"We are experiencing difficulties. Please stand by." That appears to be the message Radio One (NASDAQ:ROIA) is sending investors. Its first-quarter earnings actually beat guidance but remained dismal. Net income to common stockholders fell 57% from the previous year to $2.6 million, or $0.03 per share, down from $6.9 million, or $0.07 per share. Station operating income was down 6% to $35.3 million. But don't change the channel yet. The broadcasting company is still fine-tuning its strategy.

The urban-focused radio broadcaster makes no bones about it; Clear Channel's (NYSE:CCU) "less is more" initiative is taking a chunk of Radio One's market share. Clear Channel launched "less is more" last year, hoping that airing fewer commercials would entice listeners from other terrestrial broadcasters and commercial-free satellite providers Sirius (NASDAQ:SIRI) and XM Satellite Radio (NASDAQ:XMSR). And the strategy appears to have worked; higher ratings and advertising rates doubled Clear Channel's net income in the first quarter to $96.8 million, or $0.19 per share. In Thursday's conference call, Radio One management said that Clear Channel is gaining ground at "the expense of [Radio One] and its peers."

So what does Radio One plan to do? The company says it will focus on its core business by sticking to the tried-and-true strategy of acquiring more stations in its already thriving markets such as St. Louis and Cincinnati.

The company also maintains that staying national is the key to hedging risk for today's broadcasters. The "competitive advantage of having a national strategy is the portfolio strategy," management added during the call.

But what about anemic markets like Los Angeles that are currently hemorrhaging listeners? Management says it will rearrange programming and try a new marketing strategy, hoping to see more listeners in those markets by the close of fiscal 2006.

The good news: A recent ratings survey showed positive results in large markets such as Washington, D.C. and Philadelphia, which should boost revenues before year's end.

Management admits its Internet business is "nascent," and they're working on a growth strategy, hoping to harness success similar to that of Hispanic broadcaster Univision (NYSE:UVN). While the Internet business could certainly give Radio One a much-needed boost, don't expect the same success. Univision has the added benefit of broadcasting into other countries such as Mexico, while Radio One emphasized its plans to stay in the U.S.

Overwhelmed by the mixed signals? You're not the only one. Radio One won't be offering Q2 guidance because, well, there's just too much static to calculate.

"It's hard to quantify the impact that recent ratings gains will have on revenue," management said, adding that it's also difficult to measure the continuing impact of "less is more."

Radio One has reached a pivotal time in its strategy. Watch for the company to focus more on its Internet business and strengthen its station portfolio with more acquisitions. The company has potential and is taking the right steps to regain market share lost to Clear Channel, but the stock might not reflect that until the end of 2006.

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Fool contributor Amanda Tyler does not own shares of any company named above.