v2.4.1.9

CONTINGENCIES AND COMMITMENTS (Block) | 3 Months Ended
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Mar. 31, 2015
Commitments And Contingencies Disclosure Abstract |
Commitments And Contingencies Disclosure Text Block | 10. CONTINGENCIES AND COMMITMENTS Contingencies The Company is subject to various outstanding claims which arise in the ordinary course of business and to other legal proceedings. Management anticipates that any potential liability of the Company, which may arise out of or with respect to these matters, will not materially affect the Company’s financial position, results of operations or cash flows. There were no material changes from the contingencies listed in the Company’s Form 10-K, filed with the SEC on March 2, 2015. Commitments Pending Acquisition On December 7, 2014, the Company entered into a Stock Purchase Agreement (“SPA”) with The Lincoln National Life Insurance Company to acquire the stock of one of its subsidiaries, Lincoln Financial Media Company (“Lincoln”), that indirectly holds the assets and liabilities of 15 radio stations serving the Atlanta, Denver, Miami and San Diego radio markets. The purchase price is $105.0 million of which $77.5 million will be paid in cash and $27.5 million will be pa id with the Company’s new issuance of perpetual convertible preferred stock. Other than in Denver, the Company does not currently operate any stations in these markets. The SPA provides for a step-up in basis for tax purposes. Merger and acquisition rela ted costs of $1.7 million were expensed as a separate line item in the statement of operations for the three months ended March 31, 2015. The Department Of Justice (“DOJ”) is one of several agencies responsible for enforcing the federa l antitrust laws. In connection with the Company’s acquisition of Lincoln, the Company filed the required notice with the DOJ in December 2014 (and refiled this notice in January 2015). In February 2015, the DOJ issued the Company a request for additional information and documentary material, often referred to as a “second request.” Concurrently with entering into the SPA, the Company also entered into a time brokerage agreement (“TBA”). The TBA may only commence after the DOJ has completed its review of this transaction. During the period of the TBA, which terminates upon the closing of this transaction, the Company will include the net revenues, station operating expenses and TBA fees associated with operating these stations in the Company’s consolidated financial statements. The payment of the TBA fees is in exchange for the Company’s retention of the operating profits or losses from the operation of these stations during the TBA period. Upon commencement of the TBA, the Company believes that Lincoln will be a variable interest entity (“VIE”) and that the Company will be the primary beneficiary as the Company may absorb the profits and losses from the operation of the VIE during the period of the TBA. Effective upon the commencement of the TBA, the Co mpany expects to consolidate the assets and liabilities of the VIE within its consolidated financial statements, using fair values for the assets and liabilities as if the Company had closed on this transaction. The equity investment by Lincoln in the VIE would be reflected as a non-controlling interest. The assets of the Company’s consolidated VIE can only be used to settle the obligations of the VIE, and may not be sold, or otherwise disposed of, except for assets sold or replaced with others of like kin d or value. There is a lack of recourse by the beneficial interest holders of the VIE against the Company’s general creditors.

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