Upon consummation of each acquisition the Company evaluates whether the acquisition constitutes a business. If substantially all the fair value is concentrated in a single asset (or group of similar assets) the acquired entity is not a business. An acquisition is considered a business if it is comprised of a complete self-sustaining integrated set of activities and assets consisting of inputs and substantive processes applied to those inputs that are used to generate revenues. For a transferred set of activities and assets to be a business, it must contain all of the inputs and processes necessary for it to continue to conduct normal operations after the transferred set is separated from the transferor, which includes the ability to sustain a revenue stream by providing its outputs to customers. A transferred set of activities and assets fails the definition of a business if it excludes one or more significant items such that it is not possible for the set to continue normal operations and sustain a revenue stream by providing its products and/or services to customers.

All business acquisitions have been accounted for as purchase business combinations with the operations of the businesses included subsequent to their acquisition dates. The allocation of the respective purchase prices is generally based upon independent appraisals and or management’s estimates of the discounted future cash flows to be generated from the media properties for intangible assets, and replacement cost for tangible assets. Deferred income taxes are provided for temporary differences based upon management’s best estimate of the tax basis of acquired assets and liabilities that will ultimately be accepted by the applicable taxing authority.

On November 7, 2019, the Company completed the acquisition of television station KMBH-TV, serving the McAllen, Texas area, for an aggregate cash consideration of $2.9 million. The transaction was treated as an asset acquisition with the majority of the purchase price recorded in “Intangible assets not subject to amortization” on the Company’s consolidated balance sheet.

On June 11, 2018, the Company completed the acquisition of 100% of the stock of Smadex, S.L. (“Smadex”), a mobile programmatic solutions provider that delivers performance-based solutions and data insights for marketers. The transaction was treated as a business acquisition in accordance with the guidance of ASC 805. The Company acquired Smadex to expand its technology platform, broaden its digital solutions offering and enhance its execution of performance campaigns. The transaction was funded from cash on hand for an aggregate cash consideration of $3.5 million, net of $1.2 million of cash acquired.

The following is a summary of the final purchase price allocation for the Company’s acquisition of Smadex (in millions):

Accounts receivable	$	0.9
Other current assets		0.4
Intangible assets subject to amortization		2.0
Goodwill		3.6
Current liabilities		(2.8	)
Long-term liabilities		(0.2	)
Deferred tax		(0.4	)

The fair value of assets acquired includes trade receivables of $0.9 million. The gross amount due under contract is $0.9 million, all of which is expected to be collectible.

During the year ended December 31, 2018, Smadex generated net revenue and expenses of $6.4 million and $5.8 million, respectively, which are included in our consolidated statements of operations.

The goodwill, which is not expected to be deductible for tax purposes, is assigned to the digital segment and is attributable to the Smadex workforce and expected synergies from combining its operations with those of the Company.

The following unaudited pro forma information for the years ended December 31, 2018 and 2017 has been prepared to give effect to the acquisition of Smadex as if the acquisition had occurred on January 1, 2017. This pro-forma information does not purport to represent what the actual results of operations of the Company would have been had this acquisition occurred on such date, nor does it purport to predict the results of operations for future periods.

	Years Ended December 31,
	2018		2017
Pro Forma:
Total revenue	$	307,805	$	541,663
Net income (loss)	$	13,133	$	175,765

Basic and diluted earnings per share:
Net income per share, basic	$	0.15	$	1.95
Net income per share, diluted	$	0.15	$	1.91

Weighted average common shares outstanding, basic		89,115,997		90,272,257
Weighted average common shares outstanding, diluted		90,328,583		91,891,957

The unaudited pro forma information for the year ended December 31, 2018 was adjusted to exclude acquisition fees and costs of $0.4 million, which were expensed in connection with the acquisition.

On January 16, 2018, the Company completed the acquisition of television station KMCC-TV, which serves the Las Vegas, Nevada area, for an aggregate cash consideration of $3.6 million. The transaction was treated as an asset acquisition with the majority of the purchase price recorded in “Intangible assets not subject to amortization” on the Company’s consolidated balance sheet.

On April 4, 2017, the Company completed the acquisition of 100% of several entities collectively doing business as Headway (“Headway”), a provider of mobile, programmatic, data and performance digital marketing solutions primarily in the United States, Mexico and other markets in Latin America. The Company acquired Headway in order to acquire additional digital media platforms that the Company believes will enhance its offerings to the U.S. Hispanic marketplace as well as expand its international footprint. The transaction was funded from our cash on hand, for an aggregate cash consideration of $8.2 million, net of $4.5 million of cash acquired, and contingent consideration with a fair value of $15.9 million as of the acquisition date.

The following is a summary of the purchase price allocation for our acquisition of Headway (in millions):

Accounts receivable	$	19.8
Intangible assets subject to amortization		15.9
Goodwill		16.1
Current liabilities		(23.7	)
Deferred tax		(4.0	)

Intangible Asset	Estimated Fair Value (in millions)		Weighted average life (in years)
Existing technology	$	1.0	2.0
Publisher relationships		5.0	3.0
Advertiser relationships		4.8	5.0
MediaMath agreement		2.1	9.0
Non-Compete agreements		1.1	4.0
Trade name		1.9	5.0

The acquisition of Headway includes a contingent consideration arrangement that requires additional consideration to be paid by the Company to Headway based upon the achievement of certain annual performance benchmarks over a three-year period. The range of the total undiscounted amounts the Company could pay under the contingent consideration agreement over the three-year period is between $0 and $27.0 million. The fair value of the contingent consideration recognized on the acquisition date of $15.9 million was estimated by applying the real options approach using level 3 inputs as further discussed in Note 10. The agreement also includes payments of up to approximately $7.5 million to certain key employees, which will be treated as post-acquisition compensation expense and accrued as earned.

The fair value of the assets acquired includes trade receivables of $19.8 million. The gross amount due under contract is $20.9 million, of which $1.1 million is expected to be uncollectable.

The goodwill, which is not expected to be deductible for tax purposes, is assigned to the digital media segment and is attributable to Headway’s workforce and expected synergies from combining Headway’s operations with those of the Company.

During the quarter ended December 31, 2017, the Company recorded measurement period adjustments primarily to adjust the fair value of intangible assets and contingent consideration to the final valuations and to reflect the value of deferred tax liabilities at the tax rates of the foreign jurisdictions they relate to.

The following unaudited pro forma information for the year ended December 31, 2017 has been prepared to give effect to the acquisition of Headway as if the acquisition had occurred on January 1, 2017. This pro forma information does not purport to represent what the actual results of operations of the Company would have been had this acquisition occurred on such date, nor does it purport to predict the results of operations for any future periods.


	Year Ended December 31, 2017
Pro Forma:
Total revenue	$	545,592
Net income (loss)	$	176,138

Basic and diluted earnings per share:
Net income per share, basic	$	1.95
Net income per share, diluted	$	1.92

Weighted average common shares outstanding, basic		90,272,257
Weighted average common shares outstanding, diluted		91,891,957

The unaudited pro forma information for the year ended December 31, 2017 was adjusted to exclude acquisition fees and costs of $0.5 million, which were expensed in connection with the acquisition.

As of December 31, 2018, the Company had a liability balance of $8.1 million related to the contingent consideration arrangement based on a calculation of the fair value using the real options technique in accordance with ASC 805-30-25-5. See further detail of key assumptions used in the calculation described in Note 10. As of December 31, 2019, the three-year period of the contingent consideration arrangement concluded and therefore an estimation using the real options technique was not performed. As of December 31, 2019, the remaining estimated liability balance is $1.6 million. The Company has not completed the process, described in the agreements related to the acquisition of Headway, of finalizing the calculation of the contingent consideration, if any, related to the acquisition of Headway with respect to calendar year 2019. As a result, as of the date of this filing the Company is unable to determine the final amount of such contingent consideration, if any, to be paid with respect to calendar year 2019. The determination of the final amount of such contingent consideration, if any, to be paid with respect to calendar year 2019 may result in adjustments in future periods to the fair value of the Company’s liability for contingent consideration.