10-K 1 v370988_10k.htm FORM 10-K

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, 2013
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 ¨ Non-accelerated filer þ

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

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

Class		Outstanding at March 14, 2014
Class A Common Stock, $.001 par value		2,402,491
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		39,377,580

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, 2013, was approximately $67.9 million.

RADIO ONE, INC. AND SUBSIDIARIES

Form 10-K

For the Year Ended December 31, 2013

TABLE OF CONTENTS

		Page
	PART I

Item 1.	Business	5
Item 1A.	Risk Factors	24
Item 1B.	Unresolved Staff Comments	40
Item 2.	Properties	40
Item 3.	Legal Proceedings	40
Item 4.	Removed and Reserved	40

	PART II

Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	41
Item 6.	Selected Financial Data	45
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	47
Item 7A.	Quantitative and Qualitative Disclosure About Market Risk	76
Item 8.	Financial Statements and Supplementary Data	76
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	76
Item 9A.	Controls and Procedures	76
Item 9B.	Other Information	77

	PART III

Item 10.	Directors and Executive Officers of the Registrant	78
Item 11.	Executive Compensation	78
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	78
Item 13.	Certain Relationships and Related Transactions	78
Item 14.	Principal Accounting Fees and Services	78

	PART IV

Item 15.	Exhibits and Financial Statement Schedules	79

SIGNATURES		83

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 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 interests in income of subsidiaries, interest expense, impairment of long-lived assets, other income or expense, gain or loss 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 U.S. generally accepted accounting principles (“GAAP”). Nevertheless, we believe station operating income is 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 or loss 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 radio broadcasting companies as it includes results from all four of our reportable segments (Radio Broadcasting, Reach Media, Internet and Cable Television). 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 GAAP. Nevertheless, we believe that station operating income margin is a useful measure of our performance because it provides helpful information about our profitability as a percentage of our net revenue. As with station operating income, station 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 of 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 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/Kelsey (“BIA”), a media and telecommunications advisory services firm.

Cautionary Note Regarding Forward-Looking Statements

This document, and the documents incorporated by reference into this Annual Report on Form 10-K, 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, high unemployment and continued fluctuations in the U.S. and other world economies may have on our business and financial condition and the business and financial conditions of our advertisers;

our high degree of leverage and potential inability to refinance certain portions of our debt or finance other strategic transactions given fluctuations in market conditions;

fluctuations in the U.S. economy and the local economies of the markets in which we operate 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;

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, particularly in light of the current economic environment;

increased competition from new media distribution platforms and technologies;

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

	4

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 targets African-American and/or urban listeners. As of December 31, 2013, we owned and/or operated 54 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 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 properties. Our other media interests include our approximately 51.9% controlling ownership interest in TV One, LLC (“TV One”), an African-American targeted cable television network; an 80.0% ownership interest in Reach Media, Inc. (“Reach Media”), which operates the Tom Joyner Morning Show and our other syndicated programming assets, including the Russ Parr Morning Show, the Yolanda Adams Morning Show, the Rickey Smiley Morning Show, Bishop T.D. Jakes’ “Empowering Moments”, and the Reverend Al Sharpton Show; and our ownership of Interactive One, LLC (“Interactive One”), an online platform serving the African-American community through social content, news, information, and entertainment, which operates a number of branded sites, including News One, UrbanDaily and HelloBeautiful and social networking websites, including BlackPlanet and MiGente. Through our national multi-media presence, we provide advertisers with a unique and powerful delivery mechanism to the African-American and urban audience. Recently, the Company has executed a letter of intent with MGM to partner to develop a world-class casino property, MGM National Harbor, located in Prince George’s County, Maryland. This investment further diversifies our platform in the entertainment industry while still focusing on our core demographic.

Beginning November 1, 2012, our Columbus, Ohio radio station, WJKR-FM (The Jack, 98.9 FM) was made the subject of a local marketing agreement (“LMA”), and on February 15, 2013, the Company sold that station’s assets. The remaining assets and liabilities of the Columbus station have been classified as discontinued operations as of December 31, 2013, and December 31, 2012, and the results from operations of this station for the years ended December 31, 2013, 2012 and 2011, have been reclassified as discontinued operations in the accompanying consolidated financial statements.

As of June 2011, our remaining Boston radio station was made the subject of a LMA whereby we have made available, for a fee, air time on this station to another party. As of September 30, 2013, due to ongoing renegotiations in the terms of the LMA, the station’s radio broadcasting license was reclassified out of assets from discontinued operations and the results from operations of this station for all prior periods were reclassified from discontinued operations to continuing operations. In December 2013, we finalized the renegotiation of the terms of the LMA which now expires December 1, 2016, at which time the station will be transferred. As a result, that station’s radio broadcasting license has been classified as a long-term other asset as of December 31, 2013, and is being amortized through the anticipated transfer date. The accompanying December 31, 2012 consolidated balance sheet has been adjusted to correct an immaterial error in the classification of the Company’s long-term assets related to its Boston market. This correction resulted in an increase in radio broadcasting licenses of approximately $1.2 million and a decrease in other long-term assets of the same amount.

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.

	5

Our Stations and Markets

The table below provides information about our radio stations and the markets in which we owned or operated as of December 31, 2013.

	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 2013 Metro Population Persons 12+
	FM	AM			Total (millions)	African- American %
Atlanta	4	—	14.9	2	4.5	32.7
Washington, DC	3	2	12.9	4	4.7	26.7
Philadelphia	3	—	7.5	5	4.5	20.3
Houston(4)	3	—	15.2	6	5.3	16.9
Dallas	2	—	5.4	7	5.6	15.2
Detroit	3	1	11.2	8	3.8	22.1
Baltimore	2	2	16.2	11	2.4	28.6
Charlotte	3	—	9.7	13	2.1	22.1
St. Louis	2	—	8.1	16	2.3	18.3
Cleveland	2	2	14.2	18	1.8	19.8
Raleigh-Durham	4	—	17.5	19	1.4	22.5
Richmond(5)	4	1	6.2	20	1.0	29.9
Boston(6)	—	1	N/A	22	4.1	7.2
Columbus	2	—	9.2	27	1.6	15.5
Indianapolis	3	1	17.7	30	1.5	15.4
Cincinnati	2	1	10.1	31	1.8	12.5
Total	42	11

(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 54^th broadcast station.

(2)

Audience share data are for the 12+ demographic and derived from the Arbitron Survey ending with the Fall 2013 Arbitron Survey.

(3)

Population estimates are from the Arbitron Radio Market Report, Fall 2013.

(4)

In addition, in Houston, we operate a digital channel KMJQ-HD2.

(5)

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

(6)

We retain ownership of a station in Boston; however, that station is the subject of an LMA and is not operated by us. Therefore, we do not subscribe to Arbitron for our Boston market.

The African-American Market Opportunity

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

	6

Steady African-American Population Growth. From 2000 to 2013, the nation’s African-American population grew by 16.3 percent compared to 7.7 percent for the white population and 12.3 percent for the total population. From 2013 to 2018, the nation’s African-American population is projected to grow by 5.9 percent, which exceeds the 4.5 percent growth estimated for the total U.S. population. (Source: “The Multicultural Economy 2013,” Selig Center for Economic Growth, Terry College of Business, The University of Georgia, August 2013.) African-Americans are expected to make up 12.9% of total population growth during the period from 2010 through 2015 (Source: U.S. Census Bureau, 2008 and 2009, “Projections of the Population by Sex, Race, and Hispanic Origin for the United States: 2010 to 2050.”) 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. As of December 2013, the African-American population represents approximately 13% 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 five most populous U.S. markets are home to 21% of the overall U.S. population, 27% of the total African-American population resides in those same markets. Expanding the analysis to the 20 most populous U.S. markets, 45% of the overall U.S. population resides within these markets, with 57% of the total 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 proportionately much more meaningful reach towards the African-American population than towards non-African-American U.S. populations. Indeed, the markets in which we operate radio stations are home to 27% of the total African-American population. (Source: U.S. Census Bureau, 2008 and 2009, “Projections of the Population by Sex, Race, and Hispanic Origin for the United States: 2010 to 2050”.)

Higher African-American Income Growth. The economic status of African-Americans improved at an above-average rate over the past two decades. African-American buying power was estimated at $1.0 trillion in 2013, up from $601 billion and $951 billion in 2000 and 2010, respectively. African-American buying power is expected to increase to over $1.3 trillion by 2018. The 78 percent increase between 2000 and 2013 outstrips the 63 percent rise in white buying power and the 70 percent increase in total buying power (all races combined). In 2013, the nation’s share of total buying power that is African-American will be 8.6 percent, up from 8.2 percent in 2000 and from 7.5 percent in 1990. (Source: “The Multicultural Economy 2013,” Selig Center for Economic Growth, Terry College of Business, The University of Georgia, August 2013.) In addition, African-American consumers tend to have a different consumption profile than 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. These products and services included housing, groceries, phone services, furniture, clothing, car insurance, and gasoline and motor oil. Such findings imply that energy utilities, telecom firms, car insurers, gas stations, grocers, clothing stores, and shoe stores would greatly benefit from marketing directly to African-American consumers. This is particularly true in those states (including the District of Columbia) where the percentage that African-American buying power represents of total buying power in that state is the largest, such as the District of Columbia (26.3%), Maryland (23.1%), Georgia (22.1%), North Carolina (14.8%) and Virginia (13.0%). Indeed, in 2013, the African-American markets in Georgia, Maryland, North Carolina and Virginia were $76 billion, $64 billion, $50 billion and $46 billion, respectively. The gains in African-American buying power reflect much more than just population growth and inflation. Of the many diverse supporting forces, one of the most important and enduring is the increasing number of African-Americans who are starting and expanding their own businesses. The 2007 Survey of Business Owners (released by the U.S. Census bureau in June 2011) shows that the number of African-American owned firms was 61 percent higher in 2007 than in 2002, an increase more than three times the 18 percent gain in the number of all U.S. firms over this period. Also, compared to the 1997-2002 period, the overall rate of growth in the number of African-American owned firms accelerated — as did the rate of growth in the number of all U.S. firms. Between 2002 and 2007, the receipts of African-American owned firms grew by 55 percent compared to the 34 percent increase in the receipts of all U.S. firms. (Source: “The Multicultural Economy 2013,” Selig Center for Economic Growth, Terry College of Business, The University of Georgia, August 2013.)

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 have embraced this urbanization trend in their products as well as in their advertising messages. As noted in one recent study, “Because they are much younger, African-American consumers increasingly are setting trends for teens (and young adults) of every race and ethnic background. This isn’t surprising given that 29.4% of the African-American population is under 18 years old compared to 23.3% of the white population or 24.6% of the total population.” (Source: “The Multicultural Economy 2013,” Selig Center for Economic Growth, Terry College of Business, The University of Georgia, August 2013.)

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. Currently 43 million strong, African-American consumers have unique behaviors from the total market. For example, they’re more aggressive consumers of media and they shop more frequently. African-Americans watch more television (37%), make more shopping trips (eight), purchase more ethnic beauty and grooming products (nine times more), read more financial magazines (28%) and spend more than twice the time at personal hosted websites than any other group. (Source: “African Americans Consumers Are More Relevant Than Ever,” 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.

Significant and Growing Internet Usage among African-Americans with Limited Targeted Online Content Offerings. African-Americans outnumber all ethnic (non-white) households that reported using the Internet. (Source: U.S. Census Bureau, May 2013, “Computer and Internet Use in the United States.”) 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. Further, African-Americans are heavy smartphone owners and users. The ownership rate for smartphones grew from 33% in 2011 to more than 71% in 2013 (versus 62% for the total population. (Source: “African-Americans Consumers Are More Relevant Than Ever,” Nielsen, 2013.) African-Americans also use mobile devices for downloading and viewing video and music at 30% and 10% higher rates, respectively, than the general population. According to another national study among more than 7,000 African-American adults, the Internet represents 32% of daily media exposure for African-Americans and the average amount of time spent online is 4 hours and 21 minutes per day, a figure that is 10% higher when compared to the average amount of time spent online for all U.S. adults. (Source: “The Media Audit National Report 2010”.)

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 such dominant presence provides us with a significant opportunity to build an online business that is highly scalable.

Business Strategy

Radio Station Portfolio Optimization. Within our core radio business, 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. Recently, given market conditions, changes in ratings methodologies and economic and demographic shifts, we have reprogrammed some of our stations in underperforming segments of certain markets. However, our core franchise remains targeted toward the African-American and/or urban listener and consumer. 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 industry. The primary focus of these investments will be on businesses that provide entertainment and information content to African-American and urban consumers. Most recently, on December 31, 2012, we increased our ownership interests in Reach Media which operates the Tom Joyner Morning Show and, historically, has administered our syndicated programming operations. After we increased our ownership in Reach Media, we consolidated our syndicated programming line-up within Reach Media to create the leading syndicated radio network targeted to the African-American audience. In April 2011, we increased our ownership interest in TV One, a cable television network targeting African-Americans, to 50.9% giving us a controlling interest in the network. Since April 2011, our ownership in TV One increased to approximately 51.9% after redemptions of certain management interests. In April 2008, we acquired Community Connect Inc. (“CCI”), an online social networking company that hosted the website BlackPlanet. BlackPlanet has been integrated into our online operations, as part of Interactive One, which now includes the largest social networking site by members primarily targeted at African-Americans. The consolidation of Reach Media, TV One and BlackPlanet 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 company focused on the African-American consumer provides us with a competitive advantage in these new businesses. Recently, the Company has executed a letter of intent with MGM to partner to develop a world-class casino property, MGM National Harbor, located in Prince George’s County, Maryland. This investment further diversifies our platform in the entertainment industry while still focusing on our core demographic.

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 2013 and are based upon data provided by Arbitron.

		African-	Percentage of
		American	the Overall
		Population	Population
Rank	Market	(Persons 12+)	(Persons 12+)
		(In thousands)
1	New York, NY	2,682	16.9	%
2	Atlanta, GA	1,496	34.1
3	Chicago, IL	1,367	17.4
4	Washington, DC	1,247	26.9
5	Philadelphia, PA	932	20.6
6	Houston-Galveston, TX	891	17.4
7	Dallas-Ft. Worth, TX	853	15.7
8	Detroit, MI	839	22.3
9	Los Angeles, CA	779	7.1
10	Miami-Ft. Lauderdale-Hollywood, FL	778	20.6
11	Baltimore, MD	676	28.9
12	Memphis, TN	506	45.5
13	Charlotte-Gastonia-Rock Hill, NC	458	22.1
14	St. Louis, MO	440	19.1
15	San Francisco, CA	437	7.0
16	Norfolk-Virginia Beach-Newport News, VA	432	31.6
17	New Orleans, LA	378	31.2
18	Cleveland, OH	352	20.0
19	Raleigh-Durham, NC	313	22.3
20	Boston, MA	299	7.3
21	Richmond, VA	299	30.2
22	Tampa-St. Petersburg-Clearwater, FL	284	11.5
23	Greensboro-Winston-Salem-High Point, NC	271	22.0
24	Orlando, FL	268	16.5
25	Birmingham, AL	261	29.0
26	Jacksonville, FL	246	21.1
27	Columbus, OH	245	15.9
28	Milwaukee-Racine, WI	234	15.8
29	Indianapolis, IN	229	15.9
30	Minneapolis-St. Paul, MN	223	8.0
31	Nassau-Suffolk (Long Island), NY	223	9.1
32	Cincinnati, OH	221	12.5

	9

		African-	Percentage of
		American	the Overall
		Population	Population
Rank	Market	(Persons 12+)	(Persons 12+)
		(In thousands)
33	Kansas City, KS	221	13.4
34	Seattle-Tacoma, WA	212	6.0
35	Nashville, TN	211	16.2
36	Baton Rouge, LA	200	33.8
37	West Palm Beach-Boca Raton, FL	198	16.9
38	Jackson, MS	198	48.2
39	Middlesex-Somerset-Union, NJ	189	13.2
40	Las Vegas, NV	186	11.2
41	Columbia, SC	184	32.7
42	Hudson Valley, CA	181	12.3
43	Phoenix, AZ	179	5.5
44	Riverside-San Bernardino, CA	177	8.9
45	Pittsburgh, PA	176	8.8
46	Augusta, GA	156	34.2
47	Charleston, SC	156	26.4
48	Greenville-Spartanburg, SC	154	17.0
49	Louisville, KY	151	15.0
50	Sacramento, CA	148	7.9

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 broadcast radio franchise are our syndicated radio, cable TV 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.

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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 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,” the “Yolanda Adams Morning Show,” the “Russ Parr Morning Show,” the “DL Hughley Show and Bishop T.D. Jakes’ “Empowering Moments.” Other shows include Reverend Al Sharpton, James Fortune and News One Now with Roland Martin. In addition to being broadcast on Radio One stations, our syndicated radio programming also was available on over 200 non-Radio One stations through the United States as of December 31, 2013.

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 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.

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We have created a national platform of radio stations and syndicated programming in some of the largest African-American consumer markets. This 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 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 10 million unique visitors per month. 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 that has the potential to reach 82% of African-Americans in the United States.

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.

Our Radio Station Portfolio

The following table sets forth selected information about our portfolio of radio stations as of December 31, 2013. Market population data and revenue rank data are from BIA/Kelsey “Investing in Radio Market Report”, 2013 Fourth Edition. Audience share and audience rank data are based on Arbitron 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. We do not operate the station in Boston; thus, it is not reflected on this table.

							Audience	Audience
					Audience	Audience	Share in	Rank in
	2013 Metro	Year		Target Age	Share in 12+	Rank in 12+	Target	Target
Market	Population	Acquired	Format	Demographic	Demographic	Demographic	Demographic	Demographic
Atlanta	9
WPZE-FM		2004	Contemporary Inspirational	25-54	3.3	13(t)	3.3	14(t)
WHTA-FM		2002	Urban Contemporary	18-34	4.7	7	9.5	2
WAMJ-FM		1999	Urban AC	25-54	6.9	3	6.8	2
WUMJ-FM		1999	Urban AC	25-54	*	*	*	*

Washington, DC	7
WKYS-FM		1995	Urban Contemporary	18-34	4.1	7	9.9	2
WMMJ-FM		1987	Urban AC	25-54	5.2	6	5.1	6
WPRS-FM		2008	Contemporary Inspirational	25-54	3.6	10	3.8	10
WOL-AM		1980	News/Talk	35-64	0.0	—	—	—
WYCB-AM		1998	Gospel	25-54	0.0	52t	0.0	53t

Philadelphia	8
WPPZ-FM		1997	Contemporary Inspirational	25-54	2.5	17t	3.1	15
WPHI-FM		2000	Urban Contemporary	18-34	1.8	21t	4.0	10
WRNB-FM		2004	Urban AC	25-54	3.2	14	3.0	16

Houston	6
KMJQ-FM		2000	Urban AC	25-54	6.6	2t	6.2	3t
KBXX-FM		2000	Urban Contemporary	18-34	7.7	1	13.9	1
KROI-FM		2004	News	25-54	0.9	25	0.6	28t

Detroit	12
WGPR-FM		(3)	Urban Contemporary	18-34	3.5	14	7.1	4
WDMK-FM		1998	Urban AC	25-54	4.2	11	4.0	12t
WPZR-FM		1998	Contemporary Inspirational	25-54	2.7	16	2.6	18
WCHB-AM		1998	News/Talk	35-64	0.8	24t	0.6	27t

Dallas	5
KBFB-FM		2000	Urban Contemporary	18-34	3.1	13t	4.6	6
KSOC-FM		2001	Urban AC	25-54	2.3	21	2.0	22t

Baltimore	20
WERQ-FM		1993	Urban Contemporary	18-34	8.4	1	14.3	1
WWIN-FM		1992	Urban AC	25-54	7.1	3	6.6	3
WOLB-AM		1993	News/Talk	35-64	0.5	34t	0.3	38t
WWIN-AM		1992	Gospel	35-64	0.2	46t	0.2	43t

Charlotte	23
WPZS-FM		2004	Contemporary Inspirational	25-54	4.6	9t	4.2	11
WOSF-FM		(4)	Urban AC/Urban Oldies	25-54	5.1	8	4.8	8t
WQNC-FM		2004	Contemporary Inspirational	25-54	**	**	**	**

St. Louis	21
WFUN-FM		1999	Urban AC	25-54	3.0	15	3.0	15
WHHL-FM		2006	Urban Contemporary	18-34	5.1	11	11.1	1

Cleveland	30
WENZ-FM		1999	Urban Contemporary	18-34	5.6	7t	12.9	1
WERE-AM		2000	News/Talk	35-64	0.1	35t	0.1	32t
WZAK-FM		2000	Urban AC	25-54	7.5	3	7.9	3
WJMO-AM		1999	Contemporary Inspirational	25-54	1.0	22t	1.2	19t

Raleigh-Durham	41
WQOK-FM		2000	Urban Contemporary	18-34	5.3	6	11.8	1
WFXK-FM		2000	Urban AC	25-54	***	***	***	***
WFXC-FM		2000	Urban AC	25-54	7.7	3t	7.6	2
WNNL-FM		2000	Contemporary Inspirational	25-54	4.5	8t	4.3	9t

Richmond(1)	54
WCDX-FM		2001	Urban Contemporary	18-34	5.1	8	10.1	2
WPZZ-FM		1999	Contemporary Inspirational	25-54	6.2	5	6.2	5
WKJS-FM		2001	Urban AC	25-54	9.6	1	9.5	1
WKJM-FM		2001	Urban AC	25-54	****	****	****	****
WTPS-AM		2001	News/Talk	35-64	0.3	26t	0.3	25t

Columbus	36
WCKX-FM		2001	Urban Contemporary	18-34	5.2	6	9.4	3
WXMG-FM		2001	Urban AC	25-54	4.0	10	3.2	13

Indianapolis(2)	39
WHHH-FM		2000	Rhythmic CHR	18-34	5.7	8	11.4	1
WTLC-FM		2000	Urban AC	25-54	5.9	6t	4.9	9
WNOU-FM		2000	Pop/CHR	18-34	4.2	11	7.5	4t
WTLC-AM		2001	Contemporary Inspirational	25-54	1.9	18	2.1	17

Cincinnati	29
WIZF-FM		2001	Urban Contemporary	18-34	5.2	5	9.7	2
WOSL-FM		2006	Urban AC	25-54	4.1	9	4.2	11
WDBZ-AM		2007	News/Talk	35-64	0.8	25t	0.4	30t

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 WPZS-FM
	***	Simulcast with WFXC-FM
	****	Simulcast with WKJS-FM
	(1)	Richmond is the only market in which we operate using the diary methodology of audience measurement.
	(2)	WDNI-CD (formerly WDNI-LP), the low power television station that we acquired in Indianapolis in June 2000, is not included in this table.

	(3)	Station was operating under an LMA as of December 31, 2013, that expires December 31, 2016.
	(4)	Station was operating under an LMA as of December 31, 2013; we acquired the station on February 27, 2014.

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Radio Advertising Revenue

For the year ended December 31, 2013, approximately 50.2% 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 65.9% of our net revenue from our core radio business for the year ended December 31, 2013, was generated from the sale of local advertising and 30.4% from sales to national advertisers, including network advertising. Effective, January 1, 2013, we consolidated our syndication network programming within Reach Media to leverage that platform to create the leading syndicated radio network targeted to the African-American audience. In connection with the consolidation, we shifted our syndicated programming sales to a sales force operating out of Reach Media. 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 growth, set advertising rates and adjust programming. Advertising rates are generally highest during the morning and afternoon commuting hours.

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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. In 2008, we acquired CCI, an online social networking company that hosted the website BlackPlanet, the largest social networking site primarily targeted at African-Americans. CCI’s operations were consolidated within the operations of Interactive One. Interactive One also operates the online brands Giantlife, NewsOne, TheUrbanDaily, Elev8 and HelloBeautiful. Interactive One derives such revenue principally from advertising services on non-radio station branded websites, including advertising aimed at diversity recruiting, 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 leads are generated, or ratably over the contract period, where applicable. In addition, Interactive One derives revenue from its studio operations, which provide top-tier third-party clients with digital platforms and expertise. In the case of the studio operations, revenue is recognized primarily based on fixed contractual monthly fees or as a share of the third party’s reported revenue.

In February 2005, we acquired 51% of the common stock of Reach Media, which operates The Tom Joyner Morning Show and related businesses. Reach Media primarily derives its revenue from the sale of advertising inventory in connection with its syndicated radio shows. Mr. Joyner is a leading nationally syndicated radio personality. As of December 31, 2013, The Tom Joyner Morning Show was broadcast on almost 100 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. In December 2009, we increased our ownership interest by acquiring the noncontrolling interest from Citadel Broadcasting Corporation. On December 31, 2012, we further increased our ownership interest in Reach Media from approximately 53.5% to 80% by purchasing additional shares from certain minority shareholders. Immediately after increasing our ownership in Reach Media, we consolidated our syndication operations within Reach Media to leverage that platform to create the leading syndicated radio network targeted to the African-American audience. In connection with the consolidation, we shifted our syndicated programming sales to a sales force operating out of Reach Media.

In January 2004, the Company, together with an affiliate of Comcast Corporation and other investors, launched TV One, a cable television network featuring lifestyle, entertainment and news-related programming targeted primarily towards African-American viewers.

On February 25, 2011, TV One completed a financing to redeem certain investor and management membership interests in the limited liability company (the “Redemption Financing”). The Redemption Financing is structured as senior secured notes bearing a 10% coupon and is due in 2016. Subsequently, on February 28, 2011, TV One utilized $82.4 million of the Redemption Financing to repurchase 15.4% of its outstanding membership interests from certain financial investors and 2.0% of its outstanding membership interests held by TV One management (representing approximately 50% of interests held by management). Beginning on April 14, 2011, the Company began to account for TV One on a consolidated basis after having executed an amendment to the TV One operating agreement with the remaining members of TV One concerning certain governance issues. Finally, on April 25, 2011, TV One utilized the balance of the Redemption Financing to repurchase 12.4% of its outstanding membership interests from an investor. These redemptions by TV One, increased Radio One’s holding in TV One from 36.8% to approximately 50.9% as of April 25, 2011. Since April 2011, our ownership in TV One increased to approximately 51.9% after redemptions of certain management interests.

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We entered into separate network services and advertising services agreements with TV One in 2003. Under the network services agreement, we provided TV One with administrative and operational support services and access to Radio One personalities. In consideration of providing these services, we received equity in TV One, and received an annual management fee of $500,000 for providing services under the network services agreement. The network services agreement, originally scheduled to expire in January 2009 was extended to January 2011, at which time it expired. During 2013, we agreed with Comcast to increase the annual management fee to $1.7 million. While we are receiving the increased fee, we have yet to formally execute a new agreement. Until such time as a new network services agreement is executed, we continue to operate under the terms of the original agreement except for the increased management fee.

Under an advertising services agreement, we provided a specified amount of advertising to TV One. Prior to the consolidation date, the Company was accounting for the services provided to TV One under the advertising services agreement in accordance with ASC 505-50-30, “Equity.” As services were provided to TV One, the Company recorded revenue based on the fair value of the most reliable unit of measurement in these transactions. The most reliable unit of measurement had been determined to be the value of underlying advertising time that was provided to TV One. This agreement was also originally scheduled to expire in January 2009 and was extended to January 2011, at which time it expired. However, we entered into a new advertising services agreement with TV One with an effective date of January 2011 that expired in January 2014. Under the new advertising services agreement, we (i) provided advertising services to TV One on certain of our media properties and (ii) acted as media placement agent for TV One in certain instances. In return for such services, TV One paid us for such advertising time and services and, where we acted as media placement agent, paid us a media placement fee equal to the lesser of 15% of media placement costs or a market rate, in addition to reimbursing us (or paying in advance) for all actual costs associated with the media placement services. These costs are eliminated in consolidation. We are currently evaluating the need for a new advertising services agreement.

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.

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 core radio franchise and all of 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 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 assure 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.

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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 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, Google^TM and Microsoft^TM, social networking sites such as 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.

Federal Regulation of Radio Broadcasting

The radio broadcasting industry is subject to extensive and changing regulation by the Federal Communications Commission (“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 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.

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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 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, 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 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 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 sound recording royalties to artists, musicians or record companies 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.

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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 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 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. Stations which we do not own as of December 31, 2013, 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.

Antenna

ERP (FM)

Height

Power

(AM)

Expiration

Year of

FCC

(AM) in

HAAT in

Operating

Date of FCC

Market

Station Call Letters

Acquisition

Class

Kilowatts

Meters

Frequency

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

4/1/2012

(9)

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

10/1/2011

(9)

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(1)

1997

0.27

338.0

103.9 MHz

8/1/2014

WRNB-FM(2)

2000

17.0

263.0

100.3 MHz

8/1/2014

WPHI-FM(3)

2004

0.78

276.0

107.9 MHz

6/1/2014

Houston

KMJQ-FM

2000

100.0

524.0

102.1 MHz

8/1/2021

KBXX-FM

2000

100.0

585.0

97.9 MHz

8/1/2013

(9)

KROI-FM

2004

21.36

526

92.1 MHz

8/1/2021

Detroit

WDMK-FM

1998

20.0

221.0

105.9 MHz

10/1/2012

(9)

WCHB-AM

1998

50.0

N/A

1200 kHz

10/1/2020

WPZR-FM(4)

1998

50.0

152.0

102.7 MHz

10/1/2012

(9)

Dallas

KBFB-FM

2000

99.0

574

97.9 MHz

8/1/2013

(9)

KSOC-FM

2001

100.0

591.0

94.5 MHz

8/1/2021

Baltimore	WWIN-AM	1992	C	0.5	N/A	1400 kHz	10/1/2019
	WWIN-FM	1992	A	3.0	91.0	95.9 MHz	10/1/2019
	WOLB-AM	1993	D	0.25	N/A	1010 kHz	10/1/2011	(9)
	WERQ-FM	1993	B	37.0	174.0	92.3 MHz	10/1/2011	(9)

Charlotte	WPZS-FM(5)	2000	C3	10.5	154.0	92.7 MHz	12/1/2019
	WQNC-FM(6)	2004	A	5.2	107.0	100.9 MHz	12/1/2019

St. Louis	WFUN-FM	1999	C3	24.5	102.0	95.5 MHz	12/1/2012	(9)
	WHHL-FM	2006	C2	50.0	140.0	104.1 MHz	2/1/2013	(9)

Cleveland	WJMO-AM	1999	B	5.0	N/A	1300 kHz	10/1/2012	(9)
	WENZ-FM	1999	B	15.0	272.0	107.9 MHz	10/1/2020
	WZAK-FM	2000	B	27.5	189.0	93.1 MHz	10/1/2012	(9)
	WERE-AM	2000	C	1.0	N/A	1490 kHz	10/1/2020

Raleigh-Durham	WQOK-FM	2000	C2	50.0	146.0	97.5 MHz	12/1/2011	(9)
	WFXK-FM	2000	C1	100.0	299.0	104.3 MHz	12/1/2019
	WFXC-FM	2000	C3	8.0	146.0	107.1 MHz	12/1/2011	(9)
	WNNL-FM	2000	C3	7.9	176.0	103.9 MHz	12/1/2019

Richmond	WPZZ-FM	1999	C1	100.0	299.0	104.7 MHz	10/1/2019
	WCDX-FM	2001	B1	4.5	235.0	92.1 MHz	10/1/2019
	WKJM-FM	2001	A	6.0	100.0	99.3 MHz	10/1/2019
	WKJS-FM	2001	A	2.3	162.0	105.7 MHz	10/1/2019
	WTPS-AM	2001	C	1.0	N/A	1240 kHz	10/1/2019

Boston

WILD-AM

2001

4.8

N/A

1090 kHz

4/1/2022

Columbus

WCKX-FM

2001

1.9

126.0

107.5 MHz

10/1/2012

(9)

WXMG-FM(7)

2001

6.0

100.0

106.3 MHz

10/1/2020

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

WNOU-FM

2000

6.0

100.0

100.9 MHz

8/1/2012

(9)

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(8)

2006

3.1

141.0

100.3 MHz

10/1/2020

(1)

WPPZ-FM operates with facilities equivalent to 3kW at 100 meters.

(2)

WRNB-FM effective September 1, 2011 (formerly WPHI-FM).

(3)

WPHI-FM effective September 1, 2011 (formerly WRNB-FM).

(4)

WPZR-FM effective October 31, 2011 (formerly WHTD-FM).

(5)

WPZS-FM effective September 13, 2012 (formerly WQNC-FM).

(6)

WQNC-FM effective September 13, 2012 (formerly WPZS-FM).

(7)

WXMG-FM effective September 23, 2011 (formerly WJYD-FM).

(8)

WOSL-FM effective November 14, 2012 (formerly WMOJ-FM).

(9)

A number of our applications to renew the licenses of our stations remain pending before the FCC. In most cases, this is due to “enforcement holds” imposed upon the applications by the FCC’s Enforcement Bureau due to pending, but as yet unaddressed, complaints by listeners about material allegedly aired on the affected stations. Most of these complaints relate to the alleged broadcast of indecent matter. The FCC has a backlog of thousands of such pending complaints, and the license renewal applications of a substantial number of broadcast stations nationwide are subject to “enforcement holds.” Under the Communications Act, the authority of all of our stations with pending license renewal applications to operate is automatically extended while the renewal application remains pending.

	20

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 in certain instances.

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 corporation 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. corporations. 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 a broadcast license may be granted to or held by any such entity, 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 have been 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.

The FCC generally 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