Ladies and gentlemen, thank you for standing by and welcome to the Urban One 2026 third quarter earnings call. As a reminder, this conference is being recorded. We will begin this call with the following safe harbor statement. During this conference call, Urban One will be sharing with you certain projections or other forward-looking statements regarding future events or its future performance. Urban One cautions you that certain factors, including risks and uncertainties referred to in the 10-Ks, 10-Qs, and other reports it periodically files 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 November 10th, 2026. Please note that Urban One disclaims any duty to update any forward-looking statements made in the presentation.
In this call, Urban 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 on its website at www.urbanone.com. A replay of the conference call will also be made available from 2:00 P.M. Eastern Standard Time, November 10th, 2026, until 11:59 P.M. Eastern Standard Time, November 17th, 2026. Callers may access the replay by calling 1-800-770-2030. International callers may dial direct 1-609-800-9909. The replay access code is 9794002. Access to live audio and the replay of the conference will also be available on Urban One's corporate website at www.urbanone.com. 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 may be relied upon.
I will now turn the call over to Alfred C. Liggins, Chief Executive Officer of Urban One, who is joined by Peter Thompson, Chief Financial Officer. Mr. Liggins, please go ahead.
Thank you, operator, and welcome to our third quarter results conference call. Also joining us are Jody Drewer, CFO of TV One, Chris Simpson, our General Counsel, and Karen Wishart, our Chief Administrative Officer. Market conditions in radio continued to adversely impact our revenue in the third quarter. However, we were helped by net political revenue, about $800,000 in the quarter, and the acquisition of stations in our Dallas market effective July 17th, which contributed an additional $1.9 million of net revenue in the quarter. Net political revenue for the full year is expected to be $8.8 million across all divisions. It was weaker in radio than we anticipated. We budgeted about $11 million, and we are shy of that by about $2.5 million. Actually, it is going to come in at about $8.4 million for radio alone.
Weak demand in the cable TV scatter market shifted more inventory to the direct response category at lower rates in the third quarter. We saw an increase in local digital revenue in our radio markets, but large client attrition and suppressed rates in national direct digital revenue meant significant revenue declines in the overall digital segment. We needed to revise our adjusted EBITDA guidance for 2026, which is now $40 million, given the realities of the current advertising marketplace. Management is hyper-focused on cost reductions heading into next year, and we've identified about $20 million, at least $20 million of annualized savings thus far that we're working on and will put into effect. Peter is going to give you some more color on the quarter in detail.
Thanks, Alfred. Consolidated net revenue for the three months ended September 30, 2026, was approximately $88 million, a 5% decrease year-over-year. Net revenue for radio broadcasting segment was $36.7 million, an increase of 5.8% year-over-year. Excluding political, net revenue was up 0.5% year-over-year. According to Miller Kaplan, our local ad sales were down 5.1% against a market that was down 9.2%, and our national ad sales were up 4.2% against a market that was down 2.1%. Our largest ad category was services, which was up 6.5%, primarily due to legal services. The government and public category was up 9.9% due to the political spending that Alfred mentioned. Entertainment category was up, and then all of the rest of the major categories were either flat or down.
Net revenue for the Reach Media segment was $5.1 million in the third quarter, a decline of 17.7% from the prior year. Adjusted EBITDA there was a loss of $1.1 million for the quarter, decrease being primarily driven by lower demand in the network audio marketplace, which continued to be down double digits according to Miller Kaplan. Net revenue for the digital segment was down 24.6% at $9.6 million, and that decrease was driven by the decrease in national direct revenue streams as a result of DEI-focused spending and lower effective rates as a result of decreased demand. We recognized approximately $37.3 million of revenue from our cable television segment during the quarter, which was a decrease of 6.2% from the prior year. Cable television advertising revenues were down 5.5%, primarily due to lower total day delivery, which was partially offset by audience liability write-offs.
Cable television affiliate revenue was down by 7.1%, driven by subscriber churn as linear cable continues to decline, and that was partially offset by an increase in subscriber rates. Traditional linear cable subs for TV One, as measured by Nielsen, finished Q3 at 26 million compared to 33.6 million at the end of Q3 2025. Inclusive of virtual subs, TV One finished with 29.3 million Nielsen subscribers compared to 35.1 million in Q3 of 2025. CLEO TV had 26 million traditional linear Nielsen subs and 30 million inclusive of virtual subs. Operating expenses, excluding depreciation and amortization, stock-based compensation, and impairment charges, were approximately $78.2 million for the three months ended September 30th, compared to approximately $83.7 million for the comparable period in 2025. Decrease was mainly driven by non-recurring music license settlement costs in the prior year.
Radio operating expenses were down 3.7% or $1.2 million, driven primarily by lower revenue-related expenses and non-recurring music license settlement costs in the prior year. Reach operating expenses were down 4.8% or $300,000, driven primarily by lower revenue-related expenses such as affiliate station expense and sales commissions. Operating expenses in the digital segment were down by 15.6%, driven mainly by a decrease in traffic acquisition costs and sales commissions. Operating expenses in the cable television segment were down 2.6%, driven primarily by a decrease in research, marketing, and bad debt reserve. Operating expenses at corporate were down by approximately 18.3%, driven by lower professional service fees and a decrease of $1.4 million in the CEO's TV One award expense, which was in turn driven by a non-cash impairment charge to the cable TV reporting unit. Consolidated adjusted EBITDA was $12.3 million for the third quarter, down 13.6%.
Consolidated broadcast and digital operating income was approximately $19.4 million, which was a decrease of 2.7%. Interest expense was approximately $2 million in Q3, down from $9.4 million last year, reflecting the debt repurchase activities and the lower effective interest rates under the troubled debt restructuring accounting standard. We made cash interest payments of approximately $800,000 during the quarter, and the full semi-annual interest payment for the 2030 and 2031 Notes was made on October 1st. We borrowed $7 million and repaid $5 million during the quarter on the current ABL facility. After giving effect to the outstanding balance of $22 million and adjustments to account for the borrowing base, the company's borrowing capacity was approximately $21.2 million as of September 30th, 2026.
We recognized approximately $25.4 million of goodwill impairment and approximately $62.5 million of long-lived asset impairments related to the Radio Broadcasting reporting unit, and approximately $40.9 million of goodwill impairment related to the cable television reporting unit during the third quarter. We also recorded depreciation and amortization expense of approximately $6.6 million, including $4.7 million of amortization for the radio broadcasting licenses and TV One trade names for the three months ended September 30, 2026. The benefit from income taxes was approximately $6.3 million for the third quarter. We paid cash income taxes, net of refunds, in the amount of $34,000, and capital expenditures were approximately $1.1 million for the quarter.
Net loss was approximately $119.2 million, or $26.39 per share, compared to a net loss of $2.8 million, or $0.64 per share, for the third quarter of 2025. During the three months ended September 30th, 2026, we did not repurchase any Class A shares, and we repurchased 55,073 shares of Class D common stock for approximately $200,000, at an average price of $4.39 per share, and that related to employee shares. As of September 30, 2026, the contractually outstanding debt balance was approximately $325.2 million, and ending unrestricted cash was $17.2 million, resulting in net debt of approximately $308.1 million, compared to $44.3 million of LTM reported adjusted EBITDA, for a total net leverage ratio of 6.96x .
We completed the sale of KZMJ to Fuzion Dallas LLC on July 6th, for $6 million, and we recognized a gain of $3.2 million in the third quarter. We also completed the acquisition of Service Broadcasting Group, including radio stations KKDA and KRNB, for $22 million on July 17th, 2026. With that, I will hand it back to Alfred.
Thank you, Peter. Operator, you can open up the lines for questions.
Thank you. We will now begin the question-and-answer session. To ask a question, press star, then the number one on your telephone keypad. Again, that is star one for any questions. We will pause for a moment to compile the Q&A roster. A final reminder, to ask a question, simply press star one on your telephone keypad. There are no questions at this time, and this concludes the question-and-answer session. I will hand the call back to Alfred for any closing comments.
Thank you, operator, and thank you folks for joining in. Please follow up with Peter and I for any questions that might come to mind after the fact of the conference call. We will look forward to next quarter. Thank you.
This concludes today's conference. Thank you all for joining. You may now disconnect.