URBAN ONE, INC.UONE
URBAN ONE, INC. Fair Value Disclosure
6. FAIR VALUE MEASUREMENTS
As of December 31, 2024 and 2023, respectively, 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 December 31, 2024 | |||||||||||||||||||||||
| Liabilities subject to fair value measurement: | |||||||||||||||||||||||
Employment Agreement Award (a) | $ | 10,426 | $ | — | $ | — | $ | 10,426 | |||||||||||||||
| Mezzanine equity subject to fair value measurement: | |||||||||||||||||||||||
Redeemable non-controlling interests (b) | $ | 7,988 | $ | — | $ | — | $ | 7,988 | |||||||||||||||
| Assets subject to fair value measurement: | |||||||||||||||||||||||
Cash equivalents - money market funds (c) | $ | 102,258 | $ | 102,258 | $ | — | $ | — | |||||||||||||||
| 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 non-controlling interests (b) | $ | 16,520 | $ | — | $ | — | $ | 16,520 | |||||||||||||||
| Assets subject to fair value measurement: | |||||||||||||||||||||||
Cash equivalents - money market funds (c) | $ | 193,769 | $ | 193,769 | $ | — | $ | — | |||||||||||||||
(b) The fair value is measured using a combination of a discounted cash flow and a guideline public company methodology. Significant inputs to the discounted cash flow analysis include revenue growth rates, future operating profit margins and discount rate.
(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 years ended December 31, 2024 and 2023. The following table presents the changes in Level 3 assets and liabilities measured at fair value on a recurring basis for the years ended December 31, 2024 and 2023:
| Employment Agreement Award | Redeemable Non-controlling Interests | Available- for-Sale Securities(1) | |||||||||||||||
| (in thousands) | |||||||||||||||||
| Balance at December 31, 2022 | $ | 25,741 | $ | 25,298 | $ | 136,826 | |||||||||||
| Net income attributable to redeemable non-controlling interests | — | 2,530 | — | ||||||||||||||
| Dividends paid to redeemable non-controlling interests | — | (4,401) | — | ||||||||||||||
| Distribution | (2,940) | — | — | ||||||||||||||
| Sale of available-for-sale securities | — | — | (136,826) | ||||||||||||||
Change in fair value (*) | 169 | (6,907) | — | ||||||||||||||
| Balance at December 31, 2023 | $ | 22,970 | $ | 16,520 | $ | — | |||||||||||
| Net income attributable to redeemable non-controlling interests | — | 1,215 | — | ||||||||||||||
| Dividends paid to redeemable non-controlling interests | — | (1,799) | — | ||||||||||||||
| Distribution | (2,146) | — | — | ||||||||||||||
| Purchase of ownership interest in Reach Media | — | (7,603) | — | ||||||||||||||
Change in fair value (*) | (10,398) | (345) | — | ||||||||||||||
| Balance at December 31, 2024 | $ | 10,426 | $ | 7,988 | $ | — | |||||||||||
(*) Amount of total income (losses) for the period included in earnings attributable to the change in unrealized (gains) losses relating to assets and liabilities still held at the reporting date.
(1) On March 8, 2023, Radio One Entertainment Holdings, LLC (“ROEH”), a wholly owned subsidiary of the Company, issued a put notice (the “Put Notice”) with respect to one hundred percent (100%) of its interest (the “Put Interest”) in MGMNH. On April 21, 2023, ROEH closed on the sale of the Put Interest and the Company received approximately $136.8 million in proceeds from the sale of the available-for-sale debt security and recognized a pre-tax gain of $96.8 million, which is included in other income, net on the consolidated statements of operations. The cost of the available for sale security sold was determined using the specific identification method.
Changes in the fair value of the Employment Agreement Award were recorded in the consolidated statements of operations as corporate selling, general and administrative expenses for the years ended December 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 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:
| As of December 31, 2024 | As of December 31, 2023 | |||||||||||||||||||||||||
| Level 3 liabilities | Valuation Technique | Significant Unobservable Inputs | Significant Unobservable Input Value | |||||||||||||||||||||||
| Employment Agreement Award | Discounted cash flow | Discount rate | 11.5 | % | 10.0 | % | ||||||||||||||||||||
| Employment Agreement Award | Discounted cash flow | Operating profit margin range | 27.0% - 34.4% | 35.0% - 42.3% | ||||||||||||||||||||||
| Employment Agreement Award | Discounted cash flow | Revenue growth rate range | (12.2)% - 1.9% | (2.1)% - 2.5% | ||||||||||||||||||||||
| Employment Agreement Award | Market Approach | Average recurring EBITDA multiple | 4.5x | 6.3x - 6.5x | ||||||||||||||||||||||
| Redeemable non-controlling interests | Discounted cash flow | Discount rate | 20.5 | % | 12.5 | % | ||||||||||||||||||||
| Redeemable non-controlling interests | Discounted cash flow | Operating profit margin range | 30.9% - 34.0% | 24.5% - 31.9% | ||||||||||||||||||||||
| Redeemable non-controlling interests | Discounted cash flow | Revenue growth rate range | (5.1)% - 19.7% | 1.2% - 16.5% | ||||||||||||||||||||||
| Redeemable non-controlling interests | Market Approach | Exit multiple | 4.0x | 4.0x | ||||||||||||||||||||||
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.
Certain assets and liabilities are measured at fair value on a non-recurring basis using Level 3 inputs. These assets are not measured at fair value on an ongoing basis but are subject to fair value adjustments only in certain circumstances. Included in this category are goodwill, radio broadcasting licenses, the TV One Trade Name and other intangible assets, net, which are written down to fair value when they are determined to be impaired, as well as content assets that are periodically written down to net realizable value.
As of December 31, 2024, the total recorded carrying values of goodwill was approximately $196.4 million, respectively. For the year ended December 31, 2024, the Company recorded impairment charges of approximately $20.2 million associated with the TV One reporting unit. See Note 13 – Goodwill And Other Intangible Assets of the Company's consolidated financial statements for further discussion.
As of December 31, 2024, the total recorded carrying values of radio broadcasting licenses were approximately $257.8 million, respectively. For the year ended December 31, 2024, the Company recorded impairment charges of approximately $118.5 million associated with certain radio broadcasting licenses. See Note 13 – Goodwill And Other Intangible Assets of the Company's consolidated financial statements for further discussion.
As of December 31, 2024, the total recorded carrying value of the TV One Trade Name was approximately $26.6 million. For the year ended December 31, 2024, the Company recognized an impairment loss of approximately $13.1 million associated with the TV One Trade Name, which is included in impairment of goodwill and intangible assets, on the consolidated statement of operations. See Note 13 – Goodwill And Other Intangible Assets of the Company's consolidated financial statements for further discussion.
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.