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Note 2 - Revenue
9 Months Ended
Sep. 30, 2018
Notes to Financial Statements  
Revenue from Contract with Customer [Text Block]
2.
Revenue
 
Adoption of New Accounting Standard: ASC Topic
606,
Revenue from Contracts with Customers
 
On
January 1, 2018,
we adopted Accounting Standards Codification (“ASC”) Topic
606
-
Revenue from Contracts with Customers, as amended
. We adopted this ASC using the modified retrospective method and as a result, comparative information has
not
been restated and continues to be presented as prescribed by the accounting standards in effect during the periods presented. This transition method was applied to all open contracts with customers at the time of adoption. The adoption of this ASC did
not
result in a material impact on our current or historical results.
 
Revenue Recognition
 
We recognize revenue when we have completed a specified service and effectively transferred the control of that service to a customer in return for an amount of consideration we expect to be entitled to receive. The amount of revenue recognized is determined by the amount of consideration specified in a contract with our customers. We have elected to exclude taxes assessed by a governmental authority on transactions with our customers from our revenue. Any unremitted balance is included in current liabilities on our balance sheet.
 
Seasonality and
Cyclicality
 
Broadcast advertising revenues are generally highest in the
second
and
fourth
quarters each year. This seasonality results partly from increases in consumer advertising in the spring and retail advertising in the period leading up to and including the holiday season. Broadcast advertising revenues are also typically higher in even-numbered years due to increased spending by political candidates, political parties and special interest groups during the “on-year” of the
two
year election cycle. This political spending typically is heaviest during the
fourth
quarter. In addition, the broadcast of Olympic Games by our NBC affiliated stations during even-numbered years generally leads to increased viewership and revenue during those years.
 
Disaggregation of Revenue
 
The following table presents our revenue from contracts with customers disaggregated by type of service and sales channel (in thousands):
 
   
Three Months Ended
   
Nine Months Ended
 
   
September 30,
   
September 30,
 
   
2018
   
2017
   
2018
   
2017
 
Market and service type:
                               
Advertising:
                               
Local
  $
106,929
    $
110,033
    $
325,319
    $
330,547
 
National
   
29,199
     
31,027
     
83,584
     
86,822
 
Political
   
48,018
     
4,005
     
71,863
     
9,034
 
Total advertising
   
184,146
     
145,065
     
480,766
     
426,403
 
Retransmission consent
   
91,603
     
70,150
     
262,461
     
207,094
 
Other
   
3,561
     
3,762
     
12,685
     
15,622
 
Total revenue
  $
279,310
    $
218,977
    $
755,912
    $
649,119
 
                                 
Sales channel:
                               
Direct
  $
138,731
    $
117,998
    $
407,455
    $
352,811
 
Advertising agency intermediary
   
140,579
     
100,979
     
348,457
     
296,308
 
Total revenue
  $
279,310
    $
218,977
    $
755,912
    $
649,119
 
 
Advertising Revenue
 
Broadcast advertising revenue is generated primarily from the broadcast of television advertising time to local, national and political advertisers. Most advertising contracts are short-term, and generally run only for a few weeks. Our performance obligation is satisfied when the advertisement is broadcast or appears on our stations’ websites or mobile applications. Advertising revenue is recognized when the performance obligation is satisfied and then billed to the customer in the period the revenue is recognized. We have an unconditional right to receive payment of the amount billed generally within
30
days of the invoice date. Payment terms are expressly stated in our standard terms and conditions. The invoiced amount to be received is recorded in accounts receivable on our balance sheet.
 
We broadcast the customer’s advertisement either preceding or following a television station’s network programming and within local and syndicated programming. Broadcast advertising is sold in time increments and is priced primarily on the basis of a program’s popularity among the specific audience an advertiser desires to reach. In addition, broadcast advertising rates are affected by the number of advertisers competing for the available time, the size and demographic makeup of the market served by the station and the availability of alternative advertising media in the market area. Broadcast advertising rates are generally the highest during the most desirable viewing hours, with corresponding reductions during other hours. The ratings of a local station affiliated with a major network can be affected by ratings of network programming. Internet advertising is placed on our stations’ websites and mobile applications. These advertisements
may
be in the form of banner advertisements, pre-roll advertisements or video and other types of advertisements or sponsorships.
 
We also sell internet advertising on our stations’ websites. These advertisements
may
be sold as banner advertisements, pre-roll advertisements or video and other types of advertisements or sponsorships.
 
We generate advertising revenue either by the efforts of our direct sales employees or through
third
party advertising agency intermediaries. Third party advertising intermediaries represent the customer and contract with us to deliver broadcast or internet advertising for the customer.
 
We record revenue and expense for non-monetary trade transactions involving the exchange of tangible goods or services with our customers. The revenue is recorded at the time the advertisement is broadcast and the expense is recorded at the time the goods or services are used. The revenue and expense associated with these transactions are based on the fair value of the assets or services received.
 
Retransmission Consent Revenue
 
We enter into license agreements with cable, satellite, multichannel video programming distributors and digital delivery system (or “OTT”) customers (collectively “MVPD”) that provide them the right to use our broadcast signal for retransmission across the MVPD system for an agreed period of time. These agreements represent a sales and usage based functional intellectual property license based on the number of subscribers to the licensee’s delivery systems. Our performance obligation is to provide the licensee with access to our intellectual property when it is broadcast. The duration of the typical retransmission consent contract is
three
years. Retransmission consent revenue is recognized continuously during the period of the contract as we transmit our broadcast signal to the MVPD. The amount of revenue recognized is determined based upon a fixed rate per subscriber multiplied by the number of active subscribers to our MVPD customer systems for the given month. We bill our MVPD customers monthly over the life of the retransmission consent contract. We have an unconditional right to receive payment of the amount billed generally within
30
days from the invoice date. Payment terms are expressly stated in our retransmission consent contracts and standard terms and conditions. The invoiced amount to be received is recorded in accounts receivable on our balance sheet.
 
Subscriber data necessary to calculate the amount of retransmission consent revenue to be recognized for the current month is
not
received until subsequent to that month. We estimate the current month retransmission consent revenue based upon the subscriber data from the most recent subscriber report by the MVPD. We record the estimate in the current month as retransmission consent revenue and then adjust the amount recorded in that month when we receive the actual subscriber data. We typically have monthly adjustments to our revenue to account for changes in MVPD subscribers on a monthly basis, however, the number of MVPD subscribers does
not
change materially on a monthly basis and this adjustment does
not
materially impact our recorded retransmission consent revenue on a quarterly or annual basis.
 
Other
Revenues
 
Other revenues consist of production, tower rental and other miscellaneous items. Production revenue is derived from the production of programming. Production revenue is recognized as the programming is produced. Tower rental income is recognized monthly over the life of the lease. All of our leases under which we are lessor are considered operating leases. Other revenue is comprised of
one
-time or infrequently occurring special projects, dubbing, fees and other miscellaneous items. Other revenue is recognized as the services are performed. Other revenue is generated by our direct sales employees.
 
Accounts Receivable and Deposit Liability
 
When we invoice our customers for completed performance obligations, we are unconditionally entitled to receive payment of the invoiced amounts. Therefore, we record invoiced amounts in accounts receivable on our balance sheet. We generally require amounts due to us under advertising contracts with our political advertising customers to be paid for in advance. We record the receipt of this cash as deposit liabilities. Once the advertisements have been broadcast, the revenues are earned, and we record these revenues and reduce the balance in this deposit liabilities. Our deposit libilities of
$3.8
million as of
January 1, 2018
have been or will be recognized in revenue in
2018.
We believe that our deposit libilities of
$11.7
million as of
September 30, 2018
will be recognized as revenue in the
fourth
quarter of
2018.
 
Expedients
 
We expense direct and agency commissions when incurred because our advertising contracts are
one
year or less in duration and the amortization period for capitalized expenses would be less than
one
year. Direct commissions are included in broadcast operating expense and agency commissions are netted against gross revenue in our condensed consolidated statements of operations.
 
The nature of our contracts with advertising customers is such that our performance obligations arise and are satisfied concurrent with the broadcast or web placement of the advertisement. We did
not
have incomplete or unsatisfied performance obligations at the end of any period presented. We record a deposit liability for cash deposits received from our customers that are to be applied as payment once the performance obligation arises and is satisfied in the manner stated above. These deposits are recorded as deposit liabilities on our balance sheet.