ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
General
We are a radio broadcasting company whose primary business is operating radio stations throughout the United States. We own and operate 64
radio stations in the following radio markets: Atlanta, GA, Augusta, GA, Boston, MA, Charlotte, NC, Detroit, MI, Fayetteville, NC, Fort Myers-Naples, FL, Las Vegas, NV, Middlesex, NJ, Monmouth, NJ, Morristown, NJ, Philadelphia, PA, Tampa-Saint
Petersburg, FL, West Palm Beach-Boca Raton, FL, and Wilmington, DE. We refer to each group of radio stations in each radio market as a market cluster.
Recent Developments
On
September 27, 2018, we completed the acquisition of
WXTU-FM
in Philadelphia from Entercom Communications Corp. for $38.0 million in cash. The purchase price was partially financed with
$35.0 million in borrowings from our credit facility and partially funded with $3.0 million of cash from operations. On July 19, 2018, we also entered into a local marketing agreement (LMA) with Entercom Communications
Corp. and began operating
WXTU-FM
on July 23, 2018. During the term of the LMA, we included net revenues and station operating expenses, including the associated LMA fee from operating
WXTU-FM,
in our consolidated financial statements. The LMA ended on September 27, 2018.
On
September 27, 2018, we borrowed an additional $35.0 million under our current term loan. The proceeds were used for the acquisition of
WXTU-FM
in Philadelphia. In connection with the additional
borrowings, we recorded a loss on modification of long-term debt of $0.3 million during the third quarter of 2018.
Cautionary Note Regarding
Forward-Looking Statements
This report contains forward-looking statements about the Company within the meaning of the
Private Securities Litigation Reform Act of 1995, which relate to future, not past, events. All statements other than statements of historical fact included in this document are forward-looking statements. These forward-looking statements are based
on the current beliefs and expectations of the Companys management and are subject to known and unknown risks and uncertainties. Forward-looking statements, which address the Companys expected business and financial performance and
financial condition, among other matters, contain words such as: expects, anticipates, intends, plans, believes, estimates, may, will, plans,
projects, could, should, would, seek, forecast, or other similar expressions.
Forward-looking statements by their nature address matters that are, to different degrees, uncertain. Although the Company believes the
expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that the expectations will be attained or that any deviation will not be material. Readers are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of the date on which they are made. The Company undertakes no obligation to update or revise any forward-looking statements.
Forward-looking statements involve a number of risks and uncertainties, and actual results or events may differ materially from those
projected or implied in those statements. Factors that could cause actual results or events to differ materially from these forward-looking statements include, but are not limited to:
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external economic forces that could have a material adverse impact on the Companys advertising revenues and
results of operations;
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the ability of the Companys radio stations to compete effectively in their respective markets for
advertising revenues;
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the ability of the Company to respond to changes in technology, standards and services that affect the radio
industry;
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audience acceptance of the Companys content, particularly its radio programs;
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the Companys substantial debt levels and the potential effect of restrictive debt covenants on the
Companys operational flexibility and ability to pay dividends;
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