CONTINGENCIES AND COMMITMENTS (Block)

9 Months Ended

Sep. 30, 2015

Commitments And Contingencies Disclosure Abstract

Commitments And Contingencies Disclosure Text Block

11. 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. There were no material changes from the contingencies listed in the Company’s Form 10-K, filed with the SEC on March 2, 2015.

Pending Exchange: Denver, Colorado, And Los Angeles, California

On July 10, 2015, the Company entered into an asset exchange agreement (“AEA”) with Bonneville to exchange their radio station in Los Angeles, California, together with additional consideration for the Company’s four radio stations in Denver, Colorado. On July 17, 2015the Company entered into two TBAs. Pursuant to these TBAs, on July 17, 2015, the Company commenced operation of the Los Angeles station and Bonneville commenced operation of the Denver stations. During the period of the TBAs, the Company: (i) includes net revenues and station operating expenses associated with the Company’s operation of the Los Angeles station in the Company’s consolidated financial statements; and (ii) excludes net revenues and station operating expenses associated with Bonneville’s operation of the Denver stations in the Company’s consolidated financial statements. The Company will incur no TBA expense to Bonneville for operation of the Los Angeles station and will receive $0.3million of monthly TBA income from Bonneville until the closing of the AEA. The Company does not consider the net revenues and station operating expenses to be material to the Company’s financial position, results of operations or cash flows.

The Company, which does not anticipate that cash will be required to complete this transaction, will: (1) own one station in Los Angeles, a new market for the Company; and (2) continue to own and operate five radio stations in the Denver market. The Company expectsto close on this transaction in the fourth quarter of 2015.

Certain of the Denver radio stations to be exchanged with Bonneville qualified as assets held for sale as of September 30, 2015.

For those assets to be acquired from Bonneville and operated by the Company during the period of theTBA, the Companydidnot recognize a variable interest entity (“VIE”). During this period, the Companywasnot the primary beneficiary as Bonneville was the entity absorbing the majority of the profits and losses from the operation of the entity holding the Los Angeles, California, radio station during the period of the TBA.

For the trust assets operated by Bonneville (KKFN FM) during the period of the TBA and to be acquired by Bonneville, the Company deconsolidated the trust’s assets to be exchanged with Bonneville since Bonneville is the primary beneficiary. As the primary beneficiary, Bonneville will absorb the majority of the profits and losses from the operation of the trust during the period of the TBA.

For those assets to be acquired by Bonneville and operated by Bonneville during the period of the TBA (KYGO FM, KEPN AM and KOSI FM), the Company was the primary beneficiary and absorbed the majority of the profits and losses from those stations.

Summary Of Lincoln Transaction And Bonneville Transaction By Radio Station

Markets	Radio Stations	Transactions
Los Angeles, CA	KSWD FM	Company acquires from Bonneville
Denver, CO	KOSI FM	Company disposes to Bonneville
Denver, CO	KYGO FM; KEPN AM	Company disposes to Bonneville
Denver, CO	KKFN FM	The trust disposes to Bonneville

The following preliminary purchase price allocations are based upon a preliminary valuation of assets and liabilities and the estimates and assumptions are subject to change as the Company obtains additional information during the measurement period, which may be up to one year from the acquisition date. The assets and liabilities pending finalization include the valuation of acquired intangible assets and liabilities. Differences between the preliminary and final valuation could be substantially different from the initial estimates.

			Useful Lives In Years
Description	Amount		From	To
	(in thousands)
Other receivables	$	4,175
Equipment		1,012	3	15
Furniture and fixtures		121	5	5
Total tangible property		1,133
Advertiser lists and customer relationships		1	3	3
Trademarks and trade names		2	5	5
Broadcasting licenses		53,371	non-amortizing
Goodwill		641	non-amortizing
Total intangible assets		54,015
Total assets		59,323
Unfavorable contract and lease liabilities		(323)	1	4
Net assets acquired	$	59,000
Fair value of net assets provided as consideration	$	59,000

The allocations presented in the table are based upon management’s estimate of the fair values using valuation techniques including income, cost and market approaches. In estimating the fair value of the acquired assets and assumed liabilities, the fair value estimates are based on, but not limited to, expected future revenue and cash flows that assumes the expected future growth rate of 1.0% and an estimated discount rate of 9.2%. The gross profit margin range was similar to the ranges used in the Company’s second quarter 2015 annual impairment testing for broadcasting licenses. The Company determines the fair value of the broadcasting licenses in each of these markets by relying on a discounted cash flow approach assuming a start-up scenario in which the only assets held by an investor are broadcasting licenses. The Company’s fair value analysis contains assumptions based upon past experience, reflects expectations of industry observers and includes judgments about future performance using industry normalized information for an average station within a certain market. Any excess of the purchase price over the net assets acquired was reported as goodwill.

In valuing the non-monetary assets that were part of the consideration transferred, the Company utilized the fair value as of the acquisition date, with any excess of the purchase price over the net assets acquired reported as goodwill. The fair value was measured from the perspective of a market participant, applying the same methodology and types of assumptions as described above in estimating the fair value of the acquired assets and liabilities. Applying these methodologies requires significant judgment. The Company anticipates that upon closing on the Bonneville AEA, the Company will report a gain of $1.5million on the Denver assets provided as consideration.

Variable Interest Entity And Assets Held For Sale

As of September 30, 2015, the carrying amount and classification of the assets and liabilities of the variable interest entity, KKFN FM that is held in a trust and as described above, is included in our consolidating balance sheet as follows:

	KKFN FM
	Held In Trust
Description	September 30, 2015
	(amount in
	in thousands)
Accounts receivable	$	176
Total current assets		176
Net fixed assets		272
Radio broadcasting licenses		9,601
Goodwill		758
Deferred charges and other assets		148
Total tangible and intangible assets		10,779
Total assets	$	10,955

Other Matters

During the third quarter of 2014, the Company settled a legal claim for $1.0million. This amount was included in corporate general and administrative expenses for the nine and three months ended September 30, 2014.