SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Dec. 31, 2023

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

(a)  Cash and Cash Equivalents and Restricted Cash

Cash and cash equivalents consist of cash and money market funds at various commercial banks that have original maturities of 90 days or less. For cash and cash equivalents, cost approximates fair value. The Company’s cash and cash equivalents are insured by the Federal Deposit Insurance Corporation (“FDIC”). However, the Company has amounts held with banks that may exceed the amount of FDIC insurance provided on such accounts. Generally, the balances may be redeemed upon demand and are maintained with financial institutions of reputable credit, and, therefore, bear minimal credit risk.

In July 2021, RVAEH, a previously consolidated joint venture of the Company, entered into a Host Community Agreement (the “Original HCA”) with the City of Richmond (the “City”) for the development of the ONE Casino + Resort, (the “Project”), and the partners of RVAEH made an initial investment of $26.0 million (the “Upfront Payment”) into an escrow account. In February 2023, given a change in the joint venture ownership structure, RVAEH no longer met the consolidation requirements and therefore, the Company began accounting for its investment in RVAEH under the equity method. Accordingly, the Company deconsolidated RVAEH (including $26.0 million in restricted cash) from its consolidated financial statements. RVAEH’s restricted cash on the Company’s consolidated balance sheets was $0.0 million and $26.0 million as of December 31, 2023 and 2022, respectively.

The following table provides a reconciliation of cash, cash equivalents and restricted cash as reported within the consolidated balance sheets to “Cash, cash equivalents and restricted cash, end of period” as reported within the consolidated statements of cash flows:

	Years Ended
	December 31,
	2023		2022
	(In thousands)
Cash and cash equivalents	$	233,090	$	75,404
Restricted cash	480			26,475
Total cash, cash equivalents, and restricted cash shown in Consolidated Statements of Cash Flows	$	233,570	$	101,879

(b)  Trade Accounts Receivable

The Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”) on January 1, 2023. The Company estimates the allowance for expected credit losses on trade accounts receivable in pools based on the Company’s four reportable segments and historical credit loss information over a defined period adjusted for current conditions and reasonable and supportable forecasts. Large individual receivables for which there is indication of increased credit risk are individually assessed for loss allowances. The Company reports the allowance for expected credit losses for financial assets measured at amortized cost. The allowance for expected credit losses is reviewed periodically by management.

Trade accounts receivable, which consist of both billed and unbilled receivables, are recorded at their invoiced amount, and presented as net of an allowance for expected credit loss. Inactive delinquent accounts that are past due beyond a certain number of days are written off and often pursued by other collection efforts. Bankruptcy accounts are immediately written off upon receipt of the bankruptcy notice from the courts. Subsequent recoveries of these amounts are recorded as received.

Allowance for Expected Credit Losses

The changes in the allowance for expected credit loss are as follows:

	As of December 31, 2023
	(In thousands)
Balance at Beginning of Period(1)	$	8,643
Charged to Expense, net		2,552
Less: Deductions		(2,557)
Balance at End of Period	$	8,638

(1) The allowance for expected credit loss as of January 1, 2023 includes $0.6 million cumulative-effect adjustment of the adoption of ASU 2016-13.

(c)  Goodwill and Indefinite-Lived Intangible Assets (Primarily Radio Broadcasting Licenses)

In connection with past acquisitions, a significant amount of the purchase price was allocated to radio broadcasting licenses, goodwill and other intangible assets. Goodwill consists of the excess of the purchase price over the fair value of tangible and identifiable intangible net assets acquired. Goodwill and other indefinite-lived intangible assets are not amortized but are tested annually for impairment at the reporting unit level and unit of accounting level, respectively. The Company tests for impairment annually, on October 1 of each year, or more frequently when events or changes in circumstances or other conditions suggest impairment may have occurred. Radio broadcasting license impairment exists when the asset carrying values exceed their respective fair values. The excess is recorded to operations as an impairment

charge. The Company tests for radio broadcasting license impairment at the unit of accounting level using the income approach, which involves, but is not limited to, judgmental estimates and assumptions about market revenue and projected revenue growth by market, mature market share, operating profit margin, discount rate and terminal growth rate. In testing for goodwill impairment, the Company also relies primarily on the income approach that estimates the fair value of the reporting unit, which involves, but is not limited to, judgmental estimates and assumptions about revenue growth rates, operating profit margins, discount rate and terminal growth rate. The Company then performs a market-based analysis by comparing the average implied multiple arrived at based on the Company’s cash flow projections and estimated fair values to multiples for actual recently completed sale transactions and by comparing the total of the estimated fair values of the Company’s reporting units to the market capitalization of the Company. The Company recognizes an impairment charge to operations in the amount that the reporting unit’s carrying value exceeds its fair value. Any impairment charge recognized cannot exceed the total amount of goodwill allocated to the reporting unit.

(d)  Impairment of Long-Lived Assets and Intangible Assets, Excluding Goodwill and Indefinite-Lived Intangible Assets

Long-lived assets, excluding goodwill and other indefinite-lived intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or group of assets may not be fully recoverable. If an impairment indicator is present, the Company evaluates recoverability by a comparison of the carrying amount of the asset or group of assets to future undiscounted net cash flows expected to be generated by the asset or group of assets. Assets are grouped at the lowest levels for which there are identifiable cash flows that are largely independent of the cash flows generated by other asset groups. If the assets are impaired, the impairment recognized is measured by the amount by which the carrying amount exceeds the fair value of the asset or group of assets. Fair value is generally determined by estimates of discounted future cash flows. The discount rate used in any estimate of discounted cash flows would be the rate of return for a similar investment of like risk. The Company reviewed these long-lived assets during 2023 and 2022 and concluded no impairment to the carrying value of these assets was required.

(e)  Financial Instruments

As of December 31, 2023, and 2022, the Company’s financial instruments consisted of cash and cash equivalents, restricted cash, trade accounts receivable, asset-backed credit facility, long-term debt, and debt securities. The carrying amounts approximated fair value for each of these financial instruments as of December 31, 2023 and 2022, except for the Company’s long-term debt. On January 25, 2021, the Company borrowed $825.0 million in aggregate principal amount of senior secured notes due February 2028 and bearing interest at a rate of 7.375% (the “2028 Notes”). The 2028 Notes had a carrying value of approximately $725.0 million and fair value of approximately $616.3 million as of December 31, 2023, and had a carrying value of approximately $750.0 million and fair value of approximately $646.9 million as of December 31, 2022. The fair values of the 2028 Notes, classified as a Level 2 instrument, was determined based on the trading values of this instrument in an inactive market as of the reporting date. There were no borrowings outstanding on the Company’s asset-backed credit facility as of December 31, 2023 and 2022.

(f)  Revenue Recognition

The Company recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which it expects to be entitled in exchange for those goods or services. In general, spot and digital advertising is satisfied as advertising spots or as impressions are delivered. For cable television affiliate revenue, the Company grants a license to the affiliate to distribute its television programming content through the license period, and the Company recognizes revenue based on the number of subscribers each month. Finally, for event-based revenue, the Company’s events typically occur on one specified date when revenue is recognized. However, there may be performance obligations that are satisfied in the weeks leading up to the event, such as radio and digital advertising. In such instances revenue is recognized as the underlying performance obligations are satisfied based on the allocated transaction price and the pattern of delivery to the customer.

Within the radio broadcasting and Reach Media segments, revenues are generated from the sale of spot advertisements and sponsorships. Revenue from the sale of spot advertisements is recognized over time when the advertisements are run. Revenue from sponsorships is recognized as each underlying sponsorship performance obligation is satisfied. Revenue is

recognized for each performance obligation based on the allocated transaction price and the pattern of transfer to the customer. The Company records as revenue the amount of consideration that it receives. For the radio broadcasting and Reach Media segments, agency and outside sales representative commissions were approximately $18.8 million and $18.4 million for the years ended December 31, 2023 and 2022, respectively. Radio broadcasting and Reach Media’s contracts with advertisers are typically a year or less in duration and are generally billed monthly upon satisfaction of the performance obligations.

Within the digital segment, Interactive One generates the majority of the Company’s digital revenue. The Company’s digital revenue is principally derived from advertising services on non-radio station branded but Company-owned websites. Advertising services include the sale of banner and sponsorship advertisements. As the Company runs its advertising campaigns, the customer simultaneously receives benefits as impressions are delivered, and revenue is recognized over time. The amount of revenue recognized each month is based on the number of impressions delivered multiplied by the effective per impression unit price. Interactive One’s contracts with advertisers are typically a year or less in duration and are generally billed monthly upon satisfaction of the performance obligations.

The cable television segment derives advertising revenue from the sale of television airtime to advertisers and revenue is recognized over time when the advertisements are run. In the agreements governing advertising campaigns, the Company may also promise to deliver to its customers a guaranteed minimum number of viewers or impressions on a specific television network within a particular demographic. These guaranteed advertising campaigns are considered to represent a single, distinct performance obligation. For these campaigns, revenues are recognized based on the audience levels reached multiplied by the average price per impression. The Company provides the advertiser with advertising until the guaranteed audience level is delivered, and invoiced amounts may exceed the value of the actual audience delivery. As such, a portion of revenues associated with such campaigns is deferred until the guaranteed audience level is delivered or the rights associated with the guarantees lapse, which is typically less than one year. Actual audience and delivery information is obtained from independent ratings services. The Company records as revenue the amount of consideration that it receives.  TV One’s contracts with advertisers are typically a year or less in duration and are generally billed monthly upon satisfaction of the performance obligations.

The Company’s cable television segment also derives revenue from affiliate fees under the terms of various multi-year affiliation agreements based on a per subscriber royalty payable by the affiliate, in exchange for the right to distribute the Company’s programming. The majority of the Company’s distribution fees are collected monthly throughout the year and distribution revenue is recognized over the term of the contracts based on contracted programming rates and reported subscriber levels. The Company applies the sales- or usage-based royalty exception for its affiliate agreements. The amount of distribution fees due to the Company is reported by distributors based on actual subscriber levels. Such information is generally not received until after the close of the reporting period. In these cases, the Company estimates the number of subscribers receiving the Company’s programming to estimate royalty revenue. Historical adjustments to recorded estimates have not been material. Revenues from the Company’s cable television segment are reduced by the amortization of the Company’s launch support assets. Agency and outside sales representative commissions were approximately $19.4 million and $20.1 million for the years ended December 31, 2023 and 2022, respectively.

Some of the Company’s contracts with customers contain multiple performance obligations. In an arrangement with multiple distinct performance obligations, the transaction price is allocated among the separate performance obligations on a relative stand-alone selling price basis. The stand-alone selling price is determined with consideration given to market conditions, the size and scope of the contract, customer information, and other factors.

Revenue by Contract Type

The following chart shows the sources of the Company’s net revenue for the years ended December 31, 2023 and 2022:

	Radio		Reach				Cable
(In thousands)	Broadcasting		Media		Digital		Television		Eliminations		Consolidated
Year Ended December 31, 2023
Net Revenue:
Radio advertising	$	146,171	$	39,851	$	-	$	-	$	(3,660)	$	182,362
Political advertising		2,854		398		629		-		-		3,881
Digital advertising		-		-		74,866		-		-		74,866
Cable television advertising		-		-		-		108,307		-		108,307
Cable television affiliate fees		-		-		-		87,747		-		87,747
Event revenues & other		7,189		12,639		-		153		546		20,527
Net revenue	$	156,214	$	52,888	$	75,495	$	196,207	$	(3,114)	$	477,690
Year Ended December 31, 2022
Net Revenue:
Radio advertising	$	139,470	$	41,414	$	-	$	-	$	(3,616)	$	177,268
Political advertising		11,143		287		1,796		-		-		13,226
Digital advertising		-		-		76,730		-		-		76,730
Cable television advertising		-		-		-		112,857		-		112,857
Cable television affiliate fees		-		-		-		96,963		-		96,963
Event revenues & other		6,065		1,416		-		51		28		7,560
Net revenue	$	156,678	$	43,117	$	78,526	$	209,871	$	(3,588)	$	484,604

Contract Assets and Liabilities

Contract assets and contract liabilities that are not separately stated in the Company’s consolidated balance sheets at December 31, 2023 and 2022 were as follows:

	December 31, 2023		December 31, 2022
	(In thousands)
Contract assets:
Unbilled receivables	$	5,437	$	12,597
Contract liabilities:
Customer advances and unearned income	$	4,851	$	6,123
Reserve for audience deficiency		12,779		9,629
Unearned event income		4,864		5,708

Unbilled receivables consist of earned revenue that has not yet been billed. Contract assets are included in trade accounts receivable, net on the consolidated balance sheets.  Customer advances and unearned income represent advance payments by customers for future services under contract that are generally incurred in the near term. For advertising sold based on audience guarantees, audience deficiency typically results in an obligation to deliver additional advertising units to the customer, generally within one year of the campaign end date. To the extent that audience guarantees are not met, a reserve for audience deficiency is recorded until such a time that the audience guarantee has been satisfied. Unearned event income represents payments by customers for upcoming events. Contract liabilities are included in other current liabilities on the consolidated balance sheets.

For customer advances and unearned income as of January 1, 2023, $3.7 million was recognized as revenue for the year ended December 31, 2023. For the reserve for audience deficiency as of January 1, 2023, $6.0 million was recognized as revenue during the year ended December 31, 2023. For unearned event income as of January 1, 2023, $5.7 million was recognized as revenue during the year ended December 31, 2023.

Practical expedients and exemptions

The Company generally expenses employee sales commissions when incurred because the amortization period would have been one year or less. These costs are recorded within selling, general and administrative expenses.

The Company does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less or (ii) contracts for which variable consideration is a sales-based or usage-based royalty promised in exchange for a license of intellectual property.

(g)  Launch Support

The cable television segment has entered into certain affiliate agreements requiring various payments for launch support. Launch support assets are used to initiate carriage under affiliation agreements and are amortized over the term of the respective contracts. For the years ended December 31, 2023 and 2022, the Company paid approximately $4.3 million and $9.3 million, respectively, for carriage initiation. The weighted-average amortization period for launch support was approximately 8.1 years as of December 31, 2023 and 2022. The remaining weighted-average amortization period for launch support was 2.9 years and 3.8 years as of December 31, 2023 and 2022. Amortization is recorded as a reduction to revenue. For the years ended December 31, 2023 and 2022, launch support asset amortization was approximately $5.0 million and $4.4 million, respectively. Launch assets are included in other intangible assets, net on the consolidated balance sheets, except for the portion of the unamortized balance that is expected to be amortized within one year which is included in other current assets.

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

	As of December 31,
	2023		2022
	(In thousands)
Launch assets	$	27,764	$	27,764
Less: accumulated amortization		(14,084)		(9,104)
Launch assets, net	$	13,680	$	18,660

Future estimated launch support amortization related to launch assets for years 2024 through 2028 and thereafter is as follows:

	(In thousands)
2024	$	4,980
2025		4,980
2026		3,409
2027		237
2028		68
Thereafter		6

(h)  Barter Transactions

In a barter transaction, the Company provides broadcast advertising time in exchange for programming content and certain services. The Company includes the value of such exchanges in both broadcasting net revenue and station operating expenses. The valuation of barter time is based upon the fair value of the network advertising time provided for the programming content and services received. Barter transaction revenues were approximately $3.2 million and $2.0 million for the years ended December 31, 2023 and 2022, respectively. Barter transaction costs reflected in programming and

technical expenses were approximately $1.7 million and approximately $1.3 million, respectively for the years ended December 31, 2023 and 2022. Barter transaction costs reflected in selling, general and administrative expenses were approximately $1.5 million and $0.7 million for the years ended December 31, 2023 and 2022, respectively.

(i)  Advertising and Promotions

The Company expenses advertising and promotional costs as incurred. Total advertising and promotional expenses for the years ended December 31, 2023 and 2022, were approximately $27.1 million and $31.3 million, respectively.

(j)  Income Taxes

The Company recognizes income taxes in accordance with the liability method of accounting. Deferred tax assets or liabilities are computed based upon the difference between financial statement and income tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized into income in the period of enactment. Deferred income tax expense or benefits are based upon the changes in the net deferred tax asset or liability from period to period.

The Company recognizes deferred tax assets to the extent that it believes that these assets are more likely than not to be realized. In making such a determination, management considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If management determines that the Company would be able to realize its deferred tax assets in the future in excess of their net recorded amount, the Company would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. Conversely, if management determines that the Company would not be able to realize the recorded amount of deferred tax assets in the future, the Company would make an adjustment to the deferred tax asset valuation allowance, which would increase the provision for income taxes.

The Company records uncertain tax positions on the basis of a two-step process in which (1) it determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more likely than not recognition threshold, the Company recognizes the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. The Company recognizes interest and penalties related to unrecognized tax benefits on the income tax expense line in the accompanying consolidated statements of operations. Accrued interest and penalties are included in other current liabilities on the consolidated balance sheets.

(k)  Stock-Based Compensation

The Company recognizes stock-based compensation cost for stock options based on the award’s fair value at the grant date as calculated by the Black-Scholes valuation option-pricing model (“BSM”). The Company recognizes expense ratably over the requisite service period. The BSM incorporates various subjective assumptions including expected stock price volatility, for which historical data is heavily relied upon, expected life of options granted and interest rates. The Company measures compensation expense for restricted stock grants based on the fair value on the date of grant. The Company recognizes compensation expense for restricted stock grants ratably during the vesting period. The Company accounts for forfeitures as they occur. The fair value measurement objective for liabilities incurred in a share-based payment transaction is the same as for equity instruments. Awards classified as liabilities are subsequently remeasured to their fair values at the end of each reporting period until the liability is settled.

(l)  Segment Reporting and Major Customers

The Company has determined it has four reportable segments: (i) radio broadcasting; (ii) Reach Media; (iii) digital; and (iv) cable television. These four segments operate in the United States and are consistently aligned with the Company’s management of its businesses and its financial reporting structure.

The radio broadcasting segment consists of all broadcast results of operations. The Reach Media segment consists of the results of operations for the related activities and operations of the Company’s syndicated shows. The digital segment

includes the results of the Company’s online business, including the operations of Interactive One, as well as the digital components of the Company’s other reportable segments. The cable television segment consists of the Company’s cable TV operation, including results of operations of TV One and CLEO TV. Business activities unrelated to these four segments are included in an “all other” category which the Company refers to as “All other - corporate/eliminations.”

No single customer accounted for over 10% of the Company’s consolidated net revenues during either of the years ended December 31, 2023 or 2022.

(m)  Earnings Per Share

Basic and diluted net (loss) income per share attributable to common stockholders is presented in conformity with the two-class method required for participating securities: Class A, Class B, Class C, and Class D common stock. The rights of the holders of Class A, Class B, Class C and Class D common stock are identical, except with respect to voting, conversion, and transfer rights.

Basic net (loss) income per share attributable to common stockholders is computed by dividing the net (loss) income attributable to common stockholders by the weighted-average number of common shares outstanding during the period.

For the calculation of diluted earnings per share, net (loss) income attributable to common stockholders for basic earnings per share (“EPS”) is adjusted by the effect of dilutive securities. Diluted net (loss) income per share attributable to common stockholders is computed by dividing the net (loss) income attributable to common stockholders by the weighted-average number of common shares outstanding, including all potentially dilutive common shares. In periods of loss, there are no potentially dilutive common shares to add to the weighted-average number of common shares outstanding. The undistributed earnings or losses are allocated based on the contractual participation rights of the Class A, Class B, Class C and Class D common shares as if the earnings or losses for the year have been distributed. As the liquidation and dividend rights are identical, the undistributed earnings or losses are allocated on a proportionate basis, and as such, diluted and basic earnings per share is the same for each class of common stock under the two-class method.

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):

	Years Ended December 31,
	2023		2022
Numerator:
Net income attributable to Class A, Class B, Class C and Class D stockholders	$	2,050	$	34,343
Denominator:
Denominator for basic net income per share - weighted average outstanding shares		47,645,678		48,928,063
Effect of dilutive securities:
Stock options and restricted stock		2,598,132		3,246,274
Denominator for diluted net income per share - weighted-average outstanding shares		50,243,810		52,174,337
Net income attributable to Class A, Class B, Class C and Class D stockholders per share – basic	$	0.04	$	0.70
Net income attributable to Class A, Class B, Class C and Class D stockholders per share – diluted	$	0.04	$	0.66

There were no material potentially antidilutive securities excluded from the computation of diluted EPS for the years ended December 31, 2023 and 2022.

(n)  Fair Value Measurements

The Company reports the financial and non-financial assets and liabilities measured at fair value on a recurring and non-recurring basis under the provisions of ASC 820, “Fair Value Measurement” (“ASC 820”) which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.

The fair value framework requires the categorization of assets and liabilities into three levels based upon the assumptions (inputs) used to price the assets or liabilities. Level 1 provides the most reliable measure of fair value, whereas Level 3 generally requires significant management judgment. The three levels are defined as follows:

Level 1: Inputs are unadjusted quoted prices in active markets for identical assets and liabilities that can be accessed at the measurement date.

Level 2: Observable inputs other than those included in Level 1 (i.e., quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets).

Level 3: Unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the asset or liability.

A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value instrument.

As of December 31, 2023 and 2022, respectively, the fair values of the Company’s 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, 2023
Liabilities subject to fair value measurement:
Employment Agreement Award (a)	$	22,970	$	—	$	—	$	22,970
Mezzanine equity subject to fair value measurement:
Redeemable noncontrolling interests (b)	$	16,520	$	—	$	—	$	16,520
Assets subject to fair value measurement:
Cash equivalents - money market funds (d)	$	193,769	$	193,769	$	—	$	—
As of December 31, 2022
Liabilities subject to fair value measurement:
Employment Agreement Award (a)	$	25,741	$	—	$	—	$	25,741
Mezzanine equity subject to fair value measurement:
Redeemable noncontrolling interests (b)	$	25,298	$	—	$	—	$	25,298
Assets subject to fair value measurement:
Available-for-sale securities (c)	$	136,826	$	—	$	—	$	136,826
Cash equivalents - money market funds (d)		39,798		39,798		—		—
Total	$	176,624	$	39,798	$	—	$	136,826

(a) Pursuant to an employment agreement, 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 reporting period including the valuation of TV One (based on the

estimated enterprise fair value of TV One as determined by the income approach using a discounted cash flow analysis and the market approach using comparable public company multiples). Significant inputs to the discounted cash flow analysis include revenue growth rates, future operating profit, and discount rate. Significant inputs to the market approach include publicly held peer companies and recurring EBITDA multiples. Please refer to Note 16 – Subsequent Events of the Company’s consolidated financial statements for more details.

(b) The redeemable noncontrolling interests in Reach Media are measured at fair value using a discounted cash flow methodology as of December 31, 2022. Significant inputs to the discounted cash flow analysis include revenue growth rates, future operating profit margins, and discount rate. As of December 31, 2023 the fair value is measured using an exit price methodology. Significant inputs to the exit price analysis include revenue growth rates, future operating profit margins, discount rate and an exit multiple.

(c) During the three months ended June 30, 2023, the Company completed the sale of its MGM Investment. The investment in MGM National Harbor was preferred stock that had a non-transferable put right and is classified as an available-for-sale debt security. The investment was initially measured at fair value using a dividend discount model. Significant inputs to the dividend discount model included revenue growth rates, discount rate and a terminal growth rate. At December 31, 2022, the investment’s fair value was measured using a contractual valuation approach. This method relied on a contractually agreed upon formula established between the Company and MGM National Harbor as defined in the Second Amended and Restated Operating Agreement of MGM National Harbor, LLC (“the Agreement”) rather than market-based inputs or traditional valuation methods. As defined in the Agreement, the calculation of the put was based on operating results, Enterprise Value and the Put Price Multiple. The inputs used in this measurement technique were specific to the entity, MGM National Harbor, and there are no current observable prices for investments in private companies that are comparable to MGM National Harbor. The inputs used to measure the fair value of this security were classified as Level 3 within the fair value hierarchy. Throughout the periods from the fourth quarter of 2020 up until the third quarter of 2022, the Company relied on the dividend discount model for valuation purposes based on the facts, circumstances, and information available at the time. During the fourth quarter of 2022, the Company adopted the contractual valuation method described above as it believes it more closely approximates the fair value of the investment at that time.

(d) The Company measures and reports its cash equivalents that are invested in money market funds and valued based on quoted market prices which approximate cost due to their short-term maturities.

There were no transfers in or out of Level 1, 2, or 3 during the years ended December 31, 2023 and 2022. The following table presents the changes in Level 3 assets and liabilities measured at fair value on a recurring basis for the years ended December 31, 2023 and 2022:

	Employment		Redeemable		Available-
	Agreement		Noncontrolling		for-Sale
	Award		Interests		Securities
Balance at December 31, 2021	$	28,193	$	18,655	$	112,600
Net income attributable to redeemable noncontrolling interests		—		2,626		—
Dividends paid to redeemable noncontrolling interests		—		(1,599)		—
Distribution		(4,039)		—		—
Change in fair value included within other comprehensive income		—		—		24,226
Change in fair value (*)		1,587		5,616		—
Balance at December 31, 2022	$	25,741	$	25,298	$	136,826
Net income attributable to redeemable noncontrolling interests		—		2,530		—
Dividends paid to redeemable noncontrolling interests		—		(4,401)		—
Distribution		(2,940)		—		—
Sale of available-for-sale securities		—		—		(136,826)
Change in fair value (*)		169		(6,907)		—
Balance at December 31, 2023	$	22,970	$	16,520	$	—

(*) Amount of total losses for the period included in earnings attributable to the change in unrealized losses relating to assets and liabilities still held at the reporting date.

Changes in the fair value of the Employment Agreement Award were recorded in the consolidated statements of operations as corporate selling, general and administrative expenses for the years ended December 31, 2023 and 2022.

For Level 3 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
			December 31,		December 31,
			2023		2022
		Significant
		Unobservable	Significant Unobservable
Level 3 liabilities	Valuation Technique	Inputs	Input Value
Employment Agreement Award	Discounted cash flow	Discount rate	10.0	%	10.5	%
Employment Agreement Award	Discounted cash flow	Operating profit margin range	35.0% - 42.3	%	33.7% - 46.6	%
Employment Agreement Award	Discounted cash flow	Revenue growth rate range	(2.1)% - 2.5	%	(4.1)% - 4.2	%
Employment Agreement Award	Market Approach	Average recurring EBITDA multiple	6.3 - 6.5	x	6.6	x
Redeemable noncontrolling interests	Discounted cash flow	Discount rate	12.5	%	11.5	%
Redeemable noncontrolling interests	Discounted cash flow	Operating profit margin range	24.5% - 31.9	%	25.8% - 29.8	%
Redeemable noncontrolling interests	Discounted cash flow	Revenue growth rate range	1.2% - 16.5	%	0.2% - 32.2	%
Redeemable noncontrolling interests	Discounted cash flow	Exit Multiple	4.0	x	N/A

Any significant increases or decreases in unobservable inputs could result in significantly higher or lower fair value measurements.

Changes in fair value measurements, if significant, may affect the Company’s performance of cash flows.

Certain assets and liabilities are measured at fair value on a non-recurring basis using Level 3 inputs as defined in ASC 820. These assets are not measured at fair value on an ongoing basis but are subject to fair value adjustments only in certain circumstances. Included in this category are goodwill, radio broadcasting licenses and other intangible assets, net, that are written down to fair value when they are determined to be impaired, as well as content assets that are periodically written down to net realizable value.

As of December 31, 2023, the total recorded carrying values of goodwill and radio broadcasting licenses were approximately $216.6 million and $375.3 million, respectively. For the year ended December 31, 2023, the Company recorded impairment charges of approximately $129.3 million associated with certain radio broadcasting licenses.

(o)  Software and Web Development Costs

The Company capitalizes direct internal and external costs incurred to develop internal-use computer software during the application development stage. Internal-use software is amortized under the straight-line method using an estimated life of three years.

(p)  Redeemable Noncontrolling Interests

Redeemable noncontrolling interests are interests held by third parties in the Company’s subsidiaries that are redeemable outside of the Company’s control either for cash or other assets. These interests are classified as mezzanine equity and measured at the greater of estimated redemption value at the end of each reporting period or the historical cost basis of the noncontrolling interests adjusted for cumulative earnings allocations. The resulting increases or decreases in the estimated redemption amount are affected by corresponding charges against retained earnings, or in the absence of retained earnings, additional paid-in-capital.

(q)  Investments

Available-for-sale securities

On April 10, 2015, the Company made a $5.0 million investment in MGM’s world-class casino property, MGM National Harbor, LLC (“MGMNH” or “MGM National Harbor”) located in Prince George’s County, Maryland, which has a predominately African-American demographic profile. On November 30, 2016, the Company contributed an additional $35.0 million to complete its investment. In return for this investment, the Company received preferred stock and a non-transferable put right, exercisable for a thirty-day period each year. The price of the put right was determined based on the “Put Price” definition as defined in the agreement between the Company and MGM National Harbor.

The Company classified its investment in MGM National Harbor as an available-for-sale debt security. Investments classified as available-for-sale were carried at fair value with unrealized gains and losses, net of deferred taxes, reflected in accumulated other comprehensive income. Net realized gains and losses on sales of available-for-sale securities, and unrealized losses considered to be other-than-temporary, are recorded to other income, net in the consolidated statements of operations.

On March 8, 2023, Radio One Entertainment Holdings, LLC (“ROEH”), a wholly owned subsidiary of the Company, issued a put notice (the “Put Notice”) with respect to one hundred percent (100%) of its interest (the “Put Interest”) in MGMNH. On April 21, 2023, ROEH closed on the sale of the Put Interest and the Company received approximately $136.8 million in proceeds from the sale of the available-for-sale debt security and recognized a pre-tax gain of $96.8 million, which is included in other income, net on the consolidated statements of operations. The cost of the available for sale security sold was determined using the specific identification method.

The investment entitled the Company to an annual cash distribution based on net gaming revenue. As the Company exercised its Put Interest in March 2023, the Company did not have any distribution income for the year ended December 31, 2023. The Company recognized approximately $8.8 million in distribution income, which is included in other income, net on the consolidated statements of operations for the year ended December 31, 2022.

The amortized cost, estimated fair value, and gains and losses on the debt security classified as available-for-sale as of December 31, 2023 and 2022 are summarized as follows:

	Amortized		Gross		Gross			Gross
	Cost		Unrealized		Unrealized			Realized		Fair
	Basis		Gains		Losses			Gains		Value
	(In thousands)
December 31, 2023
MGM Investment	$	—	$	—	$	—	$	96,826	$	—
December 31, 2022
MGM Investment	$	40,000	$	104,326	$	(7,500)	$	—	$	136,826

RVA Entertainment Holding

In 2021, the Company and Peninsula Pacific Entertainment (succeeded by Churchill Downs Incorporated (“CDI”) on November 1, 2022) formed a joint venture, RVAEH, to develop and operate a casino resort in Richmond. At the time, the Company owned 75% of the joint venture and met the requirements to consolidate the joint venture under the VIE method as the Company had control to direct the activities of RVAEH and the obligation to absorb losses and the right to receive benefits that could potentially be significant to RVAEH. The investment included a put right allowing the noncontrolling interest holder the option to require the Company to purchase all shares of the noncontrolling interest holder starting 10 years after reaching a certain milestone. Therefore, the put rights were required to be presented as mezzanine equity and were recorded at cost, adjusted for the noncontrolling interests in the net loss of RVAEH. When the redemption or carrying value is less than the recorded redemption value, the Company adjusts the redeemable noncontrolling interests to equal the redemption value with changes recognized as an adjustment to retained earnings, or in the absence of retained earnings,

additional paid-in-capital. Any such adjustment, when necessary, will be performed as of the applicable balance sheet date. RVAEH’s redeemable noncontrolling interests on the Company’s consolidated balance sheet as of December 31, 2022 were $6.6 million.

On February 14, 2023, CDI purchased 25% of the Company’s investment in RVAEH for $6.6 million, bringing both the Company’s and CDI’s ownership interests to 50%. On this date, the Company’s share of voting power and its share of board rights was reduced, causing the Company to no longer be the primary beneficiary of RVAEH, and therefore no longer meeting the requirements for consolidation. The Company deconsolidated RVAEH’s assets, liabilities, and redeemable noncontrolling interest, and, using CDI’s cash payment for 25% of RVAEH to calculate the fair value of the joint venture, recognized a $0.2 million loss in other income, net on the consolidated statements of operations. At this point, the Company began accounting for its interest in the joint venture using the equity method. Under the equity method, the initial investment is recorded at cost and subsequently adjusted for the Company’s proportionate share of net income or losses, cash contributions made and distributions received, and other adjustments, as appropriate. During the year ended December 31, 2023, the Company received $13.0 million in cash, which was released from escrow. As of December 31, 2023, the carrying amount of the Company’s investment in unconsolidated joint ventures on the consolidated balance sheet was $0.0 million. Additionally, the Company is committed to fund $0.2 million related to losses that exceeded the carrying value of the investment and is included in other current liabilities on the consolidated balance sheet. The Company’s proportionate share of net loss is included in loss from unconsolidated joint venture on the consolidated statements of operations.

(r) Content Assets

The Company’s cable television segment has entered into contracts to license entertainment programming rights and programs from distributors and producers. The license periods granted in these contracts generally run from one year to five years. Contract payments are typically made in quarterly installments over the terms of the contract period. Each contract is recorded as an asset and a liability at an amount equal to its gross contractual commitment when the license period begins, and the program is available for its first airing. The Company also has programming for which the Company has engaged third parties to develop and produce, and it owns most or all rights (commissioned programming). For programming that is predominantly monetized as part of a content group, such as the Company’s commissioned programs, capitalized costs are amortized based on an estimate of the Company’s usage and benefit from such programming. The estimates require management’s judgment and include consideration of factors such as expected revenues to be derived from the programming, the expected number of future airings, among other factors. The Company’s acquired programs’ capitalized costs are amortized based on projected usage, generally resulting in an amortization pattern that is the greater of straight-line or projected usage.

The Company utilizes judgment and prepares analyses to determine the amortization patterns of the Company’s content assets. Key assumptions include the categorization of content based on shared characteristics and the use of a quantitative model to predict revenue. For each grouping of assets with similar characteristics, which the Company defines as genre, this model takes into account projected viewership which is based on (i) estimated household universe; (ii) ratings; and (iii) expected number of airings across different broadcast time slots.

As part of the Company's assessment of its amortization rates, the Company compares the estimated amortization rates to those that have been utilized during the year. Management regularly reviews, and revises, when necessary, its total revenue estimates, which may result in a change in the rate of amortization and/or a write down of the asset to fair value. Based on the expected pattern of benefit from the content, the Company applies either an accelerated method or a straight-line amortization method over the estimated useful lives of generally one to five years.

Content that is predominantly monetized within a film group is assessed for impairment at the film group level and is tested for impairment if circumstances indicate that the fair value of the content within the film group is less than its unamortized costs. The Company evaluates the fair value of content at the film group level by considering expected future revenue generation using a cash flow analysis when an event or change in circumstances indicates a change in the expected usefulness of the content or that the fair value may be less than unamortized costs. Estimates of future revenues consider historical airing patterns and future plans for airing content, including any changes in strategy. Given the significant estimates and judgments involved, actual demand or market conditions may be less favorable than those projected,

requiring a write-down to fair value. The Company determined there were no impairment indicators during the years ended December 31, 2023 and 2022. Impairment and amortization of content assets are recorded in the consolidated statements of operations as programming and technical expenses. All commissioned and licensed content is classified as a long-term asset, except for the portion of the unamortized content balance that is expected to be amortized within one year which is classified as a current asset.

Tax incentives offered by state governments are measured based on production activities and are recorded as a reduction to capitalized production costs.

(s) Impact of Recently Issued Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13. ASU 2016-13 is intended to provide financial statement users with more decision useful information about the expected credit losses on financial instruments and other commitments and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. In November 2019, the FASB issued ASU 2019-10, “Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842)”: Effective Dates which deferred the effective date of credit loss standard ASU 2016-13 by two years for smaller reporting companies and permits early adoption. ASU 2016-13 became effective for the Company beginning January 1, 2023.

The Company adopted ASU 2016-13 during the first quarter of 2023 using a modified retrospective transition method, which requires a cumulative-effect adjustment to the opening retained earnings in the consolidated balance sheet to be recognized on the date of adoption without restating prior years. The cumulative-effect adjustment on January 1, 2023 was $0.6 million.

In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting” to provide optional relief from applying GAAP to contract modifications, hedging relationships, and other transactions affected by the anticipated transition away from LIBOR. As a result of the reference rate reform initiative, certain widely used rates such as LIBOR are expected to be discontinued. The Company holds the ABL Facility, which now bears interest based on the SOFR rate, having formerly been subject to the LIBOR rate. In December 2022, the FASB issued ASU 2022-06, Reference Rate Reform Topic 848): Deferral of the Sunset Date of Topic 848, to defer the sunset date of the temporary relief in Topic 848 to December 31, 2024. The guidance became effective upon issuance. The adoption of ASU 2022-06 did not have an impact on the consolidated financial statements.

In October 2021, the FASB issued ASU 2021-08, “Business Combination (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers”, which requires an acquirer to recognize and measure contract assets and liabilities acquired in a business combination in accordance with Revenue from Contracts with Customers (Topic 606), rather than adjust them to fair value at the acquisition date. The guidance is effective for the Company beginning January 1, 2023 and applies to acquisitions occurring after the effective date. The new guidance had no impact to the consolidated financial statements during the year ended December 31, 2023.  

In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures”, which requires a public entity to disclose significant segment expenses and other segment items on an annual and interim basis and provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually. Additionally, it requires a public entity to disclose the title and position of the Chief Operating Decision Maker (CODM). The ASU does not change how a public entity identifies its operating segments, aggregates them, or applies the quantitative thresholds to determine its reportable segments. The new standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. A public entity should apply the amendments in this ASU retrospectively to all prior periods presented in the financial statements. The Company expects this ASU to only impact the disclosures with no impacts to the results of operations, cash flows and financial condition.

In December 2023, the FASB issued ASU No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures”, which focuses on the rate reconciliation and income taxes paid. ASU No. 2023-09 requires a public business

entity (PBE) to disclose, on an annual basis, a tabular rate reconciliation using both percentages and currency amounts, broken out into specified categories with certain reconciling items further broken out by nature and jurisdiction to the extent those items exceed a specified threshold. In addition, all entities are required to disclose income taxes paid, net of refunds received disaggregated by federal, state/local, and foreign and by jurisdiction if the amount is at least 5% of total income tax payments, net of refunds received. For PBEs, the new standard is effective for annual periods beginning after December 15, 2024, with early adoption permitted. An entity may apply the amendments in this ASU prospectively by providing the revised disclosures for the period ending December 31, 2025 and continuing to provide the pre-ASU disclosures for the prior periods, or may apply the amendments retrospectively by providing the revised disclosures for all period presented. The Company expects this ASU to only impact the disclosures with no impacts to the results of operations, cash flows and financial condition.

(t) Related Party Transactions

Reach Media operates the Tom Joyner Foundation’s Fantastic Voyage® (the “Fantastic Voyage®”), an annual fund-raising event, on behalf of the Tom Joyner Foundation, Inc. (the “Foundation”), a 501(c)(3) entity. The agreement under which the Fantastic Voyage® operates provides that Reach Media provide all necessary operations of the cruise, and that Reach Media will be reimbursed its expenditures and receive a fee plus a performance bonus. Reach Media bears the risk should the Fantastic Voyage® sustain a loss and bears all credit risk associated with the related passenger cruise package sales. The agreement between Reach Media and the Foundation automatically renews annually. The agreement may be terminated by: mutual agreement; by one of the parties should its financial requirements not be met; or if a party is in breach by the non-breaching party, which shall have the right, but not the obligation, to terminate unilaterally. The Foundation owed Reach Media approximately $1.0 million and $2.3 million as of December 31, 2023 and 2022, respectively.

Reach Media provides office facilities (including office space, telecommunications facilities, and office equipment) to the Foundation. Such services are provided to the Foundation on a pass-through basis at cost. Additionally, from time to time, the Foundation reimburses Reach Media for expenditures paid on its behalf at Reach Media-related events. Under these arrangements, the Foundation owed immaterial amounts to Reach Media as of December 31, 2023 and 2022.  

Fantastic Voyage 2023 took place during the second quarter of 2023. For the year ended December 31, 2023, Reach Media's revenues, expenses, and operating income for the Fantastic Voyage were approximately $9.7 million, $8.0 million, and $1.75 million, respectively. The Fantastic Voyage was not operated in 2022.

Alfred C. Liggins, President and Chief Executive Officer, (“CEO”) of Urban One, Inc., is a compensated member of the Board of Directors of Broadcast Music, Inc. (“BMI”), a performance rights organization to which the Company pays license fees in the ordinary course of business. The company incurred expenses of approximately $3.2 million and $3.8 million for the years ended December 31, 2023 and 2022, respectively. As of December 31, 2023 and 2022, the Company owed BMI approximately $0.3 million and $1.5 million, respectively. Please refer to Note 16 – Subsequent Events of the Company’s consolidated financial statements for more details.

As of December 31, 2023 and 2022, the Company had a receivable from its CEO in the amount of $0.2 million and $0.2 million, respectively, as reimbursement for payments made for various perquisites and other personal benefits, including payments for taxes for past financial services and administrative support.  The full amount of this receivable will be offset against the CEO’s bonus and/or directly reimbursed to the Company by the CEO.

(u) Leases

The Company determines whether a contract is, or contains, a lease at inception. In determining whether a contract is or contains a lease, the Company considers all relevant facts and circumstances, including whether the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The determination involves judgment with respect to whether the Company has the right to obtain substantially all of the economic benefits from the use of the identified asset and whether the Company has the right to direct the use of the identified asset.

Right of use (“ROU”) assets represent the Company’s right to use an underlying asset during the lease term, and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets are initially measured at cost, which comprises the initial amount of the lease liability adjusted for lease payments made at or before the lease commencement date, plus any initial direct costs incurred less any lease incentives received. Costs associated with operating lease assets are recognized on a straight-line basis within operating expenses over the term of the lease.

Lease liabilities are recognized at commencement date based on the present value of the lease payments over the lease term. Many of the Company’s leases provide options to extend the terms of the agreements. Generally, renewal periods are excluded when calculating the lease liabilities as the Company does not consider exercise of such options to be reasonably certain. When exercise of a renewal option is reasonably assured, the optional terms and related payments are included within lease liability calculation. The implicit rate within the Company’s lease agreements is generally not determinable and as such, the Company’s collateralized incremental borrowing rate is used.

Certain of the Company’s operating lease agreements include variable lease payments that are adjusted periodically based on an index and a rate, such as the Consumer Price Index or a market rental rate. The Company recognizes the effect of the payment changes as part of variable lease cost in the appropriate period which is accounted for separately from periodic straight-line lease expense.

For leases with an initial term of twelve months or less, the Company elected the exemption from recording ROU assets and lease liabilities and recognizes lease payments on a straight-line basis over the lease term. The Company has elected to combine lease and non-lease components for the purpose of calculating ROU assets and lease liabilities, to the extent that the non-lease components are fixed.

The Company’s operating leases are for office space, studio space, broadcast towers, and transmitter facilities that expire over the next forty-nine years.

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:

	Years Ended December 31,
	2023			2022
	(Dollars In thousands)
Operating lease cost (cost resulting from lease payments)	$	12,738		$	12,822
Variable lease cost (cost excluded from lease payments)		127			40
Total lease cost	$	12,865		$	12,862
Operating lease - operating cash flows (fixed payments)	$	13,761		$	13,978
Operating lease - operating cash flows (liability reduction)	$	10,362		$	9,935
Weighted average lease term - operating leases		5.94	years		4.85	years
Weighted average discount rate - operating leases		11.66	%		11.00	%

As of December 31, 2023, maturities of lease liabilities were as follows:

For the Year Ended December 31,	(In thousands)
2024	$	13,767
2025		7,658
2026		5,674
2027		4,148
2028		3,114
Thereafter		14,726
Total future lease payments		49,087
Less: imputed interest		(16,062)
Total future lease payments	$	33,025