URBAN ONE, INC. - FORM 10-K

Attached files

file	filename
EX-31.2 - EXHIBIT 31.2 - URBAN ONE, INC.	v460521_ex31-2.htm
EX-32.2 - EXHIBIT 32.2 - URBAN ONE, INC.	v460521_ex32-2.htm
EX-32.1 - EXHIBIT 32.1 - URBAN ONE, INC.	v460521_ex32-1.htm
EX-31.1 - EXHIBIT 31.1 - URBAN ONE, INC.	v460521_ex31-1.htm
EX-23.2 - EXHIBIT 23.2 - URBAN ONE, INC.	v460521_ex23-2.htm
EX-23.1 - EXHIBIT 23.1 - URBAN ONE, INC.	v460521_ex23-1.htm
EX-21.1 - EXHIBIT 21.1 - URBAN ONE, INC.	v460521_ex21-1.htm

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

þ	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the fiscal year ended December 31, 2016
OR

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

	For the transition period from to

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.)

1010 Wayne Avenue,

14th Floor

Silver Spring, Maryland 20910

(Address of principal executive offices)

Registrant’s telephone number, including area code

(301) 429-3200

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

None

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

Class A Common Stock, $.001 par value

Class D Common Stock, $.001 par value

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ¨ No þ

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 ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. Yes ¨ No þ

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 ¨ Accelerated filer þ Non-accelerated filer ¨

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

The number of shares outstanding of each of the issuer’s classes of common stock is as follows:

Class		Outstanding at March 3, 2017
Class A Common Stock, $.001 par value		1,669,099
Class B Common Stock, $.001 par value		2,861,843
Class C Common Stock, $.001 par value		2,928,906
Class D Common Stock, $.001 par value		40,866,371

The aggregate market value of common stock held by non-affiliates of the Registrant, based upon the closing price of the Registrant’s Class A and Class D common stock on June 30, 2016, was approximately $96.1 million.

RADIO ONE, INC. AND SUBSIDIARIES

Form 10-K

For the Year Ended December 31, 2016

TABLE OF CONTENTS

		Page
PART I		5

Item 1.	Business	5
Item 1A.	Risk Factors	22
Item 1B.	Unresolved Staff Comments	31
Item 2.	Properties	31
Item 3.	Legal Proceedings	31
Item 4.	Mine Safety Disclosure	31

PART II		32

Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	32
Item 6.	Selected Financial Data	36
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	38
Item 7A.	Quantitative and Qualitative Disclosure About Market Risk	68
Item 8.	Financial Statements and Supplementary Data	68
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	68
Item 9A.	Controls and Procedures	68
Item 9B.	Other Information	69

PART III		70

Item 10.	Directors and Executive Officers of the Registrant	70
Item 11.	Executive Compensation	70
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	70
Item 13.	Certain Relationships and Related Transactions	70
Item 14.	Principal Accounting Fees and Services	70

PART IV		71

Item 15.	Exhibits and Financial Statement Schedules	71
Item 16.	Form 10-K Summary	74

SIGNATURES		75

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 all of its subsidiaries.

We use the terms “local marketing agreement” (“LMA”) or time brokerage agreement (“TBA”) in various places in this report. An LMA or a TBA is an agreement under which a Federal Communications Commission (“FCC”) licensee of a radio station makes available, for a fee, air time on its station to another party. The other party provides programming to be broadcast during the airtime and collects revenues from advertising it sells for broadcast during that programming. In addition to entering into LMAs or TBAs, we will from, time to time, enter into management or consulting agreements that provide us with the ability, as contractually specified, to assist current owners in the management of radio station assets that we have contracted to purchase, subject to FCC approval. In such arrangements, we generally receive a contractually specified management fee or consulting fee in exchange for the services provided.

The term “broadcast and internet operating income” (formerly station operating income) is also used throughout this report. Net income (loss) before depreciation and amortization, income taxes, interest expense, interest income, noncontrolling interests in income of subsidiaries, other (income) expense, corporate selling, general and administrative, expenses, stock-based compensation, impairment of long-lived assets, loss on retirement of debt, and income or loss from discontinued operations, net of tax, is commonly referred to in our industry as station operating income. However, given the diverse nature of our business, station operating income is not truly reflective of our multi-media operation and therefore we now use the term broadcast and internet operating income. Broadcast and internet operating income is not a measure of financial performance under accounting principles generally accepted in the United States of America (“GAAP”). Nevertheless, broadcast and internet operating income is a significant measure used by our management to evaluate the operating performance of our core operating segments. Broadcast and internet operating income provides helpful information about our results of operations, apart from expenses associated with our fixed and long-lived intangible assets, income taxes, investments, impairment charges, debt financings and retirements, corporate overhead and stock-based compensation. Our measure of broadcast and internet operating income is similar to our historic use of station operating income; however, it reflects our more diverse business, and therefore, may not be similar to “station operating income” or other similarly titled measures used by other companies. Broadcast and internet 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.

The term “broadcast and internet operating income margin” is also used throughout this report. “Broadcast and internet operating income margin” consists of broadcast and internet operating income as a percentage of net revenue. Broadcast and internet operating income margin is not a measure of financial performance under GAAP. Nevertheless, we believe that broadcast and internet 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. As with broadcast and internet operating income, broadcast and internet operating income margin also includes results from all four of our reportable segments (radio broadcasting, Reach Media, internet and cable television) and may not be comparable to similarly titled measures as used by other companies.

Unless otherwise indicated:

we obtained total radio industry revenue levels from the Radio Advertising Bureau (the “RAB”);

we obtained audience share and ranking information from Nielsen Audio, Inc. (“Nielsen”); and

we derived historical market statistics and market revenue share percentages from data published by Miller, Kaplan, Arase & Co., LLP (“Miller Kaplan”), a public accounting firm that specializes in serving the broadcasting industry and BIA/Kelsey (“BIA”), a media and telecommunications advisory services firm.

Cautionary Note Regarding Forward-Looking Statements

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

economic sluggishness and volatility, credit and equity market unpredictability, employment outlook uncertainties and continued fluctuations in the United States and other world economies that may affect our business and financial condition, and the business and financial conditions of our advertisers;

·	our high degree of leverage and potential inability to finance strategic transactions given fluctuations in market conditions;

·	fluctuations in the local economies of the markets in which we operate (particularly our largest markets, Atlanta; Baltimore; Houston; and Washington, DC) that 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;

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

·	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 impairment charges against our broadcasting licenses, goodwill, and other intangible assets;

·	increased competition from new media and new content distribution platforms and technologies;

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

·	other factors mentioned in our filings with the Securities and Exchange Commission (“SEC”) including the factors discussed in detail in Item 1A, “Risk Factors,” contained in this report.

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.

PART I

ITEM 1. BUSINESS

Overview

Radio One, Inc., a Delaware corporation, and its subsidiaries (collectively, “Radio One,” “the Company,” “we,” “our” and/or “us”) is an urban-oriented, multi-media company that primarily targets African-American and urban consumers. Our core business is our radio broadcasting franchise that is the largest radio broadcasting operation that primarily targets African-American and urban listeners. As of December 31, 2016, we owned and/or operated 55 broadcast stations located in 15 of the top 35 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, the Radio One strategy is to operate the premier multi-media entertainment and information content provider targeting African-American and urban consumers. Thus, we have diversified our revenue streams by making acquisitions and investments in other complementary media and entertainment properties. Our diverse media and entertainment interests include our ownership of TV One, LLC (“TV One”), an African-American targeted cable television network; our 80.0% ownership interest in Reach Media, Inc. (“Reach Media”) which operates our syndicated programming assets, including the Tom Joyner Morning Show, the Rickey Smiley Morning Show, Get Up! Mornings with Erica Campbell, the Russ Parr Morning Show, the Ed Lover Show and the DL Hughley Show; and our ownership of Interactive One, LLC (“Interactive One”), our wholly owned online platform serving the African-American community through social content, news, information, and entertainment websites, including Global Grind, News One, TheUrbanDaily and HelloBeautiful, our online social networking websites, including BlackPlanet and MiGente. Most recently, we invested in a minority ownership interest in MGM National Harbor, a gaming resort located in Prince George’s County, Maryland. Through our national multi-media operations, we provide advertisers with a unique and powerful delivery mechanism to the African-American and urban audiences. The Company anticipates changing its corporate name from “Radio One, Inc.” to “Urban One, Inc.” to have a name more reflective of our multi-media business operations. We anticipate this change to occur prior to our reporting of our results for the period ending March 31, 2017. Our core radio broadcasting franchise will continue to operate under the brand “Radio One.” We will also retain our other brands, such as TV One and Interactive One, while developing additional branding reflective of our diverse media operations and targeting our African-American and urban audiences.

As of June 2011, our remaining Boston radio station was made the subject of a TBA whereby we made available, for a fee, air time on the station to another party. In December 2013, we renegotiated the terms of the TBA, which expired in December 2016, at which time the station was conveyed. As a result, that station’s radio broadcasting license was classified as a short-term other asset as of December 31, 2015, and was amortized through the conveyance date of December 6, 2016.

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

Our Stations and Markets

The table below provides information about our radio stations and the markets in which we owned or operated such stations as of December 31, 2016.

	Radio One						Market Data
Market	Number of Stations(1)				Entire Audience Four Book Average Audience Share(2)		Ranking by Size of African-American Population Persons 12+(3)		Estimated Fall 2016 Metro Population Persons 12+
	FM		AM						Total (millions)		African- American %
Atlanta		4		-		13.8		2		4.7		34.1
Washington, DC		3		2		12.3		4		4.9		26.7
Houston		3		-		12.1		5		5.7		17.4
Philadelphia		3		-		6.6		7		4.6		20.6
Dallas		2		-		4.4		6		6.0		16.1
Detroit		3		1		8.4		8		3.8		22.0
Baltimore		2		2		16.9		11		2.4		28.9
Charlotte		3		-		10.8		13		2.2		22.7
St. Louis		2		-		10.2		16		2.3		18.6
Cleveland		2		2		12.8		18		1.8		20.0
Raleigh-Durham		4		-		17.2		19		1.5		22.6
Richmond(4)		4		1		19.9		22		1.0		30.1
Columbus		4		-		8.5		26		1.6		16.3
Indianapolis		3		1		15.8		28		1.5		16.2
Cincinnati		2		1		6.8		35		1.8		12.7
Total		44		10

(1)	WDNI-CD (formerly WDNI-LP), the low power television station that we operate in Indianapolis is not included in this table and constitutes the 55^th broadcast station.
(2)	Audience share data are for the 12+ demographic and derived from the Nielsen Survey ending with the Fall 2016 Nielsen Survey.
(3)	Population estimates are from the Nielsen Radio Market Survey Population, Rankings and Information, Fall 2016.
(4)	Richmond is the only market in which we operate using the diary methodology of audience measurement.

The African-American Market Opportunity

We believe that urban-oriented media primarily targeting African-Americans continues as an attractive opportunity for the following reasons:

African Americans Remain Heavy Consumers of Media. While radio is a maturing industry, radio consumption among African-Americans remains high. A recent survey indicates that 91% of all African-Americans aged 12 and older – 31 million people — tune into radio each week. On average, African-Americans listen to more radio relative to the total population at all age levels but particularly in the youngest and Baby Boomer age ranges. African-Americans aged 12-17 listen to an average of over 11% more hours of radio per month than does the total 12-17 population. Further, African-Americans aged 50-64 listen to an average of over 9% more hours of radio per month than the total 50-64 population. Indeed, African-Americans listen to the radio on average more than any other ethnic group, with African-Americans on average having more than 60 hours of radio listening time per month. Critical to advertisers, in the top 50 designated market areas, radio reaches on average each month 94% of African-Americans with a household income of $75,000 or more and 93% of African-Americans who are college graduates. (Source: “African-American Consumers: The Untold Story”, The Nielsen Company 2015.) African-Americans are also heavily engaged viewers of television and video content, particularly live TV. African-American millennials watch an average of almost 33 hours of TV per week, a rate 61% higher than the average weekly hours for their total market counterparts and African-Americans aged 35 to 49 average 48 hours per week watching TV, a rate 49% higher than the average weekly hours for their total market counterparts. (Source: “Young, Connected and Black”, The Nielsen Company 2016.)

African-American Population Growth. The African-American population grew 21% between 2004 and 2014, with the United States African-American population now at 46.3 million (Source: U.S. Census, American Community Survey, 2014 Report.) There are 11.5 million African-American millennials representing 14% of the total 83.1 million millennial population. Thus, African-American millennials also comprise 25% of the total African-American population. (Source: “Young, Connected and Black”, The Nielsen Company 2016.) This is important as other demographic segments perceive African-Americans as a driving force for popular culture: 73% of whites and 67% of Hispanics believe African-Americans influence mainstream American culture. (Source: “Resilient, Receptive and Relevant: The African-American Consumer,” Nielsen, 2013.)

High African-American Geographic Concentration. An analysis of the African-American population shows a high degree of geographic concentration. Indeed, according to recent census data, about 60% of African-Americans live in 10 states. The 10 states with the largest African-American populations in 2014 were New York (3.8 million), Texas (3.6 million), Florida (3.6 million), Georgia (3.3 million), California (3.0 million), North Carolina (2.3 million), Illinois (2.0 million), Maryland (1.9 million), Virginia (1.8 million) and Ohio (1.6 million). (Source: U.S. Census Bureau 2014 Estimate). In 2015, the states with the largest African-American buying power were New York ($109 billion), Texas ($106 billion), California ($84 billion), Georgia ($81 billion), Florida ($80 billion), Maryland ($69 billion), North Carolina ($55 billion), Virginia ($49 billion), Illinois ($49 billion) and New Jersey ($42 billion). These states are also expected to see African-American buying power grow at rates between 14% and 32% between 2015 and 2020. Thus, tremendous opportunities exist for geo-target campaigns towards African-Americans in these states. (Source: “Young, Connected and Black”, The Nielsen Company 2016.)

Higher African-American Income Growth. The economic status of African-Americans has improved at an above-average rate over the past two decades. African-American buying power reached $1.2 trillion in 2015 and is expected to increase to over $1.4 trillion by 2020. African-American consumers’ share of the nation’s total buying power will rise to 8.8% in 2018, accounting for almost nine cents out of every dollar that is spent. (Source: “The Multicultural Economy 2013,” Selig Center for Economic Growth, Terry College of Business, The University of Georgia, August 2013.) The share of African-American households with incomes under $25,000 declined from 43% in 2004 to 37% in 2014. For the $25,000-$50,000 income bracket, the decline was from 28% to 26%. At the same time, the share of African-American households with incomes from $50,000 to $75,000 and $75,000 to $100,000 increased from 15% to 16% and from 7% to 9%, respectively. Further, the share with annual incomes over $100,000 increased from 7% to 12%. While these numbers are not adjusted for inflation, comparisons to the broader population provide further context. From 2004 to 2014, the number of African-American households with incomes between $50,000 and $75,000 increased 18% while the increase was just 2% for the population as a whole. During the same time frame, the number of African-American households with incomes between $75,000 and $100,000 annually increased 35% while the increase was 16% for the total population and the number of African-American households with incomes over $100,000 increased 95% compared to 66% for the population as a whole. (Source: “Young, Connected and Black”, The Nielsen Company 2016.)

Growing Influence of African-American Culture. The African-American population, on average, is younger than the average age for the total U.S. population, with an average age of 31.4 years, compared to 39 years for the non-Hispanic White population and 37.7 years for the total population. Almost 30% of the African-American population is under the age of 18. Because of their relative youth and role as avid consumers African-Americans are also key influencers and creators of pop culture. (Source: “African-American Consumers: The Untold Story”, The Nielsen Company 2015.) Further, we believe that there continues to be an ongoing “urbanization” of many facets of American society as evidenced by the influence of African-American culture in the areas of politics, music, film, fashion, sports and urban-oriented television shows and networks. We believe that many companies from a broad range of industries have embraced this urbanization trend in their products as well as in their advertising messages. Indeed, African-American celebrities are among the most well-known, influential personalities and trendsetters across the entertainment landscape. In music, Beyoncé is one of the top three trendsetting artists in the pop genre, Will Smith is the third most widely recognized actor in film, Oprah Winfrey is viewed as the most influential media personality in television and Michael Jordan is the highest marketable celebrity in all of sports. (Source: Nielsen Entertainment, N-Score 2015.)

Growth in Advertising Targeting the African-American Market. We continue to believe that large corporate advertisers are becoming more focused on reaching minority consumers in the United States. The African-American community is considered an emerging growth market within a mature domestic market. African-American consumers have behavior patterns distinguishable from those of the general market population. For example, African-Americans as a group are, relative to the total population, heavier consumers of media and shop more frequently. (Source: “Resilient, Receptive and Relevant: The African-American Consumer,” Nielsen, 2013.) We believe many large corporations are expanding their commitment to ethnic advertising. The companies that successfully market to the African-American audience have focused on building brand relationships. Advertisers are making an effort to fully understand African-American consumers, and to relate to them with messages that are relevant to their community. These advertisers are accomplishing this by visibly and consistently engaging the African-American consumer, involving themselves with the interests of the African-American consumer and increasing African-American brand loyalty. Using multiple platforms to reach African-American consumers is an effective marketing strategy as 62% of African-Americans are likely to feel advertising content accessed via mobile phones and devices is useful. Fifty-three percent agreed that TV ads provided useful information about new products and services, while the respective percentages of African-Americans that felt advertising accessed via other media was useful (newspapers (47%), magazines (46%), radio (39%), and internet (38%)) was similar to the percentages for the general population. (Source: “Powerful, Growing, Influential. The African-American Consumer, 2014 Report,” Nielsen and Essence, 2014.) In 2015, $2.3 billion was spent on advertising focused on African-American audiences, with $1.3 billion spent on cable TV, $545 million spent on spot radio, $258 million spent on broadcast television and $204 million spent on syndicated television. (Source: “Young, Connected and Black”, The Nielsen Company 2016.)

Significant and Growing Internet Usage and Its Social Impact within the African-American Community. African-American households outnumber each other ethnic (non-white) category of households as far as the number of households that reported using the internet. (Source: U.S. Census Bureau, May 2013, “Computer and Internet Use in the United States.”) African-Americans are the second ranked cultural group with respect to percentage of smartphone ownership, with 91% of African-Americans owning smartphones compared to 94% of Asian-Americans. Indeed, a full 55% of African-American millennials say they spend an hour or more daily on social media sites and some 29% say they spend 3 or more hours a day on social media sites. In addition to interacting for maintaining relationships, African-American millennials in particular use social media to raise awareness within the African-American community. The most notable example is the BlackLivesMatter movement which developed from a #movement to an ideological, political and social justice phenomenon. (Source: “Young, Connected and Black”, The Nielsen Company 2016.)

Business Strategy

Radio Station Portfolio Optimization. Within our core radio business, our core franchise remains targeted toward the African-American and/or urban listener and consumer. Our portfolio management strategy is to make select acquisitions of radio stations, primarily in markets where we already have a presence, and to divest stations which are no longer strategic in nature. Depending on market conditions, we may divest stations that do not have an urban format or stations located in smaller markets or markets where the African-American population is smaller, on a relative basis, than other markets in which we operate. Further, given market conditions, changes in ratings methodologies and economic and demographic shifts, from time to time, we may reprogram some of our stations in underperforming segments of certain markets. Through our portfolio management strategy, we are continually looking for opportunities to upgrade the performance of existing radio stations through reprogramming or by strengthening their signals to reach a larger number of potential listeners.

Investment in Complementary Businesses. We continue to invest in complementary businesses in the media and entertainment industries. The primary focus of these investments is on businesses that provide entertainment and information content to African-American and urban consumers. We own 100% of TV One, one of the largest cable television networks targeting African-Americans. In December 2014, we acquired the website and brand Global Grind which have been integrated into our Interactive One operations - including the largest social networking site by members primarily targeted at African-Americans. And, most recently, in November 2016, we invested in MGM’s world-class casino property, MGM National Harbor, located in the predominately African-American county Prince George’s County, Maryland. This investment further diversifies our platform in the entertainment industry while still focusing on our core demographic. Under the Radio One umbrella, the consolidation of these media and entertainment properties and investments into our operations is consistent with our operating strategy of becoming a multi-media entertainment and information content provider to African-American consumers. We believe that our unique position as a diversified media and entertainment company focused on the African-American consumer provides us with a competitive advantage in these new businesses.

Top 50 African-American Radio Markets in the United States

The table below notes the top 50 African-American radio markets in the United States. The bold text indicates markets where we own and/or operate radio stations. Population estimates are for 2016 and are based upon data provided by Nielsen.

		African-		Percentage of
		American		the Overall
		Population		Population
Rank	Market	(Persons 12+)		(Persons 12+)
		(In thousands)
1	New York		2,771		16.9	%
2	Atlanta		1,618		34.1	%
3	Chicago		1,347		16.9	%
4	Washington, DC		1,306		26.7	%
5	Houston-Galveston		992		17.4	%
6	Dallas-Ft. Worth		960		16.1	%
7	Philadelphia		945		20.6	%
8	Detroit		839		22.0	%
9	Miami-Fort Lauderdale		835		20.7	%
10	Los Angeles		822		7.2	%
11	Baltimore		697		28.9	%
12	Memphis		516		46.1	%
13	Charlotte-Gastonia-Rock Hill		512		22.7	%
14	San Francisco		449		6.7	%
15	Norfolk-Virginia Beach-Newport News		439		31.2	%
16	St. Louis		436		18.6	%
17	New Orleans		396		31.5	%
18	Cleveland		354		20.0	%
19	Raleigh-Durham		349		22.6	%
20	Boston		331		7.7	%
21	Tampa-St. Petersburg		313		11.8	%
22	Richmond		313		30.1	%
23	Orlando		303		16.7	%
24	Greensboro-Winston-Salem		290		22.7	%
25	Birmingham		272		29.6	%
26	Columbus, OH		268		16.3	%
27	Jacksonville		267		21.1	%
28	Indianapolis		247		16.2	%
29	Seattle-Tacoma		246		6.5	%
30	Minneapolis-St. Paul		245		8.4	%
31	Baton Rouge		243		34.8	%
32	Nassau-Suffolk		241		9.7	%
33	Nashville		236		16.5	%
34	Milwaukee-Racine		233		15.5	%
35	Cincinnati		230		12.7	%
36	Kansas City		229		13.3	%
37	West Palm Beach-Boca Raton		224		17.7	%
38	Las Vegas		219		12.0	%
39	Phoenix		210		5.9	%
40	Middlesex-Somerset-Union		203		13.7	%
41	Jackson, MS		201		48.1	%
42	Columbia, SC		200		33.5	%
43	Hudson Valley		193		12.7	%
44	Riverside-San Bernardino		181		8.8	%
45	Pittsburgh, PA		178		8.9	%
46	Charleston, SC		169		26.0	%
47	Greenville-Spartanburg		168		17.6	%
48	Augusta, GA		166		34.7	%
49	Louisville		159		15.3	%
50	Sacramento		158		8.0	%

Multi-Media Operating Strategy

To maximize net revenue and broadcast and internet operating income at our radio stations, we strive to achieve the largest audience share of African-American listeners in each market, convert these audience share ratings to advertising revenue, and control operating expenses. Complementing our core broadcast radio franchise are our syndicated radio, cable television, and online media interests. Through our national presence across our various media, we provide our customers with a multi-media advertising platform that is a unique and powerful delivery mechanism toward African-Americans and other urban consumers. We believe that as we continue to diversify into other media, the strength and effectiveness of this unique platform will become even more compelling. The success of our strategy relies on the following:

·	market research and targeted programming and marketing;

·	ownership and syndication of programming content;

·	clustering, programming segmentation and sales bundling;

·	strategic and coordinated sales, marketing and special event efforts;

·	strong management and performance-based incentives; and

·	significant community involvement.

Market Research and Targeted Programming and Marketing

We use market research to tailor the programming, marketing and promotion of our radio stations and the content of our complementary media to maximize audience share. We also use our research to reinforce and refine our current programming and content, to identify unserved or underserved markets or segments within the African-American population and to determine whether to acquire new media properties or reprogram one of our existing media properties.

We also seek to reinforce our targeted programming and content by creating a distinct and marketable identity for each of our media properties. To achieve this objective, in addition to our significant community involvement (discussed below), we employ and promote distinct, high-profile personalities across our media properties, many of whom have strong ties to the African-American community and the local communities in which a broadcasting property is located.

Ownership and Syndication of Programming Content

To diversify our revenue base beyond the markets in which we physically operate, we seek to develop or acquire proprietary African-American targeted content. We distribute this content in a variety of ways, utilizing our own network of multi-media distribution assets or through distribution assets owned by others. If we distribute content through others, we are paid for providing this content or we receive advertising inventory which we monetize through our adverting sales. Our programming content efforts have included our investment in TV One and its related programming and the acquisition and development of our interactive brands including Global Grind, BlackPlanet, NewsOne, TheUrbanDaily and HelloBeautiful. Our efforts also include the development and distribution of several syndicated radio shows, including the Tom Joyner Morning Show, the Rickey Smiley Morning Show, Get Up! Mornings with Erica Campbell, the Russ Parr Morning Show, the Ed Lover Show and the DL Hughley Show. In addition to being broadcast on Radio One stations, our syndicated radio programming also was available on over 223 non-Radio One stations throughout the United States as of December 31, 2016.

Clustering, Programming Segmentation and Sales Bundling

We strive to build clusters of radio stations in our markets, with each radio station targeting different demographic segments of the African-American population. This clustering and programming segmentation strategy allows us to achieve greater penetration within the distinct segments of our overall target market. In a similar fashion, we have multiple online brands including Global Grind, BlackPlanet, NewsOne, TheUrbanDaily, and HelloBeautiful. Each of these brands focuses upon a different segment of African-American online users. With our radio station clusters and multiple online brands, we are able to direct advertisers to specific audiences within the urban communities in which we are located or to bundle the radio stations and brands for advertising sales purposes when advantageous.

We believe there are several potential benefits that result from operating multiple radio stations within the same market as well as operating multiple online brands. First, each additional radio station in a market and online brand provides us with a larger percentage of the prime advertising time available for sale within that market and among online users. Second, the more stations we program and brands that we operate, the greater the market share we can achieve in our target demographic groups through the use of segmented programming and content delivery. Third, we are often able to consolidate sales, promotional, technical support and business functions across stations and brands to produce substantial cost savings. Finally, the purchase of additional radio stations in an existing market and the development of additional online brands allow us to take advantage of our market expertise and leverage our existing relationships with advertisers.

Strategic and Coordinated Sales, Marketing and Special Event Efforts

We have assembled an effective, highly trained sales staff responsible for converting our broadcast and online audience shares into revenue. We operate with a focused, sales-oriented culture, which rewards aggressive selling efforts through a commission and bonus compensation structure. We hire and deploy large teams of sales professionals for each of our media properties or media clusters, and we provide these teams with the resources necessary to compete effectively in the markets in which we operate. We utilize various sales strategies to sell and market our properties on a stand-alone basis, in combination with other properties within a given market, and across our various media properties, where appropriate.

We have created a national platform of radio stations and syndicated programming in some of the largest African-American consumer markets. Our radio platform together with our syndicated programming platform has the ability to reach approximately 20 million listeners weekly, more than that of any other radio broadcaster primarily targeting African-Americans. Given the high degree of geographic concentration among the African-American population, national advertisers find advertising on our radio stations an efficient and cost-effective way to reach this target audience. Through integrated sales efforts, we bundle and sell our platform of radio stations to national advertisers, thereby enhancing our revenue generating opportunities, expanding our base of advertisers, creating greater demand for our advertising inventory, and increasing the capacity utilization of our inventory and making our sales efforts more efficient. We have also created a dedicated online sales force as part of our internet segment. Our leading advertising products, custom marketing solutions, and integrated inventory opportunities provide our advertising customers a unique vehicle to reach online African-American consumers at scale. To allow marketers to reach our audience across all of our platforms (radio, including syndication, television, and online) in an efficient way, we offer “One Solution”, a cross-platform/brand sales and marketing effort which allows top tier advertisers to take full advantage of our complete suite of offerings through a one-stop shop approach.

In order to create advertising loyalty, we strive to be the recognized expert in marketing to the African-American consumer in the markets in which we operate. We believe that we have achieved this recognition by focusing on serving the African-American consumer and by creating innovative advertising campaigns and promotional tie-ins with our advertising clients and sponsoring numerous entertainment events each year. At these events, advertisers buy sponsorships, signage, booth space, and/or broadcast promotions to sell a variety of goods and services to African-American consumers.

Strong Management and Performance-Based Incentives

We focus on hiring and retaining highly motivated and talented individuals in each functional area of our organization who can effectively help us implement our growth and operating strategies. Our management team is comprised of a diverse group of individuals who bring significant expertise to their functional areas. To enhance the quality of our management in the areas of sales and programming, general managers, sales managers and program directors have significant portions of their compensation tied to the achievement of certain performance goals. General Managers’ compensation is based partially on increasing market share and achieving broadcast and internet operating income benchmarks, which creates an incentive for management to focus on both sales growth and profitability. Additionally, sales managers and sales personnel have incentive packages based on sales goals, and program directors and on-air talent have incentive packages focused on maximizing ratings in specific target segments. Our One Solution sales approach seeks to drive incremental revenue and value across all of our media properties and includes performance-based incentives for our sales team.

Significant Community Involvement

We believe our active involvement and significant relationships in the African-American community across each of our brands and in each of our markets provide a competitive advantage in targeting African-American audiences and significantly improve the marketability of our advertising to businesses that are targeting such communities. We believe that a media property’s image should reflect the lifestyle and viewpoints of the target demographic group it serves. Due to our fundamental understanding of the African-American community, we are well positioned to identify music and musical styles, as well as political and social trends and issues, early in their evolution. This understanding is integrated into significant aspects of our operations across all of our media properties and enables us to create enhanced awareness and name recognition in the marketplace. In addition, we believe our approach to community involvement leads to increased effectiveness in developing and updating our programming formats and online brands and content which in turn leads to greater listenership and users of our online properties, driving higher ratings and online traffic over the long-term.

Our Radio Station Portfolio

The following table sets forth selected information about our portfolio of radio stations as of December 31, 2016. Market population data and revenue rank data are from BIA/Kelsey “Investing in Radio Market Report”, 2016 Fourth Edition. Audience share and audience rank data are based on Nielsen Surveys unless otherwise noted. As used in this table, “n/a” means not applicable or not available and (“t”) means tied with one or more radio stations.

						Audience		Audience		Share in		Rank in
	2016 Metro	Year		Target Age		Share in 12+		Rank in 12+		Target		Target
Market	Population	Acquired	Format	Demographic		Demographic		Demographic		Demographic		Demographic
Atlanta	8
WPZE-FM		2004	Contemporary Inspirational		25-54		4.1		9		3.5		13
WHTA-FM		2002	Urban Contemporary		18-34		4.9		4		9.2		1
WAMJ-FM		1999	Urban AC		25-54		3.7		14		3.9		11
WUMJ-FM		1999	Urban AC		25-54		*		*		*		*

Washington, DC	7
WKYS-FM		1995	Urban Contemporary		18-34		3.5		12		6.8		3
WMMJ-FM		1987	Urban AC		25-54		4.9		5		2.9		15
WPRS-FM		2008	Contemporary Inspirational		25-54		3.6		9		4.6		7
WOL-AM		1980	News/Talk		35-64		0.3		34		0.4		33
WYCB-AM		1998	Gospel		35-64		0.0		n/a		n/a		n/a

Philadelphia	9
WPPZ-FM		1997	Contemporary Inspirational		25-54		1.7		21		1.4		21
WPHI-FM		2000	Urban Contemporary		18-34		1.6		22		2.4		18
WRNB-FM		2004	Urban AC/Old School		25-54		3.3		12		3.1		15

Houston	6
KMJQ-FM		2000	Urban AC		25-54		6.5		2		5.4		4
KBXX-FM		2000	Urban Contemporary		18-34		4.3		7		8.2		1
KROI-FM		2004	Urban Contemporary		25-54		1.3		23		1.7		21

Detroit	12
WGPR-FM		(1)	Urban Contemporary		18-34		2.5		19		5.2		5
WDMK-FM		1998	Urban AC		25-54		3.8		13		3.9		11
WPZR-FM		1998	Contemporary Inspirational		25-54		1.9		20		2.0		18
WCHB-AM		1998	News/Talk		35-64		0.2		33		0.2		33

Dallas	5
KBFB-FM		2000	Urban Contemporary		18-34		2.7		15		4.9		4
KSOC-FM		2001	Urban Contemporary		25-54		1.7		23		2.3		20

Baltimore	21
WERQ-FM		1993	Urban Contemporary		18-34		8.0		1		13.7		1
WWIN-FM		1992	Urban AC		25-54		7.9		2		7.9		2
WOLB-AM		1993	News/Talk		35-64		0.2		46		0.2		46
WWIN-AM		1992	Gospel		35-64		0.3		41		0.3		41

						Audience		Audience		Share in		Rank in
	2016 Metro	Year		Target Age		Share in 12+		Rank in 12+		Target		Target
Market	Population	Acquired	Format	Demographic		Demographic		Demographic		Demographic		Demographic
Charlotte	24
WPZS-FM		2004	Contemporary Inspirational		25-54		3.2		15		2.4		16
WOSF-FM		2014	Urban AC/Old School		25-54		5.3		5		5.3		5
WQNC-FM		2004	Urban Contemporary		18-34		2.3		18		4.6		9

St. Louis	22
WFUN-FM		1999	Urban AC/Old School		25-54		4.9		10		4.5		11
WHHL-FM		2006	Urban Contemporary		18-34		5.3		6		9.6		2

Cleveland	33
WENZ-FM		1999	Urban Contemporary		18-34		5.5		8		11.3		1
WERE-AM		2000	News/Talk		35-64		n/a		n/a		n/a		n/a
WZAK-FM		2000	Urban AC		25-54		7.0		5		6.1		9
WJMO-AM		1999	Contemporary Inspirational		25-54		0.3		27		0.4		24

Raleigh-Durham	38
WQOK-FM		2000	Urban Contemporary		18-34		5.4		7		9.2		2
WFXK-FM		2000	Urban AC		25-54		**		**		**		**
WFXC-FM		2000	Urban AC		25-54		7.5		2		7.8		1
WNNL-FM		2000	Contemporary Inspirational		25-54		4.3		9		3.7		12

Richmond(2)	54
WCDX-FM		2001	Urban Contemporary		18-34		5.1		7		11.1		2
WPZZ-FM		1999	Contemporary Inspirational		25-54		5.2		6		4.3		8
WKJS-FM		2001	Urban AC		25-54		9.2		1		8.9		1
WKJM-FM		2001	Urban AC		25-54		***		***		***		***
WTPS-AM		2001	News/Talk		35-64		0.4		27		0.3		26

Columbus	37
WCKX-FM		2001	Urban Contemporary		18-34		3.8		10		6.8		5
WBMO-FM		2001	Urban Contemporary		25-54		1.7		20		2.3		16
WXMG-FM		2016	Urban AC		25-54		2.3		15		1.8		19
WJYD-FM		2016	Contemporary Inspirational		25-54		0.7		24		0.5		25

Indianapolis(3)	39
WHHH-FM		2000	Urban Contemporary		18-34		4.5		11		7.7		3
WTLC-FM		2000	Urban AC		25-54		6.9		3		5.5		6
WNOW-FM		2000	Pop/CHR		18-34		3.1		14		5.2		7
WTLC-AM		2001	Contemporary Inspirational		35-64		0.8		25		0.8		23

Cincinnati	30
WIZF-FM		2001	Urban Contemporary		18-34		3.6		11		6.1		7
WOSL-FM		2006	Urban AC/Old School		25-54		2.7		15		2.6		15
WDBZ-AM		2007	News/Talk		35-64		0.5		27		0.5		29

AC—refers to Adult Contemporary

CHR—refers to Contemporary Hit Radio

R&B—refers to Rhythm and Blues

Pop—refers to Popular Music

Old School – refers to Old School Hip/Hop

Simulcast with WAMJ-FM

Simulcast with WFXC-FM

***

Simulcast with WKJS-FM

(1)

Station was operating under a TBA as of December 31, 2016. The TBA expires December 31, 2019.

(2)

Richmond is the only market in which we operate using the diary methodology of audience measurement.

(3)

WDNI-CD (formerly WDNI-LP), the low power television station that we acquired in Indianapolis in June 2000, is not included in this table.

Radio Advertising Revenue

For the year ended December 31, 2016, approximately 42.6% of our net revenue was generated from the sale of advertising in our core radio business, excluding Reach Media. Substantially all net revenue generated from our radio franchise is generated from the sale of local, national and network advertising. Local sales are made by the sales staff located in our markets. National sales are made primarily by Katz Communications, Inc. (“Katz”), a firm specializing in radio advertising sales on the national level. Katz is paid agency commissions on the advertising sold. Approximately 61.2% of our net revenue from our core radio business for the year ended December 31, 2016, was generated from the sale of local advertising and 34.6% from sales to national advertisers, including network/syndication advertising. The balance of net revenue from our radio segment is primarily derived from tower rental income, ticket sales, and revenue related to sponsored events, management fees and other revenue.

Advertising rates charged by radio stations are based primarily on:

a radio station’s audience share within the demographic groups targeted by the advertisers;

the number of radio stations in the market competing for the same demographic groups; and

the supply and demand for radio advertising time.

A radio station’s listenership is measured by the Portable People Meter^TM (the “PPM^TM”) system or diary ratings surveys, both of which estimate the number of listeners tuned to a radio station and the time they spend listening to that radio station. Ratings are used by advertisers to evaluate whether to advertise on our radio stations, and are used by us to chart audience size, set advertising rates and adjust programming. Advertising rates are generally highest during the morning and afternoon commuting hours.

Strategic Diversification and Other Sources of Revenue and Income

We have expanded our operations to include other media forms that are complementary to our core radio business. In December 2014, we acquired certain assets of GG Digital, Inc., including the website and brand Global Grind. The Global Grind website and brand have been integrated into our online operations as part of Interactive One, which includes the largest social networking site by members primarily targeted at African-Americans. Interactive One derives revenue from advertising services on non-radio station branded websites, and studio services where Interactive One provides services to other publishers. Advertising services include the sale of banner and sponsorship advertisements. Advertising revenue is recognized either as impressions (the number of times advertisements appear in viewed pages) are delivered, when “click through” purchases are made, or ratably over the contract period, where applicable. In addition, Interactive One derives revenue from its studio operations which provide third-party clients with digital platforms and expertise. In the case of the studio operations, revenue is recognized primarily through fixed contractual monthly fees and/or as a share of the third party’s reported revenue.

Reach Media primarily derives its revenue from the sale of advertising in connection with its syndicated radio shows, including the Tom Joyner Morning Show, the Rickey Smiley Morning Show, Get Up! Mornings with Erica Campbell, the Russ Parr Morning Show, the Ed Lover Show and the DL Hughley Show. Mr. Joyner is a leading nationally syndicated radio personality. As of December 31, 2016, the Tom Joyner Morning Show was broadcast on 88 affiliate stations across the United States and is a top-rated morning show in many of the markets in which it is broadcast. Reach Media operates www.BlackAmericaWeb.com, an African-American targeted website and also operates the Tom Joyner Family Reunion and various other special event-related activities.

TV One 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 derives revenue from affiliate fees under the terms of various affiliation agreements based upon a per subscriber fee multiplied by the most recent subscriber counts reported by the applicable affiliate.

We have launched websites that simultaneously stream radio station content for each of our radio stations, and we derive revenue from the sale of advertisements on those websites. We generally encourage our web advertisers to run simultaneous radio campaigns and use mentions in our radio airtime to promote our websites. By providing streaming, we have been able to broaden our listener reach, particularly to “office hour” listeners. We believe streaming has had a positive impact on our radio stations’ reach to listeners. In addition, our station websites link to our other online properties operated by Interactive One acting as traffic sources for these online brands.

Our MGM National Harbor investment entitles us to an annual cash distribution based on net gaming revenue. Future opportunities could include investments in, or acquisitions of, companies in diverse media businesses, gaming and entertainment, music production and distribution, movie distribution, internet-based services, and distribution of our content through emerging distribution systems such as the Internet, smartphones, cellular phones, tablets, and the home entertainment market.

Competition

The media industry is highly competitive and we face intense competition across our core radio franchise and all of our complementary media properties. Our media properties compete for audiences and advertising revenue with other radio stations and with other media such as broadcast and cable television, the Internet, satellite radio, newspapers, magazines, direct mail and outdoor advertising, some of which may be controlled by horizontally-integrated companies. Audience ratings and advertising revenue are subject to change and any adverse change in a market could adversely affect our net revenue in that market. If a competing station converts to a format similar to that of one of our stations, or if one of our competitors strengthens its signal or operations, our stations could suffer a reduction in ratings and advertising revenue. Other media companies which are larger and have more resources may also enter or increase their presence in markets or segments in which we operate. Although we believe our media properties are well positioned to compete, we cannot assure that our properties will maintain or increase their current ratings, market share or advertising revenue.

The radio broadcasting industry is subject to rapid technological change, evolving industry standards and the emergence of new media technologies, which may impact our business. We cannot guarantee that we will have the resources to acquire new technologies or to introduce new services that could compete with these new technologies. Several new media technologies are being, or have been, developed including the following:

satellite delivered digital audio radio service with expansive choice, high sound quality, and availability on portable devices and in automobiles;

audio programming by Internet companies, cable television systems, and direct broadcast satellite systems; and

digital audio and video content available for listening and/or viewing on the Internet and/or available for downloading to portable devices.

Along with most other public radio companies, we have invested in iBiquity, a developer of digital audio broadcast technology. In connection with the investment, we committed to convert most of our analog broadcast radio stations to in-band, on-channel digital radio broadcasts, which could provide multi-channel, multi-format digital radio services in the same bandwidth currently occupied by traditional AM and FM radio services. However, we cannot assure that these arrangements will be successful or enable us to adapt effectively to these new media technologies.

Our internet segment competes for the time and attention of internet users and, thus, advertisers and advertising revenues with a wide range of internet companies such as Amazon^TM, NetFlix^TM, Yahoo!^TM, Google^TM, and Microsoft^TM and social networking sites such as Facebook^TM and traditional media companies, which are increasingly offering their own internet products and services both organically and through acquisition. The Internet is dynamic and rapidly evolving, and new and popular competitors, such as social networking sites, frequently emerge and/or are fragmented by new and evolving technologies.

Antitrust Regulation

The agencies responsible for enforcing the federal antitrust laws, the Federal Trade Commission (“FTC”) and the Department of Justice (“DOJ”), may investigate acquisitions. The DOJ has challenged a number of media property transactions. Some of those challenges ultimately resulted in consent decrees requiring, among other things, divestitures of certain media properties. We cannot predict the outcome of any specific DOJ or FTC review of a particular acquisition.

For acquisitions meeting certain size thresholds, the Hart-Scott-Rodino Act requires the parties to file Notification and Report Forms concerning antitrust issues with the DOJ and the FTC and to observe specified waiting period requirements before completing the acquisition. If the investigating agency raises substantive issues in connection with a proposed transaction, the parties involved frequently engage in lengthy discussions and/or negotiations with the investigating agency to address those issues, including restructuring the proposed acquisition or divesting assets. In addition, the investigating agency could file suit in federal court to enjoin the acquisition or to require the divestiture of assets, among other remedies. All acquisitions, regardless of whether they are required to be reported under the Hart-Scott-Rodino Act, may be investigated by the DOJ or the FTC under the antitrust laws before or after completion. In addition, private parties may under certain circumstances bring legal action to challenge an acquisition under the antitrust laws. The DOJ has stated publicly that it believes that local marketing agreements, joint sales agreements, time brokerage agreements and other similar agreements customarily entered into in connection with radio station transfers could violate the Hart-Scott-Rodino Act if such agreements take effect prior to the expiration of the waiting period under the Hart-Scott-Rodino Act.

Federal Regulation of Radio Broadcasting

The radio broadcasting industry is subject to extensive and changing regulation by the FCC and other federal agencies of ownership, programming, technical operations, employment and other business practices. The FCC regulates radio broadcast stations pursuant to the Communications Act of 1934, as amended (the “Communications Act”). The Communications Act permits the operation of radio broadcast stations only in accordance with a license issued by the FCC upon a finding that the grant of a license would serve the public interest, convenience and necessity. Among other things, the FCC:

assigns frequency bands for radio broadcasting;

determines the particular frequencies, locations, operating power, interference standards, and other technical parameters for radio broadcast stations;

issues, renews, revokes and modifies radio broadcast station licenses;

imposes annual regulatory fees and application processing fees to recover its administrative costs;

establishes technical requirements for certain transmitting equipment to restrict harmful emissions;

adopts and implements regulations and policies that affect the ownership, operation, program content, employment, and business practices of radio broadcast stations; and

has the power to impose penalties, including monetary forfeitures, for violations of its rules and the Communications Act.

The Communications Act prohibits the assignment of an FCC license, or the transfer of control of an FCC licensee, without the prior approval of the FCC. In determining whether to grant or renew a radio broadcast license or consent to assignment or transfer of a license, the FCC considers a number of factors, including restrictions on foreign ownership, compliance with FCC media ownership limits and other FCC rules, the character and other qualifications of the licensee (or proposed licensee) and compliance with the Anti-Drug Abuse Act of 1988. A licensee’s failure to comply with the requirements of the Communications Act or FCC rules and policies may result in the imposition of sanctions, including admonishment, fines, the grant of a license renewal for less than a full eight-year term or with conditions, denial of a license renewal application, the revocation of an FCC license, and/or the denial of FCC consent to acquire additional broadcast properties.

Congress, the FCC and, in some cases, other federal agencies and local jurisdictions, are considering or may in the future consider and adopt new laws, regulations and policies that could affect the operation, ownership and profitability of our radio stations, result in the loss of audience share and advertising revenue for our radio broadcast stations or affect our ability to acquire additional radio broadcast stations or finance such acquisitions. Such matters include or may include:

changes to the license authorization and renewal process;

proposals to increase record keeping, including enhanced disclosure of stations’ efforts to serve the public interest;

proposals to impose spectrum use or other fees on FCC licensees;

changes to rules relating to political broadcasting, including proposals to grant free air time to candidates, and other changes regarding political and non-political program content, political advertising rates and sponsorship disclosures;

proposals to restrict or prohibit the advertising of beer, wine, and other alcoholic beverages;

revised rules and policies regarding the regulation of the broadcast of indecent content;

proposals to increase the actions stations must take to demonstrate service to their local communities;

technical and frequency allocation matters;

changes in broadcast multiple ownership, foreign ownership, cross-ownership and ownership attribution policies;

changes to allow satellite radio operators to insert local content into their programming service;

service and technical rules for digital radio, including possible additional public interest requirements for terrestrial digital audio broadcasters;

legislation that would provide for the payment of sound recording royalties to artists, musicians or record companies whose music is played on terrestrial radio stations; and

proposals to alter provisions of the tax laws affecting broadcast operations and acquisitions.

The FCC also has adopted procedures for the auction of broadcast spectrum in circumstances where two or more parties have filed mutually exclusive applications for authority to construct new stations or certain major changes in existing stations. Such procedures may limit our efforts to modify or expand the broadcast signals of our stations.

We cannot predict what changes, if any, might be adopted or considered in the future, or what impact, if any, the implementation of any particular proposals or changes might have on our business.

FCC License Grants and Renewals. In making licensing determinations, the FCC considers an applicant’s legal, technical, financial and other qualifications. The FCC grants radio broadcast station licenses for specific periods of time and, upon application, may renew them for additional terms. A station may continue to operate beyond the expiration date of its license if a timely filed license renewal application is pending. Under the Communications Act, radio broadcast station licenses may be granted for a maximum term of eight years.

Generally, the FCC renews radio broadcast licenses without a hearing upon a finding that:

the radio station has served the public interest, convenience and necessity;

there have been no serious violations by the licensee of the Communications Act or FCC rules and regulations; and

there have been no other violations by the licensee of the Communications Act or FCC rules and regulations which, taken together, indicate a pattern of abuse.

After considering these factors and any petitions to deny a license renewal application (which may lead to a hearing), the FCC may grant the license renewal application with or without conditions, including renewal for a term less than the maximum otherwise permitted. Historically, our licenses have been renewed for full eight-year terms without any conditions or sanctions imposed; however, there can be no assurance that the licenses of each of our stations will be renewed for a full term without conditions or sanctions.

Types of FCC Broadcast Licenses. The FCC classifies each AM and FM radio station. An AM radio station operates on either a clear channel, regional channel or local channel. A clear channel serves wide areas, particularly at night. A regional channel serves primarily a principal population center and the contiguous rural areas. A local channel serves primarily a community and the suburban and rural areas immediately contiguous to it. Class A, B and C radio stations each operate unlimited time. Class A radio stations render primary and secondary service over an extended area. Class B radio stations render service only over a primary service area. Class C radio stations render service only over a primary service area that may be reduced as a consequence of interference. Class D radio stations operate either during daytime hours only, during limited times only, or unlimited time with low nighttime power.

FM class designations depend upon the geographic zone in which the transmitter of the FM radio station is located. The minimum and maximum facilities requirements for an FM radio station are determined by its class. In general, commercial FM radio stations are classified as follows, in order of increasing power and antenna height: Class A, B1, C3, B, C2, C1, C0 and C. The FCC has adopted a rule subjecting Class C FM stations that do not satisfy a certain antenna height requirement to an involuntary downgrade in class to Class C0 under certain circumstances.

Radio One’s Licenses. The following table sets forth information with respect to each of our radio stations for which we own the license as of December 31, 2016. Stations which we do not own as of December 31, 2016, but operate under an LMA, are not reflected on this table. A broadcast station’s market may be different from its community of license. The coverage of an AM radio station is chiefly a function of the power of the radio station’s transmitter, less dissipative power losses and any directional antenna adjustments. For FM radio stations, signal coverage area is chiefly a function of the ERP of the radio station’s antenna and the HAAT of the radio station’s antenna. “ERP” refers to the effective radiated power of an FM radio station. “HAAT” refers to the antenna height above average terrain of an FM radio station.

Market

Station Call Letters

Year of
Acquisition

FCC
Class

ERP (FM)
Power
(AM) in
Kilowatts

Antenna
Height
(AM)
HAAT in
Meters

Operating
Frequency

Expiration
Date of FCC
License

Atlanta

WUMJ-FM

1999

8.5

165.0

97.5 MHz

4/1/2020

WAMJ-FM

1999

33.0

185.0

107.5 MHz

4/1/2020

WHTA-FM

2002

35.0

177.0

107.9 MHz

4/1/2020

WPZE-FM

1999

3.0

143.0

102.5 MHz

4/1/2020

Washington, DC

WOL-AM

1980

0.37

N/A

1450 kHz

10/1/2019

WMMJ-FM

1987

2.9

146.0

102.3 MHz

10/1/2019

WKYS-FM

1995

24.5

215.0

93.9 MHz

10/1/2019

WPRS-FM

2008

20.0

244.0

104.1 MHz

10/1/2019

WYCB-AM

1998

1.0

N/A

1340 kHz

10/1/2019

Philadelphia

WPPZ-FM

1997

0.27

338.0

103.9 MHz

8/1/2022

WRNB-FM

2000

17.0

263.0

100.3 MHz

8/1/2022

WPHI-FM

2004

0.78

276.0

107.9 MHz

6/1/2022

Houston

KMJQ-FM

2000

100.0

524.0

102.1 MHz

8/1/2021

KBXX-FM

2000

95.0

585.0

97.9 MHz

8/1/2021

KROI-FM

2004

21.36

526

92.1 MHz

8/1/2021

Detroit

WDMK-FM

1998

20.0

221.0

105.9 MHz

10/1/2020

WCHB-AM

1998

50.0

N/A

1200 kHz

10/1/2020

WPZR-FM

1998

50.0

152.0

102.7 MHz

10/1/2020

Dallas

KBFB-FM

2000

99.0

574

97.9 MHz

8/1/2021

KSOC-FM

2001

100.0

591.0

94.5 MHz

8/1/2021

Baltimore

WWIN-AM

1992

0.5

N/A

1400 kHz

10/1/2019

WWIN-FM

1992

3.0

91.0

95.9 MHz

10/1/2019

WOLB-AM

1993

0.25

N/A

1010 kHz

10/1/2019

WERQ-FM

1993

37.0

173.0

92.3 MHz

10/1/2019

Charlotte

WQNC-FM

2000

10.5

154.0

92.7 MHz

12/1/2019

WPZS-FM

2004

5.2

107.0

100.9 MHz

12/1/2019

WOSF-FM

2014

51.0

395.0

105.3 MHz

12/1/2019

St. Louis

WFUN-FM

1999

10.5

155.0

95.5 MHz

12/1/2020

WHHL-FM

2006

50.0

140.0

104.1 MHz

2/1/2021

Cleveland

WJMO-AM

1999

5.0

N/A

1300 kHz

10/1/2020

WENZ-FM

1999

16.0

272.0

107.9 MHz

10/1/2020

WZAK-FM

2000

27.5

189.0

93.1 MHz

10/1/2020

WERE-AM

2000

1.0

N/A

1490 kHz

10/1/2020

Raleigh-Durham

WQOK-FM

2000

50.0

146.0

97.5 MHz

12/1/2019

WFXK-FM

2000

100.0

299.0

104.3 MHz

12/1/2019

WFXC-FM

2000

8.0

146.0

107.1 MHz

12/1/2019

WNNL-FM

2000

7.9

176.0

103.9 MHz

12/1/2019

Richmond

WPZZ-FM

1999

100.0

299.0

104.7 MHz

10/1/2019

WCDX-FM

2001

4.5

235.0

92.1 MHz

10/1/2019

WKJM-FM

2001

6.0

100.0

99.3 MHz

10/1/2019

WKJS-FM

2001

2.3

162.0

105.7 MHz

10/1/2019

WTPS-AM

2001

1.0

N/A

1240 kHz

10/1/2019

Columbus

WCKX-FM

2001

1.9

126.0

107.5 MHz

10/1/2020

WBMO-FM

2001

6.0

99.0

106.3 MHz

10/1/2020

WXMG-FM

2016

21.0

232.0

95.5 MHz

10/1/2020

WJYD-FM

2016

6.0

100.0

107.1 MHz

10/1/2020

Market

Station Call Letters

Year of
Acquisition

FCC
Class

ERP (FM)
Power
(AM) in
Kilowatts

Antenna
Height
(AM)
HAAT in
Meters

Operating
Frequency

Expiration
Date of FCC
License

Indianapolis

WHHH-FM

2000

3.3

87.0

96.3 MHz

8/1/2020

WTLC-FM

2000

6.0

99.0

106.7 MHz

8/1/2020

WNOW-FM

2000

6.0

100.0

100.9 MHz

8/1/2020

WTLC-AM

2001

5.0

N/A

1310 kHz

8/1/2020

Cincinnati

WIZF-FM

2001

2.5

155.0

101.1 MHz

8/1/2020

WDBZ-AM

2007

1.0

N/A

1230 kHz

10/1/2020

WOSL-FM

2006

3.1

141.0

100.3 MHz

10/1/2020

Our Boston station, WILD-AM, was sold on December 6, 2016.

To obtain the FCC’s prior consent to assign or transfer control of a broadcast license, an appropriate application must be filed with the FCC. If the assignment or transfer involves a substantial change in ownership or control of the licensee, for example, the transfer or acquisition of more than 50% of the voting stock, the applicant must give public notice and the application is subject to a 30-day period for public comment. During this time, interested parties may file petitions with the FCC to deny the application. Informal objections may be filed at any time until the FCC acts upon the application. If the FCC grants an assignment or transfer application, administrative procedures provide for petitions seeking reconsideration or full FCC review of the grant. The Communications Act also permits the appeal of a contested grant to a federal court.

Under the Communications Act, a broadcast license may not be granted to or held by any persons who are not U.S. citizens or by any entity that has more than 20% of its capital stock owned or voted by non-U.S. citizens or entities or their representatives, by foreign governments or their representatives, or by non-U.S. entities. The Communications Act prohibits indirect foreign ownership or control through a parent company of the licensee of more than 25% if the FCC determines the public interest will be served by the refusal or revocation of such license. The FCC has interpreted this provision of the Communications Act to require an affirmative public interest finding before this 25% limit may be exceeded, and the FCC has made such an affirmative finding only in limited circumstances. Since we serve as a holding company for subsidiaries that serve as licensees for our stations, we are effectively restricted from having more than one-fourth of our stock owned or voted directly or indirectly by non-U.S. citizens or their representatives, foreign governments, representatives of foreign governments, or foreign business entities. In November 2013, the FCC clarified that it would entertain and authorize, on a case-by-case basis and upon a sufficient public interest showing, proposals to exceed the 25% indirect foreign ownership limit in broadcast licensees. In September 2016, the FCC adopted rules to simplify and streamline the process for requesting authority to exceed the 25% indirect foreign ownership limit and reformed the methodology that publicly traded broadcasters may use to assess their compliance with the foreign ownership restrictions.

The FCC applies its media ownership limits to “attributable” interests. The interests of officers, directors and those who directly or indirectly hold five percent or more of the total outstanding voting stock of a corporation that holds a broadcast license (or a corporate parent) are generally deemed attributable interests, as are any limited partnership or limited liability company interests that are not properly “insulated” from management activities. Certain passive investors that hold stock for investment purposes only may hold attributable interests with the ownership of 20% or more of the voting stock of a licensee or parent corporation. An entity with one or more radio stations in a market that enters into a local marketing agreement or a time brokerage agreement with another radio station in the same market obtains an attributable interest in the brokered radio station if the brokering station supplies more than 15% of the brokered radio station’s weekly broadcast hours. Similarly, a radio station licensee’s right under a joint sales agreement (“JSA”) to sell more than 15% per week of the advertising time on another radio station in the same market constitutes an attributable ownership interest in such station for purposes of the FCC’s ownership rules. Debt instruments, non-voting stock, unexercised options and warrants, minority voting interests in corporations having a single majority shareholder, and limited partnership or limited liability company membership interests where the interest holder is not “materially involved” in the media-related activities of the partnership or limited liability company pursuant to FCC-prescribed “insulation” provisions, generally do not subject their holders to attribution unless such interests implicate the FCC’s equity-debt-plus (or “EDP”) rule. Under the EDP rule, a major programming supplier or a same-market media entity will have an attributable interest in a station if the supplier or same-market media entity also holds debt or equity, or both, in the station that is greater than 33% of the value of the station’s total debt plus equity. For purposes of the EDP rule, equity includes all stock, whether voting or nonvoting, and interests held by limited partners or limited liability company members that are “insulated” from material involvement in the company’s media activities. A major programming supplier is any supplier that provides more than 15% of the station’s weekly programming hours.

The Communications Act and FCC rules generally restrict ownership, operation or control of, or the common holding of attributable interests in:

radio broadcast stations above certain numerical limits serving the same local market;

radio broadcast stations combined with television broadcast stations above certain numerical limits serving the same local market (radio/television cross ownership); and

a radio broadcast station and an English-language daily newspaper serving the same local market (newspaper/broadcast cross-ownership).

The media ownership rules are subject to periodic review by the FCC. In 2003, the FCC, among other actions, adopted new rules to change the way a local radio market is defined and to make JSAs involving more than 15% of a same-market radio station’s weekly advertising time “attributable” under the ownership limits. The FCC grandfathered existing combinations of radio stations that would not comply with the modified rules. However, the FCC ruled that such noncompliant combinations could not be sold intact except to certain “eligible entities,” which the agency defined as entities qualifying as a small business consistent with Small Business Administration standards. The 2003 rules were challenged in court and the Third Circuit stayed their implementation, among other things, on the basis that the FCC did not adequately justify its radio ownership limits. Subsequently, the Third Circuit partially lifted its stay to allow the new local market definition, JSA attribution and grandfathering rules to go into effect. The FCC currently is applying such revisions to pending and new applications.

The numerical limits on radio stations that one entity may own in a local market are as follows:

in a radio market with 45 or more commercial radio stations, a party may hold an attributable interest in up to eight commercial radio stations, not more than five of which are in the same service (AM or FM);

in a radio market with 30 to 44 commercial radio stations, a party may hold an attributable interest in up to seven commercial radio stations, not more than four of which are in the same service (AM or FM);

in a radio market with 15 to 29 commercial radio stations, a party may hold an attributable interest in up to six commercial radio stations, not more than four of which are in the same service (AM or FM); and

in a radio market with 14 or fewer commercial radio stations, a party may hold an attributable interest in up to five commercial radio stations, not more than three of which are in the same service (AM or FM), except that a party may not hold an attributable interest in more than 50% of the radio stations in such market.

To apply these tiers, the FCC currently relies on Nielsen Metro Survey Areas, where they exist. In other areas, the FCC relies on a contour-overlap methodology. The FCC has initiated a rulemaking to determine how to define local radio markets in areas located outside Nielsen Metro Survey Areas. The market definition used by the FCC in applying its ownership rules may not be the same as that used for purposes of the Hart-Scott-Rodino Act.

In its 2003 media ownership decision, the FCC adopted new cross-media limits to replace the newspaper-broadcast and radio-television cross-ownership rules. These provisions were stayed by the Third Circuit and remanded by the court for further FCC consideration. In 2006, the FCC began its next periodic review, which addressed issues on remand from the Third Circuit. That review culminated in a 2007 decision in which the FCC revised the newspaper/broadcast cross-ownership rule to allow a degree of same-market newspaper/broadcast ownership based on certain presumptions, criteria and limitations, but made no changes to the currently effective local radio ownership rules (as modified in 2003) or the radio/television cross-ownership rule (as modified in 1999). In July 2011, ruling on various appeals of the FCC’s 2007 decision, the Third Circuit vacated the FCC’s revisions to the newspaper/broadcast cross-ownership rule, vacated the FCC’s definition of “eligible entity” in connection with various rules designed to increase diversity of broadcast ownership, and otherwise upheld the FCC’s decision to retain the current radio ownership and radio-television cross-ownership rules. The U.S. Supreme Court declined to review the Third Circuit’s decision.

The FCC concluded its most recent review of its media ownership rules in August 2016, adopting a decision that retained the local radio ownership rules, the radio-television cross-ownership rule and the prohibition on newspaper-radio cross-ownership without significant changes. The FCC’s August 2016 decision is subject to pending petitions for reconsideration and court appeals.

The attribution and media ownership rules limit the number of radio stations we may acquire or own in any particular market and may limit the prospective buyers of any stations we want to sell. The FCC’s rules could affect our business in a number of ways, including, but not limited to, the following:

enforcement of a more narrow market definition based upon Nielsen markets could have an adverse effect on our ability to accumulate stations in a given area or to sell a group of stations in a local market to a single entity;

restricting the assignment and transfer of control of radio combinations that exceed the new ownership limits as a result of the revised local market definitions could adversely affect our ability to buy or sell a group of stations in a local market from or to a single entity; and

in general terms, future changes in the way the FCC defines radio markets or in the numerical station caps could limit our ability to acquire new stations in certain markets, our ability to operate stations pursuant to certain agreements, and our ability to improve the coverage contours of our existing stations.

Programming and Operations. The Communications Act requires broadcasters to serve the “public interest” by presenting programming that responds to community problems, needs and interests and by maintaining records demonstrating its responsiveness. The FCC considers complaints from viewers or listeners about a broadcast station’s programming, and the station is required to maintain letters and emails it receives from the public regarding station operation in a public file for three years. In January 2016, the FCC adopted rules requiring that radio stations post and maintain their public inspection files online. The rules require that, on a phased-in basis, stations upload their files into an FCC-maintained database that will display the contents of each station’s file to the public. Moreover, the FCC has proposed rules designed to increase local programming content and diversity, including renewal application processing guidelines for locally-oriented programming and a requirement that broadcasters establish advisory boards in the communities where they own stations. Stations also must follow FCC rules and policies regulating political advertising, obscene or indecent programming, sponsorship identification, contests and lotteries and technical operation, including limits on human exposure to radio frequency radiation.

The FCC’s rules prohibit a broadcast licensee, in certain circumstances, from simulcasting more than 25% of its programming on another radio station in the same broadcast service (that is, AM/AM or FM/FM). The simulcasting restriction applies if the licensee owns both radio broadcast stations or owns one and programs the other through a local marketing agreement, and only if the contours of the radio stations overlap in a certain manner.

The FCC requires that licensees not discriminate in hiring practices on the basis of race, color, religion, national origin or gender. It also requires stations with at least five full-time employees to broadly disseminate information about all full-time job openings and undertake outreach initiatives from an FCC list of activities such as participation in job fairs, internships, or scholarship programs. The FCC is considering whether to apply these recruitment requirements to part-time employment positions. Stations must retain records of their outreach efforts and keep an annual Equal Employment Opportunity (“EEO”) report in their public inspection files and post an electronic version on their websites. Radio stations with more than 10 full-time employees must file certain EEO reports with the FCC midway through their license term.

From time to time, complaints may be filed against any of our radio stations alleging violations of these or other rules. In addition, the FCC may conduct audits or inspections to ensure and verify licensee compliance with FCC rules and regulations. Failure to observe these or other rules and regulations can result in the imposition of various sanctions, including fines or conditions, the grant of “short” (less than the maximum eight year) renewal terms or, for particularly egregious violations, the denial of a license renewal application or the revocation of a license.

Employees

As of December 31, 2016, we employed 994 full-time employees and 354 part-time employees. Our employees are not unionized.

Corporate Governance

Code of Ethics. We have adopted a code of ethics that applies to all of our directors, officers (including our principal financial officer and principal accounting officer) and employees and meets the requirements of the SEC and the NASDAQ Stock Market Rules. Our code of ethics can be found on our website, www.radio-one.com. We will provide a paper copy of the code of ethics, free of charge, upon request.

Audit Committee Charter. Our audit committee has adopted a charter as required by the NASDAQ Stock Market Rules. This committee charter can be found on our website, www.radio-one.com. We will provide a paper copy of the audit committee charter, free of charge, upon request.

Compensation Committee Charter. Our Board of Directors has adopted a compensation committee charter. We will provide a paper copy of the compensation committee charter, free of charge, upon request.

Internet Address and Internet Access to SEC Reports

Our internet address is www.radio-one.com. You may obtain through our internet website, free of charge, copies of our proxies, annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934. These reports are available as soon as reasonably practicable after we electronically file them with or furnish them to the SEC. Our website and the information contained therein or connected thereto shall not be deemed to be incorporated into this Form 10-K.

ITEM 1A. RISK FACTORS

Risks Related to Our Business and Industry

In an enterprise as large and complex as ours, a wide range of factors could affect our business and financial results. The factors described below are considered to be the most significant, but are not listed in any particular order. There may be other currently unknown or unpredictable economic, business, competitive, regulatory or other factors that could have material adverse effects on our future results. Past financial performance may not be a reliable indicator of future performance and historical trends should not be used to anticipate results or trends in future periods. The following discussion of risk factors should be read in conjunction with “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and related notes in “Item 8. Financial Statements and Supplementary Data” of this Form 10-K.

Risks Related to the Nature and Operations of Our Business

The state and condition of the global financial markets and fluctuations in the global and U.S. economies may have an unpredictable impact on our business and financial condition.

From time to time, the global equity and credit markets experience high levels of volatility and disruption. At various points in time, the markets have produced downward pressure on stock prices and limited credit capacity for certain companies without regard to those companies’ underlying financial strength. In addition, sluggishness in the global and U.S. economies has produced concern over public and private debt levels, high unemployment/underemployment, a drop in consumer confidence and spending, and continued slowness in the U.S. housing market. These factors have impacted corporate profits and resulted in cutbacks in advertising budgets. If the economic sluggishness and/or levels of market disruption and volatility continue or worsen, we may experience further, potentially material, adverse effects on our business, financial condition, results of operations, and our ability to access capital. For example, any worsening of the economy, credit markets, continuing geopolitical uncertainty, a continuation of market volatility, or further weakness in employment or consumer spending could continue to adversely impact the overall demand for advertising. Such a result could have a negative effect on our revenues and results of operations. In addition, our ability to access the capital markets may be severely restricted at a time when we would like, or need, to do so, which could have an impact on our flexibility to react to changing economic and business conditions. Finally, any rise in interest rates could significantly impact our cash flows and costs of operations given our levels of debt.

Any deterioration in the economy could negatively impact our ability to meet our cash needs and our ability to maintain compliance with our debt covenants.

If economic conditions change, or other adverse factors outside our control arise, our operations could be negatively impacted, which could prevent us from maintaining compliance with our debt covenants. If it appears that we could not meet our liquidity needs or that noncompliance with debt covenants is likely, we would implement remedial measures, which could include, but not be limited to, operating cost and capital expenditure reductions and deferrals. In addition, we could implement de-leveraging actions, which may include, but not be limited to, other debt repayments, subject to our available liquidity and contractual ability to make such repayments and/or debt refinancings and amendments.

We have historically incurred net losses which could continue into the future.

We have historically reported net losses in our consolidated statements of operations, due mostly in part to recording non-cash impairment charges for write-downs to radio broadcasting licenses and goodwill, interest expenses (both cash and non-cash), net losses incurred for discontinued operations, and revenue declines caused by weakened advertising demand resulting from the current economic environment. For the years ended December 31, 2016, 2015 and 2014, we experienced net losses of $423,000, approximately $74.0 million and $62.7 million, respectively. These results have had a negative impact on our financial condition and could be exacerbated in a poor economic climate. If these trends continue in the future, they could have a material adverse effect on our financial condition.

Our revenue is substantially dependent on spending and allocation decisions by advertisers, and seasonality and/or weakening economic conditions may have an impact upon our business.

Substantially all of our revenue is derived from sales of advertisements and program sponsorships to local and national advertisers. Any reduction in advertising expenditures or changes in advertisers’ spending priorities and/or allocations across different types of media/platforms or programming could have an adverse effect on the Company’s revenues and results of operations. We do not obtain long-term commitments from our advertisers and advertisers may cancel, reduce, or postpone advertisements without penalty, which could adversely affect our revenue. Seasonal net revenue fluctuations are common in the media industries and are due primarily to fluctuations in advertising expenditures by local and national advertisers. In addition, advertising revenues in even-numbered years tend to benefit from advertising placed by candidates for political offices. The effects of such seasonality (including the weather), combined with the severe structural changes that have occurred in the U.S. economy, make it difficult to estimate future operating results based on the previous results of any specific quarter and may adversely affect operating results.

Advertising expenditures also tend to be cyclical and reflect general economic conditions, both nationally and locally. Because we derive a substantial portion of our revenues from the sale of advertising, a decline or delay in advertising expenditures could reduce our revenues or hinder our ability to increase these revenues. Advertising expenditures by companies in certain sectors of the economy, including the automotive, financial, entertainment, and retail industries, represent a significant portion of our advertising revenues. Structural changes (such as reduced footprints in retail and the movement of retailers online) and business failures in these industries have affected our revenues and continued structural changes or business failures in any of these industries could have significant further impact on our revenues. Any political, economic, social, or technological change resulting in a significant reduction in the advertising spending of these sectors could adversely affect our advertising revenues or our ability to increase such revenues. In addition, because many of the products and services offered by our advertisers are largely discretionary items, weakening economic conditions or changes in consumer spending patterns could reduce the consumption of such products and services and, thus, reduce advertising for such products and services. Changes in advertisers’ spending priorities during economic cycles may also affect our results. Disasters (domestic or external to the United States), acts of terrorism, political uncertainty or hostilities could also lead to a reduction in advertising expenditures as a result of supply or demand issues, uninterrupted news coverage and economic uncertainty.

Pricing for advertising may continue to face downward pressure.

In response to weakness and fluctuations in the economy, some advertisers have increasingly purchased lower-priced inventory rather than higher-priced inventory and demanded lower pricing, in addition to increasingly purchasing later and through advertising inventory from third-party advertising networks. If advertisers continue to demand lower-priced inventory and/or otherwise continue to put downward pressure on pricing, our operating margins and ability to generate revenue could be further adversely affected.

Our success is dependent upon audience acceptance of our content, particularly our television and radio programs, which is difficult to predict.

Video and radio content production and distribution are inherently risky businesses because the revenues derived from the production and distribution of media content or a radio program, and the licensing of rights to the intellectual property associated with the content or program, depend primarily upon their acceptance and perceptions by the public, which can change quickly and are difficult to predict. The commercial success of content or a program also depends upon the quality and acceptance of other competing programs released into the marketplace at or near the same time, the availability of alternative forms of entertainment and leisure time activities, general economic conditions, and other tangible and intangible factors, all of which are difficult to predict. Our failure to obtain or retain rights to popular content on any part of our multi-media platform could adversely affect our revenues.

Ratings for broadcast stations and traffic on a particular website are also factors that are weighed when advertisers determine which outlets to use and in determining the advertising rates that the outlet receives. Poor ratings or traffic levels can lead to a reduction in pricing and advertising revenues. For example, if there is an event causing a change of programming at one of our stations, there could be no assurance that any replacement programming would generate the same level of ratings, revenues, or profitability as the previous programming. In addition, changes in ratings methodology and technology could adversely impact our ratings and negatively affect our advertising revenues.

Television content production is inherently a risky business because the revenues derived from the production and distribution of a television program and the licensing of rights to the associated intellectual property depends primarily upon the public’s level of acceptance, which is difficult to predict. The commercial success of a television program also depends upon the quality and acceptance of other competing programs in the marketplace at or near the same time, the availability of alternative forms of entertainment and leisure time activities, general economic conditions, and other tangible and intangible factors, all of which are difficult to predict. Rating points are also factors that are weighed when determining the advertising rates that TV One receives. Poor ratings can lead to a reduction in pricing and advertising revenues. Consequently, low public acceptance of TV One’s content may have an adverse effect on TV One’s results of operations. Further, other competitive networks, such as the networks launched by Oprah Winfrey (OWN^TM), Sean Combs (REVOLT TV^TM), and Magic Johnson (ASPIRE^TM), could take away from our audience share and ratings and thus have an adverse effect on TV One’s results of operations.

Finally, the costs of developing and distributing content and programming most popular with the public may change significantly if new performance royalties (such as those that have been proposed by members of Congress from time to time) are imposed upon radio broadcasters or internet operators and such changes could have a material impact upon our business. In this regard, a new performing rights organization, Global Music Rights (“GMR”), has been formed, but the scope of its repertory is not clear and it is not clear that it licenses compositions that have not already been licensed by the other performing rights organizations. If a significant number of musical composition copyright owners withdraw from the established performing rights organizations, or if new performing rights organizations form to license compositions that are not already licensed, our royalty rates or negotiation costs could increase.

A disproportionate share of our radio segment revenue comes from a small number of geographic markets and from Reach Media.

For the year ended December 31, 2016, approximately 42.6% of our net revenue was generated from the sale of advertising in our core radio business, excluding Reach Media. Within our core radio business, four of the 15 markets in which we operate radio stations accounted for approximately 50.6% of our radio station net revenue for the year ended December 31, 2016. Revenue from the operations of Reach Media, along with revenue from both the Houston and Washington, DC markets accounted for approximately 23.6% of our total consolidated net revenue for the year ended December 31, 2016. Revenue from the operations of Reach Media, along with revenue from four of the 15 markets in which we operate radio stations, accounted for approximately 33.4% of our total consolidated net revenue for the year ended December 31, 2016. Adverse events or conditions (economic, including government cutbacks or otherwise) could lead to declines in the contribution of Reach Media or declines in one or more of the significant contributing markets (Houston, Washington, DC, Atlanta and Baltimore), which could have a material adverse effect on our overall financial performance and results of operations.

We may lose audience share and advertising revenue to our competitors.

Our media properties compete for audiences and advertising revenue with other radio stations and station groups and other media such as broadcast television, newspapers, magazines, cable television, satellite television, satellite radio, outdoor advertising, “over the top providers” on the internet and direct mail. Adverse changes in audience ratings, internet traffic, and market shares could have a material adverse effect on our revenue. Larger media companies, with more financial resources than we have may target our core audiences or enter the segments or markets in which we operate, causing competitive pressure. Further, other media and broadcast companies may change their programming format or engage in aggressive promotional campaigns to compete directly with our media properties for our core audiences and advertisers. Competition for our core audiences or in any of our segments or markets could result in lower ratings or traffic and, hence, lower advertising revenue for us, or cause us to increase promotion and other expenses and, consequently, lower our earnings and cash flow. Changes in population, demographics, audience tastes and other factors beyond our control, could also cause changes in audience ratings or market share. Failure by us to respond successfully to these changes could have an adverse effect on our business and financial performance. We cannot assure that we will be able to maintain or increase our current audience ratings and advertising revenue.

If we are unable to successfully identify, acquire, and integrate businesses pursuant to our diversification strategy, our business and prospects may be adversely impacted.

We are pursuing a strategy of acquiring and investing in other forms of media or entertainment that complement our core radio business in an effort to grow and diversify our business and revenue streams. This strategy depends on our ability to find suitable opportunities and obtain acceptable financing. Negotiating transactions and integrating an acquired business could result in significant costs, including significant use of management’s time and resources. Further, such acquisitions or investments could involve the incurrence of substantial additional indebtedness.

Our diversification strategy partially depends on our ability to identify attractive opportunities at reasonable prices and to divest properties that are no longer strategic to our business. Further, entering new businesses may subject us to additional risk factors. Some of the material risks that could hinder our ability to implement this strategy include:

·	economic fluctuations;

·	limitations under the terms of our credit facilities and/or bond indentures;

·	inability to find buyers for media properties we target for sale at attractive prices due to decreasing market prices for radio stations or the inability of a potential buyer to obtain credit;

failure or delays in completing acquisitions or divestitures due to difficulties in obtaining required regulatory approval, including possible difficulties by the seller or buyer in obtaining antitrust approval for acquisitions in markets where we already own multiple stations or establishing compliance with broadcast ownership rules;

·	reduction in the number of suitable acquisition targets due to increased competition for acquisitions;

·	we may lose key employees of acquired companies or stations;

·	difficulty in integrating operations and systems and managing a diverse media business;

·	failure of some acquisitions to prove profitable (or as profitable as anticipated) or generate sufficient cash flow;

·	changes in distribution arrangements or methods for our content and across our media properties; and

·	inability to finance acquisitions on acceptable terms, through incurring debt or issuing stock.

We can provide no assurance that our diversification strategy will be successful.

We must respond to the rapid changes in technology, content offerings, services, and standards across our entire platform in order to remain competitive.

Technological standards across our media properties are evolving and new distribution technologies/platforms are emerging at a rapid pace. We cannot assure that we will have the resources to acquire new technologies or to introduce new features, content or services to compete with these new technologies. New media has resulted in fragmentation in the advertising market, and we cannot predict the effect, if any, that additional competition arising from new technologies or content offerings may have across any of our business segments or our financial condition and results of operations, which may be adversely affected if we are not able to adapt successfully to these new media technologies or distribution platforms. The continuing growth and evolution of channels and platforms has increased our challenges in differentiating ourselves from other media platforms. We continually seek to develop and enhance our content offerings and distribution platforms/methodologies. Failure to effectively execute in these efforts, actions by our competitors, or other failures to deliver content effectively could hurt our ability to differentiate ourselves from our competitors and, as a result, have adverse effects across our business.

The loss of key personnel, including certain on-air talent, could disrupt the management and operations of our business.

Our business depends upon the continued efforts, abilities and expertise of our executive officers and other key employees, including certain on-air personalities. We believe that the combination of skills and experience possessed by our executive officers and other key employees could be difficult to replace, and that the loss of one or more of them could have a material adverse effect on us, including the impairment of our ability to execute our business strategy. In addition, several of our on-air personalities and syndicated radio programs hosts have large loyal audiences in their respective broadcast areas and may be significantly responsible for the ratings of a station. The loss of such on-air personalities or any change in their popularity could impact the ability of the station to sell advertising and our ability to derive revenue from syndicating programs hosted by them. We cannot be assured that these individuals will remain with us or will retain their current audiences or ratings.

As a part of our diversification strategy, we continue to develop our internet businesses. Failure to effectuate this strategy may adversely affect our brands and business prospects.

Our diversification strategy is in part dependent upon the development of our internet businesses. In order for our internet businesses to grow and succeed over the long-term, we must, among other things:

·	significantly increase our online traffic and revenue;

·	attract and retain a base of frequent visitors to our websites;

·	expand the content, products, and tools we offer on our websites;

·	respond to competitive developments while maintaining a distinct identity across each of our online brands;

·	attract and retain talent for critical positions;

·	maintain and form relationships with strategic partners to attract more consumers;

·	continue to develop and upgrade our technologies; and

·	bring new product features to market in a timely manner.

We cannot assure that we will be successful in achieving these and other necessary objectives. If we are not successful in achieving these objectives, our business, financial condition, and prospects could be adversely affected.

If our internet segment does not continue to develop and offer compelling and differentiated content, products and services, our advertising revenues could be adversely affected.

In order to attract internet consumers and generate increased activity on our internet properties, we believe that we must offer compelling and differentiated content, products and services. However, acquiring, developing, and offering such content, products and services may require significant costs and time to develop, while consumer tastes may be difficult to predict and are subject to rapid change. If we are unable to provide content, products and services that are sufficiently attractive to our internet users, we may not be able to generate the increases in activity necessary to generate increased advertising revenues. In addition, although we have access to certain content provided by our other businesses, we may be required to make substantial payments to license such content. Many of our content arrangements with third parties are non-exclusive, so competitors may be able to offer similar or identical content. If we are not able to acquire or develop compelling content and do so at reasonable prices, or if other companies offer content that is similar to that provided by our internet segment, we may not be able to attract and increase the engagement of internet consumers on our internet properties.

Continued growth in our internet advertising business also depends on our ability to continue offering a competitive and distinctive range of advertising products and services for advertisers and publishers and our ability to maintain or increase prices for our advertising products and services. Continuing to develop and improve these products and services may require significant time and costs. If we cannot continue to develop and improve our advertising products and services or if prices for our advertising products and services decrease, our internet advertising revenues could be adversely affected.

More individuals are using devices other than personal and laptop computers to access and use the internet, and, if we cannot make our products and services available and attractive to consumers via these alternative devices, our internet advertising revenues could be adversely affected.

Internet users are increasingly accessing and using the internet through mobile tablets and smartphones. In order for consumers to access and use our products and services via these devices, we must ensure that our products and services are technologically compatible with such devices. If we cannot effectively make our products and services available on these devices, fewer internet consumers may access and use our products and services and our advertising revenue may be negatively affected.

Unrelated third parties may claim that we infringe on their rights based on the nature and content of information posted on websites we maintain.

We host internet services that enable individuals to exchange information, generate content, comment on our content, and engage in various online activities. The law relating to the liability of providers of these online services for activities of their users is currently unsettled both within the United States and internationally. While we monitor postings to such websites, claims may be brought against us for defamation, negligence, copyright or trademark infringement, unlawful activity, tort, including personal injury, fraud, or other theories based on the nature and content of information that may be posted online or generated by our users. Our defense of such actions could be costly and involve significant time and attention of our management and other resources.

If we are unable to protect our domain names, our reputation and brands could be adversely affected.

We currently hold various domain name registrations relating to our brands, including urban1.com, radio-one.com and interactiveone.com. The registration and maintenance of domain names are generally regulated by governmental agencies and their designees. Governing bodies may establish additional top-level domains, appoint additional domain name registrars, or modify the requirements for holding domain names. As a result, we may be unable to register or maintain relevant domain names. We may be unable, without significant cost or at all, to prevent third parties from registering domain names that are similar to, infringe upon, or otherwise decrease the value of our trademarks and other proprietary rights. Failure to protect our domain names could adversely affect our reputation and brands, and make it more difficult for users to find our websites and our services.

Future asset impairment to the carrying values of our FCC licenses and goodwill could adversely impact our results of operations and net worth.

As of December 31, 2016, we had approximately $643.4 million in broadcast licenses and $258.3 million in goodwill, which totaled $901.7 million, and represented approximately 66.4% 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 recorded impairment charges against radio broadcasting licenses of approximately $1.3 million during the year ended December 31, 2016.

We are required to test our goodwill and indefinite-lived intangible assets for impairment at least annually, which we have traditionally done in the fourth quarter, or on an interim basis when events or changes in circumstances suggest impairment may have occurred. Impairment is measured as the excess of the carrying value of the goodwill or indefinite-lived intangible asset over its fair value. Impairment may result from deterioration in our performance, changes in anticipated future cash flows, changes in business plans, adverse economic or market conditions, adverse changes in applicable laws and regulations, or other factors beyond our control. The amount of any impairment must be expensed as a charge to operations. Fair values of FCC licenses and goodwill have been estimated using the income approach, which involves a 10-year model that incorporates several judgmental assumptions about projected revenue growth, future operating margins, discount rates and terminal values. We also utilize a market-based approach to evaluate our fair value estimates. There are inherent uncertainties related to these assumptions and our judgment in applying them to the impairment analysis.

For the second and third quarters of 2016 and 2015, and for the first, second and third quarters in 2014, the total market revenue growth for certain markets in which we operate was below the estimated total market revenue growth used in our respective prior year annual impairment testing. In each quarter, we deemed that to be an impairment indicator that warranted interim impairment testing of certain markets’ radio broadcasting licenses, which we performed as of each quarter-end date. We recorded an impairment charge of approximately $1.3 million related to our Columbus radio broadcasting licenses as part of our annual impairment testing as of October 1, 2016. We recorded an impairment charge of approximately $23.6 million related to our Cincinnati, Columbus, Dallas, Houston, Philadelphia, Raleigh and St. Louis radio broadcasting licenses as part of our annual impairment testing as of October 1, 2015. Finally, the Company also recorded an impairment charge of approximately $3.1 million related to our Cincinnati goodwill balance as part of our annual impairment testing as of October 1, 2015. The remaining radio broadcasting licenses that were tested during 2015 and 2016 were not impaired. There was no impairment identified as part of this testing in 2014. There were no impairment indicators present for any of our other radio broadcasting licenses. During the third and fourth quarters of 2015, the Company identified triggering events to perform a goodwill interim impairment analysis on the Interactive One reporting unit. The Company recorded a goodwill impairment charge related to Interactive One of approximately $14.5 million during the third quarter of 2015. There was no impairment identified during the fourth quarter of 2015 related to Interactive One. We did not identify any impairment indicators for the years ended December 31, 2016, 2015 and 2014 at our Reach Media or TV One reporting units. For the years ended December 31, 2016, 2015 and 2014, we recorded impairment charges against radio broadcasting licenses and goodwill of approximately $1.3 million, $41.2 million and $0, respectively.

Changes in certain events or circumstances could result in changes to our estimated fair values, and may result in further write-downs to the carrying values of these assets. Additional impairment charges could adversely affect our financial results, financial ratios and could limit our ability to obtain financing in the future.

Disruptions or security breaches of our information technology infrastructure could interfere with our operations, compromise customer information, and expose us to liability, possibly causing our business and reputation to suffer.

Any internal technology error or failure impacting systems hosted externally at third party locations, or large scale external interruption in technology infrastructure we depend on, such as power, telecommunications or the internet, may disrupt our technology network. Any individual, sustained or repeated failure of technology could impact our customer service and result in increased costs or reduced revenues. Our technology systems and related data may also be vulnerable to a variety of sources of interruption due to events beyond our control, including natural disasters, terrorist attacks, telecommunications failures, computer viruses, hackers, and other security issues. While we have in place, and continue to invest in, technology security initiatives and disaster recovery plans, these measures may not be adequate or implemented properly to prevent a business disruption and its adverse financial and reputational consequences to our business.

In addition, as a part of our ordinary business operations, we may collect and store sensitive data, including personal information of our customers and employees. The secure operation of the networks and systems on which this type of information is stored, processed, and maintained is critical to our business operations and strategy. Any compromise of our technology systems resulting from attacks by hackers or breaches due to employee error or malfeasance could result in the loss, disclosure, misappropriation of, or access to customers’, employees’, or business partners’ information. Any such loss, disclosure, misappropriation, or access could result in legal claims or proceedings, liability or regulatory penalties under laws protecting the privacy of personal information, disrupting operations and damaging our reputation, any or all of which could adversely affect our business.

The capacity, reliability, and security of our information technology hardware and software infrastructure (including our billing systems) are important to the operation of our current business, which would suffer in the event of system failures or cyber-attacks. Likewise, our ability to expand and update our information technology infrastructure in response to our growth and changing needs is important to the continued implementation of our new service offering initiatives. Our inability to expand or upgrade our technology infrastructure could have adverse consequences, which could include the delayed implementation of new service offerings and the diversion of development resources. We rely on third parties for developing key components of these systems and ongoing service after their implementation. Third parties may experience errors, cyber-attacks, or disruptions that could adversely impact us and over which we may have limited control. Interruption and/or failure of any of these new systems could disrupt our operations and damage our reputation thus adversely impacting our ability to provide our services, retain our current subscribers and attract new subscribers. In addition, although we take protective measures and endeavor to modify them as circumstances warrant, our information technology hardware and software infrastructure may be vulnerable to cyber-attacks including, among other things, unauthorized access, misuse, computer viruses or other malicious code, computer denial of service attacks, and other events that could have a security impact. If one or more of such events occur, this potentially could jeopardize our customer and other information processed and stored in, and transmitted through, our information technology hardware and software infrastructure, or otherwise cause interruptions or malfunctions in our operations, which could result in significant losses or reputational damage. We may be required to expend significant additional resources to modify our protective measures or to investigate and remediate vulnerabilities or other exposures, and we may be subject to litigation and financial losses.

We seek to limit the threat of content piracy because of its adverse effect on our businesses and profitability. These products reduce the revenue that we potentially could receive from the legitimate sale and distribution of products and services. In addition, if piracy were to increase, it could have an adverse effect on our businesses and profitability. Policing unauthorized use of our products and services and related intellectual property is often difficult, and the steps we take may not in every case prevent infringement by unauthorized third parties. Developments in technology increase the threat of content piracy by making it easier to duplicate and widely distribute pirated material. We have taken, and will continue to take, a variety of actions to combat piracy, both individually and, in some instances, together with industry associations. However, protection of our intellectual property rights is dependent on the scope and duration of our rights as defined by applicable laws in the U.S. and abroad and the manner in which those laws are construed. If those laws are drafted or interpreted in ways that limit the extent or duration of our rights, or if existing laws are changed, our ability to generate revenue from our intellectual property may decrease, or the cost of obtaining and maintaining rights may increase. There can be no assurance that our efforts to enforce our rights and protect our products, services, and intellectual property will be successful in preventing content piracy.

Risks Related to Regulation

Our business depends on maintaining our licenses with the FCC. We could be prevented from operating a radio station if we fail to maintain its license.

Within our primary business, we are required to maintain radio broadcasting licenses issued by the FCC. These licenses are ordinarily issued for a maximum term of eight years and are renewable. Currently, subject to renewal, our radio broadcasting licenses expire beginning in October 2019, and others expire at various times through August 1, 2022. While we anticipate receiving all renewals, interested third parties may challenge our renewal applications. In addition, we are subject to extensive and changing regulation by the FCC with respect to such matters as programming, indecency standards, technical operations, employment and business practices. If we or any of our significant stockholders, officers, or directors violate the FCC’s rules and regulations or the Communications Act of 1934, as amended (the “Communications Act”), or is convicted of a felony or found to have engaged in certain other types of non-FCC related misconduct, the FCC may commence a proceeding to impose fines or other sanctions upon us. Examples of possible sanctions include the imposition of fines, the renewal of one or more of our broadcasting licenses for a term of fewer than eight years or the revocation of our broadcast licenses. If the FCC were to issue an order denying a license renewal application or revoking a license, we would be required to cease operating the radio station covered by the license only after we had exhausted administrative and judicial review without success.

The FCC’s media ownership rules could restrict our ability to acquire radio stations.

The Communications Act and FCC rules and policies limit the number of broadcasting properties that any person or entity may own (directly or by attribution) in any market and require FCC approval for transfers of control and assignments of licenses. The FCC’s media ownership rules remain subject to further agency and court proceedings. In August 2016, the FCC concluded its most recent quadrennial review of its media ownership rules. See the information contained in “Business-Federal Regulation of Radio Broadcasting.”

As a result of the FCC media ownership rules, the outside media interests of our officers and directors could limit our ability to acquire stations. The filing of petitions or complaints against Radio One or any FCC licensee from which we are acquiring a station could result in the FCC delaying the grant of, refusing to grant or imposing conditions on its consent to the assignment or transfer of control of licenses. The Communications Act and FCC rules and policies also impose limitations on non-U.S. ownership and voting of our capital stock.

Enforcement by the FCC of its indecency rules against the broadcast industry could adversely affect our business operations.

The FCC’s rules prohibit the broadcast of obscene material at any time and indecent or profane material on broadcast stations between the hours of 6 a.m. and 10 p.m. Broadcasters risk violating the prohibition against broadcasting indecent material because of the vagueness of the FCC’s indecency and profanity definitions, coupled with the spontaneity of live programming. The FCC has in the past vigorously enforced its indecency rules against the broadcasting industry and has threatened to initiate license revocation proceedings against broadcast licensees for “serious” indecency violations. In June 2012, the Supreme Court issued a decision which, while setting aside certain FCC indecency enforcement actions on narrow due process grounds, declined to rule on the constitutionality of the FCC’s indecency policies. Following the Supreme Court’s decision, the FCC requested public comment on the appropriate substance and scope of its indecency enforcement policy. It is not possible to predict whether and, if so, how the FCC will revise its indecency enforcement policies or the effect of any such changes on us. The fines for broadcasting indecent material are a maximum of $325,000 per utterance. The determination of whether content is indecent is inherently subjective and, as such, it can be difficult to predict whether particular content could violate indecency standards. The difficulty in predicting whether individual programs, words or phrases may violate the FCC’s indecency rules adds significant uncertainty to our ability to comply with the rules. Violation of the indecency rules could lead to sanctions which may adversely affect our business and results of operations. In addition, third parties could oppose our license renewal applications or applications for consent to acquire broadcast stations on the grounds that we broadcast allegedly indecent programming on our stations. Some policymakers support the extension of the indecency rules that are applicable to over-the-air broadcasters to cover cable programming and/or attempts to increase enforcement of or otherwise expand existing laws and rules. If such an extension, attempt to increase enforcement, or other expansion took place and was found to be constitutional, some of TV One’s content could be subject to additional regulation and might not be able to attract the same subscription and viewership levels.

Changes in current federal regulations could adversely affect our business operations.

Congress and the FCC have considered, and may in the future consider and adopt, new laws, regulations and policies that could, directly or indirectly, affect the profitability of our broadcast stations. In particular, Congress may consider and adopt a revocation of terrestrial radio’s exemption from paying royalties to performing artists and record companies for use of their recordings (radio already pays a royalty to songwriters, composers and publishers). In addition, commercial radio broadcasters and entities representing artists are negotiating agreements that could result in broadcast stations paying royalties to artists. A requirement to pay additional royalties could have an adverse effect on our business operations and financial performance. Moreover, it is possible that our license fees and negotiating costs associated with obtaining rights to use musical compositions and sound recordings in our programming could sharply increase as a result of private negotiations, one or more regulatory rate-setting processes, or administrative and court decisions. We cannot predict whether such increases will occur.

The television and distribution industries in the United States are highly regulated by U.S. federal laws and regulations issued and administered by various federal agencies, including the FCC. The television broadcasting industry is subject to extensive regulation by the FCC under the Communications Act. The U.S. Congress and the FCC currently have under consideration, and may in the future adopt, new laws, regulations, and policies regarding a wide variety of matters that could, directly or indirectly, affect the operation of TV One. For example, the FCC has initiated a proceeding to examine and potentially regulate more closely embedded advertising such as product placement and product integration. Enhanced restrictions affecting these means of delivering advertising messages may adversely affect TV One’s advertising revenues. Changes to the media ownership and other FCC rules may affect the competitive landscape in ways that could increase the competition faced by TV One. Proposals have also been advanced from time to time before the U.S. Congress and the FCC to extend the program access rules (currently applicable only to those cable program services which also own or are owned by cable distribution systems) to all cable program services. TV One’s ability to obtain the most favorable terms available for its content could be adversely affected should such an extension be enacted into law. TV One is unable to predict the effect that any such laws, regulations or policies may have on its operations.

New or changing federal, state or international privacy legislation or regulation could hinder the growth of our internet business.

A variety of federal and state laws govern the collection, use, retention, sharing and security of consumer data that our business uses to operate its services and to deliver certain advertisements to its customers, as well as the technologies used to collect such data. Not only are existing privacy-related laws in these jurisdictions evolving and subject to potentially disparate interpretation by governmental entities, new legislative proposals affecting privacy are now pending at both the federal and state level in the U.S. Changes to the interpretation of existing law or the adoption of new privacy-related requirements could hinder the growth of our business. Also, a failure or perceived failure to comply with such laws or requirements or with our own policies and procedures could result in significant liabilities, including a possible loss of consumer or investor confidence or a loss of customers or advertisers.

Our operation of various real properties and facilities could lead to environmental liability.

As the owner, lessee or operator of various real properties and facilities, we are subject to various federal, state and local environmental laws and regulations. Historically, compliance with these laws and regulations has not had a material adverse effect on our business. There can be no assurance, however, that compliance with existing or new environmental laws and regulations will not require us to make significant expenditures of funds.

Risks Related to TV One

A decline in advertising expenditures could cause TV One’s revenues and operating results to decline significantly in any given period.

TV One derives substantial revenues from the sale of advertising. A decline in the economic prospects of advertisers or the economy in general could alter current or prospective advertisers’ spending priorities. Disasters, acts of terrorism, political uncertainty or hostilities could lead to a reduction in advertising expenditures as a result of economic uncertainty. Advertising expenditures may also be affected by increasing competition for the leisure time of audiences, particularly with increased competition and fragmentation due to new content distribution platforms. In addition, advertising expenditures by companies in certain sectors of the economy, including the automotive and financial segments, represent a significant portion of TV One’s advertising revenues. Any political, economic, social, or technological change resulting in a reduction in these sectors’ advertising expenditures may adversely affect TV One’s revenue. Advertisers’ willingness to purchase advertising may also be affected by a decline in audience ratings for TV One’s programming, the inability of TV One to retain the rights to popular programming, increasing audience fragmentation caused by the proliferation of new media formats, including other cable networks, the internet and video-on-demand, and the deployment of portable digital devices and new technologies, which allow consumers to time shift programming, make and store digital copies and skip or fast-forward through advertisements. Any reduction in advertising expenditures could have an adverse effect on TV One’s revenues and results of operations.

The loss of affiliation agreements could materially adversely affect TV One’s results of operations.

TV One is dependent upon the maintenance of affiliation agreements with cable and direct broadcast distributors for its revenues, and there can be no assurance that these agreements will be renewed in the future on terms acceptable to such distributors. The loss of one or more of these arrangements could reduce the distribution of TV One’s programming services and reduce revenues from subscriber fees and advertising, as applicable. Further, the loss of favorable packaging, positioning, pricing or other marketing opportunities with any distributor could reduce revenues from subscribers and associated subscriber fees. In addition, consolidation among cable distributors and increased vertical integration of such distributors into the cable or broadcast network business have provided more leverage to these distributors and could adversely affect TV One’s ability to maintain or obtain distribution for its network programming on favorable or commercially reasonable terms, or at all. The results of renewals could have a material adverse effect on TV One’s revenues and results and operations. We cannot assure you that TV One will be able to renew its affiliation agreements on commercially reasonable terms, or at all. The loss of a significant number of these arrangements or the loss of carriage on basic programming tiers could reduce the distribution of our content, which may adversely affect our revenues from subscriber fees and our ability to sell national and local advertising time.

Changes in consumer behavior resulting from new technologies and distribution platforms may impact the performance of our businesses.

TV One faces emerging competition from other providers of digital media, some of which have greater financial, marketing and other resources than we do. In particular, content offered over the internet has become more prevalent as the speed and quality of broadband networks have improved. Providers such as Hulu^TM, Netflix^TM, Apple^TM, Amazon^TM and Google^TM, as well as gaming and other consoles such as Microsoft’s Xbox^TM, Sony’s PS4^TM, Nintendo’s Wii^TM, and Roku^TM, are aggressively establishing themselves as alternative providers of video services, including online TV services. Most recently, new online distribution services have emerged offering live sports and other content without paying for a tradition cable bundle of channels. These services and the growing availability of online content, coupled with an expanding market for mobile devices and tablets that allow users to view content on an on-demand basis and internet-connected televisions, may impact TV One’s distribution for its services and content. Additionally, devices or services that allow users to view television programs away from traditional cable providers or on a time-shifted basis and technologies that enable users to fast-forward or skip programming, including commercials, such as DVRs and portable digital devices and systems that enable users to store or make portable copies of content, have caused changes in consumer behavior that may affect the attractiveness of our offerings to advertisers and could therefore adversely affect our revenues. If we cannot ensure that our distribution methods and content are responsive to TV One’s target audiences, our business could be adversely affected.

The failure or destruction of satellites and transmitter facilities that TV One depends upon to distribute its programming could materially adversely affect TV One’s businesses and results of operations.

TV One uses satellite systems to transmit its programming to affiliates. The distribution facilities include uplinks, communications satellites, and downlinks. Transmissions may be disrupted as a result of local disasters, including extreme weather, that impair on-ground uplinks or downlinks, or as a result of an impairment of a satellite. Currently, there are a limited number of communications satellites available for the transmission of programming. If a disruption occurs, TV One may not be able to secure alternate distribution facilities in a timely manner. Failure to secure alternate distribution facilities in a timely manner could have a material adverse effect on TV One’s businesses and results of operations. In addition, TV One uses studio and transmitter facilities that are subject to damage or destruction. Failure to restore such facilities in a timely manner could have a material adverse effect on TV One’s businesses and results of operations.

Increased programming and content costs may adversely affect TV One’s profits.

TV One produces and acquires programming (including motion pictures) and content and incurs costs for all types of creative talent, including actors, authors, writers and producers as well as marketing and distribution. An increase in any of these costs may lead to decreased profitability.

Our President and Chief Executive Officer has an interest in TV One that may conflict with your interests.

Pursuant to the terms of employment with our President and Chief Executive Officer, Mr. Alfred C. Liggins, III, in recognition of Mr. Liggins’ contributions in founding TV One on our behalf, he is eligible to receive an award amount equal to approximately 4% of any proceeds from distributions or other liquidity events in excess of the return of our aggregate investment in TV One (the “Employment Agreement Award”). Our obligation to pay the award was triggered after our recovery of the aggregate amount of our pre-Comcast Buyout capital contribution in TV One, and payment is required only upon actual receipt of distributions of cash or marketable securities or proceeds from a liquidity event in excess of such invested amount. Mr. Liggins’ rights to the Employment Agreement Award (i) cease if he is terminated for cause or he resigns without good reason and (ii) expire at the termination of his employment (but similar rights could be included in the terms of a new employment agreement or arrangement). As a result of this arrangement, the interest of Mr. Liggins’ with respect to TV One may conflict with your interests as holders of our debt or equity securities.

Risks Related to Our Corporate Governance Structure

Two common stockholders have a majority voting interest in Radio One and have the power to control matters on which our common stockholders may vote, and their interests may conflict with yours.

As of December 31, 2016, our Chairperson and her son, our President and CEO, collectively held approximately 95% of the outstanding voting power of our common stock. As a result, our Chairperson and our CEO control our management and policies and decisions involving or impacting upon Radio One, including transactions involving a change of control, such as a sale or merger. The interests of these stockholders may differ from the interests of our other stockholders and our debt holders. In addition, certain covenants in our debt instruments require that our Chairperson and the CEO maintain a specified ownership and voting interest in Radio One, and prohibit other parties’ voting interests from exceeding specified amounts. Our Chairperson and the CEO have agreed to vote their shares together in elections of members to the Board of Directors of Radio One.

Further, we are a “controlled company” under rules governing the listing of our securities on the NASDAQ Stock Market because more than 50% of our voting power is held by our Chairperson and the CEO. Therefore, we are not subject to NASDAQ Stock Market listing rules that would otherwise require us to have: (i) a majority of independent directors on the board; (ii) a compensation committee composed solely of independent directors; (iii) a nominating committee composed solely of independent directors; (iv) compensation of our executive officers determined by a majority of the independent directors or a compensation committee composed solely of independent directors; and (v) director nominees selected, or recommended for the board’s selection, either by a majority of the independent directors or a nominating committee composed solely of independent directors. While a majority of our board members are currently independent directors, we do not make any assurances that a majority of our board members will be independent directors at any given time.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

The types of properties required to support each of our radio stations include offices, studios and transmitter/antenna sites. Our other media properties, such as Interactive One, generally only require office space. We typically lease our studio and office space with lease terms ranging from five to 10 years in length. A station’s studios are generally housed with its offices in business districts. We generally consider our facilities to be suitable and of adequate size for our current and intended purposes. We lease a majority of our main transmitter/antenna sites and associated broadcast towers and, when negotiating a lease for such sites, we try to obtain a lengthy lease term with options to renew. In general, we do not anticipate difficulties in renewing facility or transmitter/antenna site leases, or in leasing additional space or sites, if required.

We own substantially all of our equipment, consisting principally of transmitting antennae, transmitters, studio equipment and general office equipment. The towers, antennae and other transmission equipment used by our stations are generally in good condition, although opportunities to upgrade facilities are periodically reviewed. The tangible personal property owned by us and the real property owned or leased by us are subject to security interests under our senior credit facility.

ITEM 3. LEGAL PROCEEDINGS

Legal Proceedings

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 4. MINE SAFETY DISCLOSURE

Not applicable.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Price Range of Our Class A and Class D Common Stock

Our Class A voting common stock is traded on The NASDAQ Stock Market (“NASDAQ”) under the symbol “ROIA.” The following table presents, for the quarters indicated, the high and low daily closing prices per share of our Class A Common Stock as reported on the NASDAQ.

	High		Low
2016
First Quarter	$	1.64	$	1.23
Second Quarter	$	3.13	$	1.26
Third Quarter	$	3.43	$	2.90
Fourth Quarter	$	3.08	$	2.20

2015
First Quarter	$	3.20	$	1.50
Second Quarter	$	4.11	$	3.01
Third Quarter	$	3.47	$	2.20
Fourth Quarter	$	2.46	$	1.58

Our Class D non-voting common stock is traded on the NASDAQ under the symbol “ROIAK.” The following table presents, for the quarters indicated, the high and low daily closing prices per share of our Class D Common Stock as reported on the NASDAQ.

	High		Low
2016
First Quarter	$	1.64	$	1.17
Second Quarter	$	3.24	$	1.29
Third Quarter	$	3.48	$	2.96
Fourth Quarter	$	3.06	$	2.30

2015
First Quarter	$	3.21	$	1.49
Second Quarter	$	4.12	$	3.16
Third Quarter	$	3.45	$	2.13
Fourth Quarter	$	2.46	$	1.55

STOCKHOLDER RETURN PERFORMANCE GRAPHS

Stockholder performance graph (Class A shares)

Performance since December 31, 2010

Source: FactSet

Note – Peer group includes Emmis Communications Corp., Entercom Communications Corp., Saga Communications Inc., Cumulus Media Inc. and Salem Communications Corp.

STOCKHOLDER RETURN PERFORMANCE GRAPHS

Stockholder performance graph (Class D shares)

Performance since December 31, 2010

Source: FactSet

Note – Peer group includes Emmis Communications Corp., Entercom Communications Corp., Saga Communications Inc., Cumulus Media Inc. and Salem Communications Corp.

Dividends

Since first selling our common stock publicly in May 1999, we have not declared any cash dividends on any class of our common stock. We intend to retain future earnings for use in our business and do not anticipate declaring or paying any cash or stock dividends on shares of our common stock in the foreseeable future. In addition, any determination to declare and pay dividends will be made by our Board of Directors in light of our earnings, financial position, capital requirements, contractual restrictions contained in our credit facility and the indentures governing our senior subordinated notes, and other factors as the Board of Directors deems relevant. (See “Management’s Discussion and Analysis — Liquidity and Capital Resources” and Note 9 of our consolidated financial statements — Long-Term Debt.)

Number of Stockholders

Based upon a survey of record holders and a review of our stock transfer records, as of February 24, 2017, there were approximately 1,653 holders of Radio One’s Class A Common Stock, two holders of Radio One’s Class B Common Stock, three holders of Radio One’s Class C Common Stock, and approximately 1,960 holders of Radio One’s Class D Common Stock.

ITEM 6. SELECTED FINANCIAL DATA

The following table contains selected historical consolidated financial data with respect to Radio One. The selected historical consolidated financial data should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements of Radio One included elsewhere in this report.

	For the Years Ended December 31,
	2016			2015			2014			2013			2012
	(In thousands, except share data)
Statements of Operations (1):
Net revenue	$	456,219		$	450,861		$	441,387		$	448,700		$	424,573
Programming and technical expenses including stock-based compensation		134,000			134,410			141,689			138,021			135,974
Selling, general and administrative expenses including stock-based compensation		147,905			151,726			144,349			146,112			141,239
Corporate selling, general and administrative expenses including stock-based compensation		50,636			51,992			41,362			38,849			37,061
Depreciation and amortization		34,247			35,355			36,822			37,870			38,777
Impairment of long-lived assets		1,287			41,211			—			14,880			313
Operating income		88,144			36,167			77,165			72,968			71,209
Interest expense (2)		81,422			79,936			79,444			88,951			90,549
(Gain) loss on retirement of debt		(2,646	)		7,091			5,679			—			—
Other (income) expense, net		(928	)		216			(32	)		(307	)		1,357
Income (loss) before provision for income taxes, noncontrolling interests in income of subsidiaries and discontinued operations		10,296			(51,076	)		(7,926	)		(15,676	)		(20,697	)
Provision for income taxes		9,580			15,058			34,814			28,719			33,235
Income (loss) from continuing operations		716			(66,134	)		(42,740	)		(44,395	)		(53,932	)
Income (loss) from discontinued operations, net of tax		—			—			—			885			(184	)
Consolidated net income (loss)		716			(66,134	)		(42,740	)		(43,510	)		(54,116	)
Noncontrolling interests in income of subsidiaries		1,139			7,888			19,930			18,471			12,749
Consolidated net loss attributable to common stockholders	$	(423	)	$	(74,022	)	$	(62,670	)	$	(61,981	)	$	(66,865	)

Basic net loss per common share:
Loss from continuing operations	$	(0.01	)	$	(1.54	)	$	(1.32	)	$	(1.30	)	$	(1.33	)
Income (loss) from discontinued operations, net of tax		0.00			0.00			0.00			0.02			(0.00	)
Net loss attributable to common stockholders per share	$	(0.01	)	$	(1.54	)	$	(1.32	)	$	(1.28	)	$	(1.34	)*

Diluted net loss per common share:
Loss from continuing operations	$	(0.01	)	$	(1.54	)	$	(1.32	)	$	(1.30	)	$	(1.33	)
Income (loss) from discontinued operations, net of tax		0.00			0.00			0.00			0.02			(0.00	)
Net loss attributable to common stockholders per share	$	(0.01	)	$	(1.54	)	$	(1.32	)	$	(1.28	)	$	(1.34	)*

*Per share amounts do not add due to rounding

Certain reclassifications have been made to prior year balances to conform to the current year presentation. These reclassifications had no effect on any other previously reported or consolidated net income or loss or any other statement of operations, balance sheet or cash flow amounts.

	For the Years Ended December 31,
	2016			2015			2014		2013		2012
	(In thousands)
Balance Sheet Data:
Cash and cash equivalents and restricted cash	$	46,781		$	67,376		$	67,781	$	56,676	$	57,255
Intangible assets, net		1,018,333			1,042,956			1,112,443		1,137,762		1,191,013
Total assets		1,358,786			1,346,524			1,391,694		1,405,100		1,447,445
Total debt (including current portion)		1,006,236			1,024,337			813,444		806,380		805,968
Total liabilities		1,417,502			1,407,062			1,160,286		1,108,126		1,080,094
Total (deficit) equity		(71,126	)		(71,824	)		220,572		284,975		354,498

(1)

Year-to-year comparisons are significantly affected by Radio One’s acquisitions and dispositions during the periods covered.

(2)

Interest expense includes non-cash interest, such as the accretion of principal, local marketing agreement (“LMA”) fees, time brokerage agreement (“TBA”) fees, the amortization of discounts on debt and the amortization of deferred financing costs.

The following table contains selected historical consolidated financial data derived from the audited financial statements of Radio One for each of the years in the five-year period ended December 31:

	For the Years Ended December 31,
	2016			2015			2014			2013			2012
	(In thousands)

Statement of Cash Flows:
Cash flows from (used in):
Operating activities	$	48,249		$	41,752		$	53,920		$	37,029		$	45,447
Investing activities		(42,164	)		(219,261	)		(15,100	)		(6,073	)		(8,044	)
Financing activities		(26,680	)		177,104			(27,715	)		(31,535	)		(16,087	)
Other Data:
Cash interest expense (1)	$	77,038		$	69,934		$	68,536		$	83,612		$	73,307
Capital expenditures		5,164			7,339			5,537			9,194			12,485

(1)

Cash interest expense is calculated as interest expense less non-cash interest, including the accretion of principal, the amortization of discounts on debt and the amortization of deferred financing costs for the indicated period.

ITEM 7. 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.

Overview

For the year ended December 31, 2016, consolidated net revenue increased approximately 1.2% compared to the year ended December 31, 2015. We project our 2017 business results will improve and compare favorably to that of 2016. Our strategy for 2017 will be to continue to: (i) grow market share; (ii) improve audience share in certain markets and improve revenue conversion of strong and stable audience share in certain other markets; and (iii) grow and diversify our revenue by successfully executing our multimedia strategy.

The state of the economy, competition from digital audio players, the internet, cable television and satellite radio, among other new media outlets, audio and video streaming on the internet, and consumers’ increased focus on mobile applications, are some of the reasons our core radio business has seen slow or negative growth over the past few years. In addition to making overall cutbacks, advertisers continue to shift their advertising budgets away from traditional media such as newspapers, broadcast television and radio to these new media outlets. Internet companies have evolved from being large sources of advertising revenue for radio companies to being significant competitors for radio advertising dollars. While these dynamics present significant challenges for companies that are focused solely in the radio industry, through our online properties, which includes our radio websites, Interactive One and other online verticals, as well as our cable television business, we are poised to provide advertisers and creators of content with a multifaceted way to reach African-American consumers.

Results of Operations

Revenue

Within our core radio business, we primarily derive revenue from the sale of advertising time and program sponsorships to local and national advertisers on our radio stations. Advertising revenue is affected primarily by the advertising rates our radio stations are able to charge, as well as the overall demand for radio advertising time in a market. These rates are largely based upon a radio station’s audience share in the demographic groups targeted by advertisers, the number of radio stations in the related market, and the supply of, and demand for, radio advertising time. Advertising rates are generally highest during morning and afternoon commuting hours.

Net revenue consists of gross revenue, net of local and national agency and outside sales representative commissions. Agency and outside sales representative commissions are calculated based on a stated percentage applied to gross billing.

The following chart shows the percentage of consolidated net revenue generated by each reporting segment.

	For the Years Ended December 31,
	2016			2015			2014

Radio broadcasting segment		42.6	%		43.8	%		48.3	%

Reach Media segment		11.8	%		12.1	%		11.9	%

Internet segment		4.9	%		4.7	%		5.5	%

Cable television segment		42.1	%		40.8	%		35.6	%

Corporate/eliminations		(1.4	)%		(1.4	)%		(1.3	)%

The following chart shows net revenue generated from our core radio business as a percentage of consolidated net revenue. The downward trend is consistent with our strategic diversification strategy. In addition, it shows the percentages generated from local and national advertising as a subset of net revenue from our core radio business.

	For the Years Ended December 31,
	2016			2015			2014

Net revenue generated from core radio business, excluding Reach Media, as a percentage of consolidated net revenue		42.6	%		44.3	%		48.8	%

Percentage of core radio business generated from local advertising		61.2	%		61.8	%		62.7	%

Percentage of core radio business generated from national advertising, including network advertising		34.6	%		33.3	%		33.0	%

National advertising also includes advertising revenue generated from our internet segment. The balance of net revenue from our radio segment was generated from tower rental income, ticket sales and revenue related to our sponsored events, management fees and other revenue.

The following charts show our net revenue (and sources) for the years ended December 31, 2016 and 2015:

	Year Ended December 31,							%
	2016		2015		$ Change			Change
	(Unaudited) (In thousands)
Net Revenue:
Radio Advertising	$	210,134	$	217,846	$	(7,712	)		(3.5	)%
Political Advertising		8,575		2,090		6,485			310.3	%
Digital Advertising		26,143		26,310		(167	)		(0.6	)%
Cable Television Advertising		85,640		83,086		2,554			3.1	%
Cable Television Affiliate Fees		105,961		100,222		5,739			5.7	%
Event Revenues & Other		19,766		21,307		(1,541	)		(7.2	)%

Net Revenue (as reported)	$	456,219	$	450,861	$	5,358			1.2	%

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.

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

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 derives revenue from affiliate fees under the terms of various affiliation agreements based upon a per subscriber fee multiplied by most recent subscriber counts reported by the applicable affiliate.

Reach Media primarily derives its revenue from the sale of advertising in connection with its syndicated radio shows, including the Tom Joyner Morning Show and our other syndicated programming assets, including the Rickey Smiley Morning Show, the Russ Parr Morning Show and the DL Hughley Show. Reach Media also operates www.BlackAmericaWeb.com, an African-American targeted news and entertainment website. Additionally, Reach Media operates various other event-related activities.

Expenses

Our significant expenses are: (i) employee salaries and commissions; (ii) programming expenses; (iii) marketing and promotional expenses; (iv) rental of premises for office facilities and studios; (v) rental of transmission tower space; (vi) music license royalty fees; and (vii) content amortization. We strive to control these expenses by centralizing certain functions such as finance, accounting, legal, human resources and management information systems and, in certain markets, the programming management function. We also use our multiple stations, market presence and purchasing power to negotiate favorable rates with certain vendors and national representative selling agencies. In addition to salaries and commissions, major expenses for our internet business include membership traffic acquisition costs, software product design, post-application software development and maintenance, database and server support costs, the help desk function, data center expenses connected with internet service provider (“ISP”) hosting services and other internet content delivery expenses. Major expenses for our cable television business include content acquisition and amortization, sales and marketing.

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

Measurement of Performance

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

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

(b) Broadcast and internet operating income (formerly station operating income): Net income (loss) before depreciation and amortization, income taxes, interest expense, interest income, noncontrolling interests in income of subsidiaries, other (income) expense, corporate selling, general and administrative, expenses, stock-based compensation, impairment of long-lived assets and loss on retirement of debt, is commonly referred to in our industry as “station operating income.” However, given the diverse nature of our business, station operating income is not truly reflective of our multi-media operation and, therefore, we now use the term broadcast and internet operating income. Broadcast and internet operating income is not a measure of financial performance under accounting principles generally accepted in the United States of America (“GAAP”). Nevertheless, broadcast and internet operating income is a significant measure used by our management to evaluate the operating performance of our core operating segments. Broadcast and internet operating income provides helpful information about our results of operations, apart from expenses associated with our fixed and long-lived intangible assets, income taxes, investments, impairment charges, debt financings and retirements, corporate overhead and stock-based compensation. Our measure of broadcast and internet operating income is similar to our historic use of station operating income; however, it reflects our more diverse business, and therefore, may not be similar to “station operating income” or other similarly titled measures as used by other companies. Broadcast and internet operating income does not represent operating loss or cash flow from operating activities, as those terms are defined under GAAP, and should not be considered as an alternative to those measurements as an indicator of our performance.

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

(d) Adjusted EBITDA: Adjusted EBITDA consists of net (loss) income plus (1) depreciation and amortization, income taxes, interest expense, noncontrolling interests in income of subsidiaries, impairment of long-lived assets, stock-based compensation, (gain) loss on retirement of debt, employment agreement and incentive plan award expenses, severance-related costs, cost method investment income, less (2) other income and interest income. Net income before interest income, interest expense, income taxes, depreciation and amortization is commonly referred to in our business as “EBITDA.” Adjusted EBITDA and EBITDA are not measures of financial performance under GAAP. We believe Adjusted EBITDA is often a useful measure of a company’s operating performance and is a significant measure used by our management to evaluate the operating performance of our business because Adjusted EBITDA excludes charges for depreciation, amortization and interest expense that have resulted from our acquisitions and debt financing, our taxes, impairment charges, and gain on retirements of debt. Accordingly, we believe that Adjusted EBITDA provides useful information about the operating performance of our business, apart from the expenses associated with our fixed assets and long-lived intangible assets, capital structure or the results of our affiliated company. Adjusted EBITDA is frequently used as one of the measures for comparing businesses in our industry, although our measure of Adjusted EBITDA may not be comparable to similarly titled measures of other companies, including, but not limited to the fact that our definition includes the results of all four of our operating segments (radio broadcasting, Reach Media, internet and cable television). Adjusted EBITDA and EBITDA do not purport to represent operating income or cash flow from operating activities, as those terms are defined under GAAP, and should not be considered as alternatives to those measurements as an indicator of our performance.

Summary of Performance

The table below provides a summary of our performance based on the metrics described above:

	For the Years Ended December 31,
	2016			2015			2014
	(In thousands, except margin data)

Net revenue	$	456,219		$	450,861		$	441,387
Broadcast and internet operating income		174,620			165,092			155,486
Broadcast and internet operating income margin		38.3	%		36.6	%		35.2	%
Adjusted EBITDA		136,186			125,470			121,388
Net loss attributable to common stockholders		(423	)		(74,022	)		(62,670	)

The reconciliation of net loss to broadcast and internet operating income is as follows:

	For the Years Ended December 31,
	2016			2015			2014
	(In thousands)

Net loss attributable to common stockholders, as reported	$	(423	)	$	(74,022	)	$	(62,670	)
Add back non-broadcast and internet operating income items included in net loss:
Interest income		(214	)		(102	)		(366	)
Interest expense		81,636			80,038			79,810
Provision for income taxes		9,580			15,058			34,814
Corporate selling, general and administrative, excluding stock-based compensation		47,532			47,252			39,905
Stock-based compensation		3,410			5,107			1,594
(Gain) loss on retirement of debt		(2,646	)		7,091			5,679
Other (income) expense, net		(928	)		216			(32	)
Depreciation and amortization		34,247			35,355			36,822
Noncontrolling interests in income of subsidiaries		1,139			7,888			19,930
Impairment of long-lived assets		1,287			41,211			—
Broadcast and internet operating income	$	174,620		$	165,092		$	155,486

The reconciliation of net loss to adjusted EBITDA is as follows:

	For the Years Ended December 31,
	2016			2015			2014
	(In thousands)
Adjusted EBITDA reconciliation:
Consolidated net loss attributable to common stockholders, as reported	$	(423	)	$	(74,022	)	$	(62,670	)
Interest income		(214	)		(102	)		(366	)
Interest expense		81,636			80,038			79,810
Provision for income taxes		9,580			15,058			34,814
Depreciation and amortization		34,247			35,355			36,822
EBITDA	$	124,826		$	56,327		$	88,410
Stock-based compensation		3,410			5,107			1,594
(Gain) loss on retirement of debt		(2,646	)		7,091			5,679
Other (income) expense, net		(928	)		216			(32	)
Noncontrolling interests in income of subsidiaries		1,139			7,888			19,930
Impairment of long-lived assets		1,287			41,211			—
Employment Agreement Award and incentive plan award expenses		7,823			4,884			4,606
Severance related costs		856			2,746			1,201
Cost method investment income		419			—			—
Adjusted EBITDA	$	136,186		$	125,470		$	121,388

Certain reclassifications have been made to prior year balances to conform to the current year presentation. These reclassifications had no effect on previously reported consolidated net income or loss or any other statement of operations, balance sheet or cash flow amounts.

RADIO ONE, INC. AND SUBSIDIARIES

RESULTS OF OPERATIONS

The following table summarizes our historical consolidated results of operations:

Year Ended December 31, 2016 Compared to Year Ended December 31, 2015 (In thousands)

	For the Years Ended December 31,						Increase/(Decrease)
	2016			2015

Statements of Operations:
Net revenue	$	456,219		$	450,861		$	5,358		1.2	%
Operating expenses:
Programming and technical, excluding stock-based compensation		134,000			134,410			(410	)	(0.3	)
Selling, general and administrative, excluding stock-based compensation		147,599			151,359			(3,760	)	(2.5	)
Corporate selling, general and administrative, excluding stock-based compensation		47,532			47,252			280		0.6
Stock-based compensation		3,410			5,107			(1,697	)	(33.2	)
Depreciation and amortization		34,247			35,355			(1,108	)	(3.1	)
Impairment of long-lived assets		1,287			41,211			(39,924	)	(96.9	)
Total operating expenses		368,075			414,694			(46,619	)	(11.2	)
Operating income		88,144			36,167			51,977		143.7
Interest income		214			102			112		109.8
Interest expense		81,636			80,038			1,598		2.0
(Gain) loss on retirement of debt		(2,646	)		7,091			9,737		137.3
Other (income) expense, net		(928	)		216			1,144		529.6
Income (loss) before provision for income taxes and noncontrolling interests in income of subsidiaries		10,296			(51,076	)		61,372		120.2
Provision for income taxes		9,580			15,058			(5,478	)	(36.4	)
Net income (loss)		716			(66,134	)		66,850		101.1
Noncontrolling interests in income of subsidiaries		1,139			7,888			(6,749	)	(85.6	)
Net loss attributable to common stockholders	$	(423	)	$	(74,022	)	$	73,599		99.4	%

Net revenue

Year Ended December 31,				Increase/(Decrease)
2016		2015
$	456,219	$	450,861	$	5,358	1.2	%

During the year ended December 31, 2016, we recognized approximately $456.2 million in net revenue compared to approximately $450.9 million during the year ended December 31, 2015. These amounts are net of agency and outside sales representative commissions. Net revenues from our radio broadcasting segment for the year ended December 31, 2016, decreased 1.5% from the same period in 2015, primarily due to continued declines in our Houston market. Based on reports prepared by the independent accounting firm Miller, Kaplan, Arase & Co., LLP (“Miller Kaplan”), the radio markets we operate in (excluding Richmond and Raleigh, both of which no longer participate in Miller Kaplan) decreased 0.8% in total revenues for the year ended December 31, 2016, consisting of a decrease of 2.6% in local revenues, partially offset by an increase of 1.2% in national revenues and an increase of 0.1% in digital revenues. We experienced net revenue growth, most significantly in our Charlotte, Cleveland, Indianapolis, Raleigh and Washington, DC markets, however, this growth was countered by declines in other markets, with our Columbus, Houston, and Philadelphia markets experiencing the most significant declines. Net revenue for our Reach Media segment decreased 1.5% versus 2015. We recognized approximately $191.9 million and $183.6 million of revenue from our cable television segment during the years ended December 31, 2016, and 2015, respectively, with the increase due to higher advertising demand and an increase in subscriber rates for certain affiliates. Our internet segment generated approximately $22.2 million in net revenue for the year ended December 31, 2016, compared to approximately $21.2 million during 2015, an increase of 4.9%, due primarily to an increase in direct revenues.

Operating expenses

Programming and technical, excluding stock-based compensation

Year Ended December 31,				Increase/(Decrease)
2016		2015
$	134,000	$	134,410	$	(410	)	(0.3	)%

Programming and technical expenses include expenses associated with on-air talent and the management and maintenance of the systems, tower facilities, and studios used in the creation, distribution and broadcast of programming content on our radio stations. Programming and technical expenses for the radio segment also include expenses associated with our programming research activities and music royalties. For our internet segment, programming and technical expenses include software product design, post-application software development and maintenance, database and server support costs, the help desk function, data center expenses connected with ISP hosting services and other internet content delivery expenses. For our cable television segment, programming and technical expenses include expenses associated with technical, programming, production, and content management. The decrease in programming and technical expenses for the year ended December 31, 2016, compared to the same period in 2015 is due primarily to lower expenses in our radio broadcasting segment. This decrease is partially offset by an increase in expenses from our cable television segment. Our radio broadcasting segment generated a decrease of approximately $2.6 million for the year ended December 31, 2016, compared to the same period in 2015, as there were lower music licensing costs, lower contract labor costs and lower consulting fees. Approximately $69.7 million of our consolidated programming and technical operating expenses were incurred by our cable broadcasting segment for the year ended December 31, 2016, versus approximately $67.3 million for the same period in 2015. Of this total amount incurred by our cable broadcasting segment, approximately $59.1 million and $57.8 million, respectively, relates specifically to program content expense.

Selling, general and administrative, excluding stock-based compensation

Year Ended December 31,				Increase/(Decrease)
2016		2015
$	147,599	$	151,359	$	(3,760	)	(2.5	)%

Selling, general and administrative expenses include expenses associated with our sales departments, offices and facilities and personnel (outside of our corporate headquarters), marketing and promotional expenses, special events and sponsorships and back office expenses. Expenses to secure ratings data for our radio stations and visitors’ data for our websites are also included in selling, general and administrative expenses. In addition, selling, general and administrative expenses for the radio broadcasting segment and internet segment include expenses related to the advertising traffic (scheduling and insertion) functions. Selling, general and administrative expenses also include membership traffic acquisition costs for our online business. The decrease in selling, general and administrative expenses for the year ended December 31, 2016, compared to the same period in 2015, was driven primarily by various cost cutting measures, such as eliminating unprofitable events, and lower contractual costs in our radio broadcasting segment.

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

Year Ended December 31,				Increase/(Decrease)
2016		2015
$	47,532	$	47,252	$	280	0.6	%

Corporate expenses consist of expenses associated with our corporate headquarters and facilities, including personnel as well as other corporate overhead functions. There was an increase in corporate expenses due to an increase in compensation expense for the Chief Executive Officer in connection with the valuation of the Employment Agreement Award element in his employment agreement. This increase was partially offset by a decrease in our cable television expenses due primarily to lower management employee compensation costs, a decrease in the allowance for doubtful accounts and lower professional and consulting fees.

Stock-based compensation

Year Ended December 31,				Increase/(Decrease)
2016		2015
$	3,410	$	5,107	$	(1,697	)	(33.2	)%

The decrease in stock-based compensation for the year ended December 31, 2016, compared to the same period in 2015 is primarily due to the vesting of stock awards for certain executive officers and other management personnel.

Depreciation and amortization

Year Ended December 31,				Increase/(Decrease)
2016		2015
$	34,247	$	35,355	$	(1,108	)	(3.1	)%

The decrease in depreciation and amortization expense for the year ended December 31, 2016, was due to the completion of useful lives for certain assets.

Impairment of long-lived assets

Year Ended December 31,				Increase/(Decrease)
2016		2015
$	1,287	$	41,211	$	(39,924	)	(96.9	)%

The impairment of long-lived assets for the year ended December 31, 2016, was related to a non-cash impairment charge recorded to reduce the carrying value of our Columbus radio broadcasting licenses. The impairment of long-lived assets for the year ended December 31, 2015, was related to a non-cash impairment charge recorded to reduce the carrying value of our internet segment’s goodwill and a non-cash impairment charge recorded to reduce the carrying value of our Cincinnati market goodwill and several radio broadcasting licenses.

Interest expense

Year Ended December 31,				Increase/(Decrease)
2016		2015
$	81,636	$	80,038	$	1,598	2.0	%

Interest expense increased to approximately $81.6 million for the year ended December 31, 2016, compared to approximately $80.0 million for the same period in 2015. The primary driver of the increase in interest expense was higher debt balances, partially offset by lower interest rates.

(Gain) loss on retirement of debt

Year Ended December 31,					Increase/(Decrease)
2016			2015
$	(2,646	)	$	7,091	$	9,737	137.3	%

The gain on retirement of debt for the year ended December 31, 2016, was due to the redemption of approximately $20 million of our 2020 Notes at a discount. The loss on retirement of debt of approximately $7.1 million for the year ended December 31, 2015, was due to the retirement of the 2011 Credit Agreement and payoff of the TV One Notes during the second quarter. This amount included a write-off of approximately $1.3 million of previously capitalized debt financing costs, a write-off of $844,000 of original issue discount associated with the 2011 Credit Agreement, as amended, as well as $827,000 associated with the call premium to refinance the credit facility, $106,000 associated with the consent to the existing holders of the 2020 Notes and approximately $4.0 million of costs associated with the financing transactions.

Provision for income taxes

Year Ended December 31,				Increase/(Decrease)
2016		2015
$	9,580	$	15,058	$	(5,478	)	(36.4	)%

During the year ended December 31, 2016, the provision for income taxes decreased to approximately $9.6 million compared to approximately $15.1 million for the year ended December 31, 2015. The decrease in the provision for income taxes was primarily due to the completion of tax amortization from previously acquired indefinite-lived intangible assets. The income tax provision consisted of deferred tax expense of approximately $9.1 million and $14.5 million and current provision expense of $466,000 and $572,000 for the years ended December 31, 2016 and 2015, respectively. The Company continued to maintain a full valuation allowance for its net deferred tax assets (“DTAs”). We do not consider deferred tax liabilities (“DTLs”) related to indefinite-lived assets in evaluating the realizability of our DTAs, as the timing of their reversal cannot be determined. The tax provision and offsetting valuation allowance resulted in an effective tax rate of 93.0% and (29.5)% for the years ended December 31, 2016 and 2015, respectively. The annual effective tax rate for Radio One primarily reflects the change in DTLs associated with the tax amortization of indefinite-lived intangible assets.

Noncontrolling interests in income of subsidiaries

Year Ended December 31,				Increase/(Decrease)
2016		2015
$	1,139	$	7,888	$	(6,749	)	(85.6	)%

The decrease in noncontrolling interests in income of subsidiaries was due to our buy-out of the remaining management interests in TV One, and as such, TV One is now wholly-owned.

Other Data

Broadcast and internet operating income

Broadcast and internet operating income increased to approximately $174.6 million for the year ended December 31, 2016, compared to approximately $165.1 million for the year ended December 31, 2015, an increase of approximately $9.5 million or 5.8%. This increase was primarily due to higher broadcast and internet operating income from our cable television and radio broadcasting segments. The radio broadcasting segment generated approximately $76.2 million of broadcast and internet operating income during the year ended December 31, 2016, compared to approximately $71.0 million during the year ended December 31, 2015, an increase of approximately $5.2 million primarily attributable to lower selling, general and administrative expenses due to the elimination of unprofitable events and lower contractual costs. TV One generated approximately $85.6 million of broadcast and internet operating income for the year ended December 31, 2016, compared to approximately $78.7 million for the year ended December 31, 2015, an increase of $6.9 million, with the increase due primarily to increased advertising and affiliate revenues.

Broadcast and internet operating income margin

Broadcast and internet operating income margin increased to 38.3% for the year ended December 31, 2016, from 36.6% for 2015. The margin increase was primarily attributable to the radio broadcasting segment and TV One’s greater broadcast and internet operating income as described above.

RADIO ONE, INC. AND SUBSIDIARIES

RESULTS OF OPERATIONS

The following table summarizes our historical consolidated results of operations:

Year Ended December 31, 2015 Compared to Year Ended December 31, 2014 (In thousands)

	For the Years Ended December 31,						Increase/(Decrease)
	2015			2014

Statements of Operations:
Net revenue	$	450,861		$	441,387		$	9,474		2.1	%
Operating expenses:
Programming and technical, excluding stock-based compensation		134,410			141,689			(7,279	)	(5.1	)
Selling, general and administrative, excluding stock-based compensation		151,359			144,212			7,147		5.0
Corporate selling, general and administrative, excluding stock-based compensation		47,252			39,905			7,347		18.4
Stock-based compensation		5,107			1,594			3,513		220.4
Depreciation and amortization		35,355			36,822			(1,467	)	(4.0	)
Impairment of long-lived assets		41,211			—			41,211		100.0
Total operating expenses		414,694			364,222			50,472		13.9
Operating income		36,167			77,165			(40,998	)	(53.1	)
Interest income		102			366			(264	)	(72.1	)
Interest expense		80,038			79,810			228		0.3
Loss on retirement of debt		7,091			5,679			1,412		24.9
Other expense (income), net		216			(32	)		(248	)	(775.0	)
Loss before provision for income taxes and noncontrolling interests in income of subsidiaries		(51,076	)		(7,926	)		(43,150	)	(544.4	)
Provision for income taxes		15,058			34,814			(19,756	)	(56.7	)
Net loss		(66,134	)		(42,740	)		(23,394	)	(54.7	)
Noncontrolling interests in income of subsidiaries		7,888			19,930			(12,042	)	(60.4	)
Net loss attributable to common stockholders	$	(74,022	)	$	(62,670	)	$	(11,352	)	(18.1	)%

Net revenue

Year Ended December 31,				Increase/(Decrease)
2015		2014
$	450,861	$	441,387	$	9,474	2.1	%

During the year ended December 31, 2015, we recognized approximately $450.9 million in net revenue compared to approximately $441.4 million during the year ended December 31, 2014. These amounts are net of agency and outside sales representative commissions. Net revenues from our radio broadcasting segment for the year ended December 31, 2015, decreased 7.3% from the same period in 2014, primarily due to continued declines in net revenue in our four largest markets. Based on reports prepared by Miller Kaplan, the radio markets we operate in (excluding Richmond and Raleigh, both of which no longer participate in Miller Kaplan) decreased 2.4% in total revenues for the year ended December 31, 2015, comprised of a decrease of 3.3% in local revenues and a decrease of 5.0% in national revenues, partially offset by an increase of 4.3% in digital revenues. We experienced net revenue growth most significantly in our Dallas, Philadelphia and St. Louis markets, however, this growth was countered by declines in other markets, with our Atlanta, Baltimore, Columbus, Detroit, Houston, Indianapolis, and Washington, DC markets experiencing the most significant declines. Net revenue for our Reach Media segment increased 4.3% versus 2014, due primarily to better performance at an annual promotional event. We recognized approximately $183.6 million and $157.1 million of revenue from our cable television segment during the years ended December 31, 2015, and 2014, respectively, with the increase due to higher advertising demand and an increase in subscriber rates for certain affiliates. Our internet segment generated approximately $21.2 million in net revenue for the year ended December 31, 2015, compared to approximately $24.3 million during 2014, a decrease of 13% due to decreases in alliance revenues.

Operating expenses

Programming and technical, excluding stock-based compensation

Year Ended December 31,				Increase/(Decrease)
2015		2014
$	134,410	$	141,689	$	(7,279	)	(5.1	)%

Programming and technical expenses include expenses associated with on-air talent and the management and maintenance of the systems, tower facilities, and studios used in the creation, distribution and broadcast of programming content on our radio stations. Programming and technical expenses for the radio segment also include expenses associated with our programming research activities and music royalties. For our internet segment, programming and technical expenses include software product design, post-application software development and maintenance, database and server support costs, the help desk function, data center expenses connected with ISP hosting services and other internet content delivery expenses. For our cable television segment, programming and technical expenses include expenses associated with technical, programming, production, and content management. The decrease in programming and technical expenses for the year ended December 31, 2015, compared to the same period in 2014 is due primarily to lower expenses in our radio broadcasting and Reach Media segments. These decreases are partially offset by an increase in expenses from our cable television segment. Our radio broadcasting segment generated a decrease of approximately $2.3 million for the year ended December 31, 2015, compared to the same period in 2014, as there were lower employee compensation costs associated with format changes in our Houston market. Our Reach Media segment generated a decrease of approximately $8.6 million for the year ended December 31, 2015, compared to the same period in 2014, with the decrease due to a reduction in talent compensation as a result of renegotiated contracts. Approximately $67.3 million of our consolidated programming and technical operating expenses were incurred by our cable broadcasting segment for the year ended December 31, 2015, versus approximately $64.3 million for the same period in 2014. Of this total amount incurred by our cable broadcasting segment, approximately $57.8 million and $54.6 million, respectively, relates specifically to program content expense. The increase in program content expense was a result of certain new series and movie premieres.

Selling, general and administrative, excluding stock-based compensation

Year Ended December 31,				Increase/(Decrease)
2015		2014
$	151,359	$	144,212	$	7,147	5.0	%

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 the radio broadcasting segment and internet segment include expenses related to the advertising traffic (scheduling and insertion) functions. Selling, general and administrative expenses also include membership traffic acquisition costs for our online business. The increase in selling, general and administrative expenses for the year ended December 31, 2015, compared to the same period in 2014, was driven primarily by our Reach Media and cable television segments. Commensurate with the increase in revenue, Reach Media incurred higher costs associated with its annual promotional event. Our cable television segment generated an increase of approximately $5.5 million, primarily due to marketing and promotional expenses to advertise and promote certain programs in addition to higher employee compensation costs.

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

Year Ended December 31,				Increase/(Decrease)
2015		2014
$	47,252	$	39,905	$	7,347	18.4	%

Corporate expenses consist of expenses associated with our corporate headquarters and facilities, including personnel as well as other corporate overhead functions. There was an increase in corporate expenses due to an increase in compensation expense for the Chief Executive Officer in connection with the valuation of the Employment Agreement Award element in his employment agreement. Our cable television segment also generated an increase in corporate expenses due primarily to higher management employee compensation costs and an increase in the allowance for doubtful accounts.

Stock-based compensation

Year Ended December 31,				Increase/(Decrease)
2015		2014
$	5,107	$	1,594	$	3,513	220.4	%

On September 30, 2014, the Compensation Committee of the Board of Directors of the Company approved the principal terms of new employment agreements for each of the Company’s named executive officers which included the granting of restricted shares and stock options effective October 6, 2014, under a long-term incentive plan (“LTIP”). Also, effective October 6, 2014, the Compensation Committee awarded 410,000 shares of restricted stock to certain employees pursuant to the LTIP. Stock-based compensation requires measurement of compensation costs for all stock-based awards at fair value on date of grant and recognition of compensation expense over the service period for which awards are expected to vest. The increase in stock-based compensation for the year ended December 31, 2015, compared to the same period in 2014, is primarily due to a full year’s impact of the actions taken above.

Depreciation and amortization

Year Ended December 31,				Increase/(Decrease)
2015		2014
$	35,355	$	36,822	$	(1,467	)	(4.0	)%

The decrease in depreciation and amortization expense for the year ended December 31, 2015, was due to the completion of amortization for certain intangible assets and the completion of useful lives for certain assets.

Impairment of long-lived assets

Year Ended December 31,				Increase/(Decrease)
2015		2014
$	41,211	$	—	$	41,211	100.0	%

The impairment of long-lived assets for the year ended December 31, 2015, was related to a non-cash impairment charge recorded to reduce the carrying value of our internet segment’s goodwill and a non-cash impairment charge recorded to reduce the carrying value of our Cincinnati market goodwill and several radio broadcasting licenses. There was no impairment of long-lived assets for the year ended December 31, 2014.

Interest expense

Year Ended December 31,				Increase/(Decrease)
2015		2014
$	80,038	$	79,810	$	228	0.3	%

Despite increased debt balances, interest expense remained relatively flat for the year ended December 31, 2015, compared to the same period in 2014, due to a lower overall effective rate in 2015. On April 17, 2015, the Company’s 2011 Credit Agreement, as amended, and TV One Notes were paid off, with balances of $367.6 million and $119.0 million, respectively. The payoffs were achieved by the Company entering into its new $350.0 million 2015 Credit Facility, issuing the 2022 Notes in an aggregate principal amount of $350.0 million and the Comcast Note in the aggregate principal amount of approximately $11.9 million. The terms 2011 Credit Agreement, TV One Notes, 2015 Credit Facility, 2022 Notes and Comcast Note are all defined below in “Liquidity and Capital Resources.”

Loss on retirement of debt

Year Ended December 31,				Increase/(Decrease)
2015		2014
$	7,091	$	5,679	$	1,412	24.9	%

The loss on retirement of debt of approximately $7.1 million for the year ended December 31, 2015, was due to the retirement of the 2011 Credit Agreement and payoff of the TV One Notes during the second quarter. This amount included a write-off of approximately $1.3 million of previously capitalized debt financing costs, a write-off of $844,000 of original issue discount associated with the 2011 Credit Agreement, as amended, as well as $827,000 associated with the call premium to refinance the credit facility, $106,000 associated with the consent to the existing holders of the 2020 Notes and approximately $4.0 million of costs associated with the financing transactions. The loss on retirement of debt of approximately $5.7 million for the year ended December 31, 2014, was due to the retirement of the 2016 Notes. This amount included a write-off of approximately $4.1 million of previously capitalized debt financing costs and approximately $1.6 million associated with the net premium paid to retire the 2016 Notes.

Provision for income taxes

Year Ended December 31,				Increase/(Decrease)
2015		2014
$	15,058	$	34,814	$	(19,756	)	(56.7	)%

During the year ended December 31, 2015, the provision for income taxes decreased to approximately $15.1 million compared to approximately $34.8 million for the year ended December 31, 2014. The decrease in the provision for income taxes was primarily due to the impairment of long-lived intangible assets and completion of tax amortization from previously acquired indefinite-lived intangible assets, which reduced the DTLs and related deferred tax expense. For the year ended December 31, 2015, the income tax provision consisted of deferred tax expense of approximately $14.5 million related to temporary differences due to tax amortization of indefinite-lived intangible assets, and current provision expense of approximately $572,000. For the year ended December 31, 2014, the income tax provision consisted of deferred tax expense of approximately $34.3 million related to temporary differences due to tax amortization of indefinite-lived intangible assets, and current provision expense of approximately $558,000. The Company continued to maintain a full valuation allowance for its net DTAs. We do not consider DTLs related to indefinite-lived assets in evaluating the realizability of our DTAs, as the timing of their reversal cannot be determined.

The tax provision and offsetting valuation allowance resulted in an effective tax rate of (29.5)% and (439.2)% for the years ended December 31, 2015 and 2014, respectively. The annual effective tax rate for Radio One in 2015 and 2014 primarily reflects the change in DTLs associated with the tax amortization of indefinite-lived intangible assets.

Noncontrolling interests in income of subsidiaries

Year Ended December 31,				Increase/(Decrease)
2015		2014
$	7,888	$	19,930	$	(12,042	)	(60.4	)%

The decrease in noncontrolling interests in income of subsidiaries was due primarily to our increased ownership percentage of TV One.

Other Data

Broadcast and internet operating income

Broadcast and internet operating income increased to approximately $165.1 million for the year ended December 31, 2015, compared to approximately $155.5 million for the year ended December 31, 2014, an increase of approximately $9.6 million or 6.2%. This increase was primarily due to higher broadcast and internet operating income from our Reach Media and cable television segments, partially offset by a decrease of broadcast and internet operating income at our radio broadcasting segment. Reach Media generated approximately $13.3 million of broadcast and internet operating income during the year ended December 31, 2015, compared to approximately $6.5 million during the year ended December 31, 2014, an increase of approximately $6.8 million. The increase was due primarily to lower programming and technical expenses associated with a decrease in talent compensation as a result of certain renegotiated contracts. TV One generated approximately $78.7 million of broadcast and internet operating income for the year ended December 31, 2015, compared to approximately $60.7 million for the year ended December 31, 2014, an increase of $18.0 million, with the increase due primarily to increased advertising and affiliate revenues. The radio broadcasting segment generated approximately $71.0 million of broadcast and internet operating income during the year ended December 31, 2015, compared to $84.4 million during the year ended December 31, 2014, with the decrease due primarily to continued net revenue declines in four of our largest markets.

Broadcast and internet operating income margin

Broadcast and internet operating income margin increased to 36.6% for the year ended December 31, 2015, from 35.2% for 2014. The margin increase was primarily attributable to TV One’s and Reach Media’s greater broadcast and internet operating income as described above.

Liquidity and Capital Resources

Our primary source of liquidity is cash provided by operations and, to the extent necessary, other debt or equity financing.

2022 Notes and 2015 Credit Facilities

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

The 2015 Credit Facility matures on December 31, 2018. At the Company’s election, the interest rate on borrowings under the 2015 Credit Facility is based on either (i) the then applicable base rate plus 3.5% (as defined in the 2015 Credit Facility) as, for any day, a rate per annum (rounded upward, if necessary, to the next 1/100th of 1%) equal to the greater of (a) the prime rate published in the Wall Street Journal, (b) a rate of 1/2 of 1% in excess rate of the overnight Federal Funds Rate at any given time, and (c) the one-month LIBOR commencing on such day plus 1.00%), or (ii) the then applicable LIBOR rate plus 4.5% (as defined in the 2015 Credit Facility). The average interest rate was approximately 5.13% for 2016 and 4.80% for 2015. Quarterly installments of 0.25%, or $875,000, of the principal balance on the term loan are payable on the last day of each March, June, September and December beginning on September 30, 2015. During the year ended December 31, 2016, the Company repaid approximately $3.5 million under the 2015 Credit Facility. During the year ended December 31, 2015, the Company repaid approximately $1.8 million under the 2015 Credit Facility.

In connection with the closing of the 2022 Notes and the 2015 Credit Facility, the Company and the guarantor parties thereto entered into a Fourth Supplemental Indenture to the indenture governing the 2020 Notes (as defined below). Pursuant to this Fourth Supplemental Indenture, TV One, which previously did not guarantee the 2020 Notes, became a guarantor under the 2020 Notes indentures. In addition, the transactions caused a “Triggering Event” (as defined in the 2020 Notes Indenture) and, as a result, the 2020 Notes became an unsecured obligation of the Company and the subsidiary guarantors and rank equal in right of payment with the Company’s other senior indebtedness.

The Company used the net proceeds from the 2022 Notes, along with term loan borrowings under the 2015 Credit Facility, to refinance its 2011 Credit Agreement, refinance the TV One Notes (as defined below), and finance the buyout of membership interests of Comcast in TV One and pay the related accrued interest, premiums, fees and expenses associated therewith.

The 2015 Credit Facility 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, 2015 and the last day of each fiscal quarter thereafter.

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

§ 5.85 to 1.00 on June 30, 2015 and the last day of each fiscal quarter thereafter.

§ liens;

§ sale of assets;

§ payment of dividends; and

§ mergers.

As of December 31, 2016, ratios calculated in accordance with the 2015 Credit Facility were as follows:

As of

December

31, 2016

Covenant

Limit

Excess

Coverage

Interest Coverage

Covenant EBITDA / Interest Expense

1.81

1.25

0.56

Senior Secured Leverage

Senior Secured Debt / Covenant EBITDA

4.85

5.85

1.00

Covenant EBITDA – Earnings before interest, taxes, depreciation and amortization (“EBITDA”) adjusted for certain other adjustments, as defined in the 2015 Credit Facility

As of December 31, 2016, the Company was in compliance with all of its financial covenants under the 2015 Credit Facility.

As of December 31, 2016, the Company had outstanding approximately $344.8 million on its 2015 Credit Facility. The original issue discount is being reflected as an adjustment to the carrying amount of the debt obligations and amortized to interest expense over the term of the credit facility. The Company early adopted ASU 2015-03 during the year ended December 31, 2015, resulting in approximately $7.4 million of net debt issuance costs presented as a direct reduction to the Company's long-term debt in the consolidated balance sheet as of December 31, 2015. 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 years ended December 31, 2016, 2015 and 2014 was approximately $5.3 million, $4.9 million and $4.6 million, respectively.

2011 Credit Facilities

On March 31, 2011, the Company entered into a 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 previously amended and restated credit agreement and to fund a past obligation with respect to a capital call initiated by TV One. The total amount available under the 2011 Credit Agreement was $411.0 million, initially consisting of a $386.0 million term loan facility that matured on March 31, 2016, and a $25.0 million revolving loan facility that matured on March 31, 2015. Borrowings under the 2011 Credit Agreement were subject to compliance with certain covenants including, but not limited to, certain financial covenants. Proceeds from the 2011 Credit Agreement could be used for working capital, capital expenditures made in the ordinary course of business, a common stock repurchase program, permitted direct and indirect investments and other lawful corporate purposes. On December 19, 2012, the Company entered into an amendment to the 2011 Credit Agreement (the “December 2012 Amendment”). The December 2012 Amendment: (i) modified financial covenant levels with respect to the Company's total-leverage, secured-leverage, and interest-coverage ratios; (ii) increased the amount of cash the Company can net for determination of its net indebtedness tests; and (iii) extended the time for certain of the 2011 Credit Agreement's call premium while reducing the time for its later and lower premium.

On January 21, 2015, the Company entered into a second amendment to the 2011 Credit Agreement (the “Second Amendment”) with its lenders. The provisions of the 2011 Credit Agreement relating to the call premium were revised by the Second Amendment to extend the call protection from April 1, 2015 until maturity. The Second Amendment provided a call premium of 101.5% if the 2011 Credit Agreement were refinanced with proceeds from a notes offering and 100.5% if the 2011 Credit Agreement was refinanced with proceeds from any other repayment, including proceeds from a new term loan. The call premium was payable at the earlier of any refinancing or final maturity.

The 2011 Credit Agreement, as amended, contained affirmative and negative covenants with which the Company was required to comply, including financial covenants. In accordance with the 2011 Credit Agreement, as amended, the calculations for the ratios did not include the operating results or related debt of TV One, but rather included our proportionate share of cash dividends received from TV One for periods presented.

Under the terms of the 2011 Credit Agreement, as amended, interest on base rate loans was payable quarterly and interest on LIBOR loans was payable monthly or quarterly. The base rate was equal to the greater of: (i) the prime rate; (ii) the Federal Funds Effective Rate plus 0.50%; or (iii) the LIBOR Rate for a one-month period plus 1.00%. The applicable margin on the 2011 Credit Agreement was 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. The average interest rate was 7.50% for the first quarter of 2015 prior to the refinancing. Quarterly installments of 0.25%, or $957,000, of the principal balance on the term loan were payable on the last day of each March, June, September and December.

On February 24, 2015, the Company entered into a letter of credit reimbursement and security agreement. As of December 31, 2016, the Company had letters of credit totaling $815,000 under the agreement for certain operating leases and certain insurance policies. Letters of credit issued under the agreement are required to be collateralized with cash.

During the year ended December 31, 2015, the Company repaid approximately $368.5 million under the 2011 Credit Agreement, as amended. The original issue discount was being reflected as an adjustment to the carrying amount of the debt obligations and amortized to interest expense over the term of the credit facility. According to the terms of the Credit Agreement, as amended, the Company did not make an excess cash flow payment in April 2015.

As noted above, the Company used the net proceeds from the private offering of the 2022 Notes, along with term loan borrowings under the 2015 Credit Facility, to refinance its 2011 Credit Agreement, as amended. The Company recorded a loss on retirement of debt of approximately $7.1 million for the year ended December 31, 2015. This amount included a write-off of approximately $1.3 million of previously capitalized debt financing costs, a write-off of $844,000 of original issue discount associated with the 2011 Credit Agreement, as amended, as well as $827,000 associated with the call premium to refinance the credit facility, $106,000 associated with the consent to the existing holders of the 2020 Notes and approximately $4.0 million of costs associated with the financing transactions.

Senior Subordinated Notes

On November 24, 2010, we issued $286.8 million of our 12.5%/15% Senior Subordinated Notes due May 2016 (the “2016 Notes”) in a private placement and exchanged and then cancelled approximately $97.0 million of $101.5 million in aggregate principal amount outstanding of our 8 7/8% senior subordinated notes due 2011 (the “2011 Notes”) and approximately $199.3 million of $200.0 million in aggregate principal amount outstanding of our 6 3/8% Senior Subordinated Notes that matured in February 2013 (the “2013 Notes” and the 2013 Notes together with the 2011 Notes, the “Prior Notes”). Subsequently, we repurchased or redeemed all remaining Prior Notes pursuant to the terms of their respective indentures. Effective March 13, 2014, the Company repurchased or otherwise redeemed all of the amounts outstanding under the 2016 Notes using proceeds from our 2020 Notes (defined below). The Company recorded a loss on retirement of debt of approximately $5.7 million during the first quarter of 2014. This amount included a write-off of approximately $4.1 million of previously capitalized debt financing costs and approximately $1.6 million associated with the net premium paid to retire the 2016 Notes.

Interest on the 2016 Notes, that the Company repurchased or otherwise redeemed in March 2014, was initially payable in cash, or at our election, partially in cash and partially through the issuance of additional 2016 Notes (a “PIK Election”) on a quarterly basis in arrears. For fiscal year 2014, interest accrued at a rate of 12.5% and was payable in cash.

On February 10, 2014, the Company closed a private placement offering of $335.0 million aggregate principal amount of 9.25% senior subordinated notes due 2020 (the “2020 Notes”). The 2020 Notes were offered at an original issue price of 100.0% plus accrued interest from February 10, 2014. The 2020 Notes mature on February 15, 2020. Interest accrues at the rate of 9.25% per annum and is payable semiannually in arrears on February 15 and August 15 in the amount of approximately $15.5 million, which commenced on August 15, 2014. Subsequent to the repurchase of a portion of the 2020 Notes (as described below), the semiannual interest payment was approximately $14.6 million. The 2020 Notes are guaranteed by certain of the Company’s existing and future domestic subsidiaries and any other subsidiaries that guarantee the existing senior credit facility or any of the Company’s other syndicated bank indebtedness or capital markets securities. The Company used the net proceeds from the offering to repurchase or otherwise redeem all of the amounts then outstanding under its 2016 Notes and to pay the related accrued interest, premiums, fees and expenses associated therewith. During the quarter ended June 30, 2016, the Company repurchased approximately $20 million of its 2020 Notes at an average price of approximately 86% of par. The Company recorded a gain on retirement of debt of approximately $2.6 million for the quarter ended June 30, 2016. As of December 31, 2016 and 2015, the Company had approximately $315.0 million and $335.0 million, respectively, of our 2020 Notes outstanding. During the year ended December 31, 2014, the Company capitalized approximately $4.5 million of costs associated with our 2020 Notes.

The indenture that governs the 2020 Notes contains 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.

TV One Senior Secured Notes

TV One issued $119.0 million in senior secured notes on February 25, 2011 (“TV One Notes”). The proceeds from the notes were used to purchase equity interests from certain financial investors and TV One management. The notes accrued interest at 10.0% per annum, which was payable monthly, and the entire principal amount was due on March 15, 2016. In connection with the closing of the financing transactions on April 17, 2015, the TV One Notes were repaid.

Comcast Note

The Company also has outstanding a senior unsecured promissory note in the aggregate principal amount of approximately $11.9 million due to Comcast (“Comcast Note”). The Comcast Note bears interest at 10.47%, is payable quarterly in arrears, and the entire principal amount is due on April 17, 2019.

Asset-Backed Credit Facility

On April 21, 2016, the Company entered into a senior credit agreement governing an asset-backed credit facility (the “ABL Facility”) among the Company, the lenders party thereto from time to time and Wells Fargo Bank National Association, as administrative agent (the “Administrative Agent”). The ABL Facility provides for $25 million in revolving loan borrowings in order to provide for the working capital needs and general corporate requirements of the Company. As of December 31, 2016, the Company did not have any borrowings outstanding on its ABL Facility.

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

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

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

The ABL Facility matures on the earlier to occur of: (a) the date that is five (5) years from the effective date of the ABL Facility and (b) the date that is thirty (30) days prior to the earlier to occur of (i) the "Term Loan Maturity Date" of the Company’s existing term loan, and (ii) the "Stated Maturity" of the Company’s existing notes. As of the effective date of the ABL Facility, the "Term Loan Maturity Date" is December 31, 2018, and the "Stated Maturity" is April 15, 2022.

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

The Company conducts a portion of its business through its subsidiaries. Certain of the Company’s subsidiaries have fully and unconditionally guaranteed the Company’s 2022 Notes, 2020 Notes and the Company’s obligations under the 2015 Credit Facility.

The 2022 Notes are the Company’s senior secured obligations and rank equal in right of payment with all of the Company’s and the guarantors’ existing and future senior indebtedness, including obligations under the 2015 Credit Facility and the Company’s 2020 Notes. The 2022 Notes and related guarantees are equally and ratably secured by the same collateral securing the 2015 Credit Facility and any other parity lien debt issued after the issue date of the 2022 Notes, including any additional notes issued under the Indenture, but are effectively subordinated to the Company’s and the guarantors’ secured indebtedness to the extent of the value of the collateral securing such indebtedness that does not also secure the 2022 Notes. Collateral includes substantially all of the Company’s and the guarantors’ current and future property and assets for accounts receivable, cash, deposit accounts, other bank accounts, securities accounts, inventory and related assets including the capital stock of each subsidiary guarantor. Finally, the Company also has the Comcast Note which is a general but senior unsecured obligation of the Company.

The following table summarizes the interest rates in effect with respect to our debt as of December 31, 2016:

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

Senior bank term debt, net of original issue discount (at variable rates)(1)	$	336.6		5.27	%
9.25% Senior Subordinated Notes, net of original issue discount and issuance costs (fixed rate)		312.7		9.25	%
7.375% Senior Secured Notes, net of original issue discount and issuance costs (fixed rate)		345.1		7.375	%
Comcast Note due April 2019 (fixed rate)		11.9		10.47	%

(1)	Subject to variable LIBOR plus a spread that is incorporated into the applicable interest rate set forth above.

The following table provides a comparison of our statements of cash flows for the years ended December 31, 2016 and 2015:

	2016			2015
	(In thousands)

Net cash flows provided by operating activities	$	48,249		$	41,752
Net cash flows used in investing activities		(42,164	)		(219,261	)
Net cash flows (used in) provided by financing activities		(26,680	)		177,104

Net cash flows provided by operating activities were approximately $48.2 million and $41.8 million for the years ended December 31, 2016 and 2015, respectively. Cash flow from operating activities for the year ended December 31, 2016, increased from the prior year primarily due to lower cash payments for content assets during the year ended December 31, 2016, compared to the same period in 2015.

Net cash flows used in investing activities were approximately $42.2 million and $219.3 million for the years ended December 31, 2016 and 2015, respectively. Capital expenditures, including digital tower and transmitter upgrades, and deposits for station equipment and purchases were approximately $5.2 million and $7.3 million for the years ended December 31, 2016 and 2015, respectively. Proceeds from sales of investment securities were approximately $3.5 million for the year ended December 31, 2015. Purchases of investment securities were $591,000 for the year ended December 31, 2015. During the year ended December 31, 2016, the Company paid approximately $35.0 million to complete its cost method investment in MGM. During the year ended December 31, 2015, the Company paid approximately $209.9 million to purchase the additional membership interest in TV One and paid approximately $5.0 million for the initial cost method investment in MGM.

Net cash flows used in financing activities were approximately $26.7 million for the year ended December 31, 2016, compared to net cash flows provided by financing activities of approximately $177.1 million for the year ended December 31, 2015. During the years ended December 31, 2016 and 2015, the Company repaid approximately $3.5 million and $370.3 million respectively, in outstanding debt. In addition, during the year ended December 31, 2015, the Company repaid approximately $119.0 million in TV One Notes. During the year ended December 31, 2015, we borrowed approximately $350.0 million in 2022 Notes and approximately $350.0 million in our new 2015 Credit Facility. During the year ended December 31, 2016 and 2015, respectively, we paid debt refinancing costs of $421,000 and approximately 23.5 million. During the years ended December 31, 2016 and 2015, we repurchased approximately $3.6 million and $1.4 million of our Class D Common Stock, respectively. TV One paid approximately $5.9 million in dividends to noncontrolling interest shareholders for the year ended December 31, 2015. Reach Media paid approximately $2.0 million in dividends to noncontrolling interest shareholders for each of the years ended December 31, 2016 and 2015. During the year ended December 31, 2015, the Company paid a net premium of $827,000 associated with the call premium to refinance the credit facility.

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.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”), which supersedes the revenue recognition requirements in ASC 605, “Revenue Recognition” and most industry-specific guidance throughout the codification. The standard requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. On July 9, 2015, the FASB voted and approved a deferral of the effective date of ASU 2014-09 by one year. As a result, ASU 2014-09 will be effective for fiscal years beginning after December 15, 2017, with early adoption permitted, but not prior to the original effective date of annual periods beginning after December 15, 2016. The Company has not yet completed its assessment of the impact of the new standard, including possible transition alternatives, on its consolidated financial statements. In March 2016, the FASB issued ASU 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net)” (“ASU 2016-08”). The amendments in ASU 2016-08 clarify the implementation guidance on principal versus agent considerations. ASU 2016-08 is effective for the Company for annual and interim reporting periods beginning July 1, 2018. The Company is currently evaluating the impact ASU 2016-08 will have on its consolidated financial statements. In April 2016, the FASB issued ASU 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing” (“ASU 2016-10”). ASU 2016-10 clarifies the implementation guidance on identifying performance obligations. In May 2016, the FASB issued ASU 2016-11, “Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815): Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting” (“ASU 2016-11”) and ASU 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients” (“ASU 2016-12”). ASU 2016-11 and ASU 2016-12 provide additional clarification and implementation guidance on the previously issued ASU 2014-09. In December 2016, the FASB issued ASU 2016-20, “Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers” (“ASU 2016-20”) which affects thirteen narrow aspects of the guidance. The Company is currently evaluating the impact ASU 2016-10, ASU 2016-11, ASU 2016-12 and ASU 2016-20 will have on its consolidated financial statements. At this time, the Company continues to assess and determine data and process requirements necessary to quantify the impacts of this standard as well as to develop and provide the enhanced disclosures required by the new guidance.

In August 2014, the FASB issued ASU 2014-15, “Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern” (“ASU 2014-15”) which requires the Company to assess its ability to continue as a going concern each interim and annual reporting period and provide certain disclosures if there is substantial doubt about our ability to continue as a going concern. The Company adopted ASU 2014-15 during the fourth quarter of 2016 and the standard did not have an impact on our consolidated financial statements.

In April 2015, the FASB issued ASU 2015-03, “Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs” (“ASU 2015-03”). ASU 2015-03 aims to simplify the presentation of debt issuance costs by requiring debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. Prior to ASU 2015-03, debt issuance costs were presented as a deferred charge under GAAP. ASU 2015-03 is effective for fiscal years beginning after December 15, 2015, and is to be applied retrospectively, with early adoption permitted. The Company early adopted ASU 2015-03 during the year ended December 31, 2015, resulting in approximately $7.4 million of net debt issuance costs presented as a direct reduction to the Company's long-term debt in the consolidated balance sheet as of December 31, 2015. In August 2015, the FASB issued ASU 2015-15, “Interest - Imputation of Interest: Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements” (“ASU 2015-15”), which allows companies to continue to defer and present debt issuance costs as an asset that is amortized ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. The Company adopted ASU 2015-15 on January 1, 2016, and capitalized $421,000 of debt issuance costs for the year ended December 31, 2016, associated with its new line of credit arrangement.

In November 2015, the FASB issued ASU 2015-17, “Balance Sheet Classification of Deferred Taxes” (“ASU 2015-17”), which simplifies the presentation of deferred income taxes by requiring deferred tax assets and liabilities to be classified as noncurrent in the consolidated balance sheet. ASU 2015-17 is effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted and may be applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented. The Company early adopted ASU 2015-17 in the fourth quarter of 2015 on a retroactive basis and included the current portion of deferred tax liabilities within the noncurrent portion of deferred tax liabilities within our consolidated balance sheets. However, the Company did not adjust our prior period consolidated balance sheet as a result of the adoption of this ASU as the impact was immaterial.

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)” (“ASU 2016-02”), which is a new lease standard that amends lease accounting. ASU 2016-02 will require lessees to recognize a lease asset and lease liability for leases classified as operating leases. ASU 2016-02 is effective for annual periods beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The Company has not yet completed its assessment of the impact of the new standard on its consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09, “Compensation - Stock Compensation (Topic 718)” (“ASU 2016-09”), which relates to the accounting for employee share-based payments. This standard provides updated guidance for the accounting for certain aspects of share-based payment awards to employees, including the accounting for income taxes, forfeitures, statutory tax withholding requirements and the classification on the statement of cash flows. This standard will be effective for interim and annual reporting periods after December 15, 2016, including interim periods within those fiscal years, with early adoption permitted. As early adoption is permitted, the Company adopted ASU 2016-09 during the fourth quarter of 2016. Under ASU 2016-09, the Company classifies the excess income tax benefits from stock-based compensation arrangements within income tax expense, rather than recognizing such excess income tax benefits in additional paid-in capital. In addition, when the Company withholds shares to satisfy income tax withholding obligations, the payment is classified as a financing activity on the statement of cash flows. The Company continues to estimate the number of stock-based awards expected to vest, as permitted by ASU 2016- 09, rather than electing to account for forfeitures as they occur.

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). ASU 2016-13 is intended to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. This standard will be effective for interim and annual reporting periods after December 15, 2019, including interim periods within those fiscal years, with early adoption permitted for annual periods after December 15, 2018. The Company has not yet completed its assessment of the impact of the new standard on its consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (A Consensus of the Emerging Issues Task Force)” (“ASU 2016-15”). ASU 2016-15 is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. This standard will be effective for interim and annual reporting periods after December 15, 2017, including interim periods within those fiscal years, with early adoption permitted. The Company has not yet completed its assessment of the impact of the new standard on its consolidated financial statements.

In November 2016, the FASB issued ASU 2016-18, “Restricted Cash” (“ASU 2016-18”). ASU 2016-18 is intended to add and clarify guidance on the classification and presentation of restricted cash in the statement of cash flows. This standard will be effective for interim and annual reporting periods after December 15, 2017, including interim periods within those fiscal years, with early adoption permitted. The Company early adopted the provisions of ASU 2016-18 during the fourth quarter of 2016. The adoption of the guidance did not have impact on prior reporting periods.

In January 2017, the FASB issued ASU 2017-04, “Intangibles – Goodwill and Other (Topic 350) - Simplifying the Test for Goodwill Impairment” (“ASU 2017-04”). ASU 2017-04 is intended to simplify the accounting for goodwill impairment. The guidance removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. This standard will be effective for interim and annual goodwill impairment tests after December 15, 2019, with early adoption permitted on testing dates after January 1, 2017. The Company has not yet completed its assessment of the impact of the new standard on its consolidated financial statements.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our accounting policies are described in Note 1 of our consolidated financial statements – Organization and Summary of Significant Accounting Policies . We prepare our consolidated financial statements in conformity with GAAP, 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. We consider the following policies and estimates 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.

Stock-Based Compensation

The Company accounts for stock-based compensation for stock options and restricted stock grants in accordance with ASC 718, “Compensation - Stock Compensation.” Under the provisions of ASC 718, stock-based compensation cost for stock options is estimated at the grant date based on the award’s fair value as calculated by the Black-Scholes valuation option-pricing model (“BSM”) and is recognized as expense, less estimated forfeitures, 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. Compensation expense for restricted stock grants is measured based on the fair value on the date of grant less estimated forfeitures. Compensation expense for restricted stock grants is recognized ratably during the vesting period.

Goodwill and Radio Broadcasting Licenses

Impairment Testing

We have made several acquisitions in the past for which a significant portion of the purchase price was allocated to radio broadcasting licenses and goodwill. Goodwill exists whenever the purchase price exceeds the fair value of tangible and identifiable intangible net assets acquired in business combinations. As of December 31, 2016, we had approximately $643.4 million in broadcast licenses and $258.3 million in goodwill, which totaled $901.7 million, and represented approximately 66.4% 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. For the years ended December 31, 2016, 2015 and 2014, we recorded impairment charges against radio broadcasting licenses and goodwill, collectively, of approximately $1.3 million, $41.2 million and $0, respectively. Significant impairment charges have been an on-going trend experienced by media companies in general, and are not unique to us.

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

Valuation of Broadcasting Licenses

We utilize the services of a third-party valuation firm to assist us in estimating the fair value of our radio broadcasting licenses and reporting units. 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. We use the income approach to test for impairment of radio broadcasting licenses. 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 cluster of radio stations into one of our 15 geographical markets. Broadcasting license fair values are based on the 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) estimated 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.

Valuation of Goodwill

The impairment testing of goodwill is performed at the reporting unit level. We had 18 reporting units as of our October 2016 annual impairment assessment, consisting of each of the 15 radio markets within the radio division and each of the other three business divisions. In testing for the impairment of goodwill, 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 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 use a 5-year model for our Reach Media reporting unit. We evaluate all events and circumstances on an interim basis to determine if a two-step process is required. 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 to attribute 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.

As part of our annual testing, when arriving at the estimated fair values for radio broadcasting licenses and goodwill, we also performed an analysis by comparing our overall average implied multiple based on our cash flow projections and fair values to recently completed sales transactions, and by comparing our fair value estimates to the market capitalization of the Company. The results of these comparisons confirmed that the fair value estimates resulting from our annual assessment for 2016 were reasonable.

Below are some of the key assumptions used in the income approach model for estimating the broadcasting license and goodwill fair values for the annual impairment testing performed and interim impairment testing performed where an impairment charge was recorded since October 2014.

Radio Broadcasting	October 1,			October 1,			October 1,
Licenses	2016			2015			2014

Impairment charge (in millions)	$	1.3		$	23.6		$	—

Discount Rate		9.0	%		9.5	%		9.5	%
Year 1 Market Revenue Growth Rate Range		1.0% – 2.4	%		0.7% – 2.2	%		0.3% – 1.0	%
Long-term Market Revenue Growth Rate Range (Years 6 – 10)		0.5% – 1.5	%		0.5% – 1.5	%		1.0% – 2.0	%
Mature Market Share Range		6.9% – 25.8	%		7.0% – 25.8	%		6.9% – 25.2	%
Mature Operating Profit Margin Range		30.5% – 51.8	%		30.5% – 50.4	%		30.0% – 48.4	%

Goodwill (Radio Market	October 1,			October 1,			October 1,
Reporting Units)	2016 (a)			2015 (a)			2014 (a)

Impairment charge (in millions)	$	—		$	3.1		$	—

Discount Rate		9.0	%		9.5	%		9.5	%
Year 1 Market Revenue Growth Rate Range		(9.4)% – 29.4	%		(9.0)% – 23.3	%		0.3% – 1.0	%
Long-term Market Revenue Growth Rate Range (Years 6 – 10)		0.5% – 1.5	%		0.5% – 1.5	%		1.0% - 2.0	%
Mature Market Share Range		8.1% - 18.4	%		8.0% - 19.1	%		7.2% - 19.5	%
Mature Operating Profit Margin Range		26.3% - 53.8	%		25.6% - 53.3	%		26.4% - 52.2	%

(a)	Reflects the key assumptions for testing only those radio markets with remaining goodwill.

Below are some of the key assumptions used in the income approach model for estimating the fair value for Reach Media for the annual assessments since October 2014. 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 assets that are highly dependent on the on-air personality Tom Joyner. As a result of our interim, annual and year-end assessments, the Company concluded that goodwill was not impaired.

	October 1,			October 1,			October 1,
Reach Media Segment Goodwill	2016			2015			2014

Impairment charge (in millions)	$	—		$	—		$	—

Discount Rate		10.5	%		11.5	%		12.0	%
Year 1 Revenue Growth Rate		(0.3	)%		(0.6	)%		1.5	%
Long-term Revenue Growth Rate (Year 5)		1.0	%		1.5	%		1.9	%
Operating Profit Margin Range		15.1% – 17.5	%		14.0% – 15.7	%		10.0% – 14.9	%

Below are some of the key assumptions used in the income approach model for determining the fair value of our internet reporting unit since October 2014. When compared to discount rates for the radio reporting units, the higher discount rate used to value the reporting unit is reflective of discount rates applicable to internet media businesses. During the third and fourth quarters of 2015, the Company performed interim impairment testing on the valuation of goodwill associated with Interactive One. Interactive One’s net revenues and cash flows declined and internal projections were revised downward, which we deemed to be impairment indicators. The Company reduced its operating cash flow projections and assumptions from the prior year based on Interactive One’s actual results which did not meet budget. As a result of our interim assessment for the third quarter of 2015, the Company recorded a goodwill impairment charge of approximately $14.5 million. As a result of the testing performed during the fourth quarter of 2015, the Company concluded that no further impairment to the carrying value of goodwill had occurred. The net revenue, cash flow projections and internal projections have been revised for the October 1, 2016 annual testing due to a new, more centralized management of its internet segment. Effective January 1, 2017, the Company will be changing its reportable segment disclosures to better reflect our operating strategy. The Company has projected increased investment in the initial years of this new strategy, which will result in losses in the short-term. However, even with these additional costs and projected losses in the early years of the new strategy, the Company concluded no impairment to the carrying value of goodwill had occurred as a result of the annual testing performed in 2016.

	October 1,			October 1,			September 30,			October 1,
Internet Segment Goodwill	2016			2015			2015			2014

Impairment charge (in millions)	$	—		$	—		$	14.5		$	—

Discount Rate		12.5	%		14.0	%		14.0	%		13.5	%
Year 1 Revenue Growth Rate		9.8	%		5.3	%		5.3	%		11.8	%
Long-term Revenue Growth Rate (Years 6 – 10)		3.0% - 8.4	%		2.6% - 4.4	%		2.6% - 4.4	%		2.7% - 6.5	%
Operating Profit Margin Range		(9.8)% - 20.3	%		4.5% - 23.9	%		4.5% - 23.9	%		9.1% - 25.6	%

Below are some of the key assumptions used in the income approach model for determining the fair value of our cable television segment since October 2014. As a result of the testing performed in 2016, 2015 and 2014, the Company concluded no impairment to the carrying value of goodwill had occurred.

	October 1,			October 1,			October 1,
Cable Television Segment Goodwill	2016			2015			2014

Impairment charge (in millions)	$	—		$	—		$	—

Discount Rate		11.0	%		10.8	%		10.4	%
Year 1 Revenue Growth Rate		7.4	%		7.1	%		11.5	%
Long-term Revenue Growth Rate Range (Years 6 – 10)		2.3% - 2.9	%		2.7% - 4.2	%		2.7% - 4.7	%
Operating Profit Margin Range		40.2% - 44.3	%		37.6% - 38.7	%		29.8% - 36.1	%

The above four goodwill tables reflect some of the key valuation assumptions used for 12 of our 18 reporting units. The other six remaining reporting units had no goodwill carrying value balances as of December 31, 2016.

In arriving at the estimated fair values for radio broadcasting licenses and goodwill, we also performed an analysis by comparing our overall average implied multiple based on our cash flow projections and fair values to recently completed sales transactions, and by comparing our fair value estimates to the market capitalization of the Company. The results of these comparisons confirmed that the fair value estimates resulting from our annual assessment for 2016 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 continued 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 current and past impairment charges, any future impairment charges will not impact our cash needs or liquidity or our bank ratio covenant compliance.

We had a total goodwill carrying value of approximately $258.3 million across 12 of our 18 reporting units as of December 31, 2016. 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 five of the reporting units, given the significant excess of their fair value over carrying value, 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 a Step 2 Test (a)
	2	1.5%	Impairment not likely
	6	0.5%	Impairment not likely
	10	1.5%	Impairment not likely
	16	1.5%	Impairment not likely
	21	2.5%	Impairment not likely
	1	1.5%	1.0%
	18	2.5%	(1.6)%
	4	1.5%	(4.3)%
	12	1.0%	(4.5)%
	11	1.0%	(5.0)%
	13	1.5%	(9.8)%
	19	1.0%	(21.0)%

(a)	The long-term cash flow growth/(decline) rate that would result in failing Step 1 of the goodwill impairment test 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 limited or no excess of fair values over their respective carrying values. As set forth in the table below, as of October 1, 2016, we appraised the radio broadcasting licenses at a fair value of approximately $813.4 million, which was in excess of the $643.4 million carrying value by $169.9 million, or 26.4%. After the impairment charges were recorded for the year ended December 31, 2016, the fair values of the licenses exceeded or equaled the carrying values of the licenses for all units of accounting. 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.

	Radio Broadcasting Licenses
	As of
	October 1, 2016		October 1, 2016		Excess
Unit of Accounting (a)	Carrying Values ("CV")		Fair Values ("FV")		FV vs. CV		% FV Over CV
	(In thousands)
Unit of Accounting 2	$	3,086	$	57,607	$	54,521		1,766.7	%
Unit of Accounting 7		16,081		16,081		—		—	%
Unit of Accounting 5		16,100		17,550		1,450		9.0	%
Unit of Accounting 4		16,142		20,719		4,577		28.4	%
Unit of Accounting 14		20,434		23,485		3,051		14.9	%
Unit of Accounting 15		20,736		22,848		2,112		10.2	%
Unit of Accounting 11		21,135		24,396		3,261		15.4	%
Unit of Accounting 6		22,642		27,834		5,192		22.9	%
Unit of Accounting 9		34,270		40,027		5,757		16.8	%
Unit of Accounting 13		47,846		52,879		5,033		10.5	%
Unit of Accounting 12		49,663		52,420		2,757		5.6	%
Unit of Accounting 16		52,965		97,344		44,379		83.8	%
Unit of Accounting 8		62,015		69,282		7,267		11.7	%
Unit of Accounting 1		93,394		114,196		20,802		22.3	%
Unit of Accounting 10		166,940		176,691		9,751		5.8	%
Total	$	643,449	$	813,359	$	169,910		26.4	%

(a)	The units of accounting are not disclosed on a specific market basis so as to not make publicly available sensitive information that could be competitively harmful to the Company.

The following table presents a sensitivity analysis showing the impact on our impairment testing resulting from: (i) a 100 basis point decrease in industry or reporting unit growth rates; (ii) a 100 basis point decrease in cash flow margins; (iii) a 100 basis point increase in the discount rate; and (iv) both a 5% and 10% reduction in the fair values of broadcasting licenses and reporting units.

	Hypothetical Increase in the Recorded Impairment Charge For the Year Ended December 31, 2016
	Broadcasting Licenses		Goodwill (a)
	(In millions)

Impairment charge recorded:
Radio Market Reporting Units	$	1.3	$	-
Radio Syndication Reporting Unit		-		-
Cable Television Reporting Unit		-		-
Internet Reporting Unit		-		-
Total Impairment Recorded	$	1.3	$	-

Hypothetical Change for Radio Market Reporting Units:
A 100 basis point decrease in radio industry long-term growth rates	$	10.5	$	3.0
A 100 basis point decrease in cash flow margin in the projection period	$	0.6	$	-
A 100 basis point increase in the applicable discount rate	$	30.5	$	9.0
A 5% reduction in the fair value of broadcasting licenses and reporting units	$	0.8	$	0.4
A 10% reduction in the fair value of broadcasting licenses and reporting units	$	12.7	$	6.2

Hypothetical Change for Reach Media Reporting Unit:
A 100 basis point decrease in long-term growth rates		Not applicable	$	-
A 100 basis point decrease in cash flow margin in the projection period		Not applicable	$	-
A 100 basis point increase in the applicable discount rate		Not applicable	$	-
A 5% reduction in the fair value of the reporting unit		Not applicable	$	-
A 10% reduction in the fair value of the reporting unit		Not applicable	$	-

Hypothetical Change for Cable Television Reporting Unit:
A 100 basis point decrease in long-term growth rates		Not applicable	$	-
A 100 basis point decrease in cash flow margin in the projection period		Not applicable	$	-
A 100 basis point increase in the applicable discount rate		Not applicable	$	-
A 5% reduction in the fair value of the reporting unit		Not applicable	$	-
A 10% reduction in the fair value of the reporting unit		Not applicable	$	-

Hypothetical Change for Internet Reporting Unit:
A 100 basis point decrease in long-term growth rates		Not applicable	$	-
A 100 basis point decrease in cash flow margin in the projection period		Not applicable	$	-
A 100 basis point increase in the applicable discount rate		Not applicable	$	-
A 5% reduction in the fair value of the reporting unit		Not applicable	$	-
A 10% reduction in the fair value of the reporting unit		Not applicable	$	-

(a)

Could require the Company to perform a Step 2 impairment analysis if these hypothetical changes would result in a failure of the Step 1 goodwill impairment test. Goodwill impairment charge applies only to further goodwill impairment and not to any potential license impairment that could result from changing other assumptions.

Impairment of Intangible Assets Excluding Goodwill, Radio Broadcasting Licenses and Other Indefinite-Lived Intangible Assets

Intangible assets, excluding goodwill, radio broadcasting licenses and other indefinite-lived intangible assets, 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 asset or group of assets to future discounted net cash flows expected to be generated by the asset or group of 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. The Company reviewed certain intangibles for impairment during 2016 and 2015 and determined no impairment charges were necessary. Any changes in the valuation estimates and assumptions or changes in certain events or circumstances could result in changes to the estimated fair values of these intangible assets and may result in future write-downs to the carrying values.

Revenue Recognition

Within our radio broadcasting and Reach Media segments, 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.

Interactive One generates the majority of the Company’s internet revenue, and derives such revenue from advertising services on non-radio station branded but Company-owned websites. Advertising services include the sale of banner and sponsorship advertisements. Advertising revenue is recognized either as impressions (the number of times advertisements appear in viewed pages) are delivered, when “click through” purchases are made, or ratably over the contract period, where applicable. In addition, Interactive One derives revenue from its studio operations, in which it provides third-party clients with publishing services including digital platforms and related expertise. In the case of the studio operations, revenue is recognized primarily through fixed contractual monthly fees and/or as a share of the third party’s reported revenue.

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 derives revenue from affiliate fees under the terms of various affiliation agreements based on a per subscriber fee multiplied by the most recent subscriber counts reported by the applicable affiliate.

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.

Uncertain Tax Positions

To address the exposures of uncertain tax positions, we recognize 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 December 31, 2016, 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 Assets

The Company maintains a full valuation allowance for its deferred tax assets (“DTAs”), primarily attributable to net operating losses (“NOLs”), as we determined that it is more likely than not that the DTAs will not be realized. The Company reached this determination based on its cumulative loss position and the uncertainty of future taxable income. Consistent with such 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 on certain indefinite-lived intangibles for the years ended December 31, 2016, 2015 and 2014.

Redeemable noncontrolling interests

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

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 December 31, 2016 and 2015, was approximately $12.4 million and $11.3 million, respectively. 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.

Fair Value Measurements

The Company accounts for an award called for in the CEO’s employment agreement (the “Employment Agreement”) as a derivative instrument. According to the Employment Agreement, executed in April 2008, the CEO is eligible to receive an award (the “Employment Agreement Award”) amount equal to approximately 4% of any proceeds from distributions or other liquidity events in excess of the return of the Company’s aggregate investment in TV One. The Company’s obligation to pay the award was triggered after the Company’s recovery of the aggregate amount of our pre-Comcast Buyout capital contribution in TV One, and payment is required only upon actual receipt of distributions of cash or marketable securities or proceeds from a liquidity event with respect to such invested amount. The CEO was fully vested in the award upon execution of the Employment Agreement, and the award lapses if the CEO voluntarily leaves the Company or is terminated for cause. The Compensation Committee of the Board of Directors of the Company approved terms for a new employment agreement with the CEO, including a renewal of the Employment Agreement Award upon similar terms as in the prior Employment Agreement. While a new employment agreement has not been executed as of the date of this report, the CEO is being compensated according to the new terms approved by the Compensation Committee.

The Company estimated the fair value of the Employment Agreement Award as of December 31, 2016, at approximately $27.0 million and, accordingly, recorded compensation expense and a liability for that amount. The fair value estimate 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.

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 ten years. Contract payments are made in installments over terms that are generally shorter than the contract period. Each contract is recorded as an asset and a liability at an amount equal to its gross contractual commitment when the license period begins and the program is available for its first airing. Acquired content is generally amortized on a straight-line method over the term of the license which reflects the estimated usage. For certain content for which the pattern of usage is accelerated, amortization is based upon the actual usage.

The Company also has programming for which the Company has engaged third parties to develop and produce, and it owns most or all rights (commissioned programming). Content amortization expense for each period is recognized based on the revenue forecast model, which approximates the proportion that estimated advertising and affiliate revenues for the current period represent in relation to the estimated remaining total lifetime revenues.

Acquired program rights are recorded at the lower of unamortized cost or estimated net realizable value. Estimated net realizable values are based on the estimated revenues associated with the program materials and related expenses. All produced and licensed content is classified as a long-term asset, except for the portion of the unamortized content balance that will be amortized within one year which is classified as a current asset.

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

Capital and Commercial Commitments

Indebtedness

We have several debt instruments outstanding within our corporate structure. We incurred senior bank debt as part of our 2015 Credit Facility in the amount of $350.0 that matures on December 31, 2018. We also have $315.0 million outstanding in our 2020 Notes and $350.0 million outstanding in our 2022 Notes. Finally, we also have outstanding our senior unsecured promissory note in the aggregate principal amount of approximately $11.9 million under the Comcast Note. See “Liquidity and Capital Resources.”

Lease obligations

We have non-cancelable operating leases for office space, studio space, broadcast towers and transmitter facilities that expire over the next 15 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 nine years.

Royalty Agreements

The Company has historically entered into fixed and variable fee music license agreements with performance rights organizations including the Society of European Stage Authors and Composers (“SESAC”), American Society of Composers, Authors and Publishers (“ASCAP”) and Broadcast Music, Inc. (“BMI”). Our ASCAP and BMI licenses expired December 31, 2016. The expirations were an industry wide issue. The Company has authorized the Radio Music License Committee (the “RMLC”) to negotiate on its behalf with respect to its licenses with SESAC, ASCAP and BMI including the ASCAP and BMI licenses that expired December 31, 2016. The RMLC negotiated a new 5 year agreement with ASCAP with a license term of January 1, 2017 through December 31, 2021. Negotiations continue with respect to BMI and all broadcasters that have authorized the RMLC to act on their behalf in negotiations with BMI can continue to play BMI compositions after December 31, 2016, because the RMLC has submitted a license application to BMI on their behalf and applicants are licensed upon application under a prior consent decree. The RMLC is in preparation for a binding rate arbitration with SESAC. This arbitration is expected to be completed by the end of the first calendar quarter of 2017 and the rate decision will have retroactive application to January 1, 2016. In the interim, we continue payments to SESAC at the existing 2015 rates, and SESAC may not increase our fees for any reason prior to the rate arbitration decision being issued. In connection with all performance rights organization agreements, including SESAC, ASCAP and BMI, the Company incurred expenses of approximately $8.7 million, $10.3 million and $9.2 million during the years ended December 31, 2016, 2015 and 2014, respectively. Finally, in 2016, a new performance rights organization, Global Music Rights (“GMR”), formed, but the scope of its repertory is not clear and it is not clear that it licenses compositions that have not already been licensed by the other performance rights organizations. To ensure licensing compliance in 2017, we have entered into a temporary license with GMR while the RMLC continues to pursue an agreement for a long term licensing solution.

Reach Media Noncontrolling Interest Shareholders’ Put Rights

Beginning on January 1, 2018, 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 (the “Put Right”). Beginning in 2018, this annual right is exercisable for a 30-day period beginning January 1 of each year. The purchase price for such shares may be paid in cash and/or registered Class D common stock of Radio One, at the discretion of Radio One.

Contractual Obligations Schedule

The following table represents our scheduled contractual obligations as of December 31, 2016:

	Payments Due by Period
Contractual Obligations	2017		2018		2019		2020		2021		2022 and Beyond		Total
	(In thousands)
9.25% Senior Subordinated Notes(1)	$	29,138	$	29,138	$	29,138	$	318,238	$	—	$	—	$	405,652
7.375% Senior Subordinated Notes(1)		25,813		25,813		25,813		25,813		25,813		357,529		486,594
Credit facilities(2)		21,944		359,507		—		—		—		—		381,451
Other operating contracts/agreements(3)		73,419		23,472		20,229		17,308		15,462		69,117		219,007
Operating lease obligations		10,173		10,380		9,626		8,975		7,548		25,043		71,745
Comcast Note		1,243		1,243		12,086		---		—		—		14,572
Total	$	161,730	$	449,553	$	96,892	$	370,334	$	48,823	$	451,689	$	1,579,021

(1)	Includes interest obligations based on effective interest rates on senior subordinated and secured notes outstanding as of December 31, 2016.

(2)	Includes interest obligations based on effective interest rate and projected interest expense on credit facilities outstanding as of December 31, 2016.

(3)	Includes employment contracts (including the Employment Agreement Award), 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.

Off-Balance Sheet Arrangements

On February 24, 2015, the Company entered into a letter of credit reimbursement and security agreement. As of December 31, 2016, the Company had letters of credit totaling $815,000 under the agreement. Letters of credit issued under the agreement are required to be collateralized with cash.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

As of December 31, 2016, our exposure related to market risk had not changed materially since December 31, 2015.

The 2015 Credit Facility bears interest, at our option, on either (i) the then applicable base rate plus 3.5% (as defined in the 2015 Credit Facility) as, for any day, a rate per annum (rounded upward, if necessary, to the next 1/100th of 1%) equal to the greater of (a) the prime rate published in the Wall Street Journal, (b) a rate of 1/2 of 1% in excess rate of the overnight Federal Funds Rate at any given time, and (c) the one-month LIBOR rate commencing on such day plus 1.00%), or (ii) the then applicable LIBOR rate plus 4.5% (as defined in the 2015 Credit Facility). We are exposed to interest rate volatility with respect to this variable rate debt. If the borrowing rates under LIBOR were to increase two percentage points above the current rates at December 31, 2016, our interest expense on the term portion of the credit facility would increase approximately $6.9 million on an annual basis.

The determination of the estimated fair value of our fixed-rate debt is subject to the effects of interest rate risk. The estimated fair value of our 9.25% senior subordinated notes at December 31, 2016, was approximately $283.5 million, and the carrying amount was $315.0 million. The estimated fair value of our 7.375% senior secured notes at December 31, 2016, was approximately $344.8 million, and the carrying amount was $350.0 million. The estimated fair value of the Comcast Note approximates carrying value. The estimated fair value of our 9.25% senior subordinated notes at December 31, 2015, was approximately $258.0 million, and the carrying amount was $335.0 million. The estimated fair value of our 7.375% senior secured notes at December 31, 2015, was approximately $311.5 million, and the carrying amount was $350.0 million.

The effect of a hypothetical one percentage point decrease in expected current interest rate yield would be to increase the estimated fair value of our 9.25% senior subordinated notes from approximately $283.5 million to $314.1 million at December 31, 2016. The effect of a hypothetical one percentage point decrease in expected current interest rate yield would be to increase the estimated fair value of our 7.375% senior secured notes from approximately $344.8 million to $398.0 million at December 31, 2016.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The consolidated financial statements of Radio One required by this item are filed with this report on Pages F-1 to F-41.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

URBAN ONE, INC. - FORM 10-K - March 10, 2017

Attached files