ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

12 Months Ended

Dec. 31, 2020

ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The following chart shows our net revenue (and sources) for the years ended December 31, 2020 and 2019:


	Year Ended December 31,
	2020		2019

Net Revenue:
Radio Advertising	$	137,849	$	193,318
Political Advertising		22,484		1,445
Digital Advertising		34,131		31,912
Cable Television Advertising		79,732		79,776
Cable Television Affiliate Fees		99,489		105,071
Event Revenues & Other		2,652		25,407
Net Revenue (as reported)	$	376,337	$	436,929

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

Contract assets (unbilled receivables) and contract liabilities (customer advances and unearned income and unearned event income) that are not separately stated in our consolidated balance sheets at December 31, 2020 and 2019 were as follows:


	December 31, 2020		December 31, 2019
	(In thousands)
Contract assets:
Unbilled receivables	$	5,978	$	3,763

Contract liabilities:
Customer advances and unearned income	$	4,955	$	3,048
Unearned event income		5,921		6,645

Schedule of gross value and accumulated amortization of the launch assets

The gross value and accumulated amortization of the launch assets is as follows:


	As of December 31,
	2020		2019
	(In thousands)
Launch assets	$	9,021	$	7,259
Less: Accumulated amortization		(3,124)		(2,038)
Launch assets, net	$	5,897	$	5,221

Schedule of future estimated launch support amortization expense

Future estimated launch support amortization expense or revenue reduction related to launch assets for years 2021 through 2025 is as follows:


	(In thousands)
2021	$	1,337
2022	$	1,337
2023	$	1,337
2024	$	1,337
2025	$	395

Schedule of earning per share by potential common shares


		Year Ended
		December 31,
		2020
		(Unaudited)
		(In thousands)
Stock options		4,019
Restricted stock awards		1,879

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

As of December 31, 2020, and December 31, 2019, respectively, the fair values of our financial assets and liabilities measured at fair value on a recurring basis are categorized as follows:


	Total		Level 1		Level 2		Level 3
	(In thousands)

As of December 31, 2020
Liabilities subject to fair value measurement:
Contingent consideration (a)	$	780		—		—	$	780
Employment agreement award (b)		25,603		—		—		25,603
Total	$	26,383	$	—	$	—	$	26,383

Mezzanine equity subject to fair value measurement:
Redeemable noncontrolling interests (c)	$	12,701	$	—	$	—	$	12,701

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.

(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). 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 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.

(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

There were no transfers in or out of Level 1, 2, or 3 during the years ended December 31, 2020 and 2019. The following table presents the changes in Level 3 liabilities measured at fair value on a recurring basis for the years ended December 31, 2020 and 2019:


			Employment		Redeemable
	Contingent		Agreement		Noncontrolling
	Consideration		Award		Interests
	(In thousands)
Balance at December 31, 2018	$	2,831	$	25,660	$	10,232
Net income attributable to redeemable noncontrolling interests		—		—		1,132
Dividends paid to redeemable noncontrolling interests		—		—		(1,000)
Distribution		(1,207)		(3,591)		—
Change in fair value		297		4,948		200
Balance at December 31, 2019	$	1,921	$	27,017	$	10,564
Net income attributable to redeemable noncontrolling interests		—		—		1,544
Dividends paid to redeemable noncontrolling interests		—		—		(2,802)
Distribution		(1,188)		(3,685)		—
Change in fair value		47		2,271		3,395
Balance at December 31, 2020	$	780	$	25,603	$	12,701

The amount of total income (losses) for the period included in earnings attributable to the change in unrealized losses relating to assets and liabilities still held at December 31, 2020	$	(47)	$	(2,271)	$	—
The amount of total income (losses) for the period included in earnings attributable to the change in unrealized losses relating to assets and liabilities still held at December 31, 2019	$	(297)	$	(4,948)	$	—

Schedule of significant unobservable input value

Losses and gains included in earnings were recorded in the consolidated statements of operations as corporate selling, general and administrative expenses for the employment agreement award and included as selling, general and administrative expenses for contingent consideration for the years ended December 31, 2020 and 2019.

For Level 3 assets and liabilities measured at fair value on a recurring basis, the significant unobservable inputs used in the fair value measurements were as follows:


			As of		As of
		Significant	December 31, 2020		December 31, 2019
Level 3 liabilities	Valuation Technique	Unobservable Inputs	Significant Unobservable Input Value
Contingent consideration	Monte Carol Simulation	Expected volatility	29.5	%	20.8	%
Contingent consideration	Monte Carol Simulation	Discount Rate	16.5	%	14.5	%
Employment agreement award	Discounted Cash Flow	Discount Rate	10.5	%	10.0	%
Employment agreement award	Discounted Cash Flow	Long-term Growth Rate	1.0	%	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:


	Year
	Ended December 31,
	2020			2019
	(Dollars
	In thousands)
Operating Lease Cost (Cost resulting from lease payments)	$	12,687		$	12,673
Variable Lease Cost (Cost excluded from lease payments)		143			160
Total Lease Cost	$	12,830		$	12,833

Operating Lease - Operating Cash Flows (Fixed Payments)	$	13,243		$	13,023
Operating Lease - Operating Cash Flows (Liability Reduction)	$	8,354		$	7,752

Weighted Average Lease Term - Operating Leases		5.37 years			5.63 years
Weighted Average Discount Rate - Operating Leases		11.00	%		11.00	%

Schedule of maturities of lease liabilities


	(Dollars in
For the Year Ended December 31,	thousands)
2021	$	13,160
2022		12,416
2023		10,784
2024		9,681
2025		5,034
Thereafter		9,474
Total future lease payments		60,549
Imputed interest		(15,044)
Total	$	45,505