Annual report pursuant to Section 13 and 15(d)

SEGMENT DATA

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SEGMENT DATA
 12 Months Ended
Dec. 31, 2014
SEGMENT DATA [Abstract]  
SEGMENT DATA

NOTE 16. SEGMENT DATA

 

FASB ASC Topic 280 “Segment Reporting” requires companies to provide certain information about their operating segments. We have two reportable segments, radio broadcasting and digital media. Digital media (formerly “Internet and e-commerce”) became a reportable segment as of the first quarter of 2011 upon the realization of organic and acquisition related revenue growth. Our acquisition of Eagle Publishing on January 10, 2014, which included Regnery Publishing, Eagle Financial Publications, Eagle Wellness, Human Events and Red State, resulted in operational changes in our business and a realignment of our operating segments. We now have three operating segments: (1) Broadcast, (2) Digital Media, and (3) Publishing.

 

We changed the composition of our operating segments to reflect management's view of the operating results for each segment. Under our new composition, digital revenue generated by our broadcast stations is now reported under broadcast operating revenue as the station sales team and general manager are responsible for this digital revenue under their bonus and commission structure. Digital revenue from our broadcast stations was previously reported as Internet and e-Commerce revenue. E-Book revenue is now reported under Publishing revenue as sales goals and bonuses for Eagle Regnery Publishing are inclusive of sales of E-Books. The sale of e-Books was previously reported as Internet & e-commerce revenue. Additionally, we have allocated specific corporate departments, such as engineering, broadcast operations, digital and publishing within their respective operating segments. Corporate expenses as revised include unallocated expenses, such as accounting and finance, human resources, and other shared functions.

 

Our operating segments reflect how our chief operating decision makers, which we define as a collective group of senior executives, assesses the performance of each operating segment and determines the appropriate allocations of resources to each segment. Our operating segments do not all meet the quantitative thresholds to qualify as reportable segments; however, we have elected to disclose the results of these non-reportable operating segments as we believe this information is useful to readers of our financial statements. We continue to review our operating segment classifications to align with operational changes in our business and may make future changes as necessary.

 

We measure and evaluate our operating segments based on operating income and operating expenses that do not include allocations of costs related to corporate functions, such as accounting and finance, human resources, legal, tax and treasury; nor do they include costs such as amortization, depreciation, taxes or interest expense. Changes to our operating segments did not impact the reporting units used to test non-amortizable assets for impairment. All prior periods presented have been updated to reflect the new composition of our operating segments.

 

Segment performance, as we define it in accordance with the FASB's guidance relating to segment reporting, is not necessarily comparable to other similarly titled captions of other companies.

 

The table below presents financial information for each operating segment as of December 31, 2014, 2013 and 2012 based on the new composition of our operating segments:

 


Broadcast		   Digital
Media		     Publishing     Unallocated
Corporate		     Consolidated  
(Dollars in thousands)
Year Ended December 31, 2014                                  
Net revenue $ 192,923     $ 46,862     $ 26,751     $ —     $ 266,536  
Operating expenses     138,564       36,232       26,143       17,092       218,031  
Net operating income (loss) before depreciation, amortization, impairment, change in estimated fair value of contingent earn-out consideration (gain) loss on the sale or disposal of assets   $ 54,359     $ 10,630     $ 608     $ (17,092 )   $ 48,505  
Depreciation     7,923       3,052       529       1,125       12,629  
Amortization     98       4,885       1,212       1       6,196  
Impairment of indefinite-lived long-term assets other than goodwill     —       —       34       —       34  
Impairment of goodwill     —       —       45       —       45  
Change in estimated fair value of contingent earn-out consideration     —       325       409       —       734  
(Gain) loss on the sale or disposal of assets     231       25       (5 )     —       251  
Net operating income (loss) from continuing operations   $ 46,107     $ 2,343     $ (1,616 )   $ (18,218 )   $ 28,616  
Year Ended December 31, 2013                                        
Net revenue   $ 188,544     $ 35,156     $ 13,234     $ —     $ 236,934  
Operating expenses     129,857       25,741       14,280       16,081       185,959  
Net operating income (loss) before depreciation, amortization, impairments and (gain) loss on the sale or disposal of assets   $ 58,687     $ 9,415     $ (1,046 )   $ (16,081 )   $ 50,975  
Depreciation     7,934       2,904       444       1,166       12,448  
Amortization     154       2,654       6       —       2,814  
Impairment of indefinite-lived long-term assets other than goodwill     —       —       1,006       —       1,006  
Impairment of goodwill     —       —       438       —       438  
(Gain) loss on the sale or disposal of assets     (274 )     —       —       10       (264 )
Net operating income (loss) from continuing operations   $ 50,873     $ 3,857     $ (2,940 )   $ (17,257 )   $ 34,533  
Year Ended December 31, 2012                                        
Net revenue   $ 187,640     $ 28,166     $ 13,373     $ —     $ 229,179  
Operating expenses     126,514       22,848       13,339       14,396       177,097  
Net operating income (loss) before depreciation, amortization, impairment and (gain) loss on the sale or disposal of assets   $ 61,126     $ 5,318     $ 34     $ (14,396 )   $ 52,082  
Depreciation     8,274       2,438       423       1,208       12,343  
Amortization     105       2,189       8       2       2,304  
Impairment of indefinite-lived long-term assets other than goodwill     —       —       88       —       88  
Impairment of long-lived assets     6,808       —       —       —       6,808  
(Gain) loss on the sale or disposal of assets     84       (76 )     —       41       49  
Net operating income (loss) from continuing operations   $ 45,855     $ 767     $ (485 )   $ (15,647 )   $ 30,490  


Broadcast		   Digital
Media		     Publishing     Unallocated
Corporate		     Consolidated  
(Dollars in thousands)
As of December 31, 2014                                  
Inventories, net $ —     $ 222     $ 350     $ —     $ 572  
Property and equipment, net     81,948       7,111       1,941       8,227       99,227  
Broadcast licenses     385,726       —       —       —       385,726  
Goodwill     3,955       19,677       1,044       8       24,684  
Other indefinite-lived intangible assets     —       —       833       —       833  
Amortizable intangible assets, net     583       9,884       1,926       2       12,395  
As of December 31, 2013                                        
Property and equipment, net   $ 82,457     $ 6,402     $ 1,596     $ 8,473     $ 98,928  
Broadcast licenses     381,836       —       —       —       381,836  
Goodwill     3,917       17,550       899       8       22,374  
Other indefinite-lived intangible assets     —       —       868       —       868  
Amortizable intangible assets, net     661       8,119       11       2       8,793  

 

The table below presents financial information for each operating segment as of December 31, 2014, 2013 and 2012 with a comparison of the results under the prior composition of our operating segments as compared to the new composition:

 

Year Ending December 31,
2012 2013     2014  
As Reported
Original		 As Updated
New		     As Reported
Original		     As Updated
New		     As updated
Original		     As Reported
New		  
(Dollars in Thousands)
Revenues by Segment:                                                 
Net Broadcast Revenue   $ 183,180     $ 187,640     $ 183,697     $ 188,544     $ 187,815     $ 192,923  
Net Digital Media Revenue     33,474       28,166       40,906       35,156       55,519       46,862  
Net Publishing Revenue     12,525       13,373       12,331       13,234       23,202       26,751  
Total Net Revenue   $ 229,179     $ 229,179     $ 236,934     $ 236,934     $ 266,536     $ 266,536  
Operating expenses by segment:                                                
Broadcast Operating Expenses   $ 120,772     $ 126,514     $ 122,862     $ 129,857     $ 130,875     $ 138,564  
Digital Media Operating Expenses     25,145       22,848       28,378       25,741       41,067       36,232  
Publishing Operating Expenses     12,288       13,339       13,289       14,280       23,052       26,143  
Unallocated Corporate Expenses     18,892       14,396       21,430       16,081       23,037       17,092  
    $ 177,097     $ 177,097     $ 185,959     $ 185,959     $ 218,031     $ 218,031  
Net operating income (loss) before depreciation, amortization, impairments and (gain) loss on the sale or disposal of assets   $ 52,082     $ 52,082     $ 50,975     $ 50,975     $ 48,505     $ 48,505