Strategic Business Proposal for Urban One, Inc

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Strategic Business Proposal

for

Urban One, Inc.

For: Urban One, Inc. https://urban1.com/

Prepared On: Feb 10, 2019

Prepared By: Toccara Thomas MBBS Craig Holifield, EBBS Jureesa McBride, MBBS Destinee Ruiz, MBBS Nicholas Potts, SMMB

Instructor Name: Myke Fakir Strategic Business Proposal Page 2 of 31

Contents

Introduction ...... 3 Executive Summary ...... 3 1. Organizational Challenges & Proposed Solution ...... 3-4 Organizational Challenges ...... 3 Proposed Solution ...... 4 2. Environmental Scanning ...... 4-5 Internal Analysis ...... 4 External Analysis ...... 8 3. Strategy Formulation ...... 11 Operations ...... 11 Sales, Marketing, & Distribution ...... 12 Legal ...... 14 4. Proposal Budget & Projections ...... 15 Sales Projections ...... 15 Project Budget ...... 16 5. Strategy Implementation ...... 17 Timeline and Key Milestones ...... 17 6. Future Plans ...... 19 Long-Term Opportunity and Development Plans ...... 19 7. Appendices and References ...... 20 References ...... 20-23 Appendices ...... 24-29 Appendix 1:Competitive Analysis ...... 24 Appendix 2: Stock Report ...... 24 Appendix 3: Phased Implementation ...... 25 Appendix 4: Key Personnel ...... 26 Appendix 5: Sales Projections ...... 26 Appendix 6: Expense Assumptions ...... 27-29 Appendix 7: Income Statement Summary ...... 30 Appendix 8: Annual Profits ...... 31

Strategic Business Proposal Page 3 of 31

Introduction Executive Summary To Urban One Board of Directors:

We live in a technology addicted society where it has become a necessity in terms of everyday life. As technology advances, we heavily rely on our smartphones to do a number of things, and the need for social media goes even deeper than that. The internet has greatly influenced and changed modern society, so much so that we have become codependents of both culture and technology. It’s a proven fact that Urban One is a business that has adapted to the changes to suit the needs of both technology and modern culture.

Urban One Inc, in conjunction with its subsidiaries, operates as an urban-oriented multi-media company in the U.S. The four subsidiaries include Reach Media, Radio Broadcasting, Digital, and Cable Television. The fundamental business model for Urban One is representing black culture in a bold and courageous way. And the company’s ultimate goal is to be the most trusted source in the African American community by entertaining and inspiring its audience with culturally relevant integrated content. But what if the company shifted its focus a bit on the needs of their audience by creating more content around topics that appeal to a more diverse audience? While Urban One has done an outstanding job of reaching 82% of African Americans, we’re proposing some changes that will help to win back the community for those who have lost faith and hope in the company’s mission and recapture their attention with something that has never been done.

The plan would be to form a partnership with BET involving a joint venture project of a combined platform mobile app with music and video content. Urban One can supply most of the music content and collaborate with BET for video media in the form of documentaries, news, music videos, movies, etc. This collaboration will be sustained with a PR and social media campaign in which our company can offer exclusive content promotions such as free Soul Train cruise tickets, scholarships to African- American college students pursuing a degree in the entertainment field, followed by a social justice campaign featuring well-known hip-hop artists like J. Cole and/or Kendrick Lamar in partnership with Black Lives Matter. Conservatively speaking, based on our past trends, assumptions, and research; if both Urban One and BET were to increase their customer base by 25% with this mobile app, they could see a return on investment of 20% per quarter by executing this plan.

A co-branding partnership with BET will allow us to borrow on the strengths of a partner that is quite similar to us; and it would be valuable for everyone involved. Bottom line, a partnership with BET will extend both companies’ reach into the African American market to increase sales. This collaboration will not only put our company ahead of the competition, it will help build a stronger brand that connects better with existing customers and opens a market segment that reaches out to a younger demographic. With Urban One’s 22 business acquisitions since we started in 1980, the company has proven itself as experts in growth by improving the customer experience.

_____Toccara Thomas______Jureesa McBride______Craig Holifield______

_____Nicholas Potts______Destinee Ruiz-Sapp_____ Strategic Business Proposal Page 4 of 31

1: Challenges & Solutions

Organizational Challenges

A significant challenge for Urban One, Inc. is not honoring its mission statement to the fullest extent and having a weak social media presence because of it. Per their statement, "Our mission is to be the most trusted source in the African-American community that informs, entertains and inspires our audience..." But on the contrary, complaints were reported for them being a fake and phony network, banning artists from using their platform (Oppan, 2018), using their gravitational pulls toward the African American community to gain their trust under false pretenses, inserting others that will not work to unite the people, and only caring about playing music and pleasing sponsors. In a matter of public opinion from the company’s direct social media page, this is definitely something that should be addressed. Moreover, past studies have shown that African American mobile phone usage rank highest than that of other ethnic groups. Of the eighty-seven percent that utilizes the internet alone and the 91 percent that own smartphones, that's all the more reason for them to strengthen their social media presence. Even more so, African American participation in social media has been spotlighted in recent years. For example, the highly influential community known as Black Twitter has driven many social and cultural issues and become a national political force (Howard, 2018). "Content is king, and professional media will not become extinct, but it will have to accommodate to the dynamics of user habits, engagement, and preferences that will require a rather large shift from where it is today." – AdWeek Poster. Content is the most important part of any business. Whether it be a product, show, or radio broadcast, it is the pinnacle of how viewers and consumers perceive the brand. Consumers are absorbing content and brand recognition differently every day with more and more being focused on mobile social media. Radio stations and television networks must be using live-stream platforms such as Twitter. This relates to Urban One by building some interactivity with viewers. (AdWeek, 2016). There is no evidence to justify the company’s low social media presence. Perhaps they feel this area is irrelevant or would result in a time constraint or an inessential expense on their end. However, personal connections matter in the industry they’re in and businesses that are currently succeeding on social media are the ones providing personalized experiences to their audience. Put simply, their audience craves a relationship and it’s their job to give it to them.

Proposed Solution

As a business, listening skills through social media or any other website blogs is critical to the company’s success. If they can wrap their brains around the needs of their audience, they can devise a strategy to help solve it. Put simply, there should be some sort of humanity and/or emotional connection to ensure their audience that they really do care about their needs. One way this can be achieved is by repurposing their brand and making a genuine shift to focus solely on their audience through podcasting. “If you’re a business in an industry that has a high customer Strategic Business Proposal Page 5 of 31 value, then a podcast may be one of your most effective education and marketing tools,” says Spencer Shaw, founder of the podcast production firm PodKick Media. (Detweiler, 2018). Another source states that among minority Americans who think podcasts could become more mainstream to a diverse audience, almost half (46%) believe that creating more content around topics that appeal to diverse audiences would help. (“Lack of Diversity in Podcasts”, 2017). The company can produce weekly content for approximately 30 minutes to learn more about the interests of their audience as well as their pain points and identify ways to resolve them. In doing so, they will be creating a connection between their audience and their ideas in a relaxed environment. But prior to releasing the content, they can make available brief online podcast surveys where anonymous individuals can weigh in on the topic of discussions and provide their input and/or concerns. The podcasts can be uploaded on the company’s website as well as their social media accounts. The surveys alone will help to provide measurable feedback and data from this can be used to build new relationships and retain current ones. This would be a great opportunity to connect with their audience, address their needs, and reinsure their support while strategically marketing their business. Furthermore, by creating content in a different format they would no longer be constrained by their regular broadcasting schedule. And by getting involved and facing the problem head-on, the audience will be more inclined to hear what the business has to say thereby becoming an even more valuable asset. Adopting this solution can not only establish a better social media presence for the company but also aid in bringing the business as a whole to the next level.

2: Environmental Scanning Internal Analysis Company Overview

Urban One, Inc. is the largest African American owned multi-media conglomerate in the United States. The company can proudly claim its status as the largest urban radio network, African American owned television network, and distributor of digital urban content. No other multimedia company in the country reaches 82% of Black America. Urban One's standings in the market put the company in a powerful position of influence as their motto describes the company as, "Representing Black Culture." Their mission statement reads: 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 (Interactive One, 2017). The company owns 55 radio stations in 15 major urban cities throughout the country which offers a variety of music, news, and talk show programming. It also operates several digital media websites with similar content and the company owns 50% of TV One, which is a cable television venture with Comcast. Founder and chairperson Catherine Hughes and her son, president and CEO Alfred Liggins, together control more than 90% of the company (Vault.com, 2019). The other 10% is controlled by NASDAQ stock shareholdings from Strategic Business Proposal Page 6 of 31 investors. Throughout Urban One's 35- year existence, it has eight separate brands in the digital, radio and television markets which include TV One. CLEO TV, Radio One, Reach Media, iOne Digital, One Solution, R1 Digital, and One VIP. Urban One's core value is to provide quality and relevant media content that targets the urban African American customer base and experience.

Financial Standings

About 50% of Urban One's revenue comes from the radio segment of the business which gets most of its revenue from the sale of advertising. Two thirds of the advertising sales are to local advertisers while the other one third comes from national advertisers (Vault.com, 2019) The company has been experiencing stable revenue growth over the past three years considering that radio and television markets overall have both seen a substantial slump due to the popularity of the internet and the introduction of other new technologies recently. Keeping in mind that Urban One has made 22 business acquisitions since its inception in 1980, the company has managed to stabilize its operating expenses and debt to maintain a profitable base. For the fiscal year 2018, the company's revenue decreased by 2.02% to 439.7 million compared to 448.6 million in the fiscal year 2017. In the most recent 52-week period, the highest sales price the stock has achieved during regular trading is 2.4086 per share which translates to good news for investors considering the average price per share is $1.94 at a +0.4686 increase (Nasdaq, 2019).

See Appendix 2

Urban One's cash flow from operations increased by $16.9 million during fiscal 2018 compared to the prior fiscal period and the company ended the year with $53.9 million in cash on hand (Vault.com, 2019). Overall, that hints at fairly good standings for a radio and television media company in the new technology age where the internet is the preferred media format. The company values integrity in doing business as one of its greatest assets and credits this as being vital to the success of their company. Using this as their mantra, Urban One's strategy is to maintain good investor relations through the bottom-line monetary growth of their company by continuing to invest in new technologies in the media and entertainment industry while steadily improving content for their African American and urban consumers. The company wishes the maintain its loyal customer base and acquire to new customers through engagement. This means supporting causes that are near and dear to the African American community and distributing interactive content through social media.

Organizational Strengths

Urban One Media has shown numerous times that they are familiar with keeping themselves out of debt for the most part. A company this huge, could very well, accumulate an intensifying level of liabilities. With short term liabilities, the company has maintained at safe levels to stay above negative levels. At the current liabilities level of US $80.83m liabilities, the company has maintained a safe level of current assets to meet its obligations, with the current ratio last standing at 2.47x. Generally, for Media companies, this is a reasonable ratio as there’s enough of a cash buffer without holding too capital in low return investments (Goff, 2018). Urban One is a Strategic Business Proposal Page 7 of 31 strong company and represents the African American communities. Throughout their 39 years of operating, the company owns 59 broadcast stations in urban markets and consequently is “the largest African American owned, diversified media corporation” (Reigart, 2019). Another great strength that they possess, is the ability to continue to invest in other companies. This company continues to invest in complementary businesses in the media and entertainment industry, with a focus on businesses that provide entertainment and information content to African-American and urban consumers (Vault, n.d). Organizational Weaknesses

Although Urban One Media, operates numerous websites, their reach could benefit from enhancement in social media platforms, instead of only their local and surrounding areas where their stations are located. Adverse business environment may lead to a decline in the contribution of Reach Media; or a decline in one or more of the significant contributing markets which may adversely impact the company's overall financial performance and results of operations (Radio One, 2017). Another weakness that the company may acquire, is standing firmly by their mission statement. Because of unnecessary artist ban and lawsuits, it's causing some fans to lose trust in some of their stations. One of Houston's biggest artist has filed suit against the company and "is suing for defamation, gross negligence, and tortious interference with prospective relations by an ongoing ban against Trae Tha Truth from all things Urban One/Radio One" (Jahmal, 2018). Lastly, their stations in Atlanta, Baltimore, and Houston are outperforming their other stations, and they must find strategies to increase revenue in the other cities of location. "We experienced net revenue growth most significantly in our Atlanta, Cleveland, Detroit, Indianapolis and Richmond markets with revenue declines most significantly in our Columbus, Dallas, Houston, Raleigh, and Washington DC markets," president and CEO Alfred Liggins said in a news release (Insider Radio, 2017). Customers

Urban One has laid out multiple different media sources to best accommodate all of their customers. They are mainly operating hip-hop/R&B radio stations in highly urbanized cities. Recently, Hip-hop and R&B took over as the most "consumed" music in the United States. It overtook Rock music for a 25.1% market share (McIntyre,2017). This means that the majority of folks listening to music are listening to the Urban One, style, content. With that being said, Urban One does have a diverse customer base. Although their culture and company are primarily a proud "African-American Owned and Operated Station" their customers are more of a melting pot.

Looking more in-depth at the make-up of who is listening to the radio we see that “Millennials", "Gen-X", and "Baby Boomers are listening to the most radio. On a weekly basis, you could see millennials listening to the radio for 11.5 hours. From there we see Gen-X and Baby Boomers listening for 14 and 14.5 hours (Marketing Charts, 2018). African-Americans as a whole listen to the radio on average 12 hours a week. That is up a .5 hour compared to the entire US population combined. As we concur, the age group of 35-64 (Gen-X, Baby Boomers) is listening to the radio the most. This is why you see in the majority of markets Urban One broadcasts operating “Oldies or Throwback” stations. With the greatest number of listeners, Urban One could possibly put more money into those stations to yield the highest ROI. Strategic Business Proposal Page 8 of 31

Urban One is missing a huge market, however, getting into streaming is essential to the success of audio content in today's world. Streaming is higher quality, more easily accessed for listeners, and cheaper for the content creators such as Urban One. AM/FM radio is still the primary way listeners hear content, however, 7% of listeners are streaming content. This is a much younger market. Seven percent may sound underwhelming however Hip-Hop/R&B make up 40% of streams (Nielson, 2018). This is the market that Urban One is missing out on. These listeners are also searching for the content they want and not just tuning into a radio station. The difference is monumental. These listeners are like loyal customers. They are not only tuning in while driving, but also while working out, grocery shopping, or in long car rides. It is absolutely paramount that Urban One soon taps into this market share.

Collaborators

Urban One has begun to diversify their content and move to television. They now operate a Television Network “CleoTv”. This network is based around content for Gen-X and millennial African-American women. They have teamed with Comcast-Xfinity for this venture. The network is exclusively seen with this cable provider. The basis of the channel is based around the Egyptian, Cleopatra. She was one of the most “ground-breaking, trend-setting, and iconic women of color in history (Yahoo Finance, 2018).

Another Television network that Urban One owns and operates is “TV One”. This network started in 2004 on cable networks. Urban One has now branched it off into Netflix and Hulu. This network has many influencers within the African-American Community such as Nick Cannon and K. Michelle.

External Analysis Competitors

Urban One, Inc. has a variety of competitors such as Bonneville International Corporation, Cox Radio, Inc., IHeart Communications, Inc. and Liberman Broadcasting, Inc. Bonneville International Corporation is considered an indirect competitor as it "operates about a dozen radio stations in four markets including Los Angeles, Phoenix, Salt Lake City, and Seattle. It also operates a television station (NBC affiliate KSL-TV in Salt Lake City)." (Vault.com) This private company is competition as it has operating stations in major cities such as Los Angeles and Seattle. Cox Radio Inc. is a direct competitor for Urban One because it is also classified as an urban radio company. Cox Radio Inc., "the company is one of the nation's largest radio broadcasters, with about 85 stations in about 20 markets, including Atlanta, Houston, and Miami." (Vault.com) However, Urban One's biggest competition is iHeart Communications, Inc. The company is a direct competitor because, "the company, formerly known as Clear Channel Communications, is the #1 radio company in the US, with more than 850 stations that reach some 245 million people. Its Premiere Radio Networks produces syndicated radio content for Strategic Business Proposal Page 9 of 31 more than 5,000 stations. Clear Channel also sells spot advertising for about 4,000 radio stations and 600 TV stations through Katz Media." (Vault.com)

Business Climate

50% of Urban One's revenue is a result of the radio side of the company. This is due to advertising sales during radio segments. "Roughly two-thirds of the advertising sales were to local advertisers in fiscal 2014 while the other third came from national advertisers." (Vault.com)

Political & Regulatory

Urban One, Inc. is a company whose mission is to be the most trusted source in the African- American community. Urban One looks to informs, entertain and inspire audiences by providing culturally relevant integrated content through radio, television, and digital platforms. (Urban1.com)

Economic

Economic issues that could cause issues for Urban one is inflation. Inflation is a decrease in the purchasing power of currency due to a rise in prices across the economy. Issues that might affect the company would be the inflation of prices. Workers in a company assume all prices are going to rise because of inflation, so they demand an increase in their salaries. Their employer then increases the price of its goods to keep up with costs. This causes companies that purchase these goods to increase their prices as well, raising the overall price level for all goods. (Rodeck, 2017)

Social & Cultural

The company is the largest distributor of urban content in the country. For more than 35 years, Urban One has been the leading voice that speaks to Black America. First, as the largest local urban radio network and then as the largest syndicator of urban programming. Urban one is also the largest African-American owned television network and distributor of digital urban content. (Urban1.com)

Technological

Urban One Media has its share of technological advances. It operates through the following segments: Radio Broadcasting, Reach Media, Digital, and Cable Television. The Radio Broadcasting segment includes all the broadcasting related operations. The Reach Media segment consists of the Tom Joyner Morning Show and its related activities. The Digital segment focuses on its online business, including the operations of Interactive One. The Cable Television segment deals with TV One's operations (Market Watch, 2019). Formerly known as Radio One, they have grown through acquisitions and mergers which have seen the selling off of underperforming radio stations, and re-arrangement of content to attract a wider reach. Because technology changes constantly, it is very important for a company to keep eye on such technological changes. The biggest disruption of technology has been felt in the media industry. Innovative technologies have revolutionized previous ways of digesting information, and the Strategic Business Proposal Page 10 of 31 world has moved to personalized news consumption. We are now in the era of over-the-top television. Audiences have shifted from the traditional TV screen, in favor of live streaming, Netflix (NASDAQ: NFLX), multi-platform videos, Amazon (NASDAQ: AMZN) Prime, Sling TV, Hulu, HBO Now and BBC iPlayer (Gachuhi, 2017). This has helped our industry because it gives a wider reach to newer consumers, as well as, listeners and viewers. Mobile apps are on the horizon lately and bring an entire demographic of new audiences. This technology is growing rapidly, and Urban One could benefit from creating an app that collaborates with BET to broaden its audience even more. According to ComScore, mobile apps dominate time spent vs. the mobile web with a slightly higher split for smartphones than tablets. Looking at their numbers for US consumers from June 2017, mobile apps are leading at 87% of the mobile time, with web browsing only scoring the remaining 13% (Saccomani, 2018). Urban One is doing great with adapting to new technologies. From radio to cable television, Urban One will continue to grow in this technological era. Industry Trends

On a weekly basis, Nielsen reports an average of 92% of African-American adults who listen to the radio, with the afternoon drive being the most popular time of day and location – in a vehicle. It just goes to show how much audio plays a major role in the lives of these consumers, while broadcast radio creates even more value for advertisers. African American listeners that are in the top 5 media markets include Atlanta, New York, Chicago, Washington DC and Houston- Galveston. Of these markets, Atlanta was one in which the company experienced a decline in revenue per third quarter results for 2018. Based on this data, perhaps the company could adopt methods to not only gain more listeners but also generate new revenue streams to avoid operating at a loss where they need it most. In addition, gearing up to power-marketing mode could also benefit even if it only includes low-budget marketing.

Business Opportunities

It is a necessity for every business to have an online presence and mobile technology has become a major part of the future in the industry. That being the case, why not expand the business in a high-demand industry with the development of a joint venture mobile app between the two companies Urban One and BET. Since they share the same audience among other things, both of their goals can co-exist and be equally served. Together, the companies can create a connected mobility multi-media platform that allows member-only access to each of the entities content, with exclusive and aggregated news, sneak peek shows, backstage content, and more. Mobile is in demand now more than ever and nowadays it’s all about real-world experiences in mobile. More importantly, there’s enormous value in it simply because it can become a thriving, vital part of the business. Consequently, not only will they attract an even larger audience, but both businesses can increase their bottom line.

Business Threats

In the company’s attempt at success in the media and entertainment industry, it’s extremely important to understand the risks associated with it. Key areas of threat include new business models with advances in technology, third-party liability, and violence. In reference to advances in technology, entertainment companies especially large ones such as this one, will have to figure Strategic Business Proposal Page 11 of 31 out the best ways to diversify and compete on smaller scales. For instance, using AI (Artificial Intelligence) technology advancement tools can be a huge advantage in multiple areas for business such as production, management, and publishing. On the other hand, it can also be a huge expense and result in massive job losses. Experts from Pew Research predict that networked artificial intelligence will not only amplify human effectiveness but will also threaten human autonomy, agency and capabilities. (Anderson, J., Luchsinger, A., Rainie, 2018). As far as third-party liability goes, companies in this particular industry regularly contract with third- party entities to achieve strategic objectives and meet certain expectations. Especially when putting on events such as festivals, award shows, and community events. With regard to violence as a possible threat to Urban One's business, they operate in a very vulnerable industry where people and groups can commit to violent acts. As a key reminder, the company would need to remain cautious of the opportunity for this to occur anywhere there’s a ton of people gathered in a confined space.

3: Strategy Formulation Operations

With the power of music and art, the two forces combined can join together in a three-year cause marketing campaign. The company can develop a phased implementation to enact change for the campaign focused on inequality in America's justice system. Co-branding with BET will positively impact Urban One's business model by increasing its overall value while providing stronger benefits to their audience. Furthermore, a strategic collaboration such as this can deliver an even higher level of perceived value, while simultaneously providing their audience within the same demographic with even more reasons to take interest in the services they provide. Company changes that can be made to accommodate this idea consist of a website update that includes new content for both businesses. For instance, adding a promotional video can drive the right people to their content. Another change may involve changing the attitudes and/or behaviors of the staff to better stimulate the creativeness for each individual and increase their effectiveness. This may involve education and training as it relates to the other company and/or team building. A benefit of this is that there will be little need to hire additional staff from the outside. In addition, notifying the company's solicitor and their accountant of any changes to the partnership, as well as the partnership's bank is highly recommended should there be any guarantees provided by both companies agreeing to the partnership. In addition, Urban One will be responsible for the funding of the creation of the mobile application as well as the day-today operations of the mobile application. For this reason, they will take a larger split of the revenue generated. Lastly, marketing and advertising expenses can be shared. This is a huge advantage because it will help to reach a broader audience.

Ref Appendix 3 for Phased Implementation

Organizational Impact

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The artist Jermaine Lamar Cole, also known professionally as J. Cole, can be the brand ambassador for the campaign and lend his voice to the movement. He is an American producer and platinum rap artist with multiple projects under his belt. Two of them consist of Dreamville Records and a non-profit organization called the Dreamville Foundation. Furthermore, he has become a hip-hop power player in the industry. This would be the perfect fit because his brand is focused on bringing awareness of socioeconomic issues affecting the African-American community. Additionally, he’s already one of hip-hop’s leading voices for Black Lives Matter, yet another movement continuing to gain momentum across the country that can partake in the campaign. With both companies collaborating in a partnership, each can distribute their knowledge and skills while accelerating their learning throughout the process. Additionally, appropriate structure, resources, and management practices must be put in place to better achieve the intended purpose of what many may call a give-and-take relationship.

Ref Appendix 4 for the departments involved.

For the success of the campaign, all parties involved must have a shared vision and mutual respect for each individual. More importantly, it would be mutually beneficial to have an in- depth understanding of each other’s role with the goal of attaining an outstanding outcome.

Staffing Needs

Both BET and Urban One already have the capabilities, expertise, and necessary resources to ensure these campaigns are a success. For this reason, it would be cost effective to proceed in a co-branding partnership. In addition, the only additional staff that may be required for use are volunteers. Deploying community resources with the use of volunteers can create exceptional value for both BET and Urban One. Any individuals who agree to assist and support the campaigns will be considered non-paid volunteers.

Other Needs

Mobile App: Starting a beta program for the development of the mobile app will help to facilitate initial features of the app. This is also beneficial because early beta users not only provide crucial feedback but helps to detect bugs.

Artist: Will need to persuade artist J. Cole to become a brand ambassador for the cause.

Sales, Marketing, & Distribution

Urban One Media and BET as a partnership elevate the African American listeners, as well as viewers. Because BET is strictly a television broadcasting network, partnering with Urban One Media will transition the popular network over into the radio broadcasting market with our company. Reaching over 90% of African American listeners, we offer Reach Media from some of the most highly respected and trusted voices in radio such as Tom Joyner, D.L. Hughley, Al Sharpton and more. Creating a mobile app that addresses the real issues in the African American community, will bring more awareness and increase revenue for both companies. The revenue Strategic Business Proposal Page 13 of 31 that we gain from the app will be split between Urban One, BET, and the newly created scholarship fund for youths attending Historically Black Colleges and Universities. Some of the financial factors we will consider are the cost of mobile app development and operational expenses. This expense is determined by setup and development, maintenance, sales representative staff, marketing staff, division manager, licensing agent, and business developer.

Marketing Mix

Price

The cost of mobile app services will be based on defeating our competitors' prices. Our competitor, iHeart, has an "all-access" cost of $9.99 (web and Google Play Store sign up) and $12.99 (iOS sign up). Therefore, our monthly subscription fee will be $7.99 a month and $10.99 a month for a family plan up to 4 people. Our strategy is to increase revenue with our listeners with a chance to promote their business on our app through advertising, and monthly subscriptions for our loyal fans, as well as, fans who support BET.

Product

This will be a mobile app that can be downloaded from Android and Apple devices. It will be entitled, “Urban One/BET Mobile App” with the tagline, “Where Power Meets Culture.” It features the latest in news on artists, social justice, black culture and the best in music for the young and mature audience.

Distribution

It will be advertised on BET’s website and television channel, all of Urban One’s sites, all 55 of Urban One’s radio stations, and both of the company’s social media platforms.

Promotion For the promotion, the companies will create visibility, drive traffic and sales, and showcase community responsibilities. They will promote on their own platforms using traditional marketing and online marketing. Both Urban One and BET will be responsible for the costs and production of their own original marketing material throughout the mobile application campaign. For example, they will advertise on Urban One’s 99 sites, which has a reach of 20 million unique visitors per month, 1 billion monthly video impressions and 100 million plus in total reach. They will promote their partnership with BET through One X Studios, a site strictly for Urban One’s branded content division. There will be advertising on all 55 stations of their stations, which will consist of ticket giveaways and chances to win concert tickets by following their trending hashtags. Since Urban One Media and BET both partner with historically black colleges and universities, together they could offer scholarships and have young African Americans enter contests to win. This content will be provided on both the company’s social media platforms. Their messaging strategy is to teach African Americans that there is power in the voice and action through our culture. Strategic Business Proposal Page 14 of 31

Sales Strategy

Urban One Media and BET’s marketing teams will be responsible for bringing awareness to the app. The app will be available for download through Google Play, iS0 and other downloadable platforms. We will create a podcast that describes the app and discusses how it works, including the prices of the family plans and regular subscription. Also, we will provide a free month of unlimited access to those who subscribe and join our email list. For every new subscriber, their name will go into a drawing to win free prizes, such as promotional gear, cruises and concert tickets.

Legal

Legal Factors

The legal factors affecting business collaborations form the bulk of the legal considerations centered around a partnership between Urban One and BET. Since this partnership also involves collaboration in the creation of a mutually owned and operated mobile app, both companies will need to have contractual agreements stating specifically what each other’s role will be in both the business partnership and in developing and maintaining the mobile app. Other legal considerations will involve the mobile app itself such as, but not limited to, licensing, regulations, and intellectual property. Also, taking into consideration that the mobile revolution is still creating a growing and changing market, laws are likely to continue to develop and provide greater clarity about exactly how developers might protect themselves and the users of their app in the legal context (Bermotech, 2014).

Regulations

Urban One and BET must first understand that laws and regulations governing mobile apps differ from those of radio and television. The Federal Trade Commission (FTC) has the broadest regulatory reach into the mobile app world and its main function is to regulate privacy laws (Ossian, 2014). Confidentiality issues come up frequently in the tech world because of the innovative nature of the industry. Mobile apps can disclose personally identifiable information (or PII) from users such as names, emails, phone numbers, addresses, birthdays, and locations (George, 2018). Having a mobile app privacy policy that completely discloses its information practices, including its collection use, disclosure, maintenance, and protection of personal information is crucial in avoiding stiff penalties for FTC violations (Practice Law, 2014)

Music streaming requires licensing in the form of Public Performance Rights. Mobile App Developers get these rights from three agencies; the Broadcast Music Incorporated (BMI), the American Society of Composers, Authors and Publishers (ASCAP), and they also need to get licensing from the record labels which are associated to the artists and their music. Although record labels have different ways for licensing deals, the most common ones are through an “as per stream rate” and through some percentage of the revenue. On average big apps like Apple Music and Spotify pays 58% and 55% respectively to these labels (Kishore, 2017).

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Contracts

Business collaboration between Urban One and BET will require new contractual agreements with specific clauses detailing each partner’s monetary contributions, duties, and shares of profits and losses. Companies like Urban One and BET, who have been in the media entertainment business for over 30 years, know what factors affect acquisitions and collaborations. However, a collaboration involving the sharing of assets must concentrate more on factors such as ownership, decision making, dispute resolution, and critical developments. Clauses in their contractual agreements should clearly define who will own newly acquired assets (including customer data), how the day-to-day management and long-term decisions will be made, how disputes will be handled, and the circumstances under which they can modify your partnership agreement (Akalp, 2019).

Insurance

The current insurance plans in place are current and will not need to be updated with the implementation of any provisions outlined in this proposal.

Intellectual Property

When developing and distributing a mobile app, Urban One and BET must consider and address both protecting their own intellectual property (IP) rights and minimizing the risk of infringing the IP rights of others. When it comes to app development, the source code, designs, graphics, app name, app icon, and any written content within the app would all be considered IP. This partnership should clearly detail who owns these processes with proper legal agreements. The companies should take further steps to protect their intellectual property against competitors by registering trademarks, copyrights, and patents with the US Patent Office. Certain aspects of the app, including its source code, may be protectable as trade secrets. Trademarks will protect things like your app name, company name or logo. Copyrights would apply to any written or artistic works, including the source code, content, and designs. Patents protect processes and inventions that are new (George, 2018). This particularly applies to innovations and upgrades for the mobile app.

4: Proposal Budget & Projections Sales Projections

As the main point of this campaign is to generate revenue from the new "Urban One/BET application, a "premium service" will be provided to assure a steady income. A total of 88 million households view the BET network and paired with the 18 million listeners of the Urban One radio stations, we expect to see the great success of the mobile application. You can expect Strategic Business Proposal Page 16 of 31 to see about 25% of customers, viewers, and listeners to download and use the mobile application. This, however, will only be the "freemium users" (We will need these users of the application in the next section). According to industry standards, a baseline conversion to premium users is 8% - 12%.

Below are the sales projections for the Urban One/BET mobile application and premium subscriptions that are within said application. According to BET and Urban One website, between the two, there is a total of 106,255,000 viewers/consumers of the brands. This will be the group of people our marketing campaigns will be focused on. Business of Apps says that 25% of serious consumers will take the time/storage space on phone to actually download an advertised application (Dogtiev, 2019). With that statistic, we find that of our original market, we are now down to 26,563,750 mobile application consumers. Once there are mobile application users, the conversion from “freemium users” to “premium subscribers” is paramount. On average, applications that offer both types of service will see an average of 8-12% of users converting into premium subscribers. It all depends on the price of the premium service in comparison to similar products (competition). Between Urban One and BET, the two have decided to create a price point that is reflective of the brands reputation, and that is slightly under their competitor’s premium service, iHeart Radio. At a $7.99 “single” service price point we see around a 10% conversion rate from non-subscribers to subscribers. The two will also be offering a $10.99 “family plan” for access to the premium content. Taking 10% of the 26,563,750 application users comes out to be a projected 2,656,375 premium subscribers. We find financial projections by taking this number of premium subscribers and applying a $7.99 payment. The two companies must factor in a certain percentage of users being on a “family plan”. With that being said, the financial projection breakdown is below.

BET Viewers (88,255,000) + Urban One listeners (18,000,000) = 106,255,000

Total Customers/Listeners/Viewers (106,255,000) x Mobile application download percentage (25%) = 26,563,750

Mobile Application Users (26,563,750) x Conversion from “Freemium to Premium members” (10% on average) = 2,656,375

Premium Members (2,656,375) x Cost of Premium Services ($7.99 - $10.99) = $17,742,924.77 - $21,224,436.25 per month.

The low end is 25% of the premium members being on a "family plan," whereas the high end is all premium members subscribing to the single premium plan. Of the total revenue generated from the premium services the split between Urban One and BET will be as followed. 70% of any and all revenue will go to Urban One, the funder of the application. Urban One also was and is responsible for the day-to-day operations of the application. BET will receive 30% of any and all revenue generated. This is for their expanded visibility that Urban One otherwise lacks. Both parties will receive revenue for the creation of their own, original marketing material that went to the advertising of the mobile application

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Project Budget

It’s no surprise with the popularity of mobile applications today that the cost of building and/or operating them is not cheap. Just like anything, there are multiple routes to take when implementing an application. Quality and volume of users should be taken into consideration when budgeting for this kind of project. With the Urban One/BET application being a medium- large type of application, the costs should be equal. For companies with a similar size, the most common spending for a mobile application is going to be $400,000-$500,000 dollars. This is the initial building of the application. This can be expected to take up to 7 months before the application goes live. Once the application is finished, it will be complete with basic controls, data storage, 3rd party integration, access to enterprise data, data encryption, and scalability. However, the budget doesn’t stop there. The application creation company will also need money for the general upkeep of the application. On average, for a medium-large application, monthly upkeep prices can be anywhere from $5,000-$9,000. This means past the initial creation of the application, Urban One and BET can expect to spend close to another $100,000 a year in the upkeep. Of course, the costs of content creation within the application will be there. This will mostly be covered by the salaries of personalities, producers, directors, and editing teams. These salaries may need to see an increase due to the extra workload that will be brought on to assure that the premium content is truly sought after. (Neagu, 2018)

5: Strategy Implementation Timeline & Key Milestones

The development of a mobile application can take about 6-12 months. In the pre-development stage, it is important to start the planning process. This consists of business rules planning, requirements gathering, reviewing best practices, competitive & problem research, and stakeholder interviews. Having a solid understanding of the target market and ideal customers is key to the success of this app. Ideas validation and research can take up to several weeks. Key information for development is choosing the main features of the app. Urban One/BET application will have a premium service that users can subscribe to. This application will have two platforms integrated into one app. Urban One will provide the latest music into the music feature of the app. BET will provide features in the app where users can access music videos, documentaries, news, and movies.

The Pre-launch and Year 1 consist of beginning with the basic stages of development. The design team will examine how the app handles data. It is important to integrate software that will collect original data from users or tap into existing data frameworks. There must be testing of Strategic Business Proposal Page 18 of 31 prototypes before the deployment of the application. After completion of testing of the prototype, the app will be presented to Urban One’s Board of Directors for approval.

Year 2 will begin with the public announcement of the mobile application by Urban One and BET. On March 1, 2020, the app will introduce Brand Ambassador J. Cole for the new application. There will be access to new subscribers and many options of premium plans for users to choose from. After the second year of development, 25% of users download and use the mobile application.

In Year 3, to ensure the continuing success of the app, annual maintenance must be done to the software. The development team will complete backups, server monitoring, updates, and upgrades. They will also do troubleshooting and bug fixing. The team will integrate the app with the latest advancement of software and remove outdated content from both platforms of the app. There will be advantages of new features in premium plans for new subscribers. 50% of customers will download and use the mobile application.

Pre-Launch

Pre-Launch and Year 1

Date / Time-frame Event / Milestone

February 17, 2019 Basic Stages of Development

March 17, 2019 Functions and Features

April 1, 2019 Software Testing

June 5, 2019 Deployment/ Marketing

August 1, 2019 Proposal to Urban One Media’s Board of Directors

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Year 2

Date / Time-frame Event / Milestone

January 1, 2020 Public announcement of the launch of Urban One/BET Mobile Application

March 1, 2020 Introduction of Brand Ambassador J. Cole

May 1, 2020 Access of new subscribers and introduction of family plans and premium plans

December 30, 2020 25% of customers/viewers/listeners to download and use the mobile application

Year 3

Date / Time-frame Event / Milestone

January 1, 2021 Annual maintenance of the application

March 1, 2021 Analysis of server monitoring, updates and upgrades

August 1, 2021 Integrate updated software/ remove outdated content

October 1, 2021 New subscribers will take advantage of new features in premium plans

December 30, 2021 50% of customers/viewers/listeners to download and use the mobile application

6: Future Plans Long-term Opportunity & Development Plans

The long-term opportunities will reach far beyond what we have initially accomplished in the first three years. Together, Urban One and BET will break emotional and financial barriers through the unity of our people. With this application, it will become the "one-stop" app where consumers and fans can nominate their favorite artists or entertainers in award shows. They will Strategic Business Proposal Page 20 of 31

be able to purchase tickets to various concerts and annual cruises, view the latest music and video content with just one click on the mobile app. Urban One and BET will continue to make opportunities that build and unite African American people. Youth will be able to apply for exclusive scholarships from Urban One and BET directly from their mobile device. Concerning purchasing through our app, we will consider M-Commerce. Various analysts believe the positive trend in mobile purchases will continue over the next 4 years as more and more consumers adapt to m-commerce. Increasing popularity of Apple Pay and Google Wallet will facilitate purchases using mobile phones instead of debit or credit cards (Maruti, n.d). The opportunities are limitless. We also expect to see a 50% rise in revenue each quarter for both companies, because the mobile expenses will be covered by both companies. This, in turn, saves these companies millions of dollars. Over the course of the years, we will continue to provide affordable subscription plans that will beat our competitors. This mobile app will be the future of Urban One and BET. These companies have managed to create a platform for so many African Americans, and this app will only expand what they have to offer to the community through art, technology, and our culture.

7: Appendices and References

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Blair, I. (2018, August 10). 4 Ways Your Business Can Benefit From Having a Mobile App. Retrieved February 23, 2019, from https://buildfire.com/ways-business-benefit-having-mobile-app/

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Appendices Appendix 1: Competitive Analysis

Appendix 2: Stock Report

Urban One, Inc. Stock Report Publicly Traded as UONEK $1.94*0.04 2.02%

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(Nasdaq, 2019}

Appendix 3: Phased Implementation

STEP 1: Define Goals & Assess the Climate (will be specific and practical goals; will also identify any obstacles and current conversations about it, examine areas that have received little attention such as schools with the highest percentage of African American population, jails, foster care, and probation. Also assess policies, practices, and programs and identify what has worked, what hasn’t worked, & strategies to avoid.)

STEP 2: Chart the Course: (ie. Persuade artist to become a brand ambassador for the cause).

STEP 3: Message for Impact (Explain the need, recommendation for addressing it, goals, & how end result can impact it)

STEP 4: Campaign Management: (Daily details, deadlines, budget, etc.) Strategic Business Proposal Page 26 of 31

Appendix 4: Key Personnel

Appendix 5: Sales Projections

Urban One / BET Split 70-30

*Refer to Section IV for projection explanations and assumptions. Strategic Business Proposal Page 27 of 31

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Appendix 7: Income Statement Summary

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Appendix 8: Annual Profits