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ACQUISITIONS AND OTHER (Block) | 12 Months Ended
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Dec. 31, 2015
Business Combinations [Abstract] |
Mergers Acquisitions And Dispositions Disclosures Text Block | 18. BUSINESS COMBINATIONS The Company consummated acquisitions under the purchase method of accounting, and the purchase price was allocated to the assets and liabilities based upon their respective fair values as determined as of the acquisition date. Merger and acquisition costs are excluded from the purchase price as these costs are expensed for book purposes and amortized for tax purposes. 2015 Acquisitions Acquisition Of Lincoln Financial Media Company On July 16, 2015, the Company acquired under a Stock Purchase Agreement (“SPA”) with The Lincoln National Life Insurance Company the stock of one of its subsidiaries, Lincoln Financial Media Company (“Lincoln”), which hold through subsidiaries the assets and liabilities of radio stations serving the Atlanta, Denver, Miami and San Diego markets. The purchase price was $105.0 million of which: (1) $77.5 million was paid in cash using $42.0 million in borrowing under the Company’s Revolver together with cash on hand; and (2) $27.5 million was paid with the Company’s issuance of Preferred. The SPA, originally dated December 7, 2014 and subsequently amended on July 10, 2015, pr ovided for a working capital reimbursement to Lincoln of $11.0 million before a working capital credit to the Company of $2.7 million. The SPA provide d for a step-up in basis for tax purposes. Three Denve r radio stations acquired from Lincoln together with another Denver radio station were included in an exchange transaction as described below in Note 18. The Company recorded goodwill on its books, which is fully deductible for income tax purposes. Management believes that this acquisition provides the Company with an opportunity to increase its national footprint to compete more effectively for national business and to benefit from certain operational synergies. In addition, this acquisition allo ws for certain operational synergies in programming, sales and administration that were not available to Lincoln. The preliminary purchase price allocations are based upon a preliminary valuation of assets and liabilities and the estimates and assumptio ns 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 working capital. Differences between the preliminary and final valuation could be substantially different from the initial estimates.
|  | As Reported |  |  |  |  | As Revised |  |  |  |
|  | September 30, |  |  |  |  | December 31, |  | Useful Lives In Years
Description |  | 2015 |  |  | Adjustment |  | 2015 |  | From |  | To
|  | (Amounts in thousands) |  |  |  |
Cash |  | $ | 2,246 |  | $ |  |  | $ | 2,246 |  |
Net accounts receivable |  |  | 11,908 |  |  | 25 |  |  | 11,933 |  | less than 1 year
Prepaid expenses, deposits and other |  |  | 953 |  |  | 17 |  |  | 970 |  | less than 1 year
Total current assets |  |  | 15,107 |  |  | 42 |  |  | 15,149 |  |  |  |
Land |  |  | 7,368 |  |  | - |  |  | 7,368 |  | non-depreciating
Land improvements |  |  | 87 |  |  | - |  |  | 87 |  | 15 |  | 15
Building |  |  | 1,067 |  |  | - |  |  | 1,067 |  | 15 |  | 25
Leasehold improvements |  |  | 973 |  |  | - |  |  | 973 |  | 2 |  | 11
Equipment and towers |  |  | 8,651 |  |  | - |  |  | 8,651 |  | 3 |  | 40
Furniture and fixtures |  |  | 29 |  |  | - |  |  | 29 |  | 5 |  | 5
Total tangible property |  |  | 18,175 |  |  | - |  |  | 18,175 |  |  |  |
Assets held for sale |  |  | 1,885 |  |  | - |  |  | 1,885 |  |  |  |
Other intangibles |  |  | 487 |  |  | - |  |  | 487 |  | 1 |  | 5
Broadcasting licenses |  |  | 79,209 |  |  | - |  |  | 79,209 |  | non-amortizing
Goodwill |  |  | 5,866 |  |  | (1,364) |  |  | 4,502 |  | non-amortizing
Deferred tax assets |  |  | - |  |  | 1,364 |  |  | 1,364 |  | over remaining lease life
Total intangible and other assets |  |  | 87,447 |  |  | - |  |  | 87,447 |  |  |  |
Total assets |  | $ | 120,729 |  | $ | 42 |  | $ | 120,771 |  |  |  |
Accounts payable |  | $ | 723 |  | $ | - |  | $ | 723 |  | less than 1 year
Accrued expenses |  |  | 3,232 |  |  | 234 |  |  | 3,466 |  | less than 1 year
Other current liabilities |  |  | 12 |  |  | - |  |  | 12 |  | less than 1 year
Total current liabilities |  |  | 3,967 |  |  | 234 |  |  | 4,201 |  |  |  |
Unfavorable contracts and other liabilities |  |  | 3,272 |  |  | - |  |  | 3,272 |  | over remaining lease life
Total liabilities acquired |  | $ | 7,239 |  | $ | 234 |  | $ | 7,473 |  |  |  |
Net assets acquired |  | $ | 113,490 |  | $ | (192) |  | $ | 113,298 |  |  |  |
The allocations as of December 31, 2015, were revised during the fourth quarter of 2015 due to: (1) a change in working capital based upon information that was not available at the time of the original estimate; and (2) the recording of a deferred tax asset associated with certain underlying unfavorable lease and contract liabilities, net of a deferred tax liability for a separate company state valuation allowance. 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 fai r 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 assume expected future growth rates of 1.0% to 1.5%; and an e stimated discount rate of 9.6%. The gross profit margins are similar to the ranges used in the Company’s second quarter 2015 annual license impairment testing. The fair value for accounts receivable is net of an estimate for bad de bts. The Company determines the fair value of the broadcasting licenses in each of these markets by relying on a discounted cash flow approach 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 judgments about future performance using industry normalized information for an average station within a certain market. Any exc ess of the purchase price over the net assets acquired was reported as goodwill. Exchange Transaction: Denver, Colorado, And Los Angeles, California On November 24, 2015, the Company completed an asset exchange agreement (“AEA”) with Bonneville International Corporation (“Bonneville”) that was entered into on July 10, 2015. The Company divested four Denver, Colorado, radio stations as consideration by the Company in exchange for a radio station in Los Angeles, California. The Company, which did not require cash to complete this transaction, now owns: (1) one station in Los Angeles, a new market for the Company; and (2) five radio stations in the Denver market, an existing market for the Company. The Company recorded both the disposition and the acquisition on its balance sheet as of December 31, 2015. On July 17, 2015 the C ompany entered into two TBAs. Pursuant to these TBAs, on July 17, 2015, the Company commenced operation of the Los Angeles station and Bonneville commenced operation of the Denver stations. During the period of the TBA s (July 17, 2015 through November 24, 2015), the Company: (i) include d 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 (ii) exclude d net revenues and station operating expens es associated with Bonneville’s operati on of the Denver stations in the Company’s consolidated financial statements. The Company incurred no TBA expense to Bonneville for operation of the Los Angeles station and received $0.3 million of monthly TBA income from Bonneville during the period of the TBA. The Company did not consider the net revenues and station operating expenses to be material to the Company’s financial position, results of operations or cash flows. Certain of the Denver r adio stations that were exchanged with Bonneville qualified as assets held for sale as of September 30, 2015. In addition, during the period of the TBA, certain of the assets and liabilities that were held in a trust (KKFN FM) and operated by Bonneville w ere deconsolidated by the Company as of September 30, 2015 as Bonneville was the primary beneficiary absorbing the majority of the profits and losses. For all other assets during the period of the TBA, the Company was the primary beneficiary absorbing the majority of the profits and losses. Upon closing, there were no remaining assets held for sale or outstanding VIEs related to this transaction. 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 diffe rent from the initial estimates.
|  | As Reported |  |  |  | As Revised |  |  |  |
|  | September 30, |  |  |  | December 31, |  | Useful Lives In Years
Description |  | 2015 |  | Adjustment |  | 2015 |  | From |  | To
|  | (amounts in thousands) |  |  |  |
Other receivables |  | $ | 4,175 |  | $ | 689 |  | $ | 4,864 |  |  |  |
Equipment |  |  | 1,012 |  |  | - |  |  | 1,012 |  | 3 |  | 15
Furniture and fixtures |  |  | 121 |  |  | - |  |  | 121 |  | 5 |  | 5
Total tangible property |  |  | 1,133 |  |  | - |  |  | 1,133 |  |  |  |
Advertiser lists and customer relationships |  |  | 1 |  |  | - |  |  | 1 |  | 3 |  | 3
Trademarks and trade names |  |  | 2 |  |  | - |  |  | 2 |  | 5 |  | 5
Broadcasting licenses |  |  | 53,371 |  |  | (314) |  |  | 53,057 |  | non-amortizing
Goodwill |  |  | 641 |  |  | (375) |  |  | 266 |  | non-amortizing
Total intangible assets |  |  | 54,015 |  |  | (689) |  |  | 53,326 |  |  |  |
Total assets |  |  | 59,323 |  |  | - |  |  | 59,323 |  |  |  |
Unfavorable contract and lease liabilities |  |  | (323) |  |  | - |  |  | (323) |  | 1 |  | 4
Net assets acquired |  | $ | 59,000 |  | $ | - |  | $ | 59,000 |  |  |  |
Fair value of net assets provided |  |  |  |  |  |  |  |  |  |  |  |  |
as consideration |  | $ | 59,000 |  | $ | - |  | $ | 59,000 |  |  |  |
The allocations as of December 31, 2015 were revised primarily to reflect a change in the original estimate of accounts receivable available for recovery. 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 ass umes the expected future growth rate of 1.0% and an estimated discount rate of 9.2%. The gross profit margin range was similar to the ranges used in the Company’s second quarter 2015 annual impairment testi ng 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 approach assuming a start-up scenario in which the only assets held by an investor are broadcasti ng licenses. The Company’s fair value analysis contains assumptions based upon past experience, reflects expectations of industry observers and includes judgments 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 participant, 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 reported in the statements of operations for the year ended December 31, 2015 a non cash gain of $1.5 million under gain (lo ss) on sale or disposal of assets on the Denver assets provided as consideration, primarily from the non-Lincoln assets included in the exchange. Summary Of Lincoln And Bonneville Transactions By Radio Station
Bonneville Exchange
Markets |  | Radio Stations |  | Transactions
Los Angeles, CA |  | KSWD FM |  | Company acquired from Bonneville
Denver, CO |  | KOSI FM |  | Company disposed to Bonneville
Denver, CO |  | KYGO FM; KEPN AM |  | Company disposed to Bonneville
Denver, CO |  | KKFN FM |  | The trust disposed to Bonneville
Lincoln Acquisition
Markets |  | Radio Stations |  | Transactions
Denver, CO |  | KKFN FM |  | The trust acquired from Lincoln
Denver, CO |  | KYGO FM; KEPN AM |  | Company acquired from Lincoln
Denver, CO |  | KQKS FM; KRWZ AM |  | Company acquired from Lincoln
Atlanta, GA |  | WSTR FM; WQXI AM |  | Company acquired from Lincoln
Miami, FL |  | WAXY AM/FM; WLYF FM; WMXJ FM |  | Company acquired from Lincoln
San Diego, CA |  | KBZT FM; KSON FM/KSOQ FM; KIFM FM |  | Company acquired from Lincoln
Merger And Acquisition Costs And Restructuring Charges Merger and acquisition costs and restructuring charges were expensed as a separate line item in the statement of operations. These costs consist primarily of legal, professional, advisory services and restructuring costs (as identified below) related to the Company’s acquisition of Lincoln and the Company’s exchange agreement with Bonneville. During the third and fourth quarter s of 2015, the Company initiated a restructuring plan primarily as a r esult of the integration of the Lincoln radio stations acquired in July 2015. The restructuring plan included: (1) costs associated with exiting contractual vendor obligations as these obligations were duplicative; (2) a workforce reduction and realignment charges that included one-time termination benefits and related costs; and (3) lease abandonment costs as described below. The estimated amount of unpaid restructuring charges as of December 31, 2015 were included in accrued expenses as most expenses are expected to be paid within one year. In connection with the Lincoln acquisition, the Company assumed a studio lease in one of its markets that included excess space. During the fourth quarter of 2015, the Company ceased using a portion of the space after analyz ing its future needs as well as comparing its space utilization in other of the Company’s markets. As a result, the Company recorded a lease abandonment expense during the fourth quarter of 2015. Lease abandonment costs include future lease liabilities of fset by estimated sublease income. Due to the location of the space in an area of the city that is not considered prime, including a very high vacancy rate in the existing and neighboring building in a soft rental market that is expected to continue throu ghout the remaining term of the lease, the Company did not include an estimate to sublease any of the space. The Company will continue to evaluate the opportunities to sublease this space and revise its sublease estimates accordingly. Any increase in the estimate of sublease income will be reflected through the income statement and such amount will also reduce the lease abandonment liability. The lease expires in the year 2026. The lease liability is discounted using a credit risk adjusted basis utilizin g the estimated rental cash flows over the remaining term of the agreement.
| Years Ended December 31,
| 2015 |  | 2014 |  | 2013
| (amounts in thousands)
Restructuring charges - beginning balance | $ | - |  | $ | - |  | $ | -
Costs to exit duplicative contracts |  | 646 |  |  | - |  |  | -
Workforce reduction |  | 1,538 |  |  | - |  |  | -
Lease abandonment costs |  | 687 |  |  | - |  |  | -
Changes in estimates |  | (13) |  |  | - |  |  | -
Total restructuring charges |  | 2,858 |  | - | - |  |  | -
Merger and acquisition costs |  | 3,978 |  |  | 1,042 |  |  | -
Total merger & acquisition costs and restructuring charges | $ | 6,836 |  | $ | 1,042 |  | $ | -
Total restructuring charges | $ | 2,858 |  | $ | - |  | $ | -
Deductions from reserves through payments |  | (1,172) |  |  | - |  |  | -
Restructuring charges unpaid and outstanding | $ | 1,686 |  | $ | - |  | $ | -
Under purchase price accounting for the Lincoln and Bonneville acquisitions, the Company recorded unfavorable lease and contract liabilities for studio and transmitter site property leases and vendor contracts as these contracts contained terms that were considered to be above market rates. The unfavorable liabilities are reflected in other long-term liabilities in the consolidated balance sheets and are amortized as a reduction to station operating expenses on a straight-line basis over the lives of the leases and contracts. The future amortization of unfavorable leases and contracts is as follows:
| As Of
| December 31,
| 2015
| (amounts in
| thousands)
Years ending December 31, |  |
2016 | $ | 1,041
2017 |  | 875
2018 |  | 295
2019 |  | 167
2020 |  | 147
Thereafter |  | 518
| $ | 3,043
Lease Abandonment Costs During the second quarter of 2013, the Company entered into a sublease for pre viously abandoned studio space. As a result, the Company eliminated a lease abandonment liability of $0.7 million and recorded a reduction to station operating expense s of $0.6 million, net of broker’s commission. The lease expires during the third quarter of 2018. Acquisitions For 2014 and 2013 There were no acquisitions during these periods. Unaudited Pro Forma Summary Of Financial Information The following pro forma information presents the consolidated results of operations as if the Lincoln and the Bonneville exchange transactions had occurred as of the beginning of the prior pro forma period presented, after giving effect to certain adjustments, including: (1) depreciation and amortization of assets; (2) amortization of unfavorable contracts related to the fair value adjustments of the assets acquired; (3) change in the effective tax rate; (4) interest expense on any debt incurred; (5) merger and acquisition costs and restructuring charges; and (6) accrued dividends on the Preferred. For purposes of this presentation, the pro forma data: (a) excludes certain Lincoln radio stations disposed to Bonneville as the Company never operated these stations and does not expect to operate these stations at a future time (KYGO FM; KKFN FM and KEPN AM); and (b) ex clude s a radio station disposed to Bonneville and operated by the Company prior to the TBA (KOSI FM) as these assets were a key component of the assets acquired. These unaudited pro forma results have been prepared for comparative purposes only and do not purport to be indicative of what would have occurred had the acquisitions been made as of that date or results which may occur in the future.
| Years Ended December 31,
| 2015 |  |  | 2014 |  | 2013
| (amounts in thousands, except per share data)
| Pro Forma |  | Pro Forma |  | Actual
Net revenues | $ | 442,485 |  | $ | 437,597 |  | $ | 377,618
Net income (loss) available to the Company | $ | 33,050 |  | $ | 22,736 |  | $ | 26,024
Net income (loss) available to common shareholders | $ | 30,850 |  | $ | 21,086 |  | $ | 26,024
Net income (loss) available to commons shareholders |  |  |  |  |  |  |  |
per common share - basic | $ | 0.81 |  | $ | 0.56 |  | $ | 0.70
Net income (loss) available to commons shareholders |  |  |  |  |  |  |  |
per common share - diluted | $ | 0.79 |  | $ | 0.55 |  | $ | 0.68
Weighted shares outstanding basic |  | 38,084 |  |  | 37,763 |  |  | 37,418
Weighted shares outstanding diluted |  | 39,038 |  |  | 38,664 |  |  | 38,301
Conversion of preferred stock for dilutive purposes |  |  |  |  |  |  |  |
under the as if method | anti-dilutive |  | anti-dilutive |  | n/a

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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 No definition available. + Details
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