10-K 1 form10-k2009.htm RADIO ONE FORM 10-K DECEMBER 31, 2009 form10-k2009.htm

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-K
 
 R
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
   
 
For the fiscal year ended December 31, 2009
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.)

5900 Princess Garden Parkway
7th Floor
Lanham, Maryland 20706
(Address of principal executive offices)

Registrant’s telephone number, including area code
(301) 306-1111

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 R

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 R

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 R     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/A.  Yes £     No R

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 £           Non-accelerated filer R

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

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

Class
Outstanding at March 26, 2010
Class A Common Stock, $.001 par value
  2,980,641
Class B Common Stock, $.001 par value
  2,861,843
Class C Common Stock, $.001 par value
  3,121,048
Class D Common Stock, $.001 par value
45,531,353

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, 2009, was approximately $14.4 million. 

 
 

 
 
RADIO ONE, INC. AND SUBSIDIARIES

Form 10-K
For the Year Ended December 31, 2009

TABLE OF CONTENTS

     
Page
PART I
   
       
    Item 1.
Business                                                                                                                                   
   
1
    Item 1A.
Risk Factors                                                                                                                                   
   
11
    Item 1B.
Unresolved Staff Comments                                                                                                               
   
16
    Item 2.
Properties                                                                                                                                   
   
16
    Item 3.
Legal Proceedings                                                                                                                                   
   
16
    Item 4.
Submission of Matters to a Vote of Security Holders                                                                                 
   
17
       
PART II
     
       
    Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
   
18
    Item 6.
Selected Financial Data                                                                                                                                   
   
21
    Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
   
22
    Item 7A.
Quantitative and Qualitative Disclosure About Market Risk                                                                      
   
41
    Item 8.
Financial Statements and Supplementary Data                                                                                            
   
41
    Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
   
41
    Item 9A.
Controls and Procedures                                                                                                                                   
   
41
    Item 9B.
Other Information                                                                                                                                   
   
41
       
PART III
     
       
    Item 10.
Directors and Executive Officers of the Registrant                                                                                     
   
42
    Item 11.
Executive  Compensation                                                                                                                                   
   
42
    Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
   
42
    Item 13.
Certain Relationships and Related Transactions                                                                                           
   
42
    Item 14.
Principal Accounting Fees and Services                                                                                                      
   
42
       
PART IV
     
       
    Item 15.
Exhibits and Financial Statement Schedules                                                                                                   
   
42
       
SIGNATURES
   
44

 

 
 

 


CERTAIN DEFINITIONS

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

We use the term “local marketing agreement” (“LMA”) in various places in this report. An LMA 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, 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 “station operating income” is also used throughout this report.  “Station operating income” consists of net loss or income before depreciation and amortization, corporate expenses, stock-based compensation, equity in income or loss of affiliated company, income taxes, noncontrolling interest in income of subsidiaries, interest expense, impairment of long-lived assets, other income or expense, gain on retirement of debt, and income or loss from discontinued operations, net of tax. Station operating income is not a measure of financial performance under generally accepted accounting principles.  Nevertheless we believe station operating income is often a useful measure of a broadcasting company’s operating performance and is a significant basis used by our management to measure the operating performance of our radio stations within the various markets because station operating income provides helpful information about our results of operations apart from expenses associated with our physical plant, income taxes, investments, debt financings, gain on retirement of debt, corporate overhead, stock-based compensation, impairment of long-lived assets and income or losses from asset sales.  Station operating income is frequently used as one of the bases for comparing businesses in our industry, although our measure of station operating income may not be comparable to similarly titled measures of other companies. Station operating income does not purport to represent operating income or cash flow from operating activities, as those terms are defined under generally accepted accounting principles, and should not be considered as an alternative to those measurements as an indicator of our performance.

The term “station operating income margin” is also used throughout this report.  “Station operating income margin” consists of station operating income as a percentage of net revenue. Station operating income margin is not a measure of financial performance under generally accepted accounting principles. Nevertheless, we believe that station operating income margin is a useful measure of our performance because it provides helpful information about our profitability as a percentage of our net revenue.

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 Arbitron Inc. (“Arbitron”); 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 Financial Network, Inc. (“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:

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

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

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

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

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

 
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 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, particularly in light of the current economic environment;

 
increased competition from new media and technologies;

 
the impact of our acquisitions, dispositions and similar transactions;

 
our high degree of leverage and potential inability to refinance our debt given current market conditions; and

 
other factors mentioned in our filings with the Securities and Exchange Commission 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 is an urban-oriented, multi-media company that primarily targets African-American consumers. Our core business is our radio broadcasting franchise that is the largest broadcasting operation that primarily targets African-American and urban listeners. We currently own 53 broadcast stations located in 16 urban markets in the United States.  While our primary source of revenue is the sale of local and national advertising for broadcast on our radio stations, our operating strategy is to operate the premier multi-media entertainment and information content provider targeting African-American consumers.  Thus, we have diversified our revenue streams by making acquisitions and investments in other complementary media properties.   Our other media interests include our approximately 37% ownership interest in TV One, LLC (“TV One”), an African-American targeted cable television network that we invested in with an affiliate of Comcast Corporation and other investors; our 53.5% ownership interest in Reach Media, Inc. (“Reach Media”), which operates the Tom Joyner Morning Show; our ownership of Interactive One, LLC (“Interactive One”), an online platform serving the African-American community through social content, news, information, and entertainment, which operates a number of branded sites, including News One, UrbanDaily, HelloBeautiful; and our ownership of Community Connect, LLC (formerly Community Connect Inc.) (“CCI”), an online social networking company, which operates a number of branded websites, including BlackPlanet, MiGente and Asian Avenue.  Through our national multi-media presence, we provide advertisers with a unique and powerful delivery mechanism to the African-American audience.   

In December 2009, the Company ceased publication of Giant Magazine. The remaining assets and liabilities of this publication have been classified as discontinued operations as of December 31, 2009 and 2008, and the publication’s results of operations for the years ended December 31, 2009, 2008 and 2007, have been classified as discontinued operations in the accompanying consolidated financial statements.

As part of our consolidated financial statements, consistent with our financial reporting structure and how the Company currently manages its businesses, we have provided selected financial information on the Company’s two reportable segments: (i) Radio Broadcasting and (ii) Internet. (See Note 18– Segment Information of the audited consolidated financial statements.)

Acquisitions

In June 2008, the Company purchased the assets of WPRS-FM, a radio station located in the Washington, DC metropolitan area, for $38.0 million in cash.  From April 2007 and until closing, the station had been operated under an LMA, and the results of its operations were included in the Company’s consolidated financial statements.  The station was consolidated with the Company’s existing Washington, DC operations in April 2007.

In April 2008, the Company acquired CCI for $38.0 million in cash. CCI is an online social networking company operating branded websites including BlackPlanet, MiGente, and AsianAvenue.   
 
Dispositions
 
Between December 2006 and May 2008, the Company sold the assets of 20 radio stations in seven markets for approximately $287.9 million in cash. These dispositions were consistent with the Company’s strategic plan to divest itself of non-core radio assets.
 
Los Angeles Station:  In May 2008, the Company sold the assets of its radio station KRBV-FM, located in the Los Angeles metropolitan area, to Bonneville International Corporation (“Bonneville”) for approximately $137.5 million in cash. Bonneville began operating the station under an LMA on April 8, 2008.
 
Miami Station:  In April 2008, the Company sold the assets of its radio station WMCU-AM (formerly WTPS-AM), located in the Miami metropolitan area, to Salem Communications Holding Corporation (“Salem”) for approximately $12.3 million in cash.  Salem began operating the station under an LMA effective October 18, 2007.
 
Augusta Stations:  In December 2007, the Company sold the assets of its five radio stations in the Augusta metropolitan area to Perry Broadcasting Company for approximately $3.1 million in cash.
 
Louisville Station:  In November 2007, the Company sold the assets of its radio station WLRX-FM in the Louisville metropolitan area to WAY FM Media Group, Inc. for approximately $1.0 million in cash.
 
Dayton and Louisville Stations:  In September 2007, the Company sold the assets of its five radio stations in the Dayton metropolitan area and five of its six radio stations in the Louisville metropolitan area to Main Line Broadcasting, LLC for approximately $76.0 million in cash.
 
Minneapolis Station:  In August 2007, the Company sold the assets of its radio station KTTB-FM in the Minneapolis metropolitan area to Northern Lights Broadcasting, LLC for approximately $28.0 million in cash.
 
 
 
1

 
 
Our Stations and Markets

 The table below provides information about our radio stations and the markets in which we operated as of December 31, 2009.

   
Radio One
   
Market Data
 
         
Entire
Audience
Four Book
Average
(Ending
Fall 2009)
Audience
Share(a)
                   
                 
                             
                   
Ranking by Size
of African-
American
Population
Persons 12+(c)
       
                       
Estimated Fall 2009 Metro
 
             
Estimated 2008
Annual Radio
Revenue(b)
       
Population Persons 12+(c)
 
   
Number of Stations
                     
African-
American%
 
Market
 
FM
   
AM
               
Total
     
                     
($ millions)
         
(millions)
       
    Atlanta (1)
   
4
     
-
     
12.4
     
398.5
     
3
     
4.4
     
31.1
%
    Washington, DC (1)
   
3
     
2
     
11.5
     
365.1
     
4
     
4.3
     
26.5
%
    Philadelphia (1)
   
3
     
-
     
9.0
     
301.4
     
5
     
4.4
     
20.2
%
    Detroit (1)
   
2
     
1
     
6.2
     
225.3
     
6
     
3.8
     
21.9
%
    Houston (1)
   
3
     
-
     
15.8
     
383.8
     
8
     
4.8
     
16.9
%
    Dallas (1)
   
2
     
-
     
6.1
     
416.3
     
9
     
5.2
     
14.3
%
    Baltimore(2)
   
2
     
2
     
16.6
     
147.6
     
11
     
2.3
     
28.5
%
    St. Louis(2)
   
2
     
-
     
8.7
     
139.7
     
14
     
2.3
     
18.2
%
    Charlotte(3)
   
2
     
-
     
5.4
     
114.5
     
15
     
2.0
     
20.9
%
    Cleveland(4)
   
2
     
2
     
14.1
     
108.4
     
18
     
1.8
     
19.1
%
    Richmond(3)
   
4
     
1
     
21.8
     
60.9
     
20
     
.9
     
29.5
%
    Raleigh-Durham(3)
   
4
     
-
     
18.2
     
84.8
     
19
     
1.3
     
21.6
%
    Boston (5)
   
-
     
1
     
-
     
310.5
     
21
     
4.0
     
6.6
%
    Cincinnati(4)
   
2
     
1
     
9.7
     
123.1
     
28
     
1.8
     
12.3
%
    Columbus(3)
   
3
     
-
     
14.2
     
102.9
     
29
     
1.5
     
14.4
%
    Indianapolis(3)(6)
   
3
     
1
     
18.4
     
93.6
     
31
     
1.4
     
14.8
%
                                                         
    Total
   
41
     
11
                                         
 
(1)
 
(2)
 
(3)
 
(4)
 
(5)
 
(6)
 The four book average and rank is measured using the Portable People MeterTM (“PPMTM”) methodology.
 
The four book average is measured using a two book diary and a two book (six months) PPMTM average.  The four book rank is based on the two book PPMTM average.
 
The four book average and rank is measured using the four book diary average.
 
The four book average is measured using a three book diary and a one book (three months) PPMTM average.  The four book rank is based on the three book diary average.
 
We do not subscribe to Arbitron for our Boston market.
 
 WDNI-CD (formerly WDNI-LP), the low power television station that we acquired in Indianapolis in June 2000, is not included in this table.

(a)
Audience share data are for the 12+ demographic and derived from the Arbitron Survey four book averages ending with the Fall 2009 Arbitron Survey.
   
(b)
2008 estimated annual radio revenues are from BIA Financials Investing in Radio Market Report, 2008 Yearbook. The BIA Financials Investing in Radio Market Report, 2009 Yearbook which would include the 2009 estimated annual radio revenues was not available at the date this Form 10-K was filed.
   
(c)
Population estimates are from the Arbitron Radio Market Report, Fall 2009.
 



 
2

 

The African-American Market Opportunity
 
We believe that urban-oriented media primarily targeting African-Americans continues as an attractive opportunity for the following reasons:
 
Relative Outperformance versus General Market.  Within our core radio business, based on reports prepared by Miller Kaplan, the total market revenue for 2009 in the markets within which we operate declined 18.2% while our revenues within these markets declined by 16.7%.  In addition, our market share within the markets in which we operate increased from 9.9% as of December 31, 2008 to 10.1% as of December 31, 2009.  We attribute this outperformance to the unique multi-media platform we operate specifically targeting the African-American population and urban listeners. Based upon population growth trends, geographic concentration among the African-American population, income growth and the significant influence of African-American culture, we believe that targeting African-Americans through advertising continues to be an attractive opportunity.  In addition, the growth in internet usage among African-Americans contrasted with the limited online content targeting the African-American and urban consumer populations represents a market opportunity that has yet to mature.
 
Rapid African-American Population Growth.  From 2000 to 2007, the African-American population grew 9.4%, compared to a 6.9% overall population growth rate, and accounted for 13.5% of total population growth by 2008. The African-American population is expected to grow to approximately 40.0 million by the end of 2010, a 9.9% increase from 2000, compared to an expected increase during the same period of 6.0% for the non-African-American U.S. population. African-Americans are expected to make up 17.9% of total population growth during the period from 2005 through 2010. (Source: U.S. Census Bureau, 2004, “U.S. Interim Projections by Age, Sex, Race, and Hispanic Origin.”) According to the U.S. Census, the average African-American population is nearly five years younger than the total U.S. population average. As a result, urban formats, in general, tend to skew younger than formats targeted to the general market population.  By 2013, the African-American population will represent almost 14% of the total U.S. population.  The African-American consumer market represents an attractive customer segment in many states.
 
High African-American Geographic Concentration.  An analysis of the African-American population shows a high degree of geographic concentration.  A recent study shows that while the most populous five U.S. markets are home to 21.0% of the overall U.S. population, 27.0% of the African-American population resides in those same markets.  Expanding the analysis to the most populous 20 U.S. markets, 45.0% of the overall U.S. population resides within these markets, with 57% of the African-American population residing within them. (Source: “Markets Within Markets,” Cable Advertising Bureau (“CAB”) Race, Relevance and Revenue, June 2007).  The practical implication of these findings is that a multi-media strategy within these pockets of geographic concentration can have a much more meaningful reach towards the African-American population than non-African-American U.S. populations.
 
Higher African-American Income Growth.  The economic status of African-Americans improved at an above-average rate over the past two decades. The per capita income of African-Americans is expected to increase 21.1% between 2005 and 2010 (Source: U.S. Census Bureau, Historical Income Data). African-American buying power was estimated at $913 billion in 2008, up from $590 billion in 2000.  African-American buying power is expected to increase to $1.2 trillion by 2013, up by 210.0% in 22 years. (Source: “The Multicultural Economy 2008,” Selig Center for Economic Growth, Terry College of Business, The University of Georgia, January 2009).  In addition, African-American consumers tend to have a different consumption profile than do non-African-Americans. A report published by the CAB notes those products and services for which African-American households spent more or a higher proportion of their money than non-African-Americans. The products and services included apparel and accessories, appliances, consumer electronics, food, personal care products, telephone service and transportation. Such findings imply that utilities, telecom firms, clothing and grocers would greatly benefit from marketing directly to African-American consumers.  This is particularly true in those states (including the District of Columbia) where African-American buying power represents the largest share of total buying power within such states, such as the District of Columbia (31.1%), Maryland (22.0%), Georgia (20.5%), North Carolina (14.5%) and Virginia (13.1%).  (Source: “Black Buying Power,” CAB Race, Relevance and Revenue, June 2007).
 
Growing Influence of African-American Culture.  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 and prominent fashion designers have embraced this urbanization trend in their products as well as their advertising messages.  As noted in one recent study, “The influence of African-American youth culture is no accident. The black population is among the youngest in the nation, with 56.1% under age 35 in 2009, and nearly 30% under age 18.”  (Source:  “African Americans Online”, eMarketer, March 2009). 
 
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. Over the 12-month period October 1, 2006 to September 30, 2007, advertisers spent $2.3 billion across all media targeting African-Americans.  Of that amount, advertisers spent $805 million, or 35% of total media spending, on radio formats targeting African-Americans.  Advertisers use radio to target African-Americans more than any other medium. (Source:  “Big Ad-Spend on Radio Targeting Blacks” Mediaweek, January 29, 2008).  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-Americanconsumers, 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.
 
Significant and Growing Internet Usage among African-Americans with Limited Targeted Online Content Offerings.  African-Americans are becoming significant users of the internet. The same factors driving increases in African-American buying power, such as improvements in education, income and employment, are also increasing African-American internet usage. One study estimates that 23.7 million African-Americans will make up 11.2% of all U.S. internet users in 2013, up from 9.9% in 2008.  (Source:  “African Americans Online”, eMarketer, March 2009).   This represents a 24% increase from 2008 versus a 15% increase for the general population and an 11% increase amount white internet users.  In one of the more recent studies available that tracks internet usage patterns, African-Americans were found to use the internet more hours per day than the general online population. Additionally, the growth of internet penetration and high-speed internet penetration in African-American households is expected to remain above that of the general population. We believe that there is no company that dominates the African-American market online and the lack of any strong competitive presence presents a significant opportunity for us to build an online business that is highly scalable.
 
The Results of our Black America Study (www.blackamericastudy.com).  In addition to relying on third-party research and our own experience, from time to time we conduct or commission our own proprietary research.  In early 2008, we released the groundbreaking “Black America Study.”  This national study, conducted by Yankelovich, a leader in consumer research for over 50 years, is one of the largest segmentation research studies ever done of Blacks and African-Americans.  This study helps us to better understand the motivations of our core demographic by segmenting the large and growing African-American audience so that we can highlight the diversity that exists in Black America. This enhanced understanding helps us identify new opportunities to serve the African-American community and assists us in helping advertisers and marketers reach Black America more effectively.
 
The study includes insight into the feelings of African-Americans about their future, past and present, as well as, details on their relationship with media, advertising and technology. The incredible wealth of quantifiable information about our listeners, viewers, readers and visitors provides invaluable marketing and programming applications for us.  This allows us to ensure that our content best reflects our audience and allows for companies, organizations and individuals to effectively reach this vital community. 
 
Business Strategy
 
Radio Station Portfolio Optimization.  Within our core radio business, our 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. 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. Since December 2006, we have completed the sale of approximately $287.9 million of our non-core radio assets in accordance with our portfolio optimization plan. Notwithstanding these dispositions, we are continually looking for opportunities to upgrade existing radio stations 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 industry. The primary focus of these investments will be on businesses that provide entertainment and information content to African-American consumers. Most recently, in April 2008, we acquired CCI, an online social networking company that hosts the website BlackPlanet, the largest social networking site primarily targeted at African-Americans.  This acquisition 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 company focused on the African-American consumer provides us with a competitive advantage in these new businesses.


 
3

 
 
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. Bold text indicate markets where we own radio stations. Population estimates are for 2009 and are based upon data provided by Arbitron.

 
 
 
Rank
 
 
 
 
 
Market
 
 
African-American Population (Persons 12+)
   
African-Americans as a Percentage of the Overall Population
(Persons 12+)
 
       
(In thousands)
       
  1  
New York, NY
   
2,701
     
17.2
%
  2  
Chicago, IL
   
1,380
     
17.6
 
  3  
Atlanta, GA
   
1,372
     
31.1
 
  4  
Washington, DC
   
1,135
     
26.5
 
  5  
Philadelphia, PA
   
879
     
20.2
 
  6  
Detroit, MI
   
840
     
21.9
 
  7  
Los Angeles, CA
   
816
     
7.4
 
  8  
Houston-Galveston, TX
   
816
     
16.9
 
  9  
Dallas-Ft. Worth, TX
   
733
     
14.3
 
  10  
Miami-Ft. Lauderdale-Hollywood, FL
   
708
     
19.8
 
  11  
Baltimore, MD
   
645
     
28.5
 
  12  
Memphis, TN
   
468
     
43.8
 
  13  
San Francisco, CA
   
437
     
7.1
 
  14  
St. Louis, MO
   
421
     
18.2
 
  15  
Charlotte-Gastonia-Rock Hill, NC
   
420
     
20.9
 
  16  
Norfolk-Virginia Beach-Newport News, VA
   
420
     
31.6
 
  17  
New Orleans, LA
   
347
     
34.7
 
  18  
Cleveland, OH
   
336
     
19.1
 
  19  
Raleigh-Durham, NC
   
287
     
21.6
 
  20  
Richmond, VA
   
278
     
29.5
 
  21  
Boston, MA
   
264
     
6.6
 
  22  
Tampa-St. Petersburg-Clearwater, FL
   
258
     
10.8
 
  23  
Birmingham, AL
   
252
     
28.3
 
  24  
Greensboro-Winston-Salem-High Point, NC
   
247
     
20.7
 
  25  
Jacksonville, FL
   
244
     
21.4
 
  26  
Orlando, FL
   
239
     
15.7
 
  27  
Nassau-Suffolk (Long Island), NY
   
224
     
9.2
 
  28  
Cincinnati, OH
   
220
     
12.3
 
  29  
Columbus, OH
   
210
     
14.4
 
  30  
Milwaukee-Racine, WI
   
208
     
14.3
 
  31  
Indianapolis, IN
   
206
     
14.8
 
  32  
Kansas City, KS
   
200
     
12.4
 
  33  
Nashville, TN
   
198
     
15.8
 
  34  
Baton Rouge, LA
   
190
     
33.5
 
  35  
Seattle-Tacoma, WA
   
185
     
5.5
 
  36  
Middlesex-Somerset-Union, NJ
   
185
     
13.3
 
  37  
Jackson, MS
   
182
     
46.1
 
  38  
Minneapolis-St. Paul, MN
   
181
     
6.7
 
  39  
Columbia, SC
   
171
     
32.4
 
  40  
Riverside-San Bernardino, CA
   
169
     
9.2
 
  41  
West Palm Beach-Boca Raton, FL
   
165
     
14.8
 
  42  
Pittsburgh, PA
   
165
     
8.3
 
  43  
Las Vegas, NV
   
158
     
10.3
 
  44  
Phoenix, AZ
   
153
     
4.6
 
  45  
Charleston, SC
   
152
     
27.4
 
  46  
Greenville-Spartanburg, SC
   
148
     
16.9
 
  47  
Augusta, GA
   
148
     
34.2
 
  48  
Sacramento, CA
   
140
     
7.6
 
  49  
Louisville, KY
   
135
     
14.1
 
  50  
San Diego, CA
   
131
     
5.1
 
 
Multi-Media Operating Strategy
 
To maximize net revenue and station 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 radio franchise is our cable 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, targeted programming and marketing;

 
ownership and syndication of programming content;

 
radio station 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.
 
 
4

 
 
Market Research, 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 to target those markets or segments.
 
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 receive advertising inventory in exchange which we monetize through our sales efforts. To date, our programming content efforts have included our investment in TV One and its related programming, our 53.5% ownership of Reach Media, the acquisition and development of our interactive brands including BlackPlanet, NewsOne, TheUrbanDaily and HelloBeautiful and the development and distribution of several syndicated radio shows, including the Russ Parr Morning Show, the Yolanda Adams Morning Show, the Rickey Smiley Morning Show, CoCo Brother Live, CoCo Brother's the “Spirit” program, Bishop T.D. Jakes' “Empowering Moments,” the Reverend Al Sharpton Show, and the Warren Ballentine Show.
 
Radio Station 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 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 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 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 in some of the largest African-American consumer markets. This platform reaches approximately 15 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 our corporate sales department, 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 time 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 interactive unit. The unit’s national team focuses on helping marketers reach our online audience of approximately 8 million unique visitors.  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, television and online) in an efficient way, in 2008, we launched 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. In these events, advertisers buy sponsorships, signage, booth space and/or broadcast promotions to sell a variety of goods and services to African-American consumers. As we expand our presence in our existing markets and into new markets, we may increase the number of events and the number of markets in which we host events based upon our evaluation of the financial viability and economic benefits of the events.
 
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 station 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.

 
 
5

 
 
Our Radio Station Portfolio
 
The following table sets forth selected information about our portfolio of radio stations as of December 31, 2009. Market population data and revenue rank data are from BIA Financials Investing in Radio Market Report, 2009 Fourth Edition. Audience share and audience rank data are based on Arbitron Survey four book averages ending with the Fall 2009 Arbitron Survey 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. We do not subscribe to Arbitron for our Boston market.
 
   
Market Rank
               
Four Book Average
 
   
2009
   
2009
               
Audience Share
   
Audience Rank
   
Audience Share
   
Audience Rank
 
   
Metro
   
Radio
 
Year
     
Target Age
   
in 12+
   
in 12+-
   
in Target
   
in Target
 
Market
 
Population
   
Revenue
 
Acquired
 
Format
 
Demographic
   
Demographic
   
Demographic
   
Demographic
   
Demographic
 
                                                         
    Atlanta(1)(2)
   
7
     
6
                                         
  
    WPZE-FM(a)
               
2004
 
Contemporary Inspirational
   
25-54
     
4.3
     
7
     
3.8
     
8
 
    WHTA-FM
               
2002
 
Urban Contemporary
   
18-34
     
3.7
     
11
     
6.9
     
3
 
    WAMJ-FM(b)
               
1999
 
Urban AC
   
25-54
     
4.3
     
6
     
5.4
     
4
 
    WUMJ-FM(c)
               
1999
 
Urban AC
   
25-54
     
*
     
*
     
*
     
*
 
                                                               
    Washington, DC(1)(2)
   
9
     
7
                                               
    WKYS-FM
               
1995
 
Urban Contemporary
   
18-34
     
3.6
     
13
     
7.9
     
3
 
    WMMJ-FM
               
1987
 
Urban AC
   
25-54
     
4.7
     
6
     
4.2
     
9
 
    WPRS-FM
               
2008
 
Contemporary Inspirational
   
25-54
     
3.2
     
15
     
3.5
     
13
 
    WYCB-AM
               
1998
 
Gospel
   
25-54
     
0.2
     
38
(t)
   
0.2
     
38
(t)
    WOL-AM
               
1980
 
News/Talk
   
35-64
     
0.3
     
32
(t)
   
0.3
     
32
(t)
 
    Philadelphia(3)
   
8
     
10
                                               
    WPPZ-FM
               
1997
 
Contemporary Inspirational
   
25-54
     
3.3
     
12
(t) 
   
3.5
     
12
(t)
    WPHI-FM
               
2000
 
Urban Contemporary
   
18-34
     
2.6
     
19
     
5.8
     
7
 
    WRNB-FM
               
2004
 
Urban AC
   
25-54
     
3.1
     
15
(t) 
   
3.0
     
17
 
 
    Detroit(1)(2)
   
11
     
13
                                               
    WHTD-FM
               
1998
 
Urban Contemporary
   
18-34
     
2.4
     
18
(t) 
   
4.4
     
8
 
    WDMK-FM
               
1998
 
Urban AC
   
25-54
     
3.2
     
17
     
3.6
     
14
 
    WCHB-AM
               
1998
 
News/Talk
   
35-64
     
0.6
     
              30
(t)
   
0.3
     
31
(t)
 
    Houston(3)
   
6
     
8
                                               
                                                               
    KMJQ-FM
               
2000
 
Urban AC
   
25-54
     
6.8
     
1
     
7.6
     
1
 
    KBXX-FM
               
2000
 
Urban Contemporary
   
18-34
     
6.5
     
2
     
10
     
1
 
    KROI-FM
               
2004
 
Contemporary Inspirational
   
25-54
     
2.5
     
17
     
2.7
     
1
8(t)
 
Dallas(1)(2)
   
5
     
4
                                               
    KBFB-FM
               
2000
 
Urban Contemporary
   
18-34
     
3.6
     
8
(t)
   
6.1
     
2
 
    KSOC-FM
               
2001
 
Urban AC
   
25-54
     
2.5
     
17
     
3.1
     
13
 
 
    Baltimore
   
22
     
20
                                               
    WERQ-FM
               
1993
 
Urban Contemporary
   
18-34
     
7.7
     
1
     
15.5
     
1
 
    WWIN-FM
               
1992
 
Urban AC
   
25-54
     
8.3
     
2
(t) 
   
8.2
     
2
 
    WOLB-AM
               
1993
 
News/Talk
   
35-64
     
0.2
     
43
(t)
   
0.2
     
46
(t)
    WWIN-AM
               
1992
 
Gospel
   
35-64
     
0.4
     
34
(t)
   
0.5
     
33
(t)
 
    St. Louis
   
20
     
21
                                               
                                                               
    WFUN-FM
               
1999
 
Urban AC
   
25-54
     
4.4
     
8
     
4.7
     
12
 
    WHHL-FM
               
2006
 
Urban Contemporary
   
18-34
     
4.3
     
12
     
7.8
     
4
 
 
    Cleveland
   
29
     
27
                                               
    WENZ-FM
               
1999
 
Urban Contemporary
   
18-34
     
6.0
     
5
     
13.2
     
1
 
    WERE-AM
               
2000
 
News/Talk
   
35-64
     
0.3
     
29
(t)
   
0.4
     
26
(t)
    WZAK-FM
               
2000
 
Urban AC
   
25-54
     
7.0
     
2
     
7.4
     
1
 
    WJMO-AM
               
1999
 
Contemporary Inspirational
   
25-54
     
0.8
     
23
(t)
   
0.9
     
22
(t)
 
    Charlotte
   
25
     
30
                                               
                                                               
    WQNC-FM
               
2000
 
Urban AC
   
25-54
     
2.1
     
18
     
2.4
     
17
 
    WPZS-FM
               
2004
 
Contemporary Inspirational
   
25-54
     
3.3
     
12
     
3.4
     
11
(t) 
 
    Richmond
   
55
     
45
                                               
    WCDX-FM
               
2001
 
Urban Contemporary
   
18-34
     
6.0
     
6
     
13.0
     
1
(t) 
    WPZZ-FM
               
1999
 
Contemporary Inspirational
   
25-54
     
5.5
     
7
     
5.0
     
7
 
    WKJS-FM
               
2001
 
Urban AC
   
25-54
     
10
     
1
     
11.7
     
1
 
    WKJM-FM
               
2001
 
Urban AC
   
25-54
     
**
     
**
     
**
     
**
 
    WTPS-AM
               
2001
 
News/Talk
   
35-64
     
0.3
     
22
(t)
   
0.3
     
24
(t)
 
    Raleigh-Durham
   
42
     
37
                                               
    WQOK-FM
               
2000
 
Urban Contemporary
   
18-34
     
6.5
     
3
(t) 
   
11.8
     
1
 
    WFXK-FM
               
2000
 
Urban AC
   
25-54
     
***
     
***
     
***
     
***
 
    WFXC-FM
               
2000
 
Urban AC
   
25-54
     
6.5
     
3
(t) 
   
7.4
     
1
 
    WNNL-FM
               
2000
 
Contemporary Inspirational
   
25-54
     
5.2
     
8
     
5.1
     
8
 
  
    Columbus
   
36
     
31
                                               
    WCKX-FM
               
2001
 
Urban Contemporary
   
18-34
     
7.0
     
3
     
13.6
     
1
 
    WXMG-FM
               
2001
 
R&B/Oldies
   
25-54
     
5.8
     
5
     
6.2
     
4
 
    WJYD-FM
               
2001
 
Contemporary Inspirational
   
25-54
     
1.4
     
21
(t) 
   
1.2
     
21
 
     
    Cincinnati
   
28
     
24
                                               
    WIZF-FM
               
2001
 
Urban Contemporary
   
18-34
     
4.4
     
9
     
8.9
     
2
 
    WMOJ-FM
               
2006
 
Urban AC
   
25-54
     
4.7
     
6
(t) 
   
4.5
     
7
 
    WDBZ-AM
               
2007
 
News/Talk
   
35-64
     
0.6
     
25
(t)
   
0.7
     
23
(t)
   
    Indianapolis(4)
   
39
     
32
                                               
    WHHH-FM
               
2000
 
Rhythmic CHR
   
18-34
     
6.6
     
3
     
13.3
     
1
 
    WTLC-FM
               
2000
 
Urban AC
   
25-54
     
6.3
     
4
     
6.6
     
3
 
    WNOU-FM
               
2000
 
Pop/CHR
   
18-34
     
3.5
     
11
(t) 
   
7.0
     
3
(t) 
    WTLC-AM
               
2001
 
Contemporary Inspirational
   
25-54
     
2.0
     
16
     
2.1
     
15
 
 
AC -
refers to Adult Contemporary
   
CHR -
refers to Contemporary Hit Radio
   
R&B -
refers to Rhythm and Blues
   
Pop -
refers to Popular Music
   
*
Simulcast with WAMJ-FM
   
**
Simulcast with WKJS-FM
   
***
Simulcast with WFXC-FM
   
(a)
WPZE-FM effective February 20, 2009 (formerly WAMJ-FM).
   
(b)
WAMJ-FM effective February 27, 2009 (formerly WJZZ-FM).
   
(c)
WUMJ-FM effective February 20, 2009 (formerly WPZE-FM).
   
(1)
Due to a methodology measurement change, the four book average is measured using the diary method in the first three quarters of the year and the PPMTM methodology for the fourth quarter.
   
(2)
Due to a methodology measurement change to PPMTM, the rank is based upon a three book diary average ranking.
   
(3)
The four book average is measured using the PPMTM methodology.
   
(4)
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, 2009, approximately 82.0% of our net revenue was generated from the sale of advertising in our core radio business. 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. Network sales are made by third-party sales representatives in exchange for commercial inventory made available to them. Approximately 56.2% of our net revenue for the year ended December 31, 2009 was generated from the sale of local advertising and 37.3% from sales to national advertisers, including network advertising. The balance of net revenue generated from our radio franchise is primarily derived from tower rental income, ticket sales and revenue related to Radio One 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 diary ratings surveys or the PPMTM system, 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 growth, set advertising rates and adjust programming. Advertising rates are generally highest during the morning and afternoon commuting hours.

 
6

 
 
Strategic Diversification and Other Sources of Revenue
 
We have expanded our operations to include other media forms that are complementary to our core radio business.  Most recently, in April 2008, we acquired CCI, an online social networking company that hosts the website BlackPlanet, the largest social networking site primarily targeted at African-Americans.  CCI currently generates the majority of the Company’s internet revenue, and derives such revenue principally from advertising services, including advertising aimed at diversity recruiting. Advertising services include the sale of banner and sponsorship advertisements.  Advertising revenue is recognized either as impressions (the number of times advertisements appear in viewed pages) are delivered, when “click through” purchases or leads are reported, or ratably over the contract period, where applicable. CCI has a diversity recruiting relationship with Monster, Inc. (“Monster”). Monster posts job listings and advertising on CCI’s websites and CCI earns revenue for displaying the images on its websites.
 
CCI is a part of our broader interactive unit, Interactive One, which also includes the online brands NewsOne, TheUrbanDaily and HelloBeautiful. Similar to CCI, these web properties primarily derive their revenue from advertising services. Revenue is recognized either as impressions are delivered, when “click through” purchases or leads are reported, or ratably over the contract, where applicable.
 
In February 2005, we acquired 51% of the common stock of Reach Media, which operates The Tom Joyner Morning Show and related businesses. A new agreement was executed in November 2009 (“Sales Representation Agreement”) to replace the old agreement which expired on December 31, 2009, whereby, effective 2010, Citadel Broadcasting Corporation (“Citadel”) will sell advertising inventory outside the Tom Joyner Morning Show. In addition, Reach Media has expanded its internal sales force to sell in-show advertising inventory, event sponsorships and BlackAmericaWeb.com advertising. As an inducement for Reach Media to enter into the new Sales Representation Agreement, Citadel returned its noncontrolling ownership interest in Reach Media back to Reach Media.  This ownership interest was part of the original agreement signed in 2003. As a result of classifying these shares as treasury stock, this transaction effectively increased Radio One’s common stock interest in Reach Media to 53.5%. In exchange for the return of the ownership interest, Reach Media issued a $1.0 million promissory note payable to Radio Networks, a subsidiary of Citadel, due in December 2011. Reach Media primarily derives its revenue from the sale of advertising inventory in connection with its syndication agreements. Mr. Joyner is a leading nationally syndicated radio personality. As of December 31, 2009, The Tom Joyner Morning Show was broadcast on 105 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 provides programming content for TV One and operates www.BlackAmericaWeb.com, an African-American targeted website. Reach Media also operates the Tom Joyner Family Reunion and various other special event-related activities.                            
 
In July 2003, we entered into a joint venture agreement with an affiliate of Comcast Corporation and other investors to create TV One, a cable television network featuring lifestyle, entertainment and news-related programming targeted primarily towards African-American viewers. At that time, we committed to make a cumulative cash investment of $74.0 million in TV One by December 31, 2006. As of April 30, 2007, $60.3 million of this commitment had been funded. No additional investment has been made as of the date of this filing.  The initial commitment period for funding the capital committed has been extended to June 30, 2010, due in part to TV One's lower than anticipated capital needs during the initial commitment period.
 
In December 2004, TV One entered into a distribution agreement with DIRECTV, Inc. (“DIRECTV”) and certain affiliates of DIRECTV became investors in TV One. As of December 31, 2009, we owned approximately 37% of TV One on a fully-converted basis. 

We entered into separate network services and advertising services agreements with TV One in 2003. Under the network services agreement, we are providing TV One with administrative and operational support services and access to Radio One personalities. This agreement was originally scheduled to expire in January 2009, but was extended to January 2010 and has been further extended to January 2011. Under the advertising services agreement, we are providing a specified amount of advertising to TV One. This agreement was also originally scheduled to expire in January 2009, and has been extended to January 2011. In consideration of providing these services, we have received equity in TV One, and receive an annual cash fee of $500,000 for providing services under the network services agreement.
 
We have launched websites that simultaneously stream radio station content for 51 of our 52 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 acting as traffic sources for these online brands.
 
In December 2006, we acquired certain assets constituting Giant Magazine, an urban-themed music and lifestyle magazine. In December 2009, we discontinued publication of the magazine. However, we continue to retain the Giant brand as part of our interactive unit.
 
Future opportunities could include investments in, or acquisitions of, companies in diverse media businesses, music production and distribution, movie distribution, internet-based services, and distribution of our content through emerging distribution systems such as the internet, cellular phones, personal digital assistants, digital entertainment devices and the home entertainment market.
 
Competition
 
The media industry is highly competitive and we face intense competition in both our core radio franchise and in our complementary media properties, including our interactive unit. 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 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 assure you 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, which has resulted in the introduction of several new satellite radio services with sound quality equivalent to that of compact discs;

 
audio programming by 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. We have committed by the end of 2009 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 you that these arrangements will be successful or enable us to adapt effectively to these new media technologies. As of December 31, 2009, we had converted 49 stations to digital broadcast.
 
Our interactive unit competes for the time and attention of internet users and, thus, advertisers and advertising revenues with a wide range of internet companies such as Yahoo!TM Inc., Google TM and Microsoft TM, social networking sites such as MySpace TM and Facebook TM and traditional media companies, which are increasingly offering their own internet products and services. 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. The DOJ has established certain revenue and audience share concentration benchmarks with respect to radio station acquisitions, above which a transaction may receive additional antitrust scrutiny. The DOJ has also investigated transactions that do not meet or exceed these benchmarks and has cleared transactions that do exceed these benchmarks.
 
 
7

 
 
Federal Regulation of Radio Broadcasting
 
The radio broadcasting industry is subject to extensive and changing regulation by the Federal Communications Commission (“FCC”) of ownership, programming, technical operations, employment and other business practices. The FCC regulates radio broadcast stations pursuant to the Communications Act (the “Communications Act”) of 1934, as amended. 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 of 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 and 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 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 of 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, local jurisdictions, are considering and may in the future 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 improve 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, funding, political advertising rates, and sponsorship disclosures;

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

 
proposals regarding the regulation of the broadcast of indecent or violent content;

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

 
technical and frequency allocation matters, including increased protection of low power FM stations from interference by full-service stations;

 
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 royalties to artists and musicians whose music is played on terrestrial radio stations;
 
 
changes to allow telephone companies to deliver audio and video programming to homes in their service areas; 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 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 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.
 
 
8

 
 
Radio One’s Licenses.  The following table sets forth information with respect to each of our radio stations. 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 (FM)
in Meters
 
 
 
Operating Frequency
 
 
 
Expiration Date
of FCC License
                                       
    Atlanta
 
WUMJ-FM(1)
 
1999
   
C3
     
7.9
     
175.0
 
97.5 MHz
 
4/1/2012
   
WAMJ-FM(2)
 
1999
   
C3
     
21.5
     
110.0
 
107.5 MHz
 
4/1/2012
   
WHTA-FM
 
2002
   
C2
     
27.0
     
176.0
 
107.9 MHz
 
4/1/2012
   
WPZE-FM(3)
 
2004
   
A
     
3.0
     
143.0
 
102.5 MHz
 
4/1/2012
    Washington, DC
 
WOL-AM
 
1980
   
C
     
.37
     
103.0
 
1450 kHz
 
10/1/2011
   
WMMJ-FM
 
1987
   
A
     
2.9
     
146.0
 
102.3 MHz
 
10/1/2011
   
WKYS-FM
 
1995
   
B
     
24.5
     
215.0
 
93.9 MHz
 
10/1/2011
   
WPRS-FM
 
2008
   
B
     
20.0
     
244.0
 
104.1 MHz
 
10/1/2011
   
WYCB-AM
 
1998
   
C
     
1.0
     
103.0
 
1340 kHz
 
10/1/2011
    Philadelphia
 
WPPZ-FM(4)
 
1997
   
A
     
0.27
     
338.0
 
103.9 MHz
 
                  8/1/2014
   
WPHI-FM
 
2000
   
B
     
17.0
     
263.0
 
100.3 MHz
 
8/1/2014
   
WRNB-FM
 
2004
   
A
     
0.78
     
276.0
 
107.9 MHz
 
6/1/2014
    Detroit
 
WDMK-FM
 
1998
   
B
     
20.0
     
221.0
 
105.9 MHz
 
10/1/2012
   
WCHB-AM
 
1998
   
B
     
50.0
     
49.3
 
1200 kHz
 
10/1/2012
   
WHTD-FM
 
1998
   
B
     
50.0
     
152.0
 
102.7 MHz
 
10/1/2012
    Houston
 
KMJQ-FM
 
2000
   
C
     
100.0
     
524.0
 
102.1 MHz
 
8/1/2013
   
KBXX-FM
 
2000
   
C
     
100.0
     
585.0
 
97.9 MHz
 
8/1/2013
   
KROI-FM
 
2004
   
C1
     
24.0
     
295.0
 
92.1 MHz
 
8/1/2013
    Dallas
 
KBFB-FM
 
2000
   
C
     
100.0
     
491.0
 
97.9 MHz
 
8/1/2013
   
KSOC-FM
 
2001
   
C
     
100.0
     
591.0
 
94.5 MHz
 
8/1/2013
    Baltimore
 
WWIN-AM
 
1992
   
C
     
0.5
     
86.9
 
1400 kHz
 
10/1/2011
   
WWIN-FM
 
1992
   
A
     
3.0
     
91.0
 
95.9 MHz
 
10/1/2011
   
WOLB-AM
 
1993
   
D
     
0.25
     
85.3
 
1010 kHz
 
10/1/2011
   
WERQ-FM
 
1993
   
B
     
37.0
     
174.0
 
92.3 MHz
 
10/1/2011
    St. Louis
 
WFUN-FM
 
1999
   
C3
     
24.5
     
102.0
 
95.5 MHz
 
12/1/2012
   
WHHL-FM
 
2006
   
C2
     
50.0
     
140.0
 
104.1 MHz
 
2/1/2013
    Cleveland
 
WJMO-AM
 
1999
   
B
     
5.0
     
128.1
 
1300 kHz
 
10/1/2012
   
WENZ-FM
 
1999
   
B
     
16.0
     
272.0
 
107.9 MHz
 
10/1/2012
   
WZAK-FM
 
2000
   
B
     
27.5
     
189.0
 
93.1 MHz
 
10/1/2012
   
WERE-AM
 
2000
   
C
     
1.0
     
106.7
 
1490 kHz
 
10/1/2012
    Charlotte
 
WQNC-FM
 
2000
   
A
     
6.0
     
100.0
 
92.7 MHz
 
12/1/2011
   
WPZS-FM
 
2004
   
A
     
6.0
     
100.0
 
100.9 MHz
 
12/1/2011
    Richmond
 
WPZZ-FM
 
1999
   
C1
     
100.0
     
299.0
 
104.7 MHz
 
10/1/2011
   
WCDX-FM
 
2001
   
B1
     
4.5
     
235.0
 
92.1 MHz
 
10/1/2011
   
WKJM-FM
 
2001
   
A
     
6.0
     
100.0
 
99.3 MHz
 
10/1/2011
   
WKJS-FM
 
2001
   
A
     
2.3
     
162.0
 
105.7 MHz
 
10/1/2011
   
WTPS-AM
 
2001
   
C
     
1.0
     
121.9
 
1240 kHz
 
10/1/2011
    Raleigh-Durham
 
WQOK-FM
 
2000
   
C2
     
50.0
     
146.0
 
97.5 MHz
 
12/1/2011
   
WFXK-FM
 
2000
   
C1
     
100.0
     
299.0
 
104.3 MHz
 
12/1/2011
   
WFXC-FM
 
2000
   
C3
     
8.0
     
146.0
 
107.1 MHz
 
12/1/2011
   
WNNL-FM
 
2000
   
C3
     
7.9
     
176.0
 
103.9 MHz
 
12/1/2011
    Boston
 
WILD-AM
 
2001
   
D
     
4.8
     
59.6
 
1090 kHz
 
4/1/2014
    Columbus
 
WCKX-FM
 
2001
   
A
     
1.9
     
126.0
 
107.5 MHz
 
10/1/2012
   
WXMG-FM
 
2001
   
A
     
2.6
     
154.0
 
98.9 MHz
 
10/1/2012
   
WJYD-FM
 
2001
   
A
     
6.0
     
100.0
 
106.3 MHz
 
10/1/2012
    Cincinnati
 
WIZF-FM
 
2001
   
A
     
2.5
     
155.0
 
101.1 MHz
 
8/1/2012
   
WDBZ-AM
 
2007
   
C
     
1.0
     
60.7
 
1230 kHz
 
10/1/2012
   
WMOJ-FM
 
2006
   
A
     
3.1
     
141.0
 
100.3 MHz
 
10/1/2012
    Indianapolis(A)
 
WHHH-FM
 
2000
   
A
     
3.3
     
87.0
 
96.3 MHz
 
8/1/2012
   
WTLC-FM