(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. Yes ☐☒ No ☒☐

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). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non accelerated filer, a 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. ~~(Check one):~~

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 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 Act). Yes ☐ No ☒

The number of shares outstanding of each of MediaCo Holding Inc.’s classes of common stock, as of ~~December 18, 2019,~~May 11, 2020, was:

	One Month Ended September 30,				Seven Months Ended September 30,				Three Months Ended March 31,
	2018		2019		2018		2019		2019		2020
NET REVENUES	$	4,405	$	4,302	$	27,916	$	30,454	$	8,146	$	11,785
OPERATING EXPENSES:
Station operating expenses excluding depreciation and amortization expense		3,664		3,911		22,301		23,454
Operating expenses excluding depreciation and amortization expense										6,888		9,457
Corporate expenses										—		1,165
Depreciation and amortization		115		94		699		698		341		1,027
Total operating expenses		3,779		4,005		23,000		24,152		7,229		11,649
OPERATING INCOME		626		297		4,916		6,302		917		136
INCOME BEFORE INCOME TAXES		626		297		4,916		6,302
PROVISION FOR INCOME TAXES		192		97		1,605		1,999
NET INCOME	$	434	$	200	$	3,311	$	4,303
OTHER EXPENSE:
Interest expense										—		(2,238	)
INCOME (LOSS) BEFORE INCOME TAXES										917		(2,102	)
PROVISION (BENEFIT) FOR INCOME TAXES										289		(617	)
CONSOLIDATED NET INCOME (LOSS)										628		(1,485	)
PREFERRED STOCK DIVIDENDS										—		529
NET INCOME (LOSS)									$	628	$	(2,014	)

Basic and diluted net income (loss) per share attributable to common shareholders									$	0.38	$	(0.28	)
Basic and diluted weighted average common shares outstanding										1,667		7,084

The accompanying notes are an integral part of these unaudited condensed consolidated and combined ~~condensed~~ statements.

	February 28, 2019		September 30, 2019		December 31, 2019			March 31, 2020
			(Unaudited)					(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents					$	2,083		$	4,405
Accounts receivable, net	$	7,886	$	10,029		11,101			10,393
Prepaid expenses		1,680		1,113		1,111			1,627
Other current assets		220		216		1,798			373
Total current assets		9,786		11,358		16,093			16,798
PROPERTY AND EQUIPMENT, NET		2,421		1,895		31,563			31,009
INTANGIBLE ASSETS, NET		64,025		63,853		78,949			78,640
OTHER ASSETS:
Deferred tax assets		6,753		5,125		13,863			14,480
Operating lease right of use assets		—		11,659		26,339			25,708
Deposits and other		143		343		359			358
Total other assets		6,896		17,127		40,561			40,546
Total assets	$	83,128	$	94,233	$	167,166		$	166,993
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses	$	809	$	1,551	$	11,184		$	8,574
Current maturities of long-term debt						3,672			3,672
Accrued salaries and commissions		370		583		728			555
Deferred revenue		1,299		936		1,688			1,506
Income taxes payable		850		1,221
Operating lease liabilities		—		2,312		3,161			3,079
Other current liabilities		543		91		346			1,085
Total current liabilities		3,871		6,694		20,779			18,471
LONG TERM DEBT, NET OF CURRENT						77,668			81,890
OPERATING LEASE LIABILITIES, NET OF CURRENT		—		11,269		22,983			22,182
ASSET RETIREMENT OBLIGATIONS						5,623			5,805
OTHER NONCURRENT LIABILITIES		1,779		76		239			256
Total liabilities		5,650		18,039		127,292			128,604
COMMITMENTS AND CONTINGENCIES
SERIES A CUMULATIVE CONVERTIBLE PARTICIPATING PREFERRED STOCK, $0.01 PAR VALUE, 10,000,000 SHARES AUTHORIZED; 220,000 SHARES ISSUED AND OUTSTANDING						22,110			22,639
EQUITY:
Net parent company investment		77,478		76,194
Class A common stock, $0.01 par value; authorized 170,000,000 shares; issued and outstanding 1,666,667 shares and 1,683,263 shares at December 31, 2019, and March 31, 2020, respectively						17			17
Class B common stock, $0.01 par value; authorized 50,000,000 shares; issued and outstanding 5,359,753 shares and 5,413,197 shares at December 31, 2019, and March 31, 2020, respectively						54			54
Class C common stock, $0.01 par value; authorized 30,000,000 shares; none issued						—			—
Additional paid-in capital						20,644			20,644
Accumulated deficit						(2,951	)		(4,965	)
Total equity		77,478		76,194		17,764			15,750
Total liabilities and equity	$	83,128	$	94,233	$	167,166		$	166,993

The accompanying notes are an integral part of these unaudited condensed consolidated and combined ~~condensed~~ statements.

CONDENSED CONSOLIDATED AND COMBINED ~~CONDENSED~~ STATEMENT OF CHANGES IN EQUITY

	Total			Class A Common Stock					Class B Common Stock
	Equity			Shares			Amount		Shares		Amount		APIC		Net Parent Investment			Accumulated Deficit			Total
Balance, February 28, 2018	$	80,291
BALANCE, DECEMBER 31, 2018					—		$	—		—	$	—	$	—	$	79,810		$	—		$	79,810
Net income		1,622			—			—		—		—		—		628			—			628
Net distributions to Emmis Communications Corp.		(1,957	)		—			—		—		—		—		(3,451	)		—			(3,451	)
Balance, May 31, 2018	$	79,956
Net income		1,255
Net distributions to Emmis Communications Corp.		(284	)
Balance, August 31, 2018	$	80,927
Net income		434
Net distributions to Emmis Communications Corp.		405
Balance, September 30, 2018	$	81,766
BALANCE, MARCH 31, 2019					—	��	$	—		—	$	—	$	—	$	76,987		$	—		$	76,987

Balance, February 28, 2019	$	77,478
Net income		1,481
Net distributions to Emmis Communications Corp.		(2,247	)
Balance, May 31, 2019	$	76,712
Net income		2,622
Net distributions to Emmis Communications Corp.		(2,716	)
Balance, August 31, 2019	$	76,618
Net income		200
Net distributions to Emmis Communications Corp.		(624	)
Balance, September 30, 2019	$	76,194
BALANCE, DECEMBER 31, 2019					1,666,667		$	17		5,359,753	$	54	$	20,644	$	—		$	(2,951	)	$	17,764
Net loss					—			—		—		—		—		—			(1,485	)		(1,485	)
Adjustments related to distribution of common shares					16,596			—		53,444		—		—		—			—			—
Preferred stock dividends					—			—		—		—		—		—			(529	)		(529	)
BALANCE, MARCH 31, 2020					1,683,263		$	17		5,413,197	$	54	$	20,644	$	—		$	(4,965	)	$	15,750

The accompanying notes are an integral part of these unaudited condensed consolidated and combined ~~condensed~~ statements.

	Seven Months Ended September 30,						Three Months Ended March 31,
	2018			2019			2019			2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	3,311		$	4,303
Adjustments to reconcile net income to net cash provided by operating activities -
Net income (loss)							$	628		$	(1,485	)
Adjustments to reconcile net income to net cash provided by (used in) operating activities -
Depreciation and amortization		699			698			341			1,027
Amortization of debt discount								—			140
Provision for bad debts		208			162			20			373
Accretion of asset retirement obligation								—			182
Provision for deferred income taxes		1,605			1,628			246			(617	)
Noncash compensation		176			181			57			—
Loss on sale of property and equipment		56			—			—			78
Changes in assets and liabilities -
Accounts receivable		(1,888	)		(2,305	)		2,709			335
Prepaid expenses and other current assets		(1,094	)		571			(676	)		909
Other assets		—			925			62			587
Accounts payable and accrued liabilities		(309	)		955			79			(2,783	)
Deferred revenue		195			(363	)		199			(182	)
Income taxes		—			371			43			—
Other liabilities		(947	)		(1,301	)		(120	)		(127	)
Net cash provided by operating activities		2,012			5,825
Net cash provided by (used in) operating activities								3,588			(1,563	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment		—			(56	)		(80	)		(197	)
Net cash used in investing activities		—			(56	)		(80	)		(197	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of long-term debt								—			(918	)
Proceeds from long-term debt								—			5,181
Payments for debt-related costs								—			(181	)
Net transactions with Emmis Communications Corp.		(2,012	)		(5,769	)		(3,508	)		—
Net cash used in financing activities		(2,012	)		(5,769	)
Net cash (used in) provided by financing activities								(3,508	)		4,082
INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH		—			—			—			2,322
CASH, CASH EQUIVALENTS AND RESTRICTED CASH:
Beginning of period		—			—			—			2,083
End of period	$	—		$	—		$	—		$	4,405
SUPPLEMENTAL DISCLOSURES:
Cash paid for interest							$	—		$	1,148

The accompanying notes are an integral part of these unaudited condensed consolidated and combined ~~condensed~~ statements.

MediaCo Holding Inc. (“MediaCo” or the “Company”) is ~~a recently formed~~an Indiana corporation ~~that was created~~formed in 2019 by Emmis Communications Corporation (“Emmis”) to facilitate the sale of a controlling interest in Emmis’ radio stations WQHT-FM and WBLS-FM (the “Stations”) to SG Broadcasting LLC (“SG Broadcasting”), an affiliate of Standard General L.P. (“Standard General”) pursuant to an agreement entered into on June 28, 2019. ~~As of September 30, 2019, MediaCo was a wholly owned subsidiary of Emmis.~~ The sale (the “Transaction”) closed on November 25, 2019. On November 26, 2019, ~~as described in Note 11.~~the Company’s Form 10 was declared effective and the Company became subject to SEC periodic filing requirements. As of December 31, 2019, all of the Company’s Class A common stock was held by Emmis and all the Company’s Class B common stock was held by SG Broadcasting. On January 17, 2020, Emmis distributed the Class A common stock pro rata to Emmis’ shareholders, making MediaCo a publicly traded company listed on the Nasdaq Capital Market.

Unless the context otherwise requires, references to “we”, “us” and “our” refer to MediaCo after giving effect to the contribution of the Stations by Emmis, as well as to the Stations while they were wholly owned by ~~Emmis.~~Emmis and other businesses owned by MediaCo. Prior to November 25, 2019, MediaCo had not conducted any business as a separate company and had no assets or liabilities. The operations of the Stations contributed to us by Emmis on November 25, 2019, are presented as if they were our operations for all historical periods described and at the carrying value of such assets and liabilities reflected in Emmis’ books and records.

On December 9, 2019, the Company’s Board approved the assumption from an affiliate of SG Broadcasting of an agreement to purchase FMG Valdosta, LLC and FMG Kentucky, LLC (“Fairway Outdoor”) from Fairway Outdoor Advertising Group, LLC (the “Fairway Acquisition”). Closing of the transaction occurred on December 13, 2019. FMG Valdosta, LLC and FMG Kentucky, LLC are outdoor advertising businesses that operate advertising displays principally across Kentucky, West Virginia, Florida and Georgia.

Our assets consist of two radio stations, WQHT-FM and WBLS-FM, which serve the New York City metropolitan ~~area.~~area, as well as approximately 3,300 advertising structures in the Southeast (Valdosta) region and Mid-Atlantic (Kentucky) region of the United States. We derive our revenues primarily from radio and outdoor advertising sales, but we also generate revenues from events, including sponsorships and ticket sales.

On October 25, 2019, in order to more closely align our operations and internal controls with standard market practice, our Board of Directors approved the change in our fiscal year end from the last day in February to December 31. Following such change, the date of our next fiscal year end is December 31, 2019. Consequently, we will file a transition report on Form 10-K for the ten-month period ended December 31, 2019, to cover such transition period. During the transition period, we have elected to file quarterly reports based on the new fiscal year.

~~The accompanying unaudited~~Our condensed consolidated and combined ~~condensed~~ financial statements ~~include the combined accounts of the Stations and~~ are prepared in accordance with accounting principles generally accepted in the United States of America ~~(“GAAP”)~~(GAAP). All significant intercompany balances and transactions have been eliminated. All transactions between us and Emmis are considered to be effectively settled in the combined condensed financial statements at the time the transaction is recorded. The total net effect of the settlement of these transactions is reflected in the combined condensed statements of cash flows as a financing activity and in the combined condensed balance sheets as net parent company investment. Our results are subject to seasonal fluctuations. Therefore, results shown on an interim basis are not necessarily indicative of results for a full year.

These unaudited combined condensed financial statements have been prepared in accordance with the instructions to Form 10-Q and include all of the information and disclosures required by GAAP for interim reporting. As permitted under the applicable rules and regulations of the SEC, certain information and footnote disclosures normally included in financial statements prepared in conformity with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, all adjustments necessary for fair presentation (including normal recurring adjustments) have been included. ~~These unaudited combined condensed~~

For the three months ended March 31, 2019, MediaCo was 100% owned by Emmis. Our financial statements should be read in conjunction with the historical audited combined financial statements of the Stations and related notes included in the Information Statement dated November 22, 2019, filed as Exhibit 99.1 to our Form 10 filed on November 22, 2019 (the “Information Statement”).

~~Our combined condensed financial statements~~for this period are derived from the books and records of Emmis and were carved-out from Emmis at a carrying value reflective of historical cost in Emmis’ records. Our historical combined financial results include an allocation of expense related to certain Emmis corporate functions, including executive oversight, legal, finance, human resources, and information technology. These expenses have been allocated to us based on direct usage or benefit where specifically identifiable, with the remainder allocated primarily on a pro rata basis of revenue, headcount and other measures. We consider this expense allocation methodology and results thereof to be ~~reasonable for all periods presented.~~reasonable. However, the allocations may not be indicative of the actual expense that would have been incurred had we operated as an independent, publicly traded company for all periods presented. It is impracticable to estimate what the standalone costs of MediaCo would have been in the historical periods. ~~These allocations are further discussed in Note 3.~~

The income tax amounts in the combined condensed financial statements have been calculated based on a separate return methodology and presented as if our stations were separate taxpayers in their respective jurisdictions.

Emmis maintains various benefit and share-based compensation plans at a corporate level. The employees we lease from Emmis participate in such programs and the portion of the cost of those plans related to these employees is included in our financial statements. However, the combined condensed balance sheets do not include any equity issued related to share-based compensation plans maintained by Emmis.

The equity balance in ~~these~~the condensed consolidated and combined ~~condensed~~ financial statements prior to the Transaction represents the excess of total assets over total ~~liabilities, including balances~~liabilities. All transactions between usthe Stations and Emmis ~~(net~~were considered to be effectively settled in the consolidated and combined financial statements at the time the intercompany transaction was recorded. The total net effect of the settlement of these intercompany transactions is reflected in the consolidated and combined statements of cash flow as a financing activity and in the consolidated and combined statements of changes in equity as net parent company ~~investment). Net~~investment.

Upon consummation of the Transaction, the debt which the Company assumed in connection with transactions between shareholders was recorded to equity, and the total amount of net parent company investment ~~primarily consists of contributions from Emmis, principally related~~was reclassified to additional paid in capital in the ~~initial purchase of the Stations, offset by treasury activities, which include daily sweeps of cash balances~~accompanying consolidated and ~~centralized funding of accounts payable and payroll.~~combined financial statements.

The following allocation policies were established by management of ~~Emmis. Unless otherwise noted, these policies were consistently applied in~~Emmis for the ~~historical financial statements.~~three-month period ended March 31, 2019. In the opinion of management, the methods for allocating these costs were reasonable. It is not practicable to estimate the costs that would have been incurred by us if we had been operated on a stand‑alone basis.

Costs which related entirely to the operations of the Stations were attributed entirely to the Stations. These expenses consisted of costs of personnel who are 100% dedicated to the operations of the Stations, all costs associated with locations that conducted only the business of the Stations and amounts paid to third parties for services rendered to the Stations. In addition, any costs incurred by Emmis, which were specifically identifiable to the operations of the Stations, were attributed to the Stations.

Emmis incurred the cost of certain corporate general and administrative services and shared services that benefited all of its entities, including the Stations. These shared services included radio executive management, legal, accounting, information services, telecommunications, human resources, insurance, and intellectual property compliance and maintenance. These costs were allocated to the Stations based on one of the following allocation methods: (1) percentage of Company revenues, (2) percentage of Company’s radio revenues, (3) headcount, and (4) pro rata portion based on the number of stations owned by Emmis. Management determined which allocation method was appropriate based on the nature of the shared service being provided.

The Stations' allocated share of the consolidated Emmis federal tax provision was determined using the separate return method. Under the separate return method, tax expense or benefit was calculated as if the Stations were subject to their own tax returns. State income taxes generally were allocated in a similar manner. Deferred tax assets and liabilities were determined based on differences between the financial reporting and tax bases of assets and liabilities carried by the Stations, and were measured using the enacted tax rates that are expected to be in effect in the period in which these differences were expected to reverse. The principal components of deferred taxes related to tax amortization of indefinite-lived intangibles, namely FCC licenses, which are not amortized (but subject to impairment testing) for financial reporting purposes.

Allocations of Emmis’ costs were included in the condensed consolidated and combined ~~condensed~~ statements of operations of the Stations as follows:

	For the One Month Ended September 30,				For the Seven Months Ended September 30,				For the Three Months Ended March 31,
	2018		2019		2018		2019		2019		2020
Station operating expenses, excluding depreciation and amortization expense	$	194	$	296	$	1,645	$	1,490
Operating expenses, excluding depreciation and amortization expense									$	481	$	—
Noncash compensation		13		35		176		181		57		—
Allocated charges from Emmis	$	207	$	331	$	1,821	$	1,671	$	538	$	—

Intercompany accounts between the Stations and Emmis were included in combined equity.

We consider time deposits, money market fund shares and all highly liquid debt investment instruments with original maturities of three months or less to be cash equivalents. ~~Emmis uses a centralized approach to cash management and financing~~At times, such deposits may be in excess of ~~its operations. Accordingly, none of Emmis’ cash or cash equivalents have been assigned to us in the combined financial statements.~~FDIC insurance limits.

As defined in ASC Topic 820, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated or generally unobservable. The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. ASC Topic 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). We have no assets or liabilities for which fair value is measured on a recurring basis using Level 3 inputs.

The Company has certain assets that are measured at fair value on a non-recurring basis under circumstances and events that include those described in Note 4, Intangible Assets, and are adjusted to fair value only when the carrying values are more than the fair values. The categorization of the framework used to price the assets is considered a Level 3 measurement due to the subjective nature of the unobservable inputs used to determine the fair value (see Note 4 for more discussion).

We prepared the accompanying condensed consolidated and combined ~~condensed~~ financial statements in accordance with GAAP. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses in the financial statements and in disclosures of contingent assets and liabilities. Actual results could differ from those estimates.

~~Presentation~~ASC Topic 260, “Earnings Per Share,” requires presentation of ~~earnings~~basic income per share ~~information~~(“EPS”) on the face of the income statement for all entities with simple capital structures. Basic EPS is ~~not applicable as all our~~computed by dividing net income attributable to common shareholders by the weighted-average number of common shares ~~since~~outstanding for the ~~date~~period. For entities with complex capital structures, diluted EPS is also required. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted. The 1,666,667 Class A shares issued to Emmis have been assumed to have been outstanding for all periods through March 31, 2020. There were no potentially dilutive securities during the three-month periods ended March 31, 2019 and 2020, as neither the convertible promissory notes issued to Emmis and SG Broadcasting described in Note 6, nor the Series A convertible preferred stock described in Note 13, are convertible until May 25, 2020.

The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of ~~our formation through~~assets and the satisfaction of liabilities in the normal course of business. Pursuant to ASC Topic 205-40, “Going Concern,” the Company is required to evaluate whether there is substantial doubt about its ability to continue as a going concern each reporting period. In evaluating the Company’s ability to continue as a going concern for this reporting period, management evaluated the conditions and events that could raise substantial doubt about the Company’s ability to continue as a going concern within one year of the date of the ~~combined condensed~~filing of these financial statements ~~are owned directly~~(May 15, 2020). Management considered the Company’s ability to forecast future cash flows, current financial condition, sources of liquidity and debt service obligations due on or ~~indirectly~~before May 15, 2021.

The Company has been and continues to be negatively impacted by ~~Emmis. However,~~COVID-19, which the Company expects to negatively impact revenues and profitability for an undetermined period of time. Management has considered these circumstances in assessing the Company’s liquidity over the next year. Liquidity is a measure of an entity’s ability to meet potential cash requirements, maintain its assets, fund its operations, and meet the other general cash needs of its business. The Company’s liquidity is impacted by general economic, financial, competitive, and other factors beyond its control. The Company’s liquidity requirements consist primarily of funds necessary to pay its expenses, principally debt service and operational expenses, such as ~~discussed~~labor costs, and other related expenditures. The Company generally satisfies its liquidity needs through cash provided by operations. In addition, the Company has taken steps to enhance its ability to fund its operational expenses by reducing various costs and is prepared to take additional steps as necessary.

The Company has debt service obligations of approximately $10.5 million due under its Senior Credit Facility in ~~Note 11, on November 25, 2019, we issued an aggregate~~the next twelve months. Additionally, the Company owes $5.0 million to Emmis in August 2020, with such amount guaranteed by Standard General in the event MediaCo is unable to make the payment when due. Because the Company’s operating results and financial condition have been adversely impacted by the COVID-19 pandemic, the Company expects its revenues and profitability to decline over the next several months. Because the duration and severity of ~~7,026,420 shares~~the impact is unknown as of ~~common stock, a portion~~the filing of ~~which~~this Form 10-Q, management is unable to determine with certainty that the Company will be ~~distributed~~able to ~~Emmis’ shareholders~~meet its liquidity needs for the next twelve months with cash and ~~trade in~~cash equivalents on hand, projected cash flows from operations, and/or additional borrowings. Under the terms of its Senior Credit Facility, the amount of debt outstanding thereunder is limited to a ~~public market in early 2020.~~

~~On March 1, 2019, we adopted Accounting Standard Update 2016-02,~~ ~~Leases, using the modified retrospective approach, applied at the beginning~~formula based on 60% of the period of adoption, and we elected the package of transitional practical expedients. The adoption of this standard resulted in recording operating lease liabilities of approximately $14.9 million as of March 1, 2019, along with a corresponding right-of-use asset. The implementation of this standard did not have an impact on our condensed consolidated statements of operations. See Note 8 for more discussionfair value of the Company’s ~~leases.~~FCC licenses plus a multiple of the Company’s Billboard Cash Flow (as defined in the Senior Credit Facility). Management is also unable to determine whether the Company will be in compliance with its debt covenants and the limits of its borrowing base for the next twelve months. If necessary, management intends to request a waiver or amendment to its Senior Credit Facility and seek additional borrowings from Standard General; however, no assurances can be made that the Company will be successful. While the Company had been successful in obtaining waivers and amendments under its Senior Credit Facility and had also received additional liquidity from Standard General in the past, no assurances can be made that the Company will be successful or receive such liquidity in the future. Accordingly, there is substantial doubt about our ability to continue as a going concern through May 15, 2021. Furthermore, depending on the duration and severity of the impact the COVID-19 pandemic has on our businesses, we may record future impairments of assets or valuation allowances against our deferred tax assets.

In June 2016, the Financial Accounting Standards Board issued Accounting Standards Update 2016-13, Financial Instruments – Credit Losses, which introduces new guidance for an approach based on using expected losses to estimate credit losses on certain types of financial instruments. It also modifies the impairment model for available-for-sale debt securities and provides a simplified accounting model for purchased financial assets with credit deterioration since their origination. Instruments in scope include loans, held-to-maturity debt securities and net investments in leases as well as reinsurance and trade receivables. This standard will be effective for us as of January 1, 2023. We are currently evaluating the impact that the adoption of the new standard will have on our condensed consolidated and combined financial statements.

In accordance with Accounting Standards Codification ("ASC") Topic 350, “Intangibles—Goodwill and Other,” the Company’s FCC licenses are considered indefinite-lived intangibles. These assets, which the Company determined were its only indefinite-lived intangibles, are not subject to amortization, but are tested for impairment at least annually as discussed below.

The carrying amounts of the Company’s FCC licenses were $63.3 million as of ~~February 28,~~December 31, 2019 and ~~September 30, 2019.~~March 31, 2020. Pursuant to our accounting policy, stations in a geographic market cluster are considered a single unit of accounting, provided that they are not being operated under an LMA with another broadcaster. The stations have historically performed an annual impairment test of indefinite-lived intangibles as of December 1 of each year. In connection with our change in fiscal years from one that ends in February to a traditional calendar year end, we plan to perform our annual impairment test of indefinite-lived intangible assets as of October 1 of each year. When indicators of impairment are present, we will perform an interim impairment test. During the three months ended ~~September 30, 2019, no new or additional impairment indicators emerged;~~March 31, 2020, the emergence of the COVID-19 pandemic only had a modest impact on our radio operations; hence, no interim impairment testing was warranted. These impairment tests may result in additional impairment charges in future periods.

Fair value of our FCC licenses is estimated to be the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To determine the fair value of our FCC licenses, the Company ~~uses an~~considers both income and market valuation ~~method~~methods when it performs its impairment tests. Under ~~this~~the income method, the Company projects cash flows that would be generated by its unit of accounting assuming the unit of accounting was commencing operations in its market at the beginning of the valuation period. This cash flow stream is discounted to arrive at a value for the FCC license. The Company assumes the competitive situation that exists in its market remains unchanged, with the exception that its unit of accounting commenced operations at the beginning of the valuation period. In doing so, the Company extracts the value of going concern and any other assets acquired, and strictly values the FCC license. Major assumptions involved in this analysis include market revenue, market revenue growth rates, unit of accounting audience share, unit of accounting revenue share and discount rate. Each of these assumptions may change in the future based upon changes in general economic conditions, audience behavior, consummated transactions, and numerous other variables that may be beyond our control. The projections incorporated into our license valuations take into consideration then current economic conditions. Under the market method, the Company uses recent sales of comparable radio stations for which the sales value appeared to be concentrated entirely in the value of the license, to arrive at an indication of fair value. When evaluating our radio broadcasting licenses for impairment, the testing is performed at the unit of accounting level as determined by ASC Topic 350-30-35. In our case, radio stations in a geographic market cluster are considered a single unit of accounting, provided that they are not being operated under an LMA.

As a result of the Fairway Acquisition discussed in Note 1, goodwill of $11.4 million was recognized in December 2019. ASC Topic 350-20-35 requires the Company to test goodwill for impairment at least annually. The acquisition closed on December 13, 2019 and all assets acquired and liabilities assumed were valued as of that date, resulting in a goodwill valuation of $11.4 million. We made a purchase price allocation adjustment during the three months ended March 31, 2020 resulting in an increase to goodwill of $0.1 million. The goodwill relating to this acquisition accounts for all goodwill on the condensed consolidated balance sheets as of December 31, 2019 and March 31, 2020. During the three months ended March 31, 2020, the emergence of the COVID-19 pandemic had a minimal impact on our outdoor operations; hence, no interim impairment testing was warranted. The Company will conduct its impairment test on October 1 of each fiscal year, unless indications of impairment exist during an interim period. The purchase price allocation of the Fairway Acquisition is preliminary and subject to adjustment. Any adjustment to the purchase price allocation may directly impact the value of goodwill.

As a result of the Fairway Acquisition, the Company acquired the trade name “Fairway”. The trade name is well known in the industry and is being retained for continued market use following the acquisition. This trade name favorably factors into customer purchasing decisions. For the purchase price allocation, the trade name was valued using the relief from royalty method. This method is based on what a company would be willing to pay for a royalty in order to exploit the related benefits of the trade name. The value of the trade name is determined by discounting the inherent after-tax royalty savings associated with ownership or possession of the trade name. The preliminary valuation assigned to the trade name as a result of the purchase price accounting is $0.7 million. The trade name is an indefinite-lived intangible asset based on our intention to renew it when legally required and to utilize it going forward. We will assess the trade name annually for impairment on October 1 of each year, unless indications of impairment exist during an interim period.

The following table presents the weighted-average useful life at ~~September 30, 2019,~~March 31, 2020, and the gross carrying amount and accumulated amortization for our ~~sole~~ definite-lived intangible ~~asset~~assets at ~~February 28,~~December, 31 2019, and ~~September 30, 2019:~~March 31, 2020:

As of February 28, 2019

As of September 30, 2019

(in 000's, except years)

Gross Carrying
Amount

Accumulated
Amortization

Net Carrying
Amount

Gross Carrying
Amount

Accumulated
Amortization

Net Carrying
Amount

Weighted
Average
Remaining
Useful Life
(in years)
Programming agreement

$
2,154

$
1,394

$
760

$
2,154

$
1,566

$
588

2.0

	As of December 31, 2019						As of March 31, 2020
	(in 000's, except years)
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Weighted Average Remaining Useful Life (in years)
Programming agreement	$	2,154	$	1,640	$	514	$	2,154	$	1,713	$	441	1.5
Customer List		3,030		14		3,016		3,030	295			2,735	2.7

In accordance with Accounting Standards Codification paragraph 360-10, the Company performs an analysis to (i) determine if indicators of impairment of a long-lived asset are present, (ii) test the long-lived asset for recoverability by comparing undiscounted cash flows of the long-lived asset to its carrying value and (iii) measure any potential impairment by comparing the long-lived asset's fair value to its current carrying value.

Total amortization expense from definite-lived intangibles for the ~~seven-month~~three-month periods ended ~~September 30, 2018~~March 31, 2019 and ~~2019~~2020 was ~~$0.2~~$0.1 million ~~in both periods.~~and $0.4 million, respectively. The following table presents the Company's estimate of future amortization expense for definite-lived intangibles:

Year ending December 31,	Expected Amortization Expense		Expected Amortization Expense
Remainder of 2019	$	73
2020		294
Remainder of 2020			$	978
2021		221		1,230
2022				968

The Company generates revenue from the sale of services including, but not limited to: (i) on-air commercial broadcast time, (ii) display advertising on outdoor structures, (iii) non-traditional revenues including event-related revenues and event sponsorship revenues, and ~~(iii)~~(iv) digital advertising. Payments received from advertisers before the performance obligation is satisfied are recorded as deferred revenue. Substantially all deferred revenue is recognized within twelve months of the payment date. We do not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less. Advertising revenues presented in the condensed consolidated and combined ~~condensed~~ financial statements are reflected on a net basis, after the deduction of advertising agency fees, usually at a rate of 15% of gross revenues.

On-air broadcast revenue is recognized when or as performance obligations under the terms of a contract with a customer are satisfied. This typically occurs over the period of time that advertisements are provided, or as an event occurs. Revenues are reported at the amount the Company expects to be entitled to receive under the contract. Payments received from advertisers before the performance obligation is satisfied are recorded as deferred revenue in the ~~combined~~ condensed consolidated balance sheet. Substantially all deferred revenue is recognized within twelve months of the payment date.

Our outdoor advertising business has approximately 3,300 faces consisting of bulletins, posters and digital billboards. Bulletins are generally large, illuminated advertising structures that are located on major highways and target vehicular traffic. Posters are generally smaller advertising structures that are located on major traffic arteries and city streets and target vehicular and pedestrian traffic. Digital billboards are computer controlled LED displays where six to eight advertisers rotate continuously, each one having seven to ten seconds to display a static image. Digital billboards are generally located on major traffic arteries and streets.

Nontraditional revenues principally consist of ticket sales and sponsorship of events our stations conduct in their local market. These revenues are recognized when our performance obligations are fulfilled, which generally coincides with the occurrence of the related event.

Digital revenue relates to revenue generated from the sale of digital marketing services (including display advertisements and video ~~sponsorships)~~sponsorships, but excluding digital billboard advertisements) to advertisers. Digital revenues are generally recognized as the digital advertising is delivered.

Other revenue includes barter revenue, network revenue, and ~~network~~production revenue. The Company provides advertising broadcast time in exchange for certain products and services, including on-air radio programming. These barter arrangements generally allow the Company to preempt such bartered broadcast time in favor of advertisers who purchase time for cash consideration. These barter arrangements are valued based upon the Company’s estimate of the fair value of the products and services received. Revenue is recognized on barter arrangements when we broadcast the advertisements. Advertisements delivered under barter arrangements are typically aired during the same period in which the products and services are consumed. The Company also sells certain remnant advertising inventory to third-parties for cash, and we refer to this as network revenue. The third-parties aggregate our remnant inventory with other broadcasters' remnant inventory for sale to third parties, generally to large national advertisers. This network revenue is recognized as we broadcast the advertisements.In connection with certain outdoor advertising arrangements, the customer may request that the Company produce the billboard wrap (commonly printed on a vinyl material) displaying the customer’s advertisement on our outdoor structure. This production revenue is recognized as the deliverable is made available to the customer or attached to our outdoor structure.

The following table presents the Company's revenues disaggregated by revenue source:

	For the One Month Ended September 30,				For the Seven Months Ended September 30,				For the Three Months Ended March 31,
	2018		2019		2018		2019		2019		% of Total			2020		% of Total
Revenue by Source:
Advertising	$	2,604	$	2,689	$	16,959	$	17,666
Radio Advertising									$	6,042		74	%	$	6,380		54	%
Outdoor Advertising										—		0	%		3,267		28	%
Nontraditional		1,079		824		6,474		7,868		261		3	%		168		1	%
Digital		379		359		1,700		2,119		714		9	%		674		6	%
Other		343		430		2,783		2,801		1,129		14	%		1,296		11	%
Total net revenues	$	4,405	$	4,302	$	27,916	$	30,454	$	8,146				$	11,785

Long-term debt was comprised of the following at December 31, 2019, and March 31, 2020:

On November 25, 2019, the Company entered into a $50.0 million, five-year senior secured term loan agreement (the “Senior Credit Facility”) with GACP Finance Co., LLC, a Delaware limited liability company, as administrative agent and collateral agent, which included one tranche of additional borrowings of $25.0 million. The Senior Credit Facility provided for initial borrowings of up to $50.0 million, of which net proceeds of $48.3 million after debt discount of $1.7 million, were paid concurrently to Emmis in connection with SG Broadcasting’s acquisition of a controlling interest in the Company. The Senior Credit Facility bears interest at a rate equal to the London Interbank Offered Rate ("LIBOR"), plus 7.5%, with a 2.0% LIBOR floor. The Senior Credit Facility requires interest payments on the first business day of each calendar month, and quarterly payments on the principal in an amount equal to one and one quarter percent of the initial aggregate principal amount are due on the last day of each calendar quarter. The Senior Credit Facility includes covenants pertaining to, among other things, the ability to incur indebtedness, restrictions on the payment of dividends, minimum Liquidity of $2.0 million for the period from the effective date until November 25, 2020, $2.5 million for the period from November 26, 2020 until November 25, 2021, and $3.0 million for the period thereafter, collateral maintenance, minimum Consolidated Fixed Charge Coverage Ratio of 1.10:1.00, and other customary restrictions. The Company borrowed $23.4 million of the remaining available borrowings to fund the Fairway Acquisition on December 13, 2019. Proceeds received were $22.6 million, net of a debt discount of $0.8 million.

On February 28, 2020, the Company entered into Amendment No. 1 to its Senior Credit Facility, in order to, among other things, increase the maximum aggregate principal amount issuable under the SG Broadcasting Promissory Note to $10.3 million.

On March 27, 2020, the Company entered into Amendment No. 2 (“Amendment No. 2”) to its Senior Credit Facility, in order to, among other things, (i) reduce the required Consolidated Fixed Charge Coverage Ratio (as defined in the Senior Credit Facility) to 1.00x from June 30, 2020 to December 31, 2020, (ii) reduce the minimum Liquidity (as defined in the Senior Credit Facility) requirement to $1.0 million through September 30, 2020, (iii) permit equity contributions and loans during calendar year 2020 under the SG Broadcasting Promissory Note and any amendments thereto to count toward Consolidated EBITDA (as defined in the Senior Credit Facility) for purposes of the Consolidated Fixed Charge Coverage Ratio calculation, and (iv) increase the maximum aggregate principal amount issuable under the Second Amended and Restated SG Broadcasting Promissory Note (as defined below) from $10.3 million to $20.0 million. In connection with Amendment No. 2, the Company incurred an amendment fee of approximately $0.2 million, which was added to the principal amount of the Senior Credit Facility then outstanding. The Senior Credit Facility is carried net of a total unamortized discount of $2.5 million at March 31, 2020.

On November 25, 2019, as part of the consideration owed to Emmis in connection with SG Broadcasting’s acquisition of a controlling interest in the Company, the Company issued to Emmis the Emmis Convertible Promissory Note in the amount of $5.0 million. The Emmis Convertible Promissory Note carries interest at a base rate equal to the interest on any senior credit facility, or if no senior credit facility is outstanding, of 6.0%, plus an additional 1.0% on any payment of interest in kind and, without regard to whether the Company pays such interest in kind, an additional increase of 1.0% following the second anniversary of the date of issuance and additional increases of 1.0% following each successive anniversary thereafter. Because the Senior Credit Facility prohibits the Company from paying interest in cash on the Emmis Convertible Promissory Note, the Company has been accruing interest since inception using the rate applicable if the interest will be paid in kind. The Emmis Convertible Promissory Note is convertible, in whole or in part, into MediaCo Class A common stock at the option of Emmis beginning six months after issuance and at a strike price equal to the thirty day volume weighted average price of the MediaCo Class A common stock on the date of conversion. The Emmis Convertible Promissory Note matures on November 25, 2024.

On November 25, 2019, the Company issued the SG Broadcasting Promissory Note, a subordinated convertible promissory note payable by the Company to SG Broadcasting, in return for which SG Broadcasting contributed to MediaCo $6.3 million for working capital and general corporate purposes. The SG Broadcasting Promissory Note carries interest at a base rate equal to the interest on any senior credit facility, or if no senior credit facility is outstanding, of 6.0%, and an additional increase of 1.0% following the second anniversary of the date of issuance and additional increases of 1.0% following each successive anniversary thereafter. The SG Broadcasting Promissory Note matures on May 25, 2025. Additionally, interest under the SG Broadcasting Promissory Note is payable in kind through maturity, and is convertible into MediaCo Class A common stock at the option of SG Broadcasting beginning six months after issuance and at a strike price equal to the thirty day volume weighted average price of the MediaCo Class A common stock on the date of conversion.

On February 28, 2020, the Company and SG Broadcasting amended and restated the SG Broadcasting Promissory Note such that the maximum aggregate principal amount issuable under the note was increased from $6.3 million to $10.3 million. Also on February 28, 2020, SG Broadcasting loaned an additional $2.0 million to the Company pursuant to the amended note for working capital purposes.

On March 27, 2020, the Company and SG Broadcasting further amended and restated the SG Broadcasting Promissory Note (the “Second Amended and Restated SG Promissory Note”) such that the maximum aggregate principal amount issuable under the note was increased from $10.3 million to $20.0 million. Amounts in excess of $6.3 million may not be converted into Class A common stock unless the issuance of such shares is approved by the Company’s shareholders. On March 27, 2020, SG Broadcasting loaned an additional $3.0 million to the Company pursuant to the Second Amended and Restated SG Promissory Note for working

capital purposes. Consequently, the principal amount outstanding under the Second Amended and Restated SG Broadcasting Promissory Note as of March 31, 2020 was $11.3 million.

Based on amounts outstanding at March 31, 2020, mandatory principal payments of long-term debt for the next five years and thereafter are summarized below:


Year ended December 31,	Senior Credit Facility		Emmis Note		SG Broadcasting Note		Total Payments
Remainder of 2020	$	2,754	$	—	$	—	$	2,754
2021		3,672		—		—		3,672
2022		3,672		—		—		3,672
2023		3,672		—		—		3,672
2024		58,019		5,000		—		63,019
Thereafter		—		—		11,250		11,250
Total	$	71,789	$	5,000	$	11,250	$	88,039

From time to time, our stations are parties to various legal proceedings arising in the ordinary course of business. In the opinion of management of the Company, however, there are no legal proceedings pending against the Company that we believe are likely to have a material adverse effect on the Company.

As discussed in Note 2,3, our provision for income taxes for the three-month period ended March 31, 2019 in these condensed consolidated and combined ~~condensed~~ financial statements has been calculated using the separate return basis, as if we filed separate tax returns. The effective tax rate for the ~~seven~~three months ended ~~September 30, 2018~~March 31, 2019 and ~~2019~~2020 was ~~33%~~32% and ~~32%~~(29)% respectively, which approximates the combined federal, state and local statutory rate of ~~31%~~30%.

We determine if an arrangement is a lease at inception. We have operating leases for office space, tower space, equipment and automobiles expiring at various dates through ~~March 2032.~~October 2049. Some leases have options to extend and some have options to terminate. Beginning March 1, 2019, operating leases are included in operating lease right-of-use assets, current operating lease liabilities, and noncurrent operating lease liabilities in our condensed consolidated and combined ~~condensed~~ balance sheet.

Operating lease assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As our leases do not provide an implicit rate, we use Emmis’ incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. We use the implicit rate if it is readily determinable. Our lease terms may include options to extend or terminate the lease, which we treat as exercised when it is reasonably certain and there is a significant economic incentive to exercise that option.

Operating lease expense for operating lease assets is recognized on a straight-line basis over the lease term. Variable lease payments, which represent lease payments that vary due to changes in facts or circumstances occurring after the commencement date other than the passage of time, are expensed in the period in which the obligation for these payments was incurred. Variable lease expense recognized in the ~~seven~~three months ended ~~September 30, 2019,~~March 31, 2020 was not material.

We elected not to apply the recognition requirements of Accounting Standards Codification 842, “~~Leases~~Leases”, to short-term leases, which are deemed to be leases with a lease term of twelve months or less. Instead, we recognized lease payments in the condensed consolidated and combined ~~condensed~~ statements of operations on a straight-line basis over the lease term and variable payments in the period in which the obligation for these payments was incurred. We elected this policy for all classes of underlying assets. Short-term lease expense recognized in the ~~seven~~three months ended ~~September 30, 2019,~~March 31, 2020, was not material.

The impact of operating leases to our condensed consolidated financial statements was as follows:

	Seven Months Ended September 30,			Three Months Ended March 31,
	2019			2020
Lease Cost
Operating lease cost	$	1,511		$	1,248
Other Information
Operating cash flows from operating leases		1,746			1,490
Right-of-use assets obtained in exchange for new operating lease liabilities		14,940			—
Weighted average remaining lease term - operating leases (in years)		7.2			9.1
Weighted average discount rate - operating leases		5.5	%		10.5	%

As of ~~September 30, 2019,~~March 31, 2020, the annual minimum lease payments of our operating lease liabilities were as follows:

Year ending December 31,
Remainder of 2019	$	749
2020		2,995
Remainder of 2020			$	3,549
2021		3,001		5,211
2022		2,926		5,105
2023		1,993		4,123
After 2023		5,040
2024				2,712
After 2024				18,968
Total lease payments		16,704		39,668
Less imputed interest		3,123		14,407
Total recorded lease liabilities	$	13,581	$	25,261

Our outdoor advertising business generates lessor revenue derived from operating leases accounted for under ASC 842, “Leases.” Minimum fixed lease consideration under non-cancelable operating leases for each of the next five years and thereafter, excluding variable lease consideration, as of March 31, 2020, is as follows:

The Company’s asset retirement obligation includes the costs associated with the removal of its structures, resurfacing of the land and retirement cost, if applicable, related to the Company’s outdoor advertising portfolio. The following table reflects information related to our asset retirement obligations.

On December 9, 2019, the Company’s Board approved the assumption from an affiliate of SG Broadcasting of an agreement to purchase FMG Valdosta, LLC and FMG Kentucky, LLC from Fairway Outdoor Advertising Group, LLC for a purchase price of $43.1 million, subject to customary working capital adjustments. Closing of the transaction occurred on December 13, 2019. FMG Valdosta, LLC and FMG Kentucky, LLC are outdoor advertising businesses that operate advertising displays principally across Kentucky, West Virginia, Florida and Georgia. The acquisition was funded through $23.4 million of additional borrowings under the Senior Credit Facility as described in Note 6, which were net of a debt discount of $0.8 million, resulting in $22.6 million of proceeds. The remainder was financed by SG Broadcasting through $22.0 million of newly-issued Series A Convertible Preferred Stock. The terms of the Series A convertible preferred stock are described in Note 13. The Company believes this is a highly-scalable business model with attractive operative leverage.

As of March 31 2020, our fair value allocation of the assets acquired and liabilities assumed from Fairway Outdoor is considered preliminary and is subject to revision, which may result in adjustments to this allocation. An adjustment was made in the three-month period ended March 31, 2020 which resulted in an increase to both goodwill and the asset retirement obligation of less than $0.1 million. We continue to analyze inputs to the valuation models for all long term assets, including intangibles, as well as estimated asset retirement obligations. We expect to finalize these amounts during 2020.The allocations presented in the table below are based upon management’s estimate of the fair value using valuation techniques including income, cost and market approaches. The most significant asset acquired, property, plant and equipment, was valued using the cost approach. The preliminary purchase price allocation was as follows:

~~Combined equity includes retained earnings~~The Fairway Acquisition was accounted for under the acquisition method of accounting, and, accordingly, the accompanying consolidated and combined financial statements include the results of operations of each acquired entity from the date of acquisition.

The following unaudited pro forma financial information for the Company gives effect to the Fairway Acquisition as if it had occurred on January 1, 2019. These pro forma results do not purport to be indicative of the ~~Stations~~results of operations which actually would have resulted had the acquisition occurred on such date or to project the Company’s results of operations for any future period.

Goodwill of $11.5 million was recognized as a result of the purchase which represented the excess of the purchase price over the identifiable acquired assets, $9.0 million of which is deductible for tax purposes. The goodwill acquired is assigned to the outdoor advertising segment.

The Company’s operations are aligned into two business segments: (i) Radio, and (ii) Outdoor advertising. Radio includes the ~~funding~~operations and results of WQHT-FM and WBLS-FM, and outdoor advertising includes the operations and results of the Fairway businesses acquired in December 2019. The Company groups activities that are not considered operating segments in the “All Other” category.

These business segments are consistent with the Company’s management of these businesses and its financial reporting structure. Corporate expenses, including transaction costs, are not allocated ~~expenses from Emmis. Corporate overhead~~to reportable segments. The Company’s segments operate exclusively in the United States.

The accounting policies as described in the summary of significant accounting policies included in the Company’s Annual Report filed on Form 10-K for the ten months ended December 31, 2019, and ~~other amounts have been allocated from Emmis~~in Note 1 to these condensed consolidated and ~~offset within~~ combined ~~equity.~~financial statements, are applied consistently across segments.

~~The accompanying combined condensed~~For the three months ended March 31, 2019, MediaCo was 100% owned by Emmis. Our financial statements ~~present the operations of WQHT-FM and WBLS-FM as carved-out~~for this period are derived from the ~~financial statements~~books and records of Emmis. As described ~~in Note 11,~~below, Emmis provides us certain services, including executive oversight, legal, finance, human resources and information technology. Our condensed consolidated and combined ~~condensed~~ financial statements reflect an allocation of these costs. When specific identification is not practicable, these costs have been allocated on a pro rata basis of revenue, headcount and other measures. In addition, our employees ~~participate~~participated in Emmis share-based compensation plans, the costs of which have been allocated to us.

Emmis’ third-party debt and the related interest expense have not been allocated to us for any of the periods presented as we were not the legal obligor of the debt and Emmis borrowings were not directly attributable to our stations.

On June 28, 2019, MediaCo entered into a Contribution and Distribution Agreement with Emmis and SG Broadcasting, pursuant to which (i) Emmis contributed the assets of its radio stations WQHT-FM and WBLS-FM, in exchange for $91.5 million in cash, a $5.0 million note and 23.72% of the common stock of MediaCo, (ii) Standard General purchased 76.28% of the common stock of MediaCo, and (iii) the common stock of MediaCo received by Emmis ~~will be~~was distributed pro rata in a taxable dividend to Emmis’ ~~shareholders.~~shareholders on January 17, 2020. The common stock of MediaCo acquired by Standard General is entitled to ten votes per share and the common stock acquired by Emmis and distributed to Emmis’ shareholders is entitled to one vote per share. Emmis will continue to provide management services to the Stations under a Management Agreement, subject to the direction of the MediaCo board of directors which ~~initially~~currently consists of four directors appointed by Standard General and three directors appointed by Emmis. MediaCo will pay Emmis an annual management fee of $1.25 million, plus reimbursement of certain expenses directly related to the operation of ~~Mediaco’s~~MediaCo’s business. The sale closed on November 25, 2019, ~~as described in Note 11,~~ at which time MediaCo and Emmis also entered into athe management agreement (the “Management Agreement”), an employee leasing agreement (the “Employee Leasing Agreement”) and certain other ancillary agreements.

For the three months ended March 31, 2020, MediaCo recorded $0.3 million of management fee expense, which is included in corporate expenses in the accompanying condensed consolidated and combined statements of operations. $0.1 million was unpaid as of March 31, 2020 and is included in accounts payable and accrued expenses in the accompanying condensed consolidated and combined balance sheets. Under the Employee Leasing Agreement, the employees of the Stations will remain employees of Emmis and we reimburse Emmis for the cost of these employees, including health and benefit costs. The initial term of the Employee Leasing Agreement will last through December 31, 2020, and will automatically renew for successive six-month periods, unless otherwise terminated upon the occurrence of certain events. Upon termination of the Employee Leasing Agreement, we will hire all of the leased employees and assume employment and collective bargaining agreements related to those employees. Expense related to the Employee Leasing Agreement was $3.1 million for the three months ended March 31, 2020. This expense is recognized in operating expenses, $0.3 million remains unpaid as of March 31, 2020.

As a result of the Transaction, ~~described above and in Note 11,~~ on November 25, 2019, we issued convertible promissory notes to both Emmis and SG Broadcasting in the amounts of $5.0 million and ~~$6.25~~$6.3 million, respectively. On February 28, 2020, the Company and SG Broadcasting amended and restated the SG Broadcasting Promissory Note such that the maximum aggregate principal amount issuable under the note was increased from $6.3 million to $10.3 million. Also on February 28, 2020, SG Broadcasting loaned an additional $2.0 million to the Company pursuant to the amended note for working capital purposes.

On March 27, 2020, the Company and SG Broadcasting further amended and restated the SG Broadcasting Promissory Note such that the maximum aggregate principal amount issuable under the note was increased from $10.3 million to $20.0 million. On March 27, 2020, SG Broadcasting loaned an additional $3.0 million to the Company pursuant to the Second Amended and Restated SG Promissory Note for working capital purposes. Consequently, the principal amount outstanding under the Second Amended and Restated SG Broadcasting Promissory Note as of March 31, 2020 was $11.3 million.

On December 13, 2019, in connection with the Fairway Acquisition, the Company issued to SG Broadcasting 220,000 shares of MediaCo Series A Convertible Preferred Stock.

MediaCo Series A Preferred Shares rank senior in preference to the MediaCo Class A common stock, MediaCo Class B common stock, and the MediaCo Class C common stock. Pursuant to the Articles of Amendment, the ability of the Company to make distributions with respect to, or make a liquidation payment on, any other class of capital stock in the Company designated to be junior to, or on parity with, the MediaCo Series A Preferred Shares, will be subject to certain restrictions, including that (i) the MediaCo Series A Preferred Shares shall be entitled to receive the amount of dividends per share that would be payable on the number of whole common shares of the Company into which each share of MediaCo Series A Preferred Share could be converted, and (ii) the MediaCo Series A Preferred Shares, upon any liquidation, dissolution or winding up of the Company, shall be entitled to a preference on the assets of the Company. Issued and outstanding shares of MediaCo Series A Preferred Shares shall accrue cumulative dividends, payable in kind, at an annual rate equal to the interest rate on any senior debt of the Company (see Note 6), or if no senior debt is outstanding, 6%, plus additional increases of 1% on December 12, 2020 and each anniversary thereof.

MediaCo Series A Preferred Shares are redeemable for cash at the option of SG Broadcasting at any time on or after June 12, 2025, and so the shares are classified outside of permanent equity. The Series A Preferred Shares are also convertible into shares of Class A common stock at the option of SG Broadcasting at any time on or after May 25, 2020, with the number of shares of common stock determined by dividing the original contribution, plus accrued dividends, by the 30-day volume weighted average share price of Class A common shares. On and after May 25, 2020, when the conversion option becomes effective, the Series A Preferred Shares will be considered participating securities and earnings per share will be calculated using the two-class method.

~~On November 25,~~In March 2020 the World Health Organization declared the global novel coronavirus disease 2019 ~~MediaCo, Emmis~~(COVID-19) outbreak a pandemic. While the pandemic began to negatively impact our businesses in late March 2020, the overall impact of the pandemic on our financial results for the three months ended March 31, 2020 was not material. However, subsequent to March 31, 2020, we have experienced a rapid deterioration in our business results, particularly in our radio operations, which are highly dependent on the economy of New York City and ~~SG Broadcasting consummated~~ the ~~Transaction contemplated~~surrounding areas, which have been amongst the areas hardest hit by the ~~Contribution~~pandemic thus far. This deterioration was caused by many advertisers cancelling their orders and ~~Distribution Agreement dated June 28, 2019 (the “Transaction Agreement”).~~ ~~At the closing~~an overall reduction in new advertising orders. The full extent of the ~~Transaction~~impact is not known at this point, including our ability to collect amounts owed to us relating to advertisements that have already been aired and invoiced to customers, as the scale and severity of the outbreak, coupled with the response from federal, state and local governments, is still unknown.

On April 22, 2020, MediaCo and Emmis entered into a certain Loan Proceeds Participation Agreement (the “LPPA”) pursuant to which (i) Emmis agreed to use certain of the proceeds of the loan Emmis received pursuant to the ~~terms~~Paycheck Protection Program under Division A, Title I of the ~~Transaction Agreement,~~ ~~Emmis contributed the assets and liabilities~~CARES Act to pay certain wages of ~~WBLS-FM and WQHT-FM (the “Initial Contribution”) and~~ ~~SG Broadcasting made an initial capital contribution~~employees leased to MediaCo pursuant to the ~~Company (the “SG Broadcasting Investment”)~~Employee Leasing Agreement, between Emmis and MediaCo (ii) Emmis agreed to waive up to $1.5 million in reimbursement obligations of ~~$41.5 million. In return for~~MediaCo to Emmis under the SG Broadcasting Investment, the Company issued to SG Broadcasting 5,359,753 shares of the Company’s Class B common stock, par value $0.01 (the “MediaCo Class B Shares”). These shares constitute all of the issued and outstanding MediaCo Class B Shares, representing in the aggregate an approximately 76.28% equity ownership interest and 96.98% of the outstanding voting interests of the Company immediately following the Transaction. In addition, SG Broadcasting loanedEmployee Leasing Agreement to the ~~Company $6.25 million for working capital purposes, in return for which~~extent that the ~~Company issued a convertible promissory note~~PPP Loan is forgiven, and (iii) MediaCo agreed to SG Broadcasting in the original principal amount of $6.25 million (the “SG Broadcasting Promissory Note”). Along with $50.0 million borrowed by the Company under the Senior Credit Facility (as defined below), the SG Broadcasting Investment and the loan evidenced by the SG Broadcasting Promissory Note funded the $91.5 million purchase price payable to Emmis for the Initial Contribution (the “Purchase Price”), as well as certain transaction expenses and working capital needs of the Company. Simultaneous with the Initial Contribution, the Company paid to Emmis the Purchase Price, issued to Emmis a convertible promissory note payable by the Company in the amount of $5.0 million (the “Emmis Convertible Promissory Note”) and issued to Emmis 1,666,667 shares of MediaCo Class A Shares. These shares constitute all of the issued and outstanding MediaCo Class A Shares and represent in the aggregate an approximately 23.72% equity ownership interest and 3.02% of the outstanding voting interests of the Company immediately following the Transaction. We expect that, on January 17, 2020, Emmis will make a taxable pro rata distribution of 0.1265 shares of our Class A common stock for each outstanding share of Emmis’ Class A and Class B common stock at the close of business of January 3, 2020. As a result we expect that, on January 18, 2020, regular way trading of the MediaCo Class A Shares will commence on the Nasdaq Capital Market under the symbol “MDIA”.

~~In connection with the Transaction, on November 25, 2019, we entered into certain agreements to provide a framework for our relationship with Emmis and SG Broadcasting following the Transaction.~~

We entered into a management agreement with Emmis Operating Company (EOC) for an initial term of two years under which Emmis will provide various services to us, including accounting, human resources, information technology, legal, public reporting and tax. We willpromptly pay Emmis ~~an annual fee of $1.25 million in equal monthly installments for these services, plus reimbursement of certain expenses directly related to our operations.~~

We have also entered into an employee leasing agreement with Emmis whereby the employees of the Stations will remain employees of Emmis and we will reimburse Emmis for the cost of these employees, including health and benefit costs. The initial term of the employee leasing agreement will last through December 31, 2020, and will automatically renew for successive six-month periods, unless otherwise terminated upon the occurrence of certain events. Upon termination of the employee leasing agreement, we will hire all of the leased employees and assume ~~employment~~ ~~and collective bargaining agreements related to those employees.~~

On November 25, 2019, the Company entered into a $50.0 million, five-year senior secured term loan agreement (the “Senior Credit Facility”) with GACP Finance Co., LLC, a Delaware limited liability company, as administrative agent and collateral agent. The Senior Credit Facility provides for initial borrowings of up to $50.0 million of which net proceeds of $48.3 million were paid concurrently to Emmis as consideration for the Initial Contribution, as well as one tranche of additional borrowings of $25.0 million. The Senior Credit Facility bears interest at a rate equal to the London Interbank Offered Rate ("LIBOR"), plus 7.5%. The Senior Credit Facility requires interest payments on the first business day of each calendar month, beginning December 2019, and quarterly payments on the principal in an amount equal to ~~one and one quarter percent~~31.56% of the initial aggregate principal amount will be due on the last day of each fiscal quarter beginning with the fiscal quarter ending December 31, 2019. The Senior Credit Facility includes covenants pertaining to, among other things, the ability to incur indebtedness, restrictions on the payment of dividends, minimum Liquidity (as defined in the Senior Credit Facility), collateral maintenance, minimum Consolidated Fixed Charge Coverage Ratio (as defined in the Senior Credit Facility) and other customary restrictions.

~~On November 25, 2019, as part of the consideration owed to Emmis at closing, the Company issued to Emmis the Emmis Convertible Promissory Note in~~ the amount of ~~$5.0 million. The~~the PPP Loan, if any, that Emmis ~~Convertible Promissory Note carries interest at a base rate equal~~is required to repay, up to the interest on any senior credit facility, or if no senior credit facility is outstanding, of 6.00%, plus an additional 1.00% on any payment of interest in kind and, without regard to whether the Company pays such interest in kind, an additional increase of 1.00% following the second anniversaryamount of the ~~date~~reimbursement obligations forgiven under (ii) above. Standard General L.P., on behalf of issuance and additional increases of 1.00% following each successive anniversary thereafter. The Emmis Convertible Promissory Note is convertible, in whole or in part, into MediaCo Class A Shares at the option of Emmis beginning six months after issuance and at a strike price equal to the thirty day volume weighted average priceall of the ~~MediaCo Class A Shares on the date of conversion. The Emmis Convertible Promissory Note matures on November 25, 2024.~~

~~On November 25, 2019, the Company issued the SG Broadcasting Promissory Note, a subordinated convertible promissory note payable by the Company to SG Broadcasting, in return~~funds for which ~~SG Broadcasting contributed~~it serves as an investment advisor, agreed to MediaCo $6.25 million for working capital and general corporate purposes. The SG Broadcasting Promissory Note carries interest at a base rate equal to the interest on any senior credit facility, or if no senior credit facility is outstanding, of 6.00%, and an additional increase of 1.00% following the second anniversary of the date of issuance and additional increases of 1.00% following each successive anniversary thereafter. The SG Broadcasting Promissory Note matures on May 25, 2025. Additionally, the SG Broadcasting Promissory Note is payable in interest in kind through maturity, and is convertible into MediaCo Class A Shares at the option of SG Broadcasting ~~beginning six months after issuance~~ ~~and at a strike price equal to the thirty day volume weighted average price of the MediaCo Class A Shares on the date of conversion.~~

~~In connection with closing the Transaction, MediaCo incurred approximately $2.1 million of transactions costs which will be reflected in our fourth quarter results.~~

On December 9, 2019, the Company’s Board approved the assumption from an affiliate of SG Broadcasting of an agreement to purchase FMG Valdosta, LLC and FMG Kentucky, LLC from Fairway Outdoor Advertising Group, LLC for a purchase price of $43.1 million, subject to customary working capital adjustments. Closing of the transaction occurred on December 13, 2019. FMG Valdosta, LLC and FMG Kentucky, LLC are outdoor advertising businesses that operate advertising displays principally across Kentucky, West Virginia, Florida and Georgia. Fees and expenses associated with the transaction were $1.2 million. The acquisition was funded through $23.4 million of additional borrowingsguaranty MediaCo’s obligations under the Senior Credit Facility described above, which were net of a debt discount of $0.8 million, resulting in $22.6 million of proceeds. The remainder was financed by SG Broadcasting through $22.0 million of newly-issued Series A Convertible Preferred Stock. The Series A Convertible Preferred Stock pays an in-kind dividend equal to the rate on the existing SG Broadcasting Promissory Note, is convertible into MediaCo Class A common stock on the same terms as the SG Broadcasting Promissory Note, and is redeemable at the option of the holder five years and six months after issuance. The excess $0.3 million of cash received will be used for general corporate purposes.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Note: Certain statements included in this report or in the financial statements contained herein which are not statements of historical fact, including but not limited to those identified with the words “expect,” “should,” “will” or “look” are intended to be, and are, by this Note, identified as “forward-looking statements,” as defined in the Securities and Exchange Act of 1934, as amended. Such statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to be materially different from any future result, performance or achievement expressed or implied by such forward-looking statement. Such factors include, among others:

For a more detailed discussion of these and other risk factors, see the Risk Factors section of our ~~Information Statement~~Transition Report on Form ~~10,~~10-KT, filed with the Securities and Exchange Commission on ~~November 22, 2019~~March 27, 2020. MediaCo does not undertake any obligation to publicly update or revise any forward-looking statements because of new information, future events or otherwise.

We own and operate two radio stations located in New York ~~New York.~~City and outdoor advertising businesses geographically focused in Southern Georgia and Eastern Kentucky. Our revenues are mostly affected by the advertising rates our ~~stations~~entities charge, as advertising sales ~~represent a majority~~are the primary component of our consolidated revenues. These rates are in large part based on our radio stations’ ability to attract audiences in demographic groups targeted by their ~~advertisers.~~advertisers and the number of persons exposed to our billboards. The Nielsen Company generally measures radio station ratings weekly for markets measured by the Portable People Meter™, which includes all of our radio stations. Because audience ratings in a station’s local market are critical to the station’s financial success, our strategy is to use market research, advertising and promotion to attract and retain audiences in each station’s chosen demographic target group.

Our revenues vary throughout the year. ~~As is typical in the broadcasting industry, our revenues~~Revenue and operating income are usually lowest in the first calendar quarter offor both our radio and outdoor advertising segments, partly because retailers cut back their advertising spending immediately following the ~~calendar year.~~holiday shopping season.

In addition to the sale of advertising time for cash, ~~our~~ stations typically exchange advertising time for goods or services, which can be used by the station in its business operations. These barter transactions are recorded at the estimated fair value of the product or service received. We generally confine the use of such trade transactions to promotional items or services for which we would otherwise have paid cash. In addition, it is our general policy not to preempt advertising spots paid for in cash with advertising spots paid for in trade.

The following table summarizes the sources of our revenues for the ~~one and seven~~three months ended ~~September 30, 2018~~March 31, 2019 and ~~2019.~~2020. The category “Non Traditional” principally consists of ticket sales and sponsorships of events our stations conduct in their local market. The category “Other” ~~primarily~~ includes, among other items, revenues related to network revenues, production of billboard advertisements and barter.

One Month Ended September 30,

Seven Months Ended September 30,

2018

% of Total

2019

% of Total

2018

% of Total

2019

% of Total

(Dollars in thousands)

Net revenues:

Local

$
2,045

46.4
%

$
2,212

51.4
%

$
14,505

52.0
%

$
14,938

49.1
%
National

148

3.4
%

477

11.1
%

2,033

7.3
%

2,728

9.0
%
Political

411

9.3
%

—

0.0
%

421

1.5
%

—

0.0
%
Non Traditional

1,079

24.5
%

824

19.2
%

6,474

23.2
%

7,868

25.8
%
Digital

379

8.6
%

359

8.3
%

1,700

6.1
%

2,119

7.0
%
Other

343

7.8
%

430

10.0
%

2,783

9.9
%

2,801

9.1
%
Total net revenues

$
4,405

$
4,302

$
27,916

$
30,454

	For the Three Months Ended March 31,
	2019		% of Total			2020		% of Total
Revenue by Source:
Radio Advertising	$	6,042		74	%	$	6,380		54	%
Outdoor Advertising		—		0	%		3,267		28	%
Nontraditional		261		3	%		168		1	%
Digital		714		9	%		674		6	%
Other		1,129		14	%		1,296		11	%
Total net revenues	$	8,146				$	11,785

~~As previously mentioned, we~~We derive a majority of our net revenues from radio advertising sales. ~~In the seven months ended September 30, 2019, local sales, excluding political revenues, represented~~Our radio operations represent approximately ~~85%~~two-thirds of our consolidated net revenues, with the remaining one-third coming from our outdoor advertising ~~revenues.~~

operations. No customer represents more than 10% of our net revenues. Our top ten categories represent approximately 67% and 70% of our stations’ total advertising net revenues for the seven months ended September 30, 2018 and 2019. The cellular and media industries were our largest categories for the seven months ended September 30, 2018 and 2019, respectively, representing 10% and 11% of our revenues, respectively.

~~A significant portion~~Roughly 20% of our expenses varies in connection with changes in revenue. These variable expenses primarily relate to costs in our sales department, such as salaries, commissions and bad debt. Our costs that do not vary as much in relation to revenue are mostly in our programming and general and administrative departments, such as talent costs, ~~syndicated programming~~ratings fees, rent, utilities ~~office expenses~~ and salaries. Lastly, our costs that are highly discretionary are costs in our marketing and promotions department, which we primarily incur to maintain and/or increase our audience and market share.

The U.S. radio industry is a mature industry and its growth rate has stalled. Management believes this is principally the result of two factors: (1) new media, such as various media distributed via the Internet, telecommunication companies and cable interconnects, as well as social networks, have gained advertising share against radio and other traditional media and created a proliferation of advertising inventory and (2) the fragmentation of the radio audience and time spent listening caused by satellite radio, audio streaming services and podcasts has led some investors and advertisers to conclude that the effectiveness of radio advertising has diminished.

Along with a large portion of the radio industry, our stations have deployed HD Radio^®. HD Radio offers listeners advantages over standard analog broadcasts, including improved sound quality and additional digital channels. In addition to offering secondary channels, the HD Radio spectrum allows broadcasters to transmit other forms of data. We are participating in a joint venture with other broadcasters to provide the bandwidth that a third party uses to transmit location-based data to hand-held and in-car navigation devices. The number of radio receivers incorporating HD Radio has increased in the past year, particularly in new automobiles. It is unclear what impact HD Radio will have on the market in which we operate.

Our stations have also aggressively worked to harness the power of broadband and mobile media distribution in the development of emerging business opportunities by developing highly interactive websites with content that engages our listeners, deploying mobile applications and streaming our content, and harnessing the power of digital video on our websites and YouTube channels.

~~Our two~~The results of our radio operations are solely dependent on the results of our stations in the New York ~~account for all of our operating results.~~market. Some of our competitors that operate larger station clusters in the New York market are able to leverage their market share to extract a greater percentage of available advertising revenue through packaging a variety of advertising inventory at discounted unit rates. Market revenues in New York as measured by Miller Kaplan Arase LLP (“Miller Kaplan”), an independent public accounting firm used by the radio industry to compile revenue information, were ~~up 1.4%~~down 7.5% for the ~~seven~~three months ended ~~September 30, 2019,~~March 31, 2020, as compared to the same period of the prior year. During this period, revenues for our stations were up ~~8.2%~~1.2%.

As ~~discussed~~part of our business strategy, we continually evaluate potential acquisitions of businesses that we believe hold promise for long-term appreciation in ~~further detail below,~~value and leverage our ~~outperformance during this period was largely attributable~~strengths. However, MediaCo’s long-term debt agreements substantially limit our ability to ~~higher ticket sale revenues for~~make acquisitions. We also regularly review our ~~largest concert, Summer Jam.~~portfolio of assets and may opportunistically dispose of assets when we believe it is appropriate to do so.

The Company has been actively monitoring the COVID-19 situation and its impact globally, as well as domestically and in the markets we serve. Our priority has been the safety of our employees, as well as the informational needs of the communities that we serve. Through the first few months of calendar 2020, the disease became widespread around the world, and on March 11, 2020, the World Health Organization declared a pandemic. In an effort to mitigate the continued spread of COVID-19, many federal, state and local governments have mandated various restrictions, including travel restrictions, restrictions on non-essential businesses and services, restrictions on public gatherings and quarantining of people who may have been exposed to the virus. These restrictions, in turn, caused the United States economy to decline and businesses to cancel or reduce amounts spent on advertising, negatively impacting our advertising-based businesses. Furthermore, some of our advertisers have seen a material decline in their businesses and may not be able to pay amounts owed to us when they come due. If the spread of COVID-19 continues, or is suppressed but later reemerges, and public and private entities continue to implement restrictive measures, we expect that our results of operations, financial condition and cash flows will continue to be negatively affected, the extent to which is difficult to estimate at this time.

Critical accounting policies are defined as those that encompass significant judgments and uncertainties, and potentially lead to materially different results under different assumptions and conditions. We believe that our critical accounting policies are those described below.

Broadcasting revenue is recognized as advertisements are aired. ~~Broadcasting~~Both broadcasting revenue and outdoor advertising revenue recognition is subject to meeting certain ~~conditions.~~conditions such as persuasive evidence that an arrangement exists and collection is reasonably assured. These criteria are generally met at the time the advertisement is aired for broadcasting revenue or displayed for outdoor advertising revenue. ~~Advertising~~Broadcasting advertising revenues presented in the financial statements are reflected on a net basis, after the deduction of advertising agency fees, usually at a rate of 15% of gross revenues.

As of ~~February 28,~~December 31, 2019 and ~~September 30, 2019,~~March 31, 2020, we have recorded approximately $63.3 million in FCC licenses, which represents approximately ~~76% and~~ ~~67%,~~38% ~~respectively,~~ of our total assets. We would not be able to operate our radio stations without the related FCC license for each property. FCC licenses are renewed every eight years; consequently, we continually monitor our stations’ compliance with the various regulatory requirements. Historically, each of our FCC licenses has been renewed at the end of its respective period, and we expect that each FCC license will continue to be renewed in the future. We consider our FCC licenses to be indefinite-lived intangibles.

We do not amortize indefinite-lived intangible assets, but rather test for impairment at least annually or more frequently if events or circumstances indicate that an asset may be impaired. When evaluating our radio broadcasting licenses for impairment, the testing is performed at the unit of accounting level as determined by Accounting Standards Codification (“ASC”) Topic 350-30-35. In our case, radio stations in a geographic market cluster are considered a single unit of accounting, provided that they are not being operated under a Local Marketing Agreement by another broadcaster. Consequently, our two radio stations in New York are considered a single unit of accounting.

~~Historically, we have completed our annual impairment tests on December 1 of each year. In connection with our change in fiscal years, we~~We plan to perform the annual impairment test of our FCC Licenses as of October 1 of each year and to perform additional interim impairment testing whenever triggering events suggest such testing is warranted.

Fair value of our FCC licenses is estimated to be the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To determine the fair value of our FCC licenses, the Company ~~uses an~~considers both income and market valuation ~~method~~methods when it performs its impairment tests. Under ~~this~~the income method, the Company projects cash flows that would be generated by its unit of accounting assuming the unit of accounting was commencing operations in its respective market at the beginning of the valuation period. This cash flow stream is discounted to arrive at a value for the FCC license. The Company assumes the competitive situation that exists in the unit of accounting’s market remains unchanged, with the exception that the unit of accounting commenced operations at the beginning of the valuation period. In doing so, the Company extracts the value of going concern and any other assets acquired, and strictly values the FCC license. Major assumptions involved in this analysis include market revenue, market revenue growth rates, unit of accounting audience share, unit of accounting revenue share and discount rate. Each of these assumptions may change in the future based upon changes in general economic conditions, audience behavior, consummated transactions, and numerous other variables that may be beyond our control. The projections incorporated into our license valuations take then current economic conditions into consideration.Under the market method, the Company uses recent sales of comparable radio stations for which the sales value appeared to be concentrated entirely in the value of the license, to arrive at an indication of fair value.

As a result of the Fairway Acquisition discussed in Note 1, goodwill of $11.4 million was recognized in December 2019. ASC Topic 350-20-35 requires the Company to test goodwill for impairment at least annually. The acquisition closed on December 13, 2019 and all assets acquired and liabilities assumed were valued as of that date, resulting in a goodwill valuation of $11.4 million. We made a purchase price allocation adjustment during the three months ended March 31, 2020 resulting in an increase to goodwill of less than $0.1 million. The goodwill relating to this acquisition accounts for all goodwill on the condensed consolidated balance sheets as of December 31, 2019 and March 31, 2020. During the three months ended March 31, 2020, the emergence of the COVID-19 pandemic had a minimal impact on our outdoor operations; hence, no interim impairment testing was warranted. The Company will conduct its impairment test on October 1 of each fiscal year, unless indications of impairment exist during an interim period. The purchase price allocation of the Fairway Acquisition is preliminary and subject to adjustment. Any adjustment to the purchase price allocation may directly impact the value of goodwill.

The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequence of events that have been recognized in the Company’s financial statements or income tax returns. Income taxes are recognized during the year in which the underlying transactions are reflected in the consolidated statements of operations. Deferred taxes are provided for temporary differences between amounts of assets and liabilities recorded for financial reporting purposes as compared to amounts recorded for income tax purposes. After determining the total amount of deferred tax assets, the Company determines whether it is more likely than not that some portion of the deferred tax assets will not be realized. If the Company determines that a deferred tax asset is not likely to be realized, a valuation allowance will be established against that asset to record it at its expected realizable value.

Results of Operations for the ~~One-Month and Seven-Month~~Three-Month Periods Ended ~~September 30, 2019~~March 31, 2020, Compared to ~~September 30, 2018~~March 31, 2019

For the One Month
Ended September 30,

For the Seven Months
Ended September 30,

2018

2019

$ Change

% Change

2018

2019

$ Change

% Change

(As reported, amounts in thousands)

Net revenues

$
4,405

$
4,302

$
(103
)

(2.3
)%

$
27,916

$
30,454

$
2,538

9.1
%

	For the Three Months Ended March 31,
	2019		2020		$ Change		% Change
	(As reported, amounts in thousands)
Net revenues:
Radio	$	8,146	$	8,339	$	193		2.4	%
Outdoor Advertising		—		3,446		3,446	N/A
Total net revenues	$	8,146	$	11,785	$	3,639

Net radio revenues ~~were down~~increased in the ~~one-month~~three-month period ended ~~September 30, 2019 due~~March 31, 2020. Our radio stations significantly outperformed the New York market during the quarter, benefitting from certain political advertising during the quarter that sought to ~~$0.4 million~~reach the demographics of ~~political revenue in the same month of the prior year, which was nonrecurring in the current year, coupled with lower sponsorship revenues associated with~~ our Circle of Sisters event held in September, partially offset by higher local and national revenues. Net revenues were up in the seven months ended September 30, 2019 due to record-setting ticket sales associated with our largest concert, Summer Jam, which occurred in June 2019. We have also experienced strong growth in digital revenues, as this has been an area of investment for us.stations’ audiences.

We typically monitor the performance of our stations against the aggregate performance of the markets in which we operate based on reports for the period prepared by Miller Kaplan. Miller Kaplan reports are generally prepared on a gross revenues basis and exclude revenues from barter and syndication arrangements. Miller Kaplan reported gross revenues for our radio markets ~~increased 1.4%~~decreased 7.5% for the ~~seven-month~~three-month period ended ~~September 30, 2019,~~March 31, 2020, as compared to the same period of the prior year. Our gross revenues reported to Miller Kaplan were up ~~8.2%~~1.2% for the ~~seven-month~~three-month period ended ~~September 30, 2019,~~March 31, 2020, as compared to the same period of the prior year.

~~Station operating~~We acquired outdoor advertising businesses principally located in Southern Georgia and Eastern Kentucky in mid-December 2019; therefore, this is the first full quarter of activity for these businesses included in our consolidated results.

For the One Month
Ended September 30,

For the Seven Months
Ended September 30,

2018

2019

$ Change

% Change

2018

2019

$ Change

% Change

(As reported, amounts in thousands)

Station operating expenses excluding depreciation and amortization expense

$
3,664

$
3,911

$
247

6.7
%

$
22,301

$
23,454

$
1,153

5.2
%

		For the Three Months Ended March 31,
		2019		2020		$ Change		% Change
	(As reported, amounts in thousands)
Operating expenses excluding depreciation and amortization expense
Radio		$	6,888	$	6,931	$	43		0.6	%
Outdoor Advertising			—		2,526		2,526	N/A
Total operating expenses excluding depreciation and amortization expense		$	6,888	$	9,457	$	2,569

The increase in ~~station~~radio operating expenses excluding depreciation and amortization expense for the ~~seven-month~~three-month period ended ~~September 30, 2019~~March 31, 2020 is primarily due to three factors: (1) higher ~~employee health care costs,~~bad debt expense as we increased the reserve as of March 31, 2020 to account for current market conditions and the impact COVID-19 may have on our advertisers and their ability to pay for what we have already broadcasted for them, (2) higher compensation costs associated with ~~supporting digital sales growth,~~certain on-air talent, and (3) ~~personnel additions~~higher ratings expense. The prior year, which is presented on a carved-out basis from Emmis, includes $0.5 million of allocated costs from Emmis.

We acquired outdoor advertising businesses principally located in Southern Georgia and Eastern Kentucky in mid-December 2019; therefore, this is the first full quarter of activity for these businesses included in our consolidated results.

MediaCo became a public company in November 2019 and there were no corporate costs in the ~~back half~~historical carve-out financial statements. Corporate costs in the quarter ended March 31, 2020 principally consist of (1) professional fees associated with being a public company, (2) consulting fees associated with the ~~prior fiscal year, particularly in sales leadership roles.~~acquisition of our outdoor advertising businesses and related accounting matters, and (3) management fees paid to Emmis.

For the One Month
Ended September 30,

For the Seven Months
Ended September 30,

2018

2019

$ Change

% Change

2018

2019

$ Change

% Change

(As reported, amounts in thousands)

Depreciation and amortization

$
115

$
94

$
(21
)

(18.3
)%

$
699

$
698

$
(1
)

(0.1
)%

		For the Three Months Ended March 31,
		2019		2020		$ Change			% Change
	(As reported, amounts in thousands)
Depreciation and amortization
Radio		$	341	$	249	$	(92	)		(27.0	)%
Outdoor Advertising			—		778		778		N/A
Total depreciation and amortization		$	341	$	1,027	$	686

~~Depreciation~~The increase in depreciation and amortization expense ~~for~~in the ~~seven-month period~~quarter ended ~~September 30, 2019 is essentially unchanged as compared~~March 31, 2020 relates to the ~~same period~~acquisition of our outdoor advertising businesses in the quarter ended December 31, 2019. Radio depreciation and amortization expense decreased due to certain assets becoming fully depreciated in the prior year.

For the One Month
Ended September 30,

For the Seven Months
Ended September 30,

2018

2019

$ Change

% Change

2018

2019

$ Change

% Change

(As reported, amounts in thousands)

Operating income

$
626

$
297

$
(329
)

(52.6
)%

$
4,916

$
6,302

$
1,386

28.2
%

	For the Three Months Ended March 31,
	2019		2020			$ Change			% Change
	(As reported, amounts in thousands)
Operating income
Radio	$	917	$	1,159		$	242			26.4	%
Outdoor Advertising		—		142			142		N/A
All Other		—		(1,165	)		(1,165	)	N/A
Total operating income	$	917	$	136		$	(781	)

Operating income for radio in the ~~seven-month period ended September 30, 2019 increased principally~~prior year is net of $0.5 million of allocated costs from Emmis associated with the presentation of carve-out financial statements. Excluding these costs, radio operating income decreased due to ~~much-improved financial performance~~higher operating expenses associated with retaining certain on-air talent, an increase to our ~~largest concert, Summer Jam.~~bad debt reserve, and higher ratings fees.

There were no stand-alone corporate expenses in the prior year as MediaCo became a public company in November 2019.

For the quarter ended March 31, 2019 there was no interest expense allocated to MediaCo from Emmis in connection with the presentation of carve-out financial statements. During the quarter ended December 31, 2019, the Company entered into numerous debt instruments to finance SG Broadcasting’s acquisition of a controlling interest in the Company from Emmis in November 2019 and the Fairway Acquisition in December 2019. The quarter ended March 31, 2020 is therefore the first full quarter since these transactions occurred.

For the One Month
Ended September 30,

For the Seven Months
Ended September 30,

2018

2019

$ Change

% Change

2018

2019

$ Change

% Change

(As reported, amounts in thousands)

Provision for income taxes

$
192

$
97

$
(95
)

(49.5
)%

$
1,605

$
1,999

$
394

24.5
%

	For the Three Months Ended March 31,
	2019		2020			$ Change			% Change
	(As reported, amounts in thousands)
Provision for income taxes	$	289	$	(617	)	$	(906	)		(313.5	)%

~~Our effective income tax rate was 33% and 32% for~~Given the ~~seven-month periods ended September 30, 2018 and 2019, respectively. The~~uncertainty in the economy due to the ongoing COVID-19 pandemic, particularly in the New York market, the Company ~~estimates its effective tax rate for the year and applies that rate to~~concluded it could not reasonably estimate pre-tax income for the ~~applicable period.~~year ended December 31, 2020, so the Company is calculating its provision for income taxes on a discrete basis until there is greater clarity.

For the One Month
Ended September 30,

For the Seven Months
Ended September 30,

2018

2019

$ Change

% Change

2018

2019

$ Change

% Change

(As reported, amounts in thousands)

Consolidated net income

$
434

$
200

$
(234
)

(53.9
)%

$
3,311

$
4,303

$
992

30.0
%

	For the Three Months Ended March 31,
	2019		2020			$ Change			% Change
	(As reported, amounts in thousands)
Consolidated net income	$	628	$	(2,014	)	$	(2,642	)		(420.7	)%

Net income ~~increased~~decreased for the ~~seven-month~~three-month period ended ~~September 30, 2019~~March 31, 2020 primarily due to ~~growth~~a decline in ~~our~~ operating income ~~partially offset by~~and an increase in ~~our provision for income taxes.~~interest expense, each as discussed above.

At ~~September 30, 2019,~~March 31, 2020, we had no cash orand cash equivalents ~~on our combined condensed balance sheets because Emmis uses a centralized approach to cash management~~of $4.4 million and ~~financing of its operations, and none of Emmis' cash or cash equivalents were assigned to us in our combined financial statements. At February 28, 2019 and September 30, 2019, our~~ net working capital ~~was $5.9~~of $(1.7) million. At December 31, 2019 we had cash and cash equivalents of $2.1 million and net working capital of $(4.7) million. The increase in net working capital is primarily due to the increase in cash as a result of the activity described below.~~$4.7~~

On February 28, 2020, the Company and SG Broadcasting amended and restated the SG Broadcasting Promissory Note such that the maximum aggregate principal amount issuable under the note was increased from $6.3 million ~~respectively.~~ to $10.3 million. Also on February 28, 2020, SG Broadcasting loaned an additional $2.0 million to the Company pursuant to the amended note for working capital purposes.

On March ~~1, 2019, we adopted ASC 842,~~ ~~Leases, which resulted in a current liability of $2.3~~27, 2020, the Company and SG Broadcasting further amended and restated the SG Broadcasting Promissory Note (the “Second Amended and Restated SG Promissory Note”) such that the maximum aggregate principal amount issuable under the note was increased from $10.3 million to $20.0 million. On March 27, 2020, SG Broadcasting loaned an additional $3.0 million to the Company pursuant to the Second Amended and Restated SG Promissory Note for working capital purposes. Consequently, the principal amount outstanding under the Second Amended and Restated SG Broadcasting Promissory Note as of ~~September 30, 2019, negatively impacting our net working capital.~~March 31, 2020 was $11.3 million.

Cash flows used in operating activities was $1.6 million for the three months ended March 31, 2020 versus cash flows provided by operating activities ~~was $2.0 million and $5.8~~of $3.6 million for the ~~seven~~three months ended ~~September 30, 2018~~March 31, 2019. The decrease was partially attributable to interest on debt that was not allocated to MediaCo from Emmis in connection with the presentation of carve-out financial statements in the prior year.

Cash flows used in investing activities were $0.2 million and $0.1 million for the three months ended March 31, 2020 and March 31, 2019, ~~respectively. The~~respectively, attributable to capital expenditures in both periods.

Cash flows provided by financing activities were $4.1 for the three months ended March 31, 2020, primarily provided by $5.2 million of debt proceeds, versus cash flows used in financing activities of $3.5 for the three months ended March 31, 2019. For the period ended March 31, 2019, the net amount of cash provided by operating activities and cash used in financing activities was swept to and retained by Emmis, as discussed above. The increase in cash provided by operating activities during the seven-month period ended September 30, 2019 as compared to the prior period was driven by an increase in net income and better working capital management. Capital expenditures for the seven months ended September 30, 2018 and 2019 were not material.Emmis.

Our primary sources of liquidity are cash on hand, ~~and cash provided by operations. Our stations' primary uses of~~ cash provided by operations, ~~during~~and, if approved, cash available through borrowings under the ~~past few years~~SG Broadcasting Promissory Note. Our primary uses of capital have been, ~~capital expenditures, working capital and distributions to Emmis,~~ and are expected to continue to be, capital expenditures, working capital, debt service requirements and ~~repayment~~acquisitions. As part of ~~debt after~~the acquisition of SG Broadcasting’s controlling interest in the Company from Emmis on November 25, 2019, Emmis retained the working capital of the stations, but the Company was permitted to collect and use, for a period of nine months, the first $5.0 million of net working capital attributable to the stations as of the closing date. This amount is due to Emmis on the nine month anniversary of the ~~Transaction. Additionally, we may grow~~closing date, or August 25, 2020. This right to $5.0 million of retained net working capital was satisfied in January 2020 and used in the ~~future through acquisitions that may be financed with debt or equity, or any combination thereof.~~operations of the business. MediaCo does not believe it will generate $5.0 million of excess cash from operations by August 25, 2020 to repay this amount to Emmis, but Standard General has guaranteed this payment to Emmis in the event MediaCo is unable to make the payment when due. The Company continually projects its anticipated cash needs, which include its operating needs, capital needs, and principal and interest payments on its indebtedness. ~~Following~~As of the ~~Transaction,~~filing of this Form 10-Q and as more fully discussed in Note 3 to the ~~Company~~accompanying condensed consolidated financial statements, management is unable to determine with certainty that it will also incur costs associated with being a standalone public reporting company, as well as with respect to ongoing payments to EOC in connection with the employee leasing agreement, the management agreement and other agreements with EOC relating to EOC's management of our operations. For further details relating to agreements with EOC, refer to Note 11. The Company intendsbe able to meet its liquidity needs for the next twelve months with cash ~~requirements and obligations following the Transaction through operating~~on hand, cash ~~flow. To the extent of any shortfall in operating cash flow following the Transaction, we expect that SG Broadcasting will fund a portion of MediaCo's cash requirements and obligations.~~provided by operations, and/or additional borrowings.

~~On November 25, 2019 we entered into a number of arrangements as described in Note 11 that impact our liquidity and capital resources, including:~~Intangibles

~~An additional $23.4 million was borrowed under the Senior Credit Facility to support the Company’s obligations with regard to the cost of acquiring~~ ~~FMG Valdosta, LLC and FMG Kentucky, LLC, as described in Note 11.~~

The $73.4 million total Senior Credit Facility includes covenants pertaining to, among other things, the ability to incur indebtedness, restrictions on the payment of dividends, minimum Liquidity (as defined in the Senior Credit Facility), collateral maintenance, minimum Consolidated Fixed Charge Coverage Ratio (as defined in the Senior Credit Facility) and other customary restrictions.

As of ~~September 30, 2019,~~March 31, 2020, approximately ~~67%~~38% of our total assets consisted of FCC broadcast licenses, the values of which depend significantly upon various factors including, among other things, market revenues, market growth rates and the operational results of our businesses. We would not be able to operate the properties without the related FCC license for each property. FCC licenses are renewed every eight years; consequently, we continually monitor our stations’ compliance with the various regulatory requirements. Historically, substantially all ~~of our~~ FCC licenses have been renewed at or after the end of their respective periods, and we expect that ~~all~~our FCC licenses will ~~continue to~~ be renewed in the future.

As ~~an emerging growth company, we~~of the end of the period covered by this transition report, the Company evaluated the effectiveness of the design and operation of its “disclosure controls and procedures” (“Disclosure Controls”). This evaluation (the “Controls Evaluation”) was performed under the supervision and with the participation of management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”).

Based upon the Controls Evaluation, our CEO and CFO concluded that as of December 31, 2019, our Disclosure Controls are ~~not~~effective to ensure that information relating to MediaCo Holding Inc. and Subsidiaries that is required to ~~provide~~be disclosed by us in the reports that we file or submit is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms, and is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

The Company is in the process of implementing our standardized control procedures within Fairway Outdoor and expects this ~~information.~~to be completed during 2020.

There were no other changes in our internal control over financial reporting (as defined in Rule 13a-15(f)) that occurred during the quarter ended March 31, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Refer to Part I, Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. In the opinion of management of the Company there are no legal proceedings pending against the Company that we believe are likely to have a material adverse effect on the Company.

~~Effective June 28, 2019, MediaCo, Emmis and SG Broadcasting entered into a Contribution and Distribution Agreement (the “Transaction Agreement”), pursuant to which~~ Emmis agreed to contribute the assets and liabilities of WBLS-FM and WQHT-FM to the Company (the “Initial Contribution”), subject to regulatory approvals and certain other conditions, in exchange for $91,500,000 in cash and 1,666,667 shares of MediaCo Class A common stock, par value $0.01, and SG Broadcasting agreed to make an initial capital contribution to the Company (the “SG Broadcasting Investment”) of $41.5 million in cash in exchange for 5,359,753 shares of MediaCo Class B common stock, par value $0.01 (the “MediaCo Class B Shares”). These sales were consummated on November 25, 2019, and the Company expects to issue additional shares to Emmis and SG Broadcasting following the January 3, 2020 record date for distributing the MediaCo Class A Shares in an amount such that (i) Emmis has sufficient shares to distribute 0.1265 MediaCo Class A Shares for each share of Emmis common stock outstanding on January 3, 2019, and (ii) SG Broadcasting holds a number of MediaCo Class B shares that equates to 78.28% of the total number of shares of MediaCo common stock. In addition, at the closing under and pursuant to the Transaction Agreement, Emmis received a convertible promissory note from the Company in the original principal amount of $5 million (the “Emmis Promissory Note”). The Emmis Promissory Note is convertible beginning six months after its issuance date into shares of MediaCo Class A common stock at a price (the “Conversion Price”) ~~equal to the average of the~~None.

volume-weighted average prices of the Class A Stock on the Nasdaq Capital Market (or certain other alternative trading markets if the Class A common stock is instead listed on one of such markets) for the last 30 trading days prior to the date of conversion, except that if there is no trading market for any such day, then the price used for such day shall be the average of the highest closing bid price and the lowest closing ask price of any of the market makers for such security as reported in the OTCQX, OTCQB, Pink or Grey markets (in that order) operated by OTCMarkets.

Simultaneously with the consummation of the transactions contemplated by the Transaction Agreement, SG Broadcasting loaned to the Company $6.25 million for working capital purposes, in return for which the Company issued a convertible promissory note to SG Broadcasting in the original principal amount of $6.25 million (the “SG Broadcasting Promissory Note”). The SG Broadcasting Promissory Note is convertible beginning six months after its issuance date into shares of MediaCo Class A common stock at the Conversion Price.

Each of these sales of securities was consummated pursuant to the exemption from registration in Section 4(a)(2) of the Securities Act of 1933, as amended. Each of the purchasers is a sophisticated entity and the Transaction Agreement and the documents entered into in connection with the consummation of the Transaction Agreement were extensively negotiated by the parties.

The following exhibits are filed or incorporated by reference as a part of this report:

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.

Large accelerated filer	☐		Accelerated filer	☐

Non-accelerated filer	☐	~~(Do not check if a smaller reporting company)~~	Smaller reporting company	☒

			Emerging growth company	☒


~~1,666,667~~1,683,263		Shares of Class A Common Stock, $.01 Par Value
~~5,359,753~~5,413,197		Shares of Class B Common Stock, $.01 Par Value
—		Shares of Class C Common Stock, $.01 Par Value


	Page
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements	3
Condensed Consolidated and Combined ~~Condensed~~ Statements of Operations for the ~~one-month and seven-month~~three-month periods ended ~~September 30, 2018~~March 31, 2019 and ~~2019~~2020	3
~~Combined~~ Condensed Consolidated Balance Sheets as of ~~February 28,~~December 31, 2019 and ~~September 30, 2019~~March 31, 2020	4
Condensed Consolidated and Combined ~~Condensed~~ Statement of Changes in Equity for the ~~seven-month~~three-month periods ended ~~September 30, 2018~~March 31, 2019 and ~~2019~~2020	5
Condensed Consolidated and Combined ~~Condensed~~ Statements of Cash Flows for the ~~seven-month~~three-month periods ended ~~September 30, 2018~~March 31, 2019 and ~~2019~~2020	6
Notes to Condensed Consolidated and Combined ~~Condensed~~ Financial Statements	7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	1519
Item 3. Quantitative and Qualitative Disclosures about Market Risk	2026
Item 4. Controls and Procedures	2026
PART II — OTHER INFORMATION
Item 1. Legal Proceedings	2026
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	2026
Item 6. Exhibits	2227
Signatures	2428

	December 31, 2019			March 31, 2020
Senior credit facility	$	72,527		$	71,789
Notes payable to Emmis		5,000			5,000
Notes payable to SG Broadcasting		6,250			11,250
Less: Current maturities		(3,672	)		(3,672	)
Less: Unamortized original issue discount		(2,437	)		(2,477	)
Total long-term debt, net of current portion and debt discount	$	77,668		$	81,890

Balance at December 31, 2019	$	5,623
Purchase price allocation adjustment		44
Accretion expense		182
Liabilities settled		(44	)
Balance at March 31, 2020	$	5,805

Title of each class	Trading symbol(s)	Name of each exchange on which registered
Class A common stock, $0.01 par value	MDIA	Nasdaq Capital Market

	As of February 28, 2019						As of September 30, 2019
	(in 000's, except years)
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Weighted Average Remaining Useful Life (in years)
Programming agreement	$	2,154	$	1,394	$	760	$	2,154	$	1,566	$	588	2.0

Year ending December 31,
Remainder of 2020	$	6,456
2021		—
2022		—
2023		—
2024		—
After 2024		—

Cash consideration	$	43,108
Due from Seller		(106	)
Total Consideration	$	43,002

Accounts receivable	$	1,676
Other current assets		105
Property, plant and equipment		29,971
Operating lease, right-of-use assets		15,267
Goodwill		11,468
Intangibles (Note 4)		3,760
Deferred tax asset		1,040
Other assets		16
Assets Acquired	$	63,303
Accounts payable	$	73
Accrued expenses and other current liabilities		539
Current portion of operating lease liabilities		822
Operating lease liabilities, less current portion		12,320
Asset retirement obligations (Note 10)		5,634
Deferred revenue		760
Other noncurrent liabilities		153
Liabilities Assumed	$	20,301
Net Assets Acquired	$	43,002

	Three Months Ended March 31, 2019
Net revenues	$	11,470
Net loss attributable to common shareholders		40

Three Months Ended March 31, 2020	Radio		Outdoor Advertising		All Other			Consolidated
Net revenues	$	8,339	$	3,446	$	—		$	11,785
Operating expenses excluding and depreciation and amortization expense		6,931		2,526		—			9,457
Corporate expenses excluding depreciation and amortization expense		—		—		1,165			1,165
Depreciation and amortization		249		778		—			1,027
Operating income (loss)	$	1,159	$	142	$	(1,165	)	$	136

	One Month Ended September 30,										Seven Months Ended September 30,
	2018		% of Total			2019		% of Total			2018		% of Total			2019		% of Total
	(Dollars in thousands)
Net revenues:
Local	$	2,045		46.4	%	$	2,212		51.4	%	$	14,505		52.0	%	$	14,938		49.1	%
National		148		3.4	%		477		11.1	%		2,033		7.3	%		2,728		9.0	%
Political		411		9.3	%		—		0.0	%		421		1.5	%		—		0.0	%
Non Traditional		1,079		24.5	%		824		19.2	%		6,474		23.2	%		7,868		25.8	%
Digital		379		8.6	%		359		8.3	%		1,700		6.1	%		2,119		7.0	%
Other		343		7.8	%		430		10.0	%		2,783		9.9	%		2,801		9.1	%
Total net revenues	$	4,405				$	4,302				$	27,916				$	30,454

	MEDIACO HOLDING INC.

Date: ~~December 20, 2019~~May 15, 2020	By:	/s/ RYAN A. HORNADAY
		Ryan A. Hornaday
		Executive Vice President, Chief Financial Officer and
		Treasurer