Industry Insider: URBAN ONE, Representing Black America
Cathy hughes - Derek White / Stringer
“I think it is my obligation to speak for the voiceless. [...] I think it is my obligation as an African-American woman to champion the causes of my people.” These are the words of Cathy Hughes, Founder and Chairperson of Urban One, the largest African-American owned media conglomerate that operates in radio and TV. With 64 broadcast stations in thirteen of the most populous African-American urban markets, Urban One reaches the Black community with a wide offer of music, talk shows, and news.
The company was founded in 1980 under the name Radio One when Hughes purchased the Washington D.C. radio station WOL-AM for almost $1 million. In 1993, Hughes’ son, Alfred C. Liggins III, took over as CEO, while Hughes became the Chair of the Board of Directors. Over the years, Radio One not only bought a number of radio stations in key geographical US markets, but also implemented a strong diversification strategy via the launch, acquisition, and investment in other complementary media companies, among which TV One, Reach Media, and Interactive One - all of which target different segments of the African-American audience. It is precisely to reflect its multimedia reach that in 2017 Radio One, Inc. changed its name to Urban One, Inc. This choice can also be interpreted as an implicit declaration of their strategy for the future as they continue their diversification in the media industry.
One of Radio One’s most important strategic investments was TV One. Launched in 2004 as a joint venture with Comcast, the TV channel targets African-Americans between the ages of 25-54. In 2007, TV One was in more than 40 million households, and in 2011 Radio One increased their share from 37% to more than 50%, thus adjudicating a majority stake in the company. In 2015, Radio One bought Comcast’s remaining shares. Among other notable investments, in 2008 Radio One also launched Interactive One (“iOne”), an online portfolio of brands such as MadameNoire, HelloBeautiful, Global Grind, and NewsOne. As per acquisitions, the 2004 acquisition of a majority stake in Reach Media, a Texas-based media company, proved to be a profitable action in their diversification strategy, as it now contributes 10.5% of all net revenues from the sale of advertising space.
In fact, Urban One’s primary source of revenue is the sale of advertising on broadcast stations. Particularly, local advertising generated close to 60% of total net revenues in the fiscal year 2021, while national advertising around 35%. The company operates four reporting segments, here reported with their respective generated percentage of consolidated net revenues: radio broadcasting (31.8%), cable television (44.9%), Reach Media (10.5%), and digital (13.6%).
Radio One went public on May 6, 1999, trading on the Nasdaq Stock Market. Now, 76 institutions own shares of Urban One (NASDAQ:UONE for Class A voting common stock and UONEK for Class D non-voting common stock), of which the first three are Zazove Associates LLC (5.95%), Blackrock Inc. (5.40%), and The Vanguard Group, Inc. (3.72%). After going public, UONE stock price knew a few years of volatility, until a slow decline from 2004 to 2007 brought it to stabilize between $2 and $5 per share. In June 2020, the share price spiked in response to the death of George Floyd and the subsequent rise of the Black Lives Matter movement. It then settled between $3 and $7 per share.
As Radio One was born as a family company, Hughes was reluctant to make it public. However, Hughes and her son Alfred were able to retain control over the company by owning what is called “super-voting shares”: together, they have more than 75% of outstanding voting power of Urban One’s common stock, thus making it a “controlled company” on the Nasdaq Stock Market. Controlled companies are not required to adhere to many restrictions, especially the ones concerning the presence of independent directors on the Board; therefore, even though Urban One’s Board is now composed by a majority of independent directors, this can change almost overnight. Hughes’ family’s tight control over Urban One brings forth both advantages and disadvantages for investors. On one hand, a tight management control makes it possible for the company to follow a set strategy with stability and commitment. However, the potential lack of alignment with other stockholders’ interests may lead to agency conflicts; for example, specific actions (such as sales or mergers) taken without a shared agreement among all stakeholders may result in a sudden fall of Urban One’s stock price.
It is important to keep in mind that the strength of Urban One does not only lie in its business model and leadership, but in the mission that it brings forth:
“Our mission is to be the most trusted source in the African-American community that informs, entertains and inspires our audience by providing culturally relevant integrated content through our radio, television, and digital platforms.”
During a 2021 interview for the radio show The Breakfast Club, Cathy Hughes goes in depth on what motivated her to found Radio One, and how she expanded it into the brand that it is now. She recalls that a pivotal moment was when she noticed the absence of a morning news program targeting the Black community. As radio’s prime time goes from 6AM to 10AM - when listeners are more attentive and receptive as they haven’t yet been burdened with everyday struggles - she decided to fill this market gap with The Daily Drum, a daily news program that is still a staple on Howard University Radio. Urban One strives to pay homage to Black culture not only by curating targeted talk shows and news segments, but also by celebrating its excellency. One of the most recent ways in which Urban One pays tribute to Black culture is with Urban One Honors. Held in January, the event showcases the most prominent Black talent in music and entertainment with musical performances, celebrity guests, and honorees.
Ultimately, Cathy Hughes’ passion for radio and broadcast was sparked by one person: her mother. In the interview, she recounts how her mother was a founding member of the Sweethearts of Rhythm, the first integrated all-women band in the US. The example of Black women “unafraid to rock the boat” during a time where the Jim Crow laws and segregation were still terribly tangible helped her realize her true calling at a very young age. A calling that she turned into her life’s mission, becoming one of the African-American pioneers in media.
“So at age eight, when my mother bought me a transistor radio, I decided that I wanted to be in media. I wanted to be in radio. I wanted to have my voice amplified.”
