Quarterly report pursuant to Section 13 or 15(d)

Revenue Recognition

v3.23.3
Revenue Recognition
 9 Months Ended
Sep. 30, 2023
Revenue from Contract with Customer [Abstract]  
Revenue Recognition
NOTE 4. REVENUE RECOGNITION
The following table presents our revenues disaggregated by revenue source for each of our operating segments
:
 
 
  
Nine Months Ended September 30, 2023
 
 
  
Broadcast
 
  
Digital Media
 
  
Publishing
 
  
Consolidated
 
 
 
 
 
 
 
 
 
 
 
  
(Dollars in thousands)
 
By Source of Revenue:
  
  
  
  
Block Programming – National
  
$
40,324
 
  
$
— 
 
  
$
— 
 
  
$
40,324
 
Block Programming – Local
  
 
18,291
 
  
 
— 
 
  
 
— 
 
  
 
18,291
 
    
 
 
     
 
 
     
 
 
     
 
 
  
Broadcast Programming Revenue
  
 
58,615
 
  
 
— 
 
  
 
— 
 
  
 
58,615
 
    
 
 
     
 
 
     
 
 
     
 
 
  
Spot Advertising – National
  
 
8,743
 
  
 
— 
 
  
 
— 
 
  
 
8,743
 
Spot Advertising – Local
  
 
29,229
 
  
 
— 
 
  
 
— 
 
  
 
29,229
 
Network Advertising
  
 
15,351
 
  
 
— 
 
  
 
— 
 
  
 
15,351
 
    
 
 
     
 
 
     
 
 
     
 
 
  
Broadcast Advertising Revenue
  
 
53,323
 
  
 
— 
 
  
 
— 
 
  
 
53,323
 
    
 
 
     
 
 
     
 
 
     
 
 
  
Infomercials
  
 
492
 
  
 
— 
 
  
 
— 
 
  
 
492
 
Other Revenue
  
 
6,670
 
  
 
— 
 
  
 
— 
 
  
 
6,670
 
    
 
 
     
 
 
     
 
 
     
 
 
  
Other Broadcast Revenue
  
 
7,162
 
  
 
— 
 
  
 
— 
 
  
 
7,162
 
    
 
 
     
 
 
     
 
 
     
 
 
  
Digital Advertising
  
 
22,468
 
  
 
11,637
 
  
 
— 
 
  
 
34,105
 
Digital Streaming
  
 
4,284
 
  
 
2,505
 
  
 
— 
 
  
 
6,789
 
Digital Downloads
  
 
164
 
  
 
5,321
 
  
 
— 
 
  
 
5,485
 
Digital Subscriptions
  
 
616
 
  
 
11,760
 
  
 
— 
 
  
 
12,376
 
Other Digital Revenue
  
 
354
 
  
 
112
 
  
 
— 
 
  
 
466
 
    
 
 
     
 
 
     
 
 
     
 
 
  
Digital Revenue
  
 
27,886
 
  
 
31,335
 
  
 
— 
 
  
 
59,221
 
    
 
 
     
 
 
     
 
 
     
 
 
  
Book Sales
  
 
— 
 
  
 
— 
 
  
 
8,718
 
  
 
8,718
 
Estimated Sales Returns & Allowances
  
 
— 
 
  
 
— 
 
  
 
(554
) 
  
 
(554
) 
    
 
 
     
 
 
     
 
 
     
 
 
  
Net Book Sales
  
 
— 
 
  
 
— 
 
  
 
8,164
 
  
 
8,164
 
    
 
 
     
 
 
     
 
 
     
 
 
  
E-Book
Sales
  
 
— 
 
  
 
— 
 
  
 
737
 
  
 
737
 
Self-Publishing Fees
  
 
— 
 
  
 
— 
 
  
 
5,002
 
  
 
5,002
 
Other Publishing Revenue
  
 
— 
 
  
 
— 
 
  
 
536
 
  
 
536
 
    
 
 
     
 
 
     
 
 
     
 
 
  
Publishing Revenue
  
 
— 
 
  
 
— 
 
  
 
14,439
 
  
 
14,439
 
    
 
 
     
 
 
     
 
 
     
 
 
  
 
  
$
146,986
 
  
$
31,335
 
  
$
14,439
 
  
$
192,760
 
    
 
 
     
 
 
     
 
 
     
 
 
  
Timing of Revenue Recognition
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
Point in Time
  
$
145,657
 
  
$
31,335
 
  
$
14,439
 
  
$
191,431
 
Rental Income (1)
  
 
1,329
 
  
 
—
 
 
  
 
—
 
 
  
 
1,329
 
    
 
 
     
 
 
     
 
 
     
 
 
  
 
  
$
146,986
 
  
$
31,335
 
  
$
14,439
 
  
$
192,760
 
    
 
 
     
 
 
     
 
 
     
 
 
  
 
  
Nine Months Ended September 30, 2022
 
 
  
Broadcast
 
  
Digital Media
 
  
Publishing
 
  
Consolidated
 
 
 
 
 
 
 
 
 
 
 
  
(Dollars in thousands)
 
By Source of Revenue:
  
  
  
  
Block Programming – National
  
$
39,998
 
  
$
— 
 
  
$
— 
 
  
$
39,998
 
Block Programming – Local
  
 
18,183
 
  
 
— 
 
  
 
— 
 
  
 
18,183
 
    
 
 
     
 
 
     
 
 
     
 
 
  
Broadcast Programming Revenue
  
 
58,181
 
  
 
— 
 
  
 
— 
 
  
 
58,181
 
    
 
 
     
 
 
     
 
 
     
 
 
  
Spot Advertising – National
  
 
11,344
 
  
 
— 
 
  
 
— 
 
  
 
11,344
 
Spot Advertising – Local
  
 
31,915
 
  
 
— 
 
  
 
— 
 
  
 
31,915
 
Network Advertising
  
 
15,961
 
  
 
— 
 
  
 
— 
 
  
 
15,961
 
    
 
 
     
 
 
     
 
 
     
 
 
  
Broadcast Advertising Revenue
  
 
59,220
 
  
 
— 
 
  
 
— 
 
  
 
59,220
 
    
 
 
     
 
 
     
 
 
     
 
 
  
Infomercials
  
 
569
 
  
 
— 
 
  
 
— 
 
  
 
569
 
Other Revenue
  
 
6,789
 
  
 
— 
 
  
 
— 
 
  
 
6,789
 
    
 
 
     
 
 
     
 
 
     
 
 
  
Other Broadcast Revenue
  
 
7,358
 
  
 
— 
 
  
 
— 
 
  
 
7,358
 
    
 
 
     
 
 
     
 
 
     
 
 
  
Digital Advertising
  
 
21,042
 
  
 
13,453
 
  
 
— 
 
  
 
34,495
 
Digital Streaming
  
 
3,915
 
  
 
2,687
 
  
 
— 
 
  
 
6,602
 
Digital Downloads
  
 
546
 
  
 
5,485
 
  
 
— 
 
  
 
6,031
 
Digital Subscriptions
  
 
731
 
  
 
9,549
 
  
 
— 
 
  
 
10,280
 
Other Digital Revenue
  
 
1,027
 
  
 
119
 
  
 
— 
 
  
 
1,146
 
    
 
 
     
 
 
     
 
 
     
 
 
  
Digital Revenue
  
 
27,261
 
  
 
31,293
 
  
 
— 
 
  
 
58,554
 
    
 
 
     
 
 
     
 
 
     
 
 
  
Book Sales
  
 
— 
 
  
 
— 
 
  
 
10,816
 
  
 
10,816
 
Estimated Sales Returns & Allowances
  
 
— 
 
  
 
— 
 
  
 
(2,799
) 
  
 
(2,799
) 
    
 
 
     
 
 
     
 
 
     
 
 
  
Net Book Sales
  
 
— 
 
  
 
— 
 
  
 
8,017
 
  
 
8,017
 
    
 
 
     
 
 
     
 
 
     
 
 
  
E-Book
Sales
  
 
— 
 
  
 
— 
 
  
 
937
 
  
 
937
 
Self-Publishing Fees
  
 
— 
 
  
 
— 
 
  
 
5,189
 
  
 
5,189
 
Other Publishing Revenue
  
 
— 
 
  
 
— 
 
  
 
697
 
  
 
697
 
    
 
 
     
 
 
     
 
 
     
 
 
  
Publishing Revenue
  
 
— 
 
  
 
— 
 
  
 
14,840
 
  
 
14,840
 
    
 
 
     
 
 
     
 
 
     
 
 
  
 
  
$
152,020
 
  
$
31,293
 
  
$
14,840
 
  
$
198,153
 
    
 
 
     
 
 
     
 
 
     
 
 
  
Timing of Revenue Recognition
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
Point in Time
  
$
150,352
 
  
$
31,293
 
  
$
14,840
 
  
$
196,485
 
Rental Income (1)
  
 
1,668
 
  
 
— 
 
  
 
— 
 
  
 
1,668
 
    
 
 
     
 
 
     
 
 
     
 
 
  
 
  
$
152,020
 
  
$
31,293
 
  
$
14,840
 
  
$
198,153
 
    
 
 
     
 
 
     
 
 
     
 
 
  
 
(1)
Rental income is not applicable to FASB ASC Topic 606, but shown for the purpose of identifying each revenue source presented in total revenue on our Condensed Consolidated Financial Statements within this report on Form
10
-Q.
 
Refer to Footnote 4 – Revenue Recognition of our annual report on Form
10-K
for the year ended December 31, 2022 for a description of each of our revenue streams under ASC 606.
Contract Assets
Contract Assets – Costs to Obtain a Contract:
We capitalize commissions paid to sales personnel in our self-publishing business when customer contracts are signed and advance payment is received. These capitalized costs are recorded as prepaid commission expense in the Condensed Consolidated Balance Sheets. The amount capitalized is incremental to the contract and would not have been incurred absent the execution of the customer contract. Commissions paid upon the initial acquisition of a contract are expensed at the point in time that related revenue is recognized. Prepaid commission expenses are periodically reviewed for impairment. At September 30, 2023, our prepaid commission expense was $0.6 million.
Contract Liabilities
Contract liabilities consist of customer advance payments and billings in excess of revenue recognized. We may receive payments from our customers in advance of completing our performance obligations. Additionally, new customers, existing customers without approved credit terms and authors purchasing specific self-publishing services, are required to make payments in advance of the delivery of the products or performance of the services. We record contract liabilities equal to the amount of payments received in excess of revenue recognized, including payments that are refundable if the customer cancels the contract according to the contract terms. Contract liabilities were historically recorded under the caption “deferred revenue” and are reported as current liabilities on our consolidated financial statements when the time to fulfill the performance obligations under terms of our contracts is less than one year. Long-term contract liabilities represent the amount of payments received in excess of revenue earned, including those that are refundable, when the time to fulfill the performance obligation is greater than one year. Our long-term liabilities consist of subscriptions with a term of two years for which some customers have purchased and paid for multiple years.
Significant changes in our contract liabilities balances during the period are as follows:
 
     Short Term     
Long-Term
  
                   
    
(Dollars in thousands)
  
Balance, beginning of period January 1, 2023
    $ 11,901      $ 1,886  
Revenue recognized during the period that was included in the beginning balance of contract liabilities
      (9,039 )       —   
Additional amounts recognized during the period
      21,346        3,131  
Revenue recognized during the period that was recorded during the period
      (12,966 )       —   
Transfers
      1,483        (1,483 ) 
    
 
 
     
 
 
  
Balance, end of period September 30, 2023
    $ 12,725      $ 3,534  
    
 
 
     
 
 
  
Amount refundable at beginning of period
    $ 11,901      $ 1,886  
Amount refundable at end of period
    $ 12,725      $ 3,534  
We expect to satisfy these performance obligations as follows:
 
    
Amount
  
For the Year Ended September 30,
   
(Dollars in thousands)
  
2024
    $ 12,725  
2025
      1,311  
2026
      1,336  
2027
      387  
2028
      112  
Thereafter
      388  
    
 
 
  
     $ 16,259  
    
 
 
  
Significant Financing Component
The length of our typical sales agreement is less than 12 months; however, we may sell subscriptions with a
two-year
term. The balance of our long-term contract liabilities represents the unsatisfied performance obligations for subscriptions with a remaining term in excess of one year. We review long-term contract liabilities that are expected to be completed in excess of one year to assess
whether the contract contains a significant financing component. The balance includes subscriptions that will be satisfied at various dates between October 1, 2023, and September 30, 2028. The difference between the promised consideration and the cash selling price of the publications is not significant. Therefore, we have concluded that subscriptions do not contain a significant financing component under FASB ASC Topic 606.
Our self-publishing contracts may exceed a
one-year
term due to the length of time for an author to submit and approve a manuscript for publication. The author may pay for publishing services in installments over the production timeline with payments due in advance of performance. The timing of the transfer of goods and services under self-publishing arrangements are at the discretion of the author and based on future events that are not substantially within our control. We require advance payments to provide us with protection from incurring costs for products that are unique and only sellable to the author. Based on these considerations, we have concluded that our self-publishing contracts do not contain a significant financing component under FASB ASC Topic 606.
Variable Consideration
We make significant estimates related to variable consideration at the point of sale, including estimates for refunds and product returns. Under FASB ASC Topic 606, estimates of variable consideration are to be recognized before contingencies are resolved in certain circumstances, including when it is probable that a significant reversal in the amount of any estimated cumulative revenue will not occur.
We enter into agreements under which the amount of revenue we earn is contingent upon the amount of money raised by our customer over the contract term. Our customer is typically a charity or programmer that purchases blocks of programming time or spots to generate revenue from our audience members. Contract terms can range from a few weeks to a few months, depending on the charity or programmer. If the campaign does not generate a
pre-determined
level of donations or revenue to our customer, the consideration that we expect to be entitled to may vary above a minimum base level per the contract. Historically, under FASB ASC Topic 605, we reported variable consideration as revenue when the amount was fixed and determinable. Under FASB ASC Topic 606, variable consideration is to be estimated using the expected value or the most likely amount to the extent it is probable that a significant reversal will not occur when the uncertainty associated with the variable consideration is subsequently resolved.
Based on the constraints for using estimates of variable consideration within FASB ASC Topic 606, and our historical experience with these campaigns, we will continue to recognize revenue at the base amount of the campaign with variable consideration recognized when the uncertainty of each campaign is resolved. These constraints include: (1) the amount of consideration received is highly susceptible to factors outside of our influence, specifically the extent to which our audience donates or contributes to our customer or programmer, (2) the length of time in which the uncertainty about the amount of consideration expected is to be resolved, and (3) our experience has shown these contracts have a large number and broad range of possible outcomes.
Trade and Barter Transactions
In broadcasting, trade or barter agreements are commonly used to reduce cash expenses by exchanging advertising time for goods or services. We may enter barter agreements to advertising for goods or services that can be used in our business or that can be sold to our audience under Listener Purchase Programs. The terms of these barter agreements permit us to preempt the barter advertising campaign in favor of customers who purchase the advertising campaign for cash. The value of these
non-cash
exchanges are included in revenue at an amount equal to the fair value of the goods or services we receive. Each transaction must be reviewed to determine that the products, supplies, and/or services we receive have economic substance, or value to us. We record barter operating expenses upon receipt and usage of the products, supplies and services, as applicable. We record barter revenue as advertising campaigns are delivered, which represents the point in time that control is transferred to the customer thereby completing our performance obligation. Barter revenue is recorded on a gross basis unless an agency represents the programmer, in which case, revenue is reported net of the commission retained by the agency.
Trade and barter revenues and expenses were as follows:
 
 
  
Three Months Ended
September 30,
 
  
Nine Months Ended
September 30,
 
 
  
2022
 
  
2023
 
  
2022
 
  
2023
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
  
(Dollars in thousands)
 
Net broadcast barter revenue
    $ 593     
$
842
 
    $ 2,118     
$
2,394
 
Net broadcast barter expense
    $ 472     
$
719
 
    $ 2,104     
$
2,299