BUSINESS COMBINATIONS AND EXCHANGES

9 Months Ended

Sep. 30, 2022

Business Combination and Asset Acquisition [Abstract]

The Company records acquisitions under the acquisition method of accounting, and allocates the purchase price 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 as incurred for book purposes and amortized for tax purposes.

2021 WideOrbit Streaming Acquisition

On October 20, 2021, the Company completed an acquisition of WideOrbit's digital audio streaming technology and the related assets and operations of WideOrbit Streaming for approximately $40.0 million (the "WideOrbit Streaming Acquisition"), which included certain employees. The assets acquired included $31.5 million of developed technology and $8.0 million of intangible licenses. The Company determined this acquisition was a business combination. The Company operates WideOrbit Streaming under the name AmperWave ® ("AmperWave"). The Company funded this acquisition through a draw on its revolving credit facility (the "Revolver"). Based upon the timing of the WideOrbit Streaming Acquisition, the Company's condensed consolidated financial statements for the period ended September 30, 2022, reflect the results of AmperWave. The Company's condensed consolidated financial statements for the period ended September 30, 2021 do not reflect the results of AmperWave.

The Company's fair value analysis contains assumptions based on past experience, reflects expectations of industry observers and includes judgments about future performance using industry normalized information. Using a residual method, any excess between the consideration paid and the fair value of net assets acquired was recorded as goodwill. The Company recorded goodwill on its books. Management believes that this acquisition provides the Company with an opportunity to benefit from acquired technology, technical knowledge and trade secrets.

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. The following table reflects the final allocation of the purchase price to the assets acquired.


	Final Value
	(amounts in thousands)
Assets
Operating lease right-of-use assets	$	142
Net property and equipment	38

Other assets, net of accumulated amortization	39,532
Goodwill	386
Total intangible and other assets	39,918

Operating lease liabilities	(142)

Deferred tax asset	134
Preliminary fair value of net assets acquired	$	40,090

2021 Urban One Exchange

On April 20, 2021, the Company completed a transaction with Urban One, Inc. ("Urban One") under which the Company exchanged its four station cluster in Charlotte, North Carolina for one station in St. Louis, Missouri, one station in Washington, D.C., and one station in Philadelphia, Pennsylvania (the "Urban One Exchange"). The Company and Urban One began programming the respective stations under local marketing agreements ("LMAs") on November 23, 2020. During the period of the LMAs, the Company's consolidated financial statements excluded net revenues and station operating expenses associated with the four station cluster in Charlotte, North Carolina (the "Divested Stations") and included net revenues and station operating expenses associated with the stations in St. Louis, Missouri, Washington, D.C., and Philadelphia, Pennsylvania (the "Acquired Stations").

Upon completion of the Urban One Exchange, the Company: (i) removed from its condensed consolidated balance sheet the assets of the Divested Stations, which were previously classified as assets held for sale; (ii) recorded the assets of the Acquired Stations at fair value; and (iii) recognized a gain on the exchange of approximately $4.0 million. Based upon the timing of the Urban One Exchange, the Company's condensed consolidated financial statements for the nine months ended

September 30, 2022: (a) reflect the results of the Acquired Stations; and (b) do not reflect the results of the Divested Stations. The Company's condensed consolidated financial statements for the nine months ended September 30, 2021: (i) reflect the results of the Acquired Stations for the entire period in which the LMAs were in effect and after the completion of the Urban One Exchange; and (ii) do not reflect the results of the Divested Stations.



	Final Value
	(amounts in thousands)
Assets
Net property and equipment	$	2,254
Total tangible property	2,254
Radio broadcasting licenses	23,233
Total intangible assets	$	23,233
Total assets	$	25,487

2021 Podcorn Acquisition

On March 9, 2021, the Company completed the acquisition of podcast influencers marketplace, Podcorn Media, Inc. ("Podcorn") for $14.6 million in cash and a performance-based earnout over the next two years (the "Podcorn Acquisition"). The Company's condensed consolidated financial statements for the nine months ended September 30, 2022 reflect the results of Podcorn. The Company's condensed consolidated financial statements for the nine months ended September 30, 2021 reflect the results of Podcorn for the portion of the period after the completion of the Podcorn Acquisition.

The Podcorn Acquisition includes a contingent consideration arrangement that requires additional consideration to be paid by the Company to Podcorn based upon the achievement of certain annual performance benchmarks over a two-year period. A portion of the contingent consideration could be paid out in 2023 and a portion of the contingent consideration could be paid out in 2024. The timing of the payment of the contingent consideration is dependent upon Adjusted EBITDA values for 2022 and 2023, as defined in the purchase agreement. The range of the total undiscounted amounts the Company could pay under the contingent consideration agreement over the two-year period is between $0 and $45.2 million. The fair value of the contingent consideration recognized on the acquisition date of $7.7 million was estimated by applying probability-weighted, discounted future cash flows at current tax rates. The significant unobservable inputs (Level 3) used to estimate the fair value include the projected Adjusted EBITDA values, as defined in the purchase agreement, for 2022 and 2023, and the discount rate. Since the acquisition date, fluctuation in the market-based inputs used to develop the discount rate resulted in an increase in the discount rate, which resulted in a lower expected present value of the contingent consideration. Additionally, reduction in projected Adjusted EBITDA values for 2022 and 2023 resulted in a lower expected present value of the contingent consideration. As a result, the fair value of the contingent consideration at September 30, 2022 decreased $8.8 million to $0.1 million. Changes in the fair value of the contingent consideration are recorded to the Station Operating Expenses line item on the Statement of Operations.

The Company's fair value analysis contains assumptions based on past experience, reflects expectations of industry observers and includes judgments about future performance using industry normalized information. Using a residual method, any excess between the consideration paid and the fair value of net assets acquired was recorded as goodwill. Management believes that this acquisition provides the Company with an opportunity to benefit from customer relationships, technical knowledge and trade secrets.



	Final Value
	(amounts in thousands)
Assets
Cash	$	702
Prepaid expenses, deposits and other	18
Other assets, net of accumulated amortization	2,545
Goodwill	19,637
Deferred tax asset	72


Net working capital	63
Preliminary fair value of net assets acquired	$	23,037

Unaudited Pro Forma Summary of Financial Information

The following unaudited pro forma information for the nine and three months ended September 30, 2021 assumes that the acquisitions in 2021 had occurred as of January 1, 2021.

Refer to information within this Note 2, Business Combinations, and to the consolidated financial statements and related notes included in the Company’s audited consolidated financial statements as of and for the year ended December 31, 2021, and filed with the SEC on March 1, 2022, for a description of the Company’s acquisition and disposition activities.

The unaudited pro forma information presented gives effect to certain adjustments, including: (i) depreciation and amortization of assets; (ii) change in the effective tax rate; (iii) merger and acquisition costs; and (iv) interest expense on any debt incurred to fund the acquisitions which would have been incurred had such acquisitions been consummated as of January 1, 2021.

This unaudited pro forma information has been prepared based on estimates and assumptions, which management believes are reasonable. 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 September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(amounts in thousands except share and per share data)
	Actual		Pro Forma		Actual		Pro Forma
Net revenues	$	316,969	$	330,242	$	911,703	$	878,275



Net loss	$	(140,975)	$	(6,573)	$	(152,821)	$	(30,252)


Net loss per common share - basic	$	(1.01)	$	(0.05)	$	(1.10)	$	(0.22)


Net loss per common share - diluted	$	(1.01)	$	(0.05)	$	(1.10)	$	(0.22)
Weighted shares outstanding basic	139,361,261		135,893,823		139,246,393		135,857,127
Weighted shares outstanding diluted	139,361,261		135,893,823		139,246,393		135,857,127