Discontinued Operations

6 Months Ended

Jun. 30, 2018

Discontinued Operations and Disposal Groups [Abstract]

6. 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 the Company 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. The Company 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, the Company 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 7). On October 5, 2017 and November 3, 2017, the Company 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 10).

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.

The net results of operations

of the Joplin, Missouri and Victoria, Texas stations have been reclassified from continuing operations to discontinued operations. These were previously included in the Company’s 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 unaudited Condensed Consolidated Statements of Operations:

	Three Months Ended June 30,				Six Months Ended June 30,
	2018 (3)		2017 (3)		2018 (3)		2017 (3)
	(in thousands)
Net operating revenue	$	—	$	5,688	$	—	$	10,942
Station operating expense		—		3,643		—		7,355
Other operating expense		—		—		—		31
Operating income		—		2,045		—		3,556
Interest expense (1)		—		8		—		16
Income before income taxes		—		2,037		—		3,540
Income tax expense (2)		—		878		—		1,490
Income from discontinued operations, net of tax	$	—	$	1,159	$	—	$	2,050

(1)

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

(2)

The effective tax rates on pretax income from discontinued operations were approximately 42%.

(3)

Results of operations for the Television stations are reflected through June 30, 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 unaudited Condensed Consolidated Statements of Cash Flows:

	June 30, 2018		June 30, 2017
	(in thousands)
Significant operating non-cash items
Depreciation and amortization	$	—	$	445
Broadcast program rights amortization		—		316
Barter revenue, net		—		17
Loss on sale of assets		—		31

Significant investing items
Acquisition of property and equipment	$	—	$	110
Proceeds from sale and disposal of assets		—		94