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Note 11 - Subsequent Events
12 Months Ended
Dec. 31, 2016
Notes to Financial Statements  
Subsequent Events [Text Block]
11.
     Subsequent Events
 
2017
Acquisitions
 
On
January
13,
2017,
we acquired KTVF-TV (NBC), KXDF-TV (CBS), and KFXF-TV (FOX) in the Fairbanks, Alaska television market, from Tanana Valley Television Company and Tanana Valley Holdings, LLC for
$8.0
million (the “Fairbanks Acquisition”). We completed the Fairbanks Acquisition with cash on hand.
 
On
January
17,
2017,
we acquired
two
television stations that were divested by Nextstar Broadcasting, Inc. (“Nexstar”) upon its merger with Media General, Inc. (“Media General”): WBAY-TV (ABC), in the Green Bay, Wisconsin television market (the “Green Bay Acquisition”), and KWQC-TV (NBC), in the Davenport, Iowa, Rock Island, Illinois, and Moline, Illinois (or “Quad Cities”) television market (the “Davenport Acquisition”), for an adjusted purchase price of
$269.9
million. We completed these acquisitions with cash on hand. The Green Bay Acquisition and the Davenport Acquisition were completed, in part, through a transaction with Gray Midwest EAT, LLC (“GME”), pursuant to which, we loaned GME
$106.0
million which GME in turn used to acquire the broadcast licenses of the stations. GME is a variable interest entity (“VIE”) for which we are the primary beneficiary. As a result, we will include the assets, liabilities and results of operations of GME in our consolidated financial statements beginning in
January
2017
and continuing for so long as we remain the primary beneficiary.
 
The preliminary fair value estimates of the assets acquired, liabilities assumed and resulting goodwill of our acquisitions completed in
2017
 are summarized as follows (in thousands):
 
 
 
Acquisition
 
 
 
Fairbanks
 
 
Green Bay
 
 
Davenport
 
                         
Other current assets
  $
176
    $
238
    $
301
 
Property and equipment
   
2,868
     
10,133
     
10,276
 
Goodwill
   
251
     
44,055
     
45,305
 
Broadcast licenses
   
2,228
     
82,845
     
63,683
 
Other intangible assets
   
2,653
     
7,767
     
5,936
 
Current liabilities
   
(176
)    
(238
)    
(301
)
                         
Total
  $
8,000
    $
144,800
    $
125,200
 
 
Amounts in the table above are based upon management’s preliminary 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, expected future growth rates, and estimated discount rates. 
 
Property and equipment are recorded at their fair value and are being depreciated over their estimated useful lives ranging from
three
years to
40
years.
 
Amounts related to other intangible assets represent primarily the estimated fair values of retransmission agreements of
$14.0
million and favorable income leases of
$1.5
million. These intangible assets are being amortized over their estimated useful lives.
 
Goodwill is calculated as the excess of the consideration transferred over the fair value of the identifiable net assets acquired and liabilities assumed, and represents the future economic benefits expected to arise from other intangible assets acquired that do not qualify for separate recognition, including assembled workforce, as well as future synergies that we expect to generate from each acquisition. We have preliminarily recorded
$89.6
million of goodwill related to
2017
Acquisitions. The goodwill recognized related to these acquisitions is deductible for income tax purposes.
 
On
February
16,
2017,
we announced that we had reached an agreement with Diversified Communications, Inc. to acquire
two
television stations: WABI-TV (CBS/CW) in the Bangor, Maine television market (DMA
156)
and WCJB-TV (ABC/CW) in the Gainesville, Florida television market (DMA
161)
for
$85.0
million. Subject to receipt of regulatory and other approvals, we expect this transaction will close in the
second
quarter of
2017
and will be completed with cash on hand and, if necessary, borrowings under our
2017
Senior Credit Facility
.
 
Amendment and Restatement of Senior Credit Facility
 
On
February
7,
2017,
we entered into the
2017
Senior Credit Facility. The
2017
Senior Credit Facility provides total commitments of
$656.4
million, consisting of a
$556.4
million term loan facility (the
“2017
Term Loan”) and a
$100.0
million revolving credit facility (the
“2017
Revolving Credit Facility”). Amounts outstanding under the
2017
Term Loan were used to repay our prior term loan.
 
The 
2017
Term Loan borrowings bear interest, at our option, of either LIBOR plus an applicable margin or the Base Rate (as defined below) plus an applicable margin. Until our results of operations for the quarter ending
September
30,
2017
have been certified, the applicable margin will be
2.50%
for all LIBOR borrowings and
1.50%
for all Base Rate borrowings (the “Initial Applicable Margin”). Thereafter, (i) if the leverage ratio as set forth in the
2017
Senior Credit Facility (the “Leverage Ratio”) is less than or equal to
5.25
to
1.00,
the applicable margin will be
2.25%
for all LIBOR borrowings and
1.25%
for all Base Rate borrowings and (ii) if the Leverage Ratio is greater than
5.25
to
1.00,
the Initial Applicable Margin will apply. The current interest rate on the
2017
Term Loan borrowings is LIBOR plus
2.50%.
The term loan also requires us to make quarterly principal reductions of
$1.4
million beginning
March
31,
2017.
 
Borrowings under the
2017
Revolving Credit Facility bear interest, at our option, based on LIBOR plus
1.50%
-
2.00%
or the Base Rate plus
0.50%
-
1.00%,
in each case based on a
first
lien leverage ratio test as set forth in the
2017
Senior Credit Facility (the “First Lien Leverage Ratio”). Base Rate is defined as the greatest of (i) the administrative agent’s prime rate, (ii) the overnight federal funds rate plus
0.50%
and (iii) LIBOR plus
1.00%.
We are required to pay a commitment fee on the average daily unused portion of the
2017
Revolving Credit Facility, which rate
may
range from
0.375%
to
0.50%
on an annual basis, based on the First Lien Leverage Ratio.
 
The
2017
 Revolving Credit Facility matures on
February
7,
2022,
and the
2017
Term Loan matures on
February
7,
2024.
 
As a result of this amendment and restatement of our senior credit facility we expect to record a loss on extinguishment of debt of approximately
$4.5
million in the
first
quarter of
2017.
In connection with the amendment and restatement we incurred approximately
$3.0
million in deferred financing costs that will be amortized over the life of the
2017
Senior Credit Facility.
 
Results of FCC Spectrum Auction
 
On
February
6,
2017,
we announced that we anticipate receiving $
90.8
million in proceeds from the FCC’s recently completed reverse auction for broadcast spectrum.
 
The anticipated proceeds reflect the FCC’s acceptance of
one
or more bids placed by us during the auction to modify and/or surrender spectrum used by certain of our television stations. We do not expect any material change in operations for us or for any individual market in which we operate.
 
We anticipate that the auction proceeds will be received in the
second
or
third
quarter of
2017.
Due to prior planning in connection with our recently completed acquisitions, we anticipate that we will be able to defer any related income tax payments on a long-term basis.