(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

As of ~~August~~May 1, ~~2022,~~2023, there were ~~61,465,531~~78,356,490 shares, $0.0001 par value per share, of the registrant’s Class A common stock outstanding, ~~14,127,613~~0 shares, $0.0001 par value per share, of the registrant’s Class B common stock outstanding and 9,352,729 shares, $0.0001 par value per share, of the registrant’s Class U common stock outstanding.

FORM 10-Q FOR THE ~~THREE- AND SIX-MONTH~~THREE-MONTH PERIODS ENDED ~~JUNE 30, 2022~~MARCH 31, 2023

This document contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited to, any projections of earnings, revenue or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements concerning proposed new services or developments; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing.

Forward-looking statements may include the words “may,” “could,” “will,” “estimate,” “intend,” “continue,” “believe,” “expect”, “anticipate”, “hope” or other similar words. These forward-looking statements present our estimates and assumptions only as of the date of this report. Except for our ongoing obligation to disclose material information as required by the federal securities laws, we do not intend, and undertake no obligation, to update any forward-looking statement.

Although we believe that the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and inherent risks and uncertainties. Some of the key factors impacting these risks and uncertainties include, but are not limited to:

For a detailed description of these and other factors that could cause actual results to differ materially from those expressed in any forward-looking statement, please see the section entitled “Risk Factors,” beginning on page 3738 of our Annual Report on Form 10-K for the year ended December 31, ~~2021~~2022 (our ~~“2021~~“2022 10-K”).

The consolidated financial statements included herein have been prepared by Entravision Communications Corporation (the “Company”), pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been omitted pursuant to such rules and regulations. These consolidated financial statements and notes thereto should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, ~~2021~~2022 included in the Company’s ~~2021~~2022 10-K for the year ended December 31, ~~2021.~~2022. The unaudited information contained herein has been prepared on the same basis as the Company’s audited consolidated financial statements and, in the opinion of the Company’s management, includes all adjustments (consisting of only normal recurring adjustments) necessary for a fair presentation of the information for the periods presented. The interim results presented herein are not necessarily indicative of the results of operations that may be expected for the full fiscal year ending December 31, ~~2022~~2023 or any other future period.

2. THE COMPANY AND SIGNIFICANT ACCOUNTING POLICIES

Nature of Business

The Company is a ~~leading~~ global advertising solutions, media and technology company. The Company's operations encompass integrated, end-to-end advertising solutions across multiple media, comprised of digital, television and audio properties. The Company's digital segment, whose operations are located in Latin America, Europe, the United States, Asia and Africa, reaches a global market, with a focus on advertisers in emerging economies that wish to advertise on digital platforms owned and operated primarily by global media companies. The Company's television and audio operations reach and engage U.S. ~~Hispanics.~~Hispanics in the United States. The Company's management has determined that the Company operates in 3three reportable segments as of ~~June 30, 2022,~~March 31, 2023, based upon the type of advertising medium: digital, television and ~~audio.~~audio (formerly radio).

The Company's digital segment provides digital end-to-end advertising solutions that allow advertisers to reach online users worldwide. These solutions are comprised of 4four ~~separate~~ business units:

•

the Company's digital commercial partnerships business;

•

Smadex, the Company's programmatic ad purchasing platform;

•

the Company's ~~branding and~~ mobile ~~performance~~growth solutions business; and

•

the Company's digital audio business.

Through the Company's digital commercial partnerships business – the largest of its digital business units – the Company acts as an intermediary between primarily global media companies and advertising customers or their ad agencies. The global media companies represented by the Company include Meta Platforms, or Meta (formerly known as Facebook Inc.), Twitter, Inc., or Twitter, ByteDance Ltd., ~~also known as~~or ByteDance, which owns the TikTok platform, and Spotify AB, or Spotify, as well as other media companies, in ~~more than~~ 3040 countries throughout the world. The Company's dedicated local sales teams sell advertising space on these ~~and other~~ media companies' digital platforms to its advertising customers or their ad agencies for the placement of ads directed to online users of a wide range of Internet-connected devices. The Company also provides some of its advertising customers billing, technological and other support, including strategic marketing and training, which it refers to as managed services.

Smadex is the Company's ~~proprietary automated~~programmatic ad purchasing platform, on which advertisers can purchase ad inventory. This practice – the purchase and sale of advertising inventory electronically – is referred to in the Company's industry as programmatic advertising. Smadex is also a “demand-side" platform, which allows advertisers to purchase space from online marketplaces on which media companies list their advertising inventory. Most advertisements acquired through Smadex are placed on mobile devices, but they may also be placed on computers and ~~other~~ Internet-connected ~~devices.~~televisions. The Company also provides managed services to some of its advertising customers in connection with their use of ~~the~~its Smadex platform.

The Company also offers a ~~branding and~~ mobile ~~performance~~growth solutions business, which provides managed services to advertisers looking to connect with consumers, primarily on mobile devices. This business allows the Company to manage programmatic media buys for its advertising customers or their ad agencies through multiple ad purchasing platforms in real time across multiple channels.

The Company's digital audio business provides digital audio advertising solutions for advertisers in the Americas. The Company's advertising customers and their ad agencies use these solutions to promote their brands on online audio streams, and provides them with tools to target specific users by demographic and geographic categories.

The Company also has a diversified media portfolio that targets ~~U.S.~~ Hispanic audiences. The Company owns and/or operates 49 primary television stations located primarily in California, Colorado, Connecticut, Florida, Kansas, Massachusetts, Nevada, New Mexico, Texas and Washington, D.C. The Company’s television operations comprise the largest affiliate group of both the top-ranked primary Univision television network of TelevisaUnivision Inc. (“TelevisaUnivision”) and TelevisaUnivision’s UniMás network. The Company owns and operates 45 radio stations in 14 U.S. markets. Its radio stations consist of 37 FM and 8 AM stations located in Arizona, California, Colorado, Florida, Nevada, New Mexico and Texas. The Company also sells advertisements and syndicates radio programming to more than 100 markets across the United States.

The Impact of the COVID-19 Pandemic on the Company’s Business

The COVID-19 pandemic ~~had~~did not have a ~~minimal impact~~material effect on the Company's business, from either an operational or financial perspective, during the quarter ended ~~June 30, 2022.~~March 31, 2023. Subject to the extent and duration of possible resurgences of the pandemic from time to time and the continuing uncertain economic environment that has resulted, in part, from the pandemic, the Company anticipates that the pandemic will continue to have little or no material effect on its business, from ~~both~~either an operational ~~and~~or financial perspective, in future periods. Nonetheless, the Company ~~remains cautious due to the unpredictable nature of the pandemic and its effects. The Company also~~ cannot give any assurance whether a resurgence ~~or more prolonged impact~~ of the pandemic in any location where its operations have employees or in which it operates would not adversely affect its operations and/or results of operations.

~~The Company elected to defer the employer portion of the social security payroll tax (6.2~~%) as provided in the Coronavirus Aid, Relief and Economic Security Act of 2020, commonly known as the CARES Act. The deferral was effective from March 27, 2020 through December 31, 2020. The deferred amount is considered to be timely paid if 50~~% is paid by December 31, 2021 and the remainder is paid by December 31, 2022. During the year ended December 31, 2021, the Company paid~~ 50~~% of the deferred amount.~~

The Company believes that its liquidity and capital resources remain adequate and that it can meet current expenses for at least the next twelve months from a combination of cash on hand and cash flows from operations.

Restricted Cash

As of ~~June 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, the Company’s balance sheet includes $~~0.7~~0.8 million in restricted cash, which was deposited into a separate account as collateral for the Company’s letters of credit.

The Company's cash and cash equivalents and restricted cash, as presented in the Consolidated Statements of Cash Flows, was as follows (in thousands):


	Six-Month Period				As of
	Ended June 30,				March 31,
	2022		2021		2023		2022
Cash and cash equivalents	$	109,950	$	171,862	$	141,455	$	126,574
Restricted cash		750		749		757		749
Total as presented in the Consolidated Statements of Cash Flows	$	110,700	$	172,611	$	142,212	$	127,323

Related Party

Substantially all of the Company’s television stations are Univision- or UniMás-affiliated television stations. The network affiliation agreement with TelevisaUnivision provides certain of the Company’s owned stations the exclusive right to broadcast ~~TelevisaUnivision’s~~TelvisaUnivision’s primary Univision network and UniMás network programming in their respective markets. Under the network affiliation agreement, the Company retains the right to sell no less than four minutes per hour of the available advertising time on stations that broadcast Univision network programming, and the right to sell approximately four and a half minutes per hour of the available advertising time on stations that broadcast UniMás network programming, subject to adjustment from time to time by TelevisaUnivision.

Under the network affiliation agreement, TelevisaUnivision acts as the Company’s exclusive third-party sales representative for the sale of certain national advertising on the Univision- and UniMás-affiliate television stations, and the Company pays certain sales representation fees to TelevisaUnivision relating to sales of all advertising for broadcast on its Univision- and UniMás-affiliate television stations. During the three-month periods ended ~~June 30,~~March 31, 2023 and 2022, ~~and 2021,~~ the amount the Company paid TelevisaUnivision in this capacity was $~~1.8~~1.4 million and $~~2.0~~1.6 million, respectively. ~~During~~These amounts were included in Direct Operating Expenses in the ~~six-month periods ended June 30, 2022 and 2021, the amount the Company paid TelevisaUnivision in this capacity was $3.3~~ ~~million and $3.9~~ ~~million, respectively.~~Company's Condensed Consolidated Statements of Operations.

The Company also generates revenue under atwo marketing and sales ~~agreement~~agreements with TelevisaUnivision, which give it the right to manage the marketing and sales operations of TelevisaUnivision-owned Univision affiliates in 3three markets – Albuquerque, Boston and Denver.

Under the Company’s current proxy agreement with TelevisaUnivision, the Company grants TelevisaUnivision the right to negotiate the terms of retransmission consent agreements for its Univision- and UniMás-affiliated television station signals. Among other things, the proxy agreement provides terms relating to compensation to be paid to the Company by TelevisaUnivision with

respect to retransmission consent agreements entered into with multichannel video programming distributors, (“MVPDs”). As of ~~June 30, 2022,~~March 31, 2023, the amount due to the Company from TelevisaUnivision was $~~6.0~~6.4 million related to the agreements for the carriage of its Univision and UniMás-affiliated television station signals. During the three-month periods ended ~~June 30,~~March 31, 2023 and 2022, ~~and 2021,~~ retransmission consent revenue accounted for ~~approximately~~ $~~9.0~~9.6 million and $~~9.3~~9.2 million, respectively, of which $~~6.2~~6.6 million and $~~6.5~~6.3 million, respectively, relate to the TelevisaUnivision proxy agreement. ~~During~~

On October 2, 2017, the ~~six-month periods ended June 30, 2022~~Company entered into the current affiliation agreement with TelevisaUnivision, which superseded and ~~2021, retransmission consent revenue accounted for approximately $18.2~~ ~~million~~replaced the Company's prior affiliation agreements with TelevisaUnivision. Additionally, on the same date, the Company entered into the current proxy agreement and $~~18.9~~ ~~million, respectively,~~current marketing and sales agreements with TelevisaUnivision, each of which $~~12.5~~ ~~million~~superseded and $~~13.3~~ ~~million, respectively, relate to~~replaced the ~~TelevisaUnivision proxy agreement.~~prior comparable agreements with TelevisaUnivision. The term of each of these current agreements expires on December 31, 2026 for all of the ~~proxy~~Univision and UniMás network affiliate stations, except that each current agreement ~~extends~~expired on December 31, 2021 with respect to ~~any MVPD for~~ the ~~length of the term of any retransmission consent agreement~~Univision and UniMás network affiliate stations in ~~effect before the expiration of the proxy agreement.~~Orlando, Tampa and Washington, D.C.

TelevisaUnivision currently owns approximately 11% of the Company’s common stock on a fully-converted basis. The Company’s Class U common stock, all of which is held by TelevisaUnivision, has limited voting rights and does not include the right to elect directors. Each share of Class U common stock is automatically convertible into 1one share of the Company’s Class A common stock (subject to adjustment for stock splits, dividends or combinations) in connection with any transfer of such shares of Class U common stock to a third party that is not an affiliate of TelevisaUnivision. In addition, as the holder of all of the Company’s issued and outstanding Class U common stock, so long as TelevisaUnivision holds a certain number of shares of Class U common stock, the Company may not, without the consent of TelevisaUnivision, merge, consolidate or enter into a business combination, dissolve or liquidate the Company or dispose of any interest in any Federal Communications Commission (“FCC”) license with respect to television stations which are affiliates of TelevisaUnivision, among other things.

Stock-Based Compensation

The Company measures all stock-based awards using a fair value method and recognizes the related stock-based compensation expense in the consolidated financial statements over the requisite service period. As stock-based compensation expense recognized in the Company’s consolidated financial statements is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures.

Stock-based compensation expense ~~related to grants of stock options and restricted stock units~~ was $~~2.6~~4.1 million and $~~1.1~~2.6 million for the three-month periods ended ~~June 30,~~March 31, 2023 and 2022, ~~and 2021,~~ respectively. ~~Stock-based compensation expense related to grants of stock options and restricted stock units was $5.2~~ ~~million and $2.2~~ ~~million for the six-month periods ended June 30, 2022 and 2021, respectively~~

~~Stock Options~~

Stock-based compensation expense related to stock options is based on the fair value on the date of grant using the Black-Scholes option pricing model and is amortized over the vesting period, generally between 1 to ~~4 years~~.

~~For the three- and six-month periods ended June 30, 2022 and 2021, there was~~ 0 ~~stock-based compensation expense related to grants of stock options. All grants of stock options have been fully expensed.~~

Restricted Stock Units

Stock-based compensation expense related to restricted stock units is based on the fair value of the Company’s stock price on the date of grant and is amortized over the vesting period, generally between 1 to 4 years.

The following is a summary of non-vested restricted stock units granted (in thousands, except grant date fair value data):


	Three-Month Period				Six-Month Period				Three-Month Period
	Ended June 30,				Ended June 30,				Ended March 31,
	2022		2021		2022		2021		2023		2022
Restricted stock units granted	122		85		175		85			3,614	53
Weighted average fair value	$	5.13	$	4.69	$	5.41	$	4.69	$	6.63	$	6.06

The 2023 restricted stock units reflect the annual grant for fiscal year 2023. In previous years, the annual grant was typically in December of the same year.

As of ~~June 30, 2022,~~March 31, 2023, there was ~~approximately~~ $~~10.6~~29.0 million of total unrecognized compensation expense related to grants of restricted stock units that is expected to be recognized over a weighted-average period of ~~1.5~~1.8 years.

Income (Loss) Per Share

The following table illustrates the reconciliation of the basic and diluted income (loss) per share ~~computations required by Accounting Standards Codification ("ASC") 260-10, “Earnings per Share”~~ (in thousands, except share and per share data):

Basic income (loss) per share is computed as net income (loss) divided by the weighted average number of shares outstanding for the period. Diluted income (loss) per share reflects the potential dilution, if any, that could occur from shares issuable through stock options and restricted stock awards.

Three-Month Period

Six-Month Period

Ended June 30,

Ended June 30,

2022

2021

2022

2021

Basic earnings per share:

Numerator:

Net income (loss) attributable to common stockholders

$
8,467

$
7,864

$
10,354

$
13,293

Denominator:

Weighted average common shares outstanding

84,959,130

85,188,182

85,735,916

85,115,310

Per share:

Net income (loss) per share attributable to common stockholders

$
0.10

$
0.09

$
0.12

$
0.16

Diluted earnings per share:

Numerator:

Net income (loss) attributable to common stockholders

$
8,467

$
7,864

$
10,354

$
13,293

Denominator:

Weighted average common shares outstanding

84,959,130

85,188,182

85,735,916

85,115,310

Dilutive securities:

Stock options and restricted stock units

2,026,687

2,588,857

2,067,262

2,266,905

Diluted shares outstanding

86,985,817

87,777,039

87,803,178

87,382,215

Per share:

Net income (loss) per share attributable to common stockholders

$
0.10

$
0.09

$
0.12

$
0.15


	Three-Month Period
	Ended March 31,
	2023		2022
Basic earnings per share:
Numerator:
Net income (loss) attributable to common stockholders	$	2,041	$	1,887

Denominator:
Weighted average common shares outstanding		87,623,887		86,522,378

Per share:
Net income (loss) per share attributable to common stockholders	$	0.02	$	0.02

Diluted earnings per share:
Numerator:
Net income (loss) attributable to common stockholders	$	2,041	$	1,887

Denominator:
Weighted average common shares outstanding		87,623,887		86,522,378
Dilutive securities:
Stock options and restricted stock units		2,162,698		2,107,838
Diluted shares outstanding		89,786,585		88,630,216

Per share:
Net income (loss) per share attributable to common stockholders	$	0.02	$	0.02

For the ~~three- and six-month periods~~three-month period ended ~~June 30, 2022,~~March 31, 2023, a total of ~~81,700~~ ~~and~~ ~~49,556~~1,870,073 shares ~~respectively,~~ of dilutive securities were not included in the computation of diluted income per share because the exercise prices of the dilutive securities were greater than the average market price of the common shares.

For the ~~three- and six-month periods~~three-month period ended ~~June 30, 2021,~~March 31, 2022, a total of ~~684~~ ~~and~~ ~~342~~17,411 shares ~~respectively,~~ of dilutive securities were not included in the computation of diluted income per share because the exercise prices of the dilutive securities were greater than the average market price of the common shares.

Treasury Stock

On March 1, 2022, the Company's Board of Directors approved a share repurchase of up to $20 million of the Company's common stock. Under this share repurchase program, the Company is authorized to purchase shares of its common stock from time to time through open market purchases or negotiated purchases, subject to market conditions and other factors. On the same date, the Board terminated the Company's previous share repurchase program of up to $45 million of the Company's common stock.

In the three-month period ended ~~June 30, 2022,~~March 31, 2023, the Company ~~repurchased~~did ~~0.6~~no ~~million~~t repurchase any shares of its Class A common ~~stock under the new share repurchase program for an aggregate purchase price of $4.1~~ ~~million, or an average price per share of $6.48~~.stock. As of ~~June 30, 2022,~~March 31, 2023, the Company has repurchased a total of 1.8 million shares of its Class A common stock under the ~~new~~current share repurchase program for an aggregate purchase price of $11.3 million, or an average price per share of $6.43. All such repurchased shares were retired as of ~~June 30, 2022.~~March 31, 2023.

Treasury stock is included as a deduction from equity in the Stockholders’ Equity section of the Condensed Consolidated Balance Sheets. Shares repurchased pursuant to the Company’s share repurchase program are retired during the same calendar year.

2017 Credit Facility

The following discussion pertains to the Company’s previous credit facility (the "2017 Credit Facility") and the agreement, as amended (the “2017 Credit Agreement”), governing the 2017 Credit Facility. It does not purport to be a complete discussion of the full terms and conditions of the 2017 Credit Facility or the 2017 Credit Agreement. For more information, please refer to the 2017 Credit Agreement itself.

The 2017 Credit Agreement was amended and restated as of March 17, 2023, when the Company entered into the Amended and Restated Credit Agreement (the "2023 Credit Agreement"), establishing its current credit facility (the "2023 Credit Facility"). A discussion of the 2023 Credit Facility and the 2023 Credit Agreement follows this discussion.

On November 30, 2017 (the ~~“Closing~~“2017 Closing Date”), the Company entered into ~~its~~the 2017 Credit Facility pursuant to the 2017 Credit Agreement. The 2017 Credit Facility ~~consists~~consisted of a $300.0 million senior secured Term Loan B Facility (the “Term Loan B

Facility”), which was drawn in full on the 2017 Closing Date. In addition, the 2017 Credit Facility ~~provides~~provided that the Company may increase the aggregate principal amount of the 2017 Credit Facility by up to an additional $100.0 million plus the amount that would result in its first lien net leverage ratio (as such term is used in the 2017 Credit Agreement) not exceeding 4.0 to 1.0, subject to the Company satisfying certain conditions.

Borrowings under the Term Loan B Facility were used on the 2017 Closing Date (a) to repay in full all of the ~~Company’s~~outstanding obligations of the Company and its ~~subsidiaries’ outstanding obligations~~subsidiaries under the Company’s previous credit facility and to terminate the credit agreement relating thereto, ~~(the “2013 Credit Agreement”),~~ (b) to pay fees and expenses in connection with the 2017 Credit Facility, and (c) for general corporate purposes.

The 2017 Credit Facility iswas guaranteed on a senior secured basis by certain of the Company’s existing and future wholly-owned domestic subsidiaries, and iswas secured on a first priority basis by the Company’s and those subsidiaries’ assets.

The Company’s borrowings under the 2017 Credit Facility ~~bear~~bore interest on the outstanding principal amount thereof from the date when made at a rate per annum equal to either: (i) the Eurodollar Rate (as defined in the 2017 Credit Agreement) plus 2.75%; or (ii) the Base Rate (as defined in the 2017 Credit Agreement) plus 1.75%. As of March 16, 2023, the interest rate on the Company's Term Loan B was 7.38%. The Term Loan B Facility ~~expires~~had an expiration date on November 30, 2024 (the ~~“Maturity~~“Original Maturity Date”).

The amounts outstanding under the 2017 Credit Facility ~~may~~could be prepaid at the Company’s option without premium or penalty, provided that certain limitations ~~are~~were observed, and subject to customary breakage fees in connection with the prepayment of a LIBOR rate loan. The principal amount of the Term Loan B Facility ~~shall~~was to be paid in installments on the dates and in the respective amounts set forth in the 2017 Credit Agreement, with the final balance due on the Original Maturity Date.

As further discussed below, on March 17, 2023, the Company repaid in full all of the outstanding obligations under the 2017 Credit Agreement and accounted for this repayment as an extinguishment of debt in accordance with ASC 470, "Debt". The repayment resulted in a loss on debt extinguishment of $1.6 million, which included a write-off of unamortized debt issuance costs in the amount of $1.1 million.

2023 Credit Facility

The following discussion pertains to the 2023 Credit Facility and the 20237 Credit Agreement. It does not purport to be a complete discussion of the full terms and conditions of the 2023 Credit Facility or the 2023 Credit Agreement. For more information, please refer to the 2023 Credit Agreement itself.

On March 17, 2023 (the “2023 Closing Date”), the Company entered into the 2023 Credit Facility, pursuant to the 2023 Credit Agreement, by and among the Company, Bank of America, N.A., as Administrative Agent (the “Agent”), and the other financial institutions party thereto as Lenders (collectively, the “Lenders” and individually each a “Lender”).

As provided for in the 2023 Credit Agreement, the 2023 Credit Facility consists of (i) a $200,000,000 senior secured Term A Facility (the "Term A Facility"), which was drawn in full on the 2023 Closing Date, and (ii) a $75,000,000 Revolving Credit Facility (the “Revolving Credit Facility”), of which $11,500,000 was drawn on the 2023 Closing Date. In addition, the 2023 Credit Agreement provides that the Company may increase the aggregate principal amount of the 2023 Credit Facility by an additional amount equal to $100,000,000 plus the amount that would result in the Company’s first lien net leverage ratio (as such term is used in the 2023 Credit Agreement) not exceeding 2.25 to 1.0, subject to the Company satisfying certain conditions.

Borrowings under the 2023 Credit Facility were used on the 2023 Closing Date (a) to repay in full all of the outstanding obligations of the Company and its subsidiaries under the 2017 Credit Facility, (b) to pay fees and expenses in connection the 2023 Credit Facility and (c) for general corporate purposes. The 2023 Credit Facility matures on March 17, 2028 (the “Maturity Date”).

The 2023 Credit Facility is guaranteed on a senior secured basis by certain of the Company’s existing and future wholly-owned domestic subsidiaries, and secured on a first priority basis by the Company’s and those subsidiaries’ assets.

The Company’s borrowings under the 2023 Credit Facility bear interest on the outstanding principal amount thereof from the date when made at a rate per annum equal to either: (i) the Term SOFR (as defined in the 2023 Credit Agreement) plus a margin between 2.50% and 3.00%, depending on the Total Net Leverage Ratio or (ii) the Base Rate (as defined in the 2023 Credit

Agreement) plus a margin between 1.50% and 2.00%, depending on the Total Net Leverage Ratio. In addition, the unused portion of the Revolving Credit Facility is subject to a rate per annum between 0.30% and 0.40%, depending on the Total Net Leverage Ratio.

As of March 31, 2023, the interest rate on the Company's Term A Facility and the drawn portion of the Revolving Credit Facility was 7.66%.

The amounts outstanding under the 2023 Credit Facility may be prepaid at the option of the Company without premium or penalty, provided that certain limitations are observed, and subject to customary breakage fees in connection with the prepayment of a Term SOFR loan. The principal amount of the Term A Facility shall be paid in installments on the dates and in the respective amounts set forth in the 2023 Credit Agreement, with the final balance due on the Maturity Date.

The Company incurred debt issuance costs of $1.3 million associated with the 2023 Credit Facility. Debt outstanding under the 2023 Credit Facility is presented net of issuance costs on the Company's condensed consolidated balance sheets. The debt issuance costs are amortized on an effective interest basis over the term of the 2023 Credit Facility, and are included in interest expense in the Company's condensed consolidated statements of operations.

Subject to certain exceptions, the ~~2017~~2023 Credit ~~Facility~~Agreement contains covenants that limit the ability of the Company and its restricted subsidiaries to, among other things:

•

incur certain liens on ~~the Company’s~~its property or assets;

•

make certain investments;

•

incur certain additional indebtedness;

•

consummate any merger, dissolution, liquidation, consolidation or sale of substantially all assets;

•

dispose of certain assets;

•

make certain restricted payments;

•

make certain acquisitions;

•

enter into substantially different lines of business;

•

enter into certain transactions with affiliates;

•

use loan proceeds to purchase or carry margin stock or for any other prohibited purpose;

•

change or amend the terms of ~~the Company’s~~ organizational documents orof the ~~organization documents of~~Company or certain restricted subsidiaries in a materially adverse way to the lenders, or change or amend the terms of certain indebtedness;

•

permit certain financial ratios to fall out of compliance;

•

enter into sale and leaseback transactions;

•

make prepayments of any subordinated indebtedness, subject to certain conditions; ~~and~~

•

violate the Foreign Corrupt Practices Act or other anti-bribery laws of other jurisdictions; or

•

change ~~the Company’s~~its fiscal year, or accounting policies or reporting practices.

The ~~2017~~2023 Credit Facility also ~~provides for~~requires compliance with financial covenants related to total net leverage ratio and interest coverage ratio (calculated as set forth in the 2023 Credit Agreement).

The 2023 Credit Agreement includes the following events of default and certain other customary events of ~~default, including the following:~~default:

•

any revocation, termination, substantial and adverse modification, or refusal by final order to renew, any media license, or the requirement (by final non-appealable order) to sell a television or radio station, where any such event or failure is reasonably expected to have a material adverse effect;

•

the interruption of operations of any television or radio station for more than 96 consecutive hours during any period of seven consecutive days;

•

default for three (3) business days in the payment when due of principal or interest on borrowings under the ~~2017~~2023 Credit ~~Facility when due;~~Facility;

•

default for five (5) business days in the payment when due of ~~the principal amount of borrowings~~any other amounts due under the ~~2017~~2023 Credit Facility;

•

failure by the Company or any subsidiary to comply with the negative covenants (including the financial covenants) and certain other covenants ~~relating to maintaining~~contained in the ~~legal existence~~2023 Credit Agreement;

•

material breaches of certain representations and warranties by the Company ~~and certain of its restricted subsidiaries and compliance with anti-corruption laws;~~or any subsidiary;

•

failure by the Company or any subsidiary to comply with ~~any of the~~certain other ~~agreements~~covenants in the ~~2017~~2023 Credit Agreement and related loan documents that continues for thirty (30) days (or ten (10) days in the case of failure to comply with covenants related to inspection rights of the administrative agent and lenders and permitted uses of proceeds from borrowings under the ~~2017~~2023 Credit Facility) after the Company’s officers first become aware of such failure or first receive written notice of such failure from any lender;

•

default in the payment of other indebtedness if the amount of such indebtedness aggregates to $15.0 million or more, or failure to comply with the terms of any agreements related to such indebtedness if the holder or holders of such indebtedness can cause such indebtedness to be declared due and payable;

•

certain events of bankruptcy or insolvency with respect to the Company or any significant subsidiary;

•

final judgment is entered against the Company or any restricted subsidiary in an aggregate amount over $15.0 million, and either enforcement proceedings are commenced by any creditor or there is a period of 30 consecutive days during which the judgment remains unpaid and no stay is in effect;

•

any material provision of any agreement or instrument governing the ~~2017~~2023 Credit Facility ceases to be in full force and effect; ~~and~~

•

~~any revocation, termination, substantial and adverse modification,~~a change of control of the Company; or ~~refusal by final order~~

•

the failure to ~~renew, any media license,~~create, or the ~~requirement (by final non-appealable order) to sell a television or radio station, where~~cessation of, any ~~such event or failure is reasonably expected to have a material adverse effect.~~liens contemplated by the 2023 Credit Agreement.

The ~~Term Loan B Facility does not contain any financial covenants. In connection with~~security agreement that the Company ~~entering into the 2017 Credit Agreement, the Company and its restricted subsidiaries also~~ entered into ~~a Security Agreement, pursuant~~with respect to ~~which the Company and all of the companies existing in future wholly-owned domestic subsidiaries each granted a first priority security interest in the collateral securing the~~its 2017 Credit Facility ~~for the benefit of the lenders under the 2017~~remains in effect with respect to its 2023 Credit Facility.

On June 4, 2021, the Company entered into the Second Amendment (the "Amendment") to the 2017 Credit Agreement, by and among the Company, Bank of America, N.A., as Administrative Agent, and the other financial institutions party thereto as Lenders (collectively, the “Lenders”). The Amendment amends the 2017 Credit Agreement, primarily to permit additional investments in restricted subsidiaries that are not loan parties, and make certain changes to the definition of “Consolidated Net Income” for the purpose of calculating EBITDA as defined by the 2017 Credit Agreement. Pursuant to the Amendment, the Company agreed to pay to the Lenders consenting to the Amendment a fee equal to ~~0.375% of the aggregate principal amount of the outstanding loans held by such Lenders under the 2017 Credit Agreement as of June 4, 2021. This fee totaled approximately $0.6~~ ~~million and it is amortized as interest expense over the remaining term of the Term Loan B.~~

The carrying amount of the Term Loan BA Facility as of ~~June 30, 2022~~March 31, 2023 approximated its fair value and was $~~209.2~~198.7 million, net of $~~1.5~~1.3 million of unamortized debt issuance costs and original issue discount. ~~The estimated fair value of the Term Loan B Facility as of June 30, 2022 was approximately $204.4~~ ~~million. The estimated fair value is based on quoted prices in markets where trading occurs infrequently.~~

As of March 31, 2023, the Company believes that it is in compliance with all covenants in the 2023 Credit Agreement.

Concentrations of Credit Risk and Trade Receivables

The Company’s financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents and trade accounts receivable. ~~The Company from~~From time to time, the Company has had, and may have, bank deposits in excess of ~~FDIC~~the Federal Deposit Insurance Corporation ("FDIC") insurance limits. As of ~~June 30, 2022,~~March 31, 2023, the majority of all U.S. deposits are maintained in two financial institutions. The Company has not experienced any losses in such accounts and believes that it is not exposed to any significant credit risk on cash and cash equivalents. In addition, to the Company's knowledge, all of the bank deposits held in banks outside of the United States are not insured.

The Company’s credit risk is spread across a large number of customers in the ~~U.S.,~~United States, Latin America, Asia and various other countries, therefore spreading the trade receivable credit risk. The Company routinely assesses the financial strength of its customers and, as a consequence, believes that it is managing its trade receivable credit risk effectively. Trade receivables are carried at original invoice amount less an estimate made for doubtful receivables based on a review of all outstanding amounts on a monthly basis. ~~A valuation~~An allowance for doubtful accounts is provided for known and anticipated credit losses, as determined by management in the course of regularly evaluating individual customer receivables. This evaluation takes into consideration of a customer’s financial condition and credit history, as well as current economic conditions. Trade receivables are written off when deemed uncollectible. Recoveries of trade receivables previously written off are recorded when received. No interest is charged on customer accounts.

Aggregate receivables from the largest 5five advertisers represented 39% and 2% of total trade receivables as of ~~June 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively. ~~NaN~~No single advertiser represents more than 5% of the total trade receivables.

Revenue from the largest advertiser represented 1612% and 1018% of total revenue for the three-month periods ended ~~June 30,~~March 31, 2023 and 2022, ~~and 2021, respectively. Revenue from the largest advertiser represented~~ 16~~% and~~ 9~~% of total revenue for the six-month periods ended June 30, 2022 and 2021,~~ respectively. This advertiser pays on a frequent basis and management does not believe this concentration of credit represents a significant risk to the Company. ~~NaN~~No other advertiser represented more than 5% of the total revenue.

Estimated losses for bad debts are provided for in the consolidated financial statements through a charge to expense that aggregated $0.9 million and $~~1.1~~0.1 million for the three-month periods ended ~~June 30,~~March 31, 2023 and 2022, ~~and 2021, respectively, and $1.0~~ ~~million and $2.2~~ ~~million for the six-month periods ended June 30, 2022 and 2021,~~ respectively. The net charge off of bad debts aggregated $~~0.3~~0.2 million and $~~0.4~~0.1 million for the three-month periods ended ~~June 30,~~March 31, 2023 and 2022, ~~and 2021, respectively, and $0.4~~ ~~million and $0.5~~ ~~million for the six-month periods ended June 30, 2022 and 2021,~~ respectively.

Dependence on Global Media Companies

The Company is dependent on the continued commercial agreements with, as well as the financial and business strength of, the global media companies for which the Company acts as a commercial partner in the digital segment, as well as the companies from which it obtains programming in the television and audio segments. The Company could be at risk should any of these entities fail to perform their respective obligations to the Company or terminate their relationship with the Company. This in turn could materially adversely affect the Company’s business, results of operations and financial condition.

Revenue related to a single media company for which the Company acts as a commercial partner represented 5251% and 5953% of the Company's total revenue for the three-month periods ended ~~June 30,~~March 31, 2023 and 2022, ~~and 2021, respectively, and~~ 52~~% and~~ 57%respectively. The Company expects that this dependence will continue. Based on communications with this media company, the Company anticipates receiving a lower rate of payment on the Company's ~~total revenue for~~sales made on behalf of this company beginning in the ~~six-month periods ended June 30, 2022 and 2021.~~second half of 2023, resulting in lower margins.

Fair Value Measurements

The Company measures certain financial assets and liabilities at fair value on a recurring basis. Fair value is the price the Company would receive to sell an asset or pay to transfer a liability in an orderly transaction with a market participant at the measurement date.

Accounting Standards Codification ("ASC") ASC 820, “Fair Value Measurements and Disclosures”, defines and establishes a framework for measuring fair value and expands disclosures about fair value measurements. In accordance with ASC 820, the Company has categorized its financial assets and liabilities, based on the priority of the inputs to the valuation technique, into a three-level fair value hierarchy as set forth below.

Level 1 – Assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market that the company has the ability to access at the measurement date.

Level 2 – Assets and liabilities whose values are based on quoted prices for similar attributes in active markets; quoted prices in markets where trading occurs infrequently; and inputs other than quoted prices that are observable, either directly or indirectly, for substantially the full term of the asset or liability.

Level 3 – Assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement.

If the inputs used to measure the financial instruments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

The following table presents the Company’s financial assets and liabilities measured at fair value on a recurring and nonrecurring basis in the condensed consolidated balance sheets (in millions):


	June 30, 2022									March 31, 2023
	Total Fair Value and Carrying Value on Balance Sheet		Fair Value Measurement Category							Total Fair Value and Carrying Value on Balance Sheet		Fair Value Measurement Category
Recurring fair value measurements			Level 1		Level 2		Level 3		Total Gains (Losses)			Level 1		Level 2		Level 3		Total Gains (Losses)
Assets:
Money market account	$	11.9	$	11.9	$	—	$	—		$	8.2	$	8.2	$	—	$	—
Corporate bonds and notes	$	66.9			$	66.9				$	36.5		—	$	36.5		—
Asset-backed securities	$	7.4			$	7.4				$	1.2		—	$	1.2		—
U.S. Government securities										$	0.7		—	$	0.7		—

Liabilities:
Contingent consideration	$	77.4	$	—		—	$	77.4		$	59.7	$	—		—	$	59.7

December 31, 2021

Total Fair Value
and Carrying
Value on
Balance Sheet

Fair Value Measurement Category

Recurring fair value measurements

Level 1

Level 2

Level 3

Total Gains (Losses)

Assets:

Money market account

$
88.3

$
88.3

$
—

$
—

Liabilities:

Contingent consideration

$
114.9

$
—

—

$
114.9

Nonrecurring fair value measurements:

FCC licenses

$
0.7

—

—

$
0.7

$
(0.1
)

The Company held investments in a money market fund, corporate bonds and notes, and asset-backed securities. The majority of the carrying of the corporate bonds and asset-backed securities held by the Company are investment grade.


	December 31, 2022
	Total Fair Value and Carrying Value on Balance Sheet		Fair Value Measurement Category
Recurring fair value measurements			Level 1		Level 2		Level 3			Total Gains (Losses)
Assets:
Money market account	$	1.4	$	1.4	$	—	$	—
Corporate bonds and notes	$	44.5		—	$	44.5		—

Liabilities:
Contingent consideration	$	63.8	$	—		—	$	63.8

Nonrecurring fair value measurements:
FCC licenses	$	24.5		—		—	$	24.5	$	(1.6	)

The Company’s money market account is comprised of cash and cash ~~equivalents.~~equivalents, which are recorded at their fair market value within Cash and cash equivalents in the Condensed Consolidated Balance Sheets.

The Company’s available for sale debt securities are comprised of corporate bonds and notes, asset-backed securities, and ~~asset-backed~~U.S. Government securities. The majority of the carrying value of these securities held by the Company are investment grade. These securities are valued using quoted prices for similar attributes in active markets (Level 2). Since these investments are classified as available for sale, they are recorded at their fair market value within ~~Cash and cash equivalents and~~ Marketable securities in the Condensed Consolidated Balance Sheets and their unrealized gains or losses are included in other comprehensive income. Realized gains and losses from the sale of available for sale securities are included in the Condensed Statements of Operations and were determined on a specific identification basis.

As of ~~June 30, 2022,~~March 31, 2023, the following table summarizes the amortized cost and the unrealized ~~(gains) losses~~gains (losses) of the available for sale securities (in thousands):



	Corporate Bonds and Notes					Asset-Backed Securities					Corporate Bonds and Notes					Asset-Backed Securities					U.S. Government securities
	Amortized Cost		Unrealized gains (losses)			Amortized Cost		Unrealized gains (losses)			Amortized Cost		Unrealized gains (losses)			Amortized Cost		Unrealized gains (losses)			Amortized Cost		Unrealized gains (losses)
Due within a year	$	37,259	$	(398	)	$	-	$	-		$	12,712	$	(98	)	$	-	$	-		$	-	$	-
Due after one year		31,680		(1,605	)		7,389		(47	)		24,434		(567	)		1,153		(1	)		734		-
Total	$	68,939	$	(2,003	)	$	7,389	$	(47	)	$	37,146	$	(665	)	$	1,153	$	(1	)	$	734	$	-

The Company’s available for sale debt securities are considered for credit losses under the guidance of Accounting Standards Update (“ASU”) 2016-13, Financial Instruments—Credit Losses (Topic 326). As of ~~June 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, the Company determined that a credit loss allowance is not required.

Included in interest income for the three-month periods ended ~~June 30,~~March 31, 2023 and 2022 ~~and 2021~~ was interest income related to the Company’s available for sale securities of $~~0.7~~0.5 million and $~~0.1~~0.4 million, respectively. ~~Included in interest income for the six-month periods ended June 30, 2022 and 2021 was interest income related to the Company’s available for sale securities of $1.1~~ ~~million and $0.2~~ ~~million, respectively~~

The fair value of the contingent consideration is related to the acquisitions of:

•

the remaining 49% of the issued and outstanding shares of stock of a digital advertising solutions company that, together with its subsidiaries, does business under the name Cisneros Interactive ("Cisneros Interactive");

•

100% of the issued and outstanding shares of stock of a digital advertising solutions company in Southeast Asia that, together with its subsidiaries, does business under the name MediaDonuts ("MediaDonuts"); and

•

100% of the issued and outstanding shares of stock of a digital advertising solutions company headquartered in South Africa, that, together with its subsidiaries, does business under the name 365 Digital ("365 Digital").

The fair value of the contingent consideration was estimated by applying the real options approach using level 3 inputs as further discussed in Note 7. The following table presents the changes in the contingent consideration (in millions):

Six-Month Period

Ended June 30,

2022

2021

Beginning balance
$
114.9

$
-

Payments to sellers

(43.6
)

-

(Gain) loss recognized in earnings

6.1

-

Ending balance
$
77.4

$
-


	Three-Month Period
	Ended March 31,
	2023			2022
Beginning balance	$	63.8		$	114.9
Payments to sellers		-			(14.7	)
(Gain) loss recognized in earnings		(4.1	)		5.1
Ending balance	$	59.7		$	105.3

3. REVENUES

Revenue Recognition

Revenues are recognized when control of the promised services is transferred to the Company’s customers, in an amount equal to the consideration the Company expects to be entitled to in exchange for those services.

Digital Advertising. Revenue from digital advertising is earned primarily from sales of advertising that are placed by the Company's advertising customers or their ad agencies on the digital platforms of third-party media companies for which the Company acts as commercial partner or placed directly with online digital marketplaces through the Company's Smadex programmatic ad purchasing platform. Revenue in the digital segment is recognized when display or other digital advertisements record impressions on the websites and mobile and Internet-connected television apps of media companies on whose digital platforms the advertisements are placed or as the advertiser’s previously agreed-upon performance criteria are satisfied.

Broadcast Advertising. Revenue related to the sale of advertising in the television and audio segments is recognized at the time of broadcast. Broadcast advertising rates are fixed based on each medium’s ability to attract audiences in demographic groups targeted by advertisers and rates can vary based on the time of day and ratings of the programming airing in that day part.

Broadcast and digital advertising revenue is recognized over time in a series as a single performance obligation as the ad, impression or performance advertising is delivered per the insertion order. The Company applies the practical expedient to recognize revenue for each distinct advertising service delivered at the amount the Company has the right to invoice, which corresponds directly to the value a customer has received relative to the Company’s performance. Contracts with customers are short term in nature and billing occurs on a monthly basis with payment due in 30 days. Value added taxes collected concurrently with advertising revenue

producing activities are excluded from revenue. Cash payments received prior to services being rendered result in deferred revenue, which is then recognized as revenue when the advertising time or space is actually provided.

Retransmission Consent. The Company generates revenue from retransmission consent agreements that are entered into with MVPDs. The Company grants the MVPDs access to its television station signals so that they may rebroadcast the signals and charge their subscribers for this programming. Payments are received on a monthly basis based on the number of monthly subscribers.

Retransmission consent revenues are considered licenses of functional intellectual property and are recognized over time utilizing the sale-based or usage-based royalty exception. The Company’s performance obligation is to provide the licensee access to the Company's intellectual property. MVPD subscribers receive and consume the content monthly as the television signal is delivered.

Spectrum Usage Rights. The Company generates revenue from agreements associated with its television stations’ spectrum usage rights from a variety of sources, including but not limited to agreements with third parties to utilize excess spectrum for the broadcast of their multicast networks; charging fees to accommodate the operations of third parties, including moving channel

positions or accepting interference with broadcasting operations; and modifying and/or relinquishing spectrum usage rights while continuing to broadcast through channel sharing or other arrangements.

Revenue generated by spectrum usage rights agreements are recognized in accordance with the contractual fees over the ~~period~~term of the ~~lease~~agreement or when the Company has relinquished all or a portion of its spectrum usage rights for a station or have relinquished its rights to operate a station on the existing channel free from interference.

Other Revenue. The Company generates other revenues that are related to its broadcast operations, which primarily consist of representation fees earned by the Company’s radio national representation firm, talent fees for the Company’s on air personalities, ticket and concession sales for radio events, rent from tenants of the Company’s owned facilities, barter revenue and revenue generated under joint sales agreements.

In the case of representation fees noted above, the Company does not control the distinct service, that being the commercial advertisement, prior to delivery and therefore recognizes revenue on a net basis. Similarly for joint service agreements, the Company does not own or control the station providing the airtime, and is not the principal in the arrangement, and therefore recognizes revenue on a net basis. In the case of talent fees, the on air personality is an employee of the Company and therefore the Company controls the service provided and recognizes revenue gross with an expense for fees paid to the employee.

Practical Expedients and Exemptions

The Company does not disclose the value of unsatisfied performance obligations when (i) contracts have an original expected length of one year or less, which applies to essentially all of the Company's advertising contracts, and (ii) variable consideration is a sales-based or usage-based royalty promised in exchange for a license of intellectual property, which applies to retransmission consent revenue.

The Company applies the practical expedient to expense contract acquisition costs, such as sales commissions generated either by internal direct sales employees or through third party advertising agency intermediaries, when incurred because the amortization period is one year or less. These costs are recorded within direct operating expenses.

Disaggregated Revenue

The following table presents our revenues disaggregated by major source (in thousands):


	Three-Month Period				Six-Month Period				Three-Month Period
	Ended June 30,				Ended June 30,				Ended March 31,
	2022		2021		2022		2021		2023		2022
Digital advertising	$	174,378	$	130,223	$	328,089	$	231,705	$	196,482	$	153,711
Broadcast advertising		35,347		36,438		66,804		70,113		29,627		31,457
Spectrum usage rights		1,674		1,109		3,209		3,953		2,146		1,535
Retransmission consent		9,038		9,286		18,233		18,933		9,623		9,195
Other		1,258		1,354		2,532		2,586		1,128		1,274
Total revenue	$	221,695	$	178,410	$	418,867	$	327,290	$	239,006	$	197,172

Contracts are entered into directly with customers or through an advertising agency that represents the customer. Sales of advertising to customers or agencies within a station’s designated market area (“DMA”) are referred to as local revenue, whereas sales

from outside the DMA are referred to as national revenue. The following table further disaggregates the Company’s broadcast advertising revenue by sales channel (in thousands):


	Three-Month Period				Six-Month Period				Three-Month Period
	Ended June 30,				Ended June 30,				Ended March 31,
	2022		2021		2022		2021		2023		2022
Local direct	$	6,009	$	5,729	$	11,430	$	10,969	$	5,308	$	5,421
Local agency		13,017		15,219		25,570		28,407		12,872		12,553
National agency		16,321		15,490		29,804		30,737		11,447		13,483
Total revenue	$	35,347	$	36,438	$	66,804	$	70,113	$	29,627	$	31,457

The following table further disaggregates the Company’s revenue by geographical region, based on the location of the sales office (in thousands):


	Three-Month Period				Six-Month Period				Three-Month Period
	Ended June 30,				Ended June 30,				Ended March 31,
	2022		2021		2022		2021		2023		2022
U.S.	$	59,069	$	54,132	$	111,340	$	106,605	$	46,970	$	52,271
Latin America		127,669		118,346		242,838		209,114		131,918		115,169
Asia		18,895		-		36,074		-		24,063		17,179
Rest of the World		16,062		5,932		28,615		11,571
EMEA										36,055		12,553
Total revenue	$	221,695	$	178,410	$	418,867	$	327,290	$	239,006	$	197,172

Deferred Revenue

The Company records deferred revenues within Accounts payable and accrued expenses in the Condensed Consolidated Balance Sheets, when cash payments are received or due in advance of its performance, including amounts which are refundable. The change in the deferred revenue balance for the ~~six-month~~three-month period ended ~~June 30, 2022~~March 31, 2023 is primarily driven by cash payments received or due in advance of satisfying the Company’s performance obligations, offset by revenues recognized that were included in the deferred revenue balance as of December 31, ~~2021.~~2022.

The Company’s payment terms vary by the type and location of customer and the products or services offered. The term between invoicing and when payment is due is typically 30 days. For certain individual customers and customer types, the Company generally requires payment before the services are delivered to the customer.


(in thousands)	December 31, 2021		Increase	Decrease *	June 30, 2022		December 31, 2022		Increase	Decrease *	March 31, 2023
Deferred revenue	$	5,942	7,163	(5,942)	$	7,163	$	7,175	6,961	(7,175)	$	6,961

* The amount reflects revenue that was deferred as of December 31, 2022 and has been recorded as revenue in the ~~six-month~~three-month period ended ~~June 30, 2022.~~March 31, 2023.

4. LEASES

The Company’s leases are considered operating leases and primarily consist of real estate such as office space, broadcasting towers, land and land easements. A Right of Use (“ROU”) asset and lease liability is recognized as of the lease commencement date based on the present value of the future minimum lease payments over the lease term. As the implicit rate for operating leases is not readily determinable, the future minimum lease payments were discounted using an incremental borrowing rate. Due to the Company’s centralized treasury function, the Company applied a portfolio approach to discount its domestic lease obligations using its secured publicly traded U.S. dollar denominated debt instruments interpolating the duration of the debt to the remaining lease term. The incremental borrowing rate for international leases is the interest rate that the Company would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment.

The operating leases are reflected within the condensed consolidated balance sheet as Operating leases right of use asset with the related liability presented as Operating lease liabilities and Long-term operating lease liabilities. Lease expense is recognized on a straight-line basis over the lease term.

Generally, lease terms include options to renew or extend the lease. Unless the renewal option is considered reasonably certain, the exercise of any such options have been excluded from the calculation of lease liabilities. In addition, as permitted within the

guidance, ROU assets and lease liabilities are not recorded for leases within an initial term of one year or less. The Company’s existing leases have remaining terms of less than one year up to 28 years. Certain of the Company’s lease agreements include rental payments based on changes in the consumer price index (“CPI”). Lease liabilities are not remeasured as a result of changes in the CPI; instead, changes in the CPI are treated as variable lease payments and recognized in the period in which the related obligation was incurred. Lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Certain real estate leases include additional costs such as common area maintenance (non-lease component), as well as property insurance and property taxes. These costs were excluded from future minimum lease payments as they are variable payments. As such, these costs were not part of the calculation of ROU assets and lease liabilities associated with operating leases upon transition.

The Company’s corporate headquarters are located in Santa Monica, California. The Company leases approximately 16,000 square feet of space in the building housing its corporate headquarters under a lease that ~~the Company~~was most recently amended as of June 7, 2022. The lease, as amended, provides that the Company will relocate and expand its corporate headquarters within the same

building to a space consisting of approximately 38,000 square feet, at which point the term of the lease will be extended until January 31, 2034~~, subject to adjustment.~~. The Company moved into temporary premises in December 2022 pending the build-out of the permanent premises and expects to complete its relocation ininto the permanent premises during the second ~~half~~quarter of ~~2022.~~ 2023.

The Company also leases approximately 41,000 square feet of space in the building housing its radio network headquarters in Los Angeles, ~~California, under a lease pursuant to which~~California. In 2021, the Company ~~has given notice that~~amended the lease to terminate it ~~is terminating as of~~ in September ~~30,~~ 2022~~. In respect of this termination, the Company will pay~~ and paid a termination fee of approximately $0.4 million ~~of which $0.2~~ ~~million has been paid as of June 30,~~in 2022. The Company will continue to lease this space on a month-to-month basis and intends on ~~moving~~relocating all of its personnel into its new, permanent premises in ~~the Los Angeles office to the expanded space in its~~ Santa ~~Monica headquarters.~~Monica.

The types of properties required to support each of the Company’s television and radio stations typically include offices, broadcasting studios and antenna towers where broadcasting transmitters and antenna equipment are located. The majority of the Company’s office, studio and tower facilities are leased pursuant to non-cancelable long-term leases. The Company also owns the buildings and/or land used for office, studio and tower facilities at certain of its television and/or radio properties. The Company owns substantially all of the equipment used in its television and radio broadcasting ~~business~~business.

The following table summarizes the expected future payments related to operating lease liabilities as of ~~June 30, 2022:~~March 31, 2023:


(in thousands)
Remainder of 2022	$	4,272
2023		6,205
Remainder of 2023				$	6,107
2024		5,045			9,610
2025		4,600			9,190
2026		3,015			7,568
2027 and thereafter		11,510
2027					5,880
2028 and thereafter					32,992
Total minimum payments	$	34,647		$	71,347
Less amounts representing interest		(7,748	)		(17,680	)
Less amounts representing tenant improvement allowance					(3,058	)
Present value of minimum lease payments		26,899			50,609
Less current operating lease liabilities		(6,097	)		(6,029	)
Long-term operating lease liabilities	$	20,802		$	44,580

The weighted average remaining lease term and the weighted average discount rate used to calculate the Company’s lease liabilities as of ~~June 30, 2022~~March 31, 2023 were ~~9.1~~8.9 years and ~~6.3~~6.2%, respectively. The weighted average remaining lease term and the weighted average discount rate used to calculate the Company’s lease liabilities as of ~~June 30, 2021~~March 31, 2022 were ~~9.6~~9.4 years and 6.3%, respectively.

The following table summarizes operating lease payments and supplemental non-cash disclosures:


	Six-Month Period Ended June 30,				Three-Month Period Ended March 31,
(in thousands)	2022		2021		2023		2022
Cash paid for amounts included in lease liabilities:

Operating cash flows from operating leases	$	5,146	$	5,329	$	2,138	$	2,480
Non-cash additions to operating lease assets	$	2,998	$	4,352	$	3,433	$	2,130

The following table summarizes the components of operating lease expense:

Three-Month Period

Three-Month Period

Six-Month Period

Six-Month Period

Ended June 30,

Ended June 30,

Ended June 30,

Ended June 30,

(in thousands)

2022

2021

2022

2021

Operating lease cost

$
2,208

$
2,051

$
4,373

$
4,204

Variable lease cost

274

438

592

566

Short-term lease cost

591

330

1,006

769

Total lease cost

$
3,073

$
2,819

$
5,971

$
5,539


	Three-Month Period		Three-Month Period
	Ended March 31,		Ended March 31,
(in thousands)	2023		2022
Operating lease cost	$	2,477	$	2,165
Variable lease cost		192		318
Short-term lease cost		1,425		415
Total lease cost	$	4,094	$	2,898

For the three-month period ended ~~June 30, 2022,~~March 31, 2023, lease cost of $~~1.5~~1.4 million, $~~1.4~~2.3 million and $~~0.2~~0.4 million, were recorded to direct operating expenses, selling, general and administrative expenses and corporate expenses, respectively. For the ~~six-month~~three-month period ended ~~June 30,~~March 31, 2022, lease cost of $~~3.0~~1.5 million, $~~2.7~~1.3 million and $~~0.3~~0.1 million, were recorded to direct operating expenses, selling, general and administrative expenses and corporate expenses, respectively.

~~For the three-month period ended June 30, 2021, lease cost of $1.4~~ ~~million, $1.2~~ ~~million and $0.2~~ ~~million, were recorded to direct operating expenses, selling, general and administrative expenses and corporate expenses, respectively. For the six-month period~~

~~ended June 30, 2021, lease cost of $2.8~~ ~~million, $2.4~~ ~~million and $0.3~~ ~~million, were recorded to direct operating expenses, selling, general and administrative expenses and corporate expenses, respectively.~~

5. SEGMENT INFORMATION

The Company’s management has determined that the Company operates in 3three reportable segments as of ~~June 30, 2022,~~March 31, 2023, based upon the type of advertising medium, which segments are digital, television and ~~audio.~~audio (formerly radio). The Company’s segments results reflect information presented on the same basis that is used for internal management reporting and it is also how the chief operating decision maker evaluates the business.

Digital

The Company's digital segment, whose operations are located in Latin America, Europe, the United States, Asia and Africa, reaches a global market, with a focus on advertisers in emerging economies that wish to advertise on digital platforms owned and operated primarily by global media companies.

The Company provides digital end-to-end advertising solutions that allow advertisers to reach online users worldwide. These solutions are comprised of 4four ~~separate~~ business units:

•

the Company's digital commercial partnerships business;

•

Smadex, the Company's programmatic ad purchasing platform;

•

the Company's ~~branding and~~ mobile ~~performance~~growth solutions business; and

•

the Company's digital audio business.

Through the Company's digital commercial partnerships business – the largest of its digital business units – the Company acts as an intermediary between primarily global media companies and advertising customers or their ad agencies. The global media companies represented by the Company include Meta (formerly known as Facebook Inc.), Spotify, ~~TikTok,~~ByteDance and Twitter, as well as other media companies ~~in more than~~ 30 ~~countries~~ throughout the world. The Company's dedicated local sales teams sell advertising space on these and other media companies' digital platforms to its advertising customers or their ad agencies for the placement of ads directed to online users of a wide range of Internet-connected devices. The Company also provides some of its advertising customers billing, technological and other support, including strategic marketing and training, which it refers to as managed services.

Smadex is the Company's ~~proprietary automated~~programmatic ad purchasing platform, on which advertisers can purchase ad inventory. This practice – the purchase and sale of advertising inventory electronically – is referred to in the Company's industry as programmatic advertising. Smadex is also a “demand-side" platform, which allows advertisers to purchase space from online marketplaces on which media companies list their advertising inventory. Most advertisements acquired through Smadex are placed on mobile devices, but they may also be placed on computers and other Internet-connected devices. The Company also provides managed services to some of its advertising customers in connection with their use of its Smadex platform.

Television

The Company's television operations reach and engage U.S. Hispanics in the United States. The Company owns and/or operates 49 primary television stations located primarily in California, Colorado, Connecticut, Florida, Kansas, Massachusetts, Nevada, New Mexico, Texas and Washington, D.C. The Company generates revenue from advertising, retransmission consent agreements and the monetization of spectrum usage rights in these markets.

Audio

The Company's audio operations reach and engage U.S. Hispanics in the United States. The Company owns and operates 45 radio stations (37 FM and 8 AM) located primarily in Arizona, California, Colorado, Florida, Nevada, New Mexico and Texas.

Separate financial data for each of the Company’s operating segments are provided below. Segment operating profit (loss) is defined as operating profit (loss) before corporate expenses, change in fair value of contingent consideration, impairment charge, foreign currency (gain) loss and other operating (gain) loss. The Company generated 7380% and 7073% of its revenue outside the United

States during the three-month periods ended ~~June 30,~~march 31, 2023 and 2022, ~~and 2021, respectively. The Company generated~~ 73~~% and~~ 67~~% of its~~

~~revenue outside the United States during the six-month periods ended June 30, 2022 and 2021,~~ respectively. The Company evaluates the performance of its operating segments based on the following (in thousands):


	Three-Month Period									Six-Month Period									Three-Month Period
	Ended June 30,						%			Ended June 30,						%			Ended March 31,						%
	2022			2021			Change			2022			2021			Change			2023			2022			Change
Net revenue
Digital	$	174,378		$	130,223			34	%	$	328,089		$	231,705			42	%	$	196,482		$	153,711			28	%
Television		32,373			34,057			(5	)%		63,240			70,148			(10	)%		30,312			30,867			(2	)%
Audio		14,944			14,130			6	%		27,538			25,437			8	%		12,212			12,594			(3	)%
Consolidated		221,695			178,410			24	%		418,867			327,290			28	%		239,006			197,172			21	%

Cost of revenue - digital		144,965			109,030			33	%		274,856			193,786			42	%		167,756			129,891			29	%

Direct operating expenses
Digital		7,843			6,238			26	%		14,976			11,139			34	%		8,010			7,133			12	%
Television		14,488			15,203			(5	)%		28,771			30,172			(5	)%		14,759			14,283			3	%
Audio		7,265			6,895			5	%		13,672			13,586			1	%		7,093			6,407			11	%
Consolidated		29,596			28,336			4	%		57,419			54,897			5	%		29,862			27,823			7	%

Selling, general and administrative expenses
Digital		9,419			5,789			63	%		17,521			11,738			49	%		13,529			8,102			67	%
Television		5,238			4,313			21	%		10,195			9,228			10	%		5,340			4,957			8	%
Audio		3,118			3,004			4	%		6,098			5,993			2	%		3,899			2,980			31	%
Consolidated		17,775			13,106			36	%		33,814			26,959			25	%		22,768			16,039			42	%

Depreciation and amortization
Digital		2,644			1,613			64	%		5,321			3,194			67	%		3,631			2,677			36	%
Television		2,808			3,107			(10	)%		5,701			6,323			(10	)%		2,658			2,893			(8	)%
Audio		811			354			129	%		1,636			741			121	%		182			825			(78	)%
Consolidated		6,263			5,074			23	%		12,658			10,258			23	%		6,471			6,395			1	%

Segment operating profit (loss)
Digital		9,507			7,553			26	%		15,415			11,848			30	%		3,556			5,908			(40	)%
Television		9,839			11,434			(14	)%		18,573			24,425			(24	)%		7,555			8,734			(13	)%
Audio		3,750			3,877			(3	)%		6,132			5,117			20	%		1,038			2,382			(56	)%
Consolidated		23,096			22,864			1	%		40,120			41,390			(3	)%		12,149			17,024			(29	)%

Corporate expenses		8,520			7,345			16	%		17,244			14,503			19	%		10,502			8,724			20	%
Change in fair value of contingent consideration		976			-		*				6,076			-		*				(4,065	)		5,100		*
Impairment charge		-			112			(100	)%		-			1,438			(100	)%
Foreign currency (gain) loss		993			(309	)	*				146			277			(47	)%		(956	)		(847	)		13	%
Other operating (gain) loss		(834	)		(523	)		59	%		(953	)		(2,436	)		(61	)%		-			(119	)		(100	)%
Operating income (loss)		13,441			16,239			(17	)%		17,607			27,608			(36	)%		6,668			4,166			60	%

Interest expense	$	(2,334	)	$	(1,856	)		26	%	$	(4,170	)	$	(3,573	)		17	%	$	(4,028	)	$	(1,836	)		119	%
Interest income		722			83			770	%		1,128			223			406	%		860			406			112	%
Dividend income		11			2			450	%		14			4			250	%		18			3			500	%
Realized gain (loss) on marketable securities																				(32	)		-		*
Gain (loss) on debt extinguishment																				(1,556	)		-		*
Income (loss) before income taxes		11,840			14,468			(18	)%		14,579			24,262			(40	)%		1,930			2,739			(30	)%

Capital expenditures
Digital	$	1,092		$	538					$	1,861		$	874					$	1,111		$	769
Television		676			430						1,136			1,461						7,336			460
Audio		123			147						411			293						103			288
Consolidated	$	1,891		$	1,115					$	3,408		$	2,628					$	8,550		$	1,517

	June 30,			December 31,															March 31,			December 31,
Total assets	2022			2021															2023			2022
Digital		350,725			309,347															415,204			408,027
Television		384,087			433,303															355,996			363,904
Audio		105,391			108,692															107,083			108,910
Consolidated	$	840,203		$	851,342														$	878,283		$	880,841

* Percentage not meaningful.

The Company is subject to various outstanding claims and other legal proceedings that may arise in the ordinary course of business. In the opinion of management, any liability of the Company that may arise out of or with respect to these matters will not materially adversely affect the financial position, results of operations or cash flows of the Company.

7. ACQUISITIONS

Cisneros Interactive

On October 13, 2020, the Company acquired from certain individuals (collectively, the ~~“Sellers”~~“Cisneros Sellers”), 51% of the issued and outstanding shares of stock of a digital advertising solutions company that, together with its subsidiaries, does business under the name Cisneros ~~Interactive.~~Interactive (“Cisneros Interactive”). The acquisition, funded from cash on hand, included a purchase price of approximately $29.9 million in cash. The Company concluded that the remaining 49% of the issued and outstanding shares of Cisneros Interactive stock was considered to be a noncontrolling interest.

In connection with the acquisition, the Company also entered into a Put and Call Option Agreement (the ~~“Put~~“Cisneros Put and Call Agreement”). Subject to the terms of the Cisneros Put and Call Agreement, if certain minimum EBITDA targets are met, the Sellers had the right (the ~~“Put~~“Cisneros Put Option”), between March 15, 2024 and June 13, 2024, to cause the Company to purchase all (but not less than all) the remaining 49% of the issued and outstanding shares of Cisneros Interactive stock at a purchase price to be based on a pre-determined multiple of six times Cisneros Interactive’s 12-month EBITDA in the preceding calendar year. The Cisneros Sellers also had the right to exercise the Cisneros Put Option upon the occurrence of certain events, between March 2022 and April 2024.

Additionally, subject to the terms of the Cisneros Put and Call Agreement, the Company had the right (the ~~“Call~~“Cisneros Call Option”), in calendar year 2024, to purchase all (but not less than all) the remaining 49% of the issued and outstanding shares of Cisneros Interactive stock at a purchase price to be based on a pre-determined multiple of six times of Cisneros Interactive’s 12-month EBITDA in calendar year 2023.

Applicable accounting guidance requires an equity instrument that is redeemable for cash or other assets to be classified outside of permanent equity if it is redeemable (a) at a fixed or determinable price on a fixed or determinable date, (b) at the option of the holder, or (c) upon the occurrence of an event that is not solely within the control of the issuer.

As a result of the Cisneros Put Option and Call Option redemption features, and because the redemption was not solely within the control of the Company, the noncontrolling interest was considered redeemable, and was classified in temporary equity within the Company’s Consolidated Balance Sheets initially at its acquisition date fair value. The noncontrolling interest was adjusted each reporting period for income (or loss) attributable to the noncontrolling interest as well as any applicable distributions made. Since the noncontrolling interest was not then redeemable under the terms of the Cisneros Put and Call Agreement and it was not probable that it would become redeemable, the Company was not required to adjust the amount presented in temporary equity to its redemption value in prior periods. The fair value of the redeemable noncontrolling interest which includes the Cisneros Put and Call Agreement recognized on the acquisition date was $30.8 million.

The following is a summary of the final purchase price allocation (in millions):


Cash	$	8.7
Accounts receivable		50.5
Other assets		8.3
Intangible assets subject to amortization		41.7
Goodwill		10.5
Current liabilities		(48.1	)
Deferred tax		(10.9	)
Redeemable noncontrolling interest		(30.8	)

Intangible assets subject to amortization acquired includes:


Intangible Asset	Estimated Fair Value (in millions)		Weighted average life (in years)
Publisher relationships	$	34.4	10.0
Advertiser relationships		5.2	4.0
Trade name		1.7	2.5
Non-Compete agreements		0.4	4.0

The fair value of the assets acquired included trade receivables ~~was~~of $50.5 million. The gross amount due under contract iswas $54.0 million, of which $3.5 million iswas expected to be uncollectable. Subsequent to the initial purchase price allocation, and during the measurement period, the Company increased other assets and deferred tax by $2.1 million and $0.3 million, respectively, and decreased goodwill by $1.8 million, to reflect final tax amounts.

2526

The goodwill, which is not expected to be deductible for tax purposes, is assigned to the Company’s digital segment and is attributable to Cisneros Interactive’s workforce and synergies from combining Cisneros Interactive’s operations with ~~those of~~ the ~~Company.~~Company's operations.

On September 1, 2021, the Company acquired the remaining 49% of the issued and outstanding shares of Cisneros Interactive stock, and as of that date owns 100% of the issued and outstanding shares of Cisneros Interactive stock. As consideration for the acquisition of the remaining 49% of the issued and outstanding shares of Cisneros Interactive stock, the Company agreed to pay the Cisneros Sellers contingent earn-out payments, based on a predetermined multiple of six times Cisneros Interactive’s 12-month EBITDA targets in calendar years 2021, 2022 and 2023, each divided by three, and an additional payment equal to $10,000,000, less an amount (up to $10,000,000) equal to 49% of any amounts paid by Cisneros Interactive for future acquisitions. The fair value of the contingent consideration recognized on the acquisition date was $84.4 million, which was estimated by applying the real options approach. Key assumptions include risk-neutral expected growth rates based on management’s assessments of expected growth in EBITDA, adjusted by appropriate factors capturing their correlation with the market and volatility, discounted at a cost of debt rate ranging from 6.5% to 7.2% over the three-year period. These are significant inputs that are not observable in the market, which ASC 820-10-35 refers to as Level 3 inputs. The Company recognizes any future changes in fair value of the contingent liability in earnings.

As part of the Company’s acquisition of the remaining 49% of the issued and outstanding shares of Cisneros Interactive stock, the Cisneros Put and Call Agreement was terminated effective September 1, 2021. Applicable accounting guidance requires changes in the Company's ownership interest while the Company retains its controlling financial interest in its subsidiary to be accounted for as an equity transaction. Therefore, 0no gain or loss was recognized in relation to the acquisition of the remaining 49% of the issued and outstanding shares of stock of Cisneros Interactive. As of the acquisition date, the carrying amount of the noncontrolling interest was adjusted to reflect the change in the Company's ownership interest, and the difference between the fair value of the contingent consideration and the amount by which the noncontrolling interest was recognized as a decrease to paid-in capital in the Consolidated Balance Sheets and the Statements of Stockholders' Equity.

Effective December 31, 2021, the Company agreed to pay certain of the Cisneros Sellers who are individual persons an accelerated earn-out in the aggregate amount of $14.7 million based on the EBITDA for calendar year 2021, which was paid in January 2022. ~~Additionally, in~~

InApril 2022, the Company paid all the Cisneros Sellers an earn-out in the aggregate amount of $28.9 million based on the final EBITDA for calendar year 2021. Additionally, effective September 13, 2022, the Company agreed to pay Sorin Properties, S.L., one of the Cisneros Sellers, an accelerated earn-out of $21.7 million based on EBITDA for the four prior fiscal quarters, which amount was paid in September 2022.

As of ~~June 30,~~December 31, 2022 the contingent liability was adjusted to its fair value of $41.4 million, of which $30.0 million was a current liability and $11.4 million was a noncurrent liability. As of March 31, 2023 the contingent liability was adjusted to its current fair value of $~~54.5~~34.9 million, of which $~~24.2~~28.3 million is a current liability and $~~30.3~~6.6 million is a noncurrent liability.

The change in the fair value of the contingent liability during the ~~three- and six-month~~three-month periods ended ~~June 30,~~March 31, 2023 and 2022, of $~~0.5~~6.5 million ~~expense~~income and $~~1.0~~0.5 million expense, respectively, is reflected in the Consolidated Statements of Operations. ~~The remaining Sellers may elect to accelerate their earn-out payments upon the occurrence of certain events.~~

~~The table below presents the reconciliation of changes in redeemable noncontrolling interests (unaudited; in thousands):~~

Three-Month Period

Six-Month Period

Ended June 30,

Ended June 30,

2022

2021

2022

2021

Beginning balance

$
-

$
34,858

$
-

$
33,285

Net income attributable to redeemable noncontrolling interest

-

2,612

-

4,185

Ending balance

$
-

$
37,470

$
-

$
37,470

~~During the three-month period ended June 30, 2022, Cisneros Interactive generated net revenue and net income of $124.9~~ ~~million and $5.2~~ million (excluding the impact of contingent consideration liability adjustments), respectively. During the six-month period ended June 30, 2022, Cisneros Interactive generated net revenue and net income of $~~237.4~~ ~~million and $10.3~~ ~~million (excluding the impact of contingent consideration liability adjustments), respectively.~~

~~During the three-month period ended June 30, 2021, Cisneros Interactive generated net revenue and net income of $114.9~~ ~~million and $5.3~~ ~~million, respectively. During the six-month period ended June 30, 2021, Cisneros Interactive generated net revenue and net income of $203.4~~ ~~million and $8.5~~ ~~million, respectively.~~

MediaDonuts

On July 1, 2021, the Company acquired 100% of the issued and outstanding shares of stock of MediaDonuts, a digital advertising solutions company in Southeast Asia. The acquisition, funded from the Company’s cash on hand, includes a purchase price of approximately $15.1 million in cash, which amount was adjusted at closing to approximately $17.1 million due to customary purchase price adjustments for cash, indebtedness and estimated working capital. Subsequently, the purchase price was adjusted downward by approximately $1.2 million, based on actual working capital acquired. Additionally, the transaction includes up to $7.4 million in contingent earn-out payments based upon the achievement of certain EBITDA targets in calendar years 2021 and 2022, and an additional earn-out based upon the achievement of certain year-over-year EBITDA growth targets in calendar years 2023 and 2024, calculated as a pre-determined multiple of EBITDA for each of those years. The total purchase price for the acquisition, including the fair value of the contingent consideration, was $36.2 million.

~~The Company is in the process of completing the purchase price allocation for its acquisition of MediaDonuts.~~ ~~The measurement period remains open pending the finalization of the pre-acquisition tax-related items~~. The following is a summary of the final purchase price allocation (in millions):


Cash	$	4.3
Accounts receivable		9.9
Other assets		1.8
Intangible assets subject to amortization		22.8
Goodwill		13.2
Current liabilities		(10.1	)
Deferred tax		(4.0	)
Debt		(1.7	)

Cash
$
4.3

Accounts receivable

9.9

Other assets

1.8

Intangible assets subject to amortization

22.8

Goodwill

13.4

Current liabilities

(10.1
)
Deferred tax

(4.2
)
Debt

(1.7
)

Intangible assets subject to amortization acquired includes:


Intangible Asset	Estimated Fair Value (in millions)		Weighted average life (in years)
Publisher relationships	$	16.9	10.0
Advertiser relationships		3.7	4.0
Trade name		2.0	5.0
Non-Compete agreements		0.2	4.0

The fair value of the assets acquired included trade receivables of $9.9 million. The gross amount due under contract was $10.2 million, of which $0.3 million was expected to be uncollectable.

The goodwill, which is not expected to be deductible for tax purposes, is assigned to the Company’s digital segment and is attributable to MediaDonuts' workforce and expected synergies from combining MediaDonuts' operations with the Company's operations.

As noted above, the acquisition of MediaDonuts includes a contingent consideration arrangement that requires additional consideration to be paid by the Company to the ~~sellers of the stock~~selling stockholders of MediaDonuts, based on a pre-determined multiple of MediaDonuts' 12-month EBITDA targets in calendar years 2021 through 2024. The fair value of the contingent consideration recognized on the acquisition date of $20.3 million was estimated by applying the real options approach. Key assumptions include risk-neutral expected growth rates based on management’s assessments of expected growth in EBITDA, adjusted by appropriate factors capturing their correlation with the market and volatility, discounted at a cost of debt rate ranging from 5.8% to 6.7% over the three year period. These are significant inputs that are not observable in the market, which ASC 820-10-35 refers to as Level 3 inputs.

As of ~~June 30,~~December 31, 2022 the contingent liability was adjusted to its fair value of $22.2 million, of which $6.5 million was a current liability and $15.7 million was a noncurrent liability. As of March 31, 2023 the contingent liability was adjusted to its current fair value of $~~19.1~~23.9 million, of which $~~5.5~~6.6 million is a current liability and $~~13.6~~17.3 million is a noncurrent liability.

The change in the fair value of the contingent liability during the ~~three- and six-month~~three-month periods ended ~~June 30,~~March 31, 2023 and 2022, of $1.7 million expense and $~~3.3~~1.6 million expense, respectively, is reflected in the Consolidated Statements of Operations.

~~The fair value of the trade receivables was $9.9~~ ~~million. The gross amount due under contract is $10.2~~ ~~million, of which $0.3~~ ~~million is expected to be uncollectable.~~

~~During the three-month period ended June 30, 2022, MediaDonuts generated net revenue and net income of $18.9~~ ~~million and $0.6~~ ~~million (excluding the impact of contingent consideration liability adjustments), respectively. During the six-month period ended June 30, 2022, MediaDonuts generated net revenue and net income of $36.1~~ ~~million and $3.2~~ ~~million (excluding the impact of contingent consideration liability adjustments), respectively.~~

The following unaudited pro forma information has been prepared to give effect to the Company’s acquisition of MediaDonuts as if the acquisition had occurred on January 1, 2021. This pro forma information was adjusted to exclude acquisition fees and costs of $~~0.5~~ ~~million and $0.7~~ million for the three- and six-month periods ended June 30, 2021, respectively, which were expensed in connection with the acquisition. This pro forma information does not purport to represent what the actual results of operations of the

~~Company would have been had this acquisition occurred on such date, nor does it purport to predict the results of operations for any future periods.~~

Three-Month Period

Six-Month Period

Ended June 30,

Ended June 30,

2021

2021

Pro Forma:

Total revenue

$
190,456

$
348,933

Net income (loss) attributable to common stockholders

9,459

16,048

Basic and diluted earnings per share:

Net income (loss) per share, attributable to common stockholders, basic

$
0.11

$
0.19

Net income (loss) per share, attributable to common stockholders, diluted

$
0.11

$
0.18

Weighted average common shares outstanding, basic

85,188,182

85,115,310

Weighted average common shares outstanding, diluted

87,777,039

87,382,215

365 Digital

On November 1, 2021, the Company acquired 100% of the issued and outstanding shares of stock of 365 Digital, a digital advertising solutions company headquartered in South Africa. The acquisition, funded from the Company’s cash on hand, included an initial purchase price of approximately $1.9 million in cash, which included customary purchase price adjustments for cash, indebtedness and estimated working capital. Subsequently, the purchase price was adjusted to $3.5 million based on a predetermined multiple of EBITDA for the trailing ~~twelve month~~twelve-month period ended March 31, 2022. Additionally, the transaction includes contingent earn-out payments based upon the achievement of certain EBITDA targets in calendar years 2022, 2023 and 2024, calculated as a ~~pre-determined~~predetermined multiple of EBITDA for each of those years. The total purchase price for the acquisition, including the fair value of the contingent consideration, was $5.5 million.

~~The Company is in the process of completing the purchase price allocation for its acquisition of 365 Digital.~~ ~~The measurement period remains open pending the finalization of the pre-acquisition tax-related items~~. The following is a summary of the final purchase price allocation ~~(unaudited; in~~(in millions):


Cash	$	0.5
Accounts receivable		1.1
Intangible assets subject to amortization		2.2
Goodwill		3.7
Current liabilities		(1.4	)
Deferred tax		(0.6	)

Intangible assets subject to amortization acquired includes:


Intangible Asset	Estimated Fair Value (in millions)		Weighted average life (in years)
Publisher relationships	$	1.7	9.0
Advertiser relationships		0.2	4.0
Trade name		0.2	5.0
Non-Compete agreements		0.1	4.0

The fair value of the assets acquired includes trade receivables of $1.1 million. The gross amount due under contract was $1.1 million, of which a de minimis amount was expected to be uncollectable.

The goodwill, which is not expected to be deductible for tax purposes, is assigned to the Company’s digital segment and is attributable to 365 Digital's workforce and expected synergies from combining 365 Digital's operations with the Company's operations.

As noted above, the acquisition of 365 Digital includes a contingent consideration arrangement that requires additional consideration to be paid by the Company to the ~~sellers of the stock~~selling stockholders of 365 Digital, based on a pre-determined multiple of 365 Digital's 12-month EBITDA targets in calendar years 2022 through 2024. The fair value of the contingent consideration recognized on the acquisition date of $2.0 million was estimated by applying the real options approach. Key assumptions include risk-neutral expected growth rates based on management’s assessments of expected growth in EBITDA, adjusted by appropriate factors capturing their correlation with the market and volatility, discounted at a cost of debt rate ranging from 7.6% to 8.3% over the three-year period. These are significant inputs that are not observable in the market, which ASC 820-10-35 refers to as Level 3 inputs.

As of ~~June 30,~~December 31, 2022 the contingent liability was adjusted to its fair value of $0.2 million, all of which was a noncurrent liability. As of March 31, 2023 the contingent liability was adjusted to its current fair value of $~~3.8~~0.9 million, of which $~~1.2~~0.4 million is a current liability and $~~2.6~~0.5 million is a noncurrent liability.

The change in the fair value of the contingent liability during the ~~three- and six-month~~three-month periods ended

~~June 30,~~ March 31, 2023 and 2022, of $~~1.2~~0.7 million ~~income~~expense and $~~1.8~~3.0 million expense, respectively, is reflected in the Consolidated Statements of Operations.

8. VARIABLE INTEREST ENTITIES

Adsmurai

On August 5, 2022, the Company made a loan (the "Adsmurai Loan") in the principal amount of €12,535,000 (approximately $12.8 million as of that date) to an entity affiliated with owners of a majority interest in Adsmurai, S.L. (“Adsmurai”), a company engaged in the sale and marketing of digital advertising. The loan has a two-year term, bears interest at a rate of 5% annually, and can be converted into 51% of the issued and outstanding shares of stock of Adsmurai at the Company’s sole discretion. If the Company elects not to convert the loan, the borrower has the option to repay the loan at maturity either in cash or with 51% of the issued and outstanding shares of stock of Adsmurai.

The Company has determined for accounting purposes that (i) Adsmurai is a VIE because the equity investors at risk, as a group, lack the characteristics of a controlling financial interest; and (ii) the Company is the primary beneficiary because the conversion right gives it the power to direct the activities of the entity that most significantly impact the entity’s economic performance. See Note 2 for more details.

The Company has determined that Adsmurai is a business and has accounted for its consolidation under the provisions of ASC 805, “Business Combinations”, and included Adsmurai's results of operations since the date of the loan in the Company's Consolidated Statements of Operations. The Company is in the process of completing the purchase price allocation for Adsmurai. The following is a summary of the preliminary purchase price allocation (in millions):


Cash	$	7.4
Accounts receivable		12.2
Other assets		0.7
Fixed assets		2.8
Intangible assets subject to amortization		8.2
Goodwill		13.0
Current liabilities		(14.4	)
Deferred tax		(2.0	)
Debt		(2.8	)
Noncontrolling interest		(12.3	)
Convertible loan		(12.8	)

Intangible assets subject to amortization acquired includes:


Intangible Asset	Estimated Fair Value (in millions)		Weighted average life (in years)
Advertiser relationships	$	4.7	7.0
Existing technology		2.4	5.0
Trade name		1.1	5.0

The fair value of the trade receivables ~~was~~is $~~1.1~~12.2 million. The gross amount due under contract is $~~1.1~~12.3 million, of which ~~a de minimis~~$0.1 million is expected to be uncollectable.

~~During the three-month period ended June 30, 2022, 365 Digital generated net revenue and net income of $2.8~~ ~~million and $0.0~~ ~~million (excluding the impact of contingent consideration liability adjustments), respectively. During the six-month period ended June 30, 2022, 365 Digital generated net revenue and net income of $4.9~~ ~~million and $0.1~~ ~~million (excluding the impact of contingent consideration liability adjustments), respectively.~~

The goodwill, which is not expected to be deductible for tax purposes, is assigned to the Company’s digital segment and is attributable to ~~365 Digital's~~Adsmurai’s workforce and ~~expected~~ synergies from combining ~~365 Digital's~~Adsmurai’s operations with those of the Company.

The following unaudited pro forma information has been prepared to give effect to the Company’s ~~acquisition~~consolidation of ~~365 Digital~~Adsmurai as if the ~~acquisition~~transaction had occurred on January 1, ~~2021.~~2022. This pro forma information does not purport to represent what the actual results of operations of the Company would have been had this ~~acquisition~~transaction occurred on such date, nor does it purport to predict the results of operations for any future periods.

Three-Month Period

Six-Month Period

Ended June 30,

Ended June 30,

2021

2021

Pro Forma:

Total revenue

$
179,008

$
328,239

Net income (loss) attributable to common stockholders

7,904

13,356

Basic and diluted earnings per share:

Net income (loss) per share, attributable to common stockholders, basic

$
0.09

$
0.16

Net income (loss) per share, attributable to common stockholders, diluted

$
0.09

$
0.15

Weighted average common shares outstanding, basic

85,188,182

85,115,310

Weighted average common shares outstanding, diluted

87,777,039

87,382,215


In thousands, except share and per share data	Three-Month Period
	Ended March 31,
	2022
Pro Forma:
Total revenue	$	206,595
Net income (loss) attributable to common stockholders	$	1,896

Basic and diluted earnings per share:
Net income (loss) per share, attributable to common stockholders, basic and diluted	$	0.02

Weighted average common shares outstanding, basic		86,522,378
Weighted average common shares outstanding, diluted		88,630,216

On April 3, 2023, the Company converted the Adsmurai Loan into a 51% equity interest in Adsmurai. See Note 9 below for more details.

29Jack of Digital

On August 3, 2022, the Company made an investment of $0.1 million in exchange for approximately 15% of the issued and outstanding stock of Jack of Digital, a digital marketing services company that serves as the exclusive advertising sales partner of ByteDance in Pakistan.

The Company has determined for accounting purposes that (i) Jack of Digital is a VIE because the equity investors at risk, as a group, lack the characteristics of a controlling financial interest; and (ii) the Company is the primary beneficiary because it has the power to direct the activities of the entity that most significantly impact the entity’s economic performance. See Note 2 for more details.

On April 3, 2023, the Company acquired the remaining issued and outstanding stock of Jack of Digital for approximately $1.1 million. Of that amount, the Company paid an initial installment payment of approximately $0.5 million and the balance will be paid through December 2025. In addition, there is an earnout payable to the sellers, subject on certain targets being achieved.

The unaudited pro forma information has been prepared to give effect to the Company’s consolidation of Jack of Digital as if the transaction had occurred on January 1, 2022. This pro forma information was adjusted to exclude acquisition fees and costs of $0.1 million for the three-month period ended March 31, 2022, which were expensed in connection with the transaction. This pro forma information does not purport to represent what the actual results of operations of the Company would have been had this transaction occurred on such date, nor does it purport to predict the results of operations for any future periods.


In thousands, except share and per share data	Three-Month Period
	Ended March 31,
	2022
Pro Forma:
Total revenue	$	197,734
Net income (loss) attributable to common stockholders	$	1,984

Basic and diluted earnings per share:
Net income (loss) per share, attributable to common stockholders, basic and diluted	$	0.02

Weighted average common shares outstanding, basic		86,522,378
Weighted average common shares outstanding, diluted		88,630,216

9. SUBSEQUENT EVENTS

Adsmurai

On April 3, 2023, the Company entered into an agreement (the “Adsmurai Acquisition Agreement”), among the Company and the selling stockholders of Adsmurai (the “Adsmurai Sellers”), pursuant to which the Company acquired a 51% equity interest in Adsmurai (the “Adsmurai Acquisition”) on the same date.

The Company acquired 51% of the issued and outstanding shares of stock of Adsmurai by means of conversion of the Adsmurai Loan for total purchase consideration of €13.0 million (approximately $14.2 million as of April 3, 2023) , including interest. The Adsmurai Acquisition Agreement also contains representations, warranties, covenants and indemnities of the parties thereto.

In connection with the Adsmurai Acquisition, the Company made a loan to entities affiliated with owners of the remaining 49% interest in Adsmurai in the principal amount of €7,355,500 (approximately $8.1 million as of April 3, 2023) plus an additional amount to be determined based on Adsmurai’s EBITDA for calendar year 2022 (the “New Adsmurai Loan”). The New Adsmurai Loan has a two-year term, bears interest at a rate of 5% annually and can be repaid upon the exercise of the option rights set forth in the Adsmurai Options Agreement (defined below).

Additionally, in connection with the Adsmurai Acquisition, the Company and the Adsmurai Sellers entered into an Options Agreement (the “Adsmurai Options Agreement”). Subject to the terms of the Adsmurai Options Agreement, for a purchase price based on a predetermined multiple of Adsmurai’s EBITDA in the trailing four fiscal quarters, plus amounts outstanding under the Adsmurai Loan:

•

the Adsmurai Sellers have the right to cause the Company to purchase:

10% of the issued and outstanding shares of Adsmurai stock between January and March 2024;

10% of the issued and outstanding shares of Adsmurai stock between January and March 2025;

all of the remaining issued and outstanding shares of Adsmurai stock between January and June 2027; and

•

the Company has the right to purchase all of the remaining issued and outstanding shares of Adsmurai stock between January and June 2027.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

We are a leading global advertising solutions, media and technology company. Our operations encompass integrated, end-to-end advertising solutions across multiple media, comprised of digital, television and audio properties. For financial reporting purposes, we report in three segments based upon the type of advertising medium: digital, television and audio (formerly radio).

Our digital segment, whose operations are primarily located in Latin America, Europe, the United States, Asia and Africa, reaches a global market, with a focus on advertisers in emerging economies that wish to advertise on digital platforms owned and operated primarily by global media companies. Our television and audio operations reach and engage U.S. Hispanics in the United States. ~~For financial reporting purposes, we report in three segments based upon the type of advertising medium: digital, television and audio.~~

Our net revenue for the three-month period ended ~~June 30, 2022~~March 31, 2023 was ~~$221.7~~$239.0 million. Of that amount, revenue attributed to our digital segment accounted for approximately ~~78%~~82%, revenue attributed to our television segment accounted for approximately ~~15%~~13% and revenue attributed to our audio segment accounted for approximately 7%5%. Our digital segment now accounts for the majority of our revenues and we expect this to continue in future periods.

We provide digital end-to-end advertising solutions that allow advertisers to reach online users worldwide. These solutions are comprised of four ~~separate~~ business units:

•

our digital commercial partnerships business;

•

Smadex, our programmatic ad purchasing platform;

•

our ~~branding and~~ mobile ~~performance~~growth solutions business; and

•

our digital audio business.

Through our digital commercial partnerships business – the largest of our digital business units – we act as an intermediary between primarily global media companies and advertising customers or their ad agencies. The global media companies we represent include Meta Platforms, or Meta (formerly known as Facebook Inc.), Twitter, Inc., or Twitter, ByteDance Ltd., ~~also known as~~or ByteDance, which owns the TikTok platform, and Spotify AB, or Spotify, as well as other media companies, in ~~more than 30~~40 countries throughout the world. Our dedicated local sales teams sell advertising space on these ~~and other~~ media companies' digital platforms to our advertising customers or their ad agencies for the placement of ads directed to online users of a wide range of Internet-connected devices. We also provide some of ~~our advertising~~these customers billing, technological and other support services, including strategic marketing and training, which we refer to as managed services. ~~We market this business under our Entravision Cisneros Interactive, Entravision MediaDonuts, and Entravision 365 Digital brands, depending upon the geographic market we serve.~~

Smadex is our ~~proprietary automated~~programmatic ad purchasing platform, on which advertisers can purchase ad inventory. This practice – the purchase and sale of advertising inventory electronically – is referred to in our industry as programmatic advertising. Smadex is also a ~~“demand-side" platform,~~“demand-side platform”, which allows advertisers to purchase space from online marketplaces on which media companies list their advertising inventory. Most advertisements acquired through Smadex are placed on mobile devices, but they may also be placed on computers and Internet-connected televisions. We also provide managed services to some of our advertising customers in connection with their use of our Smadex platform.

We also offer a ~~branding and~~ mobile ~~performance~~growth solutions business, which provides managed services to advertisers looking to connect with consumers, primarily on mobile devices. This business allows us to manage programmatic media buys for our advertising customers or their ad agencies through multiple ad purchasing platforms in real time across multiple channels.

Our digital audio business provides digital audio advertising solutions for advertisers in the Americas. Our advertising customers and their ad agencies use these solutions to promote their brands on online audio streams, and provides them with tools to target specific users by demographic and geographic categories.

We have a diversified media portfolio that targets Hispanic audiences. We own and/or operate 49 primary television stations located primarily in California, Colorado, Connecticut, Florida, Kansas, Massachusetts, Nevada, New Mexico, Texas and Washington, D.C. Our television operations comprise the largest affiliate group of both the top-ranked primary Univision television network of TelevisaUnivision Inc., or TelevisaUnivision, and TelevisaUnivision’s UniMás network. We own and operate 45 radio stations in 14 U.S. markets. Our radio stations consist of 37 FM and 8 AM stations located in Arizona, California, Colorado, Florida, Nevada, New Mexico and Texas. We also sell advertisements and syndicate radio programming to more than 100 markets across the United States.

In our digital segment, we generate revenue primarily from sales of advertising that are placed by our advertising customers or their ad agencies on the digital platforms of third-party media companies for which we act as commercial partner or placed directly with online digital marketplaces through our Smadex platform. In our television and audio segments, we generate revenue primarily from sales of national and local advertising time on television stations and radio stations, retransmission consent agreements that are entered into with MVPDs, and agreements associated with our television stations’ spectrum usage rights. Advertising rates are, in large part, based on each medium’s ability to attract audiences in demographic groups targeted by advertisers.

In our digital segment, we recognize advertising revenue when display or other digital advertisements record impressions on the websites and mobile and Internet-connected television apps of media companies on whose digital platforms the advertisements are placed or as the advertiser’s previously agreed-upon performance criteria are satisfied. In our television and audio segments, we recognize advertising revenue when commercials are broadcast. We do not obtain long-term commitments from our advertisers across

any of our operations and, consequently, they may cancel, reduce or postpone orders without penalties. In our television and audio segments, we pay commissions to agencies for local and national advertising. For contracts we have entered into directly with agencies, we record net revenue from these agencies.

We refer to the revenue generated by agreements with MVPDs as retransmission consent revenue, which represents payments from MVPDs for access to our television station signals so that they may rebroadcast our signals and charge their subscribers for this programming. We recognize retransmission consent revenue earned as the television signal is delivered to an MVPD.

Our FCC licenses grant us spectrum usage rights within each of the television markets in which we operate. These spectrum usage rights give us the authority to broadcast our stations’ over-the-air television signals to our viewers. We regard these rights as a valuable asset. With the proliferation of mobile devices and advances in technology that have freed up spectrum capacity, the monetization of our spectrum usage rights has become a significant source of revenue in recent years. We generate revenue from agreements associated with these television stations’ spectrum usage rights from a variety of sources, including but not limited to agreements with third parties to utilize spectrum for the broadcast of their multicast networks; charging fees to accommodate the operations of third parties, including moving channel positions or accepting interference with our broadcasting operations; and modifying and/or relinquishing spectrum usage rights while continuing to broadcast through channel sharing or other arrangements. Revenue generated by such agreements is recognized over the period of the ~~lease~~agreement or when we have relinquished all or a portion of our spectrum usage rights for a station or have relinquished our rights to operate a station on the existing channel free from interference. In addition, subject to certain restrictions contained in our ~~2017~~2023 Credit Agreement, we will consider strategic acquisitions of television stations to further this strategy from time to time, as well as additional monetization opportunities expected to arise as the television broadcast industry implements the standards contained in ATSC 3.0.

In our digital segment, our primary expense is cost of revenue, which consists primarily of the costs of online media acquired from the media companies for which we act as commercial partner or purchased directly from online digital marketplaces through our Smadex platform, as well as third party server costs. Our primary expenses in our television and audio segments, and a secondary expense in our digital segment, is employee compensation, including commissions paid to our sales staff and amounts paid to our national sales representative firms, as well as expenses for general and administrative functions, promotion and selling, engineering, marketing, and local programming.

Highlights

During the ~~second~~first quarter of ~~2022,~~2023, our consolidated revenue increased to ~~$221.7~~$239.0 million from ~~$178.4~~$197.2 million in the prior year period, primarily due to an increase in advertising revenue in our digital segment and ~~audio segments, partially offset by a decrease~~increases in local advertising revenue, spectrum usage rights revenue and retransmission consent revenue in our television segment. The overall increase in revenue was partially offset by decreases in political advertising revenue and national advertising revenue in our television and radio segments, and a decrease in local advertising revenue in our audio segment.

Net revenue in our digital segment increased to ~~$174.4~~$196.5 million for the three-month period ended ~~June 30, 2022~~March 31, 2023 from ~~$130.2~~$153.7 million for the three-month period ended ~~June 30, 2021.~~March 31, 2022. This increase of ~~approximately $44.2~~$42.8 million, or ~~34%~~28%, in net revenue was primarily due to advertising revenue growth from our digital commercial partnerships business, and due to our ~~acquisitions of MediaDonuts and 365 Digital during the third and fourth quarters of 2021, respectively, both of~~VIEs, which did not contribute to ~~net revenue~~our financial results in our digital segment in the comparable ~~period ended June 30, 2021.~~period.

Net revenue in our television segment decreased to ~~$32.4~~$30.3 million for the three-month period ended ~~June 30, 2022~~March 31, 2023 from ~~$34.1~~$30.9 million for the three-month period ended ~~June 30, 2021.~~March 31, 2022. This decrease of ~~approximately $1.7~~$0.6 million, or 5%2%, in net revenue was primarily due to decreases in ~~local~~political advertising revenue and national advertising revenue, and a decrease in retransmission consent revenue. These decreases were mainly attributed to the expiration of our Univision and UniMás network affiliation agreements in Orlando, Tampa and Washington, D.C. on December 31, 2021. The decrease was partially offset by increases in ~~political~~local advertising revenue, ~~and~~ spectrum usage rights revenue and retransmission consent revenue.

Net revenue in our audio segment ~~increased~~decreased to ~~$14.9~~$12.2 million for the three-month period ended ~~June 30, 2022~~March 31, 2023 from ~~$14.1~~$12.6 million for the three-month period ended ~~June 30, 2021.~~March 31, 2022. This ~~increase~~decrease of ~~approximately $0.8~~$0.4 million, or 6%3%, in net revenue was primarily due to ~~increases~~a decrease in ~~local~~political advertising revenue, and ~~political advertising revenue, partially offset by a decrease~~decreases in local and national advertising revenue.

Additionally, during the first quarter of 2023 we entered into the 2023 Credit Facility, which consists of a $200 million senior secured Term A Facility, which was drawn in full, and a $75 million Revolving Credit Facility, of which $11.5 million was drawn.

The Impact of the COVID-19 Pandemic on our Business

This section of this report should be read in conjunction with the rest of this item, “Forward-Looking Statements” and Notes to Consolidated Financial Statements appearing herein, for a more complete understanding of the impact of the COVID-19 pandemic on our business.

The COVID-19 pandemic ~~had minimal impact~~did not have a material effect on our business, from either an operational or financial perspective, during the quarter ended ~~June 30, 2022.~~March 31, 2023. Subject to the extent and duration of possible resurgences of the pandemic from time to time and the continuing uncertain economic environment that has resulted, in part, from the pandemic, we anticipate that the pandemic will continue to have little or no material effect on our business, from ~~both~~either an operational ~~and~~or financial perspective, in future periods. Nonetheless, we ~~remain cautious due to the unpredictable nature of the~~

~~pandemic and its effects. We also~~ cannot give any assurance whether a resurgence ~~or more prolonged impact~~ of the pandemic in any location where our operations have employees or where we operate would not adversely affect our ~~operations.~~

We have elected to defer the employer portion of the social security payroll tax (6.2%) as provided in the Coronavirus Aid, Relief and Economic Security Act of 2020, commonly known as the CARES Act. The deferral was effective from March 27, 2020 through December 31, 2020. The deferred amount is considered to be timely paid if 50% is paid by December 31, 2021 and the remainder is paid by December 31, 2022. During the year ended December 31, 2021, we paid 50% of the deferred amount.

~~Because of unprecedented uncertainties regarding the extent and duration of the pandemic and the continuing economic disruption that has resulted from the pandemic, our~~operations and/or results of operations for the quarter ended June 30, 2022 may not be indicative of our results of operations for any future period. We do not know how soon the global, U.S. and local economies will fully recover to pre-pandemic levels, and they may do so at different rates. Any resurgence of the pandemic; reimposition of lockdown, shelter-in-place, stay-at-home and similar orders; prolongation of the continuing economic disruption that has resulted from the pandemic; or permanent changes in consumer behavior, could adversely affect our business, results of operations and financial condition in future periods during the course of the pandemic, or beyond.operations.

We continue to closely monitor the situation across all fronts and will need to continue to remain flexible in order to respond to developments as and if they occur. However, we cannot give any assurance if, or the extent to which, we will be successful in any such efforts.

Relationship with TelevisaUnivision

Substantially all of our television stations are Univision- or UniMás-affiliated television stations. Our network affiliation agreement with TelevisaUnivision provides certain of our owned stations the exclusive right to broadcast TelevisaUnivision’s primary Univision network and UniMás network programming in their respective markets. Under the network affiliation agreement, we retain the right to sell no less than four minutes per hour of the available advertising time on stations that broadcast Univision network programming, and the right to sell approximately four and a half minutes per hour of the available advertising time on stations that broadcast UniMás network programming, subject to adjustment from time to time by TelevisaUnivision.

Under the network affiliation agreement, TelevisaUnivision acts as our exclusive third-party sales representative for the sale of certain national advertising on our Univision- and UniMás-affiliate television stations, and we pay certain sales representation fees to TelevisaUnivision relating to sales of all advertising for broadcast on our Univision- and UniMás-affiliate television stations. During the three-month periods ended ~~June 30,~~March 31, 2023 and 2022, ~~and 2021,~~ the amount we paid TelevisaUnivision in this capacity was ~~$1.8~~$1.4 million and ~~$2.0~~$1.6 million, respectively. ~~During the six-month periods ended June 30, 2022 and 2021, the amount we paid TelevisaUnivision~~These amounts were included in ~~this capacity was $3.3 million and $3.9 million, respectively.~~Direct Operating Expenses in our Condensed Consolidated Statements of Operations.

We also generate revenue under a marketing and sales agreement with TelevisaUnivision, which give us the right to manage the marketing and sales operations of TelevisaUnivision-owned Univision affiliates in three markets – Albuquerque, Boston and Denver.

Under our proxy agreement with TelevisaUnivision, we grant TelevisaUnivision the right to negotiate the terms of retransmission consent agreements for our Univision- and UniMás-affiliated television station signals. Among other things, the proxy agreement provides terms relating to compensation to be paid to us by TelevisaUnivision with respect to retransmission consent agreements entered into with MVPDs. During the three-month periods ended ~~June 30,~~March 31, 2023 and 2022, ~~and 2021,~~ retransmission consent revenue accounted for ~~approximately $9.0~~$9.6 million and ~~$9.3~~$9.2 million, respectively, of which ~~$6.2~~$6.6 million and $6.5 million, respectively, relate to the TelevisaUnivision proxy agreement. During the six-month periods ended June 30, 2022 and 2021, retransmission consent revenue accounted for approximately $18.2 million and $18.9 million, respectively, of which $12.5 million and $13.3$6.3 million, respectively, relate to the TelevisaUnivision proxy agreement. The term of the proxy agreement extends with respect to any MVPD for the length of the term of any retransmission consent agreement in effect before the expiration of the proxy agreement.

On October 2, 2017, we entered into the current affiliation agreement with TelevisaUnivision, which superseded and replaced our prior affiliation agreements with TelevisaUnivision. Additionally, on the same date, we entered into the current proxy agreement and current marketing and sales agreements with TelevisaUnivision, each of which superseded and replaced the prior comparable agreements with TelevisaUnivision. The term of ~~the proxy~~each of these current agreements expires on December 31, 2026 for all of our Univision and UniMás network affiliate stations, except that each current agreement ~~extends~~expired on December 31, 2021 with respect to ~~any MVPD for the length of the term of any retransmission consent agreement~~our Univision and UniMás network affiliate stations in ~~effect before the expiration of the proxy agreement.~~Orlando, Tampa and Washington, D.C.

~~TelevisaUnivision~~Univision currently owns approximately 11% of our common stock on a fully-converted basis. Our Class U common stock, all of which is held by TelevisaUnivision, has limited voting rights and does not include the right to elect directors. Each share of Class U common stock is automatically convertible into one share of Class A common stock (subject to adjustment for stock splits, dividends or combinations) in connection with any transfer of such shares of Class U common stock to a third party that is not an affiliate of TelevisaUnivision. In addition, as the holder of all of our issued and outstanding Class U common stock, so long as TelevisaUnivision holds a certain number of shares of Class U common stock, we may not, without the consent of TelevisaUnivision, merge, consolidate or enter into a business combination, dissolve or liquidate our company or dispose of any interest in any FCC license with respect to television stations which are affiliates of TelevisaUnivision, among other things.

Critical Accounting Policies

For a description of our critical accounting policies, please refer to “Application of Critical Accounting Policies and Accounting Estimates” in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our ~~2021~~2022 10-K.

Recent Accounting Pronouncements

For further information on recently issued accounting pronouncements, see Note 2, “The Company and Significant Accounting Policies” in the accompanying Notes to Condensed Consolidated Financial Statements.

~~Three- and Six-Month~~Three-Month Periods Ended ~~June 30,~~March 31, 2023 and 2022 ~~and 2021~~

The following table sets forth selected data from our operating results for the ~~three- and six-month~~three-month periods ended ~~June 30,~~March 31, 2023 and 2022 ~~and 2021~~ (in thousands):


	Three-Month Period									Six-Month Period									Three-Month Period
	Ended June 30,						%			Ended June 30,						%			Ended March 31,						%
	2022			2021			Change			2022			2021			Change			2023			2022			Change
Statements of Operations Data:
Net Revenue	$	221,695		$	178,410			24	%	$	418,867		$	327,290			28	%	$	239,006		$	197,172			21	%

Cost of revenue - digital		144,965			109,030			33	%		274,856			193,786			42	%		167,756			129,891			29	%
Direct operating expenses		29,596			28,336			4	%		57,419			54,897			5	%		29,862			27,823			7	%
Selling, general and administrative expenses		17,775			13,106			36	%		33,814			26,959			25	%		22,768			16,039			42	%
Corporate expenses		8,520			7,345			16	%		17,244			14,503			19	%		10,502			8,724			20	%
Depreciation and amortization		6,263			5,074			23	%		12,658			10,258			23	%		6,471			6,395			1	%
Change in fair value of contingent consideration		976			-		*				6,076			-		*				(4,065	)		5,100		*
Impairment charge		-			112			(100	)%		-			1,438			(100	)%
Foreign currency (gain) loss		993			(309	)	*				146			277			(47	)%		(956	)		(847	)		13	%
Other operating (gain) loss		(834	)		(523	)		59	%		(953	)		(2,436	)		(61	)%		-			(119	)		(100	)%
		208,254			162,171			28	%		401,260			299,682			34	%		232,338			193,006			20	%
Operating income (loss)		13,441			16,239			(17	)%		17,607			27,608			(36	)%		6,668			4,166			60	%
Interest expense		(2,334	)		(1,856	)		26	%		(4,170	)		(3,573	)		17	%		(4,028	)		(1,836	)		119	%
Interest income		722			83			770	%		1,128			223			406	%		860			406			112	%
Dividend income		11			2			450	%		14			4			250	%		18			3			500	%
Realized gain (loss) on marketable securities																				(32	)		-		*
Loss on debt extinguishment																				(1,556	)		-		*
Income before income (loss) taxes		11,840			14,468			(18	)%		14,579			24,262			(40	)%		1,930			2,739			(30	)%
Income tax benefit (expense)		(3,373	)		(3,992	)		(16	)%		(4,225	)		(6,784	)		(38	)%		(231	)		(852	)		(73	)%
Net income (loss)		8,467			10,476			(19	)%		10,354			17,478			(41	)%		1,699			1,887			(10	)%
Net (income) loss attributable to redeemable noncontrolling interest		-			(2,612	)		(100	)%		-			(4,185	)		(100	)%
Net (income) loss attributable to noncontrolling interest																				342			-		*
Net income (loss) attributable to common stockholders	$	8,467		$	7,864			8	%	$	10,354		$	13,293			(22	)%	$	2,041		$	1,887			8	%

Other Data:
Capital expenditures		1,891			1,115						3,408			2,628						8,550			1,517
Consolidated adjusted EBITDA (1)											40,594			31,982
Consolidated EBITDA (1)																				13,022			18,113
Net cash provided by operating activities											62,906			44,385						36,695			53,219
Net cash provided by (used in) investing activities											(77,278	)		14,964
Net cash used in investing activities																				(563	)		(86,900	)
Net cash used in financing activities											(60,765	)		(6,649	)					(5,365	)		(24,838	)

(1)

Consolidated ~~adjusted~~ EBITDA means net income (loss) plus gain (loss) on sale of assets, depreciation and amortization, non-cash impairment charge, non-cash stock-based compensation included in operating and corporate expenses, net interest expense, other operating gain (loss), gain (loss) on debt extinguishment, income tax (expense) benefit, equity in net income (loss) of nonconsolidated affiliate, non-cash losses, syndication programming amortization less syndication programming payments, revenue from the Federal Communications Commission, or FCC, spectrum incentive auction less related expenses, expenses associated with investments, EBITDA attributable to redeemable noncontrolling interest, acquisitions and dispositions and certain pro-forma cost savings. We use the term consolidated ~~adjusted~~ EBITDA because that measure is defined in ~~our~~both the 2017

Credit Agreement and the 2023 Credit Agreement, and does not include gain (loss) on sale of assets, depreciation and amortization, non-cash impairment charge, non-cash stock-based compensation, net interest expense, other income (loss), gain (loss) on debt extinguishment, income tax (expense) benefit, equity in net income (loss) of nonconsolidated affiliate, non-cash losses, syndication programming amortization less syndication programming payments, revenue from FCC spectrum incentive auction less related expenses, expenses associated with investments, EBITDA attributable to redeemable noncontrolling interest, acquisitions and dispositions and certain pro-forma cost savings.

Because consolidated ~~adjusted~~ EBITDA is a measure governing several critical aspects of our ~~2017~~2023 Credit Facility, and since our ability to borrow under our Revolving Credit Facility is subject to compliance with a consolidated EBITDA financial covenant, we believe that it is important to disclose consolidated ~~adjusted~~ EBITDA to our investors. ~~We may increase the aggregate principal amount outstanding by an additional amount equal to $100.0 million plus the amount that would result in our~~Our 2023 Credit Facility contains a total net leverage ratio financial covenant. The total net leverage ratio, or the ratio of consolidated total ~~senior~~ debt (net of up to ~~$75.0~~$50.0 million of unrestricted cash) to trailing-twelve-month consolidated adjusted EBITDA, affects both our ability to borrow from our Revolving Credit Facility and our applicable margin for the interest rate calculation. Under our 2023 Credit Agreement, our maximum total leverage ratio may not ~~exceeding 4.0.~~exceed 3.25 to 1.00. In addition, ~~beginning December 31, 2018, at the end of every calendar year, in the event~~ our ~~total net leverage~~2023 Credit Agreement contains interest coverage ratio ~~is within certain ranges, we must make a debt prepayment equal to a certain percentage of our Excess Cash Flow, which is defined~~financial covenant (calculated as ~~consolidated adjusted EBITDA, less consolidated interest expense, less debt principal payments, less taxes paid, less other amounts~~ set forth in the ~~definition~~2023 Credit Agreement), with a minimum permitted ratio of ~~Excess Cash Flow~~3.00 to 1.00. As of March 31, 2023, we believe that we are in compliance with all covenants in the ~~2017~~2023 Credit Agreement. ~~The total leverage ratio was as follows (in each case as of June 30): 2022, 1.4 to 1; 2021, 1.7 to 1.~~

While many in the financial community and we consider consolidated ~~adjusted~~ EBITDA to be important, it should be considered in addition to, but not as a substitute for or superior to, other measures of liquidity and financial performance prepared in accordance with accounting principles generally accepted in the United States of America, such as cash flows from operating activities, operating income (loss) and net income (loss). As consolidated ~~adjusted~~ EBITDA excludes non-cash gain (loss) on sale of assets, non-cash depreciation and amortization, non-cash impairment charge, non-cash stock-based compensation expense, net interest expense, other income (loss), non-recurring cash expenses, gain (loss) on debt extinguishment, income tax (expense) benefit, equity in net income (loss) of nonconsolidated affiliate, non-cash losses, syndication programming amortization less syndication programming payments, revenue from FCC spectrum incentive auction less related expenses, expenses associated with investments, EBITDA attributable to redeemable noncontrolling interest, acquisitions and dispositions and certain pro-forma cost savings, consolidated ~~adjusted~~ EBITDA has certain limitations because it excludes and includes several important financial line items. Therefore, we consider both non-GAAP and GAAP measures when evaluating our business. Consolidated ~~adjusted~~ EBITDA is also used to make executive compensation decisions.

3436

Consolidated ~~adjusted~~ EBITDA is a non-GAAP measure. The most directly comparable GAAP financial measure to consolidated ~~adjusted~~ EBITDA is cash flows from operating activities. A reconciliation of this non-GAAP measure to cash flows from operating activities follows (in thousands):


	Six-Month Period						Three-Month Period
	Ended June 30,						Ended March 31,
	2022			2021			2023			2022
Consolidated adjusted EBITDA	$	40,594		$	31,982
EBITDA attributable to redeemable noncontrolling interest		-			7,091
Consolidated EBITDA							$	13,022		$	18,113
EBITDA attributable to noncontrolling interest								230			-
Interest expense		(4,170	)		(3,573	)		(4,028	)		(1,836	)
Interest income		1,128			223			860			406
Dividend income		14			4			18			3
Realized gain (loss) on marketable securities								(32	)		-
Income tax expense		(4,225	)		(6,784	)		(231	)		(852	)
Amortization of syndication contracts		(231	)		(238	)		(120	)		(116	)
Payments on syndication contracts		234			239			120			118
Non-cash stock-based compensation included in direct operating expenses		(1,897	)		(650	)		(1,856	)		(958	)
Non-cash stock-based compensation included in corporate expenses		(3,312	)		(1,556	)		(2,197	)		(1,615	)
Depreciation and amortization		(12,658	)		(10,258	)		(6,471	)		(6,395	)
Change in fair value of contingent consideration		(6,076	)		-			4,065			(5,100	)
Impairment charge		-			(1,438	)
Non-recurring cash severance charge								(125	)		-
Other operating gain (loss)		953			2,436			-			119
Net (income) loss attributable to redeemable noncontrolling interest		-			(4,185	)
Gain (loss) on debt extinguishment								(1,556	)		-
Net (income) loss attributable to noncontrolling interest								342			-
Net income (loss) attributable to common stockholders		10,354			13,293			2,041			1,887

Depreciation and amortization		12,658			10,258			6,471			6,395
Impairment charge		-			1,438
Deferred income taxes		(3,213	)		3,699			(205	)		(359	)
Non-cash interest		711			298			133			280
Amortization of syndication contracts		231			238			120			116
Payments on syndication contracts		(234	)		(239	)		(120	)		(118	)
Non-cash stock-based compensation		5,209			2,206			4,053			2,573
Realized (gain) loss on marketable securities								32			-
(Gain) loss on debt extinguishment								1,556			-
(Gain) loss on disposal of property and equipment		(638	)		-			68			(151	)
Change in fair value of contingent consideration		6,076			-			(4,065	)		5,100
Net income (loss) attributable to redeemable noncontrolling interest		-			4,185
Net income (loss) attributable to noncontrolling interest								(342	)		-
Changes in assets and liabilities:
(Increase) decrease in accounts receivable		17,588			467			33,157			29,380
(Increase) decrease in prepaid expenses and other assets		(1,252	)		2,909
(Increase) decrease in prepaid expenses and other current assets, operating leases right of use asset and other assets								948			(2,405	)
Increase (decrease) in accounts payable, accrued expenses and other liabilities		15,416			5,633			(7,152	)		10,521
Cash flows from operating activities	$	62,906		$	44,385		$	36,695		$	53,219

Consolidated Operations

Net Revenue. Net revenue increased to ~~$221.7~~$239.0 million for the three-month period ended ~~June 30, 2022~~March 31, 2023 from ~~$178.4~~$197.2 million for the three-month period ended ~~June 30, 2021,~~March 31, 2022, an increase of ~~approximately $43.3~~$41.8 million, or ~~24%~~21%. Of the overall increase, ~~approximately $44.2~~$42.8 million was attributable to our digital segment and was primarily due to advertising revenue growth from our digital commercial partnerships business, and due to our ~~acquisitions of MediaDonuts and 365 Digital during the third and fourth quarters of 2021, respectively, both of~~VIEs, which did not contribute to ~~net revenue~~our financial results in our digital segment in the comparable period ended June 30, 2021. In addition, of the overall increase, approximately $0.8 million was attributable to our audio segment primarily due to increases in local advertising revenue and political advertising revenue, partially offset by a decrease in national advertising revenue.period. The overall increase was partially offset by a decrease of ~~approximately $1.7~~$0.6 million attributable to our television segment, primarily due to decreases in ~~local~~political advertising revenue and national advertising revenue, and a decrease in retransmission consent revenue. These decreases were mainly attributed to the expiration of our Univision and UniMás network affiliation agreements in Orlando, Tampa and Washington, D.C. on December 31, 2021. The decrease in our television segment revenue was partially offset by increases in ~~political~~local advertising revenue, ~~and~~ spectrum usage rights ~~revenue.~~

~~Net~~ revenue ~~increased to $418.9 million for the six-month period ended June 30, 2022 from $327.3 million for the six-month period ended June 30, 2021, an increase of approximately $91.6 million, or 28%. Of~~and retransmission consent revenue. In addition, the overall increase ~~approximately $96.4~~was partially offset by a decrease of $0.4 million was attributable to our digital segment and was primarily due to advertising revenue growth from our digital commercial partnerships business, and due to our acquisitions of MediaDonuts and 365 Digital during the third and fourth quarters of 2021, respectively, both of which did not contribute to net revenue in the comparable period ended June 30, 2021. In addition, of the overall increase, approximately $2.1 million was attributable to our audio segment, primarily due to ~~increases~~a decrease in ~~local~~political advertising revenue, and ~~political advertising revenue, partially offset by a decrease in national advertising revenue. The overall increase was partially offset by a~~

~~decrease of approximately $6.9 million attributable to our television segment, primarily due to~~ decreases in local and national advertising revenue, and a decrease in retransmission consent revenue. These decreases were mainly attributed to the expiration of our Univision and UniMás network affiliation agreements in Orlando, Tampa and Washington, D.C. on December 31, 2021. Additionally, the decrease in our television segment was attributed to a decrease in revenue from spectrum usage rights, partially offset by an increase political advertising revenue.

We believe that for the full year ~~2022,~~2023, net revenue will increase, primarily as a result of growth in our digital segment and operating ~~MediaDonuts and 365 Digital~~certain entities of this segment for a full year in ~~2022~~2023 compared to ~~2021. In addition, we believe that for the full year 2022, net revenue will increase~~approximately five months in part as a result of an increase in political advertising revenue compared to 2021. Political advertising revenue increased at an earlier time of year this year compared to previous mid-term election years, and we currently anticipate political advertising revenue will increase for the remainder of this fiscal year.2022.

Cost of revenue-Digital. Cost of revenue in our digital segment increased to ~~$145.0~~$167.8 million for the three-month period ended ~~June 30, 2022~~March 31, 2023 from ~~$109.0~~$129.9 million for the three-month period ended ~~June 30, 2021,~~March 31, 2022, an increase of ~~$36.0~~$37.9 million, or ~~33%~~29%, primarily due to increased cost of revenue related to advertising revenue growth from our digital commercial partnerships business, and due to our ~~acquisitions of MediaDonuts and 365 Digital during the third and fourth quarters of 2021, respectively, both of~~VIEs, which did not ~~incur cost of revenue for us in the comparable period ended June 30, 2021. As a percentage of digital net revenue, cost of revenue decreased~~contribute to ~~83% for the three-month period ended June 30, 2022 from 84% for the three-month period ended June 30, 2021.~~

~~Cost of revenue~~our financial results in our digital segment increased to $274.9 million for the six-month period ended June 30, 2022 from $193.8 million for the six-month period ended June 30, 2021, an increase of $81.1 million, or 42%, primarily due to increased cost of revenue related to advertising revenue growth from our digital commercial partnerships business, and our acquisitions of MediaDonuts and 365 Digital during the third and fourth quarters of 2021, respectively, both of which did not incur cost of revenue for us in the comparable ~~period ended June 30, 2021.~~period. As a percentage of digital net revenue, cost of revenue remained constant at ~~84%~~85% for each of the ~~six-month~~three-month periods ended ~~June 30, 2022~~March 31, 2023 and ~~2021.~~2022.

Direct Operating Expenses. Direct operating expenses increased to ~~$29.6~~$29.9 million for the three-month period ended ~~June 30, 2022~~March 31, 2023 from ~~$28.3~~$27.8 million for the three-month period ended ~~June 30 2021,~~March 31, 2022, an increase of ~~$1.3~~$2.1 million, or 4%7%. Of the overall increase, ~~approximately $1.6~~$0.9 million was attributable to our digital segment, primarily due to an increase in ~~expenses associated with the increase in digital advertising revenue and our acquisitions of MediaDonuts and 365 Digital during the third and fourth quarters of 2021, respectively, both of~~non-cash stock-based compensation, which ~~did not incur direct operating expenses for us in the comparable period ended June 30, 2021. In addition,~~is mainly a result of the ~~overall increase, approximately $0.4 million~~2023 annual restricted stock unit ("RSU") grant, which was ~~attributable~~made in February 2023 compared to ~~our audio segment primarily due to an increase~~the 2022 annual grant, which was made in expenses associated with the increase in advertising revenue. The overall increase was partially offset by a decrease of approximately $0.7 million that was attributable to our television segment primarily due to a decrease in expenses associated with the decrease in localDecember 2022, and national advertising revenue. As a percentage of net revenue, direct operating expenses decreased to 13% for the three-month period ended June 30, 2022 from 16% for the three-month period ended June 30, 2021, because the rate of increase in revenue exceeded the rate of increase in expenses.

Direct operating expenses increased to $57.4 million for the six-month period ended June 30, 2022 from $54.9 million for the six-month period ended June 30 2021, an increase of $2.5 million, or 5%. Of the overall increase, approximately $3.9 million was attributable to our digital segment primarily due to an increase in expenses associated with the increase in digital advertising ~~revenue and our acquisitions~~revenue. In addition, of ~~MediaDonuts and 365 Digital during~~ the ~~third and fourth quarters of 2021, respectively, both of which did not incur direct operating expenses for us in the comparable period ended June 30, 2021. The~~ overall increase, ~~was partially offset by a decrease of approximately $1.4~~$0.5 million ~~that~~ was attributable to our television segment, primarily due to an increase in non-cash stock-based compensation, which is mainly a ~~decrease~~result of the 2023 annual RSU grant, which was made in ~~expenses associated with~~February 2023 compared to the ~~decrease~~2022 annual grant, which was made in ~~local~~December 2022. Additionally, of the overall increase, $0.7 million was attributable to our audio segment, primarily due to increases in salaries and ~~national advertising revenue.~~music license fees. As a percentage of net revenue, direct operating expenses decreased to 12% for the three-month period ended March 31, 2023 from 14% for the ~~six-month~~three-month period ended ~~June 30, 2022 from 17% for the six-month period ended June 30, 2021, because the rate of increase in revenue exceeded the rate of increase in expenses.~~March 31, 2022.

We believe that direct operating expenses will increase during ~~2022,~~2023, primarily as a result of growth in our digital segment and ~~operating MediaDonuts and 365 Digital for a full year~~due to an increase in ~~2022 compared to less than a full year in 2021.~~non-cash stock-based compensation.

Selling, General and Administrative Expenses. Selling, general and administrative expenses increased to ~~$17.8~~$22.8 million for the three-month period ended ~~June 30, 2022~~March 31, 2023 from ~~$13.1~~$16.0 million for the three-month period ended ~~June 30, 2021,~~March 31, 2022, an increase of ~~$4.7~~$6.8 million, or ~~36%~~42%. Of the overall increase, ~~approximately $3.6~~$5.4 million was attributable to our digital segment and was primarily due to an increase in salary expense, and due to our ~~acquisitions of MediaDonuts and 365 Digital during the third and fourth quarters of 2021, respectively, both of~~VIEs, which did not ~~incur selling, general and administrative expenses for us~~contribute to our financial results in our digital segment in the comparable ~~period ended June 30, 2021.~~period. In addition, of the overall increase, ~~approximately $0.9~~$0.3 million was attributable to our television segment, primarily due to ~~an increase~~increased rent expense in ~~salaries~~the temporary office space until the move to our new permanent offices is completed, and an increase in bad debt expense. Additionally, of the overall increase, ~~approximately $0.1~~$0.9 million was attributable to our audio ~~segment.~~segment, primarily due to increased rent expense in the temporary office space until the move to our new permanent offices is completed. As a percentage of net revenue, selling, general and administrative expenses increased to 10% for the three-month period ended March 31, 2023 from 8% for the three-month period ended ~~June 30, 2022 from 7% for the three-month period ended June 30, 2021.~~

Selling, general and administrative expenses increased to $33.8 million for the six-month period ended June 30, 2022 from $27.0 million for the six-month period ended June 30, 2021, an increase of $6.8 million, or 25%. Of the overall increase, approximately $5.8 million was attributable to our digital segment and was primarily due to increase in salary expense and our acquisitions of MediaDonuts and 365 Digital during the third and fourth quarters of 2021, respectively, both of which did not incur selling, general and administrative expenses for us in the comparable period ended June 30, 2021. In addition, of the overall increase, approximately $1.0 million was attributable to our television segment primarily due to an increase in salaries and an increase in bad debt expense. As a percentage of net revenue, selling, general and administrative expenses remained constant at 8% for each of the six-month periods ended June 30, 2022 and 2021.March 31, 2022.

We believe that selling, general and administrative expenses will increase during ~~2022,~~2023, primarily as a result of growth in our digital segment and operating ~~MediaDonuts and 365 Digital~~certain entities of this segment for a full year in ~~2022~~2023 compared to ~~less than a full year~~approximately five months in ~~2021.~~2022.

Corporate Expenses. Corporate expenses increased to ~~$8.5~~$10.5 million for the three-month period ended ~~June 30, 2022~~March 31, 2023 from ~~$7.3~~$8.7 million for the three-month period ended ~~June 30, 2021,~~March 31, 2022, an increase of ~~$1.2~~$1.8 million or ~~16%~~20%. The increase was primarily due to ~~increases~~an increase in non-cash stock-based compensation, which is mainly a result of the 2023 annual RSU grant, which was made in February 2023 compared to the 2022 annual grant, which was made in December 2022, an increase in professional service fees, and ~~salaries.~~an increase in audit fees. As a percentage of net revenue, corporate expenses remained constant at 4% for each of the three-month periods ended ~~June 30, 2022~~March 31, 2023 and ~~2021.~~

Corporate expenses increased to $17.2 million for the six-month period ended June 30, 2022 from $14.5 million for the six-month period ended June 30, 2021, an increase of $2.7 million or 19%. The increase was primarily due to increases in non-cash stock-based compensation and salaries. As a percentage of net revenue, corporate expenses remained constant at 4% for each of the six-month periods ended June 30, 2022 and 2021.2022.

We believe that corporate expenses will increase during ~~2022~~2023 compared to ~~2021,~~2022, without taking into consideration the expense incurred in 2022 upon the passing of our late Chief Executive Officer, primarily ~~due to~~as a result of an increase in non-cash stock-based compensation ~~expense.~~and an increase in professional service fees.

Depreciation and Amortization. Depreciation and amortization increased to ~~$6.3~~$6.5 million for the three-month period ended ~~June 30, 2022~~March 31, 2023 compared to ~~$5.1~~$6.4 million for the three-month period ended ~~June 30, 2021,~~March 31, 2022, an increase of $1.2 million. The increase was primarily attributable to amortization of the intangible assets from our acquisitions of MediaDonuts and 365 Digital during the third and fourth quarters of 2021, respectively, both of which did not incur depreciation and amortization expenses for us in the comparable period ended June 30, 2021.

~~Depreciation and amortization increased to $12.7~~$0.1 million for the six-month period ended June 30, 2022 compared to $10.3 million for the six-month period ended June 30, 2021, an increase of $2.4 million. The increase was primarily attributable to amortization of the intangible assets from our acquisitions of MediaDonuts and 365 Digital during the third and fourth quarters of 2021, respectively, both of which did not incur depreciation and amortization expenses for us in the comparable period ended June 30, 2021.or 1%.

Foreign currency (gain) loss. Historically, our revenues have primarily been denominated in U.S. dollars, and the majority of our current revenues continue to be, and are expected to remain, denominated in U.S. dollars. However, we have operations in countries other than the United States, primarily related to our digital business, and as a result, a portion of our revenues is denominated in currencies other than the U.S. dollar, primarily the Mexican peso, Argentine peso, Uruguayan peso, Euro, certain other Latin American currencies and various ~~other~~Asian and African currencies. As a result, we have operating expense, attributable to foreign currency, that is primarily related to the operations ~~related to~~of our digital business. We had a foreign currency ~~loss~~gain of $1.0 million for the three-month period ended ~~June 30, 2022~~March 31, 2023 compared to a foreign currency gain of ~~$0.3~~$0.8 million for the three-month period ended June 30, 2021. We had a foreign currency loss of $0.1 million for the six-month period ended June 30, 2022 compared to a foreign currency loss of $0.3 million for the six-month period ended June 30, 2021.March 31, 2022. Foreign currency gains and losses are primarily due to currency fluctuations that ~~affected~~affect our digital segment operations located outside the United States. In our digital operations outside the United States, we typically pay our global media partners in U.S. dollars but bill certain of our customers in their local currency. Therefore, during times of a strengthening U.S. dollar relative to other currencies, we may incur a loss based on the difference in value between what we pay in U.S dollars and what we ultimately

receive in a local currency, when expressed in U.S. dollars, and conversely, during times of a weakening U.S. dollar relative to other currencies we may have a gain.

Other operating gain. ~~Other~~We did not have other operating gain ~~increased~~for the three-month period ended March 31, 2023, compared to ~~$0.8~~$0.1 million for the three-month period ended June 30, 2022 from $0.5 million for the three-month period ended June 30, 2021, primarily due to gains on assets held for sale, partially offset by a decrease in gains in connection with the required relocation of certain television stations to a different channel as part of the broadcast television repack following the FCC auction for broadcast spectrum that concluded in 2017.March 31, 2022.

Other operating gain decreased to $1.0 million for the six-month period ended June 30, 2022 from $2.4 million for the six-month period ended June 30, 2021, primarily due to a decrease in gains in connection with the required relocation of certain television stations to a different channel as part of the broadcast television repack following the FCC auction for broadcast spectrum that concluded in 2017, partially offset by gains on assets held for sale.

~~Impairment.~~ ~~During the three-and six month periods ended June 30, 2021 we recorded impairment charges of $0.1 million and $1.4 million, respectively, related to assets held for sale.~~

Change in fair value of contingent consideration. As a result of ~~change~~changes in the fair value of contingent consideration related to our various acquisitions, we recognized an income of $4.1 million and an expense of ~~$1.0 million and $6.1~~$5.1 million for the ~~three- and six-month~~three-month periods ended ~~June 30,~~March 31, 2023 and 2022, respectively.

Operating ~~Income (Loss)~~income (loss). As a result of the above factors, operating income was ~~$13.4~~$6.7 million for the three-month period ended ~~June 30, 2022,~~March 31, 2023, compared to operating income of ~~$16.2~~$4.2 million for the three-month period ended ~~June 30, 2021.~~

As a result of the above factors, operating income was $17.6 million for the six-month period ended June 30, 2022, compared to operating income of $27.6 million for the six-month period ended June 30, 2021.March 31, 2022.

Interest Expense, net. Interest expense, net ~~decreased~~increased to ~~$1.6~~$3.2 million for the three-month period ended ~~June 30, 2022~~March 31, 2023 from ~~$1.8~~$1.4 million for the three-month period ended ~~June 30, 2021.~~March 31, 2022. This ~~decrease~~increase was primarily ~~due to interest income on our available for sale securities, partially offset by an increase in interest expense~~ due to a higher interest rate on our ~~debt.~~

~~Interest expense, net decreased to $3.0 million for the six-month period ended June 30, 2022 from $3.4 million for the six-month period ended June 30, 2021. This decrease was primarily due to~~debt, partially offset by interest income on our available for sale ~~securities, partially offset by an~~securities. We anticipate that interest expense will continue to increase in future periods as long as interest ~~expense~~rates increase, since our borrowings under the 2023 Credit Facility bear interest at a variable rate.

Realized gain (loss) on marketable securities. For the three-month period ended March 31, 2023 we recorded a de minimis amount of realized loss, related to our available for sale securities.

Loss on debt extinguishment. We recorded a loss on debt extinguishment of $1.6 million for the three-month period ended March 31, 2023 due to ~~a higher interest rate on~~the refinancing of our ~~debt.~~2017 Credit Facility with the 2023 Credit Facility.

Income Tax Benefit (Expense). Income tax expense for the ~~six-month~~three-month period ended ~~June 30, 2022~~March 31, 2023 was ~~$4.2~~$0.2 million, or ~~29%~~12% of our pre-tax income. Income tax expense for the ~~six-month~~three-month period ended ~~June 30, 2021~~March 31, 2022 was ~~$6.8~~$0.9 million, or ~~28%~~31% of our pre-tax income. The effective tax rate for the ~~six-month~~three-month period ended ~~June 30, 2022~~March 31, 2023 was different from our statutory rate due to foreign and state taxes, achanges in valuation ~~allowance~~allowances on deferred tax assets, ~~in our Spanish, Paraguay, Argentina and Mexico digital entities,~~non deductible executive compensation, changes in the fair value of the contingent consideration liability, and non-taxable non-territorial ~~income~~income.

Our management periodically evaluates the realizability of the deferred tax assets and, if it is determined that it is more likely than not that the deferred tax assets are, or are not, realizable, adjusts the valuation allowance accordingly. Valuation allowances are established and maintained for deferred tax assets on a “more likely than not” threshold. The process of evaluating the need to maintain a valuation allowance for deferred tax assets and the amount maintained in any such allowance is highly subjective and is based on many factors, several of which are subject to significant judgment calls.

Based on our analysis, we determined that it was more likely than not that our deferred tax assets would be realized for all jurisdictions with the exception of certain of our digital operations ~~located in Spain, Paraguay, Argentina~~ and ~~Mexico.~~certain U.S. Foreign Tax Credit carryovers. As a result of ~~recurring~~historical losses from our digital operations in Spain, ~~Paraguay,~~Israel, Uruguay, Panama, Mexico, Argentina, Thailand, Ghana and ~~Mexico,~~Iceland and certain U.S. Foreign Tax Credit carryovers, management has determined that it is more likely than not that deferred tax assets of approximately ~~$2.2~~$4.9 million at ~~June 30, 2022~~March 31, 2023 will not be realized and therefore we have established a valuation allowance in that amount on those ~~assets.~~assets.

We intend to reinvest permanently our unremitted earnings in our foreign subsidiaries, and accordingly have not provided deferred tax liabilities on those earnings. We have not yet determined an estimate of the total amount of unremitted earnings.

Segment Operations

Digital

Net Revenue. Net revenue in our digital segment increased to ~~$174.4~~$196.5 million for the three-month period ended ~~June 30, 2022~~March 31, 2023 from ~~$130.2~~$153.7 million for the three-month period ended ~~June 30, 2021.~~March 31, 2022. This increase of ~~approximately $44.2~~$42.8 million, or 28%, in net revenue was primarily due to advertising revenue growth from our digital commercial partnerships business, and due to our ~~acquisitions of MediaDonuts and 365 Digital during the third and fourth quarters of 2021, respectively, both of~~VIEs, which did not contribute to ~~net revenue in the comparable period ended June 30, 2021.~~

~~Net revenue~~our financial results in our digital segment increased to $328.1 million for the six-month period ended June 30, 2022 from $231.7 million for the six-month period ended June 30, 2021. This increase of approximately $96.4 million in net revenue was primarily due to advertising revenue growth from our digital commercial partnerships business, and due to our acquisitions of MediaDonuts and 365 Digital during the third and fourth quarters of 2021, respectively, both of which did not contribute to net revenue in the comparable ~~period ended June 30, 2021~~period.

Cost of revenue. Cost of revenue in our digital segment increased to ~~$145.0~~$167.8 million for the three-month period ended ~~June 30, 2022~~March 31, 2023 from ~~$109.0~~$129.9 million for the three-month period ended ~~June 30, 2021,~~March 31, 2022, an increase of ~~$36.0~~$37.9 million, or 29%, primarily due to increased cost of revenue related to advertising revenue growth from our digital commercial partnerships business, and due to our ~~acquisitions of MediaDonuts and 365 Digital during the third and fourth quarters of 2021, respectively, both of~~VIEs, which did not ~~incur cost of revenue for us in the comparable period ended June 30, 2021. As a percentage of digital net revenue, cost of revenue decreased~~contribute to ~~83% for the three-month period ended June 30, 2022 from 84% for the three-month period ended June 30, 2021.~~

~~Cost of revenue~~our financial results in our digital segment increased to $274.9 million for the six-month period ended June 30, 2022 from $193.8 million for the six-month period ended June 30, 2021, an increase of $81.1 million, primarily due to increased cost of revenue related to advertising revenue growth from our digital commercial partnerships business, and our acquisitions of MediaDonuts and 365 Digital during the third and fourth quarters of 2021, respectively, both of which did not incur cost of revenue for us in the comparable ~~period ended June 30, 2021. As a percentage of digital net revenue, cost of revenue remained constant at 84% for each of the six-month periods ended June 30, 2022 and 2021.~~period.

We have previously noted a trend in our digital operations globally whereby revenue is shifting more to programmatic revenue. As a result, advertisers are demanding more efficiency and lower cost from intermediaries like us. In response to this trend, we ~~are~~have been offering programmatic alternatives to advertisers, which ~~is putting~~continues to put pressure on margins. Among our programmatic solutions is our Smadex ad purchasing platform. Additionally, we ~~experienced~~are experiencing lower margins related to revenue generated from the primarily global media companies for which we act as commercial partner, as a result of relative negotiating strength and industry

trends generally. We expect these trends will continue in future periods, likely further resulting in a ~~higher volume,~~more pronounced lower margin business in our digital segment. For example, based on communications with our largest commercial partner, we anticipate receiving a lower rate of payment on our sales made on behalf of this company beginning in the second half of 2023, resulting in lower margins. The digital advertising industry remains dynamic and is continuing to undergo rapid changes in technology, customer expectation and competition. We expect this trend to continue and possibly accelerate. We must continue to remain vigilant to meet these dynamic and rapid changes including the need to further adjust our business strategies accordingly. No assurances can be given that such strategies will be successful.

Direct operating expenses. Direct operating expenses in our digital segment increased to ~~$7.8~~$8.0 million for the three-month period ended ~~June 30, 2022~~March 31, 2023 from ~~$6.2~~$7.1 million for the three-month period ended ~~June 30, 2021,~~March 31, 2022, an increase of ~~$1.6 million.~~$0.9 million, or 12%. The increase was primarily due to an increase in non-cash stock-based compensation, which is mainly a result of the 2023 RSU grant, which was made in February 2023 compared to the 2022 annual grant, which was made in December 2022, and due to an increase in expenses associated with the increase in digital advertising revenue and our acquisitions of MediaDonuts and 365 Digital during the third and fourth quarters of 2021, respectively, both of which did not incur direct operating expenses for us in the comparable period ended June 30, 2021.

Direct operating expenses in our digital segment increased to $15.0 million for the six-month period ended June 30, 2022 from $11.1 million for the six-month period ended June 30, 2021, an increase of $3.9 million. The increase was primarily due to an increase in expenses associated with the increase in digital advertising revenue and our acquisitions of MediaDonuts and 365 Digital during the third and fourth quarters of 2021, respectively, both of which did not incur direct operating expenses for us in the comparable period ended June 30, 2021.revenue.

Selling, general and administrative expenses. Selling, general and administrative expenses in our digital segment increased to ~~$9.4~~$13.5 million for the three-month period ended ~~June 30, 2022~~March 31, 2023 from ~~$5.8~~$8.1 million for the three-month period ended ~~June 30, 2021,~~March 31, 2022, an increase of ~~$3.6 million.~~$5.4 million, or 67%. The increase was primarily due to an increase in salary expense, and due to our ~~acquisitions of MediaDonuts and 365 Digital during the third and fourth quarters of 2021, respectively, both of~~VIEs, which did not ~~incur selling, general and administrative expenses for us in the comparable period ended June 30, 2021.~~

~~Selling, general and administrative expenses. Selling, general and administrative expenses~~contribute to our financial results in our digital segment increased to $17.5 million for the six-month period ended June 30, 2022 from $11.7 million for the six-month period ended June 30, 2021, an increase of $5.8 million. The increase was primarily due to an increase in salary expense and our acquisitions of MediaDonuts and 365 Digital during the third and fourth quarters of 2021, respectively, both of which did not incur selling, general and administrative expenses for us in the comparable ~~period ended June 30, 2021.~~period.

Television

Net Revenue. Net revenue in our television segment decreased to ~~$32.4~~$30.3 million for the three-month period ended ~~June 30, 2022~~March 31, 2023 from ~~$34.1~~$30.9 million for the three-month period ended ~~June 30, 2021.~~March 31, 2022. This decrease of ~~approximately $1.7~~$0.6 million, or 2%, in net revenue was primarily due to decreases in ~~local~~political advertising revenue and national advertising revenue, and a decrease in retransmission consent revenue. These decreases were mainly attributed to the expiration of our Univision and UniMás network affiliation agreements in Orlando, Tampa and Washington, D.C. on December 31, 2021. We expect retransmission consent revenue from these three markets will continue to decline over the next two years, at which point it will be eliminated. The decrease was partially offset by increases in ~~political~~local advertising revenue, ~~and~~ spectrum usage rights revenue. Political advertising revenue increased at an earlier time of year this year compared to previous mid-term election years, and we currently anticipate political advertising revenue will increase for the remainder of this fiscal year.

Net revenue in our television segment decreased to $63.2 million for the six-month period ended June 30, 2022 from $70.1 million for the six-month period ended June 30, 2021. This decrease of approximately $6.9 million in net revenue was primarily due to decreases in local and national advertising revenue and ~~a decrease in~~ retransmission consent revenue. These decreases were mainly attributed to the expiration of our Univision and UniMás network affiliation agreements in Orlando, Tampa and Washington, D.C. on December 31, 2021. We expect retransmission consent revenue from these three markets will continue to decline over the next two years, at which point it will be eliminated. Additionally, the decrease in our television segment was attributed to a decrease in revenue from spectrum usage rights, partially offset by an increase political advertising revenue. Political advertising revenue increased at an

~~earlier time of year this year compared to previous mid-term election years, and we currently anticipate political advertising revenue will increase for the remainder of this fiscal year.~~

In general, our television segment faces declining audiences, which we believe is present across the industry, competitive factors with the other major Spanish-language ~~broadcaster,~~broadcasters, and changing demographics and preferences of ~~audiences.~~audiences, particularly younger audiences, in terms of the media they prefer to view, including streaming and social media. We anticipate that these changes in viewer habits will persist and may accelerate at least for the foreseeable future and possibly permanently. Additionally, notwithstanding the increase in local advertising revenue, we have previously noted a trend for advertising to move increasingly from traditional media, such as television, to new media, such as digital media, and we expect this trend towill also continue.

Direct Operating Expenses. Direct operating expenses in our television segment ~~decreased~~increased to ~~$14.5~~$14.8 million for the three-month period ended ~~June 30, 2022~~March 31, 2023 from ~~$15.2~~$14.3 million for the three-month period ended ~~June 30, 2021, a decrease~~March 31, 2022, an increase of ~~approximately $0.7 million.~~$0.5 million, or 3%. The ~~decrease~~increase was primarily due to an increase in non-cash stock-based compensation, which is mainly a ~~decrease~~result of the 2023 annual RSU grant, which was made in ~~expenses associated with~~February 2023 compared to the ~~decrease~~2022 annual grant, which was made in ~~local and national advertising revenue.~~

Direct operating expenses in our television segment decreased to $28.8 million for the six-month period ended June 30, 2022 from $30.2 million for the six-month period ended June 30, 2021, a decrease of approximately $1.4 million. The decrease was primarily due to a decrease in expenses associated with the decrease in local and national advertising revenue.December 2022.

Selling, General and Administrative Expenses. Selling, general and administrative expenses in our television segment increased to ~~$5.2~~$5.3 million for the three-month period ended ~~June 30, 2022~~March 31, 2023 from ~~$4.3~~$5.0 million for the three-month period ended ~~June 30, 2021,~~March 31, 2022, an increase of ~~approximately $0.9 million.~~$0.3 million, or 8%. The increase was primarily due to ~~an increase~~increased rent expense in ~~salaries and an increase in bad debt expense.~~

~~Selling, general and administrative expenses in~~the temporary office space until the move to our ~~television segment increased to $10.2 million for the six-month period endedJune 30, 2022 from $9.2 million for the six-month period ended June 30, 2021, an increase of approximately $1.0 million. The increase was primarily due to an increase in salaries~~new permanent offices is completed, and an increase in bad debt expense.

Audio

Net Revenue. Net revenue in our audio segment ~~increased~~decreased to ~~$14.9~~$12.2 million for the three-month period ended ~~June 30, 2022~~March 31, 2023 from ~~$14.1~~$12.6 million for the three-month period ended ~~June 30, 2021.~~March 31, 2022. This ~~increase~~decrease of ~~approximately $0.8~~$0.4 million, or 3%, in net revenue was primarily due to ~~increases~~a decrease in ~~local~~political advertising revenue, and ~~political advertising revenue, partially offset by a decrease~~decreases in local and national advertising revenue. Political advertising revenue increased at an earlier time of year this year compared to previous mid-term election years, and we currently anticipate political advertising revenue will increase for the remainder of this fiscal year.

Net revenue in our audio segment increased to $27.5 million for the six-month period ended June 30, 2022 from $25.4 million for the six-month period ended June 30, 2021. This increase of approximately $2.1 million in net revenue was primarily due to increases in local advertising revenue and political advertising revenue, partially offset by a decrease in national advertising revenue. Political advertising revenue increased at an earlier time of year this year compared to previous mid-term election years, and we currently anticipate political advertising revenue will increase for the remainder of this fiscal year.

~~Notwithstanding the foregoing, in~~In general, our audio segment faces declining audiences, which we believe is present across the industry, competitive factors with other major Spanish-language broadcasters, and changing demographics and preferences of ~~audiences.~~listening audiences, particularly younger audiences, including podcasts and other streaming services. We anticipate that these changes in listener habits will persist and may accelerate at least for at least for the foreseeable future and possibly permanently. Additionally, ~~notwithstanding the increases in local advertising revenue,~~ we have previously noted a trend for advertising to move increasingly from traditional media, such as radio, to new media, such as digital media, and we expect this trend towill also continue.

Direct Operating Expenses. Direct operating expenses in our audio segment increased to ~~$7.3~~$7.1 million for the three-month period ended ~~June 30, 2022~~March 31, 2023 from ~~$6.9~~$6.4 million for the three-month period ended ~~June 30, 2021,~~March 31, 2022, an increase of ~~$0.4 million.~~$0.7 million, or 11%. The increase was primarily due to ~~an increase~~increases in ~~expenses associated with the increase in advertising revenue.~~salaries and music license fees.

Direct operating expenses in our audio segment increased to $13.7 million for the six-month period ended June 30, 2022 from $13.6 million for the six-month period ended June 30, 2021, an increase of $0.1 million.40

Selling, General and Administrative Expenses. Selling, general and administrative expenses in our audio segment increased to ~~$3.1~~$3.9 million for the ~~six-month~~three-month period ended ~~June 30, 2022~~March 31, 2023 from $3.0 million for the ~~six-month~~three-month period ended ~~June 30, 2021,~~March 31, 2022, an increase of ~~$0.1 million.~~$0.9 million, or 31%. The increase was primarily due to increased rent expense in the temporary office space until the move to our new permanent offices is completed.

Selling, general and administrative expenses in our audio segment increased to $6.1 million for the six-month period ended June 30, 2022 from $6.0 million for the six-month period ended June 30, 2021, an increase of $0.1 million.

Liquidity and Capital Resources

While we have a history of operating losses in some periods and operating income in other periods, we also have a history of generating significant positive cash flows from our operations. We had net income attributable to common stockholders of $18.1 million and $29.3 million for the years ended December 31, 2022 and 2021, respectively, and a net loss attributable to common stockholders of $3.9 million for the year ended December 31, ~~2021, and net losses attributable to common stockholders~~2020. We had positive cash flow from operations of ~~$3.9~~$78.9 million, $65.3 million and ~~$19.7~~$63.4 million for the years ended December 31, ~~2020~~2022, 2021 and ~~2019,~~2020, respectively. We had positive cash flow from operations of ~~$65.3 million, $63.4 million and $31.5~~$36.7 million for the ~~years ended December 31, 2021, 2020 and 2019, respectively. We had positive cash flow from operations of $62.9 million for the six-month~~three-month period ended ~~June 30, 2022.~~March 31, 2023. For at least the next twelve months, we expect to fund our working capital requirements, capital expenditures and payments of principal and interest on outstanding indebtedness, with cash on hand and cash flows from operations.

We currently believe that our cash position is capable of meeting our operating and capital expenses and debt service requirements for at least the next twelve months from the issuance of this report. We believe that our position is strengthened by cash and cash equivalents on hand, in the amount of ~~$110.0~~$141.5 million, and available for sale marketable securities in the additional amount of ~~$74.3~~$38.4 million, as of ~~June 30, 2022.~~ March 31, 2023.

Our liquidity is not materially impacted by the amounts held in accounts outside the United States. The majority of our cash and cash equivalents is held outside the United States, primarily in Uruguay, Spain, Ecuador and Singapore, none of which countries have foreign currency controls. We hold smaller amounts of cash in certain countries that do have foreign currency controls, including South Africa and Argentina, which could impact our ability to freely repatriate such funds from those countries to the United States.

2017 Credit Facility

The following discussion pertains to the 2017 Credit Facility and the 2017 Credit Agreement. It does not purport to be a complete discussion of the full terms and conditions of the 2017 Credit Facility or the 2017 Credit Agreement. For more information, please refer to Note 2 to Notes to Consolidated Financial Statements and the 2017 Credit Agreement itself.

On November 30, 2017 (the ~~“Closing~~“2017 Closing Date”), we entered into ~~our~~its 2017 Credit Facility pursuant to the 2017 Credit Agreement. The 2017 Credit Facility ~~consists~~consisted of a $300.0 million senior secured Term Loan B Facility (the “Term Loan B Facility”), which was drawn in full on the 2017 Closing Date. In addition, the 2017 Credit Facility ~~provides~~provided that we may increase the aggregate principal amount of the 2017 Credit Facility by up to an additional $100.0 million plus the amount that would result in ~~our~~its first lien net leverage ratio (as such term is used in the 2017 Credit Agreement) not exceeding 4.0 to 1.0, subject to usour satisfying certain conditions.

Borrowings under the Term Loan B Facility were used on the 2017 Closing Date (a) to repay in full all of our and our subsidiaries’ ~~then~~ outstanding obligations under ~~the~~our previous ~~2013~~ credit ~~agreement, or 2013 Credit Agreement,~~facility and to terminate the ~~2013 Credit Agreement,~~credit agreement relating thereto, (b) to pay fees and expenses in connection with the 2017 Credit Facility and (c) for general corporate purposes.

The 2017 Credit Facility is guaranteed on a senior secured basis by certain of our existing and future wholly-owned domestic subsidiaries, and is secured on a first priority basis by our and those subsidiaries’ assets.

Our borrowings under the 2017 Credit Facility ~~bear~~bore interest on the outstanding principal amount thereof from the date when made at a rate per annum equal to either: (i) the Eurodollar Rate (as defined in the 2017 Credit Agreement) plus 2.75%; or (ii) the Base Rate (as defined in the 2017 Credit Agreement) plus 1.75%. As of ~~June 30, 2022,~~March 16, 2023, the interest rate on our Term Loan B was ~~3.81%~~7.38%. The Term Loan B Facility ~~expires~~had an expiration date on November 30, ~~2024 (the “Maturity Date”).~~2024.

~~Subject to certain exceptions, the 2017 Credit Facility contains covenants that limit the ability~~For information regarding other provisions, terms and conditions of ~~us and our restricted subsidiaries to, among other things:~~

•

~~incur liens on our property or assets;~~

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~~make certain investments;~~

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~~incur additional indebtedness;~~

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~~consummate any merger, dissolution, liquidation, consolidation or sale of substantially all assets;~~

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~~dispose of certain assets;~~

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~~make certain restricted payments;~~

•

~~make certain acquisitions;~~

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~~enter into substantially different lines of business;~~

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~~enter into certain transactions with affiliates;~~

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~~use loan proceeds to purchase or carry margin stock or for any other prohibited purpose;~~

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change or amend the terms of our organizational documents or the organization documents of certain restricted subsidiaries in a materially adverse way to the lenders, or change or amend the terms of certain indebtedness;

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~~enter into sale and leaseback transactions;~~

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~~make prepayments of any subordinated indebtedness, subject to certain conditions; and~~

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~~change our fiscal year, or accounting policies or reporting practices.~~

~~The 2017 Credit Facility also provides for certain customary events of default, including the following:~~

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~~default for three (3) business days in the payment of interest on borrowings under the 2017 Credit Facility when due;~~

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~~default in payment when due of the principal amount of borrowings under the 2017 Credit Facility;~~

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failure by us or any subsidiary to comply with the negative covenants and certain other covenants relating to maintaining the legal existence of the Company and certain of its restricted subsidiaries and compliance with anti-corruption laws;

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~~failure by us or any subsidiary to comply with any of the other agreements in~~ the 2017 Credit Agreement and related loan documents that continues for thirty (30) days (or ten (10) days in the case of failure to comply with covenants related to inspection rights of the administrative agent and lenders and permitted uses of proceeds from borrowings under the 2017 Credit Facility) after our ~~officers first become aware of such failure or first receive written notice of such failure from any lender;~~

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~~certain events of bankruptcy or insolvency with respect to us or any significant subsidiary;~~

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final judgment is entered against us or any restricted subsidiary in an aggregate amount over $15.0 million, and either enforcement proceedings are commenced by any creditor or there is a period of thirty (30) consecutive days during which the judgment remains unpaid and no stay is in effect;

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~~any material provision of any agreement or instrument governing the~~ 2017 Credit Facility, ~~ceases~~please see the discussion beginning on page 12 in Note 2 to Notes to Condensed Consolidated Financial Statements.

2023 Credit Facility

The following discussion pertains to the 2023 Credit Facility and the 2023 Credit Agreement. It does not purport to be ina complete discussion of the full ~~force~~terms and ~~effect; and~~

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~~any revocation, termination, substantial and adverse modification, or refusal by final order to renew, any media license,~~conditions of the 2023 Credit Facility or the ~~requirement (by final non-appealable order)~~2023 Credit Agreement. For more information, please refer to ~~sell a television or radio station, where any such event or failure is reasonably expected~~Note 2 to ~~have a material adverse effect.~~

~~The Term Loan B Facility does not contain any financial covenants. In connection with our entering into~~Notes to Consolidated Financial Statements and the ~~2017~~2023 Credit Agreement we and our restricted subsidiaries also entered into a Security Agreement, pursuant to which we and all of the companies existing in future wholly-owned domestic subsidiaries each granted a first priority security interest in the collateral securing the 2017 Credit Facility for the benefit of the lenders under the 2017 Credit Facility.itself.

On ~~June 4, 2021,~~March 17, 2023 (the “2023 Closing Date”), we entered into the ~~Second Amendment (the "Amendment")~~2023 Credit Facility, pursuant to the ~~2017~~2023 Credit Agreement, by and among ~~the Company,~~us, Bank of America, N.A., as Administrative Agent (the “Agent”), and the other financial institutions party thereto as Lenders (collectively, the “Lenders” and individually each a “Lender”). ~~The Amendment amends~~

As provided for in the ~~2017~~2023 Credit Agreement, ~~primarily to permit additional investments~~our 2023 Credit Facility consists of (i) a $200,000,000 senior secured Term A Facility, which was drawn in ~~restricted subsidiaries~~full on the 2023 Closing Date, and (ii) a $75,000,000 Revolving Credit Facility (the “Revolving Credit

Facility”), of which $11,500,000 was drawn on the 2023 Closing Date. In addition, the 2023 Credit Agreement provides that are not loan parties, and make certain changes to the definition of “Consolidated Net Income” for the purpose of calculating EBITDA as defined by the 2017 Credit Agreement. Pursuant to the Amendment, we ~~agreed to pay to the Lenders consenting to the Amendment a fee equal to 0.375% of~~may increase the aggregate principal amount of our 2023 Credit Facility by an additional amount equal to $100,000,000 plus the amount that would result in our first lien net leverage ratio (as such term is used in the 2023 Credit Agreement) not exceeding 2.25 to 1.0, subject to our satisfying certain conditions.

Borrowings under our 2023 Credit Facility were used on the 2023 Closing Date (a) to repay in full all of our and our subsidiaries' outstanding ~~loans held by such Lenders~~obligations under the 2017 Credit Agreement, ~~as of June 4, 2021. This fee totaled approximately $0.6 million~~(b) to pay fees and ~~it is amortized as interest expense over the remaining term of the Term Loan.~~expenses in connection with our 2023 Credit Facility and (c) for general corporate purposes. The 2023 Credit Facility matures on March 17, 2028 (the “Maturity Date”).

The ~~carrying~~2023 Credit Facility is guaranteed on a senior secured basis by certain of our existing and future wholly-owned domestic subsidiaries, and secured on a first priority basis by our and those subsidiaries’ assets.

Our borrowings under the 2023 Credit Facility will bear interest on the outstanding principal amount thereof from the date when made at a rate per annum equal to either: (i) the Term SOFR (as defined in the 2023 Credit Agreement) plus a margin between 2.50% and 3.00%, depending on the Total Net Leverage Ratio or (ii) the Base Rate (as defined in the 2023 Credit Agreement) plus a margin between 1.50% and 2.00%, depending on the Total Net Leverage Ratio. In addition, the unused portion of the Revolving Credit Facility is subject to a rate per annum between 0.30% and 0.40%, depending on the Total Net Leverage Ratio.

As of March 31, 2023, the interest rate on our Term A Facility and the drawn portion of the Revolving Credit Facility was 7.66%.

The amounts outstanding under the 2023 Credit Facility may be prepaid at our option without premium or penalty, provided that certain limitations are observed, and subject to customary breakage fees in connection with the prepayment of a Term SOFR loan. The principal amount of the Term ~~Loan B~~A Facility asshall be paid in installments on the dates and in the respective amounts set forth in the 2023 Credit Agreement, with the final balance due on the Maturity Date.

Consolidated EBITDA

Consolidated EBITDA decreased to $13.0 million for the three-month period ended March 31, 2023 compared to $18.1 million for the three-month period ended March 31, 2022. As a percentage of ~~June 30, 2022 was $209.2 million,~~ net revenue, consolidated EBITDA decreased to 5% for the three-month periods ended March 31, 2023 from 9% for the three-month periods ended March 31, 2022.

Consolidated EBITDA, which is defined in the 2023 Credit Agreement, is a non-GAAP measure. For a reconciliation of $1.5 million of unamortized debt issuance costs and original issue discount. The estimated fair value of the Term Loan B Facility as of June 30, 2022 was $204.4 million. The estimated fair value is based on quoted prices in markets where trading occurs infrequently.consolidated EBITDA to cash flows from operating activities, its most directly comparable GAAP financial measure, please see page 37.

Share Repurchase Program

On March 1, 2022, our Board of Directors approved a share repurchase program of up to $20 million of our common stock. Under this share repurchase program, we are authorized to purchase shares from time to time through open market purchases or negotiated purchases, subject to market conditions and other factors. On the same date, the Board terminated our previous share repurchase program of up to $45 million of our common stock.

In the three-month period ended ~~June 30, 2022,~~March 31, 2023, we ~~repurchased 0.6 million~~did not repurchase any shares of our Class A common ~~stock under the new share repurchase program for an aggregate purchase price of $4.1 million, or an average price per share of $6.48.~~stock. As of ~~June 30, 2022,~~March 31, 2023, we have repurchased a total of 1.8 million shares of our Class A common stock under the ~~new~~current share repurchase program for an aggregate purchase price of $11.3 million, or an average price per share of $6.43. All such repurchased shares were retired as of ~~June 30, 2022.~~March 31, 2023.

~~Consolidated Adjusted EBITDA~~

Consolidated adjusted EBITDA (as defined below) increased to $40.6 million for the six-month period ended June 30, 2022 compared to $32.0 million for the six-month period ended June 30, 2021. As a percentage of net revenue, consolidated adjusted EBITDA remained constant at 10% for each of the six-month periods ended June 30, 2022 and 2021.

Consolidated adjusted EBITDA, as defined in our 2017 Credit Agreement, means net income (loss) plus gain (loss) on sale of assets, depreciation and amortization, non-cash impairment charge, non-cash stock-based compensation included in operating and corporate expenses, net interest expense, other income (loss), non-recurring cash expenses, gain (loss) on debt extinguishment, income tax (expense) benefit, equity in net income (loss) of nonconsolidated affiliate, non-cash losses, syndication programming amortization less syndication programming payments, revenue from FCC spectrum incentive auction less related expenses, expenses associated with investments, EBITDA attributable to redeemable noncontrolling interest, acquisitions and dispositions and certain pro-forma cost savings. We use the term consolidated adjusted EBITDA because that measure is defined in our 2017 Credit Agreement and does not include gain (loss) on sale of assets, depreciation and amortization, non-cash impairment charge, non-cash stock-based compensation, net interest expense, other income (loss), non-recurring cash expenses, gain (loss) on debt extinguishment, income tax (expense) benefit, equity in net income (loss) of nonconsolidated affiliate, non-cash losses, syndication programming amortization less syndication programming payments, revenue from FCC spectrum incentive auction less related expenses, expenses associated with investments, EBITDA attributable to redeemable noncontrolling interest, acquisitions and dispositions and certain pro-forma cost savings.

Since consolidated adjusted EBITDA is a measure governing several critical aspects of our 2017 Credit Facility, we believe that it is important to disclose consolidated adjusted EBITDA to our investors. We may increase the aggregate principal amount outstanding by an additional amount equal to $100.0 million plus the amount that would result in our total net leverage ratio, or the ratio of consolidated total senior debt (net of up to $75.0 million of unrestricted cash) to trailing-twelve-month consolidated adjusted EBITDA, not exceeding 4.0. In addition, beginning December 31, 2018, at the end of every calendar year, in the event our total net leverage ratio is within certain ranges, we must make a debt prepayment equal to a certain percentage of our Excess Cash Flow, which is defined as consolidated adjusted EBITDA, less consolidated interest expense, less debt principal payments, less taxes paid, less other amounts set forth in the definition of Excess Cash Flow in the 2017 Credit Agreement. The total leverage ratio was as follows (in each case as of June 30): 2022, 1.4 to 1; 2021, 1.7 to 1.

While many in the financial community and we consider consolidated adjusted EBITDA to be important, it should be considered in addition to, but not as a substitute for or superior to, other measures of liquidity and financial performance prepared in accordance with accounting principles generally accepted in the United States of America, such as cash flows from operating activities, operating income (loss) and net income (loss). As consolidated adjusted EBITDA excludes non-cash gain (loss) on sale of assets, non-cash depreciation and amortization, non-cash impairment charge, non-cash stock-based compensation expense, net interest expense, other income (loss), non-recurring cash expenses, gain (loss) on debt extinguishment, income tax (expense) benefit, equity in net income (loss) of nonconsolidated affiliate, non-cash losses, syndication programming amortization less syndication programming payments, revenue from FCC spectrum incentive auction less related expenses, expenses associated with investments, EBITDA attributable to redeemable noncontrolling interest, acquisitions and dispositions and certain pro-forma cost savings, consolidated adjusted EBITDA has certain limitations because it excludes and includes several important financial line items. Therefore, we consider both non-GAAP and GAAP measures when evaluating our business. Consolidated adjusted EBITDA is also used to make executive compensation decisions.

Consolidated adjusted EBITDA is a non-GAAP measure. For a reconciliation of consolidated adjusted EBITDA to cash flows from operating activities, its most directly comparable GAAP financial measure, please see page 35.

Cash Flow

Net cash flow provided by operating activities was ~~$62.9~~$36.7 million for the ~~six-month~~three-month period ended ~~June 30, 2022~~March 31, 2023 compared to net cash flow provided by operating activities of ~~$44.4~~$53.2 million for the ~~six-month~~three-month period ended ~~June 30, 2021.~~March 31, 2022. We had net income of ~~$10.4~~$1.7 million for the ~~six-month~~three-month period ended ~~June 30,~~March 31, 2023, which included non-cash items such as deferred income taxes of $0.2 million, depreciation and amortization expense of $6.5 million, change in fair value of contingent consideration of $4.1 million, non-cash stock-based compensation of $4.1 million, and loss on debt extinguishment of $1.6 million. We had net income of $1.9 million for the three-month period ended March 31, 2022, which included non-cash items such as deferred income taxes of ~~$3.2~~$0.4 million, depreciation and amortization expense of ~~$12.7~~$6.4 million, change in fair value of contingent consideration of ~~$6.1~~$5.1 million, and non-cash stock-based compensation of $5.2 million, and gain on disposal of property and equipment of $0.6 million. We had net income of $17.5 million for the six-month period ended June 30, 2021, which included non-cash items such as deferred income taxes of $3.7 million, depreciation and amortization expense of $10.3 million, non-cash stock-based compensation of $2.2 million, and impairment loss of $1.4$2.6 million. We expect to have positive cash flow from operating activities for the ~~2022~~2023 year.

Net cash flow used in investing activities was ~~$77.3~~$0.6 million for the ~~six-month~~three-month period ended ~~June 30, 2022,~~March 31, 2023, compared to net cash flow ~~provided by~~used in investing activities of ~~$15.0~~$86.9 million for the ~~six-month~~three-month period ended ~~June 30, 2021.~~March 31, 2022. During the ~~six-month~~three-month period ended ~~June 30, 2022,~~March 31, 2023, we spent ~~$87.2~~$9.4 million on purchases of marketable securities, spent ~~$3.2~~$6.8 million in net capital expenditures, and received ~~$10.5~~$15.7 million from the sale of marketable securities. During the three-month period ended March 31, 2022, we spent $85.5 million on purchases of marketable securities, spent $1.5 million in net capital expenditures, and received ~~$2.7~~$0.2 million from sale of property and equipment and intangibles. ~~During the six-month period ended June 30, 2021, we had proceeds of $17.8 million from the maturity of marketable securities and spent $2.8 million in net capital expenditures.~~ We anticipate that our capital expenditures will be approximately ~~$16.4~~$19.5 million during the full year ~~2022.~~2023. Of this amount, we expect that approximately ~~$3.6~~$3.9 million will be reimbursed in connection with

our new office lease. The amount of our anticipated capital expenditures may change based on future changes in business plans and our financial condition and general economic conditions. We expect to fund capital expenditures with cash on hand and net cash flow from operations.

Net cash flow used in financing activities was ~~$60.8~~$5.4 million for the ~~six-month~~three-month period ended ~~June 30, 2022,~~March 31, 2023, compared to net cash flow used in financing activities of ~~$6.6~~$24.8 million for the ~~six-month~~three-month period ended ~~June 30, 2021.~~March 31, 2022. During the ~~six-month~~three-month period ended ~~June 30, 2022,~~March 31, 2023, we made debt payments of ~~contingent consideration of $43.6~~$211.7 million, dividend payments of ~~$4.3, debt~~$4.9 million, payments of ~~$1.5~~$1.3 million of debt issuance costs, payments for taxes related to shares withheld for share-based compensation plans of ~~$0.3~~$0.1 million, ~~spent $11.3 million for the repurchase of Class A common stock,~~ and received ~~$0.2~~$212.4 million proceeds from borrowings on debt and $0.3 million related to the issuance of common stock upon the exercise of stock options. During the ~~six-month~~three-month period ended ~~June 30, 2021,~~March 31, 2022, we made a payment of contingent consideration of $14.7 million, dividend payments of ~~$4.3~~$2.2 million, ~~principal~~ debt ~~repayments~~payments of ~~$1.5 million, payments for financing costs of $0.6 million, payments for taxes related to shares withheld for share-based compensation plans of $0.5~~$0.8 million, and ~~received $0.2~~spent $7.1 million ~~related to~~for the ~~issuance~~repurchase of Class A common ~~stock upon the exercise of stock options.~~stock.

Credit Risk

We have credit risk in our digital segment insofar as we are required to pay the media companies for which we act as commercial partner for all inventory purchased regardless of whether we are able to collect on a transaction from the local advertiser or its ad agency. We believe that we manage this credit risk effectively, in part by analyzing the creditworthiness of these customers; however, we can give no assurance that this will continue to be the case in future periods.

Additionally, we are dependent upon one single global media company for the majority of our consolidated revenue, which amounted to approximately ~~52%~~51% and 53% of our consolidated revenue for ~~each of~~ the ~~three-~~three-month period ended March 31, 2023 and ~~six-month periods ended June 30,~~ 2022, ~~and we~~respectively. We expect that this dependence will continue. The loss of all or a substantial part of that revenue ~~could~~would have a significant impact on our liquidity and cash flow.

4443

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

General

Market risk represents the potential loss that may impact our financial position, results of operations or cash flows due to adverse changes in the financial markets. We are exposed to market risk from changes in the base rates on our ~~Term Loan B.~~2023 Credit Facility.

Interest Rates

As of ~~June 30, 2022,~~March 31, 2023, we had ~~$210.8~~$211.5 million of variable rate bank debt outstanding under our ~~2017~~2023 Credit Facility. ~~The debt bears~~Our borrowings bear interest on the outstanding principal amount thereof from the date when made at a rate per annum equal to either: (i) the ~~three-month Eurodollar rate~~Term SOFR (as defined in the 2023 Credit Agreement) plus a margin between 2.50% and 3.00%, depending on the Total Net Leverage Ratio or (ii) the Base Rate (as defined in the 2023 Credit Agreement) plus a margin between 1.50% and 2.00%, depending on the Total Net Leverage Ratio. In addition, the unused portion of ~~2.75%.~~the Revolving Credit Facility is subject to a rate per annum between 0.30% and 0.40%, depending on the Total Net Leverage Ratio.

Because our debt is subject to interest at a variable rate, our earnings will be affected in future periods by changes in interest rates. If the ~~Eurodollar~~SOFR were to increase by a hypothetical 100 basis points, or one percentage point, from its ~~June 30, 2022~~March 31, 2023 level, our annual interest expense would increase and cash flow from operations would decrease by approximately $2.1 million based on the outstanding balance of our term loan as of ~~June 30, 2022.~~March 31, 2023.

Foreign Currency

We have foreign currency risks related to our revenue and operating expenses denominated in currencies other than the U.S. dollar. Historically, our revenues have primarily been denominated in U.S. dollars, and the majority of our current revenues continue to be, and are expected to remain, denominated in U.S. dollars. However, we have operations in countries other than the United States, primarily related to our digital business, and as a result we expect an increasing portion of our future revenues to be denominated in currencies other than the U.S. dollar, primarily the Mexican peso, Argentine peso, certain other Latin American currencies and various ~~other~~Asian currencies. The effect of an immediate and hypothetical 10% adverse change in foreign exchange rates on foreign-denominated accounts receivable at ~~June 30, 2022~~March 31, 2023 would not be material to our ~~overall financial condition or~~ consolidated results of ~~operations.~~operations or overall financial condition. Our operating expenses are primarily denominated in U.S. ~~Dollars.~~dollars. In addition, certain of our operating expenses are denominated in the currencies of the countries in which our operations are located, such as Spain, Latin American countries and other countries. Increases and decreases in our foreign-denominated revenue from movements in foreign exchange rates are partially offset by the corresponding decreases or increases in our foreign-denominated operating expenses.

Based on recent inflation trends, the economy in Argentina has been classified as highly inflationary. As a result, we applied the guidance in ASC 830 by remeasuring non-monetary assets and liabilities at historical exchange rates and monetary-assets and liabilities using current exchange rates (see Note 2 to Notes to Condensed Consolidated Financial Statements).

We maintain certain cash and cash equivalents in Argentina and South Africa, which countries have foreign exchange controls that could impact our ability to freely repatriate such funds from those countries to the United States.

As our international operations continue to grow, our risks associated with fluctuation in currency rates will become greater and we will continue to reassess our approach to managing this risk. In addition, currency fluctuations or a weakening U.S. dollar can increase the amount of operating expense of our international operations, which are primarily related to our digital business. To date, we have not entered into any foreign currency hedging contracts, since exchange rate fluctuations historically have not had a material impact on our operating results and cash flows.

ITEM 4. CONTROLS AND PROCEDURES

We conducted an evaluation, under the supervision and with the participation of management, including our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this quarterly report. Based on this evaluation, our chief executive officer and chief financial officer concluded that, as of the evaluation date, our disclosure controls and procedures were effective.

Our disclosure controls and procedures are designed to ensure that the information relating to our company, including our consolidated subsidiaries, required to be disclosed in our SEC reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow for timely decisions regarding required disclosure.

Our management, including our chief executive officer and chief financial officer, does not expect that our disclosure controls or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well

designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

There have not been any changes in our internal control over financial reporting during the period covered by this quarterly report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II.

OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are subject to various outstanding claims and other legal proceedings that may arise in the ordinary course of business. In the opinion of management, any liability that may arise out of or with respect to these matters will not materially adversely affect our financial position, results of operations or cash flows.

ITEM 1A. RISK FACTORS

~~None.~~The 2023 Credit Agreement contains various covenants that limit management’s discretion in the operation of our business and could limit our ability to grow and compete.

The 2023 Credit Agreement contains certain financial covenants and ratios with which we must comply. If we fail to comply with any of the financial covenants or ratios under the 2023 Credit Agreement, our lenders could:

•

elect to declare all amounts borrowed to be immediately due and payable, together with accrued and unpaid interest; and/or

•

terminate their commitments, if any, to make further extensions of credit.

Any such action by our lenders, or obtain waivers for any failure to comply with financial covenants and ratios, would have a material adverse effect on our overall business and financial condition.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer Purchases of Equity Securities

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS


31.1*		Certification by the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934.

31.2*		Certification by the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934.

32*		Certification of Periodic Financial Report by the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS*		Inline XBRL Instance Document.

101.SCH*		Inline XBRL Taxonomy Extension Schema Document.

101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document.

101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase.

104		Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101).

* Filed herewith.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	ENTRAVISION COMMUNICATIONS CORPORATION

	By:		/s/ Christopher T. Young
			Christopher T. Young Interim Chief Executive Officer and Chief Financial Officer and Treasurer

Date: ~~August 4, 2022~~May 5, 2023


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common stock	EVC	The New York Stock Exchange


Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
			Emerging growth company	☐


	June 30,			December 31,			March 31,			December 31,
	2022			2021			2023			2022
ASSETS
Current assets
Cash and cash equivalents	$	109,950		$	185,094		$	141,455		$	110,691
Marketable securities		74,278			-			38,367			44,528
Restricted cash		750			749			757			753
Trade receivables, (including related parties of $6,028 and $8,162) net of allowance for doubtful accounts of $6,763 and $6,398		184,872			201,747
Trade receivables, (including related parties of $6,440 and $5,814) net of allowance for doubtful accounts of $7,315 and $6,572								191,486			224,713
Assets held for sale		-			1,963			301			-
Prepaid expenses and other current assets (including related parties of $274 and $274)		37,029			18,925			30,135			27,238
Total current assets		406,879			408,478			402,501			407,923
Property and equipment, net of accumulated depreciation of $190,316 and $183,930		58,274			62,498
Intangible assets subject to amortization, net of accumulated amortization of $109,789 and $104,687 (including related parties of $4,178 and $4,642)		58,931			64,034
Property and equipment, net of accumulated depreciation of $197,004 and $194,448								65,868			61,362
Intangible assets subject to amortization, net of accumulated amortization of $78,897 and $75,992 (including related parties of $3,482 and $3,714)								58,908			61,811
Intangible assets not subject to amortization		209,053			209,053			207,453			207,453
Goodwill		73,273			71,708			86,991			86,991
Deferred income taxes		1,462			1,462			2,591			2,591
Operating leases right of use asset		24,356			25,582			45,883			44,413
Other assets		7,975			8,527			8,088			8,297
Total assets	$	840,203		$	851,342		$	878,283		$	880,841
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current maturities of long-term debt	$	4,795		$	4,903		$	5,778		$	5,256
Accounts payable and accrued expenses (including related parties of $1,235 and $1,920)		229,953			212,655
Accounts payable and accrued expenses (including related parties of $1,088 and $1,215)								233,791			237,415
Operating lease liabilities		6,097			7,304			6,029			5,570
Total current liabilities		240,845			224,862			245,598			248,241
Long-term debt, less current maturities, net of unamortized debt issuance costs of $1,532 and $1,851		206,218			207,416
Long-term debt, less current maturities, net of unamortized debt issuance costs of $1,305 and $1,221								207,016			207,292
Long-term operating lease liabilities		20,802			20,988			44,580			42,151
Other long-term liabilities		49,135			72,930			27,168			30,198
Deferred income taxes		67,910			68,220			67,357			67,590
Total liabilities		584,910			594,416			591,719			595,472
Commitments and contingencies (note 6)
Stockholders' equity
Class A common stock, $0.0001 par value, 260,000,000 shares authorized; shares issued and outstanding 2022 61,465,531 and 2021 63,116,896		6			6
Class B common stock, $0.0001 par value, 40,000,000 shares authorized; shares issued and outstanding 2022 and 2021 14,127,613		2			2
Class U common stock, $0.0001 par value, 40,000,000 shares authorized; shares issued and outstanding 2022 and 2021 9,352,729		1			1
Class A common stock, $0.0001 par value, 260,000,000 shares authorized; shares issued and outstanding at March 31, 2023 78,356,490 and December 31, 2022 78,172,827								8			8
Class B common stock, $0.0001 par value, 40,000,000 shares authorized; shares issued and outstanding at March 31, 2023 and December 31, 2022 0								-			-
Class U common stock, $0.0001 par value, 40,000,000 shares authorized; shares issued and outstanding at March 31, 2023 and December 31, 2022 9,352,729								1			1
Additional paid-in capital		769,977			780,388			776,198			776,298
Accumulated deficit		(512,140	)		(522,494	)		(502,334	)		(504,375	)
Accumulated other comprehensive income (loss)		(2,553	)		(977	)		(1,368	)		(1,510	)
Total stockholders' equity		255,293			256,926			272,505			270,422
Total liabilities and stockholders' equity	$	840,203		$	851,342
Noncontrolling interest								14,059			14,947
Total equity								286,564			285,369
Total liabilities and equity							$	878,283		$	880,841


	Number of Common Shares										Common Stock												Accumulated						Number of Common Shares								Common Stock												Accumulated
								Treasury			Class		Class		Class		Additional Paid-in			Accumulated			Other Comprehensive												Treasury		Class		Class		Class		Additional Paid-in			Accumulated			Other Comprehensive			Noncontrolling
	Class A			Class B		Class U		Stock			A		B		U		Capital			Deficit			Income (Loss)			Total			Class A		Class B		Class U		Stock		A		B		U		Capital			Deficit			Income (Loss)			Interest			Total
Balance, December 31, 2021		63,116,896			14,127,613		9,352,729		-		$	6	$	2	$	1	$	780,388		$	(522,494	)	$	(977	)	$	256,926
Balance, December 31, 2022																														78,172,827		-		9,352,729		-	$	8	$	-	$	1	$	776,298		$	(504,375	)	$	(1,510	)	$	14,947		$	285,369
Issuance of common stock upon exercise of stock options or awards of restricted stock units		66,000			-		-		-			-		-		-		218			-			-			218			164,474		-		-		-		-		-		-		313			-			-			-			313
Tax payments related to shares withheld for share-based compensation plans		14,955			-		-		-			-		-		-		(257	)		-			-			(257	)		19,189		-		-		-		-		-		-		(80	)		-			-			-			(80	)
Stock-based compensation expense		-			-		-		-			-		-		-		2,573			-			-			2,573			-		-		-		-		-		-		-		4,053			-			-			-			4,053
Repurchase of Class A common stock		(1,114,470	)		-		-		1,114,470			-		-		-		(7,142	)		-			-			(7,142	)
Retirement of treasury stock		-			-		-		(1,114,470	)		-		-		-		-			-			-			-
Dividends paid		-			-		-		-			-		-		-		(2,167	)		-			-			(2,167	)		-		-		-		-		-		-		-		(4,386	)		-			-			(546	)		(4,932	)
Change in fair value of marketable securities		-			-		-		-			-		-		-		-			-			(283	)		(283	)		-		-		-		-		-		-		-		-			-			103			-			103
Net income (loss) attributable to common stockholders for the three-month period-ended March 31, 2022		-			-		-		-			-		-		-		-			1,887			-			1,887
Balance, March 31, 2022		62,083,381			14,127,613		9,352,729		-			6		2		1		773,613			(520,607	)		(1,260	)		251,755
Tax payments related to shares withheld for share-based compensation plans		20,681			-		-		-			-		-		-		(10	)		-			-			(10	)
Stock-based compensation expense		-			-		-		-			-		-		-		2,636			-			-			2,636
Repurchase of Class A common stock		(638,531	)		-		-		638,531			-		-		-		(4,138	)		-			-			(4,138	)
Retirement of treasury stock		-			-		-		(638,531	)		-		-		-		-			-			-			-
Dividends paid		-			-		-		-			-		-		-		(2,124	)		-			-			(2,124	)
Change in fair value of marketable securities		-			-		-		-			-		-		-		-			-			(1,250	)		(1,250	)
OCI release due to realized gain (loss) on marketable securities																														-		-		-		-		-		-		-		-			-			23			-			23
Foreign currency translation gain (loss)		-			-		-		-			-		-		-		-			-			(43	)		(43	)		-		-		-		-		-		-		-		-			-			16			-			16
Net income (loss) attributable to common stockholders for the three-month period-ended June 30, 2022		-			-		-		-			-		-		-		-			8,467			-			8,467
Balance, June 30, 2022		61,465,531			14,127,613		9,352,729		-			6		2		1		769,977			(512,140	)		(2,553	)		255,293
Net income (loss) attributable to common stockholders																														-		-		-		-		-		-		-		-			2,041			-			(342	)		1,699
Balance, March 31, 2023																														78,356,490		-		9,352,729		-	$	8	$	-	$	1	$	776,198		$	(502,334	)	$	(1,368	)	$	14,059		$	286,564


	Number of Common Shares										Common Stock												Accumulated
								Treasury			Class		Class		Class		Additional Paid-in			Accumulated			Other Comprehensive			Noncontrolling
	Class A			Class B		Class U		Stock			A		B		U		Capital			Deficit			Income (Loss)			Interest		Total
Balance, December 31, 2021		63,116,896			14,127,613		9,352,729		-		$	6	$	2	$	1	$	780,388		$	(522,494	)	$	(977	)	$	-	$	256,926
Issuance of common stock upon exercise of stock options or awards of restricted stock units		66,000			-		-		-			-		-		-		218			-			-			-		218
Tax payments related to shares withheld for share-based compensation plans		14,955			-		-		-			-		-		-		(257	)		-			-			-		(257	)
Stock-based compensation expense		-			-		-		-			-		-		-		2,573			-			-			-		2,573
Repurchase of Class A common stock		(1,114,470	)		-		-		1,114,470			-		-		-		(7,142	)		-			-			-		(7,142	)
Retirement of treasury stock		-			-		-		(1,114,470	)		-		-		-		-			-			-			-		-
Dividends paid		-			-		-		-			-		-		-		(2,167	)		-			-			-		(2,167	)
Change in fair value of marketable securities		-			-		-		-			-		-		-		-			-			(283	)		-		(283	)
Net income (loss) attributable to common stockholders		-			-		-		-			-		-		-		-			1,887			-			-		1,887
Balance, March 31, 2022		62,083,381			14,127,613		9,352,729		-		$	6	$	2	$	1	$	773,613		$	(520,607	)	$	(1,260	)	$	-	$	251,755


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


		Page Number
	PART I. FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS	4
	CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) AS OF ~~JUNE 30, 2022~~MARCH 31, 2023 AND DECEMBER 31, ~~2021~~2022	4
	CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) FOR THE ~~THREE- AND SIX-MONTH~~THREE-MONTH PERIODS ENDED ~~JUNE 30,~~MARCH 31, 2023 AND MARCH 31, 2022 ~~AND JUNE 30, 2021~~	5
	CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED) FOR THE ~~THREE- AND SIX-MONTH~~THREE-MONTH PERIODS ENDED ~~JUNE 30,~~MARCH 31, 2023 AND MARCH 31, 2022 ~~AND JUNE 30, 2021~~	6
	CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED) FOR THE ~~THREE- AND SIX-MONTH~~THREE-MONTH PERIODS ENDED ~~JUNE 30,~~MARCH 31, 2023 AND MARCH 31, 2022 ~~AND JUNE 30, 2021~~	7
	CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE ~~SIX-MONTH~~THREE-MONTH PERIODS ENDED ~~JUNE 30,~~MARCH 31, 2023 AND MARCH 31, 2022 ~~AND JUNE 30, 2021~~	98
	NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)	109
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	3032
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	4544
ITEM 4.	CONTROLS AND PROCEDURES	4544
	PART II. OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS	46
ITEM 1A.	RISK FACTORS	46
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	46
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	46
ITEM 4.	MINE SAFETY DISCLOSURES	46
ITEM 5.	OTHER INFORMATION	46
ITEM 6.	EXHIBITS	47


	Foreign Currency Translation			Marketable Securities			Total			Foreign Currency Translation			Marketable Securities			Total
Accumulated other comprehensive income (loss) as of December 31, 2021	$	(1,300	)	$	323		$	(977	)
Accumulated other comprehensive income (loss) as of December 31, 2022										$	(1,345	)	$	(165	)	$	(1,510	)
Other comprehensive income (loss)		-			(380	)		(380	)		16			138			154
Income tax (expense) benefit		-			97			97			-			(35	)		(35	)
Other comprehensive income (loss), net of tax		-			(283	)		(283	)
Accumulated other comprehensive income (loss) as of March 31, 2022		(1,300	)		40			(1,260	)
Other comprehensive income (loss)		(43	)		(1,678	)		(1,721	)
Amounts reclassified from AOCI											-			31			31
Income tax (expense) benefit		-			428			428			-			(8	)		(8	)
Other comprehensive income (loss), net of tax		(43	)		(1,250	)		(1,293	)		16			126			142
Accumulated other comprehensive income (loss) as of June 30, 2022		(1,343	)		(1,210	)		(2,553	)
Accumulated other comprehensive income (loss) as of March 31, 2023											(1,329	)		(39	)		(1,368	)