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CONTINGENCIES AND COMMITMENTS (Block) | 9 Months Ended
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Sep. 30, 2015
Commitments And Contingencies Disclosure Abstract |
Commitments And Contingencies Disclosure Text Block | 11. 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. Pending Exchange: Denver, Colorado, And Los Angeles, California On July 1 0, 2015, the Company entered into an asset exchange agreement (“AEA”) with Bonneville to exchange their radio station in Los Angeles, California, together with additional consideration for the Company’s four radio stations in Denver, Colorado. On July 17, 2015 the Company entered into two TBAs. Pursuant to these TBAs, on July 17, 2015, the Company commenced operation of the Los Angeles station and Bonneville commenced oper ation of the Denver stations. During the period of the TBA s, the Company: (i) include s net revenues and station operating expenses associated with the Company’s operati on of the Los Angeles station in the Company’s consolidated financial statements; and (i i) excludes net revenues and station operating expenses associated with Bonneville’s operati on of the Denver stations in the Company’s consolidated financial statements. The Company will incur no TBA expense to Bonneville for operation of the Los Angeles s tation and will receive $0.3 million of monthly TBA income from Bonneville until the closing of the AEA. The Company does not consider the net revenues and station operating expenses to be material to the Company’s financial position, r esults of operations or cash flows. The Company, which do es not anticipate that cash will be required to complete this transaction, will: (1) own one station in Los Angeles, a new market for the Company; and (2) continue to own and operate five radio stat ions in the Denver market. The Company expect s to close on this transaction in the fourth quarter of 2015. Certain of the Denver radio stations to be exchanged with Bonneville qualified as assets held for sale as of September 30, 2015. For those assets to be acquired from Bonneville and operated by the Company during the period of the T BA, the Company did not recognize a variable interest entity (“VIE”). During this period, the Company was not t he primary beneficiary as Bonneville was th e entity absorb ing the majority of the profits and losses from the operation of the entity holding the Los Angeles, California, radio station during the period of the TBA. For the trust assets operated by Bonneville (KKFN FM) during the period of the T BA and to be acquired by Bonneville, the Company deconsolidated the trust’s assets to be exchanged with Bonneville since Bonneville is the primary beneficiary. As the primary beneficiary, Bonneville will absorb the majority of the profits and losses from the operation of the trust during the period of the TBA. For those assets to be acquired by Bonneville and operated by Bonneville during the period of the TBA (KYGO FM, KEPN AM and KOSI FM), the Company was the primary beneficiary and absorbed the majorit y of the profits and losses from those stations. Summary Of Lincoln Transaction And Bonneville Transaction By Radio Station
Markets |  | Radio Stations |  | Transactions
Los Angeles, CA |  | KSWD FM |  | Company acquires from Bonneville
Denver, CO |  | KOSI FM |  | Company disposes to Bonneville
Denver, CO |  | KYGO FM; KEPN AM |  | Company disposes to Bonneville
Denver, CO |  | KKFN FM |  | The trust disposes to Bonneville
The following preliminary purchase price allocations are based upon a preliminary valuation of assets and liabilities and the estimates and assumptions are subject to change as the Company obtains additional information during the measurement period, which may be up to one year from the acquisition date. The assets and liabilities pending finalization include the valuation of acquired intangible assets and liabilities. Differences between the preliminary and final valuation could be substantially different from the initial estimates.
|  |  |  |  | Useful Lives In Years
Description |  | Amount |  | From |  | To
|  | (in thousands) |  |  |  |
Other receivables |  | $ | 4,175 |  |  |  |
Equipment |  |  | 1,012 |  | 3 |  | 15
Furniture and fixtures |  |  | 121 |  | 5 |  | 5
Total tangible property |  |  | 1,133 |  |  |  |
Advertiser lists and customer relationships |  |  | 1 |  | 3 |  | 3
Trademarks and trade names |  |  | 2 |  | 5 |  | 5
Broadcasting licenses |  |  | 53,371 |  | non-amortizing
Goodwill |  |  | 641 |  | non-amortizing
Total intangible assets |  |  | 54,015 |  |  |  |
Total assets |  |  | 59,323 |  |  |  |
Unfavorable contract and lease liabilities |  |  | (323) |  | 1 |  | 4
Net assets acquired |  | $ | 59,000 |  |  |  |
Fair value of net assets provided as consideration |  | $ | 59,000 |  |  |  |
The allocations presented in the table are based upon management’s estimate of the fair values using valuation techniques including income, cost and market approaches. In estimating the fair value of the acquired assets and assumed liabilities, the fair value estimates are based on, but not limited to, expected future revenue and cash flows that assumes the expected future growth rate of 1.0% and an estimated discount rate of 9.2%. The gross profit margin r ange was similar to the ranges used in the Company’s second quarter 2015 annual impairment testing for broadcasting licenses. The Company determines the fair value of the broadcasting licenses in each of these markets by relying on a discounted cash flow a pproach assuming a start-up scenario in which the only assets held by an investor are broadcasting licenses. The Company’s fair value analysis contains assumptions based upon past experience, reflects expectations of industry observers and includes judgmen ts about future performance using industry normalized information for an average station within a certain market. Any excess of the purchase price over the net assets acquired was reported as goodwill. In valuing the non-monetary assets that were part of the consideration transferred, the Company utilized the fair value as of the acquisition date, with any excess of the purchase price over the net assets acquired reported as goodwill. The fair value was measured from the perspective of a market particip ant, applying the same methodology and types of assumptions as described above in estimating the fair value of the acquired assets and liabilities. Applying these methodologies requires significant judgment. The Company anticipates that upon closing on t he Bonneville AEA, the Company will report a gain of $1.5 million on the Denver assets provided as consideration. Variable Interest Entity And Assets Held For Sale As of September 30, 2015, the carrying amount and classification of the assets and liabilities of the variable interest entity, KKFN FM that is held in a trust and as described above, is included in our consolidating balance sheet as follows:
|  | KKFN FM
|  | Held In Trust
Description |  | September 30, 2015
|  | (amount in
|  | in thousands)
Accounts receivable |  | $ | 176
Total current assets |  |  | 176
Net fixed assets |  |  | 272
Radio broadcasting licenses |  |  | 9,601
Goodwill |  |  | 758
Deferred charges and other assets |  |  | 148
Total tangible and intangible assets |  |  | 10,779
Total assets |  | $ | 10,955
Other Matters During the third quarter of 2014, the Company settled a legal claim for $1.0 million. This amount was included in corporate general and administrative expenses for the nine and three months ended September 30, 2014.

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