Leases

12 Months Ended

Dec. 31, 2019

(11)

Leases

The Company leases office space in several markets. Some leases are for the entire building

while others are for certain office space in a building. The Company also rents land beneath a building owned by the Company in Augusta, GA.

The Company leases radio towers for the majority of its radio stations. Leases for FM radio stations are generally to install broadcast equipment on a radio tower and in a transmitter building adjacent to the radio tower. Leases for AM radio stations are generally for the entire radio tower array and the adjacent transmitter building. The Company also leases tower space to install translator equipment.

Certain rental agreements for office space and radio towers contain

non-lease

components such as common area maintenance and utilities. The Company elected to apply the practical expedient that permits lessees to make an accounting policy election to account for each separate lease component of an office space and radio tower lease contract and its associated

non-lease

components as a single lease component. Certain rental agreements for office space and radio towers also include taxes and insurance which are not considered lease components.

Consideration for office space and radio tower leases generally includes monthly payments with either a fixed annual increase or a variable annual increase based on a consumer price index. Leases with variable annual increases based on a consumer price index are initially measured using the index at the commencement date. Subsequent changes to variable increases based on a consumer price index will be recognized in the statement of operations in the period of change. The lease term begins at the commencement date and is determined on that date based on the noncancelable term of the lease, together with periods covered by an option to extend the lease if the Company is reasonably certain to exercise that option. When evaluating whether the Company is reasonably certain to exercise an option to

extend

the lease, the Company is required to assess all relevant factors that create an economic incentive for the Company to exercise the

extension

The Company rents certain office equipment, such as copiers, in several markets. Consideration for office equipment leases generally includes fixed monthly payments for the lease term. The lease term begins at the commencement date and is determined on that date based on the noncancelable term of the lease. Office equipment leases generally do not include options to extend the lease.

The Company received several vehicles through acquisitions that have completed the original lease term and are now leased on a month to month basis. The vehicles are expected to be acquired or returned to the lessor within twelve months. The Company has made an accounting policy election to not record leases with a term of 12 months or less on its balance sheet. Instead, the Company recognizes lease payments as an expense on a straight-line basis over the lease term.

The various discount rates used to calculate lease liabilities and right-of-use assets are based on the Company’s incremental borrowing rate due to the rate implicit in the leases being not readily determinable. The Company’s incremental borrowing rate is the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. The Company used the current borrowing rate on its credit facility, adjusted for the effects of collateralization, to determine the various rates it would pay to finance similar transactions over similar time periods.

The Company leases certain office space and radio towers from related parties. The current lease expiration dates range from December

2020

through December

2038

and annual rental expense ranges from $11,000 to $0.2 million. Related party

right-of-use

assets and lease liabilities are included in the amounts reported on the accompanying balance sheet as of December 31, 2019 and future minimum payments for related party leases are included in the tables below. See Note 18 for further information regarding related party leases.

The Company elected to apply a package of practical expedients that allows it not to reassess (i) whether any expired or existing contracts are or contain leases, (ii) lease classification for any expired or existing leases, and (iii) initial direct costs for any expired or existing leases.

Certain amounts related to finance leases previously reported in the 2018 financial statements have been reclassified to conform to the 2019 presentation.

The following table summarizes lease information as of and for the year ended December 31, 2019:


Lease cost
Operating lease cost	$	10,190,243
Finance lease cost:
Amortization of right-of-use assets		22,088
Interest on lease liabilities		11,285
Short-term lease cost		28,800

Total lease cost	$	10,252,416

Other information
Operating cash flows from operating leases	$	9,901,889
Operating cash flows from finance leases		11,285
Financing cash flows from finance leases		67,492
Right-of-use assets obtained in exchange for new operating lease liabilities		5,523,800
Right-of-use assets obtained in exchange for new finance lease liabilities		—
Weighted-average remaining lease term – operating leases		6.6 years
Weighted-average remaining lease term – finance leases		26.0 years
Weighted-average discount rate – operating leases		8.5	%
Weighted-average discount rate – finance leases		3.9	%

As of December 31, 2019, future minimum payments for operating and finance leases for the next five years and thereafter are summarized as follows:


2020	$	10,572,301
2021		9,445,943
2022		8,196,446
2023		6,825,678
2024		5,587,119
Thereafter		18,051,059

Total lease payments		58,678,546
Less imputed interest		(16,461,038	)

Present value of lease liabilities	$	42,217,508

As of December 31, 2018, future minimum payments for operating and finance leases for the next five years and thereafter were summarized as follows:


2019	$	9,800,202
2020		9,946,823
2021		8,881,584
2022		7,662,679
2023		6,305,127
Thereafter		19,974,004

Total	$	62,570,419