Exhibit
Number | Exhibit
Number | | Description | 3.1 | | Amended and Restated Certificate of Incorporation of Urban Inc., dated as of May 4, 2000, as filed with the State of Delaware on May 9, 2000 (incorporated by reference to Exhibit 3.1 to Urban One’s Quarterly Report on Form 10-Q for the period ended March 31, 2000). | 3.1.1 | | Certificate of Amendment, dated as of April 25, 2017, of the Amended and Restated Certificate of Incorporation of Urban One, Inc., dated as of April 25, 2017, as filed with the State of Delaware on April 25, 2017 (incorporated by reference to Exhibit 3.1 to Urban One’s Current Report on Form 8-K filed May 8, 2017). | 3.2 | | Amended and Restated By-laws of Urban One, Inc. amended as of May 5, 2017 (incorporated by reference to Exhibit 3.2 to Urban One’s Current Report on Form 8-K filed May 8, 2017). | 3.3 | | Certificate of Conversion of Bell Broadcasting Company into Bell Broadcasting Company LLC (incorporated by reference to Exhibit 3.13 to Urban One’s Annual Report on Form 10-K, filed March 14, 2016). | 3.4 | | Articles of Organization of Blue Chip Broadcasting Licenses, Ltd. (incorporated by reference to Exhibit 3.32 to Urban One’s Registration Statement on Form S-4, filed August 5, 2005). | 3.5 | | Operating Agreement of Blue Chip Broadcasting Licenses, Ltd. (incorporated by reference to Exhibit 3.60 to Urban One’s Registration Statement on Form S-4, filed August 5, 2005). | 3.6 | | Articles of Organization of Blue Chip Broadcasting, Ltd. (incorporated by reference to Exhibit 3.30 to Urban One’s Registration Statement on Form S-4, filed August 5, 2005). | 3.7 | | Amended and Restated Operating Agreement of Blue Chip Broadcasting, Ltd. (incorporated by reference to Exhibit 3.59 to Urban One’s Registration Statement on Form S-4, filed August 5, 2005). |
3.9 | | Limited Liability Company Agreement of Charlotte Broadcasting, LLC (incorporated by reference to Exhibit 3.53 to Urban One’s Registration Statement on Form S-4, filed August 5, 2005). | 3.10 | | Certificate of Formation of Distribution One, LLC. (incorporated by reference to Exhibit 3.15 to Urban One’s Registration Statement on Form S-4, filed February 9, 2011). | 3.11 | | Limited Liability Company Agreement of Distribution One, LLC. (incorporated by reference to Exhibit 3.16 to Urban One’s Registration Statement on Form S-4, filed February 9, 2011). | 3.12 | | Articles of Incorporation of Interactive One, Inc. (incorporated by reference to Exhibit 3.19 to Urban One’s Registration Statement on Form S-4, filed February 9, 2011). | 3.13 | | Bylaws of Interactive One, Inc. (incorporated by reference to Exhibit 3.20 to Urban One’s Registration Statement on Form S-4, filed February 9, 2011). | 3.14 | | Certificate of Formation of Interactive One, LLC. (incorporated by reference to Exhibit 3.21 to Urban One’s Registration Statement on Form S-4, filed February 9, 2011). | 3.15 | | Limited Liability Company Agreement of Interactive One, LLC. (incorporated by reference to Exhibit 3.22 to Urban One’s Registration Statement on Form S-4, filed February 9, 2011). | 3.16 | | Certificate of Incorporation of New Mableton Broadcasting Corporation (incorporated by reference to Exhibit 3.43 to Urban One’s Registration Statement on Form S-4, filed August 5, 2005). | 3.17 | | Bylaws of New Mableton Broadcasting Corporation (incorporated by reference to Exhibit 3.70 to Urban One’s Registration Statement on Form S-4, filed August 5, 2005). | 3.18 | | Certificate of Conversion of Radio One Cable Holdings, Inc.to Radio One Cable Holdings, LLC. (incorporated by reference to Exhibit 3.19 to Urban One’s Annual Report on Form 10-K, filed February 17, 2015). | 3.19 | | Certificate of Conversion of formation of Radio One Cable Holdings, LLC. (incorporated by reference to Exhibit 3.20 to Urban One’s Annual Report on Form 10-K, filed February 17, 2015). | 3.20 | | Certificate of Formation of Radio One Distribution Holdings, LLC. (incorporated by reference to Exhibit 3.27 to Urban One’s Registration Statement on Form S-4, filed February 9, 2011). | 3.21 | | Limited Liability Company Agreement of Radio One Cable Holdings, LLC. (incorporated by reference to Exhibit 3.20 to Urban One’s Annual Report on Form 10-K, filed February 17, 2015). | 3.22 | | Limited Liability Company Agreement of Radio One Distribution Holdings, LLC (incorporated by reference to Exhibit 3.28 to Urban One’s Registration Statement on Form S-4, filed February 9, 2011). | 3.23 | | Certificate of Formation of Radio One Licenses, LLC (incorporated by reference to Exhibit 3.3 to Urban One’s Registration Statement on Form S-4, filed August 5, 2005). | 3.24 | | Limited Liability Company Agreement of Radio One Licenses, LLC (incorporated by reference to Exhibit 3.46 to Urban One’s Registration Statement on Form S-4, filed August 5, 2005). | 3.25 | | Certificate of Formation of Radio One Media Holdings, LLC (incorporated by reference to Exhibit 3.44 to Urban One’s Registration Statement on Form S-4, filed August 5, 2005). | 3.26 | | Limited Liability Company Agreement of Radio One Media Holdings, LLC (incorporated by reference to Exhibit 3.71 to Urban One’s Registration Statement on Form S-4, filed August 5, 2005). | 3.293.27 | | Certificate of Formation of Radio One of Charlotte, LLC (incorporated by reference to Exhibit 3.15 to Urban One’s Registration Statement on Form S-4, filed August 5, 2005). | 3.303.28 | | Limited Liability Company Agreement of Radio One of Charlotte, LLC (incorporated by reference to Exhibit 3.51 to Urban One’s Registration Statement on Form S-4, filed August 5, 2005). | 3.333.29 | | Certificate of Limited Partnership of Radio One of Indiana, L.P. (incorporated by reference to Exhibit 3.35 to Urban One’s Registration Statement on Form S-4, filed August 5, 2005). | 3.343.30 | | Limited Partnership Agreement of Radio One of Indiana, L.P. (incorporated by reference to Exhibit 3.63 to Urban One’s Registration Statement on Form S-4, filed August 5, 2005). | 3.353.31 | | Certificate of Formation of Radio One of Indiana, LLC (incorporated by reference to Exhibit 3.38 to Urban One’s Registration Statement on Form S-4, filed August 5, 2005). | 3.363.32 | | Limited Liability Company Agreement of Radio One of Indiana, LLC (incorporated by reference to Exhibit 3.66 to Urban One’s Registration Statement on Form S-4, filed August 5, 2005). | 3.373.33 | | Certificate of Formation of Radio One of North Carolina, LLC (incorporated by reference to Exhibit 3.20 to Urban One’s Registration Statement on Form S-4, filed August 5, 2005). |
3.403.36 | | Limited Liability Company Agreement of Radio One of Texas II, LLC (incorporated by reference to Exhibit 3.65 to Urban One’s Registration Statement on Form S-4, filed August 5, 2005). | 3.413.37 | | Certificate of Formation of Satellite One, L.L.C. (incorporated by reference to Exhibit 3.39 to Urban One’s Registration Statement on Form S-4, filed August 5, 2005). | 3.423.38 | | Limited Liability Company Agreement of Satellite One, L.L.C. (incorporated by reference to Exhibit 3.67 to Urban One’s Registration Statement on Form S-4, filed August 5, 2005). | 3.433.39 | | Certificate of Formation of IO Acquisition Sub, LLC (incorporated by reference to Exhibit 3.46 to Urban One’s Annual Report on Form 10-K, filed February 17, 2015). | 3.443.40 | | Certificate of Amendment to Certificate of Formation of BossipMadameNoire, LLC (incorporated by reference to Exhibit 3.3 to Urban One’s Current Report on Form 8-K, filed May 8, 2017). | 3.453.41 | | Limited Liability Company Agreement of BossipMadameNoire, LLC (formerly IO Acquisition Sub and incorporated by reference to Exhibit 3.47 to Urban One’s Annual Report on Form 10-K, filed February 17, 2015). | 3.463.42 | | Certificate of Formation of Radio One Urban Network Holdings, LLC (incorporated by reference to Exhibit 3.48 to Urban One’s Annual Report on Form 10-K, filed February 17, 2015). | 3.473.43 | | Limited Liability Company Agreement of Radio One Urban Network Holdings, LLC (incorporated by reference to Exhibit 3.49 to Urban One’s Annual Report on Form 10-K, filed February 17, 2015). | 3.483.44 | | Certificate of Formation of Radio One Entertainment Holdings, LLC (incorporated by reference to Exhibit 3.50 to Urban One’s Annual Report on Form 10-K, filed February 17, 2015). | 3.493.45 | | Second Amended and Restated Limited Liability Company Agreement of Radio One Entertainment Holdings, LLC*LLC (incorporated by reference to Exhibit 3.49 to Urban One’s Annual Report on Form 10-K, filed March 31, 2021). | 3.503.46 | | Certificate of Conversion of Gaffney Broadcasting, LLC (incorporated by reference to Exhibit 3.52 to Urban One’s Annual Report on Form 10-K, filed February 17, 2015). | 3.513.47 | | Certificate of Incorporation of Reach Media, Inc. (incorporated by reference to Exhibit 3.53 to Urban One’s Annual Report on Form 10-K, filed February 17, 2015). | 3.523.48 | | Bylaws of Reach Media, Inc. (incorporated by reference to Exhibit 3.54 to Urban One’s Annual Report on Form 10-K, filed February 17, 2015). | 3.533.49 | | Certificate of Formation of RO One Solution, LLC (incorporated by reference to Exhibit 3.54 to Urban One’s Annual Report on Form 10-K, filed March 14, 2016). | 3.543.50 | | Certificate of Formation of Urban One Entertainment SPV, LLC (incorporated by reference to Exhibit 3.54 to Urban One’s Annual Report on Form 10-K, filed March 18, 2019). | 3.553.51 | | Second Amended and Restated Limited Liability Company Agreement of Urban One Entertainment SPV, LLC*LLC (incorporated by reference to Exhibit 3.55 to Urban One’s Annual Report on Form 10-K, filed March 31, 2021). | 4.1 | | Indenture, dated as of January 25, 2021, among Urban One, Inc., the guarantors named therein and Wilmington Trust, National Association, as trustee, relating to the 7.375% Senior Secured Notes due 2028 (incorporated by reference to Exhibit 4.1 to Urban One’s Current Report on Form 8-K filed January 29, 2021). | 4.2 | | Credit Agreement,First Amendment and Waiver, dated as of February 19, 2021,April 30, 2023, among Urban One, Inc., the other borrowers party thereto, the lenders party thereto from time to time and Bank of America, N.A., as administrative agent (incorporated by reference to Exhibit 10.1 to Urban One's Current Report on Form 8-K filed February 22, 2021).agent*
| 4.74.3 | | Description of Registrant'sRegistrant’s Securities* | 10.14.4 | | Second Amendment and Waiver, dated as of June 5, 2023, among Urban One, Inc., the other borrowers party thereto, the lenders party thereto from time to time and Bank of America, N.A., as administrative agent*Second Amendment and Waiver* | 10.1 | | Amended and Restated Stockholders Agreement dated as of September 28, 2004 among Catherine L. Hughes and Alfred C. Liggins, III (incorporated by reference 4.1 Urban One’s Quarterly Report on Form 10-Q for the period ended June 30, 2005). | 10.2 | | Amended and Restated Radio One, Inc. 2009 Stock Option and Restricted Stock Grant Plan (incorporated by reference to Urban One’s Definitive Proxy on Schedule 14A filed October 3, 2013).
| 10.3 | | Urban One, Inc. 2019 Equity and Performance Incentive Plan (incorporated by reference to Urban One’s Definitive Proxy on Schedule 14A filed April 11, 2019). |
10.410.3 | | Employment Agreement between Radio One, Inc. and Peter D. Thompson dated October 9, 2014as of September 27, 2022 (incorporated by reference to Exhibit 10.1299.1 to Urban One’s Current Report on Form 8-K filed November 4, 2014)October 3, 2022). | 10.510.4 | | Employment Agreement between Radio One, Inc. and Alfred C. Liggins, III dated April 16, 2008 (incorporated by reference to Exhibit 10.110.2 to Urban One’s Current Report on Form 8-K filed April 18, 2008). | 10.610.5 | | Terms of Employment Agreement between Radio One, Inc. and Alfred C. Liggins, III approved September 30, 201427, 2022 (incorporated by reference to Item 5.02 of Urban One’s Current Report on Form 8-K filed October 6, 2014)3, 2022). |
10.710.6 | | Employment Agreement between Radio One, Inc. and Catherine L. Hughes dated April 16, 2008 (incorporated by reference to Exhibit 10.1 to Urban One’s Current Report on Form 8-K filed April 18, 2008). | 10.810.7 | | Terms of Employment Agreement between Radio One, Inc. and Catherine L. Hughes approved September 30, 201427, 2022 (incorporated by reference to Item 5.02 of Urban One’s Current Report on Form 8-K filed October 6, 2014)3, 2022). | 10.910.8 | | Credit Agreement, dated as of April 21, 2016, among RadioAmended and Restated Urban One Inc., the lenders party thereto from time to time2019 Equity and Wells Fargo Bank National Association, as administrative agent (incorporatedPerformance Incentive Plan (incorporated by reference to Exhibit 10.1A to Urban One’s Current Report on Form 8-K filedProxy Statement dated April 27, 2016)30, 2021).
| 10.1021.1 | | Extension Agreement attaching to and made a part of Employment Agreement by and between Radio One, Inc. and Peter D. Thompson (incorporated by reference to Exhibit 10.1 to Urban One’s Current Report on Form 8-K filed April 27, 2016).
| 21.1 | | Subsidiaries of Urban One, Inc.* | 23.1 | | Consent of BDO USA, LLP * | 31.1 | | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.* | 31.2 | | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.* | 32.1 | | Certification of Chief Executive Officer pursuant to 18 U.S.C § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.* | 32.2 | | Certification of Chief Financial Officer pursuant to 18 U.S.C § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.* | 101 | | Financial information from the Annual Report on Form 10-K for the year ended December 31, 2020,2022, formatted in Inline XBRL.* |
104 | * | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101 | | | | | * | Indicates document filed herewith. |
ITEM 16. FORM 10-K SUMMARY None. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on March 31, 2021. June 30, 2023. | URBAN One, Inc.ONE, INC. | | | | | | | By: | /s/ Peter D. Thompson | | | Name: | Peter D. Thompson | | | Title: | Chief Financial Officer and Principal Accounting Officer | |
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the registrant in the capacities indicated on March 31, 2021. June 30, 2023. By: | /s/ Catherine L. Hughes | | | | | Name: | Catherine L. Hughes | | | | | Title: | Chairperson, Director and Secretary | | | | | By: | /s/ Alfred C. Liggins, III | | | | | Name: | Alfred C. Liggins, III | | | | | Title: | Chief Executive Officer, President and Director | | | | | By: | /s/ Terry L. Jones | | | | | Name: | Terry L. Jones | | | | | Title: | Director | | | | | By: | /s/ Brian W. McNeill | | | | | Name: | Brian W. McNeill | | | | | Title: | Director | | | | | By: | /s/ B. Doyle Mitchell, Jr. | | | | | Name: | B. Doyle Mitchell, Jr. | | | | | Title: | Director | | By: | /s/ D. Geoffrey Armstrong | | Name: | D. Geoffrey Armstrong | | Title: | Director | |
Report of Independent Registered Public Accounting Firm Shareholders and Board of Directors Urban One, Inc. Silver Spring, Maryland Opinion on Internal Control over Financial Reporting We have audited Urban One, Inc.’s (the “Company’s”) internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO criteria”). In our opinion, the Company did not maintain, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on the COSO criteria. We do not express an opinion or any other form of assurance on management’s statements referring to any corrective actions taken by the Company after the date of management’s assessment. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheets of the Company as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive income, changes in stockholders’ equity, and cash flows for each of the years then ended, and the related notes (collectively referred to as “the consolidated financial statements”) and our report dated June 30, 2023 expressed an unqualified opinion thereon. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying “Item 9A, Management’s Report on Internal Control over Financial Reporting”. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit of internal control over financial reporting in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. Material weaknesses regarding management’s failure to design and maintain controls have been identified and described in management’s assessment. The material weaknesses related to: 1) entity-level controls impacting the control environment, risk assessment procedures and monitoring activities; and 2) control activities which include: a) information technology general controls (“ITGCs”) in the areas of user access, program change management, and segregation of duties for certain information technology systems that support the Company’s financial reporting and other processes; b) proper segregation of duties relating to the review of manual journal entries; c) effective controls over revenue, income taxes, content assets, launch assets, the preparation of the statements of cash flows and certain financial statement disclosures; d) effective review controls over the accounting and disclosures related to the investment in MGM National Harbor; and e) effective controls over the completeness and accuracy of the balances of radio broadcasting licenses, goodwill and related accounts, specifically, the Company’s monitoring and control activities related to review of key third-party reports and assumptions used in the valuation of its radio broadcasting licenses, goodwill and related accounts. These material weaknesses were considered in determining the nature, timing, and extent of audit tests applied in our audit of the 2022 consolidated financial statements, and this report does not affect our report dated June 30, 2023 on those consolidated financial statements. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ BDO USA, LLP Potomac, Maryland June 30, 2023 Report of Independent Registered Public Accounting Firm Shareholders and Board of Directors Urban One, Inc. Silver Spring, Maryland Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Urban One, Inc. (the “Company”) as of December 31, 20202022 and 2019,2021, the related consolidated statements of operations, and comprehensive income, changes in stockholders’ equity, and cash flows for each of the years then ended, and the related notes and schedule (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 20202022 and 2019,2021, and the results of its operations and its cash flows for the years then ended,, in conformity with accounting principles generally accepted in the United States of America. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company's internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and our report dated June 30, 2023 expressed an adverse opinion thereon. Restatement to Correct 2021 Misstatements As discussed in Note 2 to the consolidated financial statements, the 2021 consolidated financial statements have been restated to correct misstatements. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”)PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Valuation of Certain Radio Broadcasting Licenses As described further in Notes 13, 4 and 46 to the consolidated financial statements, the carrying amount of the Company’sCompany acquired radio broadcasting licenses was $484valued at approximately $23.6 million in 2022 and had total radio broadcasting licenses of approximately $488.4 million as of December 31, 2020. The Company determined the radio broadcast licenses are indefinite-live intangible assets. In accordance with Accounting Standards Codification (“ASC”) 350, “Intangibles - Goodwill and Other,” goodwill and other indefinite-lived intangible assets are not amortized.2022. The Company tests radio broadcasting licenses for impairment annually, on October 1, or more frequently when events or changes in circumstances or other conditions suggest impairment may have occurred. DuringWith the first and third quartersassistance of a third-party valuation firm, the Company concluded that a triggering event occurred for certain radio broadcasting licenses due to a decline in the Company’s revenues as a result of the COVID-19 pandemic and the resulting government stay at home orders. As a result, the Company recorded an impairment charge for certain radio broadcasting licenses in the amount of $47.7 million and $19.1 million, in the first and third quarter, respectively. During the fourth quarter, the Company performed the annual impairment test for each radio broadcasting license, and there was no additional impairment. The radio broadcast licenses are evaluated for impairment at the unit of account level (which is a cluster of radio stations into one of the geographical markets) by comparingestimates the fair value of the radio broadcast licenses to their carrying value. An impairment exists when the carrying value of the radio broadcasting license exceeds its respective fair value. The Companylicenses acquired in business combinations and being tested for impairment using the income approach, which involves judgmental estimates and assumptions about market revenue and projected revenue growth by market, mature market share, mature operating profit margin, discount rate and the terminal growth rate. We have identified the Company’s estimate of the fair value of the radio broadcasting licenses usingacquired in the income approach. We identified the estimate of the fair value of the radio broadcastbusiness combination and certain licenses as part of the interim and annualbeing tested for impairment assessment to beas a critical audit matter. The principal considerations that led to this determination were (i) the fair value estimates wereare sensitive to changes in the significant assumptions such as the estimatedmarket revenue and projected revenue growth by market, mature market share, and revenues,mature operating profit margin, long-term revenue growth rates and the discount rate and (ii) the auditterminal growth rate. Auditing these assumptions required increased auditor effort involvedincluding the use of professionals with specialized skills and knowledge. These assumptions were especially challenging to test and required significant auditor judgment because they were affected by expected future market conditions, including the impact of COVID-19.valuation specialists.
The primary procedures we performed to address this critical audit matter included: | ·● | Obtaining an understanding of management’s process for developing the fair value estimate and evaluatingEvaluating the reasonableness of the significant assumptionsmarket revenue and mature market share utilized in the Company's forecasts for selected licenses by comparing them to historical informationexternal market data and evaluating the projected revenue growth by market by comparing to external industry and market data considering the impact of COVID-19.data. |
| ·● | Testing the completenessUtilizing professionals with specialized knowledge and accuracy of the underlying information usedexperience in the fair value estimate. |
| · | Utilizing our valuation professionals to assist in (i) assessingtest the appropriateness of the valuation methodologymature operating profit margin, discount rate and (ii) evaluating the reasonableness of the discount rate.terminal growth rate used. |
Radio Market Goodwill Impairment Assessment
As described further in Notes 13 and 46 to the consolidated financial statements, the Company’s radio broadcasting segment goodwill balance was $36.8approximately $30.0 million as of December 31, 2020.2022. The Company tests goodwill for impairment annually, on October 1, or more frequently when events or changes in circumstances or other conditions suggest impairment may have occurred. During the first and third quarters of fiscal 2020, the Company concluded that a triggering event occurred for certain reporting units due to a decline in the Company’s revenues as a result of the COVID-19 pandemic and the resulting government stay at home orders. As a result, the Company recorded an impairment charge for certain reporting units in the amount of $5.9 million and $10 million, in the first and third quarter, respectively. During the fourth quarter, the Company performed the annual impairment test for each reporting unit, and there was no additional impairment charge. An impairment exists when the radio market reporting unit’s carrying value exceeds its fair value andvalue. With the impairment charge is limited toassistance of a third-party valuation firm, the amount of goodwill allocated to the reporting unit.The Company estimates the fair value of the its reporting unitunits primarily using an income approach.approach, which involves judgmental estimates and assumptions about revenue growth rates, future operating profit margins, the terminal growth rate and the discount rate. We have identified the estimate of the fair value of certain of the Company’s radio market reporting units as part of the interim and annual impairment assessment to be a critical audit matter. The principal considerations that led to this determination were (i) the fair value estimates wereare sensitive to changes in the significant assumptions such as the estimated market share and revenue, operating profit margin, long-term revenue growth rates, future operating profit margins, the terminal growth rate and the discount rate and (ii) the auditrate. Auditing these assumptions required increased auditor effort involvedincluding the use of professionals with specialized skills and knowledge. These assumptions were especially challenging to test and required significant auditor judgment because they were affected by expected future market conditions, including the impact of COVID-19.valuation specialists. The primary procedures we performed to address this critical audit matter included: | ·● | Obtaining an understanding of management’s process for developing the fair value estimate and evaluatingTesting the reasonableness of the significant assumptionsrevenue growth rates by comparing them to historical informationexternal industry and market data consideringand evaluating the impactfuture operating profit margins utilized in the Company's forecasts for selected radio market reporting units by comparing to recent historical results of COVID-19.the Company. |
| ·● | Testing the completenessUtilizing professionals with specialized knowledge and accuracy of the underlying information usedexperience in the fair value estimate. |
| · | Utilizing our valuation professionals to assist in (i) assessingtest the appropriateness of the valuation methodologyterminal growth rate and (ii) evaluating the reasonableness of the discount rate.rate used. |
Amortization of Commissioned Programming Content Assets Realizability of Deferred Tax Assets
As described further in Notes 13 and 107 to the consolidated financial statements, the Company records a valuation allowance if,Company’s cable television segment engages third parties to develop and produce content, including original programming (“commissioned programming”) which is predominantly monetized as content groups determined by separate television programming genres. Content amortization expense for commissioned programming is based on the weight of available evidence, it is more likely than not that all or a portionan estimate of the deferred taxCompany’s usage and benefit from such program based on a revenue forecast model. Management regularly reviews, and revises when necessary, its total revenue estimates, which may result in a change in the rate of amortization. The Company recognized $43.5 million of total amortization of content assets will not be realized. As offor the year ended December 31, 2020,2022 which includes the Company recorded a valuation allowanceamortization of $277 thousand to offset the Company’s gross deferred tax assets of $157.9 million.commissioned programming content assets. We have identified the realizabilityamortization of deferred taxthe Company’s commissioned programming content assets as a critical audit matter becausematter. Management’s estimates of the significant judgmentsremaining total revenues are sensitive to changes in projected viewership which is based on estimated household universe, ratings, and estimates made by management to determine that sufficient taxable income will be generatedexpected number of airings across different broadcast time slots. Auditing these inputs used in the future periods to utilize the Federalamortization calculation for commissioned programming content assets required increased auditor effort in performing procedures and State net operating losses, including the evaluationevaluating audit evidence. Table of the impact of IRC Section 382. This required a high degree of auditor judgment and an increased extent of audit effort, including the need to involve our income tax specialists, when performing audit procedures to assess the reasonableness of management’s estimates of future taxable income, including projected pre-tax income, and qualifying tax planning strategies.Contents The primary procedures we performed to address this critical audit matter included: | ·● | Testing management’s forecasted amortization pattern for commissioned programming content asset groups through comparison of forecasted assumptions of estimated household universe, ratings and expected number of airings across different broadcast time slots to actual data from historical periods and subsequent to the reasonableness of management’s estimates of future taxable income by comparing the estimates to historical taxable income, industry and market information including the impact of COVID-19 and evidence obtained in other areas of the audit to evaluate whether contradictory evidence exists.balance sheet date. |
| ·● | EvaluatingTesting the appropriateness of management’s application of newcompleteness and updated regulatory and legislative guidance. |
| · | Evaluating changes in tax laws and assessing the interpretation of those changes under the relevant state and local jurisdictions’ tax laws. |
| · | Utilizing firm personnel with specialized knowledge and skill in income taxes to assist in (i) evaluating both positive and negative evidence, including the calculation of future taxable income, to assess the reasonablenessaccuracy of the Company’s valuation allowancehistorical viewership data including estimated household universe, ratings and (ii) testingnumber of airings across different broadcast time slots used to calculate the Company’s Section 382 calculation and resulting annual limitations on the recoverabilityestimate of net operating losses.total remaining revenues. |
/s/ BDO USA, LLP We have served as the Company's auditor since 2016. Potomac, Maryland June 30, 2023 March 31, 2021
URBAN ONE, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS | | | | | | | | | As of | | | December 31, 2022 | | December 31, 2021 | | | | | | (As Restated) | | | (In thousands, except share data) | ASSETS | | | | | | | CURRENT ASSETS: | | | | | | | Cash and cash equivalents | | $ | 75,404 | | $ | 132,245 | Restricted cash | | | 19,975 | | | 19,973 | Trade accounts receivable, net of allowance for doubtful accounts of $8,811 and $8,743, respectively | | | 143,264 | | | 127,759 | Prepaid expenses | | | 8,729 | | | 2,967 | Current portion of content assets | | | 34,003 | | | 25,883 | Other current assets | | | 8,372 | | | 3,497 | Total current assets | | | 289,747 | | | 312,324 | CONTENT ASSETS, net | | | 86,378 | | | 60,155 | PROPERTY AND EQUIPMENT, net | | | 27,758 | | | 26,291 | GOODWILL | | | 216,599 | | | 223,402 | RIGHT OF USE ASSETS | | | 31,879 | | | 37,956 | RADIO BROADCASTING LICENSES | | | 488,419 | | | 501,420 | OTHER INTANGIBLE ASSETS, net | | | 55,193 | | | 47,921 | DEBT SECURITIES - available-for-sale, at fair value; amortized cost of $40,000 at December 31, 2022 and 2021 | | | 136,826 | | | 112,600 | OTHER ASSETS | | | 5,688 | | | 6,956 | Total assets | | $ | 1,338,487 | | $ | 1,329,025 | LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND STOCKHOLDERS’ EQUITY | | | | | | | CURRENT LIABILITIES: | | | | | | | Accounts payable | | $ | 18,003 | | $ | 16,892 | Accrued interest | | | 23,111 | | | 25,458 | Accrued compensation and related benefits | | | 17,421 | | | 10,960 | Current portion of content payables | | | 26,718 | | | 18,972 | Current portion of lease liabilities | | | 8,690 | | | 10,072 | Other current liabilities | | | 36,320 | | | 24,430 | Total current liabilities | | | 130,263 | | | 106,784 | LONG-TERM DEBT, net of original issue discount and issuance costs | | | 739,000 | | | 818,616 | CONTENT PAYABLES, net of current portion | | | 10,365 | | | 2,865 | LONG-TERM LEASE LIABILITIES | | | 25,545 | | | 31,228 | OTHER LONG-TERM LIABILITIES | | | 34,540 | | | 28,320 | DEFERRED TAX LIABILITIES, net | | | 39,704 | | | 18,877 | Total liabilities | | | 979,417 | | | 1,006,690 | | | | | | | | COMMITMENTS AND CONTINGENCIES | | | | | | | REDEEMABLE NONCONTROLLING INTERESTS | | | 25,298 | | | 18,655 | | | | | | | | STOCKHOLDERS’ EQUITY: | | | | | | | Convertible preferred stock, $.001 par value, 1,000,000 shares authorized; no shares outstanding at December 31, 2022 and 2021 | | | — | | | — | Common stock — Class A, $.001 par value, 30,000,000 shares authorized; 9,854,682 and 9,104,916 shares issued and outstanding as of December 31, 2022 and 2021, respectively | | | 10 | | | 9 | Common stock — Class B, $.001 par value, 150,000,000 shares authorized; 2,861,843 shares issued and outstanding as of December 31, 2022 and 2021 | | | 3 | | | 3 | Common stock — Class C, $.001 par value, 150,000,000 shares authorized; 2,045,016 and 2,045,016 shares issued and outstanding as of December 31, 2022 and 2021, respectively | | | 2 | | | 2 | Common stock — Class D, $.001 par value, 150,000,000 shares authorized; 33,618,227 and 37,324,737 shares issued and outstanding as of December 31, 2022 and 2021, respectively | | | 34 | | | 37 | Accumulated other comprehensive income | | | 73,227 | | | 54,950 | Additional paid-in capital | | | 993,484 | | | 1,018,996 | Accumulated deficit | | | (732,988) | | | (770,317) | Total stockholders’ equity | | | 333,772 | | | 303,680 | Total liabilities, redeemable noncontrolling interests and stockholders’ equity | | $ | 1,338,487 | | $ | 1,329,025 |
| | | As of December 31, | | | | | 2020 | | | 2019 | | | | | (In thousands, except share
data) | | | ASSETS | | | | | | | | | | CURRENT ASSETS: | | | | | | | | | | Cash and cash equivalents | | $ | 73,385 | | | $ | 33,073 | | | Restricted cash | | | 473 | | | | 473 | | | Trade accounts receivable, net of allowance for doubtful accounts of $7,956 and $7,416, respectively | | | 106,296 | | | | 106,148 | | | Prepaid expenses | | | 10,154 | | | | 11,261 | | | Current portion of content assets | | | 28,434 | | | | 30,642 | | | Other current assets | | | 4,224 | | | | 4,442 | | | Total current assets | | | 222,966 | | | | 186,039 | | | CONTENT ASSETS, net | | | 63,175 | | | | 70,121 | | | PROPERTY AND EQUIPMENT, net | | | 19,192 | | | | 24,393 | | | GOODWILL | | | 223,402 | | | | 239,772 | | | RIGHT OF USE ASSETS | | | 40,918 | | | | 44,922 | | | RADIO BROADCASTING LICENSES | | | 484,066 | | | | 582,697 | | | OTHER INTANGIBLE ASSETS, net | | | 56,053 | | | | 58,212 | | | DEFERRED TAX ASSETS, net | | | 10,041 | | | | — | | | ASSETS HELD FOR SALE | | | 32,661 | | | | — | | | OTHER ASSETS | | | 43,013 | | | | 43,763 | | | Total assets | | $ | 1,195,487 | | | $ | 1,249,919 | | | LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND STOCKHOLDERS’ EQUITY | | | | | | | | | | CURRENT LIABILITIES: | | | | | | | | | | Accounts payable | | $ | 11,135 | | | $ | 5,919 | | | Accrued interest | | | 8,017 | | | | 9,094 | | | Accrued compensation and related benefits | | | 12,302 | | | | 10,903 | | | Current portion of content payables | | | 16,248 | | | | 14,804 | | | Current portion of lease liabilities | | | 8,928 | | | | 8,980 | | | Other current liabilities | | | 26,917 | | | | 25,393 | | | Current portion of long-term debt | | | 23,362 | | | | 25,945 | | | Total current liabilities | | | 106,909 | | | | 101,038 | | | LONG-TERM DEBT, net of current portion, original issue discount and issuance costs | | | 818,924 | | | | 850,308 | | | CONTENT PAYABLES, net of current portion | | | 9,479 | | | | 14,826 | | | LONG-TERM LEASE LIABILITIES | | | 36,577 | | | | 40,494 | | | OTHER LONG-TERM LIABILITIES | | | 23,999 | | | | 25,054 | | | DEFERRED TAX LIABILITIES, net | | | — | | | | 24,560 | | | Total liabilities | | | 995,888 | | | | 1,056,280 | | | | | | | | | | | | | REDEEMABLE NONCONTROLLING INTERESTS | | | 12,701 | | | | 10,564 | | | | | | | | | | | | | STOCKHOLDERS’ EQUITY: | | | | | | | | | | Convertible preferred stock, $.001 par value, 1,000,000 shares authorized; no shares outstanding at December 31, 2020 and 2019 | | | — | | | | — | | | Common stock — Class A, $.001 par value, 30,000,000 shares authorized; 4,441,635 and 1,582,375 shares issued and outstanding as of December 31, 2020 and 2019, respectively | | | 4 | | | | 2 | | | Common stock — Class B, $.001 par value, 150,000,000 shares authorized; 2,861,843 shares issued and outstanding as of December 31, 2020 and 2019 | | | 3 | | | | 3 | | | Common stock — Class C, $.001 par value, 150,000,000 shares authorized; 2,928,906 shares issued and outstanding as of December 31, 2020 and 2019 | | | 3 | | | | 3 | | | Common stock — Class D, $.001 par value, 150,000,000 shares authorized; 37,515,801 and 38,752,749 shares issued and outstanding as of December 31, 2020 and 2019, respectively | | | 38 | | | | 39 | | | Additional paid-in capital | | | 991,769 | | | | 979,834 | | | Accumulated deficit | | | (804,919 | ) | | | (796,806 | ) | | Total stockholders’ equity | | | 186,898 | | | | 183,075 | | | Total liabilities, redeemable noncontrolling interests and stockholders’ equity | | $ | 1,195,487 | | | $ | 1,249,919 | |
The accompanying notes are an integral part of these consolidated financial statements. URBAN ONE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS | | | For the Years Ended December 31, | | | | | 2020 | | | 2019 | | | | | (In thousands, except share data) | | | NET REVENUE | | $ | 376,337 | | | $ | 436,929 | | | OPERATING EXPENSES: | | | | | | | | | | Programming and technical, including stock-based compensation of $20 and $78, respectively | | | 103,833 | | | | 128,804 | | | Selling, general and administrative, including stock-based compensation of $413 and $759, respectively | | | 109,046 | | | | 152,550 | | | Corporate selling, general and administrative, including stock-based compensation of $1,861 and $3,947, respectively | | | 37,721 | | | | 40,894 | | | Depreciation and amortization | | | 9,741 | | | | 16,985 | | | Impairment of long-lived assets | | | 84,400 | | | | 10,600 | | | Total operating expenses | | | 344,741 | | | | 349,833 | | | Operating income | | | 31,596 | | | | 87,096 | | | INTEREST INCOME | | | 213 | | | | 150 | | | INTEREST EXPENSE | | | 74,507 | | | | 81,400 | | | LOSS ON RETIREMENT OF DEBT | | | 2,894 | | | | — | | | OTHER INCOME, net | | | (4,547 | ) | | | (7,075 | ) | | (Loss) income before (benefit from) provision for income taxes and noncontrolling interests in income of subsidiaries | | | (41,045 | ) | | | 12,921 | | | (BENEFIT FROM) PROVISION FOR INCOME TAXES | | | (34,476 | ) | | | 10,864 | | | CONSOLIDATED NET (LOSS) INCOME | | | (6,569 | ) | | | 2,057 | | | NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS | | | 1,544 | | | | 1,132 | | | CONSOLIDATED NET (LOSS) INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS | | $ | (8,113 | ) | | $ | 925 | | | | | | | | | | | | | BASIC NET (LOSS) INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS: | | | | | | | | | | Net (loss) income attributable to common stockholders | | $ | (0.18 | ) | | $ | 0.02 | | | | | | | | | | | | | DILUTED NET (LOSS) INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS: | | | | | | | | | | Net (loss) income attributable to common stockholders | | $ | (0.18 | ) | | $ | 0.02 | | | | | | | | | | | | | WEIGHTED AVERAGE SHARES OUTSTANDING: | | | | | | | | | | Basic | | | 45,041,467 | | | | 44,699,586 | | | | | | | | | | | | | Diluted | | | 45,041,467 | | | | 47,921,671 | |
| | | | | | | | | Years Ended December 31, | | | 2022 | | 2021 | | | | | | (As Restated) | | | (In thousands, except share data) | | | | | | | | NET REVENUE | | $ | 484,604 | | $ | 440,285 | OPERATING EXPENSES: | | | | | | | Programming and technical, including stock-based compensation of $7 and $20, respectively | | | 122,636 | | | 119,092 | Selling, general and administrative, including stock-based compensation of $239 and $31, respectively | | | 160,230 | | | 142,010 | Corporate selling, general and administrative, including stock-based compensation of $6,349 and $514, respectively | | | 56,334 | | | 51,351 | Depreciation and amortization | | | 10,034 | | | 9,289 | Impairment of long-lived assets | | | 40,683 | | | 2,104 | Total operating expenses | | | 389,917 | | | 323,846 | Operating income | | | 94,687 | | | 116,439 | INTEREST INCOME | | | 939 | | | 218 | INTEREST EXPENSE | | | 61,751 | | | 65,702 | (GAIN) LOSS ON RETIREMENT OF DEBT | | | (6,718) | | | 6,949 | OTHER INCOME, net | | | (16,083) | | | (8,134) | Income before provision for income taxes and noncontrolling interests in income of subsidiaries | | | 56,676 | | | 52,140 | PROVISION FOR INCOME TAXES | | | 16,721 | | | 13,034 | NET INCOME | | | 39,955 | | | 39,106 | NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS | | | 2,626 | | | 2,315 | NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS | | $ | 37,329 | | $ | 36,791 | | | | | | | | BASIC NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS | | | | | | | Net income attributable to common stockholders | | $ | 0.76 | | $ | 0.73 | | | | | | | | DILUTED NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS | | | | | | | Net income attributable to common stockholders | | $ | 0.72 | | $ | 0.68 | | | | | | | | WEIGHTED AVERAGE SHARES OUTSTANDING: | | | | | | | Basic | | | 48,928,063 | | | 50,163,600 | Diluted | | | 52,174,337 | | | 54,136,641 |
The accompanying notes are an integral part of these consolidated financial statements. URBAN ONE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME | | | For The Years Ended
December 31, | | | | | 2020 | | | 2019 | | | | | (In thousands) | | | COMPREHENSIVE (LOSS) INCOME | | $ | (6,569 | ) | | $ | 2,057 | | | LESS: COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS | | | 1,544 | | | | 1,132 | | | COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS | | $ | (8,113 | ) | | $ | 925 | |
| | | | | | | | | Years Ended December 31, | | | 2022 | | 2021 | | | | | | (As Restated) | | | (In thousands) | | | | | | | | OTHER COMPREHENSIVE INCOME, BEFORE TAX: | | | | | | | Unrealized gain on available-for-sale securities | | $ | 24,226 | | $ | 9,500 | Income tax expense related to unrealized gain on available-for-sale securities | | | (5,949) | | | (2,305) | OTHER COMPREHENSIVE INCOME, NET OF TAX | | | 18,277 | | | 7,195 | COMPREHENSIVE INCOME | | $ | 58,232 | | $ | 46,301 | LESS: COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS | | | 2,626 | | | 2,315 | COMPREHENSIVE INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS | | $ | 55,606 | | $ | 43,986 |
The accompanying notes are an integral part of these consolidated financial statements. URBAN ONE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS'STOCKHOLDERS’ EQUITY For The Years Ended December 31, 20192021 and 20202022 | | | Convertible
Preferred
Stock | | | Common
Stock
Class A | | | Common
Stock
Class B | | | Common
Stock
Class C | | | Common
Stock
Class D | | | Additional
Paid-In
Capital | | | Accumulated
Deficit | | | Total
Equity | | | | | (In thousands, except share data) | | | BALANCE, as of December 31, 2018 | | $ | — | | | $ | 2 | | | $ | 3 | | | $ | 3 | | | $ | 39 | | | $ | 978,628 | | | $ | (803,534 | ) | | $ | 175,141 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Consolidated net income | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 925 | | | | 925 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Stock-based compensation expense | | | — | | | | — | | | | — | | | | — | | | | 2 | | | | 4,782 | | | | — | | | | 4,784 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Issuance of 978,844 shares of Class D common stock | | | — | | | | — | | | | — | | | | — | | | | — | | | | 2,108 | | | | — | | | | 2,108 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Repurchase of 54,896 shares of Class A common stock and repurchase of 2,667,210 shares of Class D common stock | | | — | | | | — | | | | — | | | | — | | | | (2 | ) | | | (5,513 | ) | | | — | | | | (5,515 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Exercise of options for 15,000 shares of common stock | | | — | | | | — | | | | — | | | | — | | | | — | | | | 29 | | | | — | | | | 29 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Adoption of ASC 842 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 5,803 | | | | 5,803 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Adjustment of redeemable noncontrolling interests to estimated redemption value | | | — | | | | — | | | | — | | | | — | | | | — | | | | (200 | ) | | | — | | | | (200 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | BALANCE, as of December 31, 2019 | | $ | — | | | $ | 2 | | | $ | 3 | | | $ | 3 | | | $ | 39 | | | $ | 979,834 | | | $ | (796,806 | ) | | $ | 183,075 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Consolidated net loss | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (8,113 | ) | | | (8,113 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Stock-based compensation expense | | | — | | | | — | | | | — | | | | — | | | | — | | | | 2,294 | | | | — | | | | 2,294 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Issuance of 2,859,276 shares of Class A common stock | | | — | | | | 2 | | | | — | | | | — | | | | — | | | | 14,671 | | | | — | | | | 14,673 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Repurchase of 3,919,280 shares of Class D common stock | | | — | | | | — | | | | — | | | | — | | | | (3 | ) | | | (3,609 | ) | | | — | | | | (3,612 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Exercise of options for 1,032,922 shares of common stock | | | — | | | | — | | | | — | | | | — | | | | 2 | | | | 1,974 | | | | — | | | | 1,976 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Adjustment of redeemable noncontrolling interests to estimated redemption value | | | — | | | | — | | | | — | | | | — | | | | — | | | | (3,395 | ) | | | — | | | | (3,395 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | BALANCE, as of December 31, 2020 | | $ | — | | | $ | 4 | | | $ | 3 | | | $ | 3 | | | $ | 38 | | | $ | 991,769 | | | $ | (804,919 | ) | | $ | 186,898 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Convertible | | Common | | Common | | Common | | Common | | Accumulated Other | | Additional | | | | | | | | | Preferred | | Stock | | Stock | | Stock | | Stock | | Comprehensive | | Paid-In | | Accumulated | | Total | | | Stock | | Class A | | Class B | | Class C | | Class D | | Income | | Capital | | Deficit | | Equity | | | | (In thousands, except share data) | BALANCE, as of December 31, 2020 (As Restated) | | $ | — | | $ | 4 | | $ | 3 | | $ | 3 | | $ | 38 | | $ | 47,755 | | $ | 990,528 | | $ | (807,108) | | $ | 231,223 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net income, as restated | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 36,791 | | | 36,791 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Stock-based compensation expense | | | — | | | — | | | — | | | — | | | — | | | — | | | 565 | | | — | | | 565 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Issuance of 3,779,391 shares of Class A common stock | | | — | | | 4 | | | — | | | — | | | — | | | — | | | 33,273 | | | — | | | 33,277 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Repurchase of 521,877 shares of Class D common stock | | | — | | | — | | | — | | | — | | | (1) | | | — | | | (969) | | | — | | | (970) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Exercise of options for 229,756 shares of Class D common stock | | | — | | | — | | | — | | | — | | | — | | | — | | | 397 | | | — | | | 397 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Conversion of 883,890 shares of Class C common stock to 883,890 shares of Class A common stock | | | — | | | 1 | | | — | | | (1) | | | — | | | — | | | — | | | — | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Other comprehensive income, net of tax, as restated | | | — | | | — | | | — | | | — | | | — | | | 7,195 | | | — | | | — | | | 7,195 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Adjustment of redeemable noncontrolling interests to estimated redemption value, as restated | | | — | | | — | | | — | | | — | | | — | | | — | | | (4,798) | | | — | | | (4,798) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | BALANCE, as of December 31, 2021 (As Restated) | | $ | — | | $ | 9 | | $ | 3 | | $ | 2 | | $ | 37 | | $ | 54,950 | | $ | 1,018,996 | | $ | (770,317) | | $ | 303,680 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net income | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 37,329 | | | 37,329 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Stock-based compensation expense | | | — | | | 1 | | | — | | | — | | | 1 | | | — | | | 6,593 | | | — | | | 6,595 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Repurchase of 5,124,671 shares of Class D common stock | | | — | | | — | | | — | | | — | | | (4) | | | — | | | (26,539) | | | — | | | (26,543) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Exercise of options for 60,240 shares of Class D common stock | | | — | | | — | | | — | | | — | | | — | | | — | | | 50 | | | — | | | 50 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Other comprehensive income, net of tax | | | — | | | — | | | — | | | — | | | — | | | 18,277 | | | — | | | — | | | 18,277 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Adjustment of redeemable noncontrolling interests to estimated redemption value | | | — | | | — | | | — | | | — | | | — | | | — | | | (5,616) | | | — | | | (5,616) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | BALANCE, as of December 31, 2022 | | $ | — | | $ | 10 | | $ | 3 | | $ | 2 | | $ | 34 | | $ | 73,227 | | $ | 993,484 | | $ | (732,988) | | $ | 333,772 |
The accompanying notes are an integral part of these consolidated financial statements. URBAN ONE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS | | | For the Years Ended
December 31, | | | | | 2020 | | | 2019 | | | | | (In thousands) | | | CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | | | | | | | | | | | | | | | | Consolidated net (loss) income | | $ | (6,569) | | | $ | 2,057 | | | | | | | | | | | | | Adjustments to reconcile consolidated net (loss) income to net cash from operating activities: | | | | | | | | | | Depreciation and amortization | | | 9,741 | | | | 16,985 | | | Amortization of debt financing costs | | | 4,465 | | | | 3,895 | | | Amortization of content assets | | | 37,394 | | | | 48,283 | | | Amortization of launch assets | | | 1,079 | | | | 1,027 | | | Amortization of right of use assets | | | 7,940 | | | | 6,991 | | | Bad debt expense | | | 1,394 | | | | 1,370 | | | Deferred income taxes | | | (34,601 | ) | | | 10,269 | | | Non-cash interest expense | | | 2,191 | | | | 2,033 | | | Non-cash lease liability expense | | | 5,492 | | | | 5,682 | | | Impairment of long-lived assets | | | 84,400 | | | | 10,600 | | | Stock-based compensation | | | 2,294 | | | | 4,784 | | | Non-cash fair value adjustment of Employment Agreement Award | | | 2,271 | | | | 4,948 | | | | | | | | | | | | | Effect of change in operating assets and liabilities, net of assets acquired and disposed of: | | | | | | | | | | Trade accounts receivable | | | (1,542 | ) | | | 2,836 | | | Prepaid expenses and other current assets | | | (255 | ) | | | (4,280 | ) | | Other assets | | | (9,846 | ) | | | (5,695 | ) | | Accounts payable | | | 5,216 | | | | (1,412 | ) | | Accrued interest | | | (1,077 | ) | | | 2,207 | | | Accrued compensation and related benefits | | | 1,399 | | | | (4,130 | ) | | Other liabilities | | | (5,378 | ) | | | (4,495 | ) | | Payments for content assets | | | (32,141 | ) | | | (45,450 | ) | | Net cash flows provided by operating activities | | | 73,867 | | | | 58,505 | | | CASH FLOWS FROM INVESTING ACTIVITIES: | | | | | | | | | | Purchases of property and equipment | | | (3,798 | ) | | | (5,145 | ) | | Proceeds from sale of radio station | | | — | | | | 13,500 | | | Proceeds from sale of property and equipment | | | 860 | | | | — | | | Acquisition of broadcasting assets | | | (475 | ) | | | — | | | Net cash flows (used in) provided by investing activities | | | (3,413 | ) | | | 8,355 | | | CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | | | | | Proceeds from issuance of Class A common stock, net of fees | | | 14,673 | | | | — | | | Proceeds from MGM National Harbor Loan | | | 3,600 | | | | — | | | Repayment of Comcast Note | | | — | | | | (11,872 | ) | | Distribution of contingent consideration | | | — | | | | (658 | ) | | Proceeds from exercise of stock options | | | 1,976 | | | | 29 | | | Repayment of 2020 Notes | | | — | | | | (2,037 | ) | | Payment of dividends to noncontrolling interest members of Reach Media | | | (2,802 | ) | | | (1,000 | ) | | Debt refinancing costs | | | (3,470 | ) | | | — | | | Repayment of 2018 Credit Facility | | | (37,210 | ) | | | (24,854 | ) | | Repayment of 2017 Credit Facility | | | (3,297 | ) | | | (3,297 | ) | | Repurchase of common stock | | | (3,612 | ) | | | (5,515 | ) | | Net cash flows used in financing activities | | | (30,142 | ) | | | (49,204 | ) | | INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | | | 40,312 | | | | 17,656 | | | CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of year | | | 33,546 | | | | 15,890 | | | CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of year | | $ | 73,858 | | | $ | 33,546 | | | | | | | | | | | | | SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | | | | | | | | | | Cash paid for: | | | | | | | | | | Interest | | $ | 68,927 | | | $ | 73,255 | | | Income taxes, net of refunds | | $ | 115 | | | $ | 136 | | | | | | | | | | | | | NON-CASH OPERATING, FINANCING AND INVESTING ACTIVITIES: | | | | | | | | | | Right of use asset additions upon adoption of ASC 842 | | $ | — | | | $ | 49,803 | | | Lease liability additions upon adoption of ASC 842 | | $ | — | | | $ | 54,113 | | | Right of use asset and lease liability additions | | $ | 6,660 | | | $ | 1,300 | | | Issuance of common stock | | $ | — | | | $ | 2,108 | |
| | | | | | | | | Years Ended | | | December 31, | | | 2022 | | 2021 | | | | | | (As Restated) | | | (In thousands) | CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | | | Net income | | $ | 39,955 | | $ | 39,106 | | | | | | | | Adjustments to reconcile net income to net cash from operating activities: | | | | | | | Depreciation and amortization | | | 10,034 | | | 9,289 | Amortization of debt financing costs | | | 1,989 | | | 2,267 | Amortization of content assets | | | 43,533 | | | 47,126 | Amortization of launch assets | | | 4,380 | | | 1,600 | Bad debt expense | | | 1,425 | | | 1,584 | Deferred income taxes | | | 14,878 | | | 11,971 | Reduction in the carrying amount of right of use assets | | | 8,716 | | | 7,793 | Non-cash interest expense | | | — | | | 158 | Impairment of goodwill and broadcasting licenses | | | 40,683 | | | 2,104 | Stock-based compensation | | | 6,595 | | | 565 | Non-cash fair value adjustment of Employment Agreement Award | | | 2,129 | | | 6,163 | Non-cash income on PPP loan forgiveness | | | (7,575) | | | — | (Gain) loss on retirement of debt | | | (6,718) | | | 6,949 | Gain on asset exchange agreement | | | — | | | 404 | | | | | | | | Effect of change in operating assets and liabilities, net of assets acquired: | | | | | | | Trade accounts receivable | | | (16,930) | | | (22,807) | Prepaid expenses and other current assets | | | (6,691) | | | 6,651 | Other assets | | | 1,022 | | | (13,745) | Accounts payable | | | 1,111 | | | 3,606 | Accrued interest | | | (2,347) | | | 17,441 | Accrued compensation and related benefits | | | 6,461 | | | (1,342) | Other liabilities | | | (3,710) | | | (1,288) | Payment of launch support | | | (9,250) | | | — | Changes in content assets | | | (62,630) | | | (45,445) | Net cash flows provided by operating activities | | | 67,060 | | | 80,150 | CASH FLOWS FROM INVESTING ACTIVITIES: | | | | | | | Purchases of property and equipment | | | (6,763) | | | (6,286) | Proceeds from sale of broadcasting assets | | | 3,080 | | | 8,000 | Acquisition of broadcasting assets | | | (25,000) | | | — | Net cash flows (used in) provided by investing activities | | | (28,683) | | | 1,714 | CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | | Repayment of 2017 credit facility | | | — | | | (317,332) | Proceeds from issuance of Class A common stock, net of fees | | | — | | | 33,277 | Repayment of 2018 credit facility | | | — | | | (129,935) | Proceeds from exercise of stock options | | | 50 | | | 397 | Repurchase of 2028 Notes | | | (67,124) | | | — | Payment of dividends to noncontrolling interest members of Reach Media | | | (1,599) | | | (2,400) | Repurchase of common stock | | | (26,543) | | | (970) | Proceeds from 2028 Notes | | | — | | | 825,000 | Proceeds from PPP Loan | | | — | | | 7,505 | Debt refinancing costs | | | — | | | (11,157) | Repayment of MGM National Harbor Loan | | | — | | | (57,889) | Repayment of 7.375% Notes | | | — | | | (2,984) | Repayment of 8.75% Notes | | | — | | | (347,016) | Net cash flows used in financing activities | | | (95,216) | | | (3,504) | (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | | | (56,839) | | | 78,360 | CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period | | | 152,218 | | | 73,858 | CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period | | $ | 95,379 | | $ | 152,218 | | | | | | | | SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | | | | | | | Cash paid for: | | | | | | | Interest | | $ | 62,039 | | $ | 45,836 | Income taxes, net of refunds | | $ | 2,089 | | $ | 1,142 | | | | | | | | NON-CASH OPERATING, FINANCING AND INVESTING ACTIVITIES: | | | | | | | Assets acquired under Audacy asset exchange | | $ | — | | $ | 28,193 | Liabilities recognized under asset exchange/asset acquisition | | $ | 1,240 | | $ | 2,669 | Right of use asset and lease liability additions | | $ | 3,876 | | $ | 6,392 | Right of use asset and lease liability terminations | | $ | 2,418 | | $ | — | Non-cash launch additions | | $ | 9,500 | | $ | — | Non-cash content asset additions | | $ | 15,246 | | $ | — | Adjustment of redeemable noncontrolling interests to estimated redemption value | | $ | 5,616 | | $ | 4,798 |
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The accompanying notes are an integral part of these consolidated financial statements. URBAN ONE, INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS December 31, 20202022 and 2019 2021 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (a) Organization
ORGANIZATION: Urban One, Inc., a Delaware corporation, and its subsidiaries, (collectively, “Urban One,” the “Company”, “we”, “our” and/or “us”) is an urban-oriented, multi-media company that primarily targets African-American and urban consumers. Our core business is our radio broadcasting franchise which is the largest radio broadcasting operation that primarily targets African-American and urban listeners. As of December 31, 2020,2022, we owned and/or operated 6366 independently formatted, revenue producing broadcast stations (including 5455 FM or AM stations, 79 HD stations, and the 2 low power television stations we operate), located in 13 of the most populous African-American markets in the United States. While a core source of our revenue has historically been and remains the sale of local and national advertising for broadcast on our radio stations, our strategy is to operate the premier multi-media entertainment and information content providerplatform targeting African-American and urban consumers. Thus, we have diversified our revenue streams by making acquisitions and investments in other complementary media properties. Our diverse media and entertainment interests include TV One, LLC (“TV One”), an African-American targetedwhich operates two cable television network;networks targeting African-American and urban viewers, TV One and CLEO TV; our 80.0% ownership interest in Reach Media, Inc. (“Reach Media”) which operates the Rickey Smiley Morning Show and our other syndicated programming assets, including the Get Up! Mornings with Erica Campbell Show, Russ Parr Morning Show and the DL Hughley Show; and Interactive One, LLC (“Interactive One”), our wholly owned digital platform serving the African-American community through social content, news, information, and entertainment websites, including its iONE Digital, Cassius and Bossip, HipHopWired and MadameNoire digital platforms and brands. We also holdAs of December 31, 2022, we held a minority ownership interest in MGM National Harbor (the “MGM Investment”), a gaming resort located in Prince George’s County, Maryland. As of March 2023, following the exercise of a put option available to us, we no longer hold the MGM Investment, please refer to Note 18 – Subsequent Events to our consolidated financial statements for more details. Through our national multi-media operations, we provide advertisers with a unique and powerful delivery mechanism to thecommunicate with African-American and urban audiences. On January 19, 2019, the Company launched CLEO TV, a lifestyle and entertainment network targeting Millennial and Gen X women of color. CLEO TV offers quality content that defies negative and cultural stereotypes of today’s modern women. The results of CLEO TV’s operations will be reflected in the Company’s cable television segment.
Our core radio broadcasting franchise operates under the brand “Radio One.” We also operate our other brands, such as TV One, CLEO TV, Reach Media, iONE Digital and Interactive One Solution, while developing additional branding reflective of our diverse media operations and our targeting ourof African-American and urban audiences. As part of our consolidated financial statements, consistent with our financial reporting structure and how the Company currently manages its businesses, we have provided selected financial information on the Company’s four reportable segments: (i) radio broadcasting; (ii) Reach Media; (iii) digital; and (iv) cable television. (See Note 1516 – Segment Information.Information of our consolidated financial statements.) (b) Basis of Presentation
The consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and require management to make certain estimates and assumptions. These estimates and assumptions may affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements. The Company bases these estimates on historical experience, current economic environment or various other assumptions that are believed to be reasonable under the circumstances. However, continuing economic uncertainty and any disruption in financial markets increase the possibility that actual results may differ from these estimates.
(c) Principles of Consolidation
The consolidated financial statements include the accounts and operations of Urban One and subsidiaries in which Urban One has a controlling financial interest, which is generally determined when the Company holds a majority voting interest. All significant intercompany accounts and transactions have been eliminated in consolidation. Noncontrolling interests have been recognized where a controlling interest exists, but the Company owns less than 100% of the controlled entity. 2. RESTATEMENT OF FINANCIAL STATEMENTS: In connection with the preparation of the consolidated financial statements for the year ended December 31, 2022, the Company re-evaluated its accounting for the valuation of the MGM Investment and determined that adjustments are required to its previously issued financial statements as of December 31, 2021 and the interim periods ended March 31, June 30, and September 30, 2022 and 2021 (collectively, the “Affected Periods”) due to understatements in the value of the MGM Investment, and related tax effects. In accordance with accounting guidance presented in ASC 250-10, SEC Staff Accounting Bulletin No. 99, “Materiality”, and SAB No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements” for the purpose of a materiality assessment, management assessed the materiality of the error and concluded that it was material to the Company’s financial statements included in the Company’s annual report on Form 10-K and quarterly reports on Form 10-Q covering the Affected Periods. In addition to the adjustments related to the MGM Investment, the Company included corrections for misstatements that were deemed immaterial to any period presented in our previously issued financial statements. These misstatements are related to radio broadcasting license impairment, right of use assets, fair value of the Reach Media redeemable noncontrolling interest, amortization of certain launch assets, misclassifications of certain balance sheet items, and any related tax effects. The Company also corrected certain line items within the statements of cash flows and certain disclosures relating to deferred tax assets and content assets for errors identified. Accordingly, the Company has restated herein its audited financial statements as of and for the year ended December 31, 2021. The Company has also restated its unaudited quarterly financial statements as of and for all quarters in the year ended December 31, 2021 and as of and for the quarters ended March 31, June 30, and September 30, 2022 in Note 17 to the consolidated financial statements. Restatement Background MGM Investment Prior to and as of the period ended September 30, 2022, the Company accounted for its investment in MGM National Harbor at cost less impairment under ASC 321, “(d)Investments – Equity Securities” (“ASC 321”) and included the amortized cost of the MGM investment in other assets on the consolidated balance sheets. Distribution income associated with the investment was recorded in other income on the consolidated statements of operations. In connection with the preparation of its financial statements for the year ended December 31, 2022, the Company identified that the MGM Investment should have been classified as an available-for-sale (“AFS”) debt security in a separate financial line item in the Company’s consolidated balance sheets through December 31, 2022 and measured at fair value in accordance with ASC 320, “Investments – Debt Securities” (“ASC 320”) with unrealized gains and losses included in other comprehensive income (“OCI”), within accumulated other comprehensive income (“AOCI”). As a result, the Company has made corrections to record opening adjustments, unrealized gains and losses, and associated tax impacts and classify financial line items appropriately for the Affected Periods. The correction of this misstatement resulted in approximately $112.6 million being recorded to debt security – available-for-sale, a decrease to other assets of $40.0 million, an increase to deferred tax liabilities, net of approximately $17.6 million, an increase to accumulated other comprehensive income of approximately $55.0 million, and a decrease to accumulated deficit of less than $100,000in the consolidated balance sheet as of December 31, 2021. An amount of approximately $7.2 million was recorded as an unrealized gain on available-for-sale securities, net of tax in the consolidated statement of comprehensive income for the year ended December 31, 2021. The Company recorded an opening balance adjustment of approximately $47.8 million within AOCI in the December 31, 2021 consolidated statement of changes in stockholders’ equity. This correction did not have a material impact on the consolidated statement of operations and consolidated statement of cash flows for the year ended December 31, 2021. Other Adjustments Radio Broadcast License Impairment During the impairment assessment in the second quarter of 2022, the Company became aware that a specific assumption used to estimate total market revenues in the valuation of the Houston and Dallas assets for the three years ended December 31, 2019, 2020, and 2021 was incorrect and resulted in overstatements of the fair value of the radio broadcasting licenses by approximately $1.1 million, $2.8 million, and $2.1 million as of December 31, 2019, March 31, 2020, and December 31, 2021, respectively, and understated by approximately $2.3 million as of September 30, 2020. Accordingly, the Company recorded an out-of-period non-cash impairment charge of approximately $3.7 million during the three months ended June 30, 2022 as the Company determined that the errors were not material to any previous period and that correcting the errors in the three-month and six-month periods ended June 30, 2022 would not materially misstate net revenue or pre-tax income for the full year, as of and for the period ended December 31, 2022, or the earnings trend and therefore could be corrected in the period ending June 30, 2022. Additionally, during the preparation of the financial statements for the year ended December 31, 2022, the Company identified that certain assumptions used in the valuation of the Atlanta, Dallas, Houston, Raleigh, and Richmond assets for the quarters ended June 30 and September 30, 2022 were incorrect and resulted in overstatements of the fair value of the radio broadcasting licenses by approximately $1.7 million and $1.0 million, respectively. The Company, in the process of rectifying the material MGM Investment error identified above, determined it was necessary to accurately reflect the out-of-period non-cash impairment charge of approximately $3.7 million across all Affected Periods and to record the non-cash impairment charges of approximately $1.7 million and $1.0 million for the second and third quarters of 2022, respectively. Consequently, the Company made the following adjustments: a reversal of the $3.7 million impairment charge recorded in the second quarter of 2022, an opening balance sheet adjustment of a $1.6 million non-cash impairment charge for 2019 and 2020 during the first quarter of 2021, a $2.1 million impairment charge in the fourth quarter of 2021, and approximately $1.7 million and $1.0 million of impairment charges during the second and third quarters of 2022. Additionally, the Company included the associated tax implications of these adjustments. The correction of this misstatement resulted in a decrease to radio broadcasting licenses of $3.7 million, an increase to deferred tax assets, net of $905,000, and an increase to accumulated deficit of $2.8 million in the consolidated balance sheet as of December 31, 2021. Impairment of long-lived assets increased by $2.1 million and provision for income taxes decreased by $510,000 in the consolidated statement of operations for the year ended December 31, 2021. Comprehensive income in the consolidated statements of comprehensive income for the year ended December 31, 2021, decreased by $1.6 million. The Company recorded an opening balance adjustment of $1.2 million and an adjustment of $1.6 million to reduce consolidated net income within accumulated deficit in the December 31, 2021 consolidated statement of changes in stockholders’ equity. While in the consolidated statement of cash flows for the year ended December 31, 2021, this correction reduced consolidated net income by $1.6 million, reduced deferred income taxes by $510,000, and increased impairment of long-lived assets by $2.1 million, it had no impact on total net cash flows (used in) provided by operating, investing, or financing activities. Right of Use Assets During the adoption of ASC 842, “Leases” (“ASC 842”)in 2019, the Company discovered that approximately $1.3 million of deferred rent balances were not correctly accounted for, and as such, this resulted in an overstatement of right of use (“ROU”) assets for the same amount. The Company determined that the errors were not material and not correcting the errors would not materially misstate net revenue, pre-tax income, or the earnings trend in any previous or future periods. The Company, in the process of rectifying the material MGM Investment error identified above, determined it was necessary to correct these errors. Consequently, the Company has made corrections to record an opening balance sheet adjustment and associated tax impacts for the Affected Periods. The correction of this misstatement resulted in a decrease to ROU assets of approximately $1.3 million, a decrease to deferred tax assets, net of approximately $308,000, and an increase to accumulated deficit of $960,000 in the consolidated balance sheet as of December 31, 2021. The opening balance within accumulated deficit in the December 31, 2021 consolidated statement of changes in stockholders’ equity was increased by $960,000. This correction did not impact the consolidated statement of operations, consolidated statement of comprehensive income, and consolidated statement of cash flows for the year ended December 31, 2021. Reach Media Redeemable Noncontrolling Interest The redeemable noncontrolling interest is measured at fair value using a discounted cash flow methodology, adjusted for excess available working capital. In connection with the preparation of its financial statements for the year ended December 31, 2022, the Company identified an error in its calculation of excess working capital which understated the value of the redeemable noncontrolling interest. As a result, the Company determined it was necessary to correct the error and recorded opening adjustments to the redeemable noncontrolling interests and additional paid-in capital (“APIC”) for the Affected Periods. The correction of this misstatement resulted in an increase to redeemable noncontrolling interest and a decrease to additional paid-in capital of approximately $1.6 million in the consolidated balance sheet as of December 31, 2021. The Company recorded $399,000 to increase the adjustment of redeemable noncontrolling interests to estimated redemption value and recorded an opening balance adjustment of approximately $1.2 million within APIC in the December 31, 2021 consolidated statement of changes in stockholders’ equity. This correction did not impact the consolidated statement of operations, consolidated statement of comprehensive income, and consolidated statement of cash flows for the year ended December 31, 2021. Launch Assets The cable television segment has entered into certain affiliate agreements requiring various payments for launch support, which are used to initiate carriage under affiliation agreements and are amortized over the term of the respective contracts. The Company has historically recorded amortization associated with certain launch assets within selling, general and administrative expense in the consolidated statements of operations. In connection with the preparation of its financial statements for the year ended December 31, 2022, the Company determined that this amortization should have been recorded as a reduction to revenue. As a result, the Company has reclassified the amortization to reduce selling, general and administrative expense and net revenue in the consolidated statements of operations for the Affected Periods. The correction of this misstatement decreased both net revenue and selling, general and administrative expense by approximately $1.2 million in the December 31, 2021 consolidated statement of operations. This correction did not impact any other consolidated financial statements as of and for the year ended December 31, 2021. Balance Sheet Misclassifications The Company recorded adjustments to recognize certain balance sheet misclassifications for the Affected Periods. These adjustments primarily related to the classification of other current assets, other assets, other intangible assets, net, right of use assets, trade accounts receivable, net, other current liabilities, and accounts payable. Disclosure Exceptions In reconciling the income tax provision to actual tax returns filed, the Company identified that the 2021 estimate of nondeductible interest expense was calculated incorrectly. This error resulted in a disclosure exception within the Income Taxes footnote with net operating loss carryforwards overstated and interest expense carryforward understated, both by approximately $4.9 million. The disclosure exception did not have any impact on the consolidated financial statements for any of the prior periods. The Company, in the process of rectifying the material MGM Investment error identified above, determined it was necessary to correct the disclosure exception by revising the balances for net operating loss carryforwards and interest expense carryforward as of December 31, 2021 as disclosed within the Income Taxes footnote in these consolidated financial statements. During the fourth quarter of 2022, the Company identified certain fully amortized content assets that were no longer in service. Accordingly, balances associated with these fully amortized assets have been adjusted in the presentation of content assets in the Company’s footnote disclosures as of December 31, 2021. Specifically, the Company has reflected a reduction to ‘Completed’ content assets of approximately $279.3 million, a reduction to ‘Acquired Licensed’ content assets of approximately $4.6 million, and a decrease to accumulated amortization of approximately $283.9 million as of December 31, 2021. In addition, the Company recorded an adjustment of $837,000 from ‘Completed’ content assets to ‘In-Production’ content assets. This correction did not impact total net content assets disclosed within the footnote and included in the consolidated financial statements as of and for the year ended December 31, 2021. Statements of Cash Flows Prior to and as of the period ended September 30, 2022, the Company presented non-cash lease liability expense as an adjustment to net income within the consolidated statements of cash flows. During the fourth quarter of 2022, the Company identified that the non-cash lease liability expense should have been presented as a change in other liabilities and determined that it was necessary to correct the error for the Affected Periods. The correction of this misstatement resulted in a reduction to non-cash lease liability expense and an increase to other liabilities by approximately $4.7 million in the consolidated statement of cash flows as of December 31, 2021. This correction had no impact on total net cash flows (used in) provided by operating, investing, or financing activities or any other consolidated financial statements as of and for the year ended December 31, 2021. Description of Restatement Tables The following tables reflect the impact of the restatement to the specific line items presented in the Company’s consolidated balance sheets, consolidated statements of operations, consolidated statements of comprehensive income, consolidated statements of changes in stockholders’ equity, and consolidated statements of cash flows as of and for the year ended December 31, 2021. The previously reported amounts were derived from the Company's Original Filing. These amounts are labeled “As Previously Reported” in the tables below. The column labeled “Adjustments” represents the impact of the correction of the MGM Investment. The column labeled “Other Adjustments” represents the combined effects of the corrections of the misstatements relating to radio broadcasting license impairment, right of use assets, fair value of the Reach Media redeemable noncontrolling interest, amortization of certain launch assets, misclassifications of certain line items in the balance sheets and statements of cash flows, and any related tax effects, as described above, that were deemed immaterial to any period presented in our previously issued financial statements. Consolidated Balance Sheets | | | | | | | | | | | | | | | As of December 31, 2021 | | | As Previously | | | | | | | | | | | | Reported | | Adjustments | | Other Adjustments | | As Restated | | | | (In thousands) | ASSETS | | | | | | | | | | | | | CURRENT ASSETS: | | | | | | | | | | | | | Trade accounts receivable, net of allowance for doubtful accounts of $8,743 | | $ | 127,446 | | $ | — | | $ | 313 | | $ | 127,759 | Other current assets | | | 4,760 | | | — | | | (1,263) | | | 3,497 | Total current assets | | | 313,274 | | | — | | | (950) | | | 312,324 | RIGHT OF USE ASSETS | | | 38,044 | | | — | | | (88) | | | 37,956 | RADIO BROADCASTING LICENSES | | | 505,148 | | | — | | | (3,728) | | | 501,420 | OTHER INTANGIBLE ASSETS, net | | | 50,159 | | | — | | | (2,238) | | | 47,921 | DEBT SECURITIES - available-for-sale, at fair value; amortized cost of $40,000 | | | — | | | 112,600 | | | — | | | 112,600 | OTHER ASSETS | | | 44,635 | | | (40,000) | | | 2,321 | | | 6,956 | Total assets | | $ | 1,261,108 | | $ | 72,600 | | $ | (4,683) | | $ | 1,329,025 | LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND STOCKHOLDERS’ EQUITY | | | | | | | | | | | | | CURRENT LIABILITIES: | | | | | | | | | | | | | Accounts payable | | $ | 14,588 | | $ | — | | $ | 2,304 | | $ | 16,892 | Other current liabilities | | | 26,421 | | | — | | | (1,991) | | | 24,430 | Total current liabilities | | | 106,471 | | | — | | | 313 | | | 106,784 | DEFERRED TAX LIABILITIES, net | | | 2,473 | | | 17,617 | | | (1,213) | | | 18,877 | Total liabilities | | | 989,973 | | | 17,617 | | | (900) | | | 1,006,690 | REDEEMABLE NONCONTROLLING INTERESTS | | | 17,015 | | | — | | | 1,640 | | | 18,655 | STOCKHOLDERS’ EQUITY: | | | | | | | | | | | | | Accumulated other comprehensive income | | | — | | | 54,950 | | | — | | | 54,950 | Additional paid-in capital | | | 1,020,636 | | | — | | | (1,640) | | | 1,018,996 | Accumulated deficit | | | (766,567) | | | 33 | | | (3,783) | | | (770,317) | Total stockholders’ equity | | | 254,120 | | | 54,983 | | | (5,423) | | | 303,680 | Total liabilities, redeemable noncontrolling interests and stockholders’ equity | | $ | 1,261,108 | | $ | 72,600 | | $ | (4,683) | | $ | 1,329,025 |
Consolidated Statements of Operations | | | | | | | | | | | | | | | Year Ended December 31, 2021 | | | As Previously | | | | | Other | | | | | | Reported | | Adjustments | | Adjustments | | As Restated | | | | (In thousands, except share data) | NET REVENUE | | $ | 441,462 | | $ | — | | $ | (1,177) | | $ | 440,285 | OPERATING EXPENSES: | | | | | | | | | | | | | Selling, general and administrative, including stock-based compensation of $31 | | | 143,187 | | | — | | | (1,177) | | | 142,010 | Impairment of long-lived assets | | | — | | | — | | | 2,104 | | | 2,104 | Total operating expenses | | | 322,919 | | | — | | | 927 | | | 323,846 | Operating income (loss) | | | 118,543 | | | — | | | (2,104) | | | 116,439 | Income (loss) before provision for (benefit from) income taxes and noncontrolling interests in income of subsidiaries | | | 54,244 | | | — | | | (2,104) | | | 52,140 | PROVISION FOR (BENEFIT FROM) INCOME TAXES | | | 13,577 | | | (33) | | | (510) | | | 13,034 | NET INCOME (LOSS) | | | 40,667 | | | 33 | | | (1,594) | | | 39,106 | NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS | | $ | 38,352 | | $ | 33 | | $ | (1,594) | | $ | 36,791 | BASIC NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS | | | | | | | | | | | | | Net income (loss) attributable to common stockholders | | $ | 0.76 | | $ | — | | $ | (0.03) | | $ | 0.73 | DILUTED NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS | | | | | | | | | | | | | Net income (loss) attributable to common stockholders | | $ | 0.71 | | $ | — | | $ | (0.03) | | $ | 0.68 | | | | | | | | | | | | | |
Consolidated Statements of Comprehensive Income | | | | | | | | | | | | | | | Year Ended December 31, 2021 | | | As Previously | | | | | Other | | | | | | Reported | | Adjustments | | Adjustments | | As Restated | | | | (In thousands) | OTHER COMPREHENSIVE INCOME, BEFORE TAX: | | | | | | | | | | | | | Unrealized gain on available-for-sale securities | | $ | — | | $ | 9,500 | | $ | — | | $ | 9,500 | Income tax expense related to unrealized gain on available-for-sale securities | | | — | | | (2,305) | | | — | | | (2,305) | OTHER COMPREHENSIVE INCOME, NET OF TAX | | | — | | | 7,195 | | | — | | | 7,195 | COMPREHENSIVE INCOME (LOSS) | | $ | 40,667 | | $ | 7,228 | | $ | (1,594) | | $ | 46,301 | COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS | | $ | 38,352 | | $ | 7,228 | | $ | (1,594) | | $ | 43,986 |
Consolidated Statements of Changes in Stockholders’ Equity | | | | | | | | | | | | | | | | | | | | | As Previously Reported | | | | | | | | | | | | | Accumulated | | | | | | | | | Convertible | | Common | | Common | | Common | | Common | | Other | | Additional | | | | Total | | | Preferred | | Stock | | Stock | | Stock | | Stock | | Comprehensive | | Paid-In | | Accumulated | | Stockholders’ | For the year ended December 31, 2021 | | Stock | | Class A | | Class B | | Class C | | Class D | | Income | | Capital | | Deficit | | Equity | BALANCE, as of December 31, 2020 | $ | — | $ | 4 | $ | 3 | $ | 3 | $ | 38 | $ | — | $ | 991,769 | $ | (804,919) | $ | 186,898 | Net income | | — | | — | | — | | — | | — | | — | | — | | 38,352 | | 38,352 | Stock-based compensation expense | | — | | — | | — | | — | | — | | — | | 565 | | — | | 565 | Repurchase of 521,877 shares of Class D common stock | | — | | — | | — | | — | | (1) | | — | | (969) | | — | | (970) | Issuance of 3,779,391 shares of Class A common stock | | — | | 4 | | — | | — | | — | | — | | 33,273 | | — | | 33,277 | Exercise of options for 229,756 shares of Class D common stock | | — | | — | | — | | — | | — | | — | | 397 | | — | | 397 | Conversion of 883,890 shares of Class C common stock to 883,890 shares of Class A common stock | | — | | 1 | | — | | (1) | | — | | — | | — | | — | | — | Adjustment of redeemable noncontrolling interests to estimated redemption value | | — | | — | | — | | — | | — | | — | | (4,399) | | — | | (4,399) | BALANCE, as of December 31, 2021 | $ | — | $ | 9 | $ | 3 | $ | 2 | $ | 37 | $ | — | $ | 1,020,636 | $ | (766,567) | $ | 254,120 |
| | | | | | | | | | | | | | | | | | | | | Adjustments and Other Adjustments | | | | | | | | | | | | | Accumulated | | | | | | | | | Convertible | | Common | | Common | | Common | | Common | | Other | | Additional | | | | Total | | | Preferred | | Stock | | Stock | | Stock | | Stock | | Comprehensive | | Paid-In | | Accumulated | | Stockholders’ | For the year ended December 31, 2021 | | Stock | | Class A | | Class B | | Class C | | Class D | | Income | | Capital | | Deficit | | Equity | BALANCE, as of December 31, 2020 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 47,755 | $ | (1,241) | $ | (2,189) | $ | 44,325 | Net income | | — | | — | | — | | — | | — | | — | | — | | (1,561) | | (1,561) | Adjustment of redeemable noncontrolling interests to estimated redemption value | | — | | — | | — | | — | | — | | — | | (399) | | — | | (399) | Other comprehensive income, net of tax | | — | | — | | — | | — | | — | | 7,195 | | — | | — | | 7,195 | Total Adjustments | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 54,950 | $ | (1,640) | $ | (3,750) | $ | 49,560 |
| | | | | | | | | | | | | | | | | | | | | As Restated | | | | | | | | | | | | | Accumulated | | | | | | | | | Convertible | | Common | | Common | | Common | | Common | | Other | | Additional | | | | Total | | | Preferred | | Stock | | Stock | | Stock | | Stock | | Comprehensive | | Paid-In | | Accumulated | | Stockholders’ | For the year ended December 31, 2021 | | Stock | | Class A | | Class B | | Class C | | Class D | | Income | | Capital | | Deficit | | Equity | BALANCE, as of December 31, 2020 | $ | — | $ | 4 | $ | 3 | $ | 3 | $ | 38 | $ | 47,755 | $ | 990,528 | $ | (807,108) | $ | 231,223 | Net income | | — | | — | | — | | — | | — | | — | | — | | 36,791 | | 36,791 | Stock-based compensation expense | | — | | — | | — | | — | | — | | — | | 565 | | — | | 565 | Repurchase of 521,877 shares of Class D common stock | | — | | — | | — | | — | | (1) | | — | | (969) | | — | | (970) | Issuance of 3,779,391 shares of Class A common stock | | — | | 4 | | — | | — | | — | | — | | 33,273 | | — | | 33,277 | Exercise of options for 229,756 shares of Class D common stock | | — | | — | | — | | — | | — | | — | | 397 | | — | | 397 | Conversion of 883,890 shares of Class C common stock to 883,890 shares of Class A common stock | | — | | 1 | | — | | (1) | | — | | — | | — | | — | | — | Adjustment of redeemable noncontrolling interests to estimated redemption value | | — | | — | | — | | — | | — | | — | | (4,798) | | — | | (4,798) | Other comprehensive income, net of tax | | | | — | | — | | — | | — | | 7,195 | | — | | — | | 7,195 | BALANCE, as of December 31, 2021 | $ | — | $ | 9 | $ | 3 | $ | 2 | $ | 37 | $ | 54,950 | $ | 1,018,996 | $ | (770,317) | $ | 303,680 |
Consolidated Statements of Cash Flows | | | | | | | | | | | | | | | Year Ended December 31, 2021 | | | As | | | | | | | | | | | | Previously | | | | | Other | | As | | | Reported | | Adjustments | | Adjustments | | Restated | | | | (In thousands) | CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | | | | | | | | | Net income (loss) | | $ | 40,667 | | $ | 33 | | $ | (1,594) | | $ | 39,106 | Adjustments to reconcile net income (loss) to net cash from operating activities: | | | | | | | | | | | | | Deferred income taxes | | | 12,514 | | | (33) | | | (510) | | | 11,971 | Non-cash lease liability expense | | | 4,684 | | | — | | | (4,684) | | | — | Impairment of goodwill and broadcasting licenses | | | — | | | — | | | 2,104 | | | 2,104 | Effect of change in operating assets and liabilities, net of assets acquired: | | | | | | | | | | | | | Trade accounts receivable | | | (22,734) | | | — | | | (73) | | | (22,807) | Accounts payable | | | 3,453 | | | — | | | 153 | | | 3,606 | Other liabilities | | | (5,892) | | | — | | | 4,604 | | | (1,288) | Net cash flows provided by operating activities | | | 80,150 | | | — | | | — | | | 80,150 | NON-CASH OPERATING, FINANCING AND INVESTING ACTIVITIES: | | | | | | | | | | | | | Adjustment of redeemable noncontrolling interests to estimated redemption value | | $ | 4,399 | | $ | — | | $ | 399 | | $ | 4,798 |
The remainder of the notes to the Company’s financial statements have been updated and restated, as applicable, to reflect the impacts of the restatement described above. 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (a) Cash and Cash Equivalents and Restricted Cash Cash and cash equivalents consist of cash and money market funds at various commercial banks that have original maturities of 90 days or less. Investments with contractual maturities of 90 days or less from the date of original purchase are classified as cash and cash equivalents. For cash and cash equivalents, cost approximates fair value. The Company’s cash and cash equivalents are insured by the Federal Deposit Insurance Corporation. The Company has amounts held with banks that may exceed the amount of insurance provided on such accounts. Generally, the balances may be redeemed upon demand and are maintained with financial institutions of reputable credit, and therefore, bear minimal credit risk. On July 29, 2021, RVA Entertainment Holdings, LLC (“RVAEH”), a wholly owned unrestricted subsidiary of the Company, entered into a Host Community Agreement (the “Original HCA”) with the City of Richmond (the “City”) for the development of the ONE Casino + Resort (the “Project”). The Original HCA imposed certain obligations on RVAEH in connection with the development of the Project, including a $26 million upfront payment (the “Upfront Payment”) due upon successful passage of a citywide referendum permitting development of the Project (the “Referendum”). In connection with the Original HCA, RVAEH and its former development partner Pacific Peninsula Entertainment funded the Upfront Payment into escrow to be released to the City upon successful passage of the Referendum or back to RVAEH in the event the Referendum failed. In November 2021, the required Referendum was conducted and failed to pass. However, on January 24, 2022, the Richmond City Council adopted a new resolution in efforts to bring the ONE Casino + Resort to the City. The new resolution was the first of several steps in pursuit of a second referendum. The City and RVAEH then entered into a new Host Community Agreement (the “New HCA”) which also included an Upfront Payment to be held in escrow and payable upon successful passage of a citywide referendum permitting development of the Project. After the City and RVAEH entered into the New HCA, the Virginia General Assembly passed legislation that sought to delay the second referendum that was anticipated to occur in November 2022. While there were some questions as to the applicability of the legislation, RVAEH and the City determined to adhere to the legislation and to seek a second referendum in November 2023. As a result of the efforts to obtain a second referendum, including execution of the New HCA and the determination to seek a second referendum in November 2023, the Upfront Payment remains in escrow. Therefore, the Company’s portion of the Upfront Payment, approximately $19.5 million is classified as restricted cash on the balance sheets as of December 31, 2022 and 2021. (b) Trade Accounts Receivable Trade accounts receivable which consists of both billed and unbilled receivables are recorded at thetheir invoiced amount.amount and are presented net of an allowance for doubtful accounts. The allowance for doubtful accounts is the Company’s estimate of the amount of probable losses in the Company’s existing accounts receivable portfolio. The Company determines the allowance based on the aging of the receivables, the impact of economic conditions on the advertisers’ ability to pay and other factors. Inactive delinquent accounts that are past due beyond a certain amount of days are written off and often pursued by other collection efforts. Bankruptcy accounts are immediately written off upon receipt of the bankruptcy notice from the courts. (f)(c) Goodwill and Indefinite-Lived Intangible Assets (Primarily Radio Broadcasting Licenses)
In connection with past acquisitions, a significant amount of the purchase price was allocated to radio broadcasting licenses, goodwill and other intangible assets. Goodwill consists of the excess of the purchase price over the fair value of tangible and identifiable intangible net assets acquired. In accordance with Accounting Standards Codification (“ASC”) 350, “Intangibles“Intangibles - Goodwill and Other,” goodwill and other indefinite-lived intangible assets are not amortized, but are tested annually for impairment at the reporting unit level and unit of accounting level, respectively. We test for impairment annually, on October 1 of each year, or more frequently when events or changes in circumstances or other conditions suggest impairment may have occurred. Radio broadcasting license impairment exists when the asset carrying values exceed their respective fair values, and the excess is then recorded to operations as an impairment charge. With the assistance of a third-party valuation firm, weWe test for radio broadcasting license impairment at the unit of accounting level using the income approach, which involves, but is not limited to, judgmental estimates and assumptions about market revenue and projected revenue growth futureby market, mature market share, mature operating margins,profit margin, discount ratesrate and terminal values.growth rate. In testing for goodwill impairment, we also rely primarily on the income approach that estimates the fair value of the reporting unit.unit, which involves, but is not limited to, judgmental estimates and assumptions about revenue growth rates, future operating profit margins, discount rate and terminal growth rate. We then perform a market-based analysis by comparing the average implied multiple arrived at based on our cash flow projections and estimated fair values to multiples for actual recently completed sale transactions and by comparing the total of the estimated fair values of our reporting units to the market capitalization of the Company. We recognize an impairment charge to operations in the amount that the reporting unit’s carrying value exceeds its fair value. TheAny impairment charge recognized cannot exceed the total amount of goodwill allocated to the reporting unit. (g)(d) Impairment of Long-Lived Assets and Intangible Assets, Excluding Goodwill and Indefinite-Lived Intangible Assets
The Company accounts for the impairment of long-lived assets and intangible assets, excluding goodwill and other indefinite-lived intangible assets, in accordance with ASC 360, “Property, Plant and Equipment.” Long-lived intangible assets, excluding goodwill and other indefinite-lived intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or group of assets may not be fully recoverable. These events or changes in circumstances may include a significant deterioration in operating results, changes in business plans, or changes in anticipated future cash flows. If an impairment indicator is present, the Company evaluates recoverability by a comparison of the carrying amount of the asset or group of assets to future undiscounted net cash flows expected to be generated by the asset or group of assets. Assets are grouped at the lowest levels for which there are identifiable cash flows that are largely independent of the cash flows generated by other asset groups. If the assets are impaired, the impairment recognized is measured by the amount by which the carrying amount exceeds the fair value of the asset or group of assets. Fair value is generally determined by estimates of discounted future cash flows. The discount rate used in any estimate of discounted cash flows would be the rate of return for a similar investment of like risk. The Company reviewed these long-lived assets during 20202022 and 20192021 and concluded no triggering events occurred and that no impairment to the carrying value of these assets was required.
(e) Financial Instruments Financial instruments as of December 31, 20202022 and December 31, 2019,2021, consisted of cash and cash equivalents, restricted cash, trade accounts receivable, asset-backed credit facility, and long-term debt and redeemable noncontrolling interests.debt. The carrying amounts approximated fair value for each of these financial instruments as of December 31, 20202022 and December 31, 2019,2021, except for the Company’s long-term debt. On January 25, 2021, the Company borrowed $825 million in aggregate principal amount of senior secured notes due February 2028 (the “2028 Notes”). The 7.375% Senior Secured Notes that are due in April 2022 (the “7.375% Notes”) had a carrying value of approximately $3.0 million and fair value of approximately $2.8 million as of December 31, 2020. The 7.375%2028 Notes had a carrying value of approximately $350.0$750.0 million and fair value of approximately $344.8$646.9 million as of December 31, 2019.2022, and had a carrying value of approximately $825.0 million and fair value of approximately $851.8 million as of December 31, 2021. The fair values of the 7.375%2028 Notes, classified as Level 2 instruments, were determined based on the trading values of these instruments in an inactive market as of the reporting date. On April 18, 2017,June 1, 2021, the Company closedborrowed approximately $7.5 million on a $350.0 million senior secured credit facility (the “2017 Credit Facility”new PPP Loan (as defined in Note 11 – Long-Term Debt) which. During the three months ended June 30, 2022, the PPP Loan and related accrued interest was forgiven and recorded as other income in the amount of approximately $7.6 million. The PPP Loan had a carrying value of approximately $317.3$7.5 million and fair value of approximately $293.5$7.5 million as of December 31, 2020, and had a carrying value of approximately $320.6 million and fair value of approximately $309.1 million as of December 31, 2019.2021. The fair value of the 2017 Credit Facility, classified as a Level 2 instrument, was determined based on the trading values of this instrument in an inactive market as of the reporting date. On December 20, 2018, the Company closed on a $192.0 million unsecured credit facility (the “2018 Credit Facility”) which had a carrying value of approximately $129.9 million and fair value of approximately $132.5 million as of December 31, 2020, and had a carrying value of approximately $167.1 million and fair value of approximately $170.5 million as of December 31, 2019. The fair value of the 2018 Credit Facility, classified as a Level 2 instrument, was determined based on the trading values of this instrument in an inactive market as of the reporting date. On December 20, 2018, the Company also closed on a $50.0 million secured credit loan (the “MGM National Harbor Loan”) which had a carrying value of approximately $57.9 million and fair value of approximately $64.8 million as of December 31, 2020, and had a carrying value of approximately $52.1 million and fair value of approximately $58.4 million as of December 31, 2019. The fair value of the 2018 MGM National HarborPPP Loan, classified as a Level 2 instrument, was determined based on the trading valuesfair value of thisa similar instrument in an inactive market as of the reporting date using updated interest rate information derived from changes in interest rates since inception to the reporting date. On November 9, 2020, we completed an exchange of 99.15% of our outstanding 7.375% Notes for $347.0 million aggregate principal amount of newly issued 8.75% Senior Secured Notes due December 2022 (the “8.75% Notes”). As of December 31, 2020, the 8.75% Notes had a carrying value of approximately $347.0 million and fair value of approximately $338.0 million. There waswere no balanceborrowings outstanding on the Company’s asset-backed credit facility (the “ABL Facility”) as of December 31, 20202022 and December 31, 2019. See Note 16 – Subsequent Events.2021. (i) Derivative Financial Instruments
The Company recognizes all derivatives at fair value in the consolidated balance sheet as either an asset or liability. The accounting for changes in the fair value of a derivative, including certain derivative instruments embedded in other contracts, depends on the intended use of the derivative and the resulting designation. (See Note 8 – Derivative Instruments.)
(j)(f) Revenue Recognition
In accordance with Accounting Standards CodificationUpdate (“ASC”ASU”) 606, “2014-09, Revenue from Contracts with Customers (Topic 606”), the Company recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which it expects to be entitled in exchange for those goods or services. The Company elected to use the modified retrospective method, but the adoption of the standard did not have a material impact to our financial statements. In general, our spot advertising (both radio and cable television) as well as our digital advertising continues to be recognized when aired andis satisfied over time as advertising spots or impressions are delivered. For our cable television affiliate revenue, the Company grants a license to the affiliate to access itsdistribute television programming content through the license period, and the Company earns a usageapplies the sales-and usage-based royalty exception to recognize revenue based royalty whenon the usage occurs, consistent with our previous revenue recognition policy.number of subscribers each month. Finally, for event advertising,event-based revenue, the Company’s events typically occur on one specified date when revenue is recognized. However, there may be performance obligation isobligations that are satisfied at a point in time when the activity associated withweeks leading up to the event, such as radio and digital advertising, and in such instances revenue is completed.recognized as the underlying performance obligations are satisfied, based on the allocated transaction price and the pattern of delivery to the customer.
Within our radio broadcasting and Reach Media segments, revenues are generated from the Company recognizes revenuesale of spot advertisements and sponsorships. Revenue is recognized for broadcast advertising at a point in time when a commercial spot runs. The revenue is reported net of agency and outside sales representative commissions. Agency and outside sales representative commissions are calculatedeach performance obligation based on a stated percentage applied to gross billing. Generally, clients remit the gross billing amountallocated transaction price and the pattern of transfer to the agency or outside sales representative, andcustomer. The Company records as revenue the agency or outside sales representative remits the gross billing, less their commission, to the Company.amount of consideration that it receives. For our radio broadcasting and Reach Media segments, agency and outside sales representative commissions were approximately $17.5$18.4 million and $23.1$16.7 million for the years ended December 31, 20202022 and 2019,2021, respectively. Within our digital segment, including Interactive One which generates the majority of the Company’s digital revenue,revenue. Our digital revenue is principally derived from advertising services on non-radio station branded, but Company-owned websites. Advertising services include the sale of banner and sponsorship advertisements. AdvertisingAs the Company runs its advertising campaigns, the customer simultaneously receives benefits as impressions are delivered, and revenue is recognized at a point in time either as impressions (theover time. The amount of revenue recognized each month is based on the number of times advertisements appear in viewed pages) areimpressions delivered when “click through” purchases are made, or ratably overmultiplied by the contract period, where applicable. In addition, Interactive One derives revenueeffective per impression unit price, and is equal to the amount receivable from its studio operations, in which it provides third-party clients with publishing services including digital platforms and related expertise. In the case of the studio operations, revenue is recognized primarily through fixed contractual monthly fees and/or as a share of the third party’s reported revenue.customer. Our cable television segment derives advertising revenue from the sale of television air timeairtime to advertisers and recognizes revenue is recognized over time when the advertisements are run. AdvertisingIn the agreements governing advertising campaigns, the Company may also promise to deliver to its customers a guaranteed minimum number of viewers (“impressions”) on a specific television network within a particular demographic. These advertising campaigns are considered to represent a single, distinct performance obligation. Revenues are recognized based on the guaranteed audience level multiplied by the average price per impression. The Company provides the advertiser with advertising until the guaranteed audience level is delivered, and invoiced advertising revenue is recognized at a point in time whenreceivables may exceed the individual spots run. Tovalue of the extent there is a shortfall in contracts where the ratings were guaranteed,audience delivery. As such, a portion of the revenue isrevenues are deferred until the shortfallguaranteed audience level is settled,delivered or the rights associated with the guarantee lapse, which is typically by providing additional advertising units generally withinless than one year ofyear. Audience guarantees are initially developed internally, based on planned programming, historical audience levels, and market trends. Actual audience and delivery information is obtained from independent ratings services. For our cable television segment, agency and outside sales representative commissions were approximately $20.1 million and $16.9 million for the original airing. years ended December 31, 2022 and 2021, respectively. Our cable television segment also derives revenue from affiliate fees under the terms of various multi-year affiliation agreements based on a per subscriber fee multipliedroyalty payable by the most recentaffiliate, in exchange for the right to distribute the Company’s programming. The majority of the Company’s distribution fees are collected monthly throughout the year and distribution revenue is recognized over the term of the contracts based on contracted programming rates and reported subscriber countslevels. The Company applies the sales- or usage-based royalty exception for its affiliate agreements. The amount of distribution fees due to the Company is reported by distributors based on actual subscriber levels. Such information is generally not received until after the applicable affiliate. Theclose of the reporting period. In these cases, the Company recognizesestimates the affiliate fee revenue at a point in time as its performance obligationnumber of subscribers receiving the Company’s programming to provideestimate royalty revenue. Historical adjustments to recorded estimates have not been material. Revenues from the programming is met. The Company has a right of payment each month as the programming services and related obligations have been satisfied. For ourCompany’s cable television segment agencyare reduced by the amortization of the Company’s launch support assets. Some of the Company’s contracts with customers contain multiple performance obligations. For these contracts, the individual performance obligations are separately accounted for if they are distinct. In an arrangement with multiple performance obligations, the transaction price is allocated among the separate performance obligations on a relative stand-alone selling price basis. The determination of stand-alone selling price considers market conditions, the size and outside sales representative commissions were approximately $14.6 millionscope of the contract, customer information, and $14.1 millionother factors. Revenue by Contract Type The following chart shows the sources of our net revenue for the years ended December 31, 20202022 and 2019, respectively.2021: | | | | | | | | | Year Ended | | | December 31, | | | 2022 | | 2021 | | | | | | (As Restated) | | | | | | | | Radio advertising | | $ | 177,268 | | $ | 165,244 | Political advertising | | | 13,226 | | | 3,494 | Digital advertising | | | 76,730 | | | 59,812 | Cable television advertising | | | 112,857 | | | 95,589 | Cable television affiliate fees | | | 96,963 | | | 101,203 | Event revenues & other | | | 7,560 | | | 14,943 | Net revenue | | $ | 484,604 | | $ | 440,285 |
Revenue by Contract Type
The following chart shows our net revenue (and sources) for the years ended December 31, 2020Assets and 2019:
| | | Year Ended
December 31, | | | | | 2020 | | | 2019 | | | Net Revenue: | | | | | | | | | | Radio Advertising | | $ | 137,849 | | | $ | 193,318 | | | Political Advertising | | | 22,484 | | | | 1,445 | | | Digital Advertising | | | 34,131 | | | | 31,912 | | | Cable Television Advertising | | | 79,732 | | | | 79,776 | | | Cable Television Affiliate Fees | | | 99,489 | | | | 105,071 | | | Event Revenues & Other | | | 2,652 | | | | 25,407 | | | Net Revenue (as reported) | | $ | 376,337 | | | $ | 436,929 | |
Liabilities Contract assets and liabilities Contract assets (unbilled receivables) and contract liabilities (customer advances and unearned income and unearned event income) that are not separately stated in our consolidated balance sheets at December 31, 20202022 and 20192021 were as follows:
| | | December 31, 2020 | | | December 31, 2019 | | | | | (In thousands) | | | Contract assets: | | | | | | | | | | Unbilled receivables | | $ | 5,798 | | | $ | 3,763 | | | | | | | | | | | | | Contract liabilities: | | | | | | | | | | Customer advances and unearned income | | $ | 4,955 | | | $ | 3,048 | | | Unearned event income | | | 5,921 | | | | 6,645 | |
| | | | | | | | | December 31, 2022 | | December 31, 2021 | | | | | | (As Restated) | | | (In thousands) | Contract assets: | | | | | | | Unbilled receivables ($5,798 as of January 1, 2021) | | $ | 12,597 | | $ | 10,735 | | | | | | | | Contract liabilities: | | | | | | | Customer advances and unearned income ($3,044 as of January 1, 2021) | | $ | 6,123 | | $ | 5,503 | Reserve for audience deficiency ($3,544 as of January 1, 2021) | | | 9,629 | | | 6,020 | Unearned event income ($5,921 as of January 1, 2021) | | | 5,708 | | | — |
Unbilled receivables consistsconsist of earned revenue on behalf of customers that havehas not yet been billed.billed and is included in trade accounts receivable on the consolidated balance sheets. Customer advances and unearned income represents advance payments by customers for future services under contract that are generally incurred in the near term.term and are included in other current liabilities on the consolidated balance sheets. For advertising sold based on audience guarantees, audience deficiency typically results in an obligation to deliver additional advertising units to the customer, generally within one year of the original airing. To the extent that audience guarantees are not met, a reserve for audience deficiency is recorded until such a time that the audience guarantee has been satisfied. Unearned event income represents payments by customers for upcoming events. For customer advances and unearned income as of January 1, 2020,2022, approximately $2.3$2.5 million was recognized as revenue during the year ended December 31, 2020.2022. For unearned event income as of January 1, 2020,2022, there was no revenue recognized during the year ended December 31, 2020.2022. For customer advances and unearned income as of January 1, 2019,2021, approximately $2.7$3.0 million was recognized as revenue during the year ended December 31, 2019.2021. For unearned event income as of January 1, 2019,2021, approximately $3.9$5.9 million was recognized during the year ended December 31, 2019,2021 as the event took place during the secondfourth quarter of 2019. 2021. Practical expedients and exemptions We generally expense employee sales commissions when incurred because the amortization period would have been one year or less. These costs are recorded within selling, general and administrative expenses. We do not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less or (ii) contracts for which we recognize revenue at the amount to which we have the right to invoicevariable consideration is a sales-based or usage-based royalty promised in exchange for services performed.a license of intellectual property. (k)(g) Launch Support
The cable television segment has entered into certain affiliate agreements requiring various payments for launch support. Launch support assets are used to initiate carriage under affiliation agreements and are amortized over the term of the respective contracts. For the year ended December 31, 2020, there was a non-cash launch support addition of2022, the Company paid approximately $1.7$9.3 million for carriage initiation, and during the year ended December 31, 2021, the Company did not pay any launch support for carriage initiation duringinitiation. For the year ended December 31, 2019.2022, there was launch support additions of approximately $9.5 million for carriage initiation that will be paid in cash in future periods. The weighted-average amortization period for launch support was approximately 7.48.1 years and 7.1 years as of December 31, 2020,2022 and approximately 7.8 years as of December 31, 2019.2021, respectively. The remaining weighted-average amortization period for launch support was 4.53.8 years and 5.13.3 years as of December 31, 20202022 and December 31, 2019,2021, respectively. Amortization is recorded as a reduction to revenue to the extent that revenue is recognized from the vendor, and any excess amortization is recorded as launch support amortization expense.discussed in Note 2 – Restatement of Financial Statements. For the years ended December 31, 20202022 and 2019,2021, launch support asset amortization of $422,000was approximately $4.4 million and $422,000, respectively, was recorded as a reduction of revenue, and $664,000 and $605,000, respectively, was recorded as an operating expense in selling, general and administrative expenses.$1.6 million, respectively. Launch assets are included in other intangible assets on the consolidated balance sheets, except for the portion of the unamortized balance that is expected to be amortized within one year which is included in other current assets. The gross value and accumulated amortization of the launch assets is as follows: | | | | | | | | | | | As of December 31, | | | | 2022 | | 2021 | | | | As of December 31, | | | | | | 2020 | | 2019 | | | | | | (In thousands) | | | | | | (In thousands) | | Launch assets | | $ | 9,021 | | | $ | 7,259 | | | $ | 27,764 | | $ | 9,021 | | Less: Accumulated amortization | | | (3,124 | ) | | | (2,038 | ) | | Less: accumulated amortization | | | | (9,104) | | | (4,724) | | Launch assets, net | | $ | 5,897 | | | $ | 5,221 | | | $ | 18,660 | | $ | 4,297 |
Future estimated launch support amortization expense or revenue reduction related to launch assets for years 20212023 through 20252027 and thereafter is as follows: | | | | (In thousands) | | | | 2021 | | | $ | 1,337 | | | | 2022 | | | $ | 1,337 | | | | | | | | | | | (In thousands) | | 2023 | | | $ | 1,337 | | | $ | 4,980 | | 2024 | | | $ | 1,337 | | | | 4,980 | | 2025 | | | $ | 395 | | | | 4,980 | 2026 | | | | 3,410 | 2027 | | | | 237 | Thereafter | | | | 73 |
(l)(h) Barter Transactions
For barter transactions, the Company provides broadcast advertising time in exchange for programming content and certain services. The Company includes the value of such exchanges in both broadcasting net revenue and station operating expenses. The valuation of barter time is based upon the fair value of the network advertising time provided for the programming content and services received. For the years ended December 31, 20202022 and 2019,2021, barter transaction revenues were approximately $2.1$2.0 million and $2.1$1.8 million, respectively. Additionally, for the years ended December 31, 20202022 and 2019,2021, barter transaction costs were reflected in programming and technical expenses of approximately $1.5$1.3 million and $1.5$1.2 million, respectively, and selling, general and administrative expenses of approximately $570,000$679,000 and $596,000,$606,000, respectively. The Company reached an agreement with a cable television provider related to an adjustment of previously estimated affiliate fees in the amount of approximately $2.0 million for the year ended December 31, 2018, as final reporting became available. Upon settlement of this agreement, the Company will receive approximately $2.0 million in marketing services that will be utilized in future periods. (m)(i) Advertising and Promotions
The Company expenses advertising and promotional costs as incurred. Total advertising and promotional expenses for the years ended December 31, 20202022 and 2019,2021, were approximately $15.5$31.3 million and $24.8$24.7 million, respectively. (n)(j) Income Taxes
The Company accounts for income taxes in accordance with ASC 740, “Income Taxes”, (“ASC 740”). Under ASC 740, deferred tax assets or liabilities are computed based upon the difference between financial statement and income tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized into income in the period of enactment. Deferred income tax expense or benefits are based upon the changes in the net deferred tax asset or liability from period to period. The Company recognizes deferred tax assets to the extent that it believes that these assets are more likely than not to be realized. In making such a determination, management considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If management determines that the Company would be able to realize its deferred tax assets in the future in excess of their net recorded amount, the Company would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. Conversely, if management determines that the Company would not be able to realize the recorded amount of deferred tax assets in the future, the Company would make an adjustment to the deferred tax asset valuation allowance, which would increase the provision for income taxes. The Company records uncertain tax positions in accordance with ASC 740 on the basis of a two-step process in which (1) it determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more likely than not recognition threshold, the Company recognizes the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. The Company recognizes interest and penalties related to unrecognized tax benefits on the income tax expense line in the accompanying consolidated statements of operations. Accrued interest and penalties are included in other current liabilities on the consolidated balance sheets.
(k) Stock-Based Compensation The Company accounts for stock-based compensation for stock options and restricted stock grants in accordance with ASC 718, “Compensation - Stock Compensation.” Under the provisions of ASC 718, stock-based compensation cost for stock options is estimated at the grant date based on the award’s fair value as calculated by the Black-Scholes valuation option-pricing model (“BSM”) and is recognized as expense ratably over the requisite service period. The BSM incorporates various highly subjective assumptions including expected stock price volatility, for which historical data is heavily relied upon, expected life of options granted, forfeiture rates and interest rates. Compensation expense for restricted stock grants is measured based on the fair value on the date of grant less estimated forfeitures. Compensation expense for restricted stock grants is recognized ratably during the vesting period. The fair value measurement objective for liabilities incurred in a share-based payment transaction is the same as for equity instruments. Awards classified as liabilities are subsequently remeasured to their fair values at the end of each reporting period until the liability is settled. (See Note 1110 – Employment Agreement Award of our consolidated financial statements and Note 13 – Stockholders’ Equity.) (p)(l) Segment Reporting and Major Customers
In accordance with ASC 280, “Segment“Segment Reporting,” and given its diversification strategy, the Company has determined it has four reportable segments: (i) radio broadcasting; (ii) Reach Media; (iii) digital; and (iv) cable television. These four segments operate in the United States and are consistently aligned with the Company’s management of its businesses and its financial reporting structure. The radio broadcasting segment consists of all broadcast results of operations. The Reach Media segment consists of the results of operations for the related activities and operations of our syndicated shows. The digital segment includes the results of our online business, including the operations of Interactive One, as well as the digital components of our other reportable segments. The cable television segment consists of the Company’s cable TV operation, including results of operations of TV One’sOne and CLEO TV’s results of operations. Corporate/Eliminations represents financial activity associated with our corporate staff and offices and intercompany activity amongTV. Business activities unrelated to these four segments are included in an “all other” category which the four segments. Company refers to as “All other - corporate/eliminations.” No single customer accounted for over 10% of our consolidated net revenues or accounts receivable as of and during either of the years ended December 31, 20202022 or 2019.2021. (q)(m) Earnings Per Share
Basic earnings per share is computed on the basis of the weighted average number of shares of common stock (Classes A, B, C and D) outstanding during the period. Diluted earnings per share is computed on the basis of the weighted average number of shares of common stock plus the effect of potential dilutive common shares outstanding during the period using the treasury stock method. The Company’s potentially dilutive securities include stock options and unvested restricted stock. Diluted earnings per share considers the impact of potentially dilutive securities except in periods in which there is a net loss, as the inclusion of the potentially dilutive common shares would have an anti-dilutive effect. In each of the years ended December 31, 2022 and 2021, the amount of earnings per share would pertain to each of our classes of common stock because the holders of each class are entitled to equal per share dividends or distributions in liquidation in accordance with the Company’s Amended and Restated Certificate of Incorporation. The following table summarizessets forth the potential common shares excludedcalculation of basic and diluted earnings per share from the diluted calculation.continuing operations (in thousands, except share and per share data): | | | | | | | Year Ended December 31, | | 2022 | | 2021 | | | | | (As Restated) | | (In Thousands) | Numerator: | | | | | | Net income attributable to common stockholders | $ | 37,329 | | $ | 36,791 | Denominator: | | | | | | Denominator for basic net income per share - weighted average outstanding shares | | 48,928,063 | | | 50,163,600 | Effect of dilutive securities: | | | | | | Stock options and restricted stock | | 3,246,274 | | | 3,973,041 | Denominator for diluted net income per share - weighted-average outstanding shares | | 52,174,337 | | | 54,136,641 | | | | | | | Net income attributable to common stockholders per share – basic | $ | 0.76 | | $ | 0.73 | Net income attributable to common stockholders per share – diluted | $ | 0.72 | | $ | 0.68 |
| | Year Ended
December 31,
2020
| | | | (Unaudited)
(In thousands) | | Stock options | | | 4,019 | | Restricted stock awards | | | 1,879 | |
(r)(n) Fair Value Measurements
We report our financial and non-financial assets and liabilities measured at fair value on a recurring and non-recurring basis under the provisions of ASC 820, ““Fair Value Measurements and Disclosures.Measurement” (“ASC 820820”) which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The fair value framework requires the categorization of assets and liabilities into three levels based upon the assumptions (inputs) used to price the assets or liabilities. Level 1 provides the most reliable measure of fair value, whereas Level 3 generally requires significant management judgment. The three levels are defined as follows: | | | Level 1: Inputs are unadjusted quoted prices in active markets for identical assets and liabilities that can be accessed at the measurement date. | | | | Level 2: Observable inputs other than those included in Level 1 (i.e., quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets). | | | | Level 3: Unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the asset or liability. |
A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value instrument. As of December 31, 2020,2022 and December 31, 2019,2021, respectively, the fair values of our financial assets and liabilities measured at fair value on a recurring basis are categorized as follows: | | | | | | | | | | | | | | | Total | | Level 1 | | Level 2 | | Level 3 | | | | (In thousands) | As of December 31, 2022 | | | | | | | | | | | | | Liabilities subject to fair value measurement: | | | | | | | | | | | | | Employment agreement award (a) | | $ | 26,283 | | $ | — | | $ | — | | $ | 26,283 | | | | | | | | | | | | | | Mezzanine equity subject to fair value measurement: | | | | | | | | | | | | | Redeemable noncontrolling interests (b) | | $ | 25,298 | | $ | — | | $ | — | | $ | 25,298 | | | | | | | | | | | | | | Assets subject to fair value measurement: | | | | | | | | | | | | | Available-for-sale securities (c) | | $ | 136,826 | | $ | — | | $ | — | | $ | 136,826 | Cash equivalents - money market funds (d) | | | 39,798 | | | 39,798 | | | — | | | — | Total | | $ | 176,624 | | $ | 39,798 | | $ | — | | $ | 136,826 | | | | | | | | | | | | | | As of December 31, 2021 (As Restated) | | | | | | | | | | | | | Liabilities subject to fair value measurement: | | | | | | | | | | | | | Employment agreement award (a) | | $ | 28,193 | | $ | — | | $ | — | | $ | 28,193 | | | | | | | | | | | | | | Mezzanine equity subject to fair value measurement: | | | | | | | | | | | | | Redeemable noncontrolling interests (b) | | $ | 18,655 | | $ | — | | $ | — | | $ | 18,655 | | | | | | | | | | | | | | Assets subject to fair value measurement: | | | | | | | | | | | | | Available-for-sale securities (c) | | $ | 112,600 | | $ | — | | $ | — | | $ | 112,600 |
| (a) | Each quarter, pursuant to an employment agreement (the “Employment Agreement”) executed in April 2008, the Chief Executive Officer (“CEO”) is eligible to receive an award (the “Employment Agreement Award”) in an amount equal to approximately 4% of any proceeds from distributions or other liquidity events in excess of the return of the Company’s aggregate investment in TV One. The Company reviews the factors underlying this award at the end of each quarter including the valuation of TV One (based on the estimated enterprise fair value of TV One as determined by the income approach using a discounted cash flow analysis and the market approach using comparable public company multiples). The Company’s obligation to pay the award was triggered after the Company recovered the aggregate amount of capital contributions in TV One, and payment is required only upon actual receipt of distributions of cash or marketable securities or proceeds from a liquidity event with respect to such invested amount. The long-term portion of the award is recorded in other long-term liabilities and the current portion is recorded in other current liabilities in the consolidated balance sheets. The CEO was fully vested in the award upon execution of the Employment Agreement, and the award lapses if the CEO voluntarily leaves the Company or is terminated for cause. Significant inputs to the discounted cash flow analysis include revenue growth rates, future operating profit margins, discount rate and terminal growth rate. Significant inputs to the market approach include publicly held peer companies and associated multiples. In September 2022, the Compensation Committee of the Board of Directors of the Company (the “Compensation Committee”) approved terms for a new employment agreement with the CEO, including a renewal of the Employment Agreement Award upon similar terms as in the prior Employment Agreement. |
| (b) | The redeemable noncontrolling interest in Reach Media is measured at fair value using a discounted cash flow methodology. Significant inputs to the discounted cash flow analysis include revenue growth rates, future operating profit margins, discount rate and terminal growth rate. |
| (c) | The investment in MGM National Harbor is preferred stock that has a non-transferable put right and is classified as an available-for-sale debt security. The investment was initially measured at fair value using a dividend discount model. Significant inputs to the dividend discount model include revenue growth rates, discount rate and a terminal growth rate. As of December 31, 2022, the investment’s fair value is measured using a contractual valuation approach. |
F-26 | | | Total | | | Level 1 | | | Level 2 | | | Level 3 | | | | | (In thousands) | | | As of December 31, 2020 | | | | | | | | | | | | | | | | | | Liabilities subject to fair value measurement: | | | | | | | | | | | | | | | | | | Contingent consideration (a) | | $ | 780 | | | | — | | | | — | | | $ | 780 | | | Employment agreement award (b) | | | 25,603 | | | | — | | | | — | | | | 25,603 | | | Total | | $ | 26,383 | | | $ | — | | | $ | — | | | $ | 26,383 | | | | | | | | | | | | | | | | | | | | | Mezzanine equity subject to fair value measurement: | | | | | | | | | | | | | | | | | | Redeemable noncontrolling interests (c) | | $ | 12,701 | | | $ | — | | | $ | — | | | $ | 12,701 | | | | | | | | | | | | | | | | | | | | | As of December 31, 2019 | | | | | | | | | | | | | | | | | | Liabilities subject to fair value measurement: | | | | | | | | | | | | | | | | | | Contingent consideration (a) | | $ | 1,921 | | | | — | | | | — | | | $ | 1,921 | | | Employment agreement award (b) | | | 27,017 | | | | — | | | | — | | | | 27,017 | | | Total | | $ | 28,938 | | | $ | — | | | $ | — | | | $ | 28,938 | | | | | | | | | | | | | | | | | | | | | Mezzanine equity subject to fair value measurement: | | | | | | | | | | | | | | | | | | Redeemable noncontrolling interests (c) | | $ | 10,564 | | | $ | — | | | $ | — | | | $ | 10,564 | |
| This method relies on a contractually agreed upon formula established between the Company and MGM National Harbor as defined in the Second Amended and Restated Operating Agreement of MGM National Harbor, LLC (“the Agreement”) rather than market-based inputs or traditional valuation methods. As defined in the Agreement, the calculation of the put is based on operating results, Enterprise Value and the Put Price Multiple. The inputs used in this measurement technique are specific to the entity, MGM National Harbor, and there are no current observable prices for investments in private companies that are comparable to MGM National Harbor. The inputs used to measure the fair value of this security are classified as Level 3 within the fair value hierarchy. Throughout the periods from the fourth quarter of 2020 up until the third quarter of 2022, the Company relied on the dividend discount model for valuation purposes based on the facts, circumstances, and information available at the time. During the fourth quarter of 2022, the Company adopted the contractual valuation method described above as it believes it more closely approximates the fair value of the investment at that time. Please refer to Note 18 – Subsequent Events of our consolidated financial statements for further details. |
| (d) | The Company measures and reports its cash equivalents that are invested in money market funds at estimated fair value. |
(b) Each quarter, pursuant to an employment agreement (the “Employment Agreement”) executed in April 2008, the Chief Executive Officer (“CEO”) is eligible to receive an award (the “Employment Agreement Award”) amount equal to approximately 4% of any proceeds from distributions or other liquidity events in excess of the return of the Company’s aggregate investment in TV One. The Company reviews the factors underlying this award at the end of each quarter including the valuation of TV One (based on the estimated enterprise fair value of TV One as determined by a discounted cash flow analysis). The Company’s obligation to pay the award was triggered after the Company recovered the aggregate amount of certain pre-April 2015 capital contributions in TV One, and payment is required only upon actual receipt of distributions of cash or marketable securities or proceeds from a liquidity event with respect to such invested amount. The CEO was fully vested in the award upon execution of the Employment Agreement, and the award lapses if the CEO voluntarily leaves the Company or is terminated for cause. A third-party valuation firm assisted the Company in estimating TV One’s fair value using a discounted cash flow analysis. Significant inputs to the discounted cash flow analysis include forecasted operating results, discount rate and a terminal value. In September 2014, the Compensation Committee of the Board of Directors of the Company approved terms for a new employment agreement with the CEO, including a renewal of the Employment Agreement Award upon similar terms as in the prior Employment Agreement.
(c) The redeemable noncontrolling interest in Reach Media is measured at fair value using a discounted cash flow methodology. A third-party valuation firm assisted the Company in estimating the fair value. Significant inputs to the discounted cash flow analysis include forecasted operating results, discount rate and a terminal value.
There were no transfers in or out of Level 1, 2, or 3 during the years ended December 31, 20202022 and 2019.2021. The following table presents the changes in Level 3 assets and liabilities measured at fair value on a recurring basis for the years ended December 31, 20202022 and 2019:2021: | | | Contingent
Consideration | | Employment
Agreement
Award | | Redeemable
Noncontrolling
Interests | | | | | | (In thousands) | | | | Balance at December 31, 2018 | | $ | 2,831 | | $ | 25,660 | | $ | 10,232 | | | | | | | | | | | | | | | | | | | | | | | Employment | | Redeemable | | Available- | | | | Contingent | | Agreement | | Noncontrolling | | for-Sale | | | | Consideration | | Award | | Interests | | Securities | | | | | | | | | | (As Restated) | | (As Restated) | | | | (In thousands) | Balance at December 31, 2020 | | | $ | 780 | | $ | 25,603 | | $ | 13,942 | | $ | 103,100 | | Net income attributable to redeemable noncontrolling interests | | — | | — | | 1,132 | | | | — | | | — | | | 2,315 | | | — | | Dividends paid to redeemable noncontrolling interests | | — | | — | | (1,000 | ) | | | — | | | — | | | (2,400) | | | — | | Distribution | | (1,207 | ) | | (3,591 | ) | | — | | | | (1,060) | | | (3,573) | | | — | | | — | Change in fair value included within other comprehensive income | | | | — | | | — | | | — | | | 9,500 | | Change in fair value | | | 297 | | | 4,948 | | | 200 | | | | 280 | | | 6,163 | | | 4,798 | | | — | | Balance at December 31, 2019 | | $ | 1,921 | | $ | 27,017 | | $ | 10,564 | | | Balance at December 31, 2021 | | | $ | — | | $ | 28,193 | | $ | 18,655 | | $ | 112,600 | | Net income attributable to redeemable noncontrolling interests | | — | | — | | 1,544 | | | | — | | | — | | | 2,626 | | | — | | Dividends paid to redeemable noncontrolling interests | | — | | — | | (2,802 | ) | | | — | | | — | | | (1,599) | | | — | | Distribution | | (1,188 | ) | | (3,685 | ) | | — | | | | — | | | (4,039) | | | — | | | — | Change in fair value included within other comprehensive income | | | | — | | | — | | | — | | | 24,226 | | Change in fair value | | | 47 | | | 2,271 | | | 3,395 | | | | — | | | 2,129 | | | 5,616 | | | — | | Balance at December 31, 2020 | | $ | 780 | | $ | 25,603 | | $ | 12,701 | | | | | | | | | | | | | | The amount of total income (losses) for the period included in earnings attributable to the change in unrealized losses relating to assets and liabilities still held at December 31, 2020 | | $ | (47 | ) | | $ | (2,271 | ) | | $ | — | | | | The amount of total income (losses) for the period included in earnings attributable to the change in unrealized losses relating to assets and liabilities still held at December 31, 2019 | | $ | (297 | ) | | $ | (4,948 | ) | | $ | — | | | Balance at December 31, 2022 | | | $ | — | | $ | 26,283 | | $ | 25,298 | | $ | 136,826 | | | | | | | | | | | | | | | The amount of total income (losses) for the period included in earnings attributable to the change in unrealized losses relating to assets and liabilities still held at December 31, 2022 | | | $ | — | | $ | (2,129) | | $ | — | | $ | — | The amount of total income (losses) for the period included in earnings attributable to the change in unrealized losses relating to assets and liabilities still held at December 31, 2021 | | | $ | (280) | | $ | (6,163) | | $ | — | | $ | — |
Losses and gains included in earnings were recorded in the consolidated statements of operations as corporate selling, general and administrative expenses for the employment agreement award and included as selling, general and administrative expenses for contingent consideration for the years ended December 31, 20202022 and 2019.2021.
For Level 3 assets and liabilities measured at fair value on a recurring basis, the significant unobservable inputs used in the fair value measurements were as follows: | | | Valuation | | Significant | | As of December 31,
2020 | | | As of December 31,
2019 | | | Level 3 liabilities | | Technique | | Unobservable Inputs | | Significant Unobservable Input Value | | | Contingent consideration | | Monte Carol Simulation | | Expected volatility | | | 29.5 | % | | | 20.8 | % | | Contingent consideration | | Monte Carol Simulation | | Discount Rate | | | 16.5 | % | | | 14.5 | % | | Employment agreement award | | Discounted Cash Flow | | Discount Rate | | | 10.5 | % | | | 10.0 | % | | Employment agreement award | | Discounted Cash Flow | | Long-term Growth Rate | | | 1.0 | % | | | 2.0 | % | | Redeemable noncontrolling interest | | Discounted Cash Flow | | Discount Rate | | | 11.0 | % | | | 11.0 | % | | Redeemable noncontrolling interest | | Discounted Cash Flow | | Long-term Growth Rate | | | 1.0 | % | | | 1.0 | % |
| | | | | | | | | | | | | | | | As of | | As of | | | | | | | | December 31, | | December 31, | | | | | | | | 2022 | | 2021 | | | | | | | | | | (As Restated) | | | | | | Significant | | | | | | | | | | Unobservable | | Significant Unobservable | | Level 3 assets and liabilities | | Valuation Technique | | Inputs | | Input Value | | Employment agreement award | | Discounted cash flow | | Discount rate | | 10.5 | % | 9.5 | % | Employment agreement award | | Discounted cash flow | | Terminal growth rate | | 0.5 | % | 0.5 | % | Employment agreement award | | Discounted cash flow | | Operating profit margin range | | 33.7% - 46.6 | % | 34.9% - 46.4 | % | Employment agreement award | | Discounted cash flow | | Revenue growth rate range | | (4.1)% - 4.2 | % | (5.9)% - 11.6 | % | Redeemable noncontrolling interest | | Discounted cash flow | | Discount rate | | 11.5 | % | 11.5 | % | Redeemable noncontrolling interest | | Discounted cash flow | | Terminal growth rate | | 0.3 | % | 0.4 | % | Redeemable noncontrolling interest | | Discounted cash flow | | Operating profit margin range | | 25.8% - 29.8 | % | 24.0% - 32.8 | % | Redeemable noncontrolling interest | | Discounted cash flow | | Revenue growth rate range | | 0.2% - 32.2 | % | (11.8)% - 0.3 | % | Available-for-sale securities | | Dividend discount model | | Revenue growth rate | | N/A | | 8.0 | % | Available-for-sale securities | | Dividend discount model | | Discount rate | | N/A | | 10.5 | % | Available-for-sale securities | | Dividend discount model | | Long-term growth rate | | N/A | | 3.0 | % |
Any significant increases or decreases in discount rate or long-termterminal growth rate inputs could result in significantly higher or lower fair value measurements. Certain assets and liabilities are measured at fair value on a non-recurring basis using Level 3 inputs as defined in ASC 820. These assets are not measured at fair value on an ongoing basis but are subject to fair value adjustments only in certain circumstances. Included in this category are goodwill, radio broadcasting licenses and other intangible assets, net, that are written down to fair value when they are determined to be impaired, as well as content assets that are periodically written down to net realizable value. The Company recorded an impairment charge of approximately $84.4 million and $10.6 million for the years ended December 31, 2020 and 2019, respectively, related to goodwill and radio broadcasting licenses. As of December 31, 2020, the total recorded carrying values of goodwill and radio broadcasting licenses were approximately $223.4 million and $484.1 million, respectively. Pursuant to ASC 350, “Intangibles – Goodwill and Other,” for the year ended December 31, 2020, the Company recorded an impairment charge of approximately $15.9 million related to its Atlanta market and Indianapolis market goodwill balances and also an impairment charge of approximately $68.5 million associated with our Atlanta, Cincinnati, Dallas, Houston, Indianapolis, Philadelphia, Raleigh, Richmond and St. Louis market radio broadcasting licenses. For the year ended December 31, 2019, the Company recorded impairment charges totaling approximately $4.8 million related to our Indianapolis and Detroit radio broadcasting licenses and totaling approximately $5.8 million goodwill balances in our digital segment. A description of the Level 3 inputs and the information used to develop the inputs is discussed in Note 46 — Goodwill, Radio Broadcasting Licenses and Other Intangible Assets.
As of December 31, 2022, the total recorded carrying values of goodwill and radio broadcasting licenses were approximately $216.6 million and $488.4 million, respectively. Pursuant to ASC 350, “(s)Intangibles – Goodwill and Other,” for the year ended December 31, 2022, the Company recorded an impairment charge of approximately $7.2 million related to certain of our radio market goodwill balances and also an impairment charge of approximately $33.5 million associated with certain of our radio broadcasting licenses. A description of the Level 3 inputs and the information used to develop the inputs is discussed in Note 6 — Goodwill, Radio Broadcasting Licenses and Other Intangible Assets. (o) Software and Web Development Costs The Company capitalizes direct internal and external costs incurred to develop internal-use computer software during the application development stage pursuant to ASC 350-40, “Intangibles “Intangibles – Goodwill and Other.Other – Internal -Use Software.” Internal-use software is amortized under the straight-line method using an estimated life of three years. All web development costs incurred in connection with operating our websites are accounted for under the provisions of ASC 350-40 and ASC 350-50, “Website“Intangibles – Goodwill and Other– Website Development Costs”, unless a plan exists or is being developed to market the software externally. The Company has no plans to market software externally. (t)(p) Redeemable noncontrolling interests
Noncontrolling Interests Redeemable noncontrolling interests are interests in subsidiaries that are redeemable outside of the Company’s control either for cash or other assets. These interests are classified as mezzanine equity and measured at the greater of estimated redemption value at the end of each reporting period or the historical cost basis of the noncontrolling interests adjusted for cumulative earnings allocations. The resulting increases or decreases in the estimated redemption amount are affected by corresponding charges against retained earnings, or in the absence of retained earnings, additional paid-in-capital.
(u)(q) Investments, As Restated
Available-for-sale securities Cost Method
On April 10, 2015, the Company made a $5 million investment in MGM’s world-class casino property, MGM National Harbor, located in Prince George’s County, Maryland, which has a predominately African-American demographic profile. On November 30, 2016, the Company contributed an additional $35 million to complete its investment. This investment further diversified our platform in the entertainment industry while still focusing on our core demographic. We accountIn return for this investment, the Company received preferred stock and a non-transferable put right, which is exercisable for a thirty-day period each year. The price of the put right will be determined based on a cost basis. Ourthe “Put Price” definition as defined in the Agreement between the Company and MGM National Harbor. The Company classifies its investment in MGM National Harbor as an available-for-sale debt security. Investments classified as available for sale are carried at fair value with unrealized gains and losses, net of deferred taxes, reflected directly in accumulated other comprehensive income. Net realized gains and losses on sales of available for sale securities, and unrealized losses considered to be other-than-temporary, are recorded to other income, net in the Consolidated Statements of Operations. The investment entitles usthe Company to an annual cash distribution based on net gaming revenue. The value of our MGM investment is included in other assets onrevenue and the consolidated balance sheets and itsCompany recognized distribution income in the amount of approximately $4.9$8.8 million and $6.9$7.7 million, for the years ended December 31, 20202022 and 2019,2021, respectively, which is recorded in other income, on the consolidated statements of operations. The cost method investment is subject to a periodic impairment reviewnet in the normal course. TheConsolidated Statements of Operations. During the quarter ended March 31, 2023, the Company reviewed the investment during 2020 and 2019 and concluded that no impairment to the carrying value was required. As of December 31, 2020,received $8.8 million representing the Company’s annual distribution from MGMNH with respect to fiscal year 2022. On March 8, 2023, Radio One Entertainment Holdings, LLC (“ROEH”), the Company’s wholly-owned subsidiary issued a put notice (the “Put Notice”) with respect to one hundred percent (100%) of its interest (the “Put Interest”) in the MGM National Harbor, Casino securedLLC (“MGMNH”). On April 21 2023, ROEH closed on the MGM National Harbor Loan (as defined insale of the Put Interest. The Company received approximately $136.8 million at the time of settlement of the Put Interest, representing the put price. Please refer to Note 9 – Long-Term Debt.)18 - Subsequent Events within the consolidated financial statements for further information. (v)(r) Content Assets
OurThe Company’s cable television segment has entered into contracts to acquirelicense entertainment programming rights and programs from distributors and producers. The license periods granted in these contracts generally run from one year to ten years.five years. Contract payments are typically made in quarterly installments over the terms that are generally shorter thanof the contract period. Each contract is recorded as an asset and a liability at an amount equal to its gross contractual commitment when the license period begins, and the program is available for its first airing. Acquired content is generally amortized on a straight-line basis over the term of the license which reflects the estimated usage. For certain content for which the pattern of usage is accelerated, amortization is based upon the actual usage. Amortization of content assets is recorded in the consolidated statement of operations as programming and technical expenses.
The Company also has programming for which the Company has engaged third parties to develop and produce, and it owns most or all rights (commissioned programming). In accordance with ASC 926,For programming that is predominantly monetized as part of a content amortization expense for each period is recognizedgroup, such as the Company’s commissioned programs, capitalized costs are amortized based on an estimate of our usage and benefit from such programming. The estimates require management’s judgement and include consideration of factors such as expected revenues to be derived from the revenue forecastprogramming and the expected number of future airings, among other factors. The Company’s acquired programs’ capitalized costs are amortized based on projected usage, generally resulting in a straight-line amortization pattern. The Company utilizes judgment and prepares analysis to determine the amortization patterns of our content assets. Key assumptions include the categorization of content based on shared characteristics and the use of a quantitative model to predict revenue. For each film group, which approximates the proportion thatCompany defines as a genre, this model takes into account projected viewership which is based on (i) estimated advertisinghousehold universe; (ii) ratings; and affiliate revenues for(iii) expected number of airings across different broadcast time slots. As part of the current period represent in relation toCompany's assessment of its amortization rates, the Company compares the estimated remaining total lifetime revenues as ofamortization rates to those that have been utilized during the beginning of the current period.year. Management regularly reviews, and revises, when necessary, its total revenue estimates, which may result in a change in the rate of amortization and/or a write-downwrite down of the asset to fair value. Commissioned programmingvalue The result of the content amortization analysis is recordedeither an accelerated method or a straight-line amortization method over the estimated useful lives of generally one to five years.
Content that is predominantly monetized within a film group is assessed for impairment at the lowerfilm group level and is tested for impairment if circumstances indicate that the fair value of the content within the film group is less than its unamortized cost or estimated net realizable value. Estimated net realizable valuescosts. The Company’s film groups for commission programming are based ongenerally aligned along genre, while the estimated revenues associated with the program materials and related expenses.Company’s licensed content is considered a separate film group. The Company did not recordevaluates the fair value of content at the group level by considering expected future revenue generation using a cash flow analysis when an event or change in circumstances indicates a change in the expected usefulness of the content or that the fair value may be less than unamortized costs. Estimates of future revenues consider historical airing patterns and future plans for airing content, including any additional amortization expense forchanges in strategy. Given the significant estimates and judgments involved, actual demand or market conditions may be less favorable than those projected, requiring a write-down to fair value. The Company determined there were no impairment indicators evident during the year ended December 31, 2020 and2022. For the year ended December 31, 2021, the Company recorded an impairment and additional amortization expense of approximately $4.9 million,$695,000, as a result of evaluating its contracts for recoverability forimpairment. Impairment and amortization of content assets is recorded in the year ended December 31, 2019.consolidated statements of operations as programming and technical expenses. All producedcommissioned and licensed content is classified as a long-term asset, except for the portion of the unamortized content balance that is expected to be amortized within one year which is classified as a current asset. Tax incentives that state and local governments offer that are directly measured based on production activities are recorded as reductions in production costs. (w)(s) Impact of Recently Issued Accounting Pronouncements
In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). ASU 2016-13 is intended to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. In November 2019, the FASB issued ASU 2019-10, “Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates.Dates” ASU 2019-10which defers the effective date of credit loss standard ASU 2016-13 by two years for smaller reporting companies and permits early adoption. ASU 2016-13 is effective for the Company beginning January 1, 2023. The Company is evaluating the impact of the adoption of ASU 2016-13 on its consolidated financial statements.
In December 2019,March 2020, the FASB issued ASU 2019-12, “2020-04 Income TaxesReference Rate Reform (Topic 740)848): SimplifyingFacilitation of the Effects of Reference Rate Reform on Financial Reporting to provide optional relief from applying GAAP to contract modifications, hedging relationships, and other transactions affected by the anticipated transition from LIBOR. As a result of the reference rate reform initiative, certain widely used rates such as LIBOR are expected to be discontinued. The Company holds the ABL Facility, which bears interest based on the LIBOR rate. In December 2022, the FASB issued ASU 2022-06 Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848, to defer the sunset date of the temporary relief in Topic 848 to December 31, 2024. The guidance is effective upon issuance. The Company is currently assessing the impact of the adoption of ASU 2022-06 adoption on its consolidated financial statements. In October 2021, the FASB issued ASU 2021-08, Business Combination (Topic 805): Accounting for Income TaxesContract Assets and Contract Liabilities from Contracts with Customers”, which is intendedrequires an acquirer to simplify various aspects relatedrecognize and measure contract assets and liabilities acquired in a business combination in accordance with Revenue from Contracts with Customers (Topic 606), rather than adjust them to accounting for income taxes. ASU 2019-12 removes certain exceptions tofair value at the general principles in Topic 740 and also clarifies and amends existingacquisition date. The guidance to improve consistent application. ASU 2019-12 is effective for fiscal years,the Company beginning January 1, 2023 and interim periods within those fiscal years, beginningapplies to acquisitions occurring after December 15, 2020. Early adoption is permitted.the effective date. The Company adopted ASU 2019-12is currently assessing the impact the new guidance will have on January 1, 2020, and adoption did not have a material impact on ourthe consolidated financial statements and related disclosures.statements. (x)(t) Related Party Transactions
Reach Media operates the Tom Joyner Foundation’s Fantastic Voyage® (the “Fantastic Voyage®”), a fund-raising event, on behalf of the Tom Joyner Foundation, Inc. (the “Foundation”), a 501(c)(3) entity. The agreement under which the Fantastic Voyage® operates provides that Reach Media provide all necessary operations of the cruise and that Reach Media will be reimbursed its expenditures and receive a fee plus a performance bonus. Distributions from operating revenues are in the following order until the funds are depleted: up to $250,000 to the Foundation, reimbursement of Reach’s expenditures, up to a $1.0 million fee to Reach, a performance bonus of up to 50% of remaining operating revenues to Reach Media, with the balance remaining to the Foundation. For 2021 and 2022,2023, $250,000 to the Foundation is guaranteed.guaranteed; the Fantastic Voyage® did not operate in 2022. Reach Media’s earnings for the Fantastic Voyage® in any given year may not exceed $1.75 million. The Foundation’s remittances to Reach Media under the agreements are limited to its Fantastic Voyage® related cash collections. Reach Media bears the risk should the Fantastic Voyage® sustain a loss and bears all credit risk associated with the related passenger cruise package sales. The agreement between Reach and the Foundation automatically renews annually unless termination is mutually agreed or unless a party’s financial requirements are not met, in which case the party not in breach of their obligations has the right, but not the obligation, to terminate unilaterally. Due to the pandemic, the 2020 cruise has been rescheduled to November 2021 and passengers have been given the option to have the majority of their payments refunded. As of December 31, 2020,2022, the Foundation owed Reach Media approximately $2.3 million reflecting passenger payments received by the Foundation, but not yet remitted to Reach Media, and as of December 31, 2021, Reach Media owed the Foundation $244,000 due to passengers’ refunds pending and as$41,000 under the agreements for the operation of the cruises. The Fantastic Voyage took place during the fourth quarter of 2021. For the year ended December 31, 2019,2021, Reach Media's revenues, expenses, and operating income for the Foundation owed Reach Media $24,000. Fantastic Voyage were approximately $7.0 million, $6.6 million, and $400,000, respectively. Reach Media provides office facilities (including office space, telecommunications facilities, and office equipment) to the Foundation. Such services are provided to the Foundation on a pass-through basis at cost. Additionally, from time to time, the Foundation reimburses Reach Media for expenditures paid on its behalf at Reach Media-related events. Under these arrangements, as of December 31, 20202022 and 2019,2021, the Foundation owed $6,000 and $32,000, respectively,an immaterial amount to Reach Media. ForAlfred C. Liggins, President and Chief Executive Officer of Urban One, Inc., is a compensated member of the yearBoard of Directors of Broadcast Music, Inc. (“BMI”), a performance rights organization to which the Company pays license fees in the ordinary course of business. During the years ended December 31, 2019, Reach Media’s revenues, expenses,2022 and operating income for2021, the Fantastic Voyage wereCompany incurred expense of approximately $10.2 million, $8.5$3.8 million and $1.7$4.7 million, respectively. The Fantastic Voyage took place duringAs of December 31, 2022 and 2021, the second quarter of 2019. Due to the aforementioned rescheduling of the Fantastic Voyage resulting from impacts of the COVID pandemic, no cruise was operated in 2020.Company owed BMI approximately $1.5 million and $423,000, respectively.
(y)(u) Leases
As ofOn January 1, 2019, with the Company adoptedadoption of ASC 842, Leases, using the modification retrospective transition method. Prior comparative periods will be not be restated under this new standard and therefore those amounts are not presented below. The Company adopted a package of practical expedients as allowed by the transition guidance which permitspermitted the Company to carry forward the historical assessment of whether contracts contain or are leases, classification of leases and the remaining lease terms. The Company has also made an accounting policy election to exclude leases with an initial term of twelve months or less from recognition on the consolidated balance sheet. Short-term leases will be expensed over the lease term. The Company also elected to separate the consideration in the lease contracts between the lease and non-lease components. All variable non-lease components are expensed as incurred.
ASC 842 results in significant changes to the balance sheets of lessees, most significantly by requiring the recognition of right of use (“ROU”)ROU assets and lease liabilities by lessees for those leases classified as operating leases. Upon adoption of ASC 842, deferred rent balances, which were historically presented separately, were combined and presented net within the ROU asset. The adoption of this standard resulted in the Company recording an increase in ROU assets of approximately $49.8 million and an increase in lease liabilities of approximately $54.1 million. Approximately $4.3 million in deferred rent was also reclassified from liabilities to offset the applicable ROU asset. The tax impact of ASC 842, which primarily consisted of deferred gains related to previous transactions that were historically accounted for as sale and operating leasebacks in accordance with ASC Topic 840 were recognized as part of the cumulative-effect adjustment to retained earnings, resulting in an increase to retained earnings, net of tax, of approximately $5.8 million.
assets. Many of the Company's leases provide for renewal terms and escalation clauses, which are factored into calculating the lease liabilities when appropriate. The implicit rate within the Company's lease agreements is generally not determinable and as such the Company’s collateralized borrowing rate is used. The following table sets forth the components of lease expense and the weighted average remaining lease term and the weighted average discount rate for the Company’s leases: | | | Year
Ended December 31, | | | | | 2020 | | | 2019 | | | | | (Dollars In thousands) | | | Operating Lease Cost (Cost resulting from lease payments) | | $ | 12,687 | | | $ | 12,673 | | | Variable Lease Cost (Cost excluded from lease payments) | | | 143 | | | | 160 | | | Total Lease Cost | | $ | 12,830 | | | $ | 12,833 | | | | | | | | | | | | | Operating Lease - Operating Cash Flows (Fixed Payments) | | $ | 13,243 | | | $ | 13,023 | | | Operating Lease - Operating Cash Flows (Liability Reduction) | | $ | 8,354 | | | $ | 7,752 | | | | | | | | | | | | | Weighted Average Lease Term - Operating Leases | | | 5.37 years | | | | 5.63 years | | | Weighted Average Discount Rate - Operating Leases | | | 11.00 | % | | | 11.00 | % |
| | | | | | | | | | | | Year Ended December 31, | | | | | 2022 | | 2021 | | | | | | (Dollars In thousands) | | Operating lease cost (cost resulting from lease payments) | | | $ | 12,822 | | $ | 13,055 | | Variable lease cost (cost excluded from lease payments) | | | | 40 | | | 40 | | Total lease cost | | | $ | 12,862 | | $ | 13,095 | | | | | | | | | | | Operating lease - operating cash flows (fixed payments) | | | $ | 13,978 | | $ | 13,784 | | Operating lease - operating cash flows (liability reduction) | | | $ | 9,935 | | $ | 9,124 | | | | | | | | | | | Weighted average lease term - operating leases | | | | 4.85 | years | | 4.94 | years | Weighted average discount rate - operating leases | | | | 11.00 | % | | 11.00 | % |
As of December 31, 2020,2022, maturities of lease liabilities were as follows: | | | | For the Year Ended December 31, | | (In thousands) | 2023 | | $ | 11,697 | 2024 | | | 10,690 | 2025 | | | 6,834 | 2026 | | | 4,860 | 2027 | | | 3,417 | Thereafter | | | 7,140 | Total future lease payments | | | 44,638 | Less: imputed interest | | | (10,403) | Total | | $ | 34,235 |
| For the Year Ended December 31, | | (Dollars in
thousands) | | | 2021 | | $ | 13,160 | | | 2022 | | | 12,416 | | | 2023 | | | 10,784 | | | 2024 | | | 9,681 | | | 2025 | | | 5,034 | | | Thereafter | | | 9,474 | | | Total future lease payments | | | 60,549 | | | Imputed interest | | | (15,044 | ) | | Total | | $ | 45,505 | |
(z)(v) Going Concern Assessment
As part of its internal control framework, the Company routinely performsThe accompanying financial statements have been prepared on a going concern assessment.basis in accordance with the applicable accounting standard codification. We have concluded that the Company has sufficient capacity over the next twelve months to meet its financing obligations, that cash flows from operations are sufficient to meet the liquidity needs and/or has sufficient capacity to access ABL Facilityasset-backed facility funds to finance working capital needs should the need arise, and is projecting compliance with all applicable debt covenants through the one year period following the financial statement issuance date.arise.
2.
4. ACQUISITIONS AND DISPOSITIONS: On October 20, 2011, weJune 13, 2022, the Company entered into a time brokeragedefinitive asset purchase agreement with Emmis Communications (“TBA”Emmis”) to purchase its Indianapolis Radio Cluster to expand the Company’s market share. The deal was subject to FCC approval and other customary closing conditions and, after obtaining the approvals, closed on August 31, 2022. Urban One acquired radio stations WYXB (B105.7FM), WLHK (97.1FM), WIBC (93.1FM), translators W228CX and W298BB (The Fan 93.5FM and 107.5FM), and Network Indiana for $25 million. As part of the transaction, the Company disposed of its former WHHH radio broadcasting license along with WGPR, Inc. (“WGPR”). Pursuantthe intellectual property related to WNOW (there was a call letter change from WHHH to WNOW immediately prior to the TBA, on October 24, 2011, we beganclose) to broadcast programs produced, owned or acquired by the Company on WGPR’s Detroit radio station, WGPR-FM. We paid a monthly fee as well as certain operating costs of WGPR-FM, and in exchange we retained all revenues from the salethird party for approximately $3.2 million. The fair value of the advertising withinassets disposed of approximated the programming we provided. The original termcarrying value of the TBA was through December 31, 2014; however, in September 2014, we entered into an amendment to the TBA to extend the term of the TBA through December 31, 2019 on which date we ceased operation of the station on our behalf. While we ceased operations of the station on December 31, 2019, the Company continues to provide certain limited management services to the current owner and operator of WGPR. On August 31, 2019, the Company closed on its previously announced sale of assets of its Detroit, Michigan radio station, WDMK-FM and three translators W228CJ, W252BX, and W260CB for approximately $13.5 million to Beasley Broadcast Group, Inc.assets. The Company recognized an immateriala net loss onof $120,000 related to the sale of the stationdisposal transaction during the year ended December 31, 2019.2022.
The Company’s purchase accounting to reflect the fair value of assets acquired and liabilities assumed consisted of approximately $23.6 million to radio broadcasting licenses, $162,000 to towers and antennas, $326,000 to transmitters, $209,000 to studios, $111,000 to vehicles, $27,000 to furniture, fixtures, computer equipment and computer software, $87,000 to acquired advertising contracts, $437,000 to goodwill, and approximately $1.2 million to right of use assets and operating lease liabilities. The purchase price allocation was finalized during fiscal year 2022, and no significant changes were recorded from the original estimation. The operations of Emmis were included in the consolidated financial statements as of the acquisition date. The revenue and operating income for Emmis reported within the consolidated financial statements for the year ended December 31, 2022 were approximately $5.6 million and $1.2 million, respectively. Unaudited Pro Forma Information The table below sets forth unaudited pro forma results of operations, assuming that the Emmis acquisition occurred on January 1, 2021: | | | | | | | | | For The Year Ended | | | December 31, | | | | 2022 | | 2021 | | | | | (In thousands) | Net revenue | | $ | 496,613 | $ | 457,935 | Operating income | | | 95,365 | | 117,516 | Net income | | | 40,439 | | 39,921 |
This pro forma financial information is based on historical results of operations, adjusted for the allocation of the purchase price and other accounting adjustments, and is not indicative of what our results would have been had we operated Emmis for the period presented because the pro forma results do not reflect expected synergies. The pro forma adjustments primarily reflect depreciation expense and amortization of tangible and intangible assets related to the fair value adjustments of the assets acquired. The pro forma adjustments are based on available information and assumptions that the Company believes are reasonable to reflect the impact of this acquisition on the Company’s historical financial information on a supplemental pro forma basis. On December 19, 2019, weApril 20, 2021, the Company completed a definitive asset exchange agreement with Audacy, Inc. (formerly Entercom Communications Corp.) to expand the Company’s market share whereby the Company would receive Charlotte stations: WLNK-FM (Adult Contemporary); WBT-AM & FM (News Talk Radio); and WFNZ-AM & 102.5 FM Translator (Sports Radio). As part of the transaction, the Company transferred three radio stations to Audacy: St. Louis, WHHL-FM (Urban Contemporary); Philadelphia, WPHI-FM (Urban Contemporary); and Washington, DC, WTEM-AM (Sports); as well as the intellectual property to its St. Louis radio station, WFUN-FM (Adult Urban Contemporary). The Company and Audacy entered into boththe arrangement on November 6, 2020, and began operation of the exchanged stations on or about November 23, 2020 under LMAs until FCC approval was obtained and the transaction closed on April 20, 2021. In addition, the Company entered into an asset purchase agreement with Gateway Creative Broadcasting, Inc. (“APA”Gateway”) for the remaining assets of our WFUN station in a separate transaction which also closed on April 20, 2021. The Company received approximately $8.0 million in exchange for approximately $8.0 million in tangible and intangible assets as part of the transaction with Gateway. The Company’s purchase accounting to reflect the fair value of assets acquired and liabilities assumed consisted of approximately $21.1 million to radio broadcasting licenses, approximately $1.8 million to land and land improvements, approximately $2.0 million to towers and antennas, $517,000 to buildings, approximately $1.0 million to transmitters, $712,000 to studios, $53,000 to vehicles, $200,000 to furniture and fixtures, $67,000 to computer equipment, $19,000 to other equipment, approximately $1.7 million to right of use assets, $1.9 million advertising credit liability, $921,000 to operating lease liabilities, and $812,000 unfavorable lease liability. The fair value of the assets exchanged with Audacy approximate the carrying value of the assets. The Company recognized a TBA with Guardian Enterprise Group, Inc. and certainnet gain of its affiliates (collectively, “GEG”) with respect$404,000 related to the acquisitionAudacy and interim operation of low power television station WQMC-LD in Columbus, Ohio. Pursuant toGateway transactions during the TBA, in January 2020, we began to operate WQMC-LD until such time as theyear ended December 31, 2021. The purchase transaction can close under the APA. Under the terms of the TBA, we pay a monthly fee as well as certain operating costs of WQMC-LD,price allocation was finalized during fiscal year 2021, and in exchange, we will retain all revenuesno significant changes were recorded from the sale of the advertising within the programming. After receipt of FCC approval, we closed the transactions under the APA and took ownership of WQMC-LD on February 24, 2020 for total consideration of $475,000.original estimation. On October 30, 2020, we entered into a local marketing agreement (“LMA”) with Southeastern Ohio Broadcasting System for the operation of station WWCD-FM in Columbus, Ohio beginning November 2020. Under the terms of the LMA, we will pay a monthly fee as well as certain operating costs, and, in exchange, we will retain all revenues from the sale of the advertising within the programming. On November 6, 2020, the Company announced it had signed a definitive asset exchange agreement with Entercom Communications Corp. where the Company will receive Charlotte stations: WLNK-FM (Adult Contemporary); WBT-AM & FM (News Talk Radio); and WFNZ-AM & 102.5 FM Translator (Sports Radio). As part of the transaction, Urban One will transfer three radio stations to Entercom: St. Louis, WHHL-FM (Urban Contemporary); Philadelphia, WPHI-FM (Urban Contemporary); and Washington, DC, WTEM-AM (Sports); as well as the intellectual property to its St. Louis radio station, WFUN-FM (Adult Urban Contemporary). The Company and Entercom began operation of the exchanged stations on or about November 23, 2020 under LMAs until FCC approval was obtained. The deal is subject to FCC approval and other customary closing conditions and is anticipated to close early in the second quarter. In addition, we entered into an asset purchase agreement with Gateway Creative Broadcasting, Inc. for the remaining assets of our WFUN station in a separate transaction which is also anticipated to close early in the second quarter. The identified assets, with a combined carrying value of approximately $32.7 million, have been classified as held for sale in the consolidated balance sheet at December 31, 2020. The major categories of the assets held for sale include the following:
| | | As of December 31, 2020 | | | | | (In thousands) | | | Property and equipment, net | | $ | 2,144 | | | Goodwill | | | 470 | | | Radio broadcasting licenses | | | 30,606 | | | Right of use assets | | | 1,071 | | | Lease liabilities | | | (1,630 | ) | | Assets held for sale, net | | $ | 32,661 | |
3.5. PROPERTY AND EQUIPMENT:
Property and equipment are carried at cost less accumulated depreciation and amortization.depreciation. Depreciation is calculated using the straight-line method over the related estimated useful lives. Property and equipment consists of the following:
| | | | | | | | | | | | | As of December 31, | | Estimated | | | | 2022 | | 2021 | | Useful Lives | | | | As of December 31, | | Estimated | | | | | 2020 | | 2019 | | Useful Lives | | | | | (In thousands) | | | | | | | (In thousands) | | | | Land and improvements | | $ | 2,372 | | $ | 4,652 | | — | | $ | 4,128 | | $ | 4,128 | | — | | Buildings | | 2,654 | | 2,756 | | 31 years | | | 3,299 | | | 3,241 | | 31 years | | Transmitters and towers | | 39,277 | | 40,705 | | 7-15 years | | | 45,733 | | | 43,466 | | 7‑15 years | | Equipment | | 59,537 | | 60,391 | | 3-7 years | | | 67,025 | | | 63,192 | | 3‑7 years | | Furniture and fixtures | | 9,019 | | 9,322 | | 6 years | | | 9,357 | | | 9,397 | | 6 years | | Software and web development | | 29,741 | | 28,789 | | 3 years | | | 32,565 | | | 31,337 | | 3 years | | Leasehold improvements | | 24,449 | | 24,957 | | Lease Term | | | 25,231 | | | 24,727 | | Lesser of useful life or lease term | | Construction-in-progress | | | 372 | | | 226 | | — | | | 153 | | | 476 | | — | | | | 167,421 | | 171,798 | | | | | Less: Accumulated depreciation and amortization | | | (148,229 | ) | | | (147,405 | ) | | | | | | | | 187,491 | | | 179,964 | | | Less: accumulated depreciation | | | | (159,733) | | | (153,673) | | | | Property and equipment, net | | $ | 19,192 | | $ | 24,393 | | | | $ | 27,758 | | $ | 26,291 | | |
Depreciation expense for the years ended December 31, 2022, and 2021 was approximately $6.4 million and $5.6 million, respectively. Repairs and maintenance costs are expensed as incurred. Property and equipment assets identified as assets held for sale are excluded from the table above. 4.6. GOODWILL, RADIO BROADCASTING LICENSES AND OTHER INTANGIBLE ASSETS:
Impairment Testing We have historically made acquisitions whereby a significant amount of the purchase price was allocated to radio broadcasting licenses, goodwill and other intangible assets. In accordance with ASC 350,“Intangibles - Goodwill and Other,” we do not amortize our radio broadcasting licenses and goodwill. Instead, we perform a test for impairment annually across all reporting units and radio broadcasting licenses, or on an interim basis when events or changes in circumstances or other conditions suggest impairment may have occurred in any given reporting unit. We had 16 reporting units as of our October 2022 annual impairment assessment, consisting of each of the 13 radio markets within the radio segment and each of the other three business segments. Other intangible assets continue to be amortized on a straight-line basis over their useful lives. We evaluate amortizable intangible assets for recoverability when circumstances indicate impairment may have occurred, using an undiscounted cash flow methodology. If the future undiscounted cash flows for the intangible asset are less than net book value, then the net book value is reduced to the estimated fair value.
We perform our annual impairment test as of October 1 of each year. The Company noted interim triggering events during the current year which resulted in the recording of impairment losses. The Company has not identified any triggering events occurring after the annual testing date that would impact the impairment testing results obtained but will continue to monitor the fair value of the Company. As discussed in Note 2 – Restatement of Financial Statements, the Company is restating its previously issued financial statements to correct the certain misstatements, one of which is related to the impairment of radio broadcasting licenses. For the years ended December 31, 20202022 and 2019,2021, we recorded impairment charges against radio broadcasting licenses and goodwill collectively, of approximately $84.4$40.7 million and $10.6$2.1 million, respectively.respectively, which are included within Impairment of long-lived assets in the consolidated statements of operations. Broadcasting Licenses BeginningThe Company’s total broadcasting licenses carrying value is approximately $488.4 million as of December 31, 2022.
As restated, the table below presents the changes in March 2020, the Company notedCompany’s radio broadcasting licenses during 2022 and 2021: | | | | | | | | Total | | | | (In thousands) | Balance at January 1, 2021 (As Restated) | | | $ | 482,442 | Acquisitions | | | | 21,082 | Impairment charges | | | | (2,104) | Balance at December 31, 2021 (As Restated) | | | $ | 501,420 | Acquisitions | | | | 23,642 | Disposals | | | | (3,200) | Impairment charges | | | | (33,443) | Balance at December 31, 2022 | | | $ | 488,419 |
Our licenses expire at various dates through August 1, 2030. The FCC grants radio broadcast station licenses for specific periods of time and, upon application, may renew them for additional terms. A station may continue to operate beyond the expiration date of its license if a timely filed license renewal application is pending. Under the Communications Act, radio broadcast station licenses may be granted for a maximum term of eight years. The FCC may grant the license renewal application with or without conditions, including renewal for a term less than the maximum otherwise permitted. Historically, our licenses have been renewed for full eight-year terms without any conditions or sanctions; however, there can be no assurance that the COVID-19 pandemic and the resulting government stay at home orders were dramatically impacting certainlicenses of the Company's revenues. Most notably,each of our stations will be renewed for a number of advertisers across significant advertising categories have reducedfull term without conditions or ceased advertising spend due to the outbreak and stay at home orders which effectively shut many businesses down in the markets in which we operate. This was particularly true within our radio segment which derives substantial revenue from local advertisers who have been particularly hard hit due to social distancing and government interventions. As a result of COVID-19, the total market revenue growth for certain markets in which we operate was below that assumed in our annual impairment testing. 2020 Interim Impairment Testing
sanctions. During the firstsecond quarter of 2020, the Company recorded2022, there continued to be slowing in certain general economic conditions and a non-cash impairment charge of approximately $5.9 million to reduce the carrying value of our Atlanta market and Indianapolis market goodwill balances and the Company recorded a non-cash impairment charge of approximately $47.7 million associated with our Atlanta, Cincinnati, Dallas, Houston, Indianapolis, Philadelphia, Raleigh, Richmond and St. Louis radio market broadcasting licenses. We did not identify any impairment indicators for the three months ended June 30, 2020. Based on the latest market data obtained by the Company in the third quarter of 2020, the total anticipated market revenue growth for certain markets inrising interest rate environment, which we operate continues to be below that assumed in our first quarter impairment testing. We deemed that to be an impairment indicator that warranted interim impairment testing of certain markets’ radio broadcasting licenses, which we performed as it was determined more likely than not that the fair value was below its carrying value. The Company utilized the income approach to estimate the fair value of September 30, 2020.the broadcasting licenses. As a result of that testing,its impairment test, the Company recorded a non-cash impairment charge of approximately $10.0$8.7 million related to its Atlanta market and Indianapolis market goodwill balances and the Company recorded a non-cash impairment charge of approximately $19.1 million forduring the three months ended SeptemberJune 30, 20202022, associated with certain of our Atlanta, Cincinnati, Dallas, Houston, Indianapolis, Philadelphia and Raleighradio market radio broadcasting licenses. 2020 Annual Impairment Testing
We completed our 2020 annual impairment assessment as of October 1, 2020. Our 2020 annual impairment testing indicated In addition, the carrying values for our radio broadcasting licenses and goodwill attributable to Reach Media, TV One, digital and our radio broadcasting reporting units were not impaired. However weCompany recorded an impairment charge of approximately $1.7$1.9 million in the three months ended June 30, 2022, associated with the estimated asset sale consideration for one of our St. LouisIndianapolis radio broadcasting licenses.
2019 Interim Impairment Testing
During the secondthird quarter of 2019, the2022, economic conditions continued to slow and interest rates continued to rise. The Company performed additional impairment tests, and recorded a non-cashan impairment charge of approximately $3.8$15.5 million associated with the salecertain of our Detroitradio market radio broadcasting licenses. 2019 Annual Impairment Testing
We completed our 20192022 annual impairment assessment as of October 1, 2019. During the fourth quarter of 2019,2022. There was lower than forecasted revenue growth and operating profit margin in certain markets. As a result, the Company recorded a non-cashan impairment charge of approximately $1.0$7.4 million during the three months ended December 31, 2022, associated with our Indianapolis market radio broadcasting licenses and approximately $5.8 million to reduce the carrying value of our Interactive One goodwill balance. Our 2019 annual impairment testing indicated the carrying values for our goodwill attributable to Reach Media, TV One, and our other radio broadcasting reporting units were not impaired. Valuation of Broadcasting Licenses
We utilize the services of a third-party valuation firm to assist us in estimating the fair valuecertain of our radio broadcasting licenses and reporting units. Fair value 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. We use the income approach to test for impairment of radio broadcasting licenses. A projection period of 10 years is used, as that is the time horizon in which operators and investors generally expect to recover their investments.
When evaluating our radio broadcasting licenses for impairment, the testing is done at the unit of accounting level as determined by ASC 350“Intangibles - Goodwill and Other.”. In our case, each unit of accounting is a cluster of radio stations into one of our geographical markets. Broadcasting license fair values are based on the discounted future cash flows of the applicable unit of accounting assuming an initial hypothetical start-up operation which possesses FCC licenses as the only asset. Over time, it is assumed the operation acquires other tangible assets such as advertising and programming contracts, employment agreements and going concern value, and matures into an average performing operation in a specific radio market. The income approach model incorporates several variables, including, but not limited to: (i) radio market revenue estimates and growth projections; (ii) estimated market share and revenue for the hypothetical participant; (iii) likely media competition within the market; (iv) estimated start-up costs and losses incurred in the early years; (v) estimated profit margins and cash flows based on market size and station type; (vi) anticipated capital expenditures; (vii) estimated future terminal values; (viii) an effective tax rate assumption; and (ix) a discount rate based on the weighted-average cost Our methodology for valuing broadcasting licenses has been consistent for all periods presented. Below are some of the key assumptions used in the income approach model for estimating the broadcasting license and goodwill fair values for the annual impairment testing performed and interim impairment testing where an impairment charge was recorded since January 1, 2019. During2021. | | | | | | | | | | | | | | | Radio Broadcasting | | October 1, | | September 30, | | | June 30, | | October 1, | | Licenses | | 2022 | | 2022 (a) | | | 2022 (a) | | 2021 | | | | | | | | (As Restated) | | | (As Restated) | | | | (As Restated) | | | | | | | | | | | | | | | | | Impairment charge (in millions) | | $ | 7.4 | | $ | 15.5 | | $ | 10.6 | (*) | | $ | 2.1 | | | | | | | | | | | | | | | | | Discount rate | | | 9.5 | % | | 9.5 | % | | 9.5 | % | | | 9.0 | % | Revenue growth rate range | | | 0.0% – 1.7 | % | | 0.3% – 1.6 | % | | 0.7% – 2.4 | % | | | 0.7% – 8.0 | % | Terminal growth rate range | | | 0.3% – 0.8 | % | | 0.3% – 0.8 | % | | 0.7% – 1.0 | % | | | 0.7% – 1.0 | % | Mature market share range | | | 6.8% – 27.6 | % | | 6.8% – 27.6 | % | | 6.9% – 25.6 | % | | | 6.2% – 23.2 | % | Mature operating profit margin range | | | 27.2% – 34.6 | % | | 28.3% – 36.1 | % | | 28.3% – 36.1 | % | | | 26.9% – 36.1 | % |
(a) Reflects changes only to the year ended December 31, 2020,key assumptions used in the Company recorded a non-cashinterim testing for certain units of accounting. (*) Includes an impairment charge of approximately $68.5 million associated with our Atlanta, Cincinnati, Dallas, Houston, Indianapolis, Philadelphia, Raleigh, Richmond and St. Louis radio market broadcasting licenses. Duringwhereby the year ended December 31, 2019, the Company recorded a non-cash impairment charge of approximately $4.8 million associated with our Indianapolis and Detroit market radio broadcasting licenses. | Radio Broadcasting | | October 1, | | | September 30, | | | March 31, | | | October 1, | | | June 30, | | | Licenses | | 2020 | | | 2020 (a) | | | 2020 (a) | | | 2019 | | | 2019 (*) | | | Impairment charge (in millions) | | $ | 1.7* | | | $ | 19.1 | | | $ | 47.7 | | | | 1.0 | | | $ | 3.8 | | | Discount Rate | | | 9.0 | % | | | 9.0 | % | | | 9.5 | % | | | 9.0 | % | | | * | | | Year 1 Market Revenue Growth Rate Range | | | (10.7)% – (16.0 | )% | | | (10.7)% – (16.8 | )% | | | (13.3 | ) | | | 0.9% – 1.8 | % | | | * | | | Long-term Market Revenue Growth Rate Range (Years 6 – 10) | | | 0.7% – 1.1 | % | | | 0.7% – 1.1 | % | | | 0.7% – 1.1 | | | | 0.7% – 1.1 | % | | | * | | | Mature Market Share Range | | | 6.7% – 23.9 | % | | | 6.7% – 23.9 | % | | | 6.9% – 25.0 | | | | 6.9% – 25.0 | % | | | * | | | Mature Operating Profit Margin Range | | | 27.7% – 37.1 | % | | | 27.7% – 37.1 | % | | | 27.6% – 39.7 | | | | 27.6% – 39.7 | % | | | * | |
| (a) | Reflects changes only to the key assumptions used in the interim testing for certain units of accounting. | | (*) | Licenselicense fair value based on estimated asset sale consideration. |
Broadcasting Licenses Valuation Results
The Company’s total broadcasting licenses carrying value is approximately $484.1 million as of December 31, 2020. The units of accounting reflected in the table below are not disclosed on a specific market basis so as to not make sensitive information publicly available that could be competitively harmful to the Company.
| | | Radio Broadcasting Licenses
Carrying Balances | | | | | As of | | | Net | | | As of | | | Unit of Accounting | | December
31, 2019 | | | Increase
(Decrease) | | | December
31, 2020 | | | | | (In thousands) | | | Unit of Accounting 2 | | $ | 3,086 | | | $ | – | | | $ | 3,086 | | | Unit of Accounting 5 | | | 16,100 | | | | (2,575 | ) | | | 13,525 | | | Unit of Accounting 7 | | | 14,748 | | | | 475 | | | | 15,223 | | | Unit of Accounting 11 | | | 20,135 | | | | (4,575 | ) | | | 15,560 | | | Unit of Accounting 4 | | | 16,142 | | | | – | | | | 16,142 | | | Unit of Accounting 15 | | | 20,736 | | | | (20,736 | ) | | | — | | | Unit of Accounting 14 | | | 20,770 | | | | (1,700 | ) | | | 19,070 | | | Unit of Accounting 6 | | | 22,642 | | | | – | | | | 22,642 | | | Unit of Accounting 13 | | | 47,846 | | | | (8,200 | ) | | | 39,646 | | | Unit of Accounting 12 | | | 49,663 | | | | (16,695 | ) | | | 32,968 | | | Unit of Accounting 8 | | | 62,015 | | | | (9,500 | ) | | | 52,515 | | | Unit of Accounting 16 | | | 56,295 | | | | (1,625 | ) | | | 54,670 | | | Unit of Accounting 1 | | | 93,394 | | | | (9,025 | ) | | | 84,369 | | | Unit of Accounting 10 | | | 139,125 | | | | (24,475 | ) | | | 114,650 | | | Total | | $ | 582,697 | | | $ | (98,631 | )* | | $ | 484,066 | |
* The amount listed is net of additions, dispositions, impairment charges, and reclassifications into assets held for sale.
Our licenses expire at various dates through February 1, 2029.
Valuation of Goodwill
The impairment testing of goodwill is performed at the reporting unit level. We had 17 reporting units as of our October 2020 annual impairment assessment, consisting of each of the 14 radio markets within the radio division (we retained ownership of our St. Louis market assets as of December 31, 2020) and each of the other three business divisions. In testing for the impairment of goodwill, we primarily rely on the income approach. The approach involves a 10-year model with similar variables as described above for broadcasting licenses, except that the discounted cash flows are based on the Company’s estimated and projectedasset sale consideration.
If actual market revenue, market share and operating performance for its reporting units, instead ofconditions are less favorable than those for a hypothetical participant. We use a 5-year model for our Reach Media reporting unit. We evaluate allestimated by us or if events andoccur or circumstances on an interim basis to determine if an impairment indicator is present and also perform annual testing by comparingchange that would reduce the fair value of our broadcast licenses below the reporting unit with its carrying amount.value, we may be required to recognize additional impairment charges in future periods. Such a charge could have a material effect on our consolidated financial statements. We recognize an impairment chargewill continue to operationsmonitor potential triggering events and perform the appropriate analysis when deemed necessary. Goodwill The table below presents the changes in the amount that the reporting unit’sCompany’s goodwill carrying value exceedsvalues for its fair value. The impairment charge recognized cannot exceed the total amount of goodwill allocated to the reporting unit.four reportable segments during 2022 and 2021:
We have not made any changes to the methodology for valuing or allocating goodwill when determining the fair values of the reporting units.
| | | | | | | | | | | | | | | | | | Radio | | Reach | | | | | Cable | | | | | | Broadcasting | | Media | | Digital | | Television | | | | | | Segment | | Segment | | Segment | | Segment | | Total | | | | (In thousands) | Gross goodwill at January 1, 2021 | | $ | 155,000 | | $ | 30,468 | | $ | 27,567 | | $ | 165,044 | | $ | 378,079 | Additions | | | — | | | — | | | — | | | — | | | — | Impairments | | | — | | | — | | | — | | | — | | | — | Accumulated impairment losses | | | (117,748) | | | (16,114) | | | (20,345) | | | — | | | (154,207) | Audacy asset exchange | | | (470) | | | — | | | — | | | — | | | (470) | Net goodwill at December 31, 2021 | | $ | 36,782 | | $ | 14,354 | | $ | 7,222 | | $ | 165,044 | | $ | 223,402 | | | | | | | | | | | | | | | | | Gross goodwill | | $ | 155,000 | | $ | 30,468 | | $ | 27,567 | | $ | 165,044 | | $ | 378,079 | Additions | | | 437 | | | — | | | — | | | — | | | 437 | Impairments | | | (7,240) | | | — | | | — | | | — | | | (7,240) | Accumulated impairment losses | | | (117,748) | | | (16,114) | | | (20,345) | | | — | | | (154,207) | Audacy asset exchange | | | (470) | | | — | | | — | | | — | | | (470) | Net goodwill at December 31, 2022 | | $ | 29,979 | | $ | 14,354 | | $ | 7,222 | | $ | 165,044 | | $ | 216,599 |
As noted above, during the firstquarters ended June 30, 2022 and third quarters of 2020 due to the COVID-19 pandemic,September 30, 2022, we identified impairment indicators at certain of our radio markets, and, as such, we performed an interim analysis formarkets. As it was determined that it was more likely than not that the fair value of certain radio market goodwill.markets reporting units were below its carrying value, the Company performed interim quantitative impairment tests as of the June 30, 2022 and September 30, 2022 balance sheet dates. During the three months ended March 31, 2020,June 30, 2022, the Company recorded a non-cashan impairment charge of approximately $5.9$4.3 million to reduce the carrying value of our Atlanta and Indianapolis market goodwill balances. We did not identify anybalance. No impairment indicators at any of our other reportable segmentswas identified for the three months ended June 30, 2020. During the three months ended September 30, 2020,2022 based on the quantitative test performed. As part of the Company’s annual impairment assessment, the Company recorded a non-cashan impairment charge of approximately $10.0$2.9 million related to its Atlanta market and Indianapolis market goodwill balances. Duringreduce the fourth quarter of 2019, the Company performed its annual impairment testing on the valuationcarrying value of goodwill associated with our digital segment. Our digital segment’s net revenues and cash flow internal projections were revised downward andin the Philadelphia market for the quarter ending December 31, 2022 as a result of our annual assessment, the Company recorded a goodwilllower than forecasted revenue growth. There was no impairment charge of approximately $5.8 million. Below are some of the key assumptions used in the income approach model for estimating reporting unit fair values for the annual impairment assessments performed and interim impairment testing where an impairment charge was recorded since January 1, 2019.
| Goodwill (Radio Market | | October 1, | | | September 30, | | | March 31, | | | October 1, | | | Reporting Units) | | 2020(a) | | | 2020(a) | | | 2020(a) | | | 2019(a) | | | Impairment charge (in millions) | | $ | — | | | $ | 10.0 | | | $ | 5.9 | | | $ | — | | | | | | | | | | | | | | | | | | | | | Discount Rate | | | 9.0 | % | | | 9.0 | % | | | 9.5 | % | | | 9.0 | | | Year 1 Market Revenue Growth Rate Range | | | (12.9)% – 25.9 | % | | | (26.6)% – 34.7 | % | | | (14.5)% – (12.9 | )% | | | (7.6)% – 49.3 | | | Long-term Market Revenue Growth Rate Range (Years 6 – 10) | | | 0.7% – 1.1 | % | | | 0.9% – 1.1 | % | | | 0.9% – 1.1 | % | | | 0.7% – 1.1 | | | Mature Market Share Range | | | 6.8% – 16.8 | % | | | 8.4% – 12.7 | % | | | 11.1% – 13.0 | % | | | 7.1% - 17.0 | | | Mature Operating Profit Margin Range | | | 27.7% – 49.1 | % | | | 27.7% – 48.1 | % | | | 29.4% – 39.0 | % | | | 26.8% - 47.6 | |
| (a) | Reflects the key assumptions for testing only those radio markets with remaining goodwill. |
year ended December 31, 2021. Below are some of the key assumptions used in the income approach model for estimating the Radio Market goodwill reporting units fair value for Reach Mediavalues for the quantitative annual and interim impairment assessments performed since October 2019. When compared to the discount rates used for assessing radio market reporting units, the higher discount rates used in these assessments reflect a premium for a riskier and broader media business, with a heavier concentration and significantly higher amount of programming content assets that are highly dependent on a single on-air personality. As a result of our impairment assessments, the Company concluded that the goodwill was not impaired. | | | October 1, | | | October 1, | | | Reach Media Segment Goodwill | | 2020 | | | 2019 | | | Impairment charge (in millions) | | $ | — | | | $ | — | | | | | | | | | | | | | Discount Rate | | | 11.0 | % | | | 10.5 | % | | Year 1 Revenue Growth Rate | | | 22.1 | % | | | (9.7 | )% | | Long-term Revenue Growth Rate (Year 5) | | | 1.0 | % | | | 1.0 | % | | Operating Profit Margin Range | | | 18.0 – 19.1 | % | | | 13.3% - 14.3 | % |
During the fourth quarter of 2019, the Company performed its annualinterim quantitative impairment testing on the valuation of goodwill associated with our digital segment. Our digital segment’s net revenues and cash flow internal projections were revised downward and as a result of our annual assessment, the Company recorded a goodwillwhere an impairment charge of approximately $5.8 million. Below are some ofwas recorded since January 1, 2021. We used a step zero qualitative analysis for all other reporting units.
| | | | | | | | | | | | | | Goodwill (Radio Market | | October 1, | | September 30, | | June 30, | | October 1, | | Reporting Units) | | 2022 (a) | | 2022 (a) | | 2022 (a) | | 2021 (a) | | | | | | | | | | | | | | | | Impairment charge (in millions) | | $ | 2.9 | | $ | — | | $ | 4.3 | | $ | — | | | | | | | | | | | | | | | | Discount rate | | | 9.5 | % | | 9.5 | % | | 9.5 | % | | 9.0 | % | Revenue growth rate range | | | (10.3)% – 72.0 | % | | (0.3)% – 1.7 | % | | (2.5)% – 2.5 | % | | (10.7)% – 27.1 | % | Terminal growth rate range | | | 0.5% – 0.8 | % | | 1.0 | % | | 0.7% – 1.0 | % | | 0.7% – 1.0 | % | Operating profit margin range | | | 16.6% – 46.0 | % | | 33.4 | % | | 19.5% – 32.9 | % | | 21.2% – 47.3 | % |
(a) Reflects the key assumptions used in the income approach model for determining the fair value of our digital reporting unit since October 2019. When compared to discount rates for thetesting only those radio reporting units, the higher discount rate used to value the reporting unit is reflective of discount rates applicable to internet media businesses. The Company concluded no impairment to the carrying value of goodwill had occurred as a result of the annual testing performed in October 2020.
| | | October 1, | | | October 1, | | | Digital Segment Goodwill | | 2020 | | | 2019 | | | Impairment charge (in millions) | | $ | — | | | $ | 5.8 | | | | | | | | | | | | | Discount Rate | | | 14.0 | % | | | 12.0 | % | | Year 1 Revenue Growth Rate | | | (5.4) | % | | | 12.2 | % | | Long-term Revenue Growth Rate (Years 6 – 10) | | | 3.4% - 6.0 | % | | | 2.8% - 7.7 | % | | Operating Profit Margin Range | | | (12.5)% - 13.1 | % | | | (4.7)% - 11. | % |
markets with remaining goodwill. Below are some of the key assumptions used in the income approach model for determining the fair value of our cable television segment since October 2019. As a result of the testing performed in 2020 and 2019, the Company concluded no impairment to the carrying value of goodwill had occurred.
| | | October 1, | | | October 1, | | | Cable Television Segment Goodwill | | 2020 | | | 2019 | | | Impairment charge (in millions) | | $ | — | | | $ | — | | | | | | | | | | | | | Discount Rate | | | 10.5 | % | | | 10.0 | % | | Year 1 Revenue Growth Rate | | | 4.5 | % | | | 1.0 | % | | Long-term Revenue Growth Rate Range (Years 6 – 10) | | | 0.6% - 1.5 | % | | | 1.9% - 2.3 | % | | Operating Profit Margin Range | | | 37.2% - 46.1 | % | | | 33.0% - 45.5 | % |
The above goodwill tables reflect some of the key valuation assumptions used for 11 of our 17 reporting units. The other six remaining reporting units had no goodwill carrying value balances as of December 31, 2020.
Goodwill Valuation Results
The table below presents the changes in Company’s goodwill carrying values for its four reportable segments during 2020 and 2019:
| | | Radio
Broadcasting
Segment | | | Reach Media
Segment | | | Digital
Segment | | | Cable
Television
Segment | | | Total | | | | | (In thousands) | | | Gross goodwill | | $ | 155,000 | | | $ | 30,468 | | | $ | 27,567 | | | $ | 165,044 | | | $ | 378,079 | | | Accumulated impairment losses | | | (101,848 | ) | | | (16,114 | ) | | | (14,545 | ) | | | — | | | | (132,507 | ) | | Additions | | | — | | | | — | | | | — | | | | — | | | | — | | | Impairments | | | — | | | | — | | | | (5,800 | ) | | | — | | | | (5,800 | ) | | Net goodwill at December 31, 2019 | | $ | 53,152 | | | $ | 14,354 | | | $ | 7,222 | | | $ | 165,044 | | | $ | 239,772 | | | Gross goodwill | | $ | 155,000 | | | $ | 30,468 | | | $ | 27,567 | | | $ | 165,044 | | | $ | 378,079 | | | Accumulated impairment losses | | | (101,848 | ) | | | (16,114 | ) | | | (20,345 | ) | | | — | | | | (138,307 | ) | | Additions | | | — | | | | — | | | | — | | | | — | | | | — | | | Impairments | | | (15,900 | ) | | | — | | | | — | | | | — | | | | (15,900 | ) | | Assets held for sale | | | (470 | ) | | | — | | | | — | | | | — | | | | (470 | ) | | Net goodwill at December 31, 2020 | | $ | 36,782 | | | $ | 14,354 | | | $ | 7,222 | | | $ | 165,044 | | | $ | 223,402 | |
In arriving at the estimated fair values for radio broadcasting licenses and goodwill, we also performed an analysis by comparing our overall average implied multiple based on our cash flow projections and fair values to recently completed sales transactions, and by comparing our estimated fair values to the market capitalization of the Company. The results of these comparisons confirmed that the fair value estimates resulting from our annual assessments in 2020 were reasonable.
Intangible Assets Excluding Goodwill and Radio Broadcasting Licenses Other intangible assets, excluding goodwill, radio broadcasting licenses and the unamortized brand name, are being amortized on a straight-line basis over various periods. Other intangible assets consist of the following: | | | | | | | Remaining | | | | | | | | | | Weighted- | | | | | | | | | | Average | | | | | | As of December 31, | | Period of | | Period of | | | | | | 2020 | | 2019 | | Amortization | | Amortization | | | | | | (In thousands) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Remaining | | | | | | | | | | | | | | | | | | | | | | | Weighted- | | | | | | | | | | | | | | | | | | | | | | | Average | | | As of December 31, | | Period of | | Period of | | | 2022 | | 2021 | | Amortization | | Amortization | | | | | | | | | | | | (As Restated) | | | | | | | (In thousands) | | | | | | | | Gross Carrying | | | Accumulated | | | Net | | | Gross Carrying | | | Accumulated | | | Net | | | | | | | | Amount | | | Amortization | | | Amount | | | Amount | | | Amortization | | | Amount | | | | | | Trade names | | $ | 17,425 | | $ | 17,413 | | 1-5 Years | | 1.1 Years | | $ | 17,431 | | $ | (17,418) | | $ | 13 | | $ | 17,425 | | $ | (17,405) | | $ | 20 | | 1‑5 Years | | 1.6 Years | | Intellectual property | | 9,531 | | 9,531 | | 4-10 Years | | 0.0 Years | | | 6,878 | | | (6,878) | | | — | | | 6,878 | | | (6,878) | | | — | | 4‑10 Years | | 0.0 Years | | Acquired income leases | | 127 | | 127 | | 3-15 Years | | 10.2 Years | | | | Advertiser agreements | | 46,789 | | 46,789 | | 1-12 Years | | 2.4 Years | | | 46,669 | | | (45,728) | | | 941 | | | 46,582 | | | (42,276) | | | 4,306 | | 1‑12 Years | | 0.2 Years | | Favorable office and transmitter leases | | 2,097 | | 2,097 | | 2-60 Years | | 38.7 Years | | | | Brand names | | 4,413 | | 4,413 | | 10 Years | | 6.9 Years | | | 4,413 | | | (3,732) | | | 681 | | | 4,413 | | | (3,558) | | | 855 | | 10 Years | | 4.8 Years | | Brand names - unamortized | | 39,690 | | 39,690 | | Indefinite | | — | | | 39,690 | | | — | | | 39,690 | | | 39,690 | | | — | | | 39,690 | | Indefinite | | — | | Debt costs | | 2,053 | | 510 | | Debt term | | 0.0 Years | | | | Launch assets | | 9,021 | | 6,284 | | Contract length | | 4.5 Years | | | Launch assets, net of current portion | | | 22,791 | | | (9,104) | | | 13,687 | | | 7,597 | | | (4,724) | | | 2,873 | | Contract length | | 3.8 Years | | Other intangibles | | | 675 | | | 675 | | 1-5 Years | | 0.8 Years | | | 849 | | | (668) | | | 181 | | | 842 | | | (665) | | | 177 | | 1‑15 Years | | 3.3 Years | | | | 131,821 | | 127,529 | | | | | | | | Less: Accumulated amortization | | | (75,768 | ) | | | (69,317 | ) | | | | | | | | Other intangible assets, net | | $ | 56,053 | | $ | 58,212 | | | | 4.8 Years | | | Total other intangible assets | | $ | 138,721 | | $ | (83,528) | | $ | 55,193 | | $ | 123,427 | | $ | (75,506) | | $ | 47,921 | | | | 3.1 Years |
Amortization expense of intangible assets for each of the years ended December 31, 20202022 and 20192021 was approximately $3.9 million and $10.9 million, respectively.$3.7 million. The following table presents the Company’s estimate of amortization expense for the years 20212023 through 20252027 for intangible assets:assets as of December 31, 2022: | | | (In thousands) | | | | 2021 | | $ | 4,663 | | | | 2022 | | $ | 4,637 | | | | | | | | | | | (In thousands) | | 2023 | | $ | 2,212 | | | $ | 1,232 | | 2024 | | $ | 1,208 | | | | 172 | | 2025 | | $ | 230 | | | | 141 | 2026 | | | | 140 | 2027 | | | | 74 |
The table above excludes launch asset amortization as it is recorded as a reduction to revenue. Actual amortization expense may vary as a result of future acquisitions and dispositions.
5.
7. CONTENT ASSETS: The gross cost and accumulated amortization of content assets is as follows: | | | | | | | | | | | | | As of December 31, | | Period of | | | | 2022 | | 2021 | | Amortization | | | | As of December 31, | | Period of | | | | | 2020 | | 2019 | | Amortization | | | | | (In thousands) | | | | | | | (In thousands) | | | | Produced content assets: | | | | | | | | | | | | | | | | Completed | | $ | 365,806 | | $ | 349,521 | | | | $ | 122,660 | | $ | 117,058 | | | | In-production | | 11,029 | | 9,472 | | | | | 23,300 | | | 12,961 | | | | Licensed content assets acquired: | | | | | | | | | | | | | | | | Acquired | | | 56,913 | | | 46,515 | | | | | 55,751 | | | 61,374 | | | | Content assets, at cost | | 433,748 | | 405,508 | | 1-6 Years | | | 201,711 | | | 191,393 | | 1‑5 Years | | Less: Accumulated amortization | | | (342,139 | ) | | | (304,745 | ) | | | Less: accumulated amortization | | | | (81,330) | | | (105,355) | | | | Content assets, net | | 91,609 | | 100,763 | | | | 120,381 | | | 86,038 | | | | Current portion | | | (28,434 | ) | | | (30,642 | ) | | | Less: current portion | | | | (34,003) | | | (25,883) | | | | Noncurrent portion | | $ | 63,175 | | $ | 70,121 | | | $ | 86,378 | | $ | 60,155 | | |
ProducedThe aggregate amortization expense for content assets include certain unamortized costs that will not be 80% amortized within threefor the years fromended December 31, 2020, totaling2022 and 2021 is approximately $9.9 million. Approximately 38.9% of these unamortized costs are expected to be amortized within three$43.5 million and $47.1 million, respectively. The estimated future amortization expense for completed and released content assets is approximately $17.3 million, $14.6 million, and $13.1 million for the years from December 31, 2020. The remaining balance of these costs will be amortized through the year ending December 31, 2026.
2023, 2024 and 2025, respectively. Amortization of content assets is recorded in the consolidated statements of operations as programming and technical expenses. Future estimated content amortization expense related to agreements entered into as of December 31, 2020,2022, for years 20212023 through 2025 is as follows: | | | (In thousands) | | | | 2021 | | $ | 28,434 | | | | 2022 | | $ | 19,938 | | | | | | | | | | | (In thousands) | | 2023 | | $ | 10,377 | | | $ | 34,003 | | 2024 | | $ | 3,149 | | | | 23,201 | | 2025 | | $ | 1,240 | | | | 15,964 |
Future estimated content amortization expense is not included for in-production content assets in the table above. Future minimum content payments required under agreements entered into as of December 31, 2020,2022, are as follows: | | | (In thousands) | | | 2021 | | $ | 16,248 | | | 2022 | | $ | 7,974 | | | 2023 | | $ | 1,505 | |
| | | | | | (In thousands) | 2023 | | $ | 26,718 | 2024 | | | 9,371 | 2025 | | | 994 |
6.
8. INVESTMENTS: Cost Method
On April 10, 2015, the Company made a $5 million investment in MGM’s world-class casino property, MGM National Harbor, located in Prince George’s County, Maryland, which has a predominately African-American demographic profile. On November 30, 2016, the Company contributed an additional $35 million to complete its investment. This investment further diversified our platform in the entertainment industry while still focusing on our core demographic. We account for this investment on aThe amortized cost, basis. Our MGM National Harbor investment entitles us to an annual cash distribution based on net gaming revenue. Theestimated fair value, of our MGM investment is included in other assetsand unrealized gains and losses on the consolidated balance sheets and its distribution income in the amount of approximately $4.9 million and $6.9 million, for the years ended December 31, 2020 and 2019, respectively, is recorded in other income on the consolidated statements of operations. The cost method investment is subject to a periodic impairment review in the normal course. The Company reviewed the investment during 2020 and 2019 and concluded that no impairment to the carrying value was required. Asdebt security classified as available-for-sale as of December 31, 2020, the Company’s interest in the MGM National Harbor Casino secured the MGM National Harbor Loan (as defined in Note 9 – Long-Term Debt.)2022 and 2021 is summarized as follows:
7.
| | | | | | | | | | | | | | | Amortized | | Gross | | Gross | | | | | | Cost | | Unrealized | | Unrealized | | Fair | | | Basis | | Gains | | Losses | | Value | | | | (In thousands) | December 31, 2022 | | | | | | | | | | | | | MGM Investment | | $ | 40,000 | | $ | 104,326 | | $ | (7,500) | | $ | 136,826 | Total available-for-sale securities | | $ | 40,000 | | $ | 104,326 | | $ | (7,500) | | $ | 136,826 | | | | | | | | | | | | | | December 31, 2021 (As Restated) | | | | | | | | | | | | | MGM Investment | | $ | 40,000 | | $ | 73,800 | | $ | (1,200) | | $ | 112,600 | Total available-for-sale securities | | $ | 40,000 | | $ | 73,800 | | $ | (1,200) | | $ | 112,600 |
The available-for-sale debt security has no stated maturity date. 9. OTHER CURRENT LIABILITIES: Other current liabilities consist of the following: | | | As of December 31, | | | | | 2020 | | | 2019 | | | | | (In thousands) | | | Deferred revenue | | $ | 10,875 | | | $ | 10,879 | | | Deferred barter revenue | | | 935 | | | | 1,599 | | | Employment Agreement Award | | | 3,325 | | | | 3,208 | | | Accrued national representative fees | | | 1,087 | | | | 662 | | | Accrued miscellaneous taxes | | | 562 | | | | 366 | | | Income taxes payable | | | 600 | | | | 590 | | | Tenant allowance | | | 242 | | | | 305 | | | Contingent consideration | | | 780 | | | | 1,526 | | | Reserve for audience deficiency | | | 3,544 | | | | 3,005 | | | Other current liabilities | | | 4,967 | | | | 3,253 | | | Other current liabilities | | $ | 26,917 | | | $ | 25,393 | |
| | | | | | | | | As of December 31, | | | 2022 | | 2021 | | | | | | (As Restated) | | | (In thousands) | Deferred revenue | | $ | 11,831 | | $ | 5,503 | Reserve for audience deficiency | | | 9,629 | | | 6,020 | Other | | | 6,870 | | | 6,537 | Employment Agreement Award | | | 2,675 | | | 3,966 | Launch liability | | | 2,500 | | | — | Deferred barter revenue | | | 1,635 | | | 1,271 | Accrued national representative fees | | | 947 | | | 457 | Tenant allowance | | | 117 | | | 180 | Accrued miscellaneous taxes | | | 79 | | | 213 | Income taxes payable | | | 37 | | | 283 | | | $ | 36,320 | | $ | 24,430 |
8. DERIVATIVE INSTRUMENTS:
10. EMPLOYMENT AGREEMENT AWARD: The Company accounts for an award called for in the CEO’s employment agreement (the “Employment Agreement Award”) as a derivative instrument in accordance with ASC 815, “Derivatives and Hedging.”at fair value. The Company estimated the fair value of the award at December 31, 20202022 and 2019,2021, to be approximately $25.6$26.3 million and $27.0$28.2 million, respectively, and accordingly adjusted its liability to this amount. The long-term portion is recorded in other long-term liabilities and the current portion is recorded in other current liabilities in the consolidated balance sheets. The expense associated with the Employment Agreement Award was recorded in the consolidated statements of operations as corporate selling, general and administrative expenses and was approximately $2.3$2.1 million and $4.9$6.2 million for the years ended December 31, 20202022 and 2019,2021, respectively. The Company’s obligation to pay the Employment Agreement Award was triggered after the Company recovered the aggregate amount of its capital contribution in TV One and only upon actual receipt of distributions of cash or marketable securities or proceeds from a liquidity event with respect to the Company’s aggregate investment in TV One. The CEO was fully vested in the award upon execution of the employment agreement, and the award lapses if the CEO voluntarily leaves the Company, or is terminated for cause. In September 2014,2022, the Compensation Committee of the Board of Directors of the Company approved terms for a new employment agreement with the CEO, including a renewal of the Employment Agreement Award upon similar terms as in the prior employment agreement. Prior to the quarter ended September 30, 2018, there were probability factors included in the calculation of the award related to the likelihood that the award will be realized. 9.11. LONG-TERM DEBT:
Long-term debt consists of the following: | | | As of December 31, | | | | | 2020 | | | 2019 | | | | | (In thousands) | | | 2018 Credit Facility | | $ | 129,935 | | | $ | 167,145 | | | MGM National Harbor Loan | | | 57,889 | | | | 52,099 | | | 2017 Credit Facility | | | 317,332 | | | | 320,629 | | | 8.75% Senior Secured Notes due December 2022 | | | 347,016 | | | | — | | | 7.375% Senior Secured Notes due April 2022 | | | 2,984 | | | | 350,000 | | | Total debt | | | 855,156 | | | | 889,873 | | | Less: current portion of long-term debt | | | 23,362 | | | | 25,945 | | | Less: original issue discount and issuance costs | | | 12,870 | | | | 13,620 | | | Long-term debt, net | | $ | 818,924 | | | $ | 850,308 | |
| | | | | | | | | As of December 31, | | | 2022 | | 2021 | | | | (In thousands) | 7.375% Senior Secured Notes due February 2028 | | $ | 750,000 | | $ | 825,000 | PPP Loan | | | — | | | 7,505 | Total debt | | | 750,000 | | | 832,505 | Less: current portion of long-term debt | | | — | | | — | Less: original issue discount and issuance costs | | | 11,000 | | | 13,889 | Long-term debt, net | | $ | 739,000 | | $ | 818,616 |
2018 Credit Facility
2028 Notes On December 4, 2018,January 7, 2021, the Company launched an offering (the “2028 Notes Offering”) of $825 million in aggregate principal amount of 7.375% senior secured notes due 2028 (the “2028 Notes”) in a private offering exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”). On January 8, 2021, the Company entered into a purchase agreement with respect to the 2028 Notes at an issue price of 100% and the 2028 Notes Offering closed on January 25, 2021. The 2028 Notes are general senior secured obligations of the Company and are guaranteed on a senior secured basis by certain of its subsidiaries entered into a credit agreement (“the Company’s direct and indirect restricted subsidiaries. The 2028 Notes mature on February 1, 2028 and interest on the Notes accrues and is payable semi-annually in arrears on February 1 and August 1 of each year, commencing on August 1, 2021 at the rate of 7.375% per annum. The Company used the net proceeds from the 2028 Notes Offering, together with cash on hand, to repay or redeem: (i) the 2017 Credit Facility; (ii) the 2018 Credit Facility”), amongFacility; (iii) the Company,MGM National Harbor Loan; (iv) the lenders party thereto from time to time, Wilmington Trust, National Association,remaining amounts of our 7.375% Notes; and (v) our 8.75% Notes that were issued in the November 2020 Exchange Offer (all as administrative agent, and TCG Senior Funding L.L.C, as sole lead arranger and sole bookrunner. The 2018defined below). Upon settlement of the 2028 Notes Offering, the 2017 Credit Facility, provided $192.0 million in term loan borrowings, which was funded on December 20, 2018. The net proceeds of term loan borrowings under the 2018 Credit Facility were used to refinance, repurchase, redeem or otherwise repay the Company's then outstanding 9.25% Senior Subordinated Notes due 2020. Until its termination as described in Note 16 – Subsequent Events, borrowings under the 2018 Credit Facility were subject to customary conditions precedent, as well as a requirement under the 2018 Credit Facility that (i) the Company's total gross leverage ratio on a pro forma basis be not greater than 8:00 to 1:00 (this total gross leverage ratio test steps down as described below), (ii) neither of the administrative agents under the Company's existing credit facilities nor the trustee under the Company's existing senior secured notes due 2022 have objected to the terms of the new credit documents and (iii) certification by the Company that the terms and conditions of the 2018 Credit Facility satisfied the requirements of the definition of “Permitted Refinancing” (as defined in the agreements governing the Company's existing credit facilities) and neither of the administrative agents under the Company's existing credit facilities notified the Company within five (5) business days prior to funding the borrowings under the 2018 Credit Facility that it disagreed with such determination (including a reasonable description of the basis upon which it disagrees).
The 2018 Credit Facility was scheduled to mature on December 31, 2022 (the “Maturity Date”). In connection with the Exchange Offer (as defined below), we also entered into an amendment to certain terms of our 2018 Credit Facility including the extension of the maturity date to March 31, 2023. Interest rates on borrowings under the 2018 Credit Facility were either (i) from the Funding Date to the Maturity Date, 12.875% per annum, (ii) 11.875% per annum, once 50% of the term loan borrowings had been repaid or (iii) 10.875% per annum, once 75% of the term loan borrowings had been repaid. Interest payments began on the last day of the 3-month period commencing on the Funding Date. Within 90 days following the completion of the Exchange Offer (as defined below), the Company was required to repay $10 million of the 2018 Credit Facility. The amendment was accounted for as a modification in accordance with the provisions of ASC 470, “Debt”.
The Company's obligations under the 2018 Credit Facility were not secured. The 2018 Credit Facility was guaranteed on an unsecured basis by each entity that guarantees the Company's outstanding $350.0 million 2017 Credit Facility (as defined below).
The term loans could be voluntarily prepaid prior to February 15, 2020 subject to payment of a prepayment premium. The Company was required to repay principal to the extent then outstanding on each quarterly interest payment date, commencing on the last business day in March 2019, equal to one quarter of 7.5% of the aggregate initial principal amount of all term loans incurred on the Funding Date to December 2019, commencing on the last business day in March 2020, one quarter of 10.0% of the aggregate initial principal amount of all term loans incurred on the Funding Date to December 2021, and, commencing on the last business day in March 2021, one quarter of 12.5% of the aggregate initial principal amount of all term loans incurred on the Funding Date to December 2022. The Company was also required to use 75% of excess cash flow (“ECF payment”) as defined in the 2018 Credit Facility, which excluded any distributions to the Company or its restricted subsidiaries in respect of its interests in the MGM National Harbor to repay outstanding term loans at par, paid semiannuallyLoan were terminated and to use 100%the indentures governing the 7.375% Notes and the 8.75% Notes were satisfied and discharged. There was a net loss on retirement of all distributions to the Company or its restricted subsidiaries received in respectdebt of its interest in the MGM National Harbor to repay outstanding terms loans at par. Duringapproximately $6.9 million for the year ended December 31, 2020, the Company repaid approximately $37.2 million under the 2018 Credit Facility. Included in the repayments made during the year ended December 31, 2020 was approximately $11.1 million in ECF payments in accordance2021 associated with the agreement. Duringissuance of the year ended December 31, 2019, the Company repaid approximately $24.9 million, under the 2018 Credit Facility. Included in the repayments made during the year ended December 31, 2019 was approximately $3.5 million in ECF payments in accordance with the agreement.2028 Notes.
The 2018 Credit Facility contained customary representations2028 Notes and warranties and events of default, affirmative and negative covenants (in each case, subject to materiality exceptions and qualifications). The 2018 Credit Facility, as amended, also contained certain financial covenants, including a maintenance covenant requiring the Company's total gross leverage ratio to be not greater than 8.0 to 1.00 in 2019, 7.5 to 1.00 in 2020, 7.25 to 1.00 in 2021, 6.75 to 1.00 in 2022 and 6.25 to 1.00 in 2023. As of December 31, 2020, the Company was in compliance with all of its financial covenants under the 2018 Credit Facility.
As of December 31, 2020, the Company had outstanding approximately $129.9 million on its 2018 Credit Facility. The original issue discount in the amount of approximately $3.8 million and associated debt issuance costs in the amount of $875,000 were reflected as an adjustment to the carrying amount of the debt obligation and amortized to interest expense over the term of the credit facility using the effective interest rate method. The amortization of deferred financing costs was charged to interest expense for all periods presented. The amount of deferred financing costs included in interest expense for all instruments, for the years ended December 31, 2020 and 2019, was approximately $4.5 million and $3.9 million, respectively.
MGM National Harbor Loan
Concurrently, on December 4, 2018, Urban One Entertainment SPV, LLC (“UONESPV”) and its immediate parent, Radio One Entertainment Holdings, LLC (“ROEH”), each of which is a wholly owned subsidiary of the Company, entered into a credit agreement, providing $50.0 million in term loan borrowings (the “MGM National Harbor Loan”) which was funded on December 20, 2018. On June 25, 2020, the Company borrowed an incremental $3.6 million on the MGM National Harbor Loan and used the proceeds to pay down the higher coupon 2018 Credit Facility by the same amount.
Until its termination as described in Note 16 – Subsequent Events, the MGM National Harbor Loan matured on December 31, 2022 and bore interest at 7.0% per annum in cash plus 4.0% per annum paid-in kind. The loan had limited ability to be prepaid in the first two years. The loan was secured on a first priority basis by the assets of UONESPV and ROEH, including all of UONESPV's shares held by ROEH, all of UONESPV's interests in MGM National Harbor, its rights under the joint venture operating agreement governing the MGM National Harbor and UONESPV's obligation to exercise its put right under the joint venture operating agreement in the event of a UONESPV payment default or bankruptcy event, in each case, subject to applicable Maryland gaming laws and approvals. Exercise by UONESPV of its put right under the joint venture operating agreement was subject to required lender consent unless the proceeds are used to retire the MGM National Harbor Loan and any remaining excess is used to repay borrowings, if any, under the 2018 Credit Facility. The MGM National Harbor Loan also contained customary representations and warranties and events of default, affirmative and negative covenants (in each case, subject to materiality exceptions and qualifications).
As of December 31, 2020, the Company had outstanding approximately $57.9 million on its MGM National Harbor Loan. The original issue discount in the amount of approximately $1.0 million and associated debt issuance costs in the amount of approximately $1.7 million was being reflected as an adjustment to the carrying amount of the debt obligation and amortized to interest expense over the term of the obligation using the effective interest rate method. The amortization of deferred financing costs was charged to interest expense for all periods presented.
2017 Credit Facilities
On April 18, 2017, the Company closed on a senior secured credit facility (the “2017 Credit Facility”). The 2017 Credit Facility was governed by a credit agreement by and among the Company, the lenders party thereto from time to time and Guggenheim Securities Credit Partners, LLC, as administrative agent, The Bank of New York Mellon, as collateral agent, and Guggenheim Securities, LLC as sole lead arranger and sole book running manager. The 2017 Credit Facility provided for $350 million in term loan borrowings, all of which was advanced and outstanding on the date of the closing of the transaction.
Until its termination as described in Note 16 – Subsequent Events, the 2017 Credit Facility matured on the earlier of (i) April 18, 2023, or (ii) in the event such debt is not repaid or refinanced, 91 days prior to the maturity of the Company’s 7.375% Notes (as defined below). At the Company’s election, the interest rate on borrowings under the 2017 Credit Facility are based on either (i) the then applicable base rate (as defined in the 2017 Credit Facility) as, for any day, a rate per annum (rounded upward, if necessary, to the next 1/100th of 1%) equal to the greater of (a) the prime rate published in the Wall Street Journal, (b) 1/2 of 1% in excess rate of the overnight Federal Funds Rate at any given time, (c) the one-month LIBOR rate commencing on such day plus 1.00%) and (d) 2%, or (ii) the then applicable LIBOR rate (as defined in the 2017 Credit Facility). The average interest rate was approximately 5.17% for 2020 and was 6.27% for 2019.
The 2017 Credit Facility was s (i) guaranteed by each entity that guarantees the Company’s 7.375% Notes on a pari passu basis with the guarantees of the 7.375% Notes and (ii) secured on a pari passu basis with the Company’s 7.375% Notes. The Company’s obligations under the 2017 Credit Facility wereare secured, subject to permitted liens and except for certain excluded assets (i) on a first priority basis by certain notessubstantially all of the Company’s and the Guarantors’ current and future property and assets (other than accounts receivable, cash, deposit accounts, other bank accounts, securities accounts, inventory and related assets that secure our asset-backed revolving credit facility on a first priority collateral,basis (the “ABL Priority Collateral”)), including the capital stock of each guarantor (collectively, the “Notes Priority Collateral”) and (ii) on a second priority basis by collateral for the Company’s asset-backed line of credit.ABL Priority Collateral.
In addition to any mandatory or optional prepayments,The associated debt issuance costs in the Company was required to pay interest on the term loans (i) quarterly in arrears for the base rate loans, and (ii) on the last day of each interest period for LIBOR loans. Certain voluntary prepayments of the term loans during the first six months required an additional prepayment premium. Beginning with the interest payment date occurring in June 2017 and ending in March 2023, the Company was required to repay principal, to the extent then outstanding, equal to 1∕4 of 1% of the aggregate initial principal amount of all term loans incurred on the effective date of the 2017 Credit Facility. On December 19, 2018, upon drawing under the 2018 Credit Facility and MGM National Harbor Loan, the Company voluntarily prepaid approximately $20.0$15.4 million in principal on the 2017 Credit Facility. During each of the years ended December 31, 2020 and 2019, the Company repaid approximately $3.3 million under the 2017 Credit Facility.
The 2017 Credit Facility contained customary representations and warranties and events of default, affirmative and negative covenants (in each case, subject to materiality exceptions and qualifications) which may be more restrictive than those governing the 7.375% Notes. The 2017 Credit Facility also contained certain financial covenants, including a maintenance covenant requiring the Company’s interest expense coverage ratio (defined as the ratio of consolidated EBITDA to consolidated interest expense) to be greater than or equal to 1.25 to 1.00 and its total senior secured leverage ratio (defined as the ratio of consolidated net senior secured indebtedness to consolidated EBITDA) to be less than or equal to 5.85 to 1.00.
The net proceeds from the 2017 Credit Facility were used to prepay in full the Company’s previous senior secured credit facility and the agreement governing such credit facility.
The 2017 Credit Facility contained affirmative and negative covenants that the Company was required to comply with, including:
| (a) | maintaining an interest coverage ratio of no less than: |
| § | 1.25 to 1.00 on June 30, 2017 and the last day of each fiscal quarter thereafter. |
| (b) | maintaining a senior leverage ratio of no greater than: |
| § | 5.85 to 1.00 on June 30, 2017 and the last day of each fiscal quarter thereafter. |
| § | liens; | | § | sale of assets; | | § | payment of dividends; and | | § | mergers. |
As of December 31, 2020, the Company was in compliance with all of its financial covenants under the 2017 Credit Facility.
As of December 31, 2020, the Company had outstanding approximately $317.3 million on its 2017 Credit Facility. The original issue discount is being reflected as an adjustment to the carrying amount of the debt obligations and amortized to interest expense over the term of the credit facility using the effective interest rate method. The amortization of deferred financing costs wasis charged to interest expense for all periods presented.
7.375% NotesThe amount of deferred financing costs included in interest expense for all instruments, for the years ended December 31, 2022 and 2021, was approximately $2.0 million and $2.3 million, respectively. The Company’s effective interest rate was 7.84% for 2022 and was 7.96% for 2021.
During the year ended December 31, 2022, the Company repurchased approximately $75.0 million of its 2028 Notes at an average price of approximately 89.5% of par. The Company recorded a net gain on retirement of debt of approximately $6.7 million for the year ended December 31, 2022. On December 6, 2022, the Board of Directors authorized and approved a note repurchase program for up to $25 million of the currently outstanding 2028 Notes. The Company made additional repurchases of its 2028 Notes during the quarter ended March 31, 2023. See Note 18 – Subsequent Events of our consolidated financial statements for further details. The Company conducts a portion of its business through its subsidiaries. Certain of the Company’s subsidiaries have fully and unconditionally guaranteed the Company’s 2028 Notes. PPP Loan On April 17, 2015,January 29, 2021, the Company closed a private offeringsubmitted an application for participation in the second round of $350.0 million aggregate principalthe Paycheck Protection Program loan program (“PPP”) and on June 1, 2021, the Company received proceeds of approximately $7.5 million. During the quarter ended June 30, 2022, the PPP loan and related accrued interest was forgiven and recorded as other income in the amount of approximately $7.6 million. Prior to being forgiven, the loan bore interest at a fixed rate of 1% per year was scheduled to mature June 1, 2026. 8.75% Notes In October 2020, the Company announced an offer to eligible holders of its 7.375% senior secured notesSenior Secured Notes due 2022 (the “7.375% Notes”). The to exchange any and all of their 7.375% Notes were offered at an original issue price of 100.0% plus accrued interest from April 17, 2015, and matured on April 15, 2022. Interest on the 7.375% Notes accrued at the rate of 7.375% per annum and was payable semiannually in arrears on April 15 and October 15, which commenced on October 15, 2015. The 7.375% Notes were guaranteed, jointly and severally, on a senior secured basis by the Company’s existing and future domestic subsidiaries, including TV One. In connection with the closing of the 7.375% Notes, the Company and the guarantor parties thereto entered into a Fourth Supplemental Indenture to the indenture governing the 2020 Notes (as defined below). Pursuant to this Fourth Supplemental Indenture, TV One, which previously did not guarantee the 2020 Notes, became a guarantor under the 2020 Notes indentures. In addition, the transactions caused a “Triggering Event” (as defined in the 2020 Notes Indenture) and, as a result, the 2020 Notes became an unsecured obligation of the Company and the subsidiary guarantors and rank equal in right of payment with the Company’s other senior indebtedness.
The Company used the net proceeds from the 7.375% Notes, to refinance a previous credit agreement, refinance certain TV One indebtedness, and finance the buyout of membership interests of Comcast in TV One and pay the related accrued interest, premiums, fees and expenses associated therewith.
Until their satisfaction and discharge as described in Note 16 – Subsequent Events, the 7.375% Notes were the Company’s senior secured obligations and ranked equal in right of payment with all of the Company’s and the guarantors’ existing and future senior indebtedness, including obligations under the 2017 Credit Facility and the Company’s 2020 Notes (defined below). The 7.375% Notes and related guarantees were equally and ratably secured by the same collateral securing the 2017 Credit Facility and any other parity lien debt issued after the issue date of the 7.375% Notes, including any additional notes issued under the Indenture, but were effectively subordinated to the Company’s and the guarantors’ secured indebtedness to the extent of the value of the collateral securing such indebtedness that does not also secure the 7.375% Notes. Collateral included substantially all of the Company’s and the guarantors’ current and future property and assets for accounts receivable, cash, deposit accounts, other bank accounts, securities accounts, inventory and related assets including the capital stock of each subsidiary guarantor.
On November 9, 2020, we completed an exchange (the “Exchange Offer”) of 99.15% of our outstanding 7.375% Notes for $347 million aggregate principal amount of newly issued 8.75% Senior Secured Notes due December 2022 (the “8.75% Notes”).
8.75% Notes
The exchange offer closed on November 9, 2020 and, therefore, is referred to as the “November 2020 Exchange Offer”. Until their satisfaction and discharge as described in Note 16 – Subsequent Events,on settlement of the 2028 Notes, the 8.75% Notes were governed by an indenture, dated November 9, 2020 (the “8.75% Notes Indenture”), by and between the Company, the guarantors therein (the “Guarantors”) and Wilmington Trust, National Association, as trustee (in such capacity, the “8.75% Notes Trustee”) and as notes collateral agent (in such capacity, “the 8.75% Notes Collateral Agent”). Interest on the 8.75% Notes accrued at the rate per annum equal to 8.75% and was payable, in cash, quarterly on January 15, April 15, July 15 and October 15 of each year, commencing on January 15, 2021, to holders of record on the immediately preceding January 1, April 1, July 1 and October 1, respectively. The 8.75% Notes were general senior obligations and were guaranteed (the “Guarantees”) by the Guarantors. The 8.75% Notes and the Guarantees: (i) ranked equal in right of payment to all of the Company’s and the Guarantor’s existing and future senior indebtedness, (ii) were secured on a first-priority basis by the Notes Priority Collateral (as defined below) and on a second-priority basis by the ABL Priority Collateral (defined below) owned by the Company and the applicable Guarantor, in each case subject to certain liens permitted under the 8.75% Notes Indenture, (iii) were equal in priority to the collateral owned by the Company and the Guarantor with respect to obligations under the credit agreement, dated as of April 18, 2017, by and among the Company, various lenders therein and Guggenheim Securities Credit Partners, LLC, as administrative agent and any other Parity Lien Debt (as described in the 8.75% Notes Indenture), if an,any, incurred after the date the 8.75% Notes were issued, (iv) ranked senior in right of payment to any existing or future subordinated indebtedness of the Company or Guarantors, (v) were initially guaranteed on a senior basis by each of the Company’s wholly-owned domestic subsidiaries (other than certain immaterial subsidiaries, unrestricted subsidiaries, and other certain exceptions), (vi) were effectively senior to all of the Company’s and the Guarantor’s existing and future unsecured indebtedness to the extent of the value of the collateral owned by the Company or applicable Guarantors and effectively senior to all existing and future ABL Debt Obligations (as defined in the 8.75% Notes Indenture) to the extent of the value of the Notes Priority Collateral (as defined below) owned by the Company or applicable Guarantor, (vii) were effectively subordinated to all of the Company’s and the Guarantor’s existing and future indebtedness that was secured by liens on assets that do not secure the Notes or the Guarantee to the extent of the value of such assets, (viii) were structurally subordinated to all of the Company’s and the Guarantor’s existing and future indebtedness and other claims and liabilities, including preferred stock, of subsidiaries of the Company that are not guarantors, and (ix) were effectively senior to any 7.375% Notes that remain outstanding after the November 2020 Exchange Offer with respect to any collateral proceeds.
The 8.75% Notes and the guarantees were secured, subject to permitted liens and except for certain excluded assets (i) on a first priority basis by substantially all of the Company’s and the Guarantors’ current and future property and assets (other than accounts receivable, cash, deposit accounts, other bank accounts, securities accounts, inventory and related assets that secure our asset-backed revolving credit facility on a first priority basis (the “ABL Priority Collateral”), including the capital stock of each Guarantor (which, in the case of foreign subsidiaries, is limited to 65% of the voting stock and 100% of the non-voting stock of each first-tier foreign subsidiary) (collectively, the “Notes Priority Collateral”) and (ii) on a second priority basis by the ABL Priority Collateral. In connection with the November 2020 Exchange Offer, the 8.75% Notes were subject to a new intercreditor agreement, pursuant to which proceeds received by the 7.375% Notes Trustee with respect to collateral proceeds received by the 7.375% Notes Trustee for the 7.375% Notes under an existing parity lien intercreditor agreement were to be paid over to the 8.75% Notes Trustee for the 8.75% Notes to the extent of the amounts owed to the holders of the 8.75% Notes then outstanding. The Company could redeem the 8.75% Notes in whole or in part, at its option, upon not less than 30 nor more than 60 days’ prior notice at a redemption price equal to 100% of the principal amount of such 8.75% Notes plus accrued and unpaid interest, if any, to the redemption date. Within 90 days following the completion of the November 2020 Exchange Offer, the Company was required to repurchase, repay or redeem $15 million aggregate principal amount of the 8.75% Notes. Separately, within five business days after each Excess Cash Flow Calculation Date (as defined in the 8.75% Notes Indenture), the Company was to redeem an aggregate principal amount of 8.75% Notes equal to 50% of the Excess Cash Flow (as defined in the 8.75% Notes Indenture), provided that repurchases, repayments or redemption of 8.75% Notes with internally generated funds during the applicable calculation period would reduce on a dollar-for-dollar basis the amount of such redemption otherwise required on the applicable calculation date. Any such mandatory redemptions were to be at par (plus accrued and unpaid interest). During the quarter ended December 31, 2020, the Company recorded a loss on retirement of debt of approximately $2.9 million associated with the Exchange Offer. The premium paid to the bondholders in the amount of approximately $3.5 million is beingwas reflected as an adjustment to the carrying amount of the debt obligation and amortized to interest expense over the term of the obligation using the effective interest rate method. The amortization of deferred financing costs was charged to interest expense for all periods presented.
2018 Credit Facility On December 4, 2018, the Company and certain of its subsidiaries entered into a credit agreement (“2018 Credit Facility”), among the Company, the lenders party thereto from time to time, Wilmington Trust, National Association, as administrative agent, and TCG Senior Funding L.L.C, as sole lead arranger and sole bookrunner. The 2018 Credit Facility provided $192.0 million in term loan borrowings, which was funded on December 20, 2018. The net proceeds of term loan borrowings under the 2018 Credit Facility were used to refinance, repurchase, redeem or otherwise repay the Company's then outstanding 9.25% Senior Subordinated Notes due 2020. Until its termination on settlement of the 2028 Notes, borrowings under the 2018 Credit Facility were subject to customary conditions precedent, as well as a requirement under the 2018 Credit Facility that (i) the Company’s total gross leverage ratio on a pro forma basis be not greater than 8:00 to 1:00 (this total gross leverage ratio test steps down as described below), (ii) neither of the administrative agents under the Company’s existing credit facilities nor the trustee under the Company’s existing senior secured notes due 2022 have objected to the terms of the new credit documents and (iii) certification by the Company that the terms and conditions of the 2018 Credit Facility satisfied the requirements of the definition of “Permitted Refinancing” (as defined in the agreements governing the Company's existing credit facilities) and neither of the administrative agents under the Company's existing credit facilities notified the Company within five (5) business days prior to funding the borrowings under the 2018 Credit Facility that it disagreed with such determination (including a reasonable description of the basis upon which it disagrees). The 2018 Credit Facility was scheduled to mature on December 31, 2022 (the “Maturity Date”). In connection with the November 2020 Exchange Offer, we also entered into an amendment to certain terms of our 2018 Credit Facility including the extension of the maturity date to March 31, 2023. Interest rates on borrowings under the 2018 Credit Facility were either (i) from the Funding Date to the Maturity Date, 12.875% per annum, (ii) 11.875% per annum, once 50% of the term loan borrowings had been repaid or (iii) 10.875% per annum, once 75% of the term loan borrowings had been repaid. Interest payments began on the last day of the 3-month period commencing on the Funding Date. Within 90 days following the completion of the November 2020 Exchange Offer, the Company was required to repay $10 million of the 2018 Credit Facility. The amendment was accounted for as a modification in accordance with the provisions of ASC 470, “Debt”. The Company's obligations under the 2018 Credit Facility were not secured. The 2018 Credit Facility was guaranteed on an unsecured basis by each entity that guarantees the Company's outstanding $350.0 million 2017 Credit Facility (as defined below). The term loans could be voluntarily prepaid prior to February 15, 2020 subject to payment of a prepayment premium. The Company was required to repay principal to the extent then outstanding on each quarterly interest payment date, commencing on the last business day in March 2019, equal to one quarter of 7.5% of the aggregate initial principal amount of all term loans incurred on the Funding Date to December 2019, commencing on the last business day in March 2020, one quarter of 10.0% of the aggregate initial principal amount of all term loans incurred on the Funding Date to December 2021, and, commencing on the last business day in March 2021, one quarter of 12.5% of the aggregate initial principal amount of all term loans incurred on the Funding Date to December 2022. The Company was also required to use 75% of excess cash flow (“ECF payment”) as defined in the 2018 Credit Facility, which excluded any distributions to the Company or its restricted subsidiaries in respect of its interests in the MGM National Harbor, to repay outstanding term loans at par, paid semiannually and to use 100% of all distributions to the Company or its restricted subsidiaries received in respect of its interest in the MGM National Harbor to repay outstanding term loans at par. The 2018 Credit Facility contained customary representations and warranties and events of default, affirmative and negative covenants (in each case, subject to materiality exceptions and qualifications). The 2018 Credit Facility, as amended, also contained certain financial covenants, including a maintenance covenant requiring the Company’s total gross leverage ratio to be not greater than 8.0 to 1.00 in 2019, 7.5 to 1.00 in 2020, 7.25 to 1.00 in 2021, 6.75 to 1.00 in 2022 and 6.25 to 1.00 in 2023. The original issue discount in the amount of approximately $3.8 million and associated debt issuance costs in the amount of $875,000 were reflected as an adjustment to the carrying amount of the debt obligation and amortized to interest expense over the term of the credit facility using the effective interest rate method. The amortization of deferred financing costs was charged to interest expense for all periods presented. MGM National Harbor Loan Concurrently, on December 4, 2018, Urban One Entertainment SPV, LLC (“UONESPV”) and its immediate parent, Radio One Entertainment Holdings, LLC (“ROEH”), each of which is a wholly owned subsidiary of the Company, entered into a credit agreement, providing $50.0 million in term loan borrowings (the “MGM National Harbor Loan”) which was funded on December 20, 2018. On June 25, 2020, the Company borrowed an incremental $3.6 million on the MGM National Harbor Loan and used the proceeds to pay down the higher coupon 2018 Credit Facility by the same amount. Until its termination on settlement of the 2028 Notes, the MGM National Harbor Loan was scheduled to mature on December 31, 2022 and bore interest at 7.0% per annum in cash plus 4.0% per annum paid-in kind. The loan had limited ability to be prepaid in the first two years. The loan was secured on a first priority basis by the assets of UONESPV and ROEH, including all of UONESPV’s shares held by ROEH, all of UONESPV’s interests in MGM National Harbor, its rights under the joint venture operating agreement governing the MGM National Harbor and UONESPV’s obligation to exercise its put right under the joint venture operating agreement in the event of a UONESPV payment default or bankruptcy event, in each case, subject to applicable Maryland gaming laws and approvals. Exercise by UONESPV of its put right under the joint venture operating agreement was subject to required lender consent unless the proceeds are used to retire the MGM National Harbor Loan and any remaining excess is used to repay borrowings, if any, under the 2018 Credit Facility. The MGM National Harbor Loan also contained customary representations and warranties and events of default, affirmative and negative covenants (in each case, subject to materiality exceptions and qualifications). The original issue discount in the amount of approximately $1.0 million and associated debt issuance costs in the amount of approximately $1.7 million was being reflected as an adjustment to the carrying amount of the debt obligation and amortized to interest expense over the term of the obligation using the effective interest rate method. The amortization of deferred financing costs was charged to interest expense for all periods presented. 2017 Credit Facilities On February 10, 2014,April 18, 2017, the Company closed on a senior secured credit facility (the “2017 Credit Facility”). The 2017 Credit Facility was governed by a credit agreement by and among the Company, the lenders party thereto from time to time and Guggenheim Securities Credit Partners, LLC, as administrative agent, The Bank of New York Mellon, as collateral agent, and Guggenheim Securities, LLC as sole lead arranger and sole book running manager. The 2017 Credit Facility provided for $350 million in term loan borrowings, all of which was advanced and outstanding on the date of the closing of the transaction. Until its termination on settlement of the 2028 Notes, the 2017 Credit Facility matured on the earlier of (i) April 18, 2023, or (ii) in the event such debt is not repaid or refinanced, 91 days prior to the maturity of the Company’s 7.375% Notes (as defined below). At the Company’s election, the interest rate on borrowings under the 2017 Credit Facility are based on either (i) the then applicable base rate (as defined in the 2017 Credit Facility) as, for any day, a rate per annum (rounded upward, if necessary, to the next 1/100th of 1%) equal to the greater of (a) the prime rate published in the Wall Street Journal, (b) 1/2 of 1% in excess rate of the overnight Federal Funds Rate at any given time, (c) the one-month LIBOR rate commencing on such day plus 1.00%) and (d) 2%, or (ii) the then applicable LIBOR rate (as defined in the 2017 Credit Facility). The average interest rate was approximately 5.00% for 2021 and was 5.17% for 2020. The 2017 Credit Facility was (i) guaranteed by each entity that guarantees the Company’s 7.375% Notes on a pari passu basis with the guarantees of the 7.375% Notes and (ii) secured on a pari passu basis with the Company’s 7.375% Notes. The Company’s obligations under the 2017 Credit Facility were secured, subject to permitted liens and except for certain excluded assets (i) on a first priority basis by certain notes priority collateral, and (ii) on a second priority basis by collateral for the Company’s asset-backed line of credit. In addition to any mandatory or optional prepayments, the Company was required to pay interest on the term loans (i) quarterly in arrears for the base rate loans, and (ii) on the last day of each interest period for LIBOR loans. Certain voluntary prepayments of the term loans during the first six months required an additional prepayment premium. Beginning with the interest payment date occurring in June 2017 and ending in March 2023, the Company was required to repay principal, to the extent then outstanding, equal to 1∕4 of 1% of the aggregate initial principal amount of all term loans incurred on the effective date of the 2017 Credit Facility. The 2017 Credit Facility contained customary representations and warranties and events of default, affirmative and negative covenants (in each case, subject to materiality exceptions and qualifications) which may be more restrictive than those governing the 7.375% Notes. The 2017 Credit Facility also contained certain financial covenants, including a maintenance covenant requiring the Company’s interest expense coverage ratio (defined as the ratio of consolidated EBITDA to consolidated interest expense) to be greater than or equal to 1.25 to 1.00 and its total senior secured leverage ratio (defined as the ratio of consolidated net senior secured indebtedness to consolidated EBITDA) to be less than or equal to 5.85 to 1.00. The net proceeds from the 2017 Credit Facility were used to prepay in full the Company’s previous senior secured credit facility and the agreement governing such credit facility. The 2017 Credit Facility contained affirmative and negative covenants that the Company was required to comply with, including: (a) maintaining an interest coverage ratio of no less than: | ◾ | 1.25 to 1.00 on June 30, 2017 and the last day of each fiscal quarter thereafter. |
(b) maintaining a senior leverage ratio of no greater than: | ◾ | 5.85 to 1.00 on June 30, 2017 and the last day of each fiscal quarter thereafter. |
(c) limitations on: | ◾ | payment of dividends; and |
The original issue discount was reflected as an adjustment to the carrying amount of the debt obligations and amortized to interest expense over the term of the credit facility using the effective interest rate method. The amortization of deferred financing costs was charged to interest expense for all periods presented. 7.375% Notes On April 17, 2015, the Company closed a private placement offering of $335.0$350.0 million aggregate principal amount of 9.25%7.375% senior subordinatedsecured notes due 20202022 (the “2020“7.375% Notes”). The 20207.375% Notes were offered at an original issue price of 100.0% plus accrued interest from February 10, 2014. The 2020April 17, 2015 and matured on April 15, 2022. Interest on the 7.375% Notes were scheduled to mature on February 15, 2020. Interest accrued at the rate of 9.25%7.375% per annum and was payable semiannually in arrears on FebruaryApril 15 and AugustOctober 15, in the initial amount of approximately $15.5 million, which commenced on AugustOctober 15, 2014.2015. The 20207.375% Notes were guaranteed, jointly and severally, on a senior secured basis by certain of the Company’s existing and future domestic subsidiaries, and any other subsidiaries that guarantee the existing senior credit facility or any of the Company’s other syndicated bank indebtedness or capital markets securities. including TV One. The Company used the net proceeds from the offering7.375% Notes, to repurchase or otherwise redeem allrefinance a previous credit agreement, refinance certain TV One indebtedness, and finance the buyout of the amounts then outstanding under its previous notesmembership interests of Comcast in TV One and to pay the related accrued interest, premiums, fees and expenses associated therewith. During Until their satisfaction and discharge on settlement of the quarter ended December 31, 2018,2028 Notes, the 7.375% Notes were the Company’s senior secured obligations and ranked equal in conjunctionright of payment with entering intoall of the 2018Company’s and the guarantors’ existing and future senior indebtedness, including obligations under the 2017 Credit Facility and MGM National Harbor Loan, the Company repurchased approximately $243.0 millionCompany’s previously existing senior subordinated notes. The 7.375% Notes and related guarantees were equally and ratably secured by the same collateral securing the 2017 Credit Facility and any other parity lien debt issued after the issue date of its 2020the 7.375% Notes, at an average priceincluding any additional notes issued under the Indenture, but were effectively subordinated to the Company’s and the guarantors’ secured indebtedness to the extent of approximately 100.88%the value of par.
the collateral securing such indebtedness that does not also secure the 7.375% Notes. Collateral included substantially all of the Company’s and the guarantors’ current and future property and assets for accounts receivable, cash, deposit accounts, other bank accounts, securities accounts, inventory and related assets including the capital stock of each subsidiary guarantor. On January 17, 2019,November 9, 2020, we completed the Company announced that it had given the required notice under the indenture governing itsNovember 2020 Exchange Offer of 99.15% of our outstanding 7.375% Notes to redeem for cash all outstanding$347 million aggregate principal amount of its Notes to the extent outstanding on February 15, 2019 (the “Redemption Date”). The redemption price for the Notes was 100.0% of the principal amount of the Notes, plus accrued and unpaid interest to the Redemption Date. On February 15, 2019, the remaining 2020 Notes were redeemed in full.8.75% Notes. Comcast Note
For a portion of the year ended December 31, 2019, the Company also had outstanding a senior unsecured promissory note in the aggregate principal amount of approximately $11.9 million due to Comcast (“Comcast Note”). The Comcast Note bore interest at 10.47%, was payable quarterly in arrears, and the entire principal amount was due on April 17, 2019. However, the Company was contractually required to retire the Comcast Note in February 2019 upon redemption of the remaining 2020 Notes. On February 15, 2019, upon redemption of the remaining 2020 Notes, the Comcast Note was paid in full and retired.
Asset-Backed Credit Facility Facilities On April 21, 2016, the Company entered into a senior credit agreement governing an asset-backed credit facility (the “ABL“2016 ABL Facility”) among the Company, the lenders party thereto from time to time and Wells Fargo Bank National Association, as administrative agent (the “Administrative Agent”). The 2016 ABL Facility originally provided for $25 million in revolving loan borrowings in order to provide for the working capital needs and general corporate requirements of the Company. On November 13, 2019, the Company entered into an amendment to the 2016 ABL Facility, (the “ABL“2016 ABL Amendment”), which increased the borrowing capacity from $25 million in revolving loan borrowings to $37.5 million in order to provide for the working capital needs and general corporate requirements of the Company and provides for a letter of credit facility up to $7.5 million as a part of the overall $37.5 million in capacity. The 2016 ABL Amendment also redefined the “Maturity Date” to be “the earlier to occur of (a) April 21, 2021 and (b) the date that is thirty (30)(30) days prior to the earlier to occur of (i) the Term Loan Maturity Date (as defined in the Term Loan Credit Agreement as in effect on the Effective Date or as the same may be extended in accordance with the terms of the Term Loan Credit Agreement), and (ii) the Stated Maturity (as defined in the Senior Secured Notes Indenture (as defined in the Term Loan Credit Agreement)) of the Notes (as defined in the Senior Secured Notes Indenture as in effect on the Effective Date or as the same may be extended in accordance with the terms of the Senior Secured Notes Indenture).” At the Company’s election, the interest rate on borrowings under the 2016 ABL Facility arewas based on either (i) the then applicable margin relative to Base Rate Loans (as defined in the 2016 ABL Facility) or (ii) the then applicable margin relative to LIBOR Loans (as defined in the 2016 ABL Facility) corresponding to the average availability of the Company for the most recently completed fiscal quarter. Advances under the 2016 ABL Facility arewere limited to (a) eighty-five percent (85%) of the amount of Eligible Accounts (as defined in the 2016 ABL Facility), less the amount, if any, of the Dilution Reserve (as defined in the 2016 ABL Facility), minus (b) the sum of (i) the Bank Product Reserve (as defined in the 2016 ABL Facility), plus (ii) the aggregate amount of all other reserves, if any, established by Administrative Agent. All obligations under the 2016 ABL Facility arewere secured by first priority lien on all (i) deposit accounts (related to accounts receivable), (ii) accounts receivable, (iii) all other property which constitutes ABL Priority Collateral (as defined in the 2016 ABL Facility). The obligations arewere also secured by all material subsidiaries of the Company. Finally, theThe 2016 ABL Facility iswas subject to the terms of the Intercreditor Agreement (as defined in the 2016 ABL Facility) by and among the Administrative Agent, the administrative agent for the secured parties under the Company’s term loan and the trustee and collateral trustee under the senior secured notes indenture.
In connection with the offering of the 2028 Notes, the Company entered into an amendment of its 2016 ABL Facility to facilitate the issuance of the 2028 Notes. The amendments to the 2016 ABL Facility, included, among other things, a consent to the issuance of the 2028 Notes, revisions to terms and exclusions of collateral and addition of certain subsidiaries as guarantors. On February 19, 2021, the Company closed on an asset backed credit facility (the “Current ABL Facility”). The Current ABL Facility is governed by a credit agreement by and among the Company, the other borrowers party thereto, the lenders party thereto from time to time and Bank of America, N.A., as administrative agent. The Current ABL Facility provides for up to $50 million revolving loan borrowings in order to provide for the working capital needs and general corporate requirements of the Company. The Current ABL Facility also provides for a letter of credit facility up to $5 million as a part of the overall $50 million in capacity. On closing of the Current ABL Facility, the 2016 ABL Facility was terminated on February 19, 2021. As of December 31, 20202022 and 2019,2021, there is no balance outstanding on the Current ABL Facility. At the Company’s election, the interest rate on borrowings under the Current ABL Facility are based on either (i) the then applicable margin relative to Base Rate Loans (as defined in the Current ABL Facility) or (ii) the then applicable margin relative to LIBOR Loans (as defined in the Current ABL Facility) corresponding to the average availability of the Company did not have any borrowings outstanding on its ABL Facility.for the most recently completed fiscal quarter. See Note 1618 – Subsequent Events. of our consolidated financial statements for further details. Advances under the Current ABL Facility are limited to (a) eighty-five percent (85%) of the amount of Eligible Accounts (as defined in the Current ABL Facility), less the amount, if any, of the Dilution Reserve (as defined in the Current ABL Facility), minus (b) the sum of (i) the Bank Product Reserve (as defined in the Current ABL Facility), plus (ii) the AP and Deferred Revenue Reserve (as defined in the Current ABL Facility), plus (iii) without duplication, the aggregate amount of all other reserves, if any, established by Administrative Agent. All obligations under the Current ABL Facility are secured by a first priority lien on all (i) deposit accounts (related to accounts receivable), (ii) accounts receivable, and (iii) all other property which constitutes ABL Priority Collateral (as defined in the Current ABL Facility). The obligations are also guaranteed by all material restricted subsidiaries of the Company. The Current ABL Facility includes a covenant requiring the Company’s fixed charge coverage ratio, as defined in the agreement, to not be less than 1.00 to 1.00. The Company is in compliance as of December 31, 2022. The Current ABL Facility matures on the earlier to occur of (a) the date that is five (5) years from the effective date of the Current ABL Facility, and (b) 91 days prior to the maturity of the Company’s 2028 Notes. The Current ABL Facility is subject to the terms of the Revolver Intercreditor Agreement (as defined in the Current ABL Facility) by and among the Administrative Agent and Wilmington Trust, National Association. See Note 18 – Subsequent Events of our consolidated financial statements for further details. Letter of Credit Facility On February 24, 2015, the Company entered into a letter of credit reimbursement and security agreement.agreement providing for letter of credit capacity of up to $1.2 million. On October 8, 2019, the Company entered into an amendment to its letter of credit reimbursement and security agreement and extended the term to October 8, 2024. As of December 31, 2020,2022, the Company had letters of credit totaling $871,000 under the agreement.agreement for certain operating leases and certain insurance policies. Letters of credit issued under the agreement are required to be collateralized with cash. In addition, the Current ABL Facility provides for letter of credit capacity of up to $5 million subject to certain limitations on availability. The Company conducts a portion of its business through its subsidiaries. Certain of the Company’s subsidiaries have fully and unconditionally guaranteed the Company’s 7.375% Notes, the 8.75% Notes, the Company’s obligations under the 2017 Credit Facility, and the obligations under the 2018 Credit Facility. The Company’s interest in the MGM National Harbor Casino fully guarantees the MGM National Harbor Loan.
Future Minimum Principal Payments Future scheduled minimum principal payments of debt as of December 31, 2020,2022, were as follows: | | | | 2018
Credit
Facility | | | MGM
National
Harbor
Loan | | | 2017
Credit
Facility | | | 8.75%
Senior
Secured
Notes
due
December
2022 | | | 7.38%
Senior
Secured
Notes
due April
2022 | | | Total | | | | (In thousands) | | | 2021 | | | $ | 20,065 | | | $ | — | | | $ | 3,297 | | | $ | — | | | $ | — | | | $ | 23,362 | | | 2022 | | | | 24,000 | | | | 57,889 | | | | 3,297 | | | | 347,016 | | | | 2,984 | | | | 435,186 | | | 2023 | | | | 85,870 | | | | — | | | | 310,738 | | | | — | | | | — | | | | 396,608 | | | 2024 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | 2025 and thereafter | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | Total Debt | | | $ | 129,935 | | | $ | 57,889 | | | $ | 317,332 | | | $ | 347,016 | | | $ | 2,984 | | | $ | 855,156 | |
| | | | | | 7.375% Senior | | | Secured Notes due | | | February 2028 | | | (In thousands) | 2023 | | $ | — | 2024 | | | — | 2025 | | | — | 2026 | | | — | 2027 | | | — | 2028 and thereafter | | | 750,000 | Total debt | | $ | 750,000 |
10.
12. INCOME TAXES: A reconciliation of the statutory federal income taxes to the recorded (benefit from) provision for income taxes from continuing operations is as follows: | | | For the Years Ended
December 31, | | | | | | 2020 | | 2019 | | | | | | (In thousands) | | | | | | | | | | | | | | For the Years Ended December 31, | | | | 2022 | | 2021 | | | | | | | (As Restated) | | | | (In thousands) | | Statutory federal tax expense | | $ | (8,620 | ) | | $ | 2,714 | | | $ | 11,905 | | $ | 10,949 | | Effect of state taxes, net of federal benefit | | (1,205 | ) | | 1,904 | | | | 3,308 | | | 2,062 | | Effect of state rate and tax law changes | | (599 | ) | | 578 | | | | 747 | | | (1,232) | | Return to provision adjustments | | 503 | | (110 | ) | | | Other permanent items | | (213 | ) | | 75 | | | | Non-deductible meals and entertainment | | 96 | | 226 | | | | Impairment of long-lived intangible assets | | 3,339 | | 1,218 | | | | 908 | | | — | | Non-deductible officer’s compensation | | 1,002 | | 1,781 | | | | 1,985 | | | 2,055 | PPP loan income forgiveness | | | | (1,591) | | | — | | Change in valuation allowance | | 28 | | 24 | | | | (234) | | | (13) | | IRC Section 382 adjustments | | (30,143 | ) | | 573 | | | | (334) | | | (705) | | NOL expirations | | 3,000 | | 1,815 | | | | 268 | | | 610 | | Stock-based compensation forfeitures and adjustments | | 216 | | 178 | | | | Uncertain tax positions | | (1,923 | ) | | (172 | ) | | | (495) | | | (777) | | Other | | | 43 | | | 60 | | | | 254 | | | 85 | | (Benefit from) provision for income taxes | | $ | (34,476 | ) | | $ | 10,864 | | | Provision for income taxes | | | $ | 16,721 | | $ | 13,034 |
The statutory federal tax rate used for the years ended December 31, 20202022 and 20192021 is 21.0%. Major components of the effective tax rate for the yearyears ended December 31, 20202022 and 20192021 are related reductions of IRC Section 382to net operating loss limitations, net operating loss expirations, impairments of long-lived assets, limitation of officer's compensation under IRC Section 162(m), anduncertain tax positions, state income taxes.taxes, and non-taxable PPP Loan income forgiveness for the year ended December 31, 2022. On August 16, 2022, the Inflation Reduction Act was signed into law. The tax provisions included within the Inflation Reduction Act did not materially affect the Company’s consolidated financial statements in the current year. The components of the (benefit from) provision for income taxes from continuing operations are as follows: | | | For the Years Ended
December 31, | | | | | | 2020 | | 2019 | | | | | | (In thousands) | | | | | | | | | | | | | | For the Years Ended | | | | December 31, | | | | 2022 | | 2021 | | | | | | | (As Restated) | | | | (In thousands) | | Federal: | | | | | | | | | | | | | Current | | $ | — | | $ | — | | | $ | — | | $ | — | | Deferred | | (27,162 | ) | | 5,973 | | | | 13,269 | | | 12,952 | | State: | | | | | | | | | | | | | Current | | 552 | | 595 | | | | 1,843 | | | 1,063 | | Deferred | | | (7,866 | ) | | | 4,296 | | | | 1,609 | | | (981) | | (Benefit from) provision for income taxes | | $ | (34,476 | ) | | $ | 10,864 | | | Provision for income taxes | | | $ | 16,721 | | $ | 13,034 |
Deferred Income Taxes Deferred income taxes reflect the impact of temporary differences between the assets and liabilities recognized for financial reporting purposes and amounts recognized for tax purposes. Deferred taxes are based on tax laws as currently enacted. Deferred tax assets are reduced by a valuation allowance if, based upon the weight of available evidence, it is not more likely than not that we will realize some portion or all of the deferred tax assets. The significant components of the Company’s deferred tax assets and liabilities are as follows: | | | As of December 31, | | | | | | 2020 | | 2019 | | | | | | (In thousands) | | | | | | | | | | | | | | As of December 31, | | | | 2022 | | 2021 | | | | | | | (As Restated) | | | | (In thousands) | | Deferred tax assets: | | | | | | | | | | | | | Allowance for doubtful accounts | | $ | 1,924 | | $ | 1,804 | | | $ | 2,149 | | $ | 2,111 | | Accruals | | 2,358 | | 528 | | | | 304 | | | 465 | | Fixed assets | | 453 | | 418 | | | | 488 | | | 486 | | Stock-based compensation | | 290 | | 499 | | | | 328 | | | 163 | | Deferred financing costs | | 1,475 | | — | | | | Net operating loss carryforwards | | 128,023 | | 103,700 | | | | 88,813 | | | 109,343 | | Lease liability | | 11,592 | | 12,094 | | | | 8,901 | | | 10,022 | | Interest expense carryforward | | 11,934 | | 16,224 | | | | 23,788 | | | 20,380 | | Alternative minimum tax credit | | — | | 428 | | | | Other | | | (200 | ) | | | (324 | ) | | | Total deferred tax assets | | 157,849 | | 135,371 | | | | 124,771 | | | 142,970 | | Valuation allowance for deferred tax assets | | | (277 | ) | | | (249 | ) | | | (30) | | | (264) | | Total deferred tax asset, net of valuation allowance | | 157,572 | | 135,122 | | | | 124,741 | | | 142,706 | | | | | | | | | | | | | | | | | | Deferred tax liabilities: | | | | | | | | | | | | | Intangible assets | | (135,848 | ) | | (147,350 | ) | | | (129,026) | | | (131,682) | Available-for-sale securities | | | | (23,779) | | | (17,618) | | Right of use asset | | (10,336 | ) | | (10,100 | ) | | | (8,123) | | | (8,924) | | Partnership interests | | (1,347 | ) | | (1,813 | ) | | | (2,412) | | | (1,964) | | Qualified film expenditures | | | — | | | (419 | ) | | Deferred financing costs | | | | (958) | | | (1,196) | Other | | | | (147) | | | (199) | | Total deferred tax liabilities | | | (147,531 | ) | | | (159,682 | ) | | | (164,445) | | | (161,583) | | Net deferred tax asset (liability) | | $ | 10,041 | | $ | (24,560 | ) | | Net deferred tax liability | | | $ | (39,704) | | $ | (18,877) |
As of December 31, 2020,2022, the Company had pre-tax federal and state NOL carryforward amounts of approximately $703.9$525.5 million and $436.5$330.5 million, respectively. The state NOLs are applied separately from the federal NOL as the Company generally files separate state returns for each subsidiary. Additionally, the amount of the state NOLs may change if future apportionment factors differ from current factors. During 2016,Additionally, the Company performed an Internal Revenue Code (“IRC”) Section 382 study (“the study”) and concluded that there was an ownership shift during calendar year 2009 that resulted in an estimated limitation on our federal and state NOLs for approximately $361.1 million and $262.7 million, respectively. During 2018, the Company updated the study for additional information based on additional technical insight into the application of the tax law, which resulted in a decrease to the initial estimated limitation. In 2018, the Company identified certain assets with net unrealized built-in gain that reduced the estimated federal and state limitation by approximately $65.6 million and $52.9 million, respectively. During 2020, the Company further reduced the federal and state limitation by approximately $109.2 million and $93.6 million, respectively. The 2020 reductions of the IRC Section 382 limitation were related to receiving approval from the Internal Revenue Service to retroactively apply a consolidated tax return election to the 2009 income tax return, and identifying additional assets with net unrealized built-in gains. The Company continues to assess other potential tax strategies, which if successful, may reduce the impact of the annual limitations and potentially recover NOLs that otherwise would expire before being applied to reduce future income tax liabilities. If successful, the Company may be able to recover additional federal and state NOLs in future periods, which could be material. If we conclude that it is more likely than not that we will be able to realize additional federal and state NOLs, the tax benefit could materially impact future quarterly and annual periods. However, if these potential tax strategies do not meet the more likely than not threshold, the Company may claim these additional NOLs as unrecognized tax benefits. The federal and state NOLs expire in various years from 20212023 to 2039. As of December 31, 2020,2022, the gross deferred tax assets of approximately $157.8$124.7 million were primarily the result of federal and state net operating losses and the IRC Section 163(j) interest expense carryforward. A valuation allowance of $277,000$30,000 and $249,000$264,000 was recorded against our gross deferred tax asset balance as of December 31, 20202022 and December 31, 2019,2021, respectively, and is related to state jurisdictions where it is not more likely than not the deferred tax assets will be realized. The assessment to determine the value of the deferred tax assets to be realized under ASC 740 is highly judgmental and requires the consideration of all available positive and negative evidence in evaluating the likelihood of realizing the tax benefit of the deferred tax assets in a future period. Circumstances may change over time such that previous negative evidence no longer exists, and new conditions should be evaluated as positive or negative evidence that could affect the realization of the deferred tax assets. Since the evaluation requires consideration of events that may occur in some years in the future, significant judgment is required, and our conclusion could be materially different if certain expectations do not materialize. In the assessment of all available evidence, an important piece of objective verifiable evidence is evaluating a cumulative income or loss position over the most recent three-year period. Historically, the Company has maintained a full valuation against the net deferred tax assets, principally due to a cumulative loss over the most recent three-year period. During the quarter ended December 31, 2018, the Company achieved three years of cumulative income, which removed the most heavily weighed piece of objective verifiable negative evidence from our evaluation of the realizability of deferred tax assets. The Company continues to maintain three years of rolling cumulative income as of December 31, 2020. 2022. Additionally, the Company is projecting forecasts of taxable income to utilize our federal and state NOLs as part of our evaluation of positive evidence. As part of the 2017 Tax Act, IRC Section 163(j) limited the deduction of interest expense.In conjunction with evaluating and weighing the aforementioned negative and positive evidence from the Company’s historical cumulative income or loss position, management also evaluated the impact that interest expense has had on our cumulative income or loss position over the most recent three-year period. A material component of the Company’s expenses is interest, and has been the primary driver of historical pre-tax losses. Adjusting for the IRC Section 163(j) interest expense limitation on projected taxable income, we estimate utilization of federal and state net operating losses that are not subject to annual limitations as a result of the 2009 ownership shift as defined under IRC Section 382. Realization of the Company’s federal and state net operating losses is dependent on generating sufficient taxable income in future periods, and although the Company believes it is more likely than not future taxable income will be sufficient to utilize the net operating losses, realization is not assured and future events may cause a change to the judgment of the realizability of these deferred tax assets. If a future event causes the Company to re-evaluate and conclude that it is not more likely than not, that all or a portion of the deferred tax assets are realizable, the Company would be required to establish a valuation allowance against the assets at that time which would result in a charge to income tax expense and a decrease to net income in the period which the change of judgment is concluded.
Unrecognized Tax Benefits A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows: | | | | | | | | | | | 2022 | | 2021 | | | | 2020 | | 2019 | | | | | | (In thousands) | | | | | | (In thousands) | | | | | | | | | | Balance as of January 1 | | $ | 4,733 | | $ | 4,637 | | | $ | 1,315 | | $ | 2,299 | | Additions for tax positions related to current years | | — | | — | | | | — | | | — | | Additions (deductions) for tax positions related to prior years | | (2,434 | ) | | 96 | | | | 8 | | | 8 | | Deductions for tax positions as a result of tax settlements | | | — | | | — | | | Deductions for tax positions as a result of the lapse of applicable statutes of limitation | | | | (635) | | | (992) | | Balance as of December 31 | | $ | 2,299 | | $ | 4,733 | | | $ | 688 | | $ | 1,315 |
The nature of the uncertainties pertaining to the Company’s income taxes is primarily due to various state income tax positions that affect the amount of state NOLs available to be applied to reduce future state income tax liabilities. The unrecognized tax benefits liability accrued on our balance sheet increased by $8,000 and decreased by approximately $2.4 million$635,000 and increased by $96,000$992,000 during the years ended December 31, 20202022 and December 31, 2019,2021, respectively, primarily as a result of state NOL utilizations and expirations, and applicable tax rate changes. As of December 31, 2020,2022, the Company had unrecognized tax benefits of approximately $1.8 million,$688,000, which if recognized, would impact the effective tax rate. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as a component of tax expense. There is no material amount of interest and penalties recognized in the statement of operations and the balance sheet for the year ended December 31, 2020.2022. The Company believes that it is reasonably possible that a decrease of up to $1.0 million$57,000 of unrecognized tax benefits related to state tax exposures may be necessary within the coming year. The Company files income tax returns in the U.S. federal jurisdiction, various state and local jurisdictions and is subject to examination by the various taxing authorities. The Company’s open tax years for federal income tax examinations include the tax years ended December 31, 20172019 through 2020.2022. For state and local purposes, the open years for tax examinations include the tax years ended December 31, 20162018 through 2020.2022. To the extent that net operating losses are utilized, the year of the loss may be subject to examination. 11.13. STOCKHOLDERS’ EQUITY:
On June 16, 2020, the Company’s Board of Directors authorized an amendment (the “Potential Amendment”) of Urban One's certificate of incorporation to effect a reverse stock split across all classes of common stock by a ratio of not less than one-for-two and not more than one-for-fifty at any time prior to December 31, 2021, with the exact ratio to be set at a whole number within this range as determined by our boardthe Board of directorsDirectors in its discretion. The Company’s shareholders approved the Potential Amendment at the annual meeting of the shareholders June 16, 2020. The Company has not acted on the Potential Amendment but may do so in the future as determined by our boardthe discretion of directors in its discretion.the Board of Directors. OnIn August 18, 2020, the Company entered into an arrangement (the “2020 Open Market Sales Agreement with Jefferies LLC (“Jefferies”Agreement”) under which the Company may offer andto sell shares, from time to time, at its sole discretion, shares of its Class A common stock, par value $0.001 per share (the “Class A Shares”) up to an aggregate offering price of $25 million (the “2020 ATM Program”). Jefferies is acting as sales agent forDuring the Current ATM Program. In Augustyear ended December 31, 2020, the Company issued 2,859,276 shares of its Class A Shares at a weighted average price of $5.39 for approximately $14.7 million of net proceeds after associated fees and expenses. WhileIn January 2021, the Company still hasissued and sold an additional 1,465,826 shares for approximately $9.3 million of net proceeds after associated fees and expenses, which completed the 2020 Open Market Sales Agreement. Subsequently, in January 2021, the Company entered into an arrangement (the “2021 Open Market Sale Agreement”) to sell additional Class A Shares availablefrom time to time. During the three months ended March 31, 2021, the Company issued and sold 420,439 Class A Shares for issuanceapproximately $2.8 million of net proceeds after associated fees and expenses. During the three months ended June 30, 2021, the Company issued and sold an additional 1,893,126 Class A Shares for approximately $21.2 million of net proceeds after associated fees and expenses, which completed its 2021 Open Market Sales Agreement.
On May 17, 2021, the Company entered into an Open Market Sale Agreement (the “Class D Sale Agreement”) under which the Company may offer and sell, from time to time at its sole discretion, shares of its Class D common stock, par value $0.001 per share (the “Class D Shares”). On May 17, 2021, the Company filed a prospectus supplement pursuant to the Class D Sale Agreement for the offer and sale of its Class D Shares having an aggregate offering price of up to $25.0 million, that has since expired as of March 14, 2022. As of December 31, 2022, the Company has not sold any Class D Shares under the Current ATM Program, theClass D Sale Agreement. The Company may from time to time also enter into new additional ATM programs and issue additional common stock from time to time under those programs. See Note 16 – Subsequent Events.
On October 29, 2021, Alfred C. Liggins, President and Chief Executive Officer of Urban One, Inc., Catherine L. Hughes, Founder and Chairperson of Urban One, Inc., and entities affiliated with one or both of them, converted a total of 883,890 shares of Class C Common Stock from their personal holdings into 883,890 shares of Class A Common Stock, also in their personal holdings. Common Stock The Company has four classes of common stock, Class A, Class B, Class C and Class D. Generally, the shares of each class are identical in all respects and entitle the holders thereof to the same rights and privileges. However, with respect to voting rights, each share of Class A common stock entitles its holder to one vote and each share of Class B common stock entitles its holder to ten votes. The holders of Class C and Class D common stock are not entitled to vote on any matters. The holders of Class A common stock can convert such shares into shares of Class C or Class D common stock. Subject to certain limitations, the holders of Class B common stock can convert such shares into shares of Class A common stock. The holders of Class C common stock can convert such shares into shares of Class A common stock. The holders of Class D common stock have no such conversion rights. Stock Repurchase Program From time to time, the Company’s Board of Directors has authorized repurchases of shares of the Company’s Class A and Class D common stock. As of March 13, 2020,Under the Company’s Board authorized a newstock repurchase plan of upprogram, the Company intends to $2.6 millionrepurchase shares through open market purchases, privately negotiated transactions, block purchases or otherwise in accordance with applicable federal securities laws, including Rule 10b-18 of the Company’s Class A and Class D shares through December 31, 2020. In addition, on June 11, 2020, the Company’s Board authorized a repurchaseSecurities Exchange Act of $2.4 million of the Company’s Class D shares. As of December 31, 2020, the Company had no capacity remaining under the authorizations as the capacity under the June authorization was used and the March authorization lapsed by its terms on December 31, 2020.1934 (the “Exchange Act”). Under open authorizations, repurchases may be made from time to time in the open market or in privately negotiated transactions in accordance with applicable laws and regulations. Shares are retired when repurchased. The timing and extent of any repurchases will depend upon prevailing market conditions, the trading price of the Company’s Class A and/or Class D common stock and other factors, and subject to restrictions under applicable law. When in effect, the Company executes upon stock repurchase programs in a manner consistent with market conditions and the interests of the stockholders, including maximizing stockholder value. On March 7, 2022, the Board of Directors authorized and approved a share repurchase program for up to $25 million of the currently outstanding shares of the Company’s Class A and/or Class D common stock over a period of 24 months. On December 6, 2022, the Board of Directors authorized and approved a share repurchase program for up to an additional $10 million of the currently outstanding shares of the Company’s Class A and/or Class D common stock. During the year ended December 31, 2020,2022, the Company repurchased 4,779,969 shares of Class D common stock in the amount of approximately $25.0 million at an average price of $5.24 per share. The Company did not repurchase any Shares of Class A common stock during the year ended December 31, 2022. As of December 31, 2022, the Company had approximately $10.0 million remaining under its most recent and open authorization with respect to its Class A and Class D common stock. During the year ended December 31, 2021, the Company did not repurchase any shares of Class A common stock and repurchased 3,208,2886,715 shares of Class D common stock in the amount of approximately $2.4 million$39,000 at an average price of $0.76$5.80 per share. On September 27, 2022, the Compensation Committee authorized the repurchase up to $500,000 worth of shares in the aggregate from employees who want to sell in connection with the Company’s most recent employee stock grant. During the year ended December 31, 2019,2022, the Company repurchased 54,89613,577 shares of Class A Common StockD common stock in the amount of $120,000$57,000 at an average price of $2.19 per share and repurchased 1,709,315 shares of Class D Common Stock in the amount of approximately $3.5 million at an average of $2.06$4.23 per share. Giving effect to the repurchases, the Company has $443,000 remaining under its most recent and open authorization. In addition, the Company has limited but ongoing authority to purchase shares of Class D common stock (in one or more transactions at any time there remain outstanding grants) under the Company’s 2009 Stock Plan and 2019 Equity and Performance Incentive Plan (both as defined below). As of May 21, 2019, the 2019 Equity and Performance Incentive Plan will beThis limited authority is used to satisfy any employee or other recipient tax obligations in connection with the exercise of an option or a share grant under the 2009 Stock Plan and the 2019 Equity and Performance Incentive Plan, to the extent that the Company has capacity under its financing agreements (i.e., its current credit facilities and indentures) (each a “Stock Vest Tax Repurchase”). During the yearyears ended December 31, 2020,2022 and 2021, the Company executed a Stock Vest Tax RepurchaseRepurchases of 710,992344,702 shares of Class D Common Stock in the amount of approximately $1.2$1.5 million at an average price of $1.64$4.29 per share. During the year ended December 31, 2019, the Company executed a Stock Vest Tax Repurchase of 957,895share and 515,162 shares of Class D Common Stock in the amount of approximately $1.9 million$931,000 at an average price of $1.96$1.81 per share.share, respectively. Stock Option and Restricted Stock Grant Plan OurThe Company’s 2009 stock option and restricted stock plan (the “2009 Stock Plan”) was originally approved by the stockholders at the Company’s annual meeting on December 16, 2009. The Company had the authority to issue up to 8,250,000 shares of Class D Common Stock under the 2009 Stock Plan. Since its original approval, from time to time, the Board of Directors adopted and as required, our stockholders approved certain amendments to and restatement of the 2009 Stock Plan (the “Amended and Restated 2009 Stock Plan”). The amendments under the Amended and Restated 2009 Stock Plan primarily affected (i) the number of shares with respect to which options and restricted stock grants may be granted under the 2009 Stock Plan and (ii) the maximum number of shares that can be awarded to any individual in any one calendar year. On April 13,In 2015, the Board of Directors adopted, and our stockholders approved on June 2, 2015, an amendment that replenished the authorized plan shares, increasing the number of shares of Class D common stock available for grant back up to 8,250,000 shares. OurThe new stock option and restricted stock plan (“2019 Equity and Performance Incentive Plan”), currently in effect was approved by the stockholders at the Company’s annual meeting on May 21, 2019. The Board of Directors adopted, and on May 21, 2019, our stockholders approved, the 2019 Equity and Performance Incentive Plan which iswas funded with
5,500,000 shares of Class D Common Stock. On June 23, 2021, the Company’s Board of Directors authorized an amendment of the Urban One 2019 Equity and Performance Incentive Plan to increase the number of shares available for grant and to provide the grant of Class A as well as Class D shares. The amendment was approved by the Company’s shareholders and added 5,519,575 shares of Class D Shares and added 2,000,000 Class A Shares. As of December 31, 2022, 3,656,278 shares of Class D common stock and 1,250,000 shares of Class A common stock were available for grant under the 2019 Equity and Performance Incentive Plan. The Company uses an average life for all option awards. The Company settles stock options upon exercise by issuing stock. As of December 31, 2020, 520,425 shares of Class D common stock were available for grant under the 2019 Equity and Performance Incentive Plan.
On August 7, 2017,September 27, 2022, the Compensation Committee (“Compensation Committee”) of the Board of Directors of the Company awarded Catherine Hughes, Chairperson, 474,609201,961 restricted shares of the Company’s Class D common stock, and stock options to purchase 210,937101,702 shares of the Company’s Class D common stock. The grants were effective January 5, 2018,September 27, 2022, and immediately vested on January 5, 2019. September 27, 2022. On June 12, 2019,September 27, 2022, the Compensation Committee awarded Catherine Hughes, Chairperson, 393,685281,250 restricted shares of the Company’s Class D common stock, and stock options to purchase 174,971 shares of the Company’s Class DA common stock. The grants weregrant was effective JulySeptember 27, 2022, and cliff vests January 5, 2019 and vested on January 6, 2020. 2025. On June 12, 2019, the Compensation Committee awarded Catherine Hughes, Chairperson, 427,148 restricted shares of the Company’s Class D common stock, and stock options to purchase 189,843 shares of the Company’s Class D common stock. The grants were effective June 5, 2020 and vested on January 6, 2021. On August 7, 2017,September 27, 2022, the Compensation Committee awarded Alfred Liggins, Chief Executive Officer, and President, 791,015336,602 restricted shares of the Company’s Class D common stock, and stock options to purchase 351,562169,503 shares of the Company’s Class D common stock. The grants were effective January 5, 2018,September 27, 2022, and immediately vested on January 5, 2019. September 27, 2022. On June 12, 2019,September 27, 2022, the Compensation Committee awarded Alfred Liggins, Chief Executive Officer, and President, 656,142468,750 restricted shares of the Company’s Class D common stock, and stock options to purchase 291,619 shares of the Company’s Class DA common stock. The grants weregrant was effective JulySeptember 27, 2022, and cliff vests January 5, 2019 and vested on January 6, 2020. 2025. On June 12, 2019, the Compensation Committee awarded Alfred Liggins, Chief Executive Officer and President, 711,914 restricted shares of the Company’s Class D common stock, and stock options to purchase 316,406 shares of the Company’s Class D common stock. The grants were effective June 5, 2020 and vested on January 6, 2021. On August 7, 2017,September 27, 2022, the Compensation Committee awarded Peter Thompson, Chief Financial Officer, 270,833115,248 restricted shares of the Company’s Class D common stock, and stock options to purchase 120,37058,036 shares of the Company’s Class D common stock. The grants were effective January 5, 2018,September 27, 2022, and immediately vested on January 5, 2019. September 27, 2022. On June 12, 2019,September 27, 2022, the Compensation Committee awarded Peter Thompson, Chief Financial Officer, 224,654150,000 restricted shares of the Company’s Class D common stock, and stock options to purchase 99,846 shares of the Company’s Class D common stock. The grants weregrant was effective JulySeptember 27, 2022, and cliff vests January 5, 2019 and vested on January 6, 2020. 2025. On June 12, 2019, the Compensation Committee awarded Peter Thompson, Chief Financial Officer, 243,750 restricted shares of the Company’s Class D common stock, and stock options to purchase 108,333 shares of the Company’s Class D common stock. The grants were effective June 5, 2020 and vested on January 6, 2021. On August 7, 2017, the Compensation Committee awarded 575,262 shares of restricted stock and 470,000 stock options to certain employees pursuant to the Company’s long-term incentive plan. The grants were effective August 7, 2017. 470,000 shares of restricted stock and 470,000 stock options have vested or will vest in three installments, with the first installment of 33% having vested on January 5, 2018, and the second installment having vested on January 5, 2019, and the final installment vested on January 5, 2020. On October 2, 2017, Karen Wishart, our current Chief Administrative Officer, as part of her employment agreement, received an equity grant of 37,500 shares of the Company's Class D common stock as well as a grant of options to purchase 37,500 shares of the Company's Class D common stock. The grants have vested in equal increments on each of October 2, 2018, October 2, 2019 and October 2, 2020.
On June 12, 2019,September 27, 2022, the Compensation Committee awarded David Kantor, Chief Executive Officer – Radio Division, 195,242100,160 restricted shares of the Company’s Class D common stock, and stock options to purchase 86,77450,438 shares of the Company’s Class D common stock. The grants were effective July 5, 2019September 27, 2022, and immediately vested on January 6, 2020.September 27, 2022.
On June 12, 2019, the Compensation Committee awarded David Kantor, Chief Executive Officer – Radio Division, 211,838 restricted shares of the Company’s Class D common stock, and stock options to purchase 94,150 shares of the Company’s Class D common stock. The grants were effective June 5, 2020 and vested on January 6, 2021. On September 27, 2022, the Compensation Committee awarded Karen Wishart, Chief Administrative Officer, 39,007 restricted shares of the Company’s Class D common stock, and stock options to purchase 19,643 shares of the Company’s Class D common stock. The grants were effective September 27, 2022, and immediately vested on September 27, 2022. On September 27, 2022, the Compensation Committee awarded C. Kristopher Simpson, General Counsel, 23,936 restricted shares of the Company’s Class D common stock, and stock options to purchase 12,054 shares of the Company’s Class D common stock. The grants were effective September 27, 2022, and immediately vested on September 27, 2022 On September 27, 2022, the Compensation Committee awarded 195,032 restricted shares of the Company’s Class D common stock, and stock options to purchase 208,298 shares of the Company’s Class D common stock to certain employees pursuant to the Company’s long-term incentive plan. The grants were effective September 27, 2022 with various vest dates of January 5, 2023, March 31, 2023 and September 29, 2023. Pursuant to the terms of each of our stock plans and subject to the Company’s insider trading policy, a portion of each recipient’s vested shares may be sold in the open market for tax purposes on or about the vesting dates. The Company measures compensation cost for all stock-based awards at fair value on date of grant and recognizes the related expense over the service period for awards expected to vest. The restricted stock-based awards do not participate in dividends until fully vested. The fair value of stock options is determined using the BSM. Such fair value is recognized as an expense over the service period, net of estimated forfeitures, using the straight-line method. Estimating the number of stock awards that will ultimately vest requires judgment, and to the extent actual forfeitures differ substantially from our current estimates, amounts will be recorded as a cumulative adjustment in the period the estimated number of stock awards are revised. We consider many factors when estimating expected forfeitures, including the types of awards, employee classification and historical experience. Actual forfeitures may differ substantially from our current estimate. The Company’s use of the BSM to calculate the fair value of stock-based awards incorporates various assumptions including volatility, expected life, and interest rates. For options granted, the BSM determines: (i) the term by using the simplified “plain-vanilla” method as allowed under SAB No. 110; (ii) a historical volatility over a period commensurate with the expected term, with the observation of the volatility on a daily basis; and (iii) a risk-free interest rate that was consistent with the expected term of the stock options and based on the U.S. Treasury yield curve in effect at the time of the grant. Stock-based compensation expense for the years ended December 31, 20202022 and 2019,2021, was approximately $2.3$6.6 million and $4.8 million,$565,000, respectively. The Company granted 878,643a total of 884,061 stock options during the year ended December 31, 20202022 and granted 653,210a total of 40,917 stock options during the year ended December 31, 2019.2021. The per share weighted-average fair value of options granted during the years ended December 31, 20202022 and 2019,2021, was $0.66$2.82 and $1.26,$2.77, respectively. These fair values were derived using the BSM with the following weighted-average assumptions: | | | For the Years Ended
December 31, | | | | | | 2020 | | 2019 | | | | | | | | | | | | | For the Years Ended December 31, | | | | | 2022 | | 2021 | | | | | | | | | | Average risk-free interest rate | | | 0.40 | % | | | 1.84 | % | | 2.79 | % | 0.68 | % | | Expected dividend yield | | 0.00 | % | | 0.00 | % | | — | % | — | % | | Expected lives | | 5.04 years | | 5.25 years | | | 5.69 years | | 5.16 years | | | Expected volatility | | 79.75 | % | | 68.0 | % | | 79.92 | % | 82.04 | % |
Transactions and other information relating to stock options for the years December 31, 20202022 and 20192021 are summarized below: | | | Number
of
Options | | | Weighted-
Average
Exercise
Price | | | Weighted-
Average
Remaining
Contractual
Term (In
Years) | | | Aggregate
Intrinsic
Value | | | | Outstanding at December 31, 2018 | | | 3,569,000 | | | $ | 2.12 | | | | 7.19 | | | $ | 130,000 | | | | | | | | | | | | | | | | | | | | | | | Weighted-Average | | | | | | | | | | | | Remaining | | Aggregate | | | | Number of | | Weighted-Average | | Contractual Term | | Intrinsic | | | | Options | | Exercise Price | | (In Years) | | Value | Outstanding at December 31, 2020 | | | 4,018,991 | | $ | 2.11 | | 6.48 | | $ | 41,000 | | Grants | | | 653,000 | | | $ | 2.17 | | | | | | | | | | | 40,917 | | | 4.32 | | — | | | — | | Exercised | | | 15,000 | | | $ | 1.90 | | | | | | | | | | | (229,756) | | | 1.70 | | — | | | — | | Forfeited/cancelled/expired/settled | | | (10,000 | ) | | $ | 1.90 | | | | | | | | | | | (59,239) | | | 1.27 | | — | | | — | | Outstanding at December 31, 2019 | | | 4,197,000 | | | $ | 2.13 | | | | 6.70 | | | $ | 255,000 | | | Outstanding at December 31, 2021 | | | 3,770,913 | | $ | 2.18 | | 5.68 | | $ | 4,659,601 | | Grants | | | 879,000 | | | $ | 1.83 | | | | | | | | | | | 884,061 | | | 4.22 | | — | | | — | | Exercised | | | 1,033,000 | | | $ | 1.91 | | | | | | | | | | | (60,240) | | | 0.83 | | — | | | — | | Forfeited/cancelled/expired/settled | | | (24,000 | ) | | $ | 3.17 | | | | | | | | | | | — | | | — | | — | | | — | | Outstanding at December 31, 2020 | | | 4,019,000 | | | $ | 2.11 | | | | 6.48 | | | $ | 41,000 | | | | Vested and expected to vest at December 31, 2020 | | | 3,980,000 | | | $ | 2.12 | | | | 6.45 | | | $ | 41,000 | | | | Unvested at December 31, 2020 | | | 884,000 | | | $ | 1.83 | | | | 9.47 | | | $ | 7,000 | | | | Exercisable at December 31, 2020 | | | 3,135,000 | | | $ | 2.19 | | | | 5.64 | | | $ | 34,000 | | | Balance as of December 31, 2022 | | | 4,594,734 | | $ | 2.59 | | 5.72 | | $ | 5,871,492 | Vested and expected to vest at December 31, 2022 | | | 4,542,266 | | | 2.57 | | 5.68 | | | 5,871,492 | Unvested at December 31, 2022 | | | 465,798 | | | 4.23 | | 9.74 | | | — | Exercisable at December 31, 2022 | | | 4,128,936 | | | 2.40 | | 5.24 | | | 5,871,492 |
The aggregate intrinsic value in the table above represents the difference between the Company’s stock closing price on the last day of trading during the year ended December 31, 2020,2022, and the exercise price, multiplied by the number of shares that would have been received by the holders of in-the-money options had all the option holders exercised their in-the-money options on December 31, 2020.2022. This amount changes based on the fair market value of the Company’s stock. There were 1,032,92260,240 and 229,756 options exercised during the yearyears ended December 31, 20202022 and there were 15,0002021, respectively. A total of 439,180 and 903,643 options exercisedvested during the yearyears ended December 31, 2019. The number of options that vested during the year ended December 31, 2020 was 637,2702022 and the number of options that vested during the year ended December 31, 2019 was 847,030. 2021, respectively. As of December 31, 2020, $124,0002022, approximately $1.1 million of total unrecognized compensation cost related to stock options is expected to be recognized over a weighted-average period of 1.016 months. The weighted-average fair value per share of shares underlying stock options was $1.41$1.66 at December 31, 2020. 2022. The Company granted 1,649,3941,357,687 and 2,603,567101,057 restricted shares respectively, of restrictedClass D common stock during the years ended December 31, 20202022 and 2019,2021, respectively. During The Company granted 750,000 restricted shares of Class A common stock during the yearsyear ended December 31, 2020 and 2019, 18,2482022. The Company did not grant any restricted shares and 25,000 shares, respectively, of restrictedClass A common stock were issued toduring the year ended December 31, 2021. On July 5, 2022, each of the Company’s non-executive directors as a part of their compensation packages. Each of the four non-executive directors received 25,00011,848 shares of restricted stock, orvalued at $50,000 worth, of restricted stock based upon the closing price of $2.74 of the Company’s Class D common stock on June 16, 2020. Eachthe grant date. The shares vest in equal portions over two years. On July 6, 2021, each of the four non-executive directors received 25,0009,671 shares of restricted stock, orvalued at $50,000 worth, of restricted stock based upon the closing price of $2.00 of the Company’s Class D common stock on June 17, 2019.the grant date. The restricted stock grants for the non-executive directorsshares vest over a two-year period in equal 50% installments.portions over two years. Transactions and other information relating to restricted stock grants for the years ended December 31, 20202022 and 20192021 are summarized below: | | | | | | | | | | Average | | | | | Fair Value | | | | | at Grant | | | Shares | | Date | Unvested at December 31, 2020 | | 1,723,561 | | $ | 0.83 | Grants | | 101,057 | | | 3.22 | Vested | | (1,748,562) | | | 0.83 | Forfeited/cancelled/expired | | — | | | — | Unvested at December 31, 2021 | | 76,056 | | $ | 3.90 | Grants | | 1,357,687 | | | 4.27 | Vested | | (999,479) | | | 4.25 | Forfeited/cancelled/expired | | — | | | — | Unvested at December 31, 2022 | | 434,264 | | $ | 4.27 |
| | | Shares | | | Average
Fair
Value at
Grant
Date | | | Unvested at December 31, 2018 | | | 2,124,000 | | | $ | 1.85 | | | Grants | | | 2,604,000 | | | $ | 2.16 | | | Vested | | | (2,840,000 | ) | | $ | 1.94 | | | Forfeited/cancelled/expired | | | (74,000 | ) | | $ | 2.19 | | | Unvested at December 31, 2019 | | | 1,814,000 | | | $ | 2.14 | | | Grants | | | 1,649,000 | | | $ | 0.77 | | | Vested | | | (1,739,000 | ) | | $ | 2.14 | | | Forfeited/cancelled/expired | | | — | | | $ | — | | | Unvested at December 31, 2020 | | | 1,724,000 | | | $ | 0.83 | |
For awards of Class A common stock during the years ended December 31, 2022 and 2021, the Company granted 750,000 shares of restricted stock on September 27, 2022, at an average fair value at grant date of $5.39 per share. There were no shares that vested or were cancelled during the period. There were 750,000 unvested shares of restricted Class A common stock as of December 31, 2022 with an average fair value at grant date of $5.39. Restricted stock grants for Class D shares were and are included in the Company’s outstanding share numbers on the effective date of grant. As of December 31, 2020, $310,0002022, approximately $1.4 million of total unrecognized compensation cost related to restricted stock grants was expected to be recognized over a weighted-average period of 0.813 months.
12.Restricted stock grants for Class A shares were and are included in the Company’s outstanding share numbers on the effective date of grant. As of December 31, 2022, approximately $3.6 million of total unrecognized compensation cost related to restricted stock grants is expected to be recognized over a weighted-average period of 24 months.
14. PROFIT SHARING AND EMPLOYEE SAVINGS PLAN: The Company maintains a profit sharing and employee savings plan under Section 401(k) of the Internal Revenue Code. This plan allows eligible employees to defer allowable portions of their compensation on a pre-tax basis through contributions to the savings plan. The Company may contribute to the plan at the discretion of its Board of Directors. The Company does not match employee contributions. The Company did not make any contributions to the plan during the years ended December 31, 20202022 and 2019.2021. 13.15. COMMITMENTS AND CONTINGENCIES:
Radio Broadcasting Licenses Each of the Company’s radio stations operates pursuant to one or more licenses issued by the Federal Communications Commission that have a maximum term of eight years prior to renewal. The Company’s radio broadcasting licenses expire at various times beginning in October 2027 through August 2021 through February 1, 2029.2030. Although the Company may apply to renew its radio broadcasting licenses, third parties may challenge the Company’s renewal applications. The Company is not aware of any facts or circumstances that would prevent the Company from having its current licenses renewed. A station may continue to operate beyond the expiration date of its license if a timely filed license renewal application was filed and is pending, as is the case with respect to each of our stations with licenses that have expired. Royalty Agreements Musical works rights holders, generally songwriters and music publishers, have been traditionally represented by performing rights organizations, such as the American Society of Composers, Authors and Publishers (“ASCAP”), Broadcast Music, Inc. (“BMI”) and SESAC, Inc. (“SESAC”). The market for rights relating to musical works is changing rapidly. Songwriters and music publishers have withdrawn from the traditional performing rights organizations, particularly ASCAP and BMI, and new entities, such as Global Music Rights, Inc. (“GMR”), have been formed to represent rights holders. These organizations negotiate fees with copyright users, collect royalties and distribute them to the rights holders. We currently have arrangements with ASCAP, SESAC and GMR. On April 22, 2020, the Radio Music License Committee (“RMLC”), an industry group which the Company is a part of, and BMI have reached agreement on the terms of a new license agreement that covers the period January 1, 2017, through December 31, 2021. Upon approval of the court of the BMI/RMLC agreement, the Company automatically became a party to the agreement and to a license with BMI through December 31, 2021. On April 12, 2022, the RMLC announced that it had reached an interim licensing agreement with BMI. The radio industry’s previous agreement with BMI covering calendar years 2017 to 2021 expired December 31, 2021 (the “2017 Licensing Terms”), but the interim arrangement will keep the 2017 Licensing Terms in place until a new arrangement is agreed upon. The Company is party to the interim arrangement and, therefore, will continue to operate under the 2017 Licensing Terms. On February 7, 2022, the RMLC and GMR reached a settlement and achieved certain conditions which effectuate a four-year license to which the Company is a party for the period April 1, 2022 to March 31, 2026. The license includes an optional three-year extended term that the Company may effectuate prior to the end of the initial term. Leases and Other Operating Contracts and Agreements The Company has noncancelable operating leases for office space, studio space, broadcast towers and transmitter facilities that expire over the next 11nine years. The Company’s leases for broadcast facilities generally provide for a base rent plus real estate taxes and certain operating expenses related to the leases. Certain of the Company’s leases contain renewal options, escalating payments over the life of the lease and rent concessions. The future rentals under non-cancelable leases as of December 31, 2020,2022, are shown below. The Company has other operating contracts and agreements including employment contracts, on-air talent contracts, severance obligations, retention bonuses, consulting agreements, equipment rental agreements, programming related agreements, and other general operating agreements that expire over the next five years. The amounts the Company is obligated to pay for these agreements are shown below. | | | | | | | | | | | | | | Other | | | | | | | Operating | | | | Operating | | Contracts | | | | Lease | | and | | | | Agreements | | Agreements | | | | Operating
Lease
Agreements | | | Other
Operating
Contracts
and
Agreements | | | | | | (In thousands) | | | | | | (In thousands) | | Years ending December 31: | | | | | | | | | | | | | 2021 | | $ | 12,892 | | | $ | 58,532 | | | | 2022 | | | 11,739 | | | | 23,044 | | | | 2023 | | | 10,323 | | | | 11,896 | | | $ | 11,697 | | $ | 77,445 | | 2024 | | | 9,192 | | | | 10,121 | | | | 10,690 | | | 36,049 | | 2025 | | | 4,696 | | | | 9,958 | | | | 6,834 | | | 26,164 | | 2026 and thereafter | | | 7,618 | | | | 22,322 | | | 2026 | | | | 4,860 | | | 12,893 | 2027 | | | | 3,417 | | | 3,834 | 2028 and thereafter | | | | 7,140 | | | 12,959 | | Total | | $ | 56,460 | | | $ | 135,873 | | | $ | 44,638 | | $ | 169,344 |
Of the total amount of other operating contracts and agreements included in the table above, approximately $82.7$96.6 million has not been recorded on the balance sheet as of December 31, 2020,2022, as it does not meet recognition criteria. Approximately $6.9$13.0 million relates to certain commitments for content agreements for our cable television segment, approximately $16.6$38.7 million relates to employment agreements, and the remainder relates to other programming, network and operating agreements. Reach Media Redeemable Noncontrolling Interest Shareholders’ Put Rights Interests Beginning on January 1, 2018, the noncontrolling interest shareholders of Reach Media have had an annual right to require Reach Media to purchase all or a portion of their shares at the then current fair market value for such shares (the “Put Right”). This annual right is exercisable for a 30-day period beginning January 1 of each year. The purchase price for such shares may be paid in cash and/or registered Class D common stock of Urban One, at the discretion of Urban One. The noncontrolling interest shareholders of Reach Media did not exercise their Put Right for the 30-day period ending January 31, 2021.2023. Management, at this time, cannot reasonably determine the period when and if the put right will be exercised by the noncontrolling interest shareholders. Letters of Credit On February 24, 2015, theThe Company entered intocurrently is under a letter of credit reimbursement and security agreement. On October 8, 2019, the Company entered into an amendmentagreement with capacity of up to its letter of credit reimbursement and security agreement and extended the term to$1.2 million which expires on October 8, 2024. As of December 31, 2020,2022, the Company had letters of credit totaling $871,000 under the agreement.agreement for certain operating leases and certain insurance policies. Letters of credit issued under the agreement are required to be collateralized with cash. In addition, the Current ABL Facility provides for letter of credit capacity of up to $5 million subject to certain limitations on availability.
Other Contingencies The Company has been named as a defendant in several legal actions arising in the ordinary course of business. It is management’s opinion, after consultation with its legal counsel, that the outcome of these claims will not have a material adverse effect on the Company’s financial position or results of operations. 14. QUARTERLY FINANCIAL DATA (UNAUDITED):
| | | Quarters Ended | | | | | March 31(a) | | | June 30 | | | September 30(a) | | | December 31 | | | | | (In thousands, except share data) | | | | | | | | | | | 2020: | | | | | | | | | | | | | | | | | | Net revenue | | $ | 94,875 | | | $ | 76,008 | | | $ | 91,912 | | | $ | 113,542 | | | Operating (loss) income | | | (27,287 | ) | | | 20,382 | | | | 3,968 | | | | 34,533 | | | Net (loss) income | | | (23,058 | ) | | | 1,642 | | | | (12,277 | ) | | | 27,124 | | | | | | | | | | | | | | | | | | | | | Consolidated net (loss) income attributable to common stockholders | | | (23,187 | ) | | | 1,420 | | | | (12,772 | ) | | | 26,426 | | | BASIC AND DILUTED NET (LOSS) INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS | | | | | | | | | | | | | | | | | | Consolidated net (loss) income per share attributable to common stockholders - basic | | $ | (0.51 | ) | | $ | 0.03 | | | $ | (0.29 | ) | | $ | 0.58 | | | Consolidated net (loss) income per share attributable to common stockholders - diluted | | $ | (0.51 | ) | | $ | 0.03 | | | $ | (0.29 | ) | | $ | 0.55 | | | WEIGHTED AVERAGE SHARES OUTSTANDING | | | | | | | | | | | | | | | | | | Weighted average shares outstanding — basic | | | 45,228,164 | | | | 44,806,219 | | | | 44,175,385 | | | | 45,942,818 | | | Weighted average shares outstanding — diluted | | | 45,228,164 | | | | 48,154,262 | | | | 44,175,385 | | | | 48,054,418 | |
(a) | The net income (loss) from continuing operations for the quarters ended March 31, 2020, September 30, 2020, and December 31, 2020 includes approximately $53.6 million, $29.1 million, and $1.7 million, respectively of impairment charges. |
| | | Quarters Ended | | | | | March 31 | | | June 30 (a) | | | September 30 | | | December 31 (a) | | | | | (In thousands, except share data) | | | 2019: | | | | | | | | | | | | | | | | | | Net revenue | | $ | 98,449 | | | $ | 121,571 | | | $ | 111,055 | | | $ | 105,854 | | | Operating income | | | 14,796 | | | | 29,121 | | | | 31,117 | | | | 12,062 | | | Net (loss) income | | | (2,979 | ) | | | 7,137 | | | | 5,687 | | | | (7,788 | ) | | | | | | | | | | | | | | | | | | | | Consolidated net (loss) income attributable to common stockholders | | | (3,104 | ) | | | 6,591 | | | | 5,359 | | | | (7,921 | ) | | BASIC AND DILUTED NET (LOSS) INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS | | | | | | | | | | | | | | | | | | Consolidated net (loss) income per share attributable to common stockholders - basic | | $ | (0.07 | ) | | $ | 0.15 | | | $ | 0.12 | | | $ | (0.18 | ) | | Consolidated net (loss) income per share attributable to common stockholders - diluted | | $ | (0.07 | ) | | $ | 0.14 | | | $ | 0.12 | | | $ | (0.18 | ) | | WEIGHTED AVERAGE SHARES OUTSTANDING | | | | | | | | | | | | | | | | | | Weighted average shares outstanding — basic | | | 45,001,767 | | | | 45,061,821 | | | | 44,315,077 | | | | 44,172,147 | | | Weighted average shares outstanding — diluted | | | 45,001,767 | | | | 45,701,655 | | | | 46,118,702 | | | | 44,172,147 | |
(a) | The net income (loss) from continuing operations for the quarters ended June 30, 2019 and December 31, 2019, includes approximately $3.8 million and $6.8 million, respectively of impairment charges. |
15.16. SEGMENT INFORMATION:
The Company has four reportable segments: (i) radio broadcasting; (ii) Reach Media; (iii) digital; and (iv) cable television. These segments operate in the United States and are consistently aligned with the Company’s management of its businesses and its financial reporting structure. The radio broadcasting segment consists of all broadcast results of operations. The Reach Media segment consists of the results of operations for the related activities and operations of our syndicated shows. The digital segment includes the results of our online business, including the operations of Interactive One, as well as the digital components of our other reportable segments. The cable television segment consists of the Company’s cable TV operation, including results of operations of TV One’sOne and CLEO TV’s results of operations. Corporate/Eliminations represents financial activity associated with our corporate staff and offices and intercompany activity amongTV. Business activities unrelated to these four segments are included in an “all other” category which the four segments. Company refers to as “All other - corporate/eliminations.” Operating loss or income represents total revenues less operating expenses, depreciation and amortization, and impairment of long-lived assets. Intercompany revenue earned and expenses charged between segments are recorded at estimated fair value and eliminated in consolidation.
The accounting policies described in the summary of significant accounting policies in Note 13 – Organization and Summary of Significant Accounting Policies are applied consistently across the segments. Detailed segment data for the years ended December 31, 20202022 and 20192021 is presented in the following table: | | | For the Years Ended December 31, | | | | | 2020 | | | 2019 | | | | | (In thousands) | | | Net Revenue: | | | | | | | | | | Radio Broadcasting | | $ | 130,573 | | | $ | 177,478 | | | Reach Media | | | 30,996 | | | | 44,691 | | | Digital | | | 35,599 | | | | 31,922 | | | Cable Television | | | 181,583 | | | | 185,027 | | | Corporate/Eliminations* | | | (2,414 | ) | | | (2,189 | ) | | Consolidated | | $ | 376,337 | | | $ | 436,929 | | | | | | | | | | | | | Operating Expenses (including stock-based compensation and excluding depreciation and amortization and impairment of long-lived assets): | | | | | | | | | | Radio Broadcasting | | $ | 91,052 | | | $ | 119,878 | | | Reach Media | | | 22,376 | | | | 38,150 | | | Digital | | | 29,608 | | | | 31,775 | | | Cable Television | | | 81,546 | | | | 103,195 | | | Corporate/Eliminations | | | 26,018 | | | | 29,250 | | | Consolidated | | $ | 250,600 | | | $ | 322,248 | | | | | | | | | | | | | Depreciation and Amortization: | | | | | | | | | | Radio Broadcasting | | $ | 3,022 | | | $ | 3,248 | | | Reach Media | | | 237 | | | | 235 | | | Digital | | | 1,592 | | | | 1,877 | | | Cable Television | | | 3,749 | | | | 10,376 | | | Corporate/Eliminations | | | 1,141 | | | | 1,249 | | | Consolidated | | $ | 9,741 | | | $ | 16,985 | | | | | | | | | | | | | Impairment of Long-Lived Assets: | | | | | | | | | | Radio Broadcasting | | $ | 84,400 | | | $ | 4,800 | | | Reach Media | | | — | | | | — | | | Digital | | | — | | | | 5,800 | | | Cable Television | | | — | | | | — | | | Corporate/Eliminations | | | — | | | | — | | | Consolidated | | $ | 84,400 | | | $ | 10,600 | | | | | | | | | | | | | Operating income (loss): | | | | | | | | | | Radio Broadcasting | | $ | (47,901 | ) | | $ | 49,552 | | | Reach Media | | | 8,383 | | | | 6,306 | | | Digital | | | 4,399 | | | | (7,530 | ) | | Cable Television | | | 96,288 | | | | 71,456 | | | Corporate/Eliminations | | | (29,573 | ) | | | (32,688 | ) | | Consolidated | | $ | 31,596 | | | $ | 87,096 | |
| | | | | | | | | Year Ended | | | December 31, | | | 2022 | | 2021 | | | | | | (As Restated) | | | (In thousands) | Net revenue: | | | | | | | Radio broadcasting | | $ | 156,678 | | $ | 140,246 | Reach Media | | | 43,117 | | | 46,437 | Digital | | | 78,526 | | | 59,937 | Cable television | | | 209,871 | | | 197,003 | All other - corporate/eliminations* | | | (3,588) | | | (3,338) | Consolidated | | $ | 484,604 | | $ | 440,285 | | | | | | | | Operating Expenses (including stock-based compensation and excluding depreciation and amortization and impairment of long-lived assets): | | | | | | | Radio broadcasting | | $ | 108,952 | | $ | 98,250 | Reach Media | | | 28,244 | | | 32,911 | Digital | | | 56,760 | | | 42,698 | Cable television | | | 105,420 | | | 101,872 | All other - corporate/eliminations | | | 39,824 | | | 36,722 | Consolidated | | $ | 339,200 | | $ | 312,453 | | | | | | | | Depreciation and Amortization: | | | | | | | Radio broadcasting | | $ | 3,411 | | $ | 3,135 | Reach Media | | | 188 | | | 208 | Digital | | | 1,323 | | | 1,264 | Cable television | | | 3,847 | | | 3,738 | All other - corporate/eliminations | | | 1,265 | | | 944 | Consolidated | | $ | 10,034 | | $ | 9,289 | | | | | | | | Impairment of Long-Lived Assets: | | | | | | | Radio broadcasting | | $ | 40,683 | | $ | 2,104 | Reach Media | | | — | | | — | Digital | | | — | | | — | Cable television | | | — | | | — | All other - corporate/eliminations | | | — | | | — | Consolidated | | $ | 40,683 | | $ | 2,104 | | | | | | | | Operating income (loss): | | | | | | | Radio broadcasting | | $ | 3,632 | | $ | 36,757 | Reach Media | | | 14,685 | | | 13,318 | Digital | | | 20,443 | | | 15,975 | Cable television | | | 100,604 | | | 91,393 | All other - corporate/eliminations | | | (44,677) | | | (41,004) | Consolidated | | $ | 94,687 | | $ | 116,439 | | | | | | | | * Intercompany revenue included in net revenue above is as follows: | | | | | | | Radio broadcasting | | $ | (3,588) | | $ | (3,338) |
| | | | | | | Capital expenditures by segment are as follows: | | | | | | | Radio broadcasting | | $ | 3,750 | | $ | 2,826 | Reach Media | | | 269 | | | 160 | Digital | | | 1,245 | | | 1,354 | Cable television | | | 639 | | | 385 | All other - corporate/eliminations | | | 1,695 | | | 1,561 | Consolidated (a) | | $ | 7,598 | | $ | 6,286 | (a) Consolidated amount includes $835,000 related to acquisition of property, plant and equipment that is reflected in the Acquisition of broadcasting assets amount of $25.0 million in the Consolidated Statements of Cash Flows. |
| | | | | | | | | As of | | | December 31, | | December 31, | | | 2022 | | 2021 | | | | | | (As Restated) | | | (In thousands) | Total assets: | | | | | | | Radio broadcasting | | $ | 606,199 | | $ | 623,265 | Reach Media | | | 49,164 | | | 33,451 | Digital | | | 35,888 | | | 32,915 | Cable television | | | 414,697 | | | 367,896 | All other - corporate/eliminations | | | 232,539 | | | 271,498 | Consolidated | | $ | 1,338,487 | | $ | 1,329,025 |
17. QUARTERLY FINANCIAL DATA (UNAUDITED AND RESTATED):
* Intercompany revenue includedThe Company is providing restated quarterly and year-to-date unaudited consolidated financial statements for all quarters in net revenue above is as follows:2021 and for the quarters ended March 31, June 30, and September 30, 2022. See Note 2 - Restatement of Financial Statements of our consolidated financial statements for further background concerning the events preceding the restatement of financial information in this Form 10-K.
| Radio Broadcasting | | $ | (2,414 | ) | | $ | (2,189 | ) | | | | | | | | | | | | Capital expenditures by segment are as follows: | | | | | | | | | | Radio Broadcasting | | $ | 2,200 | | | $ | 2,778 | | | Reach Media | | | 82 | | | | 179 | | | Digital | | | 799 | | | | 1,390 | | | Cable Television | | | 92 | | | | 207 | | | Corporate/Eliminations | | | 625 | | | | 591 | | | Consolidated | | $ | 3,798 | | | $ | 5,145 | |
| | | As of | | | | | December 31,
2020 | | | December 31,
2019 | | | | | (In thousands) | | | Total Assets: | | | | | | | | | | Radio Broadcasting | | $ | 630,174 | | | $ | 721,295 | | | Reach Media | | | 38,235 | | | | 41,892 | | | Digital | | | 23,168 | | | | 22,223 | | | Cable Television | | | 374,046 | | | | 388,465 | | | Corporate/Eliminations | | | 129,864 | | | | 76,044 | | | Consolidated | | $ | 1,195,487 | | | $ | 1,249,919 | |
Consolidated Balance Sheets 16.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | As of March 31, 2022 (unaudited) | | As of June 30, 2022 (unaudited) | | As of September 30, 2022 (unaudited) | | | As Previously | | | | Other | | | | | As Previously | | | | Other | | | | As Previously | | | | Other | | | | | Reported | | Adjustments | | Adjustments | | As Restated | | Reported | | Adjustments | | Adjustments | | As Restated | | Reported | | Adjustments | | Adjustments | | As Restated | | | | (In thousands) | ASSETS | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | CURRENT ASSETS: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Trade accounts receivable, net of allowance for doubtful accounts of $8,747, $8,314, and $7,925, respectively | | $ | 113,687 | | $ | — | | $ | 425 | | $ | 114,112 | | $ | 123,998 | | $ | — | | $ | 352 | | $ | 124,350 | | $ | 127,301 | | $ | — | | $ | 365 | | $ | 127,666 | Other current assets | | | 8,397 | | | — | | | (1,263) | | | 7,134 | | | 8,037 | | | — | | | (1,263) | | | 6,774 | | | 8,939 | | | — | | | (1,263) | | | 7,676 | Total current assets | | | 326,143 | | | — | | | (838) | | | 325,305 | | | 311,061 | | | — | | | (911) | | | 310,150 | | | 287,088 | | | — | | | (898) | | | 286,190 | RIGHT OF USE ASSETS | | | 36,302 | | | — | | | (101) | | | 36,201 | | | 34,149 | | | — | | | (114) | | | 34,035 | | | 34,258 | | | — | | | (127) | | | 34,131 | RADIO BROADCASTING LICENSES | | | 505,148 | | | — | | | (3,728) | | | 501,420 | | | 489,340 | | | — | | | (1,700) | | | 487,640 | | | 498,532 | | | — | | | (2,700) | | | 495,832 | OTHER INTANGIBLE ASSETS, net | | | 63,727 | | | — | | | (2,163) | | | 61,564 | | | 61,508 | | | — | | | (2,086) | | | 59,422 | | | 59,376 | | | — | | | (2,009) | | | 57,367 | DEBT SECURITIES - available-for-sale, at fair value; amortized cost of $40,000 | | | — | | | 123,000 | | | — | | | 123,000 | | | — | | | 123,100 | | | — | | | 123,100 | | | — | | | 115,600 | | | — | | | 115,600 | OTHER ASSETS | | | 44,026 | | | (40,000) | | | 2,259 | | | 6,285 | | | 44,463 | | | (40,000) | | | 2,195 | | | 6,658 | | | 44,303 | | | (40,000) | | | 2,131 | | | 6,434 | Total assets | | $ | 1,284,635 | | $ | 83,000 | | $ | (4,571) | | $ | 1,363,064 | | $ | 1,254,764 | | $ | 83,100 | | $ | (2,616) | | $ | 1,335,248 | | $ | 1,250,696 | | $ | 75,600 | | $ | (3,603) | | $ | 1,322,693 | LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND STOCKHOLDERS’ EQUITY | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | CURRENT LIABILITIES: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Accounts payable | | $ | 11,997 | | $ | — | | $ | 2,309 | | $ | 14,306 | | $ | 14,819 | | $ | — | | | 2,115 | | $ | 16,934 | | $ | 14,318 | | $ | — | | | 1,958 | | $ | 16,276 | Other current liabilities | | | 35,660 | | | — | | | (1,884) | | | 33,776 | | | 31,345 | | | — | | | (1,763) | | | 29,582 | | | 40,217 | | | — | | | (1,593) | | | 38,624 | Total current liabilities | | | 99,737 | | | — | | | 425 | | | 100,162 | | | 109,645 | | | — | | | 352 | | | 109,997 | | | 112,634 | | | — | | | 365 | | | 112,999 | DEFERRED TAX LIABILITIES, net | | | 8,059 | | | 19,987 | | | (1,203) | | | 26,843 | | | 11,070 | | | 20,012 | | | (714) | | | 30,368 | | | 13,984 | | | 18,259 | | | (959) | | | 31,284 | Total liabilities | | | 996,316 | | | 19,987 | | | (778) | | | 1,015,525 | | | 976,513 | | | 20,012 | | | (362) | | | 996,163 | | | 964,680 | | | 18,259 | | | (594) | | | 982,345 | REDEEMABLE NONCONTROLLING INTERESTS | | | 17,755 | | | — | | | 2,472 | | | 20,227 | | | 18,690 | | | — | | | 1,744 | | | 20,434 | | | 19,964 | | | — | | | 2,363 | | | 22,327 | STOCKHOLDERS’ EQUITY: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Accumulated other comprehensive income | | | — | | | 62,846 | | | — | | | 62,846 | | | — | | | 62,921 | | | — | | | 62,921 | | | — | | | 57,225 | | | — | | | 57,225 | Additional paid-in capital | | | 1,020,711 | | | — | | | (2,472) | | | 1,018,239 | | | 994,678 | | | — | | | (1,744) | | | 992,934 | | | 996,954 | | | — | | | (2,363) | | | 994,591 | Accumulated deficit | | | (750,198) | | | 167 | | | (3,793) | | | (753,824) | | | (735,164) | | | 167 | | | (2,254) | | | (737,251) | | | (730,951) | | | 116 | | | (3,009) | | | (733,844) | Total stockholders’ equity | | | 270,564 | | | 63,013 | | | (6,265) | | | 327,312 | | | 259,561 | | | 63,088 | | | (3,998) | | | 318,651 | | | 266,052 | | | 57,341 | | | (5,372) | | | 318,021 | Total liabilities, redeemable noncontrolling interests and stockholders’ equity | | $ | 1,284,635 | | $ | 83,000 | | $ | (4,571) | | $ | 1,363,064 | | $ | 1,254,764 | | $ | 83,100 | | $ | (2,616) | | $ | 1,335,248 | | $ | 1,250,696 | | $ | 75,600 | | $ | (3,603) | | $ | 1,322,693 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | As of March 31, 2021 (unaudited) | | As of June 30, 2021 (unaudited) | | As of September 30, 2021 (unaudited) | | | As Previously | | | | Other | | | | As Previously | | | | Other | | | | As Previously | | | | Other | | | | | Reported | | Adjustments | | Adjustments | | As Restated | | Reported | | Adjustments | | Adjustments | | As Restated | | Reported | | Adjustments | | Adjustments | | As Restated | | | | (In thousands) | ASSETS | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | CURRENT ASSETS: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Trade accounts receivable, net of allowance for doubtful accounts of $7,954, $7,307, and $7,937, respectively | | $ | 94,633 | | $ | — | | $ | 281 | | $ | 94,914 | | $ | 103,902 | | $ | — | | $ | 158 | | $ | 104,060 | | $ | 114,045 | | $ | — | | $ | 311 | | $ | 114,356 | Other current assets | | | 4,639 | | | — | | | (1,263) | | | 3,376 | | | 4,260 | | | — | | | (1,263) | | | 2,997 | | | 4,423 | | | — | | | (1,263) | | | 3,160 | Total current assets | | | 203,893 | | | — | | | (982) | | | 202,911 | | | 279,735 | | | — | | | (1,105) | | | 278,630 | | | 271,594 | | | — | | | (952) | | | 270,642 | RIGHT OF USE ASSETS | | | 40,421 | | | — | | | (49) | | | 40,372 | | | 42,202 | | | — | | | (62) | | | 42,140 | | | 39,556 | | | — | | | (75) | | | 39,481 | RADIO BROADCASTING LICENSES | | | 484,066 | | | — | | | (1,624) | | | 482,442 | | | 505,148 | | | — | | | (1,624) | | | 503,524 | | | 505,148 | | | — | | | (1,624) | | | 503,524 | OTHER INTANGIBLE ASSETS, net | | | 54,375 | | | — | | | (2,387) | | | 51,988 | | | 53,059 | | | — | | | (2,315) | | | 50,744 | | | 51,821 | | | — | | | (2,313) | | | 49,508 | DEFERRED TAX ASSETS, net | | | 10,051 | | | (10,051) | | | — | | | — | | | 3,933 | | | (3,933) | | | — | | | — | | | — | | | — | | | — | | | — | DEBT SECURITIES - available-for-sale, at fair value; amortized cost of $40,000 | | | — | | | 101,900 | | | — | | | 101,900 | | | — | | | 106,400 | | | — | | | 106,400 | | | — | | | 110,800 | | | — | | | 110,800 | OTHER ASSETS | | | 43,092 | | | (40,000) | | | 2,431 | | | 5,523 | | | 43,211 | | | (40,000) | | | 2,372 | | | 5,583 | | | 62,958 | | | (40,000) | | | 2,383 | | | 25,341 | Total assets | | $ | 1,168,751 | | $ | 51,849 | | $ | (2,611) | | $ | 1,217,989 | | $ | 1,239,542 | | $ | 62,467 | | $ | (2,734) | | $ | 1,299,275 | | $ | 1,237,537 | | $ | 70,800 | | $ | (2,581) | | $ | 1,305,756 | LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND STOCKHOLDERS’ EQUITY | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | CURRENT LIABILITIES: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Accounts payable | | $ | 9,037 | | $ | — | | $ | 2,128 | | $ | 11,165 | | $ | 12,523 | | $ | — | | | 2,067 | | $ | 14,590 | | $ | 14,623 | | $ | — | | | 2,033 | | $ | 16,656 | Other current liabilities | | | 25,022 | | | — | | | (1,847) | | | 23,175 | | | 24,137 | | | — | | | (1,909) | | | 22,228 | | | 29,334 | | | — | | | (1,722) | | | 27,612 | Total current liabilities | | | 77,973 | | | — | | | 281 | | | 78,254 | | | 99,157 | | | — | | | 158 | | | 99,315 | | | 87,985 | | | — | | | 311 | | | 88,296 | DEFERRED TAX LIABILITIES, net | | | — | | | 5,002 | | | (703) | | | 4,299 | | | — | | | 12,493 | | | (715) | | | 11,778 | | | 2,325 | | | 17,505 | | | (715) | | | 19,115 | Total liabilities | | | 957,185 | | | 5,002 | | | (422) | | | 961,765 | | | 987,887 | | | 12,493 | | | (557) | | | 999,823 | | | 972,367 | | | 17,505 | | | (404) | | | 989,468 | REDEEMABLE NONCONTROLLING INTERESTS | | | 12,735 | | | — | | | 1,789 | | | 14,524 | | | 15,192 | | | — | | | 2,457 | | | 17,649 | | | 17,017 | | | — | | | 2,311 | | | 19,328 | STOCKHOLDERS’ EQUITY: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Accumulated other comprehensive income | | | — | | | 46,847 | | | — | | | 46,847 | | | — | | | 50,239 | | | — | | | 50,239 | | | — | | | 53,551 | | | — | | | 53,551 | Additional paid-in capital | | | 1,003,694 | | | — | | | (1,789) | | | 1,001,905 | | | 1,023,458 | | | — | | | (2,457) | | | 1,021,001 | | | 1,021,272 | | | — | | | (2,311) | | | 1,018,961 | Accumulated deficit | | | (804,912) | | | — | | | (2,189) | | | (807,101) | | | (787,046) | | | (265) | | | (2,177) | | | (789,488) | | | (773,170) | | | (256) | | | (2,177) | | | (775,603) | Total stockholders’ equity | | | 198,831 | | | 46,847 | | | (3,978) | | | 241,700 | | | 236,463 | | | 49,974 | | | (4,634) | | | 281,803 | | | 248,153 | | | 53,295 | | | (4,488) | | | 296,960 | Total liabilities, redeemable noncontrolling interests and stockholders’ equity | | $ | 1,168,751 | | $ | 51,849 | | $ | (2,611) | | $ | 1,217,989 | | $ | 1,239,542 | | $ | 62,467 | | $ | (2,734) | | $ | 1,299,275 | | $ | 1,237,537 | | $ | 70,800 | | $ | (2,581) | | $ | 1,305,756 |
Quarterly Consolidated Statements of Operations | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Three Months Ended March 31, 2022 (unaudited) | | Three Months Ended June 30, 2022 (unaudited) | | Three Months Ended September 30, 2022 (unaudited) | | | As | | | | | | | | | | | As | | | | | | | | | | | As | | | | | | | | | | | | Previously | | | | Other | | As | | Previously | | | | Other | | As | | Previously | | | | Other | | As | | | Reported | | Adjustments | | Adjustments | | Restated | | Reported | | Adjustments | | Adjustments | | Restated | | Reported | | Adjustments | | Adjustments | | Restated | | | | (In thousands, except share data) | NET REVENUE | | $ | 112,349 | | $ | — | | $ | (218) | | $ | 112,131 | | $ | 118,810 | | $ | — | | $ | (153) | | $ | 118,657 | | $ | 121,403 | | $ | — | | $ | (153) | | $ | 121,250 | OPERATING EXPENSES: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Selling, general and administrative, including stock-based compensation of $0, $0, and $5, respectively | | | 35,428 | | | — | | | (218) | | | 35,210 | | | 35,346 | | | — | | | (153) | | | 35,193 | | | 41,076 | | | — | | | (153) | | | 40,923 | Impairment of long-lived assets | | | — | | | — | | | — | | $ | — | | | 16,933 | | | — | | | (2,028) | | | 14,905 | | | 14,450 | | | — | | | 1,000 | | | 15,450 | Total operating expenses | | | 75,811 | | | — | | | (218) | | | 75,593 | | | 94,975 | | | — | | | (2,181) | | | 92,794 | | | 102,429 | | | — | | | 847 | | | 103,276 | Operating income (loss) | | | 36,538 | | | — | | | — | | | 36,538 | | | 23,835 | | | — | | | 2,028 | | | 25,863 | | | 18,974 | | | — | | | (1,000) | | | 17,974 | Income (loss) before provision for (benefit from) income taxes and noncontrolling interests in income of subsidiaries | | | 22,656 | | | — | | | — | | | 22,656 | | | 19,529 | | | — | | | 2,028 | | | 21,557 | | | 7,937 | | | — | | | (1,000) | | | 6,937 | PROVISION FOR (BENEFIT FROM) INCOME TAXES | | | 5,586 | | | (134) | | | 10 | | | 5,462 | | | 3,725 | | | — | | | 489 | | | 4,214 | | | 3,364 | | | 51 | | | (245) | | | 3,170 | NET INCOME (LOSS) | | | 17,070 | | | 134 | | | (10) | | | 17,194 | | | 15,804 | | | — | | | 1,539 | | | 17,343 | | | 4,573 | | | (51) | | | (755) | | | 3,767 | NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS | | $ | 16,369 | | $ | 134 | | $ | (10) | | $ | 16,493 | | $ | 15,034 | | $ | — | | $ | 1,539 | | $ | 16,573 | | $ | 4,213 | | $ | (51) | | $ | (755) | | $ | 3,407 | BASIC NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net income (loss) attributable to common stockholders | | $ | 0.32 | | $ | — | | $ | — | | $ | 0.32 | | $ | 0.30 | | $ | — | | $ | 0.03 | | $ | 0.33 | | $ | 0.09 | | $ | — | | $ | (0.02) | | $ | 0.07 | DILUTED NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net income (loss) attributable to common stockholders | | $ | 0.30 | | $ | — | | $ | — | | $ | 0.30 | | $ | 0.28 | | $ | — | | $ | 0.03 | | $ | 0.31 | | $ | 0.08 | | $ | — | | $ | (0.02) | | $ | 0.06 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Three Months Ended March 31, 2021 (unaudited) | | Three Months Ended June 30, 2021 (unaudited) | | Three Months Ended September 30, 2021 (unaudited) | | Three Months Ended December 31, 2021 (unaudited) | | | As | | | | | | | | | | | As | | | | | | | | | | | As | | | | | | | | | | | As | | | | | | | | | | | | Previously | | | | Other | | As | | Previously | | | | Other | | As | | Previously | | | | Other | | As | | Previously | | | | Other | | As | | | Reported | | Adjustments | | Adjustments | | Restated | | Reported | | Adjustments | | Adjustments | | Restated | | Reported | | Adjustments | | Adjustments | | Restated | | Reported | | Adjustments | | Adjustments | | Restated | | | | (In thousands, except share data) | NET REVENUE | | $ | 91,440 | | $ | — | | $ | (229) | | $ | 91,211 | | $ | 107,593 | | $ | — | | $ | (228) | | $ | 107,365 | | $ | 111,463 | | $ | — | | $ | (229) | | $ | 111,234 | | $ | 130,966 | | $ | — | | $ | (491) | | $ | 130,475 | OPERATING EXPENSES: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Selling, general and administrative, including stock-based compensation of $31, $0, $0, and $0, respectively | | | 29,987 | | | — | | | (229) | | | 29,758 | | | 31,510 | | | — | | | (228) | | | 31,282 | | | 33,102 | | | — | | | (229) | | | 32,873 | | | 48,588 | | | — | | | (491) | | | 48,097 | Impairment of long-lived assets | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 2,104 | | | 2,104 | Total operating expenses | | | 67,683 | | | — | | | (229) | | | 67,454 | | | 69,673 | | | — | | | (228) | | | 69,445 | | | 76,988 | | | — | | | (229) | | | 76,759 | | | 108,575 | | | — | | | 1,613 | | | 110,188 | Operating income (loss) | | | 23,757 | | | — | | | — | | | 23,757 | | | 37,920 | | | — | | | — | | | 37,920 | | | 34,475 | | | — | | | — | | | 34,475 | | | 22,391 | | | — | | | (2,104) | | | 20,287 | Income (loss) before provision for (benefit from) income taxes and noncontrolling interests in income of subsidiaries | | | 451 | | | — | | | — | | | 451 | | | 24,597 | | | — | | | — | | | 24,597 | | | 20,712 | | | — | | | — | | | 20,712 | | | 8,484 | | | — | | | (2,104) | | | 6,380 | PROVISION FOR (BENEFIT FROM) INCOME TAXES | | | (10) | | | — | | | — | | | (10) | | | 6,119 | | | 265 | | | (12) | | | 6,372 | | | 6,257 | | | (9) | | | — | | | 6,248 | | | 1,211 | | | (289) | | | (498) | | | 424 | NET INCOME (LOSS) | | | 461 | | | — | | | — | | | 461 | | | 18,478 | | | (265) | | | 12 | | | 18,225 | | | 14,455 | | | 9 | | | — | | | 14,464 | | | 7,273 | | | 289 | | | (1,606) | | | 5,956 | NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS | | $ | 7 | | $ | — | | $ | — | | $ | 7 | | $ | 17,866 | | $ | (265) | | $ | 12 | | $ | 17,613 | | $ | 13,876 | | $ | 9 | | $ | — | | $ | 13,885 | | $ | 6,603 | | $ | 289 | | $ | (1,606) | | $ | 5,286 | BASIC NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net income (loss) attributable to common stockholders | | $ | 0.00 | | $ | — | | $ | — | | $ | 0.00 | | $ | 0.36 | | $ | (0.01) | | $ | — | | $ | 0.35 | | $ | 0.27 | | $ | — | | $ | — | | $ | 0.27 | | $ | 0.13 | | $ | 0.01 | | $ | (0.03) | | $ | 0.11 | DILUTED NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net income (loss) attributable to common stockholders | | $ | 0.00 | | $ | — | | $ | — | | $ | 0.00 | | $ | 0.33 | | $ | — | | $ | — | | $ | 0.33 | | $ | 0.25 | | $ | — | | $ | — | | $ | 0.25 | | $ | 0.12 | | $ | 0.01 | | $ | (0.03) | | $ | 0.10 |
Year to Date Consolidated Statements of Operations | | | | | | | | | | | | | | | | | | | | | | | | | | | Six Months Ended June 30, 2022 (unaudited) | | Nine Months Ended September 30, 2022 (unaudited) | | | As Previously
Reported | | Adjustments | | Other Adjustments | | As Restated | | As Previously
Reported | | | Adjustments | | Other Adjustments | | As Restated | | | | (In thousands, except share data) | NET REVENUE | | $ | 231,159 | | $ | — | | $ | (371) | | $ | 230,788 | | $ | 352,562 | | $ | — | | $ | (524) | | $ | 352,038 | OPERATING EXPENSES: | | | | | | | | | | | | | | | | | | | | | | | | | Selling, general and administrative, including stock-based compensation of $0 and $5, respectively | | | 70,774 | | | — | | | (371) | | | 70,403 | | | 111,850 | | | — | | | (524) | | | 111,326 | Impairment of long-lived assets | | | 16,933 | | | — | | | (2,028) | | | 14,905 | | | 31,383 | | | — | | | (1,028) | | | 30,355 | Total operating expenses | | | 170,786 | | | — | | | (2,399) | | | 168,387 | | | 273,215 | | | — | | | (1,552) | | | 271,663 | Operating income | | | 60,373 | | | — | | | 2,028 | | | 62,401 | | | 79,347 | | | — | | | 1,028 | | | 80,375 | Income (loss) before provision for (benefit from) income taxes and noncontrolling interests in income of subsidiaries | | | 42,185 | | | — | | | 2,028 | | | 44,213 | | | 50,122 | | | — | | | 1,028 | | | 51,150 | PROVISION FOR (BENEFIT FROM) INCOME TAXES | | | 9,311 | | | (134) | | | 499 | | | 9,676 | | | 12,675 | | | (83) | | | 254 | | | 12,846 | NET INCOME | | | 32,874 | | | 134 | | | 1,529 | | | 34,537 | | | 37,447 | | | 83 | | | 774 | | | 38,304 | NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS | | $ | 31,403 | | $ | 134 | | $ | 1,529 | | $ | 33,066 | | $ | 35,616 | | $ | 83 | | $ | 774 | | $ | 36,473 | BASIC NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS | | | | | | | | | | | | | | | | | | | | | | | | | Net income (loss) attributable to common stockholders | | $ | 0.62 | | $ | — | | $ | 0.03 | | $ | 0.65 | | $ | 0.72 | | $ | — | | $ | 0.02 | | $ | 0.74 | DILUTED NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS | | | | | | | | | | | | | | | | | | | | | | | | | Net income (loss) attributable to common stockholders | | $ | 0.57 | | $ | — | | $ | 0.03 | | $ | 0.60 | | $ | 0.67 | | $ | — | | $ | 0.01 | | $ | 0.68 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | Six Months Ended June 30, 2021 (unaudited) | | Nine Months Ended September 30, 2021 (unaudited) | | | As Previously
Reported | | Adjustments | | Other Adjustments | | As Restated | | As Previously
Reported | | Adjustments | | Other Adjustments | | As Restated | | | | (In thousands, except share data) | NET REVENUE | | $ | 199,033 | | $ | — | | $ | (457) | | $ | 198,576 | | $ | 310,496 | | $ | — | | $ | (686) | | $ | 309,810 | OPERATING EXPENSES: | | | | | | | | | | | | | | | | | | | | | | | | | Selling, general and administrative, including stock-based compensation of $31 and $31, respectively | | | 61,497 | | | — | | | (457) | | | 61,040 | | | 94,599 | | | — | | | (686) | | | 93,913 | Total operating expenses | | | 137,356 | | | — | | | (457) | | | 136,899 | | | 214,344 | | | — | | | (686) | | | 213,658 | PROVISION FOR (BENEFIT FROM) INCOME TAXES | | | 6,109 | | | 265 | | | (12) | | | 6,362 | | | 12,366 | | | 256 | | | (12) | | | 12,610 | NET INCOME (LOSS) | | | 18,939 | | | (265) | | | 12 | | | 18,686 | | | 33,394 | | | (256) | | | 12 | | | 33,150 | NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS | | $ | 17,873 | | $ | (265) | | $ | 12 | | $ | 17,620 | | $ | 31,749 | | $ | (256) | | $ | 12 | | $ | 31,505 | BASIC NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS | | | | | | | | | | | | | | | | | | | | | | | | | Net income (loss) attributable to common stockholders | | $ | 0.36 | | $ | (0.01) | | $ | — | | $ | 0.35 | | $ | 0.64 | | $ | (0.01) | | $ | — | | $ | 0.63 |
Quarterly Consolidated Statements of Comprehensive Income | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Three Months Ended March 31, 2022 (unaudited) | | Three Months Ended June 30, 2022 (unaudited) | | Three Months Ended September 30, 2022 (unaudited) | | | As Previously | | | | | Other | | | | | As Previously | | | | | Other | | | | | As Previously | | | | | Other | | | | | | Reported | | Adjustments | | Adjustments | | As Restated | | Reported | | Adjustments | | Adjustments | | As Restated | | Reported | | Adjustments | | Adjustments | | As Restated | | | | (In thousands) | OTHER COMPREHENSIVE INCOME (LOSS), BEFORE TAX: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Unrealized gain (loss) on available-for-sale securities | | $ | — | | $ | 10,400 | | $ | — | | $ | 10,400 | | $ | — | | $ | 100 | | $ | — | | $ | 100 | | $ | — | | $ | (7,500) | | $ | — | | $ | (7,500) | Income tax (expense) benefit related to unrealized gain (loss) on available-for-sale securities | | | — | | | (2,504) | | | — | | | (2,504) | | | — | | | (25) | | | — | | | (25) | | | — | | | 1,804 | | | — | | | 1,804 | OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX | | | — | | | 7,896 | | | — | | | 7,896 | | | — | | | 75 | | | — | | | 75 | | | — | | | (5,696) | | | — | | | (5,696) | COMPREHENSIVE INCOME (LOSS) | | $ | 17,070 | | $ | 8,030 | | $ | (10) | | $ | 25,090 | | $ | 15,804 | | $ | 75 | | $ | 1,539 | | $ | 17,418 | | $ | 4,573 | | $ | (5,747) | | $ | (755) | | $ | (1,929) | COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS | | $ | 16,369 | | $ | 8,030 | | $ | (10) | | $ | 24,389 | | $ | 15,034 | | $ | 75 | | $ | 1,539 | | $ | 16,648 | | $ | 4,213 | | $ | (5,747) | | $ | (755) | | $ | (2,289) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Three Months Ended March 31, | | Three Months Ended June 30, | | Three Months Ended September 30, | | Three Months Ended December 31, | | | 2021 (unaudited) | | 2021 (unaudited) | | 2021 (unaudited) | | 2021 (unaudited) | | | As | | | | | | | | | | | As | | | | | | | | | | | As | | | | | | | | | | | As | | | | | | | | | | | | Previously | | | | | Other | | As | | Previously | | | | | Other | | As | | Previously | | | | | Other | | As | | Previously | | | | | Other | | As | | | Reported | | Adjustments | | Adjustments | | Restated | | Reported | | Adjustments | | Adjustments | | Restated | | Reported | | Adjustments | | Adjustments | | Restated | | Reported | | Adjustments | | Adjustments | | Restated | | | | (In thousands) | OTHER COMPREHENSIVE INCOME (LOSS), BEFORE TAX: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Unrealized gain (loss) on available-for-sale securities | | $ | — | | $ | (1,200) | | $ | — | | $ | (1,200) | | $ | — | | $ | 4,500 | | $ | — | | $ | 4,500 | | $ | — | | $ | 4,400 | | $ | — | | $ | 4,400 | | $ | — | | $ | 1,800 | | $ | — | | $ | 1,800 | Income tax (expense) benefit related to unrealized gain (loss) on available-for-sale securities | | | — | | | 292 | | | — | | | 292 | | | — | | | (1,108) | | | — | | | (1,108) | | | — | | | (1,088) | | | — | | | (1,088) | | | — | | | (401) | | | — | | | (401) | OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX | | | — | | | (908) | | | — | | | (908) | | | — | | | 3,392 | | | — | | | 3,392 | | | — | | | 3,312 | | | — | | | 3,312 | | | — | | | 1,399 | | | — | | | 1,399 | COMPREHENSIVE INCOME (LOSS) | | | 461 | | | (908) | | | — | | | (447) | | $ | 18,478 | | $ | 3,127 | | $ | 12 | | $ | 21,617 | | $ | 14,455 | | $ | 3,321 | | $ | — | | $ | 17,776 | | $ | 7,273 | | $ | 1,688 | | $ | (1,606) | | $ | 7,355 | COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS | | $ | 7 | | $ | (908) | | $ | — | | $ | (901) | | $ | 17,866 | | $ | 3,127 | | $ | 12 | | $ | 21,005 | | $ | 13,876 | | $ | 3,321 | | $ | — | | $ | 17,197 | | $ | 6,603 | | $ | 1,688 | | $ | (1,606) | | $ | 6,685 |
Year to Date Consolidated Statements of Comprehensive Income | | | | | | | | | | | | | | | | | | | | | | | | | | | Six Months Ended June 30, 2022 (unaudited) | | Nine Months Ended September 30, 2022 (unaudited) | | | As Previously | | | | | Other | | | | | As Previously | | | | | Other | | | | | | Reported | | Adjustments | | Adjustments | | As Restated | | Reported | | Adjustments | | Adjustments | | As Restated | | | | (In thousands) | OTHER COMPREHENSIVE INCOME, BEFORE TAX: | | | | | | | | | | | | | | | | | | | | | | | | | Unrealized gain on available-for-sale securities | | $ | — | | $ | 10,500 | | $ | — | | $ | 10,500 | | $ | — | | $ | 3,000 | | $ | — | | $ | 3,000 | Income tax expense related to unrealized gain on available-for-sale securities | | | — | | | (2,529) | | | — | | | (2,529) | | | — | | | (725) | | | — | | | (725) | OTHER COMPREHENSIVE INCOME, NET OF TAX | | | — | | | 7,971 | | | — | | | 7,971 | | | — | | | 2,275 | | | — | | | 2,275 | COMPREHENSIVE INCOME | | $ | 32,874 | | $ | 8,105 | | $ | 1,529 | | $ | 42,508 | | $ | 37,447 | | $ | 2,358 | | $ | 774 | | $ | 40,579 | COMPREHENSIVE INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS | | $ | 31,403 | | $ | 8,105 | | $ | 1,529 | | $ | 41,037 | | $ | 35,616 | | $ | 2,358 | | $ | 774 | | $ | 38,748 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | Six Months Ended June 30, 2021 (unaudited) | | Nine Months Ended September 30, 2021 (unaudited) | | | As Previously | | | | | Other | | | | | As Previously | | | | | Other | | | | | | Reported | | Adjustments | | Adjustments | | As Restated | | Reported | | Adjustments | | Adjustments | | As Restated | | | | (In thousands) | OTHER COMPREHENSIVE INCOME, BEFORE TAX: | | | | | | | | | | | | | | | | | | | | | | | | | Unrealized gain on available-for-sale securities | | $ | — | | $ | 3,300 | | $ | — | | $ | 3,300 | | $ | — | | $ | 7,700 | | $ | — | | $ | 7,700 | Income tax expense related to unrealized gain on available-for-sale securities | | | — | | | (816) | | | — | | | (816) | | | — | | | (1,904) | | | — | | | (1,904) | OTHER COMPREHENSIVE INCOME, NET OF TAX | | | — | | | 2,484 | | | — | | | 2,484 | | | — | | | 5,796 | | | — | | | 5,796 | COMPREHENSIVE INCOME | | $ | 18,939 | | $ | 2,219 | | $ | 12 | | $ | 21,170 | | $ | 33,394 | | $ | 5,540 | | $ | 12 | | $ | 38,946 | COMPREHENSIVE INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS | | $ | 17,873 | | $ | 2,219 | | $ | 12 | | $ | 20,104 | | $ | 31,749 | | $ | 5,540 | | $ | 12 | | $ | 37,301 |
Consolidated Statements of Changes in Stockholders’ Equity | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Convertible | | Common | | Common | | Common | | Common | | Accumulated Other | | Additional | | | | | | | | | Preferred | | Stock | | Stock | | Stock | | Stock | | Comprehensive | | Paid-In | | Accumulated | | Total | | | Stock | | Class A | | Class B | | Class C | | Class D | | Income | | Capital | | Deficit | | Equity | | For the three months ended March 31, 2022 | | (In thousands, except share data) | As Previously Reported | | | | | | | | | | | | | | | | | | | | | | | | | | | | BALANCE, as of December 31, 2021 | | $ | — | | $ | 9 | | $ | 3 | | $ | 2 | | $ | 37 | | $ | — | | $ | 1,020,636 | | $ | (766,567) | | $ | 254,120 | Net income | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 16,369 | | | 16,369 | Stock-based compensation expense | | | — | | | — | | | — | | | — | | | — | | | — | | | 124 | | | — | | | 124 | Repurchase of 2,649 shares of Class D common stock | | | — | | | — | | | — | | | — | | | — | | | — | | | (10) | | | — | | | (10) | Adjustment of redeemable noncontrolling interests to estimated redemption value | | | — | | | — | | | — | | | — | | | — | | | — | | | (39) | | | — | | | (39) | BALANCE, as of March 31, 2022 | | $ | — | | $ | 9 | | $ | 3 | | $ | 2 | | $ | 37 | | $ | — | | $ | 1,020,711 | | $ | (750,198) | | $ | 270,564 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Adjustments and Other Adjustments | | | | | | | | | | | | | | | | | | | | | | | | | | | | BALANCE, as of December 31, 2021 | | | — | | | — | | | — | | | — | | | — | | | 54,950 | | | (1,640) | | | (3,750) | | | 49,560 | Net income | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 124 | | | 124 | Adjustment of redeemable noncontrolling interests to estimated redemption value | | | — | | | — | | | — | | | — | | | — | | | — | | | (832) | | | — | | | (832) | Other comprehensive income, net of tax | | | — | | | — | | | — | | | — | | | — | | | 7,896 | | | — | | | — | | | 7,896 | Total Adjustments March 31, 2022 | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | 62,846 | | $ | (2,472) | | $ | (3,626) | | $ | 56,748 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | As Restated | | | | | | | | | | | | | | | | | | | | | | | | | | | | BALANCE, as of December 31, 2021 (Restated) | | | — | | | 9 | | | 3 | | | 2 | | | 37 | | | 54,950 | | | 1,018,996 | | | (770,317) | | | 303,680 | Net income | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 16,493 | | | 16,493 | Stock-based compensation expense | | | — | | | — | | | — | | | — | | | — | | | — | | | 124 | | | — | | | 124 | Repurchase of 2,649 shares of Class D common stock | | | — | | | — | | | — | | | — | | | — | | | — | | | (10) | | | — | | | (10) | Adjustment of redeemable noncontrolling interests to estimated redemption value | | | — | | | — | | | — | | | — | | | — | | | — | | | (871) | | | — | | | (871) | Other comprehensive income, net of tax | | | — | | | — | | | — | | | — | | | — | | | 7,896 | | | — | | | — | | | 7,896 | BALANCE, as of March 31, 2022 (Restated) | | $ | — | | $ | 9 | | $ | 3 | | $ | 2 | | $ | 37 | | $ | 62,846 | | $ | 1,018,239 | | $ | (753,824) | | $ | 327,312 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Convertible | | Common | | Common | | Common | | Common | | Accumulated Other | | Additional | | | | | | | | | Preferred | | Stock | | Stock | | Stock | | Stock | | Comprehensive | | Paid-In | | Accumulated | | Total | | | Stock | | Class A | | Class B | | Class C | | Class D | | Income | | Capital | | Deficit | | Equity | | For the six months ended June 30, 2022 | | (In thousands, except share data) | As Previously Reported | | | | | | | | | | | | | | | | | | | | | | | | | | | | BALANCE, as of December 31, 2021 | | $ | — | | $ | 9 | | $ | 3 | | $ | 2 | | $ | 37 | | $ | — | | $ | 1,020,636 | | $ | (766,567) | | $ | 254,120 | Net income | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 31,403 | | | 31,403 | Stock-based compensation expense | | | — | | | — | | | — | | | — | | | — | | | — | | | 460 | | | — | | | 460 | Repurchase of 4,684,419 shares of Class D common
stock | | | — | | | — | | | — | | | — | | | (4) | | | — | | | (24,665) | | | — | | | (24,669) | Exercise of options for 60,240 shares of Class D common stock | | | — | | | — | | | — | | | — | | | — | | | — | | | 50 | | | — | | | 50 | Adjustment of redeemable noncontrolling interests to estimated redemption value | | | — | | | — | | | — | | | — | | | — | | | — | | | (1,803) | | | — | | | (1,803) | BALANCE, as of June 30, 2022 | | $ | — | | $ | 9 | | $ | 3 | | $ | 2 | | $ | 33 | | $ | — | | $ | 994,678 | | $ | (735,164) | | $ | 259,561 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Adjustments and Other Adjustments | | | | | | | | | | | | | | | | | | | | | | | | | | | | BALANCE, as of December 31, 2021 | | | — | | | — | | | — | | | — | | | — | | | 54,950 | | | (1,640) | | | (3,750) | | | 49,560 | Net income | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 1,663 | | | 1,663 | Adjustment of redeemable noncontrolling interests to estimated redemption value | | | — | | | — | | | — | | | — | | | — | | | — | | | (104) | | | — | | | (104) | Other comprehensive income, net of tax | | | — | | | — | | | — | | | — | | | — | | | 7,971 | | | — | | | — | | | 7,971 | Total Adjustments June 30, 2022 | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | 62,921 | | $ | (1,744) | | $ | (2,087) | | $ | 59,090 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | As Restated | | | | | | | | | | | | | | | | | | | | | | | | | | | | BALANCE, as of December 31, 2021 (Restated) | | | — | | | 9 | | | 3 | | | 2 | | | 37 | | | 54,950 | | | 1,018,996 | | | (770,317) | | | 303,680 | Net income | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 33,066 | | | 33,066 | Stock-based compensation expense | | | — | | | — | | | — | | | — | | | — | | | — | | | 460 | | | — | | | 460 | Repurchase of 4,684,419 shares of Class D common
stock | | | — | | | — | | | — | | | — | | | (4) | | | — | | | (24,665) | | | — | | | (24,669) | Exercise of options for 60,240 shares of Class D common stock | | | — | | | — | | | — | | | — | | | — | | | — | | | 50 | | | — | | | 50 | Adjustment of redeemable noncontrolling interests to estimated redemption value | | | — | | | — | | | — | | | — | | | — | | | — | | | (1,907) | | | — | | | (1,907) | Other comprehensive income, net of tax | | | — | | | — | | | — | | | — | | | — | | | 7,971 | | | — | | | — | | | 7,971 | BALANCE, as of June 30, 2022 (Restated) | | $ | — | | $ | 9 | | $ | 3 | | $ | 2 | | $ | 33 | | $ | 62,921 | | $ | 992,934 | | $ | (737,251) | | $ | 318,651 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Convertible | | Common | | Common | | Common | | Common | | Accumulated Other | | Additional | | | | | | | | | Preferred | | Stock | | Stock | | Stock | | Stock | | Comprehensive | | Paid-In | | Accumulated | | Total | | | Stock | | Class A | | Class B | | Class C | | Class D | | Income | | Capital | | Deficit | | Equity | | For the nine months ended September 30, 2022 | | (In thousands, except share data) | As Previously Reported | | | | | | | | | | | | | | | | | | | | | | | | | | | | BALANCE, as of December 31, 2021 | | $ | — | | $ | 9 | | $ | 3 | | $ | 2 | | $ | 37 | | $ | — | | $ | 1,020,636 | | $ | (766,567) | | $ | 254,120 | Net income | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 35,616 | | | 35,616 | Stock-based compensation expense | | | — | | | 1 | | | — | | | — | | | 1 | | | — | | | 5,467 | | | — | | | 5,469 | Repurchase of 4,684,419 shares of Class D common stock | | | — | | | — | | | — | | | — | | | (4) | | | — | | | (26,482) | | | — | | | (26,486) | Exercise of options for 60,240 shares of Class D common stock | | | — | | | — | | | — | | | — | | | — | | | — | | | 50 | | | — | | | 50 | Adjustment of redeemable noncontrolling interests to estimated redemption value | | | — | | | — | | | — | | | — | | | — | | | — | | | (2,717) | | | — | | | (2,717) | BALANCE, as of September 31, 2022 | | $ | — | | $ | 10 | | $ | 3 | | $ | 2 | | $ | 34 | | $ | — | | $ | 996,954 | | $ | (730,951) | | $ | 266,052 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Adjustments and Other Adjustments | | | | | | | | | | | | | | | | | | | | | | | | | | | | BALANCE, as of December 31, 2021 | | | — | | | — | | | — | | | — | | | — | | | 54,950 | | | (1,640) | | | (3,750) | | | 49,560 | Net income | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 857 | | | 857 | Adjustment of redeemable noncontrolling interests to estimated redemption value | | | — | | | — | | | — | | | — | | | — | | | — | | | (723) | | | — | | | (723) | Other comprehensive income, net of tax | | | — | | | — | | | — | | | — | | | — | | | 2,275 | | | — | | | — | | | 2,275 | Total Adjustments September 31, 2022 | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | 57,225 | | $ | (2,363) | | $ | (2,893) | | $ | 51,969 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | As Restated | | | | | | | | | | | | | | | | | | | | | | | | | | | | BALANCE, as of December 31, 2021 (Restated) | | | — | | | 9 | | | 3 | | | 2 | | | 37 | | | 54,950 | | | 1,018,996 | | | (770,317) | | | 303,680 | Net income | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 36,473 | | | 36,473 | Stock-based compensation expense | | | — | | | 1 | | | — | | | — | | | 1 | | | — | | | 5,467 | | | — | | | 5,469 | Repurchase of 4,684,419 shares of Class D common stock | | | — | | | — | | | — | | | — | | | (4) | | | — | | | (26,482) | | | — | | | (26,486) | Exercise of options for 60,240 shares of Class D common stock | | | — | | | — | | | — | | | — | | | — | | | — | | | 50 | | | — | | | 50 | Adjustment of redeemable noncontrolling interests to estimated redemption value | | | — | | | — | | | — | | | — | | | — | | | — | | | (3,440) | | | — | | | (3,440) | Other comprehensive income, net of tax | | | — | | | — | | | — | | | — | | | — | | | 2,275 | | | — | | | — | | | 2,275 | BALANCE, as of September 31, 2022 (Restated) | | $ | — | | $ | 10 | | $ | 3 | | $ | 2 | | $ | 34 | | $ | 57,225 | | $ | 994,591 | | $ | (733,844) | | $ | 318,021 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Convertible | | Common | | Common | | Common | | Common | | Accumulated Other | | Additional | | | | | | | | | Preferred | | Stock | | Stock | | Stock | | Stock | | Comprehensive | | Paid-In | | Accumulated | | Total | | | Stock | | Class A | | Class B | | Class C | | Class D | | Income | | Capital | | Deficit | | Equity | | For the three months ended March 31, 2021 | | (In thousands, except share data) | As Previously Reported | | | | | | | | | | | | | | | | | | | | | | | | | | | | BALANCE, as of December 31, 2020 | | $ | — | | $ | 4 | | $ | 3 | | $ | 3 | | $ | 38 | | $ | — | | $ | 991,769 | | $ | (804,919) | | $ | 186,898 | Net income | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 7 | | | 7 | Repurchase of 495,296 shares of Class D common stock | | | — | | | — | | | — | | | — | | | (1) | | | — | | | (871) | | | — | | | (872) | Issuance of 1,886,265 shares of Class A common stock | | | — | | | 2 | | | — | | | — | | | — | | | — | | | 12,123 | | | — | | | 12,125 | Adjustment of redeemable noncontrolling interests to estimated redemption value | | | — | | | — | | | — | | | — | | | — | | | — | | | 420 | | | — | | | 420 | Stock-based compensation expense | | | — | | | — | | | — | | | — | | | — | | | — | | | 253 | | | — | | | 253 | BALANCE, as of March 31, 2021 | | $ | — | | $ | 6 | | $ | 3 | | $ | 3 | | $ | 37 | | $ | — | | $ | 1,003,694 | | $ | (804,912) | | $ | 198,831 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Adjustments and Other Adjustments | | | | | | | | | | | | | | | | | | | | | | | | | | | | BALANCE, as of December 31, 2020 | | | — | | | — | | | — | | | — | | | — | | | 47,755 | | | (1,241) | | | (2,189) | | | 44,325 | Adjustment of redeemable noncontrolling interests to estimated redemption value | | | — | | | — | | | — | | | — | | | — | | | — | | | (548) | | | — | | | (548) | Other comprehensive loss, net of tax | | | — | | | — | | | — | | | — | | | — | | | (908) | | | — | | | — | | | (908) | Total Adjustments March 31, 2021 | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | 46,847 | | $ | (1,789) | | $ | (2,189) | | $ | 42,869 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | As Restated | | | | | | | | | | | | | | | | | | | | | | | | | | | | BALANCE, as of December 31, 2020 (Restated) | | | — | | | 4 | | | 3 | | | 3 | | | 38 | | | 47,755 | | | 990,528 | | | (807,108) | | | 231,223 | Net income | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 7 | | | 7 | Repurchase of 495,296 shares of Class D common stock | | | — | | | — | | | — | | | — | | | (1) | | | — | | | (871) | | | — | | | (872) | Issuance of 1,886,265 shares of Class A common stock | | | — | | | 2 | | | — | | | — | | | — | | | — | | | 12,123 | | | — | | | 12,125 | Adjustment of redeemable noncontrolling interests to estimated redemption value | | | — | | | — | | | — | | | — | | | — | | | — | | | (128) | | | — | | | (128) | Stock-based compensation expense | | | — | | | — | | | — | | | — | | | — | | | — | | | 253 | | | — | | | 253 | Other comprehensive loss, net of tax | | | — | | | — | | | — | | | — | | | — | | | (908) | | | — | | | — | | | (908) | BALANCE, as of March 31, 2021 (Restated) | | $ | — | | $ | 6 | | $ | 3 | | $ | 3 | | $ | 37 | | $ | 46,847 | | $ | 1,001,905 | | $ | (807,101) | | $ | 241,700 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Convertible | | Common | | Common | | Common | | Common | | Accumulated Other | | Additional | | | | | | | | | Preferred | | Stock | | Stock | | Stock | | Stock | | Comprehensive | | Paid-In | | Accumulated | | Total | | | Stock | | Class A | | Class B | | Class C | | Class D | | Income | | Capital | | Deficit | | Equity | | For the six months ended June 30, 2021 | | (In thousands, except share data) | As Previously Reported | | | | | | | | | | | | | | | | | | | | | | | | | | | | BALANCE, as of December 31, 2020 | | $ | — | | $ | 4 | | $ | 3 | | $ | 3 | | $ | 38 | | $ | — | | $ | 991,769 | | $ | (804,919) | | $ | 186,898 | Net income | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 17,873 | | | 17,873 | Repurchase of 509,347 shares of Class D common stock | | | — | | | — | | | — | | | — | | | (1) | | | — | | | (904) | | | — | | | (905) | Issuance of 3,779,391 shares of Class A common stock | | | — | | | 4 | | | — | | | — | | | — | | | — | | | 33,278 | | | — | | | 33,282 | Exercise of options for 197,256 shares of Class D common stock | | | — | | | — | | | — | | | — | | | — | | | — | | | 315 | | | — | | | 315 | Adjustment of redeemable noncontrolling interests to estimated redemption value | | | — | | | — | | | — | | | — | | | — | | | — | | | (1,425) | | | — | | | (1,425) | Stock-based compensation expense | | | — | | | — | | | — | | | — | | | — | | | — | | | 425 | | | — | | | 425 | BALANCE, as of June 30, 2021 | | $ | — | | $ | 8 | | $ | 3 | | $ | 3 | | $ | 37 | | $ | — | | $ | 1,023,458 | | $ | (787,046) | | $ | 236,463 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Adjustments and Other Adjustments | | | | | | | | | | | | | | | | | | | | | | | | | | | | BALANCE, as of December 31, 2020 | | | — | | | — | | | — | | | — | | | — | | | 47,755 | | | (1,241) | | | (2,189) | | | 44,325 | Net income | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (253) | | | (253) | Adjustment of redeemable noncontrolling interests to estimated redemption value | | | — | | | — | | | — | | | — | | | — | | | — | | | (1,216) | | | — | | | (1,216) | Other comprehensive income, net of tax | | | — | | | — | | | — | | | — | | | — | | | 2,484 | | | — | | | — | | | 2,484 | Total Adjustments June 30, 2021 | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | 50,239 | | $ | (2,457) | | $ | (2,442) | | $ | 45,340 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | As Restated | | | | | | | | | | | | | | | | | | | | | | | | | | | | BALANCE, as of December 31, 2020 (Restated) | | | — | | | 4 | | | 3 | | | 3 | | | 38 | | | 47,755 | | | 990,528 | | | (807,108) | | | 231,223 | Net income | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 17,620 | | | 17,620 | Repurchase of 509,347 shares of Class D common stock | | | — | | | — | | | — | | | — | | | (1) | | | — | | | (904) | | | — | | | (905) | Issuance of 3,779,391 shares of Class A common stock | | | — | | | 4 | | | — | | | — | | | — | | | — | | | 33,278 | | | — | | | 33,282 | Exercise of options for 197,256 shares of Class D common stock | | | — | | | — | | | — | | | — | | | — | | | — | | | 315 | | | — | | | 315 | Adjustment of redeemable noncontrolling interests to estimated redemption value | | | — | | | — | | | — | | | — | | | — | | | — | | | (2,641) | | | — | | | (2,641) | Stock-based compensation expense | | | — | | | — | | | — | | | — | | | — | | | — | | | 425 | | | — | | | 425 | Other comprehensive income, net of tax | | | — | | | — | | | — | | | — | | | — | | | 2,484 | | | — | | | — | | | 2,484 | BALANCE, as of June 30, 2021 (Restated) | | $ | — | | $ | 8 | | $ | 3 | | $ | 3 | | $ | 37 | | $ | 50,239 | | $ | 1,021,001 | | $ | (789,488) | | $ | 281,803 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Convertible | | Common | | Common | | Common | | Common | | Accumulated Other | | Additional | | | | | | | | | Preferred | | Stock | | Stock | | Stock | | Stock | | Comprehensive | | Paid-In | | Accumulated | | Total | | | Stock | | Class A | | Class B | | Class C | | Class D | | Income | | Capital | | Deficit | | Equity | | For the nine months ended September 30, 2021 | | (In thousands, except share data) | As Previously Reported | | | | | | | | | | | | | | | | | | | | | | | | | | | | BALANCE, as of December 31, 2020 | | $ | — | | $ | 4 | | $ | 3 | | $ | 3 | | $ | 38 | | $ | — | | $ | 991,769 | | $ | (804,919) | | $ | 186,898 | Net income | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 31,749 | | | 31,749 | Repurchase of 519,347 shares of Class D common stock | | | — | | | — | | | — | | | — | | | (1) | | | — | | | (943) | | | — | | | (944) | Issuance of 3,779,391 shares of Class A common stock | | | — | | | 4 | | | — | | | — | | | — | | | — | | | 33,273 | | | — | | | 33,277 | Exercise of options for 219,756 shares of Class D common stock | | | — | | | — | | | — | | | — | | | — | | | — | | | 366 | | | — | | | 366 | Adjustment of redeemable noncontrolling interests to estimated redemption value | | | — | | | — | | | — | | | — | | | — | | | — | | | (3,671) | | | — | | | (3,671) | Stock-based compensation expense | | | — | | | — | | | — | | | — | | | — | | | — | | | 478 | | | — | | | 478 | BALANCE, as of September 30, 2021 | | $ | — | | $ | 8 | | $ | 3 | | $ | 3 | | $ | 37 | | $ | — | | $ | 1,021,272 | | $ | (773,170) | | $ | 248,153 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Adjustments and Other Adjustments | | | | | | | | | | | | | | | | | | | | | | | | | | | | BALANCE, as of December 31, 2020 | | | — | | | — | | | — | | | — | | | — | | | 47,755 | | | (1,241) | | | (2,189) | | | 44,325 | Net income | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (244) | | | (244) | Adjustment of redeemable noncontrolling interests to estimated redemption value | | | — | | | — | | | — | | | — | | | — | | | — | | | (1,070) | | | — | | | (1,070) | Other comprehensive income, net of tax | | | — | | | — | | | — | | | — | | | — | | | 5,796 | | | — | | | — | | | 5,796 | Total Adjustments September 30, 2021 | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | 53,551 | | $ | (2,311) | | $ | (2,433) | | $ | 48,807 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | As Restated | | | | | | | | | | | | | | | | | | | | | | | | | | | | BALANCE, as of December 31, 2020 (Restated) | | | — | | | 4 | | | 3 | | | 3 | | | 38 | | | 47,755 | | | 990,528 | | | (807,108) | | | 231,223 | Net income | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 31,505 | | | 31,505 | Repurchase of 519,347 shares of Class D common stock | | | — | | | — | | | — | | | — | | | (1) | | | — | | | (943) | | | — | | | (944) | Issuance of 3,779,391 shares of Class A common stock | | | — | | | 4 | | | — | | | — | | | — | | | — | | | 33,273 | | | — | | | 33,277 | Exercise of options for 219,756 shares of Class D common stock | | | — | | | — | | | — | | | — | | | — | | | — | | | 366 | | | — | | | 366 | Adjustment of redeemable noncontrolling interests to estimated redemption value | | | — | | | — | | | — | | | — | | | — | | | — | | | (4,741) | | | — | | | (4,741) | Stock-based compensation expense | | | — | | | — | | | — | | | — | | | — | | | — | | | 478 | | | — | | | 478 | Other comprehensive income, net of tax | | | — | | | — | | | — | | | — | | | — | | | 5,796 | | | — | | | — | | | 5,796 | BALANCE, as of September 30, 2021 (Restated) | | $ | — | | $ | 8 | | $ | 3 | | $ | 3 | | $ | 37 | | $ | 53,551 | | $ | 1,018,961 | | $ | (775,603) | | $ | 296,960 |
Consolidated Statements of Cash Flows | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Three Months Ended March 31, 2022 (unaudited) | | Six Months Ended June 30, 2022 (unaudited) | | Nine Months Ended September 31, 2022 (unaudited) | | | As | | | | | | | | | | | As | | | | | | | | | | | As | | | | | | | | | | | | Previously | | | | | Other | | As | | Previously | | | | | Other | | As | | Previously | | | | | Other | | As | | | Reported | | Adjustments | | Adjustments | | Restated | | Reported | | Adjustments | | Adjustments | | Restated | | Reported | | Adjustments | | Adjustments | | Restated | | | | (In thousands) | CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net income | | $ | 17,070 | | $ | 134 | | $ | (10) | | $ | 17,194 | | $ | 32,874 | | $ | 134 | | $ | 1,529 | | $ | 34,537 | | $ | 37,447 | | $ | 83 | | $ | 774 | | $ | 38,304 | Adjustments to reconcile net income to net cash from operating activities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Deferred income taxes | | | 5,586 | | | (134) | | | 10 | | | 5,462 | | | 8,597 | | | (134) | | | 499 | | | 8,962 | | | 11,511 | | | (83) | | | 254 | | | 11,682 | Non-cash lease liability expense | | | 1,043 | | | — | | | (1,043) | | | — | | | 2,038 | | | — | | | (2,038) | | | — | | | 2,994 | | | — | | | (2,994) | | | — | Impairment of goodwill and broadcasting licenses | | | — | | | — | | | — | | | — | | | 16,933 | | | — | | | (2,028) | | | 14,905 | | | 31,383 | | | — | | | (1,028) | | | 30,355 | Effect of change in operating assets and liabilities, net of assets acquired: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Trade accounts receivable | | | 13,448 | | | — | | | (112) | | | 13,336 | | | 3,483 | | | — | | | (39) | | | 3,444 | | | 208 | | | — | | | (52) | | | 156 | Accounts payable | | | (2,591) | | | — | | | 5 | | | (2,586) | | | 231 | | | — | | | (189) | | | 42 | | | (270) | | | — | | | (346) | | | (616) | Other liabilities | | | (4,641) | | | — | | | 1,150 | | | (3,491) | | | (7,283) | | | — | | | 2,266 | | | (5,017) | | | (75) | | | — | | | 3,392 | | | 3,317 | Net cash flows provided by operating activities | | | 15,734 | | | — | | | — | | | 15,734 | | | 43,624 | | | — | | | — | | | 43,624 | | | 54,067 | | | — | | | — | | | 54,067 | NON-CASH OPERATING, FINANCING AND INVESTING ACTIVITIES: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Adjustment of redeemable noncontrolling interests to estimated redemption value | | $ | 39 | | $ | — | | $ | 832 | | $ | 871 | | $ | 1,803 | | $ | — | | $ | 104 | | $ | 1,907 | | $ | 2,717 | | $ | — | | $ | 723 | | $ | 3,440 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Three Months Ended March 31, 2021 (unaudited) | | Six Months Ended June 30, 2021 (unaudited) | | Nine Months Ended September 31, 2021 (unaudited) | | | As | | | | | | | | | | | As | | | | | | | | | | | As | | | | | | | | | | | | Previously | | | | | Other | | As | | Previously | | | | | Other | | As | | Previously | | | | | Other | | As | | | Reported | | Adjustments | | Adjustments | | Restated | | Reported | | Adjustments | | Adjustments | | Restated | | Reported | | Adjustments | | Adjustments | | Restated | | | | (In thousands) | CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net income (loss) | | $ | 461 | | $ | — | | $ | — | | $ | 461 | | $ | 18,939 | | $ | (265) | | $ | 12 | | $ | 18,686 | | $ | 33,394 | | $ | (256) | | $ | 12 | | $ | 33,150 | Adjustments to reconcile net income (loss) to net cash from operating activities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Deferred income taxes | | | (10) | | | — | | | — | | | (10) | | | 6,108 | | | 265 | | | (12) | | | 6,361 | | | 12,366 | | | 256 | | | (12) | | | 12,610 | Non-cash lease liability expense | | | 1,154 | | | — | | | (1,154) | | | — | | | 2,066 | | | — | | | (2,066) | | | — | | | 3,299 | | | — | | | (3,299) | | | — | Effect of change in operating assets and liabilities, net of assets acquired: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Trade accounts receivable | | | 11,380 | | | — | | | (41) | | | 11,339 | | | 2,260 | | | — | | | 82 | | | 2,342 | | | (8,574) | | | — | | | (71) | | | (8,645) | Accounts payable | | | (2,098) | | | — | | | (23) | | | (2,121) | | | 1,388 | | | — | | | (84) | | | 1,304 | | | 3,488 | | | — | | | (118) | | | 3,370 | Other liabilities | | | (2,050) | | | — | | | 1,218 | | | (832) | | | 235 | | | — | | | 2,068 | | | 2,303 | | | 1,975 | | | — | | | 3,488 | | | 5,463 | Net cash flows provided by operating activities | | | 14,293 | | | — | | | — | | | 14,293 | | | 51,492 | | | — | | | — | | | 51,492 | | | 36,264 | | | — | | | — | | | 36,264 | NON-CASH OPERATING, FINANCING AND INVESTING ACTIVITIES: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Adjustment of redeemable noncontrolling interests to estimated redemption value | | $ | (420) | | $ | — | | $ | 548 | | $ | 128 | | $ | 1,425 | | $ | — | | $ | 1,216 | | $ | 2,641 | | $ | 3,671 | | $ | — | | $ | 1,070 | | $ | 4,741 |
18. SUBSEQUENT EVENTS: On December 27, 2020,Since January 1, 2023, and through the Consolidated Appropriations Actdate of 2021 was signed into law. The legislation creates a second round of Paycheck Protection Program (“PPP”) loans of up to $2 million available to businesses with 300 or fewer employees that have sustained a 25% revenue loss in any quarter of 2020. Certain of the new PPP provisions may benefit broadcasters such as the Company. The provisions (i) allow individual TV and radio stations to apply for PPP loans as long as the individual TV or radio station employs not more than 300 employees per physical location; (ii) permit the Small Business Administration (“SBA”) to make loans up to $10 million total across TV and radio stations owned by a station group; (iii) require newly eligible individual TV and radio stations to make a good faith certification that proceeds of the loan will be used to support expenses for the production or distribution of locally-focused or emergency information; and (iv) waive any prohibition on loans to broadcast stations owned by publicly traded entities. On January 29, 2021,this filing, the Company submitted an application for participationrepurchased 824 shares of Class D common stock in the PPP loan program. There is no guarantee thatamount of $3,000 at an average price of $3.99 per share.
Since January 1, 2023, and through the date of this filing, the Company will be awarded loan monies. While certainexecuted Stock Vest Tax Repurchases of 249,550 shares of Class D common stock for approximately $1.3 million at an average price of $5.17 per share. Since January 1, 2023, and through the loans may be forgivable, to the extentdate of this filing, the Company is awarded the loans the amount may constitute debt under therepurchased approximately $25.0 million of its 2028 Notes (as defined below)at an average price of approximately 89.1% of par. Since January 1, 2023, and increasethrough the Company’s leverage prior to repayment or forgiveness. On January 7, 2021,date of this filing, the Company launched an offering (the “2028 Notes Offering”) of $825 million in aggregate principal amount of senior secured notes due 2028 (the “2028 Notes”) in a private offering exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”). The 2028 Notes are general senior secured obligations of the CompanyCompensation Committee awarded certain executive officers and are guaranteed on a senior secured basis by certainmanagement personnel 727,215 restricted shares of the Company’s directClass D common stock, and indirectstock options to purchase 429,427 shares of the Company’s Class D common stock. Of these awards, 672,603 restricted subsidiaries. The 2028 Notes mature on February 1, 2028shares of the Company’s Class D common stock and intereststock options to purchase 405,139 shares of the Company’s Class D common stock immediately vested upon grant. In connection with the vesting of these awards, the Company withheld a total of 220,912 shares to settle the recipients’ tax obligations.
On March 8, 2023, ROEH issued a Put Notice with respect to its Put Interest in MGMNH. Upon issuance of the Put Notice, no later than thirty (30) days following receipt, MGMNH is required to repurchase the Put Interest for cash. On April 21 2023, ROEH closed on the Notes accrues and is payable semi-annually in arrears on February 1 and August 1sale of each year, commencing on August 1, 2021the Put Interest. The Company received approximately $136.8 million at the ratetime of 7.375% per annum. settlement of the Put Interest, representing the put price. During the quarter ended March 31, 2023, the Company received $8.8 million representing the Company’s annual distribution from MGMNH with respect to fiscal year 2022. On January 8, 2021,April 30, 2023, the Company entered into a purchase agreement with respectwaiver and amendment (the “Waiver and Amendment”) to the 2028 Notes at an issue priceCurrent ABL Facility, dated as of 100% and the 2028 Notes Offering closed on January 25, 2021. The Company used the net proceeds from the 2028 Notes Offering, together with cash on hand, to repay or redeem (1) the 2017 Credit Facility, (2) the 2018 Credit Facility, (3) the MGM National Harbor Loan; (4) the remaining amounts of our 7.375% Notes, and (5) our 8.75% Notes that were issued in the November 2020 Exchange Offer. Upon settlement of the 2028 Notes Offering, the 2017 Credit Facility, the 2018 Credit Facility and the MGM National Harbor Loan were terminated and the indentures governing the 7.375% Notes and the 8.75% Notes were satisfied and discharged.
The 2028 Notes are the Company’s general senior obligations and are guaranteed by each of the Company’s restricted subsidiaries (other than excluded subsidiaries). The 2028 Notes and the guarantees are secured, subject to permitted liens and except for certain excluded assets (i) on a first priority basis by substantially all of the Company’s and the Guarantors’ current and future property and assets (other than accounts receivable, cash, deposit accounts, other bank accounts, securities accounts, inventory and related assets that secure our asset-backed revolving credit facility on a first priority basis (the “ABL Priority Collateral”)), including the capital stock of each guarantor (collectively, the “Notes Priority Collateral”) and (ii) on a second priority basis by the ABL Priority Collateral.
In connection with the offering of the 2028 Notes, the Company entered into an amendment of its Credit Agreement dated April 21, 2016 among the Company, as borrow, the lenders party thereto and Wells Fargo National Association, as administrative agent (the “ABL Credit Agreement”), to facilitate the issuance of the 2028 Notes. The amendments to the ABL Credit Agreement, include, among other things, a consent to the issuance of the 2028 Notes, revisions to terms and exclusions of collateral and addition of certain subsidiaries as guarantors.
On January 19, 2021, the Company completed its 2020 ATM Program, sold an aggregate of 4,325,102 Class A shares and received gross proceeds of approximately $25.0 million and net proceeds of approximately $24.0 million for the program. On January 27, 2021, the Company entered into a new 2021 Open Market Sale AgreementSM (the “2021 Sale Agreement”) with Jefferies under which the Company may offer and sell, from time to time at its sole discretion, shares of its Class A common stock, par value $0.001 per share (the “Class A Shares”), through Jefferies as its sales agent. The Company has filed a prospectus supplement pursuant to the 2021 Sale Agreement for the offer and sale of its Class A Shares having an aggregate offering price of up to $25 million (the “2021 ATM Program”). As of March 26, 2021, the Company has issued and sold an aggregate of 420,439 Class A Shares pursuant to the 2021 Sale Agreement and received gross proceeds of approximately $3.0 million and net proceeds of approximately $2.9 million, after deducting commissions to Jefferies and other offering expenses.
On February 19, 2021 (as amended by the Company closed on a new asset backed credit facility (the “NewWaiver and Amendment, the “Amended Current ABL Facility”). The New ABL Facility is governed by a credit agreement by and among, with the Company, the other borrowers party thereto, the lenders party thereto from time to time andCompany’s subsidiaries guarantors, Bank of America, N.A., as administrative agent. The New ABL Facility provides for up to $50 million revolving loan borrowings in order to provide for the working capital needsagent (the “Administrative Agent”) and general corporate requirements of the Company. The New ABL also provides for a letter of credit facility up to $5 million as a part of the overall $50 million in capacity. The Asset Backed Senior Credit Facility entered into on April 21, 2016 among the Company, the lenders party thereto from timethereto. The Waiver and Amendment waived certain events of default under the Current ABL Facility related to time and Wells Fargo Bank National Association, as administrative agent, was terminated on February 19, 2021.
At the Company’s election,failure to timely deliver the interest rate on borrowingsAnnual Financial Deliverables for the Fiscal Year ended December 31, 2022 as required under the NewCurrent ABL Facility are based on either (i)(the “Specified Defaults”).
Additionally, under the then applicable margin relativeWaiver and Amendment, the Current ABL Facility was amended to Base Rate Loansprovide that from and after the date thereof, any request for a new LIBOR Loan (as defined in the NewCurrent ABL Facility) or (ii) the then applicable margin relative to, for a continuation of an existing LIBOR LoansLoan (as defined in the NewCurrent ABL Facility) correspondingor for a conversion of a Loan to the average availability of the Company for the most recently completed fiscal quarter. Advances under the New ABL Facility are limited to (a) eighty-five percent (85%) of the amount of Eligible Accountsa LIBOR Loan (as defined in the NewCurrent ABL Facility), less the amount, if any, of the Dilution Reserve shall be deemed to be a request for a loan bearing interest at Term SOFR (as defined in the NewAmended Current ABL Facility), minus (b) (the “SOFR Interest Rate Change”). As the sum of (i) the Bank Product Reserve (as defined in the New ABL Facility), plus (ii) the AP and Deferred Revenue Reserve (as defined in the New ABL Facility), plus (iii) without duplication, the aggregate amount of all other reserves, if any, established by Administrative Agent.
All obligationsCompany was undrawn under the NewCurrent ABL Facility are secured by first priority lien on all (i) deposit accounts (related to accounts receivable), (ii) accounts receivable, and (iii) all other property which constitutes ABL Priority Collateral (as defined in the New ABL Facility). The obligations are also guaranteed by all material restricted subsidiariesas of the Company.
The New ABL Facility matures on the earliest of: the earlier to occur of (a) the date that is five (5) years from the effective date of the NewWaiver and Amendment, the SOFR Interest Rate Change would only bear upon future borrowings by the Company such that they bear an interest rate relating to the secured overnight financing rate. These provisions of the Waiver and Amendment are intended to transition loans under the Current ABL Facility and (b) 91 days prior to the maturitynew secured overnight financing rate as the benchmark rate.
On June 5, 2023, the Company entered into a second waiver and amendment (the “Second Waiver and Amendment”) to the Amended Current ABL Facility. The Second Waiver and Amendment waived certain events of default under the Current ABL Facility related to the Company’s 2028 Notes.failure to timely deliver both the Annual Financial Deliverables for the Fiscal Year ended December 31, 2022 and Quarterly Financial Deliverables for the Quarter ended March 31, 2023 as required under the Current ABL Facility. Finally,On April 11 2023, the New ABL Facility is subjectCompany announced it has signed a definitive asset purchase agreement with Cox Media Group (“CMG”) to purchase its Houston radio cluster. Under the terms of the Revolver Intercreditor Agreement (as definedagreement, Urban One will acquire 93Q Country KKBQ-FM, classic rock station The Eagle 106.9 & 107.5 KHPT-FM and KGLK-FM, and Country Legends 97.1 KTHT-FM. In furtherance of the transaction, Urban One will divest stations to comply with FCC ownership regulations. The acquisition and disposition transactions are subject to FCC approval and other customary closing conditions and is anticipated to close in the New ABL Facility) bythird quarter of 2023. CMG and amongUrban One will continue to operate their respective stations until the Administrative Agent and Wilmington Trust, National Association.transactions close.
URBAN ONE, INC. AND SUBSIDIARIES
SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS
ForOn April 3, 2023, the Years EndedCompany received a notice from the Listing Qualifications Department of the Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that it was not in compliance with requirements of Nasdaq Listing Rule 5250(c)(1) as a result of not having timely filed its Annual Report on Form 10-K for the fiscal year ended December 31, 20202022 (the “2022 Form 10-K”), with the Securities and 2019Exchange Commission (“SEC”). On May 19, 2023, the Company received a second letter notifying (the “Second Nasdaq Letter”) it that it was not in compliance with requirements of the Rule as a result of not having timely filed its 2022 Form 10-K and its Quarterly Report on Form 10-Q for the period ended March 31, 2023 (the “Q1 2023 Form 10-Q” and, together with the 2022 Form 10-K, the “Delinquent Reports”), with the SEC.
| Description | | Balance
at
Beginning
of Year | | Additions
Charged
to
Expense | | Acquired
from
Acquisitions | | Deductions | | Balance
at End
of Year | | | | | (In thousands) | | | Allowance for Doubtful Accounts: | | | | | | | | | | | | | | | | | | 2020 | | $ | 7,416 | | $ | 1,394 | | $ | — | | $ | 854 | | $ | 7,956 | | | 2019 | | | 8,249 | | $ | 1,370 | | $ | — | | $ | 2,203 | | $ | 7,416 | |
In accordance with the Second Nasdaq Letter, the Company had until June 2, 2023, to submit a plan to file both Delinquent Reports or to submit a plan to regain compliance with respect to these Delinquent Reports. The Company submitted its plan to regain compliance with respect to these Delinquent Reports on May 26, 2023, and on June 5, 2023, the Company received a letter from Nasdaq granting an exception to enable the Company to regain compliance with the Rule. Under the terms of the exception, on or before September 27, 2023, the Company must file its Form 10-K and Form 10-Q for the period ended December 31, 2022, and March 31, 2023, as required by the Rule. | Description | | Balance
at
Beginning
of Year | | Additions
Charged
to
Expense | | Acquired
from
Acquisitions | | Deductions | | Balance
at End
of Year | | | | (In thousands) | | | Valuation Allowance for Deferred Tax Assets: | | | | | | | | | | | | | | | | | | 2020 | | $ | 249 | | $ | 28 | | $ | — | | $ | — | | $ | 277 | | | 2019 | | | 235 | | $ | 14 | | $ | — | | $ | — | | $ | 249 | |
On June 13, 2023, Urban One, Inc.’s 50/50 partnership with Churchill Downs Incorporated, RVA Entertainment Holdings, LLC, entered into a Resort Casino Host Community Agreement with the City of Richmond, Virginia (the “City”), to be the City’s preferred casino gaming operator subject to certification by the Virginia Lottery Department and a local referendum. |
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