period set forth below:

Beginning	Average weekly availability no less than
November 24, 2010 through and including June 30, 2011	$	10,000,000
July 1, 2011 and thereafter	$	15,000,000

During the period between November 24, 2010, and as of March 31, 2011, the Company was in compliance with all of its financial covenants under the Amended and Restated Credit Agreement.

As a result of our repurchase and refinancing of the 2011 Notes, the expiration of the Amended and Restated Credit Agreement was June 30, 2012.

Pre November 2010 Refinancing Transactions

Senior Subordinated Notes

Period between and including the November 2010 Refinancing Transactions and March 2011 Refinancing Transaction

Period prior to November 2010 Refinancing Transactions

On August 5, 2010, the Agent under our Pre-Refinancing Credit Agreement delivered a payment blockage notice to the Trustee under the Indenture governing our 2013 Notes. As a result, neither we nor any of our guaranteeing subsidiaries could make any payment or distribution of any kind or character in respect of obligations under the 2013 Notes, including the interest payment that was scheduled to be made on August 16, 2010. The 30-day grace period for the nonpayment of interest before such nonpayment constituted an event of default under the 2013 Notes Indenture expired on September 15, 2010. While the trustee or holders of at least 25% in principal amount of the then outstanding 2013 Notes could declare the principal amount, and accrued and unpaid interest, on all outstanding 2013 Notes to be due and payable immediately as a result of such event of default, as of the date of this filing, no such remedies were exercised as we continued to negotiate the terms of the amended exchange offer and a new support agreement with the members of the ad hoc group of holders of our 2011 and 2013 Notes. The event of default under the 2013 Notes Indenture also constituted an event of default under the Pre-Refinancing Credit Agreement. As of November 24, 2010, as a result of the November 2010 Refinancing Transactions, any and all existing defaults and events of default that had arisen or may have arisen were cured.

The following table summarizes the interest rates in effect with respect to our debt as of June 30, 2011:

Type of Debt	Amount Outstanding		Applicable Interest Rate
	(In millions)

Senior bank term debt, net of original issue discount (at variable rates)(1)	$	377.7		7.50	%
12½%/15% Senior Subordinated Notes (fixed rate)	$	299.2		15.00	%
Note payable (fixed rate)	$	1.0		7.00	%
Senior Secured Notes (fixed rate)	$	119.0		10.00	%
6⅜% Senior Subordinated Notes (fixed rate)	$	0.7		6.38	%

(1)	Subject to variable Libor Rate plus a spread currently at 6.00% and incorporated into the applicable interest rate set forth above.

The indentures governing our Prior Notes and our 2016 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. As of November 24, 2010 and in connection with the November 2010 Refinancing Transactions, we and the trustee under the indentures governing our Prior Notes entered into supplemental indentures which waived any and all existing defaults and events of default that had arisen or may have arisen that may be waived and eliminated substantially all of the covenants in each indenture other than the covenants to pay principal of and interest on the Prior Notes when due, and eliminated or modified the related events of default. Our 2011 Credit Agreement also requires compliance with financial tests based on financial position and results of operations, including an interest coverage, senior secured leverage, and total leverage ratios, all of which could effectively limit our ability to borrow under the 2011 Credit Agreement.

Reach Media issued a $1.0 million promissory note payable in November 2009 to a subsidiary of Citadel. The note was issued in connection with Reach Media entering into a new sales representation agreement with Radio Networks. The note bears interest at 7.0% per annum, which is payable quarterly, and the entire principal amount is due on December 31, 2011.

The following table provides a comparison of our statements of cash flows for the six months ended June 30, 2011 and 2010:

	2011			2010
	(In thousands)

Net cash flows provided from operating activities	$	2,136		$	6,886
Net cash flows provided from (used in) investing activities	$	59,290		$	(2,257	)
Net cash flows used in financing activities	$	(40,729	)	$	(3,544	)

Net cash flows provided by operating activities were approximately $2.1 million and $6.9 million for the six months ended June 30, 2011 and 2010, respectively. Cash flow from operating activities for the six months ended June 30, 2011 decreased from the prior year primarily due to changes in operating assets and liabilities.

Net cash flows provided by investing activities were approximately $59.3 million for the six months ended June 30, 2011 compared to net cash flows used in investing activities of $2.3 million for the six months ended June 30, 2010, respectively. Cash flow from investing activities for the six months ended June 30, 2011 increased from the prior year primarily due to the net cash and investments acquired in connection with the TV One consolidation of approximately $65.2 million. Capital expenditures, including digital tower and transmitter upgrades, content assets, and deposits for station equipment and purchases were approximately $5.9 million and $2.3 million for the six months ended June 30, 2011 and 2010, respectively.

Net cash flows used in financing activities were approximately $40.7 million and $3.5 million for the six months June 30, 2011 and 2010, respectively. During the six months ended June 30, 2011 and 2010, the Company borrowed approximately $378.3 million and $12.0 million, respectively, from its credit facility and repaid approximately $353.7 million and $8.5 million, respectively, in outstanding debt. During the six months ended June 30, 2011, we repurchased a noncontrolling interest in TV One for approximately $54.6 million. During the six months ended June 30, 2011 and 2010, respectively, we capitalized approximately $6.0 million and $7.1 million of costs associated with our evaluation of various alternatives associated with our indebtedness and its upcoming maturities. In addition, during the six months ended June 30, 2011, we repurchased approximately $7.5 million of our Class D Common Stock.

Credit Rating Agencies

Our corporate credit ratings by Standard & Poor's Rating Services and Moody's Investors Service are speculative-grade and have been downgraded and upgraded at various times during the last several years. Any reductions in our credit ratings could increase our borrowing costs, reduce the availability of financing to us or increase our cost of doing business or otherwise negatively impact our business operations.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our significant accounting policies are described in Note 1 - Organization and Summary of Significant Accounting Policies of the consolidated financial statements in our Annual Report on Form 10-K. We prepare our consolidated financial statements in conformity with accounting principles generally accepted in the United States, which require us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the year. Actual results could differ from those estimates. In Management’s Discussion and Analysis contained in our Annual Report on Form 10-K for the year ended December 31, 2010, 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. There have been no material changes to our existing accounting policies or estimates since we filed our Annual Report on Form 10-K for the year ended December 31, 2010. We acquired the controlling interest in TV One as of April 14, 2011, and as such, have included new accounting policies related to our cable television segment as of June 30, 2011.

Stock-Based Compensation

The Company accounts for stock-based compensation in accordance with ASC 718, “Compensation - Stock Compensation.” Under the provisions of ASC 718, 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

Impairment Testing

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 June 30, 2011, we had approximately $677.4 million in broadcast licenses and $285.9 million in goodwill, which totaled $963.3 million, and represented approximately 63.2% of our total assets. Therefore, we believe estimating the fair value of goodwill and radio broadcasting licenses is a critical accounting estimate because of the significance of their carrying values in relation to our total assets. We did not record any impairment charges for the three or six months ended June 30, 2011 and 2010.

Effective January 1, 2002, in accordance with ASC 350, “Intangibles – Goodwill and Other,” we discontinued amortizing radio broadcasting licenses and goodwill and instead, began testing for impairment annually, or when events or changes in circumstances or other conditions suggest impairment may have occurred. Our annual impairment testing is performed for assets owned as of October 1. Impairment exists when the carrying value of these assets exceeds its respective fair value. When the carrying value exceeds fair value, an impairment amount is charged to operations for the excess.

Valuation of Broadcasting Licenses

We utilize the services of a third-party valuation firm to provide independent analysis when evaluating the fair value of our radio broadcasting licenses and reporting units, including goodwill. The testing for radio broadcasting licenses is performed at the unit of accounting level as determined by ASC 350, “Intangibles - Goodwill and Other.” In our case, each unit of accounting is a clustering of radio stations into one geographical market. We use the income approach to value broadcasting licenses, which involves a 10-year model that incorporates several variables, including, but not limited to: (i) estimated discounted cash flows of a hypothetical market participant; (ii) estimated radio market revenue and growth projections; (iii) estimated market share and revenue for the hypothetical participant; (iv) likely media competition within the market; (v) estimated start-up costs and losses incurred in the early years; (vi) estimated profit margins and cash flows based on market size and station type; (vii) anticipated capital expenditures; (viii) probable future terminal values; (ix) an effective tax rate assumption; and (x) a discount rate based on the weighted-average cost of capital for the radio broadcast industry. In calculating the discount rate, we considered: (i) the cost of equity, which includes estimates of the risk-free return, the long-term market return, small stock risk premiums and industry beta; (ii) the cost of debt, which includes estimates for corporate borrowing rates and tax rates; and (iii) estimated average percentages of equity and debt in capital structures. Since our October 2010 annual assessment, we have not made any changes to the methodology for valuing broadcasting licenses.

During the second quarter of 2011, the total market revenue growth for specific markets was below that used in our 2010 annual impairment testing. We deemed that to be an impairment indicator that warranted interim impairment testing of certain of our radio broadcasting licenses, which we performed as of May 31, 2011. Below are some of the key assumptions used in the income approach model for estimating broadcasting licenses fair values for all annual and interim impairments assessments performed since January 2010. The Company concluded that our radio broadcasting licenses were not impaired during the second quarter of 2011.

Radio Broadcasting Licenses	October 1, 2010			May 31, 2011 (a)
	(In millions)			(In millions)

Pre-tax impairment charge	$	19.9		$	–

Discount Rate		10.0	%		10.0	%
Year 1 Market Revenue Growth or Decline Rate or Range		1.0% -3.0	%		1.3% -2.8	%
Long-term Market Revenue Growth Rate Range (Years 6 – 10)		1.0% - 2.5	%		1.5% - 2.0	%
Mature Market Share Range		0.8% - 28.3	%		9.0% - 22.5	%
Operating Profit Margin Range		19.0% - 47.3	%		32.7% - 40.8	%

(a)	Reflects changes only to the key assumptions used in the May 2011 interim testing for certain reporting units.

Valuation of Goodwill

The impairment testing of goodwill is performed at the reporting unit level. We had 19 reporting units as of our October 2010 annual impairment assessment. For the purpose of valuing goodwill, the 19 reporting units consisted of the 16 radio markets and three other business divisions. Due to the consolidation of TV One and with the transition of our Boston station into discontinued operations during the 3 months ended June 30, 2011, the Company now has 19 reporting units, consisting of the 15 radio markets and four business divisions. In testing for the impairment of goodwill, with the assistance of a third-party valuation firm, we primarily rely on the income approach. The approach involves a 10-year model with similar variables as described above for broadcasting licenses, except that the discounted cash flows are generally based on the Company’s estimated and projected market revenue, market share and operating performance for its reporting units, instead of those for a hypothetical participant. We follow a two-step process to evaluate if a potential impairment exists for goodwill. The first step of the process involves estimating the fair value of each reporting unit. If the reporting unit’s fair value is less than its carrying value, a second step is performed as per the guidance of ASC 805-10, “Business Combinations,” to allocate the fair value of the reporting unit to the individual assets and liabilities of the reporting unit in order to determine the implied fair value of the reporting unit’s goodwill as of the impairment assessment date. Any excess of the carrying value of the goodwill over the implied fair value of the goodwill is written off as a charge to operations. Since our October 2010 annual assessment, we have not made any changes to the methodology of valuing or allocating goodwill when determining the carrying values of the radio markets, Reach Media or Interactive One.

Below are some of the key assumptions used in the income approach model for estimating the fair value for Reach Media for all interim, annual and year end assessments since January 2010. When compared to the discount rates used for assessing radio market reporting units, the higher discount rates used in these assessments reflect a premium for a riskier and broader media business, with a heavier concentration and significantly higher amount of programming content related intangible assets that are highly dependent on the on-air personality Tom Joyner. As a result of the February, May and August 2010 interim assessments, the Company concluded no impairment to the carrying value of Reach Media had occurred. During the fourth quarter, Reach Media’s operating performance continued to decline, but at a decreasing rate. We believe this represented an impairment indicator and as a result, we performed a year end impairment assessment at December 31, 2010. We recorded an impairment charge of $16.1 million during the quarter ended December 31, 2010 in connection with this assessment. We performed interim impairment assessments at March 31, 2011 and June 30, 2011 as Reach Media did not meet its budgeted operating cash flow for the first and second quarters. As a result of the March 2011 and June 2011 interim impairment tests, the Company concluded that the carrying value of goodwill attributable to Reach Media had not been impaired.

Reach Media Goodwill (Reporting Unit Within the Radio Broadcasting Segment)	February 28, 2010			May 31, 2010			August 31, 2010			December 31, 2010			March 31, 2011			June 30, 2011
				(In millions)
Pre-tax impairment charge	$	–		$	–		$	–		$	16.1		$	–		$	–

Discount Rate		13.5	%		13.5	%		13.0	%		13.5	%		13.5	%		13.0	%
Year 1 Revenue Growth Rate		8.5	%		2.5	%		2.5	%		2.5	%		2.5	%		2.5	%
Long-term Revenue Growth Rate Range		2.5% – 3.0	%		2.5% – 2.9	%		2.5% – 3.3	%		(2.6)% - 4.4	%		(1.3)% - 4.9	%		(0.2)% - 3.9	%

Operating Profit Margin Range		22.7% - 31.4	%		23.3% - 31.5	%		25.5% - 31.2	%		15.5% - 25.9	%		16.2% - 27.4	%		17.6% - 22.6	%

In addition to assessing the fair value of Reach Media as of March 2011 and June 2011, we performed a sensitivity analysis showing the impact resulting from: (i) a 1% or 100 basis point decrease in Reach Media growth rates; (ii) a 1% or 100 basis point decrease in cash flow margins; (iii) a 1% or 100 basis point increase in the discount rate; and (iv) both a 5% and 10% reduction in the fair values of Reach Media. A hypothetical change in all of the stated factors did not result in any impairment.

During the second quarter of 2011, the operating performance and current projections for the remainder of the year for specific radio markets were below that used in our 2010 annual impairment testing. We deemed that to be an impairment indicator that warranted interim impairment testing of goodwill associated with specific radio markets, which we performed as of May 31, 2011. Below are some of the key assumptions used in the income approach model for estimating goodwill fair values for the annual and interim impairments assessments performed since October 1, 2010. The Company concluded that goodwill had not been impaired during the second quarter of 2011.

Goodwill (Radio Market Reporting Units)	October 1, 2010			May 31, 2011 (a)
	(In millions)			(In millions)

Pre-tax impairment charge	$	–		$	–

Discount Rate		10.0	%		10.0	%
Year 1 Market Revenue Growth or Decline Rate or Range		1.5% -3.0	%		1.5% -3.0	%
Long-term Market Revenue Growth Rate Range (Years 6 – 10)		1.5% - 2.5	%		1.5% - 2.0	%
Mature Market Share Range		7.0% - 23.0	%		7.0% - 23.0	%
Operating Profit Margin Range		27.5% - 58.0	%		30.0% - 56.0	%

(a)

Reflects changes only to the key assumptions used in the May 2011 interim testing for certain reporting units.

As part of our annual testing, when arriving at the estimated fair values for radio broadcasting licenses and goodwill, we also performed a reasonableness test by comparing our overall average implied multiple based on our cash flow projections and fair values to recently completed sales transactions, and by comparing our fair value estimates to the market capitalization of the Company. The results of these comparisons confirmed that the fair value estimates resulting from our annual assessment for 2010 were reasonable.

Sensitivity Analysis

We believe both the estimates and assumptions we utilized when assessing the potential for impairment are individually and in aggregate reasonable; however, our estimates and assumptions are highly judgmental in nature. Further, there are inherent uncertainties related to these estimates and 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 any one estimate, assumption or a combination of estimates and assumptions, or changes in certain events or circumstances (including uncontrollable events and circumstances resulting from deterioration in the economy or credit markets) could require us to assess recoverability of broadcasting licenses and goodwill at times other than our annual October 1 assessments, and could result in changes to our estimated fair values and further write-downs to the carrying values of these assets. Impairment charges are non-cash in nature, and as with past impairment charges, any future impairment charges will not impact our cash needs or liquidity or our bank covenant compliance.

As of June 30, 2011, we had a total goodwill carrying value of approximately $285.9 million across 13 of our 19 reporting units. The below table indicates the long-term cash flow growth rates assumed in our impairment testing and the long-term cash flow growth/decline rates that would result in additional goodwill impairment. For four of the reporting units, given each of their significant fair value over carrying value excess, any future goodwill impairment is not likely. However, should our estimates and assumptions for assessing the fair values of the remaining reporting units with goodwill worsen to reflect the below or lower cash flow growth/decline rates, additional goodwill impairments may be warranted in the future.

Reporting Unit	Long-Term Cash Flow Growth Rate Used	Long-Term Cash Flow Growth/Decline Rate That Would Result in Impairment (a)

21	Not tested as of June 30, 2011	Impairment not likely
2	2.0 %	Impairment not likely
16	2.0 %	Impairment not likely
11	1.5 %	Impairment not likely
5	1.5 %	0.0 %
12	2.0 %	0.5 %
7	1.5 %	0.6 %
19	2.5 %	(2.1 )%
1	2.0 %	(2.7 )%
6	1.5 %	(5.0 )%
10	2.5 %	(6.8 )%
13	2.0 %	(14.8 )%
18	3.0 %	(24.0 )%

(a)	The long-term cash flow growth/decline rate that would result in additional goodwill impairment applies only to further goodwill impairment and not to any future license impairment that would result from lowering the long-term cash flow growth rates used.

Several of the licenses in our units of accounting have no or limited excess of fair values over their respective carrying values. Should our estimates, assumptions, or events or circumstances for any upcoming valuations worsen in the units with no or limited fair value cushion, additional license impairments may be needed in the future.

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. There were no impairment triggering events for these assets for the three or six month periods ended June 30, 2011 and 2010.

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 June 30, 2011, our historical bad debt results have averaged approximately 5.0% 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 ASC 605, “Revenue Recognition.” 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.

Our online business 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.

TV One derives advertising revenue from the sale of television air time to advertisers and recognizes revenue when the advertisements are run. TV One also receives affiliate fees and records revenue during the term of various affiliation agreements at levels appropriate for the most recent subscriber counts reported by the applicable affiliate.

Equity Accounting

Effective April 14, 2011, the Company began to account for TV One on a consolidated basis. Prior to that, we accounted for our investment in TV One under the equity method of accounting in accordance with ASC 323, “Investments – Equity Method and Joint Ventures.” We had recorded our investment at cost and had 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 net income or losses of TV One as well as other capital transactions of TV One using a hypothetical liquidation at book value approach.

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.

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 ASC 740, “Income Taxes,” as it relates to 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 ASC 740 pertaining to the accounting for uncertainty in income taxes, 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 June 30, 2011, we had approximately $5.8 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 get resolved, or as statutes of limitations in various tax jurisdictions close.

Realizability of Deferred Tax Balances

Except for DTAs that may be benefited by future reversing deferred tax liabilities (“DTLs”) and DTAs related to Reach Media, the Company maintains a full valuation allowance for its 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 are not fully reserved, we believe that these assets will be realized; 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.

Redeemable noncontrolling interests

Fair Value Measurements

The Company has accounted for an award called for in the CEO’s employment agreement (the “Employment Agreement”) as a derivative instrument in accordance with ASC 815, “Derivatives and Hedging.” 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, or earlier, if the CEO voluntarily left the Company or was terminated for cause. The Company is currently in negotiations with the Company’s CEO for a new employment agreement. Until such time as his new employment agreement is executed, the terms of his April 2008 employment agreement remain in effect including eligibility for the TV One award.

The Company reassessed the estimated fair value of the award as of June 30, 2011 at approximately $7.3 million and, accordingly, recorded compensation expense and a liability for that amount. The fair value of the award as of December 31, 2010 was approximately $6.8 million. 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 June 30, 2011 was approximately $28.7 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.

The TV One incentive award plan balance is measured based on the estimated enterprise fair value of TV One. For the period ended June 30, 2011, the Company determined the enterprise fair value of TV One based on the price paid to repurchase interests from certain investors. As the Company will measure changes in the fair value of these balances at each reporting period as warranted by certain circumstances, different estimates or assumptions may result in a change to the fair value of the amounts previously recorded.

Content Assets

TV One has entered into contracts to acquire entertainment programming rights and programs from distributors and producers. The license periods granted in these contracts generally run from one year to perpetuity. Contract payments are made in installments over terms that are generally shorter than the contract period. In accordance with ASC 920, Entertainment-Broadcasters, each contract is recorded as an asset and a liability at an amount equal to its gross contractual commitment when the license period begins and the program is available for its first airing. Program rights are recorded at the lower of amortized cost or estimated net realizable value. Program rights are amortized based on the greater of the usage of the program or term of license. Estimated net realizable values are based on the estimated revenues directly associated with the program materials and related expenses.

RECENT ACCOUNTING PRONOUNCEMENTS

In June 2009, the FASB issued ASC 105, “Generally Accepted Accounting Principles,” which establishes the ASC as the source of authoritative non-SEC U.S. generally accepted accounting principles (“GAAP”) for non-governmental entities. ASC 105 is effective for financial statements issued for interim and annual periods ending after September 15, 2009. The adoption of ASC 105 did not have a material impact on the Company’s consolidated financial statements.

CAPITAL AND COMMERICAL COMMITMENTS:

Radio Broadcasting Licenses

Each of the Company’s radio stations operates pursuant to one or more licenses issued by the Federal Communications Commission that have a maximum term of eight years prior to renewal. The Company’s radio broadcasting licenses expire at various times beginning October 1, 2011 through August 1, 2014. Although the Company may apply to renew its radio broadcasting licenses, third parties may challenge the Company’s renewal applications. The Company is not aware of any facts or circumstances that would prevent the Company from having its current licenses renewed.

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 April 30, 2007. Since December 31, 2006, the initial four year commitment period for funding the capital had extended on a quarterly basis due in part to TV One’s lower than anticipated capital needs. We funded our remaining capital commitment amount of approximately $13.7 million on April 19, 2011.

Indebtedness

We have several debt instruments outstanding within our corporate structure. The total amount available under our 2011 Credit Agreement is $411.0 million, consisting of a $386.0 million term loan facility that matures on March 31, 2016 and a $25.0 million revolving loan facility that matures on March 31, 2015. We also have outstanding $747,000 in 6⅜% Senior Subordinated Notes due February 2013 and $299.2 million in our 12½%/15% Senior Subordinated Notes due May 2016. In addition, Reach Media issued a $1.0 million promissory note payable in November 2009 to a subsidiary of Citadel. The note was issued in connection with Reach Media reacquiring Citadel’s noncontrolling stock ownership in Reach Media as well as entering into a new sales representation agreement with Radio Networks, a subsidiary of Citadel. The note bears interest at 7.0% per annum, which is payable quarterly, and the entire principal amount is due on December 31, 2011. Finally, TV One issued $119.0 million in senior secured notes on February 25, 2011. The notes were issued in connection with the repurchase of its equity interest from certain financial investors and TV One management. The notes bear interest at 10.0% per annum, which is payable monthly, and the entire principal amount is due on March 15, 2016. See “Liquidity and Capital Resources.”

Royalty Agreements

Lease obligations

We have non-cancelable operating leases for office space, studio space, broadcast towers and transmitter facilities that expire over the next 19 years.

Operating Contracts and Agreements

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

Reach Media Noncontrolling Interest Shareholders’ Put Rights

Contractual Obligations Schedule

The following table represents our contractual obligations as of June 30, 2011:

	Payments Due by Period
Contractual Obligations	2011		2012		2013		2014		2015		2016 and Beyond		Total
	(In thousands)
6⅜ Senior Subordinated Notes(1)	$	24	$	48	$	753	$	—	$	—	$	—	$	825
12½%/15% Senior Subordinated Notes(1)		23,032		43,838		40,879		40,879		40,879		339,980		529,487
Credit facilities(2)		16,795		33,058		33,058		33,058		33,058		374,964		523,991
Note payable(3)		1,035		—		—		—		—		—		1,035
Other operating contracts / agreements(4)		40,730		44,495		24,659		18,499		3,819		2,048		134,250
Operating lease obligations		4,746		7,913		6,181		5,314		4,181		13,522		41,857
Senior Secured Notes [TV One] (5)		5,950		11,900		11,900		11,900		11,900		121,777		175,327
Total	$	92,312	$	141,252	$	117,430	$	109,650	$	93,837	$	852,291	$	1,406,772

(1)	Includes interest obligations based on current effective interest rate on senior subordinated notes outstanding as of June 30, 2011.

(2)	Includes interest obligations based on current effective interest rate and projected interest expense on credit facilities outstanding as of June 30, 2011.

(3)

Represents a $1.0 million promissory note payable issued in November 2009 by Reach Media to a subsidiary of Citadel. The note was issued in connection with Reach Media reacquiring Citadel’s noncontrolling stock ownership in Reach Media as well as entering into a new sales representation agreement with Radio Networks, a subsidiary of Citadel. The note bears interest at 7.0% per annum, which is payable quarterly, and the entire principal amount is due on December 31, 2011.

(4)

Includes employment contracts, severance obligations, on-air talent contracts, consulting agreements, equipment rental agreements, programming related agreements, and other general operating agreements. Also includes contracts that TV One has entered into to acquire entertainment programming rights and programs from distributors and producers. These contracts relate to their content assets as well as prepaid programming related agreements.

(5)

Represents $119.0 million issued by TV One in senior secured notes on February 25, 2011. The notes were issued in connection with the repurchase of its equity interest from certain financial investors and TV One management. The notes bear interest at 10.0% per annum, which is payable monthly, and the entire principal amount is due on March 15, 2016.

As of December 31, 2010, we had a swap agreement in place for a total notional amount of $25.0 million. At that point, the period remaining on the swap agreement was 18 months. The remaining $25.0 million swap agreement was terminated in conjunction with the March 31, 2011 retirement of our previous Credit Agreement.

Other Contingencies

Off-Balance Sheet Arrangements

RELATED PARTY TRANSACTIONS

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, for the fiscal year ended December 31, 2010. Our exposure related to market risk has not changed materially since December 31, 2010.

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, summarized and reported within the time periods specified in the SEC’s rules and forms.

In designing and evaluating the disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can only provide reasonable assurance of achieving the desired control objectives and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our disclosure controls and procedures are designed to provide a reasonable level of assurance of reaching our desired disclosure controls objectives. Our management, including our CEO and CFO, has concluded that our disclosure controls and procedures are effective in reaching that level of reasonable assurance.

Changes in internal control over financial reporting

During the three months ended June 30, 2011, 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.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

In November 2001, Radio One and certain of its officers and directors were named as defendants in a class action shareholder complaint filed in the United States District Court for the Southern District of New York, captioned, In re Radio One, Inc. Initial Public Offering Securities Litigation, Case No. 01-CV-10160. Similar complaints were filed in the same court against hundreds of other public companies (Issuers) that conducted initial public offerings of their common stock in the late 1990s (“the IPO Cases”). In the complaint filed against Radio One (as amended), the plaintiffs claimed that Radio One, certain of its officers and directors, and the underwriters of certain of its public offerings violated Section 11 of the Securities Act. The plaintiffs’ claim was based on allegations that Radio One’s registration statement and prospectus failed to disclose material facts regarding the compensation to be received by the underwriters, and the stock allocation practices of the underwriters. The complaint also contains a claim for violation of Section 10(b) of the Securities Exchange Act of 1934 based on allegations that these omissions constituted a deceit on investors. The plaintiffs seek unspecified monetary damages and other relief.

In July 2002, Radio One joined in a global motion, filed by the Issuers, to dismiss the IPO Lawsuits. In October 2002, the court entered an order dismissing the Company’s named officers and directors from the IPO Lawsuits without prejudice, pursuant to an agreement tolling the statute of limitations with respect to Radio One’s officers and directors until September 30, 2003. In February 2003, the court issued a decision denying the motion to dismiss the Section 11 and Section 10(b) claims against Radio One and most of the Issuers.

In July 2003, a Special Litigation Committee of Radio One’s board of directors approved in principle a tentative settlement with the plaintiffs. The proposed settlement would have provided for the dismissal with prejudice of all claims against the participating Issuers and their officers and directors in the IPO Cases and the assignment to plaintiffs of certain potential claims that the Issuers may have against their underwriters. In September 2003, in connection with the proposed settlement, Radio One’s named officers and directors extended the tolling agreement so that it would not expire prior to any settlement being finalized. In June 2004, Radio One executed a final settlement agreement with the plaintiffs. In 2005, the court issued a decision certifying a class action for settlement purposes and granting preliminary approval of the settlement. On February 24, 2006, the court dismissed litigation filed against certain underwriters in connection with the claims to be assigned to the plaintiffs under the settlement. On April 24, 2006, the court held a Final Fairness Hearing to determine whether to grant final approval of the settlement. On December 5, 2006, the Second Circuit Court of Appeals vacated the district court’s earlier decision certifying as class actions the six IPO Cases designated as “focus cases.” Thereafter, the district court ordered a stay of all proceedings in all of the IPO Cases pending the outcome of plaintiffs’ petition to the Second Circuit for rehearing en banc and resolution of the class certification issue. On April 6, 2007, the Second Circuit denied plaintiffs’ rehearing petition, but clarified that the plaintiffs may seek to certify a more limited class in the district court. Accordingly, the settlement was terminated pursuant to stipulation of the parties and did not receive final approval.

Plaintiffs filed amended complaints in the six “focus cases” on or about August 14, 2007. Radio One is not a defendant in the focus cases. In September 2007, Radio One’s named officers and directors again extended the tolling agreement with plaintiffs. On or about September 27, 2007, plaintiffs moved to certify the classes alleged in the “focus cases” and to appoint class representatives and class counsel in those cases. The focus cases issuers filed motions to dismiss the claims against them in November 2007 and an opposition to plaintiffs’ motion for the class certification in December 2007. On March 16, 2008, the district court denied the motions to dismiss in the focus cases. In August 2008, the parties to the IPO Cases began mediation toward a global settlement of the IPO Cases. In September 2008, Radio One’s board of directors approved in principle participation in a tentative settlement with the plaintiffs. On October 2, 2008, the plaintiffs withdrew their class certification motion. In April 2009, a global settlement was reached in the IPO Cases and submitted to the district court for approval. On June 9, 2009, the court granted preliminary approval of the proposed settlement and ordered that notice of the settlement be published and mailed to class members. On September 10, 2009, the court held a Final Fairness Hearing. On October 6, 2009, the court certified the settlement class in each IPO Case and granted final approval of the settlement. On or about October 23, 2009, three shareholders filed a Petition for Permission To Appeal Class Certification Order, challenging the court’s certification of the settlement classes. Beginning on October 29, 2009, a number of shareholders also filed direct appeals, objecting to final approval of the settlement. If the settlement is affirmed on appeal, the settlement will result in the dismissal of all claims against Radio One and its officers and directors with prejudice, and our pro rata share of the settlement fund will be fully funded by insurance.

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

Item 1A. Risk Factors

In addition to the other information set forth in this report, you should carefully consider the risk factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2010 (the “2010 Annual Report”), which could materially affect our business, financial condition or future results. The risks described in our 2010 Annual Report, as updated by our quarterly reports on Form 10-Q and Form 10-Q/A, 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.

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

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Removed and Reserved

Item 5. Other Information

None.

Item 6. Exhibits

Exhibit Number		Description

3.1*		Second Amended and Restated Limited Liability Company Operating Agreement of TV One, LLC
4.1*		Indenture, dated as of February 25, 2011, by and among TV One, LLC, and TV One Capital Corp., a Delaware corporation, as joint and several obligors, the guarantors signatory thereto and U.S. Bank National Association, as trustee and collateral trustee.
31.1*		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*		Certification of Chief Executive Officer pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*		Certification of Chief Financial Officer pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101		Financial information from the Quarterly Report on Form 10-Q for the quarter ended June 30, 2011, formatted in XBRL.

*		These exhibits were previously included in the Quarterly Report on 10-Q for the quarterly period ended June 30, 2011, filed with the Securities and Exchange Commission on August 15, 2011.

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)

September 14, 2011