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Rating Action: Moody's affirms Urban One's CFR at B3; outlook changed to positiveGlobal Credit Research - 27 Jan 2022New York, January 27, 2022 -- Moody's Investors Service ("Moody's") affirmed Urban One, Inc.'s ("Urban One") B3 Corporate Family Rating (CFR), B3-PD Probability of Default Rating (PDR) and B3 senior secured note rating. The outlook was changed to positive from stable.The affirmation of the CFR and positive outlook reflect Urban One's strong performance during the pandemic and reduction in leverage to 5.2x as of Q3 2021 (including standard Moody's adjustments) from 7x in 2019, as well as Moody's expectations for continued revenue growth in the low single digit range. However, Moody's expects that Urban One will consider strategic acquisitions or investments to expand existing operations, which has the potential to lead to higher leverage levels depending on the type and magnitude of the actions and how they will be financed. Urban One has $111 million in cash as of Q3 2021 which would be a potential source of funding for a portion of future acquisitions or investments. Urban One's speculative grade liquidity (SGL) rating remains unchanged at SGL-2.Affirmations:..Issuer: Urban One, Inc..... Corporate Family Rating Affirmed B3.... Probability of Default Rating, Affirmed B3-PD....Senior Secured Global Notes, Affirmed B3 (LGD4)Outlook Actions:..Issuer: Urban One, Inc.....Outlook, Changed To Positive From StableRATINGS RATIONALEUrban One's B3 CFR reflects high leverage (5.2x as of Q3 2021 including Moody's standard adjustments) and Moody's expectation of modest revenue growth going forward. The radio industry was particularly hard hit by the pandemic and is also being negatively affected by the shift of advertising dollars to digital mobile and social media as well as heightened competition for listeners from a number of digital music providers. The radio division will continue to recover in 2022, but secular pressures and the cyclical nature of radio advertising demand have the potential to exert additional pressure on operating performance over time. Urban One is also likely to consider strategic acquisitions or investments that could increase leverage levels, but Moody's expects Urban One will pursue lower leverage levels over the long term.Urban One benefits from diversified operations in radio, cable TV, syndicated programming, and digital media that primarily targets African American and urban consumers as well as a minority ownership position in the MGM National Harbor gaming resort which led to good performance despite the impact of the pandemic. Urban One has diversified operations over the past several years through investments in Reach Media and TV One, completing the company's transition from a pure play radio operator to a more diversified media company.The cable TV division is supported by carriage fees from cable and satellite companies and lower content production costs led to positive overall EBITDA growth despite declines in other business lines during the pandemic. While the cable division has performed well, the division faces challenges from the transition of media consumption to video streaming services and a lower subscriber base. Performance will likely continue to benefit from advertiser interest in reaching Urban One's core customer base.ESG CONSIDERATIONSUrban One's ESG Credit Impact Score is highly-negative (CIS-4) driven by the company's exposure to governance risks which is highly-negative (G-4). Urban One has reduced leverage, but it remains high and will continue to be subject to the secular pressures in the radio division. The company will also pursue additional acquisitions and investments including those outside the credit group that could pressure leverage levels, although Moody's expects the company to maintain lower leverage levels over the long term. Urban One's exposure to social risks is moderately-negative (S-3). A significant percentage of the company's revenue and profitability are generated from radio broadcasting which faces risk from social and demographical trends as competition for listeners from digital music services has increased and advertising dollars have shifted to digital and social media advertising.Urban One's Speculative Grade Liquidity (SGL) rating of SGL-2 reflects good liquidity with a cash balance of $111 million and access to an undrawn $50 million ABL facility due 2026 (unrated). The free cash flow (FCF) to debt percentage ratio was 5% LTM Q3 2021, but Moody's projects the ratio will increase to the high single digits in 2022.In June 2021, Urban One received a $7.5 million paycheck protection program (PPP) loan from the US government which may be forgiven after approval from the Small Business Administration. Urban One receives an annual distribution from its ownership position in the MGM National Harbor Casino ($7 million LTM Q3 2021) which will likely grow modestly in 2022.Urban One's senior secured notes due 2028 are not subject to financial covenants, but the ABL facility is subject to a fixed coverage test.The positive outlook reflects Moody's expectation for revenue and EBITDA growth in the low single digits in 2022, supported by strong political advertising spend in the 2022 mid-term elections. Urban One will consider strategic investments and acquisitions which would increase the company's scale, but any debt funded activity could increase leverage. Moody's projects FCF as a percentage of debt to be in the high single digit range with excess cash to be used for additional investments, acquisitions, or debt repayment. Leverage has declined over the past two years and Moody's expects that Urban One will pursue lower leverage levels over the long term.FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGSUrban One's ratings could be upgraded if Moody's expects debt-to-EBITDA to be sustained below 6x pro forma for any acquisitions or investments, with positive organic growth in the radio and cable network operations. A good liquidity position, including mid-single digit percentage free cash flow-to-debt would also be required.Urban One's ratings could be downgraded if acquisitions or weak operating performance led to debt-to-EBITDA sustained above 7x. A weakened liquidity position could also lead to a downgrade.Urban One, Inc., formerly known as Radio One, Inc., headquartered in Silver Spring, MD, is an urban oriented multi-media company that operates or owns interests in radio broadcasting stations (34% of revenue as of LTM Q3 2021 generated by 63 stations in 13 markets), cable television networks (44% of revenue), an 80% ownership in Reach Media (9% of revenue), and ownership of Interactive One, its digital platform, as well as other internet based properties (13% of revenue), largely targeting an African-American and urban audience. The Chairperson, Catherine L. Hughes, and President, Alfred C. Liggins III (Chairperson's son), maintain voting control and hold a significant ownership position. The company reported consolidated revenue of $424 million as of the LTM ended Q3 2021.The principal methodology used in these ratings was Media published in June 2021 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1276775. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.REGULATORY DISCLOSURESFor further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody's Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.The ratings have been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.These ratings are solicited. Please refer to Moody's Policy for Designating and Assigning Unsolicited Credit Ratings available on its website www.moodys.com.Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.Moody's general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1288235.The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the EU and is endorsed by Moody's Deutschland GmbH, An der Welle 5, Frankfurt am Main 60322, Germany, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody's office that issued the credit rating is available on www.moodys.com.The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the UK and is endorsed by Moody's Investors Service Limited, One Canada Square, Canary Wharf, London E14 5FA under the law applicable to credit rating agencies in the UK. Further information on the UK endorsement status and on the Moody's office that issued the credit rating is available on www.moodys.com.Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating. Scott Van den Bosch VP - Senior Credit Officer Corporate Finance Group Moody's Investors Service, Inc. 250 Greenwich Street New York, NY 10007 U.S.A. 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