QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION) |
(I.R.S. EMPLOYER IDENTIFICATION NUMBER) | |
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) |
(ZIP CODE) |
Title of each Class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
Non-accelerated filer |
☒ | Smaller Reporting Company | ||||
Emerging Growth Company |
Class A |
Outstanding at May 2, 2022 | |
Common Stock, $0.01 par value per share | ||
Class B |
Outstanding at May 2, 2022 | |
Common Stock, $0.01 par value per share |
PAGE NO. | ||||
COVER PAGE |
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INDEX |
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2 | ||||
PART I - FINANCIAL INFORMATION |
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3 | ||||
29 | ||||
46 | ||||
46 | ||||
PART II - OTHER INFORMATION |
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47 | ||||
47 | ||||
47 | ||||
47 | ||||
47 | ||||
47 | ||||
47 | ||||
47 | ||||
49 |
ITEM 1. |
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) |
December 31, 2021 (Note 1) |
March 31, 2022 (Unaudited) |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
$ | $ |
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Accounts receivable (net of allowances of $ |
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Unbilled revenue |
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Other receivables (net of allowances of $ |
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Inventories |
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Prepaid expenses |
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Assets held for sale |
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Total current assets |
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Notes receivable (net of allowance of $ |
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Property and equipment (net of accumulated depreciation of $ |
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Operating lease right-of-use |
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Financing lease right-of-use |
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Broadcast licenses |
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Goodwill |
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Amortizable intangible assets (net of accumulated amortization of $ |
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Deferred financing costs |
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Other assets |
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Total assets |
$ | $ |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current liabilities: |
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Accounts payable |
$ | $ |
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Accrued expenses |
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Accrued compensation and related expenses |
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Accrued interest |
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Contract liabilities |
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Deferred rent income |
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Income taxes payable |
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Current portion of operating lease liabilities |
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Current portion of financing lease liabilities |
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Current portion of long-term debt |
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Total current liabilities |
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Long-term debt, less current portion |
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Operating lease liabilities, less current portion |
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Financing (capital) lease liabilities, less current portion |
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Deferred income taxes |
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Contract liabilities, long-term |
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Deferred rent income, less current portion |
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Other long-term liabilities |
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Total liabilities |
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Commitments and contingencies (Note 14) |
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Stockholders’ Equity: |
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Class A common stock, $ |
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Class B common stock, $ |
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Additional paid-in capital |
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Accumulated deficit |
( |
) | ( |
) | ||||
Treasury stock, at cost ( |
( |
) | ( |
) | ||||
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
$ | $ |
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Three Months Ended March 31, |
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2021 |
2022 |
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Net broadcast revenue |
$ | $ |
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Net digital media revenue |
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Net publishing revenue |
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Total net revenue |
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Operating expenses: |
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Broadcast operating expenses, exclusive of depreciation and amortization shown below (including $ |
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Digital media operating expenses, exclusive of depreciation and amortization shown below |
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Publishing operating expenses, exclusive of depreciation and amortization shown below |
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Unallocated corporate expenses exclusive of depreciation and amortization shown below (including $ |
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Debt modification costs |
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Depreciation |
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Amortization |
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Change in the estimated fair value of contingent earn-out consideration |
( |
) | ||||||
Net (gain) loss on the disposition of assets |
( |
) | ||||||
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|
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Total operating expenses |
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Operating income |
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Other income (expense): |
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Interest income |
||||||||
Interest expense |
( |
) | ( |
) | ||||
Loss on early retirement of long-term debt |
( |
) | ||||||
Net miscellaneous income and expenses |
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Net income before income taxes |
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Provision for (benefit from) income taxes |
( |
) | ||||||
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Net income |
$ | $ |
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Basic earnings per share data: |
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Basic earnings per share Class A and Class B common stock |
$ | $ |
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Diluted earnings per share data: |
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Diluted earnings per share Class A and Class B common stock |
$ | $ |
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Basic weighted average Class A and Class B shares outstanding |
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Diluted weighted average Class A and Class B shares outstanding |
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|
Class A Common Stock |
Class B Common Stock |
Additional Paid-In Capital |
Accumulated Deficit |
Treasury Stock |
Total |
|||||||||||||||||||||||||||
Shares |
Amount |
Shares |
Amount |
|||||||||||||||||||||||||||||
Stockholders’ equity, December 31, 2020 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||||||||
Stock-based compensation |
— | — | — | — | — | — | ||||||||||||||||||||||||||
Options exercised |
— | — | — | — | ||||||||||||||||||||||||||||
Net income |
— | — | — | — | — | — | ||||||||||||||||||||||||||
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Stockholders’ equity, March 31, 2021 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||||||||
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Class A Common Stock |
Class B Common Stock |
Additional Paid-In Capital |
Accumulated Deficit |
Treasury Stock |
Total |
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Shares |
Amount |
Shares |
Amount |
|||||||||||||||||||||||||||||
Stockholders’ equity, December 31, 2021 |
$ |
$ |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
||||||||||||||||||||||
Stock-based compensation |
— | — | — | — | — | — | ||||||||||||||||||||||||||
Options exercised |
— | — | — | — | — | |||||||||||||||||||||||||||
Lapse of restricted shares |
— | — | — | — | — | — | — | |||||||||||||||||||||||||
Net income |
— | — | — | — | — | — | ||||||||||||||||||||||||||
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Stockholders’ equity, March 31, 2022 |
$ |
$ |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
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Three Months Ended March 31, |
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2021 |
2022 |
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OPERATING ACTIVITIES |
||||||||
Net income |
$ | $ |
||||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
Non-cash stock-based compensation |
||||||||
Depreciation and amortization |
||||||||
Amortization of deferred financing costs |
||||||||
Non-cash lease expense |
||||||||
Provision for bad debts |
( |
) | ( |
) | ||||
Deferred income taxes |
( |
) | ||||||
Change in the estimated fair value of contingent earn-out consideration |
( |
) | ||||||
Loss on early retirement of long-term debt |
||||||||
Net (gain) loss on the disposition of assets |
( |
) | ||||||
Changes in operating assets and liabilities: |
||||||||
Accounts receivable and unbilled revenue |
( |
) | ||||||
Inventories |
( |
) | ( |
) | ||||
Prepaid expenses and other current assets |
( |
) | ( |
) | ||||
Accounts payable and accrued expenses |
||||||||
Operating lease liabilities |
( |
) | ( |
) | ||||
Contract liabilities |
||||||||
Deferred rent income |
( |
) | ||||||
Other liabilities |
||||||||
Income taxes payable |
( |
) | ||||||
|
|
|
|
|||||
Net cash provided by operating activities |
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|
|||||
INVESTING ACTIVITIES |
||||||||
Cash paid for capital expenditures net of tenant improvement allowances |
( |
) | ( |
) | ||||
Capital expenditures reimbursable under tenant improvement allowances and trade agreements |
( |
) | ||||||
Deposit on broadcast assets and radio station acquisitions |
( |
) | ||||||
Purchases of broadcast assets and radio stations |
( |
) | ||||||
Investment in LLC |
( |
) | ||||||
Proceeds from sale of long-lived assets |
||||||||
Other |
( |
) | ( |
) | ||||
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|
|
|||||
Net cash provided by (used in) investing activities |
( |
) | ||||||
|
|
|
|
|||||
FINANCING ACTIVITIES |
||||||||
Payments to repurchase 2024 Notes |
( |
) | ||||||
Proceeds from borrowings under ABL Facility |
||||||||
Payments on ABL Facility |
( |
) | ( |
) | ||||
Proceeds from borrowings under PPP Loans |
||||||||
Payments of debt issuance costs |
( |
) | ||||||
Proceeds from the exercise of stock options |
||||||||
Payments on financing lease liabilities |
( |
) | ( |
) | ||||
Book overdraft |
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|
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Net cash provided by (used in) financing activities |
( |
) | ||||||
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|
|||||
Net increase (decrease) in cash and cash equivalents |
( |
) | ||||||
Cash and cash equivalents at beginning of year |
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|
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Cash and cash equivalents at end of period |
$ | $ |
||||||
|
|
|
|
Three Months Ended March 31, |
||||||||
2021 |
2022 |
|||||||
Supplemental disclosures of cash flow information: |
||||||||
Cash paid during the period for: |
||||||||
Cash paid for interest, net of capitalized interest |
$ | $ |
||||||
Cash paid for interest on finance lease liabilities |
$ | $ |
||||||
Net cash paid for (received from) income taxes |
$ | ( |
) | $ |
||||
Other supplemental disclosures of cash flow information: |
||||||||
Barter revenue |
$ | $ |
||||||
Barter expense |
$ | $ |
||||||
Non-cash investing and financing activities: |
||||||||
Capital expenditures reimbursable under tenant improvement allowances |
$ | $ |
||||||
Right-of-use |
$ | $ |
||||||
Right-of-use |
$ | $ |
||||||
Non-cash capital expenditures for property & equipment acquired under trade agreements |
$ | $ |
||||||
Net assets and liabilities assumed in a non-cash acquisition |
$ | $ |
||||||
Estimated present value of contingent-earn out consideration |
$ | $ |
• | We deferred $ |
• | A relaxation of interest expense deduction limitation for income tax purposes; |
• | We received Paycheck Protection Program (“PPP”) loans of $ per-location basis; and |
• | In July 2021, the SBA forgave all but $ |
• | revenue recognition; |
• | asset impairments, including broadcasting licenses, goodwill and other indefinite-lived intangible assets; |
• | contingency reserves; |
• | allowance for doubtful accounts; |
• | barter transactions; |
• | assessment of contract-based factors, asset-based factors, entity-based factors and market-based factors to determine the lease term impacting Right-Of-Use |
• | determining the Incremental Borrowing Rate (“IBR”) for calculating ROU assets and lease liabilities, |
Description |
Total Consideration |
|||
(Dollars in thousands) |
||||
Cash payments made upon closing |
$ |
|||
Escrow deposits paid in prior years |
||||
Total purchase price consideration |
$ |
|||
Net Broadcast Assets Acquired |
||||
Assets |
||||
Property and equipment |
$ | |||
Broadcast licenses |
||||
$ |
||||
Three Months Ended March 31, 2022 |
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Broadcast |
Digital Media |
Publishing |
Consolidated |
|||||||||||||
(Dollars in thousands) |
||||||||||||||||
By Source of Revenue: |
||||||||||||||||
Block Programming – National |
$ | $ | — | $ | — | $ | ||||||||||
Block Programming – Local |
— | — | ||||||||||||||
Broadcast Programming Revenue |
— |
— |
||||||||||||||
Spot Advertising – National |
— | — | ||||||||||||||
Spot Advertising – Local |
— | — | ||||||||||||||
Network Advertising |
— | — | ||||||||||||||
Broadcast Advertising Revenue |
— |
— |
||||||||||||||
Infomercials |
— | — | ||||||||||||||
Other Revenue |
— | — | ||||||||||||||
Other Broadcast Revenue |
— | — | ||||||||||||||
Digital Advertising |
||||||||||||||||
Digital Streaming |
||||||||||||||||
Digital Downloads |
||||||||||||||||
Digital Subscriptions |
||||||||||||||||
Other Digital Revenue |
||||||||||||||||
Digital Revenue |
||||||||||||||||
Book Sales |
— | — | ||||||||||||||
Estimated Sales Returns & Allowances |
— | ( |
) | ( |
) | |||||||||||
Net Book Sales |
— | |||||||||||||||
E-Book Sales |
— | |||||||||||||||
Self-Publishing Fees |
||||||||||||||||
Other Publishing Revenue |
||||||||||||||||
Publishing Revenue |
||||||||||||||||
$ |
$ |
$ |
$ |
|||||||||||||
Timing of Revenue Recognition |
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Point in Time |
$ | $ | $ | $ | ||||||||||||
Rental Income(1) |
||||||||||||||||
$ |
$ |
$ |
$ |
|||||||||||||
Three Months Ended March 31, 2021 |
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Broadcast |
Digital Media |
Publishing |
Consolidated |
|||||||||||||
(Dollars in thousands) |
||||||||||||||||
By Source of Revenue: |
||||||||||||||||
Block Programming – National |
$ | $ | — | $ | — | $ | ||||||||||
Block Programming – Local |
— | — | ||||||||||||||
Broadcast Programming Revenue |
— |
— |
||||||||||||||
Spot Advertising – National |
— | — | ||||||||||||||
Spot Advertising – Local |
— | — | ||||||||||||||
Network Advertising |
— | — | ||||||||||||||
Broadcast Advertising Revenue |
— |
— |
||||||||||||||
Infomercials |
— | — | ||||||||||||||
Other Revenue |
— | — | ||||||||||||||
Other Broadcast Revenue |
— |
— |
||||||||||||||
Digital Advertising |
||||||||||||||||
Digital Streaming |
— | |||||||||||||||
Digital Downloads |
— | |||||||||||||||
Digital Subscriptions |
— | |||||||||||||||
Other Digital Revenue |
— | |||||||||||||||
Digital Revenue |
||||||||||||||||
Book Sales |
— | — |
Estimated Sales Returns & Allowances |
— | — | ( |
) | ( |
) | ||||||||||
|
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|
|||||||||
Net Book Sales |
— | — | ||||||||||||||
|
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|
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E-Book Sales |
— | — | ||||||||||||||
Self-Publishing Fees |
— | — | ||||||||||||||
Publishing Magazine Subscriptions |
— | — | ||||||||||||||
Other Publishing Revenue |
— | — | ||||||||||||||
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|
|||||||||
Publishing Revenue |
— |
— |
||||||||||||||
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|
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$ |
$ |
$ |
$ |
|||||||||||||
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|
|
|||||||||
Timing of Revenue Recognition |
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Point in Time |
$ | $ | $ | $ | ||||||||||||
Rental Income(1) |
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|
|
|
|
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|
|
|||||||||
$ |
$ |
$ |
$ |
|||||||||||||
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|
|
Short Term | Long-Term |
|||||||
(Dollars in thousands) |
||||||||
Balance, beginning of period January 1, 2022 |
$ | $ | ||||||
Revenue recognized during the period that was included in the beginning balance of contract liabilities |
( |
) | ||||||
Additional amounts recognized during the period |
||||||||
Revenue recognized during the period that was recorded during the period |
( |
) | ||||||
Transfers |
( |
) | ||||||
|
|
|
|
|||||
Balance, end of period March 31, 2022 |
$ | $ | ||||||
|
|
|
|
|||||
Amount refundable at beginning of period |
$ | $ | ||||||
Amount refundable at end of period |
$ | $ |
Amount |
||||
For the Year Ended March 31, |
(Dollars in thousands) |
|||
20 |
$ | |||
20 |
||||
20 |
||||
20 |
||||
20 |
||||
There |
||||
|
|
|||
$ | ||||
|
|
Three Months Ended March 31, |
||||||||
2021 | 2022 |
|||||||
Net broadcast barter revenue |
$ | $ |
||||||
Net digital media barter revenue |
||||||||
Net publishing barter revenue |
||||||||
Net broadcast barter expense |
$ | $ |
||||||
Net digital media barter expense |
||||||||
Net publishing barter expense |
As of |
||||||||
December 31, 2021 | March 31, 2022 |
|||||||
(Dollars in thousands) |
||||||||
Buildings |
$ | $ |
||||||
Office furnishings and equipment |
||||||||
Antennae, towers and transmitting equipment |
||||||||
Studio, production, and mobile equipment |
||||||||
Computer software and website development costs |
||||||||
Automobiles |
||||||||
Leasehold improvements |
||||||||
|
|
|
|
|||||
$ | $ |
|||||||
Less accumulated depreciation |
( |
) | ( |
) | ||||
|
|
|
|
|||||
$ |
||||||||
|
|
|
|
|||||
Land |
$ | |||||||
Construction-in-progress |
||||||||
|
|
|
|
|||||
Property and Equipment, net |
$ | $ |
||||||
|
|
|
|
March 31, 2022 |
||||||||||||
(Dollars in thousands) |
||||||||||||
Operating Leases |
Related Party | Other | Total | |||||||||
Operating leases ROU assets |
$ | $ | $ | |||||||||
Operating lease liabilities (current) |
$ | $ | $ | |||||||||
Operating lease liabilities (non-current) |
||||||||||||
|
|
|
|
|
|
|||||||
Total operating lease liabilities |
$ | $ | $ | |||||||||
|
|
|
|
|
|
Weighted Average Remaining Lease Term |
||||
Operating leases |
||||
Finance leases |
||||
Weighted Average Discount Rate |
||||
Operating leases |
% | |||
Finance leases |
% |
Three Months Ended March 31, 2022 |
||||
(Dollars in thousands) |
||||
Amortization of finance lease ROU Assets |
$ | |||
Interest on finance lease liabilities |
||||
|
|
|||
Finance lease expense |
||||
Operating lease expense |
||||
Variable lease expense |
||||
Short-term lease expense |
||||
|
|
|||
Total lease expense |
$ | |||
|
|