Revenues

Adoption of ASC Topic 606 - Revenue from Contracts with Customers

On January 1, 2018, the Company adopted ASC 606 using the modified retrospective method. Results for reporting periods beginning after January 1, 2018 are presented in accordance with ASC 606, while prior period amounts have not been adjusted and continue to be reported in accordance with the Company's historic accounting under ASC 605 - Revenue Recognition ("ASC 605").

Revenue Recognition

Under current and prior revenue guidance, revenues are recognized when control of the promised goods or services are transferred to the customer, in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.

The following table presents revenues disaggregated by revenue source (dollars in thousands):



	Three Months Ended March 31,
	2018		2017
Radio Station Group
Advertising revenues (broadcast, digital, non-traditional revenue ("NTR") and trade)	$	165,552	$	172,724
Non-advertising revenues (tower rental and other)	2,673		879
Total Radio Station Group revenue	$	168,225	$	173,603

Westwood One
Advertising revenues (broadcast, digital and trade)	$	90,530	$	85,643
Non-advertising revenues (license fees and other)	4,260		4,212
Total Westwood One revenue	$	94,790	$	89,855

Other (1)	$	664	$	572
Total Revenue	$	263,679	$	264,030


(1)	Other is comprised of revenue from certain digital commerce and broadcast software sales and services.

Advertising Revenues

Substantially all of the Company's revenues are from advertising. The Company’s advertising revenue is primarily generated through the sale of broadcast radio advertising time, sale of advertising and promotional opportunities across digital audio networks to local, regional, and national advertisers and the hosting of promotional events. The Company considers each advertising element a separate obligation as a result of both the customer's and the Radio Station Group or Westwood One's respective ability to stop transferring promised goods or services during the contract term without notice or penalty. Thus, revenue associated with these contracts is recognized at the time advertising or other services, for example hosting an event, is delivered.

In assessing performance obligations at the Radio Station Group, each advertisement, banner, etc. is considered to be a separate contract and thus a separate performance obligation. In assessing performance obligations at Westwood One, each element of a campaign is considered to be a separate contract and thus a separate performance obligation.

The Company's payment terms vary by the type and location of customer and the products or services offered. The term between invoicing and when payment is due is not significant. There are no further obligations for returns, refunds or similar obligations related to the contracts. The Company records deferred revenues when cash payments are received or due in advance of performance, including amounts which are refundable.

Non-Advertising Revenues

Non-Advertising revenue does not constitute a material portion of the Company's revenue and primarily consists of tower rental agreements, and to a lesser degree, sublease income, remote event revenue and satellite rental income. Rental agreements typically range from one to five years with renewal clauses and often contain inflationary annual payment increases. For other revenue streams, a formal executed contract is generally obtained. Associated agreements typically contain a stated recurring monthly amount due, which is recognized upon delivery of services or passage of time (e.g. tower rental income) and contain a single performance obligation.

Nonmonetary Transactions

In the broadcasting industry, companies sometimes utilize trade or barter agreements that exchange advertising time for goods or services such as travel or lodging, instead of for cash. Trade revenue totaled $11.3 million for each of the three months ended March 31, 2018, and March 31, 2017.

Programming barter revenue is derived from an exchange of programming content, to be broadcast on the Company's airwaves, for commercial inventory, usually in the form of commercial placements inside of the show exchanged. Instead of paying cash for the right to broadcast the programming, the Company provides commercial slots in the show to a syndicator, who in turn sells the time to national advertisers for the syndicator’s benefit. The revenue is recognized as the commercial spots are aired, in the same pattern as the Company's normal cash spot revenue is recognized.

Prior to the adoption of ASC 606, the applicable revenue recognition standard required radio broadcasters to use the fair value of the product or service surrendered in reporting certain exchanges (bartering) of advertisement for products or services. ASC 606 does not contain specific guidance on the accounting for barter transactions involving advertising services; therefore, the general principles for measuring consideration apply. Upon adoption of ASC 606, the Company began to assess whether the arrangement meets the criteria of a contract with the customer. ASC 606 also specifies the fair value measurement date for noncash consideration is contract inception.

Under current GAAP, broadcasters are generally required to record revenue and corresponding programming assets/expenses for programing obtained in exchange for barter advertising spots. Upon the adoption of ASC 606, the Company accounts for advertising spots provided in exchange for other goods or services pursuant to the noncash consideration guidance in ASC 606. Under ASC 606, noncash consideration is measured at fair value, unless fair value is not determinable, in which case the standalone selling price of the goods or services sold is to be used.

The Company continues to value barter transactions at the standalone selling price of the consideration sold as the fair value of consideration received is not determinable. As such, the Company determined the implementation of ASC 606 did not have an impact on its accounting for barter agreements.

Variable Consideration

Certain customers may receive cash-based incentives or credits, which are accounted for as variable consideration. The Company estimates these amounts based on the expected amount to be provided to customers and reduces revenue recognized accordingly. The Company has not had, nor does it believe that there will be, significant changes to its estimates of variable consideration. In addition, variable consideration has not historically been material to the Company's financial statements.

Customer Options that Provide a Material Right

ASC 606 requires the allocation of a portion of a transaction price of a contract to additional goods or services transferred to a customer that are considered to be a separate performance obligation and provide a material right to the customer.

To satisfy the requirement of accounting for the material right, the Company considers both the transaction price associated with each spot as well as the timing of revenue recognition for the spots. Campaigns often include bonus spots, radio advertising spots, free of charge, explicitly within the contract terms or implicitly agreed upon with the customer consistent with industry standard practices. The Company typically runs these bonus spots related to a particular campaign concurrently with the paid spots from the same campaign. As the delivery and revenue recognition for both paid and bonus spots generally occur within the same period, the time of delivery and recognition of revenue is insignificant.

Principal versus Agent Considerations

In those instances in which the Company functions as the principal in the transaction, the revenue and associated operating costs are presented on a gross basis. In those instances where the Company functions solely as an agent or sales representative, the Company's effective commission is presented as revenue on a net basis with no corresponding operating expenses.

The Company evaluated all revenue streams and contracts to which principal versus agent considerations applied. Using guidance from ASC 606, the Company determined that broadcast advertising revenue at both the Radio Station Group and Westwood One should be recorded net of agency commissions and should be recognized when the programs and commercial announcements are broadcast.

Additionally, Westwood One maintains revenue sharing agreements and inventory representation agreements with various radio companies and syndication talent in order to acquire inventory as compensation for the syndication of radio programming. For all revenue sharing agreements, the Company performs an analysis in accordance with ASC 606 to determine if the amounts should be recorded on a gross or net basis. Consistent with the prior revenue recognition guidance, Westwood One continues to record all revenue sharing agreements on a gross basis with the shared revenue amount recorded within Content Costs.

Practical Expedients

The Company applied the completed contract practical expedient guidance under ASC 606 to contracts that were not considered completed as of January 1, 2018.

The Company capitalizes certain incremental costs of obtaining contracts with customers which it expects to recover.

For contracts with a client whose customer life covers a year or less, companies may use a practical expedient that allows the option to expense commissions as they are incurred. For contracts where the new and renewal commission rates are commensurate, the amortization period assessed by management was the contract life. As such, the Company will continue to expense commissions as incurred for the revenue streams where the new and renewal commission rates are commensurate and the contract life is less than one year. These costs are recorded within Sales, General and Administrative expense. The Company does not apply the practical expedient option to new local direct contracts, as the commission rates for new and renewal contracts is not commensurate and the customer life is typically in excess of one year. As of March 31, 2018, the Company recorded an asset of approximately $1.6 million related to the unamortized portion of commission expense on new local direct revenue. Under ASC 605, commission expense on new local direct revenue would have been expensed as incurred.

Under certain practical expedients elected, the Company did not disclose the amount of consideration allocated to the remaining performance obligations or an explanation of when the Company expects to recognize that amount as revenue for all reporting periods presented before January 1, 2018.

Results for reporting periods beginning after January 1, 2018 are presented under the amended accounting guidance, while prior period amounts are not adjusted and continue to be reported in accordance with the Company’s historic accounting guidance.

The Company elected to apply the practical expedient which allows it to not disclose information about remaining performance obligations that have original expected durations of one year or less. The Company has contracts with customers which the Company believes will produce revenue beyond one year. From these contracts, the Company estimates it will recognize approximately $6.2 million of revenue in 2019.