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ACQUISITIONS AND OTHER (Block) | 3 Months Ended
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Mar. 31, 2018
Business Combinations [Abstract] |
Mergers Acquisitions And Dispositions Disclosures Text Block | 2. BUSINESS COMBINATIONS The Company records acquisitions under the acquisition method of accounting, and allocates the purchase price 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. 2017 CBS Radio Business Acquisition On November 17, 2017, the Company acquired the CBS Radio business from CBS to further strengthen its scale and capabilities to compete more effectively with other media for a larger share of advertising dollars. The purchase price was $2.56 billion and consisted of $1.17 billion of total equity consideration and $1.39 billion of assumed debt. The CBS Radio business acquisition was completed pursuant to the CBS Radio Merger Agreement, dated February 2, 2017, by and among the Company, CBS, CBS Radio, and Merger Sub. On November 17, 2017, (i) Merger Sub was merged with and into CBS Radio, with CBS Radio continuing as the surviving corporation and a direct, wholly-owned subsidiary of the Company and (ii) each share of CBS Radio common stock was converted into one share of the Company’s common stock. The Company issued 101,407,494 shares of its Class A common Stock to the former holders of CBS Radio common stock. At the time of the Merger, each outstanding RSU and stock option with respect to CBS Class B common stock held by employees of CBS Radio was canceled and convert ed into equity awards for the Company’s Class A common stock. The conversion was based on the ratio of the volume-weighted average per share closing price of CBS stock on the five trading days prior to the date of acquisition and the Company’s stock on th e five trading days following the date of acquisition. Entercom Communications Corp. is considered to be the acquiring company for accounting purposes. To complete the Merger, certain divestitures were required by the FCC in order to comply with the FCC’s ownership rules and policies. These divestitures consisted of: (i) the exchange transaction with iHeartMedia, Inc. (“iHeart”); (ii) the exchange transaction with Beasley Broadcast Group, Inc. (“Beasley”); (iii) entry into a local marketing agreement (“LMA”) with Bonneville Interna tional Corporation (“Bonneville”); and (iv) a cash sale to Educational Media Foundation (“EMF”). Due to the structure of the transaction, there is no step-up in tax basis for the assets acquired as the Company will assume the existing tax basis of the a ssets of CBS Radio. The absence of a step-up in tax basis will limit the Company’s tax deductions in future years and impacts the amount of deferred tax liabilities recorded as part of purchase price accounting. If any of the Internal Distributions or th e Final Distribution, each as defined in the CBS Radio Merger Agreement, does not qualify as a transaction that is tax-free for U.S. federal income tax purposes under Section 355 of the Internal Revenue Code (“Code”) or the Merger does not qualify as a tax-free “reorganization” under Section 368(a) of the Code, including as a result of actions taken in connection with the distributions made by CBS to facilitate the Merger or as a result of subsequent acquisitions of shares of CBS, Entercom, or CBS Radio, th en CBS and/or holders of CBS Common Stock that received Radio Common Stock in the Final Distribution may be required to pay substantial U.S. federal income taxes, and, in certain circumstances, CBS Radio and Entercom may be required to indemnify CBS for an y such tax liability. The allocations presented in the table below 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 FCC broadcastin g licenses, the fair value estimates are based on, but not limited to, hypothetical expected future revenue and cash flows that assume an expected future growth rate of 1.0% and an estimated discount rate of 9.0%. The gross profit margins utilized were considered appropriate based on management’s expectations and experience in equivalent sized markets. The Company determines the fair value of the broadcasting licenses 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 abou t 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 goo dwill. The goodwill recorded reflects management’s expectations of its ability to gain access to and penetrate CBS Radio’s customer base and the benefits of being able to leverage operational efficiencies with favorable growth opportunities as a results of a large national presence. A portion of the goodwill carryover ba sis is tax deductible. The Company’s preliminary allocation of the purchase price to the assets acquired and liabilities assumed as of the acquisition date, including measurement period adjustments, is outlined below.
|  | Preliminary Value |  |  |  |  |  |
|  | as of acquisition date |  |  |  |  |  |
|  | (as previously |  | Measurement |  |  |
|  | reported as of |  | period |  |  |
Description |  | December 31, 2017) |  | Adjustment |  | As Adjusted
|  | (amounts in thousands)
Assets |  |  |  |  |  |  |  |  |
Accounts receivable |  | $ | 241,548 |  | $ | - |  | $ | 241,548
Prepaid sports rights and favorable sports contracts |  |  | 4,160 |  |  | - |  |  | 4,160
Prepaid expenses, deposits and other |  |  | 20,625 |  |  | - |  |  | 20,625
Other current assets |  |  | 7,350 |  |  | 421 |  |  | 7,771
Total current assets |  |  | 273,683 |  |  | 421 |  |  | 274,104
Land |  |  | 112,880 |  |  | - |  |  | 112,880
Land improvements |  |  | 3,988 |  |  | (2,640) |  |  | 1,348
Leasehold improvements |  |  | 26,255 |  |  | 9,774 |  |  | 36,029
Buildings |  |  | 19,246 |  |  | (5,206) |  |  | 14,040
Furniture and fixtures |  |  | 10,929 |  |  | (6,849) |  |  | 4,080
Equipment and towers |  |  | 76,486 |  |  | 4,921 |  |  | 81,407
Construction in process |  |  | 14,598 |  |  | - |  |  | 14,598
Total tangible property |  |  | 264,382 |  |  | - |  |  | 264,382
Advertiser relationships |  |  | 27,453 |  |  | - |  |  | 27,453
Radio broadcasting licenses |  |  | 1,880,400 |  |  | - |  |  | 1,880,400
Goodwill |  |  | 820,961 |  |  | (2,949) |  |  | 818,012
Assets held for sale |  |  | 255,650 |  |  | - |  |  | 255,650
Favorable leases |  |  | 16,580 |  |  | - |  |  | 16,580
Other noncurrent assets |  |  | 1,050 |  |  | 1,926 |  |  | 2,976
Total intangible and other assets |  |  | 3,002,094 |  |  | (1,023) |  |  | 3,001,071
Total assets |  | $ | 3,540,159 |  | $ | (602) |  | $ | 3,539,557
Liabilities |  |  |  |  |  |  |  |  |
Accounts payable |  | $ | 36,137 |  | $ | 421 |  | $ | 36,558
Accrued expenses |  |  | 35,154 |  |  | - |  |  | 35,154
Accrued salaries and benefits |  |  | 26,324 |  |  | - |  |  | 26,324
Current portion of long-term debt |  |  | 10,600 |  |  | - |  |  | 10,600
Unfavorable sports liability - current portion |  |  | 4,803 |  |  | - |  |  | 4,803
Accrued interest |  |  | 4,529 |  |  | - |  |  | 4,529
Unearned revenues - current portion |  |  | 14,971 |  |  | - |  |  | 14,971
Total current liabilities |  |  | 132,518 |  |  | 421 |  |  | 132,939
Unearned revenues - non-current portion |  |  | 13,859 |  |  | - |  |  | 13,859
Unfavorable lease liability |  |  | 12,770 |  |  | - |  |  | 12,770
Unfavorable sports liability - non-current portion |  |  | 22,597 |  |  | - |  |  | 22,597
Non-current portion of long-term debt |  |  | 1,376,900 |  |  | - |  |  | 1,376,900
Deferred tax liability |  |  | 780,832 |  |  | (2,949) |  |  | 777,883
Other long-term liabilities |  |  | 31,835 |  |  | 1,926 |  |  | 33,761
Total liabilities |  | $ | 2,371,311 |  | $ | (602) |  | $ | 2,370,709
Preliminary fair value of net assets acquired |  | $ | 1,168,848 |  | $ | - |  | $ | 1,168,848
The aggregate fair value purchase price allocation of the assets and liabilities acquired in the CBS Radio Merger as reported on the Company’s Form 10-K filed with the SEC on March 16, 2018, were revised during the first quarter of 2018 due to: (i) a change to the deferred tax liabilities associated with certain stations acquired in the CBS Radio Merger which resulted in a decrease to goodwill of $2.9 million; (ii) the recording of lease abandonment liabilities and a corresponding receivable for re imbursement from CBS Corporation; and (iii) reclassifications between the categories of acquired tangible property. The preliminary purchase price allocations are based upon the valuation of assets and liabilities and these estimates and assumptions are subject to change as the Company obtains additional information during the measurem ent period, which may be up to one year from the acquisition date. These assets and liabilities pending finalization include intangible assets and liabilities. Differences between the preliminary and final valuation could be substantially different from t he initial estimates. 2017 LMA: The Bonneville Transaction On November 1, 2017, the Company assigned assets to a trust and the trust subsequently entered into two LMAs with Bonneville. The LMAs, which were effective upon the closing of the Merger, allow Bonneville to operate eight radio stations in the San Francisco, California and Sacramento, California markets. Of the eight radio stations to be operated by Bonneville, three were originally owned by the Company and the remaining five were originally own ed by CBS Radio. The Company conducted an analysis and determined the assets of the eight stations satisfied the criteria to be presented as assets held for sale at March 31, 2018. The stations which were acquired from CBS Radio and were never operated by the Company are included within discontinued operations. Refer to Note 11, Assets Held for Sale and Discontinued Operations, for additional information. Restructuring Charges Restructuring charges were expensed as a separate line item in the consolidated statements of operations. The components of restructuring charges incurred during the first quarter of 2018 and 2017 are as follows:
| Three Months Ended
| March 31,
| 2018 |  | 2017
| (amounts in thousands)
Costs to exit duplicative contracts | $ | 143 |  | $ | -
Workforce reduction |  | 590 |  |  | -
Lease abandonment costs |  | 257 |  |  | -
Other restructuring costs |  | 491 |  |  | -
Total restructuring charges | $ | 1,481 |  | $ | -
During the fourth quarter of 2017, the Company initiated a restructuring plan as a result of the integration of the CBS Radio stations acquired in November 2017. The restructuring plan included: (i) a workforce reduction and realignment charges that included one-time termination benefits and related costs; (ii) lease abandonment costs; and (iii) costs associated with realigning radio stations within the overlap markets between CBS Radio and the Company. The Company could incur addit ional restructuring costs in the remainder of 2018 under this plan, however, these costs cannot be determined at this time. The estimated amount of unpaid restructuring charges as of March 31, 2018 includes amounts in accrued expenses that are expected to be p aid in less than one year and long-term restructuring costs for lease abandonment costs covering the remaining non-cancellable lease term.
| Three |  | Twelve
| Months Ended |  | Months Ended
| March 31, |  | December 31,
| 2018 |  | 2017
| (amounts in thousands)
Restructuring charges and lease abandonment costs, beginning balance | $ | 16,086 |  | $ | 650
Additions resulting from the integration of CBS Radio |  | 1,481 |  |  | 15,005
Restructuring charges assumed from the Merger |  | - |  |  | 1,095
Payments |  | (6,346) |  |  | (664)
Restructuring charges and lease abandonment costs unpaid and outstanding |  | 11,221 |  |  | 16,086
Restructuring charges and lease abandonment costs - noncurrent portion |  | (2,926) |  |  | (4,413)
Restructuring charges and lease abandonment costs - current portion | $ | 8,295 |  | $ | 11,673
Integration Costs The Company incurred integration costs of $9.7 million during the three months ended March 31, 2018. Integration costs were expensed as a separate line item in the consolidated statements of operations. These costs primarily relate to change management consultants and technology-related costs. Unaudited Pro Forma Summary Of Financial Information The following pro forma information presents the consolidated results of operations as if the business combinations in 2017 had occurred as of January 1, 2016, after giving effect to certain adjustments, including: (i) depreciation and amortization of assets; (ii) amortization of unfavorable contracts related to the fair value adjustments of the assets acquired; (iii) change in the effective tax rate; (iv) interest expense on any debt incurred to fund the acquisitions which would have been incurred had such acquisitions occurred as of January 1, 2016; and (v) merger and acquisition costs. For purposes of this presentation, the pro forma data excludes: (i) stations divested to iHeart and Beasl ey in the iHeartMedia Transaction and the Beasley Transaction as these stations were exchanged for the radio stations acquired in the Chattanooga, Richmond and Boston markets; and (ii) stations acquired from CBS Radio that were operated by Bonneville under two LMAs as these results were reflected under income from discontinued operations. In addition, the pro forma data includes: (i) the stations acquired in the Richmond, Virginia and Chattanooga, Tennessee markets in the iHeartMedia Transaction; (ii) the st ation acquired in the Beasley Transaction; (iii) the CBS Radio stations acquired in the Merger (except as otherwise separately excluded as described above); and (iv) the stations acquired in Charlotte, North Carolina. These unaudited pro forma results have b een 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.
| Three Months Ended
| March 31,
| 2018 |  | 2017
| (amounts in thousands, except per share data)
| Actual |  | Pro Forma
Net revenues | $ | 300,560 |  | $ | 339,678
Income (loss) from continuing operations | $ | (14,206) |  | $ | 6,319
Income (loss) from discontinued operations | $ | 328 |  | $ | -
Net income (loss) available to the Company | $ | (13,878) |  | $ | 6,319
Net income (loss) available to common shareholders | $ | (13,878) |  | $ | 5,769
Income (loss) from continuing operations |  |  |  |  |
per common share - basic | $ | (0.10) |  | $ | 0.05
Income (loss) from discontinued operations |  |  |  |  |
per common share - basic | $ | - |  | $ | -
Net income (loss) available to common shareholders |  |  |  |  |
per common share - basic | $ | (0.10) |  | $ | 0.04
Income (loss) from continuing operations |  |  |  |  |
per common share - diluted | $ | (0.10) |  | $ | 0.04
Income (loss) from discontinued operations |  |  |  |  |
per common share - diluted | $ | - |  | $ | -
Net income (loss) available to common shareholders |  |  |  |  |
per common share - diluted | $ | (0.10) |  | $ | 0.04
Weighted shares outstanding basic |  | 138,939,309 |  |  | 140,317,816
Weighted shares outstanding diluted |  | 138,939,309 |  |  | 141,481,456
Conversion of preferred stock for dilutive purposes |  |  |  |  |
under the as if method | Not applicable |  | Anti-dilutive

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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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