URBAN ONE, INC.
For the period ended Dec 31, 2024. Filed Mar 27, 2025.
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FY2024 · Filed Mar 27, 2025
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Item 8. Report of Independent Registered Public Accounting Firm
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Urban One, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Urban One, Inc. and subsidiaries (the Company) as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive (loss) income, changes in stockholders' equity and cash flows for each of the two years in the period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2024, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Impairment of Radio Market, iOne, and TV One Goodwill
| Description of the Matter | At December 31, 2024, the Company's goodwill balance attributable to its Radio Market reporting units, iOne reporting unit, and TV One reporting unit was $30.0 million, $7.2 million, and $144.9 million, respectively. As explained in Note 13 to the consolidated financial statements, goodwill is subject to annual impairment assessments, or more frequently if events or circumstances indicate an impairment may exist. The Company performed quantitative annual and interim assessments and recorded impairments of $20.2 million related to its TV One reporting unit during the year ended December 31, 2024. No impairment related to its Radio Market or iOne goodwill were recorded during the year ended December 31, 2024. |
|---|---|
| Auditing the Company's impairment assessments for the Radio Market, iOne, and TV One goodwill is complex and highly judgmental due to the significant estimation required by management in determining the fair value of the reporting units. The Company utilized a discounted cash flow approach to estimate the fair value of the Radio Market, iOne, and TV One reporting units which involves assumptions, including projected financial information for revenue, revenue growth rates, operating profit margins, terminal growth rates, and discount rates that are sensitive to and affected by economic, industry, and company-specific qualitative factors. | |
| How We Addressed the Matter in Our Audit | To test the estimated fair value of the Company’s Radio Market, iOne, and TV One reporting units, we performed audit procedures that included, among others, assessing the valuation methodologies, and testing the significant assumptions described above used in the Company’s analyses, as well as testing the completeness and accuracy of the underlying data used by the Company in its analyses. We compared the significant assumptions to current industry and market trends, and to the Company's historical results. We assessed the historical accuracy of management’s forecasts and performed sensitivity analyses of the significant assumptions to evaluate the potential change in the fair values of the reporting units resulting from hypothetical changes in underlying assumptions. We involved our valuation specialist to assist in our evaluation of the methodologies used and the most judgmental assumptions used by the Company to determine the estimated fair value of the reporting units. In addition, we tested management’s reconciliation of the aggregate fair value of its reporting units to the market capitalization of the Company. |
Impairment of Indefinite-lived Intangible Assets
| Description of the Matter | At December 31, 2024, the Company's balance related to certain of its indefinite-lived intangible assets was $257.8 million related to radio broadcasting licenses and $26.6 million related to the TV One Trade Name. As explained in Note 13 to the consolidated financial statements, indefinite-lived intangible assets are subject to annual impairment assessments, or more frequently if events or circumstances indicate an impairment may exist. The Company performed quantitative annual and interim assessments and recorded impairments of $118.5 million and $13.1 million related to its radio broadcasting licenses and TV One Trade Name, respectively, during the year ended December 31, 2024. |
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| Auditing the Company's impairment assessments for indefinite-lived intangible assets is complex and highly judgmental due to the significant estimation required by management in determining the fair value of the radio broadcasting licenses and TV One Trade Name. For the radio broadcasting licenses, the Company utilized a discounted cash flow approach for estimating the fair value of these assets which involves significant assumptions, including projected financial information for revenue growth rates by market, mature market share, operating profit margins, and discount rates. For the TV One Trade Name, the quantitative estimate of fair value was determined using the relief from royalty method, which requires significant assumptions, including estimates related to revenue, revenue growth rates, royalty rate, and discount rate. All of the assumptions are sensitive to and affected by economic, industry, and company-specific qualitative factors. | |
| How We Addressed the Matter in Our Audit | To test the estimated fair value of the Company’s radio broadcasting licenses and TV One Trade Name, we performed audit procedures that included, among others, assessing the valuation methodologies, and testing the significant assumptions described above used in the Company’s analyses, as well as testing the completeness and accuracy of the underlying data used by the Company in its analyses. We compared the significant assumptions to current industry and market trends, and to the Company's historical results. In addition, we assessed the historical accuracy of management’s forecasts and performed sensitivity analyses of the significant assumptions to evaluate the potential change in the fair values of the radio broadcasting licenses and TV One Trade Name resulting from hypothetical changes in underlying assumptions. We involved our valuation specialist to assist in our evaluation of the methodologies used and the most judgmental assumptions used by the Company to determine the estimated fair value of the radio broadcasting licenses and TV One Trade Name. |
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2023.
Tysons, Virginia
March 27, 2025
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
| As of | ||
|---|---|---|
| December 31, 2024 | December 31, 2023 | |
| ASSETS | ||
| CURRENT ASSETS: | ||
| Cash and cash equivalents | $137,090 | $233,090 |
| Restricted cash | 484 | 480 |
| Trade accounts receivable, net of allowance for expected credit losses of $4,553 and $8,638, respectively | 113,847 | 133,194 |
| Prepaid expenses | 8,156 | 9,504 |
| Current portion of content assets | 36,861 | 29,748 |
| Other current assets | 8,941 | 15,950 |
| Total current assets | 305,379 | 421,966 |
| CONTENT ASSETS, NET | 86,868 | 82,448 |
| PROPERTY AND EQUIPMENT, NET | 27,822 | 28,661 |
| GOODWILL | 196,425 | 216,599 |
| RIGHT OF USE ASSETS, NET | 31,055 | 31,649 |
| RADIO BROADCASTING LICENSES | 257,759 | 375,296 |
| OTHER INTANGIBLE ASSETS, NET | 30,860 | 49,104 |
| OTHER ASSETS | 8,622 | 5,450 |
| Total assets | $944,790 | $1,211,173 |
| LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS AND STOCKHOLDERS’ EQUITY | ||
| CURRENT LIABILITIES: | ||
| Accounts payable | $19,945 | $20,000 |
| Accrued interest | 18,028 | 22,342 |
| Accrued compensation and related benefits | 11,899 | 14,420 |
| Reserve for audience deficiency | 22,383 | 12,779 |
| Current portion of content payables | 14,233 | 22,389 |
| Current portion of lease liabilities | 7,428 | 10,648 |
| Other current liabilities | 20,386 | 30,052 |
| Total current liabilities | 114,302 | 132,630 |
| LONG-TERM DEBT, net of original issue discount and issuance costs | 579,069 | 716,246 |
| CONTENT PAYABLES, net of current portion | 6,020 | 3,402 |
| LONG-TERM LEASE LIABILITIES | 24,373 | 22,377 |
| OTHER LONG-TERM LIABILITIES | 12,788 | 24,995 |
| DEFERRED TAX LIABILITIES, NET | 29,305 | 20,938 |
| Total liabilities | 765,857 | 920,588 |
| COMMITMENTS AND CONTINGENCIES (NOTE 19) | ||
| REDEEMABLE NON-CONTROLLING INTERESTS | 7,988 | 16,520 |
| STOCKHOLDERS’ EQUITY: | ||
| Convertible preferred stock, $.001 par value, 1,000,000 shares authorized; no shares outstanding at December 31, 2024 and 2023 | — | — |
| Common stock — Class A, $.001 par value, 30,000,000 shares authorized, 7,911,622 shares issued, and 7,002,728 shares outstanding at December 31, 2024 and 9,853,672 shares issued and outstanding at December 31, 2023 | 8 | 10 |
| Common stock — Class B, $.001 par value, 150,000,000 shares authorized; 2,861,843 shares issued and outstanding at December 31, 2024 and 2023, respectively | 3 | 3 |
|---|---|---|
| Common stock — Class C, $.001 par value, 150,000,000 shares authorized; 2,045,016 shares issued and outstanding at December 31, 2024 and 2023, respectively | 2 | 2 |
| Common stock — Class D, $.001 par value, 150,000,000 shares authorized; 34,148,922 and 34,116,485 shares issued and outstanding at December 31, 2024 and 2023, respectively | 35 | 34 |
| Treasury Stock, at cost — 908,894 and no shares at December 31, 2024 and 2023, respectively | (1,345) | — |
| Additional paid-in capital | 1,011,007 | 1,007,387 |
| Accumulated deficit | (838,765) | (733,371) |
| Total stockholders’ equity | 170,945 | 274,065 |
| Total liabilities, redeemable non-controlling interests and stockholders’ equity | $944,790 | $1,211,173 |
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.