v3.24.1

INCOME TAXES | 12 Months Ended
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Dec. 31, 2023
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES Effective Tax Rate - Overview The Company’s effective income tax rate may be impacted by: (i) changes in the level of income in any of the Company’s taxing jurisdictions; (ii) changes in the statutes, rules and tax rates applicable to taxable income in the jurisdictions in which the Company operates; (iii) changes in the expected outcome of income tax audits; (iv) changes in the estimate of expenses that are not deductible for tax purposes; (v) income taxes in certain states where the states’ current taxable income is dependent on factors other than the Company’s consolidated net income; and (vi) adding facilities in states that on average have different income tax rates from states in which the Company currently operates and the resulting effect on previously reported temporary differences between the tax and financial reporting bases of the Company’s assets and liabilities. The Company’s annual effective tax rate may also be materially impacted by tax expense associated with non-amortizable assets such as goodwill and changes in the deferred tax valuation allowance. An impairment loss for financial statement purposes will result in an income tax benefit during the period incurred as the amortization of some portion of the Company’s broadcasting licenses and goodwill is deductible for income tax purposes. Expected and Reported Income Taxes (Benefit) Income tax expense (benefit) from continuing operations computed using the United States federal statutory rates is reconciled to the reported income tax expense (benefit) from continuing operations as follows:
| Year Ended December 31,
| 2023 |  | 2022 |  |
| (amounts in thousands)
Federal statutory income tax rate | 21 | % |  | 21 | % |  |
Computed tax expense at federal statutory rates on income before income taxes | $ | (312,129) |  |  | $ | (37,999) |  |  |
State income tax expense, net of federal benefit | (77,445) |  |  | (6,666) |  |  |
Goodwill impairment | — |  |  | 3,807 |  |  |
Valuation allowance current year activity | 31,722 |  |  | — |  |  |
Tax impact of share-based awards | 1,290 |  |  | 832 |  |  |
Restructuring and related costs | 3,881 |  |  | — |  |  |
Nondeductible expenses and other | 3,224 |  |  | (249) |  |  |
Income tax benefit | $ | (349,457) |  |  | $ | (40,275) |  |  |
Effective Income Tax Rates The Company recognized an income tax benefit at an effective income tax rate of 23.51% and 22.26% for 2023 and 2022, respectively. These rates were higher than the federal statutory rate of 21% primarily due to the impact of state and local income taxes. Income Tax Expense Income tax expense (benefit) for each year is summarized in the table below.
|  | Year Ended December 31,
Income tax expense |  | 2023 |  | 2022 |  |
Current: |  | (amounts in thousands)
Current: |  |  |  |  |  |
Federal |  | $ | — |  |  | $ | (5,746) |  |  |
State |  | 914 |  |  | 2,622 |  |  |
Total current |  | 914 |  |  | (3,124) |  |  |
Deferred: |  |  |  |  |  |
Federal |  | (251,426) |  |  | (26,018) |  |  |
State |  | (98,945) |  |  | (11,133) |  |  |
Total deferred |  | (350,371) |  |  | (37,151) |  |  |
Total income taxes (benefit) |  | $ | (349,457) |  |  | $ | (40,275) |  |  |
Deferred Tax Assets and Deferred Tax Liabilities The income tax accounting process to determine the Company’s deferred tax assets and liabilities involves estimating all temporary differences between the tax and financial reporting bases of the Company’s assets and liabilities based on tax laws and statutory tax rates applicable to the period in which the differences are expected to affect taxable income. These estimates include assessing the likely future tax consequences of events that have been recognized in the Company’s financial statements or tax returns. Changes to these estimates could have a future impact on the Company’s financial position or results of operations. The components of deferred tax assets and liabilities as of December 31, 2023 and 2022, are as detailed below.
| As of December 31,
| 2023 |  | 2022
| (amounts in thousands)
Deferred tax assets: |  |  |
Federal and state income tax loss carryforwards | $ | 74,734 |  |  | $ | 71,349 |
Share-based compensation | 2,042 |  |  | 2,983 |
Investments - impairments | 752 |  |  | 350 |
Lease rental obligations | — |  |  | 3 |
Deferred compensation | 5,696 |  |  | 6,489 |
Interest Expense Limitation Carryforward | 67,750 |  |  | 34,525 |
Debt fair value adjustment | 884 |  |  | 1,156 |
Reserves | 551 |  |  | 551 |
Lease liability | 63,859 |  |  | 63,335 |
Employee benefits | 1,600 |  |  | 2,151 |
Provision for doubtful accounts | 1,826 |  |  | 2,514 |
Other non-current | — |  |  | — |
Total deferred tax assets before valuation allowance | 219,694 |  |  | 185,406 |
Valuation allowance | (60,143) |  |  | (20,158) |
Total deferred tax assets | $ | 159,551 |  |  | $ | 165,248 |
Deferred tax liabilities: |  |  |
Lease ROU asset | (53,880) |  |  | (56,283) |
Property, equipment and certain intangibles | (35,579) |  |  | (48,159) |
Broadcasting licenses and goodwill | (168,043) |  |  | (507,176) |
Other non-current | (3,986) |  |  | (7,008) |
Total deferred tax liabilities | $ | (261,488) |  |  | $ | (618,626) |
Total net deferred tax liabilities | $ | (101,937) |  |  | $ | (453,378) |
Valuation Allowance for Deferred Tax Assets Judgment is required in estimating valuation allowances for deferred tax assets. Deferred tax assets are reduced by a valuation allowance if an assessment of their components indicates that it is more likely than not that all or some portion of these assets will not be realized. The realization of a deferred tax asset ultimately depends on the existence of sufficient taxable income in the carryforward periods under tax law. The Company periodically assesses the need for valuation allowances for deferred tax assets based on more-likely-than-not realization threshold criteria. In the Company’s assessment, appropriate consideration is given to all positive and negative evidence related to the realization of the deferred tax assets. This assessment considers, among other matters, forecasts of future profitability, the duration of statutory carryforward periods and any ownership change limitations under Section 382 of the Code on the Company’s future income that can be used to offset historic losses. For 2023 and 2022, the Company’s ability to utilize certain net operating loss carryforwards (“NOLs”) are limited under Section 382 of the Code as a result of the Merger. In addition, Audacy Capital Corp. has federal NOLs that are subject to a separate IRC Section 382 annual limitation. As changes occur in the Company’s assessments regarding its ability to recover its deferred tax assets, the Company’s tax provision is increased in any period in which the Company determines that the recovery is not probable. The following table presents the changes in the deferred tax asset valuation allowance for the periods indicated:
Year Ended |  | Balance at Beginning of Year |  | Increase (Decrease) Charged (Credited) to Income Taxes (Benefit) |  | Increase (Decrease) Charged (Credited) to Balance Sheet |  | Purchase Accounting |  | Balance At End Of Year
|  | (amounts in thousands)
December 31, 2023 |  | $ | 20,158 |  |  | $ | 39,985 |  |  | $ | — |  |  | $ | — |  |  | $ | 60,143 |
December 31, 2022 |  | 21,249 |  |  | (1,091) |  |  | — |  |  | — |  |  | 20,158 |
Liabilities for Uncertain Tax Positions The Company recognizes liabilities for uncertain tax positions based on whether evidence indicates that it is more likely than not that the position will be sustained on audit. It is inherently difficult and subjective to estimate such amounts, as this requires the Company to estimate the probability of various possible outcomes. The Company reevaluates these uncertain tax positions on a quarterly basis. Changes in assumptions may result in the recognition of a tax benefit or an additional charge to the tax provision. The Company classifies interest and penalties that are related to income tax liabilities as a component of income tax expense. The income tax liabilities and accrued interest and penalties are presented as non-current liabilities, as payments are not anticipated within one year of the balance sheet date. These non-current income tax liabilities are recorded in other long-term liabilities in the consolidated balance sheets. The Company’s liabilities for uncertain tax positions are reflected in the following table:
| As of December 31,
| 2023 |  | 2022
| (amounts in thousands)
Liabilities for uncertain tax positions |  |  |
Interest and penalties | $ | — |  |  | $ | (297) |
Total liabilities for uncertain tax positions | $ | — |  |  | $ | (297) |
The amounts for interest and penalties expense reflected in the statements of operations were eliminated in the statements of cash flows under net deferred taxes (benefit) and other as no cash payments were made during these periods. The following table presents the expense (income) for uncertain tax positions, which amounts were reflected in the consolidated statements of operations as an increase (decrease) to income tax expense:
| Year Ended December 31,
| 2023 |  | 2022 |  |
| (amounts in thousands)
Expense (income) for uncertain tax positions |  |  |  |  |
Interest and penalties (income) | $ | — |  |  | $ | (297) |  |  |
Total income taxes (benefit) from uncertain tax positions | $ | — |  |  | $ | (297) |  |  |
The following table presents the gross amount of changes in unrecognized tax benefits:
| Year Ended December 31,
| 2023 |  | 2022 |  |
| (amounts in thousands)
Beginning of year balance | $ | (5,741) |  |  | $ | (6,204) |  |  |
Prior year positions |  |  |  |  |
Reductions due to statute lapse | 671 |  |  | 463 |  |  |
End of year balance | $ | (5,070) |  |  | $ | (5,741) |  |  |
Ending liability balance included above that was reflected as an offset to deferred tax assets | $ | (5,070) |  |  | $ | (5,741) |  |  |
The gross amount of the Company’s unrecognized tax benefits is reflected in the above table which, if recognized, may impact the Company’s effective income tax rate in the period of recognition. The total amount of unrecognized tax benefits could increase or decrease within the next 12 months for a number of reasons including the expiration of statutes of limitations, audit settlements and tax examination activities. As of December 31, 2023, there were no significant unrecognized net tax benefits (exclusive of interest and penalties) that over the next 12 months are subject to the expiration of various statutes of limitation. Interest and penalties accrued on uncertain tax positions are released upon the expiration of statutes of limitations. Federal and State Income Tax Audits The Company is subject to federal, state and local income tax audits from time to time that could result in proposed assessments. Management believes that the Company has made sufficient tax provisions for tax periods that are within the statutory period of limitations not previously audited and that are potentially open for examination by the taxing authorities. Potential liabilities associated with these years will be resolved when an event occurs to warrant closure, primarily through the completion of audits by the taxing jurisdictions, or if the statute of limitations expires. To the extent audits or other events result in a material adjustment to the accrued estimates, the effect would be recognized during the period of the event. There can be no assurance, however, that the ultimate outcome of audits will not have a material adverse impact on the Company’s financial position, results of operations or cash flows. The Company cannot predict with certainty how these audits will be resolved and whether the Company will be required to make additional tax payments, which may include penalties and interest. For most states where the Company conducts business, the Company is subject to examination for the preceding three to six years. In certain states, the period could be longer. Income Tax Payments, Refunds and Credits The following table provides the amount of income tax payments and income tax refunds for the periods indicated:
| Year Ended December 31,
| 2023 |  | 2022 |  |
| (amounts in thousands)
Federal and state income tax payments (refunds) | $ | 1,728 |  |  | $ | (14,554) |  |  |
Net Operating Loss and Interest Expense Carryforwards As a result of the Merger with CBS Radio on November 17, 2017, changes in the cumulative ownership percentages triggered a significant limitation in the Company's NOL carryforward utilization. The Company’s ability to use its federal NOL and credit carryforwards is subject to annual limitations as defined in Section 382 of the Code. Audacy Capital Corp. also had federal NOLs that are subject to a separate IRS Section 382 limitation. As a result, the Company has recorded a valuation allowance against a portion of its federal NOLs as it does not anticipate utilizing all of its NOL carryforwards. In addition, the Company has recorded a valuation allowance against a portion of its interest expense limitation carryforward. The Company has recorded a valuation allowance for a portion of its state NOLs as the Company does not expect to obtain a benefit in future periods. In addition, utilization in future years of the NOL carryforwards may be subject to limitations due to the changes in ownership provisions under Section 382 of the Code and similar state provisions. The Company will continue to assess the ability of these carryforwards to be realized in subsequent periods. The table below reflects estimates for net operating losses and interest expense carryforwards as the final 2023 returns will not be filed until late 2024:
|  | As of December 31, 2023
Net Operating Losses: |  | (amounts in thousands) |  | Expiration Periods (in years)
Federal NOL carryforwards |  | $ | 232,114 |  |  | 2032 to indefinite
State NOL carryforwards |  | $ | 571,324 |  |  | 2024 to indefinite
Interest Expense Carryforward: |  |  |  |
Interest Expense limitation carryforward |  | $ | 254,021 |  |  | Indefinite

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 946 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 13 -Publisher FASB -URI https://asc.fasb.org//1943274/2147480990/946-20-50-13 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 235 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480678/235-10-S99-1 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//740/tableOfContent Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 14 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-14 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 21 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-21 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 270 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482526/740-270-50-1 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 17 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-17 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479360/740-10-S99-1 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479360/740-10-S99-2 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 30 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482603/740-30-50-2 + Details
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