SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The consolidated financial statements include the accounts and operations of Urban One and subsidiaries in which Urban One has a controlling financial interest, which is generally determined when the Company holds a majority voting interest. All intercompany accounts and transactions have been eliminated in consolidation. Noncontrolling interests have been recognized where a controlling interest exists, but the Company owns less than 100% of the controlled entity.

The Company is required to include the financial statements of variable interest entities (“VIE”) in its consolidated financial statements. Under the VIE model, the Company consolidates an investment if it has control to direct the activities of the entity and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE.

Supplemental Cash Flow Information

The following table provides a reconciliation of cash, cash equivalents and restricted cash as reported within the condensed consolidated balance sheets to “Cash, cash equivalents and restricted cash, end of period” as reported within the condensed consolidated statements of cash flows:


	Three Months Ended
	March 31,
	2024		2023

	(In thousands)
Cash and cash equivalents	$	155,265	$	71,455
Restricted cash	481			476
Total cash, cash equivalents, and restricted cash shown in Consolidated Statements of Cash Flows	$	155,746	$	71,931

Revenue Recognition

The following table shows the sources of the Company’s net revenue for the three months ended March 31, 2024 and 2023:


	Radio		Reach				Cable
(In thousands)	Broadcasting		Media		Digital		Television		Eliminations		Consolidated
Three Months Ended March 31, 2024
Net Revenue:
Radio advertising	$	33,754	$	8,382	$	-	$	-	$	(795)	$	41,341
Political advertising		1,167		48		22		-		-		1,237
Digital advertising		-		-		13,946		-		-		13,946
Cable television advertising		-		-		-		25,365		-		25,365
Cable television affiliate fees		-		-		-		20,787		-		20,787
Event revenues & other		1,430		42		-		73		189		1,734
Net revenue	$	36,351	$	8,472	$	13,968	$	46,225	$	(606)	$	104,410

Three Months Ended March 31, 2023
Net Revenue:
Radio advertising	$	33,841	$	10,288	$	-	$	-	$	(1,021)	$	43,108
Political advertising		249		-		47		-		-		296
Digital advertising		-		-		15,024		-		-		15,024
Cable television advertising		-		-		-		25,822		-		25,822
Cable television affiliate fees		-		-		-		23,837		-		23,837
Event revenues & other		1,090		629		-		18		45		1,782
Net revenue	$	35,180	$	10,917	$	15,071	$	49,677	$	(976)	$	109,869

Contract Assets and Liabilities

Contract assets and contract liabilities that are not separately stated in the Company’s consolidated balance sheets as of March 31, 2024 and December 31, 2023 were as follows:


	March 31, 2024		December 31, 2023

	(In thousands)
Contract assets:
Unbilled receivables	$	3,412	$	5,437
Contract liabilities:
Customer advances and unearned income	$	4,762	$	4,851
Reserve for audience deficiency		14,583		12,779
Unearned event income		9,037		4,864

Unbilled receivables consist of earned revenue that has not yet been billed. Contract assets are included in trade accounts receivable, net on the consolidated balance sheets. Customer advances and unearned income represent advance payments by customers for future services under contract that are generally incurred in the near term. For advertising sold based on audience guarantees, audience deficiency typically results in an obligation to deliver additional advertising units to the customer, generally within one year of the campaign end date. To the extent that audience guarantees are not met, a reserve for audience deficiency is recorded until such a time that the audience guarantee has been satisfied. Unearned event income represents payments by customers for upcoming events. Contract liabilities are included in other current liabilities on the consolidated balance sheets.

For customer advances and unearned income as of January 1, 2024, $2.0 million was recognized as revenue during the three months ended March 31, 2024. For the reserve for audience deficiency as of January 1, 2024, $1.0 million was recognized as revenue during the three months ended March 31, 2024. For unearned event income as of January 1, 2024, no revenue was recognized during the three months ended March 31, 2024.

Practical expedients and exemptions

The Company generally expenses employee sales commissions when incurred because the amortization period would have been one year or less. These costs are recorded within selling, general and administrative expenses on the condensed consolidated statements of operations. Agency and outside sales representative commissions were approximately $9.2 million for each of the three months ended March 31,2024 and 2023.

The Company does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less, or (ii) contracts for which variable consideration is a sales-based or usage-based royalty promised in exchange for a license of intellectual property.

Advertising and Promotions

The Company expenses advertising and promotional costs as incurred. Total advertising and promotional expenses were approximately $7.0 million and $7.1 million for the three months ended March 31, 2024 and 2023, respectively.

Fair Value Measurements

The Company reports financial and non-financial assets and liabilities measured at fair value on a recurring and non-recurring basis under the provisions of ASC 820, “Fair Value Measurement” (“ASC 820”) which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.

The fair value framework requires the categorization of assets and liabilities into three levels based upon the assumptions (inputs) used to price the assets or liabilities. Level 1 provides the most reliable measure of fair value, whereas Level 3 generally requires significant management judgment. The three levels are defined as follows:

Level 1: Inputs are unadjusted quoted prices in active markets for identical assets and liabilities that can be accessed at the measurement date.

Level 2: Observable inputs other than those included in Level 1 (i.e., quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets).

Level 3: Unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the asset or liability.

A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value instrument.

As of March 31, 2024 and December 31, 2023, the fair values of the Company’s financial assets and liabilities measured at fair value on a recurring basis are categorized as follows:


	Total		Level 1		Level 2		Level 3

	(In thousands)
As of March 31, 2024
Liabilities subject to fair value measurement:
Employment Agreement Award (a)	$	22,947	$	—	$	—	$	22,947

Mezzanine equity subject to fair value measurement:
Redeemable noncontrolling interests (b)	$	8,364	$	—	$	—	$	8,364

Assets subject to fair value measurement:
Cash equivalents - money market funds (c)	$	136,019	$	136,019	$	—	$	—

As of December 31, 2023
Liabilities subject to fair value measurement:
Employment Agreement Award (a)	$	22,970	$	—	$	—	$	22,970

Mezzanine equity subject to fair value measurement:
Redeemable noncontrolling interests (b)	$	16,520	$	—	$	—	$	16,520

Assets subject to fair value measurement:
Cash equivalents - money market funds (c)	$	193,769	$	193,769	$	—	$	—

(a)

Pursuant to an employment agreement, the Chief Executive Officer (“CEO”) is eligible to receive an award (the “Employment Agreement Award”) amount equal to approximately 4% of any proceeds from distributions or other liquidity events in excess of the return of the Company’s aggregate investment in TV One. The Company reviews the factors underlying this award at the end of each reporting period including the valuation of TV One (based on the estimated enterprise fair value of TV One as determined by the income approach using a discounted cash flow analysis and the market approach using comparable public company multiples). Significant inputs to the discounted cash flow analysis include revenue growth rates, future operating profit, and discount rate. Significant inputs to the market approach include publicly held peer companies and recurring EBITDA multiples. Please refer to Note 9 – Subsequent Events of the Company’s condensed consolidated financial statements for more details.

(b)	The fair value is measured using an exit price methodology. Significant inputs to the exit price analysis include revenue growth rates, future operating profit margins, discount rate and an exit multiple.

(c)	The Company measures and reports its cash equivalents that are invested in money market funds and valued based on quoted market prices which approximate cost due to their short-term maturities.

There were no transfers within Level 1, 2, or 3 during the three months ended March 31, 2024 and 2023. The following table presents the changes in Level 3 liabilities measured at fair value on a recurring basis for the three months ended March 31, 2024 and 2023:


	Employment		Redeemable
	Agreement		Noncontrolling
	Award		Interests

Balance at December 31, 2023	$	22,970	$	16,520
Net income attributable to noncontrolling interests		—		242
Purchase of ownership interest in Reach Media		—		(7,603)
Dividends paid to noncontrolling interests		—		(1,799)
Change in fair value ^(*)		(23)		1,004
Balance at March 31, 2024	$	22,947	$	8,364


	Employment		Redeemable
	Agreement		Noncontrolling
	Award		Interests

Balance at December 31, 2022	$	25,741	$	25,298
Net income attributable to noncontrolling interests		—		511
Dividends paid to noncontrolling interests		—		(2,001)
Change in fair value ^(*)		(144)		1,308
Balance at March 31, 2023	$	25,597	$	25,116

(*) Amount of total income/(losses) for the period included in earnings attributable to the change in unrealized (gains) losses relating to liabilities still held at the reporting date.

Changes in the fair value of the Employment Agreement Award were recorded in the condensed consolidated statements of operations as corporate selling, general and administrative expenses for the three months ended March 31, 2024 and 2023. The long-term portion is recorded in other long-term liabilities and the current portion is recorded in other current liabilities in the condensed consolidated balance sheets.

For Level 3 liabilities measured at fair value on a recurring basis, the significant unobservable inputs used in the fair value measurements were as follows:


			March 31,		December 31,
			2024		2023
		Significant
		Unobservable	Significant Unobservable
Level 3 liabilities	Valuation Technique	Inputs	Input Value
Employment Agreement Award	Discounted cash flow	Discount rate	9.5	%	10.0	%
Employment Agreement Award	Discounted cash flow	Operating profit margin range	33.9% - 41.2	%	35.0% - 42.3	%
Employment Agreement Award	Discounted cash flow	Revenue growth rate range	(2.1)% - 2.5	%	(2.1)% - 2.5	%
Employment Agreement Award	Market approach	Average recurring EBITDA multiple	6.0 - 6.1	x	6.3 - 6.5	x
Redeemable noncontrolling interests	Discounted cash flow	Discount rate	12.5	%	12.5	%
Redeemable noncontrolling interests	Discounted cash flow	Operating profit margin range	24.5% - 31.9	%	24.5% - 31.9	%
Redeemable noncontrolling interests	Discounted cash flow	Revenue growth rate range	1.2% - 16.5	%	1.2% - 16.5	%
Redeemable noncontrolling interests	Discounted cash flow	Exit multiple	4.0	x	4.0	x

Any significant increases or decreases in unobservable inputs could result in significantly higher or lower fair value measurements. Changes in fair value measurements, if significant, may affect the Company’s performance of cash flows.

Content Assets

The gross cost and accumulated amortization of content assets is as follows:


	March 31,		December 31,		Period of
	2024		2023		Amortization

	(In thousands)
Produced content assets:
Completed	$	139,304	$	132,273
In-production		13,024		11,726
Licensed content assets acquired:
Acquired		36,643		35,520
Content assets, at cost		188,971		179,519	1‑5 Years
Less: accumulated amortization		(73,491)		(67,323)
Content assets, net		115,480		112,196
Less: current portion		(33,348)		(29,748)
Noncurrent portion	$	82,132	$	82,448

The aggregate amortization expense for produced content assets for the three months ended March 31, 2024 and 2023 is $8.1 million and $6.9 million, respectively. The aggregate amortization expense for acquired content assets for the three months ended March 31, 2024 and 2023 is $3.3 million and $6.3 million, respectively. The aggregate amortization expense for content assets for the three months ended March 31, 2024 and 2023 is approximately $11.4 million and $13.2 million, respectively. Amortization of content assets is recorded in the condensed consolidated statements of operations as programming and technical expenses.

Recently Issued Accounting Pronouncements Not Yet Adopted

In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures”, which requires a public entity to disclose significant segment expenses and other segment items on an annual and interim basis and provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually. Additionally, it requires a public entity to disclose the title and position of the Chief Operating Decision Maker (CODM). The ASU does not change how a public entity identifies its operating segments, aggregates them, or applies the quantitative thresholds to determine its reportable segments. The new standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. A public entity should apply the amendments in this ASU retrospectively to all prior periods presented in the financial statements. The Company expects this ASU to only impact the its disclosures with no impacts to the its results of operations, cash flows and financial condition.

In December 2023, the FASB issued ASU No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures”, which focuses on the rate reconciliation and income taxes paid. ASU No. 2023-09 requires a public business entity (PBE) to disclose, on an annual basis, a tabular rate reconciliation using both percentages and currency amounts, broken out into specified categories with certain reconciling items further broken out by nature and jurisdiction to the extent those items exceed a specified threshold. In addition, all entities are required to disclose income taxes paid, net of refunds received disaggregated by federal, state/local, and foreign and by jurisdiction if the amount is at least 5% of total income tax payments, net of refunds received. For PBEs, the new standard is effective for annual periods beginning after December 15, 2024, with early adoption permitted. An entity may apply the amendments in this ASU prospectively by providing the revised disclosures for the period ending December 31, 2025 and continuing to provide the pre-ASU disclosures for the prior periods, or may apply the amendments retrospectively by providing the revised disclosures for all period presented. The Company expects this ASU to only impact its disclosures with no impacts to its results of operations, cash flows and financial condition.