Alfred Liggins - CEO Peter Thompson - CFO.

Aaron Watts - Deutsche Bank David Farber - Credit Suisse Chris Paciello - Penn Capital Lance Vitanza - CRT Capital Tiffany Gouch - Sweet Entertainment.

Welcome to Radio One’s First Quarter Conference Call. I've been asked to begin the call with the following Safe Harbor statement. During this call, Radio One may share with you certain projections or forward-looking statements regarding future events or its future performance.

The company cautions you that certain factors including risks and uncertainties referred to in the 10-Ks, 10-Qs and other reports periodically filed with the Securities and Exchange Commission could cause the company’s actual results to differ materially from those indicated by its projections or forward-looking statements.

This call will present information as of May 01, 2015. Please note that Radio One disclaims any duty to update any forward-looking statements made in the presentation. In this call, Radio One may also discuss some non-GAAP financial measures in talking about its performance.

These measures will be reconciled to GAAP either during the course of this call or in the company’s press release, which can be found at its website at www.radio-one.com. An audio replay of the conference will also be available on Radio One’s corporate website at www.radio-one.com under Investor Relations Section of the webpage.

The replay will be made available on the website for seven days after the call. No other recordings or copies of this call are authorized or maybe relied upon. I’ll now turn the call over to Alfred C. Liggins, Chief Executive Officer of Radio One, who is joined by Peter D. Thompson, the company's Chief Financial Officer. Mr.

Liggins?.

Thank you, operator and welcome everybody to Q1 earnings call.

We've put out a lot of information as of late, we've been in the middle of a number of transactions and so there are lots of great things happening at the company at present and as many of you know, maybe most of you know, we completed the long talked-about acquisition of Comcast 47% stake in TV One, giving Radio One full ownership of this fast-growing asset to further diversify our revenues and cash flow.

This acquisition was down with the refinance of both Radio and TV One's first lien debt tranches at substantially lower interest rates, resulting in a doubling of the company's free cash flow profile, which will allow us to de-lever on a consistent basis.

The TV One asset continues to make great progress with long-term renewals of our affiliate agreements with Comcast, Charter and now Verizon just this week having all signed new long-term agreements securing and improving our carriage as well as locking in favorable annual increase in license fees.

TV One ratings are also on fire so far in 2015 with total day 25 to 54 ratings plus 15% and prime time 25 to 54 ratings plus 28% year-to-date, while most of our competitive set is down double-digit year-to-date.

TV One will also post a mid 60-ish million EBITDA number in 2015, which has the $550 million valuation we bought Comcast at is about an 8.5 times purchase multiple, which we think is very attractive. While our radio business continues to see headwinds, it is improving sequentially from Q1 to Q2.

Peter is going to talk more deeply about the numbers in each of the divisions next. So before I turn it over, Peter I also want to acknowledge that we have also made our first $5 million investment in the MGM Casino project in Prince George’s County Maryland. When we get into Q&A, we will talk a little bit more about that.

yeah, we've talked about it before, but we think that's a very, very attractive deal for the company, that's going to continue to diversify our revenue and our cash flow.

So with that, Peter?.

Thanks Alfred. So, net revenue was approximately $105.8 million for the quarter ended March 31, 2015, a decrease of 4.8% year-to-year. Adjusting for time and differences for two major events, consolidated net revenue increased by approximately $2.7 million or 2.7%, driven by advertising and affiliate revenue growth from our cable television segment.

A breakdown of revenue by source can be found on Page 5 of the press release. Net revenue for the Radio division was down 6.7% when adjusted for time and difference of a single major event. Charlotte, Cincinnati, Dallas, and St. Louis clusters showed revenue growth in Q1.

However, these gains were offset by declines in our four biggest clusters Huston, Washington DC, Atlanta and Baltimore. For the first quarter, local revenue was down 7.9% and national was down 7.2% for our radio stations. The radio markets in which we operate were down by 4.5% for the quarter.

By category automotive was plus 4%, entertainment was plus 4%, healthcare was plus 6%, but we were hit by reduced cellular spending, which was down 35% across four large clients, driving our telecommunications category down 22% overall and by grocery stores, which were minus 26% and pushed our retail category down 19% year-over-year and that was specific to two large clients.

For Q2, our call radio business is pacing down mid single digits after a soft month in April. Our cable television revenue is pacing up strong double-digits for the second quarter. Net revenue for Reach Media increased 5.9% when adjusted for timing difference of a major event and the increase was mainly due to strong advertiser demand.

Net revenues for our Internet business decreased 10.9% for the three months ended March 31 due to a decline primarily in direct revenue. We recognized approximately $45.7 million of revenue from our cable television segment during the three month ended March 31, 2015, compared to approximately $39.7 million for the same period in 2014.

The increase was due to higher advertising demand and an increase in subscriber rates of certain affiliates. Advertising sales were up 9.9% and affiliate sales were up 21% year-over-year. Cable subscribers, as measured by Nielsen, finished the quarter at $56.9 million compared to $56.6 million at the end of December.

Operating expenses, excluding depreciation, amortization, impairments and stock-based compensation decreased to approximately $79.5 million in the first quarter from approximately $85.9 million for the prior year, mainly driven by the timing difference on events.

For the first quarter, consolidated station operating income was approximately $36.6 million, up 4% from last year. Adjusted consolidated EBITDA was $26.6 million, an increase of approximately 1.6% year-to-year or 8.3% on adjusted for the event timing differences.

Interest expense was approximately $19.2 million for the first quarter down from approximately $21.9 million from the same period last year decrease in interest expense is primarily due to the lower interest rate associated with the nine and a quarter senior subordinated notes due 2020.

The company made cash interest payments of approximately $25.8 million in the quarter. Cash interest payments were higher than in prior year due to the timing of the semi-annual payments, which are due on the 2020 notes.

Net loss was approximately $18.5 million or $0.39 per share compared to a net loss of approximately $25.2 million or $0.53 per share for the same period in 2014.

For the first quarter, capital expenditures were approximately $2.9 million compared to $1.7 million in Q1 of 2014 and this increase was mainly due to the relocation of our Dallas market office. So it was lumpy quarter. Q1 cash taxes paid were approximately $54,000.

The company received dividends from TV One in the amount of $6.3 million in the first quarter. There were no share repurchases during the quarter. Company’s cash and cash equivalents by segment are as follows; radio and internet approximately $37.6 million, Reach Media approximately $7 million, cable television approximately $16.4 million.

In addition to cash and cash equivalents, cable television segment has long-term investments of approximately $593,000. As of March 31, 2015, Radio One had total debt net of cash balances of approximately $758.7 million.

On April 17, company completed the acquisition of Comcast 47.5% interest in TV One and the simultaneous refinancing of Radio One is approximately $368 million, a first lien debt together with TV One is approximately $119 million of 10% notes.

The purchase price of $223 million and redemption of existing debt was financed by a $350 million term loan priced at LIBOR plus $450 million. $350 million of senior secured notes priced at 7.38 a $12 million selling note, which was priced at 10.47%.

Transaction will be significantly accretive to free cash flow, whilst our borrowings increased by $224 million, the reduction in our overall cost of capital means that the incremental annual cash interest expense is only approximately $5 million.

As a result of the transaction, pro forma 2014 free cash flow of $24 million more than doubles to $56 million. For bank covenant purposes, pro forma LTM bank EBITDA was approximately $142.1 million, which includes adjustments to the new Comcast carriage agreement and including the add back of non-cash loans amortization expenses.

And with that I’ll hand back to Alfred..

Thank you, Peter.

The acquisition of the other half of TV One really kind of completes our strategy of becoming a multi-platform African American targeted media company and our strategy continues to be that -- very similar to that of Univision and in the state of really kind of debating with advertisers the merit of television versus digital, versus radio, versus syndicated radio or events.

We aim to deliver it all and we’ve actually started to put more resources behind our in-house branded content studio/agency, which we recently announced called 1X for one experience.

So we’re we’ve hired staff a number of professionals advertising professionals, creative directors, copy writers, account people to help us service accounts like Walmart, University of Phoenix, J&J, which we go in and we actually create campaigns and content ideas that will run across all of our platforms and other platforms if they so desire.

We find that advertisers now have the ability to find impressions everywhere with the Internet and what they’re really looking for a better ideas to connect to important target market segments and the African American market segment continues to grow and we got a unique strategy in this area.

And we think that our MGM investment plays into that, because Prince George's County marketplace is about 70 something percent black it’s a close in the suburb of Washington DC so it’s within the stone’s throw from our corporate headquarters, we operate a lot of radio stations in Washington, Baltimore, and Richmond the surrounding area.

So not only does our investment we think make a very attractive investment we’ve got in an marketing agreement with them for them to spend significant dollars on our surrounding radio stations throughout the five years, the first years of our deal with them.

Those of you who don’t know we have invested it’s a total $40 million investment we’ve put in $5 million or two weeks ago..

Yeah, April 10..

April 10. The other $35 million is a right but not a obligation, but because of such a great deal we plan to do it. The other $35 million will go in by mid-2016.

We anticipate the Casino opening the earliest July 2016 and if it slips into first quarter we’re going to get a percentage of the gaming revenues, which will be reported to the state of Merlin as a cash distribution on an annual basis.

State of Merlin believes those gaming revenues are going to be $750 million our percentage is roughly a point on that so we got until nice cash on cash return of about 17% on that.

And then we’re going to own about 6.6% of the Casino as a residual equity interest that after the end of the year 3 we’re able to put back to MGM they don’t have to call on it we have to put.

So we can stand the deal as long as we want and we believe that it’s a start of a great partnership with them in just another effort on our part to use our platform to build value in other area.

So we’re building value in a pretty lucrative and interest business with a partner in those what they’re doing, but we’re also getting value from an advertising perspective and it’s relatively low risk and high return effort. So with that operator I’d like to open it up to Q&A from those in line..

[Operator Instructions] Our first question will come from Aaron Watts with Deutsche Bank..

Hey guys, thanks for taking the questions. Wanted to start on, on the radio side Alfred, definitely a little bit of a step back in terms of the broadcast business in the first quarter.

Can you maybe talk about month to month how it felt and I think you said April kind of turned the wrong direction, maybe what you’re feeling not only from the first quarter but as you look ahead now however, far ahead you can tell how the business feels to you?.

Yeah look we've read the -- when we get the pacing, we read them off of what’s coming out of our system. So, early on I think it was in January, pacing’s were positive and then as the quarter went on, they continued to weaken. And so January for us was minus 3, 4, February was minus 6, 7, March minus 4, 5..

Yeah, March is when it really starts to drop off. March and April really softened. So we were down double-digits in March and then April’s kind of minus 6.5..

And while we’re seeing improvement in Q2, there is still negative mid single digits. And so, yeah I think and I’ve said before, some of that is self inflected, well, I don't want to say, we do a competitor in Huston, which was our largest market.

So that’s not self inflected, but that’s not a market problem and we’ve made some changes there that are, improving our position as we speak. Self inflected was Washington in that our ratings were down there. But also last year that market was one of the worst.

It was one of the top four worst performing markets in the country in terms of negative revenue growth. So for the good news is so far this year through March its up almost 3%. So we think, things are going to be stabilizing there, but most of the markets that we're operating in irrespective of how were doing there are negative.

And people ask why that is and I always say look, we’re not in a bad business. We’re in a good business audio is still very important. Radio is ubiquitous.

It’s just that there is much more competition across all, for all traditional mediums, to share advertising dollars and so that money has to go to come from somewhere and it comes from the traditional mediums.

And where that ultimately levels out we’re not sure, but our job is to do the very best that we can in a tough market and get back to grabbing market share and then figure out other ways to insulate ourselves and diversify ourselves.

So, I would say again that Q2 is still negative and I think, you’re hearing that from other companies cumulus that and I think if you dig into the eye, heart, numbers their local markets were down too but they're offsetting it with their other businesses. So traffic and syndication and live events and we’re offsetting it with our cable network..

Okay, no that’s helpful.

Alfred, if I take that a step further, if you look into your crystal vault, do you feel like the industry as a whole can it get back to a flat or growth state or do you think that -- so I guess this is a temporary lag in spending with radio or do you see it more as just dollars are shifting out and you're kind of looking this down whatever..

I actually do think it will, because I think that you have audio delivery and then you have video delivery and I think that audio delivery has always been a part of the advertising mix. I don’t see that changing.

I saw the iHeart announcement and they're moving to programmatic and by the way, catch brought us and talked about, the promote programmatic strategy that they have for the industry. And I think that that’s going to be something that’s helpful.

I believe that the difference between a Pandora and a Spotify in delivering audio just basically come down into sort of their software systems that allow people to subscribe and stream user can create their own play list.

I believe that that's a function that is duplicateable We haven’t followed that strategy in individual company, but I think that’s duplicatable by the radio industry and ultimately, I don’t see there is nothing that much more special about their form of audio delivery or ours. We’re streaming all of radio stations online.

So if you want to listen to us on your Smartphone, you can. And I believe that we have -- we’ve got the incumbent advantage and that we’ve got most of the audience now. We’ve got most of the revenue and we currently have a favorable, cost structure as it comes -- when it comes to royalties.

I don’t believe -- I believe it’s a fair cost structure, given the value we bring to the artist and to the record industry in promoting their music. They continue to say that Radio One brings value and I think its ultimately going to be hard for the business model on the webcasters to continue to payout half of their revenues in royalties.

But again we give our music away free. We’re not charging for it. So if they are charging for it and have two revenues streams, why shouldn’t they pay more and they’re actually having to sell advertising now.

So it’s not as if Pandora and all these guys were going to have commercial free services that are going to be widely different than terrestrial radio in order to offset their cost base they've got to sell ads.

And they may start out now with three or four minutes, but trust me, there was a time when radio was running six minutes and FM radio you were running very few units and over time economic reality set in and you run more units and I think that that is happening and will happen there.

So I do think it will equalize and get back to a more normalized flat to modestly growing, plus I also believe that at least for us, our online strategy is more about display native advertising video content and our radio stations are great drivers of traffic to those websites that we own.

And I think a lot of the radio guys are figuring out how to utilize their and here comparative advantage of large and strong local sales forces to find other products to set local advertisers..

Yeah, alright that makes sense. Just shifting over to the television side, the new deals, distribution deals you've been striking, I guess the Verizon just recently.

Can you just remind me what’s kind of the tenure of those deals? Are they trending longer in length than they use to or on average how many years are we looking at?.

We’re different, bound in form of constant confidentiality to not disclose too much about these deals, but let's just say ours are longer than normal and if you were to and there is a range of them.

There is three of them that are already done, we’re in discussions with everybody else and I would say there on the short end of 5-ish years and on the long end 10-ish years and I going to tell you who’s who..

Okay. And last one for me a little bigger picture as we hear about and see more and more over the top streaming options and then also some of the smaller bundle packages that are being put out there now..

Yep..

Where does TV One fit into that world and how do you get paid for that?.

So it's interesting. So TV One is really still a nascent service. We’re 11 years old. We don’t even have dish yet and we got to figure out a strategy of how to get this. We’re in the middle, we’ve hired a consultant that I’ve worked with for a number of years.

It is very good his specialty is international and right now she is developing our international strategy and by that she is communicating with distributors, in the Caribbean, in Africa, in Canada about how do we expand our brand in those territories and by the way BET is an all with those territories, so we have that opportunity.

We’ve not approached anybody about Netflix or Hulu or Amazon deals. We haven’t even talked to Amazon or Apple yet and we’re on the front end of that process. All the while we’re continuing to create more original content and think that we’re going to be in a prime position to generate revenue in those areas.

And we haven't thought about it yet but it came up in our affiliate deals because obviously over the top is, on the top of mind for all of the distributors. We’re learning what that business model is and can be for us, but here is what I believe.

I believe with all of these assets targeted to African Americans, one of the reasons I think TV One is successful is we use our radio platform to bark TV and ever since we've owned it or created it, we've barked TV One almost on an hourly basis every day and I think it's helped grow our brand in a market where you're seeing other networks trend down significantly, we're trending up.

So that's the power of the platform to sell something, to sell TV One to black consumers. I think we have that same ability to sell some over the top service if it's BlackPlanet TV.

Now we've some restrictions on not being able to run the content on TV One simultaneously with some over the top or online service, but you could do it with library content, you could do it with content that hasn’t hit the cable network yet, you could do it with content that you've licensed other places just for that service, but if anybody has the ability to market and over the top service to African-Americans, I think it's us.

One of the things we've learned here is when we try to do a lot of things at the same time particularly when you've been dealing with a legacy business that has come out of a growth mode, it's challenging your best to focus.

So we've been focused on things that keep us in business for the long term and create the most immediate long-term value and that was getting the distribution deals done and buying the other half of TV One and stabilizing radio and getting iONE to profitability and getting Reach back up to substantial profitability.

But all these other things that I've mentioned -- just mentioned to you that you asked about, those are in our future and those are opportunities and we will focus on them as we're getting past these other things. Once we get all of our renewals done, it's like okay, what's the next opportunity to create value..

All right. Great. Appreciate the thoughts..

Thank you..

And our next question will come from David Farber with Credit Suisse. Please go ahead..

Hi guys. Good morning.

How are you?.

Good and you?.

Hi David..

Hi, some of my questions have already been asked, but I just wanted to touch base on some of the improving margins you guys put together for the quarter, can you just walk us through either or maybe Alfred sort of what's driving that and then any thoughts on how that all takes shape over the next year or so and then a couple of follow-ups thanks..

One more time, I am sorry, could you repeat that question?.

Just wanted to hear what's driving the improving margins? What are you guys doing on the cost side because it looks like you had some better flow through there and I was just curious if you had any thoughts on a go-forward. Thanks..

Obviously we're hyper-focused on it. Some of it unfortunately with just lower sales commissions were high because the revenue was down, but there is a bunch of other savings initiatives and we made some employee changes at fairly senior level.

Related to DC we must have saved a pretty good amount of cost with the revoke in DC and that's really the main things. We're just chipping away on all fronts.

I think looking at the market being down 4.5% for Q1, we're anticipating looking to Q2 something kind of similar ratio where we've just got to try and control our cost as best as we can to stabilize that cash flow..

Yes, we've and I've mentioned this before I think and mentioned this on the financing, but we've hired PWC to help us look at this entire platform and figure out how do we increase productivity, where can we create synergies, lower cost.

It also includes where do we invest to grow our revenue? This is the first time that we've ever brought in an outside big consulting firm to help us do something like that before it's just me and the Senior team sitting in a conference room and saying let's do this, let's do that.

What we're hopeful from this exercise is we weren’t -- all of the things that we don't know that have been used at other companies that maybe similar media companies or even in other industries that's what they do for a living.

We're cognizant that we don't know -- what we don't know and so we're deep in the middle of that now and we hope that that's going to result in some additional insight..

And the other area where we're trying to reduce cost is in our interactive and digital business because I think it's fair to say we set that up in anticipation of revenue coming in faster and higher and so we’re also we look at that in the context of growth being somewhat less than we would have hoped.

So we were taking out there’s been some attrition there that we're probably not replacing. So that’s actually helpful on the cost side there..

Yep..

I’m sorry was that David I was talking to, I didn’t quite get it..

No problem. Okay that makes sense and then congrats on the Verizon deal. Any update on AT&T or DirecTv and then just also wanted to hear about the MGM investment. Do you have a sense for one that will open and that’s it from me. Thanks..

Yes we’ve been in deep negotiations with AT&T for a number of months now I think we’re nearing the end of that process they just have some change of the top in their programming group, which I’m hoping doesn’t slow us down.

But I mean that just recently happened, but we were down to like that last point or two and we’re feeling very optimistic about that in particular we’re feeling very optimistic about it. It doesn’t come up until the middle of 2016 so we’re getting going early on it. And DirecTV we’re kind of assuming AT&T and DirecTV is going to happen.

And so then and our DirecTV deal ends up at ends at the end of this year. So if we end up doing the new deal with AT&T then the Direc deal doesn’t matter, but as we saw what Comcast, Time Warner anything could happen. So, because the Comcast, Time Warner deal unraveling was new news.

I think we’re rethinking right now whether or now we should engage with Direc now. I don’t even know if they are -- I don’t know if they would engage and say because they’re probably assuming their deal is going to happen.

So it’s there’s two sides of that coin, but look I feel confident the network has a unique position, it’s certainly from a price value standpoint. Our ratings versus what we cost versus the other competitors and particularly Viacom networks is really attractive.

And I think that we’re positioned well in the marketplace politically as well given that where the home in the NAACP Image awards and the official network of NAACP, we have the only black new show daily new show done out of Washington DC on Capital Hill.

Where minority owned diversity is always a big issue in this industry so the only reason somebody could have for not wanting to renew us is that they feel that you’re just a standalone and I don’t care about what your ratings are I can just live without your one channel.

And we’re not feeling like anybody is targeting us to pick one they see value in the network it’s got real audience that’s growing. And so I think I’ve been saying it I think we’re going to be okay and I got to tell you two years ago as we were going into this I felt good about these things.

But I didn’t have any real empirical data now after having significant and deep conversations with everybody I feel a lot better about it how about this Verizon they just signed up they’re not merging with anybody. So they got no reason other than they see the value of the network to continue to carrier.

So I think oh an MGM timing supposed to open in the middle of 2006 July 2016 I think it slips a little bit. But I think it gets still done between July and the end of the year. Next question..

Thank you. And our next question will come from Chris Paciello with Penn Capital..

Hi Chris..

Hi guys, how are you doing?.

Good and you?.

Good, good I know you guys have been very busy, but you also own a television station in Indianapolis and you were just at the NAB conference.

So have you guys started the process or started to look into I imagine it's not a strategic asset for you, but have you started to look into the process of what you could do regarding the spectrum auction next year?.

Yeah we have. It's complicated as you all know. We haven’t engaged a lawyer to help us. We haven't figured out what the strategy is for us to participate in it, but given the numbers that people are throwing around, actually that low power television station we bought and we bought a group of radio stations in Indianapolis.

So we never -- we never went out and bought it just to buy it right. That station was to run with the radio stations, so we bought it off. Originally it was a music video channel that we never made money on. We always lost money. A year ago and some change we switched to a Telemundo Affiliate and it's got full cable carriage.

So we’re actually breakeven now. So we’re breakeven now on it and we hope to make some money on it, but the fact of the matter is given the numbers that have been thrown around, it could be extraordinarily attractive to us to sell the spectrum in the auction.

And quite frankly we already have the cable carriage and the cable system is owned by Comcast and Bright House and Comcast owns Telemundo. So I’m assuming they still going to want carry their network on cable that they're already carrying. So you could actually give up the spectrum and still stay in the Telemundo business in Indianapolis.

So I don’t want to get too fare of my skies because I’ve never been that lucky that, somebody is going to come and give us, some double digit millions numbers for this, this television asset which by the way, we haven’t been able to sell for seven years because we would sold it for two million dollars.

We were asked when the downturn was hit, do you have any assets that you can sell? We sold radio stations that weren’t strategic or that weren’t making any money. We would have sold this for sure, but we couldn’t find a buyer.

So the answer is we’re going to figure out who is the best representative for us to help us figure out way to participate in the auction and I hope it is a robust and as big as the FCC saying it is and we would absolutely plan to participate..

Great, that’s all I had..

Okay..

And our next question will come from Lance Vitanza with CRT Capital..

Hey Lance..

Hey regarding that TV station I guess sometimes it's better to be lucky than good..

You know what, I just like -- I've been wanting to be lucky all my life..

I wanted to ask you about programmatic buying, I joined the call late, but I think you mentioned something about that with Cats and I know it was a theme on the, iHeart call yesterday and rightly or wrongly there is a perception out there that says programmatic buying equals race to the bottom in terms of pricing.

What’s your take on it? It’s not something that we spend a lot of time talking but I would be curious to get your thoughts?.

I think in digital that’s certainly been the case.

I saw Bressler’s comments about, they want to create unique value building opportunities around traffic patterns and weather patterns and quite frankly when Cats explained it to us the idea that an advertiser or an ad agency that has a business that does well when the weather is bad, preloads in order much in advance, says every time it rains or snows or whatever that this particular set of radio or audio ads triggered in these markets around these parameters, I think is actually very interesting.

I don’t know enough about, programmatic never happened, hasn’t happened in radio and I think, television yet.

So I don’t know enough about how do you do it and not just have it to be relates to the bottom to the lowest CPM, but I’m optimistic that, some smart people can figure out how to do it, but even if it is a race to the bottom, the industry is going -- a certain part of the industry inventory is going to move there anyway.

And right now we do what we call remnant business and its business that’s preemptable, it’s low cost. You can take it if you want it, if not, it’s low cost and pay on time.

And we all take a bit of that and to the extent you could automate that process, that probably increases productivity and takes cost out of the system and you can have your sellers focused on the more high clients that you’re getting better rates and doing bigger campaigns for so I tend to try to figure out what’s actually going to happen or what’s happening in the industries and just go there and see how you can best play your hand in that evolving situation.

And I think Programmatic is going to its absolutely coming right. So we still got to figure out how to play the best hand out of it. And I think what the iHeart guys are saying is right okay. Figure out what are the value points is to what local radio brands and why it shouldn’t just care about CPM if you will.

Now by the way radio already has a low cost compared to other ad mediums. So I think that that I think that has something to do with it just in example of that we have internally that I think just remain. So Dallas, Texas is a market that’s not doing great right now it’s negative, yes negative 4.2% year-to-date till March.

But our stations are up like 21% there and our competitor stations are up our direct competitor and the market does negative. And neither of our ratings have appreciated dramatically over the last call it four years.

But, because we’ve been beating each other head in for so long we were both pulling out together collectively less than the African American percentage of the marketplace.

So we were price killing each other so I think what’s actually happened is we both reached the basement and now the buyers are figuring out you can actually pay more for these guys still be way under and it’s improving business.

So I say that to the point where radio maybe already so attractively priced that even Programmatic doesn’t run it to such an intolerable price levels not like this is an overpriced medium to begin with..

Yeah and I think the other side of that coin is if we make radio easier to buy and easier measure and figure out an ROI which should traditional complaints then you end up fishing in a bigger pool and competing against for more digital dollars..

That’s great point. And that is a traditional complain, I was on the phone with media yesterday talking about a big client and they brought it up how the client the client wants to move more towards the digital, because its measurable and they’ve got ROI. How do we -- we all know the power of radio.

How do we make radio more measurable, more targeted and are actually measurable on ROI, we’re a bit ahead we’ve handled one issue and that's diary verses electronic medium. So I think with the electronic with PPM it’s kind of hard for people to argue that this isn’t the real true audience of radio.

So now how do we measure its effectiveness?.

Okay, great, thanks I appreciate that..

And our next question comes from Tiffany Gouch with Sweet Entertainment. Please go ahead. And Tiffany, your line is open. And we'll move on to Davis.

Hi, thanks for taking questions..

Yes..

So, one of the thing out of NAB we heard was that local direct billing has been positive for some of your peers in the first quarter and the second quarter, while the agency business continues to be pretty difficult.

Just curious of seeing those kind of trends and then for Peter, just wondering if you could talk about the glide path of lower leverage of 2015 and 2016, how you’re seeing that playing out. Thanks..

Sure.

So on the glide path to lower leverage, the free cash flow improvement that we talked about comes from couple of things, obviously no dividend leakage going out, which was kind of $25 million roughly last year and then growth in TV One’s EBITDA driven by the new affiliation agreements and the fact that we won‘t have recurring launch amortization.

So Alfred mentioned the kind of mid 60s EBITDA number and we’re going to participate in pretty much 100% of that, 99.6% of that is adds in the stuff, is in management equity pool. So you can see that how that -- going from $24 million to $56 million of cash flow is projected to go higher than will pretty quickly start to ramp up cash.

The other thing Alfred mentioned, we hired PWC consulting to come in and help us on the cost side and we have an internal run rate target of EBITDA, which I think will accelerate the deleveraging process. So in the very short term within 12 months we want to be back on the seven levered and then within two years we want to be on the six times.

I think where would be comfortable? It would be nice to have five or even less and the Management projections we have over the next five years get us to that position. So really we have to just execute on the strategy and the assets we have and I think you will see over the next two to three years the leverage profile should change dramatically.

In terms of the national local obviously if there is market by market, I’m just turning my page here, it's really mix, so if I’m looking at my local business for Q1 I would say the majority of the markets were down some more but.

So DC was down 15 and Huston was down 5.9 local, Atlanta down 14, Baltimore down 16 but then markets like Charlotte were plus 21, Cincinnati was plus 8, Dallas was plus 9.8 and Alfred referenced that a minute to go, St.

Louis plus 26, so we go some markets that performing really well for us locally and then we got some challenges and some headwinds in all of this. And its, it’s kind of similar one I look to the, the national business so Atlanta Q1 national was plus 3, Charlotte plus 3, Philadelphia plus 10, Richmond 30 plus, 35, St.

Louis plus 30 so some good growth stories but, as we talked about we got challenges in DC, we considering as turnaround situation and our national business in DC was down 36% for the quarter which really had is and which also speaks the fact that I think if you isolate DC and you look at take our markets as about against the minus 4.5%.

We actually outperform that. If you look at every market apart from DC, we would have been an outperformer in Q1 and then that national member in DC really hurt us in Q1..

Thank you very much..

And we’ll go back to line of Tiffany Gouch with Sweet Entertainment. Please go ahead..

Hello, can you hear me?.

Yes we can..

Okay, awesome. Thank you, I noticed a great amount of growth in your business.

I actually started as of a user of BlackPlanet and a listener to the radio stations in my home town Hartford Connecticut and I was just wondering, if you're looking into markets like Hartford, like Boston and LA for example and Oakland or San Francisco as a possibility for growth in the Radio arena?.

Yeah, we were in LA. We were in Boston and we sold out both of those markets. Yeah primarily the African-American populations as a percentage are fairly small. LA is like 7% and may be 6% and some change now. Boston was less than that. So the value of our -- but they are big markets are top ten markets right.

So the value of our radio station there kind of far outstrips, how much money we can make. Whether it's serving African-Americans and so those were two of the markets that we sold to reduce debt because the stations were worth more debt that alive to us and so the likelihood that we would be returning to those markets to operate is low..

Okay. I see what you're doing and I know also that AACP image awards and I am just really excited about the growth prospects small growth at a time that's just really what I am interested in being a partner..

All right, well thank you very much. We appreciate your support of all of our products including BlackPlanet listening to our radio stations..

Thanks..

[Operator Instructions] And currently we have no questions in queue..

All right. Thank you, operator. Thank you, everybody and I say this at the end of every call, Peter and I are always available post conference call to ask any questions that you might have and we've actually had some investors talk about coming to visit now and you're welcome to corporate any time. Thank you very much and talk to you next quarter..

And that does conclude the conference for today. Thanks for your participation and for using AT&T executive teleconference. You may now disconnect..