Urban One says a ransomware attack that occurred last winter, crippling station systems for days, was a wakeup call for the company. It has spent the past several months not only clearing computers of malware remnants but also installing new technology and personnel to help secure it from another such attack in the future. “We have beefed up our capabilities,” CFO Peter Thompson said Thursday. That included the hiring last month of Tony Spinelli, an expert in analytics and cybersecurity, to manage all aspects of the company’s technology infrastructure as its new Chief Information Officer.
On a conference call with analysts, Thompson said they now know the attack that struck in late-February and early-March was a previously unseen “day zero” virus. Immediately after the attack, he said analysis and diagnostic work soon led to them to not only remove malware but also the cyber-protection systems that the company had in place. Thompson said they were “obviously insufficient” to catch the virus.
In the months since, Urban One has installed what Thompson described as “next generation detection and monitoring systems” with remediation efforts ongoing. “The remediation is going to continue through the first half of next year,” he told analysts.
Urban One has said the cyber-attack led to more than $1 million of losses for the company, including as much as $800,000 of expenses and up to a half million dollars of lost revenue. Thompson said they were able to recover more than $600,000 from their insurance company so the incident won’t have a significant impact on its finances.
“No company is safe from this,” said Thompson. “We’re constantly in an environment where people are trying to do bad things to us and a lot of corporate America. We’re just being vigilant and improving our capabilities.”
Up In Q3, But Pacing Down In Q4
Urban One reports its radio division revenue increased 1.1% during third quarter. But when the sale of urban AC “105.9 Kiss FM” WDMK Detroit to Beasley Broadcast Group is accounted for, same-station revenue was up a stronger 4.2%, according to CEO Alfred Liggins who told analysts he is “pretty happy” with how the radio division performed during the quarter. He also noted the $13.5 million station sale helped to reduce the company’s debt level.
National led the way during the third quarter. Urban One says national radio sales increased 4.3% while local ad sales declined 2.1%. The company recorded growth in ad categories such as retail, entertainment, financial, food and beverage, while automotive, health care, professional services and telecom were each flat compared to a year ago. Urban One’s best-performing radio markets during the third quarter included Atlanta, Baltimore, Charlotte, Raleigh, St. Louis, and Washington DC. Each posted revenue growth during the quarter. The Detroit and Indianapolis markets saw revenue declines during the quarter.
Reach Media, the company segment that includes the syndicated radio shows from Tom Joyner, Rickey Smiley, Russ Parr, and DL Hughley, saw its revenue increase marginally during the third quarter compared a year earlier. That was in large part from additional $1 million revenue brought in by the Tom Joyner One More Time Experience, a multi-city tour event. That helped to offset a drop in ad sales for the network.
Urban One reports overall third quarter revenue totaled $111.1 million during the quarter, an increase of 0.3% compared to a year ago. Net revenue for its digital segment decreased 6.6%, primarily due to decreases in direct revenues. Despite the drop in revenue, Liggins said the digital division made “big strides reducing and reengineering” their costs in recent months. He also said cable television advertising was “robust” in the quarter, up 7.8%.
Looking ahead, Urban One said radio is currently pacing behind last year. “Our radio stations are currently pacing down low-single digits in the fourth quarter, excluding political on a same-station basis,” said Thompson. Nevertheless the company told investors Thursday it still expects to hit its target of having earnings of $138 million to $140 million in 2019.
Focus On Debt Refi
As the year comes to a close, Liggins told investors he’s already got one big item on his list of things to do in 2020. “The company is super-focused on next year’s refi,” he said. Starting in April, Liggins said Urban One will begin focusing on refinancing about $700 million in debt that’s set to come due in April 2021.
“We’re looking at all scenarios for that refi, including a global refi of everything in our capital structure,” Liggins said. Urban One current has about $875 million in outstanding debt overall.