Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2019 | May 09, 2019 | |
Document And Entity Information [Abstract] | ||
Entity Registrant Name | MISSION BROADCASTING INC | |
Entity Central Index Key | 0001142412 | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | No | |
Entity Filer Category | Non-accelerated Filer | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2019 | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Common Stock, Shares Outstanding | 1,000 |
CONDENSED BALANCE SHEETS (Unaud
CONDENSED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 5,583 | $ 10,798 |
Accounts receivable, net of allowance for doubtful accounts of $236 and $222, respectively | 15,448 | 12,857 |
Due from Nexstar Broadcasting, Inc. | 77,158 | 77,521 |
Prepaid expenses and other current assets | 721 | 1,130 |
Total current assets | 98,910 | 102,306 |
Property and equipment, net | 20,700 | 19,867 |
Goodwill | 33,187 | 33,187 |
FCC licenses | 43,102 | 43,102 |
Other intangible assets, net | 13,193 | 13,712 |
Deferred tax assets, net | 4,322 | 3,485 |
Other noncurrent assets, net | 7,021 | 936 |
Total assets | 220,435 | 216,595 |
Current liabilities: | ||
Current portion of debt | 2,285 | 2,285 |
Current portion of broadcast rights payable | 300 | 325 |
Accounts payable | 1,392 | 1,832 |
Interest payable | 930 | 152 |
Accrued capital expenditures | 1,801 | 1,251 |
Other accrued expenses | 1,925 | 1,992 |
Current operating lease liabilities | 1,878 | 721 |
Total current liabilities | 10,511 | 8,558 |
Debt | 221,956 | 222,354 |
Other noncurrent liabilities | 11,563 | 6,820 |
Total liabilities | 244,030 | 237,732 |
Commitments and contingencies (Note 10) | ||
Shareholders' deficit: | ||
Common stock - $1 par value, 1,000 shares authorized, issued and outstanding as of each of March 31, 2019 and December 31, 2018 | 1 | 1 |
Subscription receivable | (1) | (1) |
Accumulated deficit | (23,595) | (21,137) |
Total shareholders' deficit | (23,595) | (21,137) |
Total liabilities and shareholders' deficit | $ 220,435 | $ 216,595 |
CONDENSED BALANCE SHEETS (Una_2
CONDENSED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Current assets: | ||
Accounts receivable, allowance for doubtful accounts | $ 236 | $ 222 |
Shareholders' deficit: | ||
Common stock, par value (in dollars per share) | $ 1 | $ 1 |
Common stock, shares authorized (in shares) | 1,000 | 1,000 |
Common stock, shares issued (in shares) | 1,000 | 1,000 |
Common stock, shares outstanding (in shares) | 1,000 | 1,000 |
CONDENSED STATEMENTS OF OPERATI
CONDENSED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Net revenue | $ 27,169 | $ 24,585 |
Operating expenses (income): | ||
Direct operating expenses, excluding depreciation and amortization | 12,036 | 10,147 |
Selling, general and administrative expenses, excluding depreciation and amortization | 991 | 1,216 |
Fees incurred pursuant to local service agreements with Nexstar Broadcasting, Inc. | 14,575 | 13,250 |
Amortization of broadcast rights | 383 | 412 |
Amortization of intangible assets | 519 | 544 |
Depreciation | 608 | 517 |
Reimbursement from the FCC related to station repack | (1,536) | |
Total operating expenses | 27,576 | 26,086 |
Income from operations | (407) | (1,501) |
Interest expense | (2,886) | (2,611) |
Loss before income taxes | (3,293) | (4,112) |
Income tax benefit | 835 | 981 |
Net loss | (2,458) | (3,131) |
Net Broadcast Revenue [Member] | ||
Net revenue | 19,407 | 16,102 |
Advertising Revenue [Member] | Nexstar Broadcasting, Inc. [Member] | ||
Net revenue | $ 7,762 | $ 8,483 |
CONDENSED STATEMENTS OF CHANGES
CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS' DEFICIT (Unaudited) - USD ($) $ in Thousands | Total | Common Stock [Member] | Subscription Receivable [Member] | Accumulated Deficit [Member] |
Balances at Dec. 31, 2017 | $ (15,308) | $ 1 | $ (1) | $ (15,308) |
Balance (in shares) at Dec. 31, 2017 | 1,000 | |||
Net (loss) income | (3,131) | (3,131) | ||
Balances at Mar. 31, 2018 | (18,439) | $ 1 | (1) | (18,439) |
Balance (in shares) at Mar. 31, 2018 | 1,000 | |||
Balances at Dec. 31, 2018 | $ (21,137) | $ 1 | (1) | (21,137) |
Balance (in shares) at Dec. 31, 2018 | 1,000 | 1,000 | ||
Net (loss) income | $ (2,458) | (2,458) | ||
Balances at Mar. 31, 2019 | $ (23,595) | $ 1 | $ (1) | $ (23,595) |
Balance (in shares) at Mar. 31, 2019 | 1,000 | 1,000 |
CONDENSED STATEMENTS OF CASH FL
CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | ||
Cash flows from operating activities: | |||
Net loss | $ (2,458) | $ (3,131) | |
Adjustments to reconcile net loss to net cash used by operating activities: | |||
Deferred income tax benefit | 837 | 1,006 | |
Provision for bad debt | 13 | 24 | |
Depreciation of property and equipment | 608 | 517 | |
Amortization of intangible assets | 519 | 544 | |
Amortization of debt financing costs and debt discount | 176 | 193 | |
Amortization of broadcast rights | 383 | 412 | |
Payments for broadcast rights | (391) | (422) | |
Other noncash credits, net | (50) | (49) | |
Spectrum repack reimbursements | (1,536) | ||
Changes in operating assets and liabilities, net of acquisitions: | |||
Accounts receivable | (2,604) | (116) | |
Prepaid expenses and other current assets | 314 | 142 | |
Other noncurrent assets | 340 | (3) | |
Accounts payable, accrued expenses and deferred rent | (129) | (4,071) | |
Other noncurrent liabilities | (14) | ||
Due from Nexstar Broadcasting, Inc. | 363 | 2,920 | |
Net cash used in operating activities | (5,289) | (4,060) | |
Cash flows from investing activities: | |||
Purchases of property and equipment | (891) | (830) | |
Spectrum repack reimbursements | 1,536 | ||
Net cash provided by (used in) investing activities | 645 | (830) | |
Cash flows from financing activities: | |||
Repayments of long-term debt | (571) | (578) | |
Net cash used in financing activities | (571) | (578) | |
Net decrease in cash and cash equivalents | (5,215) | (5,468) | |
Cash and cash equivalents at beginning of period | 10,798 | 9,524 | |
Cash and cash equivalents at end of period | 5,583 | 4,056 | |
Supplemental information: | |||
Interest paid | 1,932 | $ 2,306 | |
Income tax refund, net of taxes paid | (236) | ||
Non-cash investing and financing activities | |||
Right-of-use assets obtained in exchange for operating lease obligations | [1] | $ 6,450 | |
[1] | Amounts for the three months ended March 31, 2019 pertains to the transition adjustment for the adoption of ASC 842 |
Organization and Business Opera
Organization and Business Operations | 3 Months Ended |
Mar. 31, 2019 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Organization and Business Operations | 1. Organization and Business Operations As of March 31, 2019, Mission Broadcasting, Inc. (“Mission” or the “Company”) owned and operated 19 full power television stations, affiliated with the NBC, ABC, CBS, FOX, The CW, MNTV and other broadcast television networks, in 18 markets located in the states of Arkansas, Colorado, Illinois, Indiana, Louisiana, Missouri, Montana, New York, Pennsylvania, Texas and Vermont Through local service agreements, Nexstar Broadcasting, Inc., a subsidiary of Nexstar Media Group, Inc. (collectively “Nexstar”), provides sales and operating services to all of the Mission television stations (see Note 3). The Company is highly leveraged, which makes it vulnerable to changes in general economic conditions. The Company’s ability to repay or refinance its debt will depend on, among other things, financial, business, market, competitive and other conditions, many of which are beyond its control, as well as Nexstar maintaining its pledge to continue the local service agreements with the Company’s stations. Management believes that with Nexstar’s pledge to continue the local service agreements as described in a letter of support dated March 22, 2019 Nexstar’s senior secured credit agreement contains a covenant which requires Nexstar to comply with a maximum consolidated first lien net leverage ratio of 4.25 to 1.00. The financial covenant, which is formally calculated on a quarterly basis, is based on the combined results of Nexstar and its variable interest entities, including Mission. Mission’s credit agreement does not contain financial covenant ratio requirements but does provide for default in the event Nexstar does not comply with all covenants contained in its credit agreement. As of March 31, 2019, Nexstar has informed Mission that it was in compliance with all covenants contained in its credit agreement and the indentures governing its senior unsecured notes. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Interim Financial Statements The Condensed Financial Statements as of March 31, 2019 and for the three months ended March 31, 2019 and 2018 are unaudited. However, in the opinion of management, such financial statements include all adjustments (consisting solely of normal recurring adjustments) necessary for the fair statement of the financial information included herein in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). The preparation of the Condensed Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenue and expenses during the period. Actual results could differ from those estimates. Results of operations for interim periods are not necessarily indicative of results for the full year. These Condensed Financial Statements should be read in conjunction with the Financial Statements and related Notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. The balance sheet as of December 31, 2018 has been derived from the audited Financial Statements as of that date but does not include all the information and footnotes required by U.S. GAAP for complete financial statements. Leases As discussed in Recent Accounting Pronouncements below, the Company adopted the FASB issued ASU No. 2016-02, Leases (Topic 842) and all related amendments. ASC 842 establishes a comprehensive new lease accounting model that requires the recording of assets and liabilities arising from operating leases on the balance sheet accompanied by enhanced qualitative and quantitative disclosures in the notes to the financial statements. The standard was issued to help investors and other financial statement users better understand the amount, timing, and uncertainty of cash flow arising from leases. The Company adopted this standard effective January 1, 2019 using the optional transition method. The most significant impact was the recognition of right-of-use (“ROU” ) assets and lease liabilities for operating leases. Financial information for reporting periods beginning after January 1, 2019 is presented under ASC 842, while comparative financial information has not been adjusted and continues to be reported in accor dance with the Company’s historical accounting policy for lease contracts prior to the adoption of ASC 842. The Company has elected the ‘package of practical expedients’ permitted under the transition guidance within ASC 842, which permits the Company to carry forward the historical lease classification and not reassess whether any expired or existing contracts are or contain leases. In addition, the Company is not required to reassess initial direct costs for any existing leases. The Company did not elect the land easements and the use of hindsight practical expedients in determining the lease term for existing leases. ASC 842 also provides practical expedients for an entity’s ongoing accounting. The Company has elected the short-term lease recognition exemption for all leases that qualify. As a result, for those leases with a term of less than 12 months, it will not recognize ROU assets or lease liabilities. The vast majority of the Company’s television station leases are comprised of fixed lease payments, with a small percentage of television station lease payments that are tied to a rate or index which may be subject to variability. For these leases, the calculation of the present value of future minimum lease payments is the base rate as of the later of (i) when the television station was acquired by the Company, or (ii) the commencement date of the lease agreement. Certain real estate leases also include executory costs such as common area maintenance (non-lease component), as well as property insurance and property taxes (non-components). These are not significant and the Company historically excluded these executory costs from its future minimum lease payments under its historical policy prior to the adoption of ASC 842. As such, the executory costs were excluded from the calculation of ROU assets and lease liabilities associated with operating leases upon transition. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that it will exercise that option. The discount rate represents a risk-adjusted rate on a secured basis, and is the rate at which the Company would borrow funds to satisfy the scheduled lease liability payment streams commensurate with the lease term. On January 1, 2019, the discount rate used on existing leases at adoption was determined based on the remaining lease term using available data as of that date. The Company recognized operating lease ROU assets on its Condensed Balance Sheet as of January 1, 2019 of $6.5 million, inclusive of the present value of remaining future operating lease payments of $11.0 million and reclassifications of certain operating lease related assets and liabilities under the Company’s historical accounting policy prior to the adoption of ASC 842 such as deferred rent, short-term prepaid expenses and other accruals. These are summarized in the table below (in thousands). The adoption did not result in a cumulative impact on retained earnings as of January 1, 2019. ASC 842 Adoption Adjustments Present Value of Remaining Reclassifications of Operating Lease Related Balance Sheet Items to Operating Lease Right-of-Use Assets Impact on Condensed Balance Sheets December 31, 2018 Operating Lease Payments as of January 1, 2019 Deferred Rent Other Total January 1, 2019 Prepaid expenses and other current assets $ 1,130 $ - $ - $ (77 ) $ (77 ) $ 1,053 Other intangible assets, net 13,712 - - - - 13,712 Other noncurrent assets, net 936 10,957 (4,175 ) (332 ) 6,450 7,386 Total Assets 216,595 10,957 (4,175 ) (409 ) 6,373 222,968 Other current liabilities 8,558 1,802 (531 ) (198 ) 1,073 9,631 Other noncurrent liabilities 6,820 9,155 (3,644 ) (211 ) 5,300 12,120 Total Liabilities 237,732 10,957 (4,175 ) (409 ) 6,373 244,105 After transition to ASC 842, the Company determines if an arrangement is a lease at inception. The ROU assets arising from operating leases are included in other noncurrent assets, current operating lease liabilities and other noncurrent liabilities in the accompanying Condensed Balance Sheets. Operating lease ROU assets and operating lease liabilities that are recognized after the adoption of ASC 842 are based on the present value of the future minimum lease payments ove r the lease term at the commencement date. The operating lease ROU asset also includes any lease payments made and excludes lease incentives and executory costs (not significant). The Company’s lease terms may include options to extend or terminate the lea se when it is reasonably certain that it will exercise that option. When determining if a renewal option is reasonably certain of being exercised, the Company considers several factors, including but not limited to, the significance of leasehold improvemen ts incurred on the property, whether the asset is difficult to replace, or specific characteristics unique to the particular lease that would make it reasonably certain that the Company would exercise such option. In most cases, the Company has concluded t hat renewal and early termination options are not reasonably certain of being exercised by the Company (and thus not included in its ROU asset and lease liability) unless there is an economic, financial or business reason to do so. As most of the Company’s leases do not provide an implicit rate, the incremental borrowing rate was used based on the information available at commencement date in determining the present value of future lease payments. The discount rate represents a risk-adjusted rate on a secur ed basis and is the rate at which the Company would borrow funds to satisfy the scheduled lease liability payment streams commensurate with the lease term. For new or renewed leases starting in 2019, the discount rate is determined using available data at lease commencement and based on the lease term including any reasonably certain renewal periods. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. In rare circumstances, the Company may enter into finance leases for specific equipment or real estate used in its operations, in which the lease term is for the major part of the remaining economic life of the underlying asset or the present value of the lease payments equals or exceeds substantially all of the estimated fair value of the underlying asset. The Company records its finance leases within property, plant and equipment, other current liabilities and other noncurrent liabilities on the accompanying Condensed Balance Sheets. See Note 6 for additional disclosures on leases as of and for the three months ended March 31, 2019. Financial Instruments The carrying amounts of cash and cash equivalents, accounts receivable, broadcast rights payable, accounts payable and accrued expenses approximate fair value due to their short-term nature. See Note 5 for fair value disclosures related to the Company’s debt. Basis of Presentation Certain prior year financial statement amounts have been reclassified to conform to the current year presentation. These reclassifications had no effect on net income or shareholders’ deficit as previously reported . Recent Accounting Pronouncements New Accounting Standards Adopted In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The Company adopted this standard and all related amendments effective January 1, 2019 using the optional transition method. The standard had a material impact on the Company’s Condensed Balance Sheets but did not impact its operating results, cash flows or equity. The most significant impact was the recognition of ROU assets and lease liabilities for operating leases. The adoption did not result in a cumulative impact on retained earnings as of January 1, 2019. See Leases above for the Company’s updated accounting policy and Note 6 for expanded disclosures. New Accounting Standards Not Yet Adopted In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326) (“ASU 2016-13”).” The standard requires entities to estimate loss of financial assets measured at amortized cost, including trade receivables, debt securities and loans, using an expected credit loss model. The expected credit loss differs from the previous incurred losses model primarily in that the loss recognition threshold of “probable” has been eliminated and that expected loss should consider reasonable and supportable forecasts in addition to the previously considered past events and current conditions. Additionally, the guidance requires additional disclosures related to the further disaggregation of information related to the credit quality of financial assets by year of the asset’s origination for as many as five years. Entities must apply the standard provision as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. The standard is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted for annual periods beginning after December 15, 2018, and interim periods within those fiscal years. The Company is currently evaluating the impact of adopting ASU 2016-13 on its financial statements. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820) (“ASU 2018-13”), which modifies the disclosure requirements on fair value measurements . The amendments in this update are effective for all entities for fiscal years , and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted for any removed or modified disclosures. The Company is currently evaluating the impact of adopting ASU 2018-13 on its financial statements. |
Local Service Agreements with N
Local Service Agreements with Nexstar | 3 Months Ended |
Mar. 31, 2019 | |
Local Service Agreements [Abstract] | |
Local Service Agreements with Nexstar | 3. Local Service Agreements with Nexstar The Company has entered into local service agreements with Nexstar to provide sales and operating services to all of its stations. For the stations with a shared services agreement (“SSA”), the Nexstar station in the market provides certain services including news production, technical maintenance and security, in exchange for monthly payments to Nexstar. For each station with which the Company has entered into an SSA, it has also entered into a JSA, whereby Nexstar sells certain advertising time of the station and retains a percentage of the related revenue. For the stations with a time brokerage agreement (“TBA”), Nexstar programs most of the station’s broadcast time, sells the station’s advertising time and retains the advertising revenue it generates in exchange for monthly payments to Mission, based on the station’s monthly operating expenses. JSA and TBA fees generated from Nexstar under the agreements are reported as “Revenue from Nexstar Broadcasting, Inc.,” and SSA fees incurred by Mission under the agreements are reported as “Fees incurred pursuant to local service agreements with Nexstar Broadcasting, Inc.” in the accompanying Condensed Statements of Operations. Under these agreements, Mission is responsible for certain operating expenses of its stations and therefore may have unlimited exposure to any potential operating losses. Mission will continue to operate its stations under the SSAs and JSAs or TBAs until the termination of such agreements. The local service agreements generally have a term of eight to ten years and have terms for renewal periods. Nexstar indemnifies Mission from Nexstar’s activities pursuant to the local service agreements. Under the local service agreements, Nexstar receives substantially all of the Company’s available cash, after satisfaction of operating costs and debt obligations. The Company anticipates that Nexstar will continue to receive substantially all of its available cash, after satisfaction of operating costs and debt obligations. In compliance with FCC regulations for both the Company and Nexstar, Mission maintains complete responsibility for and control over programming, finances, personnel and operations of its stations. Mission had the following local service agreements in effect with Nexstar as of March 31, 2019: Service Agreements Full Power Stations TBA Only WFXP, KHMT and KFQX SSA & JSA KJTL, KLRT, KASN, KOLR, KCIT, KAMC, KRBC, KSAN, WUTR, WAWV, WYOU, KODE, WTVO, KTVE, WTVW and WVNY |
Intangible Assets and Goodwill
Intangible Assets and Goodwill | 3 Months Ended |
Mar. 31, 2019 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Intangible Assets and Goodwill | 4. Intangible Assets and Goodwill Intangible assets subject to amortization consisted of the following (in thousands): Estimated March 31, 2019 December 31, 2018 useful life, Accumulated Accumulated in years Gross Amortization Net Gross Amortization Net Network affiliation agreements 15 $ 86,248 $ (73,641 ) $ 12,607 $ 86,248 $ (73,153 ) $ 13,095 Other definite-lived intangible assets 1-15 15,681 (15,095 ) 586 15,681 (15,064 ) 617 Other intangible assets $ 101,929 $ (88,736 ) $ 13,193 $ 101,929 $ (88,217 ) $ 13,712 The following table presents the Company’s estimate of amortization expense for the remainder of 2019, each of the five succeeding years ended December 31 and thereafter for definite-lived intangible assets as of March 31, 2019 (in thousands): Remainder of 2019 $ 1,400 2020 1,518 2021 1,517 2022 1,517 2023 1,444 Thereafter 5,797 $ 13,193 The carrying amounts of goodwill and FCC licenses were as follows (in thousands): Goodwill FCC Licenses Accumulated Accumulated Gross Impairment Net Gross Impairment Net Balances as of December 31, 2018 $ 34,737 $ (1,550 ) $ 33,187 $ 53,799 $ (10,697 ) $ 43,102 Balances as of March 31, 2019 $ 34,737 $ (1,550 ) $ 33,187 $ 53,799 $ (10,697 ) $ 43,102 Indefinite-lived intangible assets are not subject to amortization but are tested for impairment annually or whenever events or changes in circumstances indicate that such assets might be impaired. During the three months ended March 31, 2019, the Company did not identify any events that would trigger an impairment assessment. |
Debt
Debt | 3 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
Debt | 5. Debt Long-term debt consisted of the following (in thousands): March 31, December 31, 2019 2018 Term loans, net of financing costs and discount of $3,715 and $3,888, respectively $ 224,241 $ 224,639 Less: current portion (2,285 ) (2,285 ) $ 221,956 $ 222,354 2019 Transactions Through March 31, 2019, Mission repaid scheduled maturities of $0.6 million under its Term Loan B, funded by cash on hand. Unused Commitments and Borrowing Availability As of March 31, 2019, the Company had a $3.0 million unused revolving loan commitment under its senior secured credit facility, all of which was available for borrowing, based on the covenant calculations. Pursuant to the terms of the Company’s and Nexstar’s credit agreements, the Company may reallocate any of its unused revolving loan commitment to Nexstar and Nexstar may also reallocate certain of its unused revolving loan commitment to the Company Collateralization and Guarantees of Debt Nexstar guarantees full payment of all obligations under the Mission senior secured credit facility in the event of Mission’s default. Similarly, Mission is a guarantor of Nexstar’s senior secured credit facility, the $900.0 million 5.625% senior unsecured notes (the “5.625% Notes”) issued by Nexstar and the $275.0 million 6.125% senior unsecured notes (the “6.125% Notes”) issued by Nexstar. The senior secured credit facilities are collateralized by a security interest in substantially all the combined assets, excluding FCC licenses, of the Company and Nexstar. The 5.625% Notes and the 6.125% Notes are general senior unsecured obligations subordinated to all of Mission’s senior secured debt. In the event that Nexstar is unable to repay amounts due under these debt obligations, the Company will be obligated to repay such amounts. The maximum potential amount of future payments that Mission would be required to make under these guarantees would be generally limited to the amount of borrowings outstanding under Nexstar’s senior secured credit facility, the 5.625% Notes and the 6.125% Notes. As of March 31, 2019, Nexstar had $888.7 million of outstanding obligations under its 5.625% Notes, $273.6 million of outstanding obligations under its 6.125% Notes and a maximum commitment of $2.191 billion under its senior secured credit facility, of which $1.213 billion in Term Loan B and $815.0 million in Term Loan A were outstanding. Debt Covenants The Mission term loan does not require financial covenant ratios but does provide for default in the event Nexstar does not comply with all covenants contained in its credit agreement. Nexstar was in compliance with its financial covenants as of March 31, 2019 . Fair Value of Debt The aggregate carrying amounts and estimated fair values of the Company’s debt were as follows (in thousands): March 31, 2019 December 31, 2018 Carrying Fair Carrying Fair Amount Value Amount Value Term loans $ 224,241 $ 224,011 $ 224,639 $ 220,450 The fair values of the term loans are computed based on borrowing rates currently available to Mission for bank loans with similar terms and average maturities. These fair value measurements are considered Level 3, as significant inputs to the fair value calculation are unobservable in the market. |
Leases
Leases | 3 Months Ended |
Mar. 31, 2019 | |
Leases [Abstract] | |
Leases | 6. Leases The Company as a Lessee The company has operating leases for office space, tower facilities, antenna sites, studio and other real estate properties and equipment. The company’s leases have remaining lease terms of six months to 13 years, some of which may include options to extend the leases from five to 25 years, and some of which may include options to terminate the leases within one year. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. The components of lease expense include $0.4 million of operating lease cost, inclusive of immaterial short-term and variable lease costs, included in Direct operating expenses, excluding depreciation and amortization, in the accompanying Condensed Statements of Operations. The following table summarizes the components of our lease right-of-use assets and liabilities at March 31, 2019: (In thousands) Balance Sheet Classification March 31, 2019 Operating Leases Operating lease right-of-use assets, net Other noncurrent assets, net $ 6,163 Current lease liabilities Current operating lease liabilities $ 1,878 Noncurrent lease liabilities Other noncurrent liabilities $ 8,680 Other information related to leases as of March 31, 2019 was as follows (in thousands, except lease term and discount rate): Supplemental Cash Flows Information Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 539 Weighted Average Remaining Lease Term 8 Weighted Average Discount Rate 5.3 % Future minimum lease payments under non-cancellable leases as of March 31, 2019 were as follows (in thousands): Remainder of 2019 $ 1,818 2020 2,434 2021 1,494 2022 890 2023 922 Thereafter 5,732 Total future minimum lease payments 13,290 Less imputed interest (2,733 ) Total $ 10,557 |
Revenue
Revenue | 3 Months Ended |
Mar. 31, 2019 | |
Revenue From Contract With Customer [Abstract] | |
Revenue | 7. Revenue Disaggregation of Revenues The following table presents the disaggregation of our revenue for the three months ended March 31, 2019 and March 31, 2018 (in thousands): Three Months Ended March 31, 2019 2018 Retransmission compensation $ 19,104 $ 15,904 Other 303 198 Revenue from Nexstar 7,762 8,483 Net revenue $ 27,169 $ 24,585 Revenue from Nexstar is directly correlated to the advertising revenue earned at the Company’s stations and is positively affected by national and regional political campaigns, and certain events such as the Olympic Games or the Super Bowl. Company stations’ advertising revenue is generally highest in the second and fourth quarters of each year, due in part to increases in consumer advertising in the spring and retail advertising in the period leading up to, and including, the holiday season. In addition, advertising revenue is generally higher during even-numbered years when congressional and presidential elections occur, and advertising is aired during the Olympic Games. The Company receives compensation from MVPDs and OTTDs in return for the consent to the retransmission of the signals of its television stations. Retransmission compensation is recognized at the point in time the broadcast signal is delivered to the distributors and is based on a price per subscriber. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 8. Income Taxes During the three months ended March 31, 2019, we recognized an income tax benefit of $0.8 million on a pre-tax book loss of $3.3 of 25.4% income tax benefit of $1.0 million on pre-tax book loss of $4.1 million for the same period in 2018 resulting in an effective tax rate of 23.9%. The increase in the effective tax rate between the two periods was primarily due to changes in the Texas Margin tax which resulted in a 1.4% increase in the effective tax rate between the two periods. |
FCC Regulatory Matters
FCC Regulatory Matters | 3 Months Ended |
Mar. 31, 2019 | |
Risks And Uncertainties [Abstract] | |
FCC Regulatory Matters | 9. FCC Regulatory Matters Television broadcasting is subject to the jurisdiction of the FCC under the Communications Act of 1934, as amended (the “Communications Act”). The Communications Act prohibits the operation of television broadcasting stations except under a license issued by the FCC, and empowers the FCC, among other things, to issue, revoke and modify broadcasting licenses, determine the location of television stations, regulate the equipment used by television stations, adopt regulations to carry out the provisions of the Communications Act and impose penalties for the violation of such regulations. The FCC’s ongoing rule making proceedings could have a significant future impact on the television industry and on the operation of the Company’s stations. In addition, the U.S. Congress may act to amend the Communications Act or adopt other legislation in a manner that could impact the Company’s stations and the television broadcast industry in general. The FCC has adopted rules with respect to the final conversion of existing low power and television translator stations to digital operations, which must be completed by July 2021. Media Ownership The FCC is required to review its media ownership rules every four years and to eliminate those rules it finds no longer serve the “public interest, convenience and necessity.” In August 2016, the FCC adopted a Second Report and Order (the “2016 Ownership Order”) concluding the agency’s 2010 and 2014 quadrennial reviews. The 2016 Ownership Order (1) retained the then-existing local television ownership rule and radio/television cross-ownership rule with minor technical modifications, (2) extended the ban on common ownership of two top four television stations in a market to network affiliation swaps, (3) retained the then-existing ban on newspaper/broadcast cross-ownership in local markets while considering waivers and providing an exception for failed or failing entities, (4) retained the dual network rule, (5) made JSA relationships attributable interests and (6) defined a category of sharing agreements designated as SSAs between stations and required public disclosure of those SSAs (while not considering them attributable). The 2016 Ownership Order reinstated a previously adopted rule that attributed another in-market station tow ard the local television ownership limits when one station owner sells more than 15% of the second station’s weekly advertising inventory under a JSA. Parties to JSAs entered into prior to March 31, 2014 were permitted to continue to operate under those JS As until September 30, 2025. Various parties filed petitions seeking reconsideration of various aspects of the 2016 Ownership Order. On November 16, 2017, the FCC adopted an order (the “Reconsideration Order”) addressing the petitions for reconsideration. The Reconsideration Order (1) eliminated the rules prohibiting newspaper/broadcast cross-ownership and limiting television/radio cross-ownership, (2) eliminated the requirement that eight or more independently-owned television stations remain in a local market for common ownership of two television stations in that market to be permissible, (3) retained the general prohibition on common ownership of two “top four” stations in a local market but provided for case-by-case review, (4) eliminated the television JSA attribution rule, and (5) retained the SSA definition and disclosure requirement for television stations. These rule modifications took effect on February 7, 2018, when the U.S. Court of Appeals for the Third Circuit denied a mandamus petition which had sought to stay their effectiveness. The Reconsideration Order remains subject to appeals before that court. In December 2018, the FCC initiated its 2018 quadrennial review with the issuance of a Notice of Proposed Rulemaking. Among other things, the FCC seeks comment on all aspects of the local television ownership rule’s implementation and whether the current version of the rule remains necessary in the public interest. Comments and reply comments in the 2018 quadrennial review are due in the second quarter of 2019. The FCC’s media ownership rules limit the percentage of U.S. television households which a party may reach through its attributable interests in television stations to 39% on a nationwide basis. Historically, the FCC has counted the ownership of an ultra-high frequency (“UHF”) station as reaching only 50% of a market’s percentage of total national audience. On August 24, 2016, the FCC adopted a Report and Order abolishing this “UHF discount” and that rule change became effective in October 2016. On April 20, 2017, the FCC adopted an order on reconsideration that reinstated the UHF discount, which became effective again on June 15, 2017. A federal court of appeals dismissed a petition for review of the discount’s reinstatement in July 2018. In December 2017, the FCC initiated a comprehensive rulemaking to evaluate the UHF discount together with the national ownership limit. Comments and reply comments were filed in 2018, and the proceeding remains open. Mission is in compliance with the 39% national cap limitation without the UHF discount and, therefore, with the UHF discount as well. Spectrum The FCC is in the process of repurposing a portion of the broadcast television spectrum for wireless broadband use. Pursuant to federal legislation enacted in 2012, the FCC conducted an incentive auction for the purpose of making additional spectrum available to meet future wireless broadband needs. Under the auction statute and rules, certain television broadcasters accepted bids from the FCC to voluntarily relinquish their spectrum in exchange for consideration, and certain wireless broadband providers and other entities submitted successful bids to acquire the relinquished television spectrum. Over the next several years, television stations that are not relinquishing their spectrum are being “repacked” into the frequency band still remaining for television broadcast use. The incentive auction commenced on March 29, 2016 and officially concluded on April 13, 2017. None of the Company’s television stations accepted bids to relinquish their television channels. Seven of the Company’s stations have been assigned new channels in the reduced post-auction television band. These “repacked” stations are required to construct and license the necessary technical modifications to operate on their new assigned channels and will need to cease operating on their former channels, on a rolling schedule ending in July 2020. Congress has allocated up to an industry-wide total of $2.75 billion to reimburse television broadcasters, MVPDs and other parties for costs reasonably incurred due to the repack. This allocation includes $1.0 billion added to the TV Broadcaster Relocation Fund as part of the Consolidated Appropriations Act, 2018. Broadcasters and MVPDs have submitted estimates to the FCC of their reimbursable costs. As of February 6, 2019, these costs were approximately $1.9 billion The reallocation of television spectrum to broadband use may be to the detriment of the Com pany’s investment in digital facilities, could require substantial additional investment to continue current operations, and may require viewers to invest in additional equipment or subscription services to continue receiving broadcast television signals. The Company cannot predict the impact of the incentive auction and subsequent repacking on its business. Exclusivity/Retransmission Consent On March 3, 2011, the FCC initiated a Notice of Proposed Rulemaking which among other things asked for comment on eliminating the network non-duplication and syndicated exclusivity protection rules, which may permit MVPDs to import out-of-market television stations in certain circumstances. In March 2014, the FCC adopted a further notice of proposed rulemaking which sought additional comment on the elimination or modification of the network non-duplication and syndicated exclusivity rules. The FCC’s possible elimination or modification of the network non-duplication and syndicated exclusivity protection rules may affect the Company’s ability to sustain its current level of retransmission consent revenues or grow such revenues in the future and could have an adverse effect on the Company’s business, financial condition and results of operations. The Company cannot predict the resolution of the FCC’s network non-duplication and syndicated exclusivity proposals, or the impact of these proposals if they are adopted. On December 5, 2014, federal legislation directed the FCC to commence a rulemaking to “review its totality of the circumstances test for good faith [retransmission consent] negotiations.” The FCC commenced this proceeding in September 2015 and comments and reply comments were submitted. In July 2016, the then-Chairman of the FCC publicly announced that the agency would not adopt additional rules in this proceeding. However, the proceeding remains open. Further, certain online video distributors and other over-the-top video distributors (“OTTDs”) have begun streaming broadcast programming over the Internet. In June 2014, the U.S. Supreme Court held that an OTTD’s retransmissions of broadcast television signals without the consent of the broadcast station violate copyright holders’ exclusive right to perform their works publicly as provided under the Copyright Act. In December 2014, the FCC issued a Notice of Proposed Rulemaking proposing to interpret the term “MVPD” to encompass OTTDs that make available for purchase multiple streams of video programming distributed at a prescheduled time and seeking comment on the effects of applying MVPD rules to such OTTDs. Comments and reply comments were filed in 2015. Although the FCC has not classified OTTDs as MVPDs to date, several OTTDs have signed agreements for retransmission of local stations within their markets and others are actively seeking to negotiate such agreements. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2019 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 10. Commitments and Contingencies Guarantee of Nexstar Debt Mission is a guarantor of and has pledged substantially all its assets, excluding FCC licenses, to guarantee Nexstar’s credit facility. Mission is also a guarantor of Nexstar’s 6.125% Notes and Nexstar’s 5.625% Notes. The 6.125% Notes and the 5.625% Notes are general senior unsecured obligations subordinated to all of Mission’s senior secured debt. In the event that Nexstar is unable to repay amounts due under these debt obligations, Mission will be obligated to repay such amounts. The maximum potential amount of future payments that Mission would be required to make under these guarantees would be generally limited to the amount of borrowings outstanding under Nexstar’s senior secured credit facility, the 6.125% Notes and the 5.625% Notes. As of March 31, 2019, Nexstar had $273.6 million outstanding obligations under its 6.125% Notes due on February 15, 2022, $888.7 million outstanding obligations under its 5.625% Notes due on August 1, 2024, and a maximum commitment of $2.191 billion under its senior secured credit facility, of which $1.213 billion in Term Loan B and $815.0 million in Term Loan A were outstanding. Nexstar also has a $163.4 million revolving loan commitment, of which no amount was outstanding as of March 31, 2019. Nexstar’s Term Loan B matures on January 17, 2024. Nexstar’s Term Loan A and revolving loans mature on October 26, 2023. On April 29, 2019, Nexstar prepaid $30.0 million of the outstanding principal balance under its term loans, funded by cash on hand. Purchase Options Granted to Nexstar In consideration of the guarantee of Mission’s bank credit facility by Nexstar, Mission has granted Nexstar purchase options to acquire the assets and assume the liabilities of each Mission station, subject to FCC consent, for consideration equal to the greater of (1) seven times the station’s cash flow, as defined in the option agreement, less the amount of its indebtedness as defined in the option agreement, or (2) the amount of its indebtedness. Cash flow is defined as income or loss from operations, plus depreciation and amortization (including amortization of broadcast rights), interest income, nonrecurring expenses (including time brokerage agreement fees), network compensation payments received or receivable and corporate management fees, less payments for broadcast rights and network compensation revenue. Additionally, Mission’s shareholders have granted Nexstar an option to purchase any or all of the Company’s stock, subject to FCC consent, for a price equal to the pro rata portion of the greater of (1) five times the Mission stations’ cash flow, as defined in the agreement, reduced by the amount of indebtedness, as defined in the agreement, or (2) $100,000. These option agreements (which expire on various dates between 2021 and 2028) are freely exercisable or assignable by Nexstar without consent or approval by Mission or its shareholders. The Company expects these option agreements to be renewed upon expiration. Indemnification Obligations In connection with certain agreements that the Company enters into in the normal course of its business, including local service agreements, business acquisitions and borrowing arrangements, the Company enters into contractual arrangements under which the Company agrees to indemnify the other party to such arrangement from losses, claims and damages incurred by the indemnified party for certain events as defined within the particular contract. Such indemnification obligations may not be subject to maximum loss clauses and the maximum potential amount of future payments the Company could be required to make under these indemnification arrangements may be unlimited. Historically, payments made related to these indemnifications have been insignificant and the Company has not incurred significant costs to defend lawsuits or settle claims related to these indemnification agreements. Litigation From time to time, the Company is involved with claims that arise out of the normal course of business. In the opinion of management, any resulting liability with respect to these claims would not have a material adverse effect on the Company’s financial position or results of operations. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Interim Financial Statements | Interim Financial Statements The Condensed Financial Statements as of March 31, 2019 and for the three months ended March 31, 2019 and 2018 are unaudited. However, in the opinion of management, such financial statements include all adjustments (consisting solely of normal recurring adjustments) necessary for the fair statement of the financial information included herein in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). The preparation of the Condensed Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenue and expenses during the period. Actual results could differ from those estimates. Results of operations for interim periods are not necessarily indicative of results for the full year. These Condensed Financial Statements should be read in conjunction with the Financial Statements and related Notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. The balance sheet as of December 31, 2018 has been derived from the audited Financial Statements as of that date but does not include all the information and footnotes required by U.S. GAAP for complete financial statements. |
Lesses | Leases As discussed in Recent Accounting Pronouncements below, the Company adopted the FASB issued ASU No. 2016-02, Leases (Topic 842) and all related amendments. ASC 842 establishes a comprehensive new lease accounting model that requires the recording of assets and liabilities arising from operating leases on the balance sheet accompanied by enhanced qualitative and quantitative disclosures in the notes to the financial statements. The standard was issued to help investors and other financial statement users better understand the amount, timing, and uncertainty of cash flow arising from leases. The Company adopted this standard effective January 1, 2019 using the optional transition method. The most significant impact was the recognition of right-of-use (“ROU” ) assets and lease liabilities for operating leases. Financial information for reporting periods beginning after January 1, 2019 is presented under ASC 842, while comparative financial information has not been adjusted and continues to be reported in accor dance with the Company’s historical accounting policy for lease contracts prior to the adoption of ASC 842. The Company has elected the ‘package of practical expedients’ permitted under the transition guidance within ASC 842, which permits the Company to carry forward the historical lease classification and not reassess whether any expired or existing contracts are or contain leases. In addition, the Company is not required to reassess initial direct costs for any existing leases. The Company did not elect the land easements and the use of hindsight practical expedients in determining the lease term for existing leases. ASC 842 also provides practical expedients for an entity’s ongoing accounting. The Company has elected the short-term lease recognition exemption for all leases that qualify. As a result, for those leases with a term of less than 12 months, it will not recognize ROU assets or lease liabilities. The vast majority of the Company’s television station leases are comprised of fixed lease payments, with a small percentage of television station lease payments that are tied to a rate or index which may be subject to variability. For these leases, the calculation of the present value of future minimum lease payments is the base rate as of the later of (i) when the television station was acquired by the Company, or (ii) the commencement date of the lease agreement. Certain real estate leases also include executory costs such as common area maintenance (non-lease component), as well as property insurance and property taxes (non-components). These are not significant and the Company historically excluded these executory costs from its future minimum lease payments under its historical policy prior to the adoption of ASC 842. As such, the executory costs were excluded from the calculation of ROU assets and lease liabilities associated with operating leases upon transition. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that it will exercise that option. The discount rate represents a risk-adjusted rate on a secured basis, and is the rate at which the Company would borrow funds to satisfy the scheduled lease liability payment streams commensurate with the lease term. On January 1, 2019, the discount rate used on existing leases at adoption was determined based on the remaining lease term using available data as of that date. The Company recognized operating lease ROU assets on its Condensed Balance Sheet as of January 1, 2019 of $6.5 million, inclusive of the present value of remaining future operating lease payments of $11.0 million and reclassifications of certain operating lease related assets and liabilities under the Company’s historical accounting policy prior to the adoption of ASC 842 such as deferred rent, short-term prepaid expenses and other accruals. These are summarized in the table below (in thousands). The adoption did not result in a cumulative impact on retained earnings as of January 1, 2019. ASC 842 Adoption Adjustments Present Value of Remaining Reclassifications of Operating Lease Related Balance Sheet Items to Operating Lease Right-of-Use Assets Impact on Condensed Balance Sheets December 31, 2018 Operating Lease Payments as of January 1, 2019 Deferred Rent Other Total January 1, 2019 Prepaid expenses and other current assets $ 1,130 $ - $ - $ (77 ) $ (77 ) $ 1,053 Other intangible assets, net 13,712 - - - - 13,712 Other noncurrent assets, net 936 10,957 (4,175 ) (332 ) 6,450 7,386 Total Assets 216,595 10,957 (4,175 ) (409 ) 6,373 222,968 Other current liabilities 8,558 1,802 (531 ) (198 ) 1,073 9,631 Other noncurrent liabilities 6,820 9,155 (3,644 ) (211 ) 5,300 12,120 Total Liabilities 237,732 10,957 (4,175 ) (409 ) 6,373 244,105 After transition to ASC 842, the Company determines if an arrangement is a lease at inception. The ROU assets arising from operating leases are included in other noncurrent assets, current operating lease liabilities and other noncurrent liabilities in the accompanying Condensed Balance Sheets. Operating lease ROU assets and operating lease liabilities that are recognized after the adoption of ASC 842 are based on the present value of the future minimum lease payments ove r the lease term at the commencement date. The operating lease ROU asset also includes any lease payments made and excludes lease incentives and executory costs (not significant). The Company’s lease terms may include options to extend or terminate the lea se when it is reasonably certain that it will exercise that option. When determining if a renewal option is reasonably certain of being exercised, the Company considers several factors, including but not limited to, the significance of leasehold improvemen ts incurred on the property, whether the asset is difficult to replace, or specific characteristics unique to the particular lease that would make it reasonably certain that the Company would exercise such option. In most cases, the Company has concluded t hat renewal and early termination options are not reasonably certain of being exercised by the Company (and thus not included in its ROU asset and lease liability) unless there is an economic, financial or business reason to do so. As most of the Company’s leases do not provide an implicit rate, the incremental borrowing rate was used based on the information available at commencement date in determining the present value of future lease payments. The discount rate represents a risk-adjusted rate on a secur ed basis and is the rate at which the Company would borrow funds to satisfy the scheduled lease liability payment streams commensurate with the lease term. For new or renewed leases starting in 2019, the discount rate is determined using available data at lease commencement and based on the lease term including any reasonably certain renewal periods. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. In rare circumstances, the Company may enter into finance leases for specific equipment or real estate used in its operations, in which the lease term is for the major part of the remaining economic life of the underlying asset or the present value of the lease payments equals or exceeds substantially all of the estimated fair value of the underlying asset. The Company records its finance leases within property, plant and equipment, other current liabilities and other noncurrent liabilities on the accompanying Condensed Balance Sheets. See Note 6 for additional disclosures on leases as of and for the three months ended March 31, 2019. |
Financial Instruments | Financial Instruments The carrying amounts of cash and cash equivalents, accounts receivable, broadcast rights payable, accounts payable and accrued expenses approximate fair value due to their short-term nature. See Note 5 for fair value disclosures related to the Company’s debt. |
Basis of Presentation | Basis of Presentation Certain prior year financial statement amounts have been reclassified to conform to the current year presentation. These reclassifications had no effect on net income or shareholders’ deficit as previously reported . |
Recent Accounting Pronouncements | Recent Accounting Pronouncements New Accounting Standards Adopted In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The Company adopted this standard and all related amendments effective January 1, 2019 using the optional transition method. The standard had a material impact on the Company’s Condensed Balance Sheets but did not impact its operating results, cash flows or equity. The most significant impact was the recognition of ROU assets and lease liabilities for operating leases. The adoption did not result in a cumulative impact on retained earnings as of January 1, 2019. See Leases above for the Company’s updated accounting policy and Note 6 for expanded disclosures. New Accounting Standards Not Yet Adopted In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326) (“ASU 2016-13”).” The standard requires entities to estimate loss of financial assets measured at amortized cost, including trade receivables, debt securities and loans, using an expected credit loss model. The expected credit loss differs from the previous incurred losses model primarily in that the loss recognition threshold of “probable” has been eliminated and that expected loss should consider reasonable and supportable forecasts in addition to the previously considered past events and current conditions. Additionally, the guidance requires additional disclosures related to the further disaggregation of information related to the credit quality of financial assets by year of the asset’s origination for as many as five years. Entities must apply the standard provision as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. The standard is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted for annual periods beginning after December 15, 2018, and interim periods within those fiscal years. The Company is currently evaluating the impact of adopting ASU 2016-13 on its financial statements. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820) (“ASU 2018-13”), which modifies the disclosure requirements on fair value measurements . The amendments in this update are effective for all entities for fiscal years , and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted for any removed or modified disclosures. The Company is currently evaluating the impact of adopting ASU 2018-13 on its financial statements. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Schedule of ASC 842 Adoption Adjustments Impact on Condensed Balance Sheets | The Company recognized operating lease ROU assets on its Condensed Balance Sheet as of January 1, 2019 of $6.5 million, inclusive of the present value of remaining future operating lease payments of $11.0 million and reclassifications of certain operating lease related assets and liabilities under the Company’s historical accounting policy prior to the adoption of ASC 842 such as deferred rent, short-term prepaid expenses and other accruals. These are summarized in the table below (in thousands). The adoption did not result in a cumulative impact on retained earnings as of January 1, 2019. ASC 842 Adoption Adjustments Present Value of Remaining Reclassifications of Operating Lease Related Balance Sheet Items to Operating Lease Right-of-Use Assets Impact on Condensed Balance Sheets December 31, 2018 Operating Lease Payments as of January 1, 2019 Deferred Rent Other Total January 1, 2019 Prepaid expenses and other current assets $ 1,130 $ - $ - $ (77 ) $ (77 ) $ 1,053 Other intangible assets, net 13,712 - - - - 13,712 Other noncurrent assets, net 936 10,957 (4,175 ) (332 ) 6,450 7,386 Total Assets 216,595 10,957 (4,175 ) (409 ) 6,373 222,968 Other current liabilities 8,558 1,802 (531 ) (198 ) 1,073 9,631 Other noncurrent liabilities 6,820 9,155 (3,644 ) (211 ) 5,300 12,120 Total Liabilities 237,732 10,957 (4,175 ) (409 ) 6,373 244,105 |
Intangible Assets and Goodwill
Intangible Assets and Goodwill (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Intangible Assets Subject to Amortization | Intangible assets subject to amortization consisted of the following (in thousands): Estimated March 31, 2019 December 31, 2018 useful life, Accumulated Accumulated in years Gross Amortization Net Gross Amortization Net Network affiliation agreements 15 $ 86,248 $ (73,641 ) $ 12,607 $ 86,248 $ (73,153 ) $ 13,095 Other definite-lived intangible assets 1-15 15,681 (15,095 ) 586 15,681 (15,064 ) 617 Other intangible assets $ 101,929 $ (88,736 ) $ 13,193 $ 101,929 $ (88,217 ) $ 13,712 |
Estimated Future Amortization Expense of Definite-Lived Intangible Assets | The following table presents the Company’s estimate of amortization expense for the remainder of 2019, each of the five succeeding years ended December 31 and thereafter for definite-lived intangible assets as of March 31, 2019 (in thousands): Remainder of 2019 $ 1,400 2020 1,518 2021 1,517 2022 1,517 2023 1,444 Thereafter 5,797 $ 13,193 |
Goodwill and FCC Licenses | The carrying amounts of goodwill and FCC licenses were as follows (in thousands): Goodwill FCC Licenses Accumulated Accumulated Gross Impairment Net Gross Impairment Net Balances as of December 31, 2018 $ 34,737 $ (1,550 ) $ 33,187 $ 53,799 $ (10,697 ) $ 43,102 Balances as of March 31, 2019 $ 34,737 $ (1,550 ) $ 33,187 $ 53,799 $ (10,697 ) $ 43,102 |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
Long Term Debt | Long-term debt consisted of the following (in thousands): March 31, December 31, 2019 2018 Term loans, net of financing costs and discount of $3,715 and $3,888, respectively $ 224,241 $ 224,639 Less: current portion (2,285 ) (2,285 ) $ 221,956 $ 222,354 |
Fair Value of Debt | The aggregate carrying amounts and estimated fair values of the Company’s debt were as follows (in thousands): March 31, 2019 December 31, 2018 Carrying Fair Carrying Fair Amount Value Amount Value Term loans $ 224,241 $ 224,011 $ 224,639 $ 220,450 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Leases [Abstract] | |
Schedule of Components of Lease Right-of-Use Assets and Liabilities | The following table summarizes the components of our lease right-of-use assets and liabilities at March 31, 2019: (In thousands) Balance Sheet Classification March 31, 2019 Operating Leases Operating lease right-of-use assets, net Other noncurrent assets, net $ 6,163 Current lease liabilities Current operating lease liabilities $ 1,878 Noncurrent lease liabilities Other noncurrent liabilities $ 8,680 |
Schedule of Other Information Related to Leases | Other information related to leases as of March 31, 2019 was as follows (in thousands, except lease term and discount rate): Supplemental Cash Flows Information Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 539 Weighted Average Remaining Lease Term 8 Weighted Average Discount Rate 5.3 % |
Schedule of Future Minimum Lease Payments Under Non-Cancellable Leases | Future minimum lease payments under non-cancellable leases as of March 31, 2019 were as follows (in thousands): Remainder of 2019 $ 1,818 2020 2,434 2021 1,494 2022 890 2023 922 Thereafter 5,732 Total future minimum lease payments 13,290 Less imputed interest (2,733 ) Total $ 10,557 |
Revenue (Tables)
Revenue (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
ASC 606 [Member] | |
Summary of Disaggregation of Revenue | The following table presents the disaggregation of our revenue for the three months ended March 31, 2019 and March 31, 2018 (in thousands): Three Months Ended March 31, 2019 2018 Retransmission compensation $ 19,104 $ 15,904 Other 303 198 Revenue from Nexstar 7,762 8,483 Net revenue $ 27,169 $ 24,585 |
Organization and Business Ope_2
Organization and Business Operations - Additional Information (Details) | 3 Months Ended |
Mar. 31, 2019TelevisionStationSegmentTelevisionMarket | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Number of television stations owned and operated | TelevisionStation | 19 |
Number of reportable segments | Segment | 1 |
Number of television markets | TelevisionMarket | 18 |
Maximum consolidated first lien net leverage ratio | 4.25 to 1.00 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Additional Information (Details) - USD ($) | Mar. 31, 2019 | Jan. 01, 2019 | Dec. 31, 2018 |
Summary Of Significant Accounting Policies [Line Items] | |||
Operating lease ROU assets | $ 6,163,000 | ||
Opearting lease liabilities | 10,557,000 | ||
Future operating lease payments | 13,290,000 | ||
Accumulated deficit | $ (23,595,000) | $ (21,137,000) | |
ASC 842 Adoption Adjustments [Member] | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Operating lease ROU assets | $ 6,500,000 | ||
Opearting lease liabilities | 6,500,000 | ||
Future operating lease payments | 11,000,000 | ||
Accumulated deficit | $ 0 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Schedule of ASC 842 Adoption Adjustments Impact on Condensed Balance Sheets (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Jan. 01, 2019 | Dec. 31, 2018 |
Prepaid expenses and other current assets | $ 721 | $ 1,130 | |
Other intangible assets, net | 13,193 | 13,712 | |
Other noncurrent assets, net | 7,021 | 936 | |
Total Assets | 220,435 | 216,595 | |
Other current liabilities | 10,511 | 8,558 | |
Other noncurrent liabilities | 11,563 | 6,820 | |
Total Liabilities | $ 244,030 | $ 237,732 | |
ASC 842 Adoption Adjustments [Member] | |||
Prepaid expenses and other current assets | $ 1,053 | ||
Other intangible assets, net | 13,712 | ||
Other noncurrent assets, net | 7,386 | ||
Total Assets | 222,968 | ||
Other current liabilities | 9,631 | ||
Other noncurrent liabilities | 12,120 | ||
Total Liabilities | 244,105 | ||
ASC 842 Adoption Adjustments [Member] | Present Value of Remaining Operating Lease Payments Adjustments [Member] | Restatement Adjustment [Member] | |||
Other noncurrent assets, net | 10,957 | ||
Total Assets | 10,957 | ||
Other current liabilities | 1,802 | ||
Other noncurrent liabilities | 9,155 | ||
Total Liabilities | 10,957 | ||
ASC 842 Adoption Adjustments [Member] | Reclassifications Adjustments of Operating Lease Deferred Rent to Operating Lease Right of Use Assets {Member] | Restatement Adjustment [Member] | |||
Other noncurrent assets, net | (4,175) | ||
Total Assets | (4,175) | ||
Other current liabilities | (531) | ||
Other noncurrent liabilities | (3,644) | ||
Total Liabilities | (4,175) | ||
ASC 842 Adoption Adjustments [Member] | Reclassifications Adjustments of Operating Lease Other to Operating Lease Right of Use Assets [Member] | Restatement Adjustment [Member] | |||
Prepaid expenses and other current assets | (77) | ||
Other noncurrent assets, net | (332) | ||
Total Assets | (409) | ||
Other current liabilities | (198) | ||
Other noncurrent liabilities | (211) | ||
Total Liabilities | (409) | ||
ASC 842 Adoption Adjustments [Member] | Reclassifications Adjustments of Operating Lease Total to Operating Lease Right of Use Assets [Member] | Restatement Adjustment [Member] | |||
Prepaid expenses and other current assets | (77) | ||
Other noncurrent assets, net | 6,450 | ||
Total Assets | 6,373 | ||
Other current liabilities | 1,073 | ||
Other noncurrent liabilities | 5,300 | ||
Total Liabilities | $ 6,373 |
Local Service Agreements with_2
Local Service Agreements with Nexstar - Additional Information (Details) | 3 Months Ended |
Mar. 31, 2019 | |
Minimum [Member] | |
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |
Term of agreements renewal periods | 8 years |
Maximum [Member] | |
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |
Term of agreements renewal periods | 10 years |
Intangible Assets and Goodwil_2
Intangible Assets and Goodwill - Intangible Assets Subject to Amortization (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2019 | Dec. 31, 2018 | |
Finite-Lived Intangible Assets [Line Items] | ||
Gross | $ 101,929 | $ 101,929 |
Accumulated Amortization | (88,736) | (88,217) |
Net | 13,193 | 13,712 |
Other Intangible Assets [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross | 15,681 | 15,681 |
Accumulated Amortization | (15,095) | (15,064) |
Net | $ 586 | $ 617 |
Other Intangible Assets [Member] | Minimum [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated useful life | 1 year | 1 year |
Other Intangible Assets [Member] | Maximum [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated useful life | 15 years | 15 years |
Network Affiliation Agreements [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross | $ 86,248 | $ 86,248 |
Accumulated Amortization | (73,641) | (73,153) |
Net | $ 12,607 | $ 13,095 |
Estimated useful life | 15 years | 15 years |
Intangible Assets and Goodwil_3
Intangible Assets and Goodwill - Estimated Amortization Expense of Definite-Lived Intangible Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Finite Lived Intangible Assets Future Amortization Expense Current And Five Succeeding Fiscal Years [Abstract] | ||
Remainder of 2019 | $ 1,400 | |
2020 | 1,518 | |
2021 | 1,517 | |
2022 | 1,517 | |
2023 | 1,444 | |
Thereafter | 5,797 | |
Net | $ 13,193 | $ 13,712 |
Intangible Assets and Goodwil_4
Intangible Assets and Goodwill - Goodwill and FCC Licenses (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Goodwill [Abstract] | ||
Goodwill, Gross | $ 34,737 | $ 34,737 |
Goodwill, Accumulated Impairment | (1,550) | (1,550) |
Goodwill, Net | 33,187 | 33,187 |
FCC Licenses [Abstract] | ||
FCC Licenses, Gross | 53,799 | 53,799 |
FCC Licenses, Accumulated Impairment | (10,697) | (10,697) |
FCC Licenses, Net | $ 43,102 | $ 43,102 |
Debt - Long Term Debt (Details)
Debt - Long Term Debt (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Long term Debt [Abstract] | ||
Less: current portion | $ (2,285) | $ (2,285) |
Debt, noncurrent | 221,956 | 222,354 |
Term Loan B [Member] | ||
Long term Debt [Abstract] | ||
Long term Debt | 224,241 | 224,639 |
Less: current portion | (2,285) | (2,285) |
Debt, noncurrent | $ 221,956 | $ 222,354 |
Debt - Long Term Debt (Parenthe
Debt - Long Term Debt (Parenthetical) (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Term Loan B [Member] | ||
Long term Debt [Abstract] | ||
Debt financing costs and discount | $ 3,715 | $ 3,888 |
Debt - Additional Information (
Debt - Additional Information (Details) | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Financial Guarantee of Nexstar 5.625% Senior Unsecured Notes Due 2024 [Member] | |
Debt Instrument [Line Items] | |
Maximum guarantee exposure | $ 900,000,000 |
Interest rate | 5.625% |
Current exposure under the guarantee | $ 888,700,000 |
Guarantee of Nexstar 6.125% Notes Due 2022 [Member] | |
Debt Instrument [Line Items] | |
Maximum guarantee exposure | $ 275,000,000 |
Interest rate | 6.125% |
Current exposure under the guarantee | $ 273,600,000 |
Guarantee of Nexstar Senior Secured Credit Facility [Member] | |
Debt Instrument [Line Items] | |
Maximum guarantee exposure | 2,191,000,000 |
Guarantee of Nexstar Senior Secured Credit Facility Term Loan B [Member] | |
Debt Instrument [Line Items] | |
Current exposure under the guarantee | 1,213,000,000 |
Guarantee of Nexstar Senior Secured Credit Facility Term Loan A [Member] | |
Debt Instrument [Line Items] | |
Current exposure under the guarantee | 815,000,000 |
Revolving Loans [Member] | |
Debt Instrument [Line Items] | |
Available borrowing capacity | 3,000,000 |
Term Loan B [Member] | Senior Secured Credit Facility [Member] | |
Debt Instrument [Line Items] | |
Payment of contractual maturities under term loan | $ 600,000 |
Debt - Fair Value of Debt (Deta
Debt - Fair Value of Debt (Details) - Term Loan B [Member] - Level 3 [Member] - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Carrying Amount [Member] | ||
Fair Value of debt [Line Items] | ||
Carrying and Fair Value of Debt | $ 224,241 | $ 224,639 |
Fair Value [Member] | ||
Fair Value of debt [Line Items] | ||
Carrying and Fair Value of Debt | $ 224,011 | $ 220,450 |
Leases - Additional Information
Leases - Additional Information (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Lessee Lease Description [Line Items] | |
Operating lease, existence of option to extend | true |
Operating lease, existence of option to terminate | true |
Operating lease cost | $ 0.4 |
Minimum [Member] | |
Lessee Lease Description [Line Items] | |
Operating lease, remaining lease term | 6 months |
Operating lease, option to extend term | 5 years |
Maximum [Member] | |
Lessee Lease Description [Line Items] | |
Operating lease, remaining lease term | 13 years |
Operating lease, option to extend term | 25 years |
Operating lease, option to terminate term | 1 year |
Leases - Schedule of Components
Leases - Schedule of Components of Lease Right-of-Use Assets and Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Operating Leases | ||
Operating lease right-of-use assets, net | $ 6,163 | |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | us-gaap:OtherAssetsNoncurrent | |
Current lease liabilities | $ 1,878 | $ 721 |
Noncurrent lease liabilities | $ 8,680 | |
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List] | us-gaap:OtherLiabilitiesNoncurrent |
Leases - Schedule of Other Info
Leases - Schedule of Other Information Related to Leases (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Supplemental information: | |
Operating cash flows from operating leases | $ 539 |
Weighted Average Remaining Lease Term | 8 years |
Weighted Average Discount Rate | 5.30% |
Leases - Schedule of Future Min
Leases - Schedule of Future Minimum Lease Payments Under Non-Cancellable Leases (Details) $ in Thousands | Mar. 31, 2019USD ($) |
Leases [Abstract] | |
Remainder of 2019 | $ 1,818 |
2020 | 2,434 |
2021 | 1,494 |
2022 | 890 |
2023 | 922 |
Thereafter | 5,732 |
Total future minimum lease payments | 13,290 |
Less imputed interest | (2,733) |
Total | $ 10,557 |
Revenue - Summary of Disaggrega
Revenue - Summary of Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Disaggregation Of Revenue [Line Items] | ||
Net revenue | $ 27,169 | $ 24,585 |
Revenue from Nexstar | 7,762 | 8,483 |
Retransmission Compensation [Member] | ||
Disaggregation Of Revenue [Line Items] | ||
Net revenue | 19,104 | 15,904 |
Other [Member] | ||
Disaggregation Of Revenue [Line Items] | ||
Net revenue | $ 303 | $ 198 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Income Tax Disclosure [Abstract] | ||
Income tax expense (benefit) | $ (835) | $ (981) |
Pre-tax book income (loss) | $ (3,300) | $ (4,100) |
Effective income tax rate | 25.40% | 23.90% |
Percentage of increase (decrease) in effective tax rate | 1.40% |
FCC Regulatory Matters - Additi
FCC Regulatory Matters - Additional Information (Details) $ in Thousands | Feb. 06, 2019USD ($) | Mar. 31, 2019USD ($)TelevisionStation | Dec. 31, 2018USD ($) | Mar. 31, 2018USD ($) |
Risks And Uncertainties [Abstract] | ||||
Maximum percentage of television household reach | 39.00% | |||
Percentage reach of ultra high frequency station | 50.00% | |||
Date of abolishing the UHF discount | Aug. 24, 2016 | |||
Effective date of reinstating the UHF discount | Jun. 15, 2017 | |||
Number of full power stations repacked | TelevisionStation | 7 | |||
Maximum amount allocated by Congress for reimbursement of repack costs | $ 2,750,000 | |||
Relocation fund included in reimbursement of repack costs | 1,000,000 | |||
Estimated reimbursable costs | $ 1,900,000 | |||
Capital expenditures related to station repack | 800 | $ 400 | ||
Reimbursement from the FCC related to station repack | $ 1,536 | $ 0 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Details) - USD ($) | Apr. 29, 2019 | Mar. 31, 2019 |
Option Agreement to Sell Mission's Capital Stock to Nexstar [Member] | ||
Other Commitments [Abstract] | ||
Minimum purchase price Mission agreed to sell its capital stock to Nexstar | $ 100,000 | |
Minimum [Member] | Option Agreement To Sell The Assets Of Mission Stations To Nexstar [Member] | ||
Other Commitments [Abstract] | ||
Options expiration date year | 2021 | |
Maximum [Member] | Option Agreement To Sell The Assets Of Mission Stations To Nexstar [Member] | ||
Other Commitments [Abstract] | ||
Options expiration date year | 2028 | |
Guarantee of Nexstar Senior Secured Credit Facility [Member] | ||
Guarantees of Nexstar Debt [Abstract] | ||
Maximum guarantee exposure | $ 2,191,000,000 | |
Outstanding principal balance repaid | 163,400,000 | |
Revolving loan commitment outstanding | 0 | |
Guarantee of Nexstar Senior Secured Credit Facility Term Loan B [Member] | ||
Guarantees of Nexstar Debt [Abstract] | ||
Current exposure under the guarantee | $ 1,213,000,000 | |
Maturity date | Jan. 17, 2024 | |
Guarantee of Nexstar 6.125% Notes Due 2022 [Member] | ||
Guarantees of Nexstar Debt [Abstract] | ||
Maximum guarantee exposure | $ 275,000,000 | |
Current exposure under the guarantee | $ 273,600,000 | |
Interest rate | 6.125% | |
Maturity date | Feb. 15, 2022 | |
Financial Guarantee of Nexstar 5.625% Senior Unsecured Notes Due 2024 [Member] | ||
Guarantees of Nexstar Debt [Abstract] | ||
Maximum guarantee exposure | $ 900,000,000 | |
Current exposure under the guarantee | $ 888,700,000 | |
Interest rate | 5.625% | |
Maturity date | Aug. 1, 2024 | |
Guarantee of Nexstar Senior Secured Credit Facility Term Loan A [Member] | ||
Guarantees of Nexstar Debt [Abstract] | ||
Current exposure under the guarantee | $ 815,000,000 | |
Maturity date | Oct. 26, 2023 | |
Guarantee of Nexstar Senior Secured Credit Facility Term Loan A [Member] | Subsequent Event [Member] | ||
Guarantees of Nexstar Debt [Abstract] | ||
Outstanding principal balance prepaid | $ 30,000,000 |