SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Dec. 31, 2022

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

(a)  Cash and Cash Equivalents and Restricted Cash

Cash and cash equivalents consist of cash and money market funds at various commercial banks that have original maturities of 90 days or less. Investments with contractual maturities of 90 days or less from the date of original purchase are classified as cash and cash equivalents. For cash and cash equivalents, cost approximates fair value. The Company’s cash and cash equivalents are insured by the Federal Deposit Insurance Corporation. The Company has amounts held with banks that may exceed the amount of insurance provided on such accounts. Generally, the balances may be redeemed upon demand and are maintained with financial institutions of reputable credit, and therefore, bear minimal credit risk.

On July 29, 2021, RVA Entertainment Holdings, LLC (“RVAEH”), a wholly owned unrestricted subsidiary of the Company, entered into a Host Community Agreement (the “Original HCA”) with the City of Richmond (the “City”) for the development of the ONE Casino + Resort (the “Project”). The Original HCA imposed certain obligations on RVAEH in connection with the development of the Project, including a $26 million upfront payment (the “Upfront Payment”) due upon successful passage of a citywide referendum permitting development of the Project (the “Referendum”). In connection with the Original HCA, RVAEH and its former development partner Pacific Peninsula Entertainment funded the Upfront Payment into escrow to be released to the City upon successful passage of the Referendum or back to RVAEH in the event the Referendum failed. In November 2021, the required Referendum was conducted and failed to pass.  However, on January 24, 2022, the Richmond City Council adopted a new resolution in efforts to bring the ONE Casino + Resort to the City. The new resolution was the first of several steps in pursuit of a second referendum. The City and RVAEH then entered into a new Host Community Agreement (the “New HCA”) which also included an Upfront Payment to be held in escrow and payable upon successful passage of a citywide referendum permitting development of the Project.  After the City and RVAEH entered into the New HCA, the Virginia General Assembly passed legislation that sought to delay the second referendum that was anticipated to occur in November 2022. While there were some questions as to the applicability of the legislation, RVAEH and the City determined to adhere to the legislation and to seek a second referendum in November 2023.  As a result of the efforts to obtain a second referendum, including execution of the New HCA and the determination to seek a second referendum in November 2023, the Upfront Payment remains in escrow. Therefore, the Company’s portion of the Upfront Payment, approximately $19.5 million is classified as restricted cash on the balance sheets as of December 31, 2022 and 2021. 

(b)  Trade Accounts Receivable

Trade accounts receivable which consists of both billed and unbilled receivables are recorded at their invoiced amount and are presented net of an allowance for doubtful accounts. The allowance for doubtful accounts is the Company’s estimate of the amount of probable losses in the Company’s existing accounts receivable portfolio. The Company determines the allowance based on the aging of the receivables, the impact of economic conditions on the advertisers’ ability to pay and other factors. Inactive delinquent accounts that are past due beyond a certain amount of days are written off and often pursued by other collection efforts. Bankruptcy accounts are immediately written off upon receipt of the bankruptcy notice from the courts.

(c)  Goodwill and Indefinite-Lived Intangible Assets (Primarily Radio Broadcasting Licenses)

In connection with past acquisitions, a significant amount of the purchase price was allocated to radio broadcasting licenses, goodwill and other intangible assets. Goodwill consists of the excess of the purchase price over the fair value of tangible and identifiable intangible net assets acquired. In accordance with Accounting Standards Codification (“ASC”) 350, “Intangibles - Goodwill and Other,” goodwill and other indefinite-lived intangible assets are not amortized, but are tested annually for impairment at the reporting unit level and unit of accounting level, respectively. We test for impairment annually, on October 1 of each year, or more frequently when events or changes in circumstances or other conditions suggest impairment may have occurred. Radio broadcasting license impairment exists when the asset carrying values exceed their respective fair values, and the excess is then recorded to operations as an impairment charge. We test for radio broadcasting license impairment at the unit of accounting level using the income approach, which involves, but is not limited to, judgmental estimates and assumptions about market revenue and projected revenue growth by market, mature market share, mature operating profit margin, discount rate and terminal growth rate. In testing for goodwill impairment, we also rely primarily on the income approach that estimates the fair value of the reporting unit, which involves, but is not limited to, judgmental estimates and assumptions about revenue growth rates, future operating profit margins, discount rate and terminal growth rate. We then perform a market-based analysis by comparing the average implied multiple arrived at based on our cash flow projections and estimated fair values to multiples for actual recently completed sale transactions and by comparing the total of the estimated fair values of our reporting units to the market capitalization of the Company. We recognize an impairment charge to operations in the amount that the reporting unit’s carrying value exceeds its fair value. Any impairment charge recognized cannot exceed the total amount of goodwill allocated to the reporting unit.

(d)  Impairment of Long-Lived Assets and Intangible Assets, Excluding Goodwill and Indefinite-Lived Intangible Assets

The Company accounts for the impairment of long-lived assets and intangible assets, excluding goodwill and other indefinite-lived intangible assets, in accordance with ASC 360, “Property, Plant and Equipment.” Long-lived assets, excluding goodwill and other indefinite-lived intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or group of assets may not be fully recoverable. These events or changes in circumstances may include a significant deterioration in operating results, changes in business plans, or changes in anticipated future cash flows. If an impairment indicator is present, the Company evaluates recoverability by a comparison of the carrying amount of the asset or group of assets to future undiscounted net cash flows expected to be generated by the asset or group of assets. Assets are grouped at the lowest levels for which there are identifiable cash flows that are largely independent of the cash flows generated by other asset groups. If the assets are impaired, the impairment recognized is measured by the amount by which the carrying amount exceeds the fair value of the asset or group of assets. Fair value is generally determined by estimates of discounted future cash flows. The discount rate used in any estimate of discounted cash flows would be the rate of return for a similar investment of like risk. The Company reviewed these long-lived assets during 2022 and 2021 and concluded no triggering events occurred and that no impairment to the carrying value of these assets was required.

(e)  Financial Instruments

Financial instruments as of December 31, 2022 and 2021, consisted of cash and cash equivalents, restricted cash, trade accounts receivable, asset-backed credit facility, and long-term debt. The carrying amounts approximated fair value for each of these financial instruments as of December 31, 2022 and 2021, except for the Company’s long-term debt. On January 25, 2021, the Company borrowed $825 million in aggregate principal amount of senior secured notes due February 2028 (the “2028 Notes”). The 7.375% 2028 Notes had a carrying value of approximately $750.0 million and fair value of approximately $646.9 million as of December 31, 2022, and had a carrying value of approximately $825.0 million and fair value of approximately $851.8 million as of December 31, 2021. The fair values of the 2028 Notes, classified as Level 2 instruments, were determined based on the trading values of these instruments in an inactive market as of the reporting date. On June 1, 2021, the Company borrowed approximately $7.5 million on a new PPP Loan (as defined in Note 11 – Long-Term Debt). During the three months ended June 30, 2022, the PPP Loan and related accrued interest was forgiven and recorded as other income in the amount of approximately $7.6 million. The PPP Loan had a carrying value of approximately $7.5 million and fair value of approximately $7.5 million as of December 31, 2021. The fair value of the PPP Loan, classified as a Level 2 instrument, was determined based on the fair value of a similar instrument as of the reporting date using updated interest rate information derived from changes in interest rates since inception to the reporting date. There were no borrowings outstanding on the Company’s asset-backed credit facility as of December 31, 2022 and 2021.

(f)  Revenue Recognition

In accordance with Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606), the Company recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which it expects to be entitled in exchange for those goods or services. In general, our spot advertising (both radio and cable television) as well as our digital advertising is satisfied over time as advertising spots or impressions are delivered. For our cable television affiliate revenue, the Company grants a license to the affiliate to distribute television programming content through the license period, and the Company applies the sales-and usage-based royalty exception to recognize revenue based on the number of subscribers each month. Finally, for event-based revenue, the Company’s events typically occur on one specified date when revenue is recognized. However, there may be performance obligations that are satisfied in the weeks leading up to the event, such as radio and digital advertising, and in such instances revenue is recognized as the underlying performance obligations are satisfied, based on the allocated transaction price and the pattern of delivery to the customer.

Within our radio broadcasting and Reach Media segments, revenues are generated from the sale of spot advertisements and sponsorships. Revenue is recognized for each performance obligation based on the allocated transaction price and the pattern of transfer to the customer. The Company records as revenue the amount of consideration that it receives. For our radio broadcasting and Reach Media segments, agency and outside sales representative commissions were approximately $18.4 million and $16.7 million for the years ended December 31, 2022 and 2021, respectively.

Within our digital segment, Interactive One generates the majority of the Company’s digital revenue. Our digital revenue is principally derived from advertising services on non-radio station branded, but Company-owned websites. Advertising services include the sale of banner and sponsorship advertisements. As the Company runs its advertising campaigns, the customer simultaneously receives benefits as impressions are delivered, and revenue is recognized over time. The amount of revenue recognized each month is based on the number of impressions delivered multiplied by the effective per impression unit price, and is equal to the amount receivable from the customer.

Our cable television segment derives advertising revenue from the sale of television airtime to advertisers and revenue is recognized over time when the advertisements are run. In the agreements governing advertising campaigns, the Company may also promise to deliver to its customers a guaranteed minimum number of viewers (“impressions”) on a specific television network within a particular demographic. These advertising campaigns are considered to represent a single, distinct performance obligation. Revenues are recognized based on the guaranteed audience level multiplied by the average price per impression. The Company provides the advertiser with advertising until the guaranteed audience level is delivered, and invoiced advertising revenue receivables may exceed the value of the audience delivery. As such, a portion of revenues are deferred until the guaranteed audience level is delivered or the rights associated with the guarantee

lapse, which is typically less than one year. Audience guarantees are initially developed internally, based on planned programming, historical audience levels, and market trends. Actual audience and delivery information is obtained from independent ratings services. For our cable television segment, agency and outside sales representative commissions were approximately $20.1 million and $16.9 million for the years ended December 31, 2022 and 2021, respectively.

Our cable television segment also derives revenue from affiliate fees under the terms of various multi-year affiliation agreements based on a per subscriber royalty payable by the affiliate, in exchange for the right to distribute the Company’s programming. The majority of the Company’s distribution fees are collected monthly throughout the year and distribution revenue is recognized over the term of the contracts based on contracted programming rates and reported subscriber levels. The Company applies the sales- or usage-based royalty exception for its affiliate agreements. The amount of distribution fees due to the Company is reported by distributors based on actual subscriber levels. Such information is generally not received until after the close of the reporting period. In these cases, the Company estimates the number of subscribers receiving the Company’s programming to estimate royalty revenue. Historical adjustments to recorded estimates have not been material. Revenues from the Company’s cable television segment are reduced by the amortization of the Company’s launch support assets.

Some of the Company’s contracts with customers contain multiple performance obligations. For these contracts, the individual performance obligations are separately accounted for if they are distinct. In an arrangement with multiple performance obligations, the transaction price is allocated among the separate performance obligations on a relative stand-alone selling price basis. The determination of stand-alone selling price considers market conditions, the size and scope of the contract, customer information, and other factors.

Revenue by Contract Type

The following chart shows the sources of our net revenue for the years ended December 31, 2022 and 2021:

	Year Ended
	December 31,
	2022		2021
			(As Restated)
Radio advertising	$	177,268	$	165,244
Political advertising		13,226		3,494
Digital advertising		76,730		59,812
Cable television advertising		112,857		95,589
Cable television affiliate fees		96,963		101,203
Event revenues & other		7,560		14,943
Net revenue	$	484,604	$	440,285

Contract Assets and Liabilities

Contract assets and contract liabilities that are not separately stated in our consolidated balance sheets at December 31, 2022 and 2021 were as follows:

	December 31, 2022		December 31, 2021
			(As Restated)
	(In thousands)
Contract assets:
Unbilled receivables ($5,798 as of January 1, 2021)	$	12,597	$	10,735
Contract liabilities:
Customer advances and unearned income ($3,044 as of January 1, 2021)	$	6,123	$	5,503
Reserve for audience deficiency ($3,544 as of January 1, 2021)		9,629		6,020
Unearned event income ($5,921 as of January 1, 2021)		5,708		—

Unbilled receivables consist of earned revenue that has not yet been billed and is included in trade accounts receivable on the consolidated balance sheets. Customer advances and unearned income represents advance payments by customers for future services under contract that are generally incurred in the near term and are included in other current liabilities on the consolidated balance sheets. For advertising sold based on audience guarantees, audience deficiency typically results in an obligation to deliver additional advertising units to the customer, generally within one year of the original airing. To the extent that audience guarantees are not met, a reserve for audience deficiency is recorded until such a time that the audience guarantee has been satisfied. Unearned event income represents payments by customers for upcoming events.

For customer advances and unearned income as of January 1, 2022, approximately $2.5 million was recognized as revenue during the year ended December 31, 2022.  For unearned event income as of January 1, 2022, there was no revenue recognized during the year ended December 31, 2022.  For customer advances and unearned income as of January 1, 2021, approximately $3.0 million was recognized as revenue during the year ended December 31, 2021.  For unearned event income as of January 1, 2021, approximately $5.9 million was recognized during the year ended December 31, 2021 as the event took place during the fourth quarter of 2021.  

Practical expedients and exemptions

We generally expense employee sales commissions when incurred because the amortization period would have been one year or less. These costs are recorded within selling, general and administrative expenses.

We do not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less or (ii) contracts for which variable consideration is a sales-based or usage-based royalty promised in exchange for a license of intellectual property.

(g)  Launch Support

The cable television segment has entered into certain affiliate agreements requiring various payments for launch support. Launch support assets are used to initiate carriage under affiliation agreements and are amortized over the term of the respective contracts. For the year ended December 31, 2022, the Company paid approximately $9.3 million for carriage initiation, and during the year ended December 31, 2021, the Company did not pay any launch support for carriage initiation. For the year ended December 31, 2022, there was launch support additions of approximately $9.5 million for carriage initiation that will be paid in cash in future periods. The weighted-average amortization period for launch support was approximately 8.1 years and 7.1 years as of December 31, 2022 and 2021, respectively. The remaining weighted-average amortization period for launch support was 3.8 years and 3.3 years as of December 31, 2022 and 2021, respectively. Amortization is recorded as a reduction to revenue as discussed in Note 2 – Restatement of Financial Statements. For the years ended December 31, 2022 and 2021, launch support asset amortization was approximately $4.4 million and $1.6 million, respectively. Launch assets are included in other intangible assets on the consolidated balance sheets, except for the portion of the unamortized balance that is expected to be amortized within one year which is included in other current assets.

The gross value and accumulated amortization of the launch assets is as follows:

	As of December 31,
	2022		2021
	(In thousands)
Launch assets	$	27,764	$	9,021
Less: accumulated amortization		(9,104)		(4,724)
Launch assets, net	$	18,660	$	4,297

Future estimated launch support amortization related to launch assets for years 2023 through 2027 and thereafter is as follows:

	(In thousands)
2023	$	4,980
2024		4,980
2025		4,980
2026		3,410
2027		237
Thereafter		73

(h)  Barter Transactions

For barter transactions, the Company provides broadcast advertising time in exchange for programming content and certain services. The Company includes the value of such exchanges in both broadcasting net revenue and station operating expenses. The valuation of barter time is based upon the fair value of the network advertising time provided for the programming content and services received. For the years ended December 31, 2022 and 2021, barter transaction revenues were approximately $2.0 million and $1.8 million, respectively. Additionally, for the years ended December 31, 2022 and 2021, barter transaction costs were reflected in programming and technical expenses of approximately $1.3 million and $1.2 million, respectively, and selling, general and administrative expenses of $679,000 and $606,000, respectively.

(i)  Advertising and Promotions

The Company expenses advertising and promotional costs as incurred. Total advertising and promotional expenses for the years ended December 31, 2022 and 2021, were approximately $31.3 million and $24.7 million, respectively.

(j)  Income Taxes

The Company accounts for income taxes in accordance with ASC 740, “Income Taxes”, (“ASC 740”). Under ASC 740, deferred tax assets or liabilities are computed based upon the difference between financial statement and income tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized into income in the period of enactment. Deferred income tax expense or benefits are based upon the changes in the net deferred tax asset or liability from period to period.

The Company recognizes deferred tax assets to the extent that it believes that these assets are more likely than not to be realized. In making such a determination, management considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If management determines that the Company would be able to realize its deferred tax assets in the future in excess of their net recorded amount, the Company would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. Conversely, if management determines that the Company would not be able to realize the recorded amount of deferred tax assets in the future, the Company would make an adjustment to the deferred tax asset valuation allowance, which would increase the provision for income taxes.

The Company records uncertain tax positions in accordance with ASC 740 on the basis of a two-step process in which (1) it determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more likely than not recognition threshold, the Company recognizes the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. The Company recognizes interest and penalties related to unrecognized tax benefits on the income tax expense line in the accompanying consolidated statements of operations. Accrued interest and penalties are included in other current liabilities on the consolidated balance sheets.

(k)  Stock-Based Compensation

The Company accounts for stock-based compensation for stock options and restricted stock grants in accordance with ASC 718, “Compensation - Stock Compensation.” Under the provisions of ASC 718, stock-based compensation cost for stock options is estimated at the grant date based on the award’s fair value as calculated by the Black-Scholes valuation option-pricing model (“BSM”) and is recognized as expense ratably over the requisite service period. The BSM incorporates various highly subjective assumptions including expected stock price volatility, for which historical data is heavily relied upon, expected life of options granted, forfeiture rates and interest rates. Compensation expense for restricted stock grants is measured based on the fair value on the date of grant less estimated forfeitures. Compensation expense for restricted stock grants is recognized ratably during the vesting period. The fair value measurement objective for liabilities incurred in a share-based payment transaction is the same as for equity instruments. Awards classified as liabilities are subsequently remeasured to their fair values at the end of each reporting period until the liability is settled. (See Note 10 – Employment Agreement Award of our consolidated financial statements and Note 13 – Stockholders’ Equity.)

(l)  Segment Reporting and Major Customers

In accordance with ASC 280, “Segment Reporting” and given its diversification strategy, the Company has determined it has four reportable segments: (i) radio broadcasting; (ii) Reach Media; (iii) digital; and (iv) cable television. These four segments operate in the United States and are consistently aligned with the Company’s management of its businesses and its financial reporting structure.

The radio broadcasting segment consists of all broadcast results of operations. The Reach Media segment consists of the results of operations for the related activities and operations of our syndicated shows. The digital segment includes the results of our online business, including the operations of Interactive One, as well as the digital components of our other reportable segments. The cable television segment consists of the Company’s cable TV operation, including results of operations of TV One and CLEO TV. Business activities unrelated to these four segments are included in an “all other” category which the Company refers to as “All other - corporate/eliminations.”

No single customer accounted for over 10% of our consolidated net revenues or accounts receivable as of and during either of the years ended December 31, 2022 or 2021.

(m)  Earnings Per Share

Basic earnings per share is computed on the basis of the number of shares of common stock (Classes A, B, C and D) outstanding during the period. Diluted earnings per share is computed on the basis of the weighted average number of shares of common stock plus the effect of potential dilutive common shares outstanding during the period using the treasury stock method.

The Company’s potentially dilutive securities include stock options and unvested restricted stock. Diluted earnings per share considers the impact of potentially dilutive securities except in periods in which there is a net loss, as the inclusion of the potentially dilutive common shares would have an anti-dilutive effect.

In each of the years ended December 31, 2022 and 2021, the amount of earnings per share would pertain to each of our classes of common stock because the holders of each class are entitled to equal per share dividends or distributions in liquidation in accordance with the Company’s Amended and Restated Certificate of Incorporation.

The following table sets forth the calculation of basic and diluted earnings per share from continuing operations (in thousands, except share and per share data):

	Year Ended December 31,
	2022		2021
			(As Restated)
	(In Thousands)
Numerator:
Net income attributable to common stockholders	$	37,329	$	36,791
Denominator:
Denominator for basic net income per share - weighted average outstanding shares		48,928,063		50,163,600
Effect of dilutive securities:
Stock options and restricted stock		3,246,274		3,973,041
Denominator for diluted net income per share - weighted-average outstanding shares		52,174,337		54,136,641
Net income attributable to common stockholders per share – basic	$	0.76	$	0.73
Net income attributable to common stockholders per share – diluted	$	0.72	$	0.68

(n)  Fair Value Measurements

We report our financial and non-financial assets and liabilities measured at fair value on a recurring and non-recurring basis under the provisions of ASC 820, “Fair Value Measurement” (“ASC 820”) which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.

The fair value framework requires the categorization of assets and liabilities into three levels based upon the assumptions (inputs) used to price the assets or liabilities. Level 1 provides the most reliable measure of fair value, whereas Level 3 generally requires significant management judgment. The three levels are defined as follows:

Level 1: Inputs are unadjusted quoted prices in active markets for identical assets and liabilities that can be accessed at the measurement date.

Level 2: Observable inputs other than those included in Level 1 (i.e., quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets).

Level 3: Unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the asset or liability.

A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value instrument.

As of December 31, 2022 and 2021, respectively, the fair values of our financial assets and liabilities measured at fair value on a recurring basis are categorized as follows:

	Total		Level 1		Level 2		Level 3
	(In thousands)
As of December 31, 2022
Liabilities subject to fair value measurement:
Employment agreement award (a)	$	26,283	$	—	$	—	$	26,283
Mezzanine equity subject to fair value measurement:
Redeemable noncontrolling interests (b)	$	25,298	$	—	$	—	$	25,298
Assets subject to fair value measurement:
Available-for-sale securities (c)	$	136,826	$	—	$	—	$	136,826
Cash equivalents - money market funds (d)		39,798		39,798		—		—
Total	$	176,624	$	39,798	$	—	$	136,826
As of December 31, 2021 (As Restated)
Liabilities subject to fair value measurement:
Employment agreement award (a)	$	28,193	$	—	$	—	$	28,193
Mezzanine equity subject to fair value measurement:
Redeemable noncontrolling interests (b)	$	18,655	$	—	$	—	$	18,655
Assets subject to fair value measurement:
Available-for-sale securities (c)	$	112,600	$	—	$	—	$	112,600

(a) Each quarter, pursuant to an employment agreement (the “Employment Agreement”) executed in April 2008, the Chief Executive Officer (“CEO”) is eligible to receive an award (the “Employment Agreement Award”) in an amount equal to approximately 4% of any proceeds from distributions or other liquidity events in excess of the return of the Company’s aggregate investment in TV One. The Company reviews the factors underlying this award at the end of each quarter including the valuation of TV One (based on the estimated enterprise fair value of TV One as determined by the income approach using a discounted cash flow analysis and the market approach using comparable public company multiples). The Company’s obligation to pay the award was triggered after the Company recovered the aggregate amount of capital contributions in TV One, and payment is required only upon actual receipt of distributions of cash or marketable securities or proceeds from a liquidity event with respect to such invested amount. The long-term portion of the award is recorded in other long-term liabilities and the current portion is recorded in other current liabilities in the consolidated balance sheets. The CEO was fully vested in the award upon execution of the Employment Agreement, and the award lapses if the CEO voluntarily leaves the Company or is terminated for cause. Significant inputs to the discounted cash flow analysis include revenue growth rates, future operating profit margins, discount rate and terminal growth rate. Significant inputs to the market approach include publicly held peer companies and associated multiples. In September 2022, the Compensation Committee of the Board of Directors of the Company (the “Compensation Committee”) approved terms for a new employment agreement with the CEO, including a renewal of the Employment Agreement Award upon similar terms as in the prior Employment Agreement.

(b) The redeemable noncontrolling interest in Reach Media is measured at fair value using a discounted cash flow methodology. Significant inputs to the discounted cash flow analysis include revenue growth rates, future operating profit margins, discount rate and terminal growth rate.

(c) The investment in MGM National Harbor is preferred stock that has a non-transferable put right and is classified as an available-for-sale debt security. The investment was initially measured at fair value using a dividend discount model. Significant inputs to the dividend discount model include revenue growth rates, discount rate and a terminal growth rate. As of December 31, 2022, the investment’s fair value is measured using a contractual valuation approach.

This method relies on a contractually agreed upon formula established between the Company and MGM National Harbor as defined in the Second Amended and Restated Operating Agreement of MGM National Harbor, LLC (“the Agreement”) rather than market-based inputs or traditional valuation methods. As defined in the Agreement, the calculation of the put is based on operating results, Enterprise Value and the Put Price Multiple. The inputs used in this measurement technique are specific to the entity, MGM National Harbor, and there are no current observable prices for investments in private companies that are comparable to MGM National Harbor. The inputs used to measure the fair value of this security are classified as Level 3 within the fair value hierarchy. Throughout the periods from the fourth quarter of 2020 up until the third quarter of 2022, the Company relied on the dividend discount model for valuation purposes based on the facts, circumstances, and information available at the time. During the fourth quarter of 2022, the Company adopted the contractual valuation method described above as it believes it more closely approximates the fair value of the investment at that time. Please refer to Note 18 – Subsequent Events of our consolidated financial statements for further details.

(d) The Company measures and reports its cash equivalents that are invested in money market funds at estimated fair value.

There were no transfers in or out of Level 1, 2, or 3 during the years ended December 31, 2022 and 2021. The following table presents the changes in Level 3 assets and liabilities measured at fair value on a recurring basis for the years ended December 31, 2022 and 2021:

			Employment		Redeemable		Available-
	Contingent		Agreement		Noncontrolling		for-Sale
	Consideration		Award		Interests		Securities
					(As Restated)		(As Restated)
	(In thousands)
Balance at December 31, 2020	$	780	$	25,603	$	13,942	$	103,100
Net income attributable to redeemable noncontrolling interests		—		—		2,315		—
Dividends paid to redeemable noncontrolling interests		—		—		(2,400)		—
Distribution		(1,060)		(3,573)		—		—
Change in fair value included within other comprehensive income		—		—		—		9,500
Change in fair value		280		6,163		4,798		—
Balance at December 31, 2021	$	—	$	28,193	$	18,655	$	112,600
Net income attributable to redeemable noncontrolling interests		—		—		2,626		—
Dividends paid to redeemable noncontrolling interests		—		—		(1,599)		—
Distribution		—		(4,039)		—		—
Change in fair value included within other comprehensive income		—		—		—		24,226
Change in fair value		—		2,129		5,616		—
Balance at December 31, 2022	$	—	$	26,283	$	25,298	$	136,826
The amount of total income (losses) for the period included in earnings attributable to the change in unrealized losses relating to assets and liabilities still held at December 31, 2022	$	—	$	(2,129)	$	—	$	—
The amount of total income (losses) for the period included in earnings attributable to the change in unrealized losses relating to assets and liabilities still held at December 31, 2021	$	(280)	$	(6,163)	$	—	$	—

Losses and gains included in earnings were recorded in the consolidated statements of operations as corporate selling, general and administrative expenses for the employment agreement award and included as selling, general and administrative expenses for contingent consideration for the years ended December 31, 2022 and 2021.

For Level 3 assets and liabilities measured at fair value on a recurring basis, the significant unobservable inputs used in the fair value measurements were as follows:

			As of		As of
			December 31,		December 31,
			2022		2021
					(As Restated)
		Significant
		Unobservable	Significant Unobservable
Level 3 assets and liabilities	Valuation Technique	Inputs	Input Value
Employment agreement award	Discounted cash flow	Discount rate	10.5	%	9.5	%
Employment agreement award	Discounted cash flow	Terminal growth rate	0.5	%	0.5	%
Employment agreement award	Discounted cash flow	Operating profit margin range	33.7% - 46.6	%	34.9% - 46.4	%
Employment agreement award	Discounted cash flow	Revenue growth rate range	(4.1)% - 4.2	%	(5.9)% - 11.6	%
Redeemable noncontrolling interest	Discounted cash flow	Discount rate	11.5	%	11.5	%
Redeemable noncontrolling interest	Discounted cash flow	Terminal growth rate	0.3	%	0.4	%
Redeemable noncontrolling interest	Discounted cash flow	Operating profit margin range	25.8% - 29.8	%	24.0% - 32.8	%
Redeemable noncontrolling interest	Discounted cash flow	Revenue growth rate range	0.2% - 32.2	%	(11.8)% - 0.3	%
Available-for-sale securities	Dividend discount model	Revenue growth rate	N/A		8.0	%
Available-for-sale securities	Dividend discount model	Discount rate	N/A		10.5	%
Available-for-sale securities	Dividend discount model	Long-term growth rate	N/A		3.0	%

Any significant increases or decreases in discount rate or terminal growth rate inputs could result in significantly higher or lower fair value measurements.

Certain assets and liabilities are measured at fair value on a non-recurring basis using Level 3 inputs as defined in ASC 820. These assets are not measured at fair value on an ongoing basis but are subject to fair value adjustments only in certain circumstances. Included in this category are goodwill, radio broadcasting licenses and other intangible assets, net, that are written down to fair value when they are determined to be impaired, as well as content assets that are periodically written down to net realizable value. A description of the Level 3 inputs and the information used to develop the inputs is discussed in Note 6 — Goodwill, Radio Broadcasting Licenses and Other Intangible Assets.

As of December 31, 2022, the total recorded carrying values of goodwill and radio broadcasting licenses were approximately $216.6 million and $488.4 million, respectively. Pursuant to ASC 350, “Intangibles – Goodwill and Other,” for the year ended December 31, 2022, the Company recorded an impairment charge of approximately $7.2 million related to certain of our radio market goodwill balances and also an impairment charge of approximately $33.5 million associated with certain of our radio broadcasting licenses. A description of the Level 3 inputs and the information used to develop the inputs is discussed in Note 6 — Goodwill, Radio Broadcasting Licenses and Other Intangible Assets.

(o)  Software and Web Development Costs

The Company capitalizes direct internal and external costs incurred to develop internal-use computer software during the application development stage pursuant to ASC 350-40, “Intangibles – Goodwill and Other – Internal -Use Software.” Internal-use software is amortized under the straight-line method using an estimated life of three years. All web development costs incurred in connection with operating our websites are accounted for under the provisions of ASC 350-40 and ASC 350-50, “Intangibles – Goodwill and Other – Website Development Costs” unless a plan exists or is being developed to market the software externally. The Company has no plans to market software externally.

(p)  Redeemable Noncontrolling Interests

Redeemable noncontrolling interests are interests in subsidiaries that are redeemable outside of the Company’s control either for cash or other assets. These interests are classified as mezzanine equity and measured at the greater of estimated redemption value at the end of each reporting period or the historical cost basis of the noncontrolling interests adjusted for

cumulative earnings allocations. The resulting increases or decreases in the estimated redemption amount are affected by corresponding charges against retained earnings, or in the absence of retained earnings, additional paid-in-capital.

(q)  Investments, As Restated

Available-for-sale securities

On April 10, 2015, the Company made a $5 million investment in MGM’s world-class casino property, MGM National Harbor, located in Prince George’s County, Maryland, which has a predominately African-American demographic profile. On November 30, 2016, the Company contributed an additional $35 million to complete its investment. In return for this investment, the Company received preferred stock and a non-transferable put right, which is exercisable for a thirty-day period each year. The price of the put right will be determined based on the “Put Price” definition as defined in the Agreement between the Company and MGM National Harbor. The Company classifies its investment in MGM National Harbor as an available-for-sale debt security. Investments classified as available for sale are carried at fair value with unrealized gains and losses, net of deferred taxes, reflected directly in accumulated other comprehensive income. Net realized gains and losses on sales of available for sale securities, and unrealized losses considered to be other-than-temporary, are recorded to other income, net in the Consolidated Statements of Operations. The investment entitles the Company to an annual cash distribution based on net gaming revenue and the Company recognized distribution income in the amount of approximately $8.8 million and $7.7 million, for the years ended December 31, 2022 and 2021, respectively, which is recorded in other income, net in the Consolidated Statements of Operations. During the quarter ended March 31, 2023, the Company received $8.8 million representing the Company’s annual distribution from MGMNH with respect to fiscal year 2022.

On March 8, 2023, Radio One Entertainment Holdings, LLC (“ROEH”), the Company’s wholly-owned subsidiary issued a put notice (the “Put Notice”) with respect to one hundred percent (100%) of its interest (the “Put Interest”) in MGM National Harbor, LLC (“MGMNH”). On April 21 2023, ROEH closed on the sale of the Put Interest. The Company received approximately $136.8 million at the time of settlement of the Put Interest, representing the put price. Please refer to Note 18 - Subsequent Events within the consolidated financial statements for further information.  

(r)  Content Assets

The Company’s cable television segment has entered into contracts to license entertainment programming rights and programs from distributors and producers. The license periods granted in these contracts generally run from one year to five years. Contract payments are typically made in quarterly installments over the terms of the contract period. Each contract is recorded as an asset and a liability at an amount equal to its gross contractual commitment when the license period begins, and the program is available for its first airing. The Company also has programming for which the Company has engaged third parties to develop and produce, and it owns most or all rights (commissioned programming). For programming that is predominantly monetized as part of a content group, such as the Company’s commissioned programs, capitalized costs are amortized based on an estimate of our usage and benefit from such programming. The estimates require management’s judgement and include consideration of factors such as expected revenues to be derived from the programming and the expected number of future airings, among other factors. The Company’s acquired programs’ capitalized costs are amortized based on projected usage, generally resulting in a straight-line amortization pattern.

The Company utilizes judgment and prepares analysis to determine the amortization patterns of our content assets. Key assumptions include the categorization of content based on shared characteristics and the use of a quantitative model to predict revenue. For each film group, which the Company defines as a genre, this model takes into account projected viewership which is based on (i) estimated household universe; (ii) ratings; and (iii) expected number of airings across different broadcast time slots.

As part of the Company's assessment of its amortization rates, the Company compares the estimated amortization rates to those that have been utilized during the year. Management regularly reviews, and revises, when necessary, its total revenue estimates, which may result in a change in the rate of amortization and/or a write down of the asset to fair value The result of the content amortization analysis is either an accelerated method or a straight-line amortization method over the estimated useful lives of generally one to five years.

Content that is predominantly monetized within a film group is assessed for impairment at the film group level and is tested for impairment if circumstances indicate that the fair value of the content within the film group is less than its unamortized costs. The Company’s film groups for commission programming are generally aligned along genre, while the Company’s licensed content is considered a separate film group. The Company evaluates the fair value of content at the group level by considering expected future revenue generation using a cash flow analysis when an event or change in circumstances indicates a change in the expected usefulness of the content or that the fair value may be less than unamortized costs. Estimates of future revenues consider historical airing patterns and future plans for airing content, including any changes in strategy. Given the significant estimates and judgments involved, actual demand or market conditions may be less favorable than those projected, requiring a write-down to fair value. The Company determined there were no impairment indicators evident during the year ended December 31, 2022. For the year ended December 31, 2021, the Company recorded an impairment and additional amortization expense of $695,000, as a result of evaluating its contracts for impairment. Impairment and amortization of content assets is recorded in the consolidated statements of operations as programming and technical expenses. All commissioned and licensed content is classified as a long-term asset, except for the portion of the unamortized content balance that is expected to be amortized within one year which is classified as a current asset.

Tax incentives that state and local governments offer that are directly measured based on production activities are recorded as reductions in production costs.

(s)  Impact of Recently Issued Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). ASU 2016-13 is intended to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. In November 2019, the FASB issued ASU 2019-10, “Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates” which defers the effective date of credit loss standard ASU 2016-13 by two years for smaller reporting companies and permits early adoption. ASU 2016-13 is effective for the Company beginning January 1, 2023. The Company is evaluating the impact of the adoption of ASU 2016-13 on its consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04 Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting to provide optional relief from applying GAAP to contract modifications, hedging relationships, and other transactions affected by the anticipated transition from LIBOR. As a result of the reference rate reform initiative, certain widely used rates such as LIBOR are expected to be discontinued. The Company holds the ABL Facility, which bears interest based on the LIBOR rate.  In December 2022, the FASB issued ASU 2022-06 Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848, to defer the sunset date of the temporary relief in Topic 848 to December 31, 2024.  The guidance is effective upon issuance. The Company is currently assessing the impact of the adoption of ASU 2022-06 adoption on its consolidated financial statements.

In October 2021, the FASB issued ASU 2021-08, Business Combination (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires an acquirer to recognize and measure contract assets and liabilities acquired in a business combination in accordance with Revenue from Contracts with Customers (Topic 606), rather than adjust them to fair value at the acquisition date. The guidance is effective for the Company beginning January 1, 2023 and applies to acquisitions occurring after the effective date. The Company is currently assessing the impact the new guidance will have on the consolidated financial statements.  

(t)  Related Party Transactions

Reach Media operates the Tom Joyner Foundation’s Fantastic Voyage^® (the “Fantastic Voyage^®”), a fund-raising event, on behalf of the Tom Joyner Foundation, Inc. (the “Foundation”), a 501(c)(3) entity. The agreement under which the Fantastic Voyage^® operates provides that Reach Media provide all necessary operations of the cruise and that Reach Media will be reimbursed its expenditures and receive a fee plus a performance bonus. Distributions from operating revenues are in the following order until the funds are depleted: up to $250,000 to the Foundation, reimbursement of

Reach’s expenditures, up to a $1.0 million fee to Reach, a performance bonus of up to 50% of remaining operating revenues to Reach Media, with the balance remaining to the Foundation. For 2021 and 2023, $250,000 to the Foundation is guaranteed; the Fantastic Voyage^® did not operate in 2022. Reach Media’s earnings for the Fantastic Voyage^® in any given year may not exceed $1.75 million. The Foundation’s remittances to Reach Media under the agreements are limited to its Fantastic Voyage^® related cash collections. Reach Media bears the risk should the Fantastic Voyage^® sustain a loss and bears all credit risk associated with the related passenger cruise package sales. The agreement between Reach and the Foundation automatically renews annually unless termination is mutually agreed or unless a party’s financial requirements are not met, in which case the party not in breach of their obligations has the right, but not the obligation, to terminate unilaterally. As of December 31, 2022, the Foundation owed Reach Media approximately $2.3 million reflecting passenger payments received by the Foundation, but not yet remitted to Reach Media, and as of December 31, 2021, Reach Media owed the Foundation $41,000 under the agreements for the operation of the cruises.  

The Fantastic Voyage took place during the fourth quarter of 2021. For the year ended December 31, 2021, Reach Media's revenues, expenses, and operating income for the Fantastic Voyage were approximately $7.0 million, $6.6 million, and $400,000, respectively.

Reach Media provides office facilities (including office space, telecommunications facilities, and office equipment) to the Foundation. Such services are provided to the Foundation on a pass-through basis at cost. Additionally, from time to time, the Foundation reimburses Reach Media for expenditures paid on its behalf at Reach Media-related events. Under these arrangements, as of December 31, 2022 and 2021, the Foundation owed an immaterial amount to Reach Media.

Alfred C. Liggins, President and Chief Executive Officer of Urban One, Inc., is a compensated member of the Board of Directors of Broadcast Music, Inc. (“BMI”), a performance rights organization to which the Company pays license fees in the ordinary course of business. During the years ended December 31, 2022 and 2021, the Company incurred expense of approximately $3.8 million and $4.7 million, respectively. As of December 31, 2022 and 2021, the Company owed BMI approximately $1.5 million and $423,000, respectively.

(u) Leases

On January 1, 2019, with the adoption of ASC 842, the Company adopted a package of practical expedients as allowed by the transition guidance which permitted the Company to carry forward the historical assessment of whether contracts contain or are leases, classification of leases and the remaining lease terms. The Company has also made an accounting policy election to exclude leases with an initial term of twelve months or less from recognition on the consolidated balance sheet. Short-term leases will be expensed over the lease term. The Company also elected to separate the consideration in the lease contracts between the lease and non-lease components. All variable non-lease components are expensed as incurred.

ASC 842 results in significant changes to the balance sheets of lessees, most significantly by requiring the recognition of ROU assets and lease liabilities by lessees for those leases classified as operating leases. Upon adoption of ASC 842, deferred rent balances, which were historically presented separately, were combined and presented net within the ROU assets.

Many of the Company's leases provide for renewal terms and escalation clauses, which are factored into calculating the lease liabilities when appropriate. The implicit rate within the Company's lease agreements is generally not determinable and as such the Company’s collateralized borrowing rate is used.

The following table sets forth the components of lease expense and the weighted average remaining lease term and the weighted average discount rate for the Company’s leases:

	Year Ended December 31,
	2022			2021
	(Dollars In thousands)
Operating lease cost (cost resulting from lease payments)	$	12,822		$	13,055
Variable lease cost (cost excluded from lease payments)		40			40
Total lease cost	$	12,862		$	13,095
Operating lease - operating cash flows (fixed payments)	$	13,978		$	13,784
Operating lease - operating cash flows (liability reduction)	$	9,935		$	9,124
Weighted average lease term - operating leases		4.85	years		4.94	years
Weighted average discount rate - operating leases		11.00	%		11.00	%

As of December 31, 2022, maturities of lease liabilities were as follows:

For the Year Ended December 31,	(In thousands)
2023	$	11,697
2024		10,690
2025		6,834
2026		4,860
2027		3,417
Thereafter		7,140
Total future lease payments		44,638
Less: imputed interest		(10,403)
Total	$	34,235

(v) Going Concern Assessment

The accompanying financial statements have been prepared on a going concern basis in accordance with the applicable accounting standard codification. We have concluded that the Company has sufficient capacity over the next twelve months to meet its financing obligations, that cash flows from operations are sufficient to meet the liquidity needs and/or has sufficient capacity to access asset-backed facility funds to finance working capital needs should the need arise.