Acquisitions and Dispositions

12 Months Ended

Dec. 31, 2016

Business Combinations [Abstract]

Acquisitions and Dispositions

8. 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.  

2016 Acquisitions

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 approximately $13,791,000, which included $734,000 in accounts receivable and $57,000 in transactional costs. We completed this acquisition on February 3, 2016. We operated this station under a LMA from November 16, 2015 through the completion of the acquisition. This acquisition was financed through funds generated from operations. Management attributes the goodwill recognized in the acquisition to the power of the existing brands in the Columbus, Ohio market as well as the synergies and growth opportunities expected through the combination with the Company’s existing stations.

 

On March 16, 2016 we acquired an FM translator serving the Portland, Maine market for approximately $50,000.

On March 25, 2016 we acquired an FM translator serving the Milwaukee, Wisconsin market for approximately $50,000.

On April 8, 2016 we acquired an FM translator serving the Charlottesville, Virginia market for approximately $100,000.

On April 11, 2016 we acquired an FM translator serving the Clarksville, Tennessee market for approximately $30,000.

On June 3, 2016 we acquired an FM translator serving the Spencer, Iowa market for approximately $35,000.

On August 11, 2016 we acquired two FM translators serving the Bellingham, Washington market for approximately $50,000.

On September 12, 2016 we acquired an FM translator serving the Portland, Maine market for approximately $45,000.

On October 11, 2016 we acquired a FM Translator serving the Bellingham, Washington market for approximately $25,000.

On November 8, 2016 we acquired a FM Translator serving the Des Moines, Iowa market for approximately $25,000.

On November 14, 2016 we acquired a FM Translator serving the Springfield, Illinois market for approximately $23,000.

On December 2, 2016 we acquired a FM Translator serving the Ithaca, New York market for approximately $35,000.

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.

 

Condensed Consolidated Balance Sheet of 2016 and 2015 Acquisitions:  

The following condensed balance sheets represent the estimated fair value assigned to the related assets and liabilities of the 2016 and 2015 acquisitions at their respective acquisition dates.

Condensed Consolidated Balance Sheet of 2016 and 2015 Acquisitions

	Acquisitions in
	2016		2015
	(In thousands)
Assets Acquired:
Current assets	$	814	$	977
Property and equipment		375		4,614
Other assets:
Broadcast licenses-Radio segment		8,123		2,218
Broadcast licenses-Television segment		—		—
Goodwill-Radio segment		4,533		2,548
Goodwill-Television segment		—		—
Other intangibles, deferred costs and investments		398		1,623
Total other assets		13,054		6,389
Total assets acquired		14,243		11,980
Liabilities Assumed:
Current liabilities		41		82
Total liabilities assumed		41		82
Net assets acquired	$	14,202	$	11,898

Pro Forma Results of Operations for Acquisitions (Unaudited)  

The following unaudited pro forma results of our operations for the years ended December 31, 2016 and 2015 assume the 2016 and 2015 acquisitions occurred as of January 1, 2015. 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,
	2016		2015
	(In thousands, except per share data)
Pro forma Consolidated Results of Operations
Net operating revenue	$	142,591	$	139,458
Station operating expense		101,557		102,401
Corporate general and administrative		10,980		10,091
Other operating (income) expenses, net		(1,393)		541
Impairment of intangible assets		—		874
Operating income		31,447		25,551
Interest expense		776		888
Write-off of debt issuance costs		—		557
Other income		—		(417)
Income before income tax expense		30,671		24,523
Income tax expense		12,494		10,242
Net income	$	18,177	$	14,281
Basic earnings per share	$	3.10	$	2.46
Diluted earnings per share	$	3.09	$	2.44

	Years Ended December 31,
	2016		2015
	(In thousands)
Radio Broadcasting Segment
Net operating revenue	$	118,955	$	118,394
Station operating expense		86,814		88,321
Other operating (income) expenses, net		(1,351)		499
Impairment of intangible assets		—		874
Operating income	$	33,492	$	28,700

	Years Ended December 31,
	2016		2015
	(In thousands)
Television Broadcasting Segment
Net operating revenue	$	23,636	$	21,064
Station operating expense		14,743		14,080
Other operating (income) expenses, net		(42)		32
Operating income	$	8,935	$	6,952

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

					Corporate and
	Radio		Television		Other		Consolidated
	(In thousands)
Year Ended December 31, 2016:
Net operating revenue	$	118,955	$	23,636	$	—	$	142,591
Station operating expense		86,814		14,743		—		101,557
Corporate general and administrative		—		—		10,980		10,980
Other operating income		(1,351)		(42)		—		(1,393)
Impairment of intangible assets		—		—		—		—
Operating income (loss)	$	33,492	$	8,935	$	(10,980)	$	31,447

					Corporate and
	Radio		Television		Other		Consolidated
	(In thousands)
Year Ended December 31, 2015:
Net operating revenue	$	118,394	$	21,064	$	—	$	139,458
Station operating expense		88,321		14,080		—		102,401
Corporate general and administrative		—		—		10,091		10,091
Other operating expense		499		32		10		541
Impairment of intangible assets		874		—		—		874
Operating income (loss)	$	28,700	$	6,952	$	(10,101)	$	25,551