4. Discontinued Operations

On May 9, 2017 we entered into a definitive agreement to sell our Joplin, Missouri and Victoria, Texas television stations (“Television Sale”) for approximately $66.6 million, subject to certain adjustments, to Evening Telegram Company d/b/a Morgan Murphy Media. The Television Sale was completed on September 1, 2017 and we received net proceeds of $69.5 million which included the sales price of $66.6 million, the sale of accounts receivable of approximately $3.4 million, offset by certain closing adjustments and transactional costs of $500 thousand. We recognized a pretax gain of $50.8 million as a result of the Television Sale in the third quarter of 2017. The gain net of tax for the Television Sale was $29.9 million. Effective September 1, 2017, we used $24.2 million of the proceeds from the Television Sale to finance the acquisition of radio stations in South Carolina, which included the purchase price of $23 million, the purchase of $1.3 million in accounts receivable offset by certain closing adjustments and transactional costs of approximately $50,000 (as described in Note 10). On October 5, 2017 and November 3, 2017, we used $5,287,000 and $5,000,000 respectively of the proceeds from the Television Sale to pay down a portion of its Revolving Credit Facility (as defined and described in Note 5).

In accordance with authoritative guidance we have reported the results of operations of the Joplin, Missouri and Victoria, Texas television stations as discontinued operations in the accompanying consolidated financial statements. For all previously reported periods, certain amounts in the consolidated financial statements have been reclassified. All of the assets and liabilities of the Joplin, Missouri and Victoria, Texas television stations have been classified as discontinued operations and the net results of operations have been reclassified from continuing operations to discontinued operations. These were previously included in our television segment.

The following table shows the components of the results from discontinued operations associated with the Television Sale as reflected in the Company’s Consolidated Statements of Operations (in thousands):


	Year Ended December 31,
	2019		2018		2017 (4)

Net operating revenue	$	—	$	—	$	14,238
Station operating expense (1)		—		—		9,757
Other operating (income) expense		—		—		31
Operating income		—		—		4,450
Interest expense (2)		—		—		21
Income before income taxes		—		—		4,429
Pretax gain on the disposal of discontinued operations		—		—		50,842
Total pretax gain on discontinued operations		—		—		55,271
Income tax expense (3)		—		—		22,800
Income from discontinued operations, net of tax	$	—	$	—	$	32,471

⁽¹⁾

No depreciation expense was recorded by the Company beginning May 9, 2017, the date the Television segment assets’ were held for sale.

⁽²⁾

Interest expense related to the Surtsey debt that is guaranteed by the Television stations. Our affiliate repaid this loan when the television stations were sold on September 1, 2017.

⁽³⁾

The effective tax rate on pretax income from discontinued operations was approximately 41%.

⁽⁴⁾

Results of operations for the Television stations are reflected through August 31, 2017. The effective date of the sale was September 1, 2017.

The following table represents the components of the results from discontinued operations associated with the Television Sale as reflected in the Company’s Consolidated Statements of Cash Flows (in thousands):


		December 31,		December 31,		December 31,
		2019		2018		2017

Cash paid during the period
Interest	$	—	$	—	$	21
Income taxes		—		—		23,260

Significant operating non-cash items
Depreciation and amortization (1)	$	—	$	—	$	445
Broadcast program rights amortization		—		—		418
Barter revenue, net		—		—		18
Acquisition of property and equipment		—		—		—
Loss (gain) on sale of assets		—		—		31
Pretax gain on television sale		—		—		50,842

Significant investing items
Acquisition of property and equipment	$	—	$	—	$	335
Proceeds from sale and disposal of assets		—		—		—
Net proceeds from sale of television stations (2)		—		—		69,528
Proceeds from insurance claim		—		—		—

⁽¹⁾

No depreciation expense was recorded by the Company beginning May 9, 2017, the date the Television segment assets’ were held for sale.

⁽²⁾

Net proceeds from the sale of the television stations reflect the sales price of $66.6 million, the sale of accounts receivable of approximately $3.4 million, offset by certain closing adjustments and transactional costs of approximately $500 thousand.