Significant Accounting Policies (Policies) | 12 Months Ended |
Sep. 30, 2013 |
Consolidation | ' |
Consolidation—The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries after elimination of all significant intercompany accounts and transactions. |
Use of estimates and assumptions | ' |
Use of estimates and assumptions—The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates and assumptions. |
Revenue recognition | ' |
Revenue recognition—Revenues are generated principally from sales of commercial advertising and are recorded as the advertisements are broadcast net of agency and national representative commissions and music license fees. For certain program contracts which provide for the exchange of advertising time in lieu of cash payments for the rights to such programming, revenue is recorded as advertisements are broadcast at the estimated fair value of the advertising time given in exchange for the program rights. Such barter revenue was $4,708, $4,030 and $4,711 for the years ended September 30, 2011, 2012 and 2013, respectively. Subscriber fee revenues are recognized in the period during which programming is provided, pursuant to affiliation agreements with cable television systems, direct broadcast satellite service providers and telephone company operators. |
Cash and cash equivalents | ' |
Cash and cash equivalents—The Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents. |
Accounts receivable and allowance for doubtful accounts | ' |
Accounts receivable and allowance for doubtful accounts—The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. As is customary in the broadcasting industry, the Company does not require collateral for its credit sales, which are typically due within thirty days. |
Program rights | ' |
Program rights—The Company has entered into contracts for the rights to television programming. Payments related to such contracts are generally made in installments over the contract period. Program rights which are currently available and the liability for future payments under such contracts are reflected in the consolidated balance sheets. The vast majority of the Company’s program rights represent one-year contracts for first-run syndicated programming. As each broadcast over the term of the contract generally provides the same advertising value, such program rights are amortized on a straight-line basis over the term. A limited number of multi-year program contracts representing off-network syndicated programming are amortized on an accelerated basis due to the generally higher advertising value of the early broadcasts. Program rights expected to be amortized in the succeeding year and amounts payable within one year are classified as current assets and liabilities, respectively. The program rights are reflected in the consolidated balance sheets at the lower of unamortized cost or estimated net realizable value based on management’s expectation of the net future cash flows to be generated by the programming. |
Property, plant and equipment | ' |
Property, plant and equipment—Property, plant and equipment are recorded at cost and depreciated over the estimated useful lives of the assets. Maintenance and repair expenditures are charged to expense as incurred and expenditures for modifications and improvements which increase the expected useful lives of the assets are capitalized. Depreciation expense is computed using the straight-line method for buildings and straight-line and accelerated methods for furniture, machinery and equipment. Leasehold improvements are amortized using the straight-line method over the lesser of the term of the related lease or the estimated useful lives of the assets. The Company reviews the carrying amount of property, plant and equipment for impairment whenever events and circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability is measured by comparison of the carrying amount of the assets to the estimated undiscounted future cash flows associated with them. |
The useful lives of property, plant and equipment for purposes of computing depreciation and amortization expense are: |
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Buildings | | | 15-40 years | |
Leasehold improvements | | | 5-16 years | |
Furniture, machinery and equipment | | | 3-20 years | |
Intangible assets | ' |
Intangible assets—Intangible assets consist of values assigned to broadcast licenses. The amounts originally assigned to these intangible assets were based on the results of independent valuations. Broadcast licenses are deemed to have indefinite lives and are not amortized but are subject to tests for impairment at least annually each September 30, or whenever events indicate that impairment may exist. The Company also evaluates the remaining life of its broadcast licenses each period. While broadcast licenses are granted by the Federal Communications Commission (FCC) for a fixed period of time, renewals of these licenses have occurred routinely and at nominal cost. Costs associated with the renewal of broadcast licenses are expensed as incurred. |
Impairment of indefinite-lived intangible assets | ' |
Impairment of indefinite-lived intangible assets—When the Company assesses its indefinite-lived intangible assets for impairment it has the option of performing a qualitative assessment to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired, before further quantitative impairment testing is necessary. Relevant factors considered under the qualitative assessment include, but are not limited to, whether there have been changes in macroeconomic conditions, the broadcast industry, the operating model of a broadcast station, the Company’s financial performance and the results of its most recent quantitative assessment. The Company considers these factors and the impact that changes in such factors would have on the inputs used in its most recent quantitative assessment to determine whether, on a station-by-station basis, it is more likely than not that any of its broadcast licenses are impaired. |
If the Company concludes through its qualitative assessment that it is more likely than not that its broadcast licenses are impaired, or if the Company chooses to bypass the qualitative assessment, the Company would perform a quantitative assessment using an income approach consistent with the methodology used in historical valuation assessments to determine the fair value of the broadcast licenses on a station-by-station basis. If the results of such assessment yield that the carrying value of a station’s broadcast license exceeds the fair value, any excess would be recorded as the amount of impairment. The income approach assumes an initial hypothetical start-up operation, maturing into an average performing independent or non-affiliated station in a specific television market and giving consideration to other relevant factors such as the number of competing stations within that market. The net cash flows of this hypothetical average market participant are projected from the first year start-up to perpetuity and then discounted back to net present value. The calculated valuation is compared to market transactions in order to confirm the results of the income approach. The key valuation assumptions include the pre-tax discount rate, the compound annual market revenue growth rates, and operating profit margins, excluding depreciation and amortization, after the hypothetical start-up period. The inputs used in this assessment are considered to be Level 3 in the fair value hierarchy. See “Fair value” below. |
Deferred financing costs | ' |
Deferred financing costs—Costs incurred in connection with the issuance of long-term debt are deferred and amortized to other nonoperating expense on a straight-line basis over the term of the underlying financing agreement. |
Deferred rent | ' |
Deferred rent—Rent concessions and scheduled rent increases in connection with operating leases are recognized as adjustments to rental expense on a straight-line basis over the associated lease term. |
Concentration of credit risk | ' |
Concentration of credit risk—Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of certain cash and cash equivalents and receivables from advertisers. The Company invests its excess cash with high-credit quality financial institutions, and concentrations of credit risk with respect to receivables from advertisers are limited as the Company’s advertising base consists of large national advertising agencies and high-credit quality local advertisers. |
Income taxes | ' |
Income taxes—The operations of the Company are included in a consolidated federal income tax return filed by Perpetual. In accordance with the terms of a tax sharing agreement between the Company and Perpetual, the Company is required to pay to Perpetual its federal income tax liability, computed based upon statutory federal income tax rates applied to the Company’s consolidated taxable income. The Company files separate state income tax returns with the exception of Virginia and the District of Columbia, which are included in combined state income tax returns filed by Perpetual. In accordance with the terms of the tax sharing agreement, the Company is required to pay to Perpetual its combined state income tax liability, computed based upon statutory state income tax rates applied to the Company’s combined state net taxable income. Taxes payable to Perpetual are not reduced by losses generated in prior years by the Company. In addition, the amounts payable by the Company to Perpetual under the tax sharing agreement are not reduced if losses of other members of the Perpetual group are utilized to offset taxable income of the Company for purposes of the Perpetual consolidated federal or combined state income tax returns. |
The accounting rules for income taxes require that the consolidated amount of current and deferred income tax expense for a group that files a consolidated income tax return be allocated among members of the group when those members issue separate financial statements. Perpetual allocates a portion of its consolidated current and deferred income tax expense to the Company as if the Company and its subsidiaries were separate taxpayers. The Company records deferred tax assets, to the extent it is more likely than not that such assets will be realized in future periods, and deferred tax liabilities for the tax effects of the differences between the bases of its assets and liabilities for tax and financial reporting purposes. |
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The Company records income tax expense in accordance with the accounting rules for income taxes, and makes payments to Perpetual in accordance with the terms of the tax sharing agreement between the Company and Perpetual. To the extent that there is a difference between tax payments that would be due as calculated in accordance with the accounting rules and tax payments due under the tax sharing agreement, such difference is recorded to retained earnings. |
The Company classifies interest and penalties related to its uncertain tax positions as a component of income tax expense. |
Fair value | ' |
Fair value—The carrying amount of the Company’s cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and program rights payable approximate fair value due to the short maturity of those instruments. |
Accounting guidance provides a fair value hierarchy to categorize three levels of inputs that may be used to measure fair value. The three levels are as follows: |
Level 1 – Observable inputs such as quoted prices in active markets for identical assets or liabilities; |
Level 2 – Observable inputs other than Level 1, such as quoted prices for similar assets or liabilities; quoted prices for identical assets or liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; |
Level 3 – Unobservable inputs that are supported by little or no market activity which result in the use of management estimates. |
The Company estimates the fair value of its long-term debt on a recurring basis. See Note 5. |
Earnings per share | ' |
Earnings per share—Earnings per share data are not presented since the Company has only one shareholder. |
Reclassifications | ' |
Reclassifications—Certain amounts in previously issued financial statements have been reclassified to conform to the current year presentation. |