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CONTINGENCIES AND COMMITMENTS
 12 Months Ended
Dec. 31, 2019
Commitments and Contingencies Disclosure [Abstract]  
CONTINGENCIES AND COMMITMENTS 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.
FCC Matter
In January 2019, the Company received the first of three letters of inquiry from the FCC staff in response to a complaint from an individual who claimed to have purchased time on three Company stations in Buffalo, but was not charged the lowest unit rate. The Company cooperated with the FCC in this matter and timely responded to these letters of inquiry, which also addressed the timeliness of the Company's compliance with respect to the political file record keeping obligations for its Buffalo stations. On October 10, 2019, the Company met with the FCC staff and was advised that the lowest unit rate inquiry was concluded. At the same meeting, however, the FCC staff advised the Company that it had separately conducted a more extensive investigation into the timeliness of the Company's compliance with respect to the political file record keeping obligations for all of the Company's stations. The Company is in discussions with the FCC staff with respect to this investigation. The Company has assessed the FCC staff's allegations with respect to the Company's compliance with these filing obligations and the underlying facts and will continue to cooperate with the FCC and engage in discussions as to a potential conclusion or settlement of the matter. The Company is unable to reasonably estimate the ultimate outcome that will result from this matter at this time. The Company determined that this matter had an immaterial impact on the current period. The Company does not currently expect that the final resolution of this matter in future periods will have a material effect on the financial position of the Company. However, it is reasonably possible that such a resolution could have a material effect on the Company's results of operations for a given reporting period.
Like-Kind Exchange Proceeds
During the third quarter of 2018, the Company disposed of certain property that the Company considered as surplus to its operations and that resulted in significant gains reportable for tax purposes. In order to minimize the tax impact on a certain portion of these taxable gains, the Company created an entity that serves as a QI for tax purposes and that holds the net sales proceeds of $70.2 million from these transactions. The Company used a portion of these funds in a tax-free exchange by using
the net sales proceeds from relinquished property for the purchase of replacement property. This entity was treated as a VIE and is included in the Company’s 2018 consolidated financial statements as the Company was considered the primary beneficiary.
The use of a QI in a like-kind exchange enables the Company to effectively minimize its current tax liability in connection with certain asset dispositions. In connection with these transactions, the Company sold: (i) a parcel of land in Chicago, Illinois in 2018 for net proceeds of $45.5 million; and (ii) a former studio building in Los Angeles, California in 2018 for net proceeds of $24.7 million. These net sales proceeds were deposited into the account of the QI to comply with requirements under Section 1031 of the Code to execute a like-kind exchange and are reflected as restricted cash on the Company’s consolidated balance sheet as of December 31, 2018. Restrictions on these deposits lapsed during the first quarter of 2019.
The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the consolidated balance sheet that aggregate to the total of the same such amounts shown in the consolidated statement of cash flows:
Cash, Cash Equivalents and
Restricted Cash
December 31,
20192018
(amounts in thousands)
Cash and cash equivalents$20,393  $122,893  
Restricted cash—  69,365  
Total cash, cash equivalents and restricted cash shown in the statement of cash flows$20,393  $192,258  
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.
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 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 $414,454 for a single incident, with a maximum fine of up to $3,825,726 for a continuing violation. 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. 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 or we have timely filed license renewal applications.
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, the Company permanently discontinued operation of the station and returned the station’s broadcasting license to the FCC for cancellation, in order to facilitate the Merger. As a result, the Company recorded a $13.5 million loss in the statement of operations in net gain/loss on sale or disposal of assets in 2017.
Licenses
The Radio Music Licensing Committee (the “RMLC”), of which the Company is a represented participant: (i) entered into an industry-wide settlement with American Society of Composers, Authors and Publishers ("ASCAP"), resulting in a new
license made available to RMLC members, that became effective January 1, 2017, for a five-year term; (ii) is currently seeking reasonable terms and fees for a new license that would be retroactively effective to January 1, 2017, from Broadcast Music, Inc. ("BMI") through settlement negotiations and potential rate court proceedings; (iii) is currently subject to arbitration proceedings with SESAC, Inc. ("SESAC") to determine fair and reasonable fees that would be effective January 1, 2019; and (iv) commencing on January 1, 2017, entered into a series of interim licenses with Global Music Rights ("GMR"), the most current of which expires March 31, 2020. The RMLC filed a motion in the U.S. District Court for the Eastern District of Pennsylvania against GMR in November 2016 arguing that GMR is a monopoly demanding monopoly prices and asking the Court to subject GMR to an antitrust consent decree. GMR filed a counterclaim in the U.S. District Court for the Central District of California and a motion to dismiss the RMLC’s claim in the U.S. District Court for the Eastern District of Pennsylvania. There have been subsequent claims and counterclaims to establish jurisdiction. In 2019, all claims between the RMLC and GMR were transferred to the U.S. District Court of California.
The United States Copyright Royalty Board will be initiating a proceeding in March 2020 that will establish the royalty rates the Company pays under federal statutory license for the public performance of sound recordings on the Internet for 2021-2026.
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 sale and leaseback transactions whereby the Company sold certain of its radio broadcasting towers to third parties 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,
201920182017
(amounts in thousands)
Rent expense$58,947  $53,948  $23,742  
The Company also has various commitments under the following types of contracts:
Future Minimum Annual Commitments
Rent Under
Operating
Leases		Sale
Leaseback
Operating
Leases		Programming
and Related
Contracts		Total
(amounts in thousands)
Years ending December 31,
2020$47,024  $2,274  $163,392  $212,690  
202147,208  2,342  108,286  157,836  
202241,838  2,412  70,752  115,002  
202338,064  2,485  48,775  89,324  
202435,088  2,196  7,304  44,588  
Thereafter123,612  10,459  6,158  140,229  
$332,834  $22,168  $404,667  $759,669