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Acquisitions and Dispositions | 12 Months Ended
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Dec. 31, 2022
Business Combinations [Abstract] |
Acquisitions and Dispositions |
(3) | Acquisitions and Dispositions
On December 22, 2022, the Company completed an asset exchange with Audacy Nevada, LLC and Beasley Media Group, LLC under which the Company agreed to exchange all of the assets used or useful in the operations of KDWN-AM in Las Vegas, NV for all of the assets used or useful in the operations of KXTE-FM in Las Vegas, NV. On September 29, 2022, the Company also entered into a local marketing agreement (“LMA”) with Audacy Nevada, LLC and began operating KXTE-FM on November 14, 2022. The LMA ended on December 22, 2022. The assets received from the exchange did not meet the definition of a business under ASC 805. The exchange was accounted for in accordance with ASC 610-20 which resulted in the Company recognizing a gain for the difference between the fair value of the assets received and the carrying amount of the assets given. The fair value of the assets received in the asset exchange was $5.8 million. The Company recorded a gain on exchange of $3.4 million. The asset allocation is summarized as follows:
Property and equipment |  | $ | 302,336 |
FCC license |  |  | 5,451,000 |
Fair value of assets received |  |  | 5,753,336 |
Carrying amount of assets of exchanged station |  |  | (2,402,797 | )
Gain on exchange |  | $ | 3,350,539 |
The fair value of the property and equipment was estimated using cost and market approaches. Property and equipment for which there are comparable current replacements available were valued on the basis of a cost approach. The cost approach allowed for factors such as physical depreciation as well as functional and economic obsolescence. Property and equipment for which an active used market exists, including property for which there is no longer comparable current replacements available but for which there remains an active used market, were valued using a market approach. The market approach is based on the selling prices of similar assets on the used market. As few sales reflect identical assets, the selling prices of similar assets was utilized with adjustments made for any differences such as age, condition, and options. If different assumptions or estimates had been used in the cost and market approaches, the fair value of the property and equipment could have been materially different. The fair value of the FCC license was estimated using an income approach. The income approach measures the expected economic benefits the licenses provide and discounts these future benefits using discounted cash flow analyses. The discounted cash flow analyses assume that each license is held by a hypothetical start-up station and the value yielded by the discounted cash flow analyses represents the portion of the station’s value attributable solely to its license. The discounted cash flow model incorporates variables such as market revenues; the projected growth rate for market revenues; projected market revenue share; projected station operating income margins; and a discount rate appropriate for the radio broadcasting industry. The variables used in the analyses reflect historical station and market growth trends, as well as anticipated station performance, industry standards, and market conditions. The discounted cash flow projection period of ten years was determined to be an appropriate time horizon for the analyses. Stable market revenue share and operating margins are expected at the end of year three (maturity). If different assumptions or estimates had been used in the income approach, the fair value of the FCC licenses could have been materially different. If actual results are different from assumptions or estimates used in the discounted cash flow analyses, the Company may incur impairment losses in the future and they may be material. The key assumptions used in the valuation of the FCC license are as follows:
Revenue growth rates |  |  | 0.3% - 1.5 | %
Market revenue shares at maturity |  |  | 5.2% |
Operating income margins at maturity |  |  | 23.3% |
Discount rate |  |  | 9.5% |
On June 22, 2022, the Company completed the acquisition of Guarantee Digital, LLC (“Guarantee”), a digital marketing agency, for $2.0 million in cash. The acquisition broadened the Company’s digital revenue base across the U.S. The acquisition was accounted for as a business combination. The final purchase price allocation was completed during the third quarter of 2022. The final purchase price allocation is summarized as follows:
Property and equipment |  | $ | 3,000 |
Goodwill |  |  | 922,000 |
Other intangibles |  |  | 1,075,000 |
|  | $ | 2,000,000 |
Goodwill was equal to the amount the purchase price exceeded the values allocated to the tangible and identifiable intangible assets and includes the value of the assembled workforce. The goodwill was allocated to the Digital segment. The $ 0.9 million allocated to goodwill is deductible for tax purposes. Revenue and earnings for Guarantee are not material for all reporting periods presented in the accompanying financial statements. On April 1, 2022, the Company completed the sale of substantially all of the assets used in the operations of WWNN-AM in West Palm Beach-Boca Raton, FL to a third party for $1.25 million in cash. As a result of the sale, the Company recorded an impairment loss of $1.9 million related to the FCC license during the first quarter of 2022.

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- Definition The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI https://asc.fasb.org/subtopic&trid=2122178 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI https://asc.fasb.org/topic&trid=2303972 + Details
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