ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

9 Months Ended

Sep. 30, 2020

ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(In thousands, unaudited)
Net Revenue:
Radio Advertising	$	34,919	$	50,813	$	98,695	$	144,958
Political Advertising		4,324		300		7,089		741
Digital Advertising		8,121		8,171		20,514		23,270
Cable Television Advertising		19,603		20,649		59,576		60,658
Cable Television Affiliate Fees		24,421		25,330		75,247		79,404
Event Revenues & Other		524		5,792		1,674		22,044
Net Revenue (as reported)	$	91,912	$	111,055	$	262,795	$	331,075

Schedule of contract assets (unbilled receivables) and contract liabilities (customer advances and unearned income and unearned event income)


	September 30, 2020		December 31, 2019		September 30, 2019
	(Unaudited)				(Unaudited)
	(In thousands)
Contract assets:
Unbilled receivables	$	7,085	$	3,763	$	5,968

Contract liabilities:
Customer advances and unearned income	$	4,587	$	3,048	$	3,403
Unearned event income		6,809		6,645		3,831

Schedule of calculation of basic and diluted earnings per share from continuing operations

The following table sets forth the calculation of basic and diluted earnings per share from continuing operations (in thousands, except share and per share data):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(Unaudited)
	(In thousands, except share data)
Numerator:
Net (loss) income attributable to common stockholders	$	(12,772)	$	5,359	$	(34,539)	$	8,846
Denominator:
Denominator for basic net (loss) income per share - weighted average outstanding shares		44,175,385		44,315,077		44,738,635		44,912,673
Effect of dilutive securities:
Stock options and restricted stock		—		1,803,625		—		2,052,572
Denominator for diluted net (loss) income per share - weighted-average outstanding shares		44,175,385		46,118,702		44,738,635		46,965,245

Net (loss) income attributable to common stockholders per share – basic	$	(0.29)	$	0.12	$	(0.77)	$	0.20
Net (loss) income attributable to common stockholders per share –diluted	$	(0.29)	$	0.12	$	(0.77)	$	0.19

All stock options and restricted stock awards were excluded from the diluted calculation for the three and nine months ended September 30, 2020, as their inclusion would have been anti-dilutive. The following table summarizes the potential common shares excluded from the diluted calculation.


	Three Months Ended September 30,	Nine Months Ended September 30,
	2020	2020
	(Unaudited)
	(In thousands)
Stock options	3,849	3,849
Restricted stock awards	1,818	1,886

Schedule of fair values of our financial assets and liabilities measured at fair value on a recurring basis


	Total		Level 1		Level 2		Level 3
	(Unaudited)
	(In thousands)
As of September 30, 2020
Liabilities subject to fair value measurement:
Contingent consideration (a)	$	1,154		—		—	$	1,154
Employment agreement award (b)		27,710		—		—		27,710
Total	$	28,864	$	—	$	—	$	28,864

Mezzanine equity subject to fair value measurement:
Redeemable noncontrolling interests (c)	$	11,117	$	—	$	—	$	11,117

As of December 31, 2019
Liabilities subject to fair value measurement:
Contingent consideration (a)	$	1,921		—		—	$	1,921
Employment agreement award (b)		27,017		—		—		27,017
Total	$	28,938	$	—	$	—	$	28,938

Mezzanine equity subject to fair value measurement:
Redeemable noncontrolling interests (c)	$	10,564	$	—	$	—	$	10,564

(a)

This balance is measured based on the income approach to valuation in the form of a Monte Carlo simulation. The Monte Carlo simulation method is suited to instances such as this where there is non-diversifiable risk. It is also well-suited to multi-year, path dependent scenarios. Significant inputs to the Monte Carlo method include forecasted net revenues, discount rate and expected volatility. A third-party valuation firm assisted the Company in estimating the contingent consideration. The long-term portion of the contingent consideration is recorded in other long-term liabilities and the current portion is recorded in other current liabilities in the consolidated balance sheets.

(b)

Each quarter, pursuant to an employment agreement (the “Employment Agreement”) executed in April 2008, the Chief Executive Officer (“CEO”) is eligible to receive an award (the “Employment Agreement Award”) amount equal to approximately 4% of any proceeds from distributions or other liquidity events in excess of the return of the Company’s aggregate investment in TV One. The Company reviews the factors underlying this award at the end of each quarter including the valuation of TV One (based on the estimated enterprise fair value of TV One as determined by a discounted cash flow analysis), and an assessment of the probability that the Employment Agreement will be renewed and contain this provision. The Company’s obligation to pay the award was triggered after the Company recovered the aggregate amount of certain pre-April 2015 capital contributions in TV One, and payment is required only upon actual receipt of distributions of cash or marketable securities or proceeds from a liquidity event with respect to such invested amount. The long-term portion of the award is recorded in other long-term liabilities and the current portion is recorded in other current liabilities in the consolidated balance sheets. The CEO was fully vested in the award upon execution of the Employment Agreement, and the award lapses if the CEO voluntarily leaves the Company or is terminated for cause. A third-party valuation firm assisted the Company in estimating TV One’s fair value using a discounted cash flow analysis. Significant inputs to the discounted cash flow analysis include forecasted operating results, discount rate and a terminal value. In September 2014, the Compensation Committee of the Board of Directors of the Company approved terms for a new employment agreement with the CEO, including a renewal of the Employment Agreement Award upon similar terms as in the prior Employment Agreement. Prior to the quarter ended September 30, 2018, there were probability factors included in the calculation of the award related to the likelihood that the award will be realized. During the quarter ended September 30, 2018, management changed the methodology used in calculating the fair value of the Company's Employment Agreement Award liability to simplify the calculation. As part of the simplified calculation, the Company eliminated certain adjustments made to its aggregate investment in TV One, including the treatment of historical dividends paid and potential distribution of assets upon liquidation. The Compensation Committee of the Board of Directors approved the simplified method which eliminates certain assumptions that were historically used in the determination of the fair value of this liability.

(c)

The redeemable noncontrolling interest in Reach Media is measured at fair value using a discounted cash flow methodology. A third-party valuation firm assisted the Company in estimating the fair value. Significant inputs to the discounted cash flow analysis include forecasted operating results, discount rate and a terminal value.

Schedule of changes in Level 3 liabilities measured at fair value on a recurring basis


			Employment		Redeemable
	Contingent		Agreement		Noncontrolling
	Consideration		Award		Interests
	(In thousands)

Balance at December 31, 2019	$	1,921	$	27,017	$	10,564
Net income attributable to noncontrolling interests		—		—		846
Distribution		(766)		(1,625)		—
Dividends paid to noncontrolling interests		—		—		(1,000)
Change in fair value		(1)		2,318		707
Balance at September 30, 2020	$	1,154	$	27,710	$	11,117

The amount of total (losses)/income for the period included in earnings attributable to the change in unrealized losses/income relating to assets and liabilities still held at the reporting date	$	1	$	(2,318)	$	—

Schedule of significant unobservable input value


					As of
			As of		December 31,
		Significant	September 30, 2020		2019
		Unobservable	Significant Unobservable
Level 3 liabilities	Valuation Technique	Inputs	Input Value
Contingent consideration	Monte Carlo Simulation	Expected volatility	39.1	%	20.8	%
Contingent consideration	Monte Carlo Simulation	Discount Rate	16.5	%	14.5	%
Employment agreement award	Discounted Cash Flow	Discount Rate	10.0	%	10.0	%
Employment agreement award	Discounted Cash Flow	Long-term Growth Rate	2.0	%	2.0	%
Redeemable noncontrolling interest	Discounted Cash Flow	Discount Rate	11.0	%	11.0	%
Redeemable noncontrolling interest	Discounted Cash Flow	Long-term Growth Rate	1.0	%	1.0	%

Schedule of the components of lease expense and the weighted average remaining lease term and the weighted average discount rate

The following table sets forth the components of lease expense and the weighted average remaining lease term and the weighted average discount rate for the Company’s leases:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2020			2019			2020			2019
	(Unaudited)						(Unaudited)
	(Dollars In thousands)						(Dollars In thousands)
Operating Lease Cost (Cost resulting from lease payments)	$	3,166		$	3,200		$	9,477		$	9,642
Variable Lease Cost (Cost excluded from lease payments)		34			40			109			116
Total Lease Cost	$	3,200		$	3,240		$	9,586		$	9,758

Operating Lease - Operating Cash Flows (Fixed Payments)	$	3,241		$	3,212		$	9,897		$	10,010
Operating Lease - Operating Cash Flows (Liability Reduction)	$	2,080		$	1,888		$	6,258		$	6,653

Weighted Average Lease Term - Operating Leases		5.42	years		5.91	years		5.42	years		5.91	years
Weighted Average Discount Rate - Operating Leases		11.00	%		11.00	%		11.00	%		11.00	%

Schedule of maturities of lease liabilities


For the Year Ended December 31,	(Dollars in thousands)
For the remaining three months ending December 31, 2020	$	3,394
2021		13,304
2022		12,664
2023		10,916
2024		9,795
Thereafter		13,904
Total future lease payments		63,977
Imputed interest		(15,951)
Total	$	48,026