FCC Licenses

12 Months Ended

Dec. 31, 2020

(5)	FCC Licenses

Changes in the carrying amount of FCC licenses for the years ended December 31, 2019 and 2020 are as follows:


Balance as of January 1, 2019	$	516,735,554
Asset acquisition (see Note 3)		13,155,601
Impairment losses		(12,361,988	)

Balance as of December 31, 2019		517,529,167
Impairment losses		(8,970,812	)

Balance as of December 31, 2020	$	508,558,355

Licenses are tested for impairment on an annual basis, or more frequently if events or changes in circumstances indicate that the Company’s licenses might be impaired. The Company assesses qualitative factors to determine whether it is more likely than not that its licenses are impaired. If the Company determines it is more likely than not that its licenses are impaired, then the Company is required to perform a quantitative impairment test. The quantitative impairment test compares the fair value of the Company’s licenses with their carrying amounts. If the carrying amounts of the licenses exceed their fair value, an impairment loss is recognized in an amount equal to that excess. For the purpose of testing its licenses for impairment, the Company combines its licenses into reporting units based on its radio market clusters.

Due to the impact of the

COVID-19

pandemic on the U.S. economy, the Company tested its FCC licenses for impairment during the first quarter of 2020. As a result of the quantitative impairment test, the Company recorded impairment losses of $6.8

million related to the FCC licenses in its Atlanta, GA, Las Vegas, NV, Middlesex-Monmouth-Morristown, NJ, West Palm Beach-Boca Raton, FL, and Wilmington, DE radio market clusters. The impairment losses were primarily due to a decrease in projected revenue in these markets due to the impact of the

COVID-19

pandemic and an increase in the discount rate used in the discounted cash flow analyses to estimate the fair value of the FCC licenses due to certain risks specifically associated with the Company and the radio broadcasting industry. The fair values were estimated using an income approach. The income approach is based upon discounted cash flow analyses incorporating variables such as projected radio market revenues, projected growth rate for radio market revenues, projected radio market revenue shares, projected radio station operating income margins, and a discount rate appropriate for the radio broadcasting industry. The key assumptions used in the discounted cash flow analyses are as follows:


Revenue growth rates		(14.1)% - 7.9%
Market revenue shares at maturity		0.6% - 39.0%
Operating income margins at maturity		26.5% - 35.4%
Discount rate		9.5%

The Company did not identify any triggering events for impairment during the second quarter of 2020.

The Company elected to perform the quantitative impairment test for its FCC licenses in all markets during the third quarter of 2020. As a result of the quantitative impairment test performed as of September 30, 2020, the Company recorded no impairment losses related to its FCC licenses in any of its reporting units. The fair values were estimated using the income approach. The key assumptions used in the discounted cash flow analyses are as follows:


Revenue growth rates		0.5% - 18.8%
Market revenue shares at maturity		0.6% - 44.4%
Operating income margins at maturity		19.5% - 33.3%
Discount rate		9.0%

The Company did not identify any triggering events for impairment during the fourth quarter of 2020.

On December 31, 2020, the Company completed the sale of certain land in Charlotte, NC to a third party for $4.65 million. As a result of the sale, the Company no longer utilizes one FCC license in that market. Therefore, the carrying amount of $2.2 million was recorded in impairment losses during the fourth quarter of 2020.

The Company performed its annual impairment test for its FCC licenses in 2019 as of November 30, 2019. As a result of the impairment test, the Company recorded impairment losses of $12.4 million related to the FCC licenses in its Atlanta, GA and West Palm Beach-Boca Raton, FL radio market clusters for the year ended December 31, 2019. The impairment losses were primarily due to a reduced share of projected revenue in these markets. The Company believed the impairment losses were indicative of trends in the industry and are not unique to the Company or its operations. The fair value of the FCC license in Atlanta, GA and in West Palm Beach-Boca Raton, FL radio market clusters was estimated using the income approach. The key assumptions used in the discounted cash flow analyses are as follows:


Revenue growth rates		0.5% - 1.4%
Market revenue shares at maturity		0.6% - 1.1%
Operating income margins at maturity		27.5% - 29.8%
Discount rate		9.0%