Annual report pursuant to Section 13 and 15(d)

Operating and Finance Lease Right-of-Use Assets

Operating and Finance Lease Right-of-Use Assets
12 Months Ended
Dec. 31, 2021
Leases [Abstract]  
Operating and Finance Lease Right-of-Use Assets
Leasing Transactions
Our leased assets include offices and studios, transmitter locations, antenna sites, towers, tower sites, and land. Our lease portfolio has terms remaining from less than
up to twenty years. Many of these leases contain options under which we can extend the term from
twenty years
, the exercise of which is at our sole discretion. Renewal options are excluded from our calculation of lease liabilities unless we are reasonably assured to exercise the renewal option. Our lease agreements do not contain residual value guarantees or material restrictive covenants. We lease certain properties from our principal stockholders or from trusts and partnerships created for the benefit of the principal stockholders and their families. These leases are designated as Related Party leases in the details provided. We are obligated to pay taxes, insurance, and common area maintenance charges under a majority of our lease agreements.
Operating leases are reflected on our balance sheet within operating lease ROU assets and the related current and
operating lease liabilities. ROU assets represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from lease agreement. Operating lease ROU assets and liabilities are recognized at the commencement date, or the date on which the lessor makes the underlying asset available for use, based upon the present value of the lease payments over the respective lease term. Lease expense is recognized on a straight-line basis over the lease term, subject to any changes in the lease or expectation regarding the lease terms. Variable lease costs, such as common area maintenance, property taxes and insurance, are expensed as incurred.
Due to the adverse economic impact of the
pandemic, we negotiated with our landlords in early 2020 to obtain rent concessions to improve our short-term liquidity. In accordance with the FASB’s recent Staff Q&A regarding rent concessions related to the effects of the
pandemic, we did not apply the lease modification guidance under ASC 842 to rent concessions that resulted in total payments required under the modified contract were substantially the same as or less than total payments required by the original contract. For qualifying rent abatement concessions, we recorded negative lease expense for abatement during the period of relief. During the year ended December 31, 2020, we recognized negative lease expense related to rent abatement concessions of $0.3 million. At December 31, 2020, we deferred cash payments of $0.7 million that were reported in short-term and long-term operating lease liabilities as applicable based on repayment terms that range from one year through December 2024. At December 31, 2021, $0.2 million of the deferred cash payments remained with $28,000 payable in 2022, $26,000 payable in 2023 and the remainder payable in 2024.

Balance Sheet
Supplemental balance sheet information related to leases was as follows:
December 31, 2021
(Dollars in thousands)
Operating Leases
Related Party
Operating leases ROU assets
   $ 7,419      $ 36,141      $ 43,560  
Operating lease liabilities (current)
   $ 947      $ 7,704      $ 8,651  
Operating lease liabilities
     6,562        35,646        42,208  
Total operating lease liabilities
   $ 7,509      $ 43,350      $ 50,859  
Weighted Average Remaining Lease Term
Operating leases
     7.8 years  
Finance leases
Weighted Average Discount Rate
Operating leases
Finance leases
Lease Expense

The components of lease expense were as follows:
Twelve Months Ended
December 31, 2021
(Dollars in thousands)
Amortization of finance lease ROU Assets
   $ 64  
Interest on finance lease liabilities
Finance lease expense
Operating lease expense
Variable lease expense
Short-term lease expense
Total lease expense
   $ 14,235  
Supplemental Cash Flow
Supplemental cash flow information related to leases was as follows:
Twelve Months Ended
December 31, 2021
(Dollars in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases
   $ 13,953  
Operating cash flows from finance leases
Financing cash flows from finance leases
Leased assets obtained in exchange for new operating lease liabilities
   $ 6,507  
Leased assets obtained in exchange for new finance lease liabilities
Future minimum lease payments under leases that had initial or remaining
lease terms in excess of one year as of December 31, 2021, are as follows:
Operating Leases
Related Party
(Dollars in thousands)
   $ 1,537     $ 10,782     $ 12,319     $ 64     $ 12,383  
     1,408       10,404       11,812       39       11,851  
     1,314       8,086       9,400       20       9,420  
     1,021       6,890       7,911       8       7,919  
     1,341       6,678       8,019       1       8,020  
     3,955       20,411       24,366       3       24,369  
Undiscounted Cash Flows
Less: imputed interest
     (3,067     (19,901     (22,968     (12     (22,980
Reconciliation to lease liabilities:
Lease liabilities – current
Lease liabilities – long-term
Total Lease Liabilities
Impairment of ROU Assets
ROU assets are reviewed for impairment when indicators of impairment are present. ROU assets from operating and finance leases are subject to the impairment guidance in ASC 360, “
Property, Plant, and Equipment
,” as ROU assets are long-lived nonfinancial assets.
ROU assets are tested for impairment individually or as part of an asset group if the cash flows related to the ROU asset are not independent from the cash flows of other assets and liabilities. An asset group is the unit of accounting for long-lived assets to be held and used, which represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities.
After a careful analysis of the guidance, we concluded that the appropriate unit of accounting for testing ROU assets for impairment is the broadcast market cluster level for radio station operations and the entity or division level for digital media entities, publishing entities and networks. Corporate ROU assets are tested on a consolidated level with consideration given to all cash flows of the company as corporate functions do not generate cash flows and are funded by revenue-producing activities at lower levels of the entity.
ASC 360 requires three steps to identify, recognize and measure the impairment of a long-lived asset (asset group) to be held and used:
Step 1 – Consider whether Indicators of Impairment are Present
As detailed in ASC
the following are examples of impairment indicators:
A significant decrease in the market price of a long-lived asset (asset group)
A significant adverse change in the extent or manner in which a long-lived asset (asset group) is being used or in its physical condition
A significant adverse change in legal factors or in the business climate that could affect the value of a long-lived asset (asset group), including an adverse action or assessment by a regulator
An accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of a long-lived asset (asset group)
A current period operating or cash flow loss combined with a history of operating or cash flow losses or a projection or forecast that demonstrates continuing losses associated with the use of a long-lived asset (asset group)
A current expectation that, more likely than not, a long-lived asset (asset group) will be sold or otherwise disposed of significantly before the end of its previously estimated useful life. The term more likely than not refers to a level of likelihood that is more than 50 percent.
Other indicators should be considered if we believe that the carrying amount of an asset (asset group) may not be recoverable.
Step 2 – Test for Recoverability
If indicators of impairment are present, we are required to perform a recoverability test comparing the sum of the estimated undiscounted cash flows attributable to the long-lived asset or asset group in question to the carrying amount of the long-lived asset or asset group.
ASC 360 does not specifically address how operating lease liabilities and future cash outflows for lease payments should be considered in the recoverability test. Under ASC 360, financial liabilities, or long-term debt, generally are excluded from an asset group while operating liabilities, such as accounts payable, generally are included. ASC 842 characterizes operating lease liabilities as operating liabilities. Because operating lease liabilities may
be viewed as having attributes of finance liabilities as well as operating liabilities, it is generally acceptable for a lessee to either include or exclude operating lease liabilities from an asset group when testing whether the carrying amount of an asset group is recoverable provided the approach is applied consistently for all operating leases and when performing Steps 2 and 3 of the impairment model in ASC 360.
In cases where we have received lease incentives, including operating lease liabilities in an asset group may result in the long-lived asset or asset group having a zero or negative carrying amount because the incentives reduce our ROU assets. We elected to exclude operating lease liabilities from the carrying amount of the asset group such that we test ROU assets for operating leases in the same manner that we test ROU assets for financing leases.
Undiscounted Future Cash Flows
The undiscounted future cash flows in Step 2 are based on our own assumptions rather than a market participant. If an election is made to exclude operating lease liabilities from the asset or asset group, all future cash lease payments for the lease should also be excluded. The standard requires lessees to exclude certain variable lease payments from lease payments and, therefore, from the measurement of a lessee’s lease liabilities. Because these variable payments do not reduce the lease liability, we include the variable payments we expect to make in our estimate of the undiscounted cash flows in the recoverability test (Step 2) using a probability-weighted approach.
Step 3 – Measurement of an Impairment Loss
If the undiscounted cash flows used in the recoverability test are less than the carrying amount of the long-lived asset (asset group), we are required to estimate the fair value of the long-lived asset or asset group and recognize an impairment loss when the carrying amount of the long-lived asset or asset group exceeds the estimated fair value. We elected to exclude operating lease liabilities from the estimated fair value, consistent with the recoverability test. Any impairment loss for an asset group must reduce only the carrying amounts of a long-lived asset or assets of the group, including the ROU assets. The loss must be allocated to the long-lived assets of the group on a pro rata basis using the relative carrying amounts of those assets, except that the loss allocated to an individual long-lived asset of the group must not reduce the carrying amount of that asset below its fair value whenever the fair value is determinable without undue cost and effort. ASC 360 prohibits the subsequent reversal of an impairment loss for an asset held and used.
Fair Value Considerations
When determining the fair value of a ROU asset, we must estimate what market participants would pay to lease the asset or what a market participant would pay up front in one payment for the ROU asset, assuming no additional lease payments would be due. The ROU asset must be valued assuming its highest and best use, in its current form, even if that use differs from the current or intended use. If no market exists for an asset in its current form, but there is a market for a transformed asset, the costs to transform the asset are considered in the fair value estimate. Refer to Note 12, Fair Value Measurements and Disclosures.
There were no indications of impairment during the year ended December 31, 2021.