ACQUISITIONS AND OTHER (Block)

3 Months Ended

Mar. 31, 2017

Mergers Acquisitions And Dispositions Disclosures Text Block

9. BUSINESS COMBINATIONS

The Company consummated acquisitions under the purchase method of accounting, and the purchase price was allocated to the assets and liabilities based upon their respective fair values as determined as of the acquisition date. Merger and acquisition costs are excluded from the purchase price as these costs are expensed for book purposes and amortized for tax purposes.

2017 Charlotte Acquisition

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 entered into an asset purchase agreement and a TBA with Beasley to operate three of the four radio stations that were held in the Charlotte Trust. On November 1, 2016, the Company commenced operations of the radio stations held in the Charlotte Trust and began 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 stations in 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 FCC broadcasting licenses, the fair value estimates are based on, but not limited to, expected future revenue and cash flows that assume an expected future growth rate of 1.0%; and an estimated discount rate of 9.0%. 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 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

2016 Disposition

In March 2016, the Company sold certain assets of KRWZ AM in Denver, Colorado, for $3.8 million in cash. The Company believes that the sale of this station, with a marginal market share, did not alter the Company’s competitive position in the market. The Company reported a gain, net of expenses, of $0.3 million on the disposition of these assets.

Merger And Acquisition Costs

The Company records merger and acquisition costs whether or not an acquisition occurs. These costs consist primarily of legal, professional and advisory services as well as restructuring costs (as identified below) related to the Company’s acquisitions in 2015.

There were merger and acquisition costs incurred during the first quarter of 2017 primarily in connection with the announced CBS Merger.

	Three Months Ended
	March 31,
	2017		2016
	(amounts in thousands)

Merger and acquisition costs	$	10,271	$	-

The restructuring plan related to the Company’s acquisitions in 2015 included: (1) costs associated with exiting contractual vendor obligations as these obligations were duplicative; (2) a workforce reduction and realignment charges that included one-time termination benefits and related costs; and (3) lease abandonment costs. The lease abandonment costs are longer-term as the lease expires in June 2026. The estimated amount of unpaid restructuring charges as of March 31, 2017, after excluding the lease abandonment liability as of March 31, 2017, was included in accrued expenses as most expenses are expected to be paid within one year.

	Three Months		Year
	Ended		Ended
	March 31,		December 31,
	2017		2016
	(amounts in thousands)

Restructuring charges, beginning balance	$	650	$	1,686
Additions through accruals		-		-
Deductions through payments		(19)		(1,036)
Restructuring charges unpaid and outstanding		631		650
Less lease abandonment costs over a long-term period		(557)		(576)
Short-term restructuring charges unpaid and outstanding	$	74	$	74

Unaudited Pro Forma Summary Of Financial Information

The following pro forma information presents the consolidated results of operations as if the 2017 acquisition in Charlotte, North Carolina, had occurred as of January 1, 2016, after giving effect to certain adjustments, including: (1) depreciation and amortization of assets; (2) change in the effective tax rate; (3) interest expense on any debt incurred; and (4) merger and acquisition costs and restructuring charges. The pro forma information does not exclude the pro forma impact of any dispositions. These unaudited pro forma results have been prepared for comparative purposes only and do not purport to be indicative of what would have occurred had the acquisitions been made as of that date or results which may occur in the future.

	Three Months Ended
	March 31,
	2017		2016
	(amounts in thousands, except per share data)
	(amounts in thousands, except per share data)
	Actual		Pro Forma

Net revenues	$	97,452	$	100,007
Net income (loss) available to the Company	$	(9,742)	$	3,033
Net income (loss) available to common shareholders	$	(10,292)	$	2,620
Net income (loss) available to common shareholders
per common share - basic	$	(0.26)	$	0.07
Net income (loss) available to common shareholders
per common share - diluted	$	(0.26)	$	0.07

Weighted shares outstanding basic		38,910,322		38,477,724
Weighted shares outstanding diluted		38,910,322		39,259,540
Conversion of preferred stock for dilutive purposes