CONTINGENCIES AND COMMITMENTS (Block)

12 Months Ended

Dec. 31, 2014

Commitments And Contingencies Disclosure Abstract

Commitments And Contingencies Disclosure Text Block

20. CONTINGENCIES AND COMMITMENTS

Contingencies

The Company is subject to various outstanding claims which arise in the ordinary course of business and to other legal proceedings. Management anticipates that any potential liability of the Company, which may arise out of or with respect to these matters, will not materially affect the Company’s financial position, results of operations or cash flows.

Insurance

The Company uses a combination of insurance and self-insurance mechanisms to mitigate the potential liabilities for workers’ compensation, general liability, property, directors’ and officers’ liability, vehicle liability and employee health care benefits. Liabilities associated with the risks that are retained by the Company are estimated, in part, by considering claims experience, demographic factors, severity factors, outside expertise and other actuarial assumptions. Under these policies, the Company is required to maintain letters of credit in the amount of $0.6 million.

Broadcast Licenses

The Company could face increased costs in the form of fines and a greater risk that the Company could lose any one or more of its broadcasting licenses if the Federal Communications Commission (the “FCC”) concludes that programming broadcast by a Company station was obscene, indecent or profane and such conduct warrants license revocation.  The FCC's authority to impose a fine for the broadcast of such material is $325,000for a single incident, with a maximum fine of up to $3,000,000for a continuing violation. In the past, the FCC has issued Notices of Apparent Liability and a Forfeiture Order with respect to several of the Company’s stations proposing fines for certain programming which the FCC deemed to have been indecent. These cases are the subject of pending administrative appeals. The FCC has also investigated other complaints from the public that some of the Company’s stations broadcast indecent programming. These investigations remain pending.  The FCC initiated an investigation into an incident where a person died in January 2007 after participating in a contest at one of the Company’s stations and this investigation remains pending. The Company has determined that, at this time, the amount of potential fines and penalties, if any, is not fixed or determinable.

The Company has filed, on a timely basis, renewal applications for those radio stations with radio broadcasting licenses that are subject to renewal with the FCC. The Company’s costs to renew its licenses with the FCC are nominal and are expensed as incurred rather than capitalized. Twelve of our FCC radio station license renewal applications made in the most recent 2011-2014 renewal period remain pending.  Of these, eight have been pending since the prior 2003-2006 renewal period. The Company continues to operate these radio stations under their existing licenses until the licenses are renewed. The FCC may delay the renewal pending the resolution of open inquiries. The affected stations are, however, authorized to continue operations until the FCC acts upon the renewal applications.

Commitments

Pending Acquisition

On December 7, 2014, the Company entered into a Stock Purchase Agreement (“SPA”) agreement with The Lincoln National Life Insurance Company to acquire the stock of one of its subsidiaries that holds the assets and liabilities of 15 radio stations serving the Atlanta, Denver, Miami and San Diego radio markets. The purchase price is $105.0 million of which $77.5 million will be paid in cash and $27.5 million will be paid with the Company’s perpetual convertible preferred stock. Other than in Denver, the Company does not currently operate any stations in these markets. The SPA provides for a step-up in basis for tax purposes. Merger and acquisition related costs of $1.0million were expensed as a separate line item in the statement of operations for 2014. Subject to regulatory approval, the Company expects to complete this transaction during the second half of 2015.

Concurrently with entering into the SPA, the Company also entered into a TBA. During the period of the TBA, which terminates upon the closing of this transaction, the Company will include the net revenues, station operating expenses and TBA fees associated with operating these stations in the Company’s consolidated financial statements. Depending on the timing of closing, the Company could incur in 2015 up to $7.0million annually in TBA fees, which increases by $1.5million each year over the following three years. The payment of the TBA fees is in exchange for the Company’s retention of the operating profits or losses from the operation of these stations during the TBA period.

Upon commencement of the TBA, the Company believes that Lincoln is a VIE and that the Company is the primary beneficiary as the Company may absorb the profits and losses from the operation of the VIE during the period of the TBA. Effective upon the commencement of the TBA, the Company expects to consolidate the assets and liabilities of the VIE within its consolidated financial statements, using fair values for the assets and liabilities as if the Company had closed on this transaction. The equity investment by Lincoln in the VIE would be reflected as a non-controlling interest. The assets of the Company’s consolidated VIE can only be used to settle the obligations of the VIE, and may not be sold, or otherwise disposed of, except for assets sold or replaced with others of like kind or value. There is a lack of recourse by the beneficial interest holders of the VIE against the Company’s general creditors.

Other Matters

During the third quarter of 2014, the Company settled a legal claim of $1.0million. This amount was included in corporate general and administrative expenses for 2014.

Leases And Other Contracts

Rental expense is incurred principally for office and broadcasting facilities. Certain of the leases contain clauses that provide for contingent rental expense based upon defined events such as cost of living adjustments and/or maintenance costs in excess of pre-defined amounts. For the period prior to July 1, 2013, rental expense does not include any payments made in connection with financing method lease obligations as described under Note 9, Tower Sale And Leaseback.

The following table provides the Company’s rent expense for the periods indicated:

	Years Ended December 31,
	2014		2013		2012
	(amounts in thousands)
Rent Expense	$	14,556	$	13,226	$	12,748

The Company also has various commitments under the following types of contracts: (1) rent under operating leases; (2) rent under a sale and leaseback agreement; (3) sports programming; (4) on-air talent; and (5) other contracts with aggregate minimum annual commitments as of December 31, 2014 as follows:

		Future Minimum Annual Commitments
			Sale
		Rent Under	Leaseback		Programming
	Operating		Operating		And Related
	Leases		Leases		Contracts		Total
	(amounts in thousands)
Years ending December 31,
2015	$	13,398	$	817	$	73,466	$	87,681
2016		13,195		840		61,684		75,719
2017		12,282		865		20,882		34,029
2018		10,222		891		4,238		15,351
2019		8,892		918		915		10,725
Thereafter		25,019		10,637		516		36,172
	$	83,008	$	14,968	$	161,701	$	259,677