Discontinued Operations

9 Months Ended

Sep. 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, and the proceeds from sale of related 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. 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 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 (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2018 (3)		2017 (3)		2018 (3)		2017 (3)

Net operating revenue	$	—	$	3,296	$	—	$	14,238
Station operating expense		—		2,372		—		9,727
Other operating (income) expense		—		—		—		31
Operating income		—		924		—		4,480
Interest Expense (1)		—		5		—		21
Income before income taxes		—		919		—		4,459
Pretax gain on the disposal of discontinued operations		—		50,842		—		50,842
Total pretax gain on discontinued operations		—		51,761		—		55,301
Income tax expense (2)		—		21,310		—		22,800
Income from discontinued operations, net of tax	$	—	$	30,451	$	—	$	32,501

	(1)	Interest expense related to 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 41%.
	(3)	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 unaudited Condensed Consolidated Statements of Cash Flows (in thousands):

	September 30, 2018		September 30, 2017
Significant operating non-cash items
Depreciation and amortization	$	—	$	445
Broadcast program rights amortization		—		418
Barter revenue, net		—		18
Loss on sale of assets		—		31

Significant investing items
Acquisition of property and equipment	$	—	$	125
Net proceeds from sale of television stations (1)		—		69,528

(1)

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