CONTINGENCIES AND COMMITMENTS (Block)

12 Months Ended

Dec. 31, 2016

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.

Pending Acquisitions

On February 2, 2017, the Company and Merger Sub entered into the CBS Radio Merger Agreement with CBS and CBS Radio. This transaction is subject to approval by the Company’s stakeholders and customary regulatory approvals. This transaction is expected to close during the second half of 2017. If the CBS Radio Merger Agreement is terminated in certain circumstances prior to the consummation of the transactions contemplated thereby, the Company will be required to pay CBS a termination fee of $30 million. Refer to Note 1 for further discussion.

On January 6, 2017, the Company completed a transaction to acquire four radio stations in Charlotte, North Carolina, from Beasley Broadcast Group, Inc. (“Beasley”) for a purchase price of $24 million in cash. The Company used cash on hand to fund the acquisition. On October 17, 2016, the Company simultaneously entered into an asset purchase agreement and a TBA to operate three of the four radio stations that were held in a trust (“Charlotte Trust”). On November 1, 2016, the Company commenced operations of the radio stations held in the Charlotte Trust andbegan operating the fourth station upon closing on the acquisition with Beasley in January 2017.

During the period of the TBA, the Company included net revenues, station operating expenses and monthly TBA fees associated with operating these stationsin the Company’s consolidated financial statements.

The allocations presented in the table below 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 assume expected future growth rates of 1.0% to 1.5%; and an estimated discount rate of 9.6%. The gross profit margins are similar to the ranges used in the Company’s second quarter 2016 annual license impairment testing. The Company determines the fair value of the broadcasting licenses 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.

The following preliminary purchase price allocations are based upon the valuation of assets and liabilities and these 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. These 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.

	January 6,		Useful Lives In Years
Description	2017		From	To
	(amounts in
	thousands)
Assets
Land	$	2,539	non-depreciating
Buildings		217	15	25
Equipment		4,569	3	40
Total property plant and equipment		7,325
Deferred tax asset		287	life of underlying asset
Radio broadcasting licenses and goodwill		17,384	non-amortizing
Total assets		24,996
Liabilities
Unfavorable lease liabilities		735	over remaining lease life
Deferred tax liability		261	life of underlying liability
Total liabilities		996
Net assets	$	24,000

Variable Interest Entity And Assets Held For Sale

The Company believes that the Charlotte Trust is a VIE as the Company has the power to direct the activities which significantly impact the economic performance of the Charlotte Trust. Under the terms of the APA, the FCC licenses and related assets of the stations were assigned from Beasley to the Charlotte Trust. The Company also believes it is the primary beneficiary of the VIE as the Company may absorb the profits and losses from the operation of the VIE during the period of the TBA. As of December 31, 2016, the Company consolidated 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 as of December 31, 2016. The equity investment by Beasley in the Charlotte Trust is 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.

The following table reflects that assets and liabilities of the Charlotte Trust VIE at fair value at the effective date of the TBA, which were included in our consolidating balance sheets:

	Charlotte Trust
Description	December 31, 2016
	(amounts in
	in thousands)
Cash	$	302
Accounts receivable, net of allowance for doubtful accounts		2,143
Prepaid expenses, deposits and other		244
Total current assets		2,689
Net property and equipment		6,346
Radio broadcasting licenses		15,738
Deferred charges and other assets, net of accumulated amortization		366
Total assets	$	25,139
Accrued expenses	$	(1,180)
Non-controlling interest - variable interest entity		(23,959)
	$	(25,139)

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 $0.7 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 FCCconcludes 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 $350,000for a single incident, with a maximum fine of up to $3,300,000for 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 Company has determined that, at this time, the amount of potential fines and penalties, if any, cannot be estimated.

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. From time to time, the renewal of certain licenses may be delayed in their renewal. 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. Currently, all of the Company’s licenses have been renewed.

The FCC initiated an investigation in January 2007, related to a contest at one of the Company’s stations. In October 2016, the FCC designated for a hearing whether the Company operated this station in the public interest and whether such station’s license should be renewed. In February 2017, in order to facilitate the Merger, the Company permanently discontinued operation of this station in order to cancel the license, dismiss its renewal application and terminate the renewal hearing. As a result, the Company expects to record in the first quarter of 2017 a $13.5 million loss in the statement of operations in net gain/loss on sale or disposal of assets.

Performance Fees

The Company incurs fees from performing rights organizations (“PRO”) to license the Company’s public performance of the musical works contained in each PRO’s repertory. The Radio Music Licensing Committee, of which the Company is a represented participant, (1) entered into an industry-wide settlement with American Society of Composers, Authors and Publishers that was effective January 1, 2017 for a five-year term; (2) is currently seeking reasonable industry-wide fees from Broadcast Music, Inc. effective January 1, 2017; (3) is currently subject to arbitration proceedings with the Society of European Stage Authors and Composers to determine fair and reasonable fees that would be retroactive to January 1, 2016; and (4) filed in November 2016 a motion in the U.S. District Court in Pennsylvania against Global Music Rights (“GMR”) arguing that GMR is a monopoly demanding monopoly prices and asking the Court to subject GMR to an antitrust consent decree. In January 2017, the Companyobtained an interim license from GMR for fees effective January 1, 2017 to avoid any infringement claims by GMR for using GMR’s repertory without a license.

Other Matters

During the third quarter of 2016, the Company settled a legal claim with British Petroleum as a result of their Deepwater Horizon Oil Spill in the Gulf of Mexico and recovered $2.3 million on a net basis after deducting certain related expenses. The claim was a result of lost business due to the oil spill.

During the third quarter of 2014, the Company settled a legal claim for $1.0million. The amount was included in corporate general and administrative expenses for the year ended December 31, 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.

The Company also has rent obligations under a sale and leaseback transaction whereby the Company sold certain of its radio broadcasting towers to a third party for cash in return for long-term leases on these towers. These sale and leaseback obligations are listed in the future minimum annual commitments table. The Company sold these towers as operating these towers to maximize tower rental income was not part of the Company’s core strategy.

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

	Years Ended December 31,
	2016		2015		2014
	(amounts in thousands)
Rent Expense	$	17,892	$	16,116	$	14,556

The Company also has various commitments under the following types of contracts:

		Future Minimum Annual Commitments
			Sale
		Rent Under	Leaseback		Programming
	Operating		Operating		And Related
	Leases		Leases		Contracts		Total
	(amounts in thousands)
Years ending December 31,
2017	$	17,594	$	868	$	70,119	$	88,581
2018		14,767		894		40,718		56,379
2019		13,024		920		22,622		36,566
2020		10,095		948		17,339		28,382
2021		7,169		976		12,688		20,833
Thereafter		23,185		8,739		23,000		54,924
	$	85,834	$	13,345	$	186,486	$	285,665