Acquisitions and Dispositions

12 Months Ended

Dec. 31, 2015

Business Combinations [Abstract]

Acquisitions and Dispositions

9.   Acquisitions and Dispositions

We actively seek and explore opportunities for expansion through the acquisition of additional broadcast properties. The consolidated statements of income include the operating results of the acquired stations from their respective dates of acquisition. All acquisitions were accounted for as purchases and, accordingly, the total purchase consideration was allocated to the acquired assets and assumed liabilities based on their estimated fair values as of the acquisition dates. The excess of the consideration paid over the estimated fair value of net assets acquired have been recorded as goodwill. The Company accounts for acquisition under the provisions of FASB ASC Topic 805, Business Combinations. 

Management assigned fair values to the acquired property and equipment through a combination of cost and market approaches based upon each specific asset’s replacement cost, with a provision for depreciation, and to the acquired intangibles, primarily an FCC license, based on the Greenfield valuation methodology, a discounted cash flow approach.  

Pending Acquisition 

On November 2, 2015, we entered into an agreement to acquire an FM radio station (WLVQ) from Wilks Broadcast - Columbus, LLC, serving the Columbus, Ohio market for $13,000,000. We completed this acquisition in the on February 3, 2016. We operated this station under a LMA from November 16, 2015 through our completion of the acquisition. This acquisition was financed through funds generated from operations in 2016.

2015 Acquisitions and Disposition 

On July 13, 2015 we acquired an FM translator serving the Manchester, New Hampshire market for approximately $45,000. 

On August 1, 2015 we acquired two AM and three FM stations and one FM translator (WSVA-AM, WHBG-AM, WQPO-FM, WMQR-FM, WWRE-FM and WQPO-HD3) from M. Belmont VerStandig, Inc., serving the Harrisonburg, Virginia market for approximately $10,131,000, which included $128,000 in transactional costs. Cash was utilized to fund the acquisition. Management attributes the goodwill recognized in the acquisition to the power of the existing brands in the Harrisonburg, Virginia market as well as the synergies and growth opportunities expected through the combination with the Company’s existing stations.

On August 26, 2015 we acquired an FM translator serving the Asheville, North Carolina market for approximately $125,000. 

On September 1, 2015 we acquired two FM stations (WSIG-FM and WBOP-FM) from Gamma Broadcasting, LLC, serving the Harrisonburg, Virginia market for approximately $1,558,000, which included $92,000 in transactional costs. Cash was utilized to fund the acquisition. FCC multiple ownership rules prohibit us from owning both of these stations. In order to satisfy the multiple ownership requirements and receive FCC approval for this acquisition, we simultaneously donated WBOP-FM to Liberty University, Inc, a charitable organization. In exchange for donating WBOP-FM, including the Station, the FCC License and the Assets, we received an FM Translator W267BA, the FM Translator Assets, and the FM Translator FCC license, valued at approximately $50,000. We incurred a pre-tax loss of $400,000 as a result of this donation. This loss is recorded in other operating (income), expense, net on the Company’s Condensed Consolidated Statements of Income and reported in cash flows from operating activities on the Condensed Consolidated Statement of Cash Flows. Management attributes the goodwill recognized in the acquisition to the power of the existing brands in the Harrisonburg, Virginia market as well as the synergies and growth opportunities expected through the combination with the Company’s existing stations. 

On October 23, 2015 we acquired an FM translator serving the Charlottesville, Virginia market for approximately $30,000. 

On November 12, 2015 we acquired an FM translator serving the Bucyrus, Ohio market for approximately $30,000. 

On November 23, 2015 we acquired an FM translator serving the Charlottesville, Virginia market for approximately $150,000. 

On December 31, 2015 we donated the Illinois Radio Network (“the network”) to the Illinois Policy Institute. The net book value of the network was approximately $7,000.

 2014 Acquisitions and Dispositions

 On January 31, 2014 we acquired one FM station (WFIZ-FM) and three FM Translators serving the Ithaca, New York market for approximately $720,000. 

On February 28, 2014 we acquired an FM translator serving the Jonesboro, Arkansas market for approximately $35,000. 

On May 9, 2014 we acquired an FM translator serving the Clarksville, Tennessee market for approximately $30,000. 

On May 14, 2014 we acquired an FM translator serving the Portland, Maine market for approximately $44,750. 

On May 16, 2014 we acquired two FM translators serving the Asheville, North Carolina market for approximately $100,000. 

On June 16, 2014 we acquired an FM translator serving the Des Moines, Iowa market for approximately $87,500. 

On November 4, 2014 we acquired an LPTV servicing the Victoria, Texas market for approximately $18,500.  

On December 2, 2014 we sold the Michigan Radio Network, the Michigan Farm Network, the Minnesota News Network and the Minnesota Farm Network, for approximately $1,640,000. The net assets of these networks approximated $430,000, and as such recognized a gain of approximately $1,210,000 that is included in Other operating (income) expense in our 2014 Consolidated Statements of Income. The proforma results of operations for the sale of these networks is not material to our financial statements and as such are not presented. These radio networks have historically been presented within our radio segment. The radio networks did not meet the criteria of discontinued operations. 

Condensed Consolidated Balance Sheet of 2015 and 2014 Acquisitions: 

The following condensed balance sheets represent the estimated fair value assigned to the related assets and liabilities of the 2015 and 2014 acquisitions at their respective acquisition dates. The allocation of the purchase price for the 2015 acquisitions is preliminary at December 31, 2015. 

Condensed Consolidated Balance Sheet of 2015 and 2014 Acquisitions

	Acquisitions in
	2015		2014
	(In thousands)
Assets Acquired:
Current assets	$	977	$	45
Property and equipment		4,614		424
Other assets:
Broadcast licenses-Radio segment		2,218		219
Broadcast licenses-Television segment		—		19
Goodwill-Radio segment		2,548		326
Goodwill-Television segment		—		—
Other intangibles, deferred costs and investments		1,623		3
Total other assets		6,389		567
Total assets acquired		11,980		1,036
Liabilities Assumed:
Current liabilities		82		—
Total liabilities assumed		82		—
Net assets acquired	$	11,898	$	1,036

Pro Forma Results of Operations for Acquisitions (Unaudited) 

The following unaudited pro forma results of our operations for the years ended December 31, 2015 and 2014 assume the 2015 acquisitions occurred as of January 1, 2014. The translators are start-up stations and therefore, have no pro forma revenue and expenses. The pro forma results give effect to certain adjustments, including depreciation, amortization of intangible assets, increased interest expense on acquisition debt and related income tax effects. The pro forma results have been prepared for comparative purposes only and do not purport to indicate the results of operations which would actually have occurred had the combinations been in effect on the dates indicated or which may occur in the future. 

	Years Ended December 31,
	2015		2014
	(In thousands, except per share data)
Pro forma Consolidated Results of Operations
Net operating revenue	$	139,458	$	143,238
Station operating expense		102,226		104,912
Corporate general and administrative		10,091		8,901
Other operating expenses (income), net		541		(1,210)
Impairment of intangible assets		874		1,936
Operating income		25,726		28,699
Interest expense		888		1,064
Write-off of debt issuance costs		557		—
Other income		(417)		(71)
Income taxes		10,314		11,179
Net income	$	14,384	$	16,527
Basic earnings per share	$	2.52	$	2.90
Diluted earnings per share	$	2.51	$	2.87

	Years Ended December 31,
	2015		2014
	(In thousands)
Radio Broadcasting Segment
Net operating revenue	$	118,394	$	122,867
Station operating expense		88,146		91,655
Other operating expenses (income), net		499		(1,210)
Impairment of intangible assets		874		1,936
Operating income	$	28,875	$	30,486

	Years Ended December 31,
	2015		2014
	(In thousands)
Television Broadcasting Segment
Net operating revenue	$	21,064	$	20,371
Station operating expense		14,080		13,257
Other operating expenses		32		—
Operating income	$	6,952	$	7,114

Reconciliation of pro forma segment operating income to pro forma consolidated operating income:

	Radio		Television		Corporate and Other		Consolidated
	(In thousands)
Year Ended December 31, 2015:
Net operating revenue	$	118,394	$	21,064	$	—	$	139,458
Station operating expense		88,146		14,080		—		102,226
Corporate general and administrative		—		—		10,091		10,091
Other operating expenses		499		32		10		541
Impairment of intangible assets		874		—		—		874
Operating income (loss)	$	28,875	$	6,952	$	(10,101)	$	25,726

	Radio		Television		Corporate and Other		Consolidated
	(In thousands)
Year Ended December 31, 2014:
Net operating revenue	$	122,867	$	20,371	$	—	$	143,238
Station operating expense		91,655		13,257		—		104,912
Corporate general and administrative		—		—		8,901		8,901
Other operating income		(1,210)		—		—		(1,210)
Impairment of intangible assets		1,936		—		—		1,936
Operating income (loss)	$	30,486	$	7,114	$	(8,901)	$	28,699