UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO
SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2021
Commission File Number 001-39029
MEDIACO HOLDING INC.
(Exact name of registrant as specified in its charter)
INDIANA
(State of incorporation or organization)
84-2427771
(I.R.S. Employer Identification No.)
ONE EMMIS PLAZA
40 MONUMENT CIRCLE, SUITE 700
INDIANAPOLIS, INDIANA 46204
(Address of principal executive offices)
(317) 266-0100
(Registrant’s Telephone Number, Including Area Code)
NOT APPLICABLE
(Former Name, Former Address and Former Fiscal Year, if Changed
Since Last Report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
|
Trading symbol(s)
|
Name of each exchange on which registered
|
Class A common stock, $0.01 par value
|
MDIA
|
Nasdaq Capital Market
|
Indicate by check mark whether the registrant: (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing
requirements for the past 90
days. Yes ☒
No ☐
Indicate by check mark whether the registrant has submitted
electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period
that the registrant was required to submit such
files). Yes ☒
No ☐
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non accelerated filer, a
smaller reporting company, or an emerging growth company. See the
definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company,” and “emerging growth company” in Rule
12b-2 of the Exchange Act.
Large accelerated filer
|
☐
|
|
|
Accelerated filer
|
☐
|
|
|
|
|
|
|
Non-accelerated filer
|
☐
|
|
|
Smaller reporting company
|
☒
|
|
|
|
|
|
|
|
|
|
|
Emerging growth company
|
☒
|
If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards pursuant to Section 13(a) of the Exchange Act.
☐
Indicate by check mark whether the Registrant is a shell company
(as defined in Rule 12b-2 of the
Act). Yes ☐
No ☒
The number of shares outstanding of each of MediaCo Holding Inc.’s
classes of common stock, as of May 18, 2021, was:
|
|
|
2,437,550
|
|
Shares of Class A Common Stock, $.01 Par Value
|
5,413,197
|
|
Shares of Class B Common Stock, $.01 Par Value
|
—
|
|
Shares of Class C Common Stock, $.01 Par Value
|
INDEX
PART
I — FINANCIAL INFORMATION
ITEM 1. FINANCIAL
STATEMENTS
MEDIACO HOLDING
INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
|
|
Three Months Ended
March 31,
|
|
|
|
2020
|
|
|
2021
|
|
NET REVENUES
|
|
$
|
11,785
|
|
|
$
|
9,743
|
|
OPERATING EXPENSES:
|
|
|
|
|
|
|
|
|
Operating expenses excluding depreciation and amortization
expense
|
|
|
9,457
|
|
|
|
7,761
|
|
Corporate expenses
|
|
|
1,165
|
|
|
|
1,641
|
|
Depreciation and amortization
|
|
|
1,027
|
|
|
|
981
|
|
Gain on disposal of assets
|
|
|
—
|
|
|
|
(6
|
)
|
Total operating expenses
|
|
|
11,649
|
|
|
|
10,377
|
|
OPERATING INCOME (LOSS)
|
|
|
136
|
|
|
|
(634
|
)
|
OTHER EXPENSE:
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
(2,238
|
)
|
|
|
(2,538
|
)
|
LOSS BEFORE INCOME TAXES
|
|
|
(2,102
|
)
|
|
|
(3,172
|
)
|
(BENEFIT) PROVISION FOR INCOME TAXES
|
|
|
(617
|
)
|
|
|
81
|
|
CONSOLIDATED NET LOSS
|
|
|
(1,485
|
)
|
|
|
(3,253
|
)
|
PREFERRED STOCK DIVIDENDS
|
|
|
529
|
|
|
|
634
|
|
NET LOSS
|
|
$
|
(2,014
|
)
|
|
$
|
(3,887
|
)
|
|
|
|
|
|
|
|
|
|
Basic and diluted loss per share attributable to common
shareholders
|
|
$
|
(0.28
|
)
|
|
$
|
(0.55
|
)
|
Basic and diluted weighted average number of common shares
outstanding
|
|
|
7,084
|
|
|
|
7,115
|
|
The accompanying notes are an integral part of these unaudited
condensed consolidated
statements.
- 3 -
MEDIACO HOLDING
INC.
CONDENSED
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
|
|
December 31,
2020
|
|
|
March 31,
2021
|
|
|
|
|
|
|
|
(Unaudited)
|
|
ASSETS
|
|
|
|
|
|
|
|
|
CURRENT ASSETS:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
4,171
|
|
|
$
|
4,490
|
|
Accounts receivable, net
|
|
|
8,508
|
|
|
|
7,264
|
|
Prepaid expenses
|
|
|
1,247
|
|
|
|
1,648
|
|
Other current assets
|
|
|
1,274
|
|
|
|
1,059
|
|
Total current assets
|
|
|
15,200
|
|
|
|
14,461
|
|
PROPERTY AND EQUIPMENT, NET
|
|
|
27,650
|
|
|
|
27,086
|
|
INTANGIBLE ASSETS, NET
|
|
|
79,217
|
|
|
|
78,903
|
|
OTHER ASSETS:
|
|
|
|
|
|
|
|
|
Operating lease right of use assets
|
|
|
23,953
|
|
|
|
23,178
|
|
Deposits and other
|
|
|
331
|
|
|
|
290
|
|
Total other assets
|
|
|
24,284
|
|
|
|
23,468
|
|
Total assets
|
|
$
|
146,351
|
|
|
$
|
143,918
|
|
LIABILITIES AND DEFICIT
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES:
|
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses
|
|
$
|
2,557
|
|
|
$
|
2,207
|
|
Current maturities of long-term debt
|
|
|
1,836
|
|
|
|
2,754
|
|
Accrued salaries and commissions
|
|
|
709
|
|
|
|
647
|
|
Deferred revenue
|
|
|
1,535
|
|
|
|
1,750
|
|
Operating lease liabilities
|
|
|
3,573
|
|
|
|
3,503
|
|
Other current liabilities
|
|
|
549
|
|
|
|
1,740
|
|
Total current liabilities
|
|
|
10,759
|
|
|
|
12,601
|
|
LONG TERM DEBT, NET OF CURRENT
|
|
|
93,918
|
|
|
|
93,147
|
|
OPERATING LEASE LIABILITIES, NET OF CURRENT
|
|
|
20,176
|
|
|
|
19,305
|
|
ASSET RETIREMENT OBLIGATIONS
|
|
|
6,316
|
|
|
|
6,481
|
|
DEFERRED INCOME TAXES
|
|
|
1,711
|
|
|
|
1,792
|
|
OTHER NONCURRENT LIABILITIES
|
|
|
221
|
|
|
|
125
|
|
Total liabilities
|
|
|
133,101
|
|
|
|
133,451
|
|
COMMITMENTS AND CONTINGENCIES
|
|
|
|
|
|
|
|
|
SERIES A CUMULATIVE CONVERTIBLE PARTICIPATING PREFERRED STOCK,
$0.01 PAR VALUE, 10,000,000 SHARES AUTHORIZED; 220,000 SHARES
ISSUED AND OUTSTANDING
|
|
|
24,258
|
|
|
|
24,892
|
|
DEFICIT:
|
|
|
|
|
|
|
|
|
Class A common stock, $0.01 par value; authorized 170,000,000
shares; issued and outstanding 1,785,880 shares and 2,437,550
shares at December 31, 2020, and March 31, 2021, respectively
|
|
|
18
|
|
|
|
24
|
|
Class B common stock, $0.01 par value; authorized 50,000,000
shares; issued and outstanding 5,413,197 shares at December 31,
2020, and March 31, 2021
|
|
|
54
|
|
|
|
54
|
|
Class C common stock, $0.01 par value; authorized 30,000,000
shares; none issued
|
|
|
—
|
|
|
|
—
|
|
Additional paid-in capital
|
|
|
20,772
|
|
|
|
21,236
|
|
Accumulated deficit
|
|
|
(31,852
|
)
|
|
|
(35,739
|
)
|
Total deficit
|
|
|
(11,008
|
)
|
|
|
(14,425
|
)
|
Total liabilities and deficit
|
|
$
|
146,351
|
|
|
$
|
143,918
|
|
The accompanying notes are an integral part of these unaudited
condensed consolidated
statements.
- 4 -
MEDIACO
HOLDING INC.
CONDENSED CONSOLIDATED
STATEMENT OF CHANGES IN EQUITY (DEFICIT)
(Unaudited)
(In thousands, except share data)
|
|
Class A Common Stock
|
|
|
Class B Common Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
APIC
|
|
|
Accumulated Deficit
|
|
|
Total
|
|
BALANCE, DECEMBER 31, 2019
|
|
|
1,666,667
|
|
|
$
|
17
|
|
|
|
5,359,753
|
|
|
$
|
54
|
|
|
$
|
20,644
|
|
|
$
|
(2,951
|
)
|
|
$
|
17,764
|
|
Net loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1,485
|
)
|
|
|
(1,485
|
)
|
Adjustments related to distribution of common shares
|
|
|
16,596
|
|
|
|
—
|
|
|
|
53,444
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
Preferred stock dividends
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(529
|
)
|
|
|
(529
|
)
|
BALANCE, MARCH 31, 2020
|
|
|
1,683,263
|
|
|
$
|
17
|
|
|
|
5,413,197
|
|
|
$
|
54
|
|
|
$
|
20,644
|
|
|
$
|
(4,965
|
)
|
|
$
|
15,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE, DECEMBER 31, 2020
|
|
|
1,785,880
|
|
|
$
|
18
|
|
|
|
5,413,197
|
|
|
$
|
54
|
|
|
$
|
20,772
|
|
|
$
|
(31,852
|
)
|
|
$
|
(11,008
|
)
|
Net loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(3,253
|
)
|
|
|
(3,253
|
)
|
Issuance of class A to employees, officers and directors
|
|
|
651,670
|
|
|
|
6
|
|
|
|
—
|
|
|
|
—
|
|
|
|
464
|
|
|
|
—
|
|
|
|
470
|
|
Preferred stock dividends
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(634
|
)
|
|
|
(634
|
)
|
BALANCE, MARCH 31, 2021
|
|
|
2,437,550
|
|
|
$
|
24
|
|
|
|
5,413,197
|
|
|
$
|
54
|
|
|
$
|
21,236
|
|
|
$
|
(35,739
|
)
|
|
$
|
(14,425
|
)
|
The accompanying notes are an integral part of these unaudited
condensed consolidated
statements.
- 5 -
MEDIACO
HOLDING INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
|
|
Three Months Ended March 31,
|
|
|
|
2020
|
|
|
2021
|
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(1,485
|
)
|
|
$
|
(3,253
|
)
|
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities -
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
1,027
|
|
|
|
981
|
|
Amortization of debt discount
|
|
|
140
|
|
|
|
146
|
|
Noncash lease expense
|
|
|
631
|
|
|
|
775
|
|
Provision for bad debts
|
|
|
373
|
|
|
|
61
|
|
Accretion of asset retirement obligation
|
|
|
182
|
|
|
|
165
|
|
(Benefit) provision for deferred income taxes
|
|
|
(617
|
)
|
|
|
81
|
|
Noncash compensation
|
|
|
—
|
|
|
|
634
|
|
Loss (gain) on sale of property and equipment
|
|
|
78
|
|
|
|
(6
|
)
|
Changes in assets and liabilities -
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
335
|
|
|
|
1,183
|
|
Prepaid expenses and other current assets
|
|
|
909
|
|
|
|
(186
|
)
|
Other assets
|
|
|
(44
|
)
|
|
|
39
|
|
Accounts payable and accrued liabilities
|
|
|
(2,783
|
)
|
|
|
(412
|
)
|
Deferred revenue
|
|
|
(182
|
)
|
|
|
215
|
|
Other liabilities
|
|
|
(127
|
)
|
|
|
155
|
|
Net cash provided by (used in) operating activities
|
|
|
(1,563
|
)
|
|
|
578
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Purchases of property and equipment
|
|
|
(197
|
)
|
|
|
(206
|
)
|
Proceeds from the sale of property and equipment
|
|
|
—
|
|
|
|
111
|
|
Net cash used in investing activities
|
|
|
(197
|
)
|
|
|
(95
|
)
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Payments of long-term debt
|
|
|
(918
|
)
|
|
|
—
|
|
Proceeds from long-term debt
|
|
|
5,181
|
|
|
|
—
|
|
Payments for debt-related costs
|
|
|
(181
|
)
|
|
|
—
|
|
Settlement of tax withholding obligations
|
|
|
—
|
|
|
|
(164
|
)
|
Net cash provided by (used in) financing activities
|
|
|
4,082
|
|
|
|
(164
|
)
|
INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH
|
|
|
2,322
|
|
|
|
319
|
|
CASH, CASH EQUIVALENTS AND RESTRICTED CASH:
|
|
|
|
|
|
|
|
|
Beginning of period
|
|
|
2,083
|
|
|
|
4,171
|
|
End of period
|
|
$
|
4,405
|
|
|
$
|
4,490
|
|
SUPPLEMENTAL DISCLOSURES:
|
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
$
|
1,148
|
|
|
$
|
1,157
|
|
The accompanying notes are an integral part of these unaudited
condensed consolidated statements.
- 6 -
MEDIACO
HOLDING INC.
NOTES TO CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS UNLESS
INDICATED OTHERWISE, EXCEPT SHARE DATA)
March 31, 2021
(Unaudited)
Note 1. Summary of
Significant Accounting Policies
Organization
MediaCo Holding Inc. (“MediaCo” or the “Company”) is an Indiana
corporation formed in 2019, focused on radio and outdoor
advertising.
Our assets consist of two radio stations, WQHT-FM and WBLS-FM,
which serve the New York City metropolitan area, as well as
approximately 3,500 outdoor advertising displays in the Southeast
(Valdosta) region and Mid-Atlantic (Kentucky) region of the United
States. We derive our revenues primarily from radio and outdoor
advertising sales, but we also generate revenues from events,
including sponsorships and ticket sales.
Unless the context otherwise requires, references to “we”, “us” and
“our” refer to MediaCo and its subsidiaries.
Basis of presentation
Our condensed consolidated financial statements are prepared in
accordance with accounting principles generally accepted in the
United States of America (GAAP). All significant intercompany
balances and transactions have been eliminated. In the opinion of
management, all adjustments necessary for fair presentation
(including normal recurring adjustments) have been included.
Cash and Cash Equivalents
We consider time deposits, money market fund shares and all highly
liquid debt investment instruments with original maturities of
three months or less to be cash equivalents. At times, such
deposits may be in excess of FDIC insurance limits.
Fair Value Measurements
As defined in Accounting Standards Codification (“ASC”) Topic 820,
fair value is the price that would be received to sell an asset or
paid to transfer a liability in an orderly transaction between
market participants at the measurement date (exit price). The
Company utilizes market data or assumptions that market
participants would use in pricing the asset or liability, including
assumptions about risk and the risks inherent in the inputs to the
valuation technique. These inputs can be readily observable, market
corroborated or generally unobservable. The Company utilizes
valuation techniques that maximize the use of observable inputs and
minimize the use of unobservable inputs. ASC Topic 820 establishes
a fair value hierarchy that prioritizes the inputs used to measure
fair value. The hierarchy gives the highest priority to unadjusted
quoted prices in active markets for identical assets or liabilities
(Level 1 measurement) and the lowest priority to unobservable
inputs (Level 3 measurement). We have no assets or liabilities for
which fair value is measured on a recurring basis using Level 3
inputs.
The Company has certain assets that are measured at fair value on a
non-recurring basis under circumstances and events that include
those described in Note 3, Intangible Assets, and are adjusted to
fair value only when the carrying values are more than the fair
values. The categorization of the framework used to price the
assets is considered a Level 3 measurement due to the subjective
nature of the unobservable inputs used to determine the fair value
(see Note 3 for more discussion).
The Company’s long-term debt is not actively traded and is
considered a Level 3 measurement. The Company believes the current
carrying value of its long-term debt approximates its fair
value.
Use of Estimates
The Company has been actively monitoring the COVID-19 situation and
its impact globally, as well as domestically and in the markets we
serve. Our priority has been the safety of our employees, as well
as the informational needs of the communities that we serve.
Through the first few months of calendar 2020, the disease became
widespread around the world, and on March 11, 2020, the World
Health Organization declared a pandemic. In an effort to mitigate
the continued spread of COVID-19, many federal, state and local
governments have mandated various restrictions, including travel
restrictions, restrictions on non-essential businesses and
services, restrictions on public gatherings and quarantining of
people who may have been exposed to the virus. These restrictions,
in turn, caused the United States economy to decline and businesses
to cancel or reduce amounts spent on advertising, negatively
impacting our advertising-based businesses. Furthermore, some of
our advertisers have seen a material decline in their businesses
and may not be able to pay amounts owed to us when they come due.
If the spread of COVID-19 continues, or is suppressed but later
reemerges as a variant strain, and public and private entities
continue to implement restrictive measures, we expect that our
results of operations, financial condition and cash flows will
continue to be negatively affected, the extent to which is
difficult to estimate at this time.
- 7 -
The preparation of condensed
consolidated
financial statements in conformity with GAAP requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities as of the date of the financial statements, as well as
the reported amounts of revenue and expenses during the reporting
period. Due to the uncertain
future impacts of the COVID-19 pandemic and the related economic
disruptions, actual results could differ from those estimates
particularly as it relates to estimates reliant on forecasts and
other assumptions reasonably available to the
Company.
The extent to which the COVID-19 pandemic and related economic
disruptions impact the Company’s business and financial results
will depend on future developments including, but not limited to:
(i) the continued spread, duration and severity of the COVID-19
pandemic, (ii) the occurrence, spread, duration and severity of any
subsequent wave or waves of outbreaks after the initial outbreak
has subsided, (iii) the actions taken by the U.S. and foreign
governments to contain the COVID-19 pandemic, address its impact or
respond to the reduction in global and local economic activity,
(iv) the occurrence, duration and severity of a global, regional or
national recession, depression or other sustained adverse market
event, and (v) how quickly and to what extent normal economic and
operating conditions can resume. The accounting matters assessed
included, but were not limited to, allowance for doubtful accounts,
our ability to realize our deferred tax assets, and the carrying
value of goodwill, FCC licenses and other long-lived
assets.
As discussed in Note 7, during the year ended December 31, 2020, as
a result of a sharp deterioration of business activity related to
the COVID-19 pandemic, the Company determined that it was more
likely than not that it would be unable to realize its deferred tax
assets and recorded a $18.8 million valuation allowance against
these assets through an increase to our provision for income taxes.
The Company’s future assessment of the magnitude and duration of
COVID-19, as well as other factors, could result in material
changes to the estimates and material impacts to the Company’s
condensed consolidated financial statements in future reporting
periods.
Per Share Data
Our basic and diluted net loss per share is computed using the
two-class method. The two-class method
is an earnings allocation that determines net income per share for
each class of common stock and participating securities according
to their participation rights in dividends and undistributed
earnings or losses. Shares of Series A preferred stock include
rights to participate in dividends and distributions to common
stockholders on an if-converted basis, and accordingly are
considered participating securities. During periods of
undistributed losses however, no effect is given to our
participating securities since they are not contractually obligated
to share in the losses. We did not have any participating
securities for the three-month period ended March 31, 2020, as the
preferred stock only became convertible to common stock on May 25,
2020. The following is a reconciliation of basic and diluted net
loss per share attributable to Class A and Class B common
shareholders:
|
For the Three Months
Ended March 31,
|
|
|
2020
|
|
|
2021
|
|
Net loss
|
$
|
(1,485
|
)
|
|
$
|
(3,253
|
)
|
Preferred dividends
|
|
529
|
|
|
|
634
|
|
Net loss attributable to common shareholders
|
$
|
(2,014
|
)
|
|
$
|
(3,887
|
)
|
Basic and diluted weighted average Class A shares outstanding
|
|
1,680
|
|
|
|
1,702
|
|
Net loss per share attributable to Class A shareholders
|
$
|
(0.28
|
)
|
|
$
|
(0.55
|
)
|
Basic and diluted weighted average Class B shares outstanding
|
|
5,404
|
|
|
|
5,413
|
|
Net loss per share attributable to Class B shareholders
|
$
|
(0.28
|
)
|
|
$
|
(0.55
|
)
|
Because we have incurred a net loss for all periods where the
Company had potentially dilutive securities, diluted net loss per
common share is the same as basic net loss per common share. The
following convertible equity shares were excluded from the
calculation of diluted net loss per share because their effect
would have been anti-dilutive. There were no potentially dilutive
shares for the three-month period ended March 31, 2020 as neither
the convertible promissory notes issued to Emmis and SG
Broadcasting described in Note 5, nor the Series A convertible
preferred stock, were convertible until May 25, 2020. The Company
did not issue any restricted stock awards until the three months
ended September 30, 2020.
|
For the Three Months
Ended March 31,
|
|
|
2020
|
|
|
2021
|
|
Convertible Emmis promissory note
|
$
|
—
|
|
|
$
|
2,126
|
|
Convertible Standard General promissory notes
|
|
—
|
|
|
|
8,219
|
|
Series A convertible preferred stock
|
|
—
|
|
|
|
9,560
|
|
Restricted stock awards
|
|
—
|
|
|
|
174
|
|
Total
|
$
|
—
|
|
|
$
|
20,079
|
|
- 8 -
Recent Accounting Pronouncements Not Yet Implemented
In June 2016, the Financial Accounting Standards Board issued
Accounting Standards Update 2016-13, Financial Instruments – Credit Losses,
which introduces new guidance for an approach based on using
expected losses to estimate credit losses on certain types of
financial instruments. It also modifies the impairment model for
available-for-sale debt securities and provides a simplified
accounting model for purchased financial assets with credit
deterioration since their origination. Instruments in scope include
loans, held-to-maturity debt securities and net investments in
leases as well as reinsurance and trade receivables. This standard
will be effective for us as of January 1, 2023. We are currently
evaluating the impact that the adoption of the new standard will
have on our condensed consolidated financial statements.
Note 2. Share Based
Payments
The amounts recorded as share based compensation expense consist of
restricted stock awards issued to employees and directors. Awards
to officers are typically made pursuant to employment agreements.
Restricted stock awards are granted out of the Company’s 2020
Equity Compensation Plan.
The
following table presents a summary of the Company’s restricted
stock grants outstanding at March 31, 2021, and restricted stock
activity during the three months ended March 31, 2021 (“Price”
reflects the weighted average share price at the date of
grant):
|
|
Awards
|
|
|
Price
|
|
Grants outstanding, beginning of period
|
|
|
102,617
|
|
|
$
|
5.41
|
|
Granted
|
|
|
718,816
|
|
|
|
3.34
|
|
Vested
|
|
|
141,412
|
|
|
|
3.17
|
|
Grants outstanding, end of period
|
|
|
680,021
|
|
|
|
3.69
|
|
Recognized Non-Cash Compensation Expense
The following table summarizes stock-based compensation expense
recognized by the Company during the three months ended March 31,
2020 and 2021. The Company did not recognize any tax benefits
related to stock-based compensation during the periods presented
below.
|
|
For the Three Months Ended March 31,
|
|
|
|
2020
|
|
|
2021
|
|
Operating expenses, excluding depreciation and amortization
|
|
$
|
—
|
|
|
$
|
259
|
|
Corporate expenses
|
|
|
—
|
|
|
|
375
|
|
Share-based compensation expense
|
|
$
|
—
|
|
|
$
|
634
|
|
As of March 31, 2021, there was $2.2 million of unrecognized
compensation cost, net of estimated forfeitures, related to
nonvested share-based compensation arrangements. The cost is
expected to be recognized over a weighted average period of
approximately 1.4 years.
Note 3. Intangible
Assets
As of December 31, 2020 and March 31, 2021, intangible assets
consisted of the following:
|
|
As of December 31, 2020
|
|
|
As of March 31, 2021
|
|
Indefinite-lived intangible assets
|
|
|
|
|
|
|
|
|
FCC Licenses
|
|
$
|
63,266
|
|
|
$
|
63,266
|
|
Trade Name
|
|
|
733
|
|
|
|
733
|
|
Goodwill
|
|
|
13,102
|
|
|
|
13,102
|
|
Definite-lived intangible assets
|
|
|
|
|
|
|
|
|
Programming contract
|
|
|
220
|
|
|
|
147
|
|
Customer list
|
|
|
1,896
|
|
|
|
1,655
|
|
Total
|
|
$
|
79,217
|
|
|
$
|
78,903
|
|
Valuation of Indefinite-lived Broadcasting Licenses
In accordance with ASC Topic 350, “Intangibles—Goodwill and Other,” the
Company’s FCC licenses are considered indefinite-lived intangibles;
therefore, they are not subject to amortization, but are tested for
impairment at least annually as discussed below.
The carrying amounts of the Company’s FCC licenses were $63.3
million as of December 31, 2020 and March 31, 2021. Pursuant to our
accounting policy, stations in a geographic market cluster are
considered a single unit of accounting. The stations perform an
annual impairment test of indefinite-lived intangibles as of
October 1 of each year. When indicators of impairment are present,
we will perform an interim impairment test. There have been no
indicators of impairment since we performed our annual
- 9 -
impairment assessment as of October 1, 2020 and therefore there has
been no need to perform an interim impairment asset.
Future impairment tests may result in additional impairment charges
in subsequent periods.
Fair value of our FCC licenses is estimated to be the price that
would be received to sell an asset or paid to transfer a liability
in an orderly transaction between market participants at the
measurement date. To determine the fair value of our FCC licenses,
the Company considers both income and market valuation methods when
it performs its impairment tests. Under the income method, the
Company projects cash flows that would be generated by its unit of
accounting assuming the unit of accounting was commencing
operations in its market at the beginning of the valuation period.
This cash flow stream is discounted to arrive at a value for the
FCC license. The Company assumes the competitive situation that
exists in its market remains unchanged, with the exception that its
unit of accounting commenced operations at the beginning of the
valuation period. In doing so, the Company extracts the value of
going concern and any other assets acquired, and strictly values
the FCC license. Major assumptions involved in this analysis
include market revenue, market revenue growth rates, unit of
accounting audience share, unit of accounting revenue share and
discount rate. Each of these assumptions may change in the future
based upon changes in general economic conditions, audience
behavior, consummated transactions, and numerous other variables
that may be beyond our control. The projections incorporated into
our license valuations take into consideration then current
economic conditions. Under the market method, the Company uses
recent sales of comparable radio stations for which the sales value
appeared to be concentrated entirely in the value of the license,
to arrive at an indication of fair value. When evaluating our radio
broadcasting licenses for impairment, the testing is performed at
the unit of accounting level as determined by ASC Topic 350-30-35.
In our case, radio stations in a geographic market cluster are
considered a single unit of accounting.
Valuation of Goodwill
ASC Topic 350-20-35 requires the Company to test goodwill for
impairment at least annually. Under ASC 350 we have the option to first assess
qualitative factors to determine whether it is more likely than not
that the fair value of a reporting unit is less than its carrying
value as a basis for determining whether it is necessary to perform
an annual quantitative goodwill impairment test. Given
the macroeconomic environment as a result of the COVID-19 pandemic
we have elected not to perform the qualitative
assessment. When performing a quantitative assessment for
impairment, the Company uses a market approach to determine the
fair value of the reporting unit. Management determines the fair
value for the reporting unit by multiplying the cash flows of the
reporting unit by an estimated market multiple. Management believes
this methodology for valuing outdoor advertising businesses is a
common approach and believes that the multiples used in the
valuation are reasonable given our peer comparisons, analyst
reports, and market transactions. To corroborate the fair values
determined using the market approach described above, management
also uses an income approach, which is a discounted cash flow
method to determine the fair value of the reporting unit. If the
carrying value of a reporting unit’s goodwill exceeds its fair
value, the Company recognizes an impairment charge equal to the
difference in the statement of operations. All goodwill on the
condensed consolidated balance sheets as of December 31, 2020 and
March 31, 2021 is assigned to our Outdoor Advertising segment.
While the COVID-19 pandemic has
negatively affected our outdoor operations, as of March 31, 2021,
we don’t believe the long-term value of the outdoor business, and
thus the associated goodwill, has been impaired. The Company
conducts its impairment test as of October 1 of each year, unless
indications of impairment exist during an interim period.
Valuation of Trade Name
As a result of the purchase of our outdoor advertising segment, the
Company acquired the trade name “Fairway”. The trade name is well
known in the industry and is being retained for continued market
use following the acquisition. This trade name favorably factors
into customer purchasing decisions. For the purchase price
allocation, the trade name was valued using the relief from royalty
method. This method is based on what a company would be willing to
pay for a royalty in order to exploit the related benefits of the
trade name. The value of the trade name is determined by
discounting the inherent after-tax royalty savings associated with
ownership or possession of the trade name. The valuation assigned
to the trade name as a result of the purchase price accounting was
$0.7 million. The trade name is an indefinite-lived intangible
asset based on our intention to renew it when legally required and
to utilize it going forward. We assess the trade name annually for
impairment as of October 1 of each year, unless indications of
impairment exist during an interim period.
Definite-lived intangibles
The following table presents the weighted-average useful life at
March 31, 2021, and the gross carrying amount and accumulated
amortization for our definite-lived intangible assets at December
31, 2020, and March 31, 2021:
|
|
As of December 31, 2020
|
|
|
As of March 31, 2021
|
|
|
(in 000's, except years)
|
|
|
Gross Carrying
Amount
|
|
|
Accumulated
Amortization
|
|
|
Net Carrying
Amount
|
|
|
Gross Carrying
Amount
|
|
|
Accumulated
Amortization
|
|
|
Net Carrying
Amount
|
|
Weighted
Average
Remaining
Useful Life
(in years)
|
Programming agreement
|
|
$
|
2,154
|
|
|
$
|
1,934
|
|
|
$
|
220
|
|
|
$
|
2,154
|
|
|
$
|
2,007
|
|
|
$
|
147
|
|
0.5
|
Customer list
|
|
|
2,906
|
|
|
|
1,010
|
|
|
|
1,896
|
|
|
|
2,906
|
|
|
|
1,251
|
|
|
|
1,655
|
|
1.7
|
- 10 -
In accordance with Accounting Standards Codification paragraph
360-10, the Company performs an analysis to (i) determine if
indicators of impairment of a long-lived asset are present, (ii)
test the long-lived asset for recoverability by comparing
undiscounted cash flows of the long-lived asset to its carrying
value and (iii) measure any potential impairment by comparing the
long-lived asset's fair value to its current carrying value.
Total amortization expense from definite-lived intangibles for the
three-month periods ended March 31, 2020 and 2021 was $0.4 million
and $0.3 million, respectively. The following table presents the
Company's estimate of future amortization expense for
definite-lived intangibles:
Year ending December 31,
|
|
Expected Amortization Expense
|
|
Remainder of 2021
|
|
$
|
874
|
|
2022
|
|
|
928
|
|
Note 4. Revenue
The Company generates revenue from the sale of services including,
but not limited to: (i) on-air commercial broadcast time, (ii)
display advertising on outdoor structures, (iii) non-traditional
revenues including event-related revenues and event sponsorship
revenues, and (iv) digital advertising. Payments received from
advertisers before the performance obligation is satisfied are
recorded as deferred revenue. Substantially all deferred revenue is
recognized within twelve months of the payment date. We do not
disclose the value of unsatisfied performance obligations for
contracts with an original expected length of one year or less.
Advertising
revenues presented in the condensed consolidated financial statements are
reflected on a net basis, after the deduction of advertising agency
fees, usually at a rate of 15% of gross revenues.
Radio Advertising
On-air broadcast revenue is recognized when or as performance
obligations under the terms of a contract with a customer are
satisfied. This typically occurs over the period of time that
advertisements are provided, or as an event occurs. Revenues are
reported at the amount the Company expects to be entitled to
receive under the contract. Payments received from advertisers
before the performance obligation is satisfied are recorded as
deferred revenue in the condensed consolidated balance
sheet. Substantially all deferred revenue is recognized within
twelve months of the payment date.
Outdoor
Advertising
Our outdoor advertising business has approximately 3,500 faces
consisting of bulletins, posters and digital billboards. Bulletins
are generally large, illuminated advertising structures that are
located on major highways and target vehicular traffic. Posters are
generally smaller advertising structures that are located on major
traffic arteries and city streets and target vehicular and
pedestrian traffic. Digital billboards are computer controlled LED
displays where six to eight advertisers rotate continuously, each
one having seven to ten seconds to display a static image. Digital
billboards are generally located on major traffic arteries and
streets. A substantial portion of this revenue is lessor revenue
derived from operating leases accounted for under ASC 842,
“Leases.” Rental revenue is
recognized on a straight-line basis over the term of the respective
lease.
Nontraditional
Nontraditional revenues principally consist of ticket sales and
sponsorship of events our stations conduct in their local market.
These revenues are recognized when our performance obligations are
fulfilled, which generally coincides with the occurrence of the
related event.
Digital
Digital revenue relates to revenue generated from the sale of
digital marketing services (including display advertisements and
video sponsorships, but excluding digital billboard advertisements)
to advertisers. Digital revenues are generally recognized as the
digital advertising is delivered.
Other
Other revenue includes
barter revenue, network revenue, and production revenue. The
Company provides advertising broadcast time in exchange for certain
products and services, including on-air radio programming. These
barter arrangements generally allow the Company to preempt such
bartered broadcast time in favor of advertisers who purchase time
for cash consideration. These barter arrangements are valued based
upon the Company’s estimate of the fair value of the products and
services received. Revenue is recognized on barter arrangements
when we broadcast the advertisements. Advertisements delivered
under barter arrangements are typically aired during the same
period in which the products and services are consumed. The Company
also sells certain remnant advertising inventory to third-parties
for cash, and we refer to this as network revenue. The
third-parties aggregate our remnant inventory with other
broadcasters' remnant inventory for sale to third parties,
generally to large national advertisers. This network revenue is
recognized as we broadcast the advertisements. In connection with certain outdoor advertising
arrangements, the customer
- 11 -
may request that the Company produce
the billboard wrap (commonly
printed on a vinyl material) displaying the customer’s advertisement on our
outdoor structure. This production revenue is recognized as the
deliverable is made available to the customer or attached to our
outdoor structure. Other
revenue also includes the management fee received from Billboards
LLC (See Note 11.)
Disaggregation of revenue
The following table presents the Company's revenues disaggregated
by revenue source:
|
|
For the Three Months Ended March 31,
|
|
|
|
2020
|
|
% of Total
|
|
|
2021
|
|
% of Total
|
|
Revenue by Source:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Radio Advertising
|
|
$
|
6,380
|
|
|
54.1
|
%
|
|
$
|
4,955
|
|
|
50.9
|
%
|
Outdoor Advertising (1)
|
|
|
3,267
|
|
|
27.7
|
%
|
|
|
2,972
|
|
|
30.5
|
%
|
Nontraditional
|
|
|
168
|
|
|
1.4
|
%
|
|
|
137
|
|
|
1.4
|
%
|
Digital
|
|
|
674
|
|
|
5.7
|
%
|
|
|
485
|
|
|
5.0
|
%
|
Other
|
|
|
1,296
|
|
|
11.1
|
%
|
|
|
1,194
|
|
|
12.2
|
%
|
Total net revenues
|
|
$
|
11,785
|
|
|
|
|
|
$
|
9,743
|
|
|
|
|
(1) A
substantial portion of this revenue is from lessor revenue derived
from operating leases accounted for under ASC 842, “Leases.”
Note 5. Long Term
Debt
Long-term debt was comprised of the following at December 31, 2020,
and March 31, 2021:
|
|
December 31,
2020
|
|
|
March 31,
2021
|
|
Senior credit facility
|
|
$
|
70,972
|
|
|
$
|
70,972
|
|
Notes payable to Emmis
|
|
|
5,535
|
|
|
|
5,535
|
|
Notes payable to SG Broadcasting
|
|
|
21,400
|
|
|
|
21,400
|
|
Less: Current maturities
|
|
|
(1,836
|
)
|
|
|
(2,754
|
)
|
Less: Unamortized original issue discount
|
|
|
(2,153
|
)
|
|
|
(2,006
|
)
|
Total long-term debt, net of current portion and debt discount
|
|
$
|
93,918
|
|
|
$
|
93,147
|
|
Senior secured term loan agreement
The Company has a five-year senior secured term loan agreement (the
“Senior Credit Facility”) with GACP Finance Co., LLC, (“GACP”) a
Delaware limited liability company, as administrative agent and
collateral agent. The Senior Credit Facility bears interest at a
rate equal to the London Interbank Offered Rate ("LIBOR"), plus
7.5%, with a 2.0% LIBOR floor. Prior to subsequent amendments
discussed below, and in Note 12, Subsequent Event, the Senior
Credit Facility required interest payments on the first business
day of each calendar month, and quarterly payments on the principal
in an amount equal to one and one quarter percent of the initial
aggregate principal amount were due on the last day of each
calendar quarter. At its inception, the Senior Credit Facility
included covenants pertaining to, among other things, the ability
to incur indebtedness, restrictions on the payment of dividends,
minimum liquidity requirements, collateral maintenance, minimum
Consolidated Fixed Charge Coverage Ratio of 1.10:1.00, and other
customary restrictions.
As of March 31, 2021, a number of amendments had been entered into
by the Company and GACP to modify,
among other things, certain provisions relating to the repayment of
the Term Loan (as defined in the Senior Credit Facility) such that
no quarterly payments are required beginning with the fiscal
quarter ending September 30, 2020 through and including the fiscal
quarter ending June 30, 2021 and the testing of the Consolidated
Fixed Charge Coverage Ratio (as defined in the Senior Credit
Facility) is suspended through and including June 30, 2021. The
Senior Credit Facility currently requires us to maintain Minimum
Liquidity (as defined in the Senior Credit Facility) of $2.5
million until November 25, 2021, and $3.0 million for the period
thereafter. In addition, the Senior Credit Facility includes a loan
to value calculation, whereby the amount of debt outstanding
thereunder is limited to a formula based on 60% of the fair value
of the Company’s FCC licenses plus a multiple of the Company’s
Billboard Cash Flow (as defined in the Senior Credit
Facility).
There is $71.0 million outstanding and the Senior Credit Facility
is carried net of a total unamortized discount of $2.0 million at
March 31, 2021.
See Note 12, Subsequent Event, for a discussion of Amendment No. 4
to the Senior Credit Facility, executed on May 19, 2021.
- 12 -
Emmis Convertible Promissory Note
The Emmis Convertible Promissory Note carries interest at a base
rate equal to the interest on any senior credit facility, or if no
senior credit facility is outstanding, of 6.0%, plus an additional
1.0% on any payment of interest in kind and, without regard to
whether the Company pays such interest in kind, an additional
increase of 1.0% following the second anniversary of the date of
issuance and additional increases of 1.0% following each successive
anniversary thereafter. Because the Senior Credit Facility
prohibits the Company from paying interest in cash on the Emmis
Convertible Promissory Note, the Company has been accruing interest
since inception using the rate applicable if the interest will be
paid in kind. The Emmis Convertible Promissory Note is convertible,
in whole or in part, into MediaCo Class A common stock at the
option of Emmis and at a strike price equal to the thirty day
volume weighted average price of the MediaCo Class A common stock
on the date of conversion. The Emmis Convertible Promissory Note
matures on November 25, 2024. As of March 31, 2021, the principal
balance outstanding under the Emmis Convertible Promissory Note is
$5.5 million.
Second Amended and Restated SG Broadcasting Promissory Note and
Additional SG Broadcasting Promissory Note
The Second Amended and Restated SG Broadcasting Promissory Note
carries interest at a base rate equal to the interest on any senior
credit facility, or if no senior credit facility is outstanding, of
6.0%, and an additional increase of 1.0% following the second
anniversary of the date of issuance and additional increases of
1.0% following each successive anniversary thereafter. The Second
Amended and Restated SG Broadcasting Promissory Note matures on May
25, 2025. Additionally, interest under the Second Amended SG
Broadcasting Promissory Note is payable in kind through maturity,
and is convertible into MediaCo Class A common stock at the option
of SG Broadcasting at a strike price equal to the thirty day volume
weighted average price of the MediaCo Class A common stock on the
date of conversion.
The Additional SG Broadcasting Promissory Note carries interest at
a base rate equal to the interest on any senior credit facility, or
if no senior credit facility is outstanding, of 6.0%, and an
additional increase of 1.0% following the second anniversary of the
date of issuance and additional increases of 1.0% following each
successive anniversary thereafter. The Additional SG Broadcasting
Promissory Note matures on March 30, 2025. Additionally, interest
under the Additional SG Broadcasting Promissory Note is payable in
kind through maturity, and is convertible into MediaCo Class A
common stock at the option of SG Broadcasting at a strike price
equal to the thirty day volume weighted average price of the
MediaCo Class A common stock on the date of conversion.
As of March 31, 2021, there was a total of $21.4 million
outstanding under the Second Amended and Restated SG Broadcasting
Promissory Note and the Additional SG Broadcasting Promissory
Note.
See Note 12, Subsequent Event, for discussion of an additional
contribution from Standard General in the form of subordinated debt
subsequent to March 31, 2021, on May 19, 2021.
Based on amounts outstanding at March 31, 2021, mandatory principal
payments of long-term debt for the next five years and thereafter
are summarized below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
|
Senior Credit Facility
|
|
|
Emmis Note
|
|
|
SG Broadcasting Notes
|
|
|
Total Payments
|
|
Remainder of 2021
|
|
$
|
2,754
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,754
|
|
2022
|
|
|
3,672
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3,672
|
|
2023
|
|
|
3,672
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3,672
|
|
2024
|
|
|
60,874
|
|
|
|
5,535
|
|
|
|
—
|
|
|
|
66,409
|
|
2025
|
|
|
—
|
|
|
|
—
|
|
|
|
21,400
|
|
|
|
21,400
|
|
Total
|
|
$
|
70,972
|
|
|
$
|
5,535
|
|
|
$
|
21,400
|
|
|
$
|
97,907
|
|
Note 6. Regulatory, Legal
and Other Matters
From time to time, our stations are parties to various legal
proceedings arising in the ordinary course of business. In the
opinion of management of the Company, however, there are no legal
proceedings pending against the Company that we believe are likely
to have a material adverse effect on the Company.
- 13 -
Note
7.
Income Taxes
The effective tax rate for the three months ended March 31, 2020
and 2021 was (29)%, and 3% respectively. During the year ended
December 31, 2020, as a result of a sharp deterioration of business
activity related to the COVID-19 pandemic, the Company determined
that it was more likely than not that it would be unable to realize
its deferred tax assets and recorded a $18.8 million valuation
allowance against these assets through an increase to our provision
for income taxes. Our effective tax rate for the three months ended
March 31, 2021 differs from the statutory tax rate due to the
recognition of additional valuation allowance.
Note 8. Leases
We determine if an arrangement is a lease at inception. We have
operating leases for office space, sites upon which advertising structures are
built, tower space, equipment and automobiles expiring at
various dates through October 2049. Some leases have options to
extend and some have options to terminate. Operating leases are
included in operating lease right-of-use assets, current operating
lease liabilities, and noncurrent operating lease liabilities in
our condensed
consolidated balance sheet.
Operating lease assets represent our right to use an underlying
asset for the lease term and lease liabilities represent our
obligation to make lease payments arising from the lease. Operating
lease assets and liabilities are recognized at commencement date
based on the present value of lease payments over the lease term.
As our leases do not provide an implicit rate, we use our
incremental borrowing rate based on the information available at
commencement date in determining the present value of lease
payments. We use the implicit rate if it is readily determinable.
Our lease terms may include options to extend or terminate the
lease, which we treat as exercised when it is reasonably certain
and there is a significant economic incentive to exercise that
option. Our outdoor advertising segment treats evergreen leases as
though they will be automatically renewed at the end of each
term.
Operating lease expense for operating lease assets is recognized on
a straight-line basis over the lease term. Variable lease payments,
which represent lease payments that vary due to changes in facts or
circumstances occurring after the commencement date other than the
passage of time, are expensed in the period in which the obligation
for these payments was incurred. Variable lease expense recognized
in the three months ended March 31, 2021 was not material.
We elected not to apply the recognition requirements of Accounting
Standards Codification 842, “Leases”, to short-term leases, which
are deemed to be leases with a lease term of twelve months or less.
Instead, we recognized lease payments in the condensed consolidated statements
of operations on a straight-line basis over the lease term and
variable payments in the period in which the obligation for these
payments was incurred. We elected this policy for all classes of
underlying assets. Short-term lease expense recognized in the three
months ended March 31, 2021, was not material.
The impact of operating leases to our condensed consolidated
financial statements was as follows:
|
|
Three Months Ended
March 31,
|
|
|
Three Months Ended
March 31,
|
|
|
|
2020
|
|
|
2021
|
|
Lease Cost
|
|
|
|
|
|
|
|
|
Operating lease cost
|
|
$
|
1,248
|
|
|
$
|
1,247
|
|
Other Information
|
|
|
|
|
|
|
|
|
Operating cash flows from operating leases
|
|
|
1,490
|
|
|
|
1,290
|
|
Right-of-use assets obtained in exchange for new operating lease
liabilities
|
|
|
—
|
|
|
|
—
|
|
Weighted average remaining lease term - operating leases (in
years)
|
|
|
9.1
|
|
|
|
8.6
|
|
Weighted average discount rate - operating leases
|
|
|
10.5
|
%
|
|
|
9.1
|
%
|
As of March 31, 2021, the annual minimum lease payments of our
operating lease liabilities were as follows:
Year ending December 31,
|
|
|
|
|
Remainder of 2021
|
|
$
|
4,019
|
|
2022
|
|
|
5,254
|
|
2023
|
|
|
4,270
|
|
2024
|
|
|
2,855
|
|
2025
|
|
|
2,847
|
|
After 2025
|
|
|
15,915
|
|
Total lease payments
|
|
|
35,160
|
|
Less imputed interest
|
|
|
12,352
|
|
Total recorded lease liabilities
|
|
$
|
22,808
|
|
- 14 -
Our outdoor advertising business generates lessor revenue derived
from operating leases accounted for under ASC
842, “Leases.” Minimum
fixed lease consideration under non-cancelable operating leases for
each of the next five years and thereafter, excluding variable
lease consideration, as of March 31, 2021, is as follows:
Year ending December
31,
|
|
|
|
Remainder of 2021
|
$
|
6,097
|
|
2022
|
|
1,231
|
|
2023
|
|
—
|
|
2024
|
|
—
|
|
2025
|
|
—
|
|
After 2025
|
|
—
|
|
Note 9. Asset Retirement
Obligations
The Company’s asset retirement obligation includes the costs
associated with the removal of its structures, resurfacing of the
land and retirement cost, if applicable, related to the Company’s
outdoor advertising portfolio. The following table reflects
information related to our asset retirement obligations.
Balance at December 31, 2020
|
|
|
$
|
6,316
|
|
Accretion expense
|
|
|
|
165
|
|
Balance at March 31, 2021
|
|
|
$
|
6,481
|
|
Note 10. Segment
Information
The Company’s operations are aligned into two business segments:
(i) Radio, and (ii) Outdoor advertising. Radio includes the
operations and results of WQHT-FM and WBLS-FM, and outdoor
advertising includes the operations and results of the Fairway
businesses acquired in December 2019. The Company groups activities
that are not considered operating segments in the “All Other”
category.
These business segments are consistent with the Company’s
management of these businesses and its financial reporting
structure. Corporate expenses, including transaction costs, are not
allocated to reportable segments. The Company’s segments operate
exclusively in the United States.
The accounting policies as described in the summary of significant
accounting policies included in the Company’s Annual Report filed
on Form 10-K for the year ended December 31, 2020, and in Note 1 to
these condensed consolidated financial statements, are
applied consistently across segments.
Three Months Ended March 31, 2021
|
|
Radio
|
|
|
Outdoor Advertising
|
|
|
All Other
|
|
|
Consolidated
|
|
Net revenues
|
|
$
|
6,502
|
|
|
$
|
3,241
|
|
|
$
|
—
|
|
|
$
|
9,743
|
|
Operating expenses excluding depreciation and amortization
expense
|
|
|
5,291
|
|
|
|
2,470
|
|
|
|
—
|
|
|
|
7,761
|
|
Corporate expenses
|
|
|
—
|
|
|
|
—
|
|
|
|
1,641
|
|
|
|
1,641
|
|
Depreciation and amortization
|
|
|
191
|
|
|
|
790
|
|
|
|
—
|
|
|
|
981
|
|
Loss on disposal of assets
|
|
|
—
|
|
|
|
(6
|
)
|
|
|
—
|
|
|
|
(6
|
)
|
Operating income (loss)
|
|
$
|
1,020
|
|
|
$
|
(13
|
)
|
|
$
|
(1,641
|
)
|
|
$
|
(634
|
)
|
Three Months Ended March 31, 2020
|
|
Radio
|
|
|
Outdoor Advertising
|
|
|
All Other
|
|
|
Consolidated
|
|
Net revenues
|
|
$
|
8,339
|
|
|
$
|
3,446
|
|
|
$
|
—
|
|
|
$
|
11,785
|
|
|